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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934
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DAMSON/BIRTCHER REALTY INCOME FUND II
(NAME OF SUBJECT COMPANY)
GRAPE INVESTORS, LLC
A DELAWARE LIMITED LIABILITY COMPANY
ARLEN CAPITAL ADVISORS, LLC
(BIDDER)
LIMITED PARTNERSHIP INTERESTS
(TITLE OF CLASS OF SECURITIES)
(CUSIP Number of Class of Securities)
Don Augustine, Manager
Arlen Capital Advisors, LLC
1650 Hotel Circle North - Suite 200
San Diego, California 92108
(619) 686-2002
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidder)
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AMENDMENT NO. 1 TO SCHEDULE 14D-1
This Amendment No. 1 amends the Offer to Purchase on Schedule 14D-1 filed with
the Securities and Exchange Commission on June 18, 1997 (the "Schedule 14D-1")
by Grape Investors, LLC, a Delaware limited partnership (the "Purchaser"),
relating to the Offer by the Purchaser to purchase up to 10,000 limited
partnership interests ("Interests") in Damson/Birtcher Realty Income Fund II, a
Delaware Limited Partnership (the "Partnership"), for a purchase price of $1,645
for each .01 percent interest to (i) add Arlen Capital Advisors, LLC as an
additional bidder, (ii) extend the term of the Offer and (iii) to include the
amended information set forth below. Terms not otherwise defined herein shall
have the meaning ascribed to them in the Schedule 14D-1 and the Offer to
Purchase.
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TERMS OF THE OFFER.
Terms of the Offer is hereby amended to read as follows:
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THIS OFFER WILL EXPIRE AT 12:00 MIDNIGHT, PACIFIC DAYLIGHT TIME,
ON AUGUST 29, 1997, UNLESS THE OFFER IS EXTENDED.
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INTRODUCTION (page 1 of the Offer)
Introduction is hereby amended to read as follows:
INTRODUCTION
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According to the records provided to us by the General Partner you currently own
[XXX]% OF THE OUTSTANDING INTERESTS IN THE PARTNERSHIP
We are offering to purchase those Interests for
$[XXX] CASH
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GRAPE IS NOT AN AFFILIATE OF THE GENERAL PARTNERS OR THE PARTNERSHIP
BEFORE SELLING YOUR INTERESTS TO GRAPE, PLEASE CONSIDER THE FOLLOWING FACTORS:
- The Partnership's Annual Report for 1996 filed with the SEC on Form
10-K indicates that the appraised value of the Partnership's remaining
properties have an estimated net asset value of $31,163,000 or $5,926
per $10,000 of original investor subscription. (Net asset value
represents the appraised value of the Partnership's properties, cash
and all other assets less secured loans payable and all other
liabilities.) Grape's net asset value of the Partnership's remaining
properties was estimated to be $24,803,841 or $4,736 per $10,000 of
original investor subscription. The net asset value was then reduced
by Grape's administrative and tender offer costs to arrive at an
adjusted net asset value of $4,256. A 26% discount factor was then
applied to the adjusted net asset value to arrive at Grape's offer
price of $1,645 for each .01 percent of Interests, which is equal to
approximately $3,150 per $10,000 of original investor subscription.
- No independent person has been retained to evaluate or render any
opinion with respect to the fairness of Grape's offer and no
representation is made as to such fairness or other measures of value
that may be relevant to the Limited Partners. We urge you to consult
your own financial and tax advisors in connection with Grape's offer.
- Although Grape cannot predict the future value of the Partnership
assets on a per Interest basis, the purchase price could differ
significantly from the net proceeds that would be realized from a
current sale of the Properties owned by the Partnership or from that
which may be realized upon future liquidation of the Partnership.
- Grape is making the offer with a view to making a profit.
Accordingly, there is a conflict between Grape's desire to acquire
your Interests at a low price and your desire to sell your Interests
at a high price. Grape's intent is to acquire the Interests at a
discount to the value Grape might ultimately realize from owning the
Interests.
- The tax consequences of the Offer to a particular Limited Partner may
be different from those of other Limited Partners and we urge you to
consult your own tax advisor in connection with the Offer.
- Limited Partners who sell their Interests will be giving up the
opportunity to participate in any future potential benefits
represented by ownership of Interests, including the right to
participate in any future distribution of cash or property.
- If the Purchaser is successful in purchasing more than 10 percent of
the outstanding Interests, the Purchaser will be in a position to
exert a strong influence upon the General Partners and the operation
of the Partnership.
PURCHASE PRICE
When you consider the illiquid market (which is essentially nothing more
than a "matching service" that attempts to bring buyers and sellers
together), the secondary cost of selling commissions, payment of the
transfer fee, your annual cost of tax reporting, and the cost of a trustee
if Interests are held in an IRA or pension plan, the sale of your Interests
for $3,150 cash per original $10,000 investment may be a good choice for
you despite the fact that the net asset value of the Partnership has been
estimated at $5,926 per original investment.
