<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 29549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
MCCOMBS REALTY PARTNERS
(Name of Subject Company)
AIMCO PROPERTIES, L.P.
(Bidder)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
NONE
(CUSIP Number of Class of Securities)
PATRICK J. FOYE
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
1873 SOUTH BELLAIRE STREET, 17TH FLOOR
DENVER, COLORADO 80222
(303) 757-8101
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
------------------------
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CALCULATION OF FILING FEE
- -------------------------------------------------------------------------------
Transaction Valuation* $3,869 Amount of Filing Fee: $0.77
- -------------------------------------------------------------------------------
* For purposes of calculating the fee only. This amount assumes the
purchase of 7,738.38 units of limited partnership interest of the
subject partnership for $0.50 per unit. The amount of the filing fee,
calculated in accordance with Section 14(g)(1)(B)(3) and Rule 0-11(d)
under the Securities Exchange Act of 1934, as amended, equals 1/50th of
one percent of the aggregate of the cash offered by the bidder.
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number or the form or schedule and the date of its filing.
Amount Previously Paid: Filing Parties:
Form or Registration No.: Date Filed:
(Continued on following pages)
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SCHEDULE 14D-1
This Statement (the "Statement") constitutes the initial Schedule 14D-1
of AIMCO Properties, L.P. (the "AIMCO OP"), relating to AIMCO OP's offer to
purchase units of limited partnership interest ("Units") of McCombs Realty
Partners (the "Partnership"). AIMCO/IPT, Inc. ("AIMCO/IPT"), Insignia
Properties, L.P. ("IPLP"), AIMCO OP, AIMCO-GP, Inc. ("AIMCO-GP") and Apartment
Investment and Management Company ("AIMCO") are herein referred to as the
"Reporting Persons." The item numbers and responses thereto are set forth below
in accordance with the requirements of Schedule 14D-1.
(1) SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is McCombs Realty Partners, a
California limited partnership. The address of the Partnership's principal
executive offices is 1873 South Bellaire Street, 17th Floor, Denver, Colorado
80222.
(b) This Statement relates to an offer by AIMCO OP to purchase up to
7,738.38 of the 17,196.39 outstanding units of limited partnership interest (the
"Units") of the Partnership at a purchase price per Unit, net to the seller, of
$0.50 in cash (less the amount of any distributions paid by the Partnership on
and after July 22, 1999), upon the terms and subject to the conditions set forth
in an Offer to Purchase, dated July 22, 1999 (as amended or supplemented from
time to time, the "Offer to Purchase"), and the related Letter of Transmittal
and Instructions thereto (as amended or supplemented from time to time, the
"Letter of Transmittal"), copies of which are filed as Exhibits (a)(1) and
(a)(2) hereto, respectively.
(c) The information set forth in the Offer to Purchase under "The Offer
- -- Section 9. Background and Reasons for the Offer -- Prices on Secondary
Market" is incorporated herein by reference.
(2) IDENTITY AND BACKGROUND.
(a)-(d), (g) The principal business of the Reporting Persons is the
ownership, acquisition, development, expansion and management of multi-family
apartment properties. The principal executive offices of the Reporting Persons
are located at 1873 South Bellaire Street, 17th Floor, Denver, Colorado 80222.
The information set forth in the Offer to Purchase under "The Offer -- Section
8. Information Concerning Us and Certain of Our Affiliates" is incorporated
herein by reference. The executive officers and directors of AIMCO and AIMCO-GP
are listed on Annex I to the Offer to Purchase ("Annex I"), which is
incorporated herein by reference.
(e)-(f) During the last five years, none of the Reporting Persons nor,
to the best of their knowledge, any of the persons listed in Annex I (i) has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining further
violations of or prohibiting activities subject to federal or state securities
laws or finding any violation with respect to such laws.
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(3) PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in Item 1 of Part I and Items 9
through 12 of Part III of the Partnership's Form 10-KSB for the year ended
December 31, 1998, and the financial statements and notes thereto included
therein, and the information set forth in the Offer to Purchase under "The Offer
- -- Section 9. Background and Reasons for the Offer -- General," "The Offer --
Section 9. Background and Reasons for the Offer -- Prior Tender Offers," "The
Offer -- Section 11. Conflicts of Interest and Transactions with Affiliates,"
"The Offer -- Section 13. Certain Information Concerning Your Partnership --
Distributions" and "The Offer -- Section 13. Certain Information Concerning Your
Partnership -- Compensation Paid to the General Partner and Its Affiliates" is
incorporated herein by reference.
(4) SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in the Offer to Purchase under "The
Offer -- Section 15. Source of Funds" is incorporated herein by reference.
(5) PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) The information set forth in the Offer to Purchase under "The
Offer -- Section 9. Background and Reasons for the Offer," "The Offer -- Section
12. Future Plans of the Purchaser" and "The Offer -- Section 7. Effects of the
Offer" is incorporated herein by reference.
(6) INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The Reporting Persons do not own any beneficial interest in the
Partnership.
(7) CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE
SUBJECT COMPANY'S SECURITIES.
Not applicable.
(8) PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Offer to Purchase under "The Offer --
Fees and Expenses" is incorporated herein by reference.
(9) FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The financial statements included in AIMCO OP's Annual Report
on Form 10-K for the year ended December 31, 1998, which are listed on the Index
to Financial Statements on page F-1 of such report, are incorporated herein by
reference. Such report may be inspected at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549; Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661; and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such material can also be obtained from the Public Reference Room of
the Commission in Washington, D.C. at prescribed rates and from the Commission's
web site at www.sec.gov.
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(10) ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(d) The information set forth in the Offer to Purchase under "The
Offer -- Section 18. Certain Legal Matters" is incorporated herein by reference.
(e) The information set forth in the Offer to Purchase under "The Offer
- -- Section 9. Background and Reasons for the Offer -- Certain Litigation" is
incorporated herein by reference
(f) The Offer to Purchase is hereby incorporated by reference.
(11) MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated July 22, 1999.
(a)(2) Letter of Transmittal and related Instructions.
(a)(3) Letter, dated July 22, 1999, from AIMCO OP to the Limited
Partners of the Partnership.
(b) Amended and Restated Credit Agreement (Unsecured
Revolver-to-Term Facility), dated as of October 1, 1998, among
AIMCO OP, Bank of America National Trust and Savings
Association, and BankBoston, N.A. (Exhibit 10.1 to AIMCO's
Current Report on Form 8-K, dated October l, 1998, is
incorporated herein by this reference).
(b)(2) First Amendment to Credit Agreement, dated as of November 6,
1998, by and among AIMCO OP, the financial institutions listed
on the signature pages thereof and Bank of America National
Trust and Savings Association (Exhibit 10.2 to AIMCO's Annual
Report on Form 10-K for the fiscal year ended December 31,
1998, is incorporated herein by this reference).
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
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SIGNATURE
After due 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: July 22, 1999
AIMCO/IPT, INC.
By: /s/ Patrick J. Foye
----------------------------
Executive Vice President
INSIGNIA PROPERTIES, L.P.
By: AIMCO/IPT, INC.
----------------------------
(General Partner)
By: /s/ Patrick J. Foye
----------------------------
Executive Vice President
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, INC.
----------------------------
(General Partner)
By: /s/ Patrick J. Foye
----------------------------
Executive Vice President
AIMCO-GP, INC.
By: /s/ Patrick J. Foye
----------------------------
Executive Vice President
APARTMENT INVESTMENT
AND MANAGEMENT COMPANY
By: /s/ Patrick J. Foye
----------------------------
Executive Vice President
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
(a)(1) Offer to Purchase, dated July 22, 1999.
(a)(2) Letter of Transmittal and related Instructions.
(a)(3) Letter, dated July 22, 1999, from AIMCO OP to the
Limited Partners of the Partnership.
(b) Amended and Restated Credit Agreement (Unsecured
Revolver-to-Term Facility), dated as of October 1,
1998, among AIMCO OP, Bank of America National Trust
and Savings Association, and BankBoston, N.A.
(Exhibit 10.1 to AIMCO's Current Report on Form 8-K,
dated October l, 1998, is incorporated herein by this
reference).
(b)(2) First Amendment to Credit Agreement, dated as of
November 6, 1998, by and among AIMCO OP, the
financial institutions listed on the signature pages
thereof and Bank of America National Trust and
Savings Association (Exhibit 10.2 to AIMCO's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1998, is incorporated herein by this
reference).
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
<PAGE> 1
OFFER TO PURCHASE FOR CASH
AIMCO PROPERTIES, L.P.
IS OFFERING TO PURCHASE UP TO 7,738.38 UNITS OF LIMITED PARTNERSHIP INTEREST IN
MCCOMBS REALTY PARTNERS
FOR $0.50 PER UNIT IN CASH
We will only accept a maximum of 7,738.38 units whose holders made additional
capital contributions in response to our offer. If more units are tendered to
us, we will generally accept units on a pro rata basis according to the number
of units tendered by each person.
We will pay for accepted units promptly after expiration of the offer.
Our offer price will be reduced for any distributions subsequently made by your
partnership prior to the expiration of our offer.
Our offer and your withdrawal rights will expire at 5:00 p.m., New York City
time, on August 19, 1999, unless we extend the deadline.
YOU WILL NOT PAY ANY FEES OR COMMISSIONS IF YOU TENDER YOUR UNITS.
Our offer is subject to a minimum of 35% of the units whose holders make
additional contributions being tendered.
SEE "RISK FACTORS" BEGINNING ON PAGE 1 OF THIS OFFER TO PURCHASE FOR A
DESCRIPTION OF RISK FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH OUR
OFFER, INCLUDING THE FOLLOWING:
- We determined the offer price of $0.50 per unit without any arms-length
negotiations. Accordingly, our offer price may not reflect the fair
market value of your units.
- While secondary sales activity in the units of your partnership have been
limited and sporadic, sales prices for your units ranged from $14.40 to
$42 since April 1, 1998.
- Although your partnership's agreement of limited partnership provides for
termination in the year 2030, the prospectus pursuant to which the units
were sold in 1984 indicated that the properties owned by your partnership
might be sold within 5 to 10 years of their acquisition if conditions
permitted.
- Your general partner and the property manager of the property are
subsidiaries of ours and, therefore, the general partner has substantial
conflicts of interest with respect to our offer.
- We are making this offer with a view to making a profit and, therefore,
there is a conflict between our desire to purchase your units at a low
price and your desire to sell your units at a high price.
- Continuation of your partnership will result in our affiliates continuing
to receive management fees from your partnership. Such fees would not be
payable if your partnership was liquidated.
- It is possible that we may conduct a subsequent offer at a higher price.
- For any units that we acquire from you, you will not receive any future
distributions from operating cash flow of your partnership or upon a sale
or refinancing of the property owned by your partnership.
- If we acquire a substantial number of units, we will increase our ability
to influence voting decisions with respect to your partnership and may
control such voting decisions.
If you desire to accept our offer, you should complete and sign the letter
of transmittal in accordance with the instructions thereto and mail or deliver
the signed letter of transmittal and any other required documents to River Oaks
Partnership Services, Inc., which is acting as Information Agent in connection
with our offer, at one of its addresses set forth on the back cover of this
offer to purchase. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL
COPIES OF THIS OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL MAY ALSO BE
DIRECTED TO THE INFORMATION AGENT AT (888) 349-2005.
July 22, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
INTRODUCTION................................................ 1
RISK FACTORS................................................ 1
No Third Party Valuation or Appraisal; No Arms-Length
Negotiation............................................ 1
No Fairness Opinion From a Third Party.................... 1
Offer Price May Not Represent Fair Market Value........... 2
Offer Price Does Not Reflect Future Prospects............. 2
Offer Price Based on Our Estimate of Liquidation
Proceeds............................................... 2
Offer Price May Not Represent Liquidation Value........... 2
Continuation of the Partnership; No Time Frame Regarding
Sale of Properties..................................... 2
Holding Units May Result in Greater Future Value.......... 2
Conflicts of Interest With Respect to the Offer........... 2
No General Partner Recommendation......................... 3
Conflicts of Interest Relating to Management Fees......... 3
Possible Subsequent Offer at a Higher Price............... 3
Taxable Gain and Tax Liability on a Sale of Your Units May
Exceed Our Offer Price................................. 3
Loss of Future Distributions from Your Partnership........ 3
Possible Increase in Control of Your Partnership by Us.... 3
Recognition of Gain Resulting from Possible Future
Reduction in Your Partnership Liabilities.............. 4
Risk of Inability to Transfer Units for 12-Month Period... 4
Potential Delay in Payment................................ 4
THE OFFER................................................... 4
Section 1. Terms of the Offer; Expiration Date;
Proration.............................................. 4
Section 2. Acceptance for Payment and Payment for Units... 5
Section 3. Procedure for Tendering Units.................. 6
Section 4. Withdrawal Rights.............................. 8
Section 5. Extension of Tender Period; Termination;
Amendment.............................................. 8
Section 6. Certain Federal Income Tax Matters............. 9
Section 7. Effects of the Offer........................... 12
Section 8. Information Concerning Us and Certain of Our
Affiliates............................................. 12
Section 9. Background and Reasons for the Offer........... 13
Section 10. Position of the General Partner of Your
Partnership With Respect to the Offer.................. 19
Section 11. Conflicts of Interest and Transactions with
Affiliates............................................. 20
Section 12. Future Plans of the Purchaser................. 21
Section 13. Certain Information Concerning Your
Partnership............................................ 22
Section 14. Voting Power.................................. 26
Section 15. Source of Funds............................... 26
Section 16. Dissenters' Rights............................ 27
Section 17. Conditions of the Offer....................... 27
Section 18. Certain Legal Matters......................... 29
Section 19. Fees and Expenses............................. 29
ANNEX I -- OFFICERS AND DIRECTORS........................... I-1
</TABLE>
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INTRODUCTION
We are offering to purchase up to 7,738.38 units, representing
approximately 45% of the units whose holders made additional capital
contributions in your partnership, for the purchase price of $0.50 per unit, net
to the seller in cash, without interest, less the amount of distributions, if
any, made by your partnership in respect of any unit from the date hereof until
the expiration date. Our offer is made upon the terms and subject to the
conditions set forth in this offer to purchase and in the accompanying letter of
transmittal.
We are offering to acquire only the units whose holders made additional
capital contributions pursuant to your partnership's reorganization plan in
October 1998. Therefore, throughout this offer to purchase, the term "units"
refers only to such units and not the units for which additional capital
contributions were not made. For more information regarding the reorganization
plan, please refer to "The Offer -- Section 9. Background and Reasons for the
Offer -- Your Partnership's Bankruptcy Reorganization."
If you tender your units in response to our offer you will not be obligated
to pay any commissions or partnership transfer fees but will be obligated to pay
any transfer taxes (see Instruction 8 to the letter of transmittal). We have
retained River Oaks Partnership Services, Inc. to act as the Information Agent
in connection with our offer. We will pay all charges and expenses in connection
with the services of the Information Agent. The offer is conditioned on a
minimum of 35% of the units being tendered. In addition, certain other
conditions apply. See "The Offer -- Section 17." You may tender all or any
portion of the units that you own. Under no circumstances will we be required to
accept any unit if the transfer of that unit to us would be prohibited by the
agreement of limited partnership of your partnership.
Our offer will expire at 5:00 p.m., New York City time, on August 19, 1999,
unless extended. If you desire to accept our offer, you must complete and sign
the letter of transmittal in accordance with the instructions contained therein
and forward or hand deliver it, together with any other required documents, to
the Information Agent. You may withdraw your tender of units pursuant to the
offer at any time prior to the expiration date of our offer and, if we have not
accepted such units for payment, on or after September 22, 1999.
We are AIMCO Properties, L.P., a Delaware limited partnership. Together
with our subsidiaries, we conduct substantially all of the operations of
Apartment Investment and Management Company, or AIMCO. AIMCO is a
self-administered and self-managed real estate investment trust engaged in the
ownership, acquisition, development, expansion and management of multifamily
apartment properties. As of March 31, 1999, AIMCO owned or managed 373,409
apartment units in 2,071 properties located in 49 states, the District of
Columbia and Puerto Rico. AIMCO's Class A Common Stock is listed and traded on
the New York Stock Exchange under the symbol "AIV."
As a result of our October 1, 1998 merger with Insignia Financial Group,
Inc. and our February 26, 1999 merger with Insignia Properties Trust, we
acquired a 100% ownership interest in the general partner of your partnership
and the company that manages the residential properties owned by your
partnership.
RISK FACTORS
Before deciding whether or not to tender any of your units, you should
consider carefully the following risks and disadvantages of the offer:
NO THIRD PARTY VALUATION OR APPRAISAL; NO ARMS-LENGTH NEGOTIATION
We did not base our valuation of the property owned by your partnership on
any third-party appraisal or valuation. We established the terms of our offer
without any arms-length negotiation. The terms of the offer could differ if they
were subject to independent third party negotiations. It is uncertain whether
our offer price reflects the value which would be realized upon a sale of your
units to a third party.
NO FAIRNESS OPINION FROM A THIRD PARTY
We did not obtain an opinion from a third party that our offer price is
fair from a financial point of view.
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OFFER PRICE MAY NOT REPRESENT FAIR MARKET VALUE
There is no established or regular trading market for your units, nor is
there another reliable standard for determining the fair market value of the
units. Our offer price does not necessarily reflect the price that you would
receive in an open market for your units. Such prices could be higher than our
offer price.
OFFER PRICE DOES NOT REFLECT FUTURE PROSPECTS
Our offer price is based on your partnership's historical property income.
It does not ascribe any value to potential future improvements in the operating
performance of your partnership's property.
OFFER PRICE BASED ON OUR ESTIMATE OF LIQUIDATION PROCEEDS
The offer price represents slightly more than our estimate of the amount
you would receive if we liquidated the partnership. In determining the
liquidation value, we used the direct capitalization method to estimate the
value of your partnership's property because we think a prospective purchaser of
the properties would value the properties using this method. In doing so, we
applied a capitalization rate to your partnership's property income for the year
ended December 31, 1998. If property income for a different period or a
different capitalization rate was used, a higher valuation could result. Other
methods of valuing your units could also result in a higher valuation.
OFFER PRICE MAY NOT REPRESENT LIQUIDATION VALUE
The actual proceeds obtained from a liquidation are highly uncertain and
could be more than our estimate. Accordingly, our offer price could be less than
the net proceeds that you would realize upon an actual liquidation of your
partnership.
CONTINUATION OF THE PARTNERSHIP; NO TIME FRAME REGARDING SALE OF PROPERTIES
Your general partner (which is our subsidiary) is proposing to continue to
operate your partnership and not to attempt to liquidate it at the present time.
Thus, our offer does not satisfy any expectation that you would receive the
return of your investment in the partnership through a sale of any property. It
is not known when the property owned by your partnership may be sold. There may
be no way to liquidate your investment in the partnership in the future until
the property is sold and the partnership is liquidated. The general partner of
your partnership continually considers whether the property should be sold or
otherwise disposed of after consideration of relevant factors, including
prevailing economic conditions, availability of favorable financing and tax
considerations, with a view to achieving maximum capital appreciation for your
partnership. At the current time the general partner of your partnership
believes that a sale of the property would not be advantageous given market
conditions, the property's condition and tax considerations. In particular, the
general partner considered the changes in the local rental market, the potential
for appreciation in the property's value and the tax consequences to you and
your partners on the property's sale. We cannot predict when the property will
be sold or otherwise disposed of.
HOLDING UNITS MAY RESULT IN GREATER FUTURE VALUE
You might receive more value if you retain your units until your
partnership is liquidated.
CONFLICTS OF INTEREST WITH RESPECT TO THE OFFER
The general partner of your partnership is our subsidiary and, therefore,
has substantial conflicts of interest with respect to our offer. We are making
this offer with a view to making a profit. There is a conflict between our
desire to purchase your units at a low price and your desire to sell your units
at a high price. We determined our offer price without negotiation with any
other party, including any general or limited partner.
