<PAGE> 1
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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
------------------------
CIGNA INCOME REALTY - I LIMITED PARTNERSHIP
(NAME OF SUBJECT ISSUER)
EVEREST REALTY INVESTORS, LLC
(BIDDER)
UNITS OF INTEREST
(TITLE OF CLASS OF SECURITIES)
NONE
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
W. ROBERT KOHORST
EVEREST REALTY INVESTORS, LLC
3280 E. FOOTHILL BLVD., #320
PASADENA, CALIFORNIA 91107
(818) 585-5920
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON BEHALF OF BIDDER)
------------------------
COPY TO:
PETER J. TENNYSON, ESQ.
STEPHEN D. COOKE, ESQ.
PAUL, HASTINGS, JANOFSKY & WALKER LLP
SEVENTEENTH FLOOR
695 TOWN CENTER DRIVE
COSTA MESA, CALIFORNIA 92626-1924
(714) 668-6200
------------------------
CALCULATION OF FILING FEE
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TRANSACTION VALUATION*: $9,200,000 AMOUNT OF FILING FEE: $1,840
* FOR PURPOSES OF CALCULATING THE FILING FEE ONLY. THIS AMOUNT ASSUMES THE
PURCHASE OF 80,000 UNITS OF INTEREST OF THE SUBJECT PARTNERSHIP FOR $115 PER
UNIT IN CASH. THE AMOUNT OF THE FILING FEE, CALCULATED IN ACCORDANCE WITH 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 BIDDER.
[ ] 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 FILING PARTY: NOT APPLICABLE
FORM OR REGISTRATION NO.: NOT APPLICABLE DATE FILED: NOT APPLICABLE
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INDEX TO EXHIBITS LOCATED AT PAGE 6
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CUSIP No.: NONE 14D-1
- ----------------------
<TABLE>
<S> <C> <C>
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Everest Realty Investors, LLC
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCES OF FUNDS
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(e) OR 2(f) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None
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8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [ ]
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
N/A
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10 TYPE OF REPORTING PERSON
OO
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</TABLE>
2
<PAGE> 3
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
an offer by Everest Realty Investors, LLC, a California limited liability
company (the "Purchaser") to purchase up to 80,000 of the units of interest (the
"Units") of the Partnership at $115 per Unit, less the amount of Distributions
(as defined in the Offer to Purchase) 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 Purchaser 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, as it may be supplemented or amended
from time to time (the "Offer to Purchase") and the related Agreement of
Transfer and Letter of Transmittal, as it may be supplemented or amended from
time to time (the "Letter of Transmittal," which, together with the Offer to
Purchase, constitutes the "Offer"), copies of which are filed as Exhibits 99.2
and 99.3 hereto, respectively. Capitalized terms used but not defined herein
have the meaning ascribed to them in the Offer to Purchase.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is CIGNA Income Realty - I Limited
Partnership, a Delaware limited partnership (the "Partnership"). The address of
the Partnership's principal executive offices is 900 Cottage Grove Road, South
Building, Bloomfield, Connecticut 06002.
(b) The class of equity securities to which this Statement relates is the
Units. Reference is hereby made to the information set forth on the cover page
and in the "Introduction" of the Offer to Purchase, which is incorporated herein
by reference.
(c) Reference is hereby made to the information set forth in the
"Introduction -- Purpose of the Offer" and "Determination of Purchase
Price -- Trading History of the Units" of the Offer to Purchase, which is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) Reference is hereby made to the information set forth in the
"Introduction," "Certain Information Concerning the Purchaser" and Schedule I
("Directors and Executive Officers of the Purchaser") of the Offer to Purchase,
which is incorporated herein by reference.
(e)-(f) During the last five years, neither the Purchaser nor, to the best
of its knowledge, any of the persons listed in Schedule I ("Directors and
Executive Officers of the Purchaser") of the Offer to Purchase has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
any such person 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 of such laws.
(g) Reference is hereby made to the information set forth in Schedule I
("Directors and Executive Officers of the Purchaser") of the Offer to Purchase,
which is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) None.
(b) Reference is hereby made to the information set forth in "General
Information Concerning the Partnership -- Prior Acquisitions of Units and Prior
Contacts" of the Offer to Purchase, which is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) Reference is hereby made to the information set forth in "Certain
Information Concerning the Purchaser -- Source of Funds" of the Offer to
Purchase, which is incorporated herein by reference.
(b)-(c) Not applicable.
3
<PAGE> 4
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSAL OF THE BIDDER.
(a)-(g) Reference is hereby made to the information set forth in the
"Introduction -- Purpose of the Offer," "Future Plans of the Purchaser" and
"Effects of the Offer" of the Offer to Purchase, which is incorporated herein by
reference. Except as set forth in the Offer to Purchase, the Purchaser does not
have any present plans or proposals which would relate to, or would result in,
any transaction, change or other occurrence with respect to the Partnership or
the Units as is listed in paragraphs (a) through (g) of Item 5 of Schedule
14D-1.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) Reference is hereby made to the information set forth in the
"Introduction" and "Certain Information Concerning the Partnership -- Prior
Acquisitions of Units and Prior Contacts" of the Offer to Purchase, which is
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
None.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Reference is hereby made to the information set forth in "Certain Legal
Matters -- Fees and Expenses" of the Offer to Purchase, which is incorporated
herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF BIDDER.
Not applicable. Certain information regarding the ability of the Purchaser
to finance the Offer is set forth in "Certain Information Concerning the
Purchaser -- Source of Funds" of the Offer to Purchase and is incorporated
herein by reference. The incorporation by reference herein of the above
referenced information does not constitute an admission that such information is
material to a decision by a holder of the Units as to whether to sell, tender or
hold Units being bought in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(d) Reference is hereby made to the information set forth in "Certain
Legal Matters" of the Offer to Purchase, which is incorporated herein by
reference.
(e) To the best knowledge of the Purchaser, no such proceedings are pending
or have been instituted.
(f) Reference is hereby made to the entire text of the Offer to Purchase
and the related Letter of Transmittal, which are incorporated herein by
reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
99.1 Summary Advertisement, dated November 18, 1996.
99.2 Offer to Purchase, dated November 18, 1996.
99.3 Agreement of Transfer and Letter of Transmittal.
4
<PAGE> 5
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.
EVEREST REALTY INVESTORS, LLC
By: EVEREST REALTY MANAGEMENT,
LLC, Manager
By: /s/ W. ROBERT KOHORST
----------------------------
W. Robert Kohorst
President
Dated: November 18, 1996
5
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------------------------------------------------------------------- ------------
<C> <S> <C>
99.1 Form of Summary Advertisement, dated November 18, 1996 7
99.2 Offer to Purchase, dated November 18, 1996 8
99.3 Agreement of Transfer and Letter of Transmittal 30
</TABLE>
6
<PAGE> 1
EXHIBIT 99.1
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This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Units. The Offer is being made solely by the Offer to Purchase dated
November 18, 1996 and the related Agreement of Transfer and Letter of
Transmittal and is not being made to, nor will tenders be accepted from or
on behalf of Unitholders that reside in any jurisdiction in which making
or accepting the Offer would violate that jurisdiction's laws. In
those jurisdictions where the laws require the Offer to be made by
a licensed broker or dealer, the Offer shall be deemed to be
made on behalf of the Purchaser, if at all, only by one or more
registered brokers or dealers licensed under the laws of the
applicable jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
UP TO 80,000 UNITS OF INTEREST
IN
CIGNA INCOME REALTY - I
LIMITED PARTNERSHIP
AT
$115 PER UNIT
BY
EVEREST REALTY INVESTORS, LLC
Everest Realty Investors, LLC, a California limited liability company (the
"Purchaser"), is offering to purchase up to 80,000 units of interest ("Units")
in CIGNA Income Realty - I Limited Partnership, a Delaware limited partnership
(the "Partnership"), at a cash purchase price of $115 per Unit (the "Purchase
Price"), less the amount of the Distributions (as defined in the Offer to
Purchase) per Unit, if any, made by the Partnership after the distribution from
operations for the third quarter of 1996 and before the date on which the
Purchaser purchases the tendered Units pursuant to the Offer (as defined below)
and any transfer fees imposed by the Partnership for each transfer. This Offer
is upon the terms and subject to the conditions set forth in the Offer to
Purchase dated November 18, 1996, as it may be supplemented or amended from time
to time (the "Offer to Purchase"), and in the related Agreement of Transfer and
Letter of Transmittal, as it may be supplemented or amended from time to time
(the "Letter of Transmittal," which, together with the Offer to Purchase,
constitutes the "Offer").
THE OFFER, WITHDRAWAL RIGHTS AND PRO-RATION PERIOD WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME ON TUESDAY, DECEMBER 17, 1996
UNLESS THE OFFER IS EXTENDED.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment pursuant to the Offer, and thereby purchased, validly tendered Units if,
as and when the Purchaser gives oral or written notice to the Depositary (as
defined in the Offer to Purchase) of the Purchaser's acceptance for payment of
those Units pursuant to the Offer. A tendering beneficial owner of Units whose
Units are owned of record by an Individual Retirement Account, a Keogh or other
employee benefit plan will not receive direct payment of the Purchase Price;
rather, payment will be made to the custodian of the account or plan. Upon the
terms and subject to the conditions of the Offer, payment for Units accepted for
payment pursuant to the Offer will be made by deposit of the Purchase Price
therefor with the Depositary, which will act as agent for tendering Unitholders
for the purpose of receiving payments from the Purchaser and transmitting
payments to Unitholders whose Units have been accepted for payment.
The Purchaser is making the Offer in order to acquire a substantial equity
interest in the Partnership primarily for investment and does not currently
intend to change current management or the operation of the Partnership and does
not have current plans for any extraordinary transaction involving the
Partnership.
In all cases, payment for Units purchased pursuant to the Offer will be made
only after timely receipt by the Depositary of a properly completed and duly
executed Letter of Transmittal, together with all documents required by the
Letter of Transmittal. If more than 80,000 Units are validly tendered and not
withdrawn on or prior to the Expiration Date, the Purchaser will, upon the terms
and subject to the conditions of the Offer, take into account the number of
Units tendered, accept and pay for an aggregate of 80,000 Units (or, if less,
the maximum number of Units that can be purchased without imposing limitations
on future resales), pro rata, with appropriate adjustments to avoid purchases of
fractional Units and purchases that would cause a Unitholder to tender less than
10 Units and if the Unitholder (a) is a Qualified Plan (as defined in the Offer
to Purchase), to retain less than 4 Units, or (b) is not a Qualified Plan, to
retain less than 10 Units. Under no circumstance will interest on the Purchase
Price for Units be paid, regardless of any delay in making the payment to
Unitholders.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Tuesday, December 17, 1996, unless the Purchaser in its sole discretion extends
the period of time during which the Offer is open, in which event the term
"Expiration Date" will mean the latest time and date at which the Offer, as so
extended by the Purchaser, will expire. Subject to the applicable regulations of
the Securities and Exchange Commission, the Purchaser expressly reserves the
right, at any time, to extend the period of time during which the Offer is open
for any reason, including the occurrence of any of the events specified in the
Offer to Purchase, by giving oral or written notice of the extension to the
Depositary. Any extension will be followed as promptly as practicable by a press
release or public announcement made no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date.
