<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
------------------------------------
WINTHROP CALIFORNIA INVESTORS LIMITED PARTNERSHIP
(Name of Subject Company)
QUADRANGLE ASSOCIATES II LLC
WIN MANAGER CORP.
(Bidders)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
NONE
(Cusip Number of Class of Securities)
------------------------------------
Michael L. Ashner
Chief Executive Officer
WIN Manager Corp.
100 Jericho Quadrangle, Suite 214
Jericho, New York 11753
(516) 822-0022
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
Copy to:
Mark I. Fisher
Rosenman & Colin LLP
575 Madison Avenue
New York, New York 10032
------------------------------------
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
Transaction Valuation*: $2,768,000 Amount of Filing Fee: $553.60
- --------------------------------------------------------------------------------
* For purposes of calculating the fee only. This amount assumes the purchase of
1,384 units of limited partnership interest ("Units") of the subject partnership
for $2,000 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.
[ ] 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
Form or Registration No.: Not Applicable
Filing Party: Not Applicable
Date Filed: Not Applicable
<PAGE>
CUSIP No. NONE 14D-1 Page 2
- --------------------------------------------------------------------------------
1. Name of Reporting Persons; I.R.S. Identification Nos. of Above Persons
Quadrangle Associates II LLC
--------------
- --------------------------------------------------------------------------------
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
None
- --------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares [ ]
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
0
- --------------------------------------------------------------------------------
10. Type of Reporting Person
OO
- --------------------------------------------------------------------------------
<PAGE>
CUSIP No. NONE 14D-1 Page 3
- --------------------------------------------------------------------------------
1. Name of Reporting Persons; I.R.S. Identification Nos. of Above Persons
WIN MANAGER CORP.
--------------
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources of Funds
N/A
- --------------------------------------------------------------------------------
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
None
- --------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares [ ]
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
0
- --------------------------------------------------------------------------------
10. Type of Reporting Person
CO
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14D-1
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Winthrop California Investors
Limited Partnership, a Delaware limited partnership (the "Partnership"). The
address of the Partnership's principal executive offices is 5 Cambridge Center,
9th Floor Cambridge, Massachusetts 02142.
(b) This Statement relates to an offer by Quadrangle Associates II LLC,
a Delaware limited liability company (the "Purchaser"), to purchase up to 1,384
of the outstanding units of limited partnership interest ("Units") of the
Partnership at a purchase price of $2,000 per Unit, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated January 3, 2000 (the "Offer to Purchase") and the related Letter of
Transmittal (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" and Section 9 ("Certain Information Concerning your Partnership")
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 and WIN
Manager Corp. (collectively, the "Bidders"). The information set forth in the
Offer to Purchase under "Introduction," in Section 11 ("Certain Information
Concerning Us") and in Schedule 1 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 Schedule 1 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.
4
<PAGE>
(g) Each of the individuals listed on Schedule 1 to the Offer to
Purchase is a citizen of the United States.
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 9 ("Certain Information Concerning Your
Partnership"), in Section 10 ("Conflicts of Interest and Transactions with
Affiliates") and in Section 13 ("Background of the Offer") is incorporated
herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in the Offer to Purchase 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)-(c), (e) The information set forth in the Offer to Purchase under
"Introduction" and in Section 8 ("Our Future Plans") 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," and in Section 11 ("Certain Information Concerning Us") 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 Us") and Section 13 ("Background of the Offer") is incorporated
herein by reference.
5
<PAGE>
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.
Not applicable.
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
Letter of Transmittal, 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 January 3, 2000.
(a)(2) Letter of Transmittal and Related Instructions.
(a)(3) Cover Letter, dated January 3, 2000, from the Purchaser to
the Limited Partners of the Partnership.
6
<PAGE>
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: January 3, 2000
QUADRANGLE ASSOCIATES II L.L.C.
By: WIN Manager Corp.
By: Peter Braverman
-----------------------------
Peter Braverman
Vice President
WIN MANAGER CORP.
By: Peter Braverman
-----------------------------
Peter Braverman
Vice President
7
<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------- -----------
(a)(1) Offer to Purchase, dated January 3, 2000.
(a)(2) Letter of Transmittal and Related Instructions.
(a)(3) Cover Letter, dated January 3, 2000, from the Purchaser to the
Limited Partners of the Partnership.
8
<PAGE>
Exhibit (a)(i)
Offer to Purchase for Cash
Quadrangle Associates II LLC
is offering to purchase up to 1,384 units of limited partnership interest in
Winthrop California Investors Limited Partnership,
a Delaware Limited Partnership,
for $2,000 per unit in Cash
Our purchase price is $500 per unit more than the purchase price being offered
by Sutter/Jamboree Acquisition Fund, LLC in a competing offer.
The general partners of your partnership have recommended that you not accept
the Sutter offer.
Our offer and your withdrawal rights will expire at 12:00 midnight, New York
City time, on January 31, 2000, unless we extend the deadline.
Our offer is not subject to any minimum number of units being tendered.
We will purchase up to 1,384 (39.5%) of the outstanding units of limited
partnership interest in your partnership. If more units are tendered to us or
if units have been purchased in the competing offer, we will accept units on a
pro rata basis according to the number of units tendered by each person.
We are an affiliate of your general partners and are making this offer with a
view towards making a profit.
You will not pay any fees or commissions to us if you tender your units.
See "Risk Factors" beginning on page 1 of this offer to purchase for a
description of risk factors that you should consider in connection with our
offer, including the following:
o We are making our offer to make a return on our investment.
Accordingly, in establishing our purchase price, we were
motivated to set the lowest price for the units that might be
acceptable to you consistent with our objectives. Such
objectives and motivations may conflict with your interest in
receiving the highest price for your units.
o Our purchase price of $2,000 is not based on any third party
appraisal or valuation. In addition, the purchase price was
determined without any arms-length negotiations with your
partnership. No independent person has given an opinion on the
fairness of our offer, and no representation is made by us or
the general partner of your partnership on the fairness of our
offer.
o If you tender your units you will be giving up future
potential benefits from owning the units, including receiving
any future distributions from your partnership.
o You may receive more value by retaining your units until your
partnership is liquidated rather than by tendering your units
to us.
o We are an affiliate of the general partners of your
partnership. Accordingly, there are certain conflicts of
interest for the general partners of your partnership.
o If we acquire a substantial number of units, we will increase
our influence on, and may be able to direct, voting decisions
by your partnership.
To accept our offer, please execute the enclosed letter of transmittal
and return it to us, together with any additional documents required, in the
enclosed pre-addressed, postage paid envelope (see "Procedures for Tendering
Units"). If you have already tendered your units in the offer being made by
Sutter/Jamboree Acquisition Fund, LLC (the "Sutter Offer") and you desire to
tender your units to us, our letter of transmittal provides for a withdrawal of
your tender in the Sutter Offer, which we will in turn forward to North Coast
Securities, Inc. If we increase our purchase price, you will receive the
increased price even if you tendered your units before the increase. Questions
and requests for assistance or for additional copies of this offer to purchase,
the letter of transmittal should be directed to us at (888) 448-5554.
January 3, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTION.....................................................................................1
RISK FACTORS.....................................................................................1
THE TENDER OFFER.................................................................................3
Section 1. Terms of the Offer..........................................................3
Section 2. Proration; Acceptance for Payment and Payment for Units.....................3
Section 3. Procedures for Tendering Units..............................................4
Section 4. Withdrawal Rights...........................................................5
Section 5. Extension of Tender Period; Termination; Amendment..........................6
Section 6. Certain Federal Income Tax Consequences.....................................6
Section 7. Effects of the Offer........................................................9
Section 8. Future Plans................................................................9
Section 9. Certain Information Concerning Your Partnership............................10
Section 10. Conflicts of Interest and Transactions with Affiliates.....................18
Section 11. Certain Information Concerning Us..........................................19
Section 12. Source of Funds............................................................20
Section 13. Background of the Offer....................................................20
Section 14. Conditions of the Offer....................................................23
Section 15. Certain Legal Matters......................................................24
Section 16. Fees and Expenses..........................................................24
Section 17. Miscellaneous..............................................................25
Schedule 1 Information With Respect to the Executive Officers and
Directors of WIN Manager Corp.
</TABLE>
(i)
<PAGE>
INTRODUCTION
------------
We are offering to purchase up to 1,384 units, representing
approximately 39.5% of the outstanding units of limited partnership interest in
your partnership, for the purchase price of $2,000 per unit, net to the seller
in cash, without interest, less any distributions paid after the date hereof and
prior to the expiration date. We are affiliated with your general partners and
our offer is made upon the terms and subject to the conditions set forth in this
offer to purchase and in the accompanying letter of transmittal.
Our offer will expire at 12:00 midnight, New York City time, on January
31, 2000, unless we have extended the period of time during which the offer is
open. If you desire to accept our offer, you must complete and sign the letter
of transmittal in accordance with the instructions and mail the letter of
transmittal and any other required documents to us. Furthermore, if you have
previously tendered your units to Sutter/Jamboree Acquisition Fund LLC and its
affiliates pursuant to the Sutter Offer and you desire to receive the higher
price being offered by us, by initialing the appropriate box on the cover of our
letter of transmittal and returning the letter of transmittal to us by the
expiration date of the Sutter Offer, you will withdraw your tender in the Sutter
Offer. We will in turn forward the withdrawal to North Coast Securities, Inc.,
the depository for the Sutter Offer. See "The Tender Offer" Section 3,
Procedures for Tendering. You may withdraw your tender of units to us at any
time prior to the expiration date of our offer.
We have been advised by your general partners that your partnership
does not intend to effect any transfers of units pursuant to either our offer or
the Sutter Offer until such time as current financial information is available
to you. As discussed below, due to a dispute with the general partner of Crow
Winthrop Development Limited Partnership (the "development partnership"), an
entity in which your partnership holds a 25% limited partnership interest, your
partnership has only recently been provided with some of the financial
information necessary to complete its financial statements for the years ended
December 31, 1997 and 1998. On December 22, 1999, your partnership filed its
annual report on Form 10-K for 1998 with the Securities and Exchange Commission.
The annual report contains certain financial information on the development
partnership but does not contain audited financial statements of your
partnership. Your partnership anticipates that such financial statements will be
available within a few weeks.
Our affiliates currently beneficially own 1,023 units representing
approximately 29.23% of the outstanding units. None of the units owned by our
affiliates will be tendered in the offer.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT, THE
LETTER OF TRANSMITTAL AND OTHER DOCUMENTS THAT WE HAVE REFERRED YOU TO. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT.
RISK FACTORS
------------
Before deciding whether or not to tender any of your units, you should
consider carefully the following risks and disadvantages of the offer:
Lack of Financial Information
Because of the continuing failure of the general partner of the
development partnership to provide your partnership with the necessary financial
information, your partnership was not able to complete its quarterly and annual
filings with the Securities and Exchange Commission since September 1997.
Offer Price May Not Represent the Value of Your Units
There is no established or regular trading market for your units, nor
is there another reliable standard for determining the fair market value of the
units. Our offer price may not reflect the price that you could receive in the
open market for your units which could be higher than our offer price. According
to information provided by your general partners, between November 1, 1998 and
October 31, 1999, the only sales of units that occurred were the
<PAGE>
128 units acquired by Sutter Opportunity Fund, LLC, an affiliate of the
purchaser in the Sutter Offer, in July 1999 for $750 per unit.
Uncertainty of Realizing Benefits from Ownership of Development Partnership
Your partnership's most significant asset is a 25% limited partnership
interest in the development partnership. The development partnership owns
approximately 90 acres of land in Orange County, California. During the past
several years your partnership has been involved in a series of disputes with
the general partner of the development partnership that are described on pages
15-17. The ongoing litigation with the general partner of the development
partnership may prevent your partnership from realizing the full estimated value
of its interest in the development partnership. Because of the disputes with the
general partner, we have estimated that the liquidation value of your
partnership's interest in the development partnership may be as low as $1,864
per unit rather than the full estimated value. The value of your units will
increase if the partnership is able to favorably resolve the disputes with the
general partner of the development partnership. However, your partnership may
not be able to resolve those disputes.
Estimate of Value of Partnership
We have estimated that the liquidation value of your partnership as of
November 30, 1999 is $3,514 per unit. Our estimate may not reflect the current
market value of your partnership's assets and the value of your units would
increase if the ongoing disputes involving the development partnership were
resolved in favor of your partnership. See "Section 13. Background of the
Offer-Valuation of Units"
Loss of Future Benefits from Your Ownership of Units
If you tender your units in response to our offer you will transfer to
us all right, title and interest in and to all of the units we accept, including
the right to participate in any future potential benefits represented by the
ownership of the units. Accordingly, you will not receive any future potential
benefits from units you sell to us, such as future distributions by your
partnership, including distributions resulting from a favorable resolution of
disputes relating to the development partnership and your partnership's exercise
of a buy-sell right relating to the development partnership.
Disputes Involving Jamboree LLC
Your partnership owns a 9.9% interest in Jamboree LLC. Jamboree LLC
owns an approximately 1.6 million square foot office facility in Orange County,
California. The office facility is located adjacent to property owned by the
development partnership. Jamboree LLC is also involved in various lawsuits with
the general partner of the development partnership. These ongoing disputes
between Jamboree LLC and the development partnership have an adverse impact on
the value of your partnership's interest in both Jamboree LLC and the
development partnership.
Possible Increase in Control of Your Partnership by Us
Our affiliates currently beneficially own approximately 29.23% of the
outstanding units. The more units we acquire, the more we are able to influence
limited partner voting decisions of your partnership, including decisions on the
removal of your general partners, amendment of the partnership agreement, the
sale of substantially all of your partnership's assets and the liquidation of
your partnership. If we were to acquire at least 728 units in our offer,
together with our affiliates we would hold a majority of your partnership's
limited partnership interests and, therefore, have the right to effect most
matters on which limited partners are entitled to vote.
