SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BRAUVIN REAL ESTATE FUND L.P. 4
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)and 0-11.
Title of each class of securities to which transaction applies:
Aggregate number of securities to which transaction applies:
Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
Proposed maximum aggregate value of transaction:
Total fee paid:
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
Amount Previously Paid: N/A
Form, Schedule or Registration Statement No.: N/A
Filing Party: N/A
Date Filed: N/A
<PAGE>
BRAUVIN REAL ESTATE FUND L.P. 4
30 North LaSalle Street
Suite 3100
Chicago, Illinois 60602
312-759-7660
SOLICITATION OF VOTE OF LIMITED PARTNERS
Dear Limited Partner:
As discussed more fully in the attached Solicitation
Statement, we are soliciting the vote of Limited Partners to
authorize the sale of all the Partnership's existing properties and
a subsequent liquidation of the Partnership. Please read the
Solicitation Statement carefully before filling out the enclosed
Ballot.
Holders of more than 50% of the outstanding Units must approve
the sale of all or substantially all of the Partnership's assets.
Only Limited Partners of record at the close of business on May 14,
1999 will be entitled to notice of, and to participate in, the
vote. Failure of a Limited Partner to return a Ballot by July 12,
1999 will constitute a vote AGAINST the proposed sale.
If Limited Partners holding a majority of outstanding Units
approve the sale, we will aggressively pursue the sale of the
properties on the terms described in the Solicitation Statement.
Your vote is important. Please sign and date the enclosed
Ballot and return it promptly to the Partnership in the enclosed
return envelope.
Very truly yours,
BRAUVIN REAL ESTATE FUND L.P. 4
By:/s/ Jerome J. Brault
Jerome J. Brault
Managing General Partner
June 14, 1999
<PAGE>
BRAUVIN REAL ESTATE FUND L.P. 4
30 North LaSalle Street
Suite 3100
Chicago, Illinois 60602
312-759-7660
SOLICITATION STATEMENT
June 14, 1999
This Solicitation Statement is being furnished to the Limited
Partners of Brauvin Real Estate Fund L.P. 4, a Delaware limited
partnership (the "Partnership"), in connection with the General
Partners' solicitation of the votes of the Limited Partners to
approve a sale of all of the Partnership's properties either on an
individual or group basis (the "Proposed Transaction"), and to
subsequently liquidate the Partnership. This authorization is the
only authorization that will be solicited by the General Partners
in connection with the sale of the Properties (as hereinafter
defined). No meeting will be held in connection with this
solicitation of votes from the Limited Partners. To be counted, a
properly completed Ballot must be received by the Partnership at 30
North LaSalle Street, Suite 3100, Chicago, Illinois 60602 on or
before July 12, 1999. Failure of a Limited Partner to return a
Ballot by July 12, 1999 will constitute a vote AGAINST the Proposed
Transaction. Ballots will not be deemed to have been returned
until actually received by the Partnership at the foregoing
address.
This Solicitation Statement is made by the General Partners,
Brauvin Ventures, Inc. and Jerome J. Brault, on behalf of the
Partnership. Solicitation of votes other than by mail may be made
by telephone, facsimile or in person by regularly employed
officers, agents and employees of the General Partners who will not
receive additional compensation for their efforts. The total cost
of soliciting votes will be borne by the Partnership.
The General Partners have set May 14, 1999 as the record date
for determining the Limited Partners entitled to a Ballot and to
vote on the Proposed Transaction. Only the Limited Partners of
record at the close of business on May 14, 1999 will be entitled to
vote on the Proposed Transaction. A Limited Partner holding Units
(as hereinafter defined) of record as of the record date will
retain the right to vote on the Proposed Transaction even if such
Limited Partner sells or transfers such Units after such date.
The total number of outstanding Units and economic interests
as of December 31, 1998 was 9,550. Each Limited Partner is
entitled to cast one vote for each Unit owned of record on the
record date. There is no established trading market for the Units.
A Limited Partner may revoke its Ballot at any time prior to
July 12, 1999 by mailing a properly executed Ballot bearing a later
date or by mailing a signed, written notice of revocation to the
attention of the General Partners. Revocation of a Ballot will be
effective upon receipt by the General Partners of either: (i) an
instrument revoking the Ballot; or (ii) a duly executed Ballot
bearing a later date.
This Solicitation Statement and Ballot were first mailed to
Limited Partners on or about June 14, 1999. Votes will be tallied
within ten days of July 12, 1999, and within ten days of the final
tally, the General Partners will notify each of the Limited
Partners of the outcome of the vote by mail.
INTRODUCTION
General Information
If the Proposed Transaction is consummated and all of the
Properties are sold, the gross sales price of the Partnership's
assets will be no less than $8,940,050. This minimum sales price
represents approximately 70% of the cumulative appraised value of
the Properties, before deducting any expenses incurred to close the
transaction. However, the General Partners will endeavor to
maximize the value of the Properties in the marketplace. See
"Description of the Proposed Transaction Description of the
Properties" and " Terms and Conditions" for the appraised market
value and the terms and conditions of the Proposed Transaction.
The General Partners intend to sell all of the Properties, as
well as the retail properties of those owned by two affiliated
limited partnerships, Brauvin Real Estate Fund L.P. 5 and Brauvin
Income Properties L.P. 6, in a single sale. However, if the General
Partners believe it is in the best interest of the Limited
Partners, the Properties may be sold individually or in any
combination provided that the total sales price for the Properties
included in the transaction equals or exceeds 70% of the aggregate
appraised value for such Properties. Properties with debt equal to
or greater than the proposed sales price, if any, net of applicable
sales cost may not be sold by the Partnership. Instead, those
Properties will be returned to the mortgage holders. As the
Partnership will not receive any sales proceeds in those instances,
the total proceeds received by the Partnership from the Proposed
Transaction may be less than 70% of the aggregate appraised value
of the Properties. The General Partners will not receive any fees
in connection with the Proposed Transaction. The General Partners
will not sell any Properties to affiliates of the Partnership.