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NO GENERAL PARTNER RECOMMENDATION
The general partner of your partnership makes no recommendation as to
whether you should tender or refrain from tendering your units. Although the
general partner believes the offer is fair, you must make your own decision
whether or not to participate in the offer, based upon a number of factors,
including your financial position, your need or desire for liquidity, other
financial opportunities available to you, and your tax position and the tax
consequences to you of selling your units.
CONFLICTS OF INTEREST RELATING TO MANAGEMENT FEES
Since our subsidiaries receive fees for managing your partnership and its
property, a conflict of interest exists between our continuing the partnership
and receiving such fees, and the liquidation of the partnership and the
termination of such fees. Another conflict is the fact that a decision of the
limited partners of your partnership to remove, for any reason, the general
partner of your partnership or the property manager of any property owned by
your partnership would result in a decrease or elimination of the substantial
fees paid to them for services provided to your partnership.
POSSIBLE SUBSEQUENT OFFER AT A HIGHER PRICE
It is possible that we may conduct a subsequent offer at a higher price.
Such a decision will depend on, among other things, the performance of the
partnership, prevailing economic conditions, and our interest in acquiring
additional limited partnership interests.
TAXABLE GAIN AND TAX LIABILITY ON A SALE OF YOUR UNITS MAY EXCEED OUR OFFER
PRICE
Your sale of units for cash will be a taxable sale, with the result that
you will recognize taxable gain or loss measured by the difference between the
amount realized on the sale and your adjusted tax basis in the units of limited
partnership interest of your partnership you transfer to us. The "amount
realized" with respect to a unit of limited partnership interest of your
partnership you transfer to us will be equal to the sum of the amount of cash
received by you for the unit sold pursuant to the offer plus the amount of
partnership liabilities allocable to the unit. As a result, your taxable gain
and any tax liability resulting from a sale of units to us pursuant to the offer
could exceed our offer price. The particular tax consequences for you of our
offer will depend upon a number of factors related to your tax situation,
including your tax basis in your units of limited partnership interest of your
partnership you transfer to us, whether you dispose of all of your units and
whether you have available suspended passive losses, credits or other tax items
to offset any gain recognized as a result of your sale of your units of limited
partnership interest of your partnership. Because the tax consequences of
tendering units will not be the same for everyone, you should consult your tax
advisor to determine the tax consequences of the offer to you.
LOSS OF FUTURE DISTRIBUTIONS FROM YOUR PARTNERSHIP
If you tender your units in response to our offer, you will transfer to us
all right, title and interest in and to all of the units we accept, and the
right to receive all distributions in respect of such units on and after the
date on which we accept such units for purchase. Accordingly, for any units that
we acquire from you, you will not receive any future distributions from
operating cash flow of your partnership or upon a sale or refinancing of
properties owned by your partnership.
POSSIBLE INCREASE IN CONTROL OF YOUR PARTNERSHIP BY US
Decisions with respect to the day-to-day management of your partnership are
the responsibility of the general partner. Because the general partner of your
partnership is our affiliate, we control the management of your partnership.
Under your partnership's agreement of limited partnership, limited partners
holding a majority of the outstanding units must approve certain extraordinary
transactions, including the removal of the general partner, the addition of a
new general partner, most amendments to the partnership agreement and the sale
of all or substantially all of your partnership's assets. If we acquire all the
units we are tendering for we
3
<PAGE> 6
will own slightly less than a majority of the outstanding units and will have
the ability to substantially influence any vote of the limited partners.
RECOGNITION OF GAIN RESULTING FROM POSSIBLE FUTURE REDUCTION IN YOUR PARTNERSHIP
LIABILITIES
Generally, a decrease in your share of partnership liabilities is treated,
for Federal income tax purposes, as a deemed cash distribution. Although no
general partner of your partnership has any current plan or intention to reduce
the liabilities of your partnership, it is possible that future economic,
market, legal, tax or other considerations may cause a general partner to reduce
the liabilities of your partnership. If you retain all or a portion of your
units of limited partnership interest, and the liabilities of your partnership
were to be reduced, you will be treated as receiving a hypothetical distribution
of cash resulting from a decrease in your share of the liabilities of the
partnership. Any such hypothetical distribution of cash would be treated as a
nontaxable return of capital to the extent of your adjusted tax basis in your
units and thereafter as gain.
RISK OF INABILITY TO TRANSFER UNITS FOR 12-MONTH PERIOD
Your partnership's agreement of limited partnership prohibits any transfer
of an interest if such transfer, together with all other transfers during the
preceding 12 months, would cause 50% or more of the total interest in capital
and profits of your partnership to be transferred within such 12-month period.
If we acquire a significant percentage of the interest in your partnership, you
may not be able to transfer your units for a 12-month period following our
offer.
POTENTIAL DELAY IN PAYMENT
We reserve the right to extend the period of time during which our offer is
open and thereby delay acceptance for payment of any tendered units. The offer
may be extended indefinitely and no payment will be made in respect of tendered
units until the expiration of the offer and acceptance of units for payment.
THE OFFER
SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE; PRORATION.
Upon the terms and subject to the conditions of the offer, we will accept
(and thereby purchase) up to 7,738.38 units that are validly tendered on or
prior to the expiration date and not withdrawn in accordance with the procedures
set forth in "The Offer -- Section 4." For purposes of the offer, the term
"expiration date" shall mean 5:00 p.m., New York City time, on August 19, 1999,
unless we in our sole discretion shall have extended the period of time for
which the offer is open, in which event the term "expiration date" shall mean
the latest time and date on which the offer, as extended by us, shall expire.
See "The Offer -- Section 5" for a description of our right to extend the period
of time during which the offer is open and to amend or terminate the offer.
The purchase price per unit will automatically be reduced by the aggregate
amount of distributions per unit, if any, made by your partnership to you on or
after the commencement of our offer and prior to the date on which we acquire
your units pursuant to our offer.
If, prior to the expiration date, we increase the consideration offered to
limited partners pursuant to the offer, the increased consideration will be paid
for all units accepted for payment pursuant to the offer, whether or not the
units were tendered prior to the increase in consideration.
If more than 7,738.38 units are validly tendered prior to the expiration
date and not properly withdrawn prior to the expiration date in accordance with
the procedures specified in Section 4, we will, upon the terms and subject to
the conditions of the offer, accept for payment and pay for an aggregate of
7,738.38 of the units so tendered, pro rata according to the number of units
validly tendered by each limited partner and not properly withdrawn on or prior
to the expiration date, with appropriate adjustments to avoid purchases of
fractional units. If the number of units validly tendered and not properly
withdrawn on or prior to the
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expiration date is less than or equal to 7,738.38 units, we will purchase all
units so tendered and not withdrawn, upon the terms and subject to the
conditions of the offer.
If proration of tendered units is required, then, subject to our obligation
under Rule 14e-1(c) under the Securities Exchange Act of 1934 (the "Exchange
Act") to pay limited partners the purchase price in respect of units tendered or
return those units promptly after termination or withdrawal of the offer, we do
not intend to pay for any units accepted for payment pursuant to the offer until
the final proration results are known. Notwithstanding any such delay in
payment, no interest will be paid on the cash offer price.
The offer is conditioned on satisfaction of certain conditions. THE OFFER
IS CONDITIONED UPON A MINIMUM OF 35% OF THE UNITS BEING TENDERED. See "The
Offer -- Section 17," which sets forth in full the conditions of the offer. We
reserve the right (but in no event shall we be obligated), in our reasonable
discretion, to waive any or all of those conditions. If, on or prior to the
expiration date, any or all of the conditions have not been satisfied or waived,
we reserve the right to (i) decline to purchase any of the units tendered,
terminate the offer and return all tendered units to tendering limited partners,
(ii) waive all the unsatisfied conditions and purchase all units validly
tendered, (iii) extend the offer and, subject to the withdrawal rights of
limited partners, retain the units that have been tendered during the period or
periods for which the offer is extended, or (iv) amend the offer. The transfer
of units will be effective April 1, 1999.
This offer is being mailed to the persons shown by your partnership's
records to have been limited partners or, in the case of units owned of record
by Individual Retirement Accounts and qualified plans, beneficial owners of
units, as of July 22, 1999.
SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS.
Upon the terms and subject to the conditions of the offer, we will
purchase, by accepting for payment, and will pay for, up to 7,738.38 units
validly tendered as promptly as practicable following the expiration date. A
tendering beneficial owner of units whose units are owned of record by an
Individual Retirement Account or other qualified plan will not receive direct
payment of the offer price; rather, payment will be made to the custodian of
such account or plan. In all cases, payment for units purchased pursuant to the
offer will be made only after timely receipt by the Information Agent of a
properly completed and duly executed letter of transmittal and other documents
required by the letter of transmittal. See "The Offer -- Section 3." UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE OFFER PRICE BY REASON OF ANY DELAY IN
MAKING SUCH PAYMENT.
We will, upon the terms and subject to the conditions of the offer, accept
for payment and pay for up to 7,738.38 units, with appropriate adjustments to
avoid purchases that would violate the agreement of limited partnership of your
partnership and any relevant procedures or regulations promulgated by the
general partner. Accordingly, in some circumstances, we may accept an assignment
of your right to receive distributions and other payments in respect of the
units and defer, perhaps indefinitely, the transfer of ownership of units on the
partnership books.
For purposes of the offer, we will be deemed to have accepted for payment
pursuant to the offer, and thereby purchased, validly tendered units, if, as and
when we give verbal or written notice to the Information Agent of our acceptance
of those units for payment pursuant to the offer. Payment for units accepted for
payment pursuant to the offer will be made through the Information Agent, which
will act as agent for tendering limited partners for the purpose of receiving
cash payments from us and transmitting cash payments to tendering limited
partners.
If any tendered units are not accepted for payment by us for any reason,
the letter of transmittal with respect to such units not purchased may be
destroyed by us or the Information Agent. If, for any reason, acceptance for
payment of, or payment for, any units tendered pursuant to the offer is delayed
or we are unable to accept for payment, purchase or pay for units tendered
pursuant to the offer, then, without prejudice to our rights under "The
Offer -- Section 17," the Information Agent may, nevertheless, on our behalf
retain tendered units, and those units may not be withdrawn except to the extent
that the tendering limited partners are entitled to withdrawal rights as
described in "The Offer -- Section 4;" subject, however, to our obligation
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under Rule 14e-1(c) under the Exchange Act, to pay you the offer price in
respect of units tendered or return those units promptly after termination or
withdrawal of the offer.
We reserve the right to transfer or assign, in whole or in part, to one or
more of our affiliates, the right to purchase units tendered pursuant to the
offer, but no such transfer or assignment will relieve us of our obligations
under the offer or prejudice your rights to receive payment for units validly
tendered and accepted for payment pursuant to the offer.
SECTION 3. PROCEDURE FOR TENDERING UNITS.
Valid Tender. To validly tender units pursuant to the offer, a properly
completed and duly executed letter of transmittal and any other documents
required by such letter of transmittal must be received by the Information
Agent, at one of its addresses set forth on the back cover of this offer to
purchase, on or prior to the expiration date. You may tender all or any portion
of your units. No alternative, conditional or contingent tenders will be
accepted.
Signature Requirements. If the letter of transmittal is signed by the
registered holder of a unit and payment is to be made directly to that holder,
then no signature guarantee is required on the letter of transmittal. Similarly,
if a unit is tendered for the account of a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc. or a commercial bank, savings bank, credit union, savings and loan
association or trust company having an office, branch or agency in the United
States (each an "Eligible Institution"), no signature guarantee is required on
the letter of transmittal. However, in all other cases, all signatures on the
letter of transmittal must be guaranteed by an Eligible Institution.
In order for you to tender in the offer, your units must be validly
tendered and not withdrawn on or prior to the expiration date.
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS IS AT YOUR OPTION AND RISK AND DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE INFORMATION AGENT. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
Appointment as Proxy; Power of Attorney. By executing the letter of
transmittal, you are irrevocably appointing us and our designees as your proxy,
in the manner set forth in the letter of transmittal, each with full power of
substitution, to the fullest extent of the your rights with respect to the units
tendered by you and accepted for payment by us. Each such proxy shall be
considered coupled with an interest in the tendered units. Such appointment will
be effective when, and only to the extent that, we accept the tendered unit for
payment. Upon such acceptance for payment, all prior proxies given by you with
respect to the units will, without further action, be revoked, and no subsequent
proxies may be given (and if given will not be effective). We and our designees
will, as to those units, be empowered to exercise all voting and other rights as
a limited partner as we, in our sole discretion, may deem proper at any meeting
of limited partners, by written consent or otherwise. We reserve the right to
require that, in order for units to be deemed validly tendered, immediately upon
our acceptance for payment for the units, we must be able to exercise full
voting rights with respect to the units, including voting at any meeting of
limited partners then scheduled or acting by written consent without a meeting.
By executing the letter of transmittal, you agree to execute all such documents
and take such other actions as shall be reasonably required to enable the units
tendered to be voted in accordance with our directions. The proxy and power of
attorney granted by you to us upon your execution of the letter of transmittal
will remain effective and be irrevocable for a period of ten years following the
termination of our offer.
By executing the letter of transmittal, you also irrevocably constitute and
appoint us and our managers and designees as your attorneys-in-fact, each with
full power of substitution, to the full extent of your rights with respect to
the units tendered by you and accepted for payment by us. Such appointment will
be effective when, and only to the extent that, we pay for your units. You agree
not to exercise any rights pertaining to the tendered units without our prior
consent. Upon such payment, all prior powers of attorney granted by you with
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respect to such units will, without further action, be revoked, and no
subsequent powers of attorney may be granted (and if granted will not be
effective). Pursuant to such appointment as attorneys-in-fact, we and our
managers and designees each will have the power, among other things, (i) to
transfer ownership of such units on the partnership books maintained by your
general partner (and execute and deliver any accompanying evidences of transfer
and authenticity it may deem necessary or appropriate in connection therewith),
(ii) upon receipt by the Information Agent of the offer consideration, to become
a substituted limited partner, to receive any and all distributions made by your
partnership on or after the date on which we acquire such units, and to receive
all benefits and otherwise exercise all rights of beneficial ownership of such
units in accordance with the terms of our offer, (iii) to execute and deliver to
the general partner of your partnership a change of address form instructing the
general partner to send any and all future distributions to which we are
entitled pursuant to the terms of the offer in respect of tendered units to the
address specified in such form, and (iv) to endorse any check payable to you or
upon your order representing a distribution to which we are entitled pursuant to
the terms of our offer, in each case, in your name and on your behalf.
Assignment of Interest in Future Distributions. By executing the letter of
transmittal, you will irrevocably assign to us and our assigns all of your
right, title and interest in and to any and all distributions made by your
partnership from any source and of any nature, including, without limitation,
distributions in the ordinary course, distributions from sales of assets,
distributions upon liquidation, winding-up, or dissolution, payments in
settlement of existing or future litigation, and all other distributions and
payments from and after the expiration date of our offer, in respect of the
units tendered by you and accepted for payment and thereby purchased by us. If,
after the unit is accepted for payment and purchased by us, you receive any
distribution from any source and of any nature, including, without limitation,
distributions in the ordinary course, distributions from sales of assets,
distributions upon liquidation, winding-up or dissolution, payments in
settlement of existing or future litigation and all other distributions and
payments, from your partnership in respect of such unit, you will agree to
forward promptly such distribution to us.
Determination of Validity; Rejection of Units; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of units pursuant to our offer will be determined by us, in our reasonable
discretion, which determination shall be final and binding on all parties. We
reserve the absolute right to reject any or all tenders of any particular unit
determined by us not to be in proper form or if the acceptance of or payment for
that unit may, in the opinion of our counsel, be unlawful. We also reserve the
absolute right to waive or amend any of the conditions of the offer that we are
legally permitted to waive as to the tender of any particular unit and to waive
any defect or irregularity in any tender with respect to any particular unit of
any particular limited partner. Our interpretation of the terms and conditions
of the offer (including the letter of transmittal) will be final and binding on
all parties. No tender of units will be deemed to have been validly made unless
and until all defects and irregularities have been cured or waived. Neither us,
the Information Agent, nor any other person will be under any duty to give
notification of any defects or irregularities in the tender of any unit or will
incur any liability for failure to give any such notification.
Backup Federal Income Tax Withholding. To prevent the possible application
of back-up Federal income tax withholding of 31% with respect to payment of the
offer price, you may have to provide us with your correct taxpayer
identification number. See the instructions to the letter of transmittal and
"The Offer -- Section 6."
FIRPTA Withholding. To prevent the withholding of Federal income tax in an
amount equal to 10% of the amount realized on the disposition (the amount
realized is generally the offer price plus the partnership liabilities allocable
to each unit purchased), you must certify that you are not a foreign person if
you tender units. See the instructions to the letter of transmittal and "The
Offer -- Section 6."
Transfer Taxes. The amount of any transfer taxes (whether imposed on the
registered holder of units or any person) payable on account of the transfer to
such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is submitted.
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Binding Agreement. A tender of a unit pursuant to any of the procedures
described above and the acceptance for payment of such unit will constitute a
binding agreement between the tendering unitholder and us on the terms set forth
in this offer to purchase and the related letter of transmittal.
SECTION 4. WITHDRAWAL RIGHTS.
You may withdraw tendered units at any time prior to the expiration date or
on or after September 22, 1999, if the units have not been previously accepted
for payment.
For a withdrawal to be effective, a written notice of withdrawal must be
timely received by the Information Agent at one of its addresses set forth on
the back cover of the offer to purchase. Any such notice of withdrawal must
specify the name of the person who tendered, the number of units to be withdrawn
and the name of the registered holder of such units, if different from the
person who tendered. In addition, the notice of withdrawal must be signed by the
person who signed the letter of transmittal in the same manner as the letter of
transmittal was signed.
If purchase of, or payment for, a unit is delayed for any reason, or if we
are unable to purchase or pay for a unit for any reason, then, without prejudice
to our rights under the offer, tendered units may be retained by the Information
Agent; subject, however, to our obligation, pursuant to Rule 14e-1(c) under the
Exchange Act, to pay the offer price in respect of units tendered or return
those units promptly after termination or withdrawal of our offer.
Any units properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of our offer. However, withdrawn units may be
re-tendered at any time prior to the expiration date by following the procedures
described in "The Offer -- Section 3."
All questions as to the validity and form (including time of receipt) of
notices of withdrawal will be determined by us in our reasonable discretion,
which determination shall be final and binding on all parties. Neither we, the
Information Agent, nor any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT.
We expressly reserve the right, in our reasonable discretion, at any time
and from time to time, (i) to extend the period of time during which our offer
is open and thereby delay acceptance for payment of, and payment for, any unit,
(ii) to terminate the offer and not accept any units not theretofore accepted
for payment or paid for if any of the conditions to the offer are not satisfied
or if any event occurs that might reasonably be expected to result in a failure
to satisfy such conditions, (iii) upon the occurrence of any of the conditions
specified in "The Offer -- Section 17," to delay the acceptance for payment of,
or payment for, any units not already accepted for payment or paid for, and (iv)
to amend our offer in any respect (including, without limitation, by increasing
the consideration offered, increasing or decreasing the units being sought, or
both). Notice of any such extension, termination or amendment will promptly be
disseminated to you in a manner reasonably designed to inform you of such
change. In the case of an extension of the offer, the extension will be followed
by a press release or public announcement which will be issued no later than
9:00 a.m., New York City time, on the next business day after the scheduled
expiration date of our offer, in accordance with Rule 14e-1(d) under the
Exchange Act.
If we extend the offer, or if we delay payment for a unit (whether before
or after its acceptance for payment) or are unable to pay for a unit pursuant to
our offer for any reason, then, without prejudice to our rights under the offer,
the Information Agent may retain tendered units and those units may not be
withdrawn except to the extent tendering unitholders are entitled to withdrawal
rights as described in "The Offer -- Section 4;" subject, however, to our
obligation, pursuant to Rule 14e-1(c) under the Exchange Act, to pay the offer
price in respect of units tendered or return those units promptly after
termination or withdrawal of the offer.
