SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
AMENDMENT NO. 2
CIGNA INCOME REALTY-I
LIMITED PARTNERSHIP
(Name of Subject Company)
CIGNA INCOME REALTY-I
LIMITED PARTNERSHIP
(Name of Person(s) Filing Statement)
UNITS OF INTEREST
(Title of Class of Securities)
NONE
(CUSIP Number of Class of Securities)
John D. Carey
CIGNA Realty Resources, Inc.-Tenth
900 Cottage Grove Road, South Building
Hartford, Connecticut 06152-2313
(860) 726-6000
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Person(s) Filing Statement)
Copy to:
W. Christian Drewes, Esq.
Kelley Drye & Warren LLP
101 Park Avenue
New York, New York 10178
(212) 808-7800
Index to Exhibits Located at Page 4
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This document constitutes Amendment No. 2 (superceding and
correcting Amendment No. 1, which was filed with the Securities and Exchange
Commission but not delivered to Unitholders) to the Solicitation/Recommendation
Statement on Schedule 14D-9 filed with the Commission on December 2, 1996 (as
amended, the "Statement"), by CIGNA Income Realty-I Limited Partnership, a
Delaware limited partnership (the "Partnership"), relating to a tender offer by
Everest Realty Investors, LLC, a California limited liability company (the
"Bidder"), to purchase up to 80,000 of the units of limited partnership interest
in the Partnership (the "Units") at a purchase price of $115 per Unit, less the
amount of any Distributions (as defined in the Offer to Purchase referred to
below) per Unit, if any, made by the Partnership after any Distributions made
after the distribution from operations for the third quarter of 1996 and before
the date on which the Bidder purchases the Units tendered pursuant to the Offer
(as defined below) and less any Partnership transfer fees, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated November 18,
1996 (the "Offer to Purchase"), as supplemented by the Supplement Letter to
Offer to Purchase, dated December 6, 1996 (the "Supplement"), and the related
Agreement of Transfer and Letter of Transmittal (the "Letter of Transmittal",
which, together with the Offer to Purchase and the Supplement, constitute the
"Offer"). Those items of the Statement which are indicated below are hereby
amended by the addition of the information set forth below.
ITEM 4. THE SOLICITATION OR RECOMMENDATION and
The Partnership recommended rejection of the Offer primarily
for two reasons: (1) the Partnership believes that the Offer price of $115 per
Unit, less certain amounts, is inadequate; and (2) the Offer to purchase is
limited to 80,000 Units, representing only approximately forty percent (40%) of
outstanding Units. In reaching its determination, the Partnership considered a
number of factors, including the fact that the Partnership was then engaged in
negotiations with Koll General Partner Services ("Koll") in connection with an
offer made by Koll, on behalf of Glenborough Realty Trust Incorporated
("Glenborough"), to purchase all of the assets and liabilities of the
Partnership as reflected in the Partnership's June 30, 1996 balance sheet for a
purchase price of $28,000,000, an amount equal to approximately ninety percent
(90%) of the Partnership's net asset value as of December 31, 1995.
On December 10, 1996, following further negotiations in which
Glenborough agreed to increase its purchase price and to assume certain
transaction costs, the Partnership and Glenborough executed a letter of intent
(a copy of which is attached as Exhibit 8 hereto and incorporated herein by
reference) setting forth an agreement in principle on the terms and conditions
of the sale of all of the real estate assets of the Partnership (the "Letter of
Intent"). Under the terms of the Letter of Intent, Glenborough would purchase
all of the real estate assets of the Partnership for a purchase price of
$29,650,000, which amount, when added to the other liquid assets of the
Partnership and after taking into account the establishment of a reserve for
anticipated fees and expenses of the sale and the liquidation of the
Partnership,
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results in a return to Unitholders of approximately $150 per Unit, an amount
equal to approximately ninety percent (90%) of the Partnership's current net
asset value (the "Glenborough Transaction"). In addition, Glenborough has agreed
to pay all closing costs, including Koll's fees, except for the Partnership's
legal fees and similar costs. Consummation of the Glenborough Transaction is
anticipated to occur by the end of January 1997, and is subject to (i) the
preparation and execution of definitive acquisition agreements and the review of
title and survey matters, (ii) the requisite approval of the holders of a
majority of the issued and outstanding Units of the Partnership pursuant to the
Limited Partnership Agreement pursuant to which the Partnership was formed, and
(iii) consummation of the purchase by Glenborough of the assets of Connecticut
General Equity Properties-I Limited Partnership, a Connecticut limited
partnership ("CGEP").
