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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
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CENTURY PROPERTIES GROWTH FUND XXII
(Name of Subject Company)
CENTURY PROPERTIES GROWTH FUND XXII
(Name of Person Filing Statement)
LIMITED PARTNERSHIP UNITS
(Title of Class of Securities)
N/A
(CUSIP Number of Class of Securities)
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WILLIAM H. JARRARD, JR.
President
Fox Capital Management Corporation
One Insignia Financial Plaza
Greenville, South Carolina 29602
(864) 239-2854
(Name, Address, and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of the Person(s) filing Statement)
Copy to:
ARNOLD S. JACOBS, ESQ.
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
(212) 969-3210
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject partnership is Century Properties
Growth Fund XXII, a California limited partnership (the "Partnership"), and
the address of its principal executive offices is One Insignia Financial
Plaza, Greenville, South Carolina 29602. The title of the class of equity
securities to which this statement relates is the Partnership's Limited
Partnership Units ("Units").
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to an offer by IPLP Acquisition I
LLC, a Delaware limited liability company (the "Purchaser"), Insignia
Properties, L.P., a Delaware limited partnership ("IPLP") , Insignia
Properties Trust, a Maryland real estate investment trust ("IPT"), and
Insignia Financial Group, Inc., a Delaware corporation ("Insignia," and
together with IPLP, IPT and the Purchaser, the "Bidders"), disclosed in a
Tender Offer Statement on Schedule 14D-1 dated August 28 , 1997 (the "Schedule
14D-1"), to purchase up to 25,000 outstanding Units at a purchase price of
$275 per Unit, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated August 28, 1997, (the
"Offer to Purchase") and the related Assignment of Partnership Interest (which
collectively constitute the "Offer" and are contained within the Schedule
14D-1).
The address of the Purchaser's principal executive offices
is One Insignia Financial Plaza, Greenville, South Carolina 29602.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Partnership, which
is the person filing this statement, are set forth in Item 1 above.
(b)(i) The Partnership's sole general partner is Fox
Partners IV, a California general partnership (the "General Partner") and an
affiliate of the Bidders.
Fox Partners IV has three partners: Fox Capital Management
Corporation, a California corporation ("FCMC"), which is the managing general
partner of the General Partner; Fox Realty Investors, a California general
partnership ("FRI"), which is an affiliated general partner of the General
Partner; and Fox Partners 84, a California general partnership, which is an
unaffiliated general partner of the General Partner.
In January 1996, IFGP Corporation, a wholly-owned subsidiary
of Insignia, acquired all of the outstanding stock of National Property
Investors, Inc. ("NPI") which (prior to December 1996) was the parent
corporation of NPI Equity Investments II, Inc. ("NPI Equity"), the managing
general partner of FRI (and thus acquired all of the outstanding stock of NPI
Equity and the managing general partner interest in FRI). In June 1996,
Insignia Properties Corporation ("IPC"), which at that time was a wholly-owned
subsidiary of Insignia, acquired all of the outstanding stock of FCMC. In
December 1996, in connection with the formation of IPT, NPI contributed all of
the outstanding stock of NPI Equity to IPT and Insignia merged IPC with and
into IPT. As a result, FCMC and NPI Equity each is a wholly-owned subsidiary
of IPT, and IPT controls the General Partner.
The Purchaser is a newly-formed, wholly-owned subsidiary of
IPLP, which is the operating partnership of IPT. IPT is the sole general
partner of IPLP (owning approximately 68% of the total equity interests in
IPLP), and Insignia is the sole limited partner of IPLP (owning approximately
32% of the total
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equity interests in IPLP). Insignia and its affiliates also own approximately
70% of the outstanding common shares of beneficial interest of IPT. NPI-AP
Management, L.P. ("NPI-AP"), which since its acquisition by Insignia in
mid-January 1996 has been an indirect wholly-owned subsidiary of Insignia and
is an affiliate of IPT and the Purchaser, has provided property management
services to the Partnership, and since mid-January 1996 Insignia (directly or
through its affiliates) has performed asset management and partnership
administration services for the Partnership. By reason of these relationships,
the General Partner has conflicts of interest in considering the Offer.
In a series of transactions between October 1994 and June
1995, DeForest Ventures I, L.P. ("DeForest "), which at the time was an
affiliate of the General Partner but not an affiliate of any of the Bidders,
acquired 17,022.5 Units (or approximately 20.5% of the total Units) at a
purchase price of $87.80 per Unit pursuant to a series of tender offers.
As a result of litigation instituted in connection with the
tender offers conducted by DeForest, in March 1995 the General Partner (and
certain of its affiliates at the time) entered into an Amended Stipulation of
Settlement (the "Stipulation") which, among other things, (i) requires the
General Partner to prohibit the Partnership from entering into a "roll-up"
transaction involving the General Partner or any of its affiliates prior to
January 1, 2000 unless such "roll-up" transaction is approved by Limited
Partners holding at least a majority of the outstanding Units owned by persons
who are unaffiliated with the General Partner and (ii) prohibits DeForest and
its affiliates from initiating or participating in any tender offer for Units
for a period of 24 months following the completion of the tender offers
conducted by DeForest (which period has now expired).