Alternatives to Selling Us Your Units
The original anticipated holding period of your partnership's assets
was through December 31, 1995. However, your partnership is not required to be
dissolved until December 31, 2035. Instead of selling us your units you and
other limited partners in your partnership could propose alternative actions
such as liquidating your partnership.
Conflicts of Interest
2
<PAGE>
Since our affiliates receive fees for managing and administering your
partnership and its assets, a conflict of interest exists for your general
partners between continuing the partnership and receiving such fees, and
liquidating the partnership.
Sale of Your Units Will Be a Taxable Transaction
Most unitholders will realize a capital loss on a sale of their units
in our offer. We also believe that, as a result of a special tax election made
by most unitholders in connection with a prior debt restructuring involving your
partnership, most unitholders will also realize ordinary income on a sale. Your
after-tax benefit (or cost) from a sale will be based on a number of factors
including your tax basis in the units sold, whether you have unused passive
activity losses from your partnership and, if so, whether you sell all of your
units, and whether (assuming you sell at a loss) you have capital gains against
which to offset your capital loss. We recommend that you consult with your tax
advisor prior to tendering your units to determine your particular tax
situation.
Holding Units May Result in Greater Future Value
You might receive more value if you retain your units until your
partnership is liquidated.
Continuation of the Partnership
Your partnership will continue to be operated as it has in the past.
Accordingly, there may be no way to liquidate your investment in the partnership
in the future until the assets are sold and the partnership is liquidated.
However, it is anticipated that your general partners may seek to exercise its
buy/sell right with respect to the development partnership which may enable your
partnership to liquidate its investment in the development partnership. "See
Section 8. Future Plans."
THE TENDER OFFER
----------------
Section 1. Terms of the Offer. Upon the terms of the offer, we will
accept (and thereby purchase) up to 1,384 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 of this offer to purchase. For purposes of this offer,
the term "expiration date" shall mean 12:00 Midnight, New York City time, on
January 31, 2000, unless we have extended the period of time during which the
offer is open, in which case the term "expiration date" shall mean the latest
time and date on which the offer, as extended by us, shall expire. See Section 5
of this offer to purchase for a description of our right to extend the period of
time during which the offer is open and to amend or terminate our offer.
Our offer is subject to satisfaction of certain conditions. The offer
is not conditioned upon any minimum amount of units being tendered. See Section
14, which sets forth in full the conditions of the offer. We reserve the right
(but in no event shall we be obligated), in our sole discretion, to waive any or
all of those conditions. If, on or prior to the expiration date, any or all of
such conditions have not been satisfied or waived, we may (i) decline to
purchase any of the units tendered, terminate the offer and return all tendered
units to tendering limited partners, (ii) waive all the unsatisfied conditions
and, subject to complying with applicable rules and regulations of the
Securities and Exchange Commission (the "Commission"), purchase all units
validly tendered, (iii) extend the offer and, subject to the withdrawal rights
of limited partners, retain the units that have been tendered during the period
or periods for which the offer is extended, or (iv) amend the offer.
Section 2. Proration; Acceptance for Payment and Payment for Units. If
the number of units validly tendered on or before the expiration date (and not
properly withdrawn) is 1,384 or less and no units are purchased prior to such
time under the Sutter Offer, we will accept for payment, subject to the terms
and conditions of the offer, all units so tendered. If more than 1,384 units are
validly tendered on or prior to the expiration date (and not properly withdrawn
and no units are purchased prior to such time under the Sutter Offer), we will
accept for payment an aggregate of 1,384 units so tendered on a pro rata basis
according to the number of units validly tendered by each limited partner (with
appropriate adjustments to avoid purchases of fractional units). If units are
purchased under the Sutter Offer prior to the expiration date of our offer, we
will accept for payment to the extent validly tendered (and not properly
withdrawn) a number of units equal to 1,384 less the number of units so
purchased under the Sutter Offer on a pro rata basis according to the number of
units validly tendered by each limited partner (with appropriate adjustments to
avoid purchases of fractional units).
3
<PAGE>
We will pay for up to the maximum number of units validly tendered and
not withdrawn in accordance with Section 4, as promptly as practicable following
the expiration date. In all cases, the payments for units purchased pursuant to
the offer will be made only after timely receipt by us of a properly completed
and duly executed letter of transmittal (or a facsimile thereof), and any other
documents required pursuant to the terms hereof or by the letter of transmittal.
(See "Section 3. Procedures for Tendering Units".)
For purposes of the offer, we will be deemed to have accepted for
payment pursuant to the offer, and thereby purchased, validly tendered units
when, as and if we give verbal or written notice to your general partner of our
acceptance of those units for payment pursuant to the offer. Upon the terms and
subject to the conditions of the offer, payment for units tendered and accepted
for payment pursuant to the offer will be made by transmitting cash payments to
tendering limited partners. Under no circumstances will interest be paid on the
offer price by reason of any delay in making such payment.
If any tendered units are not purchased for any reason, the letter of
transmittal with respect to such units will be destroyed by us. If, for any
reason, acceptance for payment of, or payment for, any units tendered pursuant
to the offer is delayed or we are unable to accept for payment, purchase or pay
for units tendered pursuant to the offer, then, without prejudice to our rights
under Section 14 of this offer to purchase, we may 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 of this
offer to purchase; subject, however, to our obligation under Rule 14e-1(c) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to pay
limited partners the offer price in respect of units tendered or return those
units promptly after termination or withdrawal of the offer.
Section 3. Procedures for Tendering Units.
Valid Tender. In order for you to participate in our offer, your units
must be validly tendered and not withdrawn on or prior to the expiration date.
To validly tender your units, a properly completed and duly executed letter of
transmittal and any other documents required by the letter of transmittal must
be received by us, at our address set forth on the back cover of this offer to
purchase, on or prior to the expiration date. You must tender all of the units
owned by you in order for the tender to be valid. No alternative, conditional or
contingent tenders will be accepted.
Signature Requirements. If the letter of transmittal is signed by the
registered holder of a unit, then no notarization or signature guarantee is
required on the letter of transmittal. Similarly, if a unit is tendered for the
account of a member firm of a registered national securities exchange, a member
of the National Association of Securities Dealers, Inc. or a commercial bank,
savings bank, credit union, savings and loan association or trust company having
an office, branch or agency in the United States (each an "Eligible
Institution"), no notarization or signature guarantee is required on the letter
of transmittal. However, in all other cases, all signatures on the letter of
transmittal must either be notarized or guaranteed by an Eligible Institution.
In order for you to take part in the offer, your units must be validly
tendered and not withdrawn on or prior to the expiration date.
The method of delivery of the letter of transmittal and all other
required documents is at your option and risk of delivery will be deemed made
only when actually received by us.
Withdrawal of Units Tendered Pursuant to the Sutter Offer. If you have
tendered your units pursuant to the Sutter Offer and you wish to receive a
greater price for your units by tendering your units to us pursuant to this
offer, you must withdraw your tender in the Sutter Offer by following the
procedures set forth below. In order to withdraw your tender in the Sutter
Offer, you must do so in accordance with the applicable procedures set forth in
Section 4 of the Sutter Offer and the related Letter of Transmittal. If you
require assistance in withdrawing your tender, please call us at (888) 448-5554.
The Sutter Offer provides, in relevant part:
"For withdrawal to be effective, a written or
facsimile transmission notice of withdrawal must be
timely received by the Depositary at the address or
the facsimile number set forth in the [Letter of
Transmittal attached to the Sutter Offer]. 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
Letter of Transmittal in the same manner as the
Letter of Transmittal was signed."
4
<PAGE>
For your convenience, our letter of transmittal, when properly
completed and timely delivered to us, will enable you to withdraw your tender
pursuant to the Sutter Offer. To properly withdraw your tender in the Sutter
Offer, the letter of transmittal or any other appropriate form of "Notice of
Withdrawal" which complies with the withdrawal requirements of Section 4 of the
Sutter Offer should be sent to us (in the case of a letter of transmittal) or
North Coast Securities, Inc. (with respect to all other Notices of Withdrawal)
by no later than the expiration date of the Sutter Offer (currently, December
31, 1999).
Backup Federal Income Tax Withholding. If you tender your units and you
are not a corporation or foreign individual, you may be subject to 31% backup
federal income tax withholding unless you provide us with your correct taxpayer
identification number ("TIN"). To avoid this backup withholding, you should
complete and sign the Substitute Form W-9 included in the letter of transmittal.
If you tender your units and do not complete the Substitute Form W-9, we will be
required to withhold 31% (and if you fail to provide your TIN, an additional $50
or such other amount as may be imposed by law) from the purchase price payment
made to you. See the instructions to the letter of transmittal and "Section 6.
Certain Federal Income Tax Matters."
FIRPTA Withholding. If you are a foreign person and you tender your
units, we will be required, in certain instances, to withhold a tax equal to 10%
of the amount realized on the sale (i.e., the purchase price plus the
partnership liabilities allocable to each unit sold) unless you complete and
sign the FIRPTA Affidavit included in the letter of transmittal certifying your
TIN and your address and that you are not a foreign person. See the instructions
to the letter of transmittal and "Section 6. Certain Federal Income Tax
Matters."
Other Requirements. By executing the letter of transmittal, you are
irrevocably appointing us and our designees, in the manner set forth in the
letter of transmittal, each with full power of substitution, to the full extent
of your rights with respect to the units tendered by you and accepted for
payment and purchased by us. Such appointment will be effective when, and only
to the extent that, we accept the tendered units for payment. Upon such
acceptance for payment, all prior proxies given by you with respect to the units
will, without further action, be revoked, and no subsequent proxies may be given
(and if given will not be effective). We and our designees will, as to those
units, be empowered to exercise all of your voting and other rights as a limited
partner as we in our sole discretion may deem proper at any meeting of limited
partners, by written consent or otherwise. We reserve the right to require that,
in order for units to be deemed validly tendered, immediately upon our
acceptance for payment for the units, we must be able to exercise full voting
rights with respect to the units, including voting at any meeting of limited
partners then scheduled. In addition, by executing the letter of transmittal,
you also assign to us all of your rights to receive distributions from the
partnership with respect to units which we have accepted for payment and
purchased pursuant to the offer. (See "Section 6. Certain Federal Income Tax
Matters".)
Determination of Validity; Rejection of Units; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of units pursuant to our offer will be determined by us, in our sole discretion,
which determination shall be final and binding. We reserve the absolute right to
reject any or all tenders of any particular unit determined by us not to be in
proper form or if the acceptance of, or payment for, that unit may, in the
opinion of our counsel, be unlawful. We also reserve the right to waive any
defect or irregularity in any tender with respect to any particular unit of any
particular limited partner, and our interpretation of the terms and conditions
of the offer (including the letter of transmittal and the instructions thereto)
will be final and binding. Neither we, nor any other person will be under any
duty to give notification of any defects or irregularities in the tender of any
unit or will incur any liability for failure to give any such notification.
Binding Agreement. A tender of a unit pursuant to any of the procedures
described above and the acceptance for payment of such unit will constitute a
binding agreement between the tendering unitholder and us on the terms set forth
in this offer and the related letter of transmittal.
Section 4. Withdrawal Rights. You may withdraw tendered units at any
time prior to the expiration date and after the 60th day following the date of
this offer to purchase, if the units have not been previously accepted for
payment.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by us at the 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 number of units to be withdrawn
and must be signed by the person(s) who signed the letter of transmittal in the
same manner as the letter of transmittal was signed.
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If purchase of, or payment for, a unit is delayed for any reason, or if
we are unable to purchase or pay for a unit for any reason, then, without
prejudice to our rights under the offer, we may retain tendered units and such
units may not be withdrawn except to the extent that a tendering limited partner
is entitled to withdrawal rights as set forth in this Section 4; subject,
however, to our obligation, pursuant to Rule 14e-1(c) under the Exchange Act, to
pay the offer price in respect of units tendered or return those units promptly
after termination or withdrawal of the offer.
Any units properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of our offer. However, withdrawn units may be
re-tendered by following any of the procedures described in Section 3 at any
time prior to the expiration date.
Section 5. Extension of Tender Period; Termination; Amendment. We
expressly reserve the right, in our sole discretion, at any time and from time
to time (i) to extend the period of time during which our offer is open and
thereby delay acceptance for payment of, and the payment for, any unit, (ii)
upon the occurrence of any of the conditions specified in Section 14 of this
offer to purchase, to delay the acceptance for payment of, or payment for, any
units not already accepted for payment or paid for and (iii) to amend our 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 an amendment will promptly be disseminated to you in a manner
reasonably designed to inform you of the change in compliance with Rule 14d-4(c)
under the Exchange Act. An extension of the offer will be followed by a press
release or public announcement which will be issued no later than 9:00 a.m., New
York City time, on the next business day after the scheduled expiration date of
our offer, in accordance with Rule 14e-1(d) under the Exchange Act.
If we extend the offer, or if we delay payment for a unit (whether
before or after its acceptance for payment) or are unable to pay for units
pursuant to our offer for any reason, then, without prejudice to our rights
under the offer, we 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 our
obligation, pursuant to Rule 14e-1(c) under the Exchange Act, to pay the offer
price in respect of units tendered or return those units promptly after
termination or withdrawal of the offer.
If we make a material change in the information concerning the offer or
if we waive a material condition to our offer, we will extend the offer and
disseminate additional tender offer materials to the extent required by Rules
14d-4(c) and 14d-6(d) under the Exchange Act. The minimum period during which an
offer must remain open following any material change in the information
concerning the offer will depend upon the facts and circumstances, including the
relative materiality of the change in 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 for 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.
