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
---------------------------------------------------
HIGH EQUITY PARTNERS L.P. - SERIES 86
(Name of Subject Company)
MILLENNIUM FUNDING III LLC
PRESIDIO CAPITAL INVESTMENT COMPANY, LLC
----------------------------------------
(Bidders)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
NONE
(Cusip Number of Class of Securities)
-------------------------------------
David G. King, Jr.
Presidio Capital Investment Company, LLC
527 Madison Avenue
New York, New York 10022
(212) 319-3400
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
Copy to:
Mark I. Fisher, Esq.
Rosenman & Colin LLP
575 Madison Avenue
New York , New York 10022
(212) 940-8877
------------------------------------
CALCULATION OF FILING FEE
================================================================================
Transaction Valuation*: $4,080,368 Amount of Filing Fee: $816.07
================================================================================
* For purposes of calculating the fee only. This amount assumes the purchase of
39,596 units of limited partnership interest ("Units") of the subject
partnership for $103.05 per Unit. The amount of the filing fee, calculated in
accordance with Section 14(g)(3) and Rule 0-11(d) under the Securities Exchange
Act of 1934, as amended, equals 1/50th of one percent of the aggregate of the
cash offered by the bidders.
|_| Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form or
schedule and the date of its filing.
Amount Previously Paid: Not Applicable
Form or Registration No.: Not Applicable
Filing Party: Not Applicable
Date Filed: Not Applicable
<PAGE>
CUSIP No. NONE 14D-1
================================================================================
1. Name of Reporting Persons; I.R.S. Identification Nos. of Above Persons
Millennium Funding III LLC
---------------
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4 Sources of Funds
AF
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f) |_|
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
None
- --------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares |_|
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
0
- --------------------------------------------------------------------------------
10. Type of Reporting Person
OO
================================================================================
2
<PAGE>
CUSIP No. NONE 14D-1
================================================================================
1. Name of Reporting Persons; I.R.S. Identification Nos. of Above Persons
PRESIDIO CAPITAL INVESTMENT COMPANY, LLC
---------------
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4 Sources of Funds
N/A
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f) |_|
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
100,210*
- --------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares |_|
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
17.04%
- --------------------------------------------------------------------------------
10. Type of Reporting Person
OO
================================================================================
* 20 Units are owned by Millennium Funding Corp., 80,873 Units are owned by
Millennium Funding III Corp. and 2,942 Units are owned by Millennium Funding I
LLC. In addition, Presidio Capital Corp. has the right to acquire an additional
16,375 Units. All of such entities are directly or indirectly 100% owned by
Presidio Capital Investment Company, LLC.
3
<PAGE>
SCHEDULE 14D-1
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is High Equity Partners L.P. - Series
86 (the "Partnership"), a Delaware limited partnership. The address of the
Partnership's principal executive offices is 5 Cambridge Center, 9th Floor
Cambridge, Massachusetts 02142.
(b) This Statement relates to an offer by Millennium Funding III LLC, a
Delaware limited liability company (the "Purchaser"), to purchase up to 39,596
of the outstanding units of limited partnership interest ("Units") of the
Partnership at a purchase price of $103.05 per Unit, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated November 24, 1999 (the "Offer to Purchase") and the related Letter of
Transmittal (which, together with any supplements or amendments, collectively
constitute the "Offer"), copies of which are filed as Exhibits (a)(1) and (a)(2)
hereto, respectively. The information set forth in the Offer to Purchase under
"Introduction" and Section 9 ("Certain Information Concerning your Partnership")
is incorporated herein by reference. As of September 30, 1999, the Partnership
had 588,010 Units outstanding.
(c) The information set forth in the Offer to Purchase in Section 13
("Background of the Offer") is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is being filed by the Purchaser and Presidio
Capital Investment Company, LLC (collectively, the "Bidders"). The information
set forth in the Offer to Purchase under "Introduction," in Section 11 ("Certain
Information Concerning Us") and in Schedule 1 to the Offer to Purchase is
incorporated herein by reference.
(e)-(f) During the last five years, none of the Bidders nor, to the best
of their knowledge, any of the persons listed in Schedule 1 to the Offer to
Purchase (i) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) was a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
further violations of or prohibiting activities subject to federal or state
securities laws or finding any violation with respect to such laws.
(g) Each of the individuals listed on Schedule 1 to the Offer to Purchase
is a citizen of the United States.
4
<PAGE>
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Offer to Purchase under
"Introduction," in Section 9 ("Certain Information Concerning Your
Partnership"), in Section 10 ("Conflicts of Interest and Transactions with
Affiliates") and in Section 13 ("Background of the Offer") is incorporated
herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in the Offer to Purchase in Section 12
("Source of Funds") is incorporated herein by reference.
(b)-(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Offer to Purchase under
"Introduction" and in Section 8 ("Future Plans") is incorporated herein by
reference.
(f)-(g) The information set forth in the Offer to Purchase in Section 7
("Effects of the Offer") is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Offer to Purchase under
"Introduction," and in Section 11 ("Certain Information Concerning Us") is
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Offer to Purchase under "Introduction,"
in Section 7 ("Effects of the Offer"), Section 10 ("Conflicts of Interest and
Transactions with Affiliates"), Section 11 ("Certain Information Concerning Us")
and Section 13 ("Background of the Offer") is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Offer to Purchase under "Introduction"
and in Section 16 ("Fees and Expenses") is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
5
<PAGE>
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(d)The information set forth in the Offer to Purchase in Section 15
("Certain Legal Matters") is incorporated herein by reference.
(e) The information set forth in the Offer to Purchase under
"Introduction" and in Section 13 ("Background of the Offer") is incorporated
herein by reference.
(f) The information set forth in the Offer to Purchase and the related
Letter of Transmittal, copies of which are filed as Exhibits (a)(1) and (a)(2)
hereto, respectively, is incorporated herein by reference in its entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated November 24, 1999.
(a)(2) Letter of Transmittal and Related Instructions.
(a)(3) Cover Letter, dated November 24, 1999, from the
Purchaser to the Limited Partners of the Partnership.
(c)(1) Agreement, dated March 6, 1998 (the "Agreement") among
Presidio Capital Corp., American Real Estate Holdings,
L.P. and Olympia Investors L.P. (incorporated by
reference to Exhibit (c)(i) to Statement on Schedule
14D-9 of the Partnership (the "Olympia 14D-9"), which
was filed with the Securities and Exchange Commission
(the "Commission") as of March 25, 1998).
(c)(2) Amendment No. 1 to the Agreement (incorporated by
reference to Exhibit (iii) to Amendment No. 1 to the
Olympia 14D-9 which was filed with the Commission as of
May 22, 1998).
(c)(3) Amendment No. 2 to the Agreement (incorporated by
reference to Exhibit (iii) to Amendment No. 2 to the
Olympia 14D-9 which was filed with the Commission as of
July 1, 1998).
(c)(4) Amendment No. 3 to the Agreement (incorporated by
reference to Exhibit (a)(6) to Amendment No. 9 to
Schedule 14D-1 of Olympia Investors L.P. and certain
other bidders which was filed with the Commission as of
July 17, 1998).
6
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: November 24, 1999
MILLENNIUM FUNDING III LLC
By: Presidio Capital Investment
Company, LLC, Member
By: /s/ David G. King, Jr.
----------------------------------
David G. King, Jr.
President
PRESIDIO CAPITAL INVESTMENT
COMPANY, LLC
By: /s/ David G. King, Jr.
----------------------------------
David G. King, Jr.
President
7
<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------- -----------
(a)(1) Offer to Purchase, dated November 24, 1999.
(a)(2) Letter of Transmittal and Related Instructions.
(a)(3) Cover Letter, dated November 24, 1999, from the Purchaser to the
Limited Partners of the Partnership.
(c)(1) Agreement, dated March 6, 1998 (the "Agreement") among Presidio
Capital Corp., American Real Estate Holdings, L.P. and Olympia
Investors L.P. (incorporated by reference to Exhibit (c)(i) to
Statement on Schedule 14D-9 of the Partnership (the "Olympia
14D-9"), which was filed with the Securities and Exchange Commission
(the "Commission") as of March 25, 1998).
(c)(2) Amendment No. 1 to the Agreement (incorporated by reference to
Exhibit (iii) to Amendment No. 1 to the Olympia 14D-9 which was
filed with the Commission as of May 22, 1998).
(c)(3) Amendment No. 2 to the Agreement (incorporated by reference to
Exhibit (iii) to Amendment No. 2 to the Olympia 14D-9 which was
filed with the Commission as of July 1, 1998).
(c)(4) Amendment No. 3 to the Agreement (incorporated by reference to
Exhibit (a)(6) to Amendment No. 9 to Schedule 14D-1 of Olympia
Investors L.P. and certain other bidders which was filed with the
Commission as of July 17, 1998).
8
<PAGE>
Exhibit (a)(1)
Offer to Purchase for Cash
MILLENNIUM FUNDING III LLC
is offering to purchase up to 39,596 units of limited partnership interest in
High Equity Partners L.P. - Series 86,
for $103.05 per unit in Cash
We are an affiliate of your general partners and are making this offer to you as
required by a court-approved settlement of a class action and derivative
litigation involving your partnership.
We will purchase up to 39,596 (6.7%) of the outstanding units of limited
partnership interest in your partnership. If more units are tendered to us, we
will accept units on a pro rata basis according to the number of units tendered
by each person.
Our offer and your withdrawal rights will expire at 12:00 midnight, New York
City time, on December 22, 1999, unless we extend the deadline.
You will not pay any fees or commissions if you tender your units.
Our offer is not subject to any minimum number of units being tendered.
See "Risk Factors" beginning on page 1 of this offer to purchase for a
description of risk factors that you should consider in connection with our
offer, including the following:
o Our offer price and the maximum number of units we may purchase were
determined as part of the negotiations of the court-approved
settlement. The offer price was based on March 1998 appraisals of
your partnership's properties and may not reflect the current fair
market value of your units.
o We have estimated that the net asset value of your partnership as of
September 30, 1999 is $127.72 per unit. Our estimate is based on the
March 1998 appraisals of your partnership's properties and the net
current assets of your partnership on September 30, 1999.
o You will not receive any future potential benefits from units you
sell to us, such as future distributions by your partnership and the
potential for appreciation in the value of the units you sell to us.
You will not be entitled to vote units you sell to us for or against
a reorganization of your partnership into a real estate investment
trust or other publicly-traded entity which your general partners
intend to propose to you in the near future as required by the
court-approved settlement. If you sell your units to us, you also
will not receive stock or other securities to be exchanged for units
if the reorganization is approved by limited partners.
o Our affiliates currently own approximately 14.26% of the outstanding
units. The more units we acquire, the more we are able to influence
limited partner voting decisions of your partnership.
o Your general partners are affiliates of ours and, therefore, your
general partners have conflicts of interest relating to our offer.
If you desire to accept our offer, you should complete and sign the letter
of transmittal in accordance with the instructions and mail the signed letter of
transmittal and any other required documents to Georgeson Shareholder
Communications Inc., which is acting as Information Agent and Depositary for our
offer, at one of its addresses set forth on the back cover of this offer to
purchase. Questions and requests for assistance or for additional copies of this
offer to purchase or the letter of transmittal may also be directed to the
Information Agent/Depositary at (800) 223-2064.
November 24, 1999
1
<PAGE>
TABLE OF CONTENTS
Page
----
INTRODUCTION................................................................ 1
RISK FACTORS................................................................ 1
THE TENDER OFFER............................................................ 3
Section 1. Terms of the Offer......................................... 3
Section 2. Proration; Acceptance for Payment and Payment for Units.... 3
Section 3. Procedures for Tendering Units............................. 4
Section 4. Withdrawal Rights.......................................... 5
Section 5. Extension of Tender Period; Termination; Amendment......... 5
Section 6. Certain Federal Income Tax Consequences.................... 6
Section 7. Effects of the Offer....................................... 7
Section 8. Future Plans............................................... 8
Section 9. Certain Information Concerning Your Partnership............ 8
Section 10. Conflicts of Interest and Transactions with Affiliates..... 13
Section 11. Certain Information Concerning Us.......................... 13
Section 12. Source of Funds............................................ 14
Section 13. Background of the Offer.................................... 15
Section 14. Conditions of the Offer.................................... 16
Section 15. Certain Legal Matters...................................... 16
Section 16. Fees and Expenses.......................................... 17
Section 17. Miscellaneous.............................................. 17
Appendix A..................................................... Glossary
Schedule 1 Information With Respect to the Executive Officers and
Directors of NorthStar Capital Investment Corp.