The Partnership's Limited Partnership Agreement (the
"Partnership Agreement") provides in Section P.2(e) that the
General Partners may not sell or dispose of all, or substantially
all, of the Properties without the approval of the Limited Partners
owning a majority of the limited partnership interests (excluding
non-voting economic interests) of the Partnership (the "Units"),
except the sale or disposition of the final Property. For purposes
hereof, "Properties" means the real estate, together with the
buildings, improvements, equipment, furniture, fixtures and
personal property associated therewith, used by the Partnership in
the conduct of its business.
As of December 31, 1998, the Partnership had approximately 799
Limited Partners and economic interest holders. Neither the General
Partners, nor any of the officers or directors of Brauvin Ventures,
Inc., are the beneficial owners of any Units.
Forward-Looking Statements
This Solicitation Statement contains forward-looking
statements. Discussions containing such forward-looking statements
may be found in the material set forth under "Description of the
Proposed Transaction" and "Pro Forma Unaudited Financial Data" as
well as within the Solicitation Statement generally. In addition,
when used in this Solicitation Statement, the words "believes,"
"anticipates," "expects" and similar expressions are intended to
identify forward-looking statements; however, not all forward-
looking statements will contain such expressions. Such statements
are subject to a number of risks and uncertainties. Actual results
or events in the future could differ materially from those
described in the forward-looking statements as a result of the
inability of the General Partners to find a suitable buyer for the
Properties, the inability to agree on an acceptable purchase price
or contract terms, a decrease in the financial performance of the
Properties, the discovery of an environmental condition impacting
one or more of the Properties, an economic downturn in the markets
in which the Properties are located and other factors set forth in
this Solicitation Statement. The Partnership undertakes no
obligation to publicly release any revisions to these forward-
looking statements to reflect any future events or circumstances.
DESCRIPTION OF THE PROPOSED TRANSACTION
Background and Recommendation of the General Partners
The General Partners have been reviewing potential sale
strategies, including both aggregate sales possibilities and
single-property sales, to determine the most profitable and
efficient manner to sell the Properties. While the General
Partners' marketing efforts have not been aggressive to date, the
General Partners intend to increase their efforts upon a majority
vote of the Limited Partners in favor of the Proposed Transaction.
To that end, the General Partners retained Landauer Associates,
Inc. ("Landauer") to assist in the marketing process.
The Partnership has entered into separate engagement letters
(the "Marketing Contracts") with Landauer for the various
Properties owned by the Partnership. The Marketing Contracts are
structured in two phases: (i) Phase I: due diligence and market
pricing analysis; and (ii) Phase II: marketing of the Properties.
Phase II is further sub-divided into three sub-phases: (i) pre-
marketing; (ii) marketing; and (iii) post-marketing. The total fee
for appraisals of the Properties and completion of Phase I of the
Marketing Contracts was $28,500. The total fee for Phase II of the
Marketing Contracts is contingent on the closing of the sale of the
Properties (the "Placement Fee") and the Placement Fee shall be an
amount equal to 2% of the gross sales price (sales price without
deduction for closing expenses, adjustments or costs) of the
Properties. Landauer will provide a credit against the Placement
Fee for any fees it received in connection with Phase I of the
engagement. Under the Marketing Contracts, Landauer has the
exclusive right to represent the Partnership in the sale of the
Properties for a period of 12 months. However, the Marketing
Contracts may be terminated at anytime by either party upon 30 days
written notice to the other party.
Copies of the Marketing Contracts with Landauer will be made
available to the Limited Partners upon request.
Landauer, founded in 1946, is an international real estate
advisory organization with professionals in the appraisal,
consulting and investment banking areas of the commercial real
estate industry. The Capital Market Group of Landauer represents
clients in structuring their real estate initiatives including the
disposition of selected real estate assets, such as retail centers,
hotels, office and industrial buildings. Landauer's investor
database contains a current list of the most active investors, many
of whom are clients of Landauer's many practice areas.
Landauer will employ a marketing plan to attempt to achieve
the optimum value for the assets. Initially, Landauer will conduct
due diligence on the Properties and prepare a confidential offering
memorandum. Once the offering memorandum has been approved,
Landauer will embark on marketing the Properties including, but not
limited to, print advertising, press releases and contacting
current buyers from its investor database. Interest will be sought
directly from private investors and firms, insurance and pension
funds and publicly owned real estate companies. Landauer will
inform the Partnership of any serious interest in the Properties
and will work with both buyer and seller to arrive at an agreeable
purchase and sale contract. While it is the intent of Landauer to
sell all of the retail properties to one buyer, Landauer may
recommend to divide the portfolio should it be more prudent.
Landauer represents that it prepared the appraisal reports in
conformity with the Uniform Standards of Professional Practice and
in accordance with the requirements of the Code of Professional
Ethics and the Standards of Professional Practice of the Appraisal
Institute. Landauer reviewed lease abstracts, rent rolls,
operating budgets and other property data provided by the
Partnership. Landauer also conducted an on-site investigation of
each Property and its surrounding area.
There are three traditional approaches to value: The Income
Approach, the Sales Comparison Approach and the Cost Approach. The
applicability of each depends on the characteristics of the subject
property and the behavior of market participants as of the date of
value. Investment-grade properties, such as the Properties,
typically possess detailed and complex physical, legal, locational
and economic characteristics. The primary valuation approach
employed by buyers and sellers of such properties is the Income
Approach. The Income Approach converts the anticipated future
benefits of ownership to an expression of present value. For
multi-tenant properties, such as the Properties appraised by
Landauer, the discounted cash flow analysis technique is typically
employed. This technique first projects the anticipated cash flows
for the properties over a holding period (normally ten years). The
projected cash flows and net residual value are then discounted to
an expression of present value at a market-oriented discount rate.
