<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)
------------------------------------
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
(Name of Subject Company)
MADISON RIVER PROPERTIES, L.L.C.
INSIGNIA PROPERTIES, L.P.
INSIGNIA PROPERTIES TRUST
INSIGNIA FINANCIAL GROUP, INC.
(Bidders)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
NONE
(Cusip Number of Class of Securities)
------------------------------------
JEFFREY P. COHEN
SENIOR VICE PRESIDENT
INSIGNIA FINANCIAL GROUP, INC.
375 PARK AVENUE, SUITE 3401
NEW YORK, NEW YORK 10152
(212) 750-6070
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
COPY TO:
JOHN A. HEALY, ESQ.
ROGERS & WELLS
200 PARK AVENUE
NEW YORK, NEW YORK 10166
(212) 878-8000
------------------------------------
CALCULATION OF FILING FEE
- -------------------------------------------------------------------------------
Transaction Valuation*: $12,325,000 Amount of Filing Fee: $2,465
- -------------------------------------------------------------------------------
* For purposes of calculating the fee only. This amount assumes the
purchase of 145,000 units of limited partnership interest ("Units") of
the subject partnership for $85 per Unit. The amount of the filing
fee, calculated in accordance with Section 14(g)(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 bidders.
o 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: Not Applicable Filing Party: Not Applicable
Form or Registration No.: Not Applicable Date Filed: Not Applicable
- -------------------------------------------------------------------------------
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<TABLE>
<CAPTION>
<S> <C> <C>
- ---------------------------------- ---------------------------------
CUSIP No. NONE 14D-1 AND 13D/A Page 2
- ---------------------------------- ---------------------------------
========================================================================================================================
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
MADISON RIVER PROPERTIES, L.L.C.
- ------------------------------------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [X]
- ------------------------------------------------------------------------------------------------------------------------
3. SEC Use Only
- ------------------------------------------------------------------------------------------------------------------------
4. Sources of Funds
AF
- ------------------------------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f)
[ ]
- ------------------------------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
DELAWARE
- ------------------------------------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
43,195.8
- ------------------------------------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
[ ]
- ------------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
11.3%
- ------------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person
OO
========================================================================================================================
<PAGE>
- ---------------------------------- ---------------------------------
CUSIP No. NONE 14D-1 AND 13D/A Page 3
- ---------------------------------- ---------------------------------
========================================================================================================================
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
INSIGNIA PROPERTIES, L.P.
- ------------------------------------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [X]
- ------------------------------------------------------------------------------------------------------------------------
3. SEC Use Only
- ------------------------------------------------------------------------------------------------------------------------
4. Sources of Funds
WC
- ------------------------------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f)
[ ]
- ------------------------------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
DELAWARE
- ------------------------------------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
43,195.8
- ------------------------------------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
[ ]
- ------------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
11.3%
- ------------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person
PN
========================================================================================================================
<PAGE>
- ---------------------------------- ---------------------------------
CUSIP No. NONE 14D-1 AND 13D/A Page 4
- ---------------------------------- ---------------------------------
========================================================================================================================
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
INSIGNIA PROPERTIES TRUST
- ------------------------------------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [X]
- ------------------------------------------------------------------------------------------------------------------------
3. SEC Use Only
- ------------------------------------------------------------------------------------------------------------------------
4. Sources of Funds
NOT APPLICABLE
- ------------------------------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f)
[ ]
- ------------------------------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
MARYLAND
- ------------------------------------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
43,195.8
- ------------------------------------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
[ ]
- ------------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
11.3%
- ------------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person
OO
========================================================================================================================
<PAGE>
- ---------------------------------- ---------------------------------
CUSIP No. NONE 14D-1 AND 13D/A Page 5
- ---------------------------------- ---------------------------------
========================================================================================================================
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
INSIGNIA FINANCIAL GROUP, INC.
- ------------------------------------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [X]
- ------------------------------------------------------------------------------------------------------------------------
3. SEC Use Only
- ------------------------------------------------------------------------------------------------------------------------
4. Sources of Funds
NOT APPLICABLE
- ------------------------------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f)
[ ]
- ------------------------------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
DELAWARE
- ------------------------------------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
43,195.8
- ------------------------------------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
[ ]
- ------------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
11.3%
- ------------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person
CO
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<PAGE>
- ---------------------------------- ---------------------------------
CUSIP No. NONE 14D-1 AND 13D/A Page 6
- ---------------------------------- ---------------------------------
========================================================================================================================
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
ANDREW L. FARKAS
- ------------------------------------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [X]
- ------------------------------------------------------------------------------------------------------------------------
3. SEC Use Only
- ------------------------------------------------------------------------------------------------------------------------
4. Sources of Funds
NOT APPLICABLE
- ------------------------------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f)
[ ]
- ------------------------------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
UNITED STATES
- ------------------------------------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
43,195.8
- ------------------------------------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
[ ]
- ------------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
11.3%
- ------------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person
IN
========================================================================================================================
</TABLE>
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SCHEDULE 14D-1/AMENDMENT NO. 3 TO SCHEDULE 13D
This Tender Offer Statement on Schedule 14D-1 (the "Statement") also
constitutes Amendment No. 3 to the Statement on Schedule 13D (the "Schedule
13D") previously filed by Insignia Properties, L.P. ("IPLP"), Insignia
Properties Trust ("IPT"), Insignia Financial Group, Inc. ("Insignia") and
Andrew L. Farkas ("Mr. Farkas") in connection with their beneficial ownership
of Units (as defined below). The item numbers and responses thereto set forth
below are in accordance with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Consolidated Capital
Institutional Properties/3, a California limited partnership (the
"Partnership"). The address of the Partnership's principal executive offices is
One Insignia Financial Plaza, Greenville, South Carolina 29602.
(b) This Statement relates to an offer by Madison River Properties,
L.L.C., a Delaware limited liability company (the "Purchaser"), to purchase up
to 145,000 of the outstanding units of limited partnership interest ("Units")
of the Partnership at a purchase price of $85 per Unit, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated December 31, 1997 (the "Offer to Purchase") and the related
Assignment of Partnership Interest (which, together with any supplements or
amendments, collectively constitute the "Offer"), copies of which are filed as
Exhibits (a)(1) and (a)(2) hereto, respectively. The information set forth in
the Offer to Purchase under "Introduction" is incorporated herein by reference.
(c) The information set forth in the Offer to Purchase in Section 13
("Background of the Offer") is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is being filed by the Purchaser, IPLP, IPT
and Insignia (collectively, the "Bidders"), and solely, insofar as the filing
also constitutes Amendment No. 3 to the Schedule 13D, by Mr. Farkas. The
information set forth in the Offer to Purchase under "Introduction," in Section
11 ("Certain Information Concerning the Purchaser, IPLP, IPT and Insignia") and
in Schedules II, III and IV to the Offer to Purchase is incorporated herein by
reference.
(e)-(f) During the last five years, none of the Bidders nor, to the
best of their knowledge, any of the persons listed in Schedules II, III and IV
to the Offer to Purchase (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.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Offer to Purchase under
"Introduction," in Section 10 ("Conflicts of Interest and Transactions with
Affiliates") and in Section 13 ("Background of the Offer") is incorporated
herein by reference.
7
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ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in the Offer to Purchase in Section 10
("Conflicts of Interest and Transactions with Affiliates") and in Section 12
("Source of Funds") is incorporated herein by reference.
(b)-(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(b), (e) The information set forth in the Offer to Purchase under
"Introduction" and in Section 8 ("Future Plans of Insignia, IPT and the
Purchaser") is incorporated herein by reference.
(c) The information set forth in the Offer to Purchase in Section 8
("Future Plans of Insignia, IPT and the Purchaser"), in Section 10 ("Conflicts
of Interest and Transactions with Affiliates") and in Section 13 ("Background
of the Offer") is incorporated herein by reference.
(d) Not applicable.
(f)-(g) The information set forth in the Offer to Purchase in Section
7 ("Effects of the Offer") is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Offer to Purchase under
"Introduction," in Section 11 ("Certain Information Concerning the Purchaser,
IPLP, IPT and Insignia") and in Schedule I to the Offer to Purchase is
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Offer to Purchase under
"Introduction," in Section 7 ("Effects of the Offer"), Section 10 ("Conflicts
of Interest and Transactions with Affiliates"), Section 11 ("Certain
Information Concerning the Purchaser, IPLP, IPT and Insignia") and Section 13
("Background of the Offer") is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Offer to Purchase under
"Introduction" and in Section 16 ("Fees and Expenses") is incorporated herein
by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in the Offer to Purchase in Section 11
("Certain Information Concerning the Purchaser, IPLP, IPT and Insignia") is
incorporated herein by reference. In addition, the following are expressly
incorporated in this Statement by reference: (i) the audited financial
statements of Insignia set forth at Part I-Item 8 of Insignia's Annual Report
on Form 10-K for the year ended December 31, 1996, which is on file with the
Commission; and (ii) the unaudited financial statements of Insignia set
8
<PAGE>
forth at Part I-Item 1 of Insignia's Quarterly Report on Form 10-Q/A for the
period ended September 30, 1997, which is on file with the Commission.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(d) The information set forth in the Offer to Purchase in Section
15 ("Certain Legal Matters") is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the related
Assignment of Partnership Interest, copies of which are filed as Exhibits
(a)(1) and (a)(2) hereto, respectively, is incorporated herein by reference in
its entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated December 31, 1997.
(a)(2) Assignment of Partnership Interest and Related
Instructions.
(a)(3) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(4) Cover Letter, dated December 31, 1997, from the Purchaser
to the Limited Partners of the Partnership.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(z)(1) Summaries of appraisals referred to in the Offer to
Purchase in Section 13 ("Background of the Offer").
(z)(2) Agreement of Joint Filing, dated December 31, 1997, among
the Purchaser, IPLP, IPT, Insignia and Andrew L. Farkas.
9
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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: December 31, 1997
MADISON RIVER PROPERTIES, L.L.C. INSIGNIA FINANCIAL GROUP, INC.
By: /s/ JEFFREY P. COHEN By: /s/ FRANK M. GARRISON
--------------------------- --------------------------------
Jeffrey P. Cohen Frank M. Garrison
Manager Executive Managing Director
INSIGNIA PROPERTIES, L.P. SOLELY FOR PURPOSES OF, AND INSOFAR
AS THIS FILING CONSTITUTES, AMENDMENT
By: Insignia Properties Trust, NO. 3 TO THE STATEMENT ON SCHEDULE
its General Partner 13D
By: /s/ JEFFREY P. COHEN /s/ ANDREW L. FARKAS
--------------------------- -------------------------------------
Jeffrey P. Cohen ANDREW L. FARKAS
Senior Vice President
INSIGNIA PROPERTIES TRUST
By: /s/ JEFFREY P. COHEN
---------------------------
Jeffrey P. Cohen
Senior Vice President
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints Jeffrey P. Cohen his true and lawful
attorney-in-fact and agent to sign in any and all capacities any and all
amendments to this Statement on Schedule 13D and to file the same with all
exhibits thereto and other documents in connection therewith with the
Securities and Exchange Commission, granting to such attorney-in-fact and agent
full power and authority to do all such other acts and execute all such other
documents as he may deem necessary or desirable in connection with the
foregoing, as fully as the undersigned might or could do in person, hereby
ratifying and confirming that such attorney-in-fact and agent may lawfully do
or cause to be done by virtue hereof.
/s/ ANDREW L. FARKAS
- ---------------------------------
Andrew L. Farkas
Dated: December 31, 1997
10
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
(a)(1) Offer to Purchase, dated December 31, 1997.
(a)(2) Assignment of Partnership Interest and Related
Instructions.
(a)(3) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(4) Cover Letter, dated December 31, 1997, from the
Purchaser to the Limited Partners of the Partnership.
(z)(1) Summaries of appraisals referred to in the Offer to
Purchase in Section 13 ("Background of the Offer").
(z)(2) Agreement of Joint Filing, dated December 31, 1997,
among the Purchaser, IPLP, IPT, Insignia and
Andrew L. Farkas.
11
<PAGE>
Offer to Purchase for Cash
Up to 145,000 Units of Limited Partnership Interest
in
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3,
a California limited partnership
for
$85 Net Per Unit
by
MADISON RIVER PROPERTIES, L.L.C.
- -------------------------------------------------------------------------------
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK TIME, ON JANUARY 29,
1998, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
IMPORTANT
Madison River Properties, L.L.C., a Delaware limited liability company
(the "Purchaser"), is offering to purchase up to 145,000 of the outstanding
units of limited partnership interest ("Units") in Consolidated Capital
Institutional Properties/3, a California limited partnership (the
"Partnership"), at a purchase price of $85 per Unit (the "Purchase Price"), net
to the seller in cash, without interest, upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Assignment of
Partnership Interest (which, together with any supplements or amendments,
collectively constitute the "Offer"). The Purchase Price is subject to
adjustment under certain circumstances, as described herein. Holders of Units
(each, a "Limited Partner") who tender their Units in response to the Offer
will not be obligated to pay any commissions or partnership transfer fees. The
Purchaser is an affiliate of ConCap Equities, Inc., which is the general
partner of the Partnership (the "General Partner").
Limited Partners are urged to consider the following factors:
o The Purchaser and the General Partner are both affiliates of
and controlled by Insignia Properties Trust ("IPT"), which is
controlled by Insignia Financial Group, Inc. ("Insignia").
IPT, through its operating partnership Insignia Properties,
L.P. ("IPLP"), currently owns 43,195.8 Units (34,215 Units of
which were originally acquired by an entity which was an
affiliate of the General Partner but was not an affiliate of
Insignia, IPT or the Purchaser, at a purchase price of $45
per Unit, pursuant to a tender offer commenced in November
1992).
o The net liquidation value per Unit (the "Estimated
Liquidation Value") estimated by the Purchaser (which is an
affiliate of the General Partner) in connection with the
Offer is $119.83. The Purchaser does not believe, however,
that the Estimated Liquidation Value represents a fair
estimate of the market value of a Unit, primarily due to the
fact that such estimate does not take into account timing
considerations, market uncertainties and legal and other
expenses that would be incurred in connection with a
liquidation of the Partnership. See Section 13. Accordingly,
the Purchaser does not believe that the Estimated Liquidation
Value should be viewed as representative of the amount a
Limited Partner can realistically expect to obtain on a sale
of a Unit in the near term.
<PAGE>
o The Purchaser will have the right to vote all Units acquired
pursuant to the Offer. Accordingly, if the Purchaser (which
is an affiliate of the General Partner) is successful in
acquiring a significant number of Units, it will be able to
significantly influence all voting decisions with respect to
the Partnership, including decisions regarding liquidation,
amendments to the Limited Partnership Agreement, removal and
replacement of the General Partner and mergers,
consolidations and other extraordinary transactions.
o The Purchaser (which is an affiliate of the General Partner)
is making the Offer with a view to making a profit.
Accordingly, there is a conflict between the desire of the
Purchaser (which is an affiliate of the General Partner) to
purchase Units at a low price and the desire of the Limited
Partners to sell their Units at a high price.
THE OFFER IS NOT CONDITIONED ON FINANCING OR UPON ANY MINIMUM
AGGREGATE NUMBER OF UNITS BEING TENDERED.
----------------------------------------
Any Limited Partner desiring to tender Units should complete and sign
the Assignment of Partnership Interest in accordance with the Instructions to
the Assignment of Partnership Interest and mail or deliver the signed
Assignment of Partnership Interest to the Depositary. A Limited Partner may
tender any or all of the Units owned by that Limited Partner; provided,
however, that because of restrictions in the Partnership's Limited Partnership
Agreement, a partial tender of Units must be for a minimum of twenty Units
(other than Limited Partners who hold Units in an Individual Retirement Account
or Keogh Plan). Tenders of fractional Units will not be permitted, except by a
Limited Partner who is tendering all of the Units owned by that Limited
Partner.
Questions and requests for assistance or for additional copies of this
Offer to Purchase and the Assignment of Partnership Interest may be directed to
the Information Agent at the address and telephone numbers set forth below and
on the back cover of this Offer to Purchase. No soliciting dealer fees or other
payments to brokers for tenders are being paid by the Purchaser (which is an
affiliate of the General Partner).
----------------------------------------
For More Information or for Further Assistance Please Call:
Beacon Hill Partners, Inc.
at
(800) 854-9486
December 31, 1997
<PAGE>
TABLE OF CONTENTS
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INTRODUCTION.................................................................................................... 1
The Purchaser; Affiliation with the General Partner........................................................... 1
Some Factors to Be Considered by Limited Partners............................................................. 1
Reasons for and Effects of the Offer.......................................................................... 3
Certain Tax Considerations.................................................................................... 3
Originally Anticipated Term of the Partnership; General Policy Regarding Sales
and Refinancings of Partnership Properties; Alternatives.................................................... 4
Conditions.................................................................................................... 4
Distributions................................................................................................. 4
Outstanding Units............................................................................................. 5
THE OFFER....................................................................................................... 6
Section 1. Terms of the Offer; Expiration Date; Proration.................................................... 6
Section 2. Acceptance for Payment and Payment for Units...................................................... 7
Section 3. Procedure for Tendering Units..................................................................... 7
Valid Tender................................................................................................ 7
Signature Requirements...................................................................................... 8
Delivery of Assignment of Partnership Interest.............................................................. 8
Appointment as Proxy; Power of Attorney..................................................................... 8
Assignment of Interest in Future Distributions.............................................................. 9
Determination of Validity; Rejection of Units; Waiver of Defects; No Obligation
to Give Notice of Defects................................................................................. 9
Backup Federal Income Tax Withholding....................................................................... 9
FIRPTA Withholding.......................................................................................... 9
Binding Obligation.......................................................................................... 9
Section 4. Withdrawal Rights................................................................................. 9
Section 5. Extension of Tender Period; Termination; Amendment................................................ 10
Section 6. Certain Federal Income Tax Matters................................................................ 11
General..................................................................................................... 11
Gain or Loss Generally...................................................................................... 11
Unrealized Receivables and Certain Inventory................................................................ 11
Passive Activity Loss Limitation............................................................................ 12
Partnership Termination..................................................................................... 12
Backup Withholding and FIRPTA Withholding................................................................... 13
Section 7. Effects of the Offer.............................................................................. 13
Limitations on Resales...................................................................................... 13
Effect on Trading Market; Registration Under Section 12(g) of the Exchange Act.............................. 13
Control of Limited Partner Voting Decisions by Purchaser; Effect of Relationship
with General Partner...................................................................................... 13
Section 8. Future Plans of Insignia, IPT and the Purchaser................................................... 14
Section 9. Certain Information Concerning the Partnership.................................................... 15
General..................................................................................................... 15
Originally Anticipated Term of Partnership; Alternatives.................................................... 15
General Policy Regarding Sales and Refinancings of Partnership Properties................................... 15
Selected Financial and Property-Related Data................................................................ 16
Cash Distributions History.................................................................................. 19
Operating Budgets of the Partnership........................................................................ 19
Section 10. Conflicts of Interest and Transactions with Affiliates........................................... 20
Conflicts of Interest with Respect to the Offer............................................................. 20
i
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PAGE
Voting by the Purchaser..................................................................................... 20
Financing Arrangements...................................................................................... 20
Transactions with Affiliates................................................................................ 21
Section 11. Certain Information Concerning the Purchaser, IPLP, IPT and Insignia............................. 21
The Purchaser............................................................................................... 21
IPT and IPLP................................................................................................ 21
Insignia.................................................................................................... 23
Section 12. Source of Funds.................................................................................. 25
Section 13. Background of the Offer.......................................................................... 25
Affiliation with the General Partner........................................................................ 25
Previous Tender Offer....................................................................................... 25
Determination of Purchase Price............................................................................. 25
Section 14. Conditions of the Offer.......................................................................... 31
Section 15. Certain Legal Matters............................................................................ 32
General..................................................................................................... 32
Antitrust................................................................................................... 33
Margin Requirements......................................................................................... 33
Section 16. Fees and Expenses................................................................................ 33
Section 17. Miscellaneous.................................................................................... 33
SCHEDULE I - Transactions in the Units Effected by IPLP in the Past 60 Days....................S-1
SCHEDULE II - Information Regarding the Managers of the Purchaser...............................S-2
SCHEDULE III - Information Regarding the Trustees and Executive Officers of IPT..................S-3
SCHEDULE IV - Information Regarding the Directors and Executive Officers of Insignia............S-5
SCHEDULE V - IPT Partnerships..................................................................S-8
</TABLE>
ii
<PAGE>
TO THE LIMITED PARTNERS OF
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
INTRODUCTION
Madison River Properties, L.L.C. (the "Purchaser"), which is a
Delaware limited liability company and an affiliate of the General Partner (as
defined below), hereby offers to purchase up to 145,000 of the outstanding
units of limited partnership interest ("Units"), representing approximately 38%
of the Units outstanding, in Consolidated Capital Institutional Properties/3, a
California limited partnership (the "Partnership"), at a purchase price of $85
per Unit (the "Purchase Price"), net to the seller in cash, without interest,
upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Assignment of Partnership Interest (which, together
with any supplements or amendments, collectively constitute the "Offer"). The
Offer is not conditioned on any aggregate minimum number of Units being
tendered. A Limited Partner may tender any or all of the Units owned by that
Limited Partner; provided, however, that because of restrictions in the
Partnership's Limited Partnership Agreement (the "Limited Partnership
Agreement"), a partial tender of Units must be for a minimum of twenty Units
(other than Limited Partners who hold Units in an Individual Retirement Account
("IRA") or Keogh Plan). Accordingly, any Limited Partner that owns twenty or
fewer Units (other than Limited Partners who hold Units in an IRA or Keogh
Plan) must tender all or none of its Units. Tenders of fractional Units will
not be permitted, except by a Limited Partner who is tendering all of the Units
owned by that Limited Partner. The Purchaser (which is an affiliate of the
General Partner) will pay all charges and expenses of Beacon Hill Partners,
Inc., who will serve as the Purchaser's information agent for the Offer (the
"Information Agent"), and Harris Trust Company of New York, who will act as
depositary for the Offer (the "Depositary").
The Purchaser; Affiliation with the General Partner. ConCap Equities,
Inc., which is the general partner of the Partnership (the "General Partner"),
is a wholly-owned subsidiary of Insignia Properties Trust, a Maryland real
estate investment trust ("IPT"). The Purchaser is a newly-formed, wholly-owned
subsidiary of Insignia Properties, L.P., a Delaware limited partnership
("IPLP"), which is the operating partnership of IPT. IPT is the sole general
partner of IPLP (owning approximately 66% of the total equity interests in
IPLP), and Insignia Financial Group, Inc., a Delaware corporation ("Insignia"),
is the sole limited partner of IPLP (owning approximately 34% of the total
equity interests in IPLP). Insignia and its affiliates also own approximately
67% of the outstanding common shares of IPT. Since late December 1994, Insignia
Residential Group, L.P. ("IRG") and Insignia Commercial Group, Inc. ("ICG"),
which are affiliates of the Purchaser and the General Partner, have provided
property management services to the Partnership, and Insignia (directly or
through affiliates) has performed asset management, partnership administration
and investor relations services for the Partnership. By reason of these
relationships, the General Partner has conflicts of interest in considering the
Offer. The General Partner has indicated in a Statement on Schedule 14D-9 (the
"Schedule 14D-9") filed with the Securities and Exchange Commission (the
"Commission") that it is remaining neutral and making no recommendation as to
whether Limited Partners should tender their Units in response to the Offer.
LIMITED PARTNERS ARE URGED TO READ THIS OFFER TO PURCHASE AND THE RELATED
MATERIALS AND THE SCHEDULE 14D-9 CAREFULLY AND IN THEIR ENTIRETY BEFORE
DECIDING WHETHER TO TENDER THEIR UNITS. See Sections 10 and 13.
Some Factors to Be Considered by Limited Partners. In considering the
Offer, Limited Partners may wish to consider the following factors:
Potential Adverse Aspects of the Offer for Limited Partners
o The Purchaser and the General Partner are affiliates of and
controlled by IPT, which is controlled by Insignia. The
General Partner has conflicts of interest in considering the
Offer, including (i) as a result of the fact that a sale or
liquidation of the Partnership's assets would result in a
decrease or elimination of the fees paid to the General
Partner and/or its affiliates and (ii) the fact that as a
consequence of the Purchaser's ownership of Units, the
Purchaser (which is an affiliate
<PAGE>
of the General Partner) may have incentives to seek to
maximize the value of its ownership of Units, which in turn
may result in a conflict for the General Partner in
attempting to reconcile the interests of the Purchaser (which
is an affiliate of the General Partner) with the interests of
the other Limited Partners. See Section 10.
o The net liquidation value per Unit (the "Estimated
Liquidation Value") estimated by the Purchaser (which is an
affiliate of the General Partner) in connection with the
Offer is $119.83. See Section 13 for a discussion of why the
Purchaser (which is an affiliate of the General Partner)
believes that the Estimated Liquidation Value is not
necessarily indicative of the fair market value of a Unit.
