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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9/A
Amendment No. 1 to Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4)
of the Securities Exchange Act of 1934
T. Rowe Price Realty Income Fund I, A No-Load Limited Partnership
(Name of Subject Company)
T. Rowe Price Realty Income Fund I, A No-Load Limited Partnership
(Name of Person Filing Statement)
Units of Limited Partnership Interests
(Title of Class of Securities)
None
(CUSIP Numbers of Classes of Securities)
Henry H. Hopkins, Esq.
T. Rowe Price Associates, Inc.
100 E. Pratt Street
Baltimore, Maryland 21201
(410) 345-6640
(Name, Address, and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) filing Statement)
Copies to:
Judith D. Fryer, Esq. Henry D. Kahn, Esq.
Greenberg, Traurig, Hoffman, Lipoff, Piper & Marbury
Rosen & Quental 36 South Charles Street
153 E. 53rd Street Baltimore, Maryland 21201
New York, NY 10022
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THE PURPOSE OF THIS AMENDMENT IS TO FILE THIS SCHEDULE IN A
MANNER WHICH WILL CAUSE THE BODY OF THE SCHEDULE TO BE INCLUDED
IN THE EDGAR SYSTEM.
Item 1. Security and Subject Company
The subject company is T. Rowe Price Realty Income Fund
I, A No-Load Limited Partnership, a Maryland limited partnership
(the "Partnership"). The address of the principal executive
offices of the Partnership and of T. Rowe Price Realty Income
Fund I Management, Inc., a Maryland corporation, the general
partner of the Partnership ("General Partner"), is 100 E. Pratt
Street, Baltimore, Maryland 21202. The title of the class of
equity securities to which this statement relates is the
outstanding units of limited partnership interest (the "Units")
of the Partnership.
Item 2. Tender Offer of the Bidder
This statement relates to the unsolicited tender offer
("Offer to Purchase") being made by Lido Associates, L.L.C. (the
"Bidder") disclosed in a Tender Offer Statement on Schedule 14D-
1, dated December 10, 1996, (the "Schedule 14D-1"), to purchase
from holders of Units ("Limited Partners") up to 40,000 Units
constituting approximately 45% of the outstanding Units of the
Partnership at $298 per Unit, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated December 10,
1996, and the related Letter of Transmittal (collectively with
the Offer to Purchase, the "Lido Offer"). The Partnership did
not solicit the Lido Offer. The Schedule 14D-1 states that the
address of the principal office of Lido is 4343 Von Karman
Avenue, Newport Beach, CA 92660.
Item 3. Identity and Background
(a) The name and business address of the Partnership,
which is the person filing this statement, is set forth in Item 1
above.
(b)(1) The General Partner is the sole general partner
of the Partnership, and as such is solely responsible for the
management of the Partnership s business. The General Partner is
an indirect, wholly owned subsidiary of T. Rowe Price Associates,
Inc. ("Associates"). Except as described below, there are no
material contracts, agreements, arrangements and understandings
or any actual or potential conflicts of interest between the
General Partner or its affiliates and the Partnership and its
affiliates. The Partnership does not have any directors or
executive officers. The directors of the General Partner are
James S. Riepe, Alvin M. Younger, Henry H. Hopkins, Douglas O.
Hickman and Joseph P. Croteau, each of whom is also an officer of
Associates. Mr. Riepe is also Chairman of the Board and
President of the General Partner. Certain contracts, agreements,
arrangements and understandings between the Partnership and the
General Partner and affiliates of the General Partner are
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described in the Notes to Financial Statements in the
Partnership s Annual Report to Security-Holders for the fiscal
year ended September 30, 1996 ("Annual Report") in Note 1 -
"Organization" and Note 3 - "Transactions with Related Parties
and Other", which report is filed with the Commission herewith as
Exhibit 9(c)(1). Notes 1 and 3 of such Notes to Financial
Statements are hereby incorporated herein.