In arriving at the appraised market value for the Properties,
Landauer placed its greatest reliance on the Income Approach.
Copies of the appraisal reports for the Properties will be
made available to the Limited Partners upon request.
The General Partners believe the Proposed Transaction is in
the best interests of the Limited Partners at this time and
strongly recommend a vote in favor of the Proposed Transaction due
to the: (1) improved conditions for the sale of the Properties; (2)
lack of an established trading market for the Units; (3) limited
representations and warranties anticipated to be made to the
buyers; (4) majority approval requirement; and (5) return of a
portion of the outstanding capital contribution. See "Description
of the Proposed Transaction -- Advantages to the Limited Partners."
Description of the Properties
For the purpose of the information disclosed in this section,
the following terms are defined as follows:
Occupancy Rate: The occupancy rate is defined as the occupied
square footage as of December 31, divided by the total square
footage excluding square footage of outparcels, if any.
Average Annual Base Rent Per Square Footage: The average
annual base rent per square footage is defined as the total
effective base rental income for the year divided by the
Average Square Footage Occupied excluding outparcels, if any.
Average Square Footage Occupied: The average square footage
occupied is calculated by averaging the occupied square
footage at the beginning of the year with the occupied square
footage at the end of the year excluding outparcels, if any.
The Partnership currently owns the Properties described below:
(a) Raleigh Springs Marketplace ("Raleigh Springs")
On June 26, 1985, the Partnership acquired Raleigh Springs,
located in Memphis, Tennessee, for $7,486,800. Raleigh Springs is
a community shopping center with approximately 114,000 rentable
square footage. Raleigh Springs was constructed in two phases.
Phase I was completed in 1984 and Phase II was completed in 1985.
Raleigh Springs was 95% occupied at December 31, 1998. The
national anchor tenant was Toys "R" Us.
Raleigh Springs had an appraised market value of $6,800,000,
as of October 22, 1998.
Raleigh Springs is secured by a first mortgage loan on Phase
I in the amount of $5,186,800 (the "Raleigh Springs First Mortgage
Loan"). The Raleigh Springs First Mortgage Loan bears interest at
the rate of 10.00% per annum, is amortized over a 25 year period,
requires monthly payments of principal and interest and matures on
October 1, 1999. The outstanding mortgage balance encumbered by
the property was $4,759,142 at December 31, 1998.
The Partnership may prepay the Raleigh Springs First Mortgage
Loan, in full only, with interest to the date of such prepayment,
at any time during the term of such loan on 60 days prior written
notice plus a prepayment premium equal to the greater of: (a) 1% of
the then-outstanding balance due under the Raleigh Springs First
Mortgage Loan; and (b) the difference between the interest rate of
the loan and the current yield, on the date of such prepayment, of
the U.S. Treasury Note closest in maturity to the remaining term of
the Raleigh Springs First Mortgage Loan, multiplied by: (x) the
loan amount and (y) the number of years (or fraction thereof)
remaining in the term of the Raleigh Springs First Mortgage Loan.
In the event that the Treasury Note yield is greater than the
interest rate of the Raleigh Springs First Mortgage Loan, there
will be no discount as provided above.
The occupancy rate and average annual base rent per square
foot at December 31 for the last two years were as follows:
1998 1997
Occupancy Rate 95% 78%
Average Annual Base
Rent Per
Square Footage $8.39 $8.28
Raleigh Springs has one tenant which occupies ten percent or
more of the rentable square footage. The following is a summary of
the tenant rent roll at December 31, 1998:
<PAGE>
Tenant Square Footage Annual Base Lease Renewal Nature of
Rent Expiration Date Options Business
Toys "R" Us 36,416 $218,496 10/2017 10/5 yrs. ea. Toy Store
Others 71,854 607,969 Various Various
Vacant 6,000 ---
114,270 $826,465
(b) Fortune Professional Building ("Fortune")
On September 15, 1985, the Partnership acquired Fortune,
located in Albuquerque, New Mexico for approximately $1,888,000.
Fortune is a two-story office building with approximately 28,000
rentable square footage. Fortune was 80% occupied at December 31,
1998. Management of the Partnership is actively marketing the
vacant space.
Fortune had an appraised market value of $1,660,000, as of
October 14, 1998.
Fortune is secured by a first mortgage loan in the amount of
$875,000 (the "Fortune First Mortgage Loan") from American National
Bank and Trust Company ("American National Bank"). The Fortune
First Mortgage Loan bears interest based on American National
Bank's prime rate, is amortized over a 15 year period, requires
monthly payments of principal and interest and matures on June 30,
1999 at which time a balloon mortgage payment in the amount of
approximately $758,300 will be due. The outstanding balance of the
Fortune First Mortgage Loan was $787,484 at December 31, 1998.
The Partnership may prepay the Fortune First Mortgage First
Mortgage Loan, at any time, in whole or in part, without premium or
penalty.
The occupancy rate and average annual base rent per square
foot at December 31 for the last two years were as follows:
1998 1997
Occupancy Rate 80% 75%
Average Annual Base
Rent Per Square Footage $10.34 $10.98
Fortune has no tenants which individually occupy ten percent
or more of the rentable square footage. The following is a summary
of the tenant rent roll at December 31, 1998:
Tenant Square Footage Annual Base Rent Lease Expiration Date Renewal Options
Others 22,798 $229,447 Various Various
Vacant 5,800 --------
28,598 $229,447
(c) Strawberry Fields Shopping Center ("Strawberry Fields")
On December 12, 1985, the Partnership and Brauvin Real Estate
Fund L.P. 5 ("BREF 5"), an affiliated public real estate limited
partnership, formed a joint venture (the "Strawberry Joint
Venture") to purchase Strawberry Fields located in West Palm Beach,
Florida for $9,875,000. The Partnership has a 58% interest and
BREF 5 has a 42% interest in the Strawberry Joint Venture.