2
<PAGE>
INTRODUCTION
We are offering to purchase up to 39,596 units, representing approximately
6.7% of the outstanding units of limited partnership interest in your
partnership, for the purchase price of $103.05 per unit, net to the seller in
cash, without interest. We are affiliated with your general partners and our
offer is made upon the terms and subject to the conditions set forth in this
offer to purchase and in the accompanying letter of transmittal.
We are making our offer to satisfy the requirements of a court-approved
settlement of a class action and derivative litigation involving your
partnership. The first step in the settlement was the solicitation of consents
to amend the partnership agreement of your partnership. The required consents
have been obtained and the partnership agreement has been amended. The
amendments modify (i) the partnership management fee paid by your partnership to
one of your general partners and (ii) the manner of calculating the payments
that your general partners may be required to make on liquidation of your
partnership.
Our offer is the second step required by the settlement. If you tender
your units in response to our offer you will not be obligated to pay any fees or
commissions. We have retained Georgeson Shareholder Communications Inc. to act
as the Information Agent in connection with our offer. We will pay all charges
and expenses in connection with the services of the Information Agent. The offer
is not conditioned on any minimum number of units being tendered.
Our offer will expire at 12:00 midnight, New York City time, on December
22, 1999, unless we have extended the period of time during which the offer is
open. If you desire to accept our offer, you must complete and sign the letter
of transmittal in accordance with the instructions and mail the letter of
transmittal and any other required documents to the Information Agent. You may
withdraw your tender of units at any time prior to the expiration date of our
offer.
Our affiliates currently own 83,835 units representing approximately
14.26% of the outstanding units.
In the third step of the settlement your general partners are required to
use their best efforts to reorganize your partnership into a real estate
investment trust or other entity whose shares are listed on a national
securities exchange or on the NASDAQ National Market System. The reorganization
will only occur if it is approved by the holders of a majority of the units. If
you sell units to us, you will not be entitled to vote on the reorganization.
You also will not receive stock or other securities if the reorganization is
approved.
RISK FACTORS
Before deciding whether or not to tender any of your units, you should
consider carefully the following risks and disadvantages of the offer:
Offer Price May Not Represent Fair Market Value
There is no established or regular trading market for your units, nor is
there another reliable standard for determining the fair market value of the
units. Our offer price may not reflect the price that you could receive in the
open market for your units. Such price could be higher than our offer price
which was determined as part of the negotiations of the court-approved
settlement and was based on March 1998 property appraisals. According to
Partnership Spectrum, an independent industry publication, between August 1,
1999 and September 30, 1999, a limited number of units traded in the informal
secondary market for units at prices ranging from a high of $96 per unit to a
low of $80 per unit, with a weighted average price of $89.44 per unit (not
taking into account commissions and other transactional costs).
Our Estimate of Net Asset Value May Not Properly Reflect Current Market Value
We have estimated that the net asset value of your partnership as of
September 30, 1999 is $127.72 per unit. Our estimate is based on March 1998
appraisals of your partnership's properties and the amount of your partnership's
net current assets on September 30, 1999. The appraised values used in our
estimate may not reflect the current market value of your partnership's
properties.
<PAGE>
Loss of Future Benefits from Your Ownership of Units
If you tender your units in response to our offer you will transfer to us
all right, title and interest in and to all of the units we accept, including
the right to participate in any future potential benefits represented by the
ownership of the units. Accordingly, you will not receive any future potential
benefits from units you sell to us, such as future distributions by your
partnership of operating cash flow or property sale proceeds and the potential
for appreciation in the value of the units you sell to us. You also will not be
entitled to vote units you sell to us for or against a reorganization of your
partnership into a real estate investment trust or other publicly-traded entity
which your general partners intend to propose to you in the near future as
required by the court-approved settlement. Additionally, you will not receive
stock or other securities to be exchanged for units if the reorganization is
approved by limited partners.
Possible Increase in Control of Your Partnership by Us
Our affiliates currently own approximately 14.26% of the outstanding
units. The more units we acquire, the more we are able to influence limited
partner voting decisions of your partnership, including decisions on the removal
of your general partners, amendment of the partnership agreement, the
reorganization of your partnership, the sale of substantially all of your
partnership's assets and the liquidation of your partnership.
Alternatives to Selling Us Your Units
Your general partners originally anticipated holding your partnership's
properties for seven to ten years following the time such properties were
acquired (the properties were acquired between November 1986 and November 1988).
Instead of selling us your units you and other limited partners in your
partnership could propose alternative actions such as liquidating your
partnership.
Conflicts of Interest
Since our affiliates receive fees for managing and administering your
partnership and its properties, a conflict of interest exists for your general
partners between continuing the partnership and receiving such fees, and
liquidating the partnership. Also, under the court-approved settlement the
amount our affiliates are required to pay to your partnership upon its
liquidation is reduced each year that your partnership is not liquidated. This
obligation is completely eliminated if your partnership is not liquidated by the
end of 2008. Accordingly, a conflict of interest exists for your general
partners between continuing the partnership and reducing the amount they would
be required to pay to the partnership, and liquidating the partnership. This
obligation is also eliminated if your partnership is reorganized into a
publicly-traded entity assuming such reorganization occurs.
Sale of Your Units Will Be a Taxable Transaction
A sale of units to us will be a taxable sale. In general, you will
recognize gain or loss equal to the difference between the amount realized on
the sale of your units and your adjusted tax basis in the units sold. If you are
subject to income tax, your after-tax benefit or cost from a sale will be based
on a number of factors including your tax basis in the units sold, whether you
sell all of your units, whether you have unused passive activity losses from
your partnership, and whether (if you sell at a loss) you have capital gains
against which to offset your capital loss. We recommend that you consult with
your tax advisor prior to tendering your units to determine your particular tax
situation.
Holding Units May Result in Greater Future Value
You might receive more value if you retain your units until your
partnership is liquidated or until your partnership is reorganized into a real
estate investment trust or other publicly-traded entity assuming such
reorganization occurs.
Continuation of the Partnership
Unless the reorganization of your partnership is approved, your
partnership will continue to be operated as it has in the past. Accordingly,
unless your partnership is actually reorganized into a publicly-traded entity,
there
<PAGE>
may be no way to liquidate your investment in the partnership in the future
until the properties are sold and the partnership is liquidated.
THE TENDER OFFER
Section 1. Terms of the Offer. Upon the terms of the offer, we will accept
(and thereby purchase) up to 39,596 units that are validly tendered on or prior
to the expiration date and not withdrawn in accordance with the procedures set
forth in Section 4 of this offer to purchase. For purposes of this offer, the
term "expiration date" shall mean 12:00 Midnight, New York City time, on
December 22, 1999, unless we have extended the period of time during which the
offer is open, in which case the term "expiration date" shall mean the latest
time and date on which the offer, as extended by us, shall expire. See Section 5
of this offer to purchase for a description of our right to extend the period of
time during which the offer is open and to amend or terminate our offer.
Our offer is subject to satisfaction of certain conditions. The offer is
not conditioned upon any minimum amount of units being tendered. See Section 14,
which sets forth in full the conditions of the offer. We reserve the right (but
in no event shall we be obligated), in our sole discretion, to waive any or all
of those conditions. If, on or prior to the expiration date, any or all of such
conditions have not been satisfied or waived, we may (i) decline to purchase any
of the units tendered, terminate the offer and return all tendered units to
tendering limited partners, (ii) waive all the unsatisfied conditions and,
subject to complying with applicable rules and regulations of the Securities and
Exchange Commission (the "Commission"), purchase all units validly tendered or
(iii) extend the offer and, subject to the withdrawal rights of limited
partners, cause the Depositary to retain the units that have been tendered
during the period or periods for which the offer is extended.
Section 2. Proration; Acceptance for Payment and Payment for Units. If the
number of units validly tendered on or before the expiration date and not
withdrawn is 39,596 or less, we will accept for payment, subject to the terms
and conditions of the offer, all units so tendered. If more than 39,596 units
are validly tendered on or prior to the expiration date and not properly
withdrawn prior to the expiration date in accordance with the procedures set
forth in Section 4, we will accept for payment and pay for, subject to the terms
and conditions of the offer, an aggregate of 39,596 of the units so tendered on
a pro rata basis according to the number of units validly tendered by each
limited partner and not properly withdrawn on or prior to the expiration date
(with appropriate adjustments to avoid purchases of fractional units).
The Purchaser will pay for up to 39,596 units validly tendered and not
withdrawn in accordance with Section 4, as promptly as practicable following the
expiration date. In all cases, the payments for units purchased pursuant to the
offer will be made only after timely receipt by the Depositary of a properly
completed and duly executed letter of transmittal (or a facsimile thereof), and
any other documents required by the letter of transmittal. (See "Section 3.
Procedures for Tendering Units".)
For purposes of the offer, we will be deemed to have accepted for payment
pursuant to the offer, and thereby purchased, validly tendered units when, as
and if we give verbal or written notice to the Depositary of our acceptance of
those units for payment pursuant to the offer. Upon the terms and subject to the
conditions of the offer, payment for units tendered and accepted for payment
pursuant to the offer will in all cases be made through the Depositary, which
will act as agent for tendering limited partners for the purpose of receiving
cash payments from us and transmitting cash payments to tendering limited
partners. Under no circumstances will interest be paid on the offer price by
reason of any delay in making such payment.
If any tendered units are not purchased for any reason, the letter of
transmittal with respect to such units will be destroyed by us. If, for any
reason, acceptance for payment of, or payment for, any units tendered pursuant
to the offer is delayed or we are unable to accept for payment, purchase or pay
for units tendered pursuant to the offer, then, without prejudice to our rights
under Section 14 of this offer to purchase, we may cause the Depositary to
retain tendered units and those units may not be withdrawn except to the extent
that the tendering limited partners are entitled to withdrawal rights as
described in Section 4 of this offer to purchase; subject, however, to our
obligation under Rule 14e-1(c) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), to pay limited partners the offer price in respect
of units tendered or return those units promptly after termination or withdrawal
of the offer.
<PAGE>
Section 3. Procedures for Tendering Units.
Valid Tender. To validly tender units, a properly completed and duly
executed letter of transmittal and any other documents required by the letter of
transmittal (including certificates representing the units being tendered) must
be received by us on or prior to the expiration date. If you have lost or
misplaced the certificate(s) representing your units and you would like to
tender your units to us, you must complete, sign, have notarized and return to
us the enclosed Affidavit of Loss and Indemnity Agreement. In order to comply
with certain restrictions on transfer in the partnership agreement, a tender
which would result in the tendering limited partner owning less than ten units
(four units in the case of a limited partner which is an IRA or Keogh Plan) will
not be effective.
Signature Requirements. If the letter of transmittal is signed by the
registered holder of a unit, then no notarization or signature guarantee is
required on the letter of transmittal. Similarly, if a unit is tendered for the
account of a member firm of a registered national securities exchange, a member
of the National Association of Securities Dealers, Inc. or a commercial bank,
savings bank, credit union, savings and loan association or trust company having
an office, branch or agency in the United States (each an "Eligible
Institution"), no notarization or signature guarantee is required on the letter
of transmittal. However, in all other cases, all signatures on the letter of
transmittal must either be notarized or guaranteed by an Eligible Institution.
In order for you to take part in the offer, your units must be validly
tendered and not withdrawn on or prior to the expiration date.
The method of delivery of the letter of transmittal and all other required
documents (including certificates representing the units being tendered) is at
your option and risk of delivery will be deemed made only when actually received
by the Depositary.