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If we make a material change in the terms of our offer, or if we waive a
material condition to our offer, we will extend the offer and disseminate
additional tender offer materials to the extent required by Rule 14e-1 under the
Exchange Act. The minimum period during which the offer must remain open
following any material change in the terms of the offer, other than a change in
price or a change in percentage of securities sought or a change in any dealer's
soliciting fee, if any, will depend upon the facts and circumstances, including
the materiality of the change. With respect to a change in price or, subject to
certain limitations, a change in the percentage of securities sought or a change
in any dealer's soliciting fee, if any, a minimum of ten business days from the
date of such change is generally required to allow for adequate dissemination to
unitholders. Accordingly, if prior to the expiration date, we increase (other
than increases of not more than two percent of the outstanding units) or
decrease the number of units being sought, or increase or decrease the offer
price, and if the offer is scheduled to expire at any time earlier than the
tenth business day after the date that notice of such increase or decrease is
first published, sent or given to unitholders, the offer will be extended at
least until the expiration of such ten business days. As used in the offer to
purchase, "business day" means any day other than a Saturday, Sunday or a
Federal holiday, and consists of the time period from 12:01 a.m. through 12:00
midnight, New York City time.
SECTION 6. CERTAIN FEDERAL INCOME TAX MATTERS.
The following summary is a general discussion of certain of the United
States federal income tax consequences of the offer that may be relevant to (i)
unitholders who tender some or all of their units for cash pursuant to our
offer, and (ii) unitholders who do not tender any of their units pursuant to our
offer. This discussion is based on the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code"), Treasury regulations, rulings issued by the
Internal Revenue Service (the "IRS"), and judicial decisions, all as of the date
of this offer to purchase. All of the foregoing are subject to change or
alternative construction, possibly with retroactive effect, and any such change
or alternative construction could affect the continuing accuracy of this
summary. This summary is based on the assumption that your partnership is
operated in accordance with its organizational documents including its
certificate of limited partnership and agreement of limited partnership. This
summary is for general information only and does not purport to discuss all
aspects of United States federal income taxation which may be important to a
particular person in light of its investment or tax circumstances, or to certain
types of investors subject to special tax rules (including financial
institutions, broker-dealers, insurance companies, and, except to the extent
discussed below, tax-exempt organizations and foreign investors, as determined
for United States federal income tax purposes), nor (except as otherwise
expressly indicated) does it describe any aspect of state, local, foreign or
other tax laws. This summary assumes that the units constitute capital assets in
the hands of the unitholders (generally, property held for investment). No
advance ruling has been or will be sought from the IRS regarding any matter
discussed in this offer to purchase. Further, no opinion of counsel has been
obtained with regard to the offer.
THE UNITED STATES FEDERAL INCOME TAX TREATMENT OF A UNITHOLDER
PARTICIPATING IN THE OFFER DEPENDS IN SOME INSTANCES ON DETERMINATIONS OF FACT
AND INTERPRETATIONS OF COMPLEX PROVISIONS OF UNITED STATES FEDERAL INCOME TAX
LAW FOR WHICH NO CLEAR PRECEDENT OR AUTHORITY MAY BE AVAILABLE. ACCORDINGLY, YOU
SHOULD CONSULT YOUR TAX ADVISOR REGARDING THE UNITED STATES FEDERAL, STATE,
LOCAL, AND FOREIGN TAX CONSEQUENCES OF SELLING THE LIMITED PARTNERSHIP INTERESTS
IN YOUR PARTNERSHIP REPRESENTED BY UNITS PURSUANT TO OUR OFFER OR OF A DECISION
NOT TO SELL IN LIGHT OF YOUR SPECIFIC TAX SITUATION.
Tax Consequences to Limited Partners Tendering Units for Cash. You will
recognize gain or loss on a sale of a unit of limited partnership of your
partnership equal to the difference between (i) your "amount realized" on the
sale and (ii) your adjusted tax basis in the unit sold. The "amount realized"
with respect to a unit of limited partnership of your partnership will be equal
to the sum of the amount of cash received by you for the unit sold pursuant to
the offer plus the amount of partnership liabilities allocable to the unit (as
determined under Section 752 of the Internal Revenue Code). Thus, your taxable
gain and tax liability resulting from a sale of a unit of limited partnership of
your partnership could exceed the cash received upon such sale.
Adjusted Tax Basis. If you acquired your units of limited partnership of
your partnership for cash, your initial tax basis in such units was generally
equal to your cash investment in your partnership increased by your
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share of partnership liabilities at the time you acquired such units. Your
initial tax basis generally has been increased by (1) your share of partnership
income and gains, and (2) any increases in your share of partnership
liabilities, and has been decreased (but not below zero) by (i) your share of
partnership cash distributions, (ii) any decreases in your share of partnership
liabilities, (iii) your share of partnership losses, and (iv) your share of
nondeductible partnership expenditures that are not chargeable to capital, and
(3) any additional capital contributions made by you. For purposes of
determining your adjusted tax basis in units of limited partnership of your
partnership immediately prior to a disposition of your units, your adjusted tax
basis in your units will include your allocable share of partnership income,
gain or loss for the taxable year of disposition. If your adjusted tax basis is
less than your share of partnership liabilities (e.g., as a result of the effect
of net loss allocations and/or distributions exceeding the cost of your unit),
your gain recognized with respect to a unit of limited partnership of your
partnership pursuant to the offer will exceed the cash proceeds realized upon
the sale of such unit.
Character of Gain or Loss Recognized Pursuant to the Offer. Except as
described below, the gain or loss recognized by you on a sale of a unit of
limited partnership of your partnership pursuant to the offer generally will be
treated as a long-term capital gain or loss if you held the unit for more than
one year. Long-term capital gains recognized by individuals and certain other
noncorporate taxpayers generally will be subject to a maximum United States
federal income tax rate of 20%. If the amount realized with respect to a unit of
limited partnership of your partnership that is attributable to your share of
"unrealized receivables" of your partnership exceeds the tax basis attributable
to those assets, such excess will be treated as ordinary income. Among other
things, "unrealized receivables" include depreciation recapture for certain
types of property. In addition, the maximum United States federal income tax
rate applicable to persons who are noncorporate taxpayers for net capital gains
attributable to the sale of depreciable real property (which may be determined
to include an interest in a partnership such as your units) held for more than
one year is currently 25% (rather than 20%) with respect to that portion of the
gain attributable to depreciation deductions previously taken on the property.
If you tender a unit of limited partnership interest of your partnership in
the offer, you will be allocated a share of partnership taxable income or loss
for the year of tender with respect to any units sold. You will not receive any
future distributions on units of limited partnership interest of your
partnership tendered on or after the date on which such units are accepted for
purchase and, accordingly, you may not receive any distributions with respect to
such accreted income. Such allocation and any partnership cash distributions to
you for that year will affect your adjusted tax basis in your unit of limited
partnership interest of your partnership and, therefore, the amount of your
taxable gain or loss upon a sale of a unit pursuant to the offer.
Passive Activity Losses. The passive activity loss rules of the Internal
Revenue Code limit the use of losses derived from passive activities, which
generally include investments in limited partnership interests such as the units
of limited partnership interest of your partnership. An individual, as well as
certain other types of investors, generally cannot use losses from passive
activities to offset nonpassive activity income received during the taxable
year. Passive losses that are disallowed for a particular tax year are
"suspended" and may be carried forward to offset passive activity income earned
by the investor in future taxable years. In addition, such suspended losses may
be claimed as a deduction, subject to other applicable limitations, upon a
taxable disposition of the investor's interest in such activity.
Accordingly, if your investment in your units is treated as a passive
activity, you may be able to reduce gain from the sale of your units of limited
partnership interest of your partnership with passive losses in the manner
described below. If you sell all or a portion of your units of limited
partnership interest of your partnership pursuant to the offer and recognize a
gain on your sale, you will generally be entitled to use your current and
"suspended" passive activity losses (if any) from your partnership and other
passive sources to offset that gain. In general, if you sell all or a portion of
your units of limited partnership interest of your partnership pursuant to the
offer and recognize a loss on such sale, you will be entitled to deduct that
loss currently (subject to other applicable limitations) against the sum of your
passive activity income from your partnership for that year (if any) plus any
passive activity income from other sources for that year. If you sell all of
your units pursuant to the offer, the balance of any "suspended" losses from
your partnership that were not otherwise utilized against passive activity
income as described in the two preceding sentences will
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generally no longer be suspended and will generally therefore be deductible
(subject to any other applicable limitations) by you against any other income
for that year, regardless of the character of that income. You are urged to
consult your tax advisor concerning whether, and the extent to which, you have
available "suspended" passive activity losses from your partnership or other
investments that may be used to reduce gain from the sale of units pursuant to
the offer.
Information Reporting, Backup Withholding and FIRPTA. If you tender any
units, you must report the transaction by filing a statement with your United
States federal income tax return for the year of the tender which provides
certain required information to the IRS. To prevent the possible application of
back-up United States federal income tax withholding of 31% with respect to the
payment of the offer consideration, you are generally required to provide us
with your correct taxpayer identification number. See the instructions to the
letter of transmittal.
Gain realized by a foreign person on the sale of a unit pursuant to the
offer will be subject to United States federal income tax under the Foreign
Investment in Real Property Tax Act of 1980. Under these provisions of the
Internal Revenue Code, the transferee of an interest held by a foreign person in
a partnership which owns United States real property generally is required to
deduct and withhold 10% of the amount realized on the disposition. Amounts
withheld would be creditable against a foreign person's United States federal
income tax liability and, if in excess thereof, a refund could be claimed from
the Internal Revenue Service by filing a United States income tax return. See
the instructions to the letter of transmittal.
Tax Consequences to Non-Tendering and Partially-Tendering Limited
Partners. Section 708 of the Internal Revenue Code provides that if there is a
sale or exchange of 50% or more of the total interest in capital and profits of
a partnership within any 12-month period, such partnership terminates for United
States federal income tax purposes. It is possible that our acquisition of units
pursuant to the offer alone or in combinations with other transfers of interests
in your partnership could result in such a termination of your partnership. If
your partnership is deemed to terminate for tax purposes, the following United
States federal income tax events will be deemed to occur: the terminated
partnership will be deemed to have contributed all of its assets (subject to its
liabilities) to a new partnership in exchange for an interest in the new
partnership and, immediately thereafter, the old partnership will be deemed to
have distributed interests in the new partnership to the remaining limited
partners in proportion to their respective interests in the old partnership in
liquidation of the old partnership.
A remaining limited partner will generally not recognize any gain or loss
upon the deemed distribution or upon the deemed contribution and the capital
accounts of the remaining limited partners in the old partnership will carry
over intact into the new partnership. A termination may change (and possibly
shorten) a remaining partner's holding period with respect to its retained units
in your partnership for United States federal income tax purposes.
The new partnership's adjusted tax basis in its assets will generally be
the same as the old partnership's basis in such assets immediately before the
termination. A termination may also subject the assets of the new partnership to
depreciable lives in excess of those currently applicable to the old
partnership. This would generally decrease the annual average depreciation
deductions allocable to the remaining limited partners for a number of years
following consummation of the offer (thereby increasing the taxable income
allocable to their units in each such year), but would have no effect on the
total depreciation deductions available over the useful lives of the assets of
your partnership.
Elections as to certain tax matters previously made by the old partnership
prior to termination will not be applicable to the new partnership unless the
new partnership chooses to make the same elections.
Additionally, upon a termination for tax purposes, the old partnership's
taxable year will close for all limited partners. In the case of a remaining
limited partner or a partially tendering limited partner reporting on a tax year
other than a calendar year, the closing of the partnership's taxable year may
result in more than 12 months' taxable income or loss of the old partnership
being includible in such limited partner's taxable income for the year of
termination.
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SECTION 7. EFFECTS OF THE OFFER.
Future Control by AIMCO. Because the general partner of your partnership is
our subsidiary, we have control over the management of your partnership. If we
are successful in acquiring 45% of the units pursuant to the offer, we will be
able to significantly influence or control the outcome of all voting decisions
with respect to your partnership. In general, we will vote the units owned by us
in whatever manner we deem to be in our best interests, which may not be in the
interest of other limited partners. This could (1) prevent non-tendering limited
partners from taking action they desire but that we oppose and (2) enable us to
take action desired by us but opposed by non-tendering limited partners. We also
own the company that manages the property owned by your partnership. In the
event that we acquire a substantial number of units pursuant to the offer,
removal of a property manager may become more difficult or impossible.
Distributions to Us. If we acquire units in the offer, we will participate
in any subsequent distributions to limited partners to the extent of the units
purchased.
Partnership Status. We believe our purchase of units should not adversely
affect the issue of whether your partnership is classified as a partnership for
Federal income tax purposes.
Business. Our offer will not affect the operation of the properties owned
by your partnership's property. We will continue to control the general partner
of your partnership and the property manager, both of which will remain the
same. Consummation of the offer will not affect your agreement of limited
partnership, the operations of your partnership, the business and properties
owned by your partnership, the management compensation payable to your general
partner or any other matter relating to your partnership, except that it would
result in us increasing our ownership of units. We have no current intention of
changing the fee structure for your general partner or the manager of your
partnership's property.
Effect on Trading Market; Registration Under 12(g) of the Exchange Act. If
a substantial number of units are purchased pursuant to the offer, the result
will be a reduction in the number of limited partners in your partnership. In
the case of certain kinds of equity securities, a reduction in the number of
securityholders might be expected to result in a reduction in the liquidity and
volume of activity in the trading market for the security. In this case,
however, there is no established public trading market for the units and,
therefore, we do not believe a reduction in the number of limited partners will
materially further restrict your ability to find purchasers for your units
through secondary market transactions.
The units are registered under Section 12(g) of the Exchange Act, which
means, among other things, that your partnership is required to file periodic
reports with the SEC and to comply with the SEC's proxy rules. We do not expect
or intend that consummation of the offer will cause the units to cease to be
registered under Section 12(g) of the Exchange Act. If the units were to be held
by fewer than 300 persons, your partnership could apply to de-register the units
under the Exchange Act. Because the units are widely-held, however, we believe
that, even if we purchase the maximum number of units in the offer, the units
will be held of record by more than 300 persons.
SECTION 8. INFORMATION CONCERNING US AND CERTAIN OF OUR AFFILIATES.
We are AIMCO Properties, L.P., a Delaware limited partnership. Together
with our subsidiaries, we conduct substantially all of the operations of
Apartment Investment and Management Company, a Maryland corporation ("AIMCO").
AIMCO is a real estate investment trust that owns and manages multifamily
apartment properties throughout the United States. Based on apartment unit data
compiled by the National Multi-Housing Council, we believe that, as of March 31,
1999, AIMCO was one of the largest owners and managers of multifamily apartment
properties in the United States, with a total portfolio of 373,409 apartment
units in 2,071 properties located in 49 states, the District of Columbia and
Puerto Rico. AIMCO's Class A Common Stock is listed and traded on the New York
Stock Exchange under the symbol "AIV." As of March 31, 1999, AIMCO:
- owned or controlled 63,069 units in 240 apartment properties;
- held an equity interest in 168,817 units in 891 apartment properties; and
- managed 141,523 units in 940 apartment properties for third party owners
and affiliates.
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<PAGE> 15
Our general partner is AIMCO-GP, Inc., which is a wholly owned subsidiary
of AIMCO. Our principal executive offices are located at 1873 South Bellaire
Street, Denver, Colorado 80222, and our telephone number is (303) 757-8101.
The names, positions and business addresses of the directors and executive
officers of AIMCO and your general partner (which is our subsidiary) as well as
a biographical summary of the experience of such persons for the past five years
or more, are set forth on Annex I attached hereto and are incorporated herein by
reference.
We and AIMCO are both subject to the information and reporting requirements
of the Exchange Act and, in accordance therewith, file reports and other
information with the Securities and Exchange Commission relating to our
business, financial condition and other matters. Such reports and other
information may be inspected at the public reference facilities maintained by
the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549;
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661; and 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material can
also be obtained from the Public Reference Room of the SEC in Washington, D.C.
at prescribed rates. The SEC also maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
In addition, information filed by AIMCO with the New York Stock Exchange may be
inspected at the offices of the New York Stock Exchange at 20 Broad Street, New
York, New York 10005.
For more information regarding AIMCO Properties, L.P., please refer to the
Annual Report on Form 10-K for the year ended December 31, 1998, and the
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1999
(particularly the management's discussion and analysis of financial condition
and results of operations) and other reports and documents filed by it with the
SEC.
Except as described below in "The Offer -- Section 9" and "The
Offer -- Section 11," neither we nor, to the best of our knowledge, any of the
persons listed on Annex I attached hereto, (i) beneficially own or have a right
to acquire any units, (ii) have effected any transaction in the units in the
past 60 days, or (iii) have any contract, arrangement, understanding or
relationship with any other person with respect to any securities of your
partnership, including, but not limited to, contracts, arrangements,
understandings or relationships concerning transfer or voting thereof, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies (except for
previous tender offers we may have conducted for units).
SECTION 9. BACKGROUND AND REASONS FOR THE OFFER.
General. We are in the business of acquiring direct and indirect interests
in apartment properties such as the properties owned by your partnership. Our
offer provides us with an opportunity to increase our ownership interest in your
partnership's property while providing you and other investors with an
opportunity to liquidate your current investment.
On October 1, 1998, AIMCO merged (the "Insignia Merger") with Insignia
Financial Group, Inc. ("Insignia"). As a result of the Insignia Merger, AIMCO
acquired approximately 51% of the outstanding common shares of beneficial
interest of Insignia Properties Trust ("IPT"). The general partner of your
partnership is a wholly owned subsidiary of IPT. Through the Insignia Merger,
AIMCO also acquired a majority ownership interest in the entity that manages the
property owned by your partnership. On October 31, 1998, IPT and AIMCO entered
into an agreement and plan of merger, dated as of October 1, 1998, pursuant to
which IPT merged with AIMCO on February 26, 1999 (the "IPT Merger"). AIMCO does
not currently own any of the outstanding limited partnership units of your
partnership.
One of the reasons we chose to acquire Insignia is that we would be able to
make the tender offers to acquire limited partnership interests of some of the
limited partnerships formerly controlled or managed by Insignia (the "Insignia
Partnerships"). Such offers would provide liquidity for the limited partners of
the Insignia Partnerships, and would provide AIMCO Properties, L.P. with a
larger asset and capital base and
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<PAGE> 16
increased diversification. As of the date of this offering, AIMCO Properties,
L.P. proposes to make offers to approximately 90 of the Insignia Partnerships,
including your partnership.
During our negotiations with Insignia in early 1998, we decided that if the
merger with Insignia were consummated, we could also benefit from making offers
for limited partnership interests in the Insignia Partnerships. While some of
the Insignia Partnerships are public partnerships and information is publicly
available on such partnerships for weighing the benefits of making a tender
offer, many of the partnerships are private partnerships and information about
such partnerships comes principally from the general partner. Our control of the
general partner makes it possible to obtain access to such information. Further,
such control also means that we control the operations of the partnerships and
their properties. Insignia did not propose that we conduct such tender offers,
rather we initiated the offers on our own. We determined in June of 1998 that if
the merger with Insignia were consummated, we would offer to limited partners of
certain of the Insignia Partnerships limited partnership units of AIMCO
Properties, L.P. and/or cash.
Prior Tender Offers. We are aware that tender offers may have been made by
unaffiliated third parties to acquire units in your partnership in exchange for
cash. We are unaware of the amounts offered, terms, tendering parties or number
of units involved in these tender offers. In connection with tender offers made
by Insignia affiliates with respect to partnerships for which we are making
offers, some limited partners filed lawsuits. We are not aware of any merger,
consolidation or other combination involving any of the Insignia Partnerships,
or any acquisitions of any of such partnerships or a material amount of the
assets of such partnerships.