Strawberry Fields is a neighborhood retail development constructed
on an 11.87 acre site in 1985. Strawberry Fields' main building
contains 103,614 square feet of retail space and is complemented by
two outparcel sites, plus an older 5,400 square foot Uniroyal tire
and automotive outlet. The outparcel sites are leased to Taco
Bell, a division of Tricon Global, and Flagler National Bank.
Strawberry Fields was 86% occupied at December 31, 1998.
Strawberry Fields had an appraised market value of $4,800,000,
as of November 1, 1998. The appraised market value attributable to
the Partnership pursuant to its 58% interest in the Strawberry
Joint Venture was $2,784,000.
Strawberry Fields is secured by a first mortgage loan in the
amount $6,000,000 (the "Strawberry Fields First Mortgage Loan")
from Lutheran Brotherhood ("Lutheran Brotherhood"). The Strawberry
Fields First Mortgage Loan bears interest at the rate of 7% per
annum, is amortized over an 18 year period and matures on December
31, 1999. The outstanding mortgage balance encumbered by this
property was $5,454,205 at December 31, 1998.
There is no prepayment penalty for the Strawberry Fields First
Mortgage Loan.
The occupancy rate and average annual base rent per square
foot at December 31 for the last two years were as follows:
1998 1997
Occupancy Rate 86% 86%
Average Annual Base
Rent Per Square Footage $7.36 $7.63
Strawberry Fields has one tenant which occupies ten percent or
more of the rentable square footage. The following is a summary of
the tenant rent roll at December 31, 1998:
<PAGE>
Annual Lease
Square Base Expiration Renewal Nature of
Tenant Feet Rent Date Options Business
Florida Choice Discount
(sublet by Syms) 54,300 $380,100 3/2005 8/5 yrs ea. Clothing
Others 34,684 279,771 Various Various
Vacant 14,630 --
103,614 $659,871
(d) Sabal Palm Square ("Sabal Palm")
On October 31, 1986, the Partnership and BREF 5 formed a joint
venture (the "Sabal Joint Venture") to purchase Sabal Palm, a
shopping center in Palm Bay, Florida, for $5,924,000. The
Partnership has a 47% interest and BREF 5 has a 53% interest in the
Sabal Joint Venture. Sabal Palm is a neighborhood shopping center
consisting of approximately 89,000 square feet of retail space
situated on approximately 9.7 acres of land. Sabal Palm was
constructed in 1985 and is anchored by a Winn-Dixie food store and
Walgreens. Winn-Dixie completed an approximately 6,500 square foot
expansion in the fourth quarter of 1992. Sabal Palm has several
outparcels, which are not owned by the Partnership, but which add
to the center's appearance and customer activity. Sabal Palm was
96% economically occupied at December 31, 1998.
Sabal Palm had an appraised market value of $3,250,000, as of
November 1, 1998. The appraised market value attributable to the
Partnership pursuant to its 47% interest in the Sabal Joint Venture
was $1,527,500.
Sabal Palm is secured by a first mortgage loan in the amount
of $3,200,000 (the "Sabal Palm First Mortgage Loan") from
NationsBanc Mortgage Capital Corporation ('NationsBanc"). The
Sabal Palm First Mortgage Loan bears interest at the rate of 8.93%
per annum, is amortized over a 25 year period, requires monthly
payments of principal and interest of approximately $26,700 and
matures on March 26, 2002. The outstanding mortgage balance
encumbered by the property was $3,145,598 at December 31, 1998.
Through September 30, 2001, the Partnership has the right,
upon 60 days prior written notice, to prepay, in full only, the
unpaid principal balance of the Sabal Palm First Mortgage Loan on
the last business day before a scheduled monthly payment date by
paying, in addition to the unpaid principal balance, and all
accrued interest and any other sums due NationsBanc at the time of
such prepayment, a prepayment premium equal to the greater of: (i)
1% of the entire unpaid principal balance of the Sabal Palm First
Mortgage Loan; or (ii) yield maintenance fee pursuant to a formula
set forth in the Sabal Palm First Mortgage Loan.
The occupancy rate and average annual base rental per square
foot at December 31 for the last two years were as follows:
1998 1997
Occupancy Rate 96% 95%
Average Annual Base
Rental Per Square Footage $6.56 $6.32
Sabal Palm has two tenants which individually occupy 10% or
more of the net rentable square footage. The following is a
summary of the tenant rent roll at December 31, 1998:
<PAGE>
Annual Lease
Square Base Expiration Renewal Nature of
Tenant Feet Rent Date Options Business
Winn-
Dixie 41,983 $142,406 4/2005 5/5 yrs ea. Food Store
Walgreens 13,000 81,252 4/2025 2/5 yrs.ea. Drug Store
Others 30,650 334,474 Various Various
Vacant 3,300 --
88,933 $558,132
Terms and Consideration
If the Proposed Transaction is consummated for all of the
Properties, the consideration will be at least $8,940,050 (the
"Minimum Price"), before deducting all closing fees and other
necessary expenses, the sum of which is estimated at 6% of the
final sales price. Any potential buyer will agree, subject to the
terms and conditions set by the Partnership in its bid package, to
acquire either: (i) all the Properties set forth above for an
aggregate purchase price equal to at least the Minimum Price; or
(ii) less than all the Properties for a purchase price at least
equal to 70% of the cumulative sum of the appraised value for such
Properties. Should the Partnership be forced to return a Property
to a mortgage holder, the calculation of the Minimum Price will be
based on the valuation of the Properties sold and will not include
the valuation of Properties subject to foreclosure, deeds in lieu
of foreclosure or similar forms of conveyance.