(b)(2) The Partnership was compelled by applicable law
to deliver a list of the names of the Limited Partners to an
affiliate of the Bidder together with the Limited Partners'
addresses and number of Units held. However, the Partnership was
able to negotiate an agreement which substantially restricts the
Bidder's use of the list (Agreement for Delivery and Use of List
of Limited Partners - the "List Agreement," a copy of which is
attached hereto as Exhibit 9(c)(2). In order to permit the
Partnership to continue in an orderly manner with its previously
announced plan for the disposition of the Partnership's
properties, the Partnership also obtained the Bidder's agreement
to the following:
(i) to limit its purchase of the Units to 46% of the
outstanding Units;
(ii) to vote any and all Units owned by Bidder pro rata
to the vote of all other limited partners;
(iii) not to attempt to remove the General Partner from
its position as such; and
(iv) not to act to effect a change in control of the
Partnership.
(b)(3) The following may be deemed actual or potential
conflicts of interest between the Partnership and its executive
officers, directors or affiliates:
(A) Pursuant to the terms of Section 8.2 of the
Partnership s Amended and Restated Agreement of Limited
Partnership ("Partnership Agreement"), a copy of which Section is
attached hereto as Exhibit 9(c)(3) and hereby incorporated by
reference herein, the General Partner may under certain
circumstances be obligated to contribute to the capital of the
Partnership upon its liquidation up to $913,000. Based on
current facts and circumstances, including the current Estimated
Unit Value (as hereinafter defined), the Partnership believes the
General Partner will be obligated to contribute the full amount.
Conversely, pursuant to the provisions of Section 4.2 of the
Partnership Agreement, a copy of which section is attached hereto
as Exhibit 9(c)(4) and incorporated by reference herein, as each
property in the Partnership s portfolio is sold the General
Partner is entitled to receive the first 4% of the sale proceeds
(as defined). Based on the Estimated Unit Value, this share of
the proceeds could amount to approximately $1.4 million.
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(B) Under the provisions of Section 5.7 of the Partnership
Agreement, a copy of which section is attached as Exhibit 9(c)(5)
and hereby incorporated by reference herein, the General Partner
may (subject to certain limitations set forth therein) be
entitled to indemnification by the Partnership for any loss or
damage incurred by the General Partner and against expenses
(including reasonable attorney s fees) incurred by it in
connection with the defense or settlement of any threatened,
pending, or completed action or suit by any Limited Partner in
connection with certain acts or omission of the General Partner,
acting in its capacity as such.
Item 4. The Solicitation or Recommendation
(a) Following the Partnership s receipt of the Lido
Offer, the Partnership reviewed and considered the Lido Offer and
explored various possible alternative courses of action that
might be available in response to the Lido Offer. Based on its
analysis, the Partnership, in light of all relevant
circumstances, determined that the Lido Offer is inadequate, and
may not be in the best interests of the Limited Partners. The
Partnership makes no recommendation as to whether Limited
Partners should accept or reject the Lido Offer, but recommends
that Limited Partners become as fully informed as possible about
the current and prospective value of their investment, and
consider carefully whether acceptance of the Lido Offer is in
their best interests. Limited Partners with a pressing need for
liquidity may want to consider accepting the Lido offer, but in
doing so they will be foregoing future distributions of cash from
operations, as well as sales proceeds.
(b) The Partnership reached the conclusions set forth
in Item 4(a) after considering a variety of factors, including,
but not limited to, the following:
(i) The Partnership has conducted its annual formal
Unit valuation to determine the estimated value of a Unit as of
the end of the Partnership s fiscal year (September 30, 1996).
This value (the "Estimated Unit Value") is based on the
Partnership s estimate of the price range in which each property
in the Partnership s portfolio would be likely to be sold as of
the date of the valuation ("Fair Market Value"). These Fair
Market Value ranges are then combined to generate a range of
values for the real estate portfolio as a whole, and an estimate
of the value of the portfolio is made within this range. This
estimate is then combined with the Partnership s other assets and
its liabilities, and the result is divided by the number of
outstanding Units to produce the Estimated Unit Value.
