SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
SCHEDULE 14D-9
Solicitation/Recommendation Statement Pursuant to Section
14(d)(4) of the Securities Exchange Act of 1934
OXFORD RESIDENTIAL PROPERTIES I
LIMITED PARTNERSHIP
(Name of Subject Company)
Oxford Residential Properties I Limited Partnership
(Name(s) of Person(s) Filing Statement)
Assignee Units
(Title of Class of Securities)
Not Applicable
(CUSIP Number of Class of Securities)
Robert B. Downing
7200 Wisconsin Avenue
Suite 1100
Bethesda, Maryland 20814
(301) 654-3100
(Name, address and telephone number of
persons authorized to receive notices
and communications on behalf of the
persons filing statement)
With a copy to:
Robert B. Robbins, Esq.
Shaw Pittman Potts & Trowbridge
2300 N Street, N.W.
Washington, D.C. 20037
Item 4. The Solicitation or Recommendation
The Managing General Partner believes that Unit holders
will realize a better return on their investment by holding
their Units than by selling them, particularly at $425 per
share. Like most real estate partnerships, ORP does not
engage in annual valuations of its assets because of the
expense of annual appraisals, and, more importantly, because
there is no business need for such valuations, except in the
context of periodic refinancings of ORP's debt.
Accordingly, the Managing General Partner has not prepared
or ordered an appraisal or valuation of the properties or
the Units, nor has it published a specific net asset value
per Unit for ORP. Based on its real estate experience,
knowledge of the real estate markets in which ORP's
properties are located and recent improvements in the
operating performance of the properties, the Managing
General Partner believes that the net value of ORP's assets,
on a per Unit basis, is significantly higher than $425. The
Managing General Partner's belief as to the value of ORP's
assets is based primarily on the most recently-reported net
operating income of its properties (less a reasonable
reserve for capital improvements), divided by capitalization
rates that the Managing General Partner believes currently
are consistent with those applicable to properties of
quality, age and location comparable to the properties in
ORP's portfolio. The Managing General Partner's views are
based on its own estimates as to the value of ORP's assets,
and do not represent a judgment as to the market value of
the Units themselves.
The Managing General Partner's earlier letter to Unit
Holders contained a reference to a third-party valuation of
the net asset value per Unit of ORP. The May/June 1998
issue of a limited partnership trade publication named The
Partnership Spectrum reported that The Valuation Group, an
independent valuation firm, had estimated that the net asset
value per Unit of ORP was $611 as of December 31, 1997,
which value was derived from ORP's financial statements
included in the Form 10-Q filed for the period ended June
30, 1997. This value is only an estimate and does not
necessarily represent the prices that would be obtained in
the event all of ORP's properties were sold and its assets
liquidated. According to The Valuation Group, the estimated
net asset value per Unit is the net cash proceeds that would
be available for distribution to Unit holders on a per Unit
basis, assuming all assets were sold and all liabilities
retired. The Managing General Partner referenced this
valuation in its earlier letter not to endorse the valuation
conclusion or the underlying methodology used to reach such
conclusion, but to inform Unit Holders that an independent
firm had placed a net asset value on the Units that is
substantially higher than the MacKenzie Patterson Group's
offer price of $425. The Managing General Partner believes
the net asset value per Unit is higher than $611.
ORP's financial condition and operating results have
continued to improve due to improvements in the performance
of its properties. The aggregate net operating income
before debt service and refurbishment expenses ("NOI") of
the four properties in ORP's portfolio increased by
$178,000, or 9.5%, for the six months ended June 30, 1998,
compared with the same period in 1997, and by $207,000, or
5.7%, for the year ended December 31, 1997 compared to 1996
operating results.
As a result of these improvements in operations, the value
of ORP's properties has increased in recent years, as has
the properties' ability to support higher levels of mortgage
debt. The timing of any refinancing of ORP's mortgage debt,
however, needs to be carefully planned for several reasons.
First, in order to prepay the existing mortgage debt, a
prepayment penalty may be required. Second, the Managing
General Partner wishes to ensure that the recent
improvements in operating performance are fully reflected in
any valuation undertaken in connection with any such
refinancing.
