<PAGE> 1
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
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 13)
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
(Name of Subject Company)
AIMCO PROPERTIES, L.P.
(Bidder)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
NONE
(CUSIP Number of Class of Securities)
PATRICK J. FOYE
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
1873 SOUTH BELLAIRE STREET, 17TH FLOOR
DENVER, COLORADO 80222
(303) 757-8101
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
COPY TO:
JONATHAN L. FRIEDMAN
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
300 SOUTH GRAND, 34TH FLOOR
LOS ANGELES, CALIFORNIA 90071
(213) 687-5000
----------------------
<PAGE> 2
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
Transaction Valuation* $7,625,921 Amount of Filing Fee: $1,525.18
- --------------------------------------------------------------------------------
* For purposes of calculating the fee only. This amount assumes the
purchase of 88,673.5 units of limited partnership interest of the
subject partnership for $86 per unit. The amount of the filing fee,
calculated in accordance with Section 14(g)(1)(B)(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 bidder.
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number or the form or schedule and the date of its filing.
Amount Previously Paid: Filing Parties:
Form or Registration No.: Date Filed:
(Continued on following pages)
Page 1 of 12 Pages
<PAGE> 3
CUSIP No. NONE 14D-1 AND 13D/A
1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
AIMCO PROPERTIES, L.P.
84-1275621
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP
(a) [ ]
(b) [X]
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC, BK
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
13,929
8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
10.8%
10. TYPE OF REPORTING PERSON
PN
Page 2 of 12 Pages
<PAGE> 4
CUSIP No. NONE 14D-1 AND 13D/A
1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
AIMCO-GP, INC.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
3. SEC USE ONLY
4. SOURCES OF FUNDS
Not Applicable
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
13,929
8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
10.8%
10. TYPE OF REPORTING PERSON
CO
Page 3 of 12 Pages
<PAGE> 5
CUSIP No. NONE 14D-1 AND 13D/A
1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
INSIGNIA PROPERTIES, L.P.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
3. SEC USE ONLY
4. SOURCES OF FUNDS
Not Applicable
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
12,146
8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
9.43%
10. TYPE OF REPORTING PERSON
PN
Page 4 of 12 Pages
<PAGE> 6
CUSIP No. NONE 14D-1 AND 13D/A
1. NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
AIMCO/IPT, INC.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
3. SEC USE ONLY
4. SOURCE OF FUNDS
Not Applicable
5. CHECK BOX 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
26,192.5
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES [ ]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
20.33%
10. TYPE OF REPORTING PERSON
CO
Page 5 of 12 Pages
<PAGE> 7
CUSIP No. NONE 14D-1 AND 13D/A
1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
84-129577
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
3. SEC USE ONLY
4. SOURCES OF FUNDS
Not Applicable
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(e) OR 2(f)
[ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Maryland
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
40,136.5
8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
31.2%
10. TYPE OF REPORTING PERSON
CO
Page 6 of 12 Pages
<PAGE> 8
SCHEDULE 14D-1/AMENDMENT NO. 13 TO SCHEDULE 13D
This Statement (the "Statement") constitutes (a) the initial
Schedule 14D-1 of AIMCO Properties, L.P. (the "AIMCO OP"), relating to AIMCO
OP's offer to purchase units of limited partnership interest ("Units") of
Johnstown/Consolidated Income Partners (the "Partnership"); and (b) Amendment
No. 13 to the Schedule 13D (the "Schedule 13D") originally filed with the
Securities and Exchange Commission (the "Commission") on December 4, 1995, by
Liquidity Assistance, L.L.C. ("Liquidity"), and Insignia Financial Group, Inc.
("Insignia"), as amended by (i) Amendment No. 1, filed with the Commission on
October 16, 1996, by Insignia, Liquidity, and Market Ventures, L.L.C. ("Market
Ventures"), (ii) Amendment No. 2, filed with the Commission on April 25, 1997,
by Insignia, Insignia Properties, L.P., ("IPLP"), and Andrew L. Farkas, (iii)
Amendment No. 3, filed with the Commission on December 19, 1997, by Madison
River Properties, L.L.C. ("Madison River"), IPLP, IPT, Insignia, and Andrew L.
Farkas, (iv) Amendment No. 4, filed with the Commission on January 15, 1998, by
Madison River, IPLP, IPT, Insignia, and Andrew L. Farkas, (v) Amendment No. 5,
filed with the Commission on January 22, 1998, by Madison River, IPLP, IPT,
Insignia, and Andrew L. Farkas, (vi) Amendment No. 6, filed with the Commission
on February 2, 1998, by Madison River, IPLP, IPT, Insignia, and Andrew L.
Farkas, (vii) Amendment No. 7, filed with the Commission on February 10, 1998,
by Madison River, IPLP, IPT, Insignia, and Andrew L. Farkas, (viii) Amendment
No. 8, filed with the Commission on March 12, 1998, by Madison River, IPLP, IPT,
Insignia, and Andrew L. Farkas, (ix) Amendment No. 9, filed with the Commission
on November 11, 1997, by Madison River, AIMCO OP, AIMCO-GP, Inc. ("AIMCO-GP"),
and Apartment Investment and Management Company ("AIMCO"), (x) Amendment No. 10,
filed with the Commission on May 27, 1999 by Madison, AIMCO/IPT, Inc.
("AIMCO/IPT"), IPLP, AIMCO OP, AIMCO-GP and AIMCO, (xi) Amendment No. 11, filed
with the Commission on July 1, 1999, by Madison River, AIMCO OP/IPT, IPLP, AIMCO
OP, AIMCO- GP and AIMCO and (xii) Amendment No. 12, filed with the Commission on
August 6, 1999 by Madison River, AIMCO/IPT, IPLP, AIMCO OP, AIMCO-GP and AIMCO.
The item numbers and responses thereto are set forth below in accordance with
the requirements of Schedule 14D-1.
(1) SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Johnstown/Consolidated
Income Partners, a California limited partnership. The address of the
Partnership's principal executive offices is 1873 South Bellaire Street, 17th
Floor, Denver, Colorado 80222.
(b) This Statement relates to an offer by AIMCO OP to purchase
any and all of the 128,810 outstanding units of limited partnership interest
(the "Units") of the Partnership at a purchase price per Unit, net to the
seller, of $86 in cash (less the amount of any distributions paid by the
Partnership on and after October 25, 1999), upon the terms and subject to the
conditions set forth in an Offer to Purchase, dated October 25, 1999 (as amended
or supplemented from time to time, the "Offer to Purchase"), and the related
Letter of Transmittal and Instructions thereto (as amended or supplemented from
time to time, the "Letter of Transmittal"), copies of which are filed as
Exhibits (a)(1) and (a)(2) hereto, respectively.