The Letter of Intent is solely a reflection of the business
terms of a proposed transaction, and does not create any contractual obligation
to consummate the transaction. There can be no assurance that the Glenborough
Transaction will be consummated unless the foregoing conditions are satisfied.
CGEP and Glenborough have executed the same letter of intent setting forth an
agreement in principle on the terms and conditions of the sale of all of the
real estate assets of CGEP.
The Partnership intends to solicit the consent of Unitholders
to the Glenborough Transaction once definitive acquisition agreements have been
finalized and executed.
A supplemental letter to the Unitholders of the Partnership
communicating the Partnership's recommendation is filed as Exhibit 9 hereto and
is incorporated herein by reference.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
The response to Item 4 above (The Solicitation or
Recommendation) is incorporated in this Item 7 by reference.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Item 8 of the Statement is hereby amended by adding the
following:
Reference is hereby made to (i) the Letter of Intent attached hereto as Exhibit
8, and (ii) the Supplement Letter to Letter of Recommendation attached hereto as
Exhibit 9, both which are incorporated herein by reference.
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ITEM 9. MATERIALS TO BE FILED AS EXHIBITS.
Item 9 of the Statement is hereby amended by the addition of
the following to the list of Exhibits set forth in Item 9.
Exhibit No. Description
8 Letter of Intent, dated December 10, 1996, between the
Partnership and Glenborough Realty Trust Incorporated
9 Supplement Letter to Letter of Recommendation to Unitholders,
dated December 12, 1996
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.
CIGNA INCOME REALTY-I LIMITED
PARTNERSHIP
By: CIGNA Realty Resources,
Inc.-Tenth,
General Partner
By: /s/ John D. Carey
John D. Carey, President
Dated: December 12, 1996
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<TABLE>
<CAPTION>
EXHIBIT INDEX
Sequentially
Exhibit No. Description Numbered Page
<S> <C> <C>
8 Letter of Intent, dated December 10, 1996, between the 5
Partnership and Glenborough Realty Trust Incorporated
9 Supplement Letter to Letter of Recommendation to 10
Unitholders, dated December 12, 1996
</TABLE>
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EXHIBIT 8
[LETTERHEAD OF GLENBOROUGH REALTY TRUST INCORPORATED]
Mr. John D. Carey, President
CIGNA Realty Resources Inc. - Tenth
Connecticut General Realty Resources, Inc. - Third
900 Cottage Grove Road S-3 13
Hartford, CT 06152-2313
Re: CIGNA Income Realty I ("CIR")
Connecticut General Equity Properties I ("CGEP")
Purchase of Real Estate Portfolios
Dear Mr. Carey:
In accordance with your recent discussions with Andrew Batinovich, I am pleased
to submit this letter, which outlines the principal terms upon which the
principal subsidiary of Glenborough Realty Trust Incorporated, a Maryland
corporation (NYSE:GLB) ("Buyer"), is prepared to enter into two separate
Purchase Contracts (the "Purchase Contracts,,) with CIR and CGEP (collectively,
the "Partnerships"). to purchase their respective real estate portfolios,
comprising the real property listed on Exhibit A attached hereto, together with
all personal property owned by the Partnerships (including any computer hardware
and software) located thereon (the "Properties").
This letter sets forth the terms and conditions under which the proposed
transaction would occur. This letter of intent is solely a reflection of the
general business terms of a proposed transaction and, except to the extent
specifically noted in the Exclusivity section of this letter, only the fully
executed Purchase Contracts shall create any contractual obligations between the
parties.
PURCHASE PRICE AND METHOD OF PAYMENT
The purchase prices shall to be paid by Buyer ("Purchase Prices") shall be
$29,650,000 to CIR and $14,554,000 to CGEP. The Purchase Prices shall be paid by
Buyer in cash at closing, representing the total consideration for the
acquisition of the Properties. Upon execution of a definitive agreement, Buyer
shall deposit an amount equal to 1% of the Purchase Prices, which shall
represent liquidated damages in the event of a default by Buyer.
