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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [_]
Filed by a party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[_] Confidential, For Use of the
Commission Only
(as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Decade Companies Income Properties - A Limited Partnership
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(Name of Registrant as Specified in Its Charter)
Arnold K. Leas and Wellington Management Corporation
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not Applicable
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(2) Aggregate number of securities to which transaction applies:
Not Applicable
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
Not Applicable
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(4) Proposed maximum aggregate value of transaction:
Not Applicable
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(5) Total fee paid:
Not Applicable
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[_] Fee paid previously with preliminary materials.
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[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(3) Filing Party:
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(4) Date Filed:
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January 31, 1997
Re: Decade Companies Income Properties
Dear Limited Partner:
It is unfortunate that you have been subjected to a recent barrage of
misinformation designed by Decade to mislead and confuse you. I hope you will
not let these efforts succeed in preventing you from making an informed
decision.
I have enclosed a copy of a letter which addresses the latest false information
contained in Decade's January 25 and January 29, 1997 letters. Decade has
clearly decided to run a negative campaign rather than relying on their own
track record. It's little wonder; after ten years they wanted to pay you only
40% of what you paid for your investment. Given that track record, I expect
them to be defensive, but not to twist the truth the way they have.
Please read my response. It provides additional information about Decade which
you should take into consideration.
I ask you to let your common sense prevail. Consider that there are much easier
ways for WMC and me to make money than fighting with Decade over management of
this partnership. Also consider that the cost of removing Decade will only be
repaid out of savings WMC produces by reducing property management fees. I had
no grand plan to take over management of DCIP; but when I read the November
letter offering only $402 per interest for a $1,000 investment made 10 years
ago, I became fed-up with Decade's management. You were probably just as angry;
the difference is that I have the resources and staff to pursue what you cannot.
Ask yourself this: Has Decade earned your trust over the past 10 years? Are you
better off now with your $1,000 per interest investment than you were 10 years
ago? If not, vote for change.
Decade has responded to our proposal by trying to scare you. They will more
than likely continue to bombard you with misleading and inaccurate information.
BUT THEY WON'T TELL YOU WHERE ALL YOUR MONEY HAS GONE! WOULDN'T YOU LIKE TO
FIND OUT? You have received our proxy and consent form. Now is your chance to
do what you've wanted to do for years - replace Decade and get your money out of
DCIP.
Thank you for your consideration and support. Please take the time to exercise
your right to do what's best for you.
Best personal regards,
WELLINGTON MANAGEMENT CORPORATION
Arnold K. Leas
President/Chief Executive Officer
AKL:srr
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January 31, 1997
Michael G. Sweet
Partnership Manager
Decade Companies Income Properties
250 Patrick Boulevard, Suite 140
Brookfield, WI 53045-5864
Re: Decade Companies Income Properties ("DCIP") - a limited partnership
Dear Mike:
Your January 25, 1997 letter to the DCIP limited partners was unfair and
misleading. Now you are taking passages from our proxy statement out of
context, deleting key language and offering misleading and inaccurate
interpretations to deceive the investors. Like a desperate politician, you're
attempting to discredit my character rather than running on your own record.
Most people find such tactics distasteful, especially when the information is
revealed to be untrue. The following information must be supplied to investors
to set the record straight.
1. In November I said that Wellington Management Corporation ("WMC") and I
intended to present a proposal to replace Decade as the general partner of
DCIP. Since that time Decade has sued us in federal court to prevent us
from presenting such a proposal. On December 23 both Decade and WMC agreed
to let the limited partners decide the issue by vote. We honored that
commitment and allowed Decade to mail its "fair price" amendment (in
reality a poison pill) on January 4, 1997. You broke your promise to us,
the Court and to investors on January 24 by seeking to obtain a Court order
to keep investors from receiving our proxy. When the Court learned the full
story, the judge immediately ordered that we be allowed to communicate with
investors. The limited partners should know that it is because of Decade
that they were not allowed to receive our proposal. For you to imply
otherwise is untrue. Our proxy statement has now been mailed to the limited
partners and they will finally make their choice.
2. You have stated repeatedly that replacing Decade could have a negative
effect on DCIP'S financing. We have contacted three of DCIP's four lenders.
Two of them said they would not automatically declare a default upon
removal of Decade. The other stated that he could not discuss the loan with
us until WMC is appointed as replacement general partner. You also failed
to tell investors that the interest rate on DCIP's largest and most
favorable loan will be escalated above current market rates next year and
that loan may need to be refinanced at that time whether Decade, WMC or
anyone else is the general partner. Your implication that DCIP's loans will
automatically be accelerated and become due upon WMC's appointment is a
blatant attempt to scare the limited partners.
3. As you stated, WMC has spent more than $100,000 attempting to remove Decade
as the general partner of DCIP. But you failed to tell investors that most
of this cost has been incurred because you have tied us up in litigation in
an effort to keep us from
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communicating with investors. You have also failed to tell investors how
much of their money you are spending in pursuing this litigation which we
believe is designed to protect Decade from being removed by the investors
after we communicate with them and give them a choice. Why didn't you tell
the investors that we have committed to recover this money only out of
savings to the partnership which WMC will produce by replacing Decade's
property management firm? In other words, you intentionally omitted
language that makes clear there will be no reimbursement from the
partnership unless WMC produces better results, didn't you? Can Decade say
the same about litigation costs it continues to generate?