THE PURCHASER (WHICH IS AN AFFILIATE OF THE GENERAL PARTNER)
MAKES NO REPRESENTATION AND EXPRESSES NO OPINION AS TO THE
FAIRNESS OR ADEQUACY OF THE PURCHASE PRICE.
o As with any rational investment decision, the Purchaser
(which is an affiliate of the General Partner) is making the
Offer with a view to making a profit. Accordingly, there is a
conflict between the desire of the Purchaser (which is an
affiliate of the General Partner) to purchase Units at a low
price and the desire of the Limited Partners to sell their
Units at a high price.
o If the Purchaser is successful in acquiring a significant
number of Units pursuant to the Offer, the Purchaser (which
is an affiliate of the General Partner) will have the right
to vote those Units and thereby significantly influence all
voting decisions with respect to the Partnership, including
decisions concerning liquidation, amendments to the Limited
Partnership Agreement, removal and replacement of the General
Partner and mergers, consolidations and other extraordinary
transactions. This means that (i) non-tendering Limited
Partners could be prevented from taking action they desire
but that IPT (which is an affiliate of the General Partner)
opposes and (ii) IPT (which is an affiliate of the General
Partner) may be able to take action desired by IPT but
opposed by the non-tendering Limited Partners.
Potentially Beneficial Aspects of the Offer for Limited Partners
o Although there are some limited resale mechanisms available
to Limited Partners wishing to sell their Units, there is no
formal trading market for Units. Moreover, the Purchaser
understands that the operations of the Chicago Partnership
Board, one of the leading partnership interest "auction"
intermediaries, have been suspended by securities regulators.
Accordingly, THE OFFER AFFORDS LIMITED PARTNERS AN
OPPORTUNITY TO DISPOSE OF THEIR UNITS FOR CASH WHICH
OTHERWISE MIGHT NOT BE AVAILABLE TO THEM.
o THE OFFER MAY BE ATTRACTIVE TO LIMITED PARTNERS WHO HAVE AN
IMMEDIATE NEED FOR CASH. Although the Purchase Price is
approximately 20% less than the highest reported secondary
market sales price of any Unit during the past six months
(based on published information and information provided by
the General Partner), the Purchaser (which is an affiliate of
the General Partner) believes the most recently reported
secondary market sales price does not reflect the payment of
a cash distribution of approximately $18 per Unit to Limited
Partners in October 1997. In addition, reported secondary
market sales prices do not take into account commissions and
transfer fees typically payable by a Limited Partner in
connection with a secondary market sale. Therefore, the
actual proceeds received by a Limited Partner who sells Units
in the secondary market are typically significantly less than
the reported sales prices.
o LIMITED PARTNERS WHO SELL UNITS PURSUANT TO THE OFFER WILL
NOT BE CHARGED ANY SALES COMMISSIONS (WHICH GENERALLY RANGE
FROM 3% TO 10% OF THE SALES PRICE) OR PARTNERSHIP TRANSFER
FEES (WHICH ARE TYPICALLY $100 PER TRANSFER). The Purchaser
will pay all transfer fees imposed by the Partnership in
connection with sales of Units pursuant to the Offer.
2
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o Real estate markets in the United States generally have
recovered and experienced an upward trend since the end of
the last recession. That recovery and upward trend might
continue. On the other hand, those markets also may be
adversely affected by a variety of factors, including
possible fluctuations in interest rates, economic slowdowns
and overbuilding. Accordingly, ownership of Units continues
to be a speculative investment. THE OFFER MAY PROVIDE LIMITED
PARTNERS WITH THE OPPORTUNITY TO LIQUIDATE THEIR INTERESTS IN
THE PARTNERSHIP AND REPLACE THEM WITH INVESTMENTS THAT ARE
LESS SPECULATIVE.
o The Offer may be attractive to Limited Partners who wish to
avoid in the future the expenses, delays and complications in
filing personal income tax returns which may be caused by
ownership of Units. In addition, A LIMITED PARTNER WHO SELLS
100% OF ITS UNITS PURSUANT TO THE OFFER WILL NO LONGER BE
SUBJECT TO THE PASSIVE ACTIVITY LOSS LIMITATION WITH RESPECT
TO "SUSPENDED" LOSSES, IF ANY, ATTRIBUTABLE TO THOSE UNITS
AND, THEREFORE, WILL BE ABLE TO UTILIZE FULLY ANY SUCH
LOSSES.
o The Offer may be attractive to those Limited Partners who
have become disenchanted with real estate investments
generally, and in particular with the perceived illiquidity
of investments made through limited partnerships, because it
may afford an immediate opportunity for those Limited
Partners to liquidate their investments in the Partnership.
On the other hand, Limited Partners who tender their Units
will be giving up the opportunity to participate in any
potential future benefits represented by the ownership of
those Units, including, for example, the right to participate
in any future distributions of cash or property, whether from
operations, the proceeds of a sale or refinancing of one or
more of the Partnership's properties or in connection with
any future liquidation of the Partnership. Instead, any such
distributions of cash or property with respect to Units
tendered in the Offer and purchased by the Purchaser will be
paid to the Purchaser.
The Purchaser (which is an affiliate of the General Partner) makes no
recommendation to any Limited Partner as to whether to tender or refrain from
tendering Units and has been advised by the General Partner that the General
Partner also expects to make no recommendation. Each Limited Partner must make
its own decision, based on the Limited Partner's particular circumstances, as
to whether to tender Units and, if so, how many Units to tender. Limited
Partners should consult with their respective advisors regarding the financial,
tax, legal and other implications of accepting the Offer. LIMITED PARTNERS ARE
URGED TO READ THIS OFFER TO PURCHASE AND THE RELATED MATERIALS CAREFULLY AND IN
THEIR ENTIRETY BEFORE DECIDING WHETHER TO TENDER THEIR UNITS.
Reasons for and Effects of the Offer. The Purchaser's purpose in
making the Offer is to increase IPT's equity interest in the Partnership,
primarily for investment purposes and with a view to making a profit. Although
the number of Units sought in the Offer will not give the Purchaser (which is
an affiliate of the General Partner) absolute control over the Partnership, if
the Purchaser is successful in acquiring all or a substantial portion of the
Units it is tendering for, it will be in a position to exercise significant
influence over the outcome of any vote by Limited Partners. See Sections 8, 10
and 13.
Certain Tax Considerations. A sale by a Limited Partner pursuant to
the Offer will result in taxable gain (or loss) equal to the excess (deficit)
of the amount realized by the Limited Partner for the Units sold over such
Limited Partner's adjusted tax basis in those Units, which may be taxable as
ordinary income or loss, capital gain or loss or gain from real estate
depreciation recapture. If a Limited Partner has suspended "passive losses"
from the Partnership or other passive activity investments, such Limited
Partner generally may deduct these losses up to the amount of any gain from the
sale. A sale pursuant to the Offer of all of a Limited Partner's Units will
terminate his or her investment in the Partnership and, commencing with the
year following the year of sale, the Limited Partner will no longer receive
Partnership tax information or have to report the complicated tax information
currently required of Limited Partners. See Section 6.
3
<PAGE>
Originally Anticipated Term of the Partnership; General Policy
Regarding Sales and Refinancings of Partnership Properties; Alternatives. The
Partnership was formed for the purpose of making loans, pursuant to a loan
agreement dated February 26, 1986 (the "Loan") to ConCap Equity Partners/3, a
California limited partnership ("CCEP/3"), ConCap Equity Partners/4, a
California limited partnership ("CCEP/4"), and ConCap Equity Partners/5, a
California limited partnership ("CCEP/5"). CCEP/3, CCEP/4 and CCEP/5 used
proceeds from the Loan to purchase two apartment complexes and one office
building (which was later transferred pursuant to a foreclosure proceeding),
four apartment complexes and one office building (which was later sold), and
two apartment complexes and two office buildings, respectively. Through a
series of transactions in 1992 through 1994, the Partnership acquired the
properties formerly owned by CCEP/3, CCEP/4 and CCEP/5 in full satisfaction of
the Loan. According to the Partnership's Prospectus dated July 25, 1986, the
then general partner (predecessor to the current General Partner) anticipated
that CCEP/3, CCEP/4 and CCEP/5 would sell and/or refinance their properties,
and consequently repay the Loan, within a period of less than twelve years
after the termination of the public offering of the Units, depending upon the
then current real estate and capital markets, economic climate and income tax
consequences to their partners. In any event, the Loan would be repayable ten
years after the termination of the public offering of the Units (subject to the
right of each of CCEP/3, CCEP/4 and/or CCEP/5 to extend the Loan for up to two
additional years).
In general, the General Partner regularly evaluates the Partnership's
properties by considering various factors, such as the Partnership's financial
position and real estate and capital markets conditions. The General Partner
monitors each property's specific locale and sub-market conditions 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 financing structure for
each property, tax implications and the investment climate are all considered.
Any of these factors, and possibly others, could potentially contribute to any
decision of the General Partner to sell, refinance, upgrade with capital
improvements or hold a particular Partnership property. The Purchaser (which is
an affiliate of the General Partner) has been advised that the General Partner
presently expects to market for sale Lamplighter Park in Bellevue, Washington
in early 1998. In the event of a sale of Lamplighter Park, the General Partner
has advised the Purchaser (which is an affiliate of the General Partner) that
it may distribute to Limited Partners the net cash proceeds (after repayment of
any outstanding mortgage debt and payment of other costs of sale) from such
sale; however, there can be no assurance that such sale would in fact occur or
as to the amount of cash proceeds that might result from such sale. Further, no
determination has been made as to whether any net cash proceeds generated by
such sale would be distributed to Limited Partners, which determination will be
made at the time of such sale, and will be based on, among other things, the
Partnership's working capital requirements at the time. Based on the foregoing
considerations and except for the potential sale of Lamplighter Park, the
General Partner is not currently contemplating the sale of any other
Partnership properties.
Under the Limited Partnership Agreement the term of the Partnership
will continue until December 31, 2015, unless sooner terminated as provided in
the Limited Partnership 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 causing the Partnership to
merge with another entity or engage in a "roll-up" or similar transaction.
Conditions. The Offer is not conditioned on any aggregate minimum
number of Units being tendered. Certain other conditions do apply, however. See
Section 14.
Distributions. The Partnership has made cash distributions to Limited
Partners of $36.14 per Unit in 1997 (through December 31), $18.98 per Unit in
1996 and $9.42 per Unit in 1995. The 1997 distributions consisted primarily of
proceeds from refinancing two of the Partnership's properties and from
obtaining initial financing on three of the Partnership's properties in 1996
(approximately $30 per Unit); the remaining portion was from operating cash
flow. The 1996 distribution was not made completely out of operating cash flow;
rather, a portion of that distribution consisted of proceeds from refinancing
three of the Partnership's properties in 1995 (approximately $6 per Unit). In
total, original investors in the Partnership have received distributions of
only $171.07 in respect of their original $250 investment made in 1984. See
Section 9. The Partnership is currently generating positive cash flow from
operations, and the Purchaser (which is an affiliate of the General Partner)
4
<PAGE>
believes that the Partnership will continue to generate positive cash flow from
operations, depending upon the real estate, capital markets and general
economic conditions at the time. The potential for this and other future
distributions was considered by the Purchaser (which is an affiliate of the
General Partner) when establishing the Purchase Price. Limited Partners who
tender their Units in response to the Offer will retain any distributions made
through December 31, 1997, and will be entitled to receive and retain any
subsequent distributions made by the Partnership prior to the date on which the
Purchaser pays for tendered Units pursuant to the Offer, although any such
subsequent distribution will result in a reduction of the Purchase Price. See
Section 1. However, tendering Limited Partners will not be entitled to receive
or retain any distributions in respect of tendered Units which are made on or
after the date on which the Purchaser pays for such Units pursuant to the
Offer, regardless of the fact that the record date (as opposed to the payment
date) for any such distribution may be a date prior to the date of purchase.
See Section 3.
Outstanding Units. According to information supplied by the
Partnership, as of December 1, 1997 there were 383,033 Units issued and
outstanding, which were held of record by 18,282 Limited Partners. IPLP
currently owns 43,195.8 Units. See Schedule I to this Offer to Purchase for a
list of transactions in the Units effected by IPLP within the past 60 days.
5
<PAGE>
THE OFFER
SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE; PRORATION. Upon the
terms and subject to the conditions of the Offer, the Purchaser (which is an
affiliate of the General Partner) will accept for payment (and thereby
purchase) up to 145,000 Units that are validly tendered on or prior to the
Expiration Date and not withdrawn in accordance with the procedures set forth
in Section 4. For purposes of the Offer, the term "Expiration Date" shall mean
12:00 midnight, New York City time, on January 29, 1998, unless the Purchaser
(which is an affiliate of the General Partner) in its 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 the Purchaser, shall expire. See Section 5 for a
description of the Purchaser's right to extend the period of time during which
the Offer is open and to amend or terminate the Offer.
THE PURCHASE PRICE WILL AUTOMATICALLY BE REDUCED BY THE AGGREGATE
AMOUNT OF DISTRIBUTIONS PER UNIT, IF ANY, MADE BY THE PARTNERSHIP TO LIMITED
PARTNERS ON OR AFTER DECEMBER 31, 1997 AND PRIOR TO THE DATE ON WHICH THE
PURCHASER PAYS FOR UNITS PURCHASED PURSUANT TO THE OFFER.
If, prior to the Expiration Date, the Purchaser (which is an affiliate
of the General Partner) increases 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, regardless of whether the Units
were tendered prior to the increase in the consideration offered.
If more than 145,000 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, the Purchaser (which is
an affiliate of the General Partner) will, upon the terms and subject to the
conditions of the Offer, accept for payment and pay for an aggregate of 145,000
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 (i) purchases of
fractional Units and (ii) purchases that would violate Section 5.01 of the
Limited Partnership Agreement (which generally requires that a Limited Partner
transfer a minimum of twenty Units (other than Limited Partners who hold Units
in an IRA or Keogh Plan)). If the number of Units validly tendered and not
properly withdrawn on or prior to the Expiration Date is less than or equal to
145,000 Units, the Purchaser (which is an affiliate of the General Partner)
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 the
Purchaser's 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 the termination or
withdrawal of the Offer, the Purchaser (which is an affiliate of the General
Partner) does 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 PURCHASE PRICE.
The Offer is conditioned on satisfaction of certain conditions. See
Section 14, which sets forth in full the conditions of the Offer. The Purchaser
(which is an affiliate of the General Partner) reserves the right (but in no
event shall be obligated), in its sole 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, the Purchaser reserves the right
to (i) decline to purchase any of the Units tendered and terminate the Offer,
(ii) waive all of the unsatisfied conditions and, subject to complying with
applicable rules and regulations of the Commission, purchase all Units validly
tendered, (iii) extend the Offer and, subject to the right of Limited Partners
to withdraw Units until the Expiration Date, retain the Units that have been
tendered during the period or periods for which the Offer is extended, and/or
(iv) amend the Offer.
This Offer to Purchase and the related Assignment of Partnership
Interest are being mailed by the Purchaser (which is an affiliate of the
General Partner) to the persons shown by the Partnership's records to have been
Limited
6
<PAGE>
Partners or (in the case of Units owned of record by IRAs and qualified plans)
beneficial owners of Units as of December 1, 1997.
SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS. Upon the
terms and subject to the conditions of the Offer, the Purchaser (which is an
affiliate of the General Partner) will accept for payment (and thereby
purchase) and will pay for all Units validly tendered and not withdrawn in
accordance with the procedures specified in Section 4, as promptly as
practicable following the Expiration Date. A tendering beneficial owner of
Units whose Units are owned of record by an IRA or other qualified plan will
not receive direct payment of the Purchase 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
Depositary of a properly completed and duly executed Assignment of Partnership
Interest and any other documents required by the Assignment of Partnership
Interest. See Section 3. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE BY REASON OF ANY DELAY IN MAKING SUCH PAYMENT.
For purposes of the Offer, the Purchaser (which is an affiliate of the
General Partner) will be deemed to have accepted for payment pursuant to the
Offer, and thereby purchased, validly tendered Units if, as and when the
Purchaser (which is an affiliate of the General Partner) gives verbal or
written notice to the Depositary of the Purchaser's acceptance of those Units
for payment pursuant to the Offer. Upon the terms and subject to the conditions
of the Offer, payment for Units accepted for payment pursuant to the Offer will
be made by deposit of the Purchase Price with the Depositary, which will act as
agent for tendering Limited Partners for the purpose of receiving payments from
the Purchaser and transmitting those payments to Limited Partners whose Units
have been accepted for payment.
If any tendered Units are not purchased for any reason, the Assignment
of Partnership Interest with respect to such Units will be destroyed by the
Purchaser (which is an affiliate of the General Partner). If for any reason
acceptance for payment of, or payment for, any Units tendered pursuant to the
Offer is delayed or the Purchaser is unable to accept for payment, purchase or
pay for Units tendered pursuant to the Offer, then, without prejudice to the
Purchaser's rights under Section 14, the Depositary may, nevertheless, on
behalf of the Purchaser (which is an affiliate of the General Partner) 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 Section 4; subject, however, to the Purchaser's obligation under Rule
14e-1(c) under 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.
The Purchaser (which is an affiliate of the General Partner) reserves
the right to transfer or assign, in whole or from time to time in part, to one
or more of the Purchaser's 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 Limited Partners to receive payment for Units validly tendered and
accepted for payment pursuant to the Offer.
SECTION 3. PROCEDURE FOR TENDERING UNITS.
Valid Tender. In order for a tendering Limited Partner to participate
in the Offer, its Units must be validly tendered and not withdrawn on or prior
to the Expiration Date. To validly tender Units, a properly completed and duly
executed Assignment of Partnership Interest and any other documents required by
the Assignment of Partnership Interest must be received by the Depositary, at
its address set forth on the back cover of this Offer to Purchase, on or prior
to the Expiration Date. A Limited Partner may tender any or all of the Units
owned by that Limited Partner; provided, however, that because of restrictions
in the Limited Partnership Agreement, a partial tender of Units must be for a
minimum of twenty Units (other than Limited Partners who hold Units in an IRA
or Keogh Plan). Accordingly, any Limited Partner that owns twenty or fewer
Units (other than Limited Partners who Units in an IRA or Keogh Plan) must
tender all or none of its Units. Tenders of fractional Units will not be
permitted, except by a Limited Partner who is tendering all of the Units owned
by that Limited Partner. No alternative, conditional or contingent tenders will
be accepted.
7
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Signature Requirements. If the Assignment of Partnership Interest is
signed by the registered holder of the Units and payment is to be made directly
to that holder, then no signature guarantee is required on the Assignment of
Partnership Interest. Similarly, if the Units are 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 Assignment of Partnership Interest.
HOWEVER, IN ALL OTHER CASES, ALL SIGNATURES ON THE ASSIGNMENT OF PARTNERSHIP
INTEREST MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION. Please contact the
Information Agent for assistance in obtaining a signature guarantee.
Delivery of Assignment of Partnership Interest. The method of delivery
of the Assignment of Partnership Interest and all other required documents is
at the option and risk of the tendering Limited Partner, and delivery will be
deemed made only when actually received by the Depositary. In all cases,
sufficient time should be allowed to assure timely delivery.
Appointment as Proxy; Power of Attorney. By executing an Assignment of
Partnership Interest, a tendering Limited Partner irrevocably appoints the
Purchaser (which is an affiliate of the General Partner), and its managers and
designees as the Limited Partner's proxies, in the manner set forth in the
Assignment of Partnership Interest, each with full power of substitution, to
the full extent of the Limited Partner's rights with respect to the Units
tendered by the Limited Partner and accepted for payment by the Purchaser
(which is an affiliate of the General Partner). 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, the Purchaser (which is an
affiliate of the General Partner) accepts the tendered Units for payment. Upon
such acceptance for payment, all prior proxies given by the Limited Partner
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). The
Purchaser (which is an affiliate of the General Partner) and its managers and
designees will, as to those Units, be empowered to exercise all voting and
other rights of the Limited Partner as they in their sole discretion may deem
proper at any meeting of Limited Partners, by written consent or otherwise. The
Purchaser (which is an affiliate of the General Partner) reserves the right to
require that, in order for Units to be deemed validly tendered, immediately
upon the Purchaser's acceptance for payment of the Units, the Purchaser 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 an Assignment of Partnership Interest, a tendering
Limited Partner also irrevocably constitutes and appoints the Purchaser and its
managers and designees as the Limited Partner's attorneys-in-fact, each with
full power of substitution, to the full extent of the Limited Partner's rights
with respect to the Units tendered by the Limited Partner and accepted for
payment by the Purchaser. Such appointment will be effective when, and only to
the extent that, the Purchaser accepts the tendered Units for payment. The
tendering Limited Partner agrees not to exercise any rights pertaining to the
tendered Units without the prior consent of the Purchaser. Upon such acceptance
for payment, all prior powers of attorney granted by the Limited Partner with
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, the Purchaser
and its managers and designees each will have the power, among other things,
(i) to transfer ownership of such Units on the Partnership books maintained by
the General Partner (and execute and deliver any accompanying evidences of
transfer and authenticity any of them may deem necessary or appropriate in
connection therewith), (ii) upon receipt by the Depositary (as the tendering
Limited Partner's agent) of the Purchase Price, to become a substituted Limited
Partner, to receive any and all distributions made by the Partnership on or
after the date on which the Purchaser purchases such Units, and to receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Units in accordance with the terms of the Offer, (iii) to execute and deliver
to the General Partner a change of address form instructing the General Partner
to send any and all future distributions to which the Purchaser is 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 or upon the
order of such Limited Partner 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 Limited Partner.
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Assignment of Interest in Future Distributions. By executing an
Assignment of Partnership Interest, a tendering Limited Partner irrevocably
assigns to the Purchaser (which is an affiliate of the General Partner) and its
assigns all of the right, title and interest of the Limited Partner in and to
any and all distributions made by the Partnership on or after the date on which
the Purchaser purchases such Units, in respect of the Units tendered by such
Limited Partner and accepted for payment by the Purchaser, regardless of the
fact that the record date for any such distribution may be a date prior to the
date of such purchase. The Purchaser will seek to be admitted to the
Partnership as a substituted Limited Partner upon consummation of the Offer.
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 the Offer will be determined by the Purchaser
(which is an affiliate of the General Partner), in its sole discretion, which
determination shall be final and binding. The Purchaser (which is an affiliate
of the General Partner) reserves the absolute right to reject any or all
tenders of any particular Units determined by it not to be in proper form or if
the acceptance of or payment for those Units may, in the opinion of the
Purchaser's counsel, be unlawful. The Purchaser (which is an affiliate of the
General Partner) also reserves the absolute right to waive or amend any of the
conditions of the Offer that it is legally permitted to waive as to the tender
of any particular Units and to waive any defect or irregularity in any tender
with respect to any particular Units of any particular Limited Partner. The
Purchaser's interpretation of the terms and conditions of the Offer (including
the Assignment of Partnership Interest and the Instructions thereto) will be
final and binding. No tender of Units will be deemed to have been validly made
until all defects and irregularities have been cured or waived. None of the
Purchaser (which is an affiliate of the General Partner), the Information
Agent, the Depositary or any other person will be under any duty to give
notification of any defects or irregularities in the tender of any Units or
will incur any liability for failure to give any such notification.
Backup Federal Income Tax Withholding. To prevent the possible
application of backup federal income tax withholding of 31% with respect to
payment of the Purchase Price, each tendering Limited Partner must provide the
Purchaser (which is an affiliate of the General Partner) with the Limited
Partner's correct taxpayer identification number by completing the Substitute
Form W-9 included in the Assignment of Partnership Interest. See the
Instructions to the Assignment of Partnership Interest and Section 6.
FIRPTA Withholding. To prevent the withholding of federal income tax
in an amount equal to 10% of the amount of the Purchase Price plus Partnership
liabilities allocable to each Unit purchased, each tendering Limited Partner
must complete the FIRPTA Affidavit included in the Assignment of Partnership
Interest certifying the Limited Partner's taxpayer identification number and
address and that such Limited Partner is not a foreign person. See the
Instructions to the Assignment of Partnership Interest and Section 6.
Binding Obligation. A tender of Units pursuant to and in accordance
with the procedures described in this Section 3 and the acceptance for payment
of such Units will constitute a binding agreement between the tendering Limited
Partner and the Purchaser (which is an affiliate of the General Partner) on the
terms set forth in this Offer to Purchase and in the Assignment of Partnership
Interest.