Certain Litigation. On March 24, 1998, certain persons claiming to own
limited partner interests in certain of the limited partnerships for which our
subsidiaries act as general partner (excluding your partnership) filed a
purported class and derivative action in California Superior Court in the County
of San Mateo against AIMCO, Insignia, the general partners of the partnerships,
certain persons and entities who purportedly formerly controlled the general
partners, and additional entities affiliated with and individuals who are
officers, directors and/or principals of several of the defendants. The
complaint contains allegations that, among other things, (i) the defendants
breached fiduciary duties owed to the plaintiffs, or aided and abetted in those
purported breaches, by selling or agreeing to sell their "fiduciary positions"
as stockholders, officers and directors of the general partners for a profit and
retaining said profit rather than distributing it to the plaintiffs; (ii) the
defendants breached fiduciary duties, or aided and abetted in those purported
breaches, by mismanaging the partnerships and misappropriating assets of the
partnerships by (a) manipulating the operations of the partnerships to depress
the trading price of limited partnership units of the partnerships; (b) coercing
and fraudulently inducing unitholders to sell units to certain of the defendants
at depressed prices; and (c) using the voting control obtained by purchasing
units at depressed prices to entrench certain of the defendants' positions of
control over the partnerships; and (iii) the defendants breached their fiduciary
duties to the plaintiffs by (a) selling assets of the partnerships such as
mailing lists of unitholders and (b) causing the general partners to enter into
exclusive arrangements with their affiliates to sell goods and services to the
general partners, the unitholders and tenants of properties owned by the
partnerships. The complaint also alleges that the foregoing allegations
constitute violations of various California securities, corporate and
partnership statutes, as well as conversion and common law fraud. The complaint
seeks unspecified compensatory and punitive damages, an injunction blocking the
sale of control of the general partners and a court order directing the
defendants to discharge their fiduciary duties to the plaintiffs. On June 25,
1998, the defendants filed motions seeking dismissal of the action. In lieu of
responding to the motion, plaintiffs have filed an amended complaint. On October
14, 1998, the AIMCO and Insignia defendants filed demurrers to the amended
complaint. The demurrers (which are requests to dismiss the action as a matter
of law) were heard on February 8, 1999, but no decision has been reached by the
Court. While no assurances can be given, we believe that the ultimate outcome of
this litigation will not have a material adverse effect on us.
Your Partnership's Bankruptcy Reorganization. Your partnership was formed
and syndicated its limited partnership units in the early 1980s. Although it
once held three parcels of real property, two were lost to foreclosure in
connection with your partnership's reorganization case under chapter 11 of the
United States
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<PAGE> 17
Bankruptcy Code. Your partnership's only remaining property is the 271-unit
Pelham Place apartment complex in Greenville, South Carolina.
Your partnership commenced its chapter 11 case in the United States
Bankruptcy Court for the Central District of California in 1987, and the court
confirmed its reorganization plan in October 1998. In connection with the plan,
certain holders of limited partnership units elected to make "additional capital
contributions" to finance the reorganization. Among other things, the plan
provided that the partnership would make distributions, to the extent its funds
permitted, on the 20th day of the 120th month after the plan became effective,
i.e. on October 20, 1998, as follows: first, to repay the additional capital
contributions; second, to repay the limited partners' original contributions,
except that the contributions of limited partners who did not make additional
capital contributions would be reduced to one-third of their original amount.
Under the plan, its provisions relating to distributions constitute amendments
to your partnership's agreement of limited partnership.
The plan did not specify how these payments would be financed but appeared
to contemplate the sale of your partnership's property. As explained below, your
general partner estimates that the proceeds of the property's sale would not
permit any distribution to limited partners. Accordingly, your general partner
has determined not to sell the property. In order to provide liquidity to the
limited partners, your general partner has arranged for us to offer to acquire
your units for cash.
Alternatives Considered by Your General Partner. Before we commenced this
offer, your general partner (which is our subsidiary) considered a number of
alternative transactions. The following is a brief discussion of the advantages
and disadvantages of these alternatives.
Liquidation
One alternative would be for the partnership to sell its assets, distribute
the net liquidation proceeds to its partners in accordance with the agreement of
limited partnership, and thereafter dissolve. Partners would be at liberty to
use the net liquidation proceeds after taxes for investment, business, personal
or other purposes, at their option. If your partnership were to sell its assets
and liquidate, you and your partners would not need to rely upon capitalization
of income or other valuation methods to estimate the fair market value of
partnership assets. Instead, such assets would be valued through negotiations
with prospective purchasers (in many cases unrelated third parties).
However, as discussed below under the heading "Valuation of Units," we
estimate that if your partnership sold its property, the net proceeds from the
sale would not permit any distribution at all to limited partners. Moreover, in
the opinion of your general partner (which is our subsidiary), the present time
may not be the most desirable time to sell the property in a private
transaction. Liquidation of the partnership assets may also trigger a
substantial prepayment penalty under the property's mortgage. Your general
partner believes it currently is in the best interest of your partnership to
continue holding the property.
Sale of Assets
Your partnership could sell its property and not liquidate. However, any
such sale would likely be a taxable transaction and, without a liquidating
distribution, would not provide limited partners with any cash to pay any tax
liabilities arising as a result thereof.
Alternative Transactions. Before we decided to make our offer, we
considered a number of alternative transactions, including merging your
partnership with us or another partnership. However, this alternative would
require the vote of the limited partners. If the transaction was approved, all
limited partners, including those who wish to continue to participate in the
ownership of your partnership's properties, would be forced to participate in
the transaction. If the transaction was not approved, all limited partners,
including those who would like to dispose of their investment in your
partnership's properties, would be forced to retain their investment. We also
considered an offer to exchange units in your partnership for units of AIMCO
Properties, L.P. However because of the expense and delay associated with making
such an exchange offer, we decided to
15
<PAGE> 18
make an offer for cash only. In addition, our historical experience has been
that most holders of limited partnership units, when given a choice, prefer
cash.
Determination of Offer Price. In establishing the offer price, we reviewed
certain publicly available information and certain information made available to
us by the general partner (which is our subsidiary) and our other affiliates,
including among other things: (i) the agreement of limited partnership, as
amended to date; (ii) the partnership's Annual Report on Form 10-KSB for the
year ended December 31, 1998; (iii) unaudited results of operations of the
partnership's property for the period since the beginning of the partnership's
current fiscal year; and (iv) the operating budget prepared by the property
manager with respect to the partnership's property for the year ending December
31, 1999. Our determination of the offer price was based on our review and
analysis of the foregoing information, the other financial information and the
analyses concerning the partnership summarized below.
Valuation of Units. We determined our offer price by estimating the value
of your partnership's property using the direct capitalization method. This
method involves applying a capitalization rate to your partnership's annual
property income. A capitalization rate is a percentage (rate of return),
commonly applied by purchasers of residential real estate to property income to
determine the present value of income property. The lower the capitalization
rate utilized the higher the value produced, and the higher the capitalization
rate utilized the lower the value produced. We used your partnership's property
income for the fiscal year ended December 31, 1998. Our method for selecting a
capitalization rate begins with each property being assigned a location and
condition rating (e.g., "A" for excellent, "B" for good, "C" for fair, and "D"
for poor). We then adjust the capitalization rate based on whether the mortgage
debt that the property is subject to bears interest at a rate above or below
7.5% per annum. Generally, for every 0.5% in excess of 7.5%, the capitalization
rate would be increased by 0.25%. The evaluation of a property's location and
condition, and the determination of an appropriate capitalization rate for a
property, is subjective in nature, and others evaluating the same property might
use a different capitalization rate and derive a different property value.
Property income is the difference between the revenues from the property
and related costs and expenses, excluding income derived from sources other than
its regular activities and before income deductions. Income deductions include
interest, income taxes, prior-year adjustments, charges to reserves, write-off
of intangibles, adjustments arising from major changes in accounting methods and
other material and nonrecurring items. In this respect, property income differs
from net income disclosed in the partnership's financial statements, which does
not exclude these income sources and deductions. The following is a
reconciliation of your partnership's property income for the year ended December
31, 1998, to your partnership's net operating income for the same period.
<TABLE>
<S> <C>
Net Income (Loss)......................................... $(95,000)
Other Non-Operating Expense............................... (66,000)
Depreciation.............................................. 224,000
Interest.................................................. 481,000
--------
Property Income........................................... $544,000
</TABLE>
Although the direct capitalization method is a widely accepted way of
valuing real estate, there are a number of other methods available to value real
estate, each of which may result in different valuations of a property. Further,
in applying the direct capitalization method, others may make different
assumptions and obtain different results. The proceeds that you would receive if
you sold your units to someone else or if your partnership were actually
liquidated might be higher than our offer price. We determined our offer price
as follows:
- First, we estimated the value of the property owned by your partnership
using the direct capitalization method. We selected capitalization rates
based on our experience in valuing similar properties. The lower the
capitalization rate applied to a property's income, the higher its value.
We considered local market sales information for comparable properties,
estimated actual capitalization rates (property income less capital
reserves divided by sales price) and then evaluated the property in light
of its relative competitive position, taking into account its location,
occupancy rate, overall property
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<PAGE> 19
condition and other relevant factors. We believe that arms-length
purchasers would base their purchase offers on capitalization rates
comparable to those used by us, however there is no single correct
capitalization rate and others might use different rates. We divided the
fiscal 1998 property income of $544,000 by the property's capitalization
rate of 11% to derive an estimated gross property value of $4,950,000.
- Second, we calculated the value of the equity of your partnership by
adding to the aggregate gross property value of the property owned by
your partnership, the value of the non-real estate assets of your
partnership, and deducting the liabilities of your partnership, including
mortgage debt and debt owed by your partnership to its general partner
(which is our subsidiary) or its affiliates after consideration of any
applicable subordination provisions affecting payment of such debt. We
deducted from this value certain other costs including required capital
expenditures, deferred maintenance, and closing costs to derive a net
equity value for your partnership of $0. Closing costs, which are
estimated to be 5% of the gross property value, include legal and
accounting fees, real property, transfer taxes, title and escrow costs
and broker's fees.
- Third, using this net equity value, we determined the proceeds that would
be paid to holders of units in the event of a liquidation of your
partnership, based on the terms of your partnership's agreement of
limited partnership. We believe that if your partnership was liquidated
there would not be enough value to fully discharge all known liabilities.
We have, however, decided to offer you $0.50 per unit.
<TABLE>
<S> <C>
Gross valuation of partnership properties................... $ 4,950,000
Plus: Cash and cash equivalents............................. 363,145
Plus: Other partnership assets, net of security deposits.... 470,646
Less: Mortgage debt, including accrued interest............. (5,708,110)
Less: Accounts payable and accrued expenses................. (13,198)
Less: Other liabilities..................................... (131,243)
-----------
Partnership valuation before taxes and certain costs........ $ (68,760)
Less: Disposition fees...................................... 0
Less: Extraordinary capital expenditures and deferred
maintenance............................................... (262,236)
Less: Closing costs......................................... (247,500)
-----------
Estimated net valuation of your partnership................. $ 0
Percentage of estimated net valuation allocated to holders
of units.................................................. 100%
-----------
Estimated net valuation of units............................ 0
Total number of units............................. 14,730
-----------
Estimated valuation per unit................................ $ 0
-----------
Cash consideration per unit................................. $ 0.50
-----------
</TABLE>
Comparison of Consideration to Alternative Consideration. To assist holders
of units in evaluating the offer, your general partner (which is our subsidiary)
has attempted to compare the offer price against: (a) prices at which the units
have sold in the secondary market; and (b) estimates of the value of the units
on a liquidation basis. The general partner of your partnership believes that
analyzing the alternatives in terms of estimated value, based upon currently
available data and, where appropriate, reasonable assumptions made in good
faith, establishes a reasonable framework for comparing alternatives. Since the
value of the consideration for alternatives to the offer is dependent upon
varying market conditions, no assurance can be given that the estimated values
reflect the range of possible values.
The results of these comparative analyses are summarized in the following
chart. You should bear in mind that the estimated values assigned to the
alternate forms of consideration are based on a variety of assumptions that have
been made by us. These assumptions relate to, among other things: the operating
results, if any, since December 31, 1998 as to income and expenses of each
property, other projected amounts and the capitalization rates that may be used
by prospective buyers if your partnership assets were to be liquidated.
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<PAGE> 20
In addition, these estimates are based upon certain information available
to your general partner (which is our subsidiary) at the time the estimates were
computed, and no assurance can be given that the same conditions analyzed by it
in arriving at the estimates of value would exist at the time of the offer. The
assumptions used have been determined by the general partner of your partnership
in good faith, and, where appropriate, are based upon current and historical
information regarding your partnership and current real estate markets, and have
been highlighted below to the extent critical to the conclusions of the general
partner of your partnership. Actual results may vary from those set forth below
based on numerous factors, including interest rate fluctuations, tax law
changes, supply and demand for similar apartment properties, the manner in which
your partnership's properties are sold and changes in availability of capital to
finance acquisitions of apartment properties.
Under your partnership's agreement of limited partnership, the term of the
partnership will continue until December 31, 2030, unless sooner terminated as
provided in the agreement or by law. Limited partners could, as an alternative
to tendering their units, take a variety of possible actions, including voting
to liquidate the partnership or amending the agreement of limited partnership to
authorize limited partners to cause the partnership to merge with another entity
or engage in a "roll-up" or similar transaction.
COMPARISON TABLE
<TABLE>
<CAPTION>
PER UNIT
-------------
<S> <C>
Cash offer price............................................ $ 0.50
Alternatives:
Prices on secondary market................................ $14.40-$42.00
Estimated liquidation proceeds............................ $ 0
</TABLE>
Prices on Secondary Market
Secondary market sales information is not a reliable measure of value
because of the lack of any known trades. At present, privately negotiated sales
and sales through intermediaries are the only means which may be available to a
limited partner to liquidate an investment in units (other than our offer)
because the units are not listed or traded on any exchange or quoted on NASDAQ,
on the Electronic Bulletin Board, or in "pink sheets." Secondary sales activity
for the units, including privately negotiated sales, has been limited and
sporadic. However, since April 1, 1998, your general partner is aware of
transfers of only 207.60 units of your partnership. For those transactions where
your general partner has pricing information, the sales prices ranged from
$14.40 to $42.00 per unit, averaging $26.00 per unit.
The Partnership Spectrum, which is an independent, third-party source of
information regarding sales of partnership units, reported no sales of your
partnership units for the years ended December 31, 1996, 1997 and 1998 or for
the first two months of 1999.
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<PAGE> 21
Set forth in the table below are the high and low sales prices of units for
the year ended December 31, 1998, the first quarter of 1999 and the two months
ended May 31, 1999, as reported by the American Partnership Board, which is an
independent, third-party source. The gross sales prices reported by American
Partnership Board do not necessarily reflect the net sales proceeds received by
sellers of units, which typically are reduced by commissions and other secondary
market transaction costs to amounts less than the reported prices. The American
Partnership Board represents one source of secondary sales information, and the
other services may contain prices for units that equal or exceed sales prices
reported by the American Partnership Board. We do not know whether the
information compiled by the American Partnership Board is accurate or complete.
SALES PRICES OF PARTNERSHIP UNITS, AS REPORTED BY THE AMERICAN PARTNERSHIP BOARD
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
Fiscal Year Ended December 31, 1999
Two Months ended May 31, 1999............................. -- --
First Quarter............................................. -- --
Fiscal Year Ended December 31, 1998......................... $42.00 $42.00
</TABLE>
Estimated Liquidation Proceeds
Liquidation value is a measure of the price at which the assets of your
partnership would sell if disposed of in an arms-length transaction between a
willing buyer and your partnership, each having access to relevant information
regarding the historical revenues and expenses of the business. Your general
partner (which is our subsidiary) estimated the liquidation value of units using
the same direct capitalization method and assumptions as we did in valuing the
units for the offer price. The liquidation analysis also assumed that your
partnership's properties were sold to an independent third-party buyer at the
current property value and that other balance sheet assets (excluding amortizing
assets) and liabilities of your partnership were sold at their book value, and
that the net proceeds of sale were allocated to your partners in accordance with
your partnership's agreement of limited partnership.
The liquidation analysis assumes that the assets of your partnership are
sold in a single transaction. Should the assets be liquidated over time, even at
prices equal to those projected, distributions to limited partners from cash
flow from operations might be reduced because your partnership's relatively
fixed costs, such as general and administrative expenses, are not
proportionately reduced with the liquidation of assets. However, for
simplification purposes, the sales of the assets are assumed to occur
concurrently. The liquidation analysis assumes that the assets would be disposed
of in an orderly manner and not sold in forced or distressed sales where sellers
might be expected to dispose of their interests at substantial discounts to
their actual fair market value.
Allocation of Consideration. We have allocated to the limited partners the
amount of the estimated net valuation of your partnership based on your
partnership's agreement of limited partnership as if your partnership was being
liquidated at the current time. We believe that if your partnership was
liquidated there would not be enough value to fully discharge all known
liabilities. We have, however, decided to offer you $0.50 per unit.
SECTION 10. POSITION OF THE GENERAL PARTNER OF YOUR PARTNERSHIP WITH RESPECT TO
THE OFFER.
The general partner of your partnership believes the offer price and the
structure of the transaction are fair to the limited partners. In making such
determination, the general partner considered all of the factors and information
set forth below, but did not quantify or otherwise attach particular weight to
any such factors or information:
- The offer gives you an opportunity to make an individual decision on
whether to tender your units or to continue to hold them.
- Our offer price, and the method we used to determine our offer price.
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<PAGE> 22
- The fact that the price offered for your units is based on an estimated
value of your partnership's properties that has been determined using a
method believed to reflect the valuation of such assets by buyers in the
market for similar assets.
- Prices at which the units have recently sold, to the extent such
information is available.
- The absence of an established trading market for your units.
- An analysis of possible alternative transactions, including a property
sale or refinancing, or a liquidation of the partnership.
- An evaluation of the financial condition and results of operations of
your partnership including the decrease in property income of your
partnership from $699,000 for the year ended December 31, 1997 to
$544,000 for the year ended December 31, 1998.
The general partner of your partnership makes no recommendation as to
whether you should tender or refrain from tendering your units. Although the
general partner believes the offer is fair, you must make your own decision
whether or not to participate in the offer, based upon a number of factors,
including your financial position, your need or desire for liquidity, other
financial opportunities available to you, and your tax position and the tax
consequences to you of selling your units.
SECTION 11. CONFLICTS OF INTEREST AND TRANSACTIONS WITH AFFILIATES.
Conflicts of Interest With Respect to the Offer. The general partner of
your partnership became a majority-owned subsidiary of AIMCO on October 1, 1998,
when AIMCO merged with Insignia. Your general partner became a wholly owned
subsidiary of AIMCO on February 26, 1999 when IPT merged with AIMCO.
Accordingly, the general partner of your partnership has substantial conflicts
of interest with respect to the offer. The general partner of your partnership
has a fiduciary obligation to obtain a fair offer price for you, even as a
subsidiary of AIMCO. It also has a duty to remove the property manager for your
partnership's property, under certain circumstances, even though the property
manager is also an affiliate of AIMCO. The conflicts of interest include: (1)
the fact that a decision to remove, for any reason, the general partner of your
partnership from its current position as a general partner of your partnership
would result in a decrease or elimination of the substantial management fees
paid to an affiliate of the general partner of your partnership for managing
your partnership's properties; and (2) as a consequence of our ownership of
units, because we may have incentives to seek to maximize the value of our
ownership of units, which in turn may result in a conflict for your general
partner in attempting to reconcile our interests with the interests of the other
limited partners. Additionally, we desire to purchase units at a low price and
you desire to sell units at a high price. The general partner of your
partnership makes no recommendation as to whether you should tender or refrain
from tendering your units. Such conflicts of interest in connection with the
offer and the operation of AIMCO differ from those conflicts of interest that
currently exist for your partnership. See "Risk Factors -- Conflicts of Interest
With Respect to the Offer." Your general partner has filed a
Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC, which
indicates that it is remaining neutral and making no recommendation as to
whether limited partners should tender their units pursuant to the offer.
LIMITED PARTNERS ARE URGED TO READ THIS OFFER TO PURCHASE AND THE SCHEDULE 14D-9
AND THE RELATED MATERIALS CAREFULLY AND IN THEIR ENTIRETY BEFORE DECIDING
WHETHER TO TENDER THEIR UNITS.