(c) The information set forth in the Offer to Purchase under
"The Offer -- Section 9. Background and Reasons for the Offer -- Prices on
Secondary Market" is incorporated herein by reference.
Page 7 of 12 Pages
<PAGE> 9
(2) IDENTITY AND BACKGROUND.
(a)-(d). (g) This Statement is being filed by AIMCO
Properties, L.P., a Delaware limited partnership, and, insofar as this Statement
constitutes Amendment No. 13 to the Schedule 13D, by Madison River Properties,
L.L.C., a Delaware limited liability company, Insignia Properties, L.P., a
Delaware limited partnership, AIMCO/IPT, Inc., a Delaware corporation, AIMCO-GP,
Inc., a Delaware corporation, and Apartment Investment and Management Company, a
Maryland corporation. The sole general partner of AIMCO OP is AIMCO-GP. AIMCO-GP
is a wholly owned subsidiary of AIMCO. On February 26, 1999,IPT was merged into
AIMCO, and AIMCO contributed IPT's interest in IPLP to AIMCO's wholly owned
subsidiary, AIMCO/IPT. AIMCO/IPT also replaced IPT as the sole general partner
of IPLP. Madison is a wholly owned subsidiary of IPLP. The principal business of
the Reporting Persons is the ownership, acquisition, development, expansion and
management of multi-family apartment properties. The principal executive offices
of the Reporting Persons are located at 1873 South Bellaire Street, 17th Floor,
Denver, Colorado 80222. The information set forth in the Offer to Purchase under
"The Offer -- Section 8. Information Concerning Us and Certain of Our
Affiliates" is incorporated herein by reference. The executive officers and
directors of AIMCO, AIMCO-GP and AIMCO/IPT are listed on Annex I to the Offer to
Purchase ("Annex I"), which is incorporated herein by reference.
(e)-(f) During the last five years, none of the Reporting
Persons nor, to the best of their knowledge, any of the persons listed in Annex
I (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.
(3) PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT
COMPANY.
(a)-(b) The information set forth in Part III of the
Partnership's Form 10-KSB for the year ended December 31, 1998, and the
Partnership's Form 10-QSB for the six months ended June 30, 1999, and the
financial statements and notes thereto included therein, and the information set
forth in the Offer to Purchase under "The Offer -- Section 9. Background and
Reasons for the Offer -- General," "The Offer -- Section 9. Background and
Reasons for the Offer -- Prior Tender Offers," "The Offer -- Section 11.
Conflicts of Interest and Transactions with Affiliates," "The Offer -- Section
13. Certain Information Concerning Your Partnership -- Distributions" and "The
Offer -- Section 13. Certain Information Concerning Your Partnership --
Compensation Paid to the General Partner and Its Affiliates" is incorporated
herein by reference.
(4) SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in the Offer to Purchase
under "The Offer -- Section 15. Source of Funds" is incorporated herein by
reference.
(5) PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) The information set forth in the Offer to Purchase
under "The Offer -- Section 9. Background and Reasons for the Offer," "The Offer
- -- Section 12. Future Plans of the Purchaser" and "The Offer -- Section 7.
Effects of the Offer" is incorporated herein by reference.
Page 8 of 12 Pages
<PAGE> 10
(6) INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) Madison River directly owns 14,061.5 Units, IPLP directly
owns 12,146 Units, and AIMCO OP directly owns 13,929 Units (for an aggregate of
40,136.5 Units), representing 10.92%, 9.43%, and 10.8%, respectively, or a total
of 31.2% of the outstanding Units based on the 128,810 Units outstanding at
December 31, 1998.
IPLP, AIMCO/IPT and AIMCO may be deemed to beneficially own
the Units directly owned by Madison River by reason of each of their
relationship with Madison River. AIMCO/IPT and AIMCO may be deemed to
beneficially own the units directly owned by IPLP by reason of each of their
relationships with IPLP. Madison River is a wholly owned subsidiary of IPLP, and
AIMCO/IPT is the sole general partner of IPLP (owning approximately 66.17% of
the total equity interests). AIMCO/IPT is a wholly owned subsidiary of AIMCO.
AIMCO-GP and AIMCO may be deemed to beneficially own the Units
directly owned by AIMCO OP by each of their relationship with AIMCO OP. AIMCO-GP
is the sole general partner of AIMCO OP (owning approximately 1% of the total
equity interests). AIMCO-GP is a wholly owned subsidiary of AIMCO.
Accordingly, for purposes of this Statement: (i) Madison River
is reporting that it shares the power to vote or direct the vote and the power
to dispose or direct the disposition of the 14,061.5 Units directly owned by it;
(ii) IPLP is reporting that it shares the power to vote and the 14,016.5 Units
owned by Madison River or direct the vote and the power to dispose and direct
the disposition of the 12,146 Units owned by it; (iii) AIMCO/IPT is reporting
that it shares the power to vote or direct the vote and the power to dispose or
direct the disposition of the 14,016.5 Units directly owned by Madison River and
the 12,146 Units directly owned by IPLP; (iv) AIMCO OP is reporting that it
shares the power to vote or direct the power to vote and the power to dispose or
direct the disposition of the 13,929 Units directly owned by it; (v) AIMCO-GP is
reporting that it shares the power to vote or direct the disposition of the
13,929 Units owned by AIMCO OP; and (vi) AIMCO is reporting that it shares the
power to vote or direct the vote and the power to dispose or direct the
disposition of the 14,061.5 Units directly owned by Madison River, the 12,146
Units directly owned by IPLP, the 13,929 Units directly owned by AIMCO OP.
(b) The information set forth in the Offer to Purchase under
"The Offer -- Section 9. Background and Reasons for the Offer -- Prior Tender
Offers" and "The Offer -- Section 9. Background and Reasons for the Offer -- Our
Prior Tender Offer" is incorporated herein by reference.
(7) CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SUBJECT COMPANY'S SECURITIES.
Not applicable.
(8) PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Offer to Purchase under "The
Offer -- Fees and Expenses" is incorporated herein by reference.
Page 9 of 12 Pages
<PAGE> 11
(9) FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The financial statements included in AIMCO OP's Annual Report
on Form 10-KSB for the year ended December 31, 1998, which are listed on the
Index to Financial Statements on page F-1 of such report, and Quarterly Report
on Form 10-QSB dated June 30, 1999, are incorporated herein by reference. Such
reports may be inspected at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549;
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661; and 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material can
also be obtained from the Public Reference Room of the Commission in Washington,
D.C. at prescribed rates and from the Commission's web site at www.sec.gov.
(10) ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(d) The information set forth in the Offer to Purchase
under "The Offer -- Section 18. Certain Legal Matters" is incorporated herein by
reference.