Tenders of Units made pursuant to the Offer are irrevocable, except that Units
tendered pursuant to the Offer may be withdrawn at any time on or prior to the
Expiration Date and, unless already accepted for payment by the Purchaser
pursuant to the Offer, may also be withdrawn at any time after January 17, 1997.
For withdrawal to be effective, a written or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses set
forth on the back cover of the Offer to Purchase. Any notice of withdrawal must
specify the name of the person(s) 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. Any Units properly withdrawn
will be deemed not validly tendered for purposes of the Offer. Withdrawn Units
may be re-tendered, however, at any time prior to the Expiration Date.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended (the "Act"), is contained in the Offer to Purchase and is incorporated
herein by reference.
A request is being made under Rule 14d-5 under the Act, for the use of the
list of the Unitholders for the purpose of disseminating the Offer to
Unitholders. Upon compliance by the Partnership with the request, the Offer to
Purchase and the Letter of Transmittal and, if required, other relevant
materials will be mailed to registered owners of Units and will be furnished to
brokers, banks and similar persons whose names, or whose nominees, appear on the
list of Unitholders, or, if applicable, who are listed as participants in a
clearing agency's security position listing for subsequent transmittal to
beneficial owners of Units.
Questions and requests for assistance may be directed to the Information Agent
at its address and telephone number set forth below. Requests for copies of the
Offer to Purchase and the related Letter of Transmittal may be directed to the
Information Agent, and copies will be furnished promptly at the Purchaser's
expense. The Purchaser will not pay any fees or commissions to any broker or
dealer or any other person (other than to the Information Agent) in connection
with the solicitation of tenders of Units pursuant to the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 WATER STREET
NEW YORK, NEW YORK 10005
(212) 269-5550
(800) 431-9645 (TOLL FREE)
November 18, 1996
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<PAGE> 1
EXHIBIT 99.2
November 18, 1996
$115.00 PER UNIT CASH OFFER
TO ALL UNITHOLDERS OF
CIGNA INCOME REALTY - I
LIMITED PARTNERSHIP
Dear Unitholder:
Enclosed for your immediate consideration is an OFFER TO PURCHASE up to
80,000 Units of CIGNA Income Realty - I Limited Partnership (the "Partnership")
FOR A CASH PRICE OF $115.00 per Unit, without interest, less the amount of
Distributions (as defined in the Offer to Purchase) per Unit made by the
Partnership after the distribution from operations for the third quarter for
1996 until the date on which the tendered Units are purchased, less any
Partnership transfer fees. The Offer is not subject to brokerage commissions.
WE URGE YOU TO CONSIDER THE FOLLOWING POINTS AS DISCUSSED IN GREATER DETAIL
IN THE OFFER TO PURCHASE:
- THE PARTNERSHIP'S PUBLICLY FILED DOCUMENTS STATE THAT THERE IS NO
ESTABLISHED PUBLIC TRADING MARKET FOR the Units and that the General
Partner will not redeem or repurchase the Units. Consequently, the Offer
presents an opportunity to dispose of Units for cash that might not be
available otherwise.
- THE GENERAL PARTNER HAS NOT ANNOUNCED ANY SPECIFIC PLANS FOR LIQUIDATING
THE PARTNERSHIP.
- THE OFFER ALLOWS UNITHOLDERS TO DISPOSE OF THEIR UNITS WITHOUT INCURRING
THE SALES COMMISSIONS (approximately 10%) typically associated with
transfers of Units arranged through brokers or other intermediaries.
- THE OFFER IS AN IMMEDIATE OPPORTUNITY FOR UNITHOLDERS TO LIQUIDATE THEIR
INVESTMENTS IN THE Partnership, subject to proration, if necessary.
- THE UNITHOLDERS WHO ACCEPT THE OFFER WILL LIKELY RECEIVE NO FURTHER
PARTNERSHIP K-1S AFTER THE 1996 K-1.
We urge you to read carefully the Offer to Purchase for a full disclosure
of information pertinent to this Offer.
FOR ANSWERS TO ANY QUESTIONS YOU MIGHT HAVE REGARDING THESE MATERIALS OR
OUR OFFER, OR ASSISTANCE IN THE PROCEDURES FOR ACCEPTING OUR OFFER AND TENDERING
YOUR UNITS, PLEASE CONTACT OUR INFORMATION AGENT, D.F. KING & CO., INC. AT (800)
431-9645.
SINCERELY,
EVEREST REALTY INVESTORS, LLC
<PAGE> 2
OFFER TO PURCHASE FOR CASH
UP TO 80,000 UNITS OF
CIGNA INCOME REALTY - I
LIMITED PARTNERSHIP
FOR
$115 PER UNIT
BY
EVEREST REALTY INVESTORS, LLC
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME ON TUESDAY, DECEMBER 17, 1996
UNLESS THE OFFER IS EXTENDED.
Everest Realty Investors, LLC, a California limited liability company (the
"Purchaser") is offering to purchase up to 80,000 units of interest ("Units") in
Cigna Income Realty - I Limited Partnership, a Delaware limited partnership (the
"Partnership"), at a net cash price of $115 per Unit (the "Purchase Price"),
less the amount of Distributions (as defined below) per Unit, if any, made by
the Partnership after the distribution from operations for the third quarter of
1996, and before the date on which the Purchaser purchases the Units tendered
pursuant to the Offer (as defined below) and any transfer fees imposed by the
Partnership for each transfer. The Offer is subject to certain terms and
conditions. This Offer is upon the terms set forth in this Offer to Purchase
(the "Offer to Purchase") and in the related Agreement of Transfer and Letter of
Transmittal (the "Letter of Transmittal"), as each may be supplemented or
amended from time to time. The Offer to Purchase and the Letter of Transmittal
constitute the "Offer." The Offer is not conditioned upon financing.
------------------------
For More Information or for Further Assistance Please Call
or Contact the Information Agent:
D.F. KING & CO., INC.
77 WATER STREET
NEW YORK, NEW YORK 10005
(212) 269-5550
(800) 431-9645 (TOLL FREE)
November 18, 1996
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION.......................................................................... 1
PURPOSE OF THE OFFER
DETAILS OF THE OFFER.................................................................. 2
1. TERMS OF THE OFFER; EXPIRATION DATE........................................... 2
2. ACCEPTANCE FOR PAYMENT AND PAYMENT OF PURCHASE PRICE.......................... 2
3. PROCEDURE TO ACCEPT THE OFFER................................................. 3
4. DETERMINATION OF VALIDITY; REJECTION OF UNITS; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS.......................................... 3
5. WITHDRAWAL RIGHTS............................................................. 4
6. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT............................ 4
7. CONDITIONS OF THE OFFER....................................................... 5
8. BACKUP FEDERAL INCOME TAX WITHHOLDING......................................... 6
9. FIRPTA WITHHOLDING............................................................ 6
CERTAIN INFORMATION CONCERNING THE PARTNERSHIP........................................ 6
GENERAL
DESCRIPTION OF THE PROPERTIES
OUTSTANDING UNITS
SELECTED FINANCIAL AND PROPERTY RELATED DATA
PRIOR ACQUISITIONS OF UNITS AND PRIOR CONTACTS
DETERMINATION OF PURCHASE PRICE....................................................... 7
TRADING HISTORY OF THE UNITS
NET ASSET VALUE
HOLDING PERIODS OF PROPERTIES; ALTERNATIVES
CERTAIN INFORMATION CONCERNING THE PURCHASER.......................................... 8
THE PURCHASER
GENERAL
SOURCE OF FUNDS
FUTURE PLANS OF THE PURCHASER......................................................... 9
EFFECTS OF THE OFFER.................................................................. 9
LIMITATIONS ON RESALES
INFLUENCE ON UNITHOLDER VOTING DECISIONS BY THE PURCHASER
CERTAIN FEDERAL INCOME TAX MATTERS.................................................... 10
CERTAIN LEGAL MATTERS................................................................. 11
GENERAL
STATE TAKEOVER STATUTES
FEES AND EXPENSES
MISCELLANEOUS
SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER.......................... 13
Appendix A
</TABLE>
i
<PAGE> 4
INTRODUCTION
The Purchaser hereby offers to purchase up to 80,000 Units in the
Partnership at a cash purchase price of $115 per Unit, less the amount of
Distributions per Unit, if any, made by the Partnership after the distribution
from operations for the third quarter of 1996 until the date on which the
Purchaser purchases the Units tendered pursuant to the Offer and any transfer
fees imposed by the Partnership for each transfer.
PURPOSE OF THE OFFER. The purpose of the Offer is for the Purchaser to
acquire a substantial equity interest in the Partnership primarily for
investment.
In considering the Offer, holders of Units ("Unitholders") may wish to
consider the following:
- The Partnership's publicly filed documents state that there is no
established public trading market for the Units and that the General
Partner will not redeem or repurchase the Units. The Partnership has also
announced a policy of not permitting transfers that might cause the
Partnership to be treated as a "publicly traded partnership."
Consequently, the Offer presents an opportunity to dispose of Units for
cash that might not be available otherwise.
- The General Partner has not announced any specific plans for liquidating
the Partnership.
- The Purchaser is making the Offer with a view to making a profit for
itself. Accordingly, there is a conflict between the desire of the
Purchaser to purchase Units at a low price and the desire of the
Unitholders to sell their Units at a high price.
- The Offer allows Unitholders to dispose of their Units without incurring
the sales commissions (approximately 10%) typically associated with
transfers of Units arranged through brokers or other intermediaries.
- If the Purchaser becomes the registered owner of sufficient Units, the
Purchaser may be able to significantly influence voting decisions with
respect to the Partnership.
- The Offer is an immediate opportunity for Unitholders to liquidate their
investments in the Partnership, but Unitholders who tender their Units
will be giving up the opportunity to participate in any potential future
benefits from ownership of Units.
- Unitholders who accept the Offer will likely receive no further
Partnership K-1's after the 1996 K-1.