I believe WMC will save the partnership more than the cost to remove
Decade. For example, if WMC Realty would have managed DCIP's properties
during 1993-95, the partnership would have saved $514,034 in property
management fees alone. That's because WMC Realty charges a flat 5% property
management fee; not the additional half month's rent fee charged by Decade
Properties. By the way, we believe that Decade's additional leasing fee
violates NASAA real estate program guidelines and, therefore, may have been
improperly collected from the partnership for years. Be assured that as the
new general partner we will pursue this issue.
In addition, Decade and affiliates charged the partnership $1,019,845 in
expense reimbursements during 1995 alone. What did you spend it all on? We
have requested details of these expenses, but have received no evidence
that such amount is necessary or reasonable. If appointed we will attempt
to reduce this expense and you should be prepared to substantiate all
expenses charged during past years.
4. You made several references to Wellington Properties Trust ("WLPT"), WMC's
real estate investment trust. Many of them were outright false or seriously
misleading to investors.
A. WLPT owns several apartment communities, the largest of which has been
under construction during the past three years. You should have
disclosed this to the investors so they would know the truth. As a
development stage entity, WLPT was not expected to cash flow until
1997. We expect that it will cash flow this year.
B. You stated that WLPT purchases most of its properties from affiliated
entities. That is simply untrue. Of the 410 apartment units owned by
WLPT, 304 units were purchased from third party sellers. Of the 106
units purchased from affiliates, one received the appraised value
(paid fully in WLPT stock) and the other received a fair price (which
is $60,000 less than a current offer). These were positive
transactions for WLPT.
C. Equally deceptive was your claim that we overpaid for property based
on a prior appraisal. You should have told investors that the
appraisal you mentioned occurred before construction was finished and
before lease-up. During May 1993, WMC paid $1,775,000 for the
apartment community. As the project approached completion and began
filing up, it became much more valuable. Upon completing construction
and attaining 95% occupancy, the property was sold to WLPT for
$1,890,000. The
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$115,000 brokerage commission you mentioned was included in that
purchase price. WLPT recently received an offer from a third party to
purchase the same property for $1,950,000. We have presented a
counter-offer to the prospective buyer at $2,025,000. There was
nothing wrong with this transaction, despite your implication to the
contrary. Are half-truths what investors should expect from you?
5. You don't seem to understand the difference between return on investment
and return of investment. WMC's investment programs distribute cash
quarterly. These programs have distributed over $11,000,000 to date. We do
not consider these distributions to be a return of investors' principal,
nor do our investors consider such distributions to be a return of their
principal. The distributions are a return on investment, which appears to
be a foreign concept to Decade. Your statement that we admitted otherwise
in the litigation is untrue. In fact, we expressly denied your assertion.
As for your deep feelings for the Decade "family" of partnerships, let me remind
you of a few "step children." As you know, the following family members are no
longer with us, having passed away from the dreaded real estate disease known as
"mortgage foreclosure":
<TABLE>
<CAPTION>
Partnership Liquidated Apartment
Following Foreclosure Community Address Limited Partners' Investment*
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<S> <C> <C>
Decade Sunbelt Properties 200 Country Club Drive $1,890,000
Largo, FL
Decade Sunbelt Properties II The Paces $1,920,000
Tarpon Springs, FL
Decade Preferred Placement VII Flamingo West $1,440,000
Tampa, FL
Decade Preferred Placement IX Villas of Central Park $2,700,000
Orlando, FL
Decade Preferred Placement X Fox River $3,149,250
Atlanta (Marietta), GA ----------
Total Investors' Funds Lost: $11,099,025
</TABLE>
* Amount raised in partnership offering.
I don't know if the DCIP investors received disclosure at the time of these
foreclosures, but they should now be informed. Since the investors in these
partnerships lost all of their investment in the foreclosure, but Decade charged
over a million dollars in fees and commissions, I ask you; is that any way to
treat your family? WMC, in contrast, has never lost a property in a foreclosure
action or otherwise.
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You must not have been feeling very deeply for the DCIP limited partners when
you decided to sell Ashley Pointe Apartments in April 1994. The partnership
suffered a loss of $970,958 as a result of that sale. In addition, a Decade
affiliate charged a $92,100 commission on the sale, bringing the partnership's
total loss to $1,071,710 on that transaction. That's adding insult to injury.
Does that help explain where all the money went?
Other Decade charges we intend to investigate if WMC is appointed replacement
general partner are the following which were listed DCIP's 1995 financial
statements:
. Acquisition fees $2,146,635
. Real estate commissions 440,700
. Interest on "accrued" acquisition fees 572,467
. Interest on "accrued" real estate commissions 115,821
----------
Total charges subject to inquiry $3,275,623
We believe that some of these fees are not even payable under the terms of the
DCIP partnership agreement, unless the limited partners have received a return
of all of their capital contribution plus a priority return of 6% per annum.
Did these contingent liabilities motivate the recently completed self-tender,
whereby the partnership repurchased interests at $402 per interest? After all,
the fewer limited partners that remain to collect their priority return, the
more likely Decade is to collect those contingent fees. If investors were bought
out at a discount so that you can collect contingent fees, what does that say
about the way you treat your family?
The limited partners know something is wrong with DCIP. It's not the properties,
nor is it the real estate market; the problem is management. The limited
partners want to know where all the money is going. We are convinced that the
only way to find out where all the money is going is to replace Decade and hire
new management. We are offering the limited partners that option. We are asking
them to vote to remove Decade and appoint WMC as the replacement general partner
of the partnership.
Very truly yours,
WELLINGTON MANAGEMENT CORPORATION
Arnold K. Leas
President/Chief Executive Officer
AKL:srr
cc: All DCIP limited partners
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