(e) The information set forth in the Offer to Purchase under
"The Offer -- Section 9. Background and Reasons for the Offer -- Certain
Litigation" is incorporated herein by reference
(f) The Offer to Purchase is hereby incorporated by reference.
(11) MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated October 25, 1999.
(a)(2) Letter of Transmittal and related Instructions.
(a)(3) Letter, dated October 25, 1999, from AIMCO OP to the
Limited Partners of the Partnership.
(b) Credit Agreement (Secured Revolving Credit Facility),
dated as of August 16, 1999, among AIMCO Properties,
L.P., Bank of America, Bank Boston, N.A., and First
Union National Bank. (Exhibit 10.1 to AIMCO's Current
Report on Form 8-K, dated August 16, 1999, is
incorporated herein by this reference.)
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(z)(1) Agreement of Joint Filing, dated October 25, 1999,
among AIMCO, AIMCO- GP, AIMCO OP, AIMCO/IPT, IPLP,
and Madison River.
Page 10 of 12 Pages
<PAGE> 12
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: October 25, 1999
MADISON RIVER PROPERTIES, L.L.C.
By: /s/ Patrick J. Foye
------------------------------------
Executive Vice President
AIMCO/IPT, INC.
By: /s/ Patrick J. Foye
------------------------------------
Executive Vice President
INSIGNIA PROPERTIES, L.P.
By: AIMCO/IPT, INC.
(General Partner)
By: /s/ Patrick J. Foye
------------------------------------
Executive Vice President
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, INC.
(General Partner)
By: /s/ Patrick J. Foye
------------------------------------
Executive Vice President
AIMCO-GP, INC.
By: /s/ Patrick J. Foye
------------------------------------
Executive Vice President
APARTMENT INVESTMENT
AND MANAGEMENT COMPANY
By: /s/ Patrick J. Foye
------------------------------------
Executive Vice President
Page 11 of 12 Pages
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
(a)(1) Offer to Purchase, dated October 25, 1999.
(a)(2) Letter of Transmittal and related Instructions.
(a)(3) Letter, dated October 25, 1999, from AIMCO OP to the
Limited Partners of the Partnership.
(b) Credit Agreement (Secured Revolving Credit Facility),
dated as of August 16, 1999, among AIMCO Properties,
L.P., Bank of America, Bank Boston, N.A., and First
Union National Bank. (Exhibit 10.1 to AIMCO's Current
Report on Form 8-K, dated August 16, 1999, is
incorporated herein by this reference.)
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(z)(1) Agreement of Joint Filing, dated October 25, 1999,
among AIMCO, AIMCO-GP, AIMCO OP, AIMCO/IPT, IPLP and
Madison River.
</TABLE>
Page 12 of 12 Pages
<PAGE> 1
EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
AIMCO Properties, L.P.
is offering to purchase any and all units of limited partnership interest in
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
for $86 per unit in CASH
Upon the terms and subject to the conditions set forth herein, we will accept
all units in response to our offer. If units are validly tendered and not
properly withdrawn prior to the expiration date and the purchase of all such
units would result in there being less than 320 unitholders, we will purchase
only 99% of the total number of units so tendered by each limited partner.
Our offer price will be reduced for any distributions subsequently made by your
partnership prior to the expiration of our offer.
Our offer and your withdrawal rights will expire at midnight, New York City
time, on November 22, 1999, unless we extend the deadline.
You will not pay any partnership transfer fees if you tender your units. You
will pay any other fees and costs, including any transfer taxes.
Our offer is not subject to a 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 We determined the offer price of $86 per unit without any
arms-length negotiations. Accordingly, our offer price may not
reflect the fair market value of your units.
o Although your partnership's agreement of limited partnership
provides for termination in the year 2017, the prospectus
pursuant to which the units were sold in 1986 indicated that
the properties owned by your partnership might be sold within
5 to 7 years of their acquisition if conditions permitted.
o Your general partner and the property manager of the
residential property are subsidiaries of ours and, therefore,
the general partner has substantial conflicts of interest with
respect to our offer.
o We are making this offer with a view to making a profit and,
therefore, there is a conflict between our desire to purchase
your units at a low price and your desire to sell your units
at a high price.
(continued on next page)
--------------------------------
If you desire accept our offer, you should complete and sign the
enclosed letter of transmittal in accordance with the instructions thereto and
mail or deliver the signed letter of transmittal and any other required
documents to River Oaks Partnership Services, Inc., which is acting as
Information Agent in connection with 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 AT (888) 349-2005.
October 25, 1999
<PAGE> 2
(continued from cover page)
o Continuation of your partnership will result in our affiliates
continuing to receive management fees from your partnership.
Such fees would not be payable if your partnership was
liquidated.
o It is possible that we may conduct a subsequent offer at a
higher price.
o For any units that we acquire from you, you will not receive
any future distributions from operating cash flow of your
partnership or upon a sale or refinancing of property owned by
your partnership.
o If we acquire a substantial number of units, we will increase
our ability to influence voting decisions with respect to your
partnership and may control such voting decisions, including
but not limited to the removal of the general partner, most
amendments to the partnership agreement and the sale of all or
substantially all of your partnership's assets.
i
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION................................................................................................1
RISK FACTORS................................................................................................1
No Third Party Valuation or Appraisal; No Arms-Length Negotiation......................................2
No Fairness Opinion From a Third Party.................................................................2
Offer Price May Not Represent Fair Market Value........................................................2
Offer Price Does Not Reflect Future Prospects..........................................................2
Offer Price Based on Our Estimate of Liquidation Proceeds..............................................2
Offer Price May Not Represent Liquidation Value........................................................2
Continuation of the Partnership; No Time Frame Regarding Sale of Properties............................2
Holding Units May Result in Greater Future Value.......................................................3
Conflicts of Interest With Respect to the Offer........................................................3
No General Partner Recommendation......................................................................3
Conflicts of Interest Relating to Management Fees......................................................3
Possible Subsequent Offer at a Higher Price............................................................3
Recognition of Taxable Gain on a Sale of Your Units....................................................3
Loss of Future Distributions from Your Partnership.....................................................4
Possible Increase in Control of Your Partnership by Us.................................................4
Recognition of Gain Resulting from Possible Future Reduction in Your Partnership Liabilities...........4
Risk of Inability to Transfer Units for 12-Month Period................................................4
Potential Delay in Payment.............................................................................5
THE OFFER...................................................................................................5
Section 1. Terms of the Offer; Expiration Date; Proration............................................5
Section 2. Acceptance for Payment and Payment for Units..............................................5
Section 3. Procedure for Tendering Units.............................................................7
Section 4. Withdrawal Rights.........................................................................9
Section 5. Extension of Tender Period; Termination; Amendment........................................9
Section 6. Certain Federal Income Tax Matters.......................................................10
Section 7. Effects of the Offer.....................................................................13
Section 8. Information Concerning Us and Certain of Our Affiliates..................................14
Section 9. Background and Reasons for the Offer.....................................................15
Section 10. Position of the General Partner of Your Partnership With Respect to the Offer............24
Section 11. Conflicts of Interest and Transactions with Affiliates...................................24
Section 12. Future Plans of the Purchaser............................................................25
Section 13. Certain Information Concerning Your Partnership..........................................26
Section 14. Voting Power.............................................................................31
Section 15. Source of Funds..........................................................................31
Section 16. Dissenters' Rights.......................................................................31
Section 17. Conditions of the Offer..................................................................32
Section 18. Certain Legal Matters....................................................................33
Section 19. Fees and Expenses........................................................................34
ANNEX I - OFFICERS AND DIRECTORS........................................................................I-1
</TABLE>
ii
<PAGE> 4
INTRODUCTION
We are offering to purchase any and all units for the purchase price of
$86 per unit, net to the seller in cash, without interest, less the amount of
distributions, if any, made by your partnership in respect of any unit from the
date hereof until the expiration date. 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.