Each Unitholder must make its own decision, based on the Unitholder's
particular circumstances, whether to tender Units and, if so, how many Units to
tender. Unitholders should consult with their respective advisors about the
financial, tax, legal and other implications of accepting the Offer.
1
<PAGE> 5
DETAILS OF THE OFFER
1. Terms of the Offer; Expiration Date; Proration. On the terms and
subject to the conditions of the Offer, the Purchaser will accept and purchase
up to 80,000 Units that are validly tendered in accordance with the procedures
set forth in Section 3 on or prior to the Expiration Date and not withdrawn in
accordance with the procedures set forth in Section 5. For purposes of the
Offer, the term "Expiration Date" means 12:00 Midnight, New York City time on
Tuesday, December 17, 1996, unless the Purchaser in its sole discretion extends
the period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as
extended by the Purchaser, shall expire.
If, prior to the Expiration Date, the Purchaser increases the Purchase
Price offered to the Unitholders pursuant to the Offer, the increased Purchase
Price will be paid for all Units accepted for payment pursuant to the Offer,
whether or not the Units were tendered prior to the increase in consideration.
If more than 80,000 Units are validly tendered in accordance with the
procedures specified in Section 3 and not properly withdrawn in accordance with
the procedures specified in Section 5 on or prior to the Expiration Date, (or if
the number of units tendered would be in excess of the number that can be
transferred without imposing limitations on resales) the Purchaser will, upon
the terms and subject to the conditions of the Offer, take into account the
number of Units so tendered, accept for payment and pay for an aggregate of
80,000 Units (or, if less, the maximum number which can be transferred without
imposing limitations on resales), pro rata, according to the number of Units
validly tendered by each Unitholder and not properly withdrawn on or prior to
the Expiration Date, with appropriate adjustments to avoid purchases of
fractional Units, and purchases that would cause a Unitholder to sell fewer than
10 Units and that would cause a Unitholder who sells fewer than all of its Units
to continue to hold fewer than 4 Units if the Unitholder is a Qualified Plan or
fewer than 10 Units if the Unitholder is not a Qualified Plan. If the number of
Units validly tendered and not properly withdrawn on or prior to the Expiration
Date is less than or equal to 80,000 Units, (or, if less, the maximum number
which can be transferred without imposing limitations on resales) the Purchaser
will purchase all Units so tendered and not withdrawn, upon the terms and
subject to the conditions of the Offer.
If proration of tendered Units is required, the Purchaser may not be able
to announce the final results of the proration until at least approximately
seven business days after the Expiration Date because of the difficulty of
determining the proration results. The Purchaser does not intend to pay for any
Units accepted for payment pursuant to the Offer until the final proration or
other adjustment results are known.
If on or prior to the Expiration Date any or all of the conditions have not
been satisfied or waived, the Purchaser reserves the right to: (i) decline to
purchase any of the Units tendered, terminate the Offer and return all tendered
Units, (ii) waive 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 right of Unitholders to withdraw Units until the Expiration Date,
retain the Units that have been tendered during the period or periods for which
the Offer is extended, and (iv) amend the Offer.
2. Acceptance for Payment and Payment of Purchase Price. On the terms and
subject to the conditions of the Offer, the Purchaser will purchase and will pay
for up to 80,000 Units validly tendered in accordance with the procedures set
forth in Section 3 and not withdrawn in accordance with the procedures specified
in Section 5, as promptly as practicable following the Expiration Date. For
Units whose registered owner is an Individual Retirement Account, a Keogh or
other employment benefit plan (each a "Qualified Plan") payment will be made to
the custodian of such account or plan. In all cases, payment for Units purchased
pursuant to the Offer will be made only after timely receipt by the Depositary
of: (i) a properly completed and duly executed and acknowledged Letter of
Transmittal (or facsimile thereof) and (ii) any other documents required in
accordance with the Letter of Transmittal.
UNDER NO CIRCUMSTANCE WILL INTEREST ON THE PURCHASE PRICE BE PAID,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
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If any tendered Units are not purchased for any reason (other than
proration adjustments), the original Letter of Transmittal with respect to the
Units may be destroyed by the Depositary (in accordance with its customary
practice). If for any reason acceptance of payment of, or payment for, any Units
tendered pursuant to the Offer is delayed or the Purchaser is unable to accept
for payment, purchase or pay for Units tendered, then, without prejudice to the
Purchaser's rights under Section 4, the Depositary may, nevertheless, on behalf
of the Purchaser, retain documents concerning tendered Units, and those Units
may not be withdrawn except to the extent that the tendering Unitholders are
entitled to withdrawal rights as described in Section 5; subject, however, to
the Purchaser's obligation under Rule 14e-1(c) under the Exchange Act to pay
Unitholders the Purchase Price in respect of Units tendered or return documents,
if any, representing those Units promptly after termination or withdrawal of the
Offer.
3. Procedure to Accept the Offer. For Units to be validly tendered
pursuant to the Offer the Depositary must receive, at one of its addresses
listed on the back page of this Offer to Purchase on or prior to the Expiration
Date, a properly completed and duly executed Letter of Transmittal, together
with all documents required by the Letter of Transmittal.
A Unitholder may tender any or all of the Units owned by that Unitholder;
provided, however, that to comply with the Partnership's Partnership Agreement
(the "Partnership Agreement") the Unitholder must tender at least 10 Units (four
Units for Qualified Plans) and if the Unitholder desires to tender less than all
of its Units and (a) if the Unitholder is a Qualified Plan, then the Unitholder
must retain at least 4 Units, or (b) if the Unitholder is not a Qualified Plan,
then the Unitholder must retain at least 10 Units.
The method of delivery of the Letter of Transmittal, and all other required
documents is at the option and risk of the tendering Unitholder, and delivery
will be deemed made only when actually received by the Depositary. If delivery
is by mail, registered mail with return receipt requested, properly insured, is
recommended. In all cases, sufficient time should be allowed to assure timely
delivery.
By executing and delivering a Letter of Transmittal, a tendering Unitholder
irrevocably appoints the Purchaser and its officers, and each of them or any
other designee of the Purchaser, the attorneys-in-fact and proxies of the
Unitholders, in the manner set forth in the Letter of Transmittal, each with
full power of substitution, to the full extent of the Unitholder's rights with
respect to the Units tendered by the Unitholder and accepted for payment by the
Purchaser (and with respect to any and all distributions, other Units, rights or
other securities issued or issuable in respect thereof; collectively,
"Distributions"), including without limitation the right to direct any IRA
custodian, trustee or other record owner to execute and deliver the Letter of
Transmittal and to complete the transfer contemplated thereby. All such proxies
will be considered coupled with an interest in the tendered Units, are
irrevocable and are granted in consideration of, and are effective upon, the
acceptance for payment of the Units by the Purchaser in accordance with the
terms of the Offer. Upon acceptance for payment, all prior powers of attorney
and proxies given by the Unitholder with respect to the Units and Distributions
will, without further action, be revoked, and no subsequent powers of attorney
or proxies may be given (and, if given, will be without force or effect). The
designees of the Purchaser will, with respect to the Units for which the
appointment is effective, be empowered to exercise all voting and other rights
of the Unitholder as they in their sole discretion may deem proper at any
meeting of the Partnership or any adjournment or postponement thereof. In order
for Units to be deemed validly tendered, immediately upon the Purchaser's
acceptance for payment of the Units, the Purchaser or its designee must be able
to exercise full voting rights with respect to the Units, including voting at
any meeting of the Partnership's Limited Partners.
By executing and delivering a Letter of Transmittal, a tendering Unitholder
irrevocably assigns to the Purchaser and its assigns all of the right, title and
interest of the Unitholder in and to any and all Distributions made by the
Partnership from and after the date of acceptance with respect to Units accepted
for payment and thereby purchased by the Purchaser.
4. Determination of Validity; Rejection of Units; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions about the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Units pursuant to the Offer will be determined by the Purchaser, in its sole
discretion, which determination will be final and binding. The Purchaser
reserves the absolute right to reject
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<PAGE> 7
any or all tenders of any particular Units determined by it not to be in proper
form or if the acceptance of or payment for those Units may, in the opinion of
Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right
to waive or amend any of the conditions of the Offer that it is legally
permitted to waive and to waive any defect in any tender with respect to any
particular Units. The Purchaser's interpretation of the terms and conditions of
the Offer (including the Letter of Transmittal) will be final and binding. No
tender of Units will be deemed to have been validly made until all defects have
been cured or waived. Neither the Purchaser, the Information Agent, the
Depositary nor any other person will be under any duty to give notification of
any defects in the tender of any Units or will incur any liability for failure
to give any such notification.
A tender of Units pursuant to the procedure described above and the
acceptance for payment of such Units will constitute a binding agreement between
the tendering Unitholder and the Purchaser on the terms set forth in the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment pursuant to this Offer, and thereby purchased, validly tendered
Units if, as and when the Purchaser gives written notice to the Depositary of
the Purchaser's acceptance of those Units for payment pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, payment for Units
accepted for payment pursuant to the Offer will be made by deposit of the
Purchase Price therefor with the Depositary, which will act as agent for
tendering Unitholders for the purpose of receiving payments from the Purchaser
and transmitting those payments to Unitholders whose Units have been accepted
for payment.
5. Withdrawal Rights. Tenders of Units made pursuant to the Offer are
irrevocable, except that Units tendered pursuant to the Offer may be withdrawn
at any time on or prior to the Expiration Date and, unless already accepted for
payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after January 17, 1997. If purchase of, or payment for, Units is delayed
for any reason, including extension by the Purchaser of the Expiration Date, or
if the Purchaser is unable to purchase or pay for Units for any reason (for
example, because of proration adjustments) then, without prejudice to the
Purchaser's rights under the Offer, tendered Units may be retained by the
Depositary and may not be withdrawn, except to the extent that tendering
Unitholders are entitled to withdrawal rights as set forth in this Section 5;
subject, however, to the Purchaser's obligation, pursuant to Rule 14e-1(c) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to pay
Unitholders the Purchase Price in respect of Units tendered promptly after
termination or withdrawal of the Offer.
For withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its addresses
listed on the back cover of this Offer to Purchase. Any notice of withdrawal
must specify the name of the person(s) 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. Any Units properly
withdrawn will be deemed not validly tendered for purposes of the Offer.
Withdrawn Units may be re-tendered, however, by following the procedures
described in Section 3 at any time prior to the Expiration Date.
All questions about the validity and form (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, which determination shall be final and binding. Neither the
Purchaser, the Information Agent, the Depositary nor any other person will be
under any duty to give notice of any defects in any notice of withdrawal or
incur any liability for failure to give any such notice.