Section 6. Certain Federal Income Tax Matters. The following summary is
a general discussion of certain federal income tax considerations that should be
relevant to you in connection with a sale of units in our 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 our 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 you in light of your specific circumstances or
to certain types of investors subject to special tax rules (for example, dealers
in securities, banks, insurance companies and, except as discussed below,
foreign and tax-exempt investors), nor does it discuss any aspect of state,
local, foreign or other tax laws. Sales of units pursuant to our offer will be
taxable transactions for federal income tax purposes, and may also be taxable
transactions under applicable state, local, foreign and other tax laws. Your
resulting tax consequences will depend, in part, on your personal tax situation.
YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES,
INCLUDING STATE AND LOCAL TAX CONSEQUENCES, TO YOU OF SELLING UNITS IN OUR
OFFER.
You will recognize gain or loss on a sale of units in our offer equal
to the difference between (i) your "amount realized" on the sale and (ii) your
adjusted tax basis in the units sold. The amount of your adjusted tax basis will
vary depending upon your particular circumstances, but generally will equal your
cash investment in your units, increased
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by your share of your partnership's income and gain and decreased by your share
of your partnership's losses and distributions. Your adjusted tax basis in your
units also was decreased by your share of your partnership's debt discharge
income resulting from the 1997 debt restructuring involving your partnership
(see "Section 9. Certain Information Concerning Your Partnership") if you
elected to defer recognizing your share of such income. The "amount realized"
with respect to a unit sold will be a sum equal to the amount of cash received
by you for the unit plus the amount of your partnership's liabilities that are
allocable to the unit.
You will be allocated a share of your partnership's taxable income or
loss with respect to the units sold by you in accordance with the provisions of
your partnership's limited partnership agreement concerning transfers of units.
Such allocations and any cash distributed by your partnership to you or for your
benefit will affect your adjusted tax basis in your units and, therefore, your
taxable gain or loss upon a sale of units in our offer. In this regard, if you
tender your units, you will be allocated a pro rata share of taxable income with
respect to your units sold in our offer through the end of the calendar quarter
in which the units are sold, but we will receive all future distributions made
with respect to your units.
We believe that most unitholders elected to defer recognizing their
share of your partnership's 1997 debt discharge income, and that, if you made
the election to defer the income, you will realize ordinary income of $6,571 per
unit (based on adjustments resulting from your deferral election through
December 31, 1998) and a capital loss on a sale of your units in our offer.
Based on the results of your partnership's operations through December 31, 1998,
and without giving effect to your partnership's operations, transactions or
distributions after that date, we estimate that, if you purchased your units in
your partnership's original offering, then, depending on your date of entry and
whether you paid the purchase price for your units in full when you subscribed
or in installments, your loss on the sale will be between ($10,812) per unit for
units paid for in full in August 1985 and ($22,271) per unit for units paid for
in full in December 1986, or between ($12,340) per unit for units acquired in
August 1985 and paid for in installments and ($23,271) per unit for units
acquired in December 1986 and paid for in installments. (If you did not elect to
defer recognizing your share of your partnership's 1997 debt discharge income
and you purchased your units in your partnership's original offering, then we
estimate that you will realize a tax loss on a sale of your units in our offer
of between ($26,950) per unit for units paid for in full in August 1985 and
($38,409) per unit for units paid for in full in December 1986, or between
($28,478) per unit for units acquired in August 1985 and paid for in
installments and ($39,409) per unit for units acquired in December 1986 and paid
for in installments.) We also estimate that, if you purchased your units in your
partnership's original offering and elected to defer recognizing your share of
your partnership's 1997 debt discharge income, you may have "suspended" passive
activity losses (i.e., tax losses that you could not previously deduct under the
passive activity loss rules described below) from your partnership (based on
results of operation through December 31, 1998) of between $40,226 per unit for
units acquired in August 1985 and $43,812 per unit for units acquired in
December 1986, subject to reduction to the extent you utilized any of such
losses to offset your passive activity income from other investments. (If you
did not elect to defer recognizing your share of your partnership's 1997 debt
discharge income and you purchased your units in your partnership's original
offering, then we estimate that you may have suspended passive activity losses
from your partnership, based on results of operation through December 31, 1998
and subject to reduction to the extent you utilized such losses to offset your
passive activity income from other investments, of between $17,517 per unit for
units acquired in August 1985 and $21,103 per unit for units acquired in
December 1986.) Under the passive activity loss rules (discussed below), your
unused passive activity losses from your partnership would first be applied to
offset any ordinary income realized by you on your sale of units in our offer
(assuming you elected to defer recognizing your share of your partnership's 1997
debt discharge income) and, to the extent of any remaining unused passive
activity losses, should be deductible by you from your other income (subject to
any other applicable limitations) if you sell all your units in our offer.
Except for ordinary income estimated at $6,571 per unit, if you elected
to defer recognizing your share of your partnership's 1997 debt discharge
income, your gain or loss on a sale of a unit in our offer generally will be
treated as a capital gain or loss assuming you held the unit as a capital asset.
Your capital gain or loss will be treated as long-term capital gain or loss
assuming your holding period for the unit exceeds 12 months. Under current law,
capital gains and losses of individuals and non-corporate taxpayers are taxed
under tax rules different from the rules applicable to corporations. Long-term
capital gains of individuals and other non-corporate taxpayers are taxed at a
maximum federal income tax rate of 20%; however, their gain attributable to
straight-line depreciation deductions is taxed at a federal income tax rate of
25%. The maximum federal income tax rate for other income of such persons is
39.6%. Capital losses can offset capital gains but not ordinary income, even if
ordinary income is realized on the sale, except that non-corporate taxpayers may
deduct up to $3,000 of their capital losses for the year in excess of their
total capital gains for the year against their ordinary income. Therefore, if
you have a net capital loss for the year of sale, such loss could offset up to
$3,000 of ordinary income that you realize on a sale of your units in our offer.
An individual's long-term capital losses in excess of his long-term capital
gains can offset his short-term capital gains on which he would
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otherwise be subject to tax at the same federal income tax rates as his 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); in addition, corporations,
but not non-corporate taxpayers, are allowed to carry back excess capital losses
to the three preceding taxable years.
Under special tax rules applicable to "passive activity losses," if you
are a non-corporate taxpayer or closely held corporation, you generally cannot
use your losses from your partnership's passive activities to offset your
non-passive activity income. As a result, you may have suspended passive
activity losses from your partnership. Such losses would first be applied to
offset any ordinary income that you realize on a sale of your units in our
offer. If you sell all your units in our offer, then your remaining suspended
passive activity losses (if any) from your partnership, as well as any loss you
recognize on the sale of your units in our offer, generally could be deducted by
you in the year of sale (subject to any other applicable limitations). If you do
not sell all of your units, then your loss on the sale and your remaining
suspended passive activity losses (if any) from your partnership would be
deductible by you only to the extent of your passive activity income from your
partnership or from other sources.
In order to avoid liability for federal estimated tax penalties, an
individual generally is required to make quarterly estimated tax payments on
account of his annual tax liability. Penalties generally may be avoided by the
individual's paying at least 90% of his taxes due for the current year or a
percentage of his prior year's tax equal to 108.6% if the preceding tax year is
1999, 110% if the preceding tax year is 2000, 112% if the preceding tax year is
2001 and 110% if the preceding tax year is 2002 or thereafter. Accordingly, if
you are an individual and you elect to pay estimated taxes for 2000 equal to
108.6% of your tax liability for 1999, you would be able to defer payment of
taxes, if any, associated with a sale of your units until April, 2001, whereas
if you elect to pay estimated taxes for 2000 equal to 90% of your estimated tax
liability for 2000, you will have to make quarterly estimated tax payments on
account of your tax liability, if any, on a sale of your units in 2000.
Your partnership's assets are debt-financed. Accordingly, the foregoing
discussion of certain tax consequences of selling units in our offer generally
will be relevant to you, even if you are a tax-exempt investor, and should be
reviewed by you with your tax advisor. If you are a tax-exempt investor
described in section 501(c)(7), (c)(9), (c)(17) or (c)(20) of the Code, you also
should consult your tax advisor concerning the application of "set aside" and
reserve requirements to a sale of your units.
In addition to federal income tax, you may be subject to state and
local taxes on your gain (if any) on a sale of your units. You should consult
with your own professional tax advisors concerning the state and local tax
consequences of a sale of your units.
Information Reporting, Backup Withholding and FIRPTA. If you sell your
units, you must report the sale by filing a statement with your federal income
tax return for the year of sale. To prevent the possible application of back-up
federal income tax withholding of 31% with respect to the payment of the
purchase price, you will have to provide us with your correct taxpayer
identification number. See the instructions to the letter of transmittal.
If you are a foreign person (as defined in the Code), your gain, if
any, on the sale of your units in our offer will be subject to federal income
tax under the Foreign Investment in Real Property Tax Act, and we will be
required to deduct and withhold 10% of the amount realized by you on the sale.
Amounts withheld would be creditable against your federal income tax liability
and, if in excess thereof, you could obtain a refund from the Internal Revenue
Service by filing a U.S. federal income tax return. See the instructions to the
letter of transmittal.
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Section 7. Effects of the Offer.
Limitations on Resales. Under the partnership agreement, transfers of
units which in the opinion of counsel to your partnership would cause a
termination of your partnership for federal income tax purposes (which
termination may occur when 50% or more of the units are transferred in a
twelve-month period) are not permitted. Depending upon the number of units
tendered in our offer and the Sutter Offer, sales of units on the secondary
market for the twelve-month period following completion of our offer may be
limited. The partnership will not process any requests for transfers of units
during such twelve-month period which the general partners of your partnership
believe may cause a tax termination. In determining the number of units subject
to our offer, we took this restriction into account so as to permit historical
levels of transfers to occur after consummation of our offer without violating
this restriction.
Effect on Trading Market. There is no established public trading market
for the units and, therefore, a reduction in the number of limited partners
should not materially further restrict your ability to find purchasers for your
units through secondary market transactions.
Influence on Limited Partner Voting Decisions by Us and our Affiliates.
We will have the right to vote each unit that we purchase in the offer. Our
affiliates currently own 29.23% of the units. Depending on the number of units
that we purchase in the offer, we and our affiliates could be in a position to
control the outcome of voting decisions with respect to your partnership.
Accordingly, we and our affiliates could (i) prevent non-tendering limited
partners from taking action they desire but that we and our affiliates oppose
and (ii) take action desired by us and our affiliates but opposed by
non-tendering limited partners. Under the partnership agreement, limited
partners holding a majority of the units are entitled to take action with
respect to a variety of matters, including: removing your general partners;
dissolving your partnership; selling all or substantially all of your
partnership's assets; and causing most types of amendments to the partnership
agreement. When voting on matters, we and our affiliates will vote units owned
and acquired by us, in our interest, which, because of our affiliation with your
general partners, may also be in the interest of your general partners.
The units are registered under the Exchange Act, which means, among
other things, that your partnership is required to furnish certain information
to its limited partners and to the Commission and comply with the Commission's
proxy rules in connection with meetings of, and solicitation of consents from,
limited partners. Our purchase of units pursuant to the offer will not result in
the units becoming eligible for deregistration under Section 12(g) of the
Exchange Act.
Section 8. Future Plans. We are seeking to acquire units primarily for
investment purposes and with a view to making a profit. Following the completion
of our offer, we and/or persons related to or affiliated with us may acquire
additional units. Any such acquisition may be made through private purchases,
through one or more future tender 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 in our offer, and may be for cash or other consideration. We also
may consider disposing of some or all of the units in our offer to persons not
yet determined, which may include our affiliates. There can be no assurance,
however, that we will initiate or complete any subsequent transaction during any
specific time period following the expiration date or at all.
The development partnership's partnership agreement provides that if at
any time either your partnership or the general partner in the development
partnership believes in good faith that irreconcilable differences between them
prevent the development partnership from achieving its purposes, either your
partnership or the general partner may make a written offer to purchase the
partnership interest of the other. The offer shall set forth a definite price
based on a hypothetical sales price for the property then owned by the
development partnership, assuming the property was sold for cash subject to
existing debt and that all allocations and distributions were made to your
partnership and the general partner in accordance with the terms of the
development partnership's partnership agreement. The partner to whom an offer is
made shall have 30 days to elect to either sell its partnership interest
pursuant to the offer or to purchase for cash the interest of the other partner
on the same terms as the offer made. In order to enable your partnership to
receive as much as possible on account of a priority distribution of up to
approximately $32,967,000 ($9,322 per unit), your general partner is presently
considering exercising its rights under the buy-sell agreement. Your partnership
may not exercise its buy-sell rights without first obtaining the consent of the
holders of a majority of the outstanding units. We intend to vote any units
which we acquire in our offer in favor of authorizing the exercise of the
buy-sell rights if the consent of limited partners is sought. The general
partner of the development partnership has disputed your partnership's
entitlement to the priority distribution.
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Except as set forth in this Section 8, we do not have any present plans
or intentions with respect to an extraordinary transaction, such as a merger,
reorganization or liquidation, involving your partnership or a sale or
refinancing of any of your partnership's properties. However, we expect that
consistent with its fiduciary obligations, the general partner of your
partnership will review opportunities presented to it to engage in transactions
which could benefit your partnership, such as sales or refinancings of assets or
a combination of your partnership with one or more other entities, with the
objective of seeking to maximize returns to limited partners.
Section 9. Certain Information Concerning Your Partnership. As a result
of an ongoing dispute with the general partner of the development partnership,
since September 1997 your partnership had been unable to obtain the requisite
financial information needed to complete its financial statements. As a result,
your partnership has been unable to file its Annual Reports on Form 10-K for the
years ended December 31, 1997 and 1998 and its Quarterly Reports on Form 10-Q
for the fiscal quarters during 1998 and 1999. Your partnership has stated in its
Schedule 14D-9 filed in connection with the Sutter Offer that it has now
obtained additional information on the operations of the development partnership
and believes that within the next few weeks it will be able to deliver current
financial statements of your partnership.