SECTION 4. WITHDRAWAL RIGHTS. Tenders of Units pursuant to the Offer
are irrevocable, except that Units tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless already accepted
for payment as provided in this Offer to Purchase, may also be withdrawn at any
time after February 28, 1998. For withdrawal to be effective, a written or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at its address set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the person who
tendered the Units to be withdrawn and must be signed by the person(s) who
signed the Assignment of Partnership Interest in the same manner as the
Assignment of Partnership Interest was signed (including signature guarantees
by an Eligible Institution). Units properly withdrawn will be deemed not to be
validly tendered for purposes of the Offer. Withdrawn Units may be re-tendered,
however, by following the procedures described in Section 3 at any time prior
to the Expiration Date.
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If payment for Units is delayed for any reason or if the Purchaser
(which is an affiliate of the General Partner) is unable to pay for Units for
any reason, then, without prejudice to the Purchaser's rights under the Offer,
tendered Units may be retained by the Depositary and may not be withdrawn
except to the extent that tendering Limited Partners are entitled to withdrawal
rights as set forth in this Section 4; subject, however, to the Purchaser's
obligation, pursuant to Rule 14e-1(c) under 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.
All questions as to the validity and form (including time of receipt)
of notices of withdrawal will be determined by the Purchaser (which is an
affiliate of the General Partner), in its sole discretion, which determination
shall be final and binding. None of the Purchaser, the Information Agent, the
Depositary or 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. The
Purchaser (which is an affiliate of the General Partner) expressly reserves the
right, in its sole discretion, at any time and from time to time, (i) to extend
the period of time during which the Offer is open and thereby delay acceptance
for payment of, and the payment for, validly tendered Units, (ii) to terminate
the Offer and not accept for payment any Units not already accepted for payment
or paid for, (iii) upon the occurrence of any of the conditions specified in
Section 14, to delay the acceptance for payment of, or payment for, any Units
not already accepted for payment or paid for, and (iv) to amend the Offer in
any respect (including, without limitation, by increasing the consideration
offered, increasing or decreasing the number of Units being sought, or both).
Notice of any such extension, termination or amendment will be disseminated
promptly to Limited Partners in a manner reasonably designed to inform Limited
Partners of such change in compliance with Rule 14d-4(c) under the Exchange
Act. 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 then
scheduled Expiration Date, in accordance with Rule 14e-1(d) under the Exchange
Act.
If the Purchaser (which is an affiliate of the General Partner)
extends the Offer, or if the Purchaser (whether before or after its acceptance
for payment of Units) is delayed in its payment for Units or is unable to pay
for Units pursuant to the Offer for any reason, then, without prejudice to the
Purchaser's rights under the Offer, the Depositary may retain tendered Units
and those Units may not be withdrawn except to the extent tendering Limited
Partners are entitled to withdrawal rights as described in Section 4; subject,
however, to the Purchaser's obligation, pursuant to Rule 14e-1(c) under 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.
If the Purchaser (which is an affiliate of the General Partner) makes
a material change in the terms of the Offer or the information concerning the
Offer or waives a material condition of the Offer, the Purchaser will extend
the Offer and disseminate additional tender offer materials to the extent
required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act. The minimum
period during which an offer must remain open following a material change in
the terms of the offer or information concerning the offer will depend upon the
facts and circumstances, including the relative materiality of the change in
the terms or information. In the Commission's view, an offer should remain open
for a minimum of five business days from the date the material change is first
published, sent or given to securityholders, and if material changes are made
with respect to information that approaches the significance of price or the
percentage of securities sought, a minimum of ten business days may be required
to allow for adequate dissemination to securityholders and investor response.
As used in this 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.
10
<PAGE>
SECTION 6. CERTAIN FEDERAL INCOME TAX MATTERS.
General. The following summary is a general discussion of certain of
the federal income tax consequences of a sale of Units pursuant to the Offer.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), applicable Treasury regulations thereunder, administrative rulings,
practice and procedures and judicial authority, all as of the date of the
Offer. All of the foregoing are subject to change, and any such change could
affect the continuing accuracy of this summary. This summary does not discuss
all aspects of federal income taxation that may be relevant to a particular
Limited Partner in light of such Limited Partner's specific circumstances or to
certain types of Limited Partners subject to special treatment under the
federal income tax laws (for example, foreign persons, dealers in securities,
banks, insurance companies and tax-exempt organizations), nor (except as
otherwise expressly indicated) does it describe any aspect of state, local,
foreign or other tax laws. Sales of Units pursuant to the Offer will be taxable
transactions for federal income tax purposes, and also may be taxable
transactions under applicable state, local, foreign and other tax laws. EACH
LIMITED PARTNER SHOULD CONSULT ITS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO SUCH LIMITED PARTNER OF SELLING UNITS PURSUANT TO THE OFFER.
Gain or Loss Generally. In general, a Limited Partner will recognize
gain or loss on a sale of Units pursuant to the Offer equal to the difference
between (i) the Limited Partner's "amount realized" on the sale and (ii) the
Limited Partner's adjusted tax basis in the Units sold. Generally, a Limited
Partner's adjusted tax basis with respect to a Unit equals its cost, increased
by the amount of income and the amount of Partnership liabilities (as
determined under Code Section 752) allocated to the Unit, and decreased by (i)
any distributions made with respect to such Unit, (ii) the amount of deductions
or losses allocated to the Unit and (iii) any decrease in the amount of
Partnership liabilities (as determined under Code Section 752) allocated to the
Unit. Thus, the amount of a Limited Partner's adjusted tax basis in tendered
Units will vary depending upon the Limited Partner's particular circumstances.
The "amount realized" with respect to a Unit will be a sum equal to the amount
of cash received by the Limited Partner for the Unit pursuant to the Offer,
plus the amount of the Partnership's liabilities allocable to the Unit (as
determined under Code Section 752).
A portion of the gain or loss recognized by a Limited Partner on a
sale of a Unit pursuant to the Offer generally will be treated as a capital
gain or loss, if (as is generally expected to be the case) the Unit was held by
the Limited Partner as a capital asset. Under the Taxpayer Relief Act of 1997,
the capital gains rate for individuals and other non-corporate taxpayers is
reduced to 20% for sales of capital assets after July 28, 1997 if such assets
were held for more than 18 months. However, any gain from the sale of such
assets attributable to the recapture of depreciation with respect to real
property (as defined in Code Section 1250) is taxed at a maximum rate of 25%.
The 28% rate continues to apply to individual and noncorporate taxpayers who
sell a capital asset held for more than one year but not more than 18 months.
Corporate taxpayers are taxed at a maximum marginal rate of 35% for both
capital gains and ordinary income. The maximum marginal federal income tax rate
for ordinary income of individuals and other noncorporate taxpayers is 39.6%.
Capital losses are deductible only to the extent of capital gains, except that,
subject to the passive activity loss limitations discussed below, non-corporate
taxpayers may deduct up to $3,000 of capital losses in excess of the amount of
their capital gains against ordinary income. Excess capital losses generally
can be carried forward to succeeding years (a corporation's carryforward period
is five years and a non-corporate taxpayer can carry forward such losses
indefinitely); and a corporation is permitted to carry back excess capital
losses to the three preceding taxable years, provided the carryback does not
increase or produce a net operating loss for any of those years.
A tendering Limited Partner will be allocated a pro rata share of the
Partnership's taxable income or loss for the year of sale with respect to the
Units sold in accordance with the provisions of the Limited Partnership
Agreement concerning transfers of Units. Such allocation and any cash
distributed by the Partnership to the Limited Partner for that year will affect
the Limited Partner's adjusted tax basis in Units and, therefore, the amount of
such Limited Partner's taxable gain or loss upon a sale of Units pursuant to
the Offer.
Unrealized Receivables and Certain Inventory. If any portion of the
amount of gain or loss realized by a Limited Partner is attributable to
"unrealized receivables" (which includes depreciation recapture) or
"substantially
11
<PAGE>
appreciated inventory" as defined in Code Section 751, then a portion of the
Limited Partner's gain or loss may be ordinary rather than capital and, in
addition, a portion of such gain may be taxed at the 25% rate discussed above.
A portion, if not all, of the gain upon the sale of Units is expected to be
attributable to unrealized receivables. A Limited Partner who tenders Units
which are purchased pursuant to the Offer must file an information statement
with such Limited Partner's federal income tax return for the year of the sale
which provides the information specified in Treasury Regulation ss.
1.751-1(a)(3). A selling Limited Partner also must notify the Partnership of
the date of the transfer and the names, addresses and tax identification
numbers of the transferor(s) and transferee within 30 days of the date of the
transfer (or, if earlier, by January 15 of the following calendar year).
Passive Activity Loss Limitation. Under Code Section 469, a
non-corporate taxpayer or personal service corporation generally can deduct
"passive losses" in any year only to the extent of the person's passive income
for that year. Closely held corporations (other than personal service
corporations) may offset such losses against active income as well as passive
activity income for that year. A portion of the Partnership's losses, if any,
following the acquisition of the Partnership's properties beginning in 1994
would have been passive losses. Substantially all gain or loss from a sale of
Units pursuant to the Offer will be passive income or loss.
If a Limited Partner sells less than all of its Units pursuant to the
Offer, "suspended" passive losses from the Partnership (i.e., post-1986 net
taxable losses in excess of statutorily permitted "phase-in" amounts which have
not been used to offset income from other passive activities or from the
Partnership), if any (including a portion of any loss recognized on the sale of
Units), can be currently deducted (subject to other applicable limitations) to
the extent of the Limited Partner's passive income from the Partnership for
that year (including any gain recognized on the sale of Units) plus any other
passive income for that year. If, on the other hand, a Limited Partner sells
100% of its Units pursuant to the Offer, any "suspended" losses and any losses
recognized upon the sale of the Units will be offset first against any other
net passive gain to the Limited Partner from the sale of the Units and any
other net passive activity income from other passive activity investments, and
the balance of any "suspended" net losses from the Units will no longer be
subject to the passive activity loss limitation and, therefore, will be
deductible by such Limited Partner from its other income (subject to any other
applicable limitations), including ordinary income. If a tendering Limited
Partner has suspended passive losses from the Partnership, such Limited Partner
must sell all of its Units to receive these tax benefits. If more than 45,000
of the outstanding Units are tendered, some tendering Limited Partners may not
be able to sell 100% of their Units pursuant to the Offer because of proration
of the number of Units to be purchased by the Purchaser. See Section 1.
Partnership Termination. Section 708(b) of the Code provides that a
partnership terminates for income tax purposes if there is a sale or exchange
of 50% or more of the total interest in partnership capital and profits within
a twelve-month period (although successive transfers of the same interest
within a twelve-month period will be treated as a single transfer for this
purpose). In the event of a termination, the Partnership's tax year would close
and the Partnership would be treated for income tax purposes as if it had
contributed all of its assets and liabilities to a "new" partnership in
exchange for an interest in the "new" partnership. The Partnership would then
be treated as making a distribution of the interests in the "new" partnership
to the new partners and the remaining partners, followed by the liquidation of
the Partnership. Because the "new" partnership would be treated as having
acquired its assets on the date of the deemed contribution, a new depreciation
recovery period would begin on such date, and the Partnership's annual
depreciation deductions over the next few years would be substantially reduced,
and the Partnership would have greater taxable income (or less tax loss) than
if no tax termination occurred. In addition, depreciation may be required to be
allocated to those Limited Partners that have a higher tax basis, such as the
Purchaser. A tax termination of the Partnership would also terminate any
partnership in which the Partnership holds a majority interest (50% or more).
The Limited Partnership Agreement prohibits transfers of Units if a
transfer, when considered with all other transfers during the same applicable
twelve-month period, would cause a termination of the Partnership for tax
purposes. The Purchaser believes that even if the maximum number of Units is
purchased pursuant to the Offer, those transfers will not cause a tax
termination of the Partnership.
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<PAGE>
Backup Withholding and FIRPTA Withholding. Limited Partners (other
than tax-exempt persons, corporations and certain foreign individuals) who
tender Units may be subject to 31% backup withholding unless those Limited
Partners provide a taxpayer identification number ("TIN") and certify that the
TIN is correct or properly certify that they are awaiting a TIN. A Limited
Partner may avoid backup withholding by properly completing and signing the
Substitute Form W-9 included as part of the Assignment of Partnership Interest.
If a Limited Partner who is subject to backup withholding does not properly
complete and sign the Substitute Form W-9, the Purchaser will withhold 31% from
payments to such Limited Partner.
Gain realized by a foreign Limited Partner on the sale of a Unit
pursuant to the Offer will be subject to federal income tax. Under Code Section
1445, 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 a tax equal to 10% of the amount realized on the disposition. In order
to comply with this requirement, the Purchaser will withhold 10% of the amount
realized by a tendering Limited Partner unless the Limited Partner properly
completes and signs the FIRPTA Affidavit included as part of the Assignment of
Partnership Interest certifying the Limited Partner's TIN and address, and that
such Limited Partner is not a foreign person. Amounts withheld would be
creditable against a foreign Limited Partner's federal income tax liability
and, if in excess thereof, a refund could be obtained from the Internal Revenue
Service by filing a U.S. income tax return.
SECTION 7. EFFECTS OF THE OFFER.
Limitations on Resales. The Limited Partnership Agreement prohibits
transfers of Units if a transfer, when considered with all other transfers
during the same applicable twelve-month period, would cause a termination of
the Partnership for federal or any applicable state income tax purposes. This
provision may limit sales of Units in the secondary market and in private
transactions for the twelve-month period following completion of the Offer. The
General Partner has advised the Purchaser that the Partnership will not process
any requests for recognition of substitution of Limited Partners upon a
transfer of Units during such twelve-month period which the General Partner
believes may cause a tax termination in contravention of the Limited
Partnership Agreement. In determining the number of Units for which the Offer
is made (representing approximately 38% of the outstanding Units if 145,000
Units are tendered), the Purchaser (which is an affiliate of the General
Partner) took this restriction into account so as to permit normal historical
levels of transfers to occur following the transfers of Units pursuant to the
Offer without violating this restriction.
Effect on Trading Market; Registration Under Section 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 the
case of certain kinds of equity securities, a reduction in the number of
security-holders 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, the Purchaser (which is an affiliate of the General Partner) does
not believe a reduction in the number of Limited Partners will materially
further restrict the Limited Partners' ability to find purchasers for their
Units through secondary market transactions. See Section 13 for certain limited
information regarding recent secondary market sales of the Units.
The Units are registered under Section 12(g) of the Exchange Act,
which means, among other things, that the Partnership is required to file
periodic reports with the Commission and to comply with the Commission's proxy
rules. The Purchaser (which is an affiliate of the General Partner) does 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, the Partnership could apply to de-register
the Units under the Exchange Act. Because the Units are widely held, however,
the Purchaser (which is an affiliate of the General Partner) believes that,
even if it purchases the maximum number of Units in the Offer, after that
purchase the Units will be held of record by more than 300 persons.
Control of Limited Partner Voting Decisions by Purchaser; Effect of
Relationship with General Partner. The Limited Partnership Agreement provides
that the General Partner has absolute discretion as to whether to admit an
assignee of Units to the Partnership as a substituted Limited Partner. The
Purchaser (which is an affiliate of the
13
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General Partner) will seek to be admitted to the Partnership as a substituted
Limited Partner upon consummation of the Offer and, if admitted, will have the
right to vote each Unit purchased pursuant to the Offer. Even if the Purchaser
(which is an affiliate of the General Partner) is not admitted to the
Partnership as a substituted Limited Partner, however, the Purchaser may have
the right to vote each Unit purchased in the Offer pursuant to the irrevocable
appointment by tendering Limited Partners of the Purchaser and its managers and
designees as proxies with respect to the Units tendered by such Limited
Partners and accepted for payment by the Purchaser. See Section 3. As a result,
the Purchaser (which is an affiliate of the General Partner) could be in a
position to significantly influence all voting decisions with respect to the
Partnership. In general, IPLP and the Purchaser (which are affiliates of the
General Partner) will vote the Units owned by them in whatever manner they deem
to be in the best interest of IPT, which, because of their relationship with
the General Partner, also may be in the interest of the General Partner, but
may not be in the interest of other Limited Partners. This could (i) prevent
non-tendering Limited Partners from taking action they desire but that IPT
opposes and (ii) enable IPT to take action desired by IPT but opposed by
non-tendering Limited Partners. Under the Limited Partnership Agreement,
Limited Partners holding a majority of the Units are entitled to take action
with respect to a variety of matters, including: removal of a general partner
and in certain circumstances election of new or successor general partners;
dissolution of the Partnership; the sale of all or substantially all of the
assets of the Partnership; and most types of amendments to the Limited
Partnership Agreement.
The Offer will not result in any change in the compensation payable to
the General Partner or its affiliates. However, as a result of the Offer, the
Purchaser (which is an affiliate of the General Partner) will participate, in
its capacity as a Limited Partner, in any subsequent distributions to Limited
Partners to the extent of the Units purchased pursuant to the Offer.
SECTION 8. FUTURE PLANS OF INSIGNIA, IPT AND THE PURCHASER. IPT,
through the Purchaser (which is an affiliate of the General Partner), is
seeking to acquire Units pursuant to the Offer in order to increase its equity
interest in the Partnership, primarily for investment purposes and with a view
to making a profit. Following the completion of the Offer, IPT and/or persons
related to or affiliated with it may acquire additional Units. Any such
acquisition may be made through private purchases, through one or more future
tender or exchange offers or by any other means deemed advisable. Any such
acquisition may be at a price higher or lower than the price to be paid for the
Units purchased pursuant to the Offer, and may be for cash or other
consideration. Insignia and IPT (which are affiliates of the General Partner)
also may consider disposing of some or all of the Units the Purchaser acquires
pursuant to the Offer, either directly or by a sale or other disposition of one
or more interests in IPT or IPLP, depending among other things on the
requirements from time to time of Insignia, IPT and their affiliates in light
of liquidity, strategic, tax and other considerations.
Neither IPT nor the Purchaser (which are affiliates of the General
Partner) has any present plans or intentions with respect to a liquidation of
the Partnership or a sale of assets or refinancing of any of the Partnership's
properties, other than the potential sale in early 1998 of Lamplighter Park (as
described in Section 9). IPT and the Purchaser expect that consistent with the
General Partner's fiduciary obligations, the General Partner will seek and
review opportunities (including opportunities identified by IPT and the
Purchaser) to engage in transactions which could benefit the 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.
IPT and the Purchaser (which are affiliates of the General Partner)
have been advised that the possible future transactions the General Partner
expects to consider on behalf of the Partnership include (i) payment of
extraordinary distributions; (ii) refinancing, reducing or increasing existing
indebtedness of the Partnership; (iii) sales of assets, individually or as part
of a complete liquidation; and (iv) mergers or other consolidation transactions
involving the Partnership. Any such merger or consolidation transaction could
involve other limited partnerships in which the 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 IPT (which is an affiliate of the General Partner) or IPT itself), 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
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<PAGE>
to the Limited Partners of the Partnership, the Purchaser (and thus IPT) will
participate in those benefits to the extent of its ownership of Units. A merger
or other consolidation transaction and certain kinds of other extraordinary
transactions would require a vote of the Limited Partners, and if the Purchaser
is successful in acquiring a significant number of Units pursuant to the Offer
(or otherwise), IPT will be able to significantly influence the outcome of any
such vote. IPT's primary objective in seeking to acquire the Units through the
Purchaser 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 9. CERTAIN INFORMATION CONCERNING THE PARTNERSHIP. Except as
otherwise indicated, information contained in this Section 9 is based upon
documents and reports publicly filed by the Partnership with the Commission.
Although the Purchaser has no information that any statements contained in this
Section 9 are untrue, the Purchaser cannot take responsibility for the accuracy
or completeness of any information contained in this Section 9 which is derived
from such public documents, or for any failure by the Partnership to disclose
events which may have occurred and may affect the significance or accuracy of
any such information but which are unknown to the Purchaser.
General. The Partnership was organized on May 23, 1984 under the laws
of the State of California. Its principal executive offices are located at One
Insignia Financial Plaza, Greenville, South Carolina 29602, and its telephone
number at that address is (864) 239-2747.
The Partnership was formed for the purpose of making loans, pursuant
to the Loan to CCEP/3, CCEP/4 and CCEP/5. CCEP/3, CCEP/4 and CCEP/5 used
proceeds from the Loan to purchase two apartment complexes and one office
building (which was later transferred pursuant to a foreclosure proceeding),
four apartment complexes and one office building (which was later sold), and
two apartment complexes and two office buildings, respectively. Through a
series of transactions in 1992 through 1994, the Partnership acquired the
properties formerly owned by CCEP/3, CCEP/4 and CCEP/5 in full satisfaction of
the Loan.
The Partnership currently owns two office buildings and eight
residential apartment complexes. Those properties are as follows: a 107,670
square foot office building in Tampa, Florida; a 165,687 square foot office
building in Chula Vista, California; a 104-unit residential apartment complex
in Renton, Washington; a 105-unit residential apartment complex in Seattle,
Washington; a 120-unit residential apartment complex in Belleville, Michigan; a
174-unit residential apartment complex in Bellevue, Washington; a 135-unit
residential apartment complex in Salt Lake City, Utah; a 564-unit residential
apartment complex in Denver, Colorado; a 183-unit residential apartment complex
in Cary, North Carolina; and a 276-unit residential apartment complex in St.
Petersburg, Florida.
Originally Anticipated Term of Partnership; Alternatives. According to
the Partnership's Prospectus dated July 25, 1986, the then general partner
(predecessor to the current General Partner) anticipated that CCEP/3, CCEP/4
and CCEP/5 would sell and/or refinance their properties, and consequently repay
the Loan, within a period of less than twelve years after the termination of
the public offering of the Units, depending upon the then current real estate
and capital markets, economic climate and income tax consequences to their
partners. In any event, the Loan would be repayable ten years after the
termination of the public offering of the Units (subject to the right of each
of CCEP/3, CCEP/4 and/or CCEP/5 to extend the Loan for up to two additional
years). Under the Limited Partnership Agreement, the term of the Partnership
will continue until December 31, 2015, unless sooner terminated as provided in
the Limited Partnership 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 causing the Partnership to
merge with another entity or engage in a "roll-up" or similar transaction.
General Policy Regarding Sales and Refinancings of Partnership
Properties. In general, the General Partner regularly evaluates the
Partnership's properties by considering various factors, such as the
Partnership's financial position and real estate and capital markets
conditions. The General Partner monitors each property's specific locale and
sub-market conditions evaluating current trends, competition, new construction
and economic changes. The General Partner oversees each asset's operating
performance and continuously evaluates the physical improvement
15
<PAGE>
requirements. In addition, the financing structure for each property, tax
implications and the investment climate are all considered. Any of these
factors, and possibly others, could potentially contribute to any decision of
the General Partner to sell, refinance, upgrade with capital improvements or
hold a particular Partnership property. The Purchaser (which is an affiliate of
the General Partner) has been advised that the General Partner presently
expects to market for sale Lamplighter Park in Bellevue, Washington in early
1998. In the event of a sale of Lamplighter Park, the General Partner has
advised the Purchaser (which is an affiliate of the General Partner) that it
may distribute to Limited Partners the net cash proceeds (after repayment of
any outstanding mortgage debt and payment of other costs of sale) from such
sale; however, there can be no assurance that such sale would in fact occur or
as to the amount of cash proceeds that might result from such sale. Further, no
determination has been made as to whether any net cash proceeds generated by
such sale would be distributed to Limited Partners, which determination will be
made at the time of such sale, and will be based on, among other things, the
Partnership's working capital requirements at the time. Based on the foregoing
considerations and except for the potential sale of Lamplighter Park, the
General Partner is not currently contemplating the sale of any other
Partnership properties.
Selected Financial and Property-Related Data. Set forth below is a
summary of certain financial and statistical information with respect to the
Partnership and its properties, all of which has been excerpted or derived from
the Partnership's Annual Reports on Form 10-K for the years ended December 31,
1996, 1995, 1994, 1993 and 1992 and the Partnership's Quarterly Reports on Form
10-Q for the periods ended September 30, 1997 and 1996. More comprehensive
financial and other information is included in such reports and other documents
filed by the Partnership with the Commission, and the following summary is
qualified in its entirety by reference to such reports and other documents and
all the financial information and related notes contained therein.