Upon the terms and subject to the conditions set forth herein, we will
accept all units validly tendered in response to our offer. If units are validly
tendered prior to the expiration date and not properly withdrawn prior to the
expiration date in accordance with the procedures set forth in Section 4 and the
purchase of all such units would result in there being less than 320
unitholders, we will purchase only 99% of the total number of units so tendered
by each limited partner.
We will pay any transfer fees imposed for the transfer of units by your
partnership. However, you will have to pay any taxes that arise from your sale
of units. You will also have to pay any fees or commissions imposed by your
broker, or by any custodian or other trustee of any Individual Retirement
Account or benefit plan which is the owner of record of your units. Although the
fees charged for transferring units from an Individual Retirement Account vary,
such fees are typically $25-$50 per transaction. Depending on the number of
units that you tender, any fees charged on a per transaction basis could exceed
the aggregate offer price you receive (as a result of proration or otherwise).
We have retained River Oaks Partnership Services, 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. However, certain
other conditions do apply. See "The Offer -- Section 17." You may tender all or
any portion of the units that you own. Under no circumstances will we be
required to accept any unit if the transfer of that unit to us would be
prohibited by the agreement of limited partnership of your partnership.
Our offer will expire at midnight, New York City time, on November 22,
1999, unless extended. If you desire to accept our offer, you must complete and
sign the letter of transmittal in accordance with the instructions contained
therein and forward or hand deliver it, together with any other required
documents, to the Information Agent. You may withdraw your tender of units
pursuant to the offer at any time prior to the expiration date of our offer and,
if we have not accepted such units for payment, on or after December 23, 1999.
We are AIMCO Properties, L.P., a Delaware limited partnership. Together
with our subsidiaries, we conduct substantially all of the operations of
Apartment Investment and Management Company, or AIMCO. AIMCO is a
self-administered and self-managed real estate investment trust engaged in the
ownership, acquisition, development, expansion and management of multifamily
apartment properties. As of June 30, 1999, AIMCO owned or managed 369,404
apartment units in 2,037 properties located in 49 states, the District of
Columbia and Puerto Rico. AIMCO's Class A Common Stock is listed and traded on
the New York Stock Exchange under the symbol "AIV."
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:
1
<PAGE> 5
NO THIRD PARTY VALUATION OR APPRAISAL; NO ARMS-LENGTH NEGOTIATION
We did not base our valuation of the properties owned by your
partnership on any third-party appraisal or valuation. We established the terms
of our offer without any arms-length negotiation. The terms of the offer could
differ if they were subject to independent third party negotiations. It is
uncertain whether our offer price reflects the value which would be realized
upon a sale of your units to a third party.
NO FAIRNESS OPINION FROM A THIRD PARTY
We did not obtain an opinion from a third party that our offer price is
fair from a financial point of view.
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 does not necessarily reflect the price that you would
receive in an open market for your units. Such prices could be higher than our
offer price.
OFFER PRICE DOES NOT REFLECT FUTURE PROSPECTS
Except for the one commercial property, our offer price is based on
your partnership's historical property income. It does not ascribe any value to
potential future improvements in the operating performance of your partnership's
residential property. The commercial property value is based on offers for such
property.
OFFER PRICE BASED ON OUR ESTIMATE OF LIQUIDATION PROCEEDS
The offer price represents only our estimate of the amount you would
receive if we liquidated the partnership. In determining the liquidation value,
we used for the residential property the direct capitalization method to
estimate the value of your partnership's properties because we think a
prospective purchaser of the properties would value the properties using this
method. In doing so, we applied a capitalization rate to your partnership's
property income for the year ended December 31, 1998. If property income for a
different period or a different capitalization rate was used, a higher valuation
could result. Other methods of valuing your units could also result in a higher
valuation.
OFFER PRICE MAY NOT REPRESENT LIQUIDATION VALUE
The actual proceeds obtained from a liquidation are highly uncertain
and could be more than our estimate. Accordingly, our offer price could be less
than the net proceeds that you would realize upon an actual liquidation of your
partnership.
CONTINUATION OF THE PARTNERSHIP; NO TIME FRAME REGARDING SALE OF PROPERTIES
Your general partner (which is our subsidiary) is proposing to continue
to operate your partnership and not to attempt to liquidate it at the present
time. Your partnership currently holds two commercial properties, Phoenix
Business Campus located in Atlanta, Georgia, and Florida #1 Mini Warehouse
located in Davie, Florida, and are currently being marketed for sale. While
these offers have been received for the purchase of such property, it is unknown
whether or not such property will be sold and for what price. The general
partner of your partner ship believes that the market for the sale of commercial
properties is strong at this time. However, it is not known when the residential
property owned by your partnership may be sold. There may be no way to liquidate
your investment in a partnership in the future until the residential property is
sold and the partnership is liquidated. The general partner of your partnership
continually considers whether a
2
<PAGE> 6
property should be sold or otherwise disposed of after consideration of relevant
factors, including prevailing economic conditions, availability of favorable
financing and tax considerations, with a view to achieving maximum capital
appreciation for your partnership. At the current time the general partner of
your partnership believes that a property sale of the residential property would
not be advantageous given market conditions, the condition of the properties and
tax considerations. In particular, the general partner considered the changes in
the local rental market, the potential for appreciation in the value of a
property and the tax consequences to you and your partners on a sale of
property. We cannot predict when any property will be sold or otherwise disposed
of.
