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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP
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(Name of Subject Company)
NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP
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(Name of Person Filing Statement)
CLASS A LIMITED PARTNERSHIP UNITS; DEPOSITARY RECEIPTS
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(Titles of Classes of Securities)
000644206-104
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((CUSIP) Number of Class of Securities)
Stephen M. Honig, Esq.
Derek Davis, Esq.
Goldstein & Manello, P.C.
265 Franklin Street
Boston, MA 02110
Telephone: 617-439-8900
Telecopier: 617-439-8988
ITEM 1. SECURITY AND SUBJECT COMPANY.
This Schedule 14D-9 relates to the Class A Limited Partnership Units (and
the Depositary Receipts into which such Class A Limited Partnership Units are
convertible) issued by New England Realty Associates Limited Partnership, a
Massachusetts limited partnership (the "Subject Company").
The address of the principal executive offices of the Subject Company is 39
Brighton Avenue, Allston, Massachusetts 02134.
ITEM 2. TENDER OFFER OF THE BIDDER.
This Schedule 14D-9 relates to a certain "Offer to Purchase for Cash
Units or Depositary Receipts representing up to 8,500 Class A Units" (the
"Offer") of the Subject Company. The Offer was made by MacKenzie Patterson,
Inc. and Sutter Capital Management, LLC (the "Bidders"), pursuant to a
solicitation sent on a date unknown to the Subject Company to holders of the
Subject Company's of Class A Units and Depositary Receipts (collectively, the
"Holders"). The Bidders' principal executive offices are located 1640 School
Street, Moraga, California 94556. The foregoing information regarding the
Bidders is based on information contained in the solicitation sent to the
Holders. A copy of the Offer was delivered to the Subject Company by one of
the Holders on March 11, 1999. In the Offer, the Bidders offered to purchase
Class A Units or Depositary
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Receipts representing up to 8,500 Class A Limited Partnership Units of the
Subject Company for a purchase price of $90.00 per Class A Limited
Partnership Unit (or $9.00 per Depositary Receipt) less any distributions
paid to such Holder by the Subject Company after March 7, 1999, on the terms
and conditions set forth in the Offer.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The Subject Company is filing this Schedule 14D-9. The name of the
Subject Company is New England Realty Associates Limited Partnership which has a
principal executive office address at 39 Brighton Avenue, Allston, Massachusetts
02134.
(b) The authorized capital of the Subject Company is represented by three
classes of partnership units ("Partnership Units"). There are two categories of
limited partnership interests ("Class A Units" and "Class B Units"), and one
category of general partnership interest (the "General Partnership Units"). The
Class A Units originally were issued to creditors and limited partners of the
Subject Company's predecessor. Each Class A Unit is exchangeable for ten
publicly traded depositary receipts ("Receipts"). The Class B Units were issued
to the original general partners of the Subject Company. The General Partnership
Units are held by the current general partner of the Subject Company, NewReal,
Inc. (the "General Partner").
The Subject Company is managed by the General Partner, which is a
Massachusetts corporation wholly owned by the owners of all of the issued and
outstanding Class B Units, Ronald Brown and Harold Brown. The General Partner
has employed The Hamilton Company, Inc. (the "Hamilton Company"), the successor
to the Hamilton Management Corporation, to perform the management functions for
the Subject Company's properties. The Hamilton Company employs Ronald Brown and
Harold Brown. The Hamilton Company is wholly owned by Harold Brown.