Backup Federal Income Tax Withholding. If you tender your units and you
are not a corporation or foreign individual, you may be subject to 31% backup
federal income tax withholding unless you provide us with your correct taxpayer
identification number ("TIN"). To avoid this backup withholding, you should
complete and sign the Substitute Form W-9 included in the letter of transmittal.
If you tender your units and do not complete the Substitute Form W-9, we will be
required to withhold 31% (and if you fail to provide your TIN, an additional $50
or such other amount as may be imposed by law) from the purchase price payment
made to you. See the instructions to the letter of transmittal and "Section 6.
Certain Federal Income Tax Matters."
FIRPTA Withholding. If you are a foreign person and you tender your units,
we will be required, in certain instances, to withhold a tax equal to 10% of the
amount realized on the sale (i.e., the purchase price plus the Partnership
liabilities allocable to each unit sold) unless you complete and sign the FIRPTA
Affidavit included in the letter of transmittal certifying your TIN and your
address and that you are not a foreign person. See the instructions to the
letter of transmittal and "Section 6. Certain Federal Income Tax Matters."
Other Requirements. By executing the letter of transmittal, you are
irrevocably appointing us and our designees, in the manner set forth in the
letter of transmittal, each with full power of substitution, to the full extent
of your rights with respect to the units tendered by you and accepted for
payment and purchased by us. Such appointment will be effective when, and only
to the extent that, we accept the tendered units for payment. Upon such
acceptance for payment, all prior proxies given by you with respect to the units
will, without further action, be revoked, and no subsequent proxies may be given
(and if given will not be effective). We and our designees will, as to those
units, be empowered to exercise all of your voting and other rights as a limited
partner as we in our sole discretion may deem proper at any meeting of limited
partners, by written consent or otherwise. We reserve the right to require that,
in order for units to be deemed validly tendered, immediately upon our
acceptance for payment for the units, we must be able to exercise full voting
rights with respect to the units, including voting at any meeting of limited
partners then scheduled. In addition, by executing the letter of transmittal,
you also assign to us all of your rights to receive distributions from the
partnership with respect to units which we have accepted for payment and
purchased pursuant to the offer. (See "Section 6. Certain Federal Income Tax
Matters".)
Determination of Validity; Rejection of Units; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of units pursuant to our offer will be determined by us, in our sole discretion,
which determination shall be final and binding. We reserve the absolute right to
reject any or all tenders of any particular unit determined by us not to be in
proper form or if the acceptance of, or payment for, that unit may, in the
opinion of our counsel, be unlawful. We also reserve the right to waive any
defect or irregularity in any tender with respect to any particular
<PAGE>
unit of any particular limited partner, and our interpretation of the terms and
conditions of the offer (including the letter of transmittal and the
instructions thereto) will be final and binding. Neither us, the Depositary nor
any other person will be under any duty to give notification of any defects or
irregularities in the tender of any unit or will incur any liability for failure
to give any such notification.
Binding Agreement. A tender of a unit pursuant to any of the procedures
described above and the acceptance for payment of such unit will constitute a
binding agreement between the tendering unitholder and us on the terms set forth
in this offer and the related letter of transmittal.
Section 4. Withdrawal Rights. You may withdraw tendered units at any time
prior to the expiration date or after the 60th day following the date of this
offer to purchase, if the units have not been previously accepted for payment.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at the address
set forth on the back cover of the offer to purchase. Any such notice of
withdrawal must specify the name of the person who tendered, the number of units
to be withdrawn and must be signed by the person(s) who signed the letter of
transmittal in the same manner as the letter of transmittal was signed.
If purchase of, or payment for, a unit is delayed for any reason, or if we
are unable to purchase or pay for a unit for any reason, then, without prejudice
to our rights under the offer, we may cause the Depositary to retain tendered
units and such units may not be withdrawn except to the extent that a tendering
limited partner is entitled to withdrawal rights as set forth in this Section 4;
subject, however, to our obligation, pursuant to Rule 14e-1(c) under the
Exchange Act, to pay the offer price in respect of units tendered or return
those units promptly after termination or withdrawal of the offer.
Any units properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of our offer. However, withdrawn units may be
re-tendered by following any of the procedures described in Section 3 at any
time prior to the expiration date.
Section 5. Extension of Tender Period; Termination; Amendment. We
expressly reserve the right, in our sole discretion, at any time and from time
to time (i) to extend the period of time during which our offer is open and
thereby delay acceptance for payment of, and the payment for, any unit and (ii)
upon the occurrence of any of the conditions specified in Section 14 of this
offer to purchase, to delay the acceptance for payment of, or payment for, any
units not already accepted for payment or paid for. An extension of the offer
will be followed by a press release or public announcement which will be issued
no later than 9:00 a.m., New York City time, on the next business day after the
scheduled expiration date of our offer, in accordance with Rule 14e-1(d) under
the Exchange Act.
If we extend the offer, or if we delay payment for a unit (whether before
or after its acceptance for payment) or are unable to pay for units pursuant to
our offer for any reason, then, without prejudice to our rights under the offer,
we may cause the Depositary to retain tendered units and those units may not be
withdrawn except to the extent tendering limited partners are entitled to
withdrawal rights as described in Section 4; subject, however, to our
obligation, pursuant to Rule 14e-1(c) under the Exchange Act, to pay the offer
price in respect of units tendered or return those units promptly after
termination or withdrawal of the offer.
If we make a material change in the information concerning the offer or if
we waive a material condition to our offer, we will extend the offer and
disseminate additional tender offer materials to the extent required by Rules
14d-4(c) and 14d-6(d) under the Exchange Act. The minimum period during which an
offer must remain open following any material change in the information
concerning the offer will depend upon the facts and circumstances, including the
relative materiality of the change in information. In the Commission's view, an
offer should remain open for a minimum of five business days from the date the
material change is first published, sent or given to securityholders, and if
material changes are made with respect to information that approaches the
significance of price or the percentage of securities sought, a minimum of ten
business days may be required to allow for adequate dissemination to
securityholders and for investor response. As used in this offer to purchase,
"business day" means any day other than a Saturday, Sunday or a federal holiday,
and consists of the time period from 12:01 a.m. through 12:00 Midnight, New York
City time.
<PAGE>
Section 6. Certain Federal Income Tax Matters. The following summary is a
general discussion of certain federal income tax considerations that should be
relevant to you in connection with a sale of units in our offer. This summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), applicable
Treasury regulations thereunder, administrative rulings, practice and procedures
and judicial authority, all as of the date of our offer. All of the foregoing
are subject to change, and any such change could affect the continuing accuracy
of this summary. This summary does not discuss all aspects of federal income
taxation that may be relevant to you in light of your specific circumstances or
to certain types of investors subject to special tax rules (for example, dealers
in securities, banks, insurance companies and, except as discussed below,
foreign and tax-exempt investors), nor does it discuss any aspect of state,
local, foreign or other tax laws. Sales of units pursuant to our offer will be
taxable transactions for federal income tax purposes, and may also be taxable
transactions under applicable state, local, foreign and other tax laws. Your
resulting tax consequences will depend, in part, on your personal tax situation.
YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES,
INCLUDING STATE AND LOCAL TAX CONSEQUENCES, TO YOU OF SELLING UNITS IN OUR
OFFER.
You will recognize gain or loss on a sale of units in our offer equal to
the difference between (i) your "amount realized" on the sale and (ii) your
adjusted tax basis in the units sold. The amount of your adjusted tax basis will
vary depending upon your particular circumstances, but generally will equal your
cash investment in your units, increased by your share of your partnership's
income and gain and decreased by your share of your partnership's losses and
distributions. The "amount realized" with respect to a unit sold will be a sum
equal to the amount of cash received by you for the unit plus the amount of your
partnership's liabilities that are allocable to the unit.
You will be allocated a share of your partnership's taxable income or loss
with respect to the units sold by you in accordance with the provisions of your
partnership's limited partnership agreement concerning transfers of units. Such
allocations and any cash distributed by your partnership to you or for your
benefit will affect your adjusted tax basis in your units and, therefore, your
taxable gain or loss upon a sale of units in our offer. In this regard, if you
tender your units, you will be allocated a pro rata share of taxable income (or
loss) with respect to your units sold in our offer through the end of the
calendar quarter in which the units are sold, but we will receive all future
distributions made with respect to your units.
Based on the results of your partnership's operations through December 31,
1998, and without giving effect to your partnership's operations, transactions
or distributions after that date other than distributions of your partnership's
cash flow from operations through June 30, 1999, we estimate that, depending on
your date of entry into your partnership, if you sell your units in our offer
and you are a taxable investor who purchased your units in your partnership's
original offering, you will recognize a loss for federal income tax purposes of
between ($1.27) per unit for units acquired in July 1986 and ($19.55) per unit
for units acquired in October 1987. We also estimate that, if you purchased your
units in your partnership's original offering, you may have "suspended" passive
activity losses (i.e., net tax losses that you could not previously deduct under
the passive activity loss rules described below) from your partnership of up to
$31.38 per unit depending on your date of entry into your partnership (subject
to reduction to the extent you utilized any of such losses to offset your
passive activity income from other investments). Under the passive activity loss
rules (discussed below), your loss on the sale together with your suspended
passive activity losses from your partnership generally should be deductible by
you from your other income (subject to any other applicable limitations) if you
sell all of your units in our offer.
Your gain or loss on a sale of a unit in our offer generally will be
treated as a capital gain or loss if you held the unit as a capital asset. Your
capital gain or loss will be treated as long-term capital gain or loss assuming
your holding period for the unit exceeds 12 months. Under current law, capital
gains and losses of individuals and non-corporate taxpayers are taxed under tax
rules different from the rules applicable to corporations. Long-term capital
gains of individuals and other non-corporate taxpayers are taxed at a maximum
federal income tax rate of 20%; however, their gain attributable to
straight-line depreciation deductions is taxed at a federal income tax rate of
25%. The maximum federal income tax rate for other income of such persons is
39.6%. Capital losses are deductible only to the extent of capital gains, except
that non-corporate taxpayers may deduct up to $3,000 of capital losses in excess
of the amount of their capital gains against their ordinary income. An
individual's long-term capital losses in excess of his long-term capital gains
can offset his short-term capital gains on which he would otherwise be subject
to tax at the same federal income tax rates as his ordinary income. Excess
capital losses generally can be carried forward to succeeding years (a
corporation's carryforward period is five years and a non-corporate taxpayer can
carry forward such losses indefinitely); in addition, corporations, but not
non-corporate taxpayers, are allowed to carry back excess capital losses to the
three preceding taxable years.
<PAGE>
Under special tax rules applicable to "passive activity losses," if you
are a non-corporate taxpayer or closely held corporation, you generally cannot
use your losses from your partnership to offset your non-passive activity
income. As a result, you may have suspended passive activity losses from your
partnership. However, if you sell all your units in our offer, then your
suspended passive activity losses from your partnership, as well as any loss you
recognize on the sale of your units in our offer, generally could be deducted by
you in the year of sale (subject to any other applicable limitations). If you
recognize a gain on the sale of your units in our offer but do not sell all of
your units, then any suspended passive activity losses from your partnership in
excess of your gain recognized on the sale could not be deducted by you (except
to the extent of your passive activity income from other sources) until your
remaining units are sold. If you recognize a loss on the sale of your units in
our offer but do not sell all of your units, then your loss on the sale and your
suspended passive activity losses (if any) from your partnership would be
deductible by you only to the extent of your passive activity income from your
partnership or from other sources.
In order to avoid liability for federal estimated tax penalties, an
individual generally is required to make quarterly estimated tax payments on
account of his annual tax liability. Penalties generally may be avoided by the
individual's paying at least 90% of his taxes due for the current year or a
percentage of his prior year's tax equal to 105% if the preceding tax year is
1998, 108.6% if the preceding tax year is 1999, 110% if the preceding tax year
is 2000, 112% if the preceding tax year is 2001 and 110% if the preceding tax
year is 2002 or thereafter. Accordingly, if you are an individual and you elect
to pay estimated taxes for 1999 equal to 105% of your tax liability for 1998,
you would be able to defer payment of taxes associated with a sale of your units
until April, 2000, whereas if you elect to pay estimated taxes for 1999 equal to
90% of your estimated tax liability for 1999, you will have to make quarterly
estimated tax payments on account of your tax liability on a sale of your units
in 1999.