HOLDING UNITS MAY RESULT IN GREATER FUTURE VALUE
Although a liquidation of your partnership is not currently
contemplated in the near future, you might receive more value if you retain your
units until your partnership is liquidated.
CONFLICTS OF INTEREST WITH RESPECT TO THE OFFER
The general partner of your partnership is our subsidiary and,
therefore, has substantial conflicts of interest with respect to our offer. We
are making this offer with a view to making a profit. There is a conflict
between our desire to purchase your units at a low price and your desire to sell
your units at a high price. We determined our offer price without negotiation
with any other party, including any general or limited partner.
NO GENERAL PARTNER RECOMMENDATION
The general partner of your partnership makes no recommendation as to
whether you should tender or refrain from tendering your units. Although the
general partner believes the offer is fair, you must make your own decision
whether or not to participate in the offer, based upon a number of factors,
including your financial position, your need or desire for liquidity, other
financial opportunities available to you, and your tax position and the tax
consequences to you of selling your units.
CONFLICTS OF INTEREST RELATING TO MANAGEMENT FEES
Since we or our subsidiaries receive fees for managing your partnership
and its residential property, a conflict of interest exists between our
continuing the partnership and receiving such fees, and the liquidation of the
partnership and the termination of such fees. Another conflict is the fact that
a decision of the limited partners of your partnership to remove, for any
reason, the general partner of your partnership or the residential property
manager of any property owned by your partnership would result in a decrease or
elimination of the substantial fees paid to them for services provided to your
partnership.
POSSIBLE SUBSEQUENT OFFER AT A HIGHER PRICE
It is possible that we may conduct a subsequent offer at a higher
price. Such a decision will depend on, among other things, the performance of
the partnership, prevailing economic conditions, and our interest in acquiring
additional limited partnership interests.
RECOGNITION OF TAXABLE GAIN ON A SALE OF YOUR UNITS
Your sale of units for cash will be a taxable sale, with the result
that you will recognize taxable gain or loss measured by the difference between
the amount realized on the sale and your adjusted tax basis in the units of
limited partnership interest of your partnership you transfer to us. The "amount
realized" with respect to a unit of limited partnership interest you transfer to
us will be equal to the sum of the amount of cash received by you for the unit
sold pursuant to the offer plus the amount of partnership liabilities allocable
to the
3
<PAGE> 7
unit. The particular tax consequences for you of our offer will depend upon a
number of factors related to your tax situation, including your tax basis in the
units you transfer to us, whether you dispose of all of your units and whether
you have available suspended passive losses, credits or other tax items to
offset any gain recognized as a result of your sale of your units. Therefore,
depending on your basis in the units and your tax position, your taxable gain
and any tax liability resulting from a sale of units to us pursuant to the offer
could exceed our offer price. Because the income tax consequences of tendering
units will not be the same for everyone, you should consult your own tax advisor
to determine the tax consequences of the offer to you.
LOSS OF FUTURE DISTRIBUTIONS FROM YOUR PARTNERSHIP
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, and the
right to receive all distributions in respect of such units on and after the
date on which we accept such units for purchase. Accordingly, for any units that
we acquire from you, you will not receive any future distributions from
operating cash flow of your partnership or upon a sale or refinancing of
properties owned by your partnership.
POSSIBLE INCREASE IN CONTROL OF YOUR PARTNERSHIP BY US
Decisions with respect to the day-to-day management of your partnership
are the responsibility of the general partner. Because the general partner of
your partnership is our affiliate, we control the management of your
partnership. Under your partnership's agreement of limited partnership, limited
partners holding a majority of the outstanding units must approve certain
extraordinary transactions, including the removal of the general partner, the
addition of a new general partner, most amendments to the partnership agreement
and the sale of all or substantially all of your partnership's assets. If we
acquire 24,269.5 additional units, we will own a majority of the outstanding
units and will have the ability to control any vote of the limited partners.
RECOGNITION OF GAIN RESULTING FROM POSSIBLE FUTURE REDUCTION IN YOUR PARTNERSHIP
LIABILITIES
Generally, a decrease in your share of partnership liabilities is
treated, for Federal income tax purposes, as a deemed cash distribution.
Although no general partner of your partnership has any current plan or
intention to reduce the liabilities of your partnership, it is possible that
future economic, market, legal, tax or other considerations may cause a general
partner to reduce the liabilities of your partnership. If you retain all or a
portion of your units and the liabilities of your partnership were to be
reduced, you would be treated as receiving a hypothetical distribution of cash
resulting from a decrease in your share of the liabilities of the partnership.
Any such hypothetical distribution of cash would be treated as a nontaxable
return of capital to the extent of your adjusted tax basis in your units and
thereafter as gain. Gain recognized by you on the disposition of retained units
with a holding period of 12 months or less may be classified as short-term
capital gain and subject to taxation at ordinary income tax rates.
RISK OF INABILITY TO TRANSFER UNITS FOR 12-MONTH PERIOD
Your partnership's agreement of limited partnership prohibits any
transfer of an interest if such transfer, together with all other transfers
during the preceding 12 months, would cause 50% or more of the total interest in
capital and profits of your partnership to be transferred within such 12-month
period. If we acquire a significant percentage of the interest in your
partnership, you may not be able to transfer your units for a 12-month period
following our offer.
4
<PAGE> 8
POTENTIAL DELAY IN PAYMENT
We reserve the right to extend the period of time during which our
offer is open and thereby delay acceptance for payment of any tendered units.
The offer may be extended indefinitely, and no payment will be made in respect
of rendered units until the expiration of the offer and acceptance of units for
payment.
THE OFFER
SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE; PRORATION.
Upon the terms and subject to the conditions of the offer, we will
accept (and thereby purchase) any and all units that are validly tendered on or
prior to the expiration date and not withdrawn in accordance with the procedures
set forth in "The Offer -- Section 4." For purposes of the offer, the term
"expiration date" shall mean midnight, New York City time, on November 22, 1999,
unless we in our sole discretion shall have extended the period of time for
which the offer is open, in which event the term "expiration date" shall mean
the latest time and date on which the offer, as extended by us, shall expire.
See "The Offer -- Section 5" for a description of our right to extend the period
of time during which the offer is open and to amend or terminate the offer.
The purchase price per unit will automatically be reduced by the
aggregate amount of distributions per unit, if any, made by your partnership to
you on or after the commencement of our offer and prior to the date on which we
acquire your units pursuant to our offer.
If, prior to the expiration date, we increase the consideration offered
to limited partners pursuant to the offer, the increased consideration will be
paid for all units accepted for payment pursuant to the offer, whether or not
the units were tendered prior to the increase in consideration.