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Mr. John D. Carey
December 10, 1996
Page -2-
CONTINGENCIES
Buyer has completed its due diligence investigation. The only closing
contingencies in favor of Buyer shall be (i) satisfactory completion of title
and survey review: (ii) absence of monetary encumbrances other than property
taxes not yet due; (iii) the execution of estoppel certificates consistent with
rent rolls provided by the Partnerships, by tenants representing a significant
majority of the rental revenues for each non-residential property, with the
specific requirements to be specified in the Purchase Contracts; and (iv)
neither the Partnerships nor Buyer shall bc required to complete the transaction
as to either Partnership if the other Partnership is unable to complete the
transaction. The only closing contingency in favor of the Partnerships shall be
obtaining the requisite majority vote by each Partnership's limited partners in
accordance with the Partnerships' respective partnership agreements.
CONDUCT OF ESCROW, PRORATIONS AND COSTS
Escrow will be conducted through Chicago Title Insurance Company, Los Angeles
office. Buyer and the Partnerships shall each be responsible for their
respective legal fees and costs associated with negotiations. Transfer taxes as
to any Property shall be borne by Buyer. Escrow fees, title insurance premiums
and all other closing costs for each Property shall be allocated in accordance
with local custom. Revenues, expenses and other items which are normally
prorated shall be prorated and paid through escrow. Buyer shall be credited at
closing for the amount of any tenant security deposit liabilities.
TIMING
Execution of Purchase Contracts: December 12, 1996 or as soon thereafter as
practicable. Closing: January 31, 1997 or as soon thereafter as practicable.
BROKERAGE
Buyer is obligated to pay a brokerage commission to K/B Realty Advisors, and
agrees to hold the Partnerships harmless from any claims by K/B Realty Advisors.
The Partnerships and Buyer agree that there are no other brokers involved in
this transaction and no fees payable to any other broker. Each Partnership and
Buyer agree to defend, indemnify and hold harmless
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Mr. John D. Carey
December 10, 1996
Page -3-
the other for any and all judgments, costs of suit, attorneys fees, and other
reasonable expenses which the other may incur by reason of any action or claim
against the other by any broker, agent or finder with whom the indemnifying
party has dealt arising out of this Letter of Intent except for the above
described commission, which shall be paid by Buyer at closing.
OPERATION OF THE PROPERTY
The Partnerships agree to continue to operate the Property in the same manner as
it is now being operated. No new encumbrances or liens of any kind which cannot
be discharged promptly at closing shall be incurred, except as may be permitted
in the Purchase Contracts.
EXCLUSIVITY
The Partnerships hereby agree not to entertain or accept any other offers to
purchase the Properties or any part thereof, until revocation of this letter by
both Buyer and the Partnerships or termination of the Purchase Contracts. The
Partnerships acknowledge that Buyer has incurred and will incur substantial
expenses in performing its underwriting and investigation concerning the
Properties and that adequate consideration exists for this agreement by the
Partnerships as provided in the preceding sentence.
DOCUMENTATION
Immediately upon acceptance of this letter of intent, Buyer shall prepare for
review and execution by the Partnerships the Purchase Contracts, reflecting the
terms and conditions of this letter and containing such additional covenants,
representations and conditions as the parties may agree. The Purchase Contracts
shall govern the proposed transaction. Buyer and the Partnerships shall
reasonably cooperate in preparing and executing such other collateral
documentation and agreements as may be necessary to implement the proposed
transaction as intended herein.
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Mr. John D. Carey
December 10, 1996
Page -4-
If this letter accurately sets forth the terms and conditions of an acceptable
transaction, please so indicate by executing a copy where indicated below and
returning a fully executed copy to me on or before 2 business days from the date
of this letter. I look forward to your affirmative response at your earliest
convenience.
Sincerely,
GLENBOROUGH REALTY TRUST INCORPORATED
s/
ROBERT BATINOVICH
President
RB:mm
Accepted this 10th day of December, 1996:
CIGNA INCOME REALTY I CONNECTICUT GENERAL EQUITY PROPERTIES I
By: CIGNA Realty Resources, Inc. - Tenth By: Connecticut General Realty
Partners, Inc. - Third
By: s/ By: s/
John D. Carey, President John D. Carey, President
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Mr. John D. Carey
December 10, 1996
Page -5-
EXHIBIT A
TO LETTER OF INTENT
CIGNA INCOME REALTY I
Woodlands Tech Center St. Louis, MO
Piedmont Plaza Apopka, FL
Overlook Apartments Scottsdale, AZ
Westford Corporate Center (74% interest) Westford, MA
CONNECTICUT GENERAL EQUITY PROPERTIES I
Westford Corporate Center (26% interest) Westford, MA
Lake Point I, II and III Orlando, FL
Woodlands Plaza II St. Louis, MO
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EXHIBIT 9
[LETTERHEAD OF THE PARTNERSHIP]
December 12, 1996
Re: Everest Realty Investors, LLC Tender Offer
Dear Unitholder:
This letter supplements our letter of December 2, 1996, in which we
recommended that you reject an Offer to Purchase dated November 18, 1996, from
Everest Realty Investors, LLC ("Everest"). Everest has offered to purchase up to
80,000 (40%) of the currently outstanding Units of CIGNA Income Realty-I Limited
Partnership (the "Partnership") at a purchase price of $115 per Unit less
certain adjustments and expenses (the "Everest Offer"). Everest recently sent a
supplemental letter dated December 6, 1996, in which it did not increase the
price or otherwise alter the terms of the Everest Offer but rather offered
various arguments for its acceptance.