6. Extension of Tender Period; Termination; Amendment. The Purchaser
expressly reserves the right, in its sole discretion, at any time, (i) to extend
the period of time during which the Offer is open and thereby delay acceptance
for payment of, and the payment for, any Units, (ii) to terminate the Offer and
not accept for payment any Units not already accepted for payment, (iii) upon
the occurrence of any of the conditions specified in Section 7, to delay the
acceptance for payment of, or payment for, any Units not already accepted for
payment or paid for, and (iv) to amend the 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 any such
extension, termination or amendment will promptly be disseminated to Unitholders
in a manner reasonably designed to inform Unitholders of such change in
compliance with Rule 14d-4(c) under
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<PAGE> 8
the Exchange Act. In the case of an extension of the Offer, the extension 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, in accordance with Rule 14e-1(d) under the Exchange
Act. If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives
a material condition of the Offer, the Purchaser 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.
7. Conditions of the Offer. Notwithstanding any other term of the Offer,
the Purchaser will not be required to accept for payment or to pay for any Units
tendered if all authorizations, consents, orders of, or filings with, or
expirations of waiting periods imposed by, any court, administrative agency or
other governmental authority necessary for the consummation of the transactions
contemplated by the Offer shall not have occurred or been filed, or obtained.
Furthermore, notwithstanding any other term of the Offer and in addition to the
Purchaser's right to withdraw the Offer at any time before the Expiration Date,
the Purchaser will not be required to accept for payment or pay for any Units,
or may delay the acceptance for payment of the Units tendered if, at any time on
or after the date of the Offer and before the acceptance of such Units for
payment or the payment therefor, any of the following conditions exists:
(a) a preliminary or permanent injunction or other order of any
federal or state court, government or governmental 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 the
Offer or the acceptance for payment, purchase of or payment for any Units
by the Purchaser, (ii) imposes or confirms limitations on the ability of
the Purchaser effectively to exercise full rights of both legal and
beneficial ownership of the Units, (iii) requires divestiture by the
Purchaser of any Units, (iv) causes any material diminution of the benefits
to be derived by the Purchaser as a result of the transactions contemplated
by the Offer, (v) might materially adversely affect the business,
properties, assets, liabilities, financial condition, operations, results
of operations or prospects of the Purchaser, or the Partnership, or (vi)
seeks to impose any material condition to the Offer unacceptable to the
Purchaser;
(b) there shall be any action taken, or any statute, rule, regulation
or order proposed, enacted, enforced, promulgated, issued or deemed
applicable to the 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 (vi)
of paragraph (a) above;
(c) any change or development shall have occurred or been threatened
or disclosed in the business, properties, assets, liabilities, financial
condition, operations, results of operations or prospects of the
Partnership, which is or may be materially adverse to the Partnership, or
there shall be any material lien not disclosed in the Partnership's
financial statements, or the Purchaser shall have become aware of any fact
that does or may have a material adverse effect on the value of the Units
or the Properties;
(d) the General Partner of the Partnership shall have failed or
refused to take all other action that the Purchaser deems necessary, in the
Purchaser's judgment, for the Purchaser to be the registered owner of the
Units tendered and accepted for payment hereunder simultaneously with the
consummation of the Offer or as soon thereafter as is permitted under the
Partnership Agreement as in accordance with the Partnership Agreement and
applicable law;
(e) there shall have been threatened, instituted or pending any action
or proceeding before any court or governmental agency or other regulatory
or administrative agency or commission or by any other person, challenging
the acquisition of any Units pursuant to the Offer or otherwise directly or
indirectly relating to the Offer, or otherwise, in the sole judgment of the
Purchaser, adversely affecting the Purchaser, the Partnership or the
Properties or the value of the Units or the benefits expected to be derived
by the Purchaser as a result of the transactions contemplated by the Offer;
(f) the 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,
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<PAGE> 9
(iii) declared or paid any Distribution, other than in cash, on any of the
Units, or (iv) the Partnership or the General Partner 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; or
(g) the General Partner shall have modified, or taken any step or
steps to modify, in any way, the procedures or regulations applicable to
the registration of Units or transfers of Units on the books and records of
the Partnership or the admission of transferees of Units as registered
owners and as Unitholders.
The foregoing conditions are for the sole benefit of the Purchaser and may
be (but need not be) asserted by the Purchaser regardless of the circumstances
giving rise to such conditions or may be waived by the Purchaser in whole or in
part at any time in its sole discretion. Any determination by the Purchaser
concerning the events described above will be final and binding upon all
parties.
8. Backup Federal Income Tax Withholding. To prevent the possible
application of backup federal income tax withholding of 31 percent with respect
to payment of the Purchase Price, a tendering Unitholder must provide the
Purchaser with the Unitholder's correct taxpayer identification number in the
space provided in the Letter of Transmittal.
9. FIRPTA Withholding. To prevent the withholding of federal income tax in
an amount equal to ten percent of the amount of the Purchase Price plus
Partnership liabilities allocable to each Unit purchased, the Letter of
Transmittal includes FIRPTA representations certifying the Unitholder's taxpayer
identification number and address and that the Unitholder is not a foreign
person.
CERTAIN INFORMATION CONCERNING THE PARTNERSHIP
Information contained in this section is based upon documents and reports
publicly filed by the Partnership. Although the Purchaser has no information
that any statements contained in this section are untrue, the Purchaser has not
independently investigated the accuracy of statements, and takes no
responsibility for the accuracy, inaccuracy, completeness or incompleteness of
any of the information contained in this section or for the failure by the
Partnership to disclose events which may have occurred and may affect the
significance or accuracy of any such information.
General. The Partnership was formed on October 15, 1985 under the laws of
the State of Delaware. Its principal executive offices are located at 900
Cottage Grove Road, South Building, Bloomfield, Connecticut 06002. The General
Partner of the Partnership is CIGNA Realty Resources, Inc. - Tenth (the "General
Partner"), which is an indirect wholly-owned subsidiary of CIGNA Corporation, a
publicly held corporation whose stock is traded on the New York Stock Exchange.
The Partnership was formed to invest in, hold and manage income-producing
real estate. Under the Partnership Agreement, the term of the Partnership will
continue until December 31, 2014 unless terminated earlier pursuant to the
provisions of the Partnership Agreement.
At June 30, 1996, the Partnership's investment portfolio consisted of its
interest in the Properties. See Appendix A.
The Partnership is subject to the information reporting requirements of the
Exchange Act, and accordingly, is required to file reports and other information
with the Commission relating to its business, financial results and other
matters. 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 at
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.
Description of the Properties. The Properties consist of three commercial
properties (including one owned through a joint venture) located in Missouri,
Massachusetts and Florida, and one residential property
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<PAGE> 10
located in Arizona. The Partnership acquired the properties for an aggregate
purchase price of approximately $41,450,000. In connection with the purchase the
Partnership owes acquisition fees of $2,500,000 to an affiliate of the General
Partner. The Properties include: Woodland Tech Center, a single-story suburban
office/warehouse containing a net leasable area of approximately 97,383 square
feet, is located on 7.6 acres in West St. Louis County, Missouri; Westford
Corporate Center, an office and research and development building located in
suburban Boston, Massachusetts; Piedmont Plaza, a one level, two anchor,
neighborhood strip shopping center, containing a net leasable area of 150,700
square feet, is located in Apopka, Florida, in northwest Orange County, Florida;
and Overlook Apartments, a multi-family residential facility, is located in
Scottsdale, Arizona. Westford Corporate Center is owned by Westford Office
Venture, a joint venture partnership in which the Partnership owns a 73.92%
equity interest. The remaining equity interest in the venture is held by
Connecticut General Equity Properties - I Limited Partnership, an affiliated
limited partnership.
During 1995, the Partnership attempted to sell its shopping center
property, Piedmont Plaza. After a marketing period and the completion of due
diligence by potential buyers, the Partnership did not sell the Property. As of
December 31, 1995, the Partnership was reevaluating Piedmont Plaza's sale
strategy. Attached hereto as Appendix A are excerpts from the Partnership's 1995
Form 10-K for its fiscal year ended December 31, 1995 filed with the Commission
(the "1995 Form 10-K") more particularly describing the Properties.
Outstanding Units. According to the Partnership's 1995 Form 10-K, there
were 200,000 Units issued and outstanding, held by approximately 3,944
Unitholders, as of December 31, 1995.
Selected Financial and Property Related Data. Attached as Appendix A is a
summary of certain financial and statistical information with respect to the
Partnership and the Properties, all of which has been copied from the
Partnership's Form 10-K for the year ended December 31, 1995 and from the
Partnership's Form 10-Q for the quarter ended June 30, 1996. More comprehensive
financial and other information is included in such reports and other documents
filed by the Partnership with the Commission, and Appendix A is qualified in its
entirety by reference to such reports and other documents and all the financial
information and related notes contained therein.
Prior Acquisitions of Units and Prior Contacts. On May 28, 1996, Everest
Investors 3, LLC ("Everest 3"), an affiliate of Purchaser, commenced an offer to
purchase up to 4.9% of the outstanding Units of the Partnership for a purchase
price of $80 per Unit, less any distributions made by the Partnership after
April 30, 1996. Pursuant to such offer, Everest 3 received tenders for 1,822.9
Units (.93%) of the Partnership. Everest 3 submitted to the General Partner of
the Partnership Agreements of Transfer to effect the acquisition of such 1,822.9
Units. The General Partner initially refused to process the submitted transfers
on the grounds that Everest 3 had not supplied a fully executed Partnership
transfer form. Everest 3 disputed the necessity of providing such form and on
November 7, 1996 entered into an agreement with the General Partner and the
Partnership's transfer agent pursuant to which (i) the General Partner agreed to
accept Everest 3's Agreement of Transfer (which is substantially the same as the
Letter of Transmittal), (ii) Everest 3 would be recognized as a substitute
limited partner for 849.9 Units effective as of October 1, 1996 and for 973
Units effective as of November 1, 1996, and (iii) Everest 3 would indemnify the
Partnership, the General Partner and their affiliates, pay the Partnership's
transfer fee and jointly request with the General Partner that certain tendering
limited partners execute and deliver such Partnership transfer form. Except as
set forth above, neither the Purchaser nor its affiliates are party to any past,
present or proposed material contracts, arrangements, understandings,
relationships, or negotiations with the Partnership or the General Partner.
DETERMINATION OF PURCHASE PRICE
In establishing the Purchase Price, the Purchaser reviewed certain publicly
available information including among other things: (i) the Partnership
Agreement; and (ii) the 1995 Form 10-K and the Partnership's Form 10-Q for the
quarters ended March 31, 1996 and June 30, 1996. Based on that information, the
Purchaser considered several factors, some of which are discussed below.