Information included herein concerning your partnership is derived from
your partnership's publicly-filed reports and from other information delivered
to limited partners. Additional financial and other information concerning your
partnership is contained in your partnership's annual reports on Form 10-K,
quarterly reports on Form 10-Q and other filings with the Commission. Such
reports and other documents may be examined and copies may be obtained from the
offices of the Commission at 450 Fifth Street, N.W., Washington, D.C 20549, and
at the regional offices of the Commission located in the Northwestern Atrium
Center, 500 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
materials may also be reviewed through the Commission's Web site
(http://www.sec.gov).
Your partnership was originally organized on January 24, 1985 as a
Maryland limited partnership. On October 16, 1985, your partnership was
reorganized under the laws of the State of Delaware. Its principal executive
offices are located at 5 Cambridge Center, 9th floor, Cambridge, Massachusetts
02142. Its telephone number is (617) 234-3000. Your partnership was formed for
the purpose of acquiring its interests in the development partnership and an
operating partnership described below.
On November 30, 1999, your partnership received a letter from counsel
to the purchasers in the Sutter Offer notifying it of the Sutter Offer and
providing a copy of the offering materials related thereto. The letter also
contained a request that your partnership comply with certain provisions of the
Exchange Act by either providing the purchasers in the Sutter Offer with a list
of the name and address of, and the number of units held by, each limited
partner of your partnership, or agreeing to mail the Sutter Offer offering
materials to limited partners.
On December 2, 1999, a representative of your partnership telephoned a
representative of the purchasers in the Sutter Offer and stated that your
partnership would neither provide the requested list of limited partner
information nor agree to mail the Sutter Offer offering materials, and that a
letter from your partnership's legal counsel would be forthcoming.
On December 2, 1999, your partnership's legal counsel mailed a letter
written on behalf of your partnership to counsel for the purchasers in the
Sutter Offer. In the letter counsel indicated that (i) your partnership's
agreement of limited partnership required (A) the prior written consent of your
managing general partner to any assignment or transfer of units and (B) that any
transfer of units comply with applicable Federal securities laws, (ii) as a
result of the absence of current financial information with respect to your
partnership, your managing general partner will not consent to any transfer of
units made pursuant to the Sutter Offer, and (iii) the Sutter Offer does not
comply with the disclosure requirements of the Exchange Act applicable to tender
offers for limited partnership units, and, accordingly, your partnership is not
required to comply with the request received on November 30th.
On December 7, 1999, a representative of Sutter Opportunity Fund, LLC,
an affiliate of the purchaser in the Sutter Offer, appeared at your
partnership's office and delivered a letter demanding that they be permitted to
inspect and copy the register of holders of units pursuant to the provisions of
your partnership's limited partnership agreement and Delaware law. A
representative of your partnership advised them that your partnership needed to
consult with its counsel before responding.
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On December 8, 1999, Sutter Opportunity Fund, LLC commenced an action
in the Delaware Chancery Court against your partnership and one of its general
partners, Winthrop Financial Associates, A Limited Partnership ("WFA"), to
obtain a list of the limited partners of your partnership.
In a letter to limited partners dated December 9, 1999, your
partnership indicated that, in accordance with the provisions of your
partnership's partnership agreement, it had decided to restrict transfers of
units under the Sutter Offer based on its belief that the Sutter Offer violates
certain provisions of applicable securities laws and the absence of current
financial information on your partnership sufficient to enable limited partners
to make an informed decision as to whether to sell units. Your partnership also
recommended that limited partners reject the Sutter Offer and disclosed that an
affiliate of your general partners may be making an offer to purchase units at a
price substantially above the price provided for in the Sutter Offer.
On December 14, 1999, your partnership sent a letter to counsel for
Sutter Opportunity Fund, LLC rejecting the request to provide a list of limited
partners.
On December 21, 1999, your partnership's legal counsel informed the
purchaser in the Sutter Offer that (i) in view of the anticipated filing of your
partnership's Form 10-K for 1998, your partnership had agreed to mail the Sutter
Offer offering materials to limited partners and (ii) your partnership will not
consent to any transfer of units unless limited partners have previously
received the 1998 audited financial statements of your partnership.
Your Partnership's Current Investments. Your partnership was originally
organized for the purpose of owning (i) a 99% general partnership interest in,
and serving as a general partner of, Crow Winthrop Operating Partnership, a
Maryland general partnership (the "operating partnership"), and (ii) a limited
partnership interest in the development partnership. Your partnership
subsequently acquired in March 1992 a 99% limited partnership interest in
Winthrop California Management Limited Partnership, a Maryland limited
partnership ("WC Management").
The Operating Partnership. The operating partnership was originally
organized to acquire, own and operate an approximately 1.6 million square foot
office facility known as the Fluor Corporation World Headquarters Facility in
Irvine (Orange County), California (the "Headquarters Facility"). For various
reasons including the vacating of the Headquarters Facility by Fluor
Corporation, the operating partnership was unable to meet its debt obligations.
The operating partnership successfully negotiated a workout with the
holder of its mortgage indebtedness pursuant to which the operating partnership
filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code
on March 28, 1997. Pursuant to its approved Second Amended and Restated Plan of
Reorganization dated June 27, 1997 (the "Plan"), the operating partnership
contributed all of its assets and liabilities, including all of its right, title
and interest in the Headquarters Facility and $500,000 of unencumbered cash, to
Jamboree LLC, a newly formed Delaware limited liability company, in exchange for
an initial 10% ownership interest in Jamboree LLC. In addition, Jamboree LLC
paid to your partnership a $500,000 fee in connection with the Plan. Immediately
prior to the transfer by the operating partnership of its assets and liabilities
to Jamboree LLC, the operating partnership's existing mortgage indebtedness was
satisfied by (i) the forgiveness of approximately $93 million of the debt plus
interest accrued thereon and (ii) the issuance by the operating partnership of
two intermediate notes, one in the original principal amount of $4.5 million
(the "First Intermediate Note") and the second in the original principal amount
of $100 million (the "Second Intermediate Note"). Subsequent to the contribution
by the operating partnership of all of its assets and liabilities to Jamboree
LLC, the holders of the First Intermediate Note and the Second Intermediate Note
contributed the notes to Jamboree Office REIT which, in turn, contributed the
First Intermediate Note to Jamboree LLC in exchange for the remaining 90%
interest in Jamboree LLC. Jamboree LLC satisfied the Second Intermediate Note by
issuing the New Notes (as defined below) in the original principal amount of
$100 million in satisfaction of the $100 million outstanding balance.
In connection with the transactions contemplated by the Plan, the
operating partnership was granted the right (the "Exchange Right") to exchange
its interest in Jamboree LLC at any time after one year from the effectiveness
of the Plan (subject to certain exceptions) through March 27, 2002 for shares in
Jamboree Office REIT ("REIT Shares"). In general, the operating partnership may
exchange its 10% interest in Jamboree LLC for a fixed number of REIT Shares (on
a one-for-one basis), subject to adjustment, equal to 900,000 multiplied by the
operating partnership's then ownership percentage in Jamboree LLC. This number
currently equates to 90,000 REIT shares. Furthermore, the operating partnership
has the right to acquire additional equity interests in, or receive cash
payments from, Jamboree Office REIT (the "Property Appreciation Rights"). The
Property Appreciation Rights will be exercisable, if at all, at any time until
the close of business on March 27, 2002. In general, the Property
11
<PAGE>
Appreciation Rights entitle the operating partnership to purchase (i) REIT
Shares representing 10% of the equity value of Jamboree LLC for a purchase price
of $10,888,889 in the aggregate, if the fair market value of all of the issued
and outstanding REIT Shares equals or exceeds $98 million divided by Jamboree
Office REIT's interest in Jamboree LLC and (ii) REIT Shares representing 55% of
the equity value of Jamboree LLC for a purchase price of $152,777,778 in the
aggregate, if the fair market value of the issued and outstanding Shares equals
or exceeds $125 million divided by Jamboree Office REIT's interest in Jamboree
LLC. Alternatively, the operating partnership can purchase such additional REIT
Shares on a "cashless basis" by surrendering a portion of the REIT Shares to be
purchased in payment of the applicable purchase price. If the operating
partnership elects to exercise either of the Property Appreciation Rights,
Jamboree Office REIT has the option to deliver to the operating partnership in
lieu of the issuance of REIT Shares a cash payment equal to the difference
between the then current market value of the REIT Shares which would otherwise
be issued and the exercise price for such REIT Shares. We have been unable to
ascertain a market quotation for the REIT shares. However, based on our
valuation of the Headquarters Facility, we do not believe that the Property
Appreciation Rights currently have any value.
To satisfy the Second Intermediate Note, Jamboree LLC issued promissory
notes (the "New Notes") having an aggregate principal amount of $100,000,000 to
the then holders of the Second Intermediate Note. The New Notes are divided into
two tranches, the Class A Notes and the Class B Notes. The Class A Tranche had
an initial principal balance of $80,000,000, bears interest at 2.25% above the
interest rate on United States Treasury Bonds or Notes with a maturity date
closest to the Class A Notes and is payable in interest only for the first 36
months (provided, however, that payments of interest for a the first 12 month
period may be made by issuing additional Class A Notes) and thereafter, monthly
payments of interest and principal based on a 25-year amortization schedule. The
Class B Tranche had an initial principal balance of $20,000,000, bears interest
at 3.0% above the interest rate on United States Treasury Bonds or Notes with a
maturity date closest to the Class B Notes and is payable in interest only for
the first 36 months ( provided, however, that payments of interest for the first
48 months may be made by issuing additional Class B Notes) and thereafter,
monthly payments of interest and principal based on a 25-year amortization
schedule.
As security for the New Notes, among other things, Jamboree LLC granted
the holders of the New Notes a security interest on the Headquarters Facility
and the operating partnership executed a Pledge and Security Agreement pursuant
to which the operating partnership pledged its interest in Jamboree LLC to the
Class A Noteholders and the Class B Noteholders as collateral for the payment in
full of all amounts evidenced by the New Notes. If Jamboree LLC were to default
on its obligations under the New Notes, the Class A Noteholders and the Class B
Noteholders will have the right to foreclose on the operating partnership's
interest in Jamboree LLC. If this were to occur, your partnership would lose its
entire ownership interest in the Headquarters Facility.
The Headquarters Facility consists of eight buildings; a 10-story
tower, a single story concourse and six four-story buildings; containing, in the
aggregate, approximately 1,692,219 rentable square feet of space and
approximately 15 acres of land. The property is located in the Greater Airport
area of Irvine, California and is used principally by an engineering firm and as
various tenants' corporate headquarters.
12
<PAGE>
The following table sets forth those tenant's at the Headquarters
Facility that occupy 10% or more of the rentable square footage, business
conducted by the tenant, expiration date of the lease term, renewal options and
the 1999 annual rent for the leases:
<TABLE>
<CAPTION>
Lease Renewal 1999 Monthly
Tenant/Business Square Footage (%) Expiration Option(1) Base Rent
- --------------- ------------------ ---------- --------- ------------
<S> <C> <C> <C> <C>
ConAgra, Inc.(2) 384,117 (22.7%) 8/31/10 2-5 yr. (3)
Air Touch Cellular 189,265 (11.18%) 11/30/00 2-5 yr.(4) $246,045
Communication Services
Denny's Inc. 158,362 (9.36%) 7/24/04 3-5 yr. $214,841
Food service company(5)
Waban, Inc.(6) 57,208 (3.39%) 7/24/04 3-5 yr. $62,035
Home improvement retailer
</TABLE>
(1) The first number represents the number of renewal options. The
second number represents the length of each option.
(2) According to tenant's Annual Report on Form 10-K, ConAgra is a
diversified food company that operates across the food chain, from basic
agricultural inputs to production and sale of branded consumer products. Tenant
entered into lease on November 19, 1999.
(3) Tenant improvements are now under construction. Tenant is not
required to commence paying rent until September 2000 with respect to 262,648
square feet of space and December 1, 2000 with respect to 121,469 square feet of
space. Lease provides for the following rental payments
<TABLE>
<CAPTION>
262,648 Square Feet 121,469 Square Feet
------------------- -------------------
Rent Dates Monthly Rate Rent Dates Monthly Rate
---------- ------------ ---------- ------------
<S> <C> <C> <C>
9/1/00 to 8/31/01 $422,863 12/1/00 to 8/31/03 $176,130
9/1/01 to 2/28/03 $467,513 9/1/03 to 8/31/05 $193,136
3/1/03 to 8/31/05 $491,152 9/1/05 to 2/29/08 $202,853
9/1/05 to 2/29/08 $514,790 3/1/08 to 8/31/10 $213,785
3/1/08 to 8/31/10 $541,055
</TABLE>
(4) Tenant has advised WC Management that it does not intend to
exercise its renewal option.
(5) Tenant has subleased 106,676 square feet of space to Waban's and
the remainder of the space to one of its affiliates. The parent company of
Denny's, which filed for bankruptcy, guaranteed the lease.
(6) The space listed is in addition to the space subleased from Denny's
Inc.
13
<PAGE>
The following table sets forth the occupancy rates for the last five
years and the associated gross rental per square foot amount, as footnoted.
Percentage Average Annual Total
Occupancy Gross Rental Per SF
Year Rate(1) of Occupied Space (2)
---- ---------- ---------------------
1994 99.5% 23.59
1995 95.0% 23.08
1996 91.5% 23.34
1997 97.5% 20.51
1998 88.0% 21.33
(1) Occupancy rates are based on December 31 of indicated year and are not
yearly averages. The occupancy rate at November 30, 1999 (inclusive of
the lease with ConAgra, Inc.) was 92%.