Conflicts of Interest That Currently Exist for Your Partnership. We own
both the general partner of your partnership and the manager of your
partnership's property. The general partner does not receive an annual
management fee but may receive reimbursements for expenses incurred in its
capacity as general partner. The general partner of your partnership received
total fees and reimbursements of $36,000 in 1996, $36,000 in 1997 and $56,000 in
1998. The property manager received management fees of $71,000 in 1996, $75,000
in 1997 and $74,000 in 1998. We have no current intention of changing the fee
structure for your general partner or the manager of your partnership's
property.
Competition Among Properties. Because AIMCO and your partnership both
invest in apartment properties, these properties may compete with one another
for tenants. Furthermore, you should bear in mind
20
<PAGE> 23
that AIMCO may acquire properties in general market areas where your
partnership's property are located. It is believed that this concentration of
properties in a general market area will facilitate overall operations through
collective advertising efforts and other operational efficiencies. In managing
AIMCO's properties, we will attempt to reduce such conflicts between competing
properties by referring prospective customers to the property considered to be
most conveniently located for the customer's needs.
Future Offers. Although we have no current plans to conduct future tender
offers for your units, our plans may change based on future circumstances. Any
such future offers that we might make could be for consideration that is more or
less than the consideration we are currently offering.
SECTION 12. FUTURE PLANS OF THE PURCHASER.
As described above under "The Offer -- Section 9. Background and Reasons
for the Offer," we own the general partner and thereby control the management of
your partnership. In addition, we own the manager of your partnership's
property. We currently intend that, upon consummation of the offer, your
partnership will continue its business and operations substantially as they are
currently being conducted. The offer is not expected to have any effect on
partnership operations.
Although we have no present intention to do so, we may acquire additional
units or sell units after completion or termination of the offer. Any
acquisition may be made through private purchases, through one or more future
tender or exchange offers, by merger, consolidation or by any other means deemed
advisable. Any acquisition may be at a price higher or lower than the price to
be paid for the units purchased pursuant to this offer, and may be for cash,
limited partnership interests in AIMCO Properties, L.P. or other consideration.
We also may consider selling some or all of the units we acquire pursuant to the
offer to persons not yet determined, which may include our affiliates. There can
be no assurance, however, that we will initiate or complete, or will cause your
partnership to initiate or complete, any subsequent transaction during any
specific time period following the expiration of the offer or at all.
Except as set forth herein, we do not have any present plans or proposals
which relate to or would result in an extraordinary transaction, such as a
merger, reorganization or liquidation, involving your partnership or any of your
partnership's subsidiaries; a sale or transfer of a material amount of your
partnership's assets (or assets of the partnership's subsidiaries); any changes
in composition of your partnership's senior management or personnel or their
compensation; any changes in your partnership's present capitalization or
distribution policy; or any other material changes in your partnership's
structure or business. We or our affiliates may loan funds to your partnership
which may be secured by your partnership's property. If any such loans are made,
upon default of such loans, the lender could seek to foreclose on the loan and
related mortgage or security interest. However, we expect that consistent with
your general partner's fiduciary obligations, the general partner will seek and
review opportunities (including opportunities identified by us) to engage in
transactions which could benefit your partnership, such as sales or refinancings
of assets or a combination of the partnership with one or more other entities,
with the objective of seeking to maximize returns to limited partners.
We have been advised that the possible future transactions the general
partner expects to consider on behalf of your partnership include: (1) payment
of extraordinary distributions; (2) refinancing, reducing or increasing existing
indebtedness of the partnership; (3) sales of assets, individually or as part of
a complete liquidation; and (4) mergers or other consolidation transactions
involving the partnership. Any such merger or consolidation transaction could
involve other limited partnerships in which your general partner or its
affiliates serve as general partners, or a combination of the partnership with
one or more existing, publicly traded entities (including, possibly, affiliates
of AIMCO), in any of which limited partners might receive cash, common stock or
other securities or consideration. There is no assurance, however, as to when or
whether any of the transactions referred to above might occur. If any such
transaction is effected by the partnership and financial benefits accrue to the
limited partners of your partnership, we will participate in those benefits to
the extent of our ownership of units. The agreement of limited partnership
prohibits limited partners from voting on actions taken by the partnership,
unless otherwise specifically permitted therein. Limited partners may vote on a
liquidation, and if we are successful in acquiring a substantial number of units
pursuant to the offer, we will be able to control the outcome of any such vote.
Our primary objective in seeking to acquire the units
21
<PAGE> 24
pursuant to the offer is not, however, to influence the vote on any particular
transaction, but rather to generate a profit on the investment represented by
those units.
SECTION 13. CERTAIN INFORMATION CONCERNING YOUR PARTNERSHIP.
General. McCombs Realty Partners was organized on June 22, 1984, under the
laws of the State of California. Its primary business is real estate ownership
and related operations. Your partnership was formed for the purpose of making
investments in various types of real properties which offer potential capital
appreciation and cash distributions to its limited partners.
Your partnership's investment portfolio currently consists of the following
residential apartment complex: Lakewood at Pelham, a 271-unit complex in
Greenville, South Carolina.
The general partner of your partnership is CRPTEX, Inc., which is a wholly
owned subsidiary of AIMCO. A wholly owned subsidiary of AIMCO serves as manager
of the property owned by your partnership. As of December 31, 1998, there were
17,196.39 units issued and outstanding, which were held of record by 1,263
limited partners. Your partnership's principal executive offices are located at
1873 South Bellaire Street, 17th Floor, Denver, Colorado 80222, and its
telephone number at that address is (303) 757-8101.
For additional information about your partnership, please see Section
9 -- "Background and Reasons for the Offer" and refer to the annual report
prepared by your partnership which was sent to you prior to this offer to
purchase, particularly Item 2 of Form 10-KSB which contains detailed information
regarding the partnership's property, including its mortgage, rental rates and
taxes.
Investment Objectives and Policies; Sale or Financing of Investments. In
general, your general partner (which is our subsidiary) regularly evaluates the
partnership's property by considering various factors, such as the partnership's
financial position and real estate and capital markets conditions. The general
partner monitors the property's specific locale and sub-market conditions
(including stability of the surrounding neighborhood), evaluating current
trends, competition, new construction and economic changes. The general partner
oversees each asset's operating performance and continuously evaluates the
physical improvement requirements. In addition, the property's financing
structure (including any prepayment penalties), tax implications, availability
of attractive mortgage financing to a purchaser, and the investment climate are
all considered. Any of these factors, and possibly others, could potentially
contribute to any decision by the general partner to sell, refinance, upgrade
with capital improvements or hold the property. If rental market conditions
improve, distributions might become possible. It is possible that the private
resale market for properties could improve over time, making a sale of the
partnership's property in a private transaction at some point in the future more
viable than it is currently. After taking into account the foregoing
considerations, your general partner is not currently seeking a sale of your
partnership's property primarily because it expects the property's operating
performance to improve in the near term. In making this assessment, your general
partner noted that occupancy and rental rates at the property were 90% and
$5,750/unit, respectively, at December 31, 1998, compared to 94% and
$5,530/unit, respectively, at December 31, 1997. In particular, the general
partner noted that it expects to spend approximately $262,236 for capital
improvements at the property in 1999 to repair and update the property. Although
there can be no assurance as to future performance, these expenditures are
expected to improve the desirability of the property to tenants. The general
partner does not believe that a sale of the property at the present time would
adequately reflect the property's future prospects. Another significant factor
considered by your general partner is the likely tax consequences of a sale of
the property for cash. Such a transaction would likely result in tax liabilities
for many limited partners. The general partner has not received any recent
indication of interest or offer to purchase the property.
Originally Anticipated Term of Partnership. Your partnership's prospectus,
dated December 27, 1984, pursuant to which units in your partnership were sold,
indicated that your partnership was intended to be self-liquidating and that it
was anticipated that the partnership's properties would be sold within five to
ten years of their acquisition, provided market conditions permit. The
prospectus also indicated that there could be no assurance that the partnership
would be able to so liquidate and that, unless sooner terminated as provided in
the partnership agreement, the existence of the partnership would continue until
December 31, 2030. Similarly, your partnership's agreement of limited
partnership provides that the partnership will continue until
22
<PAGE> 25
December 31, 2030, unless sooner terminated as provided in the agreement or by
law. As explained above, the reorganization plan confirmed by the bankruptcy
court in your partnership's chapter 11 case, contemplated that your partnership
would sell its property and make distributions to partners in October 1998. We
and the general partner determined not to sell the property at that time,
because of market conditions and because, in our estimate, the net proceeds of a
sale would not permit any distribution to limited partners.
Limited partners could, as an alternative to tendering their units, take a
variety of possible actions, including voting to liquidate the partnership or
amending the agreement of limited partnership to authorize limited partners to
cause the partnership to merge with another entity or engage in a "roll-up" or
similar transaction.
Capital Replacement. Your partnership has an ongoing program of capital
improvements, replacements and renovations, including roof replacements, kitchen
and bath renovations, balcony repairs (where applicable), replacement of various
building systems and other replacements and renovations in the ordinary course
of business. All capital improvement and renovation costs are expected to be
paid from operating cash flows, cash reserves, or from short-term or long-term
borrowings.
Competition. There are other properties within the market area of your
partnership's property. The number and quality of competitive properties in such
an area could have a material effect on the rental market for the apartments at
your partnership's property and the rents that may be charged for such
apartments. While we are a significant factor in the United States in the
apartment industry, competition for apartments is local. According to data
published by the National Multi-Housing Council, as of January 1, 1999, our
portfolio of 373,409 owned or managed apartment units represents approximately
2.2% of the national stock of rental apartments in structures with at least five
apartments.
Selected Financial and Property-Related Data. The summary financial
information of McCombs Realty Partners for the years ended December 1998 and
1997 is based on audited financial statements. The summary financial information
for the three months ended March 31, 1999 and 1998 is based on unaudited
financial statements. This information should be read in conjunction with such
financial statements, including notes thereto, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations of Your Partnership"
in the Annual Report on Form 10-KSB of your partnership for the year ended
December 31, 1998.
MCCOMBS REALTY PARTNERS
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED FOR THE YEAR ENDED
MARCH 31, DECEMBER 31,
--------------- ---------------------
1999 1998 1998 1997
----- ------- --------- ---------
(IN THOUSANDS, EXCEPT PER UNIT DATA)
<S> <C> <C> <C> <C>
OPERATING DATA:
Total Revenues.............................................. $356 $ 343 $1,396 $1,460
Net income (Loss)........................................... (12) (20) (95) 11
Net Income per limited partnership unit..................... (.70) (1.16) (5.47) .64
Distributions per limited partnership unit.................. 0.00 0.00 0.00 0.00
</TABLE>
23
<PAGE> 26
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
----------------- -----------------
1999 1998 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and Cash Equivalents.............................. $ 332 $ 414 $ 350 $ 451
Real Estate, Net of Accumulated Depreciation........... 2,425 2,602 2,473 2,641
Total Assets........................................... 6,840 3,495 6,878 6,797
Notes Payable.......................................... 5,654 5,713 5,669 5,727
General Partners' Capital (Deficit).................... 0 1 0 1
Limited Partners' Capital (Deficit).................... (2,469) (2,383) (2,457) (2,363)
Partners' Capital (Deficit)............................ (2,469) (2,382) (2,457) (2,362)
Total Distributions.................................... 0 0 0 0
Net increase (decrease) in cash and cash equivalents... (18) (37) (101) 65
Net cash provided by operating activities.............. 25 12 86 306
</TABLE>
Description of Property. The following shows the location, the date of
purchase, the nature of your partnership's ownership interest in and the use of
your partnership's property.
<TABLE>
<CAPTION>
PROPERTY DATE OF PURCHASE TYPE OF OWNERSHIP USE
-------- ---------------- --------------------- ---------
<S> <C> <C> <C>
Lakewood at Pelham.......................... 01/85 Fee ownership subject Apartment
Greenville, South Carolina to first mortgage.(1) 271 units
</TABLE>
- ---------------
(1) Property is held by a limited partnership in which your partnership owns a
100% interest.
Accumulated Depreciation Schedule. The following shows the gross carrying
value, accumulated depreciation and federal tax basis of your partnership's
property as of December 31, 1998.
<TABLE>
<CAPTION>
GROSS
CARRYING ACCUMULATED FEDERAL
PROPERTY VALUE DEPRECIATION RATE METHOD TAX BASIS
-------- ---------- ------------ ---- ------ --------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Lakewood at Pelham
Greenville, South Carolina............ $5,947,000 $3,474,000 3-25 S/L $1,500,000
---------- ---------- ----------
</TABLE>
Schedule of Mortgages. The following shows certain information regarding
the outstanding mortgages encumbering your partnership's property as of December
31, 1998.
<TABLE>
<CAPTION>
PRINCIPAL
PRINCIPAL STATED BALANCE
BALANCE AT INTEREST PERIOD MATURITY DUE AT
PROPERTY DECEMBER 31, 1998 RATE AMORTIZED DATE MATURITY
-------- ----------------- -------- --------- -------- --------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Lakewood at Pelham
1st mortgage........................ $5,669,000 8.10% (1) 07/01/05 $5,151,000
---------- ----------
</TABLE>
- ---------------
(1) The principal balance is amortized over 30 years with a balloon payment due
July 1, 2005.
Average Annual Rental Rate and Occupancy. The following shows the average
annual rental rates and occupancy percentages for your partnership's property
during the past two years.
<TABLE>
<CAPTION>
AVERAGE ANNUAL
AVERAGE ANNUAL RENTAL RATE OCCUPANCY
---------------------------- --------------
PROPERTY 1998 1997 1998 1997
- -------- ----------- ----------- ---- ----
<S> <C> <C> <C> <C>
Lakewood at Pelham............................ $5,750/unit $5,530/unit 90% 94%
</TABLE>
24
<PAGE> 27
Schedule of Real Estate Taxes and Rates. The following shows the real
estate taxes and rates for 1998 for your partnership's property.
<TABLE>
<CAPTION>
PROPERTY 1998 BILLING 1998 RATE
-------- -------------- ---------
(IN THOUSANDS)
<S> <C> <C>
Lakewood at Pelham.......................................... $80 1.44%
</TABLE>
Property Management. Your partnership's property is managed by an entity
which is a wholly owned subsidiary of AIMCO. Pursuant to the management
agreement between the property manager and your partnership, the property
manager operates your partnership's property, establishes rental policies and
rates and directs marketing activities. The property manager also is responsible
for maintenance, the purchase of equipment and supplies, and the selection and
engagement of all vendors, suppliers and independent contractors.
Distributions. Your partnership has paid no distributions during the five
years ended December 31, 1998.
Operating Budgets of the Partnership. A summary of the operating budget of
your partnership's property for the year ending on December 31, 1999 is as
follows:
FISCAL 1999 OPERATING BUDGET
<TABLE>
<CAPTION>
LAKEWOOD AT
PELHAM
-----------
<S> <C>
Total Revenues.............................................. $1,549,257
Operating Expenses.......................................... (677,224)
Replacement Reserves -- Net................................. 66,936
Debt Service................................................ (520,007)
Capital Expenditures........................................ (186,990)
----------
Net Cash Flow..................................... $ 231,972
==========
</TABLE>
The above budget at the time it was made was forward-looking information
developed by your general partner (which is our subsidiary). Therefore, the
budget was dependent upon future events with respect to the ability of your
partnership to meet such budget. The budget incorporated various assumptions
including, but not limited to, lease revenue (including occupancy rates),
various operating expenses, general and administrative expenses, depreciation
expenses, capital expenditures, and working capital levels. While the general
partner deemed such budget to be reasonable and valid at the date made, there is
no assurance that the assumed facts will be validated or that the circumstances
will actually occur. Any estimate of the future performance of a business, such
as your partnership's business, is forward-looking and based on assumptions some
of which inevitably will prove to be incorrect.
The budget amounts provided above are figures that were not computed in
accordance with GAAP. In particular, items that are categorized as capital
expenditures for purposes of preparing the operating budget are often
re-categorized as expenses when the financial statements are audited and
presented in accordance with GAAP. Therefore, the summary operating budget
presented for fiscal 1999 should not necessarily be considered as indicative of
what the audited operating results for fiscal 1999 will be. For the year ended
December 31, 1998, the partnership reported revenues of $1,365,572, operating
expenses of $739,804 and replacement reserves and capital expenditures of
$81,000.
Beneficial Ownership of Interests in Your Partnership. We currently do not
own any of the outstanding limited partnership units of your partnership. Except
as set forth above, neither we, nor, to the best of our knowledge, any of our
affiliates, (i) beneficially own or have a right to acquire any units, (ii) have
effected any transactions in the units in the past 60 days, or (iii) have any
contract, arrangement, understanding or relationship with any other person with
respect to any securities of your partnership, including, but not limited to,
contracts, arrangements, understandings or relationships concerning transfer or
voting thereof, joint
25
<PAGE> 28
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies.
Compensation Paid to the General Partner and its Affiliates. The following
table shows, for each of the years indicated, compensation paid to your general
partner and its affiliates:
<TABLE>
<CAPTION>
PARTNERSHIP PROPERTY
FEES AND MANAGEMENT
YEAR EXPENSES FEES
- ---- ----------- ----------
<S> <C> <C>
1995........................................................ $42,000 $68,000
1996........................................................ 36,000 71,000
1997........................................................ 36,000 73,000
1998........................................................ 56,000 74,000
</TABLE>
Legal Proceedings. Your partnership may be party to a variety of legal
proceedings related to its ownership of the partnership's properties and
management and leasing business, respectively, arising in the ordinary course of
the business, which are not expected to have a material adverse effect on your
partnership.
Additional Information Concerning Your Partnership. Your partnership files
annual, quarterly and special reports, proxy statements and other information
with the SEC. You may read and copy any document your partnership files at the
SEC's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Your partnership's SEC filings are also available
to the public at the SEC's web site at http://www.sec.gov.
SECTION 14. VOTING POWER.
Decisions with respect to the day-to-day management of your partnership are
the responsibility of the general partner. Because the general partner of your
partnership is our affiliate, we control the management of your partnership.
Under your partnership's agreement of limited partnership, limited partners
holding a majority of the outstanding units must approve certain extraordinary
transactions, including the removal of the general partner, the addition of a
new general partner, most amendments to the partnership agreement and the sale
of all or substantially all of your partnership's assets. If we acquire all the
units we are offering to purchase, we will own slightly less than a majority of
the outstanding units and will have the ability to substantially influence any
vote of the limited partners.
SECTION 15. SOURCE OF FUNDS.
We expect that approximately $3,869 will be required to purchase all of the
7,738.38 limited partnership units that we are seeking in this offer (exclusive
of fees and expenses estimated to be $10,263). For more information regarding
fees and expenses, see "The Offer -- Section 19, Fees and Expenses" in the Offer
to Purchase.
In addition to this offer, we are concurrently making offers to acquire
interests in approximately 100 other limited partnerships. If all such offers
were fully subscribed for cash, we would be required to pay approximately $260
million for all such units. If for some reason we did not have such funds
available we might extend this offer for a period of time sufficient for us to
obtain additional funds, or we might terminate this offer. However, based on our
past experience with similar offers, we do not expect all such offers to be
fully subscribed. Also, in some offers, investors have been offered a choice of
cash or securities. As a result, we expect that the funds that will be necessary
to consummate all the offers will be substantially less than $200 million. We
believe that we have sufficient cash on hand and available sources of financing
to pay such amounts. As of March 31, 1999, we had $38,000,000 of cash on hand
and $145,000,000 available for borrowing under our existing lines of credit.