The General Partners intend to sell the Properties under a
closed bid process. Such a process will include identification of
target buyers with proven financing ability and performance of
certain evaluations of the Properties, such as environmental
testing. Potential buyers will be requested to sign
confidentiality agreements to safeguard the Partnership's
confidential and proprietary information. Sealed bids will be
requested. Each bid must be all cash, completely unconditional and
accompanied by a substantial deposit.
The General Partners will attempt to sell the Properties on
the most favorable terms that the General Partners are able to
negotiate, but in no event will the General Partners accept a sale
price for a group sale of all of the Properties which is less than
the Minimum Price, nor a sales price for a sale of less than all of
the Properties which is less than 70% of the cumulative appraised
value of those Properties nor less than the existing first mortgage
debt on a property by property basis. Note that in a group sale of
two or more Properties, certain individual Properties may be sold
for less than 70% of their appraised value if other Properties in
the group can be sold at a high enough price to meet the cumulative
minimum of 70% of appraised value of all such Properties.
If the Proposed Transaction is approved, the General Partners
intend to conduct the sale in an aggressive and efficient manner,
followed by timely distributions to Limited Partners. Accordingly,
the General Partners have established the following time line goals
for completion of the Proposed Transaction:
July 12, 1999 Deadline for receipt of Ballots
August 9, 1999 Send bid packages to prospective buyers
October 4, 1999 Deadline for receipt of bid proposals
November 15, 1999 Closing of Proposed Transaction
February 12, 2000 Final Distribution to Limited Partners
The foregoing are the General Partners' goals for and
estimates of the time required for each step of the Proposed
Transaction. Various delays may be encountered which could result
in a later closing date or distribution date.
Advantages to the Limited Partners
Improved Conditions for the Sale of the Properties. As the
economic well-being of consumers has increased as a result of full
employment and strong financial markets, commercial tenants have
seen increased customer traffic. As a result, in many real estate
markets, prices for commercial properties have been increasing.
Lack of an Established Trading Market. There is currently no
active or established trading market for Units. The Proposed
Transaction would provide an efficient and cost effective manner
for Limited Partners to realize the value of their Units without
having to comply with the conditions and restrictions of selling
their Units individually. The General Partners believe that the
Proposed Transaction is the most attractive opportunity for the
Limited Partners to obtain the value of their Units because the
Properties will be sold in a competitive bid process. Selling
Units individually may require selling at a price below the
appraised value to attract a buyer for an illiquid investment. The
General Partners also believe that the Proposed Transaction is
likely to result in a higher value to Limited Partners than a
tender offer for Units, because such tender offers usually reflect
a substantial discount for lack of marketability of the Units and
the profit requirements of the offeror.
Limited Representations and Warranties. The Partnership will
only be required to make limited representations and warranties to
the buyer as to the condition of the Properties, thereby
eliminating the need to establish a substantial escrow of funds as
is typically required in merger transactions or asset sales in
accordance with Section V.1(b) of the Partnership Agreement. This
will allow greater net proceeds to be paid to the Limited Partners
at the time of the sale and, thereafter, to be invested by the
Limited Partners in other investments.
Majority Approval Requirement. The vote of a majority of the
Limited Partners is required to approve the Proposed Transaction.
As a result of the majority approval requirement, the Proposed
Transaction will only be effected if it is approved by persons who
are not affiliated with the buyer and, therefore, not subject to a
conflict of interest.
Return of Capital. The distribution of net proceeds from the
Proposed Transaction will provide the Limited Partners a cash
return of a portion of their capital contribution to the
Partnership. Such proceeds can then be reinvested by the Limited
Partners in other investments that could possibly yield a higher
return than the investment in the Partnership.
Disadvantages to Limited Partners
While the General Partners believe that the Proposed
Transaction would be in the best interests of the Limited Partners,
each Limited Partner should consider the following factors in
evaluating the Proposed Transaction. Upon the completion of the
liquidation, Limited Partners will no longer be eligible to receive
future distributions of cash flows from operations since the
Partnership will no longer be operating the Properties. However,
Limited Partners will receive a distribution of the net proceeds
from the sale of the Properties, after deduction of certain
expenses and fees as described above. Limited Partners will be
subject to capital gains taxes to the extent the sales price per
Unit exceeds the Limited Partner's adjusted tax basis in each Unit.
Finally, Limited Partners will not benefit from future
appreciation, if any, in the value of the Properties if the
Properties are sold.
Security Ownership of Certain Beneficial Owners and Management
MP Value Fund 4 L.P. is the owner of 5.88220% and Accelerated
High Yield Institutional Investors, Ltd., is the owner of approximately
5.7068% of limited economic rights ("Limited Rights") in the Partnership
(collectively, the "Economic Investors"). As owners of Limited
Rights, the Economic Investors have economic rights to receive
Partnership distributions and allocations of profits and losses
subject to the terms of the Partnership Agreement. However, the
Economic Investors have no voting privileges.