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<PAGE> 11
Trading History of the Units. Secondary market sales activity for the
Units, including privately negotiated sales, has been limited and sporadic. The
1995 Form 10-K states that "[t]here is no established public trading market for
Units." At present, privately negotiated sales and sales through intermediaries
(such as through the trading system operated by Chicago Partnership Board, Inc.,
which publishes sell offers by holders of Units) are the only means available to
a Unitholder to liquidate an investment in Units (other than the Offer) because
the Units are not listed or traded on any exchange or quoted on any NASDAQ list
or system.
According to Partnership Spectrum, an independent third party source, the
high and low sales price per Unit for the twelve-month period ending on or about
August 31, 1996 were $136 and $75, respectively. Sales may be conducted which
are not reported in the Partnership Spectrum and the prices of sales through
other channels may differ from those reported by the Partnership Spectrum. The
reported gross sales prices may not reflect the net sales proceeds received by
sellers of Units, which typically are reduced by commissions (approximately 10%)
and other secondary market transaction costs. Purchaser does not know whether
the information provided by the Partnership Spectrum is accurate or complete.
Net Asset Value. Based on the values described in the 1995 Form 10-K, the
Purchaser calculated a net asset value for the Partnership, as of December 31,
1995, of $141.29 per Unit (before deducting costs of sale of the Properties and
liquidation of the Partnership). Since this estimate is based only on the
Partnership's published data, the Purchaser does not know if a current appraisal
would produce a higher or a lower value for the Partnership's assets. According
to the Chicago Partnership Board, the General Partner estimates the net asset
value per Unit is $156. The Purchaser is offering to purchase Units, which are a
relatively illiquid investment, and is not offering to purchase the
Partnership's underlying assets. Consequently, the Purchaser believes that the
value of the Units, representing a fractional interest of the Partnership, is
less than the underlying asset value of the Partnership.
Holding Periods of Properties; Alternatives. According to the 1995 Form
10-K, the expected holding period of each of the Properties was from nine to
twelve years. Currently, the Properties have been held for more than ten years.
The 1995 Form 10-K described unsuccessful efforts to sell one property.
Unitholders could, as an alternative to tendering their Units, take a variety of
possible actions including voting to liquidate the Partnership, removing and
replacing the General Partner, causing the Partnership to merge with another
entity or engage in a "roll-up" or similar transaction.
CERTAIN INFORMATION CONCERNING THE PURCHASER
The Purchaser. The Purchaser, a California limited liability company, was
formed on September 18, 1996. The Purchaser has not engaged in any activities to
date, other than those incidental to its organization, purchasing Units and
making the Offer. The principal office of the Purchaser is 3280 E. Foothill
Blvd., #320, Pasadena, CA 91107. The Purchaser is owned by Everest/TJ Partners,
a California general partnership, and by AEW Partners II, a Delaware limited
partnership. The Manager of Purchaser is Everest Realty Management, LLC, a
California limited liability company, and it is the person which manages
Purchaser's affairs. Everest/TJ Partners is owned fifty percent by Everest
Partners, LLC, a California limited liability company and fifty percent by
Thomas Jordan Capital Corporation, a California corporation. Everest Partners,
LLC is the Managing General Partner of Everest/TJ Partners. The General Partner
of AEW Partners II, L.P. is AEW II, L.P., a Delaware limited partnership; the
General Partner of AEW II, L.P. is Partners II Holdings, L.P., a Delaware
limited partnership; the General Partner of Partners II Holdings, L.P. is AEW II
Corporation, a Massachusetts corporation. For certain information concerning the
directors and executive officers of Everest Realty Management, LLC, Everest
Partners, LLC, and AEW II Corporation, see Schedule I to the Offer to Purchase.
General. Except as set forth above or elsewhere in this Offer to Purchase:
(i) the Purchaser does not beneficially own or have a right to acquire, and, to
the best knowledge of the Purchaser, no associate or majority-owned subsidiary
of any of the Purchaser or the persons listed in Schedule I hereto, beneficially
owns or has a right to acquire any Units or any other equity securities of the
Partnership; (ii) the Purchaser does not
8
<PAGE> 12
have, and, to the best knowledge of the Purchaser, neither the persons and
entities referred to in clause (i) above nor any of their executive officers,
directors or subsidiaries has, effected any transaction in the Units or any
other equity securities of the Partnership during the past 60 days other than as
stated in this Offer; (iii) the Purchaser does not have, and, to the best
knowledge of the Purchaser, none of the persons listed in Schedule I hereto has,
any contract, arrangement, understanding or relationship with any other person
with respect to any securities of the Partnership, including, but not limited
to, the transfer or voting thereof, joint ventures, loan or option arrangements,
puts or calls, guarantees of loans, guarantees against loss or the giving or
withholding of proxies, consents or authorizations; (iv) since December 31,
1992, there have been no transactions which would require reporting under the
rules and regulations of the Commission between the Partnership or any of its
affiliates and the Purchaser or any of its subsidiaries or, to the best
knowledge of the Purchaser, any of their executive officers, directors or
affiliates; and (v) since December 31, 1992, there have been no contacts,
negotiations or transactions between the Purchaser or any of its subsidiaries
or, to the best knowledge of the Purchaser, any of the persons listed in
Schedule I hereto, on the one hand, and the Partnership or its affiliates, on
the other hand, concerning a merger, consolidation or acquisition, tender offer
or other acquisition of securities, or a sale or other transfer of a material
amount of assets of the Partnership.
Source of Funds. Based on the Purchase Price of $115.00 per Unit, the
Purchaser estimates that the total amount of funds necessary to purchase all
Units sought by this Offer and to pay related fees and expenses, will be
approximately $9,300,000. The Purchaser expects to obtain these funds by means
of equity capital contributions from its members at the time the Units tendered
pursuant to the Offer are accepted for payment. Such members will fund their
capital contributions through existing cash and other financial assets and
existing lines of credit, which in the aggregate are sufficient to provide the
funds required in connection with the Offer without any additional borrowings.
FUTURE PLANS OF THE PURCHASER
The Purchaser is seeking to acquire Units pursuant to the Offer to acquire
a substantial equity interest in the Partnership, primarily for investment.
Following the completion of the Offer, the Purchaser and persons related to or
affiliated with the Purchaser may acquire additional Units. Any such acquisition
may be made through private purchases, through one or more future tender or
exchange offers or by any other means deemed advisable by the Purchaser in its
sole discretion. Any such acquisition may be at a price higher or lower than the
price to be paid for the Units purchased pursuant to the Offer, and may be for
cash or other consideration. The Purchaser also may consider selling some or all
of the Units it acquires pursuant to the Offer, either directly or by a sale of
one or more interests in the Purchaser itself, depending among other things on
liquidity, strategic, tax and other considerations.
The Purchaser does not currently intend to change current management or the
operation of the Partnership and does not have current plans for any
extraordinary transaction involving the Partnership. However, these plans could
change at any time in the future. If any transaction is effected by the
Partnership and financial benefits accrue to the Unitholders, the Purchaser and
its affiliates will participate in those benefits to the extent of their
ownership of the Units.
Except as set forth in this Offer to Purchase, the Purchaser has no present
plans or proposals that would result in an extraordinary transaction, such as a
merger, reorganization, liquidation, reallocation of operations or sale or
transfer of assets involving the Partnership or any material changes in the
Partnership's structure, business or composition of its management or personnel.
EFFECTS OF THE OFFER
Limitations on Resales. The Partnership Agreement provides that no
assignment of Units by a Unitholder may be made if the Units sought to be
assigned, when added to the total of all other Units assigned within the period
of 12 consecutive months prior to the proposed date of assignment would, in the
opinion of counsel for the Partnership, result in the termination of the
Partnership for federal income tax purposes (which termination may occur when
50% or more of the Units are transferred in a twelve-month period). This
9
<PAGE> 13
provision may limit sales of Units on the secondary market and in private
transactions for the twelve-month period following completion of the Offer.
Accordingly, the Partnership may not recognize any requests for recognition of a
transferee Unitholder upon a transfer of Units during such twelve-month period
if the General Partner believes the transfers would cause a tax termination of
the Partnership.
Influence on Unitholder Voting Decisions by the Purchaser. Under the
Partnership Agreement, Unitholders holding a majority of the Units are entitled
to take action with respect to a variety of matters, including removal of the
General Partner, dissolution and termination of the Partnership, and approval of
most types of amendments to the Partnership Agreement. If the Purchaser obtains
all 80,000 Units sought, its influence on such actions will increase.
CERTAIN FEDERAL INCOME TAX MATTERS
The following summary is a general discussion of certain of the federal
income tax consequences of a sale of Units pursuant to the Offer. The summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), applicable
Treasury regulations thereunder, administrative rulings, and judicial authority,
all as of the date of the 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 a particular Unitholder in light of such Unitholder's specific
circumstances, nor does it describe any aspect of state, local, foreign or other
tax laws. Sales of Units pursuant to the Offer will be taxable transactions
under applicable state, local, foreign and other tax laws. UNITHOLDERS SHOULD
CONSULT THEIR RESPECTIVE TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO
EACH SUCH UNITHOLDER OF SELLING UNITS PURSUANT TO THE OFFER.
In general, a Unitholder will recognize gain or loss on a sale of Units
pursuant to the Offer equal to the difference between (i) the Unitholder's
"amount realized" on the sale and (ii) the Unitholder's adjusted tax basis in
the Units sold. The amount of a Unitholder's adjusted tax basis in such Units
will vary depending upon the Unitholder's particular circumstances. The "amount
realized" with respect to a Unit will be a sum equal to the amount of cash
received by the Unitholder for the Unit pursuant to the Offer (that is, the
Purchase Price), plus the amount of the Partnership's liabilities allocable to
the Unit (as determined under Code Section 752).
The gain or loss recognized by a Unitholder on a sale of a Unit pursuant to
the Offer generally will be treated as a capital gain or loss if the Unit was
held by the Unitholder as a capital asset. That capital gain or loss will be
treated as long-term capital gain or loss if the tendering Unitholder's holding
period for the Unit exceeds one year. Under current law, long-term capital gains
of individuals are taxed at a maximum marginal federal income tax rate of 28
percent, whereas the maximum marginal federal income tax rate for ordinary
income of such persons is approximately 39.6 percent. Capital losses are
deductible only to the extent of capital gains, except that individual taxpayers
may deduct up to $3,000 of capital losses in excess of the amount of their
capital gains against ordinary income. Excess capital losses generally can be
carried forward to succeeding years (a corporation's carry-forward period is
five years and an individual taxpayer can carry forward such losses
indefinitely).