ORP expects a refinancing of its existing mortgage debt and
a possible liquidity transaction to become increasingly
attractive in the near future as the prepayment penalties
reduce to very small amounts during the next two and one-
half years. The Managing General Partner anticipates that
any such refinancing may offer the opportunity for ORP to
make a significant distribution of net refinancing proceeds
to its Unit Holders, which for most Unit Holders should be
tax-deferred. Based on today's interest rates and estimated
property values, the amount of this distribution could
possibly exceed the $425 per Unit offered by the MacKenzie
Patterson Group. In addition, in contrast to a sale or
redemption, Unit Holders who benefited from such a
refinancing would continue to receive semi-annual
distributions of cash flow from ORP's operations after such
a refinancing and ORP would continue to own all of its
properties. Over the last two years, ORP has doubled the
amount of its distribution paid to Unit Holders and, as
discussed above, it recently declared an additional increase
in the amount of the distribution paid to Unit Holders.
The Managing General Partner is not currently engaged in any
negotiations regarding any such refinancing or other
liquidity transaction. While there can be no assurance that
any such refinancing or other transaction will occur, the
Managing General Partner believes that the prospects for a
refinancing or other transaction are good and, therefore,
Unit Holders should be able to realize a value for their
Units in excess of the $425 offer price. For these reasons,
the Managing General Partner cannot recommend a sale at this
time, particularly at $425 per Unit.
The price offered by the MacKenzie Patterson Group will be
reduced by the amount of any distributions declared or made
with respect to the Units between July 28, 1998 and August
31, 1998. The Managing General Partner recently approved an
increase in ORP's semi-annual distribution, payable on
August 28, 1998, from $10 per Unit to $15 per Unit, a fifty
(50%) percent increase. Based on the net $410 offer price
(the MacKenzie Patterson Group's offer reduced by the amount
of the August 28 dividend), ORP's current distribution level
equates on an annualized basis to approximately a 7.3%
current, cash-on-cash yield on a pre-tax basis.
Therefore, in determining whether or not to sell Units, a
Unit Holder may wish to consider the feasibility of using
the net proceeds of any such sale to acquire another
investment that generates a current annualized yield of at
least 7.3%, all or a portion of which may be sheltered from
current income tax depending on the Unit Holder's individual
tax situation, and that has the potential for appreciation
in value. In this regard, it should be noted that ORP's
distributions are not guaranteed, and might decline in the
event of unforeseen circumstances, but also that ORP's
distributions may increase if the performance of ORP's
properties continues to improve.
Item 6. Recent Transactions and Intent with Respect to
Securities
As previously reported, ORP has indicated a willingness to
consider offers from Unit holders who wish to sell their
Units, despite the Managing General Partner's recommendation
that they not sell.
The Managing General Partner believes that purchases at
appropriate prices of Units offered by Unit Holders benefits
ORP. First, these purchases provide those investors who
desire to sell all or a portion of their investment in ORP
(despite the Managing General Partner's recommendation that
they not sell their Units) with an opportunity to do so.
Second, these purchases provide long-term benefits to the
remaining Unit Holders.
All Units purchased by ORP are retired; they are not being
acquired for anyone's investment account. The Managing
General Partner believes that retiring the Units that are
purchased by ORP benefits remaining Unit Holders by reducing
the aggregate number of Units outstanding at a price that is
substantially less than the net asset value of these Units.
ORP does not itself set a price at which Units will be
purchased, and makes no representation that the offers it
accepts reflect prevailing market prices. In making its
determination as to what offers to accept, the Managing
General Partner gives consideration to prevailing secondary
market prices. This means that ORP will not accept offers
it believes are too high in relation to prevailing secondary
market prices, or in relation to other factors. It is not a
representation that any offers accepted by ORP reflect
prevailing secondary market prices. Secondary market
prices, and therefore the prices that may be accepted by ORP
are likely to vary and may, in the future, be more or less
than any offer currently accepted by ORP or the price
offered by the MacKenzie Patterson Group.
On August 11, 1998, ORP acquired 13 Units from several
holders at a price of $425 per Unit. These Unit holders
offered to sell their Units to ORP prior to commencement of
the MacKenzie Patterson Group Offer at prices of less than
$350 per Unit. The Managing General Partner advised them
that a tender offer had been filed at a price of $425 per
Unit, less certain distributions, and that the Managing
General Partner had determined it should not accept their
offers at a price lower than the $425 per Unit tender offer
price. On August 20, 1998, ORP accepted an offer from one
Unit holder to purchase 5 Units at a price of $445 per Unit,
and on August 31, 1998, ORP accepted an offer from one Unit
Holder to purchase 15 Units at a price of $450 per Unit.
ORP anticipates that the aggregate consideration for
purchases made while the MacKenzie Patterson Group Offer is
outstanding will not exceed $20,000, which ORP will fund
from its working capital.