(2) Calculated using operating revenues, including rent escalations and
other revenues, for the entire year divided by the total square footage
of occupied space (based on the occupancy rates reported in this
table). The average annual total gross rental per square foot of
occupied space at November 30, 1999 (exclusive of the lease with
ConAgra, Inc.) was $21.
The following table sets forth certain information concerning lease
expirations as of January 1, 1999 (assuming no renewals for this property for
the period from January 1, 1999 through December 31, 2008). The leases which
were scheduled to expire in 1999 have not been renewed.
<TABLE>
<CAPTION>
Aggregate SF
Number of Tenants Covered By Annualized Rentals Percentage of Total
Whose Leases Expire Expiring Leases for Leases Expiring($) Annualized Rental
------------------- -------------------- ---------------------- -------------------
<S> <C> <C> <C> <C>
1999 2 558,625 4,636,913 18.78
2000 12 254,762 3,251,518 15.31
2001 7 62,787 496,091 2.83
2002 11 70,882 590,059 3.66
2003 6 136,214 1,615,262 11.20
2004 5 311,887 3,765,864 36.13
2005 4 133,167 2,485,124 41.23
2006 0 0 0 0
2007 0 0 0 0
2008 0 0 0 0
</TABLE>
14
<PAGE>
Selected Financial Data. The following is a summary of certain
financial data for Jamboree LLC, the entity in which the partnership holds a
9.9% interest, for the periods indicated. The summary financial information for
Jamboree LLC for the years ended 1998 and 1997 is based on audited financial
statements delivered to your partnership's limited partners under cover of a
letter dated September 10, 1999. All figures are in thousands.
<TABLE>
<CAPTION>
------------ ----------------
Year ended October 3, 1997
December 31, through December
1998 31, 1997
------------ ----------------
<S> <C> <C>
Statements of Income:
Rent $24,709 $5,999
Common area expense reimbursement 8,886 1,855
Interest income 751 175
Other income 893 279
Total revenues 35,239 8,307
Total reimbursable common area expenses 13,321 3,332
Total nonreimbursable expenses 2,397 362
Total expenses 26,780 6,245
Net Income 8,459 2,062
Statements of Cash Flows
Cash and Cash Equivalents $23,237 $13,164
Net cash provided by operating activities 14,584 1,249
------------ ----------------
Year ended October 3, 1997
December 31, through December
1998 31, 1997
------------ ----------------
Total Assets $123,901 $112,686
Total Liabilities 118,475 107,930
Member's equity 5,426 4,755
</TABLE>
The Development Partnership. The development partnership was formed in
1985 for the purpose of acquiring, owning and developing approximately 122 acres
of land in Orange County, California. The general partner is Crow Irvine #2, a
California limited partnership and the limited partner is your partnership.
During 1997, the development partnership formed Shops at Park Place LLC
for the purpose of owning and operating a retail center. The development
partnership is the managing and sole member of Shops at Park Place LLC. During
1998, the development partnership formed Park Place Residential Realty LLC and
Park Place Residential Realty-Land LLC, for the purpose of reacquiring and
reselling approximately 32 acres of residential property located in Orange
County, California. The 32 acres were sold in 1998 for a gross sales price of
$50,000,000. In addition, during 1998, the development partnership formed 3121
Michelson Drive LLC and Park Place Hotel Company LLC and, in January 1998 formed
Park Place Parking Company LLC for the purposes of developing, owning and
operating a 150,000 square foot Class A office building, a luxury hotel and
parking structures, respectively. In 1999, Park Place Hotel signed a 20-year
operating agreement with a hotel operator. The development partnership is the
managing and sole member of each of these limited liability companies.
As previously mentioned, your partnership and the general partner of
the development partnership have had continuing and ongoing acrimonious disputes
resulting in extensive litigation regarding the development partnership. The
claims and counterclaims brought by your partnership and the general partner of
the development partnership are as follows:
1. Crow Winthrop Development Limited Partnership, et al. v. Winthrop
California Investors Limited Partnership, et al., Civil Action No. 174570,
Circuit Court of Montgomery County, Maryland. In August 1997, the development
partnership and its general partner Crow Irvine #2 ("Crow") sued your
partnership and its general partners seeking a declaratory judgment and
injunctive relief to prevent your registrant from converting the operating
partnership, in which your partnership and Crow were partners, from a general
partnership to a limited
15
<PAGE>
partnership and from converting Crow to a limited partner. The plaintiffs also
sought unspecified damages. Upon the filing of the action, the Court granted a
temporary restraining order in favor of the plaintiffs. In October 1997, after
hearing, the Court refused to grant a preliminary injunction in favor of the
plaintiffs and the temporary restraining order expired. The operating
partnership thereafter was converted to a limited partnership with Crow as its
limited partner. An answer was filed on behalf of your partnership and each of
the parties has served written discovery. The court thereafter stayed the action
due to the pendency of actions in California involving the parties or their
affiliates. The stay has now expired and on November 3, 1999 the Court dismissed
the action without prejudice.
2. Crow Winthrop Development Limited Partnership and Crow Orange County
Management Company, Inc. v. Winthrop California Management Limited Partnership,
Superior Court of California, County of Orange, Docket No. 789429. In January
1998, WC Management was named as a defendant in an action seeking declaratory
relief that certain agreements between the parties have been terminated and that
plaintiff has the exclusive right to manage the common areas of certain
contiguous parcels of real estate containing office and retail space located in
Irvine, California. In the alternative, the plaintiffs seek a declaration that
WC Management perform certain tasks and be prevented from assessing certain
charges in connection with its management of the common areas. The action was
removed to federal court and transferred to the Bankruptcy Court which, in April
1998, granted summary adjudication in favor of WC Management on plaintiffs'
termination claims. The plaintiffs did not appeal from that decision. The
remainder of the claims were thereafter remanded to state court. Plaintiffs'
alternative claims for declaratory relief concerning performance issues related
to the management of the subject property remain pending. The case was
transferred to the complex litigation panel of the Orange County Superior Court
and deemed related to two other actions which involve the same subject property.
WC Management is not a party to those other actions.
On or about September 24, 1999, the plaintiffs were granted the right
to file an amended complaint. The amended complaint is not substantively
different from the original complaint, and the only relief sought is declaratory
relief. An answer was filed on behalf of WC Management and Winthrop Management,
LLC on or about October 22, 1999. Discovery is ongoing, and several of the
plaintiffs' claims are now moot.
There are two motions pending which seek the consolidation of this
action with other pending actions involving the same subject property. One
motion filed on or about October 21, 1999, by the plaintiffs in this action
seeks to consolidate this action with an action captioned as Crow Winthrop
Development Limited Partnership, a Maryland limited partnership, and Crow Orange
County Management Company, Inc., a Texas corporation vs. Jamboree LLC, a
Delaware limited liability company, OCSC Case No. 813915.
The second motion filed by Jamboree LLC on or about November 12, 1999,
in one of the other currently pending actions, in which your partnership is not
a party, seeks to consolidate this action with the same action for which
consolidation is sought in the first motion to consolidate (OCSC Case No.
813915) and with three additional cases: Crow Winthrop Development Limited
Partnership v. Jamboree LLC, et al., OCSC Case No. 789562; Crow Winthrop
Development Limited Partnership v. Jamboree LLC, et al., OCSC Case No. 791662;
and Jamboree LLC v. Crow Winthrop Development Limited Partnership, Crow Orange
County Management Company, Inc., et al., OCSC Case No. 806526. WC Management has
filed notices that it does not oppose these motions to consolidate.
3. Winthrop California Investors Limited Partnership v. Crow Winthrop
Development Limited Partnership, Civil Action No. 178303, Circuit Court of
Montgomery County, Maryland. In October 1997, your partnership brought suit
against the development partnership and its general partner seeking declaratory
and injunctive relief to allow your partnership to exercise its rights as a
limited partner in the development partnership to audit the development
partnership's books and records and seeking damages for the development
partnership's past refusals to allow such access. In January 1998, the Court
granted partial summary judgment in favor of your partnership, declaring and
ordering that your partnership has the right to inspect and audit the
development partnership's books, records and files. Your partnership's auditors
thereafter reviewed certain of the development partnership's books and records
but were not permitted to review all of the books and records necessary to
complete audited financial statements. After obtaining access to the development
partnership's books and records, your partnership voluntarily dismissed its
claim for breach of fiduciary duty based on the development partnership's past
refusals to allow your partnership access.
4. Winthrop California Investors Limited Partnership v. Crow Winthrop
Development Limited Partnership, Superior Court of California, County of Orange,
Case No. 812346. In January 1999 your partnership brought suit in Maryland
against the development partnership, its general partner, the general partner of
the
16
<PAGE>
development partnership's general partner, and the general partner of that
entity alleging claims for breach of the development partnership's partnership
agreement, breach of fiduciary duty, and conversion and requested that a
receiver be appointed to conduct the business of the development partnership.
Your partnership sought approximately $9 million in damages resulting from
wrongful distributions of capital proceeds of the development partnership in
connection with a 1998 sale of real estate by the development partnership.
The defendants filed a motion to dismiss the action claiming that they
are not subject to personal jurisdiction in Maryland and that Maryland is an
inconvenient forum. Defendants argued that the action should proceed in
California, if at all. The court in Maryland granted the defendants' motion on
the ground of inconvenient forum in July, 1999.
Your partnership thereafter filed substantially the same claims in
California, with the above-caption. The defendants filed a demurrer to the
complaint, arguing that it should be dismissed for a variety of reasons. The
court overruled the defendants' demurrer on September 24, 1999. On or about
November 5, 1999, the defendants filed their answer in which they alleged a
general denial to the allegations of the complaint. The case is now in
discovery.
5. Winthrop California Investors Limited Partnership v. Crow Winthrop
Development Limited Partnership, et al.,/Crow Winthrop Development Limited
Partnership and Crow Irvine #2 v. Winthrop California Investors Limited
Partnership, et al., United States District Court for the Central District of
California, Southern Division, Case No. SACV99-1519 GLT (ANx). On or about
November 5, 1999, the development partnership and its general partner filed a
cross-complaint in the action described in numbered paragraph 4 above,
purporting to allege claims for breach of fiduciary duty, aiding and abetting
breach of fiduciary duty and unfair business practices. Your partnership and
certain affiliates, as well as several unaffiliated entities are named as
cross-defendants in the cross-complaint. In summary, the cross-complaint appears
to allege that the cross-defendants have engaged in a conspiracy to fraudulently
acquire and manipulate the management positions of numerous partnerships to
their benefit and in particular have done so with respect to the operating
partnership, which the cross-claimants allege was improperly forced into
bankruptcy to the alleged detriment of the cross-claimants. The cross-claimants
also allege that your partnership in its capacity as a limited partner in the
development partnership has breached its alleged fiduciary duties to the
development partnership by allegedly participating in or filing lawsuits, in
order to hinder the development of the development partnership's land; failing
to abide by agreements; and by disclosing proprietary information concerning the
development partnership.
On December 8, 1999, your partnership and others removed the
cross-complaint to the United States District Court for the Central District of
California, Southern Division seeking the reference of the cross-complaint to
the United States Bankruptcy Court for the Central District of California where
the operating partnership bankruptcy proceeding remains open.
17
<PAGE>
Selected Financial Data. The following is a summary of certain
financial data for the development partnership, the entity in which your
partnership holds a 25% interest, for the years ended 1998 and 1997. The summary
financial information provided for the development partnership is based on
audited financial statements. All figures are in thousands.
<TABLE>
<CAPTION>
Year Ended
-----------------------------------
1998 1997
---- ----
<S> <C> <C>
Minimum rents $2,779 $2,436
Operating expense recoveries 2,000 1,915
Percentage rents 285 226
Parking 140 208
Other revenues 22 32
Total revenues 5,226 4,816
Total operating costs and expenses 6,077 4,937
Operating Loss (851) (121)
Other income (expense)
Interest expense (1,704) (1,490)
Interest income 935 308
Gain on sale of residential property 42,952 --
Other 3,340 --
Net income (Loss) $44,673 $(1,304)
Statements of Cash Flows
Cash and Cash Equivalents $26,563 $4,727
Net cash provided by operating activities (2,151) 731
<CAPTION>
Year Ended
-----------------------------------
1998 1997
---- ----
<S> <C> <C>
Balance Sheet Data:
Total Assets $105,678 $79,035
Total Liabilities 40,499 52,065
Total partners' capital 65,180 26,970
</TABLE>
WC Management Your partnership holds a 99% limited partnership interest
in WC Management. WC Management has the right to perform management and leasing
functions at the Headquarters Facility. WC Management has, in turn, contracted
with Winthrop Management, LLC, an affiliate of your general partners, to provide
such services. See "Section 10. Conflicts of Interest and Transaction with
Affiliates." WC Management is entitled to receive a fee of 2% of gross receipts
from the Headquarters Facility. From this amount, WC Management reimburses
Winthrop Management LLC for the compensation paid by Winthrop Management LLC to
certain senior level on-site employees as well as for accounting and other
support functions performed off-site by Winthrop Management. Additionally, WC
Management will receive certain incentive fees based on reductions it is able to
achieve, if any, with respect to certain operating and other expenses. Leasing
commission payments, consistent with prevailing market rates, will be paid to WC
Management for all third-party leases it procures for the Headquarters Facility.
Section 10. Conflicts of Interest and Transactions with Affiliates.
Your general partners have certain conflicts of interest with respect to the
offer as set forth below.
Voting by Us and Our Affiliates. As a result of the offer, we and our
affiliates may be in a position to influence the outcome of partnership
decisions on which limited partners may vote. This means that (i) non-tendering
limited partners could be prevented from taking action they desire but that we
and our affiliates oppose and (ii) we and our affiliates may be able to take
action desired by us and our affiliates but opposed by non-tendering limited
partners. (See "Section 7. Effects of the Offer".)