A tendering Unitholder will be allocated a pro rata share of the
Partnership's taxable income or loss for the year of the sale with respect to
the Units sold in accordance with the provisions of the Partnership Agreement
concerning transfers of Units. Such allocation and any cash distributed by the
Partnership to the Unitholder for that year will affect the Unitholder's
adjusted tax basis in Units and, therefore, the amount of such Unitholder's
taxable gain or loss upon a sale of Units pursuant to the Offer.
Under Code Section 469, individuals and certain types of corporations
generally are able to deduct "passive activity losses" in any year only to the
extent of the person's passive activity income for that year. Substantially all
post-1986 losses of Unitholders from the Partnership are passive activity
losses. Unitholders may have "suspended" passive activity losses from the
Partnership (i.e., post-1986 net taxable losses in excess of statutorily
permitted "phase-in" amounts and which have not been used to offset income from
other passive activities).
10
<PAGE> 14
If a Unitholder sells less than all of its Units pursuant to the Offer, a
loss recognized by that Unitholder can be currently deducted (subject to the
other applicable limitations) to the extent of the Unitholder's passive income
from the Partnership for that year plus any other passive activity income for
that year, and a gain recognized by a Unitholder upon the sale of Units can be
offset by the Unitholders' current or "suspended" passive activity losses (if
any) from the Partnership and other sources. If, on the other hand, a Unitholder
sells 100 percent of its Units pursuant to the Offer, any "suspended" losses and
any losses recognized upon the sale of the Units will be offset first against
any other net passive gain to the Unitholder from the sale of the Units and any
other net passive activity income from other passive activity investments, and
the balance of any "suspended" net losses from the Units will no longer be
subject to the passive activity loss limitation and, therefore, will be
deductible by such Unitholder from its other income (subject to any other
applicable limitations). If more than 80,000 Units are tendered, some tendering
Unitholders may not be able to sell 100 percent of their Units pursuant to the
Offer because of proration of the number of Units to be purchased by the
Purchaser.
Unitholders (other than tax-exempt persons, corporations and certain
foreign individuals) who tender Units may be subject to 31 percent backup
withholding unless those Unitholders provide a taxpayer identification number
("TIN") and are certain that the TIN is correct or properly certify that they
are awaiting a TIN. A Unitholder may avoid backup withholding by properly
completing and signing the Substitute Form W-9 included as part of the Letter of
Transmittal. If a Unitholder who is subject to backup withholding does not
properly complete and sign the substitute Form W-9, the Purchaser will withhold
31 percent from payments to such Unitholder.
A Unitholder who tenders Units must file an information statement with his
federal income tax return for the year of the sale which provides the
information specified in Treasury Regulation Section 1.751-1(a)(3). The selling
Unitholder must also notify the Partnership of the date of the transfer and the
names, addresses and tax identification numbers of the transferrors and
transferee within 30 days of the date of the transfer (or, if earlier, January
15 of the following calendar year) (See IRS Form 8308).
CERTAIN LEGAL MATTERS
General. Except as set forth in this Section, the Purchaser is 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 the Purchaser pursuant to the Offer. The Purchaser's
obligation to purchase and pay for Units is subject to certain conditions,
including conditions related to the legal matters discussed in this Section.
State Takeover Statutes. The Partnership was formed under the laws of the
State of Delaware, which currently does not have any takeover statute applicable
to limited partnerships. However, it is a condition to the Offer that no state
or federal statute impose a material limitation on the Purchaser's right to vote
the Units purchased pursuant to the Offer. If this condition is not met,
Purchaser may terminate or amend the Offer.
If any person seeks to apply any state takeover statute, the Purchaser will
take such action as then appears desirable, which action may include challenging
the validity or applicability of any such statute in appropriate court
proceedings. If there is a claim that one or more takeover statutes apply to the
Offer, and it is not determined by an appropriate court that such statutes do
not apply or are invalid as applied to the Offer, the Purchaser might be
required to file certain information with, or receive approvals from, the
relevant state authorities. This could prevent the Purchaser from purchasing or
paying for Units tendered pursuant to the Offer, or cause delay in continuing or
consummating the Offer. In such case, the Purchaser may not be obligated to
accept for payment or pay for Units tendered.
Fees and Expenses. Except as set forth in this Section, the Purchaser will
not pay any fees or commissions to any broker, dealer or other person for
soliciting tenders of Units pursuant to the Offer. The Purchaser has retained
D.F. King & Co., Inc. to act as Information Agent and IBJ Schroder Bank & Trust
Company to act as Depositary in connection with the Offer. The Purchaser will
pay the Information Agent and the Depositary reasonable and customary
compensation for their respective services in connection with
11
<PAGE> 15
the Offer, plus reimbursement of out-of-pocket expenses, and will indemnify the
Information Agent and the Depositary against certain liabilities and expenses in
connection therewith, including liabilities under the federal securities laws.
The Purchaser will also pay all costs and expenses of printing and mailing the
Offer and its legal fees and expenses. The Purchaser will reduce the purchase
price of Units by any transfer fees imposed by the Partnership.
Miscellaneous. The Offer is not made to (nor will tenders be accepted on
behalf of) Unitholders residing in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the securities
or other laws of such jurisdiction. However, the Purchaser may, in its
discretion, take such action as it deems necessary to make the Offer in any
jurisdiction and extend the Offer to Unitholders in such jurisdiction.
In any jurisdiction where the securities or other laws require the Offer to
be made by a licensed broker or dealer, the Offer will be deemed to be made on
behalf of the Purchaser by one or more registered brokers or dealers that are
licensed under the laws of such jurisdiction.
The Purchaser has filed with the Commission a Tender Offer Statement on
Schedule 14D-1 pursuant to Rule 14d-3 under the Exchange Act, furnishing certain
additional information with respect to the Offer, and may file amendments
thereto. The Schedule 14D-1 and any amendments thereto, including exhibits, may
be inspected and copies may be obtained at the same places and in the same
manner as set forth under the caption "CERTAIN INFORMATION CONCERNING THE
PARTNERSHIP -- GENERAL" (except that they will not be available at the regional
offices of the Commission).
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser 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.
EVEREST REALTY INVESTORS, LLC
November 18, 1996
12
<PAGE> 16
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
The business address of each executive officer and director of Everest
Realty Management, LLC and of Everest Partners, LLC is 3280 E. Foothill
Boulevard, #320, Pasadena, California 91107. Each executive officer and director
is a United States citizen. The name and principal occupation or employment of
each executive officer and director of Everest Realty Management, LLC and of
Everest Partners, LLC, are set forth below.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME POSITION AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------------- ------------------------------------------------------
<S> <C>
W. Robert Kohorst.................... President of Everest Realty Management, LLC, and
Everest Partners, LLC from 1996 -- present. President
and Director of Everest Properties, Inc., from
1994 -- present. President and Director of KH
Financial, Inc., from 1991 -- present.
David I. Lesser...................... Executive Vice President and Secretary of Everest
Realty Management, LLC, and Everest Partners, LLC from
1996 -- present. Executive Vice President of Everest
Properties, Inc., from 1995 -- present. Principal and
member of Feder, Goodman & Schwartz, Inc. from
1992 -- 1996. Counsel to Howard, Rice, Nemerovski,
Canady, Robertson & Falk from 1990 -- 1992.
</TABLE>
The business address of each executive officer and director of AEW II
Corporation is 225 Franklin Street, Boston, Massachusetts 02110-2803. Each
executive officer and director is a United States citizen. The name and
principal occupation or employment of each executive officer and director of AEW
II Corporation are set forth below.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME POSITION AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------------- ------------------------------------------------------
<S> <C>
Joseph F. Azrack..................... Director and President of AEW II Corporation from
September 30, 1995 to present. President and Chief
Executive Officer of Aldrich Eastman & Waltch, L.P.
since 1991.
J. Grant Monahon..................... Director and Vice President and Clerk of AEW II
Corporation from September 30, 1995 to present.
General Counsel of Aldrich Eastman & Waltch, L.P.
since 1991.
Thomas H. Nolan, Jr.................. Director and Vice President of AEW II Corporation from
September 30, 1995 to present. Director of Portfolio
Management for Aldrich Eastman & Waltch, L.P. since
1991.
</TABLE>
13
<PAGE> 17
APPENDIX A
THE FOLLOWING INFORMATION HAS BEEN COPIED FROM THE PARTNERSHIP'S REPORT ON
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995.
ITEM 1. BUSINESS
The Registrant, CIGNA Income Realty - I Limited Partnership (the
"Partnership"), was formed on October 15, 1985, under the Delaware Revised
Uniform Limited Partnership Act for the purpose of acquiring, operating, holding
for investment and disposing of industrial and office buildings, retail and
service center space and, to a lesser extent, residential properties. On
February 4, 1986, the Partnership commenced an offering of $35,000,000 (subject
to increase up to $50,000,000) of Limited Partnership Interests (the "Units") at
$250 per Unit, pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933 (Registration No. 33-1818).
The General Partner of the Partnership is CIGNA Realty Resources,
Inc. - Tenth (the "General Partner"), which is an indirect wholly owned
subsidiary of CIGNA Corporation, a publicly held corporation whose stock is
traded on the New York Stock Exchange.
The offering terminated on December 1, 1987, with a total of 200,000 Units
having been sold to the public. The holders of 110,042 Units representing 64,146
non-taxable and 45,896 taxable Units were admitted to the Partnership in 1986;
the holders of the remaining 89,958 Units, representing 51,109 non-taxable and
38,849 taxable Units, were admitted to the Partnership in 1987. From the 200,000
Units sold, the Partnership received net proceeds of $45,463,209. The holders of
units ("Unit Holders" or "Limited Partners") of the Partnership share in the
ownership of the Partnership's real property investments according to the number
of Units held. Subsequent to admittance to the Partnership, no Unit Holder has
made any additional capital contribution. The Partnership is engaged solely in
the business of real estate investment. A presentation of information about
industry segments is not applicable.
The Partnership is engaged in passive activities and therefore its
investors are subject to the applicable provisions of the Internal Revenue
Service Code and Regulations. Losses from "passive activities" (which include
any rental activity) may only offset income from "passive activities".
Investors' passive losses in excess of passive income from all sources are
suspended and are carried over to future years when they may be deducted against
passive income generated by the Partnership in such year (including gain
recognized on the sale of the Partnership's assets) or against passive income
derived by investors from other sources. Any suspended losses remaining
subsequent to Partnership dissolution may be used by investors to offset
ordinary income.