The Managing General Partner does not recommend that Unit
Holders sell their Units at $425 or at any other prices at
which ORP has purchased Units. The Managing General Partner
has made the decision to purchase Units from Unit Holders at
these prices because the Unit Holders, being in possession
of all relevant information, wished to sell their Units, and
because it was in the best interests of ORP to buy the
Units. The fact that ORP has purchased Units at the prices
indicated above does not mean that the Managing General
Partner recommends that other Unit Holders sell at these
prices.
Item 9. Materials to Be Filed as Exhibits
(a) (i) Letter to Unitholders dated August 13, 1998.
(previously filed)
(ii) Letter to Unit Holders dated September 16, 1998.
(b) (i) Response to Potential Unit Holder Questions.
(previously filed)
(c) Not applicable.
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: September 16, 1998
OXFORD RESIDENTIAL
PROPERTIES I LIMITED
PARTNERSHIP
By: Oxford Residential
Properties I
Corporation
Managing General
Partner
By: /s/ Robert B. Downing
-------------------------
Robert B. Downing
Executive Vice
President
EXHIBIT INDEX
Exhibit Description
No.
(a)(i) Letter to Unit Holders dated
August 13, 1998 *
(a)(ii) Letter to Unit Holders dated
September 16, 1998
(b)(i) Responses to Potential Unit
Holder Questions *
* Previously filed
September 16, 1998
To All Unit Holders
of
Oxford Residential Properties I Limited Partnership ("ORP")
We recently wrote to you to advise you that the
Managing General Partner strongly recommends that you REJECT
the offer by a group of bidders (the "MacKenzie Patterson
Group") to purchase Units of ORP at a price of $425 per
assignee unit of limited partnership ("Units"). The purpose
of this letter is to provide you with additional information
about your Units and the reasons for the Managing General
Partner's position. If you have any questions, please
contact our Investor Services Department at (248) 614-4550.
As previously noted, the Managing General Partner
believes Unit Holders should retain their Units, rather than
sell their Units at the MacKenzie-Patterson Group's offer
price of $425 per Unit, for, among others, the following
reasons:
1. The Managing General Partner believes that the MacKenzie
Patterson Group's offer price of $425 per Unit represents a
substantial discount to net asset value per Unit.
(See "Valuation of Units," and "How to Evaluate Your
Options" below.)
2. The MacKenzie Patterson Group offer price does not represent
a premium over sales prices reported for many transactions that
occurred during 1998. Recently, ORP, as well as other buyers,
have purchased Units at prices in excess of the MacKenzie
Patterson Group offer price. (See "Purchases of Units by ORP,"
below.)
3. ORP's financial condition and operating results have
continued to improve rapidly due to recent improvements in the
performance of its properties. Accordingly, the value of the
properties and the Units has increased significantly in recent
years. The Managing General Partner expects to capture this
increased value with a future refinancing and/or liquidity
transaction, as the existing mortgage debt becomes prepayable and
the prepayment penalties decline to relatively small amounts
during the next 2-3 years. (See "Future Transactions May Improve
ORP's Value and Liquidity," below.)
4. On an annualized basis, ORP's current distribution, which was
recently increased, equates to approximately a 7.3% current yield
on the net $410 offer price.
Valuation of Units
The Managing General Partner believes that Unit Holders
will realize a better return on their investment by holding
their Units than by selling them, particularly at $425 per
share. Like most real estate partnerships, ORP does not
engage in annual valuations of its assets because of the
expense of annual appraisals, and, more importantly, because
there is no business need for such valuations, except in the
context of periodic refinancings of ORP's debt.
Accordingly, the Managing General Partner has not prepared
or ordered an appraisal or valuation of the properties or
the Units, nor has it published a specific net asset value
per Unit for ORP.
Based on its real estate experience, knowledge of the
real estate markets in which ORP's properties are located
and recent improvements in the operating performance of the
properties, the Managing General Partner believes that the
net value of ORP's assets, on a per Unit basis, is
significantly higher than $425. The Managing General
Partner's belief as to the value of ORP's assets is based
primarily on the most recently-reported net operating income
of its properties (less a replacement reserve for capital
improvements), divided by capitalization rates that the
Managing General Partner believes currently are consistent
with those applicable to properties of quality, age and
location comparable to the properties in ORP's portfolio.
The Managing General Partner's views are based on its own
estimates as to the value of ORP's assets, and do not
represent a judgment as to the market value of the Units
themselves.