The Subject Company is engaged in the business of acquiring, developing,
holding for investment, operating and selling real estate. The Second Amended
and Restated Contract of Limited Partnership of the Subject Company (the
"Partnership Agreement") authorizes the General Partner to acquire real estate
and real estate related investments from or in participation with either or both
of Harold Brown and Ronald Brown, or their affiliates, upon the satisfaction of
certain terms and conditions, including the approval of the Partnership's
Advisory Committee, and limitations on the price paid by the Subject Company for
such investments. The Partnership Agreement also permits the Subject Company's
limited partners and the General Partner to make loans to the Subject Company,
subject to certain limitations on the rate of interest which may be charged to
the Subject Company. Except for the foregoing, the Subject Company does not have
any policies prohibiting any limited partner, general partner, or any other
person from having any direct or indirect pecuniary interest in any investment
to be acquired or disposed of by the Subject Company or in any transaction to
which the Subject Company is a party or has an interest in or from engaging for
their own account in business activities of the types conducted or to be
conducted by the Subject Company.
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ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) POSITION OF THE GENERAL PARTNER. The General Partner, on behalf of the
Subject Company, is recommending that the Holders decline the Offer of the
Bidders. The General Partner's position is being provided to the Holders in a
letter from the Subject Company dated March 24, 1999.
(b) REASONS FOR GENERAL PARTNER'S POSITION. The reasons for the General
Partner's position are as follows: (i) the purchase price offered by the
Bidders for the Class A Units and corresponding Receipts is below the price
at which such Units historically have been purchased by the Subject Company
(which has on occasion purchased periodically offered Units at ten times the
then market price for Receipts) and, in the case of Receipts, the price at
which the Receipts are currently traded on the Nasdaq Smallcap Market (which
at March 19, 1999, the closing last trade price per Receipt was $10.75); (ii)
Holders who transfer their shares prior to March 31, 1999 will not receive
the proposed distribution announced by the Subject Company on March 1, 1999,
in the amount of $4.60 per Class A Unit or $.46 per Receipt (a 12.2% increase
over the 1998 distribution), and a one-time dividend of $3.50 per Class A
Unit or $.35 per Receipt; and (iii) Holders may realize a better return on
their investment by holding their Class A Units and/or Receipts if the value
of such securities increases. The aforementioned one time dividend of $3.50
per Class A Unit or $.35 per Receipt is being made by the Subject Company to
assist Holders in their payment of income taxes resulting from extraordinary
income which such Holders recognized in 1998. Holders who sell their Class A
Units or Receipts prior to the distribution will remain responsible for their
1998 income taxes, but will not have the benefit of utilizing the one-time
dividend to defray such tax costs.
Based on its real estate experience, knowledge of the real estate
markets in which the Subject Company's properties are located, and recent
improvements in the operating performance of the commercial and residential
properties, the General Partner believes that the net asset value of the
Subject Company is higher than the amount reflected by the proposed purchase
price for Class A Units and Receipts contained in the Offer of the Bidders.
In addition, the Bidders propose to offset the purchase price of the Class A
Units and/or Receipts by any distributions or dividends to be received by the
Holders after March 7, 1999. Therefore the proposed purchase price represents
a discount to the actual value of a Class A Unit and/or Receipt of the
Subject Company.
The long-term goals of the Subject Company are to manage, rent and improve
its properties and, as suitable opportunities arise, to acquire additional
properties with income and capital appreciation potential. When appropriate, the
Subject Company may sell or refinance selected properties with low
debt-to-equity ratios. Proceeds from any such sales or refinancings will be
reinvested in acquisitions of other properties, distributed to the partners, or
used for operating expenses or reserves, as determined by the General Partner.
The General Partner believes Holders will be better served if they maintain
their investment in the Subject Company, as the Subject Company strives to
achieve its long-term goals.
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ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
None
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) In January 1999, Harold Brown purchased a total aggregate amount
of 4,000 Receipts through open market purchases which were reported on Forms 4
and 5 Statements of Changes in Beneficial Ownership.
(b) Harold Brown does not intend to sell any of his securities.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
None
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
None
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a) Letter to Holders dated March 24, 1999
(b) Copy of statement contained in Voice Mail of Subject Company which
relates to the Offer made by the Bidders.
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.
March 24, 1999
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(Date)
/s/ Ronald Brown
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(Signature)
Ronald Brown, President New Real, Inc.