In January 1996, Insignia NPI, L.L.C. ("Insignia NPI"),
which at that time was a wholly-owned subsidiary of Insignia, purchased from
DeForest all of the Units held by DeForest I. In December 1996, Insignia NPI
merged with and into IPLP and IPLP acquired ownership of all of the foregoing
Units.
The Partnership, the General Partner and NPI-AP (which is
the property manager for the Partnership) were not affiliates of Insignia
prior to mid-January 1996. Accordingly, this section only discusses
transactions between the Partnership, on the one hand, and Insignia and its
affiliates (including the General Partner and NPI-AP), on the other hand,
which have occurred since mid-January 1996.
Under the Limited Partnership Agreement, the General Partner
holds an interest in the Partnership and is entitled to participate in certain
cash distributions made by the Partnership to its partners. The General
Partner received from the Partnership in respect of its interest in the
Partnership a cash distribution of $52,000 in 1996. No distributions have been
made to the General Partner to date in 1997. The Partnership paid NPI-AP
property management fees for property management services in the aggregate
amounts of $1,010,000 for the year ended December 31, 1996 and $515,000 for
the six-month period ended June 30, 1997. Insignia and its affiliates do not
receive any fees from the Partnership for the asset management or partnership
administration services they provide, although, pursuant to the Limited
Partnership Agreement, the General Partner and its affiliates are entitled to
be reimbursed by the Partnership for the expenses they incur in connection
with providing those services. The Partnership reimbursed the General Partner
and its affiliates for expenses incurred in connection with asset management
and partnership administration services performed by them for the Partnership
in the amounts of $182,000 for the year ended December 31, 1996 and $78,000
during the first six months of 1997. An affiliate of the General Partner
received $206,000 in 1996 in connection with the refinancing of four of the
Partnerships' properties. On January 19, 1996, the Partnership began insuring
its properties under a master policy through an agency and insurer
unaffiliated with the General Partner. An affiliate of the General Partner
acquired, in the acquisition of a business, certain financial obligations from
an insurance agency which was later acquired by the agent
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who placed the current year's master policy. The current agent assumed the
financial obligations to the affiliate of the General Partner who receives
payments on these obligations from the agent. Insignia and the General Partner
believe that the aggregate financial benefit derived by Insignia and its
affiliates from the arrangement described in the three preceding sentences has
been immaterial.
The Purchaser and the General Partner are affiliates of and
controlled by IPT, which is controlled by Insignia. The General Partner has
conflicts of interest in considering the Offer, including (i) as a result of
the fact that a sale or liquidation of the Partnership's assets would result
in a decrease or elimination of the fees paid to the General Partner and/or
its affiliates and (ii) the fact that as a consequence of the Purchaser's
ownership of Units, the Purchaser (which is an affiliate of the General
Partner) may have incentives to seek to maximize the value of its ownership of
Units, which in turn may result in a conflict for the General Partner in
attempting to reconcile the interests of the Purchaser (which is an affiliate
of the General Partner) with the interests of the other Limited Partners.
The Purchaser (which is an affiliate of the General Partner)
expects to pay for the Units it purchases pursuant to the Offer with funds
provided by IPLP as capital contributions. IPLP in turn intends to use its
cash on hand to make such contributions. It is possible, however, that in
connection with future financing activities, IPT or IPLP may cause or request
the Purchaser (which is an affiliate of the General Partner) to pledge the
Units as collateral for loans, or otherwise agree to terms which provide IPT,
IPLP and the Purchaser with incentives to generate substantial near-term cash
flow from the Purchaser's investment in the Units. This could be the case, for
example, if a loan has a "bullet" maturity after a relatively short time or
bears a high or increasing interest rate. In such a situation, the General
Partner may experience a conflict of interest in seeking to reconcile the best
interests of the Partnership with the need of its affiliates for cash flow
from the Partnership's activities.
If the Purchaser is successful in acquiring more than
24,150.5 Units pursuant to the Offer (or otherwise), IPT (which is an
affiliate of the General Partner) will own in excess of 50% of the total Units
outstanding and, accordingly, will be able to control the outcome of almost
all voting decisions with respect to the Partnership, including decisions
concerning liquidation, amendments to the Limited Partnership Agreement,
removal and replacement of the General Partner and mergers, consolidations and
other extraordinary transactions not involving a "roll-up." Even if the
Purchaser acquires a lesser number of Units pursuant to the Offer, however,
because IPT already owns (through IPLP) approximately 20.8% of the outstanding
Units, it will be able to significantly influence the outcome of almost all
voting decisions with respect to the Partnership. This means that, other than
with respect to "roll-up" transactions prior to January 1, 2000, (i)
non-tendering Limited Partners could be prevented from taking action they
desire but that IPT (which is an affiliate of the General Partner) opposes and
(ii) IPT (which is an affiliate of the General Partner) may be able to take
action desired by IPT but opposed by the non-tendering Limited Partners.