Accounting Treatment of the Proposed Transaction
If the Proposed Transaction is approved by the Limited
Partners, the Partnership will cease the operational phase of the
Partnership's cycle and begin the liquidation phase with the sale
of the properties. In accordance with generally accepted
accounting principles, the Partnership's financial statements will
then be prepared on a liquidation basis. Accordingly, the carrying
value of the assets will be presented at the estimated realizable
amounts and all liabilities will be presented at estimated
settlement amounts, including estimated costs associated with
carrying out the liquidation. Preparation of the financial
statements on a liquidation basis requires significant assumptions
by management, including assumptions regarding the amount that
creditors would agree to accept in settlement of obligations due
them, the estimate of liquidation costs to be incurred and the
resolution of contingent liabilities, including tax liabilities
resulting from the liquidation. There may be differences between
the assumptions and the actual results because events and
circumstances frequently do not occur as expected.
FEDERAL INCOME TAX CONSEQUENCES OF THE PROPOSED TRANSACTION
The following is a summary of the material federal income tax
consequences to a Limited Partner which may result from the
Proposed Transaction. This summary is not intended as a substitute
for careful tax planning, and consequences may vary according to
each Limited Partner's individual circumstances.
This summary is based on the Internal Revenue Code of 1986, as
amended (the "Code"), as well as currently existing regulations
thereunder, judicial decisions and current administrative rules and
practices. The following discussion does not discuss the impact, if
any, that state, local or foreign taxes may have on the Proposed
Transaction. Furthermore, no assurance can be given as to the
accuracy or completeness of this summary.
Taxation of Partnerships in General
An entity classified as a partnership for federal income tax
purposes is not subject to federal income tax. Rather, income or
loss "flows through" the partnership to the partners, who are taxed
individually on their allocable shares of partnership income, gain,
loss or deduction. However, the partnership is a tax reporting
entity that must file an annual return disclosing the partnership's
gain or loss. The tax treatment of partnership items of taxable
income or loss is generally determined at the partnership level.
Each partner is required to treat partnership items on its tax
return in a manner consistent with the treatment of such items on
the partnership return and may be penalized for intentional
disregard of the consistency requirement. Each partner must account
for its allocable share of partnership taxable income or loss in
computing its income tax, whether or not any actual cash
distribution is made to such partner during its taxable year.
Basis of Partnership Interests
A partner's basis in its Unit is equal to its cost for such
Unit, reduced by its allocable share of: (i) partnership
distributions, (ii) taxable losses and (iii) expenditures of the
partnership not deductible in computing its taxable income and not
properly chargeable to its capital account, and increased by its
allocable share of: (i) partnership taxable profits, (ii) income of
the partnership exempt from tax and (iii) additional contributions
to the partnership. For purposes of determining basis, an increase
in a partner's share of partnership liability is treated as a
contribution of money by that partner to the partnership.
Conversely, a decrease in its share of partnership liability is
treated as distribution of money from the partnership. Generally,
a partner may not take non-recourse liabilities into account in
determining its basis except to the extent of any additional
capital contribution it is required to make under the partnership
agreement. However, if a partnership asset is subject to a
liability for which no partner has any personal liability, in
general, the partner's allocable share of the non-recourse
liability will be taken into account to determine basis.
Effect of the Proposed Transaction
The Proposed Transaction will be a taxable event to the
Limited Partners. Gain or loss on a sale generally will be measured
by the difference between the amount realized and the adjusted
basis of the assets that are sold. Generally the amount realized is
the sum of any money received, plus the fair market value of any
property received, plus the amount of liability from which the
partnership is discharged as a result of the sale. The adjusted
basis of property is generally the initial tax basis less
deductions, allowed or allowable, for depreciation.
A substantial portion of the assets to be sold, including
buildings, land and equipment, which were held for more than one
year are expected to be treated as "section 1231 assets." Section
1231 assets are property used in the trade or business of a
character which is subject to the allowance for depreciation, held
for more than one year, and real property used in the trade or
business held for more than one year. Gains or losses from the sale
of section 1231 assets would be combined with any other section
1231 gains or losses incurred by the Partnership in that year, and
the section 1231 gains or losses would be allocated to the Limited
Partners as provided in the Partnership Agreement.
Effect of Liquidation
Generally, upon the liquidation of a partnership, gain will be
recognized by and taxable to a partner to the extent that the
amount of cash, plus the fair market value of any marketable
securities, distributed to it exceeds the partner's basis in its
Units at the time of distribution. Any gain or loss which a Limited
Partner recognizes from a liquidating distribution is generally
taxed as capital gain or loss. However, any income or loss received
from the normal operations of the partnership during the year of
liquidation may constitute ordinary income or loss.
Any capital gain or loss will be treated as long-term if the
Limited Partner has held its Units for more than one year when the
liquidation is consummated. For non-corporate Limited Partners,
long-term capital gains are generally taxed at a 20% rate. If the
Limited Partner has held its Units for one year or less, any gain
will be a short-term capital gain. Short-term capital gains are
taxed as ordinary income. Capital losses generally are deductible
only to the extent of capital gains plus, in the case of a non-
corporate Limited Partner, up to $3,000 of ordinary income. Capital
losses realized upon the liquidation may be utilized to offset
capital gains from other sources and may be carried forward,
subject to applicable limitations.
Exempt Employee Trusts and Individual Retirement Accounts
Tax-exempt organizations, including trusts which hold assets
of employee benefit plans, although not generally subject to
federal income tax, are subject to tax on certain income derived
from a trade or business carried on by the organization which is
unrelated to its exempt activities. However, such unrelated
business taxable income does not in general include income from
real property, gain from the sale of property other than inventory,
interest, dividends and certain other types of passive investment
income that are not derived from "debt-financed property" as
defined in Section 514 of the Code. If, as the Partnership
believes, the Properties are not characterized as "inventory," and
are not held primarily for sale to customers in the ordinary course
of the Partnership's business, the income from the sale of the
Properties should not constitute unrelated business taxable income.
Finally, the Partnership's temporary investment of funds in
interest-bearing instruments and deposits also should not give rise
to unrelated business taxable income.