Under our $145 million revolving credit facility with Bank of America
National Trust and Savings Association ("Bank of America") and BankBoston, N.A.,
AIMCO Properties, L.P. is the borrower and all obligations thereunder are
guaranteed by AIMCO and certain of its subsidiaries. The annual interest rate
26
<PAGE> 29
under the credit facility is based on either LIBOR or Bank of America's
reference rate, at our election, plus, an applicable margin. We elect which
interest rate will be applicable to particular borrowings under the credit
facility. The margin ranges between 2.25% and 2.75% in the case of LIBOR-based
loans and between 0.75% and 1.25% in the case of base rate loans, depending upon
a ratio of our consolidated unsecured indebtedness to the value of certain
unencumbered assets. The credit facility matures on September 30, 1999 unless
extended, at the discretion of the lenders. The credit facility provides for the
conversion of the revolving facility into a three year term loan. The
availability of funds to us under the credit facility is subject to certain
borrowing base restrictions and other customary restrictions, including
compliance with financial and other covenants thereunder. The financial
covenants require us to maintain a ratio of debt to gross asset value of no more
than 0.55 to 1.0, an interest coverage ratio of 2.25 to 1.0 and a fixed charge
coverage ratio of at least 1.7 to 1.0 from January 1, 1999 through June 30,
1999, and 1.8 to 1.0 thereafter. In addition, the credit facility limits us from
distributing more than 80% of our Funds From Operations (as defined) to holders
of our units, imposes minimum net worth requirements and provides other
financial covenants related to certain unencumbered assets.
SECTION 16. DISSENTERS' RIGHTS.
Neither the agreement of limited partnership of your partnership nor
applicable law provides any right for you to have your units appraised or
redeemed in connection with, or as a result of, our offer. You have the
opportunity to make an individual decision on whether or not to tender your
units in the offer.
SECTION 17. CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of our offer, we will not be required
to accept for payment and pay for any units tendered pursuant to our offer, may
postpone the purchase of, and payment for, units tendered, and may terminate or
amend our offer if at any time on or after the date of this offer to purchase,
and at or before the expiration of our offer (including any extension thereof),
any of the following shall occur or may be reasonably expected to occur:
(a) any change (or any condition, event or development involving a
prospective change) shall have occurred or been threatened in the business,
properties, assets, liabilities, indebtedness, capitalization, condition
(financial or otherwise), operations, licenses or franchises, management
contract, or results of operations or prospects of your partnership or
local markets in which your partnership owns property, including any fire,
flood, natural disaster, casualty loss, or act of God that, in our
reasonable judgment, are or may be materially adverse to your partnership
or the value of the units to us, or we shall have become aware of any facts
relating to your partnership, its indebtedness or its operations which, in
our reasonable judgment, has or may have material significance with respect
to the value of your partnership or the value of the units to us; or
(b) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or the over-the-counter market in the United States, (ii) a
decline in the closing price of a share of AIMCO's Class A Common Stock of
more than 7.5% from the date hereof, (iii) any extraordinary or material
adverse change in the financial, real estate or money markets or major
equity security indices in the United States such that there shall have
occurred at least a 7.5% increase in LIBOR or at least a 7.5% decrease in
the S&P 500 Index, the Morgan Stanley REIT Index, or the price of the
10-year Treasury Bond or the 30-year Treasury Bond, in each case from the
date hereof, (iii) any material adverse change in the commercial mortgage
financing markets, (iv) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (vi) a
commencement of a war, conflict, armed hostilities or other national or
international calamity directly or indirectly involving the United States,
(vii) any limitation (whether or not mandatory) by any governmental
authority on, or any other event which, in our reasonable judgment, might
affect the extension of credit by banks or other lending institutions, or
(viii) in the case of any of the foregoing existing at the time of the
commencement of the offer, in our reasonable judgment, a material
acceleration or worsening thereof; or
27
<PAGE> 30
(c) there shall have been threatened, instituted or pending any
action, proceeding, application or counterclaim by any Federal, state,
local or foreign government, governmental authority or governmental agency,
or by any other person, before any governmental authority, court or
regulatory or administrative agency, authority or tribunal, which (i)
challenges or seeks to challenge our purchase of the units, restrains,
prohibits or delays the making or consummation of our offer, prohibits the
performance of any of the contracts or other arrangements entered into by
us (or any affiliates of ours), seeks to obtain any material amount of
damages as a result of the transactions contemplated by our offer, (ii)
seeks to make the purchase of, or payment for, some or all of the units
pursuant to our offer illegal or results in a delay in our ability to
accept for payment or pay for some or all of the units, (iii) seeks to
prohibit or limit the ownership or operation by us or any of our affiliates
of the entity serving as general partner of the partnership or to remove
such entity as general partner of your partnership, or seeks to impose any
material limitation on our ability or the ability of any affiliate of ours
to conduct your partnership's business or own such assets, (iv) seeks to
impose material limitations on our ability to acquire or hold or to
exercise full rights of ownership of the units including, but not limited
to, the right to vote the units purchased by us on all matters properly
presented to the limited partners, or (v) might result, in our reasonable
judgment, in a diminution in the value of your partnership or a limitation
of the benefits expected to be derived by us as a result of the
transactions contemplated by our offer or the value of the units to us; or
(d) there shall be any action taken, or any statute, rule, regulation,
order or injunction shall be sought, proposed, enacted, promulgated,
entered, enforced or deemed applicable to our offer, your partnership, any
general partner of your partnership, us or any affiliate of ours or your
partnership, or any other action shall have been taken, proposed or
threatened, by any government, governmental authority or court, that, in
our reasonable judgment, might, directly or indirectly, result in any of
the consequences referred to in clauses (i) through (vi) of paragraph (c)
above; or
(e) your partnership shall have (i) changed, or authorized a change
of, the units or your partnership's capitalization, (ii) issued,
distributed, sold or pledged, or authorized, proposed or announced the
issuance, distribution, sale or pledge of (A) any equity interests
(including, without limitation, units), or securities convertible into any
such equity interests or any rights, warrants or options to acquire any
such equity interests or convertible securities, or (B) any other
securities in respect of, in lieu of, or in substitution for units
outstanding on the date hereof, (iii) purchased or otherwise acquired, or
proposed or offered to purchase or otherwise acquire, any outstanding units
or other securities, (iv) declared or paid any dividend or distribution on
any units or issued, authorized, recommended or proposed the issuance of
any other distribution in respect of the units, whether payable in cash,
securities or other property, (v) authorized, recommended, proposed or
announced an agreement, or intention to enter into an agreement, with
respect to any merger, consolidation, liquidation or business combination,
any acquisition or disposition of a material amount of assets or
securities, or any release or relinquishment of any material contract
rights, or any comparable event, not in the ordinary course of business,
(vi) taken any action to implement such a transaction previously
authorized, recommended, proposed or publicly announced, (vii) issued, or
announced its intention to issue, any debt securities, or securities
convertible into, or rights, warrants or options to acquire, any debt
securities, or incurred, or announced its intention to incur, any debt
other than in the ordinary course of business and consistent with past
practice, (viii) authorized, recommended or proposed, or entered into, any
transaction which, in our reasonable judgment, has or could have an adverse
affect on the value of your partnership or the units, (ix) proposed,
adopted or authorized any amendment of its organizational documents, (x)
agreed in writing or otherwise to take any of the foregoing actions or (xi)
been notified that any debt of your partnership or any of its subsidiaries
secured by any of its or their assets is in default or has been
accelerated; or
(f) a tender or exchange offer for any units shall have been commenced
or publicly proposed to be made by another person or "group" (as defined in
Section 13(d)(3) of the Exchange Act), or it shall have been publicly
disclosed or we shall have otherwise learned that (i) any person or group
shall have acquired or proposed or be attempting to acquire beneficial
ownership of more than five percent of the units, or shall have been
granted any option, warrant or right, conditional or otherwise, to acquire
28
<PAGE> 31
beneficial ownership of more than five percent of the units, other than
acquisitions for bona fide arbitrage purposes, or (ii) any person or group
shall have entered into a definitive agreement or an agreement in principle
or made a proposal with respect to a merger, consolidation or other
business combination with or involving your partnership; or
(g) we shall not have adequate cash or financing commitments available
to pay the for the units validly tendered;
(h) the offer to purchase may have an adverse effect on AIMCO's status
as a REIT; or
(i) a minimum of 35% of the units has not been validly tendered.
The foregoing conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to such conditions or may be waived
by us in whole or in part at any time and from time to time in our reasonable
discretion. The failure by us at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right, the waiver of any such
right with respect to any particular facts or circumstances shall not be deemed
a waiver with respect to any other facts or circumstances and each right shall
be deemed a continuing right which may be asserted at any time and from time to
time.
SECTION 18. CERTAIN LEGAL MATTERS.
General. Except as set forth in this Section 18, we are not, based on
information provided by your general partner (which is our subsidiary), aware of
any licenses or regulatory permits that would be material to the business of
your partnership, taken as a whole, and that might be adversely affected by our
acquisition of units as contemplated herein, or any filings, approvals or other
actions by or with any domestic or foreign governmental authority or
administrative or regulatory agency that would be required prior to the
acquisition of units by us pursuant to the offer, other than the filing of a
Tender Offer Statement on Schedule 14D-1 with the SEC (which has already been
filed) and any required amendments thereto. While there is no present intent to
delay the purchase of units tendered pursuant to the offer pending receipt of
any such additional approval or the taking of any such action, there can be no
assurance that any such additional approval or action, if needed, would be
obtained without substantial conditions or that adverse consequences might not
result to your partnership or its business, or that certain parts of its
business might not have to be disposed of or other substantial conditions
complied with in order to obtain such approval or action, any of which could
cause us to elect to terminate the offer without purchasing units thereunder.
Our obligation to purchase and pay for units is subject to certain conditions,
including conditions related to the legal matters discussed in this Section 18.
Antitrust. We do not believe that the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, is applicable to the acquisition of units
contemplated by our offer.
Margin Requirements. The units are not "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly, those regulations generally are not applicable to our offer.
State Laws. We are not aware of any jurisdiction in which the making of our
offer is not in compliance with applicable law. If we become aware of any
jurisdiction in which the making of the offer would not be in compliance with
applicable law, we will make a good faith effort to comply with any such law.
If, after such good faith effort, we cannot comply with any such law, the offer
will not be made to (nor will tenders be accepted from or on behalf of)
unitholders residing in such jurisdiction. In those jurisdictions with
securities or blue sky laws that require the offer to be made by a licensed
broker or dealer, the offer shall be made on behalf of us, if at all, only by
one or more registered brokers or dealers licensed under the laws of that
jurisdiction.
SECTION 19. FEES AND EXPENSES.
Except as set forth in this Section 19, we will not pay any fees or
commissions to any broker, dealer or other person for soliciting tenders of
units pursuant to the offer. We have retained River Oaks Partnership Services,
Inc. to act as Information Agent in connection with our offer. The Information
Agent may contact
29
<PAGE> 32
holders of units by mail, telephone, telex, telegraph and personal interview and
may request brokers, dealers and other nominee limited partners to forward
materials relating to the offer to beneficial owners of the units. We will pay
the Information Agent reasonable and customary compensation for its services in
connection with the offer, plus reimbursement for out-of-pocket expenses, and
will indemnify it against certain liabilities and expenses in connection
therewith, including liabilities under the Federal securities laws. We will also
pay all costs and expenses of printing and mailing the offer and its legal fees
and expenses.
---------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF US NOT CONTAINED HEREIN OR IN THE LETTER OF
TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED.
We have filed with the Commission a Tender Offer Statement on Schedule
14D-1, pursuant to Section 14(d)(1) and Rule 14d-3 under the Exchange Act,
furnishing certain additional information with respect to our offer, and may
file amendments thereto. The Schedule 14D-1 and any amendments thereto,
including exhibits, may be inspected and copies may be obtained at the same
place and in the same manner as described in "The Offer -- Section 13" under
"Additional Information Concerning Your Partnership."
AIMCO PROPERTIES, L.P.
30
<PAGE> 33
ANNEX I
OFFICERS AND DIRECTORS
The names and positions of the executive officers of Apartment Investment
and Management Company ("AIMCO"), AIMCO-GP, Inc. ("AIMCO-GP") and the directors
of AIMCO are set forth below. The two directors of AIMCO-GP are Terry Considine
and Peter Kompaniez. The two directors of the general partner of your
partnership are Peter K. Kompaniez and Patrick J. Foye. The two executive
officers of the general partner of your partnership are Patrick J. Foye,
Executive Vice President, and Carla R. Stoner, Senior Vice President -- Real
Estate Accounting. Unless otherwise indicated, the business address of each
executive officer and director is 1873 South Bellaire Street, 17th Floor,
Denver, Colorado 80222. Each executive officer and director is a citizen of the
United States of America.
<TABLE>
<CAPTION>
NAME POSITION
- ---- --------
<S> <C>
Terry Considine...................... Chairman of the Board of Directors and Chief Executive
Officer
Peter K. Kompaniez................... Vice Chairman, President and Director
Thomas W. Toomey..................... Executive Vice President -- Finance and Administration
Joel F. Bonder....................... Executive Vice President, General Counsel and Secretary
Patrick J. Foye...................... Executive Vice President
Robert Ty Howard..................... Executive Vice President -- Ancillary Services
Steven D. Ira........................ Executive Vice President and Co-Founder
Harry G. Alcock...................... Senior Vice President -- Acquisitions
Troy D. Butts........................ Senior Vice President and Chief Financial Officer
Richard S. Ellwood................... Director
J. Landis Martin..................... Director
Thomas L. Rhodes..................... Director
John D. Smith........................ Director
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
- ---- ---------------------------------------------
Terry Considine...................... Chief Executive Officer of AIMCO and AIMCO-GP since July
1994. He is the sole owner of Considine Investment Co. and
prior to July 1994 was owner of approximately 75% of
Property Asset Management, L.L.C., Limited Liability
Company, a Colorado limited liability company, and its
related entities (collectively, "PAM"), one of AIMCO's
predecessors. On October 1, 1996, Mr. Considine was
appointed Co-Chairman and director of Asset Investors Corp.
and Commercial Asset Investors, Inc., two other public real
estate investment trusts, and appointed as a director of
Financial Assets Management, LLC, a real estate investment
trust manager. Mr. Considine has been involved as a
principal in a variety of real estate activities, including
the acquisition, renovation, development and disposition of
properties. Mr. Considine has also controlled entities
engaged in other businesses such as television broadcasting,
gasoline distribution and environmental laboratories. Mr.
Considine received a B.A. from Harvard College, a J.D. from
Harvard Law School and was formerly admitted as a member of
the Massachusetts Bar (inactive).
</TABLE>
I-1
<PAGE> 34
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
- ---- ---------------------------------------------
<S> <C>
Peter K. Kompaniez................... Mr. Kompaniez has been Vice Chairman and a director of AIMCO
since July 1994 and was appointed President of AIMCO in July
1997. Mr. Kompaniez has served as Vice President of AIMCO-GP
from July 1994 through July 1998 and was appointed President
in July 1998. Mr. Kompaniez has been a director of AIMCO-GP
since July 1994. Since September 1993, Mr. Kompaniez has
owned 75% of PDI Realty Enterprises, Inc., a Delaware
corporation ("PDI"), one of AIMCO's predecessors, and serves
as its President and Chief Executive Officer. From 1986 to
1993, he served as President and Chief Executive Officer of
Heron Financial Corporation ("HFC"), a United States holding
company for Heron International, N.V.'s real estate and
related assets. While at HFC, Mr. Kompaniez administered the
acquisition, development and disposition of approximately
8,150 apartment units (including 6,217 units that have been
acquired by the AIMCO) and 3.1 million square feet of
commercial real estate. Prior to joining HFC, Mr. Kompaniez
was a senior partner with the law firm of Loeb and Loeb
where he had extensive real estate and REIT experience. Mr.
Kompaniez received a B.A. from Yale College and a J.D. from
the University of California (Boalt Hall).
Thomas W. Toomey..................... Mr. Toomey has served as Senior Vice President -- Finance
and Administration of AIMCO since January 1996 and was
promoted to Executive Vice-President-Finance and
Administration in March 1997. Mr. Toomey has been Executive
Vice President -- Finance and Administration of AIMCO-GP
similar capacity with Lincoln Property Company ("LPC") as
well as Vice President/Senior Controller and Director of
Administrative Services of Lincoln Property Services where
he was responsible for LPC's computer systems, accounting,
tax, treasury services and benefits administration. From
1984 to 1990, he was an audit manager with Arthur Andersen &
Co. where he served real estate and banking clients. From
1981 to 1983, Mr. Toomey was on the audit staff of Kenneth
Leventhal & Company. Mr. Toomey received a B.S. in Business
Administration/Finance from Oregon State University and is a
Certified Public Accountant.
Joel F. Bonder....................... Mr. Bonder has served as Executive Vice President and
General Counsel of AIMCO since December 8, 1997. Mr. Bonder
has been Executive Vice President and General Counsel of
AIMCO-GP since July 1998. Prior to joining AIMCO, Mr. Bonder
served as Senior Vice President and General Counsel of NHP
Incorporated from April 1994 until December 1997. Mr. Bonder
served as Vice President and Deputy General Counsel of NHP
Incorporated from June 1991 to March 1994 and as Associate
General Counsel of NHP from 1986 to 1991. From 1983 to 1985,
Mr. Bonder was with the Washington, D.C. law firm of Lane &
Edson, P.C. From 1979 to 1983, Mr. Bonder practiced with the
Chicago law firm of Ross and Hardies. Mr. Bonder received an
A.B. from the University of Rochester and a J.D. from
Washington University School of Law.
Patrick J. Foye...................... Mr. Foye has served as Executive Vice President of AIMCO and
AIMCO-GP since May 1998. Prior to joining AIMCO, Mr. Foye
was a partner in the law firm of Skadden, Arps, Slate,
Meagher & Flom LLP from 1989 to 1998 and was Managing
Partner of the firm's Brussels, Budapest and Moscow offices
from 1992 through 1994. Mr. Foye is also
</TABLE>
I-2
<PAGE> 35
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
- ---- ---------------------------------------------
<S> <C>
Deputy Chairman of the Long Island Power Authority and
serves as a member of the New York State Privatization
Council. He received a B.A. from Fordham College and a J.D.
from Fordham University Law School.
Robert Ty Howard..................... Mr. Howard has served as Executive Vice
President -- Ancillary Services since February 1998. Mr.
Howard was appointed Executive Vice President -- Ancillary
Services of AIMCO-GP in July 1998. Prior to joining AIMCO,
Mr. Howard served as an officer and/or director of four
affiliated companies, Hecco Ventures, Craig Corporation,
Reading Company and Decurion Corporation. Mr. Howard was
responsible for financing, mergers and acquisitions
activities, investments in commercial real estate, both
nationally and internationally, cinema development and
interest rate risk management. From 1983 to 1988, he was
employed by Spieker Properties. Mr. Howard received a B.A.
from Amherst College, a J.D. from Harvard Law School and an
M.B.A. from Stanford University Graduate School of Business.
Steven D. Ira........................ Mr. Ira is a Co-Founder of AIMCO and has served as Executive
Vice President of AIMCO since July 1994. Mr. Ira has been
Executive Vice President of AIMCO-GP since July 1998. From
1987 until July 1994, he served as President of PAM. Prior
to merging his firm with PAM in 1987, Mr. Ira acquired
extensive experience in property management. Between 1977
and 1981 he supervised the property management of over 3,000
apartment and mobile home units in Colorado, Michigan,
Pennsylvania and Florida, and in 1981 he joined with others
to form the property management firm of McDermott, Stein and
Ira. Mr. Ira served for several years on the National
Apartment Manager Accreditation Board and is a former
president of both the National Apartment Association and the
Colorado Apartment Association. Mr. Ira is the sixth
individual elected to the Hall of Fame of the National
Apartment Association in its 54-year history. He holds a
Certified Apartment Property Supervisor (CAPS) and a
Certified Apartment Manager designation from the National
Apartment Association, a Certified Property Manager (CPM)
designation from the National Institute of Real Estate
Management (IREM) and he is a member of the Board of
Directors of the National Multi-Housing Council, the
National Apartment Association and the Apartment Association
of Metro Denver. Mr. Ira received a B.S. from Metropolitan
State College in 1975.
Harry G. Alcock...................... Mr. Alcock has served as Vice President of AIMCO and
AIMCO-GP since July 1996, and was promoted to Senior Vice
President -- Acquisitions in October 1997, with
responsibility for acquisition and financing activities
since July 1994. From June 1992 until July 1994, Mr. Alcock
served as Senior Financial Analyst for PDI and HFC. From
1988 to 1992, Mr. Alcock worked for Larwin Development
Corp., a Los Angeles based real estate developer, with
responsibility for raising debt and joint venture equity to
fund land acquisitions and development. From 1987 to 1988,
Mr. Alcock worked for Ford Aerospace Corp. He received his
B.S. from San Jose State University.