If units are validly tendered prior to the expiration date and not
properly withdrawn prior to the expiration date in accordance with the
procedures set forth in Section 4 and the purchase of all such units would
result in there being less than 320 unitholders, we will purchase only 99% of
the total number of units so tendered by each limited partner. In such case, you
would continue to be a limited partner and receive a K-1 for tax reporting
purposes.
The offer is conditioned on satisfaction of certain conditions. THE
OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS BEING TENDERED. See
"The Offer -- Section 17," which sets forth in full the conditions of the offer.
We reserve the right (but in no event shall we be obligated), in our reasonable
discretion, to waive any or all of those conditions. If, on or prior to the
expiration date, any or all of the conditions have not been satisfied or waived,
we reserve the right to (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 purchase all units validly
tendered, (iii) extend the offer and, subject to the withdrawal rights of
limited partners, retain the units that have been tendered during the period or
periods for which the offer is extended, or (iv) amend the offer. The transfer
of units will be effective August 1, 1999.
This offer is being mailed to the persons shown by your partnership's
records to have been limited partners or, in the case of units owned of record
by Individual Retirement Accounts and qualified plans, beneficial owners of
units, as of October 25, 1999.
SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS.
Upon the terms and subject to the conditions of the offer, we will
purchase, by accepting for payment, and will pay for, any and all units validly
tendered as promptly as practicable following the expiration date. A tendering
beneficial owner of units whose units are owned of record by an Individual
Retirement Account or other
5
<PAGE> 9
qualified plan will not receive direct payment of the offer price; rather,
payment will be made to the custodian of such account or plan. In all cases,
payment for units purchased pursuant to the offer will be made only after timely
receipt by the Information Agent of a properly completed and duly executed
letter of transmittal and other documents required by the letter of transmittal.
See "The Offer -- Section 3." UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON
THE OFFER PRICE BY REASON OF ANY DELAY IN MAKING SUCH PAYMENT.
We will, upon the terms and subject to the conditions of the offer,
accept for payment and pay for all units validly tendered, with appropriate
adjustments to avoid purchases that would violate the agreement of limited
partnership of your partnership and any relevant procedures or regulations
promulgated by the general partner. Accordingly, in some circumstances, we may
pay you the full offer price and accept an assignment of your right to receive
distributions and other payments and an irrevocable proxy in respect of the
units and defer, perhaps indefinitely, the transfer of ownership of the units on
the partnership books. In other circumstance we may only be able to purchase
units which, together with units previously transferred within the preceding
twelve months, do not exceed 50% of the outstanding units.
If more units than can be purchased under the partnership agreement are
validly tendered prior to the expiration date and not properly withdrawn prior
to the expiration date in accordance with the procedures specified herein, we
will, upon the terms and subject to the conditions of the offer, accept for
payment and pay for those units so tendered which do not violate the terms of
the partnership agreement, pro rata 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. If the number of units validly tendered and not properly withdrawn on or
prior to the expiration date is less than or equal to the maximum number we can
purchase under the partnership agreement, we will purchase all units so tendered
and not withdrawn, upon the terms and subject to the conditions of the offer.
If proration of tendered units is required, then, subject to our
obligation under Rule 14e-1(c) under the Securities Exchange Act of 1934
("Exchange Act") to pay limited partners the purchase price in respect of units
tendered or return those units promptly after termination or withdrawal of the
offer, we do not intend to pay for any units accepted for payment pursuant to
the offer until the final proration results are known. Notwithstanding any such
delay in payment, no interest will be paid on the cash offer price.
For purposes of the offer, we will be deemed to have accepted for
payment pursuant to the offer, and thereby purchased, validly tendered units,
if, as and when we give verbal or written notice to the Information Agent of our
acceptance of those units for payment pursuant to the offer. Payment for units
accepted for payment pursuant to the offer will be made through the Information
Agent, 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.
If any tendered units are not accepted for payment by us for any
reason, the letter of transmittal with respect to such units not purchased may
be destroyed by us or the Information Agent. 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 "The Offer
- -- Section 17," the Information Agent may, nevertheless, on our behalf 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
"The Offer -- Section 4"; subject, however, to our obligation under Rule
14e-1(c) under the Exchange Act, to pay you the offer price in respect of units
tendered or return those units promptly after termination or withdrawal of the
offer.
We reserve the right to transfer or assign, in whole or in part, to one
or more of our affiliates, the right to purchase units tendered pursuant to the
offer, but no such transfer or assignment will relieve us of our
6
<PAGE> 10
obligations under the offer or prejudice your rights to receive payment for
units validly tendered and accepted for payment pursuant to the offer.
SECTION 3. PROCEDURE FOR TENDERING UNITS.
VALID TENDER. To validly tender units pursuant to the offer, a properly
completed and duly executed letter of transmittal and any other documents
required by such letter of transmittal must be received by the Information
Agent, at one of its addresses set forth on the back cover of this offer to
purchase, on or prior to the expiration date. You may tender all or any portion
of your units. No alternative, conditional or contingent tenders will be
accepted.
SIGNATURE REQUIREMENTS. If the letter of transmittal is signed by the
registered holder of a unit and payment is to be made directly to that holder,
then no 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 signature guarantee is required on
the letter of transmittal. However, in all other cases, all signatures on the
letter of transmittal must be guaranteed by an Eligible Institution.
In order for you to tender in the offer, your units must be validly
tendered and not withdrawn on or prior to the expiration date.
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT YOUR OPTION AND RISK AND DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED BY THE INFORMATION AGENT. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
APPOINTMENT AS PROXY; POWER OF ATTORNEY. By executing the letter of
transmittal, you are irrevocably appointing us and our designees as your proxy,
in the manner set forth in the letter of transmittal, each with full power of
substitution, to the fullest extent of the your rights with respect to the units
tendered by you and accepted for payment by us. Each such proxy shall be
considered coupled with an interest in the tendered units. Such appointment will
be effective when, and only to the extent that, we accept the tendered unit 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 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 of 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 or acting by written consent without a meeting. By
executing the letter of transmittal, you agree to execute all such documents and
take such other actions as shall be reasonably required to enable the units
tendered to be voted in accordance with out directions. The proxy and power of
attorney granted by you to us upon your execution of the letter of transmittal
will remain effective and be irrevocable for a period of ten years following the
termination of our offer.