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NO SELLING COMMISSION
Interests sold in the informal market "matching service" usually require
payment of a selling commission of the greater of $200 or 10 percent. If
you sell to Grape, you will NOT pay any selling commission.
NO TRANSFER FEE
Grape will be responsible for paying the $25 transfer fee.
PAYMENT OF THE PURCHASE AMOUNT
A cash payment for your Interest will be made to you within 10 business
days following the Expiration Date provided Grape has received from you a
properly completed and duly executed Agreement of Sale.
SECTION 7. PURPOSE AND EFFECTS OF THE OFFER. (PAGE 5 OF THE OFFER)
Section 7 is hereby amended to read as follows:
PURPOSE OF THE OFFER. The Purchaser is making the Offer for investment
purposes with a view towards making a profit. The Purchaser's intent is to
acquire the Interests at a discount to the value that the Purchaser might
ultimately realize from owning the Interests. No independent person has been
retained by Grape to evaluate or render any opinion with respect to the fairness
of the Purchase Price and no representation is made as to such fairness.
The Purchaser established the Purchase Price based on its own
independent analysis of the Partnership, which included a valuation of the
properties and other assets owned by the Partnership and by a subjective
determination of the financial condition of the Partnership. The Purchaser
derived the Purchase Price per Interest from its analysis of financial
information which was available from information in the Form 10-Ks and
Form 10-Qs. In determining the estimated value of the Interests, the Purchaser
first calculated the estimated current value of the Partnership's properties
from a net operating income analysis. In performing the net income analysis,
the Purchaser made a reduction in the 1996 revenues, expenses, and net operating
income of the Partnership to reflect the sale of Atrium Place on November 21,
1996. In determining the appropriate discount rate to apply to the Partnership,
the Purchaser considered several factors, including: (i) the illiquid nature of
the investment; (ii) the terms and conditions of the Partnership Agreement; and
(iii) property occupancy and income levels. Based upon these factors, the
Purchaser believes a discount rate of 12 percent was appropriate for the
Purchaser's valuation of the Units. The resulting discounted value of the
Partnership's operations was added to the Partnership's net current assets, and
the Partnership's total estimated asset value was then allocated to the Limited
Partners in accordance with the Purchaser's hypothetical liquidation of the
Partnership's properties. The liquidation proceeds were then reduced by the
Purchaser's administrative and transfer costs. The Purchaser's resulting
estimated current value was $1,645 per .01 percent interests or, approximately
$3,150 per $10,000 of original investor subscription.
<TABLE>
<CAPTION>
DAMSON/BIRTCHER REALTY INCOME FUND II
<S> <C> <C> <C>
PROPERTY FAIR MARKET VALUE (1) NET ASSET VALUE
Revenues: Partnership Equity 24,629,611
Rental Income (2) 5,251,684 General Partner's share of liquidation proceeds 0
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Limited Partners Equity 24,629,611
Expenses: Number of LP Interests at Original $10,000 Investment 5,200
Operating Expenses (2) (1,173,926) Net Asset Value per Original $10,000 Investment $4,736
Property Taxes (2) (750,948) ----------
General & Administrative (2)(3) (350,349) ----------
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Net Operating Income (2) 2,976,461
Capitalization rate for property NOI 12%
FMV of Property 24,803,841 GRAPE'S OFFER
(All figures based on original $10,000 Investment)
PARTNERSHIP EQUITY (1)
FMV of Property (4) 24,803,841 Net Asset Value $4,736
Selling Costs (2.5%) (676,468) Administrative and Tender Offer Costs (6) $480
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Est. Property Disposition Fees (5) (811,762) Adjusted Net Asset Value $4,256
Net Current Assets 1,314,000 Discount to value (26%) ($1,106)
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Partnership Equity 24,629,611 Grape's Offer $3,150
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24,629,611
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</TABLE>
(1) Reflects the Partnership's 58% interest with Real Estate Income Partners
III in Cooper Village Partners.
(2) Adjustments have been made to reflect the sale of Atrium Place on November
21, 1996. Due to the lack of property-by-property disclosure in the
Partnership's 10-K, the Atrium property's contribution to revenues,
expenses, and net operating income is an estimate based on its contribution
to the total appraised value, as disclosed in the Partnership's 1996 10-K.
(3) One-half G&A is assumed to be property expenses.
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(4) As reported in the Partnership's 1996 10-K, an independent appraisal on
January 1, 1997, valued the Partnership's remaining properties at
$31,163,000.
(5) The Partnership, in certain circumstances, can earn a property disposition
fee equal to 50% of the competitive real estate commissions that would be
charged by an unaffiliated third party.
(6) Assumes a purchase of 2.5% of the outstanding Interests in the Partnership.
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: August 8, 1997 GRAPE INVESTORS, LLC
By: Arlen Capital Advisors, LLC
its Manager
By: /s/ DON AUGUSTINE
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Don Augustine, Manager