Our earlier letter contained a reference to a third-
party valuation of the net asset value per Unit of ORP. The
May/June 1998 issue of a limited partnership trade
publication named The Partnership Spectrum reported that The
Valuation Group, an independent valuation firm, had
estimated that the net asset value per Unit of ORP was $611
as of December 31, 1997, which value was derived from ORP's
financial statements included in the Form 10 Q filed for the
period ended June 30, 1997. According to The Valuation
Group, the estimated net asset value per Unit is the net
cash proceeds that would be available for distribution to
Unit holders on a per Unit basis, assuming all assets were
sold and all liabilities retired. This value is only an
estimate and does not necessarily represent the prices that
would be obtained in the event all of ORP's properties were
sold and its assets liquidated. We referenced this
valuation in our earlier letter not to endorse the valuation
conclusion or the underlying methodology used to reach such
conclusion, but to inform you that an independent firm had
placed a net asset value on the Units that is substantially
higher than the MacKenzie Patterson Group's offer price of
$425. The Managing General Partner believes the net asset
value per Unit is higher than $611.
There are several independent firms that will, for a
fee, prepare valuation reports that provide estimates of the
fair market value of a non-controlling, minority interest in
a partnership. As is the case with most appraisals, the
values reflected in these reports are based on numerous and
material assumptions, some or all of which may not
materialize. We can provide you with the names of these
firms if you are interested in obtaining such a report.
Purchases of Units by ORP
The Managing General Partner recommends that Unit
Holders retain their Units, rather than sell them at $425.
However, as previously reported, ORP has indicated a
willingness to consider offers from Unit Holders who wish to
sell their Units, despite the Managing General Partner's
recommendation that they not sell.
The Managing General Partner believes that purchases at
appropriate prices of Units offered by Unit Holders benefits
ORP. First, these purchases provide those investors who
desire to sell all or a portion of their investment in ORP
(despite the Managing General Partner's recommendation that
they not sell their Units) with an opportunity to do so.
Second, these purchases provide long-term benefits to the
remaining Unit Holders.
All Units purchased by ORP are retired; they are not
being acquired for anyone's investment account. The Managing
General Partner believes that retiring the Units that are
purchased by ORP benefits remaining Unit Holders by reducing
the aggregate number of Units outstanding at a price that is
substantially less than the net asset value of these Units.
ORP does not itself set a price at which Units will be
purchased, and makes no representation that the offers it
accepts reflect prevailing market prices. In making its
determination as to what offers to accept, the Managing
General Partner gives consideration to prevailing secondary
market prices. This means that ORP will not accept offers
it believes are too high in relation to prevailing secondary
market prices, or in relation to other factors. It is not a
representation that any offers accepted by ORP reflect
prevailing secondary market prices. Secondary market
prices, and therefore the prices that may be accepted by ORP
are likely to vary and may, in the future, be more or less
than any offer currently accepted by ORP or the price
offered by the MacKenzie Patterson Group.
On August 11, 1998, ORP acquired 13 Units from several
holders at a price of $425 per Unit. These Unit Holders
offered to sell their Units to ORP prior to commencement of
the MacKenzie Patterson Group Offer at prices of less than
$350 per Unit. The Managing General Partner advised them
that a tender offer had been filed at a price of $425 per
Unit, less certain distributions, and that the Managing
General Partner had determined it should not accept their
offers at a price lower than the $425 per Unit tender offer
price. On August 20, 1998, ORP accepted an offer from one
Unit Holder to purchase 5 Units at a price of $445 per Unit,
and on August 31, 1998, ORP accepted an offer from one Unit
Holder to purchase 15 Units at a price of $450 per Unit.
ORP anticipates that the aggregate consideration for
purchases made while the MacKenzie Patterson Group offer is
outstanding will not exceed $20,000, which ORP will fund
from its working capital.
The Managing General Partner wishes to emphasize that
it does not recommend that Unit Holders sell their Units at
$425 or at any other prices at which ORP has purchased
Units. The Managing General Partner has made the decision
to purchase Units from Unit Holders at these prices because
the Unit Holders, being in possession of all relevant
information, wished to sell their Units, and because it was
in the best interests of ORP to buy the Units. The fact
that ORP has purchased Units at the prices indicated above
does not mean that the Managing General Partner recommends
that other Unit Holders sell at these prices.