Troy D. Butts........................ Mr. Butts has served as Senior Vice President and Chief
Financial Officer of AIMCO since November 1997. Mr. Butts
has been Senior Vice President and Chief Financial Officer
of AIMCO-GP since July
</TABLE>
I-3
<PAGE> 36
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
- ---- ---------------------------------------------
<S> <C>
1998. Prior to joining AIMCO, Mr. Butts served as a Senior
Manager in the audit practice of the Real Estate Services
Group for Arthur Andersen LLP in Dallas, Texas. Mr. Butts
was employed by Arthur Andersen LLP for ten years and his
clients were primarily publicly-held real estate companies,
including office and multi-family real estate investment
trusts. Mr. Butts holds a Bachelor of Business
Administration degree in Accounting from Angelo State
University and is a Certified Public Accountant.
Richard S. Ellwood................... Mr. Ellwood was appointed a Director of AIMCO in July 1994
12 Auldwood Lane and is currently Chairman of the Audit Committee. Mr.
Rumson, NJ 07660 Ellwood is the founder and President of R.S. Ellwood & Co.,
Incorporated, a real estate investment banking firm. Prior
to forming R.S. Ellwood & Co., Incorporated in 1987, Mr.
Ellwood had 31 years experience on Wall Street as an
investment banker, serving as: Managing Director and senior
banker at Merrill Lynch Capital Markets from 1984 to 1987;
Managing Director at Warburg Paribas Becker from 1978 to
1984; general partner and then Senior Vice President and a
director at White, Weld & Co. from 1968 to 1978; and in
various capacities at J.P. Morgan & Co. from 1955 to 1968.
Mr. Ellwood currently serves as a director of FelCor Suite
Hotels, Inc. and Florida East Coast Industries, Inc.
J. Landis Martin..................... Mr. Martin was appointed a Director of AIMCO in July 1994
199 Broadway and became Chairman of the Compensation Committee in March
Suite 4300 1998. Mr. Martin has served as President and Chief Executive
Denver, CO 80202 Officer and a Director of NL Industries, Inc., a
manufacturer of titanium dioxide, since 1987. Mr. Martin has
served as Chairman of Tremont Corporation, a holding company
operating through its affiliates Titanium Metals Corporation
("TIMET") and NL Industries, Inc., since 1990 and as Chief
Executive Officer and a director of Tremont since 1998. Mr.
Martin has served as Chairman of Timet, an integrated
producer of titanium, since 1987 and Chief Executive Officer
since January 1995. From 1990 until its acquisition by
Dresser Industries, Inc. ("Dresser") in 1994, Mr. Martin
served as Chairman of the Board and Chief Executive Officer
of Baroid Corporation, an oilfield services company. In
addition to Tremont, NL and TIMET, Mr. Martin is a director
of Dresser, which is engaged in the petroleum services,
hydrocarbon and engineering industries.
Carla R. Stoner...................... Ms. Stoner joined AIMCO in July 1997 as Vice President of
Finance and Administration and became Senior Vice
President -- Real Estate Accounting in November 1998. Prior
to joining AIMCO, Ms. Stoner was with National Housing
Partners since 1989. While at National Housing Partners, Ms.
Stoner served as a real estate controller from 1989 to 1992,
as Vice President of Accounting from 1992 to 1995 and as
Interim Chief Information Officer from 1995 to July 1997.
Prior to joining National Housing Partners, Ms. Stoner was a
Senior Auditor with Deloitte & Touche from 1984 to 1989. Ms.
Stoner received a B.A. in accounting from Virginia Tech.
</TABLE>
I-4
<PAGE> 37
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
- ---- ---------------------------------------------
<S> <C>
Thomas L. Rhodes..................... Mr. Rhodes was appointed a Director of AIMCO in July 1994.
215 Lexington Avenue Mr. Rhodes has served as the President and a Director of
4th Floor National Review magazine since November 30, 1992, where he
New York, NY 10016 has also served as a Director since 1998. From 1976 to 1992,
he held various positions at Goldman, Sachs & Co. and was
elected a General Partner in 1986 and served as a General
Partner from 1987 until November 27, 1992. He is currently
Co-Chairman of the Board, Co-Chief Executive Officer and a
Director of Commercial Assets Inc. and Asset Investors
Corporation. He also serves as a Director of Delphi
Financial Group, Inc. and its subsidiaries, Delphi
International Ltd., Oracle Reinsurance Company, and the
Lynde and Harry Bradley Foundation. Mr. Rhodes is Chairman
of the Empire Foundation for Policy Research, a Founder and
Trustee of Change NY, a Trustee of The Heritage Foundation,
and a Trustee of the Manhattan Institute.
John D. Smith........................ Mr. Smith was appointed a Director of AIMCO in November
3400 Peachtree Road Suite 831 1994. Mr. Smith is Principal and President of John D. Smith
Atlanta, GA 30326 Developments. Mr. Smith has been a shopping center
developer, owner and consultant for over 8.6 million square
feet of shopping center projects including Lenox Square in
Atlanta, Georgia. Mr. Smith is a Trustee and former
President of the International Council of Shopping Centers
and was selected to be a member of the American Society of
Real Estate Counselors. Mr. Smith served as a Director for
Pan-American Properties, Inc. (National Coal Board of Great
Britain) formerly known as Continental Illinois Properties.
He also serves as a director of American Fidelity Assurance
Companies and is retained as an advisor by Shop System Study
Society, Tokyo, Japan.
</TABLE>
I-5
<PAGE> 38
The letter of transmittal and any other required documents should be sent
or delivered by each unitholder or such unitholder's broker, dealer, bank, trust
company or other nominee to the Information Agent at one of its addresses set
forth below.
The Information Agent for the Offer Is:
RIVER OAKS PARTNERSHIP SERVICES, INC.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
P.O. Box 2065 111 Commerce Road 111 Commerce Road
S. Hackensack, N.J. 07606-2065 Carlstadt, N.J. 07072 Carlstadt, N.J. 07072
Attn.: Reorganization Dept.
</TABLE>
For information, please call:
TOLL FREE (888) 349-2005
I-6
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER UNITS OF LIMITED PARTNERSHIP IN MCCOMBS
REALTY PARTNERS (THE "PARTNERSHIP")
PURSUANT TO AN OFFER TO PURCHASE
DATED JULY 22, 1999 (THE "OFFER DATE")
BY
AIMCO PROPERTIES, L.P.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 5:00 P.M., NEW YORK TIME,
ON AUGUST 19, 1999, UNLESS EXTENDED (THE "EXPIRATION DATE")
- --------------------------------------------------------------------------------
WE ARE OFFERING TO PURCHASE UNITS IN YOUR PARTNERSHIP FOR $0.50 PER UNIT.
The Information Agent for the offer is:
RIVER OAKS PARTNERSHIP SERVICES, INC.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
P.O. Box 2065 111 Commerce Road 111 Commerce Road
S. Hackensack, N.J. 07606-2065 Carlstadt, N.J. 07072 Carlstadt, N.J. 07072
Attn.: Reorganization Dept. Attn.: Reorganization Dept.
By Telephone:
TOLL FREE (888) 349-2005
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF UNITS TENDERED
- -------------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s) (Please indicate Units in McCombs Realty Partners
changes or corrections to the name, address and tax
identification number printed below.)
- -------------------------------------------------------------------------------------------------------------------
2. Number of 3. Total Num
1. Total Number of Units Tendered ber of Units
Units Owned for Cash Tendered
(#) (#) (#)
------------------ -------------- -------------
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
To participate in the offer, you must send a duly completed and executed copy of
this Letter of Transmittal and any other documents required by this Letter of
Transmittal so that such documents are received by River Oaks Partnership
Services, Inc., the Information Agent, on or prior to the Expiration Date,
unless extended. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT YOUR OPTION AND RISK, AND DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE INFORMATION AGENT. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED IS RECOMMENDED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. DELIVERY OF
THIS LETTER OF TRANSMITTAL OR ANY OTHER REQUIRED DOCUMENTS TO AN ADDRESS OTHER
THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE VALID DELIVERY.
--------------------------
IF YOU HAVE THE CERTIFICATE ORIGINALLY ISSUED TO REPRESENT YOUR
INTEREST IN THE PARTNERSHIP PLEASE SEND IT TO THE INFORMATION
AGENT WITH THIS LETTER OF TRANSMITTAL.
---------------------------
FOR INFORMATION OR ASSISTANCE IN CONNECTION WITH THE OFFER OR THE
COMPLETION OF THIS LETTER OF TRANSMITTAL, PLEASE CONTACT THE INFORMATION AGENT
AT (888) 349-2005 (TOLL FREE).
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
- --------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 2, 4 AND 9)
To be completed ONLY if the consideration for the purchase price of Units
accepted for payment is to be issued in the name of someone other than the
undersigned.
[ ] Issue consideration to:
NAME
------------------------------------------------------
(Please Type or Print)
ADDRESS
---------------------------------------------------
---------------------------------------------------
(Include Zip Code)
---------------------------------------------------
(Tax Identification or Social Security No.)
(See Substitute Form W-9)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 2, 4 AND 9)
To be completed ONLY if the consideration for the purchase price of Units
accepted for payment is to be sent to someone other than the undersigned or to
the undersigned at an address other than that shown above.
[ ] MAIL CONSIDERATION TO:
NAME
------------------------------------------------------
(Please Type or Print)
ADDRESS
---------------------------------------------------
---------------------------------------------------
(Include Zip Code)
---------------------------------------------------
(Tax Identification or Social Security No.)
(See Substitute Form W-9)
- --------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby acknowledges that he or she has received and reviewed
(i) the Purchaser's Offer to Purchase relating to the offer by AIMCO Properties,
L.P. (the "Purchaser") to purchase Limited Partnership Interests (the "Units")
in the Partnership and (ii) this Letter of Transmittal and the Instructions
hereto, as each may be supplemented or amended from time to time (collectively,
the "Offer").
Upon the terms and subject to the conditions set forth in the Offer to
Purchase, and this Letter of Transmittal, the undersigned hereby tenders to the
Purchaser the Units set forth in the box above entitled "Description of Units
Tendered," including all interests in any limited partnership represented by
such units (collectively, the "Units"), at the price indicated on the Offer to
Purchase, less the amount of distributions, if any, made by the Partnership from
the Offer Date until the Expiration Date (the "Offer Price"), net to the
undersigned in cash, without interest.
Subject to and effective upon acceptance for payment of any of the Units
tendered hereby in accordance with the terms of the Offer, the undersigned
hereby irrevocably sells, assigns, transfers, conveys and delivers to, or upon
the order of, the Purchaser all right, title and interest in and to such Units
tendered hereby that are accepted for payment pursuant to the Offer, including,
without limitation, (i) all of the undersigned's interest in the capital of the
Partnership, and the undersigned's interest in all profits, losses and
distributions of any kind to which the undersigned shall at any time be entitled
in respect of the Units; (ii) all other payments, if any, due or to become due
to the undersigned in respect of the Units, under or arising out of the
agreement of limited partnership of the Partnership (the "Partnership
Agreement"), or any agreement pursuant to which the Units were sold (the
"Purchase Agreement"), whether as contractual obligations, damages, insurance
proceeds, condemnation awards or otherwise; (iii) all of the undersigned's
claims, rights, powers, privileges, authority, options, security interests,
liens and remedies, if any, under or arising out of the Partnership Agreement or
Purchase Agreement or the undersigned's ownership of the Units, including,
without limitation, all voting rights, rights of first offer, first refusal or
similar rights, and rights to be substituted as a limited partner of the
Partnership; and (iv) all present and future claims, if any, of the undersigned
against the Partnership, the other partners of the Partnership, or the general
partner and its affiliates, including the Purchaser, under or arising out of the
Partnership Agreement, the Purchase Agreement, the undersigned's status as a
limited partner, or the terms or conditions of the Offer, for monies loaned or
advanced, for services rendered, for the management of the Partnership or
otherwise.
The undersigned hereby irrevocably constitutes and appoints the Purchaser
and any designees of the Purchaser as the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Units, with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to vote or act in such manner as any such attorney
and proxy or substitute shall, in its sole discretion, deem proper with respect
to such Units, to do all such acts and things necessary or expedient to deliver
such Units and transfer ownership of such Units on the partnership books
maintained by the general partner of the Partnership, together with all
accompanying evidence of transfer and authenticity to, or upon the order of, the
Purchaser, to sign any and all documents necessary to authorize the transfer of
the Units to the Purchaser including, without limitation, the "Transferor's
(Seller's) Application for Transfer" created by the National Association of
Securities Dealers, Inc., if required, and upon receipt by the Information Agent
(as the undersigned's agent) of the Offer Price, to become a substitute limited
partner, to receive any and all distributions made by the Partnership from and
after the Expiration Date of the Offer (regardless of the record date for any
such distribution), and to receive all benefits and otherwise exercise all
rights of beneficial ownership of such Units, all in accordance with the terms
of the Offer. This appointment is effective upon the purchase of the Units by
the Purchaser as provided in the Offer and shall be irrevocable for a period of
ten years following the termination of the Offer. Upon the purchase of Units
pursuant to the Offer, all prior proxies and consents given by the undersigned
with respect to such Units will be revoked and no subsequent proxies or consents
may be given (and if given will not be deemed effective).
<PAGE> 4
In addition to and without limiting the generality of the foregoing, the
undersigned hereby irrevocably (i) requests and authorizes (subject to and
effective upon acceptance for payment of any Unit tendered hereby) the
Partnership and its general partners to take any and all actions as may be
required to effect the transfer of the undersigned's Units to the Purchaser (or
its designee) and to admit the Purchaser as a substitute limited partner in the
Partnership under the terms of the Partnership Agreement; (ii) empowers the
Purchaser and its agent to execute and deliver to each general partner a change
of address form instructing the general partner to send any and all future
distributions to the address specified in the form, and to endorse any check
payable to or upon the order of such unitholder representing a distribution to
which the Purchaser is entitled pursuant to the terms of the offer, in each
case, in the name and on behalf of the tendering unitholder; (iii) agrees not to
exercise any rights pertaining to the Units without the prior consent of the
Purchaser; and (iv) requests and consents to the transfer of the Units, to be
effective on the books and records of the Partnership as of the Offer Date.
NOTWITHSTANDING ANY PROVISION IN A PARTNERSHIP AGREEMENT OR ANY PURCHASE
AGREEMENT TO THE CONTRARY, THE UNDERSIGNED HEREBY DIRECTS EACH GENERAL PARTNER
OF THE PARTNERSHIP TO MAKE ALL DISTRIBUTIONS AFTER THE PURCHASER ACCEPTS THE
TENDERED UNITS FOR PAYMENT TO THE PURCHASER OR ITS DESIGNEE. Subject to and
effective upon acceptance for payment of any Unit tendered hereby, the
undersigned hereby requests that the Purchaser be admitted to the Partnership as
a substitute limited partner under the terms of the Partnership Agreement. Upon
request, the undersigned will execute and deliver additional documents deemed by
the Information Agent or the Purchaser to be necessary or desirable to complete
the assignment, transfer and purchase of Units tendered hereby and will hold any
distributions received from the Partnership after the Expiration Date in trust
for the benefit of the Purchaser and, if necessary, will promptly forward to the
Purchaser any such distributions immediately upon receipt. The Purchaser
reserves the right to transfer or assign, in whole or in part, from time to
time, to one or more of its affiliates, the right to purchase Units tendered
pursuant to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer or prejudice the rights of
tendering unitholders to receive payment for Units validly tendered and accepted
for payment pursuant to the Offer.
By executing this Letter of Transmittal, the undersigned represents that
either (i) the undersigned is not a plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code"), or an entity deemed
to hold "plan assets" within the meaning of 29 C.F.R. Section 2510.3-101 of any
such plan, or (ii) the tender and acceptance of Units pursuant to the Offer will
not result in a nonexempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code.
The undersigned understands that a tender of Units to the Purchaser will
constitute a binding agreement between the undersigned and the Purchaser upon
the terms and subject to the conditions of the Offer. The undersigned recognizes
that under certain circumstances set forth in the Offer, the Purchaser may not
be required to accept for payment any of the Units tendered hereby. In such
event, the undersigned understands that any Letter of Transmittal for Units not
accepted for payment may be destroyed by the Purchaser (or its agent). EXCEPT AS
STATED IN THE OFFER, THIS TENDER IS IRREVOCABLE, PROVIDED THAT UNITS TENDERED
PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE,
OR UNLESS ALREADY ACCEPTED FOR PAYMENT, ANY TIME AFTER 60 DAYS FROM THE OFFER
DATE.
THE UNDERSIGNED HAS BEEN ADVISED THAT THE PURCHASER IS AN AFFILIATE OF THE
GENERAL PARTNER OF THE PARTNERSHIP AND NO SUCH GENERAL PARTNER MAKES ANY
RECOMMENDATION AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING UNITS IN THE
OFFER. THE UNDERSIGNED HAS MADE HIS OR HER OWN DECISION TO TENDER UNITS.
<PAGE> 5
The undersigned hereby represents and warrants for the benefit of the
Partnership and the Purchaser that the undersigned owns the Units tendered
hereby and has full power and authority and has taken all necessary action to
validly tender, sell, assign, transfer, convey and deliver the Units tendered
hereby and that when the same are accepted for payment by the Purchaser, the
Purchaser will acquire good, marketable and unencumbered title thereto, free and
clear of all liens, restrictions, charges, encumbrances, conditional sales
agreements or other obligations relating to the sale or transfer thereof, and
such Units will not be subject to any adverse claims and that the transfer and
assignment contemplated herein are in compliance with all applicable laws and
regulations.
Our records indicate that the undersigned owns the number of Units set forth
in the box above entitled "Description of Units Tendered" under the column
entitled "Total Number of Units Owned." If you would like to tender only a
portion of your Units, please so indicate in the space provided in the box above
entitled "Description of Units Tendered."
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligations of the undersigned
shall be binding upon the heirs, personal representatives, trustees in
bankruptcy, legal representatives, and successors and assigns of the
undersigned.
The undersigned further represents and warrants that, to the extent a
certificate evidencing the Units tendered hereby (the "original certificate") is
not delivered by the undersigned together with this Letter of Transmittal, (i)
the undersigned represents and warrants to the Purchaser that the undersigned
has not sold, transferred, conveyed, assigned, pledged, deposited or otherwise
disposed of any portion of the Units, (ii) the undersigned has caused a diligent
search of its records to be taken and has been unable to locate the original
certificate, (iii) if the undersigned shall find or recover the original
certificate evidencing the Units, the undersigned will immediately and without
consideration surrender it to the Purchaser; and (iv) the undersigned shall at
all times indemnify, defend, and save harmless the Purchaser and the
Partnership, its successors, and its assigns from and against any and all
claims, actions, and suits whether groundless or otherwise, and from and against
any and all liabilities, losses, damages, judgments, costs, charges, counsel
fees, and other expenses of every nature and character by reason of honoring or
refusing to honor the original certificate when presented by or on behalf of a
holder in due course of a holder appearing to or believed by the partnership to
be such, or by issuance or delivery of a replacement certificate, or the making
of any payment, delivery, or credit in respect of the original certificate
without surrender thereof, or in respect of the replacement certificate.
<PAGE> 6
================================================================================
SIGNATURE BOX
(SEE INSTRUCTION 2)
- --------------------------------------------------------------------------------
Please sign exactly as your name is printed on the front of this Letter of
Transmittal. For joint owners, each joint owner must sign. (See Instruction 2).
TRUSTEES, EXECUTORS, ADMINISTRATORS, GUARDIANS, ATTORNEYS-IN-FACT, OFFICERS
OF A CORPORATION OR OTHER PERSONS ACTING IN A FIDUCIARY OR REPRESENTATIVE
CAPACITY, PLEASE COMPLETE THIS BOX AND SEE INSTRUCTION 2.