18
<PAGE>
Transactions with Affiliates.
Certain Relationships. Your general partners are Three Winthrop
Properties, Inc. and WFA. Affiliates of your general partners own 1,023 Units
representing approximately 29.2% of the outstanding units, and are allocated or
receive approximately 29.2% of profit and loss and distributions allocated or
distributed to holders of units. The foregoing units have been pledged to a
lending institution as security for a loan.
In addition, under the terms of your partnership's Agreement of Limited
Partnership, your general partners and their affiliates are entitled to receive
certain cash distributions from, and be allocated taxable profits and losses of,
your Partnership. In addition, your general partners and their affiliates
receive certain fees and compensation for services rendered in connection with
the operations of your partnership.
In this regard, your partnership is required to pay WFA an annual asset
management fee of $750,000, which was paid in respect of each of 1998, 1997 and
1996. Your partnership has paid $562,500 in respect of the asset management fee
for the nine months ended September 30, 1999.
In addition, an affiliate of your general partners holds a 1% general
partnership interest in WC Management, the entity that acquired the right to
manage the Headquarters Facility owned by Jamboree LLC. Your partnership holds a
99% limited partnership interest in WC Management and an indirect 9.9% interest
in Jamboree LLC. The affiliate of your general partners which is the general
partner of WC Management received distributions of $14,384, $16,076 and $12,380
for 1998, 1997 and 1996, respectively, in respect of its 1.0% interest. WC
Management has retained Winthrop Management LLC, an affiliate of your general
partners, to perform management and leasing services at the Headquarters
Facility. WC Management is entitled to receive a fee of 2% of gross receipts
from the Headquarters Facility. From this amount, WC Management reimburses
Winthrop Management LLC for the compensation paid by Winthrop Management LLC to
certain senior level on-site employees as well as for accounting and other
support functions performed off-site by Winthrop Management LLC. WC Management
is also entitled to receive (i) certain incentive fees based on reductions it is
able to achieve, if any, in certain operating and other expenses and (ii)
leasing commissions, consistent with prevailing market rates, for all
third-party leases it procures for the Headquarters Facility.
Section 11. Certain Information Concerning Us. We were organized for
the purpose of acquiring the units as well as units in other partnerships. Our
principal executive office and the principal executive office of our manager,
WIN Manager Corp., is at 5 Cambridge Center, 9th Floor, Cambridge, Massachusetts
02142. We are indirectly 100% owned by Apollo Real Estate Investment Fund IV,
L.P. ("Apollo Fund IV"), an investment fund organized in 1999 to make direct and
indirect investments in real estate assets, joint ventures and operating
companies, and an entity owned by certain officers and employees of the general
partner of your partnership. See "Section 13, Background of the
Offer-Affiliation with General Partner
For certain information concerning the directors and executive officers
of the WIN Manager Corp., see Schedule 1 to this offer to purchase..
Except as otherwise set forth herein, (i) neither we, the manager, to
the best of our knowledge, the persons listed on Schedule 1, nor any affiliate
of the foregoing beneficially owns or has a right to acquire any units, (ii)
neither we, the manager, to the best of our knowledge, the persons listed on
Schedule 1, nor any affiliate thereof or director, executive officer or
subsidiary of the manager has effected any transaction in the units within the
past 60 days, (iii) neither we, the manager, to the best of our knowledge, any
of the persons listed on Schedule 1, nor any director or executive officer of
the manager has any contract, arrangement, understanding or relationship with
any other person with respect to any securities of your partnership, including,
but not limited to, contracts, arrangements, understandings or relationships
concerning the transfer or voting thereof, joint ventures, loan or option
arrangements, puts or calls, guarantees or loans, guarantees against loss or the
giving or withholding of proxies, (iv) there have been no transactions or
business relationships which would be required to be disclosed under the rules
and regulations of the Commission between any of us, the manager, to the best of
our knowledge, the persons listed on Schedule 1, on the one hand, and your
partnership or its affiliates, on the other hand, and (v) there have been no
contracts, negotiations or transactions us, the manager, to the best of our
knowledge, the persons listed on Schedule 1, on the one hand, and your
partnership or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets.
19
<PAGE>
Section 12. Source of Funds. We expect that approximately $2,768,000
(exclusive of fees and expenses) will be required to purchase all of the 1,384
units we are seeking in this offer. We plan to obtain the funds necessary to
consummate the offer (including fees and expenses) from capital contributions
from our members who have an aggregate net worth substantially greater than the
amount required to purchase the units.
Section 13. Background of the Offer.
Affiliation With the General Partner. The general partner of your
partnership is indirectly controlled by Apollo Real Estate Investment Fund, L.P.
("Apollo Fund I") and Apollo Real Estate Fund II, L.P. ("Apollo Fund II").
Apollo Fund I and Apollo Fund II are investment funds organized in 1993 and
1996, respectively, to make direct and indirect investments in real estate
assets, joint ventures and operating companies. The general partner of Apollo
Fund IV is an affiliate of the general partner of Apollo Fund I and the general
partner of Apollo Fund II. In addition, certain officers and employees of the
general partner of your partnership indirectly own an interest in us. As a
result of these affiliations, we are affiliated with the general partner of your
partnership.
Establishment of Purchase Price. We are offering to purchase units
which are a relatively illiquid investment and which do not presently generate
current income. We are not offering to purchase your partnership's underlying
assets. Consequently, we do not believe that the underlying asset value of your
partnership is determinative in arriving at the purchase price. Nevertheless, as
set forth below, we have determined an estimated liquidation value for your
partnership.
With respect to your partnership's interest in Jamboree LLC, we
utilized an income capitalization methodology to determine a liquidation value
for the Headquarters Facility owned by Jamboree LLC. This method involves
applying a capitalization rate to the property's net operating income (revenues
less operating expenses). A capitalization rate is a percentage (rate of return)
commonly applied by purchasers of properties to net operating income to
determine the value of income producing real property. In our valuation we
increased net operating income for the 12 months ended November 30, 1999 by the
amount of non-operating legal costs incurred by Jamboree LLC and decreased net
operating income by a reserve ($.50 per square foot) for leasing commissions and
tenant improvements. We then applied a 10.5% capitalization rate to the adjusted
net operating income and deducted from the resulting amount estimated costs of
selling the Headquarters Facility (3% of gross property value) as well as the
debt encumbering the Headquarters Facility at November 30, 1999. Using this
methodology, we derived a value for the Headquarters Facility of $41,563,045. We
then adjusted the resulting amount to deduct the deficit in net current assets
of Jamboree LLC and to reflect the fact that your partnership holds a 9.9%
indirect interest in the Jamboree LLC. The resulting value of your partnership's
interest in Jamboree LLC is $3,748,948 or $1,060 per unit. We utilized a 10.5%
capitalization rate because the value of the Headquarters Facility has been
adversely affected by disputes with the development partnership as reflected by
the significant legal costs referred to above and your partnership has a
minority position in Jamboree LLC with no ability to control the sale of the
Headquarters Facility.
The development partnership owns approximately 90 acres of land, a
portion of which has been developed. Your partnership has been unable to obtain
detailed information on the operations of the development partnership.
Accordingly, we are unable to value the development partnership based on an
analysis of its operations. Therefore, we valued the development partnership by
initially utilizing a gross value of $1,562,500 per acre for each of the
approximately 90 acres owned by the development partnership. The foregoing value
was based on the gross price obtained by the development partnership in
connection with a 1998 sale of 32 acres. Based on this valuation, we derived an
initial gross value for the development partnership of $140,625,000. We believe
that there are significant zoning, parking and use restrictions which detract
from the value of the property owned by the development partnership. As a
result, we believe that a more appropriate valuation would reflect a $65,000,000
discount for a net valuation of $75,625,000. The 1998 financials of the
development partnership indicate, based on a substantially similar valuation,
that your partnership could receive as much as approximately $42,700,000 for its
interest in the development partnership. However, in view of the provisions of
the partnership agreement of the development partnership relating to
distributions of capital proceeds, we do not believe it is likely that your
partnership would realize more than a maximum of $32,957,000 (which represents
the amount of a priority distribution) for your partnership's interest in the
development partnership regardless of which of the foregoing valuations is
utilized. Furthermore, the general partner of the development partnership has
disputed your partnership's interpretation of the distribution provisions.
20
<PAGE>
As a result of the foregoing analysis we utilized the $75,625,000
valuation for the property, deducted the outstanding debt balance, added the net
current assets of the development partnership as of December 31, 1998 and
derived a value for the development partnership of $63,166,374. As set forth
above, out of the foregoing amount we believe your partnership would be entitled
to receive a maximum of $32,957,000 or approximately $9,322 per unit. However,
in determining a liquidation value for your partnership we discounted the value
by 80% to a net liquidation value of $6,591,400 or $1,864 per unit. We believe
that it is appropriate to provide for this discount because of the following
factors: (1) the general partner of the development partnership has disputed
your partnership's interpretation of the distribution provisions of the
partnership agreement, (2) the amount your partnership is entitled to receive in
liquidation would in any event depend upon adjusted capital account balances at
that time, and we do not have sufficient information to calculate these adjusted
balances, (3) depending upon the foregoing calculations, your partnership may
receive substantially less than $32,957,000 on a liquidation of the development
partnership, (4) your partnership has been, and continues to be, engaged in a
series of disputes with the general partner of the development partnership, (5)
as a result of the foregoing disputes, your partnership and the development
partnership have been, and will continue to be, required to incur significant
legal expenses, (6) the general partner of the development partnership has
failed to distribute to your partnership amounts which your general partner
believes your partnership is entitled to receive, and (7) your partnership is a
limited partner in the development partnership owning a minority position with
no significant control rights.
We attributed no value to your partnership's interest in WC Management.
WC Management derives all of its revenues from performing managing and leasing
services at the Headquarter Facility. Those services would terminate in the
event a sale of the Headquarters Facility.
21
<PAGE>
To determine the estimated liquidation value of your partnership, we
added to the value we attributed to your partnership's interest in Jamboree LLC
and the development partnership the cash balances of your partnership as of
December 1, 1999 (net of $1,000,000 of estimated reserves required to wind up
your partnership). The resulting estimated liquidation value of your partnership
is $12,421,593, or $3,514 per unit (based upon the percentage of proceeds to
which limited partners are entitled to receive). The following chart summarizes
our determination of the estimated liquidation value of your partnership.
<TABLE>
<CAPTION>
1. Jamboree LLC
<S> <C> <C> <C>
Net operating income for the 12 Months
ended 11/30/99 $ 13,576,749
Non-operating legal costs 3,032,101
Reserve for leasing commissions and
tenant improvements (846,110)
------------
Adjusted net operating income $ 15,762,740
Gross asset value utilizing
10.5% capitalization rate $150,121,333
Outstanding debt at 11/30/99 (104,054,644)
------------
Net asset value $ 46,066,689
Liquidation costs (4,503,640)
------------
Liquidation proceeds $ 41,563,049
Net current assets (3,694,885)
------------
Net liquidation value $ 37,868,164
Your partnership's share of net liquidation value $ 3,748,948
2. Development partnership
Land value $140,625,000
Discount for use restrictions 65,000,000
------------
Net land value $ 75,625,000
Outstanding debt as of 12/31/98 (37,658,711)
Net current assets at 12/31/98 25,200,085
------------
Liquidation value $ 63,166,375
Your partnership's share of liquidation value $ 32,956,692
Discount attributable to uncertainty
of realizing liquidation value (26,365,354)
------------
Net liquidation value $ 6,591,338
3. Your partnership
Cash balance of your partnership
at 12/1/99 $ 3,081,245
Reserves to wind up your partnership (1,000,000)
------------
Net cash $ 2,081,231
------------
Liquidation Value $ 12,421,593
Per unit liquidation value $ 3,514
</TABLE>
We believe that the above methodology is an appropriate method for
determining the liquidation value of your partnership. The utilization of
different valuation methods, capitalization rate or assumptions also could be
appropriate. In this regard, you should be aware that (i) the use of lower
discount rates in valuing the Headquarters Facility would result in a higher
value, and (ii) the favorable settlement of the disputes involving the
development partnership would significantly increase the value of your
partnership's interest in the development partnership. Furthermore, you should
understand that other appropriate valuation methods could yield a higher value.
22
<PAGE>
The purchase price represents the price at which we are willing to
purchase the units. No independent person has been retained to evaluate or
render any opinion on the fairness of the offer price and no representation is
made by us, or the general partner of your partnership as to the fairness of our
offer. We did not, nor did the general partners of your partnership, attempt to
obtain a current independent valuation or appraisal of your partnership's
assets. You are urged to consider carefully all of the information contained
herein and consult with your own advisors, tax, financial or otherwise, in
evaluating the terms of our offer before deciding whether to tender your units.
Secondary Market. According to your partnership's annual report on Form
10-K, there is no established public trading market for units. Trading in units
is sporadic and occurs through private transactions. Based on information
provided by your general partners, the only transfers of units that have
occurred within the last year, other than transfers by operation of law, were
the 128 units acquired by Sutter Opportunity Fund, LLC for a purchase price of
$750 per unit.
Partnership Makes No Recommendation. Your partnership is making no
recommendation as to whether limited partners should tender their units.