By executing the letter of transmittal, you also irrevocably constitute
and appoint us and our managers and designees as your attorneys-in-fact, 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 by us. Such appointment
will be effective when, and only to the extent that, we pay for your units. You
will agree not to exercise any rights pertaining to the tendered units without
our prior consent. Upon such payment, all prior powers of attorney granted by
you with respect to such units will, without further action, be revoked, and no
subsequent powers of attorney may be granted (and if granted will not be
effective). Pursuant to such appointment as attorneys-in-fact, we and our
managers and
7
<PAGE> 11
designees each will have the power, among other things, (i) to transfer
ownership of such units on the partnership books maintained by your general
partner (and execute and deliver any accompanying evidences of transfer and
authenticity it may deem necessary or appropriate in connection therewith), (ii)
upon receipt by the Information Agent of the offer consideration, to become a
substituted limited partner, to receive any and all distributions made by your
partnership on or after the date on which we acquire such units, and to receive
all benefits and otherwise exercise all rights of beneficial ownership of such
units in accordance with the terms of our offer, (iii) to execute and deliver to
the general partner of your partnership a change of address form instructing the
general partner to send any and all future distributions to which we are
entitled pursuant to the terms of the offer in respect of tendered units to the
address specified in such form, and (iv) to endorse any check payable to you or
upon your order representing a distribution to which we are entitled pursuant to
the terms of our offer, in each case, in your name and on your behalf.
If you tender units through the enclosed letter of transmittal you will
irrevocably constitute and appoint us and any of our designees as your true and
lawful agent and attorney-in-fact with respect to such units, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to withdraw any or all of such units that have been
previously tendered in response to any other tender or exchange offer, provided
that the price per unit we are offering is equal to or higher than the price per
unit being offered in the other tender or exchange offer. Such appointment is
effective upon the receipt of such letter of transmittal and shall continue to
be effective unless and until you withdraw such units from this offer prior to
the expiration date.
ASSIGNMENT OF INTEREST IN FUTURE DISTRIBUTIONS. By executing the letter
of transmittal, you will irrevocably assign to us and our assigns all of your
right, title and interest in and to any and all distributions made by your
partnership from any source and of any nature, including, without limitation,
distributions in the ordinary course, distributions from sales of assets,
distributions upon liquidation, winding-up, or dissolution, payments in
settlement of existing or future litigation, and all other distributions and
payments from and after the expiration date of our offer, in respect of the
units tendered by you and accepted for payment and thereby purchased by us. If,
after the unit is accepted for payment and purchased by us, you receive any
distribution from any source and of any nature, including, without limitation,
distributions in the ordinary course, distributions from sales of assets,
distributions upon liquidation, winding-up or dissolution, payments in
settlement of existing or future litigation and all other distributions and
payments, from your partnership in respect of such unit, you will agree to
forward promptly such distribution to us.
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 reasonable
discretion, which determination shall be final and binding on all parties. 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
absolute right to waive or amend any of the conditions of the offer that we are
legally permitted to waive as to the tender of any particular unit and to waive
any defect or irregularity in any tender with respect to any particular unit of
any particular limited partner. Our interpretation of the terms and conditions
of the offer (including the letter of transmittal) will be final and binding on
all parties. No tender of units will be deemed to have been validly made unless
and until all defects and irregularities have been cured or waived. Neither us,
the Information Agent, 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.
BACKUP FEDERAL INCOME TAX WITHHOLDING. To prevent the possible
application of back-up Federal income tax withholding of 31% with respect to
payment of the offer price, you may have to provide us with your correct
taxpayer identification number. See the instructions to the letter of
transmittal and "The Offer -- Section 6."
8
<PAGE> 12
FIRPTA WITHHOLDING. To prevent the withholding of Federal income tax in
an amount equal to 10% of the amount realized on the disposition (the amount
realized is generally the offer price plus the partnership liabilities allocable
to each unit purchased), you must certify that you are not a foreign person if
you tender units. See the instructions to the letter of transmittal and "The
Offer -- Section 6."
TRANSFER TAXES. The amount of any transfer taxes (whether imposed on
the registered holder of units or any person) payable on account of the transfer
to such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is submitted.
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 to purchase and the related letter of transmittal.
SECTION 4. WITHDRAWAL RIGHTS.
You may withdraw tendered units at any time prior to the expiration
date or on or after December 23, 1999, if the units have not been previously
accepted for payment.
For a withdrawal to be effective, a written notice of withdrawal must
be timely received by the Information Agent at one of its addresses 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 the name of the registered holder of such units, if different from the
person who tendered. In addition, the notice of withdrawal must be signed by the
person 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, tendered units may be retained by the
Information Agent; 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 our
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 at any time prior to the expiration date by following the procedures
described in "The Offer -- Section 3."
All questions as to the validity and form (including time of receipt)
of notices of withdrawal will be determined by us in our reasonable discretion,
which determination will be final and binding on all parties. Neither we, the
Information Agent, nor any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT.
We expressly reserve the right, in our reasonable discretion, at any
time and from time to time, (i) to extend the period of time during which our
offer is open and thereby delay acceptance for payment of, and the payment for,
any unit, (ii) to terminate the offer and not accept any units not theretofore
accepted for payment or paid for if any of the conditions to the offer are not
satisfied or if any event occurs that might reasonably be expected to result in
a failure to satisfy such conditions, (iii) upon the occurrence of any of the
conditions specified in "The Offer -- Section 17," to delay the acceptance for
payment of, or payment for, any units not already accepted for payment or paid
for, and (iv) to amend our offer in any respect (including, without limitation,
by increasing the consideration offered, increasing or decreasing the units
being sought, or both). Notice of any such extension, termination or amendment
will promptly be disseminated to you in a manner reasonably designed to inform
you
9
<PAGE> 13
of such change. In the case of an extension of the offer, the extension will be
followed by a press release or public announcement which will be issued no later
than 9:00 a.m., New York City time, on the next business day after the scheduled
expiration date 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 a unit
pursuant to our offer for any reason, then, without prejudice to our rights
under the offer, the Information Agent may retain tendered units and those units
may not be withdrawn except to the extent tendering unitholders are entitled to
withdrawal rights as described in "The Offer -- 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 terms of our 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 Rule 14e-1 under the
Exchange Act. The minimum period during which the offer must remain open
following any material change in the terms of the offer, other than a change in
price or a change in percentage of securities sought or a change in any dealer's
soliciting fee, if any, will depend upon the facts and circumstances, including
the materiality of the change. With respect to a change in price or, subject to
certain limitations, a change in the percentage of securities sought or a change
in any dealer's soliciting fee, if any, a minimum of ten business days from the
date of such change is generally required to allow for adequate dissemination to
unitholders. Accordingly, if, prior to the expiration date, we increase (other
than increases of not more than two percent of the outstanding units) or
decrease the number of units being sought, or increase or decrease the offer
price, and if the offer is scheduled to expire at any time earlier than the
tenth business day after the date that notice of such increase or decrease is
first published, sent or given to unitholders, the offer will be extended at
least until the expiration of such ten business days. As used in the offer to
purchase, "business day" means any day other than a Saturday, Sunday or a
Federal holiday, and consists of the time period from 12:01 a.m. through 12:00
midnight, New York City time.