<TABLE>
<CAPTION>
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
SELECTED FINANCIAL DATA
(in thousands, except Unit data)
NINE MONTHS ENDED FISCAL YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
------------------------ ------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----------- ------------ ----------- ----------- ----------- ---------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Statements of Operations Data:
Rental Income................. $ 10,329 $ 9,456 $ 12,815 $ 11,223 $ 8,431 $ 8,090 $ 6,153
Other Income.................. $ 1,066 $ 690 $ 1,066 $ 1,346 $ 2,273 $ 2,351 $ 2,153
Total Revenues............. $ 11,395 $ 10,146 $ 13,881 $ 12,569 $ 10,704 $ 10,441 $ 8,306
Income (Loss) from Operations
(before extraordinary item) $ 1,508 $ 732 $ 1,153 $ (1,606) $ (115) $ (940) $ 1,505
Net Income (Loss)............. $ 1,508 $ 732 $ 1,153 $ (1,624) $ (529) $ (1,141) $ 3,496
Net Income (Loss) per Unit.... $ 3.90 $ 1.89 $ 2.98 $ (4.20) $ (1.37) $ (2.95) $ 9.04
AS OF AS OF
SEPTEMBER 30, DECEMBER 31,
------------------------ ------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----------- ------------ ----------- ----------- ----------- ---------- -------
(UNAUDITED)
Balance Sheets Data:
Total Assets.................. $ 64,052 $ 56,298 $ 69,537 $ 62,863 $ 61,910 $ 65,628 $ 69,709
Total Liabilities............. $ 32,253 $ 19,423 $ 32,241 $ 19,402 $ 13,181 $ 12,840 $ 12,994
Limited Partners' Equity
(Deficit) $ 32,235 $ 37,323 $ 37,739 $ 43,868 $ 49,084 $ 53,102 $ 56,990
Units Outstanding............. 383,033 383,033 383,033 383,033 383,033 383,033 383,033
Book Value per Unit........... $ 84.16 $ 97.44 $ 98.53 $ 114.53 $ 128.15 $ 138.64 $ 148.79
</TABLE>
16
<PAGE>
Description of Properties. Set forth below is a table showing the
location, the date of purchase, the nature of the Partnership's ownership
interest in and the use of each of the Partnership's properties.
<TABLE>
<CAPTION>
PROPERTY DATE OF PURCHASE TYPE OF OWNERSHIP USE
- ---------------------------- ---------------- ----------------- ----------------------
<S> <C> <C> <C>
Cedar Rim 04/91 Fee ownership (subject Residential Apartments
Renton, Washington to first mortgage) (104 units)
City Heights 04/90 Fee ownership (subject Residential Apartments
Seattle, Washington to first mortgage) (105 units)
Corporate Center 04/90 Fee ownership Commercial Center
Tampa, Florida (107,670 sq. ft.)
Hidden Cove by the Lake 03/90 Fee ownership (subject Residential Apartments
Belleville, Michigan to first mortgage) (120 units)
Lamplighter Park 04/91 Fee ownership (subject Residential Apartments
Bellevue, Washington to first mortgage) (174 units)
Park Capitol 04/90 Fee ownership (subject Residential Apartments
Salt Lake City, Utah to first mortgage) (135 units)
Tamarac Village 06/92 Fee ownership (subject Residential Apartments
I, II, III, IV to first mortgage) (564 units)
Denver, Colorado
Williamsburg Manor 11/94 Fee ownership (subject Residential Apartments
Cary, North Carolina to first mortgage) (183 units)
Sandpiper I & II 11/94 Fee ownership (subject Residential Apartments
St. Petersburg, Florida to first mortgage) (276 units)
South City Business Center 02/96 Fee ownership Commercial Center
Chula Vista, California (165,687 sq. ft.)
</TABLE>
Accumulated Depreciation Schedule. Set forth below is a table showing
the gross carrying value, accumulated depreciation and federal tax basis of
each of the Partnership's properties as of December 31, 1996 ($ amounts in
thousands).
<TABLE>
<CAPTION>
GROSS
CARRYING ACCUMULATED FEDERAL
PROPERTY VALUE DEPRECIATION RATE METHOD TAX BASIS
- ----------------------------------- ------------- ------------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
Cedar Rim $ 4,706 $ 1,428 3-20 yrs. S/L $ 4,846
City Heights 4,806 1,480 3-20 yrs. S/L 4,843
Corporate Center 3,424 1,254 5-20 yrs. S/L 3,810
Hidden Cove 5,314 1,925 3-20 yrs. S/L 4,335
Lamplighter Park 7,818 1,699 3-20 yrs. S/L 6,892
Park Capitol 2,859 1,041 5-20 yrs. S/L 2,351
Tamarac Village 14,122 2,591 5-20 yrs. S/L 12,321
Williamsburg Manor 6,756 522 5-22 yrs. S/L 6,329
Sandpiper I & II 7,634 586 5-22 yrs. S/L 7,156
South City Business Center 4,382 108 14-25 yrs. S/L 4,330
--------- --------- ---------
TOTALS $ 61,821 $ 12,634 $ 57,213
========= ========= =========
</TABLE>
17
<PAGE>
Schedule of Mortgages. Set forth below is a table showing certain
information regarding the outstanding mortgages encumbering each of the
Partnership's properties as of December 31, 1996 ($ amounts in thousands).
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL
BALANCE AT STATED BALANCE
DECEMBER 31, INTEREST PERIOD MATURITY DUE AT
PROPERTY 1996 RATE AMORTIZED DATE MATURITY
- ---------------------------------- --------------------- ----------------- --------------- -------------- --------
<S> <C> <C> <C> <C> <C>
Lamplighter Park $ 3,500 7.33% (a) 11/01/03 $ 3,500
Park Capitol 2,725 6.95% (a) 12/01/05 2,725
Tamarac Village 9,400 7.33% (a) 11/01/03 9,400
Williamsburg Manor 4,150 6.95% (a) 12/01/05 4,150
Sandpiper I & II 3,950 6.95% (a) 12/01/05 3,950
Cedar Rim 2,000 7.33% (a) 11/01/03 2,000
City Heights 2,600 7.33% (a) 11/01/03 2,600
Hidden Cove 2,200 7.33% (a) 11/01/03 2,200
-------- --------
TOTALS $ 30,525 $30,525
-------------- =======
Accrued Interest 183
--------------
TOTAL $ 30,708
------========
</TABLE>
- ------------------------
(a) Interest only payments
Average Annual Rental Rate and Occupancy. Set forth below is a table
showing the average annual rental rates and occupancy percentages for each of
the Partnership's properties during the past two years.
<TABLE>
<CAPTION>
PROPERTY AVERAGE ANNUAL RENTAL RATE AVERAGE ANNUAL OCCUPANCY
- --------------------- ------------------------------------- -----------------------------
1996 1995 1996 1995
--------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Cedar Rim $ 8,837/unit $378,512/unit 94% 89%
City Heights 9,591/unit 9,430/unit 96% 85%
Corporate Center 5.68/sq.ft. 5.42/sq.ft. 94% 99%
Hidden Cove 8,258/unit 7,716/unit 94% 95%
Lamplighter Park 7,925/unit 7,639/unit 96% 95%
Park Capitol 7,276/unit 7,007/unit 98% 96%
Tamarac Village 6,659/unit 6,332/unit 94% 86%
Williamsburg Manor 8,200/unit 7,900/unit 95% 96%
Sandpiper I & II 6,736/unit 6,873/unit 91% 87%
South City 5.38/sq.ft. (a) 88% (a)
</TABLE>
- --------------------------
(a) The South City Business Center was foreclosed on by the Partnership in
February of 1996. Rental rate and occupancy information for 1995 are not
available.
18
<PAGE>
Schedule of Real Estate Taxes and Rates. Set forth below is a table
showing the real estate taxes and rates for 1996 for each of the Partnership's
properties.
<TABLE>
<CAPTION>
1996 1996
PROPERTY BILLING RATE
- ------------------------------------- --------- ----------
<S> <C> <C>
Cedar Rim $ 68,000 1.42%
City Heights $ 75,000 1.31%
Corporate Center $ 57,000 2.56%
Hidden Cove $ 64,000 4.58%
Lamplighter Park $ 80,000 1.24%
Park Capitol $ 41,000 1.55%
Tamarac Village $ 155,000 8.12%
Williamsburg Manor $ 75,000 1.21%
Sandpiper I & II $ 178,000 2.46%
South City Business Center $ 73,000 1.16%
</TABLE>
Other Information. The Partnership is subject to the information
reporting requirements of the Exchange Act and accordingly is required to file
reports and other information with the Commission relating to its business,
financial results and other matters. Such reports and other documents may be
inspected at the Commission's Public Reference Section, Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, where copies may be obtained at
prescribed rates, and at the regional offices of the Commission located in the
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and 7 World Trade Center, New York, New York 10048. Copies should be available
by mail upon payment of the Commission's customary charges by writing to the
Commission's principal offices at 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission also maintains a web site that contains reports, proxy
and other information filed electronically with the Commission, the address of
which is http://www.sec.gov.
Cash Distributions History. The Partnership has made distributions to
Limited Partners of $36.14 in 1997 (through December 31), $18.98 per Unit in
1996 and $9.42 per Unit in 1995. The 1997 distributions consisted primarily of
proceeds from refinancing two of the Partnership's properties and from
obtaining initial financing on three of the Partnership's properties in 1996
(approximately $30 per Unit); the remaining portion was from operating cash
flow. The 1996 distribution was not made completely out of operating cash flow;
rather, a portion of that distribution consisted of proceeds from refinancing
three of the Partnership's properties in 1995 (approximately $6 per Unit). In
total, original investors in the Partnership have received distributions of
only $171.07 in respect of their original $250 investment made in 1984.
Operating Budgets of the Partnership. A summary of the fiscal 1996 and
1997 operating budgets and the audited results of operations for fiscal 1996 of
the Partnership are set forth in the table below. The budgeted amounts provided
below are figures that were not computed in accordance with generally accepted
accounting principles ("GAAP"). Historically, budgeted operating results of
operations for a particular fiscal year have differed significantly in certain
respects from the audited operating results for that year. In particular, items
that are categorized as capital expenditures for purposes of preparing the
operating budgets are often re-categorized as expenses when the financial
statements are audited and presented in accordance with GAAP. Therefore, the
summary operating budgets presented for fiscal 1997 should not necessarily be
considered as indicative of what the audited operating results for fiscal 1997
will be. Furthermore, any estimate of the future performance of a business,
such as the Partnership's business, is forward-looking and based on numerous
assumptions, some of which inevitably will prove to be incorrect. For this
reason, it is probable that the Partnership's future operating results will
differ from those projected in the operating budget, and those differences may
be material. Therefore, such information should not be relied on by Limited
Partners.
19
<PAGE>
<TABLE>
<CAPTION>
FISCAL 1996 FISCAL 1996 FISCAL 1997
BUDGETED AUDITED BUDGETED
---------------- --------------- ---------------
<S> <C> <C> <C>
Total Revenues from Property Operations................. $ 13,556,761 $ 13,767,000 $ 14,371,576
Total Operating Expenses ............................... $ 6,693,938 $ 7,796,000 $ 7,209,775
Net Operating Income.................................... $ 6,862,823 $ 5,971,000 $ 7,161,801
Capital Expenditures.................................... $ 1,943,884 $ 1,699,000 $ 1,541,394
</TABLE>
SECTION 10. CONFLICTS OF INTEREST AND TRANSACTIONS WITH AFFILIATES.
The General Partner and its affiliates have conflicts of interest with respect
to the Offer as set forth below.
Conflicts of Interest with Respect to the Offer. The General Partner
has conflicts of interest with respect to the Offer, including conflicts
resulting from its affiliation with IPT and the Purchaser. The General Partner
also would have a conflict of interest (i) as a result of the fact that a sale
or liquidation of the Partnership's assets would result in a decrease or
elimination of the fees paid to the General Partner and/or its affiliates and
(ii) as a consequence of the Purchaser's ownership of Units, because the
Purchaser (which is an affiliate of the General Partner) may have incentives to
seek to maximize the value of its ownership of Units, which in turn may result
in a conflict for the General Partner in attempting to reconcile the interests
of the Purchaser (which is an affiliate of the General Partner) with the
interests of the other Limited Partners. In addition, the Purchaser (which is
an affiliate of the General Partner) is making the Offer with a view to making
a profit. Accordingly, there is a conflict between the desire of the Purchaser
(which is an affiliate of the General Partner) to purchase Units at a low price
and the desire of the Limited Partners to sell their Units at a high price. The
General Partner has indicated in the Schedule 14D-9 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.
Voting by the Purchaser. The Limited Partnership Agreement provides
that the General Partner has absolute discretion as to whether to admit an
assignee of Units to the Partnership as a substituted Limited Partner. The
Purchaser (which is an affiliate of the General Partner) will seek to be
admitted to the Partnership as a substituted Limited Partner upon consummation
of the Offer and, if admitted, will have the right to vote each Unit purchased
pursuant to the Offer. Even if the Purchaser (which is an affiliate of the
General Partner) is not admitted to the Partnership as a substituted Limited
Partner, however, the Purchaser may have the right to vote each Unit purchased
in the Offer pursuant to the irrevocable appointment by tendering Limited
Partners of the Purchaser (which is an affiliate of the General Partner) and
its managers and designees as proxies with respect to the Units tendered by
such Limited Partners and accepted for payment by the Purchaser. See Section 3.
As a result, if the Purchaser (which is an affiliate of the General Partner) is
successful in acquiring a significant number of Units pursuant to the Offer,
the Purchaser will have the right to vote those Units and thereby significantly
influence all voting decisions with respect to the Partnership. In general,
IPLP and the Purchaser (which are affiliates of the General Partner) will vote
the Units owned by them in whatever manner they deem to be in IPT's best
interest, which, because of their relationship with the General Partner, also
may be in the interest of the General Partner, but may not be in the interest
of other Limited Partners. This could (i) prevent non-tendering Limited
Partners from taking action they desire but that IPT opposes and (ii) enable
IPT to take action desired by IPT but opposed by nontendering Limited Partners.
Under the Limited Partnership Agreement, Limited Partners holding a majority of
the Units are entitled to take action with respect to a variety of matters,
including: removal of a general partner and in certain circumstances election
of new or successor general partners; dissolution of the Partnership; the sale
of all or substantially all of the assets of the Partnership; and most types of
amendments to the Limited Partnership Agreement. See Section 7.
Financing Arrangements. The Purchaser (which is an affiliate of the
General Partner) expects to pay for the Units it purchases pursuant to the
Offer with funds provided by IPLP as capital contributions. IPLP in turn
intends to use its cash on hand to make such contributions. See Section 12. It
is possible, however, that in connection with its future financing activities,
IPT or IPLP may cause or request the Purchaser (which is an affiliate of the
General Partner) to pledge the Units as collateral for loans, or otherwise
agree to terms which provide IPT, IPLP and the Purchaser with incentives to
generate substantial near-term cash flow from the Purchaser's investment
20
<PAGE>
in the Units. This could be the case, for example, if a loan has a "balloon"
maturity after a relatively short time or bears a high or increasing interest
rate. In such a situation, the General Partner may experience a conflict of
interest in seeking to reconcile the best interests of the Partnership with the
need of its affiliates for cash flow from the Partnership's activities.
Transactions with Affiliates. Under the Limited Partnership Agreement,
the General Partner holds an interest in the Partnership and is entitled to
participate in certain cash distributions made by the Partnership to its
partners. The General Partner received from the Partnership in respect of its
interest in the Partnership cash distributions of $165,000 to date in 1997,
$48,000 in 1996 and $36,000 in 1995. In late December 1994, IRG and ICG (which
are affiliates of the Purchaser and the General Partner) assumed day-to-day
property management responsibilities for the Partnership's properties. The
Partnership paid IRG and ICG property management fees for property management
services in the amounts of approximately $658,000 and $572,000 for the years
ended December 31, 1996 and 1995, respectively, and has paid IRG and ICG
property management fees equal to $548,000 during the first nine months of
1997. The Partnership reimbursed the General Partner and its affiliates
(including Insignia) for expenses incurred in connection with asset management
and partnership administration services performed by them for the Partnership
for the years ended December 31, 1996 and 1995 in the amounts of $435,000
(including reimbursements paid to an affiliate of the General Partner of
$32,000 for commercial lease commissions) and $443,000 (including
reimbursements paid to an affiliate of the General Partner of $14,000 for
commercial lease commissions), respectively, and has reimbursed them for such
services in the amount of $270,000 through September 30, 1997. During 1996, an
affiliate of the General Partner was paid $98,000 in connection with obtaining
financing on certain of the Partnership's properties. On July 1, 1995, the
Partnership began insuring its properties under a master policy through an
agency and insurer unaffiliated with the General Partner. An affiliate of the
General Partner acquired, in the acquisition of a business, certain financial
obligations from an insurance agency which was later acquired by the agent who
placed the current year's master policy. The current agent assumed the
financial obligations to the affiliate of the General Partner who receives
payments on these obligations from the agent. Insignia and the General Partner
believe that the aggregate financial benefit derived by Insignia and its
affiliates from the arrangement described in the three preceding sentences has
been immaterial.
SECTION 11. CERTAIN INFORMATION CONCERNING THE PURCHASER, IPLP, IPT
AND INSIGNIA.
The Purchaser. The Purchaser (which is an affiliate of the General
Partner) is a newly formed entity controlled by IPT and organized for the
purpose of making the Offer. The Purchaser is a wholly-owned subsidiary of
IPLP. The Purchaser (which is an affiliate of the General Partner) has not
engaged in any business activity other than in connection with the Offer and
certain other tender offers for units of limited partnership interests in other
IPT Partnerships (as defined below) being made contemporaneously with the
Offer, and has no significant assets or liabilities at the present time. Upon
consummation of the Offer and such other offers, the Purchaser's only
significant assets will be the Units it acquires pursuant to the Offer and the
other limited partnership units it acquires pursuant to such other offers.
The principal executive offices of the Purchaser (which is an
affiliate of the General Partner) are located at One Insignia Financial Plaza,
P.O. Box 19059, Greenville, South Carolina 29602, and its telephone number is
(864) 239-1300. For certain information concerning the managers of the
Purchaser (which is an affiliate of the General Partner), see Schedule II to
this Offer to Purchase.
IPT and IPLP. IPT was formed by Insignia in May 1996 for the purpose
of acquiring and owning interests in multifamily residential properties,
principally through ownership of limited and general partner interests in real
estate limited partnerships (including the Partnership). IPT has been organized
and operates in a manner that will qualify it to be taxed as a real estate
investment trust ("REIT") under the Code. Substantially all of IPT's
investments are held through IPLP, which is the operating partnership of IPT.
IPT is presently the sole general partner and Insignia is presently the sole
limited partner of IPLP.
In forming IPT, Insignia and its affiliates (i) transferred to IPT
equity interests in entities comprising or controlling the general partners of
36 public real estate limited partnerships (including the Partnership) (the
"IPT
21
<PAGE>
Partnerships") in exchange for common shares of beneficial interest of IPT and
(ii) transferred to IPLP limited partner interests in the IPT Partnerships (or
equity interests in entities owning limited partner interests in the IPT
Partnerships) in exchange for units of limited partner interest in IPLP. The
IPT Partnerships own, in the aggregate, 184 properties containing approximately
42,000 residential apartment units and approximately 4.2 million square feet of
commercial space. See Schedule V for a list of the IPT Partnerships.
IPT does not currently operate as a self-administered and self-managed
REIT, but rather has engaged Insignia to act as advisor to IPT and IPLP. In
such capacity, Insignia and its affiliates provide a broad range of services to
IPT and IPLP, including executive advisory, investment advisory, acquisition,
administrative, financial and accounting services, including in connection with
the Offer.
On July 18, 1997, IPT, Insignia, MAE GP Corporation (which is an
affiliate of Insignia) and Angeles Mortgage Investment Trust, an unincorporated
California business trust ("AMIT"), entered into a definitive merger agreement
(the "AMIT Merger Agreement"), pursuant to which AMIT is to be merged with and
into IPT, with IPT being the surviving entity, in a stock for stock transaction
(the "AMIT Merger"). AMIT is a public company whose Class A shares trade on the
American Stock Exchange under the symbol ANM. Insignia and its affiliates
currently own 96,800 (or approximately 3.7%) of the 2,617,000 outstanding AMIT
Class A shares and all of the 1,675,113 outstanding AMIT Class B shares. If the
AMIT Merger is consummated, IPT will become a publicly traded company (IPT
presently intends to apply for listing of its shares on the New York Stock
Exchange, which listing would be subject to completion of the AMIT Merger), and
it is anticipated that Insignia and its affiliates will own approximately 56%
of post-merger IPT, the former AMIT shareholders (other than Insignia and its
affiliates) will own approximately 17% of post-merger IPT, and the current
unaffiliated shareholders of IPT will own the remaining 27% of post-merger IPT.
The AMIT Merger is expected to be completed in the first quarter of
1998. Consummation of the AMIT Merger is subject to several conditions,
including approval of the AMIT Merger Agreement and the AMIT Merger by the
respective shareholders of IPT and AMIT and the receipt by AMIT of a fairness
opinion from its financial advisor to the effect that the AMIT Merger is fair
to AMIT's shareholders from a financial point of view. Accordingly, there can
be no assurance as to when the AMIT Merger will occur, or that it will occur at
all.
IPT's principal executive offices are located at One Insignia
Financial Plaza, P.O. Box 19059, Greenville, South Carolina 29602, and its
telephone number is (864) 239-1300. For certain information concerning the
trustees and executive officers of IPT, see Schedule III to this Offer to
Purchase. IPLP does not have any officers or employees.
Set forth below is certain consolidated financial information with
respect to IPT and IPLP.
22
<PAGE>
<TABLE>
<CAPTION>
INSIGNIA PROPERTIES TRUST SELECTED
CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except share and unit data)
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1997 1996
----------------- ------------
(unaudited) (audited)
<S> <C> <C>
Statements of Operations Data:
Revenues.................................................................. $ 11,144 $ 9,705
Income Before Extraordinary Item.......................................... $ 2,930 $ 3,557
Net Income................................................................ $ 2,930 $ 2,425
Supplemental Data:
Funds From Operations(1).................................................. $ 14,324 $ 12,563
IPT Common Shares Outstanding............................................. 17,573,151 11,168,036
IPLP Units Outstanding.................................................... 8,399,499 8,399,499
---------- ----------
IPT Common Shares and IPLP Units Outstanding(2)........................... 25,972,650 19,567,535
========== ==========
Balance Sheets Data:
Cash...................................................................... $ 53,897 $ 4,928
Investments in IPT Partnerships(3)........................................ $ 126,505 $ 118,741
Long-Term Debt............................................................ $ 19,300 $ 19,730
Shareholders' Equity(4)................................................... $ 138,710 $ 121,068
</TABLE>
- ---------------------
(1) Funds from Operations represent income or loss from real estate operations,
which is net income or loss in accordance with GAAP, excluding gains or
losses from debt restructuring or sales of property, plus depreciation and
provision for impairment.
(2) Assumes all outstanding IPLP units are exchanged for IPT Common Shares.
(3) Represents IPT's investment in 26 of the 36 IPT Partnerships which IPT
accounts for using the equity method. Of the remaining ten IPT
Partnerships, IPT accounts for nine using the cost method and one using the
consolidation method.
(4) Includes Insignia's investments in predecessor entities.
Insignia. Insignia is a fully integrated real estate services
organization. Insignia is the largest manager of multi-family residential
properties in the United States and is among the largest managers of commercial
properties. Insignia's real estate services include property management,
providing all of the day-to-day services necessary to operate a property,
whether residential or commercial; asset management, including long-term
financial planning, monitoring and implementing capital improvement plans, and
development and execution of refinancings and dispositions; real estate leasing
and brokerage; maintenance and construction services; marketing and
advertising; investor reporting and accounting; and investment banking,
including assistance in workouts and restructurings, mergers and acquisitions,
and debt and equity securitizations.
Insignia provides property and/or asset management services for
approximately 2,600 properties, which include approximately 290,000 residential
units (including cooperative and condominium units), and in excess of 150
million square feet of retail, commercial and industrial space, located in over
500 cities in 48 states. Insignia currently provides partnership administration
services to approximately 900 limited partnerships having approximately 330,000
limited partners. Insignia is a public company whose stock is traded on the New
York Stock Exchange under the symbol IFS.
Insignia is subject to the information and reporting requirements of
the Exchange Act and in accordance therewith is required to file periodic
reports, proxy statements and other information with the Commission relating to
its business, financial condition and other matters. Certain information, as of
particular dates, concerning Insignia's business, principal properties, capital
structure, material pending legal proceedings, operating results, financial
condition, directors and officers (including their remuneration and stock
options granted to them), the principal holders of Insignia's securities, any
material interests of such persons in transactions with Insignia and certain
other matters is required to be disclosed in proxy statements and annual
reports distributed to Insignia's shareholders and filed with the Commission.
Such reports, proxy statements and other information may be inspected
23
<PAGE>
and copied at the Commission's public reference facilities and should also be
available for inspection in the same manner as set forth with respect to the
Partnership in Section 9.