Inasmuch as your partnership's assets are not generating unrelated
business taxable income and are not subject to "acquisition indebtedness" (as
defined in the Code), if you are a tax-exempt investor, you generally should not
realize unrelated business taxable income upon a sale of your units in our offer
unless your units are held subject to acquisition indebtedness incurred by you.
If you are a tax-exempt investor described in section 501(c)(7), (c)(9), (c)(17)
or (c)(20) of the Code, you should consult your tax advisor concerning the
application of "set aside" and reserve requirements to a sale of your units.
In addition to federal income tax, you may be subject to state and local
taxes on your gain (if any) on a sale of your units. You should consult with
your own professional tax advisors concerning the state and local tax
consequences of a sale of your units.
Information Reporting, Backup Withholding and FIRPTA. If you sell your
units, you must report the sale by filing a statement with your federal income
tax return for the year of sale. To prevent the possible application of back-up
federal income tax withholding of 31% with respect to the payment of the
purchase price, you will have to provide us with your correct taxpayer
identification number. See the instructions to the letter of transmittal.
If you are a foreign person (as defined in the Code), your gain, if any,
on the sale of your units in our offer will be subject to federal income tax
under the Foreign Investment in Real Property Tax Act, and we will be required
to deduct and withhold 10% of the amount realized by you on the sale. Amounts
withheld would be creditable against your federal income tax liability and, if
in excess thereof, you could obtain a refund from the Internal Revenue Service
by filing a U.S. federal income tax return. See the instructions to the letter
of transmittal.
Section 7. Effects of the Offer.
Effect on Trading Market. There is no established public trading market
for the units and, therefore, a reduction in the number of limited partners
should not materially further restrict your ability to find purchasers for your
units through secondary market transactions.
Stronger Influence on Limited Partner Voting Decisions by Purchaser and
its Affiliates. We will have the right to vote each unit that we purchase in the
offer. Depending on the number of units that we purchase in the offer, we and
our affiliates could be in a stronger position to influence the outcome of
voting decisions with respect to your partnership. Accordingly, we and our
affiliates could (i) prevent non-tendering limited partners from taking action
they desire but that we and our affiliates oppose and (ii) take action desired
by us and our affiliates but opposed by non-tendering limited partners. Under
the partnership agreement, limited partners holding a majority of the units are
entitled to take action with respect to a variety of matters, including:
removing your general partners; dissolving your partnership; selling all or
substantially all of your partnership's properties; effecting material
<PAGE>
changes in the investment objectives and policies of your partnership; and
causing most types of amendments to the partnership agreement. Consent of
limited partners holding a majority of the outstanding units will also be
required to approve the reorganization of your partnership into a real estate
investment trust or other publicly-traded entity which your general partners
have agreed to propose as part of the settlement of the class action and
derivative litigation involving your partnership. When voting on matters, we and
our affiliates will vote units owned and acquired by us, in our interest, which,
because of our affiliation with your general partners, may also be in the
interest of your general partners.
The units are registered under the Exchange Act, which means, among other
things, that your partnership is required to furnish certain information to its
limited partners and to the Commission and comply with the Commission's proxy
rules in connection with meetings of, and solicitation of consents from, limited
partners. Our purchase of units pursuant to the offer will not result in the
units becoming eligible for deregistration under Section 12(g) of the Exchange
Act.
Section 8. Future Plans. We are offering to purchase units as required by
the court-approved settlement of a class action and derivative litigation
involving your partnership. Following the completion of the offer, we may
acquire additional units. Any such acquisition may be made through private
purchases or by any other means deemed advisable. Any such acquisition may be at
a price higher or lower than the price to be paid for the units purchased under
this offer.
Under the settlement, your general partners have agreed to use their best
efforts to reorganize the partnership into a separate real estate investment
trust or other entity whose shares will be listed on a national securities
exchange or on the NASDAQ National Market System. The reorganization will be
made in accordance with applicable federal securities law which provides, among
other things, for the preparation of a detailed disclosure document containing a
comprehensive description of the proposed reorganization. In addition, the
reorganization will require approval by the limited partners holding a majority
of the outstanding units. Your general partners believe that an investment in
the reorganized entity will be significantly different from an investment in
your partnership. The potential benefits of, and risks associated with, an
investment in the reorganized entity can only be assessed after the structure
and terms of the reorganization have been fully determined. Although the
structure and terms have not yet been fully determined, it is presently
anticipated that, unlike your partnership, the reorganized entity may have an
infinite life, will have the ability to borrow money to purchase additional
properties and will be able to reinvest the proceeds of property sales.
Other than the reorganization described above, your general partners do
not have any present plans or intentions with respect to a merger,
reorganization or liquidation of your partnership, a sale of assets or financing
of any of your partnership's properties or a change in the management,
capitalization or distribution policy of your partnership. (See "Section 9.
Certain Information Concerning Your Partnership".) However, we expect that
consistent with their fiduciary obligations, your general partners will continue
to review any opportunities such as sales of your partnership's properties and
will seek to maximize returns to limited partners. Your general partners'
intentions are to manage your partnership's assets to maximize capital
appreciation and improve property operations.
Section 9. Certain Information Concerning Your Partnership. Information
included herein concerning your partnership is derived from your partnership's
publicly-filed reports. Additional financial and other information concerning
your partnership is contained in your partnership's annual reports on Form 10-K,
quarterly reports on Form 10-Q and other filings with the Commission. Such
reports and other documents may be examined and copies may be obtained from the
offices of the Commission at 450 Fifth Street, N.W., Washington, D.C 20549, and
at the regional offices of the Commission located in the Northwestern Atrium
Center, 500 Madison Street, Suite 1400, Chicago, Illinois 60661, and 7 World
Trade Center, New York, New York 10048. Copies should be available by mail upon
payment of the Commission's customary charges by writing to the Commission's
principal offices at 450 Fifth Street, N.W., Washington, D.C. 20549. The
materials may also be reviewed through the Commission's Web site
(http://www.sec.gov).
Your partnership was organized on November 14, 1985 under the laws of the
State of Delaware. Its principal executive offices are located at 5 Cambridge
Center, 9th floor, Cambridge, Massachusetts 02142. Its telephone number is (617)
234-3000. Your partnership is engaged in the business of operating and holding
for investment previously acquired income-producing properties consisting of
office buildings, shopping centers and other commercial and industrial
properties. The original anticipated holding period of your partnership's
properties
<PAGE>
was 7-10 years from the acquisition of such properties by your partnership
(which occurred from November 1986 to November 1988).
Presidio Capital Investment Company, LLC, the entity which is our sole
member, and certain of its affiliates and affiliates of your general partners,
entered into a services agreement with AP-PCC III, L.P. pursuant to which AP-PCC
III, L.P. was retained to provide asset management and investor relation
services to your partnership and other entities affiliated with your
partnership.
As a result of this agreement, AP-PCC III, L.P. has the duty to direct the
day to day affairs of your partnership, including, without limitation, reviewing
and analyzing potential sale, financing or restructuring proposals regarding
your partnership's assets, preparation of all partnership reports, maintaining
partnership records and maintaining bank accounts of your partnership. AP-PCC
III, L.P. is not permitted, however, without the consent of our affiliate
Presidio Capital Corp., or as otherwise required under the terms of your
partnership's agreement of limited partnership to, among other things, cause
your partnership to sell or acquire an asset or file for bankruptcy.
In order to facilitate the provision by AP-PCC III, L.P. of the asset
management services and the investor relation services, effective October 25,
1999, the officers and directors of your managing general partner resigned and
nominees of AP-PCC III, L.P. were elected as the officers and directors of your
managing general partner. AP-PCC III, L.P. is an affiliate of Winthrop Financial
Associates, a Boston based company that provides asset management services,
investor relation services and property management services to over 150 limited
partnerships which own commercial property and other assets.
<PAGE>
Properties.
The following is a description of the properties in which your partnership
has an interest. Unless otherwise indicated, all properties listed are owned by
your partnership in fee simple.
Property Name Rentable Square Acquisition
(and Description) Location Footage Date
- ----------------- -------- ------- ----
Century Park I (1) Kearny Mesa, CA 200,002 11/7/86
(Office Complex)
568 Broadway (2) New York, NY 299,000 12/2/86
(Office Building)
Seattle Tower (1) Seattle, WA 141,000 12/16/86
(Office Building)
Commonwealth Industrial Park Fullerton, WA 273,576 4/14/87
(Industrial Park)
Commerce Plaza I Richmond, VA 85,000 4/23/87
(Office Building)
Melrose Crossing Melrose Park, IL 138,355 1/5/88
(Shopping Center)
Matthews Township Festival Matthews, NC 127,388 2/23/88
(Shopping Center)
Sutton Square Raleigh, NC 101,965 4/15/88
(Shopping Center)
TMR Warehouses (3) Various, OH 1,010,500 9/15/88
(Warehouses)
The Melrose Out Parcel (4) Melrose, Park, IL 18,000 11/3/88
- ----------
(1) Owned in fee simple by a joint venture in which your partnership and
Integrated Resources High Equity Partners - Series 85, A California
Limited Partnership ("HEP 85") each have a 50% interest.
(2) Owned in fee simple by a joint venture in which your partnership and HEP
85 each have a 38.925% interest and in which High Equity Partners L.P. -
Series 88 ("HEP 88") has a 22.15% interest.
(3) Owned in fee simple by a joint venture with HEP 88 in which your
partnership has a 20.66% interest and HEP 88 has a 79.34% interest.
(4) This parcel is adjacent to the Melrose Crossing Shopping Center. In 1993,
the Partnership entered into a ten year ground lease with Rally's
Hamburgers, Inc. ("Rally's"), which constructed a drive-through hamburger
restaurant on the site at its own cost. In January 1995, Rally's ceased
operating due to low sales volume. Rally's is required to continue paying
rent for the entire lease term which expires in April 2004.
<PAGE>
Real Estate and Accumulated Depreciation.
The following table shows the encumbrances, the initial cost to your
partnership of land, buildings and improvements, cost capitalization of
improvements and carrying costs subsequent to acquisition, gross carrying value
and accumulated depreciation of each of your partnership's properties as of
December 31, 1998. Limited partners should note that the gross carrying value of
a property does not represent the fair market value of the property or the
amount for which the property could be sold.