After adjusting for distributions paid in November of
1996, the Estimated Unit Value is $398. It should be noted that
the Estimated Unit Value does not represent an estimate by the
Partnership of the price for which a Unit could be sold at the
present time.
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(ii) In June 1996, recognizing that the Partnership was
approaching the end point of its expected investment life, the
Partnership announced that it had determined to begin the orderly
liquidation of all of its assets. Although there can be no
assurance made as to the timing of any liquidations due to real
estate market conditions, the general difficulty of disposing of
real estate, and other general economic factors, the Partnership
expects such liquidation to occur in the next two to three years.
(iii) The Partnership anticipates that in addition to
proceeds from the sale of properties, Limited Partners will
continue to receive cash from operations over the life of the
Partnership. The amount of such distributions is not
determinable at this time, and is anticipated to decrease as the
Partnership liquidates its portfolio of properties.
Nevertheless, if a Limited Partner accepts the Lido Offer, the
Limited Partner will forego any such future distributions.
(iv) The Partnership is presently marketing two
properties for sale. On October 22, 1996, the Partnership
entered into an agreement in principle to negotiate a purchase
and sales agreement for the Royal Biltmore property. This
property accounts for approximately 16% of the estimated unit
value of RIF I at September 30, 1996. If agreement can be
reached with this potential buyer, the Partnership would expect
to close the sale of Royal Biltmore by the end of February 1997.
Based on the timing and terms indicated by the agreement in
principle, the Partnership would expect that the limited Partners
would receive up to $67 per Unit from the sale of this property.
This represents approximately 5% more than the amount at which
the property was valued at September 30, 1996. There is no
assurance that this transaction will be consummated on these
terms, or at all.
(v) The Partnership believes that the highest value of
an investment in the Units can only be realized by a Limited
Partner who retains his or her Units through the liquidation of
the Partnership.
(vi) The Lido Offer is approximately 75% of the
Estimated Unit Value.
(vii) The Bidder is making the Lido Offer with a view
to making a profit. Accordingly, there is a conflict of interest
between its desire to purchase the Units at a low price and a
Limited Partner s desire to sell its Units at a high price. In
fact, the Bidder concedes that its own estimates of net asset
value per Unit are above the price it is offering for Units. The
Bidder believes it can make a profit on the Units while the
Partnership remains under current management. This is not a
situation where the offeror claims it can increase value for
investors by its actions. Rather the Lido Offer is simply an
attempt to buy, at a substantial
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discount, an asset the Bidder believes will be liquidated in the
near future, resulting in a quick profit for the Bidder.
(viii) Like the recent offer from Fir Investors, LLC,
the price offered by the Bidder can be reduced by any
partnership distributions declared or made after November 25,
1996. Further, the Lido Offer also entitles the Bidder to
receive the amount of such distribution.
(ix) Because the Bidder fails to take the General
Partner's interest into account, Section 10 of the Lido Offer
overstates the loss per Unit for the 1996 fiscal year by $2.87.
(x) Section 13 of the Lido Offer contains numerous
conditions to which it is subject, all of which are by the
Bidder's own admission for the Bidder's sole benefit.
Item 5. Persons Retained, Employed, or to be Compensated
Neither the Partnership nor any person or entity acting
on its behalf has employed, retained or compensated any other
person to make solicitations or recommendations to Limited
Partners on its behalf concerning the Lido Offer, nor does it
presently intend to do so.
Item 6. Recent Transactions and Intent with Respect to
Securities
(a) Neither the Partnership, nor the General Partner
have effected any transactions in the Units during the past 60
days. The Partnership is not aware of any other transactions in
the Units during the past 60 days by any of the General Partner s
executive officers, directors, affiliates, or subsidiaries.
(b) Neither the Partnership nor, to the knowledge of
the Partnership, any of the General Partner s executive officers,
directors, affiliates, or subsidiaries intends to tender Units
owned by them in response to the Lido Offer.