THE FOREGOING ANALYSIS CANNOT BE, AND IS NOT INTENDED AS, A
SUBSTITUTE FOR CAREFUL TAX PLANNING. LIMITED PARTNERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THEIR OWN TAX
SITUATIONS AND THE EFFECTS OF THIS TRANSACTION AS TO FEDERAL,
STATE, LOCAL AND FOREIGN TAXES INCLUDING, BUT NOT LIMITED TO,
INCOME AND ESTATE TAXES.
DISTRIBUTION UPON LIQUIDATION OF THE PARTNERSHIP
Upon completion of the Proposed Transaction, the Partnership
will be dissolved and its business wound up in accordance with
Section V of the Partnership Agreement. The sale proceeds, after
establishing any necessary cash reserves to cover liabilities, will
be distributed to the Limited Partners and the General Partners in
the manner set forth in the Partnership Agreement.
While the Minimum Price provides a floor on the amounts to be
received in the proposed sale, the General Partners believe that
there is a reasonable likelihood that the Properties will actually
be sold at or above their appraised values. The General Partners
estimate that a sale of the Properties at the appraised values,
after deducting all expenses associated with this solicitation, the
sale of Properties and establishment of required reserves, will
result in a liquidating distribution to the Limited Partners of
approximately $320.03 per Unit. If a final liquidating distribution
of $320.03 per Unit is achieved, the Limited Partners will have
received a total of $565 to $531 per Unit in distributions over the
life of the Partnership (from the first Unit sold in 1984 to the
last Unit sold in December 1984). For additional information
regarding the calculation of the estimated liquidating
distributions, if any, upon a sale at the Minimum Value, the
appraised value, and at 10% above the appraised value, see "Notes
to Unaudited Pro Forma Financial Statements" below.
Upon completion of the distribution of the Partnership's funds
and the liquidation of the Partnership, the General Partners will
execute and record a Certificate of Cancellation of the
Partnership, and the legal existence of the Partnership will cease.
REGULATORY REQUIREMENTS
Other than the requirement under Delaware law that the
Partnership file a Certificate of Cancellation to dissolve the
Partnership, there are no federal or state regulatory requirements
that apply to the Proposed Transaction.
AVAILABLE INFORMATION
The Units are registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
As such, the Partnership is subject to the informational filing
requirements of the Exchange Act, and in accordance therewith, is
obligated to file reports and other information with the Securities
and Exchange Commission (the "Commission") relating to its
business, financial condition and other matters. Comprehensive
financial information is included in the Partnership's Annual
Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB and other
documents filed by the Partnership with the Commission, including
the 1998 Annual Report on Form 10-KSB. Such reports and other
information should be available for inspection and copying at the
public reference facilities of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 and at regional offices of the
Commission located at 7 World Trade Center, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies should be available by mail upon
payment of the Commission's customary charges by writing to the
Commission's principal offices at 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, the Commission maintains an
internet Web site that contains reports, proxy and information
statements and other information regarding registrants that file
electronically with the Commission. The Partnership's electronic
filings are publicly available on the internet at
http://www.sec.gov/.
The Corporate General Partner, Brauvin Ventures, Inc., is a
privately held company and is not subject to the reporting
requirements of the Exchange Act.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Partnership with the
Commission are hereby incorporated in this Solicitation Statement
by reference:
Annual Report on Form 10-KSB for the year ended December 31,
1998 and Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1999.
All reports and other documents filed by the Partnership after
the date of this Solicitation Statement pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act and prior to the final date
on which Ballots may be received shall be deemed to be incorporated
by reference herein and to be a part hereof from the dates of
filing of such reports or documents. Any statement contained herein
or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for
the purposes of this Solicitation Statement to the extent that a
statement contained herein or in another document that also is or
is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to
constitute a part of this Solicitation Statement.
Any statement contained in a document incorporated by
reference shall be deemed to be modified or superseded for all
purposes to the extent that a statement contained in this
Solicitation Statement modifies or replaces such statement. Any
such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this
Solicitation Statement.
The Partnership will provide, without charge, to each person
to whom a copy of this Solicitation Statement is delivered, upon
the written or oral request of any such person, a copy of any or
all of the documents incorporated herein by reference (other than
exhibits to such documents, unless such documents are specifically
incorporated by reference into the information this Solicitation
Statement incorporates), as well as the Landauer Marketing
Contracts and the appraisals. Written and telephone requests for
such copies should be addressed to the Partnership at its principal
executive office at 30 North LaSalle Street, Suite 3100, Chicago,
Illinois 60602, telephone number (312) 759-7660. All such requests
will be sent by first class mail or other equally prompt means
within one business day of receipt of such request.
<PAGE>
PRO FORMA UNAUDITED FINANCIAL DATA
The following unaudited pro forma balance sheet assumes that
as of December 31, 1998, the Partnership had sold the Properties at
the Minimum Value, the appraised value and 10% above the appraised
value, and liquidated the Partnership. The funds available for
distributions to the Partners based on the appraised value,
adjusting for payment of liabilities of the Partnership, expenses
and prorations of sale and expenses of liquidation, are expected to
total approximately $3,056,317.
The unaudited pro forma balance sheet should be read in
conjunction with the appropriate notes to the unaudited pro forma
financial data.
ALL OF THE FOLLOWING UNAUDITED PRO FORMA FINANCIAL DATA IS
BASED UPON AMOUNTS AS OF DECEMBER 31, 1998. FINAL RESULTS MAY
DIFFER FROM SUCH INFORMATION.