Insignia's principal executive offices are located at One Insignia
Financial Plaza, Greenville, South Carolina 29602, and its telephone number is
(864) 239-1000. For certain information concerning the directors and executive
officers of Insignia, see Schedule IV to this Offer to Purchase.
Set forth below is certain consolidated financial information with
respect to Insignia and its consolidated subsidiaries for its fiscal years
ended December 31, 1996, 1995 and 1994 and the nine-month periods ended
September 30, 1997 and 1996. More comprehensive financial and other information
is included in Insignia's Annual Report on Form 10-K for the year ended
December 31, 1996 (including management's discussion and analysis of financial
condition and results of operations) and in other reports and documents filed
by Insignia with the Commission. The financial information set forth below is
qualified in its entirety by reference to such reports and documents filed with
the Commission and the financial statements and related notes contained
therein. These reports and other documents may be examined and copies thereof
may be obtained in the manner set forth above.
<TABLE>
<CAPTION>
INSIGNIA FINANCIAL GROUP, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share data)
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
------------------------- ------------------------------------
1997 1996 1996 1995 1994
---------- ----------- --------- ------- ----------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statements of Operations Data:
Total Revenues.................................. $ 254,630 $ 149,204 $ 227,074 $ 123,032 $ 75,453
Income Before Taxes and Extraordinary Item...... $ 7,879 $ 8,097 $ 14,946 $ 10,093 $ 12,101
Net Income...................................... $ 4,727 $ 5,020 $ 8,564 $ 5,806 $ 7,261
Earnings Per Share.............................. $ 0.15 $ 0.15 $ 0.27 $ 0.20 $ 0.35
AS OF AS OF
SEPTEMBER 30, DECEMBER 31,
----------------------- ------------------------------------
1997 1996 1996 1995 1994
---------- ---------- -------- -------- ----------
(unaudited)
Balance Sheets Data:
Cash and Cash Equivalents....................... $ 89,427 $ 60,131 $ 54,614 $ 49,846 $ 36,596
Receivables..................................... $ 73,657 $ 14,292 $ 46,040 $ 26,445 $ 13,572
Total Assets................................ $ 568,768 $ 471,889 $ 492,402 $ 245,409 $ 174,272
Accounts Payable................................ $ 8,767 $ 2,602 $ 1,711 $ 1,497 $ 3,478
Commissions Payable............................. $ 30,841 $ 9,257 $ 18,736 $ 602 --
Accrued and Sundry Liabilities.................. $ 50,893 $ 24,604 $ 40,741 $ 25,619 $ 18,790
Long-Term Debt.................................. $ 58,417 $ 205,590 $ 69,140 $ 42,996 $ 73,198
Total Liabilities........................... $ 148,918 $ 255,714 $ 130,328 $ 70,714 $ 95,466
Redeemable Convertible Preferred Stock.......... -- -- -- $ 15,000 --
Redeemable Convertible Preferred Securities
of Subsidiary Trust........................... $ 143,993 -- $ 144,169 -- --
Minority Interest in Consolidated Subsidiaries.. $ 52,778 $ 2,762 -- $ 2,682 --
Shareholders' Equity........................ $ 223,079 $ 213,413 $ 217,905 $ 157,013 $ 78,806
</TABLE>
Except as otherwise set forth herein and in Schedule I, none of the
Purchaser (which is an affiliate of the General Partner), IPLP, IPT, Insignia
or, to the best of the Purchaser's knowledge, any of the persons listed on
Schedules II, III or IV hereto, or any affiliate of the foregoing, (i)
beneficially owns or has a right to acquire any Units, (ii) has effected any
transaction in the Units in the last 60 days, or (iii) has any contract,
arrangement, understanding or relationship with any other person with respect
to any securities of the Partnership, including, but not limited to, contracts,
arrangements, understandings or relationships concerning the transfer or voting
thereof,
24
<PAGE>
joint ventures, loan or option arrangements, puts or calls, guarantees of
loans, guarantees against loss or the giving or withholding of proxies. Andrew
L. Farkas, who is the Chairman of the Board, Chief Executive Officer and
President of Insignia and a trustee of IPT, beneficially owns approximately 28%
of Insignia's outstanding common stock and, as a result, may be deemed to
beneficially own the Units owned by IPLP.
SECTION 12. SOURCE OF FUNDS. The Purchaser (which is an affiliate of
the General Partner) expects that approximately $12,750,000 will be required to
purchase 145,000 Units, if tendered, and to pay related fees and expenses. The
Purchaser (which is an affiliate of the General Partner) expects to obtain all
of those funds from IPLP, which in turn intends to use its cash on hand.
SECTION 13. BACKGROUND OF THE OFFER.
Affiliation with the General Partner. Upon the Partnership's formation
in 1984, Consolidated Capital Equities Corporation ("CCEC"), a Colorado
corporation, was the corporate general partner of the Partnership. As a result
of a succession of agreements, CCEC became the Partnership's managing general
partner. In 1988, through a series of transactions, Southmark Corporation
acquired control of CCEC. In December 1988, CCEC filed for reorganization under
Chapter 11 of the United States Bankruptcy Code. In 1990, as part of CCEC's
reorganization plan, the General Partner acquired CCEC's general partner
interests in the Partnership and in 15 other affiliated public limited
partnerships (the "Affiliated Partnerships") and the General Partner replaced
CCEC as the general partner of the Partnership (and as the general partner of
each of the Affiliated Partnerships). The selection of the General Partner as
the general partner of the Partnership (and of each of the Affiliated
Partnerships) was approved by a majority of the Limited Partners in the
Partnership (and by a majority of the limited partners in each of the
Affiliated Partnerships) pursuant to solicitations commenced in August 1990.
Insignia acquired the stock of the General Partner through two transactions in
December 1994 and October 1995, and contributed that stock to IPT in December
1996 in connection with IPT's formation.
Previous Tender Offer. In 1992, LP3 Acceptance Corporation ("LP3
Corporation") acquired 34,215 (or approximately 8.9%) of the outstanding Units,
at a purchase price of $45 per Unit, pursuant to a tender offer commenced in
November 1992. LP3 Corporation was affiliated with the General Partner at the
time, but was not an affiliate of the Purchaser, IPT or Insignia. Insignia
acquired, as a result of a transaction that occurred in December 1994, those
Units and contributed such Units to IPLP following the formation of IPT in
December 1996.
Determination of Purchase Price. In establishing the Purchase Price,
the Purchaser (which is an affiliate of the General Partner) reviewed certain
publicly available information and certain information made available to it by
the General Partner and its other affiliates, including among other things: (i)
the Limited Partnership Agreement, as amended to date; (ii) the Partnership's
Annual Report on Form 10-K for the year ended December 31, 1996 and the
Partnership's Quarterly Report on Form 10-Q for the period ended September 30,
1997; (iii) unaudited results of operations of the Partnership's properties for
the period since the beginning of the Partnership's current fiscal year; (iv)
the operating budgets prepared by IRG and ICG with respect to the Partnership's
properties for the year ending December 31, 1997; (v) independent appraisals of
certain of the Partnership's properties; and (vi) other information obtained by
IRG, ICG, Insignia and other affiliates in their capacities as providers of
property management, asset management and partnership administration services
to the Partnership. Based on the that information, the Purchaser (which is an
affiliate of the General Partner) considered several factors, as discussed
below.
Trading History of Units. Secondary market sales activity for the
Units, including privately negotiated sales, has been limited and sporadic.
According to information obtained from the General Partner, from October 1,
1995 to September 30, 1997 an aggregate of 16,786 Units (representing less than
4.4% of the total outstanding Units) was transferred in sale transactions
(excluding the transfers of Units to IPLP by Insignia in connection with the
formation of IPT). Set forth in the table below are the high and low sales
prices of Units for the quarterly periods from October 1, 1995 to September 30,
1997, as reported by the General Partner and by The Partnership Spectrum, which
is an independent, third-party source. The gross sales prices reported by The
Partnership Spectrum do not necessarily reflect the net sales proceeds received
by sellers of Units, which typically are reduced
25
<PAGE>
by commissions and other secondary market transaction costs to amounts less
than the reported prices; thus the Purchaser does not know whether the
information reported by The Partnership Spectrum is accurate or complete. The
transfer paperwork submitted to the General Partner often does not include the
requested price information or contains conflicting information as to the
actual sales price; accordingly, Limited Partners should not rely upon this
information as being completely accurate.
<TABLE>
<CAPTION>
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
REPORTED SALES PRICES OF PARTNERSHIP UNITS
AS REPORTED BY AS REPORTED BY
THE GENERAL PARTNER(a) THE PARTNERSHIP SPECTRUM(b)
------------------------------- ---------------------------------
LOW SALES HIGH SALES LOW SALES HIGH SALES
PRICE PRICE PRICE PRICE
PER UNIT PER UNIT PER UNIT PER UNIT
--------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
Fiscal Year Ended December 31, 1997:
Third Quarter(c).................................. $31 $102 $78 $ 97
Second Quarter.................................... 21 111 71 100
First Quarter .................................... 20 102 80 112
Fiscal Year Ended December 31, 1996:
Fourth Quarter ................................... 25 100 92 112
Third Quarter..................................... 12 105 75 112
Second Quarter.................................... 24 91 79 101
First Quarter..................................... 50 91 80 105
Fiscal Year Ended December 31, 1995:
Fourth Quarter.................................... 59 91 60 96
</TABLE>
- ------------------
(a) Although the General Partner requests and records information on the
prices at which Units are sold, it does not regularly receive or maintain
information regarding the bid or asked quotations of secondary market
makers, if any. The General Partner processes transfers of Units only 12
times per year - on the first day of each month. The prices in the table
are based solely on information provided to the General Partner by sellers
and buyers of Units transferred in sale transactions (i.e., excluding
transactions believed to result from the death of a Limited Partner,
rollover to an IRA account, establishment of a trust, trustee to trustee
transfers, termination of a benefit plan, distributions from a qualified
or non-qualified plan, uniform gifts, abandonment of Units or similar
nonsale transactions).
(b) The gross sales prices reported by The Partnership Spectrum 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 Purchaser
(which is an affiliate of the General Partner) does not know whether the
information reported by The Partnership Spectrum is accurate or complete.
(c) In October 1997, the Partnership made a cash distribution to Limited
Partners of approximately $18.00 per Unit. The Purchaser believes that the
highest secondary market sales prices reported by the General Partner and
The Partnership Spectrum for the third quarter do not reflect that
distribution.
The Purchaser (which is an affiliate of the General Partner) believes
that, although secondary market sales information probably is not a reliable
measure of value because of the limited and inefficient nature of the market
for Units, this information may be relevant to a Limited Partner's decision as
to whether to tender its Units pursuant to the Offer. At present, privately
negotiated sales and sales through intermediaries (e.g., through the trading
system operated by American Partnership Board, Inc., which publishes sell
offers by holders of Units) are the only means available to a Limited Partner
to liquidate an investment in Units (other than the Offer) because the Units
are not listed or traded on any exchange or quoted on NASDAQ.
Appraisals. Certain of the Partnership's properties have been
appraised in the past several years by independent, third party appraisers
(Joseph J. Blake & Associates, Inc. ("Blake") or Koeppel Tener Real Estate
Services, Inc. ("KTR")). According to the appraisal reports, the scope of the
appraisals included an inspection of each property and an analysis of the
respective surrounding markets. In each case, the applicable independent
appraiser relied principally on the income capitalization approach to valuation
and secondarily on the sales comparison approach, and represented that its
report was prepared in accordance with the Code of Professional Ethics and
Standards of Professional Appraisal Practice of the Appraisal Institute and the
Uniform Standards of Professional Appraisal Practice, and in compliance with
the Appraisal Standards set forth in the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 (known as "FIRREA"). The estimated market
values of the fee
26
<PAGE>
simple estate of each of the properties specified in the most recent appraisal
reports for the Partnership's properties which have been appraised within the
past three years are set forth in the table below, and copies of the summaries
of those appraisals have been filed as exhibits to the Purchaser's Tender Offer
Statement on Schedule 14D-1 filed with the Commission.
<TABLE>
<CAPTION>
APPRAISED DATE OF
PROPERTY NAME VALUE APPRAISAL APPRAISER
- ------------- ---------------------------- --------- ---------
<S> <C> <C> <C>
Cedar Rim $ 4,500,000 04/26/96 Blake
City Heights $ 5,200,000 04/15/96 Blake
Hidden Cove $ 4,650,000 04/12/96 KTR
Lamplighter Park $ 7,600,000 04/15/96 Blake
Park Capitol $ 5,200,000 11/07/95 Blake
Tamarac Village $19,000,000 04/23/96 Blake
Williamsburg Manor $ 7,900,000 11/07/95 Blake
Sandpiper I & II $ 7,800,000 10/15/95 Blake
</TABLE>
IPT Formation Values. In connection with the formation of IPT,
Insignia prepared estimates of the values of the Partnership's properties and
of a Unit as of December 31, 1996 for purposes of determining the number of
units of limited partnership interest in IPLP it would receive in exchange for
the Units contributed to IPLP by Insignia and its affiliates. For this purpose,
Insignia estimated the aggregate value of the Partnership's properties to be
$70,147,062 and the net asset value of a Unit to be $151. This aggregate
property value estimate is approximately $4,300,000 (or 5.8%) less than the
Gross Real Estate Value Estimate described below, principally due to changes in
the operating performances of the properties between December 1996 and October
1997, and this Unit value estimate is approximately $31 (or 26%) greater than
the Estimated Liquidation Value described below, principally due to two
factors: (i) changes in the Partnership's net current assets between December
1996 and September 1997, and (ii) this was an estimate of the "net asset value"
of a Unit and not the "liquidation value" of a Unit and, therefore, Insignia
did not deduct a 2% reserve to account for the costs associated with
liquidating the Partnership's properties, or a 3% non-subordinated disposition
fee payable to the General Partner on the sale of the Partnership's properties,
as described below.
Purchaser's Estimate of Gross Real Estate Value. In estimating the
gross real estate value of the Partnership's properties (except where noted
below), the Purchaser utilized the capitalization of income approach. The
estimate of the gross real estate value of the Partnership's properties
prepared by the Purchaser does not purport to be an estimate of the aggregate
fair market value of the Units themselves, nor should it be viewed as such by
Limited Partners. Neither the Purchaser nor any of its affiliates prepared any
estimates of the values of the Partnership's properties based upon any other
valuation method.
RESIDENTIAL PROPERTIES
The following is a description of the methodology employed by the
Purchaser in preparing such estimates for the residential properties owned by
the Partnership (as used below, "net operating income" is calculated before
depreciation, amortization, debt service payments and certain capital
expenditure items):
CEDAR RIM. In estimating the value of this property, the Purchaser
reviewed the income ($805,744) generated by the property for the ten months
ended October 31, 1997 (comprised of $757,834 of gross rental income and
$47,910 of other income), and then deducted from this amount the total
operating expenses of the property for the first ten months of 1997 ($402,696),
resulting in the Purchaser's estimate of net operating income for the first ten
months of 1997 ($403,048). The Purchaser then annualized this amount, resulting
in estimated annual net operating income of $483,658, and then increased that
annualized net operating income amount by $400 per apartment unit, representing
the Purchaser's estimate of the adjustment that would be imputed by a third
party purchaser in underwriting the operating expenses, including normal
replacement reserves, of the property for
27
<PAGE>
valuation purposes. Finally, the Purchaser capitalized its estimated adjusted
net operating income amount ($525,258) at a 10% capitalization rate, resulting
in an estimated gross property value of $5,252,580.
CITY HEIGHTS. In estimating the value of this property, the Purchaser
reviewed the income ($881,323) generated by the property for the ten months
ended October 31, 1997 (comprised of $826,909 of gross rental income and
$54,414 of other income), and then deducted from this amount the total
operating expenses of the property for the first ten months of 1997 ($376,597),
resulting in the Purchaser's estimate of net operating income for the first ten
months of 1997 ($504,726). The Purchaser then annualized this amount, resulting
in estimated annual net operating income of $605,671. Finally, the Purchaser
capitalized its estimated annual net operating income amount at a 10%
capitalization rate, resulting in an estimated gross property value of
$6,056,712.
HIDDEN COVE. In estimating the value of this property, the Purchaser
reviewed the income ($793,365) generated by the property for the ten months
ended October 31, 1997 (comprised of $765,829 of gross rental income and
$27,536 of other income), and then deducted from this amount the total
operating expenses of the property for the first ten months of 1997 ($412,510),
resulting in the Purchaser's estimate of net operating income for the first ten
months of 1997 ($380,855). The Purchaser then annualized this amount, resulting
in estimated annual net operating income of $457,026, and then increased that
annualized net operating income amount by $300 per apartment unit, representing
the Purchaser's estimate of the adjustment that would be imputed by a third
party purchaser in underwriting the operating expenses, including normal
replacement reserves, of the property for valuation purposes. Finally, the
Purchaser capitalized its estimated adjusted net operating income amount
($493,026) at a 10.5% capitalization rate, resulting in an estimated gross
property value of $4,695,486.
LAMPLIGHTER PARK. In estimating the value of this property, the
Purchaser reviewed the income ($1,236,155) generated by the property for the
ten months ended October 31, 1997 (comprised of $1,183,216 of gross rental
income and $52,939 of other income), and then deducted from this amount the
total operating expenses of the property for the first ten months of 1997
($563,322), resulting in the Purchaser's estimate of net operating income for
the first ten months of 1997 ($672,833). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $807,400.
Finally, the Purchaser capitalized its estimated annual net operating income
amount at a 10% capitalization rate, resulting in an estimated gross property
value of $8,074,000.
PARK CAPITOL. In estimating the value of this property, the Purchaser
reviewed the income ($880,067) generated by the property for the ten months
ended October 31, 1997 (comprised of $836,855 of gross rental income and
$43,212 of other income), and then deducted from this amount the total
operating expenses of the property for the first ten months of 1997 ($338,953),
resulting in the Purchaser's estimate of net operating income for the first six
months of 1997 ($541,114). The Purchaser then annualized this amount, resulting
in estimated annual net operating income of $649,337, and then reduced that
annualized net operating income amount by $400 per apartment unit, representing
the Purchaser's estimate of the adjustment that would be imputed by a third
party purchaser in underwriting the operating expenses, including normal
replacement reserves, of the property for valuation purposes. Finally, the
Purchaser capitalized its estimated adjusted net operating income amount
($595,337) at a 10% capitalization rate, resulting in an estimated gross
property value of $5,953,370.
TAMARAC VILLAGE. In estimating the value of this property, the
Purchaser reviewed the income ($3,207,806) generated by the property for the
ten months ended October 31, 1997 (comprised of $3,044,391 of gross rental
income and $163,415 of other income), and then deducted from this amount the
total operating expenses of the property for the first ten months of 1997
($1,330,183), resulting in the Purchaser's estimate of net operating income for
the first ten months of 1997 ($1,877,623). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $2,253,148, and
then reduced that annualized net operating income amount by $300 per apartment
unit, representing the Purchaser's estimate of the adjustment that would be
imputed by a third party purchaser in underwriting the operating expenses,
including normal replacement reserves, of the property for valuation purposes.
Finally, the Purchaser capitalized its estimated adjusted net operating income
amount ($2,083,948) at a 10.5% capitalization rate, resulting in an estimated
gross property value of $19,847,124.
WILLIAMSBURG MANOR. In estimating the value of this property, the
Purchaser reviewed the income ($1,317,749) generated by the property for the
ten months ended October 31, 1997 (comprised of $1,266,067 of
28
<PAGE>
gross rental income and $51,682 of other income), and then deducted from this
amount the total operating expenses of the property for the first ten months of
1997 ($543,892), resulting in the Purchaser's estimate of net operating income
for the first ten months of 1997 ($773,857). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $928,628, and
then reduced that annualized net operating income amount by $400 per apartment
unit, representing the Purchaser's estimate of the adjustment that would be
imputed by a third party purchaser in underwriting the operating expenses,
including normal replacement reserves, of the property for valuation purposes.
Finally, the Purchaser capitalized its estimated adjusted net operating income
amount ($855,428) at a 10% capitalization rate, resulting in an estimated gross
property value of $8,554,280.
SANDPIPER I & II. In estimating the value of this property, the
Purchaser reviewed the income ($1,626,152) generated by the property for the
ten months ended October 31, 1997 (comprised of $1,491,233 of gross rental
income and $134,919 of other income), and then deducted from this amount the
total operating expenses of the property for the first ten months of 1997
($902,200), resulting in the Purchaser's estimate of net operating income for
the first ten months of 1997 ($723,952). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $868,742, and
then reduced that annualized net operating income amount by $350 per apartment
unit, representing the Purchaser's estimate of the adjustment that would be
imputed by a third party purchaser in underwriting the operating expenses,
including normal replacement reserves, of the property for valuation purposes.
Finally, the Purchaser capitalized its estimated adjusted net operating income
amount ($772,142) at a 10% capitalization rate, resulting in an estimated gross
property value of $7,721,420.
COMMERCIAL PROPERTIES
The following is a description of the methodology employed by the
Purchaser in preparing the estimates of the values of the commercial properties
owned by the Partnership:
CORPORATE CENTER. In estimating the value of this property, the
Purchaser reviewed the income ($516,036) generated by the property for the ten
months ended October 31, 1997 (comprised of $515,249 of gross rental income and
$787 of other income), and then deducted from this amount the total operating
expenses of the property for the first ten months of 1997 ($230,366), resulting
in the Purchaser's estimate of net operating income for the first ten months of
1997 ($285,670). The Purchaser then annualized this amount, resulting in
estimated annual net operating income of $342,804. The Purchaser then
capitalized that estimated annual net operating income amount at a 9.5%
capitalization rate, resulting in an estimated gross property value of
$3,608,463. Finally, the Purchaser reduced the estimated gross property value
by $100,000 to reflect capital expenditures that the Purchaser believes a third
party purchaser would deem necessary at the time of acquisition or in
connection with recently executed leases, resulting in an estimated gross
property value of $3,508,463.
SOUTH CITY BUSINESS CENTER. In estimating the value of this property,
the Purchaser reviewed the income ($882,100) generated by the property for the
ten months ended October 31, 1997 (comprised of $791,787 of gross rental income
and $90,313 of other income), and then deducted from this amount the total
operating expenses of the property for the first ten months of 1997 ($475,564),
resulting in the Purchaser's estimate of net operating income for the first ten
months of 1997 ($406,536). The Purchaser then annualized this amount, resulting
in estimated annual net operating income of $487,843. The Purchaser then
capitalized that estimated annual net operating income amount at a 10%
capitalization rate, resulting in an estimated gross property value of
$4,878,430. Finally, the Purchaser reduced the estimated gross property value
by $50,000 to reflect capital expenditures that the Purchaser believes a third
party purchaser would deem necessary at the time of acquisition or in
connection with recently executed leases, resulting in an estimated gross
property value of $4,828,430.
* * *
Based on the individual estimates of the gross values of the
Partnership's properties described above, the Purchaser estimated that the
current aggregate gross real estate value of the Partnership's properties is
$74,491,865 (the "Gross Real Estate Value Estimate"). The property-specific
capitalization rates used by the Purchaser in the valuation estimates described
above were based upon the Purchaser's, IPT's and Insignia's general knowledge
of
29
<PAGE>
the revenues and expenses associated with operating multi-family properties in
the markets in which the Partnership's properties are located, their general
knowledge of property values in those markets and their experience in the real
estate market in general.
Although there are several other methods of estimating the value of
real estate of this type, the Purchaser believes that this approach represents
a reasonable method of estimating the aggregate gross value of the
Partnership's properties (without taking into account the costs of disposing of
the properties), subject to the substantial uncertainties inherent in any
estimate of value. The use of other assumptions, however, particularly as to
the applicable capitalization rate, could produce substantially different
results. None of the Purchaser, IPT or Insignia solicited any offers or
inquiries from prospective buyers of the Partnership's properties in connection
with preparing the Purchaser's estimates of the fair market values of those
properties, and the actual amounts for which the Partnership's properties might
be sold could be significantly higher or significantly lower than the
Purchaser's estimates.
The Gross Real Estate Value Estimate does not take into account (i)
the debt encumbering the Partnership's properties or the other liabilities of
the Partnership, (ii) cash and other assets held by the Partnership, (iii) real
estate transaction costs that would be incurred on a sale of the Partnership's
properties, such as brokerage commissions and other selling and closing
expenses, (iv) timing considerations or (v) costs associated with winding up
the Partnership. For this reason, the Purchaser considers the Gross Real Estate
Value Estimate to be less meaningful in evaluating the Purchase Price offered
by the Purchaser than its pro forma estimate of the net liquidation value per
Unit described below.