<TABLE>
<CAPTION>
Costs Reductions
Capitalized Recorded
Subsequent to Subsequent to
Initial Cost Acquisition Acquisition
------------------------ --------------------------- --------------
Buildings
and
Description Encumbrances Land Improvements Improvements Carrying Costs Write-downs
----------- ------------ ---- ------------ ------------ -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
RETAIL:
Melrose Crossing Shopping Center $ -- $ 2,002,532 $12,721,968 $ 828,834 $ 1,064,777 $(12,100,000)
Melrose Park, IL
Matthews Township Festival Shopping -- 2,973,646 12,571,750 368,892 1,581,384 (5,300,000)
Center, Matthews, NC
Sutton Square Shopping Center -- 2,437,500 10,062,500 291,438 1,025,898 --
Raleigh, NC
----------- ----------- ----------- ----------- ------------ ------------
-- 7,413,678 35,356,218 1,489,164 3,672,059 (17,400,000)
----------- ----------- ----------- ----------- ------------ ------------
OFFICE:
Commerce Plaza Office Building -- 733,279 7,093,433 1,754,092 468,324 (2,700,000)
Richmond, VA
Century Park I Office Complex -- 3,122,064 12,717,936 1,966,127 1,203,130 (11,700,000)
Kearny Mesa, CA
568 Broadway Office Building -- 2,318,801 9,821,517 5,106,279 1,220,484 (10,821,150)
New York, NY
Seattle Tower Office Building -- 2,163,253 5,030,803 2,124,134 486,969 (6,050,000)
Seattle, WA
----------- ----------- ----------- ----------- ------------ ------------
-- 8,337,397 34,663,691 10,950,632 3,378,907 (31,271,150)
----------- ----------- ----------- ----------- ------------ ------------
INDUSTRIAL:
Commonwealth Industrial Park -- 3,749,700 7,125,300 342,761 767,573 (5,800,000)
Fullerton, CA
TMR Warehouse -- 369,215 5,363,935 29,326 435,653 --
Various, OH
Melrose (Lot #7) -- 450,000 -- -- 36,628 --
Melrose Park, IL
----------- ----------- ----------- ------------ ------------
-- 4,568,915 12,489,235 372,087 1,239,854 (5,800,000)
----------- ----------- ----------- ----------- ------------ ------------
$ $20,319,990 $82,509,144 $12,811,883 $ 8,290,820 $(54,471,150)
=========== =========== =========== =========== ============ ============
Gross Amount at Which
Carried at Close Of Period
------------------------------------------
Buildings
and Accumulated Date
Description Land Improvements Total Depreciation Acquired
----------- ---- ------------ ----- ------------ --------
<S> <C> <C> <C> <C> <C>
RETAIL:
Melrose Crossing Shopping Center $ 569,462 $ 3,948,649 $ 4,518,111 $ 2,753,147 1988
Melrose Park, IL
Matthews Township Festival Shopping 2,249,562 9,946,110 12,195,672 3,552,445 1988
Center, Matthews, NC
Sutton Square Shopping Center 2,637,550 11,179,786 13,817,336 3,115,944 1988
Raleigh, NC
------------ ----------- ----------- -----------
5,456,574 25,074,545 30,531,119 9,421,536
------------ ----------- ----------- -----------
OFFICE:
Commerce Plaza Office Building 556,,352 6,792,778 7,349,130 2,285,139 1987
Richmond, VA
Century Park I Office Complex 1,092,744 6,216,513 7,309,257 3,046,013 1986
Kearny Mesa, CA
568 Broadway Office Building 922,338 6,723,593 7,645,931 2,792,955 1986
New York, NY
Seattle Tower Office Building 724,808 3,030,351 3,755,159 1,406,134 1986
Seattle, WA
------------ ----------- ----------- -----------
3,296,242 22,763,235 26,059,477 9,530,241
------------ ----------- ----------- -----------
INDUSTRIAL:
Commonwealth Industrial Park 2,032,937 4,152,397 6,185,334 1,788,776 1987
Fullerton, CA
TMR Warehouse 397,271 5,800,858 6,198,129 1,487,950 1988
Various, OH
Melrose (Lot #7) 486,628 -- 486,628 -- 1988
Melrose Park, IL
------------ ----------- ----------- -----------
2,916,836 9,935,255 12,870,091 3,276,726
------------ ----------- ----------- -----------
$ 11,669,652 $57,791,035 $69,460,687 $ 2,228,503
============ =========== =========== ===========
</TABLE>
Note: The aggregate cost for Federal income tax purposes is $123,931,837 at
December 31, 1998.
11
<PAGE>
Selected Financial Data.
The following is a summary of certain financial data for your partnership
for the periods indicated. The summary financial information for your
partnership for the years ended 1998, 1997, 1996, 1995 and 1994 is based on
audited financial statements. The summary financial information for the nine
months ended September 30, 1999 and 1998 is based on unaudited financial
statements.
<TABLE>
<CAPTION>
Nine Months Ended September 30, Year Ended December 31,
------------------------------- ----------------------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Rental Revenue ..... $ 8,895,796 $ 8,444,641 $11,390,709 $11,249,284 $ 11,748,459 $ 10,452,432 $ 10,233,925
Net Income (Loss) $ 2,734,732 $ 2,210,429 $ 3,100,160 $ 2,845,625(1) $ 2,244,520 $(22,084,905)(2) $ 936,307(3)
Net Income(Loss) Per
Unit ............... $ 4.42 $ 3.57 $ 5.01 $ 4.60 $ 3.63 $ (35.68)(2) $ 1.51(3)
Distributions Per .. $ 2.30(5) $ 3.45 $ 4.60 $ 4.03 $ 2.48 $ 2.48 $ 2.45
Unit(4)
Total Assets ....... $62,599,911 $62,030,298 $61,837,211 $61,919,546 $ 61,979,385 $ 60,266,933 $ 83,682,263
</TABLE>
- ----------
(1) Net income for the year ended December 31, 1997 includes a
write-down for impairment on Commonwealth of $600,000, or $0.97 per
unit.
(2) Net loss for the year ended December 31, 1995 includes a write-down
for impairment on Century Park I, Seattle Tower, 568 Broadway, 230
East Ohio Street, Commonwealth, Commerce Plaza I, Melrose Crossing
and Matthews Festival in the aggregate amount of $23,769,050, or
$38.40 per unit.
(3) Net income for the year ended December 31, 1994 includes a
write-down for the impairment of Commonwealth of $600,000, or $0.97
per unit.
(4) All distributions are in excess of accumulated undistributed net
income and, therefore, represent a return of capital to investors on
a generally accepted accounting principles basis.
(5) No distributions were made in respect of the third quarter of 1999.
12
<PAGE>
Section 10. Conflicts of Interest and Transactions with Affiliates. Your
general partners have certain conflicts of interest with respect to the offer as
set forth below.
Voting by Us and Our Affiliates. As a result of the offer, we and our
affiliates may be in a stronger position to influence the outcome of partnership
decisions on which limited partners may vote. This means that (i) non-tendering
limited partners could be prevented from taking action they desire but that we
and our affiliates oppose and (ii) we and our affiliates may be able to take
action desired by us and our affiliates but opposed by non-tendering limited
partners. (See "Section 7. Effects of the Offer".)
Transactions with Affiliates. Your partnership has a property management
services agreement with Resources Supervisory Management Corp. ("Resources
Supervisory"), an affiliate of your general partners, to perform certain
functions relating to the management of the properties of your partnership.
Portions of the property management fees were paid to unaffiliated management
companies which are engaged for the purpose of performing the management
functions for certain properties. For 1998, 1997, and 1996, and for the first
nine months of 1999, Resources Supervisory received an aggregate of $427,126,
$416,428, $435,467, and $294,200, respectively, of which $278,204, $287,466,
$254,005 and $243,469 was paid to unaffiliated management companies,
respectively.
Resources Capital Corp., your administrative general partner, received
reimbursement of expenses of $200,000 per year for the administration of your
partnership for each of 1998, 1997 and 1996, and $150,000 for the first nine
months of 1999. Another affiliate of your general partner was reimbursed for
$102,025 of expenses during 1998 and $76,500 of expenses during the first nine
months of 1999.
Your administrative general partner receives a partnership asset
management fee for managing the affairs of your partnership which, prior to the
effectiveness of recent amendments to the partnership agreement, was equal to
1.05% of the invested assets (as defined in the partnership agreement). Under
this method of calculation, your administrative general partner received a
partnership asset management fee of $1,285,432, $1,376,011, and $1,406,204,
respectively, for 1998, 1997 and 1996. As a result of the recent amendments to
the partnership agreement, your administrative general partner is now entitled
to a partnership asset management fee which is equal to 1.25% of the gross asset
value of the assets of your partnership, as determined by an independent
appraiser of national reputation selected by your general partners. The recently
enacted amendments provide that for 1999 your administrative general partner
will be paid an asset management fee of $973,293.
Your general partners were allocated 5% of the net income (losses) of your
partnership which in the aggregate, amounted to $155,008, $142,281, $112,226 and
$136,737, for 1998, 1997 and 1996 and the first nine months of 1999,
respectively, and received $142,360, $124,721, $76,752, and $71,180,
respectively, as its 5% share of distributions for those periods.
The recently enacted amendments also fix the amount your general partners
must pay to your partnership on liquidation at $2,861,277. This amount is
reduced by 10% for each full calendar year after 1998 (prorated for any calendar
year in which your partnership is liquidated on a day of the year which is not
December 31) in which your partnership is not liquidated and will be eliminated
if your partnership has not been liquidated by the end of 2008. The obligation
will also be eliminated if your partnership is reorganized into a
publicly-traded entity. Presidio Capital Corp., an affiliate of ours, has
guaranteed your general partners' obligation to pay to your partnership such
amounts described above upon the liquidation of your partnership.
Your partnership's limited partnership agreement provides for the
indemnification of your general partners and their affiliates in certain
circumstances. Your partnership reimbursed your general partners for $1,034,510
of costs they incurred in defending and preparing the settlement materials in
respect of the class action and derivative litigation involving your partnership
which is more fully described in Section 13.
Section 11. Certain Information Concerning Us. We are Millennium Funding
III LLC, a Delaware limited liability company formed for the purpose of making
the offer. We are wholly-owned by Presidio Capital Investment Company, LLC, a
Delaware limited liability company controlled by NorthStar Capital Investment
Corp., a Maryland corporation. Our principal executive office is at 527 Madison
Avenue, New York, New York 10022.
13
<PAGE>
The names, positions and business addresses of the directors and executive
officers of NorthStar Capital Investment Corp., as well as a biographical
summary of the experience of such persons for the past five years or more, are
set forth on Schedule 1 attached hereto and are incorporated herein by
reference.
In connection with a tender offer for units in your partnership made on
March 12, 1998 by Olympia Investors, L.P., a Delaware limited partnership
("Olympia"), Olympia and our affiliate, Presidio Capital Corp., entered into an
agreement which provides, among other things, for: (i) an agreement by Olympia
and its affiliates to limit their acquisition of units to those acquired in the
Olympia tender offer and to limit Olympia's acquisition of assets or properties
of your partnership to properties or assets which your general partners or its
affiliates have publicly announced their intention to sell or in respect of
which they have hired a broker; (ii) an agreement by Olympia and its affiliates
not to (A) seek the removal of your general partners or call any meeting of
limited partners of your partnership; (B) make any proposal to or seek proxies
from limited partners of your partnership; or (C) act, either alone or together
with others, to seek to control the management, policies or affairs of your
partnership or to effect any business combination or other extraordinary
transaction that involves your partnership or your general partners; (iii) an
agreement by Olympia and its affiliates to vote all units in your partnership
which they own in favor of any proposal by your general partners resulting in
limited partners receiving securities listed on NASDAQ or a national securities
exchange; (iv) Olympia's grant to an affiliate of your general partners of an
option to purchase 50% of the units acquired in Olympia's tender offer at a
price determined in accordance with Olympia's agreement with Presidio Capital
Corp., and 50% of Olympia's costs associated with its tender offer; and (v) an
agreement pursuant to which either party can initiate so-called "buy/sell"
procedures by notifying the other of a specified price per unit and the other
terms and conditions on which the other party would then be required to elect
(subject to certain exceptions) either to buy the units acquired in connection
with Olympia's tender offer from the initiating party or to sell the units to
the initiating party. The agreements described in clauses (i), (ii) and (iii)
above expire on March 6, 2001, but may expire earlier under certain
circumstances. After Olympia's tender expired, Olympia announced that it had
accepted for payment 32,750 units pursuant to its tender offer. Pursuant to the
agreement, an affiliate of Presidio Capital Corp. bought 50% of the units which
were owned by Olympia as a result of its tender offer, or 16,375 units, for
$91.73 per unit. Presidio Capital Corp. may be deemed to beneficially own the
remaining units owned by Olympia as a consequence of the agreement.
On November 10, 1999, an affiliate of ours and of your general partners
purchased 2,942 units from Everest Properties II LLC and its affiliates for
$118.35 per unit.