Under the Limited Partnership Agreement, Limited Partners
holding a majority of the Units are entitled to take action with respect to a
variety of matters, including: removal of a general partner and in certain
circumstances election of new or successor general partners; dissolution of
the Partnership; the sale of all or substantially all of the assets of the
Partnership; and most types of amendments to the Limited Partnership
Agreement. However, under the Stipulation (as defined above) the General
Partner may not initiate or support a "roll-up" transaction involving the
Partnership prior to January 1, 2000 unless such "rollup" transaction is
approved by Limited Partners holding at least a majority of the outstanding
Units not held by persons affiliated with the General Partner. IPLP and the
Purchaser (which are affiliates of the General Partner) will vote the Units
owned by them in whatever manner they deem to be in the best interests of IPT
which, because of their relationship with the General Partner, also may be in
the interest of the General Partner, but may not be in the interest of other
Limited Partners.
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The Offer will not result in any change in the compensation
payable to the General Partner or its affiliates. However, as a result of the
Offer, the Purchaser (which is an affiliate of the General Partner) will
participate, in its capacity as a Limited Partner, in any subsequent
distributions to Limited Partners to the extent of the Units purchased
pursuant to the Offer.
(b)(ii) To the best knowledge of the General Partner, except
as described in this Schedule 14D-9, there are no other material agreements,
arrangements, understandings or any actual or potential conflicts of interest
between the Partnership, the General Partner and their affiliates and the
Bidders, their executive officers, directors or affiliates.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Because of the existing and potential future conflicts of
interest described in Item 3 above, the Partnership and the General Partner
are remaining neutral and making no recommendation as to whether Unit holders
should tender their Units in response to the Offer.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Neither the Partnership nor any person acting on its behalf
has employed, retained or compensated, or intends to employ, retain or
compensate, any person or class of persons to make solicitations or
recommendations to Unit holders on its behalf concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except as described in Schedule I attached hereto, no
transactions in the Units have been effected during the past 60 days by the
Partnership or the General Partner or, to the knowledge of the General
Partner, by any of its current or former executive officers, directors or
affiliates.
(b) To the knowledge of the Partnership, neither the General
Partner nor any of its current or former executive officers, directors or
affiliates intends to tender pursuant to the Offer any Units beneficially
owned by them.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
None.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
None.
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a) Form of cover letter to Unit holders from the
Partnership dated August 28, 1997.
(b) None.
(c) None.
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SCHEDULE I
TRANSACTIONS IN THE UNITS
EFFECTED BY IPLP WITHIN THE PAST 60 DAYS
Number of Price
Date Units Purchased Per Unit
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7/08/97 15 $244.00
7/09/97 10 $145.00
7/22/97 21 $235.00
7/23/97 1 $257.00
8/12/97 10 $215.00
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SIGNATURE
After reasonable 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: August 28, 1997
CENTURY PROPERTIES GROWTH FUND XXII
By: FOX PARTNERS IV
Its General Partner
By: FOX CAPITAL MANAGEMENT CORPORATION
Its General Partner
By: /s/ William H. Jarrard, Jr.
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William H. Jarrard, Jr.
President and Director
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EXHIBIT INDEX
Exhibit Description
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(a) Form of cover letter to Unit holders from the
Partnership dated August 28, 1997.
(b) None.
(c) None.
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Exhibit (a)
Century Properties Growth Fund XXII
August 28, 1997
Dear Limited Partner:
Enclosed is the Schedule 14D-9 which was filed by Century
Properties Growth Fund XXII (the "Partnership") with the Securities and
Exchange Commission in connection with an offer (the "Offer") by IPLP
Acquisition I LLC, a Delaware limited liability company (the "Purchaser"),
Insignia Properties, L.P., a Delaware limited partnership ("IPLP"), Insignia
Properties Trust, a Maryland real estate investment trust ("IPT") and Insignia
Financial Group, Inc., a Delaware corporation ("Insignia," and together with
IPLP, IPT and the Purchaser, the "Bidders"), to purchase limited partnership
units ("Units") of the Partnership.
The Partnership's sole general partner (the "General
Partner") is Fox Partners IV, a California general partnership and an
affiliate of the Bidders. Due to the affiliation between the General Partner
of the Partnership and the Bidders, the General Partner is subject to certain
conflicts of interest in connection with the response to the Offer.
AS A RESULT OF THE EXISTING AND POTENTIAL CONFLICTS OF
INTEREST, NEITHER THE PARTNERSHIP NOR THE GENERAL PARTNER EXPRESSES ANY
OPINION AS TO THE OFFER AND EACH IS REMAINING NEUTRAL AND MAKING NO
RECOMMENDATION AS TO WHETHER UNIT HOLDERS SHOULD TENDER THEIR UNITS IN
RESPONSE TO THE OFFER.
Limited partners are advised to carefully read the enclosed
Schedule 14D-9.
Century Properties Growth Fund XXII