Purchaser's Pro Forma Estimate of Net Liquidation Value per Unit. The
Purchaser is offering to purchase Units, which are a relatively illiquid
investment, and is not offering to purchase the Partnership's underlying assets
or assume any of its liabilities. Consequently, the Purchaser does not believe
that the per-Unit amount which might be distributed to Limited Partners
following a future sale of all the Partnership's properties necessarily
reflects the present fair value of a Unit. Conversely, the realizable value of
the Partnership's assets clearly is a relevant factor in determining the price
a prudent purchaser would offer for Units.
In considering this factor, the Purchaser made a pro forma calculation
of the amount each Limited Partner might receive in a theoretical orderly
liquidation of the Partnership (which may not be realistically possible,
particularly in the near term, due to real estate market conditions, the
general difficulty of disposing of real estate in a short period of time, and
other general economic factors), based on the Gross Real Estate Value Estimate
described above and the other considerations described below. The Purchaser
based its pro forma liquidation analysis on the Gross Real Estate Value
Estimate (and thus on the Purchaser's estimates of the values of the
Partnership's properties described above), as opposed to the appraised values
of the Partnership's properties or the values estimated in connection with the
formation of IPT (as described above), because the Purchaser believes that the
Gross Real Estate Value Estimate represents the best estimate, based on
currently available information, of the values of the Partnership's properties.
In estimating the pro forma net liquidation value per Unit, the
Purchaser adjusted its Gross Real Estate Value Estimate of $74,491,865 to
reflect the Partnership's other assets and liabilities (excluding prepaid and
deferred expenses and security deposits). Specifically, the Purchaser added the
amounts of cash, accounts receivable and escrow deposits shown on the
Partnership's unaudited balance sheet at September 30, 1997 ($14,378,000), and
subtracted the aggregate amount of the distribution made by the Partnership to
Limited Partners and the General Partner subsequent to September 30, 1997
($7,001,391), the mortgage debt encumbering the Partnership's properties
($30,525,000) and all other liabilities shown on that balance sheet
($1,258,000). The Purchaser then deducted from that amount $1,489,837,
representing a reserve equal to 2% of the Gross Real Estate Value Estimate
(which represents the Purchaser's estimate of the probable costs of real estate
transfer taxes and other disposition expenses). The result, $48,595,637,
represents the Purchaser's pro forma estimate of the aggregate net liquidation
proceeds (before provision for the costs described in the following sentence)
which could be realized on an orderly liquidation of the Partnership, based on
the assumptions implicit in the calculations described above. The Purchaser did
not, however, deduct any amounts in respect of the legal and other costs which
the Purchaser expects would be incurred
30
<PAGE>
in a liquidation, including costs of negotiating purchase and sale contracts,
possibly conducting a consent solicitation in order to obtain the Limited
Partners' approvals for the sales as may be required by the Limited Partnership
Agreement, and winding up the Partnership, because of the difficulty of
estimating those amounts.
To complete its pro forma estimate of the amount of the theoretical
liquidation proceeds that would be distributable per Unit, the Purchaser then
deducted $2,234,756 (which represents the 3% non-subordinated disposition fee
payable to the General Partner upon a sale of the Partnership's properties),
resulting in net aggregate liquidation proceeds of $46,360,881. The Purchaser
then deducted 1% which is the percentage allocable to the General Partner in
respect of its non-subordinated interest in the Partnership, and the remaining
$45,897,272 was then divided by the 383,033 Units reported as outstanding by
the General Partner as of December 1, 1997. The resulting estimated pro forma
liquidation value was $119.83 per Unit (the "Estimated Liquidation Value"),
before provision for the legal and other costs of liquidating the Partnership
described in the last sentence of the preceding paragraph.
The Purchaser's pro forma liquidation analysis described above is
merely theoretical and does not itself reflect the value of the Units because
(i) there is no assurance that any such liquidation in fact will occur in the
foreseeable future, and (ii) any liquidation in which the estimated fair market
values described above might be realized would take an extended period of time
(at least a year, and quite possibly significantly longer), during which time
the Partnership and its partners would continue to be exposed to the risk of
fluctuations in asset values because of changing market conditions and other
factors. For any property sales in which the Partnership is required to
indemnify the buyer for matters arising after the closing, a portion of the
sales proceeds could be held by the Partnership until all possible claims were
satisfied, further extending the delay in the receipt by the Limited Partners
of liquidation proceeds. In light of these factors, the Purchaser (which is an
affiliate of the General Partner) believes the actual current value of the
Units is substantially less than its estimate of the Estimated Liquidation
Value. Conversely, there is a substantial possibility that the per-Unit value
realized in an orderly liquidation could be greater than the Estimated
Liquidation Value. A reduction in either operating expenses or capital
expenditures from the levels reflected in the property operating statements for
the ten months ending October 31, 1997 would result in a higher liquidation
value under the method described above. Similarly, a higher liquidation value
would result if a buyer applied lower capitalization rates (reflecting a
willingness to accept a lower rate of return on its investment) to the
applicable net operating income generated by the Partnership's properties than
the capitalization rates applied by the Purchaser. For example, a 5% increase
or decrease in the value of the Partnership's properties would produce a
corresponding increase or decrease in the Estimated Liquidation Value of
approximately $9 per Unit. Furthermore, the analysis described above is based
on a series of assumptions, some of which may not be correct. Accordingly, this
analysis should be viewed merely as indicative of the Purchaser's approach to
valuing Units and not as any way predictive of the likely result of any future
transactions.
SECTION 14. CONDITIONS OF THE OFFER. Notwithstanding any other term of
the Offer, the Purchaser (which is an affiliate of the General Partner) will
not be required to accept for payment or to pay for any Units tendered if all
authorizations, consents, orders or approvals of, or declarations or filings
with, or expirations of waiting periods imposed by, any court, administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign, necessary for the consummation of the transactions
contemplated by the Offer shall not have been filed, occurred or been obtained
prior to the Expiration Date. Furthermore, notwithstanding any other term of
the Offer and in addition to the Purchaser's right to withdraw the Offer at any
time before the Expiration Date, the Purchaser (which is an affiliate of the
General Partner) will not be required to accept for payment or pay for any
Units not theretofore accepted for payment or paid for and may terminate or
amend the Offer as to such Units if, at any time on or after the date of the
Offer and before the Expiration Date, any of the following conditions exists:
(a) a preliminary or permanent injunction or other order of any
federal or state court, government or governmental authority or agency shall
have been issued and shall remain in effect which (i) makes illegal, delays or
otherwise directly or indirectly restrains or prohibits the making of the Offer
or the acceptance for payment, purchase of or payment for any Units by the
Purchaser (which is an affiliate of the General Partner), (ii) imposes or
confirms limitations on the ability of the Purchaser effectively to exercise
full rights of ownership of any Units,
31
<PAGE>
including without limitation the right to vote any Units acquired by the
Purchaser pursuant to the Offer or otherwise on all matters properly presented
to the Partnership's Limited Partners, (iii) requires divestiture by the
Purchaser of any Units, (iv) causes any material diminution of the benefits to
be derived by the Purchaser as a result of the transactions contemplated by the
Offer, or (v) might materially adversely affect the business, properties,
assets, liabilities, financial condition, operations, results of operations or
prospects of the Purchaser or the Partnership;
(b) there shall be any action taken, or any statute, rule, regulation
or order proposed, enacted, enforced, promulgated, issued or deemed applicable
to the Offer by any federal or state court, government or governmental
authority or agency, which might, directly or indirectly, result in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;
(c) any change or development shall have occurred or been threatened
since the date of the Offer to Purchase, in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Partnership, which is or may be materially adverse to the
Partnership, or the Purchaser (which is an affiliate of the General Partner)
shall have become aware of any fact that does or may have a material adverse
effect on the value of the Units;
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market in the United States, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation by any governmental authority on, or other
event which might affect, the extension of credit by lending institutions or
result in any imposition of currency controls in the United States, (iv) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States, (v) a material
change in United States or other currency exchange rates or a suspension of, or
imposition of a limitation on, the markets thereof, or (vi) in the case of any
of the foregoing existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof; or
(e) it shall have been publicly disclosed or the Purchaser (which is
an affiliate of the General Partner) shall have otherwise learned that (i) more
than ten percent of the outstanding Units have been or are proposed to be
acquired by another person (including a "group" within the meaning of Section
13(d)(3) of the Exchange Act), or (ii) any person or group that prior to such
date had filed a Statement with the Commission pursuant to Section 13(d) or (g)
of the Exchange Act has increased or proposes to increase the number of Units
beneficially owned by such person or group as disclosed in such Statement by
two percent or more of the outstanding Units.
The foregoing conditions are for the sole benefit of the Purchaser
(which is an affiliate of the General Partner) and may be asserted by the
Purchaser regardless of the circumstances giving rise to such conditions or may
be waived by the Purchaser in whole or in part at any time and from time to
time in its sole discretion. Any determination by the Purchaser (which is an
affiliate of the General Partner) concerning the events described above will be
final and binding upon all parties.
SECTION 15. CERTAIN LEGAL MATTERS.
General. The Purchaser (which is an affiliate of the General Partner)
is not aware of any filings, approvals or other actions by any domestic or
foreign governmental or administrative agency that would be required prior to
the acquisition of Units by the Purchaser (which is an affiliate of the General
Partner) pursuant to the Offer, other than the filing of a Tender Offer
Statement on Schedule 14D-1 with the Commission (which has already been filed)
and any required amendments thereto. Should any such approval or other action
be required, it is the Purchaser's present intention that such additional
approval or action would be sought. Although 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 the Partnership's business, or that certain parts of the
Partnership's business might not have to be disposed of or other substantial
32
<PAGE>
conditions complied with in order to obtain such approval or action, any of
which could cause the Purchaser (which is an affiliate of the General Partner)
to elect to terminate the Offer without purchasing Units thereunder.
Antitrust. The Purchaser (which is an affiliate of the General
Partner) does not believe that the Hart-ScottRodino Antitrust Improvements Act
of 1976, as amended, is applicable to the acquisition of Units contemplated by
the 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 the Offer.
SECTION 16. FEES AND EXPENSES. Except as set forth in this Section 16,
the Purchaser (which is an affiliate of the General Partner) will not pay any
fees or commissions to any broker, dealer or other person for soliciting
tenders of Units pursuant to the Offer. The Purchaser (which is an affiliate of
the General Partner) has retained Beacon Hill Partners, Inc. to act as
Information Agent and Harris Trust Company of New York to act as Depositary in
connection with the Offer. The Purchaser (which is an affiliate of the General
Partner) will pay the Information Agent and the Depositary reasonable and
customary compensation for their respective services in connection with the
Offer, plus reimbursement for out-of-pocket expenses, and has agreed to
indemnify the Information Agent and the Depositary against certain liabilities
and expenses in connection therewith, including liabilities under the federal
securities laws. The Purchaser (which is an affiliate of the General Partner)
will also pay all costs and expenses of printing and mailing the Offer and its
legal fees and expenses.
SECTION 17. MISCELLANEOUS. The Purchaser (which is an affiliate of the
General Partner) is not aware of any jurisdiction in which the making of the
Offer is not in compliance with applicable law. If the Purchaser (which is an
affiliate of the General Partner) becomes aware of any jurisdiction in which
the making of the Offer would not be in compliance with applicable law, the
Purchaser will make a good faith effort to comply with any such law. If, after
such good faith effort, the Purchaser (which is an affiliate of the General
Partner) cannot comply with any such law, the Offer will not be made to (nor
will tenders be accepted from or on behalf of) Limited Partners residing in
such jurisdiction. In those jurisdictions whose securities or blue sky laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of the Purchaser (which is an affiliate of the
General Partner) by one or more registered brokers or dealers licensed under
the laws of that jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser (which is an affiliate of the General
Partner) not contained in this Offer to Purchase or in the Assignment of
Partnership Interest and, if given or made, such information or representation
must not be relied upon as having been authorized.
The Purchaser (which is an affiliate of the General Partner), IPLP,
IPT and Insignia have filed with the Commission a Tender Offer Statement on
Schedule 14D-1, pursuant to Rule 14d-3 under the Exchange Act, furnishing
certain additional information with respect to the 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 places and in
the same manner as set forth in Section 9 (except that they will not be
available at the regional offices of the Commission).
MADISON RIVER PROPERTIES, L.L.C.
DECEMBER 31, 1997
33
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
SCHEDULE I
TRANSACTIONS IN THE UNITS
EFFECTED BY IPLP WITHIN THE PAST 60 DAYS
<TABLE>
<CAPTION>
Number of Price
DATE Units Purchased Per Unit
---- --------------- --------
<S> <C> <C>
11/18/97 16.30 92.00
11/25/97 12.20 86.71
11/25/97 12.20 86.71
11/25/97 8.00 82.41
11/25/97 5.30 76.04
11/25/97 8.00 82.41
11/25/97 12.00 94.91
11/25/97 120.00 94.08
</TABLE>
S-1
<PAGE>
SCHEDULE II
INFORMATION REGARDING THE MANAGERS OF THE PURCHASER
Set forth in the table below are the name and the present principal occupations
or employment and the name, principal business and address of any corporation
or other organization in which such occupation or employment is conducted, and
the five-year employment history of each of the managers of the Purchaser. Each
person identified below is employed by Insignia and is a United States citizen.
The principal business address of the Purchaser and, unless otherwise
indicated, the business address of each person identified below, is One
Insignia Financial Plaza, Greenville, South Carolina 29602.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---- ----------------------------
<S> <C>
Jeffrey P. Cohen Jeffrey P. Cohen has been a Manager of the Purchaser since its inception in
375 Park Avenue December 1997. For additional information regarding Mr. Cohen, see
Suite 3401 Schedule III.
New York, NY 10152
John K. Lines John K. Lines has been a Manager of the Purchaser since its inception in
December 1997. For additional information regarding Mr. Lines, see
Schedules III and IV.
Ronald Uretta Ronald Uretta has been a Manager of the Purchaser since its inception in
December 1997. For additional information regarding Mr. Uretta, see
Schedules III and IV.
</TABLE>
S-2
<PAGE>
SCHEDULE III
INFORMATION REGARDING THE
TRUSTEES AND EXECUTIVE OFFICERS OF IPT
Set forth in the table below are the name and the present principal occupations
or employment and the name, principal business and address of any corporation
or other organization in which such occupation or employment is conducted, and
the five-year employment history of each of the trustees and executive officers
of IPT. Each person identified below is employed by Insignia and is a United
States citizen. The principal business address of IPT and, unless otherwise
indicated, the business address of each person identified below, is One
Insignia Financial Plaza, Greenville, South Carolina 29602. Trustees are
identified by an asterisk.
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---- --------------------------------
Andrew L. Farkas* Andrew L. Farkas has served as a
Trustee of IPT since December
1996, and has served as Chairman
of the Board of Trustees and
Chief Executive Officer of IPT
since January 1997. For
additional information regarding
Mr. Farkas, see Schedule IV.
James A. Aston* James A. Aston has served as a
Trustee and President of IPT
since its inception in May 1996.
For additional information
regarding Mr. Aston, see
Schedule IV.
Frank M. Garrison* Frank M. Garrison has served as
102 Woodmont Boulevard a Trustee of IPT since December
Suite 400 1996. Mr. Garrison also served
Nashville, TN 37205 as an Executive Managing
Director of IPT from January
1997 to April 1997. For
additional information regarding
Mr. Garrison, see Schedule IV.
Jeffrey P. Cohen Jeffrey P. Cohen has served as a
375 Park Avenue Senior Vice President of IPT
Suite 3401 since August 1997, and served as
New York, NY 10152 a Vice President of IPT from
June 1997 until August 1997.
Since April 1997, Mr. Cohen's
principal occupation has been to
serve as a Senior Vice President
-- Investment Banking of
Insignia. Prior to April 1997,
Mr. Cohen's principal occupation
was as an attorney with the law
firm of Rogers & Wells, New
York, New York.
William D. Falls William D. Falls has served as
the Controller of IPT since
August 1997. Since April 1995,
Mr. Falls' principal occupation
has been to serve as an
accountant with Insignia. Prior
to April 1995, Mr. Falls'
principal occupation was as a
senior auditor with the
accounting firm of Ernst & Young
LLP.
William H. Jarrard, Jr. William H. Jarrard, Jr. has
served as a Senior Vice
President of IPT since August
1997, and served as Vice
President and Director of
Operations of IPT from December
1996 until August 1997. Mr.
Jarrard's principal employment
has been with Insignia for more
than the past five years. From
January 1994 to September 1997,
Mr. Jarrard served as Managing
Director-- Partnership
Administration of Insignia.
S-3
<PAGE>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---- --------------------------------
John K. Lines John K. Lines has served as
Secretary of IPT since December
1996, and has served as a Senior
Vice President of IPT since
August 1997. Mr. Lines served as
a Vice President IPT from May
1996 until August 1997. For
additional information regarding
Mr. Lines, see Schedule IV.
Ronald Uretta Ronald Uretta has served as
Treasurer of IPT since December
1996, and has served as a Senior
Vice President of IPT since
August 1997. Mr. Uretta served
as a Vice President of IPT from
December 1996 until August 1997
and as Chief Financial Officer
of IPT from May 1996 until
December 1996. For additional
information regarding Mr.
Uretta, see Schedule IV.
Carroll D. Vinson Carroll D. Vinson has served as
Chief Operating Officer of IPT
since May 1997. Since August
1994, Mr. Vinson's principal
occupation has been to serve as
President of the various
corporate general partners of
partnerships controlled by
Metropolitan Asset Enhancement,
L.P., which is an affiliate of
Insignia.
S-4
<PAGE>
SCHEDULE IV
INFORMATION REGARDING THE
DIRECTORS AND EXECUTIVE OFFICERS OF INSIGNIA
Set forth in the table below are the name and the present principal occupations
or employment and the name, principal business and address of any corporation
or other organization in which such occupation or employment is conducted, and
the five-year employment history of each of the directors and executive
officers of Insignia. Unless otherwise indicated, each person identified below
is employed by Insignia and is a United States citizen. The principal business
address of Insignia and, unless otherwise indicated, the business address of
each person identified below, is One Insignia Financial Plaza, Greenville,
South Carolina 29602. Directors are identified by an asterisk.
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
Andrew L. Farkas* Andrew L. Farkas has been a
Director and Chairman, President
and Chief Executive Officer of
Insignia since its inception in
January 1991. Mr. Farkas has
also been President of
Metropolitan Asset Group, Ltd.
("MAG"), a real estate
investment banking firm, since
1983.
Robert J. Denison* Robert J. Denison has been a
1212 North Summit Drive Director of Insignia since May
Santa Fe, NM 87501 1996. For more than the past five
years, Mr. Denison's principal
occupation has been as a
General Partner of First Security
Company II, L.P., an investment
advisory firm.
Robin L. Farkas* Robin L. Farkas has been a
730 Park Avenue Director of Insignia since
New York, NY 10021 August 1993. Mr. Farkas is the
retired Chairman of the Board
and Chief Executive Officer of
Alexander's Inc., a real estate
company. He also serves as a
director of Refac Technology
Development Corporation, Noodle
Kiddoodle, and Containerways
International Ltd.
Merril M. Halpern* Merril M. Halpern has been a
535 Madison Avenue Director of Insignia since
New York, NY 10022 August 1993. For more than the
past five years, Mr. Halpern's
principal occupation has been as
Chairman of the Board of
Directors and Co-Chief Executive
Officer of Charterhouse Group
International, Inc., a
privately-owned investment firm
which, among other things,
actively engages in making
private equity investments in a
broad range of industrial and
service companies located
primarily in the United States.
Mr. Halpern is also a director
of American Disposal Services,
Inc., Designer Holdings Ltd. and
Microwave Power Devices, Inc.
Robert G. Koen* Robert G. Koen has been a
125 West 55th Street Director of Insignia since
New York, NY 10019 August 1993. Since February
1996, Mr. Koen has been a
partner in the law firm of Akin,
Gump, Strauss, Hauer & Feld,
which represents Insignia and
certain of its affiliates from
time to time. From January 1991
to February 1996, Mr. Koen was a
partner in the law firm LeBoeuf,
Lamb, Greene & MacRae.
<PAGE>
Michael I. Lipstein* Michael I. Lipstein has been a
110 East 59th Street Director of Insignia since
New York, NY 10022 August 1993. For more than the
past five years, Mr. Lipstein's
principal occupation has been as
a self-employed consultant in
the real estate business,
including ownership, management
and lending.
S-5
<PAGE>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
Buck Mickel* Buck Mickel has been a Director
301 N. Main Street of Insignia since August 1993.
Greenville, SC 29601 For more than the past five
years, Mr. Mickel's principal
occupation has been to serve as
Chairman of the Board and Chief
Executive Officer of RSI
Holdings, a company which
distributes outdoor equipment.
Mr. Mickel is also a director of
Fluor Corporation, The Liberty
Corporation, NationsBank
Corporation, Emergent Group,
Inc., Delta Woodside Industries,
Inc., Duke Power Company, and
Textile Hall Corporation.
James A. Aston James A. Aston's principal
employment has been with
Insignia for more than the past
five years. Mr. Aston currently
serves as Chief Financial
Officer of Insignia (since
August 1996) and with the Office
of the Chairman (since July
1994).
Albert J. Frazia Albert Frazia has been a Senior
Vice President -- Human
Resources of Insignia since
August 1997. Prior to August
1997, Mr. Frazia's principal
employment for more than the
prior five years was as Director
-- Human Resources of E&Y
Kenneth Leventhal Real Estate
Group, New York, New York.
Frank M. Garrison Frank M. Garrison's principal
102 Woodmont Boulevard employment has been with
Suite 400 Insignia for more than the past
Nashville, TN 37205 five years. Mr. Garrison
currently serves as an Executive
Managing Director of Insignia
(since July 1994) and as
President of Insignia Financial
Services, a division of Insignia
(since July 1994).
Jeffrey L. Goldberg Jeffrey L. Goldberg's principal
375 Park Avenue employment has been with
Suite 3401 Insignia for more than the past
New York, NY 10152 five years. Mr. Goldberg
currently serves as a Managing
Director -- Investment Banking
of Insignia (since July 1994).
Edward S. Gordon Edward S. Gordon has been with
200 Park Avenue the Office of the Chairman of
New York, NY 10166 Insignia since July 1996. Prior
to July 1996, Mr. Gordon's
principal employment for more
than the prior five years was as
a founder and Chairman of Edward
S. Gordon Company, Incorporated
("ESG"), a commercial property
management and brokerage firm
located in New York, New York
that was acquired by Insignia in
June 1996.
Albert H. Gossett Albert H. Gossett's principal
employment has been with
Insignia for more than the past
five years. Mr. Gossett
currently serves as a Senior
Vice President of Insignia
(since July 1994) and as Chief
Information Officer of Insignia
(since January 1991).
<PAGE>
Henry Horowitz Henry Horowitz's principal
employment has been with
Insignia since January 1993. Mr.
Horowitz currently serves as an
Executive Managing Director of
Insignia (since June 1994) and
Chief Operating Officer of
Insignia Commercial Group (since
January 1997). From January 1987
to January 1993, Mr. Horowitz's
principal employment was as
Chief Executive Officer of First
Resource Realty, Inc., a
commercial property management
organization located in Oklahoma
that Insignia acquired in
January 1993.
S-6
<PAGE>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
Neil Kreisel Neil Kreisel has been an
909 Third Avenue Executive Managing Director of
New York, NY 10022 Insignia since September 1995
and President of Insignia
Residential Group since
September 1997. Prior to
September 1995, Mr. Kreisel's
principal occupation was to
serve as President and Chief
Executive Officer of Kreisel
Company, Inc., a residential
property management firm located
in New York, New York which
Insignia acquired in September
1995.
John K. Lines John K. Lines has been General
Counsel of Insignia since June
1994 and Secretary since July
1994. From May 1993 until June
1994, Mr. Lines' principal
employment was as Assistant
General Counsel and Vice
President of Ocwen Financial
Corporation, a thrift holding
company located in West Palm
Beach, Florida. From October
1991 until April 1993, Mr.
Lines' principal employment was
as Senior Attorney of Banc One
Corporation, a bank holding
company in Columbus, Ohio.
Martha Long Martha Long has been a Senior
Vice President -- Finance of
Insignia since January 1997 and
Controller of Insignia since
June 1994. Prior to June 1994,
Ms. Long was Senior Vice
President and Controller of The
First Savings Bank located in
Greenville, South Carolina.
Mauro Keller Sarmiento Mauro Keller Sarmiento has been
375 Park Avenue Managing Director and Chief
New York, NY 10152 Strategic Officer for European
Operations of Insignia since
June 1997. From November 1993
until June 1997, Mr. Sarmiento's
principal employment was as
Manager of YPF, a petroleum
company located in Buenos Aires,
Argentina. From May 1991 until
October 1993, Mr. Sarmiento's
principal employment was as a
partner of MCA, an advisory
company in Madrid, Spain.