Except as otherwise set forth herein, (i) neither we, Presidio Capital
Corp., Presidio Capital Investment Company, LLC, NorthStar Capital Investment
Corp. (collectively, the "Presidio Entities") to the best of our knowledge, the
persons listed on Schedule 1, nor any affiliate of the foregoing beneficially
owns or has a right to acquire any units, (ii) neither we, any Presidio Entity,
to the best of our knowledge, the persons listed on Schedule 1, nor any
affiliate thereof or director, executive officer or subsidiary of us or the
Presidio Entities. has effected any transaction in the units within the past 60
days, (iii) neither we, any Presidio Entity, to the best of our knowledge, any
of the persons listed on Schedule 1, nor any director or executive officer of us
or the Presidio Entities, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of your
partnership, including, but not limited to, contracts, arrangements,
understandings or relationships concerning the transfer or voting thereof, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies, (iv) there have
been no transactions or business relationships which would be required to be
disclosed under the rules and regulations of the Commission between us, any
Presidio Entity, or, to the best of our knowledge, the persons listed on
Schedule 1, on the one hand, and your partnership or its affiliates, on the
other hand, and (v) there have been no contracts, negotiations or transactions
between us, any Presidio Entity, or, to the best of our knowledge, the persons
listed on Schedule 1, on the one hand, and your Partnership or its affiliates,
on the other hand, concerning a merger, consolidation or acquisition, tender
offer or other acquisition of securities, an election of directors or a sale or
other transfer of a material amount of assets.
Section 12. Source of Funds. We expect that approximately $4,080,368
(exclusive of fees and expenses) will be required to purchase all of the 39,596
units we are seeking in this offer. We plan to obtain the funds necessary to
consummate the offer (including fees and expenses) from capital contributions
directly or indirectly from Presidio Capital Investment Company, LLC, which has
a net worth substantially greater than the amount required to purchase the
units. (See "THE TENDER OFFER - Section 11. Certain Information Concerning Us".)
14
<PAGE>
Section 13. Background of the Offer.
Acquisition of Control. In November 1994, Presidio Capital Corp. acquired
control of your general partners upon consummation of a Plan of Reorganization
of Integrated Resources, Inc. under Chapter 11 of the Bankruptcy Code.
The Action. The class action and derivative litigation involving your
partnership was brought by certain limited partners in your partnership as well
as Integrated Resources High Equity Partners, Series 85, A California Limited
Partnership and High Equity Partners L.P. - Series 88. The complaint in the
action alleged, among other things, various state law class and derivative
claims against your general partners, the general partners of the other HEP
Partnerships and certain related parties, including claims for breach of
fiduciary duty; breach of contract; unfair and fraudulent business practices;
negligence; dissolution, accounting, receivership and removal of general
partners; fraud; and negligent misrepresentation. Your general partners and the
other defendants in the action at all times considered the action to be without
merit and vigorously defended the action.
The Settlement. In January 1999 the parties agreed to the terms of the
settlement. Following a hearing held on April 29, 1999, the California Superior
Court approved the settlement and all of the transactions contemplated thereby
and found them to be fair, reasonable and adequate and in the best interest of
the settlement class and your partnership. On August 1999, the settlement was
consummated following the approval of amendments to the partnership agreement.
The settlement required your general partners to cause this offer to be made and
also requires the general partners to propose the reorganization of your
partnership into a real estate investment trust or other publicly-traded entity.
Establishment of Purchase Price. Our offer price was determined as part of
the negotiation of the court-approved settlement and was based on March 1998
appraisals of your partnership's properties.
We used the March 1998 appraisals of your partnership's properties to
estimate the net asset value of your partnership as of September 30, 1999. The
following table sets forth the values in the appraisals. For joint venture
investments, the value listed represents your partnership's proportionate
interest in the joint venture. The appraised values listed below may not reflect
the current market value of your partnership's properties.
- --------------------------------------------------------------------------------
Property Appraised Value
-------- ---------------
- --------------------------------------------------------------------------------
Century Park I $ 9,500,000(1)
- --------------------------------------------------------------------------------
568 Broadway 12,456,000(2)
- --------------------------------------------------------------------------------
Seattle Tower 5,150,000(1)
- --------------------------------------------------------------------------------
Commonwealth Industrial Park 7,200,000
- --------------------------------------------------------------------------------
Commerce Plaza I 7,600,000
- --------------------------------------------------------------------------------
Melrose Crossing 3,100,000
- --------------------------------------------------------------------------------
Matthews Township Festival 9,600,000
- --------------------------------------------------------------------------------
Sutton Square Shopping Center 10,200,000
- --------------------------------------------------------------------------------
TMR Warehouses 4,379,920(3)
- --------------------------------------------------------------------------------
TOTAL $ 69,185,920
- --------------------------------------------------------------------------------
- ----------
(1) Your partnership has a 50% interest in this property and the amount listed
in the table represents 50% of the appraised value.
(2) Your partnership has a 38.925% interest in this property and the amount
listed in the table represents 38.925% of the appraised value.
(3) Your partnership has a 20.60% interest in this property and the amount
listed in the table represents 20.66% of the appraised value.
15
<PAGE>
To estimate your partnership's net asset value as of September 30, 1999,
we added to the aggregate appraised values the amount of all net current assets
of your partnership at September 30, 1999 which equaled $9,869,000. The
resulting net asset value of your partnership was approximately $79,054,920 or
$127.72 per unit (based on the percentage of distributions to which limited
partners are entitled).
Secondary market sales activity for the units, including privately
negotiated sales, has been limited. At present, privately negotiated sales and
sales through intermediaries (e.g., 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 limited partner to liquidate an
investment in units 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 industry publication, between August 1, 1999 and
September 30, 1999, there were 53 reported trades in the secondary market (for a
total of 2,748 units) which were made at between a high of $96 per unit and a
low of $80 per unit, with a weighted average price of $89.44 per unit. These
prices do not take into account commissions and other transactional costs which
sellers of units may be required to pay (which typically range between 8% and
10% of the reported selling price).
No independent person has been retained to evaluate or give any opinion
about the fairness of the offer and no representation is made by us or your
general partners as to such fairness. Other measures of the value of the units
may be relevant to limited partners. Limited partners are urged to consider
carefully all of the information contained in this offer to purchase and consult
with their own advisors, tax, financial or otherwise, in evaluating the terms of
this offer before deciding whether to tender units.
Partnership Makes No Recommendation. Your partnership is making no
recommendation as to whether limited partners should tender their units.
Section 14. Conditions of the Offer. Notwithstanding any other provisions
of our offer, we will not be required to accept for payment or to pay for any
units tendered pursuant to our offer if all authorizations, consents, orders or
approvals of, or declarations or filings with, or expirations of waiting periods
imposed by, any court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, necessary for the
consummation of the transactions contemplated by our offer shall not have been
filed, occurred or been obtained. Furthermore, notwithstanding any other term of
our offer, we will not be required to accept for payment or pay for any units
not theretofore accepted for payment or paid for and may terminate our offer as
to such units 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, or the later
thereof, as applicable and as determined by us, any of the following conditions
exists:
(a) a preliminary or permanent injunction or other order of any
federal or state court, government or governmental authority or agency shall
have been issued and shall remain in effect which makes illegal, delays or
otherwise directly or indirectly restrains or prohibits the making of our offer
or the acceptance for payment of or payment for any units by us; and
(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 (iii) of paragraph
(a) above.
The foregoing conditions are for our sole benefit and may be asserted by
us regardless of the circumstances giving rise to such conditions or may be
waived by us in whole or in part at any time and from time to time in our sole
discretion. Any determination by us concerning the events described above will
be final and binding upon all parties. Notwithstanding anything to the contrary
set forth in this Section 14, all conditions set forth in this Section 14 must
be satisfied or waived prior to the expiration date.
Section 15. Certain Legal Matters.
General. Except as set forth in this Section 15, we are not aware of any
filings, approvals or other actions by any domestic or foreign governmental or
administrative agency that would be required before we acquire units
16
<PAGE>
pursuant to our offer. Should any such approval or other action be required, it
is our present intention to seek such additional approval or action. While there
is no present intent to delay the purchase of units tendered pursuant to our
offer pending receipt of any such additional approval or the taking of any such
action, there can be no assurance that any such additional approval or action,
if needed, would be obtained without substantial conditions or that adverse
consequences might not result to your partnership's business, or that certain
parts of your partnership's business might not have to be disposed of or held
separate or other substantial conditions complied with in order to obtain such
approval or action, any of which could cause us to elect to terminate our offer
without purchasing units under the offer. Our obligation to purchase and pay for
units is subject to certain conditions, including conditions related to the
legal matters discussed in this Section 15.
Antitrust. We do not believe that the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, is applicable to the acquisition of units
contemplated by our offer.
Margin Requirements. The units are not "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly, those regulations are not applicable to our offer.
State Takeover Laws. Many states have adopted anti-takeover laws which
purport, to varying degrees, to be applicable to attempts to purchase securities
of corporations which are incorporated in those states or which have substantial
assets, securityholders, principal executive offices or principal places of
business in those states. Although we have not attempted to comply with any
state anti-takeover statutes in connection with our offer, we reserve the right
to challenge the validity or applicability of any state law allegedly applicable
to the offer and nothing in this offer to purchase nor any action taken in
connection with our offer is intended as a waiver of that right. If any state
anti-takeover statute is applicable to our offer, we might be unable to accept
for payment or purchase units tendered pursuant to the offer or be delayed in
continuing or consummating the offer. In such case, we may not be obligated to
accept for purchase or pay for any units tendered.
Section 16. Fees and Expenses. Except as set forth in this Section 16, we
will not pay any fees or commissions to any broker, dealer or other person for
soliciting tenders of units pursuant to the offer. We have retained Georgeson
Shareholder Communications Inc. to act as Depositary in connection with our
offer. We will pay Georgeson Shareholder Communications Inc. reasonable and
customary compensation for its respective services in connection with the offer,
plus reimbursement for out-of-pocket expenses. We will also pay all costs and
expenses of printing and mailing the offer and its legal fees and expenses. You
will be responsible for the payment of any fees imposed by your broker for
assisting you in tendering your units or any fees charged by a custodian or
other trustee of any Individual Retirement Account or profit plan that is the
record owner of your units.
Section 17. Miscellaneous. We are not aware of any jurisdiction in which
the making of our offer is not in compliance with applicable law. If we become
aware of any jurisdiction in which the making of the offer would not be in
compliance with applicable law, we will make a good faith effort to comply with
any such law. If, after such good faith effort, we cannot comply with any such
law, our offer will not be made to (nor will tenders be accepted from or on
behalf of) the holders of units who reside in such jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of us not contained herein or in the letter of
transmittal and, if given or made, such information or representation must not
be relied upon as having been authorized.
We have filed with the Commission a Schedule 14D-1, pursuant to Rule 14d-3
under the Exchange Act, furnishing certain additional information with respect
to our offer, and may file amendments thereto. The Schedule 14D-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 in Section 9
hereof (except that they will not be available at the regional offices of the
Commission).
Millennium Funding III LLC
November 24, 1999
17
<PAGE>
SCHEDULE 1
INFORMATION WITH RESPECT TO THE EXECUTIVE OFFICERS
AND DIRECTORS OF NORTHSTAR CAPITAL INVESTMENT CORP.
Set forth below is the name, current business address, present principal
occupation, and employment history for at least the past five years of each
director and executive officer of NorthStar Capital Investment Corp. Each person
listed below is a citizen of the United States.
Present Principal Occupation or Employment;
Material Occupation, Position, Office
or Employment for the Past Five Years
Peter W. Ahl, 34, has been a Vice President of NorthStar Capital
Investment Corp. since November 1997. For the previous five years he was a
director in the Alternate Investment Group of AEW Capital Management, L.P. Mr.
Ahl's current business address is 527 Madison Avenue, New York, New York 10022.
Martin L. Edelman, 58, has been a director of NorthStar Capital Investment
Corp. since November 1997. Since 1994, Mr. Edelman has been of counsel to Battle
Fowler LLP, a New York City law firm specializing in real estate and corporate
law. Mr. Edelman is one of the Managing Partners of Chartwell Hotel Associates
(an affiliate of Fisher Brothers, the Getty family and Soros family interests),
and is on the Board of Directors and Executive Committee of Grupo Chartwell de
Mexico, S.A. de C.V. Mr. Edelman is a member of the Board of Directors of each
of Avis Rent-a-Car, Inc. Cendant Incorporated, Delancey Estates PLC., Acadia
Real Estate Trust, and Capital Trust. Mr. Edelman's current business address is
75 East 55th Street, New York, New York 10022.
Richard Georgi, 36, has been a director of NorthStar Capital Investment
Corp. since June 1999. Currently, Mr. Georgi is a Managing Partner of Soros Real
Estate Partnership and is responsible for the Soros group of funds (including
Quantum Realty Fund) global real estate investments. Prior to joining SREP in
1999, Mr. Georgi spent nine years with Goldman Sachs & Co. in real estate
related businesses, including responsibility for the Real Estate Principal Area
and the Whitehall Real Estate Funds in Europe from 1995 to 1999. Mr. Georgi is a
board member of Europlex, Mapeley and MedGroup. Mr. Georgi's current business
address is 20 St. James Street, London SW2A 1ES.