<PAGE>
BRAUVIN REAL ESTATE FUND L.P. 4,
a Delaware limited partnership
PRO FORMA LIQUIDATION BASIS
STATEMENT OF NET (LIABILITIES) ASSETS IN LIQUIDATION
December 31, 1998
(Unaudited)
Based on Based on Based on
70% of 100% of 110% of
Appraised Appraised Appraised
Value Value Value
ASSETS:
Investment in Sabal Palm Joint Venture $(361,607) $85,187 $119,722
Cash and cash equivalents 752,613 752,613 752,613
Real estate held for sale 8,960,325 12,824,250 14,112,225
Rent receivable (net) 193,998 193,998 193,998
Escrow deposits 14,392 14,392 14,392
Other assets 4,037 4,037 4,037
Total Assets $9,563,758 $13,874,477 $15,196,987
LIABILITIES:
Mortgage notes payable $11,000,831 $11,000,831 $11,000,831
Accounts payable and accrued
expenses 190,463 190,463 190,463
Tenant security deposits 63,878 63,878 63,878
Deferred gain -- 892,962 2,064,156
Estimated losses through liquidation 213,785 213,785 213,785
Due to affiliates 45,331 45,331 45,331
Minority Interest
in Strawberry Joint Venture (947,957) (358,277) (316,658)
Total Liabilities 10,566,331 12,048,973 13,261,786
Net (liabilities) assets in
liquidation $(1,002,573) $1,825,504 $1,935,201
See accompanying notes to pro forma financial statements.
<PAGE>
BRAUVIN REAL ESTATE FUND L.P. 4
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(1) Basis of Presentation
The pro forma financial statements have been prepared under
the assumption that the Limited Partners have approved the Proposed
Transaction, and in accordance with generally accepted accounting
principles, the liquidation basis of accounting has been adopted.
Accordingly, the carrying value of the assets are presented at the
estimated realizable amounts and all liabilities are presented at
estimated settlement amounts, including estimated costs associated
with completing the liquidation. Preparation of the financial
statements on a liquidation basis requires significant assumptions
by management, including assumptions regarding the amount that
creditors would agree to accept in settlement of obligations due
them, the estimate of liquidation costs to be incurred and the
resolution of contingent liabilities, including tax liabilities
resulting from the liquidation. There may be differences between
the assumptions and the actual results because events and
circumstances frequently do not occur as expected.
(2) Reconciliation of net assets in liquidation and total
distribution upon liquidation
The difference between the net assets in liquidation and total
distribution upon liquidation is primarily the result of the
liquidation of the Strawberry Joint Venture and the Sabal Joint
Venture. Under any of the value assumptions used in the pro forma
financial statements, the Strawberry Joint Venture will not be able
to fully repay all of its debts (which primarily consists of the
nonrecourse first mortgage loan). However, under generally
accepted accounting principles, the Partnership is unable to
recognize this event until it is realized. Likewise, the same is
true for the Sabal Joint Venture under the assumption that the
property is disposed of under the 70% of appraised value scenario.
When these items are recognized they will have the effect of
increasing net assets in liquidation and thus increasing the total
distribution upon liquidation.
(3) Value assumptions
Three separate property sale scenarios, based upon the
Landauer appraisals, have been presented in the pro forma financial
statements. The scenarios represent the sale of the properties at
70%, 100% and 110% of the appraised values. Additionally, as
stated in Note 1 above, under the liquidation basis of accounting
the real estate held for sale presented in the pro forma financial
statements is recorded at the net realizable amount (which includes
the estimated amounts associated with the sale of the property).
<PAGE>
BRAUVIN REAL ESTATE FUND L.P. 4
a Delaware limited partnership
BALLOT
The undersigned Limited Partner acknowledges receipt of the
Solicitation Statement dated June 14, 1999 respecting the proposed
sale of the Partnership's Properties and the subsequent liquidation
of the Partnership. The undersigned Limited Partner understands
that the General Partners are seeking the approval of the Limited
Partners to a sale of the Partnership's properties at a Minimum
Sale Price of $8,940,050 (unless certain Properties are conveyed
back to the mortgage holders), to one or more buyers.
The General Partners recommend a vote FOR a sale of the
Partnership's Properties.
THIS PROPOSED SALE OF THE PARTNERSHIP'S PROPERTIES REQUIRES
THE APPROVAL BY THE HOLDERS OF MORE THAN 50% OF THE OUTSTANDING
UNITS OF THE PARTNERSHIP.
PLEASE CHECK THE APPROPRIATE BLANK BOX BELOW IN BLUE OR BLACK
INK TO INDICATE YOUR VOTE ON THIS MATTER.
Vote Regarding the Sale of the Partnership's
Properties: proposal to authorize the General
Partners to sell all of the Partnership's
Properties at a gross purchase price of not
less than $8,940,050 (unless certain
Properties are conveyed back to the mortgage
holders). Approval of a sale of the
Partnership's Properties will also be deemed a
vote for the termination and dissolution of
the Partnership (upon completion of the sale).
FOR [ ] AGAINST [ ] ABSTAIN [ ]
______________________________ Date:______________
Signature of Unit Holder
______________________________
Print Name
______________________________ Date:______________
Signature of Unit Holder, if held
jointly
______________________________
Print Name
THIS BALLOT MUST BE RECEIVED BY THE GENERAL PARTNERS ON OR BEFORE
JULY 12, 1999. ALL BALLOTS NOT RECEIVED, OR RECEIVED AFTER JULY
12, 1999, SHALL NOT BE COUNTED.
<PAGE>
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THE ABOVE LABEL
REPRESENTING YOUR PARTNERSHIP INTEREST(S). WHEN SUCH INTEREST(S)
ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS AN
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE
FULL TITLE AS SUCH. IF A CORPORATION, PLEASE HAVE SIGNED IN FULL
CORPORATE NAME BY THE PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE HAVE SIGNED IN THE PARTNERSHIP'S NAME BY AN
AUTHORIZED PERSON.