Sales on the Informal Secondary Market
As we also indicated, you may wish to investigate the
prices that may be offered for Units in the informal
secondary market. Upon request, we will provide you with a
list of companies that engage in secondary market
transactions. You should be aware that the informal
secondary market in which Units are intermittently
transferred is not a liquid or efficient market. The prices
that may be offered may be more or less than the MacKenzie
Patterson Group's offer price or any offer accepted by ORP,
and are not necessarily indicative of the fair value of the
Units. You also should be aware that sales in the secondary
market are likely to include material transaction costs
which would reduce the net proceeds that a Unit holder would
receive in such a transaction. If you make inquiries
regarding prices available in the secondary market, you
should thoroughly investigate the terms of and costs of any
transaction before you proceed. You should note that the
amounts paid by ORP and the MacKenzie Patterson Group are
not reduced by these transaction costs.
Future Transactions May Further Improve ORP's Value and
Liquidity
ORP's financial condition and operating results have
continued to improve due to improvements in the performance
of its properties. The aggregate net operating income
before debt service and refurbishment expenses ("NOI") of
the four properties in ORP's portfolio increased by
$178,000, or 9.5%, for the six-month period ended June 30,
1998, compared with the same period in 1997, and by
$207,000, or 5.7%, for the year ended December 31, 1997
compared to 1996 operating results.
As a result of these improvements in operations, the
value of ORP's properties has increased in recent years, as
has the properties' ability to support higher levels of
mortgage debt. The timing of any refinancing of ORP's
mortgage debt, however, needs to be carefully planned for
several reasons. First, in order to prepay the existing
mortgage debt, a prepayment penalty may be required.
Second, we wish to ensure that the recent improvements in
operating performance are fully reflected in any valuation
undertaken in connection with any such refinancing.
ORP expects a refinancing of its existing mortgage debt
and a possible liquidity transaction to become increasingly
attractive in the near future as the prepayment penalties
reduce to very small amounts during the next two and one-
half years. We anticipate that any such refinancing may
offer the opportunity for ORP to make a significant
distribution of net refinancing proceeds to its Unit
Holders, which for most Unit Holders should be tax-deferred.
Based on today's interest rates and estimated property
values, the amount of this distribution could possibly
exceed the $425 per Unit offered by the MacKenzie Patterson
Group. In addition, in contrast to a sale or redemption,
Unit Holders who benefited from such a refinancing would
continue to receive semi-annual distributions of cash flow
from ORP's operations after such a refinancing and ORP would
continue to own all of its properties. Over the last two
years, ORP has doubled the amount of its distribution paid
to Unit Holders and, as discussed above, it recently
declared an additional increase in the amount of the
distribution paid to Unit Holders.
The Managing General Partner is not currently engaged in any
negotiations regarding any such refinancing or other
liquidity transaction. While there can be no assurance that
any such refinancing or other transaction will occur, the
Managing General Partner believes that the prospects for a
refinancing or other transaction are good and, therefore,
Unit Holders should be able to realize a value for their
Units in excess of the $425 offer price. For these reasons,
the Managing General Partner cannot recommend a sale at this
time, particularly at $425 per Unit.
How to Evaluate Your Options
The price offered by the MacKenzie Patterson Group will
be reduced by the amount of any distributions declared or
made with respect to the Units between July 28, 1998 and
August 31, 1998. The Managing General Partner recently
approved an increase in ORP's semi-annual distribution,
payable on August 28, 1998, from $10 per Unit to $15 per
Unit, a fifty (50%) percent increase. Based on the net $410
offer price (the MacKenzie Patterson Group's offer reduced
by the amount of the August 28 dividend), ORP's current
distribution level equates on an annualized basis to
approximately a 7.3% current, cash-on-cash yield on a pre-
tax basis.
Therefore, in determining whether or not to sell your
Units, you may wish to consider the feasibility of using the
net proceeds of any such sale to acquire another investment
that generates a current annualized yield of at least 7.3%,
all or a portion of which may be sheltered from current
income tax depending on your individual tax situation, and
that has the potential for appreciation in value. In this
regard, it should be noted that ORP's distributions are not
guaranteed, and might decline in the event of unforeseen
circumstances, but also that ORP's distributions may
increase if the performance of ORP's properties continues to
improve.
If you have questions regarding this letter, our
Investor Services Department would be pleased to assist you
at (248) 614-4550.
Very truly yours,
Oxford Residential Properties I Limited
Partnership
By: Oxford Residential Properties I
Corporation, Managing General Partner
By: /s/ Robert B. Downing
-----------------------------
Robert B. Downing,
Executive Vice President