Marc Gordon, 35, has been a Vice President and Assistant Secretary of
NorthStar Capital Investment Corp. since November 1997. From 1993 to 1997, Mr.
Gordon was Vice President in the real estate investment banking group at Merrill
Lynch. Mr. Gordon's current business address is 527 Madison Avenue, New York,
New York 10022.
David Hamamoto, 40, has been a Co-Chairman of the Board, Co-President and
Co-Chief Executive of NorthStar Capital Investment Corp. since November 1997.
Previously he was a partner and co-head of the Real Estate Principal Investment
Area at Goldman, Sachs & Co. Mr. Hamamoto's current business address is 527
Madison Avenue, New York, New York 10022.
Christopher M. Jeffries, 49, has been a director of NorthStar Capital
Investment Corp. since May 1998. Mr. Jeffries founded Millennium Partners in
1990, a developer of mixed-use urban entertainment and living centers. Mr.
Jeffries' current business address is 1995 Broadway, New York, New York 10023.
David King, 37, has been a Vice President and Assistant Treasurer of
NorthStar Capital Investment Corp. since November 1997. He is also a Vice
President of your general partners. For more than the previous five years he was
a Senior Vice President of Finance at Olympia & York Companies (USA). Mr. King's
current business address is 527 Madison Avenue, New York, New York 10022.
Martin Lamb, 38, has been a Vice President of NorthStar Capital Investment
Corp. since April 1998. From 1996 until 1998 he was a Senior Vice President with
The Morgan Stanley Real Estate Fund. Prior to that, he served as Vice President
at The Argo Fund, an opportunistic real estate joint venture between affiliates
of J.P. Morgan and The O'Connor Group. Mr. Lamb's current business address is
527 Madison Avenue, New York, New York 10022.
Dallas E. Lucas, 37, has been a director, Vice President, Treasurer and Chief
Financial Officer of NorthStar Capital Investment Corp. since August 1998. He is
also a Vice President of your general partners. From 1994 until August 1998
<PAGE>
he was the Chief Financial Officer and Senior Vice President of Crescent Real
Estate Equities Company. Mr. Lucas' current business address is 527 Madison
Avenue, New York, New York 10022.
Richard J. McCready, 41, has been a Vice President and Secretary of
NorthStar Capital Investment Corp. since March 1998. Previously, he was
President, Chief Operating Officer and a director of First Winthrop Corporation.
Mr. McCready's current business address is 527 Madison Avenue, New York, New
York 10022.
W. Edward Scheetz, 34, has been a Co-Chairman of the Board, Co-President
and Co-Chief Executive Officer of NorthStar Capital Investment Corp. since
November 1997. Previously he was a partner at Apollo Real Estate Advisors L.P.
since 1993. Mr. Scheetz' current business address is 527 Madison Avenue, New
York, New York 10022.
Robert Soros has been a director of NorthStar Capital Investment Corp.
since June 1999. Mr. Soros is a partner at Soros Private Equity Partners, an
affiliate of Soros Fund Management LLC, which is responsible for the private
equity and real estate investing for Quantum Group of Funds and Soros Fund
Management Fund LLC. In addition, Mr. Soros oversees various Soros Family
investments. Mr. Soros has been with Soros Fund Management LLC since 1994. Mr.
Soros is a member of the Board of Directors of American Malls International and
MenuDirect Corporation. Mr. Soros' current business address is 888 Seventh
Avenue, 33rd Floor, New York, New York 10106.
<PAGE>
The letter of transmittal and any other required documents should be sent
or delivered by each unitholder or such unitholder's broker, dealer, commercial
bank, trust company or other nominee to the Depositary at the address set forth
below:
By Mail or Overnight Delivery: Georgeson Shareholder Communications Inc.
17 State Street, 27th Floor
New York, New York 10004
If you have any questions or if you need assistance in completion of the
letter of transmittal, you may contact Georgeson Shareholder Communications
Inc., the Information Agent for the offer, by calling:
(800) 223-2064
Any questions or requests for assistance or for additional copies of this
offer to purchase, the letter of transmittal and other tender offer materials
may be directed to us at the telephone number and address listed above. You may
also contact your broker for assistance concerning the offer.
<PAGE>
Exhibit (a)(2)
HIGH EQUITY PARTNERS L.P. - SERIES 86
LETTER OF TRANSMITTAL
THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON DECEMBER 22, 1999 (the "Expiration Date") UNLESS EXTENDED.
================================================================================
To participate in the Offer, a duly executed copy of this Letter of
Transmittal, all certificates representing the undersigned's interest in units
of limited partnership tendered hereby (the "Certificates") and any other
documents required by this Letter of Transmittal must be received by the
Purchaser (as defined below) on or prior to the Expiration Date. Delivery of
this Letter of Transmittal or any other required documents to an address other
than as set forth below does not constitute valid delivery. The method of
delivery of all documents is at the election and risk of the tendering Limited
Partner. Please use the pre-addressed envelope provided.
This Letter of Transmittal is to be completed by limited partners
("Limited Partners") of High Equity Partners L.P. - Series 86 (the
"Partnership") pursuant to the procedures set forth in the Offer to Purchase (as
defined below). Capitalized terms used herein and not defined herein have the
meanings ascribed to such terms in the Offer to Purchase, dated November 24,
1999 (the "Offer to Purchase"), made by Millennium Funding III LLC, a Delaware
limited liability company.
PLEASE READ CAREFULLY THE ACCOMPANYING INSRUCTIONS
For information or assistance in connection with the offer or the completion
of this Letter of Transmittal, please contact the Information Agent
at (800) 223-2064.
(Please indicate changes or corrections to the name, address and Tax
Identification Number printed below.)
<PAGE>
To: Millennium Funding III LLC
The undersigned hereby tenders all of its units of limited partnership
interest in the Partnership as set forth above (together with the Certificates,
the "Units") to Millennium Funding III LLC, a Delaware limited liability company
(the "Purchaser") for $103.05 cash per Unit, upon the terms and subject to the
conditions set forth in the Offer to Purchase, receipt of which is hereby
acknowledged, and this Letter of Transmittal (the "Letter of Transmittal",
which, together with the Offer to Purchase and any supplements, modifications or
amendments thereto, constitute the "Offer").
The undersigned recognizes that, under the circumstances described in the
Offer to Purchase, the Purchaser will accept Units for payment on a pro rata
basis (with adjustments to avoid purchases of certain fractional Units) based
upon the number of Units tendered prior to or on the Expiration Date and not
withdrawn.
Subject to and effective upon acceptance for payment of any Units tendered
hereby in accordance with the terms of the Offer, the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Purchaser all right, title
and interest in and to such Units purchased (including the related Certificates)
and requests, authorizes and directs the General Partner to substitute the
Purchaser as a limited partner of the Partnership in place of the undersigned
with respect to such Units. The undersigned hereby irrevocably constitutes and
appoints the Purchaser as the Limited Partner's proxy and true and lawful agent
and attorney-in-fact of the undersigned with respect to such Units, with full
power of substitution (such power of attorney and proxy being deemed to be an
irrevocable power and proxy coupled with an interest) to deliver such Units and
transfer ownership thereof on the Partnership books maintained by the General
Partner, together with all accompanying evidences of transfer and authenticity,
to or upon the order of the Purchaser and upon payment of the purchase price
payable by the Purchaser in accordance with the terms of the Offer to Purchase
in respect of such Units (the "Purchase Price"), to receive all benefits and
otherwise exercise all rights of beneficial ownership of such Units, including,
without limitation, all voting rights and the right to receive distributions
from the Partnership, all in accordance with the Offer. Subject to and effective
upon the purchase of any Units tendered hereby, the undersigned hereby requests
that the Purchaser be admitted as a "Substitute Limited Partner" under the terms
of the Partnership Agreement of the Partnership. Upon the purchase of such Units
pursuant to the Offer, all prior proxies and consents given by the undersigned
with respect thereto will be revoked and no subsequent proxies or consents may
be given (and if given will not be deemed effective).
The undersigned hereby represents and warrants that the undersigned owns
the Units tendered hereby within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended, and has full power and authority to validly
tender, sell, assign and transfer, the Units tendered hereby, and that when any
such Units are accepted for payment by the Purchaser, the Purchaser will acquire
good, marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges, encumbrances, conditional sales agreements or other
obligations relating to the sale or transfer thereof, and such Units will not be
subject to any adverse claim. Upon request, the undersigned will execute and
deliver any additional documents deemed by the Purchaser to be necessary or
desirable to complete the assignment, transfer, or purchase of the Units
tendered hereby.
The undersigned understands that a valid tender of Units to the Purchaser
will constitute a binding agreement upon the terms and subject to the conditions
of the Offer. The undersigned recognizes that under certain circumstances set
forth in the Offer to Purchase, the Purchaser may not accept for payment any
Units tendered hereby. If any tendered Units are not purchased for any reason,
this Letter of Transmittal shall be effective to transfer to the Purchaser only
that number of Units as is accepted and thereby purchased by the Purchaser, and
the Certificates (or, if necessary, new certificates) representing such
unpurchased Units shall be returned. All authority herein conferred or agreed to
be conferred shall survive the death or incapacity of the undersigned and any
obligations of the undersigned shall be binding upon the heirs, personal
representatives, administrators, executors, successors, assigns and trustees in
bankruptcy and other legal representatives of the undersigned. Except as stated
in the Offer to Purchase, this tender is irrevocable.
- --------------------------------------------------------------------------------
FOR INFORMATION AND ASSISTANCE WITH THE OFFER, PLEASE CALL: (800) 223-2064. For
Units to be validly tendered, Limited Partners should complete and sign this
Letter of Transmittal and return it and all other documents required hereby in
the self addressed envelope enclosed, or by Hand or Overnight Delivery to:
Georgeson Shareholder Communications Inc. at 17 Street Street, 27th Floor, New
York, New York 10004.
- --------------------------------------------------------------------------------
<PAGE>
BEFORE SIGNING AND RETURNING THIS LETTER OF TRANSMITTAL,
PLEASE REFER TO THE ACCOMPANYING INSTRUCTIONS
- --------------------------------------------------------------------------------
SIGNATURE BOX (ALL OWNERS)
(See Instructions 1, 3 and 4 as necessary)
Please sign exactly as your name is printed on the front of this Letter of
Transmittal. For joint owners, each owner must sign. (See Instruction 1.)
The signatory hereto hereby tenders the number of Units indicated in this Letter
of Transmittal to the Purchaser pursuant to the terms of the Offer and certifies
under penalties of perjury the statements in Box A, Box B, and, if applicable,
Box C.
X______________________________________ X______________________________________
(Signature) (Signature)
Tax I.D. Number X________________________________________
Name and Capacity (if other than individuals) ______________(Title)_____________
Address ________________________________________________________________________
(city) (state) (zip)
Area Code and Telephone No. ( )______________(Day) ( )____________(Evening)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BOX A
SUBSTITUTE FORM W-9
(See Instruction 3 - Box A)
The person signing this Letter of Transmittal hereby certifies the following to
the Purchaser of the Units indicated in this Letter of Transmittal under
penalties of perjury:
(i) The Taxpayer Identification Number ("TIN") printed (or corrected) on
the front of this Letter of Transmittal is the correct TIN of the Limited
Partner, or if this box |_| is checked, the Limited Partner has applied for a
TIN. If the Limited Partner has applied for a TIN, a TIN has not been issued to
the Limited Partner, and either: (a) the Limited Partner has mailed or delivered
an application to receive a TIN to the appropriate IRS Center or Social Security
Administration Office, or (b) the Limited Partner intends to mail or deliver an
application in the near future (it being understood that if the Limited partner
does not provide a TIN to the Purchaser within sixty (60) days, 31% of all
reportable payments made to the Limited Partner will be withheld until the TIN
is provided to the Purchaser); and
(ii) Unless this box |_| is checked, the Limited Partner is not subject to
backup withholding either because the Limited Partner: (a) is exempt from backup
withholding, (b) has not been notified by the IRS that the Limited Partner is no
longer subject to backup withholding as a result of a failure to report all
interest or dividends, or (c) has been notified by the IRS that such Limited
Partner is no longer subject to backup withholding.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BOX B
FIRPTA AFFIDAVIT
(See Instruction 3 - Box B)
Under Section 1445(c)(5) of the Internal Revenue Code and Treas. Reg.