Item 7. Certain Negotiations and Transactions by the Subject
Company
As mentioned in Item 4(b)(2)(v) above, prior to the
Lido Offer and other recent tender offers, the Partnership
announced its intention to begin the orderly disposition of the
Partnership's properties. No negotiation is being undertaken or
is under way by the Partnership in response to the Lido Offer
that relates to or would result in:
(1) An extraordinary transaction such as a merger or
reorganization, involving the Partnership;
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(2) A purchase, sale or transfer of a material amount
of assets by the Partnership;
(3) A tender offer for or other acquisition of
securities by or of the Partnership; or
(4) Any material change in the present capitalization
or distribution policy of the Partnership.
(b) There has been no transaction, board resolution,
agreement in principle, or a signed contract in response to the
Lido Offer which relates to or would result in one or more of the
matters referred to in Item 7(a)(1),(2), (3) or (4), other than
the one described pursuant to Item 3(b) of this statement, which
agreement proceeded the Lido Offer.
Item 8. Additional Information to be Furnished.
Restrictions on Transfers; Tax Termination
The Partnership intends that no transfer or assignment
of Units will be recognized, which, when considered with all
other transfers or assignments ("Transfers") during the
Partnership s taxable year, would cause more than 5% of the
Partnership s Units to be so transferred or assigned, unless the
Partnership receives from the proposed transferor or transferee
an opinion satisfactory to the General Partner from reputable
counsel that the recognition of the proposed transfer will not
cause the Partnership to be treated as a "publicly traded
partnership" as defined in Section 7704 of the Internal Revenue
Code of 1986, as amended. For the taxable year commencing
October 1, 1996, the Partnership has received Transfers through
December 17, 1996, totaling .13%. For the taxable year ending
September 30, 1996, the Partnership received Transfers totaling
1.75%.
The Partnership also intends that no Transfer of Units
will be recognized which, when considered with all other
Transfers during the twelve-month period ending with such
transfer or assignment, would, in the opinion of counsel to the
Partnership, cause a termination of the Partnership for federal
income tax purposes (which termination may occur when 50% or more
of the total interest in the Partnership capital and profits is
transferred by sale or exchange in a twelve-month period). The
Partnership will not process any requests for Transfers of Units
during such twelve-month period which the Partnership believes
would cause a tax termination. Because of this tax-related
transfer restriction, in no event will an aggregate of 50% or
more of the Units be accepted for Transfer by the Partnership
pursuant to the Lido Offer (reduced to the extent of any prior
transfers of Units within the preceding twelve months).
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In addition to the Lido Offer, the Partnership is aware
of two other tender offers for Units which are pending as of the
date of this Schedule, one by Fir Investors, LLC, and one by
Kensington Partners LLC. Other tender offers may be made in the
future. Depending upon the number of Units sold by Limited
Partners pursuant to the Lido Offer or other tender offers or
otherwise, including sales on the secondary market, certain
Transfers may not be recognized. In particular, recognition of
Transfers for the twelve-month period following completion of the
Lido Offer may be limited.
Item 9. Material to be Filed as Exhibits.
(a) Letter from James S. Riepe to Limited Partners
dated December 20, 1996 regarding the Lido Offer.
(b) None.
(c) (1) Annual Report of the Partnership to Limited
Partners for the Year Ended September 30, 1996.
(2) Agreement for Delivery and Use of List of
Limited Partners between an affiliate Bidder and the Partnership.
(3) Section 8.2 of the Partnership s Amended and
Restated Agreement of Limited Partnership.
(4) Section 4.2 of the Partnership s Amended and
Restated Agreement of Limited Partnership.
(5) Section 5.7 of the Partnership s Amended and
Restated Agreement of Limited Partnership.
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: January 24, 1997 T. Rowe Price Realty
Income Fund I, A No-Load
Limited Partnership
By: T. Rowe Price Realty
Income Fund I Management,
Inc., General
Partner of the Partnership
By: /s/ Lucy B. Robins
Lucy B. Robins
Vice-President
