SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
(Amendment No. 2)
Solicitation/Recommendation Statement Pursuant to Section 14(d)(4) of the
Securities Exchange Act of
1934
BALCOR REALTY INVESTORS 86 - SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(Name of Subject Company)
BALCOR REALTY INVESTORS 86 - SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(Name of Person(s) Filing Statement)
Limited Partnership Interests
(Title of Class of Securities)
N/A
(CUSIP Number of Class of Securities)
Thomas E. Meador
Chairman
The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road, Suite A200
Bannockburn, Illinois 60015
(708) 267-1600
(Name, Address and Telephone Number of Person
Authorized to Receive Notice and Communications on
Behalf of the Person(s) Filing Statement)
Copy To:
Michael P. Morrison, Esq.
Hopkins & Sutter
Three First National Plaza, Suite 4100
Chicago, Illinois 60602
(312) 558-6600
<PAGE>
Amendment No. 2 to Schedule 14D-9
This Amendment No. 2 to Schedule 14D-9 amends the Schedule 14D-9 (the
"Schedule 14D-9") filed by Balcor Realty Investors 86 - Series I, an Illinois
limited partnership (the "Partnership"), with the Securities and Exchange
Commission ("SEC") on March 22, 1996, as amended by Amendment No. 1 to Schedule
14D-9 ("Amendment No. 1") filed with the SEC on April 2, 1996. All capitalized
terms used herein but not otherwise defined shall have the meanings ascribed to
such terms in the Schedule 14D-9 and Amendment No. 1.
Item 4. The Solicitation and Recommendation
Item 4(b)(3) is hereby amended in its entirety to read as follows:
"3. On April 8, 1996, an unaffiliated third party, Equity
Residential Properties Trust ("Equity"), made a non-binding proposal to
the Partnership to purchase one of the Partnership's four remaining
properties. The General Partner is in serious negotiations with Equity
and intends to sign a letter of intent with them.
The proposed sale price of the one property included in the Equity
proposal is $16,320,000. Taking into account closing costs, mortgage
indebtedness, and prorations, and provided that there are no adjustments
to the sale price as contained in the Equity proposal, the General Partner
estimates that the net proceeds per Unit available for distribution will
be approximately $64 (see attachment to Exhibit (a)(3) for computation).
The Partnership will continue to own three properties if the sale
contemplated by the Equity proposal is consummated.
As described in Item 4(b)(2), one of the Partnership's four remaining
assets is under a letter of intent with another third party. When the
General Partner signs a letter of intent with Equity, of the four
remaining assets two will be under letters of intent.
The sale of the property to Equity is contingent upon many factors,
including the negotiation of a mutually acceptable sale contract.
Therefore, there can be no assurance that the sale to Equity will
ultimately be completed. Even in the event that all of the contemplated
sales are consummated, there can be no assurance that the distribution
level described above will actually be paid to the Limited Partners.
Item 7. Certain Negotiations and Transactions by the Subject Company
Item 7 is hereby amended in its entirety to read as follows:
"(a) Except as described below, no negotiations are being undertaken or
are underway by the Partnership in response to the Offer which relate to or
would result in: (1) an extraordinary transaction such as a merger or
reorganization involving the Partnership or any affiliate controlled by the
Partnership; (2) a purchase, sale or transfer of a material amount of assets by
the Partnership or any affiliate controlled by the Partnership; (3) a tender
offer for or other acquisition of securities by or of the Partnership; or (4)
any material change in the present capitalization or distribution policy of the
Partnership.
On April 8, 1996, Equity made a non-binding proposal to the
Partnership to purchase one of the Partnership's four remaining
properties. The General Partner is in serious negotiations with Equity
and intends to sign a letter of intent with them.
The proposed sale price of the one property included in the Equity
proposal is $16,320,000. Taking into account closing costs, mortgage
indebtedness, and prorations, and provided that there are no adjustments
to the sale price as contained in the Equity proposal, the General Partner
estimates that the net proceeds per Unit available for distribution will
be approximately $64 (see attachment to Exhibit (a)(3) for computation).
The Partnership will continue to own three properties if the sale
contemplated by the Equity proposal is consummated.
As described in Item 4(b)(2), one of the Partnership's four remaining
assets is under a letter of intent with another third party. When the
General Partner signs a letter of intent with Equity, of the four
remaining assets two will be under letters of intent.
The sale of the property to Equity is contingent upon many factors,
including the negotiation of a mutually acceptable sale contract.
Therefore, there can be no assurance that the sale to Equity will
ultimately be completed. Even in the event that all of the contemplated
sales are consummated, there can be no assurance that the distribution
level described above will actually be paid to the Limited Partners.
(b) Except for the non-binding proposal from Equity as described in 7(a)
above, there are no transactions, General Partner resolutions, agreements in
principle or signed contracts in response to the Offer that relate to or would
result in one or more of the events referred to in Item 7(a)."