Thomas R. Shuler Thomas R. Shuler's principal
employment has been with
Insignia for more than the past
five years. Mr. Shuler currently
serves as Chief Operating
Officer of Insignia Residential
Group (since January 1997).
Stephen B. Siegel Stephen B. Siegel has been an
200 Park Avenue Executive Managing Director of
New York, NY 10166 Insignia since July 1996 and
President of Insignia Commercial
Group since January 1997. From
February 1992 until July 1996,
Mr. Siegel's principal
employment was as President of
ESG.
Ronald Uretta Ronald Uretta's principal
employment has been with
Insignia for more than the past
five years. Mr. Uretta currently
serves as Chief Operating
Officer (since August 1996) and
Treasurer (since January 1992)
of Insignia.
Joseph T. Aveni Joseph T. Aveni's principal
6000 Rockside Woods employment has been with Realty
Blvd. One, Inc., a wholly-owned
Cleveland, OH 44131 subsidiary of Insignia ("Realty
One"), for more than the past
five years. Mr. Aveni currently
serves as a Director and Chief
Executive Officer of Realty One
(since October 1997).
Anthony M. Ciepiel Anthony M. Ciepiel's principal
6000 Rockside Woods employment has been with Realty
Blvd. One for more than the past five
Cleveland, OH 44131 years. Mr. Ciepiel currently
serves as Director, President,
Chief Operating Officer and
Treasurer of Realty One (since
October 1997).
S-7
<PAGE>
SCHEDULE V
IPT PARTNERSHIPS
Consolidated Capital Growth Fund
Consolidated Capital Institutional Properties
Consolidated Capital Institutional Properties/2
Consolidated Capital Institutional Properties/3
Consolidated Capital Properties III
Consolidated Capital Properties IV
Consolidated Capital Properties V
Consolidated Capital Properties VI
Shelter Properties I Limited Partnership
Shelter Properties II Limited Partnership
Shelter Properties III Limited Partnership
Shelter Properties IV Limited Partnership
Shelter Properties V Limited Partnership
Shelter Properties VI Limited Partnership
Shelter Properties VII Limited Partnership
National Property Investors III
National Property Investors 4
National Property Investors 5
National Property Investors 6
National Property Investors 7
National Property Investors 8
Century Properties Fund XIV
Century Properties Fund XV
Century Properties Fund XVI
Century Properties Fund XVII
Century Properties Fund XVIII
Century Properties Fund XIX
Century Properties Fund XX
Century Properties Growth Fund XXII
Century Pension Income Fund XXIII
Century Pension Income Fund XXIV
Johnstown/Consolidated Income Partners
Davidson Growth Plus, L.P.
Multi-Benefit Realty Fund `87-1
U.S. Realty Partners, L.P.
Fox Strategic Housing Income Partners
S-8
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Manually signed facsimile copies of the Assignment of Partnership
Interest will be accepted. The Assignment of Partnership Interest and any other
required documents should be sent or delivered by each Limited Partner or such
Limited Partner's broker, dealer, bank, trust company or other nominee to the
Depositary as set forth below.
<TABLE>
<CAPTION>
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<S> <C> <C> <C>
By Mail: By Facsimile: To Confirm: By Hand/Overnight Delivery:
Wall Street Station (212) 701-7636 (212) 701-7624 Wall Street Plaza
P.O. Box 1023 88 Pine Street, 19th Floor
New York, New York 10268-1023 New York, New York 10005
</TABLE>
Questions and requests for assistance or for additional copies of this
Offer to Purchase and the Assignment of Partnership Interest may be directed to
the Information Agent at its telephone number and address listed below. You may
also contact your broker, dealer, bank, trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
90 Broad Street
20th Floor
New York, New York 10004
(800) 854-9486
(Toll Free)
(212) 843-8500
(Call Collect)
<PAGE>
ASSIGNMENT OF PARTNERSHIP INTEREST
FOR THE TENDER OF UNITS OF LIMITED PARTNERSHIP INTEREST IN
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
PURSUANT TO THE OFFER TO PURCHASE DATED DECEMBER 31, 1997
- -------------------------------------------------------------------------------
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD
WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK TIME, ON JANUARY
29, 1998, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<S> <C> <C> <C>
By Mail: By Facsimile: To Confirm: By Hand/Overnight Delivery:
Wall Street Station (212) 701-7636 (212) 701-7624 Receive Window
P.O. Box 1023 Wall Street Plaza
New York, New York 10268-1023 88 Pine Street, 19th Floor
New York, New York 10005
</TABLE>
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE IN COMPLETING THIS ASSIGNMENT
OF PARTNERSHIP INTEREST, PLEASE CALL OUR INFORMATION AGENT, BEACON HILL
PARTNERS, TOLL FREE AT (800) 854-9486.
DELIVERY OF THIS ASSIGNMENT OF PARTNERSHIP INTEREST (OR A FACSIMILE COPY)
OR ANY OTHER REQUIRED DOCUMENTS TO AN ADDRESS OR FACSIMILE NUMBER OTHER THAN AS
SET FORTH ABOVE DOES NOT CONSTITUTE VALID DELIVERY.
PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS
Ladies and Gentlemen:
The undersigned hereby tenders to Madison River Properties, L.L.C., a
Delaware limited liability company (the "Purchaser"), the number of the
undersigned's units of limited partnership interest ("Units") in Consolidated
Capital Institutional Properties/3, a California limited partnership (the
"Partnership"), specified below, at a price of $85 per Unit (the "Purchase
Price"), net to the seller in cash, upon the terms and subject to the
conditions set forth in the offer to purchase dated December 31, 1997 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Assignment of Partnership Interest (which, together with any supplements or
amendments, collectively constitute the "Offer"). The undersigned understands
and agrees that the Purchase Price will automatically be reduced by the
aggregate amount of distributions per Unit, if any, made by the Partnership on
or after December 31, 1997 and prior to the date on which the Purchaser pays
for the Units purchased pursuant to the Offer. Holders of Units ("Limited
Partners") who tender their Units will not be obligated to pay any commissions
or Partnership transfer fees, which commissions and Partnership transfer fees,
if any, will be borne by the Purchaser. The Purchaser reserves the right to
transfer or assign, in whole or from time to time in part, to one or more of
its affiliates, the right to purchase Units tendered pursuant to the Offer.
Subject to and effective upon acceptance for payment of and payment for the
Units tendered hereby, the undersigned hereby sells, assigns and transfers to
or upon the order of the Purchaser all right, title and interest in and to all
of the Units tendered hereby. The undersigned understands that upon acceptance
for payment of and payment for the tendered Units, the Purchaser will be
entitled to seek admission to the Partnership as a substituted Limited Partner
in substitution for the undersigned as to all the tendered Units.
The undersigned irrevocably appoints the Purchaser and its managers and
designees as the attorneys-in-fact and proxies of the undersigned, each with
full power of substitution, to exercise all voting and other rights with
respect to the Units tendered by the undersigned and purchased by the
Purchaser. Such power of attorney and proxy shall be considered coupled with an
interest in the tendered Units and is irrevocable. When the Units tendered
hereby are accepted for payment pursuant to the Offer, all prior proxies and
powers given by the undersigned with respect to the Units will, without further
action, be revoked, and no subsequent proxies or powers may be given (and if
given will not be effective). The Purchaser and its managers and designees
will, with respect to the Units, be empowered to exercise all voting and other
rights of the undersigned as they in their sole discretion may deem proper,
whether at any meeting of the Partnership's Limited Partners, by written
consent or otherwise, subject to the restrictions in the Limited Partnership
Agreement of the Partnership. The foregoing proxy and power may be exercised by
the Purchaser or any of the other persons referred to above acting alone.
In addition to and without limiting the generality of the foregoing, the
undersigned hereby irrevocably (a) appoints the Purchaser and its managers and
designees (each an "Agent") as the undersigned's attorneys-in-fact, each with
full power of substitution, with an irrevocable instruction to each Agent to
execute all or any instrument of transfer and/or other documents in the Agent's
discretion in relation to the Units tendered hereby and accepted for payment by
the Purchaser, and to do all such other acts and things as may in the opinion
of the Agent be necessary or expedient for the purpose of, or in connection
with, the undersigned's acceptance of the Offer and to vest in the Purchaser,
or as it may direct, those Units, effective when, and only to the extent that,
the Purchaser accepts the tendered Units for payment; (b) authorizes and
requests the Partnership and general partner (the "General Partner") to take
any and all acts as may be required to effect the transfer of the undersigned's
Units to the Purchaser (or its designee) and admit the Purchaser (or its
designee) as a substituted Limited Partner in the Partnership; (c) assigns to
the Purchaser and its assigns all of the right, title and interest of the
undersigned in and to any and all distributions made by the Partnership from
and after the expiration of the Offer in respect of the Units tendered by the
undersigned; (d) grants to the Purchaser and its assigns the right to receive
any and all distributions made by the Partnership on or after the date on which
the Purchaser pays for the Units tendered by the undersigned (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; (e)
empowers the Purchaser and the Agent to execute and deliver to the 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 Limited Partner
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
Limited Partner; and (f) agrees not to exercise any rights pertaining to the
Units without the prior consent of the Purchaser.
The undersigned hereby represents and warrants that the undersigned owns
the Units tendered hereby and has full power and authority to validly tender,
sell, assign and transfer the Units tendered hereby and that when the same are
purchased 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. The undersigned will, upon request, execute and deliver any additional
documents deemed by the Purchaser to be necessary or desirable to complete the
sale, assignment and transfer of the Units tendered hereby.
The undersigned understands that a tender of Units pursuant to the
procedures described in the Offer to Purchase and in the Instructions to this
Assignment of Partnership Interest will constitute a binding agreement between
the undersigned and the Purchaser upon the terms and subject to the conditions
of the Offer. All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned, and any obligation of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned.
THIS TENDER IS IRREVOCABLE, EXCEPT THAT UNITS TENDERED PURSUANT TO THE
OFFER MAY BE WITHDRAWN AS DESCRIBED IN SECTION 4 OF THE OFFER TO PURCHASE.
<PAGE>
PLEASE COMPLETE ALL LETTERED AREAS
SIGN HERE TO TENDER YOUR UNITS
B
O
X
A
- -------------------------------------------------------------------------------
The undersigned hereby tenders the number of Units specified below
pursuant to the terms of the Offer. The undersigned hereby certifies, under
penalties of perjury, that the information and representations provided in
Boxes A, B and C of this Assignment of Partnership Interest, which have been
duly completed by the undersigned, are true and correct as of the date hereof.
X
- ---------------------------------------
X
- ---------------------------------------
SIGNATURE(S) OF LIMITED PARTNER (A)
DATE (B):
-----------------------------
(MUST BE SIGNED BY REGISTERED LIMITED PARTNER EXACTLY AS NAME(S)
APPEAR(S) IN THE PARTNERSHIP'S RECORDS. IF SIGNATURE IS BY AN OFFICER OF A
CORPORATION, ATTORNEY-IN-FACT, AGENT, EXECUTOR, ADMINISTRATOR, TRUSTEE,
GUARDIAN OR OTHER PERSON(S) ACTING IN FIDUCIARY OR REPRESENTATIVE CAPACITY,
PLEASE COMPLETE THE LINE CAPTIONED "CAPACITY (FULL TITLE)" AND SEE
INSTRUCTION 5.)
PRINT NAME(S) (H):
---------------------------------------
--------------------------------
CAPACITY (FULL TITLE) (I):
--------------------------------
ADDRESS (C):
----------------------------------------------
- ----------------------------------------------------------
(INCLUDE ZIP CODE)
(THE ADDRESS PROVIDED ABOVE MUST BE THE REGISTERED ADDRESS OF THE LIMITED
PARTNER)
- ------------------------------- ------------------------------------
AREA CODE AND SOCIAL SECURITY NUMBER
TELEPHONE NUMBER (D) OR TAXPAYER IDENTIFICATION (E)
NUMBER OF NUMBER OF
UNITS TENDERED (F): UNITS OWNED (G):
------------ -----------------
(If no indication is given, all Units owned of record by the Limited Partner
will be deemed tendered.)
- -------------------------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS - SECTION 1)
AUTHORIZED SIGNATURE: NAME OF FIRM:
--------------- ---------------------------
NAME: ADDRESS:
------------------------------ --------------------------------
DATE: AREA CODE AND TEL. NO.:
------------------------------- ----------------
- -------------------------------------------------------------------------------
IMPORTANT!
LIMITED PARTNERS MUST ALSO COMPLETE LINES A THROUGH F BELOW.
<PAGE>
B
O
X
B
<TABLE>
<CAPTION>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND -------------------------------
Form W-9 CERTIFY BY SIGNING AND DATING BELOW Social Security Number(s) or
Department of Employer Identification Number (A)
the Treasury
Internal Revenue
Service
----------------------------------------------------------------------------------------------------------------
PAYER'S PART 2 -- Certification -- Under penalties of perjury, I certify that: (1) The number shown on this form is my
REQUEST FOR correct Taxpayer of Identification Number (or I am waiting for a number to be issued to me) and (2) I am not
TAXPAYER subject to back-up withholding either because I have not been notified by the Internal Revenue
IDENTIFICATION Service("IRS") that I am subject to back-up withholding as a result of failure to report all interest or
NUMBER (TIN) dividends, or the IRS has notified me that I am no longer subject to back-up withholding.
----------------------------------------------------------------------------------------------------------------
Certification Instructions -- You must cross out item (2) above if you have been notified by PART 3 --
the IRS that you are subject to back-up withholding because of underreporting interest or AWAITING TIN [ ]
dividends on your tax return. However, if after being notified by the IRS that you were
subject to back-up withholding you received another notification from the IRS that you are no
longer subject to back-up withholding, do not cross out item (2).
SIGNATURE (B): DATE (C):
---------------------------- ----------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
*(TO BE COMPLETED ONLY IF THE BOX IN PART 3 ABOVE IS CHECKED)
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number within
sixty days, 31 percent of all reportable payments made to me thereafter will
be withheld until I provide a number.
- ----------------------------- --------------------------------
SIGNATURE SIGNATURE
B
O
X
C
- -------------------------------------------------------------------------------
FIRPTA AFFIDAVIT -- CERTIFICATE OF NON-FOREIGN STATUS
Section 1445 of the Internal Revenue Code provides that a transferee of
a U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform the Purchaser that withholding of tax is not required upon
this disposition of a U.S. real property interest, the undersigned hereby
certifies the following on behalf of the tendering Limited Partner named
above:
1. The Limited Partner, if an individual, is not a nonresident alien for
purposes of U.S. income taxation, and if not an individual, is not a
foreign corporation, foreign partnership, foreign trust, or foreign
estate (as those terms are defined in the Internal Revenue Code and
Income Tax Regulations);
2. The Limited Partner's Social Security Number (for individuals) or
Employer Identification Number (for non-individuals) is (D): ; and
-----
3. The Limited Partner's address is (E): .
--------------------------------
I understand that this certification may be disclosed to the Internal
Revenue Service by the transferee and that any false statement I have made
here could be punished by fine, imprisonment, or both.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct
and complete.
- ---------------------------------------- ------------------------------------
Signature (F) Signature
Title: Title:
------------------------------- --------------------------------
- -------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
TO
ASSIGNMENT OF PARTNERSHIP INTEREST
FOR
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
FORMING PART OF TERMS AND CONDITIONS OF THE OFFER
- -------------------------------------------------------------------------------
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE COMPLETING THE ASSIGNMENT OF
PARTNERSHIP INTEREST, PLEASE CALL BEACON HILL PARTNERS TOLL FREE AT
(800) 854-9486 OR COLLECT AT (212) 843-8500
- -------------------------------------------------------------------------------
1. GUARANTEE OF SIGNATURES. If the Assignment of Partnership Interest
is signed by the registered holder of the Units and payment is to be made
directly to that holder, then no signature guarantee is required on the
Assignment of Partnership Interest. Similarly, if the Units are 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 Assignment of
Partnership Interest. HOWEVER, IN ALL OTHER CASES, ALL SIGNATURES ON THE
ASSIGNMENT OF PARTNERSHIP INTEREST MUST BE GUARANTEED BY AN ELIGIBLE
INSTITUTION. A notarization is not the same thing as a signature guarantee, and
a notarization of the Assignment of Partnership Interest will not be
sufficient. IN THE MAJORITY OF CASES, THE LOCAL BANK AT WHICH YOU DO YOUR DAY
TO DAY BANKING IS AN ELIGIBLE INSTITUTION AND WILL BE ABLE TO PROVIDE YOU WITH
THE REQUIRED MEDALLION GUARANTEE.
2. DELIVERY OF ASSIGNMENT OF PARTNERSHIP INTEREST. The Assignment of
Partnership Interest is to be completed by all Limited Partners who wish to
tender Units in response to the Offer. For a Limited Partner validly to tender
Units, a properly completed and duly executed Assignment of Partnership
Interest (or a facsimile copy), along with the required signature guarantees by
an Eligible Institution and any other required documents, must be received by
the Depositary at one of its addresses set forth on the Assignment of
Partnership Interest on or prior to the Expiration Date (as defined in the
Offer to Purchase).
THE METHOD OF DELIVERY OF THE ASSIGNMENT OF PARTNERSHIP INTEREST AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING LIMITED
PARTNER AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY
DELIVERY.
No alternative, conditional or contingent tenders will be accepted,
and no fractional Units will be purchased (except from a Limited Partner who is
tendering all of the Units owned by that Limited Partner). All tendering
Limited Partners, by execution of the Assignment of Partnership Interest, waive
any right to receive any notice of the acceptance of their Units for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate,
additional information may be provided on a separate signed schedule attached
hereto.
4. MINIMUM TENDERS. A Limited Partner may tender any or all of his or
her Units; provided, however, that because of restrictions in the Partnership's
Limited Partnership Agreement, a partial tender of Units must be for a minimum
of twenty Units (other than Limited Partners who hold Units in an Individual
Retirement Account or Keogh Plan). Tenders of fractional Units will be
permitted only by a Limited Partner who is tendering all Units owned by that
Limited Partner.
5. SIGNATURES ON ASSIGNMENT OF PARTNERSHIP INTEREST. If the Assignment
of Partnership Interest is signed by the registered Limited Partner(s), the
signature(s) must correspond exactly with the name(s) as shown on the records
of the Partnership, without alteration, enlargement or any change whatsoever.
If any of the Units tendered hereby are held of record by two or more
joint Limited Partners, each such Limited Partner must sign the Assignment of
Partnership Interest.
If the Assignment of Partnership Interest is signed by trustees,
executors, administrators, guardians, attorneys-in-fact, agents, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to
the Depositary of their authority to so act must be submitted.
6. WAIVER OF CONDITIONS. The Purchaser expressly reserves the absolute
right, in its sole discretion, to waive any of the specified conditions of the
Offer, in whole or in part, in the case of any Units tendered.
7. REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions or
requests for assistance may be directed to Beacon Hill Partners, the
Information Agent, at its address and telephone number set forth on the back
cover of the Offer to Purchase. Copies of the Offer to Purchase and the
Assignment of Partnership Interest may be obtained from the Information Agent.
(Continued on Reverse Side)
<PAGE>
8. SUBSTITUTE FORM W-9. Each tendering Limited Partner is required to
provide the Depositary with a correct taxpayer identification number ("TIN"),
generally the Limited Partner's social security or federal employer's
identification number, on Substitute Form W-9, which is provided under
"Important Tax Information" below. You must cross out item (2) in the
Certification box on Substitute Form W-9 if you are subject to back-up
withholding. Failure to provide the information on the form may subject the
tendering Limited Partner to 31% federal income tax withholding on the payments
made to the Limited Partner with respect to Units purchased pursuant to the
Offer. The box in Part 3 of the form may be checked if the tendering Limited
Partner has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 3 is checked and the
Depositary is not provided with a TIN within sixty (60) days, thereafter the
Depositary will withhold 31% on all such payments of the Purchase Price until a
TIN is provided to the Depositary.
9. FIRPTA AFFIDAVIT. To avoid potential withholding of tax pursuant to
Section 1445 of the Internal Revenue Code in an amount equal to 10% of the
purchase price for Units purchased pursuant to the Offer, plus the amount of
any liabilities of the Partnership allocable to such Units, each Limited
Partner who or which is a United States person must complete the FIRPTA
Affidavit contained in the Assignment of Partnership Interest stating, under
penalties of perjury, such Limited Partner's TIN and address, and that such
Limited Partner is not a foreign person. Tax withheld under Section 1445 of the
Internal Revenue Code is not an additional tax. If withholding results in an
overpayment of tax, a refund may be obtained from the IRS.
IMPORTANT: THE ASSIGNMENT OF PARTNERSHIP INTEREST (OR A FACSIMILE
COPY) (TOGETHER WITH ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE
DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE.
----------------
IMPORTANT TAX INFORMATION
To prevent backup withholding on payments made to a Limited Partner or
other payee with respect to Units purchased pursuant to the Offer, the Limited
Partner is required to notify the Depositary of the Units of the Limited
Partner's correct TIN by completing the form below, certifying that the TIN
provided on Substitute Form W-9 is correct (or that such Limited Partner is
awaiting a TIN) and that (1) the Limited Partner has not been notified by the
Internal Revenue Service that the Limited Partner is subject to backup
withholding as a result of failure to report all interest or dividends or (2)
the Internal Revenue Service has notified the Limited Partner that the Limited
Partner is no longer subject to backup withholding. If backup withholding
applies, the Depositary is required to withhold 31% of any payments made to the
Limited Partner. Backup withholding is not an additional tax. Rather, the
federal income tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
The Limited Partner is required to give the Depositary the TIN (e.g.,
social security number or employer identification number) of the record owner
of the Units. If the Units are in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
Certain Limited Partners (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding
and reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that Limited Partner must submit to the Depositary a properly
completed Internal Revenue Service Form W-8, signed under penalties of perjury,
attesting to that Limited Partner's exempt status. A Form W-8 can be obtained
from the Depositary. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional institutions.
----------------
INDIVIDUAL RETIREMENT ACCOUNT (IRAS)
PLEASE NOTE THAT A TENDERING BENEFICIAL OWNER OF UNITS WHOSE UNITS ARE
OWNED OF RECORD BY AN INDIVIDUAL RETIREMENT ACCOUNT (IRA) OR OTHER QUALIFIED
PLAN WILL NOT RECEIVE DIRECT PAYMENT OF THE PURCHASE PRICE, RATHER, PAYMENT
WILL BE MADE TO THE CUSTODIAN OF SUCH ACCOUNT OR PLAN. IF THE UNITS ARE HELD IN
AN IRA ACCOUNT, THE CUSTODIAN OF THE ACCOUNT MUST SIGN THE ASSIGNMENT OF
PARTNERSHIP INTEREST.
<PAGE>
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
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- --------------------------------------- ------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, the first
individual on the account(1)
3. Husband and wife The actual owner of
(joint account) the account or, if joint
funds, either person(1)
4. Custodian account of a minor The minor(2)
(Uniform 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 The ward, minor, or
committee for a designated ward, incompetent(3)
minor, or incompetent person(3)
7. a. The usual revocable savings trust The grantor-trustee(1)
account (grantor is also trustee)
b. So-called trust account that is not The actual owner(1)
a legal or valid trust under State
law
8. Sole proprietorship account The owner(4)
- --------------------------------------- ------------------------------
</TABLE>
<TABLE>
<CAPTION>
GIVE THE
TAXPAYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- -------------------------------------- ----------------------------------
<S> <C>
9. A valid trust, estate or pension The legal entity (Do not furnish
trust 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 The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
Agriculture 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, minor'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>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
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:
o A corporation.
o A financial institution.
o 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.
o The United States or any agency or instrumentality thereof.
o A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
o A foreign government, a political subdivision of a foreign government,
or any agency or instrumentality thereof.
o An international organization or any agency or instrumentality thereof.
o A registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S.
o A real estate investment trust.
o A common trust fund operated by a bank under section 584(a) of the Code.
o An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
o An entity registered at all times under the Investment Company Act of
1940.
o A foreign central bank of issue.
o 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:
o Payments to nonresident aliens subject to withholding under section 1441
of the Code.
o Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
o Payments of patronage dividends where the amount received is not paid in
money.
o Payments made by certain foreign organizations.
o Payments made to an appropriate nominee.
o Section 404(k) payments made by an ESOP.