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(Name and Title)
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Exhibit 99(a)
EXHIBIT A
NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP
March 24, 1999
To Holders of Class A Units
and Despositary Receipts
of New England Realty Associates
Limited Partnership
Re: Offer to Purchase for Cash Units or Depositary Receipts representing
8,500 Class A Units by MacKenzie Patterson, Inc. and Sutter Capital
MANAGEMENT, LLC
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Dear Holder:
MacKenzie Patterson, Inc. and Sutter Capital Management, LLC (the
"Bidders") recently mailed to you an offer (the "Offer") to purchase Units and
depositary receipts representing 8,500 Class A Limited Partnership Units of New
England Realty Associates Limited Partnership ("NERA"). The Bidders have no
affiliation with NERA. The Offer was made without consultation with NERA or
NERA's general partner, NewReal, Inc. (the "General Partner").
The General Partner has reviewed the Offer carefully, and recommends that
you decline the Offer for the following reasons:
- OFFER PRICE IS LOWER THAN CURRENT TRADING PRICE. The purchase price
offered by the Bidders for the Class A Units and corresponding
Receipts is below the price at which such Units historically have
been purchased by NERA (NERA has on occasion purchased periodically
offered Units at a purchase price equal to ten times the market
price for Receipts) and, in the case of Receipts, the price at
which the Receipts are currently traded on Nasdaq Smallcap Market
(which at March 19, 1999, the last trade price per Receipt was
$10.75).
- LOSS OF DISTRIBUTIONS AND DIVIDENDS. Holders who transfer their
shares prior to March 31, 1999 will not receive the proposed
distributions announced by NERA in a press release on March 1, 1999,
in the amount of $4.60 per Class A Unit or $.46 Receipt (a 12.2%
increase over the 1998 distribution), and a one-time dividend of
$3.50 per Class A Unit or $.35 per Receipt. Moreover, Holders will
be responsible to the Bidders for all applicable transfer fees.
- HOLDERS REMAIN RESPONSIBLE FOR 1998 TAXABLE INCOME AFTER TRANSFER.
The aforementioned one-time dividend of $3.50 per Class A Unit or
$.35 per Receipt is being made by NERA to assist Holders in their
payment of income taxes resulting from extraordinary income which
such Holders recognized in 1998. Holders who sell their Class A
Units or Receipts prior to the distribution will remain responsible
for their 1998 income taxes, but will not have the benefit of
utilizing the one-time dividend to defray such tax costs.
- HOLDERS MAY REALIZE BETTER RETURN BY HOLDING UNITS. Holders may
realize a better return on their investment by holding their
Class A Units and/or Receipts, if NERA continues to strengthen
its real estate portfolio through its management and development
of its commercial and residential properties.
While there can be no assurance that the current strength of the real
estate market will continue and thereby sustain or increase the value of
Holders' securities, the General Partner cannot recommend a sale by Holders at
this time to the Bidders, particularly at the proposed offer price of $90.00 per
Class A Unit and $9.00 per Receipt.
Very truly yours,
New England Realty Associates Limited
Partnership
NewReal, Inc.
Its General Partner
By: /s/ Ronald Brown
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Ronald Brown, President
By: /s/ Harold Brown
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Harold Brown, Treasurer
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Exhibit 99(b)
EXHIBIT B
The Subject Company has maintained a voice-mail response for callers making
inquiry of the Offer which states:
"You have reached New England Realty Associates information line.
If you are calling regarding the form letter sent by
Mackenzie/Sutter Capital, please be advised that we are unable to
give you any advice as to whether or not your should sell your
stock. Please note that the current market price for the stock is
trading at $10.50 -$11.00 per Depositary Receipt or $110-$115 per
Class A Unit. If you need to know how many units you own, please
look on your form letter sent by Mackenzie/Sutter Capital, to the
right of your name on the label is a number. That is how many
units you own. If you have any other questions, please leave your
name and number and we will return your call."