Item 9. Material to be Filed as Exhibits
Item 9 is hereby amended to include the following exhibit:
"(a)(3) Letter to Investors, dated April 10, 1996 (includes
attachment regarding estimated distributable proceeds from
sale to Equity)."
<PAGE>
Signature. After reasonable 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: April 10, 1996 BALCOR REALTY INVESTORS 86 - SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
By: Balcor Partners-XIX, its general partner
By: The Balcor Company, a partner
/s/ Thomas E. Meador
--------------------------
Thomas E. Meador, Chairman
<PAGE>
BALCOR REALTY INVESTORS 86-Series I
A Real Estate Limited Partnership
P.O. Box 7190
Deerfield, Illinois 60015-7190
April 10, 1996
Dear Investor:
As you know, on March 11, 1996, Metropolitan Acquisition VII, L.L.C.
("Metropolitan") announced an unsolicited offer to purchase up to approximately
30% of the outstanding limited partnership interests ("Units") of Balcor Realty
Investors 86-Series I A Real Estate Limited Partnership (the "Partnership") at
a price of $155 per Unit. In our letter to you dated March 22, 1996, we
informed you that we were expressing no opinion and remaining neutral with
respect to Metropolitan's offer. While our position with respect to the offer
has not changed, we wanted to provide you with certain additional information
that may be useful to you in evaluating the offer.
As you may recall, in our March 22 letter, we informed you that an
unaffiliated third party had contacted The Balcor Company to discuss the
potential for a sale of substantially all of the remaining properties of the
Partnership. While these discussions did not lead to a definitive offer for
the sale of all of the Partnership's properties, this third party, Equity
Residential Properties Trust ("Equity"), made a non-binding proposal to the
Partnership on April 8, 1996 to purchase one of the Partnership's four
remaining properties. We are in serious negotiations with Equity and intend to
sign a letter of intent with them.
The proposed sale price of the one property included in the Equity
proposal is $16,320,000. Taking into account closing costs, mortgage
indebtedness, and prorations, and provided that there are no adjustments to the
sale price as contained in the Equity proposal, we estimate that the net
proceeds per Unit available for distribution will be approximately $64 (see
attachment hereto for computation). Keep in mind that Metropolitan's offer is
$155 per Unit and that the Partnership will continue to own three properties if
the sale contemplated by the Equity proposal is consummated.
You should also keep in mind that, as we advised you in our March 22, 1996
letter, the mid-April, 1996 distribution payable to you in the amount of $74
will be deducted from Metropolitan's offering price for your Units if you elect
to tender your Units to Metropolitan.
Also, in the March 22 letter, we advised you that one of the Partnership's
four remaining assets was under a letter of intent. When we sign a letter of
intent with Equity, of the four remaining assets two will be under letters of
intent. This illustrates our belief that the market for multifamily housing
properties has become increasingly favorable to sellers of these properties.
Please note that the sale of the property to Equity is contingent upon
many factors, including the negotiation of a mutually acceptable sale contract.
Therefore, there can be no assurance that the sale to Equity will ultimately be
completed. Even in the event that all of the contemplated sales are
consummated, there can be no assurance that the distribution level described
above will actually be paid to the limited partners.
Please note that pursuant to an amendment dated April 8, 1996,
Metropolitan has extended their offer and cannot purchase any tendered Units
prior to April 12, 1996. If you wish to withdraw any Units tendered to
Metropolitan at any time prior to 5:00 p.m., Eastern Standard Time, on
April 12, 1996, you may do so by complying with the withdrawal procedures set
forth in the Metropolitan offer.
Your General Partner will continue to act in the manner that it believes
to be in the best interests of the Partnership.
Very truly yours,
/s/Thomas E. Meador
Thomas E. Meador
Chairman, Balcor Partners - XIX,
the General Partner
<PAGE>
BALCOR REALTY INVESTORS 86-Series I
CALCULATION OF DISTRIBUTABLE PROCEEDS FROM
PROPOSED SALE TO EQUITY RESIDENTIAL
Proposed Mortgage Distributable
Name of Property Purchase Price(1) Debt(2) Proceeds
- ---------------- -------------- ---- --------
Lakeville(3) $16,320,000 ($12,498,300) $3,821,700
----------- ------------- ----------
Total $16,320,000 ($12,498,300) $3,821,700
==========
Number of Limited Partnership Units: 59,791
Total Distributable Proceeds per
Limited Partnership Unit ($3,821,700 / 59,791) $63.92
======
- --------------------
(1)Equity Residential will pay mortgage assumption fees (if any) and
related closing costs. There are no brokerage commissions. We are assuming
that prorations or other closing costs payable by the Partnership (if any) will
come from Partnership working capital.
(2)Estimated loan balance assuming a June, 1996 closing.
(3)Represents the 60% ownership position of Balcor Realty Investors
86-Series I in this property.