The signatory hereto hereby tenders the Units indicated in this Letter of
Transmittal to the Purchaser pursuant to the terms of the Offer, and certifies
under penalties of perjury that the statements in Box A, Box B and, if
applicable, Box C and Box D are true.
X
------------------------------------------------------------------
(Signature of Owner)
X
------------------------------------------------------------------
(Signature of Joint Owner)
------------------------------------------------------------------
Name and Capacity (if other than individ
Title:
-------------------------------------------------------------
Address:
-----------------------------------------------------------
------------------------------------------------------------------
(City) (State) (Zip)
Area Code and Telephone No. (Day):
------------------------
(Evening):
------------------------------
SIGNATURE GUARANTEE (IF REQUIRED)
(SEE INSTRUCTION 2)
Name and Address of Eligible Institution:
-------------------------
Authorized Signature: X
----------------------------------------------
Name:
--------------------------------------------------------------
Title: Date:
--------------------------------------- ----------------
================================================================================
<PAGE> 7
================================================================================
TAX CERTIFICATIONS
(See Instruction 4)
- --------------------------------------------------------------------------------
By signing the Letter of Transmittal in the Signature Box, the
unitholder certifies as true under penalty of perjury, the representations in
Boxes A, B and C below. Please refer to the attached Instructions for completing
this Letter of Transmittal and Boxes A, B and C below.
================================================================================
================================================================================
BOX A
SUBSTITUTE FORM W-9
(SEE INSTRUCTION 4 - BOX A)
- --------------------------------------------------------------------------------
The unitholder hereby certifies the following to the Purchaser under
penalties of perjury:
(i) The Taxpayer Identification No. ("TIN") printed (or corrected) on
the front of this Letter of Transmittal is the correct TIN of the unitholder,
unless the Units are held in an Individual Retirement Account ("IRA"); or if
this box [ ] is checked, the unitholder has applied for a TIN. If the unitholder
has applied for a TIN, a TIN has not been issued to the unitholder, and either
(a) the unitholder has mailed or delivered an application to receive a TIN to
the appropriate IRS Center or Social Security Administration Office, or (b) the
unitholder intends to mail or deliver an application in the near future (it
being understood that if the unitholder does not provide a TIN to the Purchaser,
31% of all reportable payments made to the unitholder will be withheld); and
(ii) Unless this box [ ] is checked, the unitholder is not subject to
backup withholding either because the unitholder: (a) is exempt from backup
withholding; (b) has not been notified by the IRS that the unitholder is subject
to backup withholding as a result of a failure to report all interest or
dividends; or (c) has been notified by the IRS that such unitholder is no longer
subject to backup withholding.
Note: Place an "X" in the box in (ii) above, only if you are unable to
certify that the unitholder is not subject to backup withholding.
================================================================================
================================================================================
BOX B
FIRPTA AFFIDAVIT
(SEE INSTRUCTION 4 - BOX B)
- --------------------------------------------------------------------------------
Under Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg.
1.1445-11T(d), a transferee must withhold tax equal to 10% of the amount
realized with respect to certain transfers of an interest in a partnership if
50% or more of the value of its gross assets consists of U.S. real property
interests and 90% or more of the value of its gross assets consists of U.S. real
property interests plus cash equivalents, and the holder of the partnership
interest is a foreign person. To inform the Purchaser that no withholding is
required with respect to the unitholder's Units in the Partnership, the person
signing this Letter of Transmittal hereby certifies the following under
penalties of perjury:
(i) Unless this box [ ] is checked, the unitholder, if an individual,
is a U.S. citizen or a resident alien for purposes of U.S. income taxation, and
if other than an individual, is not a foreign corporation, foreign partnership,
foreign estate or foreign trust (as those terms are defined in the Internal
Revenue Code and Income Tax Regulations);
(ii) The unitholder's U.S. social security number (for individuals) or
employer identification number (for non-individuals) is correct as furnished in
the blank provided for that purpose on the front of the Letter of Transmittal;
(iii) The unitholder's home address (for individuals), or office
address (for non-individuals), is correctly printed (or corrected) on the front
of this Letter of Transmittal.
The person signing this Letter of Transmittal understands that this
certification may be disclosed to the IRS by the Purchaser and that any false
statements contained herein could be punished by fine, imprisonment, or both.
================================================================================
================================================================================
BOX C
SUBSTITUTE FORM W-8
(SEE INSTRUCTION 4 - BOX C)
- --------------------------------------------------------------------------------
By checking this box o, the person signing this Letter of Transmittal hereby
certifies under penalties of perjury that the unitholder is an "exempt foreign
person" for purposes of the Backup Withholding rules under the U.S. Federal
income tax laws, because the unitholder has the following characteristics:
(i) Is a nonresident alien individual or a foreign corporation,
partnership, estate or trust;
(ii) If an individual, has not been and plans not to be present in the
U.S. for a total of 183 days or more during the calendar year; and
(iii) Neither engages, nor plans to engage, in a U.S. trade or business
that has effectively connected gains from transactions with a
broker or barter exchange.
================================================================================
<PAGE> 8
INSTRUCTIONS
FOR COMPLETING LETTER OF TRANSMITTAL
1. REQUIREMENTS OF TENDER. To be effective, a duly completed and signed
Letter of Transmittal (or facsimile thereof) and any other required
documents must be received by the Information Agent at one of its
addresses (or its facsimile number) set forth herein before 5:00 p.m.,
New York Time, on the Expiration Date, unless extended. To ensure receipt
of the Letter of Transmittal and any other required documents, it is
suggested that you use overnight courier delivery or, if the Letter of
Transmittal and any other required documents are to be delivered by
United States mail, that you use certified or registered mail, return
receipt requested.
WHEN TENDERING, YOU MUST SEND ALL PAGES OF THE LETTER OF TRANSMITTAL,
INCLUDING TAX CERTIFICATIONS (BOXES A, B, AND C).
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING UNITHOLDER
AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
INFORMATION AGENT. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ASSURE TIMELY DELIVERY.
2. SIGNATURE REQUIREMENTS.
INDIVIDUAL AND JOINT OWNERS -- After carefully reading and completing the
Letter of Transmittal, to tender Units, unitholders must sign at the "X"
in the Signature Box of the Letter of Transmittal. The signature(s) must
correspond exactly with the names printed (or corrected) on the front of
the Letter of Transmittal. If the Letter of Transmittal is signed by the
unitholder (or beneficial owner in the case of an IRA), no signature
guarantee on the Letter of Transmittal is required. If any tendered Units
are registered in the names of two or more joint owners, all such owners
must sign this Letter of Transmittal.
IRAS/ELIGIBLE INSTITUTIONS -- For Units held in an IRA account, the
beneficial owner should sign in the Signature Box and no signature
guarantee is required. Similarly, if Units are tendered for the account
of a member firm of a registered national security exchange, a member
firm of the National Association of Securities Dealers, Inc. or a
commercial bank, savings bank, credit union, savings and loan association
or trust company having an office, branch or agency in the United States
(each an "Eligible Institution"), no signature guarantee is required.
TRUSTEES, CORPORATIONS, PARTNERSHIP AND FIDUCIARIES -- Trustees,
executors, administrators, guardians, attorneys-in-fact, officers of a
corporation, authorized partners of a partnership or other persons acting
in a fiduciary or representative capacity must sign at the "X" in the
Signature Box and have their signatures guaranteed by an Eligible
Institution by completing the signature guarantee set forth in the
Signature Box of the Letter of Transmittal. If the Letter of Transmittal
is signed by trustees, administrators, guardians, attorneys-in-fact,
officers of a corporation, authorized partners of a partnership or others
acting in a fiduciary or representative capacity, such persons should, in
addition to having their signatures guaranteed, indicate their title in
the Signature Box and must submit proper evidence satisfactory to the
Purchaser of their authority to so act (see Instruction 3 below).
3. DOCUMENTATION REQUIREMENTS. In addition to the information required to be
completed on the Letter of Transmittal, additional documentation may be
required by the Purchaser under certain circumstances including, but not
limited to, those listed below. Questions on documentation should be
directed to the Information Agent at its telephone number set forth
herein.
<TABLE>
<S> <C> <C>
DECEASED OWNER (JOINT TENANT) -- Copy of death certificate.
DECEASED OWNER (OTHERS) -- Copy of death certificate (see also Exec
utor/Administrator/Guardian below).
EXECUTOR/ADMINISTRATOR/GUARDIAN -- Copy of court appointment documents for executor or
administrator; and
</TABLE>
<PAGE> 9
<TABLE>
<S> <C> <C>
(a) a copy of applicable provisions of the will
(title page, executor(s)' powers, asset
distribution); or
(b) estate distribution documents.
ATTORNEY-IN-FACT -- Current power of attorney.
CORPORATION/PARTNERSHIP -- Corporate resolution(s) or other evidence of authority
to act. Partnership should furnish a copy of the
partnership agreement.
TRUST/PENSION PLANS -- Unless the trustee(s) are named in the registration, a
copy of the cover page of the trust or pension plan,
along with a copy of the section(s) setting forth names
and powers of trustee(s) and any amendments to such
sections or appointment of successor trustee(s).
</TABLE>
4. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If consideration is to be
issued in the name of a person other than the person signing the
Signature Box of the Letter of Transmittal or if consideration is to be
sent to someone other than such signer or to an address other than that
set forth on the Letter of Transmittal in the box entitled "Description
of Units Tendered," the appropriate boxes on the Letter of Transmittal
should be completed.
5. TAX CERTIFICATIONS. The unitholder(s) tendering Units to the Purchaser
pursuant to the Offer must furnish the Purchaser with the unitholder(s)'
taxpayer identification number ("TIN") and certify as true, under
penalties of perjury, the representations in Box A, Box B and, if
applicable, Box C. By signing the Signature Box, the unitholder(s)
certifies that the TIN as printed (or corrected) on this Letter of
Transmittal in the box entitled "Description of Units Tendered" and the
representations made in Box A, Box B and, if applicable, Box C, are
correct. See attached Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for guidance in determining
the proper TIN to give the Purchaser.
U.S. PERSONS. A unitholder that is a U.S. citizen or a resident alien
individual, a domestic corporation, a domestic partnership, a domestic
trust or a domestic estate (collectively, "U.S. Persons"), as those terms
are defined in the Code, should follow the instructions below with
respect to certifying Box A and Box B.
BOX A - SUBSTITUTE FORM W-9.
Part (i), Taxpayer Identification Number -- Tendering unitholders must
certify to the Purchaser that the TIN as printed (or corrected) on this
Letter of Transmittal in the box entitled "Description of Units Tendered"
is correct. If a correct TIN is not provided, penalties may be imposed by
the Internal Revenue Service (the "IRS"), in addition to the unitholder
being subject to backup withholding.
Part (ii), Backup Withholding -- In order to avoid 31% Federal income tax
backup withholding, the tendering unitholder must certify, under penalty
of perjury, that such unitholder is not subject to backup withholding.
Certain unitholders (including, among others, all corporations and
certain exempt non-profit organizations) are not subject to backup
withholding. Backup withholding is not an additional tax. If withholding
results in an overpayment of taxes, a refund may be obtained from the
IRS. DO NOT CHECK THE BOX IN BOX A, PART (II), UNLESS YOU HAVE BEEN
NOTIFIED BY THE IRS THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING.
When determining the TIN to be furnished, please refer to the following
as a guide:
Individual accounts - should reflect owner's TIN.
Joint accounts - should reflect the TIN of the owner whose name appears
first.
Trust accounts - should reflect the TIN assigned to the trust.
IRA custodial accounts - should reflect the TIN of the custodian (not
necessary to provide).
Custodial accounts for the benefit of minors - should reflect the TIN of
the minor.
Corporations, partnership or other business entities - should reflect the
TIN assigned to that entity.
<PAGE> 10
By signing the Signature Box, the unitholder(s) certifies that the TIN as
printed (or corrected) on the front of the Letter of Transmittal is
correct.
BOX B - FIRPTA AFFIDAVIT -- Section 1445 of the Code requires that each
unitholder transferring interests in a partnership with real estate
assets meeting certain criteria certify under penalty of perjury the
representations made in Box B, or be subject to withholding of tax equal
to 10% of the purchase price for interests purchased. Tax withheld under
Section 1445 of the Code is not an additional tax. If withholding results
in an overpayment of tax, a refund may be obtained from the IRS. PART (I)
SHOULD BE CHECKED ONLY IF THE TENDERING UNITHOLDER IS NOT A U.S. PERSON,
AS DESCRIBED THEREIN.
BOX C - FOREIGN PERSONS -- In order for a tendering unitholder who is a
Foreign Person (i.e., not a U.S. Person, as defined above) to qualify as
exempt from 31% backup withholding, such foreign Unitholder must certify,
under penalties of perjury, the statement in Box C of this Letter of
Transmittal, attesting to that Foreign Person's status by checking the
box preceding such statement. UNLESS THE BOX IS CHECKED, SUCH UNITHOLDER
WILL BE SUBJECT TO 31% WITHHOLDING OF TAX.
6. VALIDITY OF LETTER OF TRANSMITTAL. All questions as to the validity,
form, eligibility (including time of receipt) and acceptance of a Letter
of Transmittal and other required documents will be determined by the
Purchaser and such determination will be final and binding. The
Purchaser's interpretation of the terms and conditions of the Offer
(including these Instructions for this Letter of Transmittal) will be
final and binding. The Purchaser will have the right to waive any
irregularities or conditions as to the manner of tendering. Any
irregularities in connection with tenders, unless waived, must be cured
within such time as the Purchaser shall determine. This Letter of
Transmittal will not be valid until any irregularities have been cured or
waived. Neither the Purchaser nor the Information Agent are under any
duty to give notification of defects in a Letter of Transmittal and will
incur no liability for failure to give such notification.
7. ASSIGNEE STATUS. Assignees must provide documentation to the Information
Agent which demonstrates, to the satisfaction of the Purchaser, such
person's status as an assignee.
8. TRANSFER TAXES. The amount of any transfer taxes (whether imposed on the
registered holder or such person) payable on account of the transfer to
such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is
submitted.
<PAGE> 11
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER - - Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
GIVE THE
TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF - -
- ------------------------------------------------------ ---------------------------------------------------------
<S> <C> <C>
1. An individual account The individual
2. Two or more individuals (joint account) The actual owner of the account or, if combined
funds, the first individual on the account
3. Husband and wife (joint account) The actual owner of the account or, if joint funds,
either person
4. Custodian account of a minor (Uniform The minor (2)
Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the minor is the only contributor,
the minor (1)
6. Account in the name of guardian or com The ward, minor or incompetent person (3)
mittee for a designated ward, minor or
incompetent person (3)
7. a. The usual revocable savings trust account The grantor trustee (1)
(grantor is also trustee)
b. So-called trust account that is not a legal The actual owner (1)
or valid trust under state law
8. Sole proprietorship account The owner (4)
9. A valid trust, estate or pension trust The legal entity (Do not furnish the identifying
number of the personal representative or trustee
unless the legal entity itself is not designated in the
account title.) (5)
10. Corporate account The corporation
11. Religious, charitable, or educational The organization
organization account
12. Partnership account held in the name of the The partnership
business
13. Association, club, or other tax-exempt The organization
organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of Agriculture The public entity
in the name of a public entity (such as a State
or local government, school district, or prison)
that receives agricultural program payments
</TABLE>
- --------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's or incompetent person's name and furnish such person's
social security number or employer identification number.
(4) Show your individual name. You may also enter your business name. You
may use your social security number or employer identification number.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number
will be considered to be that of the first name listed.
<PAGE> 12
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a) of the Code.
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947 (a)(1). - An entity registered at all times under the
Investment Company Act of 1940.
- A foreign central bank of issue.
- A futures commission merchant registered with the Commodity Futures
Trading Commission.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441
of the Code.
- Payments to Partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to an appropriate nominee.
- Section 404(k) payments made by an ESOP.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600
or more and is paid in the course of the payer's trade or business and
you have not provided your correct taxpayer identification number to the
payer. Payments of tax exempt interest (including exempt interest
dividends under section 852 of the Code).
- Payments described in section 6049(b)(5) of the Code to nonresident
aliens.
- Payments on tax-free covenant bonds under section 1451 of the Code.
- Payments made by certain foreign organizations.
- Payments of mortgage interest to you.
- Payments made to an appropriate nominee.
<PAGE> 13
Exempt payees described above should file a substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM. IF YOU ARE A NONRESIDENT ALIEN OR A
FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED
INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(A),
6045, and 6050A of the Code.
PRIVACY ACT NOTICE - - Section 6109 of the Code requires most recipients of
dividend, interest, or other payments to give correct taxpayer identification
numbers to payers who must report the payments to the IRS. The IRS uses the
numbers for identification purposes. Payers must be given the numbers whether or
not recipients are required to file a tax return. Payers must generally withhold
31% of taxable interest, dividend, and certain other payments to a payee who
does not furnish a correct taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER - - If
you fail to furnish your correct taxpayer identification number to a payer, you
are subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING - - If
you make a false statement with no reasonable basis that results in no
imposition of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION - - Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
<PAGE> 14
<TABLE>
<S> <C> <C>
The Information Agent for the offer is:
RIVER OAKS PARTNERSHIP SERVICES, INC.
By Mail: By Overnight Courier: By Hand:
P.O. Box 2065 111 Commerce Road 111 Commerce Road
S. Hackensack, N.J. 07606-2065 Carlstadt, N.J. 07072 Carlstadt, N.J. 07072
Attn.: Reorganization Dept. Attn.: Reorganization Dept.
By Telephone:
TOLL FREE (888) 349-2005
</TABLE>
<PAGE> 1
AIMCO PROPERTIES, L.P.
1873 SOUTH BELLAIRE STREET, 17TH FLOOR
DENVER, COLORADO 80222
July 22, 1999
Dear Unitholder:
We are offering to acquire up to 7,738.38 units in your partnership,
McCombs Realty Partners. We are only offering to purchase the units whose
holders made additional capital contributions. Our offer presents you with the
following two options, which you are free to accept or reject in any combination
you like:
1. You may tender each of your units in exchange for $0.50 in
cash, in which case you may recognize a gain or loss for federal income
tax purposes.
2. You may retain any or all of your units. If you choose to
retain any or all of your units, your rights as a holder of units will
remain unchanged. You will continue to participate in gains and losses
of your partnership, and you will receive distributions, if any,
payable in respect of your units.
We are offering to acquire up to 7,738.38 units in your partnership.
Our offer is conditioned upon a minimum of 35% of the units whose holders made
additional capital contributions being tendered. If more units are tendered than
we are offering to acquire, we will prorate the purchase so that the same
approximate percentage of units tendered by each partner will be purchased. YOU
WILL NOT BE REQUIRED TO PAY ANY COMMISSIONS OR FEES IN CONNECTION WITH ANY
DISPOSITION OF YOUR UNITS PURSUANT TO OUR OFFER. Our offer price will be reduced
for any distributions subsequently made by your partnership prior to the
expiration of our offer.
There are advantages and disadvantages to you of accepting or declining
our offer. The terms of the offer are more fully described in the enclosed
materials. These documents describe the material risks and opportunities
associated with the offer, including certain tax considerations. Please review
these documents carefully. The general partner of your partnership makes no
recommendation as to whether you should tender or refrain from tendering your
units. Although the general partner believes the offer is fair, you must make
your own decision whether or not to participate in the offer, based upon a
number of factors, including your financial position, your need or desire for
liquidity, other financial opportunities available to you, and your tax position
and the tax consequences to you of selling your units.
If you desire to tender any of your units in response to our offer, you
should complete and sign the enclosed letter of transmittal in accordance with
the enclosed instructions and mail or deliver the signed letter of transmittal
and any other required documents to River Oaks Partnership Services, Inc., which
is acting as the Information Agent in connection with our offer, at the address
set forth on the back cover of the enclosed Offer to Purchase. The offer will
expire at 5:00 p.m., New York City time, on August 19, 1999, unless extended. If
you have questions or require further information, please call the Information
Agent, toll free, at (888) 349-2005.
Very truly yours,
AIMCO PROPERTIES, L.P.