The Partnership has acquired three commercial properties (including one
owned through a joint venture) located in Missouri, Massachusetts and Florida,
and one residential property located in Arizona. In order to acquire the
properties, the Partnership, which purchased its properties for all cash,
invested a total of $41,254,243 and paid $179,539 in acquisition expenses and
fees to non-affiliates. In conjunction with these purchases, the Partnership
owes acquisition fees of $2,500,000 to an affiliate of the General Partner.
Pursuant to the limited partnership agreement of the Partnership ("Partnership
Agreement"), the fees are payable from adjusted cash from operations
subordinated to a 6% non-cumulative, non-compounded annual return to Limited
Partners on their adjusted invested capital or, if necessary, from cash from
property sales. To date, no such fees have been paid and the General Partner
expects payment to be made as properties are sold.
Pursuant to the Partnership Agreement, the Partnership is required to
terminate on or before December 31, 2014. The Partnership anticipated that prior
to its termination and dissolution, some or all of the Partnership's properties
would be sold, the retention or sale of any property dependent, in part, on the
anticipated remaining economic benefits of continued ownership. It was expected
that most sales would occur after a period of ownership extending from nine to
twelve years.
A-1
<PAGE> 18
The Partnership has made the real property investments set forth in the
following table:
<TABLE>
<CAPTION>
PURCHASE ACQUISITION
PRICES FEES AND DATE OF TYPE OF
NAME, TYPE OF PROPERTY AND LOCATION (A)(B)(C) EXPENSES (D) SIZE (E) PURCHASE OWNERSHIP
- ------------------------------------- ----------- ------------ --------------- -------- ------------------
<S> <C> <C> <C> <C> <C>
1. Woodlands Tech Center............. $ 7,820,000 $605,586 98,400 sq. ft. 07/03/86 100% fee simple
St. Louis, MO interest
2. Westford Corporate Center......... $12,598,206 $733,542 162,835 sq. ft. 11/01/86 73.92% fee simple
Westford, MA (f) interest
3. Piedmont Plaza Shopping Center.... $10,636,037 $640,406 147,750 sq. ft. 05/01/87 100% fee simple
Apopka, FL interest
4. Overlook Apartments............... $10,200,000 $700,005 224 units 10/14/88 100% fee simple
Scottsdale, AZ interest
</TABLE>
- ---------------
(a) Excludes all broker fees.
(b) The Partnership did not incur any debt in connection with the acquisition of
investment properties.
(c) The table does not reflect purchase price adjustments resulting from earnout
and master lease provisions.
(d) Pursuant to the Partnership Agreement, acquisition fees to affiliates will
be paid from adjusted cash from operations or, if necessary, from cash from
property sales.
(e) Represents net leasable area at acquisition date except for Piedmont Plaza;
current net leasable area may vary due to completion of tenant finish.
Piedmont Plaza added 21,052 square feet subsequent to acquisition.
(f) The Partnership owns a 73.92% interest in the Westford Joint Venture
Partnership (the "Venture") which owns the Westford Corporate Center.
Connecticut General Equity Properties - I Limited Partnership, an affiliated
partnership, is the co-venturer. The financial information shown represents
the Partnership's share of the total investment. Reference is made to the
Notes to Consolidated Financial Statements for a description of the joint
venture partnership through which the Partnership participates in this real
property investment.
Woodlands Tech is located in the Northwestern St. Louis service center
market. Overall, the St. Louis economy saw continued growth through 1995, albeit
at a slightly slower pace than in 1994. During the year, St. Louis added
approximately 34,000 new jobs and unemployment fell to a twenty-year low of
4.8%. While the manufacturing sector continued to decline, the service sector,
including computer services, health and tourism, grew by approximately 3.3% for
the year. The defense industry was also helped by a $1.8 billion contract from
the United States Air Force awarded to McDonnell Douglas, the largest defense
manufacturer and employer in the state. The submarket, consisting of 29
buildings totalling 964,709 square feet, ended 1995 at 93% occupancy. The
submarket reported negative absorption in 1995 as tenants moved back to
Chesterfield Valley to buildings that have been renovated since the 1993 floods.
The negative absorption may repeat again in 1996. As in the office market,
smaller service center spaces of up to 8,000 square feet are plentiful, while
spaces over 15,000 square feet are scarce and can command higher rental rates.
Overall, rates were relatively flat for the year, ranging between $6 and $11 per
square foot for comparable properties. The majority of comparable properties
with a large percentage of office space is leasing in the $8.00 to $8.50 per
square foot range. Woodlands Tech is leasing at rates comparable to the
competition. Tenant finish packages are still readily available in the service
center market in the range of $3 to $20 per square foot. Existing rollover
spaces can typically be improved within the lower end of the scale. Existing
space that has 30% to 60% finish will require $2 to $6 per square foot and space
which has a higher percentage of finish requires $5 to $10 per square foot.
Westford Corporate Center is located in the Boston submarket known as the
Northwest Corridor, between Routes I-128 and I-495. During 1995, metropolitan
Boston experienced continued job growth due to the strengthened economy.
Out-migration trends have finally reversed and over one-half of the jobs lost
during the 1989-1992 recession have been regained. Nearly two-thirds of all new
jobs are in the service sector,
A-2
<PAGE> 19
including computer software, engineering, and research and health care. Overall,
manufacturing employment continues to decline, although the computer hardware
industry has finally turned around. The market in which Westford competes
contains approximately 16.8 million square feet of space with a 19% vacancy
rate. Absorption through the end of 1995 totalled approximately 1,177,300 square
feet. Westford maintained its 100% occupancy level in 1995. Rents for R&D space
held steady during the year in the $5.75 to $7 per square foot range. Rents and
occupancy levels in the market will move up slowly as the market works through
an estimated one to two year supply of available R&D space.
The Piedmont Plaza is located in Apopka, Florida, north of Orlando in
northwest Orange County. Apopka experienced population growth of approximately
2% in 1995. The median income for the area is approximately $50,000 and
single-family home prices range from $60,000 to $120,000. The major industry in
Apopka is agriculture. Because of Apopka's affordable housing and its convenient
location on the axis of two main roads, Route 4 and State Road 436, many
residents work in downtown Orlando. However, while the property is located
approximately 20 miles outside Orlando and its major theme parks, including Walt
Disney World, it doesn't significantly benefit from the tourism trade.
In general, the retail environment was turbulent in 1995. Total retail
sales for 1995 were up only 3%; apparel sales were down. The Christmas season
proved to be very weak for many retailers. The 1995 retail market has been
affected by an over-supply of space combined with cautious consumer behavior.
Retail bankruptcies in general, and for apparel companies in particular, are
showing big increases. Most retailers have moved to value pricing, although most
have not made the transition profitably. Leasing decisions for both retailers
and shopping center owners have been postponed because of mergers, acquisitions,
reformatting, bankruptcy, and management reorganizations. The cost to attract
quality tenants continues to escalate at three times the inflation rate.
Effective rents, after tenant improvement amortization, have decreased for
virtually all retail product types. Current trends suggest a future drop in the
total demand for retail space and an intense competition for the consumer's
dollar. Poorly conceived retail centers will close or adopt alternative uses
with the stronger, more dominant centers capturing a greater market share and
better financial performance. All successful retailers and retail sites will
offer a high-grade blend of goods and services at value prices. Retailers will
be attempting to achieve success by efficiencies in distribution, inventory
control, better use of technology and better management.
Piedmont's submarket changed very little in 1995. Strip centers, in
particular, remained overbuilt with approximately 1.6 million square feet of
retail space housed in twenty-one centers, twelve of which are anchored by two
or more tenants. The strip center market had a 20% vacancy rate for unanchored
centers and a 15% vacancy rate for anchored centers. Piedmont was 95% occupied
at year end, ahead of the market. Due to the overbuilt conditions, rental rates
remained flat at approximately $6 per square foot for unanchored space to $10 to
$13 per square foot for anchored facilities. Pass through costs averaged $2.75
per square foot. Piedmont was in line with the market at $6 to $8 per square
foot for space in the back of the center to $9 to $12 per square foot in the
more visible and easily accessed areas. Concessions of one month free rent per
lease year were the norm. There was no new construction in 1995 and none is
planned for the next two years.
Overlook Apartments is located in Scottsdale, Arizona, approximately 20
miles outside downtown Phoenix. During 1995, Phoenix enjoyed continued
in-migration trends with the addition of approximately 50,000 residents and
20,000 new jobs. Scottsdale saw its population grow by 5% in 1995, and this
trend is expected to continue through the end of the decade. Unemployment was
under 3% in 1995, one of the lowest in the nation. Job growth in 1995 was
strong, particularly in the service sector, retail trade and the financial
industry. The tourism industry was also a major contributor to the local economy
during the year. Scottsdale remains targeted as a "hot spot" for development,
particularly for single-family residential communities. The median income in
Scottsdale approaches $50,000 and new homes in this upscale market range from
approximately $90,000 to $300,000.
The North Scottsdale apartment submarket, which contains approximately
7,300 units, expects an additional 1,300 to come online in 1996. The Adobe Ranch
submarket, in which Overlook directly competes, contains 1,446 units, 218 of
which came online in 1995. This market consists of six luxury apartment
complexes and is extremely competitive. During 1996, an additional 534 units are
scheduled to be added to the
A-3
<PAGE> 20
Adobe submarket. The average rent at Overlook during the year was $573 per
month, slightly ahead of the competition. The addition of new units in the North
Scottsdale market does not compete directly with Overlook, but will keep rental
rates increases at approximately 3% over the coming year and continue to
encourage the use of concessions through the end of 1996. The rent growth
continues to be possible as a result of the upscale new apartment inventory
creating a high rental base for the area. While other complexes offer a wider
range of amenities, Overlook competes within its market through its desirable
location with mountain views, excellent on-site service, and professionally
landscaped grounds. During 1995, the property had average occupancy of 96%,
slightly below the prior year but in line with the market.
Approximate occupancy levels for the properties on a quarterly basis are
set forth in the table in Item 2.
The Partnership itself has no employees; however, the unaffiliated property
managers engaged by CIGNA Investments, Inc. ("CII", formerly CIGNA Capital
Advisers, Inc.) on behalf of the Partnership
maintain on-site staff. For a description of asset management services provided
by CII and the terms of transactions between the Partnership and affiliates of
the General Partner, see Item 13 below and the Notes to Consolidated Financial
Statements.
The following list details gross revenues for each of the Partnership's
investment properties as a percentage of the Partnership's total gross revenues
during 1993, 1994 and 1995. Excluded from this calculation is the joint venture
partner's share of the gross revenues of the Westford joint venture. In each
year, interest income accounted for the balance of gross revenues.
