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Decade Companies Income Properties--A Limited Partnership
(Name of Registrant as Specified In Its Charter)
Filed by Registrant
(Name of Person(s) Filing Proxy Statement,
if Other than Registrant)
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Exhibit Index
Exhibit
1 Letter dated February 5, 1997
[DECADE COMPANIES LETTERHEAD]
February 5, 1997
Re: Decade Companies Income Properties ("DCIP")
Dear Limited Partner:
We are pleased to report that the proposed Fair Price
Provision has been overwhelmingly adopted (by approximately a 3
to 1 margin). Under this amendment, all partners (even those who
abstained or voted against it) could have additional rights. We
believe this can be a benefit to all partners. Preserve your
rights under the Fair Price Provision and vote "Against" the Leas
proposal.
Despite adoption of the Fair Price Provision, Arnold Leas
persists in his campaign to take over your Partnership and has
sent another self-serving letter containing errors and
inaccuracies. In his latest letter, Leas inquires as to where
DCIP's money has gone. As you have all received annually DCIP's
audited financial statements, audited by one of the six largest
independent accounting firms, you know exactly what revenue has
been received and what expenses were incurred. In fact, with the
original $18 million raised, DCIP now owns three properties which
were appraised at $34.55 million. Additionally, DCIP has also
repurchased 23% of its Interests on your behalf in the recent
tender offer and has distributed over $11 million to the
partners.
Obviously, Leas would like to divert your attention from his
own proxy statement. However, if you read his lengthy document
closely, you will see that his proposal does not even make sense
and it could cost DCIP hundreds of thousands of dollars. As we
have explained in our earlier letters, Leas' past record casts
serious doubts over his ability to manage a partnership with good
properties including two Florida properties where Leas has no
management or operating experience whatsoever.
Leas wants to take over your Partnership, but he doesn't
want to pay you anything. Leas could also cause your Partnership
to incur about $600,000 or more in costs. You be the judge. Add
up the costs:
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Costs Leas Estimate Our Thoughts
Leas wants your Partnership $105,000 $200,000
to pay his own legal costs, or more
if he is successful
DCIP will pay additional Florida $81,550 $81,550
taxes, if all the loans need
to be refinanced
Loan fees and legal costs, if all He doesn't say, $250,000
the loans need to be refinanced but admits it or more
or if fees are charged by lenders could be costly
Increased interest rates on the He doesn't say, $100,000
mortgage loans from refinancing but notes there or more
or escalated rates by current could be costs each year
lenders
$186,550 $631,550 or
more
In addition, under the Leas proposal, your Partnership may
have to immediately refinance $23.3 million in loans that become
due upon Decade's removal.
As your General Partner, Decade Companies works very hard to
make your investment a success. Since inception, our goal has
been to distribute cash to the partners on a regular basis and to
obtain the best selling price for the properties so that the
investment objectives of the Partnership can be met. Since
inception, the Partnership has consistently distributed over $11
million in cash on a quarterly basis (except for the third
quarter of 1996 during the tender offer). We have continued to
pay the partners, even before paying all of our fees, which Leas
agrees would have to be paid upon removal.
In return for all these costs and uncertainties, Leas also
suggests that he would lower the property management fees. Yet,
his actions could cost over $600,000. And we believe the quality
of service would go down. Leas has no Florida experience in
managing apartment properties for others. In addition, Leas'
only manages approximately 500 Wisconsin apartment units,
approximately half of the size of your Partnership. We do not
believe he has the staff or expertise for managing Florida
properties.
In contrast, over the past years, Decade Properties, Inc.
has provided valuable property management services to DCIP. At
no additional charge to DCIP, Decade Properties, Inc. has lowered
property taxes on your properties by challenging assessments and
lowered insurance premiums (saving thousands) and has increased
occupancy while maintaining these properties in condition ready
to be sold. Quality services cost money. Despite Leas'
"promises" you generally get what you pay for.
We are proud of the fact that DCIP survived the worst real
estate crisis since the Great Depression while consistently
distributing cash to the partners. We believe that positive
trends in the real estate market are now emerging and property
values are increasing, although there can be no assurance as to
any particular increase. In contrast, Leas' own REIT, in these
relatively good times, doesn't even cash flow according to his
latest publicly available financial statements.
As we have stated before, favorable changes in tax laws or
renewed inflationary expectations could make the Partnership's
properties more valuable. As you know, Congress has given
serious consideration to reducing the capital gains tax rate.
Decade believes that the Partnership is well positioned to take
advantage of any run-up in real estate values.
With regard to Leas' January 31, 1997 letter, we ask you to
examine the record.
* Leas admits his REIT does not cash flow. In fact it
operates at a loss. How can any business that operates
at a loss and doesn't cash flow, distribute earnings?
It cannot. But he has previously stated that he
produces 8+% returns. You be the judge on Leas and his
past.
* We have also contacted DCIP's lenders and have been
told that they would consider raising the mortgage
interest rate on loans and charging additional fees, if
they were agreeable to management changes. From these
calls and our experience, we believe it more likely
than not that the interest rates on some of DCIP's
loans will rise and that additional fees will be owed.
* Leas complains about litigation and wants you to pay
his legal bills. (In addition to the law firm he
hired, Leas has two attorneys that work for him. One
of his lawyers is a relative and he wants you to pay
these legal costs as well). In addition, he wants you
to also pay his administrative expenses relating to his
actions. Why should you?
* It is sad that Leas is now attacking other Decade
partnerships. His facts are wrong. We have been in
the business for more than fifteen years and have had
both success and failure. Under Decade's management,
DCIP has three solid properties that cash flow. We
believe Leas is unsuitable to run DCIP. He has told
you he produces returns from entities that do not cash
flow and have incurred losses.
We recommend that you do not support the Leas proposal.
Vote "Against" on the Leas Notification Form and do not sign
the Power of Attorney so that you may protect your rights. If
you have any questions or concerns, please call me at 414-792-
9200.
Very truly yours,
Michael G. Sweet
Partnership Manager