Payments of interest not generally subject to backup withholding include the
following:
o 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.
o Payments of tax-exempt interest (including exempt-interest dividends
under section 852 of the Code).
o Payments described in section 6049(b)(5) of the Code to nonresident
aliens.
o Payments on tax-free covenant bonds under section 1451 of the Code.
o Payments made by certain foreign organizations.
o Payments of mortgage interest to you.
o Payments made to an appropriate nominee.
Exempt payees described above should file 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.
PRIVACY ACT NOTICE--Section 6109 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) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being
due to negligence and will be subject to a penalty of 20% on any portion of
an underpayment attributable to that failure unless there is clear and
convincing evidence to the contrary.
(3) 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.
(4) 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>
EXHIBIT (a)(4)
MADISON RIVER PROPERTIES, L.L.C
One Insignia Financial Plaza
Greenville, South Carolina 29602
December 31, 1997
To: The Limited Partners of
Consolidated Capital Institutional Properties/3
Enclosed for your review and consideration are documents relating to
an offer by Madison River Properties, L.L.C. ("Madison River") to purchase
your units of limited partnership interest in Consolidated Capital
Institutional Properties/3 for $85 in cash per unit. This offer will expire
midnight, New York City time on January 29, 1998 (unless extended by
Madison River).
Madison River is an affiliate of the General Partner of the
Partnership.
The enclosed documents contain important information and should be
read carefully and in their entirety before you decide whether to sell your
units to Madison River pursuant to this offer.
If you have any questions concerning the terms of the offer, or need
assistance in completing the forms necessary to tender your units, please
contact our Information Agent, Beacon Hill Partners, at (800) 854-9486.
Thank you.
Sincerely,
Madison River Properties, L.L.C.
<PAGE>
EXHIBIT (z)(1)
Summaries of appraisals referred to in the Offer
to Purchase in Section 13 ("Background of the Offer").
<PAGE>
(a)
Cedar Rim
Renton, Washington
<PAGE>
EXECUTIVE SUMMARY
Effective Date of Value: March 26, 1996
Project Name: Cedar Rim Apartments
Property Location: 7926 110th Avenue Southeast
Newcastle, Washington
Owner of Record: Consolidated Capital Institutional Properties
Assessor's Parcel Number: 334330-0800-0
Site Area: Approximately 4.37 acres of 190,300 square
feet
Total Rentable Area: 108,150 square feet
Average Unit Size: 1,050 square feet
Property Description: As of the site inspection date, the subject
property was improved with a 104-unit
apartment complex (with one unit utilized as
the leasing office and clubhouse).
Constructed in 1981, the project features a
total of thirteen four-story residential
structures all of which employ wood-frame and
stucco structual systems over concrete slab
foundations. On-site parking at the subject
is provided through 104 open asphalt paved
parking spaces. The unit mix of the complex
includes five (5) two bedroom/one bathroom
units and ninety-eight (98) two bedroom/two
bathroom apartments all of which feature a
1,050 square foot area measure. Each
apartment is equipped with a refrigerator,
combination oven/range, dishwasher, garbage
disposal, mini-blind window treatments,
walk-in closets, and a private patio or
balcony. Furthermore, all units contain a
fireplace, washer/dryer units and electric
baseboard heating systems; all of the upper
level apartments (floors 2 through 4) also
contain an additional private balcony. The
community amenity package at the complex
includes a swimming pool, spa, and a clubhouse
building which contains a fitness center and
tanning salon. As of the date of the site
inspection, the subject featured an 88.3%
occupancy.
<PAGE>
EXECUTIVE SUMMARY
Assessed Values (1995-96): Land: $761,200
Improvements: $4,035,500
----------
Total: $4,796,700
Tax Rate (1995-96): 1.3795449%
Base Real Estate Taxes: $66,172.63
Special Assessment: County Surface Water: $1,820.64
Conservation: $1.25
----------
Total $1,821.89
Current Real Estate Taxes and
Special Assessments (1995-96): $67,994.52
Zoning: R-24 (High Density Residential), City of
Newcastle, Washington
Property Rights Appraised: Fee Simple Estate
Property Inspection: A physical inspection of the property was
performed on March 26, 1996 by Joham Tavera,
an associate at Joseph J. Blake and
Associates, Inc. Subsequently, Brad Paul, MAI
Vice President/Principal of Joseph J. Blake
and Associates, Inc. inspected the property.
Highest and Best Use: As improved with the existing apartment
complex.
<PAGE>
(b)
City Heights
Seattle, Washington
<PAGE>
EXECUTIVE SUMMARY
Effective Date of Value: March 26, 1996
Project Name: City Heights Apartments
Property Location: 1311 12th Avenue South
Seattle, Washington
Owner of Record: Consolidated Capital Institutional Properties
Assessor's Parcel Number: 766010-0005-0
Site Area: Approximately 1.57 acres of 68,213 square
feet
Total Rentable Area: 94,203 square feet
Average Unit Size: 897 square feet
Property Description: As of the site inspection date, the subject
property was improved with a 105-unit
apartment complex. Constructed in 1985, the
project features a total of seven four-story
residential structures which employ a
wood-frame construction design over concrete
slab foundations. In addition, the property
contains a single-story leasing office of
cobblestone construction which features a 1914
developement date. This building, along with
a cobblestone milk cooler which is also
located on the site, have been designated as
historical landmarks by the City of Seattle's
Department of Community Developement Office
of Urban Preservation. On-site parking at the
project is provided through a gated
subterranean garage which contains 148
spaces. The unit mix of the complex includes
ninety-four (94) two bedroom/one bathroom
units (867 square feet) and eleven (11) two
bedroom/two bathroom apartments (1,155 square
feet). Each apartment is equipped with a
refrigerator, combination oven/stove,
dishwasher, garbage disposal, baseboard
electric heaters, mini-blind window
treatments, walk-in closets, and a private
patio or balcony. Furthermore, all units
contain a wood-burning fireplace and
washer/dryer units. The
<PAGE>
EXECUTIVE SUMMARY
Property Description (cont.): community amenity package at the complex
includes a heated outdoor swimming pool and
spa. As of the date of the site inspection,
the subject property was 100% occupied.
Assessed Values (1995-96): Land: $818,000
Improvements: $4,915,000
----------
Total: $5,733,000
Tax Rate (1995-96): 1.296251%
Base Real Estate Taxes: $74,314.07
Direct Assessments: County Surface Water: $659.90
Conservation: $1.25
-------
Total: $661.15
Current Real Estate Taxes and
Special Assessments (1995-96): $74,975.22
Zoning: L-3 (High Density Residential), City of
Seattle, Washington
Property Rights Appraised: Fee Simple Estate
Property Inspection: A physical inspection of the property was
performed on March 26, 1996 by Joham
Tavera, an associate at Joseph J. Blake and
Associates, Inc. Subsequently, Brad Paul,
MAI Vice President/Principal of Joseph J.
Blake and Associates, Inc. inspected the
property.
Highest and Best Use: As improved with the existing apartment
complex.
<PAGE>
(c)
Hidden Cove by the Lake
Belleville, Michigan
<PAGE>
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
Property Name: Hidden Cove Apartments
Location of Property: 46020 Lake Villa Drive, City of Belleville,
Van Buren Township, Wayne County, Michigan
Purpose of the Appraisal: To estimate the Market Value of the subject.
Property Rights Appraised: Fee Simple Estate
Highest and Best Use: As Vacant-To develop for multi-family use.
As Improved-Considered to be that of the
existing improvements.
Site Data and Zoning: The subject parcel is irregular in shape and
contains approximately 7.85 acres of land.
The site is zoned RM Multi-Family
Development by the Township of Van Buren.
Improvement Data: The subject consists of 120 dwelling units
totaling 116,300 square feet of net
rentable area. The structural improvements
consist of 5 residential buildings. Exterior
finish consists of brick veneer with some
wood siding, pitched roofs, and concrete
slab foundations. The improvements were
completed in 1969. Additional amenities
include a swimming pool, playground, asphalt
parking areas, concrete walkways, and
landscaping.
Tenant Data: The Hidden Cove Apartments cater primarily
to adults and families employed in the
surrounding area. Leases are typically
signed for 12-month terms. The subject is
reportedly 92% occupied as of the date of
inspection.
Date of Value Estimate: March 21, 1996
<PAGE>
SUMMARY OF SALIENT FACTS AND CONCLUSIONS (CONTINUED)
SUMMARY OF STABILIZED PRO FORMA:
<TABLE>
<CAPTION>
Totals Per Unit
<S> <C> <C>
Potential Gross Income $1,003,800 $8,365
Vacancy & Credit Loss (60,228) (502)
Employee Discount (1,320) (11)
----------- -------
Effective Gross Income $942,252 $7,852
Operating Expenses 455,916 3,799
----------- -------
$486,336 $4,053
</TABLE>
VALUE CONCLUSIONS
The Sales Comparison Approach: $4,600,000
The Income Capitalization Approach: $4,650,000
FINAL VALUE ESTIMATE: $4,650,000
<PAGE>
(d)
Lamplighter Park
Bellevue, Washington
<PAGE>
EXECUTIVE SUMMARY
Effective Date of Value: April 26, 1995 (date of property inspection)
Project Identification: Lamplighter Park Apartments
Property Address: 825 156th Avenue N.E.
Bellevue, Washington
Assessor's Parcel Number: 417680-0005-08
Property Description: The subject property is represented by a
9.99 acre (435,235 square feet) land parcel
of an L-shaped configuration which is
situated on the west side of 156th Avenue
Northeast, north of Northeast 8th Avenue,
within the City of Bellevue, King County,
State of Washington. The site is presently
improved with a 174-unit apartment complex
commonly known as the Lamplighter Park
Apartments. Developed circa 1968, the
project is comprised of four two-story
structures and three three-story buildings,
all of which feature similar wood-frame
construction designs with painted wood
siding exteriors and flat tar and gravel
roof surfaces complemented by partial wood
shake mansards. The unit mix of the property
consists of 108 one bedroom/one bath units
(724 SF) and 66 two bedroom/two bath flats
(950 SF). All of the apartments feature
well-appointed interiors, including an
all-electric kitchen with built-in
dishwasher, clothes washer and dryer,
decorative ceiling fan, wall-to-wall
carpeting and ample closet space throughout
the unit. The extensive community amenities
package at the property is comprised of a
clubhouse with an indoor lap pool,
recreational lounge, tanning salon, exercise
room and saunas, as well as two outdoor
swimming pools, jacuzzi, tennis court and a
multi-purpose sports court. Furthermore, the
subject project maintains ample parking for
its residents and guests in the form of an
aggregate 274 open asphalt paved surface
stalls encircling the property. As of the
site inspection date, the subject
improvements were observed to be in average
physical condition.
<PAGE>
EXECUTIVE SUMMARY
1995 Assessed Values: Land: $2,100,000
Improvements: $4,400,000
----------
Total: $6,500,000
1995 Tax Rate: $12.25531 per $1,000 of Assessed Value
Total Real Estate Taxes: $79,659.51
Special Assessments: $1.25
1995 Total Real Estate
Taxes and Assessments: $79,660.76
Zoning: Multifamily Residential District (R-30)
City of Bellevue, Washington
Property Rights Appraised: Fee Simple Estate
Property Inspection: The subject property was physically examined
by Charmaine Cheuk, an associate of Joseph J.
Blake and Associates, Inc., on April 26,
1995. The property was subsequently inspected
by Brad Paul, MAI, Vice President and
Principal of the company.
Highest and Best Use: As an improved property, its existing use as
a multi-family rental housing development
<PAGE>
(e)
Park Capitol
Salt Lake City, Utah
<PAGE>
EXECUTIVE SUMMARY
Date of Valuation: September 26, 1995
Date of Inspection: September 26, 1995
Property Address: 215 North Main Street, Salt Lake City,
County of Salt Lake, Utah 84103
Tax Reference: Parcel #08-36-436-001-0000
Property Description: The Park Capitol Apartments is a two and
six-story apartment complex comprised of
135 units in three residential buildings and
a total of 102,478+/- rentable square feet.
The improvements, which are situated on a
1.9582+/- acre site, were completed in 1972.
The unit mix includes several variations of
one and two-bedroom units.
Zoning: "RMF-45", Moderate High Density Multi-Family
Residential
Our research concluded that the subject, as
developed, is a legally non-conforming use
in the "RMF-45", Moderate High Density
Multi-Family Residential District. The
property has inadequate parking and exceeds
the maximum density requirement. The impact
of the legal non-conformance on the
day-to-day operation of the property is
minimal, however, should more than 50% of
the property be damaged or destroyed, in the
absence of receiving a variance, the property
would have to be rebuilt to the density and
parking requirements in the "RMF-45"
District. The reader is referred to the
Zoning section of this report for further
details.
Market Brief: According to the Salt Lake Area Apartment
Vacancy Survey, the Salt Lake Valley area
had a mid-year 1995 vacancy rate of 3.5%.
Properties constructed since 1984 had a
vacancy rate of 2.6%, while properties
constructed prior to 1984 displayed
<PAGE>
EXECUTIVE SUMMARY
average vacancies of 2.8%. Properties
constructed in 1994 and 1995 displayed
average vacancies of 5.3% largely due to
on-going lease-up. Average monthly rents
in the Salt Lake Valley have increased $10
to $20 per unit within the past six months.
Multi-family construction accelerated during
the second quarter of 1995. Strong, pent-up
demand and low vacancy rates continued to
spur multifamily developments. Multifamily
construction jumped 37.3% to 3,112 units
during the second quarter. Most new
development has been concentrated in the
metropolitan areas. Salt Lake and Utah
Counties comprise 72.9% of the new
construction.
Property Rights Appraised: Fee Simple Estate
Highest and Best Use: Multi-family Residential
Indicated Value by Approaches:
Income Capitalization
Approach: $5,200,000
Sales Comparison
Approach: $5,350,000
Cost Approach: $5,500,000
Final Conclusion of
Market Value: $5,200,000
COMMENT
In estimating the subject's market value, the Income Capitalization Approach
was given the most weight due to the income-producing nature of the subject.
The Sales Comparison Approach was also given weight due to the number of
comparable sales in the subject's market. Due to market participants espousing
the lack of the Cost Approach's applicability in a market where estimating
depreciation from all forms is extremely subjective, the Cost Approach was
given very little weight in our reconciliation of a final value estimate.
<PAGE>
(f)
Tamarac Village I, II, III, IV
Denver Colorado
<PAGE>
EXECUTIVE SUMMARY 1
- -------------------------------------------------------------------------------
Valuation Date: March 25, 1996
Property Name: Tamarac Apartments
Address: 3300 South Tamarac Drive, Denver, Denver
County, Colorado 80231
Tax Reference: 06333-00-097, 06333-00-098, 06333-00-099
Description: The subject is a 564 unit apartment complex
that was reportedly completed in 1977 and
includes 13 residential buildings
containing 411,593+/- square feet of net
rentable area. The subject has a clubhouse
that includes the leasing office, two
indoor racquetball courts, a fitness
center, a hot tub, an indoor volleyball
court, two locker rooms with saunas, a game
room and a large entertainment room.
Additional amenities include three heated
pools, three tennis courts, a sand
volleyball court, three enclosed
courtyards with ponds, 12 laundry rooms,
and 116+/- covered and 878+/- open parking
spaces. The complex was reportedly
constructed in 1977. As of the date of
inspection, the subject was observed as
being in average condition. According to
the Property Condition Assessment conducted
by Inspection and Valuation International,
the subject suffers from $3,000 of deferred
maintenance requiring immediate attention
and $355,000 of maintenance that needs to
be cured within one year. Items sited by the
report include replacing the wood shingles
on Buildings E, G, M and N, continued
replacement of major appliances and
air-conditioning units, and repainting
exterior balcony stairs on Buildings C and
G. A complete listing of deferred
maintenance items and cost to cure are
listed in the Addenda section of this
report. Site improvements include asphalt
paving and concrete sidewalks, lighting,
drainage and landscaping.
Land Acres: 25.1705+/- acres (1,096,427+/- square feet)
Zoning: "R-2-A", Residential-2-A District, under
the jurisdiction of the City of Denver.
<PAGE>
EXECUTIVE SUMMARY 2
- -------------------------------------------------------------------------------
Market Brief: Rental rates in most submarkets of the
Denver apartment market have increased over
the last year. According to the Denver Area
Apartment Vacancy Survey, Apartment
Association of Metro Denver, 4th Quarter
1995, rents for one-bedroom units increased
6.1%, two-bedroom, one-bath units increased
8.1%, two-bedroom, two-bath units increased
5.8% and three-bedroom units increased 7.3%.
The only unit type to report a decrease was
efficiency units, which had a rental rate
decrease of 4.3%. Less than 4% of the
subject units are efficiencies. Since the
beginning of 1993, a reported 9,431 units
have been constructed. This represents a
significant increase in construction
compared to the previous six years. As of
the end of 1995 the Denver area had an
average occupancy rate of 95.7%. The
subject's submarket reported an average
occupancy of 93.4% as of the end of 1995.
Subject Occupancy: 96%
Property Rights Appraised: Fee Simple Estate
Highest and Best Use: Multifamily rental apartment complex
Indicated "As Cured" Value by Approaches:
Income Capitalization Approach: $19,000,000
Sales Comparison Approach: $19,000,000
Cost Approach: $18,950,000
Reconciled "As Cured"
Market Value: $19,000,000
Value per SF: $46.16
Value per Unit: $33,688
EGIM: 5.22x
Effective OAR: 10.0%
Insurable Value: $15,600,000
<PAGE>
EXECUTIVE SUMMARY 3
- -------------------------------------------------------------------------------
COMMENT
In estimating the subject's "as cured" market value, the Income Capitalization
Approach was given the most weight due to the income-producing nature of the
subject. The Sales Comparison Approach was also given weighted due to the
number of recent comparable sales in the subject's market. Due to market
participants espousing the lack of the Cost Approach's applicability in a market
where estimating depreciation from all forms is extremely subjective, the Cost
Approach was given little weight in the reconciliation of a final value
estimate.
<PAGE>
(g)
Williamsburg Manor
Cary, North Carolina
<PAGE>
EXECUTIVE SUMMARY 2
DATE OF VALUATION: October 12, 1995
DATE OF INSPECTION: October 12, 1995
PROPERTY ADDRESS: 1248 Donaldson Drive
Cary, North Carolina 27511
TAX REFERENCE: 574-0354
DEED REFERENCE: 6391/216
CENSUS TRACT: 535.05
PROPERTY DESCRIPTION: Williamsburg Manor is a two-story townhouse
style apartment complex made up of 183
units in 30 buildings and a total of
212,700 rentable square feet. The
improvements, which are situated on a
16.006-acre site, were completed in 1970.
The unit mix includes several variations of
one, two, and three-bedroom units. The
average unit size is 1,162 square feet.
ZONING: R-12 MF (Multi-family)
MARKET BRIEF: Apartments continue to be a highly
desirable investment property type in
Raleigh over the past year. The popularity
of apartments is due principally to the
lower risk perceived by buyers.
Advantageous investment characteristics of
multifamily properties include short term
leases normally at market rates,
predictable demographics, low tenant
improvement costs at tenant turnover, and
a market which generally reflects the
ability to raise rents to keep up with
inflation. Occupancy rates in Wake County
are predominantly above 95%, which adds to
the desirability of this investment type.
Better financing terms are available for
multifamily investments than other
commercial segments of the market.
<PAGE>
EXECUTIVE SUMMARY 3
Because of the continued popularity,
apartment prices are increasing and
capitalization rates are being driven
lower. Although the current market is very
tight, approximately 2,293 units are under
construction, and another 302-units are in
planning. The addition of these units will
add completion to the subject's submarket.
PROPERTY RIGHTS APPRAISED: Fee Simple Estate
HIGHEST AND BEST USE: Multi-family Residential
INDICATED VALUE BY APPROACHES:
INCOME CAPITALIZATION APPROACH: $7,900,000
SALES COMPARISON APPROACH: $7,700,000
COST APPROACH: $8,700,000
FINAL CONCLUSION OF MARKET VALUE: $7,900,000
COMMENT
In estimating the subject's market value, the income capitalization approach
was given the most weight due to the income-producing nature of the subject
property. The sales comparison which was also given weight due to the number
of recent comparable sales in the subject's market. Due to market participants
espousing the lack of the cost approach's applicability in a market where
estimating depreciation from all forms is extremely subjective, the cost
approach's applicability in a market where estimating depreciation from all
forms is extremely subjective, the cost approach was given very little weight
in our reconciliation of a final value estimate. However, it should be said that
with the number of current land sales, it is evident that the market has
strengthened to a point of warranting new development in some areas, which
would indicate that the applicability of the cost approach may be becoming a
more meaningful value.
<PAGE>
(h)
Sandpiper I & II
St. Petersburg, Florida
<PAGE>
EXECUTIVE SUMMARY
DATE OF VALUATION: September 27, 1995
DATE OF INSPECTION: September 27, 1995
PROPERTY ADDRESS: 10501 Third Street North,
St. Petersburg, Pinellas County, Florida
TAX REFERENCE: 18-30-17-11342-002-0010
18-30-17-11343-003-0010
DEED REFERENCE: 9046/1367
PROPERTY DESCRIPTION: The subject consists of a 276-unit,
2-story, garden style apartment complex
with 279,974+/- SF of gross building area.
The net rentable area consists of
261,004+/- SF housed in 29 buildings. The
improvements, which sit on 17.00+/- acres
or 740,433+/- SF of land, were build in 2
phases. Phase I contains 192 units built in
1974, and are of CBS construction. Phase II
contains 84 units built in 1985, and are of
wood-frame construction.
ZONING: The site is zoned "RO-P" - Residential
Office Parkway, under the jurisdiction of
the City of St. Petersburg, Pinellas
County, Florida. This zoning has a density
of 12 units per acre.
MARKET BRIEF: The Pinellas County apartment market is
made up of 257 developments totaling
46,761+/- units. The average size of the
developments within this market is 182
units. The developments that are older than
20 years of age represent the largest
portion of units within this apartment
market, 55.7%. The overall average
occupancy rate in this market was 96.65%.
The subject is located in the Gateway
apartment submarket of Pinellas County,
which is comprised of 47 developments
totaling 10,375+/- units. This market is
delineated by 66th Street to the west,
Courtney Campbell Causeway to the north,
38th Avenue North to the south and Tampa
Bay to the east. The average size of the
developments within this submarket is 221
units. The developments that are older than
20 years of age represent the largest
segment, 38.5%, of units within this
sub-market. The overall average unit
occupancy rate in this sub-market was
97.11% as of the first quarter of 1995.
1
<PAGE>
EXECUTIVE SUMMARY
PROPERTY RIGHTS APPRAISED: Fee Simple Estate
HIGHEST AND BEST USE:
AS VACANT: Development of a rental apartment complex
AS IMPROVED: Its existing use, a 276-unit apartment
complex
INDICATED VALUE BY APPROACHES:
INCOME CAPITALIZATION APPROACH: $7,800,000
SALES COMPARISON APPROACH: $7,400,000 - $8,000,000
COST APPROACH: $8,400,000
FINAL CONCLUSION OF VALUE: $7,800,000
COMMENT
In estimating the subject's market value, the Income Capitalization Approach
was given the most weight due to the income-producing nature of the subject.
The Sales Comparison Approach was also given weight due to the number of
recent comparable sales in the subject's market. Due to market participants
espousing the lack of the Cost Approach's applicability in a market where
estimating depreciation from all forms is extremely subjective, the Cost
Approach was given little weight in the reconciliation of a final value
estimate.
2
<PAGE>
EXHIBIT (z)(2)
AGREEMENT OF JOINT FILING
Madison River Properties, L.L.C., Insignia Properties, L.P., Insignia
Properties Trust, Insignia Financial Group, Inc. and Andrew L. Farkas hereby
agree that the Amendment No. 3 to Statement on Schedule 13D to which this
agreement is attached as an exhibit, and all further amendments thereto, shall
be filed on behalf of each of them. This agreement is intended to satisfy the
requirements of Rule 13d- 1(f)(1)(iii) under the Securities Exchange Act of
1934, as amended.
Dated: December 31, 1997
MADISON RIVER PROPERTIES, L.L.C.
By: /s/ JEFFREY P. COHEN
-------------------------------
Jeffrey P. Cohen
Manager
INSIGNIA PROPERTIES, L.P.
By: Insignia Properties Trust,
its General Partner
By: /s/ JEFFREY P. COHEN
-------------------------------
Jeffrey P. Cohen
Senior Vice President
INSIGNIA PROPERTIES TRUST
By: /s/ JEFFREY P. COHEN
-------------------------------
Jeffrey P. Cohen
Senior Vice President
INSIGNIA FINANCIAL GROUP, INC.
By: /s/ FRANK M. GARRISON
-------------------------------
Frank M. Garrison
Executive Managing Director
/s/ ANDREW L. FARKAS
-----------------------------------
ANDREW L. FARKAS