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<C> <S> <C> <C> <C>
1. Woodlands Tech Center
St. Louis, MO.................................... 21% 17% 16%
2. Westford Corporate Center
Westford, MA..................................... 22% 24% 27%
3. Piedmont Plaza Shopping Center
Apopka, FL....................................... 23% 26% 23%
4. Overlook Apartments
Scottsdale, AZ................................... 33% 31% 31%
</TABLE>
ITEM 6. SELECTED FINANCIAL DATA (A)
CIGNA INCOME REALTY-I LIMITED PARTNERSHIP
(A DELAWARE LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
DECEMBER 31, 1995, 1994, 1993, 1992 AND 1991
(NOT COVERED BY REPORT OF INDEPENDENT ACCOUNTANTS)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total income (b)................ $ 5,174,279 $ 5,019,967 $ 4,289,754 $ 3,462,774 $ 3,102,718
Net income (loss) (c)........... 1,702,991 1,244,897 954,378 (6,219,956) (99,127)
Net income (loss) per Unit
(c)........................... 8.43 6.16 4.72 (30.79) (0.49)
Total assets (b)................ 31,201,168 32,525,759 33,782,661 35,176,295 44,162,951
Cash distributions to Limited
Partners (d).................. 3,090,000 2,472,000 2,400,000 2,562,000 1,248,000
Cash distributions per Unit
(d)........................... 15.45 12.36 12.00 12.81 6.24
</TABLE>
- ---------------
(a) The above selected financial data should be read in conjunction with the
consolidated financial statements and the related notes herein. Reference is
made to the Notes to Consolidated Financial Statements for a description of
payments to the State of Connecticut on behalf of Limited Partners. These
payments are charged to Limited Partner capital accounts and have not been
included as part of the above presentation.
A-4
<PAGE> 21
(b) Total income excludes the venture partner's share of income and total assets
exclude venture partner's equity interest. See the Notes to Consolidated
Financial Statements for a description of the joint venture.
(c) Includes losses due to impairment of assets of $280,000 ($1.39 per Unit) in
1994 and $6,408,960 ($31.72 per Unit) in 1992, net of the venture partner's
share.
(d) Quarterly distributions are paid and recorded in the Partnership's records
as distributions 45 days following the close of the calendar quarter.
THE FOLLOWING INFORMATION HAS BEEN EXCERPTED OR DERIVED FROM THE
PARTNERSHIP'S REPORT ON FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1996.
CIGNA INCOME REALTY - I LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF AS OF
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
<S> <C> <C>
Cash and Equivalents.......................................... $ 3,397,679 $ 3,227,503
Net Property and Improvements................................. 29,145,432 29,850,166
Other Assets.................................................. 800,320 802,891
Total Assets.................................................. 33,343,431 33,880,560
Total Liabilities............................................. 2,975,397 2,899,233
Venture Partner's Equity in Joint Venture..................... 2,719,145 2,679,392
Partner's Capital............................................. 27,648,889 28,301,935
</TABLE>
OPERATING DATA
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
1996 1995
----------- ------------
<S> <C> <C>
Base Rental Income............................................ $ 2,276,030 $ 2,324,451
Other Income.................................................. 475,019 539,310
Net Income.................................................... 780,954 891,442
General Partner's Share of Net Income......................... 7,810 8,914
Limited Partner's per unit data:
Net Income per unit......................................... 3.87 4.41
Distribution per unit....................................... 7.17 7.95
</TABLE>
A-5
<PAGE> 22
The Letter of Transmittal, and any other required documents should be sent
or delivered by each Unitholder or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary at one of its addressees set forth
below:
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
(212) 858-2103
<TABLE>
<S> <C>
By Mail: By Hand/Overnight Delivery:
P.O. Box 84
Bowling Green Station One State Street
New York, New York 10274-0084 New York, New York 10004
Attn: Securities Processing Window, Subcellar
Attn: Reorganization Operations Department One
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number listed below. Additional copies of
this Offer to Purchase, the Letter of Transmittal, and other tender offer
materials may be obtained from the Information Agent as set forth below, and
will be furnished promptly at the Purchaser's expense. You may also contact your
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
(800) 431-9645 or (212) 269-5550
77 Water Street
New York, New York 10005
<PAGE> 1
EXHIBIT 99.3
AGREEMENT OF TRANSFER AND LETTER OF TRANSMITTAL
FOR UNITS OF INTEREST
IN
CIGNA INCOME REALTY - I LIMITED PARTNERSHIP
FOR $115 PER UNIT
Subject to and effective upon acceptance for payment, the undersigned (the
"Seller") hereby sells, assigns, transfers, conveys and delivers and irrevocably
directs any custodian or trustee to sell, assign, transfer, convey and deliver
("Transfer") to Everest Realty Investors, LLC, a California limited liability
company (the "Purchaser"), all of the Seller's right, title and interest in
units of interest (the "Units") in CIGNA Income Realty - I Limited Partnership,
a Delaware limited partnership (the "Partnership"), for $115 per Unit, less the
amount of distributions (as defined in the Offer to Purchase) per Unit, if any,
made to Seller by the Partnership after the distribution from operations for the
third quarter of 1996 and before the date on which the Purchaser purchases the
Units tendered pursuant to the Offer (the "Purchase Date"), in accordance with
and pursuant to the Offer to Purchase, dated November 18, 1996, as it may be
supplemented or amended from time to time (the "Offer to Purchase") and this
Agreement of Transfer and Letter of Transmittal, as it may be supplemented or
amended from time to time (the "Letter of Transmittal," which together with the
Offer to Purchase, constitutes the "Offer").
Such transfer shall include, without limitation, all rights in, and claims
to, any Partnership profits and losses, cash distributions, voting rights and
other benefits of any nature whatsoever distributable or allocable to such Units
under the Partnership's Certificate and Agreement of Limited Partnership, as
amended (the "Partnership Agreement"), and all certificates evidencing the same,
and Seller agrees immediately to endorse and deliver to Purchaser all
distribution checks received from the Partnership after the Purchase Date. The
Seller hereby irrevocably constitutes and appoints the Purchaser as the true and
lawful agent and attorney-in-fact of the Seller 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 vote, inspect Partnership books
and records or act in such manner as any such attorney-in-fact shall, in its
sole discretion, deem proper with respect to such Units, to deliver such Units
and transfer ownership of such Units on the Partnership's books maintained by
the General Partner of the Partnership, together with all accompanying evidences
of transfer and authenticity to, or upon the order of, the Purchaser, to direct
any custodian or trustee holding record title to the Units to do any of the
foregoing, including the execution and delivery of a copy of this Letter of
Transmittal, and upon payment by the Purchaser of the purchase price, to receive
all benefits and cash distributions, endorse Partnership checks payable to
Seller and otherwise exercise all rights of beneficial ownership of such Units.
The Purchaser shall not be required to post bond of any nature in connection
with this power of attorney.
The Seller hereby represents and warrants to the Purchaser that the Seller
owns such Units and has full power and authority to validly sell, assign,
transfer, convey and deliver such Units to the Purchaser, and that when any such
Units are accepted for payment by the Purchaser, the Purchaser will acquired
good, marketable and unencumbered title thereto, free and clear of all options,
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. If the undersigned is signing on behalf of
an entity, the undersigned declares that he has authority to sign this document
on behalf of the entity. The Seller further represents and warrants that the
Seller is a "United States person", as defined in Section 7701(a)(30) of the
Internal Revenue Code of 1986, as amended, or if the Seller is not a United
States person, that the Seller does not own beneficially or of record more than
5% of the outstanding Units.
The undersigned recognizes that under certain circumstances act forth in
the Offer to Purchase (including proration), the Purchaser may not be required
to accept for payment any or all of the Units tendered hereby. In such event,
the undersigned understands that this Letter of Transmittal will be effective to
Transfer only those Units accepted for purchase by the Purchaser and any Letter
of Transmittal for Units not accepted for payment may be destroyed by the
Depositary (in accordance with its customary practice).
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity or liquidation of the Seller and any obligations of the
Seller shall be binding upon the heirs, personal representatives, successors and
assigns of the undersigned.
<PAGE> 2
Upon request, the Seller will execute and deliver, and irrevocably direct
any custodian to execute and deliver, any additional documents deemed by the
Purchaser to be necessary or desirable to complete the assignment, transfer and
purchase of such Units.
The Seller hereby certifies, under penalties of perjury, that (1) the
number shown below on this form as the Seller's Taxpayer Identification Number
is correct and (2) Seller is not subject to backup withholding either because
Seller has not been notified by the Internal Revenue Service (the "IRS") that
Seller is subject to backup withholding as a result of a failure to report all
interest or dividends, or the IRS has notified Seller that Seller is no longer
subject to backup withholding. The Seller hereby also certifies, under penalties
of perjury, that the Seller, if an individual, is not a nonresident alien for
purposes of U.S. income taxation, and if not an individual, is not a foreign
corporation, foreign partnership, foreign trust, or foreign estate (as those
terms are defined in the Internal Revenue Code and Income Tax Regulations). The
Seller 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.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of a Letter of Transmittal will be determined by the
Purchaser and the determinations will be final and binding. The Purchaser's
interpretation of the terms and conditions of the Offer (including this Letter
of Transmittal) will be final and binding. The Purchaser will have the right to
waive any defects or conditions as to the manner of tendering. Any defects in
connection with tenders, unless waived, must be cured within such time as the
Purchaser will determine. This Letter of Transmittal will not be valid until all
defects have been cured or waived.
Date: ___________________ , 1996
<TABLE>
<S> <C>
ALL
- ----------------- ---------------- ----------------------------
[Specify Number of Units Tendered if [Signature of Owner]
less than "ALL"]
- -------------------------------------- ----------------------------
[Your Telephone Number] [Signature of Co-Owner]
- ------------------------------------- ----------------------------
[Your Social Security or [Name of IRA Custodian,
Taxpayer ID Number] if applicable]
</TABLE>
-----------------------------------
The completed Letter of Transmittal
should be forwarded to the
Depositary for the Offer:
IBJ SCHRODER BANK & TRUST COMPANY
(212) 858-2103
RE: CIGNA INCOME REALTY - I
LIMITED PARTNERSHIP
By Mail:
P.O. Box 84
Bowling Green Station
New York, New York 10274-0084
Attn: Reorganization Operations
Department
By Hand/Overnight Delivery:
One State Street
New York, New York 10004
Attn: Securities Processing Window,
Subcellar One
-----------------------------------