Section 14. Conditions of the Offer. Notwithstanding any other term of
our offer, we shall 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 our offer shall not have been filed, occurred or
been obtained. Furthermore, notwithstanding any other term of our offer, we
shall 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 our offer as to such
units if, at any time on or after the date of our offer and before the
acceptance of such units for payment or the payment therefore, 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 our offer
or the acceptance for payment of or payment for any units by us, (ii) imposes or
confirms limitations on our ability to effectively exercise full rights of
ownership of any units, including, without limitation, the right to vote any
units acquired by us in our offer or otherwise on all matters properly presented
to your partnership's limited partners, (iii) requires divestiture by us of any
units, (iv) causes any material diminution of the benefits to be derived by us
as a result of the transactions contemplated by our offer, or (v) might
materially adversely affect our or your partnership's business, properties,
assets, liabilities, financial condition, operations, results of operations or
prospects ;
(b) there shall be any action taken, or any statute, rule,
regulation or order proposed, enacted, enforced, promulgated, issued or deemed
applicable to our 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 hereof, in the business, properties, assets,
liabilities, financial condition, operations, results of operations or prospects
of your partnership, which, in our reasonable judgment, is or may be materially
adverse to your partnership, or we shall have become aware of any fact that, in
our reasonable judgment, does or may have a material adverse effect on the value
of the units;
(d) there shall have been threatened, instituted or pending
any action or proceeding before any court or government agency or other
regulatory or administrative agency or commission or by any other person
challenging the acquisition of any units in our offer, or otherwise directly or
indirectly relating to our offer, or otherwise, in our reasonable judgment,
adversely affecting us or your partnership;
(e) your partnership shall have (i) issued, or authorized or
proposed the issuance of, any partnership interests of any class, or any
securities convertible into, or rights, warrants or options to acquire, any such
interests or other convertible securities, (ii) issued or authorized or proposed
the issuance of any other securities, in respect of, in lieu of, or in
substitution for, all or any of the presently outstanding units, (iii)
refinanced any of your partnership's properties, other than in the ordinary
course of your partnership's business and consistent
23
<PAGE>
with the past practice, (iv) declared or paid any distribution, other than in
cash and consistent with past practice, on any of its partnership interests, or
(v) your partnership or the general partner of your partnership shall have
authorized, proposed or announced its intention to propose any merger,
consolidation or business combination transaction, acquisition of assets,
disposition of assets or material change in its capitalization, or any
comparable event not in the ordinary course of business and consistent with past
practice; or
(f) 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 a limitation on the markets thereof, or (vi) in the case of any of
the foregoing existing at the time of the commencement of our offer, a material
acceleration or worsening thereof.
The foregoing conditions are for our sole benefit and may be asserted
by us regardless of the circumstances giving rise to such conditions or may be
waived by us in whole or in part at anytime and from time to time in our sole
discretion. Any determination by us concerning the events described above will
be final and binding upon all parties.
Section 15. Certain Legal Matters.
General. Except as set forth in this Section 15, we are 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 us in our offer. Should any such approval or other action be required,
it is our present intention that such additional approval or action would be
sought. While there is no present intent to delay the purchase of units tendered
in our offer pending receipt of any such additional approval or the taking of
any such action, there can be no assurance that any such additional approval or
action, if needed, would be obtained without substantial conditions or that
adverse consequences might not result to your partnership's business, or that
certain parts of your partnership's business might not have to be disposed of or
held separate or other substantial conditions complied with in order to obtain
such approval or action, any of which could cause us to elect to terminate our
offer without purchasing units hereunder. Our obligation to purchase and pay for
units is subject to certain conditions, including conditions related to the
legal matters discussed in this Section 15.
Antitrust. We do not believe that the Hart-Scott-Rodeo Antitrust
Improvements Act of 1976, as amended, is applicable to the acquisition of units
contemplated by our offer.
Margin Requirements. The units are not "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly such regulations are not applicable to our offer.
State Takeover Laws. A number of states have adopted anti-takeover laws
which purport, to varying degrees, to be applicable to attempts to acquire
securities of corporations which are incorporated in such states or which have
substantial assets, security holders, principal executive offices or principal
places of business therein. Although we have not attempted to comply with any
state anti-takeover statutes in connection with our offer, we reserve the right
to challenge the validity or applicability of any state law allegedly applicable
to our offer and nothing in this offer to purchase nor any action taken in
connection herewith is intended as a waiver of such right. If any state
anti-takeover statute is applicable to our offer, we might be unable to accept
for payment or purchase units tendered in our offer or be delayed in continuing
or consummating our offer. In such case, we may not be obligated to accept for
purchase or pay for any units tendered.
Section 16. Fees and Expenses. Except as set forth in this Section 16,
we will not pay any fees or commissions to any broker, dealer or other person
for soliciting tenders of units in our offer. We will pay all costs and expenses
of printing and mailing our offer and its legal fees and expenses. You will be
responsible for the payment of any fees charged by your broker for assisting you
in tendering your units or any fee charged by a custodian or other trustee of an
Individual Retirement Account or profit sharing plan that is the record owner of
your units.
24
<PAGE>
Section 17. Miscellaneous. We are not aware of any jurisdiction in
which the making of our offer is not in compliance with applicable law. If we
become aware of any jurisdiction in which the making of our offer would not be
in compliance with applicable law, we will make a good faith effort to comply
with any such law. If, after such good faith effort, we cannot comply with any
such law, our offer will not be made to (nor will tenders be accepted from or on
behalf of) the holders of units residing in such jurisdiction.
No person has been authorized to give any information or to make any
representation on our behalf not contained herein or in the letter of
transmittal and, if given or made, such information or representation must not
be relied upon as having been authorized.
We have filed with the Commission a Schedule 14D-1, pursuant to Rule
14d-3 under the Exchange Act, furnishing certain additional information with
respect to our offer, and may file amendments thereto. The Schedule 14D-1and any
amendments thereto, including exhibits, may be inspected and copies maybe
obtained at the same places and in the same manner as set forth in Section 9
hereof (except that they will not be available at the regional offices of the
Commission).
January 3, 2000 Quadrangle Associates II LLC
25
<PAGE>
OFFICERS AND DIRECTORS
----------------------
The names and positions of the executive officers of and directors of
WIN Manager Corp. (the "Manager"), the manager of Quadrangle Associates II
L.L.C. as set forth below. Each of the executive officers is also an executive
officer of the general partner of your partnership and Michael L. Ashner is the
sole director of the general partner of your partnership. The business address
of Michael L. Ashner and Peter Braverman is 100 Jericho Quadrangle, Suite 214,
Jericho, New York 11753. The business address of the other executive officers is
5 Cambridge Center, 9th Floor, Cambridge, Massachusetts 02142. Each executive
officer and director is a citizen of the United States of America.
Michael L. Ashner, age 47, has been the Chief Executive Officer and
sole director of the Manager since its formation in July 1999. Mr. Ashner also
serves as the Chief Executive Officer of Winthrop Financial Associates, A
Limited Partnership ("WFA") and its affiliates, positions he has held since
January 15, 1996, as well as the Chief Executive Officer of The Newkirk Group.
From June 1994 until January 1996, Mr. Ashner was a Director, President and
Co-chairman of National Property Investors, Inc., a real estate investment
company ("NPI"). Mr. Ashner was also a Director and executive officer of NPI
Property Management Corporation ("NPI Management") from April 1984 until January
1996. In addition, since 1981 Mr. Ashner has been President of Exeter Capital
Corporation, a firm which has organized and administered real estate limited
partnerships.
Thomas C. Staples, age 43, has been the Chief Financial Officer of the
Manger since its formation in July 1999. Since January 1, 1999, Mr. Staples has
served as the Chief Financial Officer of WFA. Mr. Staples also serves as the
Chief Financial Officer of The Newkirk Group. From March 1996 through December
1998, Mr. Staples was Vice President/Corporate Controller of WFA. From May 1994
through February 1996, Mr. Staples was the Controller of the Residential
Division of Winthrop Management.
Peter Braverman, age 47, has been the Executive Vice President of the
Manager since its inception. In addition, Mr. Braverman has served as the
Executive Vice President of WFA and its affiliates since January 1996. Mr.
Braverman also serves as the Executive Vice President of The Newkirk Group. From
June 1995 until January 1996, Mr. Braverman was a Vice President of NPI and NPI
Management. From June 1991 until March 1994, Mr. Braverman was President of the
Braverman Group, a firm specializing in management consulting for the real
estate and construction industries. From 1988 to 1991, Mr. Braverman was a Vice
President and Assistant Secretary of Fischbach Corporation, a publicly traded,
international real estate and construction firm.
Carolyn Tiffany, age 32, has been the Chief Operating Office of the
Manger since its inception. Ms. Tiffany has also been employed with WFA since
January 1993. From 1993 to September 1995, Ms. Tiffany was a Senior Analyst and
Associate in WFA's accounting and asset management departments. Ms. Tiffany was
a Vice President in the asset management and investor relations departments of
WFA from October 1995 to December 1997, at which time she became the Chief
Operating Officer of WFA. In addition, Ms. Tiffany is the Chief Operating
Officer of The Newkirk Group.
<PAGE>
The letter of transmittal and any other required documents should be
sent or delivered by you or your broker, dealer, commercial bank, trust company
or other nominee to us at our address set forth below:
<TABLE>
<CAPTION>
<S> <C>
Via U.S. Mail or overnight Courier: Attention: Special Projects Department
5 Cambridge Center
9th Floor
Cambridge, Massachusetts 02142
Via Facsimile: (617) 234-3310
For Information Call: (888) 448-5554
</TABLE>
Any questions or requests for assistance or for additional copies of
this offer to purchase or the letter of transmittal may be directed to us at the
telephone number and address listed above. To confirm delivery of your letter of
transmittal and related documents, please contact us.
<PAGE>
Exhibit (a)(ii)
WINTHROP CALIFORNIA INVESTORS LIMITED PARTNERSHIP
LETTER OF TRANSMITTAL
(and Notice of Withdrawal from Sutter Offer)
--------------------------------------------
THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON JANUARY 31, 2000 (the "Expiration Date")
UNLESS EXTENDED.
(Please indicate changes or corrections to the name, address and Tax
Identification Number printed above.)
================================================================================
NOTICE OF WITHDRAWAL FROM SUTTER OFFER
--------------------------------------
IMPORTANT!!!
If you have previously tendered your units of limited partnership
interest in the Partnership (the "Units") pursuant to the Sutter Offer and you
wish to tender your Units to the Purchaser, you must first withdraw such
tendered Units prior to the expiration date of the Sutter Offer. In order to
withdraw the Units you have tendered pursuant to the Sutter Offer and tender
your Units to the Purchaser, please initial in the space indicated below, sign
this Letter of Transmittal in the appropriate space on page 3 and return the
Letter of Transmittal to us in accordance with the Instructions enclosed
herewith.
_________ All units of limited partnership interest of Winthrop California
(initial) Investors Limited Partnership which (initial) were previously
tendered by the undersigned to the Sutter Offer are hereby
withdrawn in accordance with Rule 14d-7 promulgated under the
Securities Exchange Act of 1934, as amended.
--------------------------------
To participate in the Offer, a duly executed copy of this Letter of
Transmittal and any other documents required by this Letter of Transmittal must
be received by the Purchaser (as defined below) on or prior to the Expiration
Date. Delivery of this Letter of Transmittal or any other required documents to
an address other than as set forth below does not constitute valid delivery. The
method of delivery of all documents is at the election and risk of the tendering
Limited Partner. Please use the pre-addressed, postage paid envelope provided.
This Letter of Transmittal is to be completed by limited partners
("Limited Partners") of Winthrop California Investors Limited Partnership (the
"Partnership") pursuant to the procedures set forth in the Offer to Purchase (as
defined below). Capitalized terms used herein and not defined herein have the
meanings ascribed to such terms in the Offer to Purchase, dated January 3, 2000
(the "Offer to Purchase"), made by Quadrangle Associates II LLC, a Delaware
limited liability company (the "Purchaser").
PLEASE READ CAREFULLY THE ACCOMPANYING INSRUCTIONS
--------------------------------------------------
For information or assistance in connection with the offer or the
completion of this Letter of Transmittal and/or the Notice of
Withdrawal, please contact the Purchaser at (888) 448-5554.
<PAGE>
To: Quadrangle Associates II LLC
The undersigned hereby tenders all of its units of limited partnership
interest in the Partnership as set forth above (the "Units") to Quadrangle
Associates II LLC, a Delaware limited liability company (the "Purchaser") for
$2,000 cash per Unit, less any distributions made by the Partnership prior to
the expiration date, upon the terms and subject to the conditions set forth in
the Offer to Purchase, receipt of which is hereby acknowledged, and this Letter
of Transmittal (the "Letter of Transmittal", which, together with the Offer to
Purchase and any supplements, modifications or amendments thereto, constitute
the "Offer").
The undersigned recognizes that, under the circumstances described in
the Offer to Purchase, the Purchaser will accept Units for payment on a pro rata
basis (with adjustments to avoid purchases of certain fractional Units) based
upon the number of Units tendered prior to or on the Expiration Date and not
withdrawn.
Subject to and effective upon acceptance for payment of any Units
tendered hereby in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Purchaser all
right, title and interest in and to such Units purchased and requests,
authorizes and directs the general partners of the Partnership (the "General
Partner") to substitute the Purchaser as a limited partner of the Partnership in
place of the undersigned with respect to such Units. The undersigned hereby
irrevocably constitutes and appoints the Purchaser as the Limited Partner's
proxy and true and lawful agent and attorney-in-fact of the undersigned with
respect to such Units, with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest) to deliver
such Units and transfer ownership thereof on the Partnership books maintained by
the General Partner, together with all accompanying evidences of transfer and
authenticity, to or upon the order of the Purchaser and upon payment of the
purchase price payable by the Purchaser in accordance with the terms of the
Offer to Purchase in respect of such Units (the "Purchase Price"), to receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Units, including, without limitation, all voting rights and the right to receive
distributions from the Partnership, all in accordance with the Offer. Subject to
and effective upon the purchase of any Units tendered hereby, the undersigned
hereby requests that the Purchaser be admitted as a "Substitute Limited Partner"
under the terms of the Partnership Agreement of the Partnership. Upon the
purchase of such Units pursuant to the Offer, all prior proxies and consents
given by the undersigned with respect thereto will be revoked and no subsequent
proxies or consents may be given (and if given will not be deemed effective).