THE PARTNERSHIP RECOMMENDS THAT UNITHOLDERS REJECT THE EVEREST OFFER
AND NOT TENDER THEIR UNITS TO EVEREST.
As set forth in our December 2, 1996 letter, the Partnership
recommended rejection of the Everest Offer for several reasons, including the
fact that the Partnership was engaged in negotiations with Koll General Partner
Services ("Koll") in connection with an offer made by Koll, on behalf of
Glenborough Realty Trust Incorporated ("Glenborough"), to purchase all of the
assets of the Partnership for a price that would have resulted in a return to
investors substantially greater than that represented by the Everest Offer.
On December 10, 1996, following further negotiations in which
Glenborough agreed to increase its purchase price and to assume certain
transactional costs, the Partnership and Glenborough executed a letter of intent
(a copy of which is enclosed) setting forth an agreement in principle on the
terms and conditions of the sale of all of the real estate assets of the
Partnership (the "Letter of Intent"). Under the terms of the Letter of Intent,
Glenborough would purchase all of the real estate assets of the Partnership for
a purchase price of $29,650,000, which amount, when added to the other liquid
assets of the Partnership and after taking into account the establishment of a
reserve for anticipated fees and expenses of the sale and the liquidation of the
Partnership, results in a return to Unitholders of approximately $150 per Unit,
an amount equal to approximately ninety percent (90%) of the current net asset
value (the "Glenborough Transaction"). In addition, Glenborough would pay all
closing costs, including Koll's fees, except for the Partnership's legal fees
and similar costs. Consummation
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of the Glenborough Transaction is anticipated to occur by the end of January
1997, and is subject to (i) the preparation and execution of definitive
acquisition agreements and the review of title and survey matters, (ii) the
requisite approval of the holders of a majority of the issued and outstanding
Units of the Partnership pursuant to the Limited Partnership Agreement pursuant
to which the Partnership was formed, and (iii) consummation of the purchase by
Glenborough of the assets of Connecticut General Equity Properties-I Limited
Partnership, a Connecticut limited partnership ("CGEP").
The Letter of Intent is solely a reflection of the general business
terms of a proposed transaction, and does not create any contractual obligation
to consummate the transaction. There can be no assurance that the Glenborough
Transaction will be consummated unless the foregoing conditions are satisfied.
CGEP and Glenborough have executed the same letter of intent setting forth an
agreement in principle on the terms and conditions of the sale of all of the
real estate assets of CGEP.
THE PARTNERSHIP INTENDS TO SOLICIT THE CONSENT OF UNITHOLDERS TO THE
GLENBOROUGH TRANSACTION ONCE DEFINITIVE ACQUISITION AGREEMENTS HAVE BEEN
FINALIZED AND EXECUTED.
Please note that if you have previously tendered your Units to Everest
pursuant to the Everest Offer, such tender of Units may be withdrawn by you at
any time on or prior to December 17, 1996. For such withdrawal to be effective,
a written or facsimile transmission notice of withdrawal must be timely received
by IBJ Schroder Bank & Trust Company (the Depository under the Everest Offer) at
one of the addresses set forth in the Everest Offer or by facsimile at (212)
858-2611.
Please call the undersigned with any questions you may have regarding
the Everest Offer, the Glenborough Transaction, the status of your investment,
or any other related matter.
Sincerely,
CIGNA INCOME REALTY-I
LIMITED PARTNERSHIP
By: CIGNA Realty
Resources, Inc.-Tenth
General Partner
By:
John D. Carey, President
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