1.1445-11T(d), a transferee must withhold tax equal to 10% of the amount
realized with respect to certain transfers of an interest in a partnership if
50% or more of the value of its gross assets consists of U.S. real property
interests and 90% or more of the value of its gross assets consists of U.S. real
property interest plus cash or cash equivalents, and the holder of the
partnership interest is a foreign person. To inform the Purchaser that no
withholding is required with respect to the Limited Partner's interest in the
Partnership, the person signing this Letter of Transmittal hereby certifies the
following under penalties of perjury:
(i) Unless this box |_| is checked, the Limited Partner, if an individual,
is a U.S. citizen or a resident alien for purposes of U.S. income taxation, and
if other than an individual, is not a foreign corporation, foreign partnership,
foreign estate or foreign trust (as those terms are defined in the Internal
Revenue Code and Income Tax Regulations); (ii) the Limited Partner's U.S. social
security number (for individuals) or employer identification number (for
non-individuals) is correctly printed (or corrected) on the front of this Letter
of Transmittal; and (iii) the Limited Partner's home address (for individuals),
or office address (for non-individuals), is correctly printed (or corrected) on
this Letter of Transmittal. If a corporation, the jurisdiction of incorporation
is ___________.
The person signing this Letter of Transmittal understands that this
certification may be disclosed to the IRS by the Purchaser and that any false
statements contained herein could be punished by fine, imprisonment or both.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BOX C
SUBSTITUTE FORM W-8
(See instruction 4)
By checking this box |_|, the person signing this Letter of Transmittal
hereby certifies under penalties of perjury that the Limited Partner is an
"exempt foreign person" for purposes of the backup withholding rules under the
U.S. federal income tax laws, because the Limited Partner:
(i) Is a nonresident alien individual or a foreign corporation,
partnership, estate or trust;
(ii) If an individual, has not been and plans not to be present in the
U.S. for a total of 183 days or more during the calendar year; and
(iii) Neither engages, nor plans to engage, in a U.S. trade or business
that has effectively connected gains from transactions with a broker
or barter exchange.
- --------------------------------------------------------------------------------
<PAGE>
The Information Agent for the offer is:
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
By Mail or Overnight Courier:
17 State Street
27th Floor
New York, New York 10004
For Information please call:
TOLL FREE (800) 223-2064
<PAGE>
AFFIDAVIT OF LOSS AND INDEMNITY AGREEMENT
(IF REQUIRED - SEE INSTRUCTION NO. 5)
TO BE COMPLETED ONLY IF YOU CANNOT LOCATE YOUR CERTIFICATES
The undersigned person(s) hereby represents, warrants, acknowledges and agrees
under penalty of perjury as follows:
I am the lawful owner of Certificate(s) representing the number of Units
referred to in the Letter of Transmittal (the "Letter of Transmittal") executed
by me in connection with the Offer to Purchase Units by Millennium Funding III
LLC (the "Purchaser"), dated November 24, 1999. The Certificate(s) has (have)
not been endorsed, cashed, negotiated, transferred, assigned, or otherwise
disposed of. I have made a diligent search for the Certificate(s) and have been
unable to find it (them), and make this Statement to the Purchaser, the
Partnership and the general partners thereof for the purpose of inducing the
acceptance of tender of the Units without surrender of the Certificate(s), and
hereby agree to surrender the Certificate(s) for cancellation should I at any
time find the Certificate(s). In consideration of the proceeds of tendering the
Units and the Certificate(s), I agree to completely indemnify, protect and save
harmless the Purchaser, the Partnership, the general partners thereof, the
Depositary, and each of their respective agents and affiliates, and any other
party to the transaction (collectively, the "Obligees") from and against all
loss, costs and damages, including, without limitation, court costs and
attorneys' fees, which they may be subject to or liable for in respect of the
cancellation and replacement of the Certificate(s), and the distribution of the
proceeds of the Certificate(s). The rights accruing to the Obligees under the
preceding sentences shall not be limited by the negligence, inadvertence,
accident, oversight or their failure to inquire into, contest, or litigate any
claim, whenever such negligence, inadvertence, accident, oversight, breach or
failure may occur or have occurred.
Capitalized terms used herein and not defined herein have the meanings ascribed
to such terms in the Letter of Transmittal.
x_____________________________________ Address:_______________________________
Signature of Limited Partner - Date
______________________________________ _______________________________________
Printed name of Limited Partner - Date (Include zip code)
(The address provided above must be the
registered address of the Limited
Partner.)
x_____________________________________
Signature of Limited Partner - Date
______________________________________ _______________________________________
Printed name of Limited Partner - Date Telephone (Day)
______________________________________ _______________________________________
Printed name of Limited Partner - Date Telephone (Evening)
______________________________________
Capacity (Full Title)
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. SIGNATURE AND DELIVERY OF REQUIREMENTS
Individual and Joint Owners - Signature Requirements. After carefully
reading and completing this Letter of Transmittal, in order to tender your
Units, Limited Partner(s) must sign at the "X" in the Signature Box. The
signature(s) must correspond exactly with the name printed (or corrected)
on the front of this Letter of Transmittal without any change whatsoever.
Note: For Units held in a custodial account, the beneficial owner should
sign in the Signature Box. If the Units are registered in the names of two
or more joint holders, all such holders must sign this Letter of
Transmittal.
Trustees, Corporations and Fiduciaries - Signature Requirements. Trustees,
executors, administrators, guardians, attorneys-in-fact, officers of a
corporation, authorized partner of a partnership or other persons acting
in a fiduciary or representative capacity must sign at the "X" in the
Signature Box. Signatories should indicate their title when signing and
must submit proper evidence satisfactory to the Purchaser of their
authority to act.
Delivery Requirements. For Units to be validly assigned, a properly
completed and duly executed copy of this Letter of Transmittal, any and
all Certificates, together with any other documents required by this
Letter of Transmittal, must be received by the Purchaser prior to or on
the Expiration Date. To ensure receipt of this Letter of Transmittal,
along with any and all Certificates, it is suggested that you use
overnight courier delivery or, if this Letter of Transmittal is to be
delivered by U.S. Mail, you use certified or registered mail, return
receipt requested. All Letters of Transmittal should be addressed as
follows:
By Mail or Overnight Courier: Georgeson Shareholder Communications Inc.
17 State Street
27th Floor
New York, New York 10004
For Additional Information Call: (800) 223-2064
Documentation
Deceased Owner - Copy of Death Certificate. If other than
a Joint Tenant, see also
Executor/Administrator/Guardian below.
Deceased Owner (Other) - See Executor/Administrator/Guardian (a)
below.
Executor/Administrator Guardian - (a) Send copy of Court Appointment
Documents; and (b) a copy of applicable
provisions of Will (Title Page, Executor
powers asset distributions); or (c)
Estate distribution documents.
Attorney-in-fact - Power of Attorney.
Corporate/Partnerships - Resolution(s) of Board of Directors or
other evidence of authority to so act.
Trust/Pension Plans - Cover pages of the trust or plan, along
with the trustee(s) section and/or
amendments or resolutions of the above
to prove authority to so act.
<PAGE>
2. TRANSFER TAXES. The Purchaser will pay or cause to be paid all transfer
taxes, if any, payable in respect of Units accepted for payment pursuant
to the Offer.
3. U.S. PERSONS. A Limited Partner who or which is a United States citizen or
resident alien individual, a domestic corporation, a domestic partnership,
a domestic trust or a domestic estate (collectively, "United States
persons") as those terms are defined in the Internal Revenue code and
Income Tax Regulations, should complete the following:
Box A -Substitute Form W-9. In order to avoid 31% federal income tax backup
withholding, the Limited Partner must provide to the Purchaser the Limited
Partner's correct Taxpayer Identification Number ("TIN") and certify,
under penalties of perjury, that such Limited Partner is not subject to
such backup withholding. The TIN that must be provided on the Substitute
W-9 is that of the registered Limited Partner as printed (or corrected) on
the front of this Letter of Transmittal. If a correct TIN is not provided,
penalties may be imposed by the Internal Revenue Service ("IRS"), in
addition to the Limited Partner being subject to backup withholding.
Certain Limited Partners (including, among others, all corporations) are
not subject to backup withholding. Backup withholding is not an additional
tax. If withholding results in an overpayment of taxes, a refund may be
obtained from the IRS. NOTE: The correct TIN for an IRA account is that of
the Custodian (not the individual Social Security number of the beneficial
owner).
Box B - FIRPTA Affidavit. To avoid potential withholding of tax pursuant
to section 1445 of the Internal Revenue Code, each Limited Partner who or
which is a United States Person (as defined in Instruction 4 above) must
certify, under penalties of perjury, the Limited Partner's TIN and
address, and that the Limited Partner is not a foreign person. Tax
withheld under Section 1445 of the Internal Revenue Code is not an
additional tax. If withholding results in an overpayment of tax, a refund
may be obtained from the IRS.
4. BOX C - FOREIGN PERSONS. In order for a Limited Partner who is a foreign
person (i.e., not a United States person as defined in 3 above) to qualify
as exempt from 31% backup withholding, such foreign Limited Partner must
certify, under penalties of perjury, the statement in BOX C of this Letter
of Transmittal attesting that foreign person's status by checking the box
preceding such statement. Unless such box is checked, such foreign person
will be subject to withholding tax under Section 3406 of the Code.
5. AFFIDAVIT OF LOSS AND INDEMNITY AGREEMENT. If the Limited Partner is
unable to locate any of the Certificates representing Units to be
tendered, the Limited Partner must complete and sign an Affidavit of Loss
and Indemnity Agreement.
6. ADDITIONAL COPIES OF OFFER TO PURCHASE AND LETTER OF TRANSMITTAL. Request
for assistance or additional copies of the Offer to Purchase and this
Letter of Transmittal may be obtained from Georgeson Shareholder
Communications Inc. by calling (800) 223-2064.
<PAGE>
Exhibit (a)(3)
Millennium Funding III LLC
c/o Georgeson Shareholder Communications Inc.
17 State Street
New York, New York 10004
November 24, 1999
Re: Offer to Purchase Units of Limited Partnership Interest in
High Equity Partners L.P. - Series 86
Dear Limited Partners:
In accordance with a court-approved settlement of a class action and derivative
litigation involving High Equity Partners L.P. - Series 86 (your "partnership"),
we are offering to acquire up to 39,596 units of limited partnership interest in
your partnership for $103.05 per unit in cash. Enclosed for your review and
consideration are documents relating to our offer to purchase your units.
The general partners of your partnership are our affiliates. As a result of this
affiliation, your partnership has indicated that it is remaining neutral and
making no recommendation as to whether its limited partners should tender their
units in response to our offer. Limited partners are urged to read our offer to
purchase and the related materials and the enclosed Schedule 14D-9 carefully and
in their entirety before deciding whether to tender their units.
To accept our offer, complete the enclosed letter of transmittal and return it
to us on or prior to December 22, 1999. Any questions, requests for additional
information, or requests for assistance should be made to us at (800) 223-2064.
You should evaluate our offer based on your own particular financial
circumstances. Our offer contains numerous terms and conditions that you should
review before making a decision, including certain risk factors that are
summarized on the first page of our offer to purchase. We suggest that you
review our offer to purchase with your personal financial and tax advisors.
Sincerely,
Millennium Funding III LLC