The undersigned hereby represents and warrants that the undersigned
owns the Units tendered hereby within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended, and has full power and authority to
validly tender, sell, assign and transfer, the Units tendered hereby, and that
when any such Units are accepted for payment by the Purchaser, the Purchaser
will acquire good, marketable and unencumbered title thereto, free and clear of
all liens, restrictions, charges, encumbrances, conditional sales agreements or
other obligations relating to the sale or transfer thereof, and such Units will
not be subject to any adverse claim. Upon request, the undersigned will execute
and deliver any additional documents deemed by the Purchaser to be necessary or
desirable to complete the assignment, transfer, or purchase of the Units
tendered hereby.
The undersigned understands that a valid tender of Units to the
Purchaser will constitute a binding agreement upon the terms and subject to the
conditions of the Offer. The undersigned recognizes that under certain
circumstances set forth in the Offer to Purchase, the Purchaser may not accept
for payment any Units tendered hereby. In such event, the undersigned
understands that this Letter of Transmittal will be of no force or effect. All
authority herein conferred or agreed to be conferred shall survive the death or
incapacity of the undersigned and any obligations of the undersigned shall be
binding upon the heirs, personal representatives, administrators, executors,
successors, assigns and trustees in bankruptcy and other legal representatives
of the undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
- --------------------------------------------------------------------------------
FOR INFORMATION AND ASSISTANCE WITH THE OFFER, PLEASE CALL: (888) 448-5554. For
Units to be validly tendered, Limited Partners should complete and sign this
Letter of Transmittal and return it in the self addressed, postage-paid envelope
enclosed, or by Hand or Overnight Delivery to the Purchaser at the address set
forth on the back cover of this Letter of Transmittal or by Facsimile to (617)
234-3310.
- --------------------------------------------------------------------------------
<PAGE>
BEFORE SIGNING AND RETURNING THIS LETTER OF TRANSMITTAL,
PLEASE REFER TO THE ACCOMPANYING INSTRUCTIONS
- --------------------------------------------------------------------------------
SIGNATURE BOX (ALL OWNERS)
(See Instructions 1, 3 and 4 as necessary)
Please sign exactly as your name is printed on the front of this Letter of
Transmittal. For joint owners, each owner must sign. (See Instruction 1.)
The signatory hereto hereby tenders the number of Units indicated in this Letter
of Transmittal to the Purchaser pursuant to the terms of the Offer and certifies
under penalties of perjury the statements in Box A, Box B, and, if applicable,
Box C. In addition, to the extent indicated above, the signatory hereto hereby
withdraws the number of Units indicated above from the Sutter Offer.
<TABLE>
<S> <C>
X X
-------------------------------------------------- -----------------------------------------------------------
(Signature) (Signature)
Tax I.D. Number X
----------------------------------
<CAPTION>
<S> <C>
Name and Capacity (if other than individuals) (Title)
--------------------------------------------- ------------------------
<CAPTION>
<S> <C>
Address
- -------------------------------------------------------------------------------------------------------------------------
(city) (state) (zip)
<CAPTION>
<S> <C>
Area Code and Telephone No. ( ) (Day) ( ) (Evening)
--------------------------------- --------------------------------
</TABLE>
- --------------------------------------------------------------------------------
BOX A
SUBSTITUTE FORM W-9
(See Instruction 3 - Box A)
The person signing this Letter of Transmittal hereby certifies the following to
the Purchaser of the Units indicated in this Letter of Transmittal under
penalties of perjury:
(i) The Taxpayer Identification Number ("TIN") printed (or corrected)
on the front of this Letter of Transmittal is the correct TIN of the Limited
Partner, or if this box / / is checked, the Limited Partner has applied for a
TIN. If the Limited Partner has applied for a TIN, a TIN has not been issued to
the Limited Partner, and either: (a) the Limited Partner has mailed or delivered
an application to receive a TIN to the appropriate IRS Center or Social Security
Administration Office, or (b) the Limited Partner intends to mail or deliver an
application in the near future (it being understood that if the Limited partner
does not provide a TIN to the Purchaser within sixty (60) days, 31% of all
reportable payments made to the Limited Partner will be withheld until the TIN
is provided to the Purchaser); and
(ii) Unless this box / / is checked, the Limited Partner is not subject
to backup withholding either because the Limited Partner: (a) is exempt from
backup withholding, (b) has not been notified by the IRS that the Limited
Partner is no longer subject to backup withholding as a result of a failure to
report all interest or dividends, or (c) has been notified by the IRS that such
Limited Partner is no longer subject to backup withholding.
- --------------------------------------------------------------------------------
BOX B
FIRPTA AFFIDAVIT
(See Instruction 3 - Box B)
Under Section 1445(c)(5) of the Internal Revenue Code and Treas. Reg.
1.1445-11T(d), a transferee must withhold tax equal to 10% of the amount
realized with respect to certain transfers of an interest in a partnership if
50% or more of the value of its gross assets consists of U.S. real property
interests and 90% or more of the value of its gross assets consists of U.S. real
property interest plus cash or cash equivalents, and the holder of the
partnership interest is a foreign person. To inform the Purchaser that no
withholding is required with respect to the Limited Partner's interest in the
Partnership, the person signing this Letter of Transmittal hereby certifies the
following under penalties of perjury:
(i) Unless this box / / is checked, the Limited Partner, if an
individual, is a U.S. citizen or a resident alien for purposes of U.S. income
taxation, and if other than an individual, is not a foreign corporation, foreign
partnership, foreign estate or foreign trust (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations); (ii) the Limited Partner's
U.S. social security number (for individuals) or employer identification number
(for non-individuals) is correctly printed (or corrected) on the front of this
Letter of Transmittal; and (iii) the Limited Partner's home address (for
individuals), or office address (for non-individuals), is correctly printed (or
corrected) on this Letter of Transmittal. If a corporation, the jurisdiction of
incorporation is ___________.
The person signing this Letter of Transmittal understands that this
certification may be disclosed to the IRS by the Purchaser and that any false
statements contained herein could be punished by fine, imprisonment or both.
- --------------------------------------------------------------------------------
BOX C
SUBSTITUTE FORM W-8
(See instruction 4)
By checking this box / /, the person signing this Letter of Transmittal
hereby certifies under penalties of perjury that the Limited Partner is an
"exempt foreign person" for purposes of the backup withholding rules under the
U.S. federal income tax laws, because the Limited Partner:
(i) Is a nonresident alien individual or a foreign corporation,
partnership, estate or trust;
(ii) If an individual, has not been and plans not to be present in
the U.S. for a total of 183 days or more during the calendar
year; and
(iii) Neither engages, nor plans to engage, in a U.S. trade or
business that has effectively connected gains from
transactions with a broker or barter exchange.
- --------------------------------------------------------------------------------
<PAGE>
QUADRANGLE ASSOCIATES II LLC
By Mail, Overnight Courier or Hand:
Attention: Special Projects Department
5 Cambridge Center
9th Floor
Cambridge, Massachusetts 02142
By Facsimile:
(617) 234-3310
For Information please call
TOLL FREE (888) 448-5554
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. SIGNATURE AND DELIVERY OF REQUIREMENTS
Individual and Joint Owners - Signature Requirements. After carefully
reading and completing the Letter of Transmittal, in order to tender
your Units, Limited Partner(s) must sign at the "X" in the Signature
Box. The signature(s) must correspond exactly with the name printed (or
corrected) on the front of the Letter of Transmittal without any change
whatsoever. Note: For Units held in a custodial account, the beneficial
owner should sign in the Signature Box. If the Units are registered in
the names of two or more joint holders, all such holders must sign the
Letter of Transmittal.
Trustees, Corporations and Fiduciaries - Signature Requirements.
Trustees, executors, administrators, guardians, attorneys-in-fact,
officers of a corporation, authorized partner of a partnership or other
persons acting in a fiduciary or representative capacity must sign at
the "X" in the Signature Box. Signatories should indicate their title
when signing and must submit proper evidence satisfactory to the
Purchaser of their authority to act.
Delivery Requirements. For Units to be validly assigned, a properly
completed and duly executed copy of the Letter of Transmittal, together
with any other documents required by the Letter of Transmittal, must be
received by the Purchaser prior to or on the Expiration Date. To ensure
receipt of the Letter of Transmittal, it is suggested that you use
overnight courier delivery or, if the Letter of Transmittal is to be
delivered by U.S. Mail, you use certified or registered mail, return
receipt requested. Facsimiles will be accepted subject to the receipt
by the Purchaser of original documentation. All Letters of Transmittal
should be addressed as follows:
<TABLE>
<S> <C> <C>
By Mail or Overnight Courier: Attention: Special Projects Department
5 Cambridge Center
9th Floor
Cambridge, Massachusetts 02142
By Facsimile: (617) 234-3310
For Additional Information Call: (888) 448-5554
Documentation
Deceased Owner - Copy of Death Certificate. If other than a Joint Tenant,
see also Executor/Administrator/Guardian below.
Deceased Owner (Other) - See Executor/Administrator/Guardian (a) below.
Executor/Administrator Guardian - (a) Send copy of Court Appointment Documents; and (b) a
copy of applicable provisions of Will (Title Page, Executor
powers asset distributions); or (c) Estate distribution
documents.
Attorney-in-fact - Power of Attorney.
Corporate/Partnerships - Resolution(s) of Board of Directors or other evidence of
authority to so act.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Trust/Pension Plans - Cover pages of the trust or plan, along with the trustee(s)
section and/or amendments or resolutions of the above to prove
authority to so act.
</TABLE>
2. TRANSFER TAXES. The Purchaser will pay or cause to be paid all transfer
taxes, if any, payable in respect of Units accepted for payment
pursuant to the Offer.
3. U.S. PERSONS. A Limited Partner who or which is a United States citizen
or resident alien individual, a domestic corporation, a domestic
partnership, a domestic trust or a domestic estate (collectively,
"United States persons") as those terms are defined in the Internal
Revenue code and Income Tax Regulations, should complete the following:
Box A -Substitute Form W-9. In order to avoid 31% federal income tax
backup withholding, the Limited Partner must provide to the Purchaser
the Limited Partner's correct Taxpayer Identification Number ("TIN")
and certify, under penalties of perjury, that such Limited Partner is
not subject to such backup withholding. The TIN that must be provided
on the Substitute W-9 is that of the registered Limited Partner as
printed (or corrected) on the front of this Letter of Transmittal. If a
correct TIN is not provided, penalties may be imposed by the Internal
Revenue Service ("IRS"), in addition to the Limited Partner being
subject to backup withholding. Certain Limited Partners (including,
among others, all corporations) are not subject to backup withholding.
Backup withholding is not an additional tax. If withholding results in
an overpayment of taxes, a refund may be obtained from the IRS. NOTE:
The correct TIN for an IRA account is that of the Custodian (not the
individual Social Security number of the beneficial owner).
Box B - FIRPTA Affidavit. To avoid potential withholding of tax
pursuant to section 1445 of the Internal Revenue Code, each Limited
Partner who or which is a United States Person (as defined in
Instruction 4 above) must certify, under penalties of perjury, the
Limited Partner's TIN and address, and that the 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.
4. BOX C - FOREIGN PERSONS. In order for a Limited Partner who is a
foreign person (i.e., not a United States person as defined in 3 above)
to qualify as exempt from 31% backup withholding, such foreign Limited
Partner must certify, under penalties of perjury, the statement in BOX
C of this Letter of Transmittal attesting that foreign person's status
by checking the box preceding such statement. Unless such box is
checked, such foreign person will be subject to withholding tax under
Section 3406 of the Code.
5. ADDITIONAL COPIES OF OFFER TO PURCHASE AND LETTER OF TRANSMITTAL.
Request for assistance or additional copies of the Offer to Purchase
and the Letter of Transmittal may be obtained from the Purchaser by
calling (888) 448-5554.
<PAGE>
Exhibit (a)(iii)
QUADRANGLE ASSOCIATES II LLC
5 Cambridge Center
9th Floor
Cambridge, Massachusetts 02142
January 3, 2000
Dear Limited Partner:
We are offering to acquire your units of limited partnership interest
in Winthrop California Investors Limited Partnership, (your "partnership") for
$2,000 per Unit in cash. Our offer is $500 per unit more than a recently filed
competing offer being made by Sutter/Jamboree Acquisition Fund, LLC (the "Sutter
Offer"). Enclosed for your review and consideration are documents relating to
our Offer to purchase your Units. Our offer will expire at 12:00 midnight, New
York City time on January 31, 2000 (unless extended by us).
The general partners of your partnership are our affiliates. As a
result of this affiliation, your partnership has indicated that it is remaining
neutral and making no recommendation as to whether its limited partners should
tender their Units in response to our Offer. Limited Partners are urged to read
our offer to purchase and the related materials and the enclosed Schedule 14D-9
carefully and in their entirety before deciding whether to tender their units.
HIGHEST OFFER TO DATE. Although not indicative of value, our Purchase
Price is $500 per unit greater than the purchase price being paid in the Sutter
Offer. You should evaluate our offer based on your own particular financial
circumstances. We suggest that you review our offer to purchase with your
personal financial and tax advisors.
IF YOU TENDERED YOUR UNITS IN THE SUTTER OFFER, YOU MAY STILL TENDER
YOUR UNITS TO US BY INITIALING THE BOX ON THE COVER OF THE LETTER OF
TRANSMITTAL, SIGNING THE LETTER OF TRANSMITTAL ON PAGE THREE OF THE LETTER OF
TRANSMITTAL AND DELIVERING THE LETTER OF TRANSMITTAL TO US BY NO LATER THAN THE
EXPIRATION DATE OF THE SUTTER OFFER, UNLESS EXTENDED.
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 us at (888) 448-5554.
QUADRANGLE ASSOCIATES II LLC