SECTION 6. CERTAIN FEDERAL INCOME TAX MATTERS.
The following summary is a general discussion of certain of the United
States federal income tax consequences of the offer that may be relevant to (i)
unitholders who tender some or all of their units for cash pursuant to our
offer, and (ii) unitholders who do not tender any of their units pursuant to our
offer. This discussion is based on the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code"), Treasury Regulations, rulings issued by the
Internal Revenue Service (the "IRS"), and judicial decisions, all as of the date
of this offer to purchase. All of the foregoing are subject to change or
alternative construction, possibly with retroactive effect, and any such change
or alternative construction could affect the continuing accuracy of this
summary. This summary is based on the assumption that your partnership is
operated in accordance with its organizational documents including its
certificate of limited partnership and agreement of limited partnership. This
summary is for general information only and does not purport to discuss all
aspects of federal income taxation which may be important to a particular person
in light of its investment or tax circumstances, or to certain types of
investors subject to special tax rules (including financial institutions,
broker-dealers, insurance companies, and, except to the extent discussed below,
tax-exempt organizations and foreign investors, as determined for United States
federal income tax purposes), nor (except as otherwise expressly indicated) does
it describe any aspect of state, local, foreign or other tax laws. This summary
assumes that the units constitute capital assets in the hands of the unitholders
(generally, property held for investment). No advance ruling has been or will be
sought from the IRS regarding any matter discussed in this offer to purchase.
Further, no opinion of counsel has been obtained with regard to the offer.
THE UNITED STATES FEDERAL INCOME TAX TREATMENT OF A UNITHOLDER
PARTICIPATING IN THE OFFER DEPENDS IN SOME INSTANCES ON DETERMINATIONS OF FACT
AND INTERPRETATIONS OF COMPLEX PROVISIONS OF UNITED STATES FEDERAL INCOME TAX
LAW FOR WHICH NO CLEAR PRECEDENT OR AUTHORITY MAY BE AVAILABLE. ACCORDINGLY, YOU
SHOULD CONSULT YOUR TAX ADVISOR REGARDING THE UNITED STATES FEDERAL, STATE,
LOCAL AND FOREIGN TAX CONSEQUENCES OF
10
<PAGE> 14
SELLING THE LIMITED PARTNERSHIP INTERESTS IN YOUR PARTNERSHIP REPRESENTED BY
UNITS PURSUANT TO OUR OFFER OR OF A DECISION NOT TO SELL IN LIGHT OF YOUR
SPECIFIC TAX SITUATION.
TAX CONSEQUENCES TO LIMITED PARTNERS TENDERING UNITS FOR CASH. You will
recognize gain or loss on a sale of a unit of limited partnership of your
partnership equal to the difference between (i) your "amount realized" on the
sale and (ii) your adjusted tax basis in the unit sold. The "amount realized"
with respect to a unit of limited partnership of your partnership will be equal
to the sum of the amount of cash received by you for the unit sold pursuant to
the offer plus the amount of partnership liabilities allocable to the unit (as
determined under Section 752 of the Internal Revenue Code). Thus, your taxable
gain and tax liability resulting from a sale of a unit of limited partnership of
your partnership could exceed the cash received upon such sale.
ADJUSTED TAX BASIS. If you acquired your units of limited partnership
of your partnership for cash, your initial tax basis in such units was generally
equal to your cash investment in your partnership increased by your share of
partnership liabilities at the time you acquired such units. Your initial tax
basis generally has been increased by (i) your share of partnership income and
gains, and (ii) any increases in your share of partnership liabilities, and has
been decreased (but not below zero) by (i) your share of partnership cash
distributions, (ii) any decreases in your share of partnership liabilities,
(iii) your share of partnership losses, and (iv) your share of nondeductible
partnership expenditures that are not chargeable to capital. For purposes of
determining your adjusted tax basis in units of limited partnership of your
partnership immediately prior to a disposition of your units, your adjusted tax
basis in your units will include your allocable share of partnership income,
gain or loss for the taxable year of disposition. If your adjusted tax basis is
less than your share of partnership liabilities (e.g., as a result of the effect
of net loss allocations and/or distributions exceeding the cost of your unit),
your gain recognized with respect to a unit of limited partnership of your
partnership pursuant to the offer will exceed the cash proceeds realized upon
the sale of such unit.
CHARACTER OF GAIN OR LOSS RECOGNIZED PURSUANT TO THE OFFER. Except as
described below, the gain or loss recognized by you on a sale of a unit of
limited partnership of your partnership pursuant to the offer generally will be
treated as a long-term capital gain or loss if you held the unit for more than
one year. Long-term capital gains recognized by individuals and certain other
noncorporate taxpayers generally will be subject to a maximum United States
federal income tax rate of 20%. If the amount realized with respect to a unit of
limited partnership of your partnership that is attributable to your share of
"unrealized receivables" of your partnership exceeds the tax basis attributable
to those assets, such excess will be treated as ordinary income. Among other
things, "unrealized receivables" include depreciation recapture for certain
types of property. In addition, the maximum United States federal income tax
rate applicable to persons who are noncorporate taxpayers for net capital gains
attributable to the sale of depreciable real property (which may be determined
to include an interest in a partnership such as your units) held for more than
one year is currently 25% (rather than 20%) with respect to that portion of the
gain attributable to depreciation deductions previously taken on the property.
If you tender a unit of limited partnership interest of your
partnership in the offer, you will be allocated a share of partnership taxable
income or loss for the year of tender with respect to any units sold. You will
not receive any future distributions on units of limited partnership interest of
your partnership tendered on or after the date on which such units are accepted
for purchase and, accordingly, you may not receive any distributions with
respect to such accreted income. Such allocation and any partnership cash
distributions to you for that year will affect your adjusted tax basis in your
unit of limited partnership interest of your partnership and, therefore, the
amount of your taxable gain or loss upon a sale of a unit pursuant to the offer.
PASSIVE ACTIVITY LOSSES. The passive activity loss rules of the
Internal Revenue Code limit the use of losses derived from passive activities,
which generally include investments in limited partnership interests such as the
units of limited partnership interest of your partnership. An individual, as
well as certain other types of investors, generally cannot use losses from
passive activities to offset nonpassive activity income received during the
taxable year. Passive losses that are disallowed for a particular tax year are
"suspended" and may be carried
11
<PAGE> 15
forward to offset passive activity income earned by the investor in future
taxable years. In addition, such suspended losses may be claimed as a deduction,
subject to other applicable limitations, upon a taxable disposition of the
investor's interest in such activity.
Accordingly, if your investment in your units is treated as a passive
activity, you may be able to reduce gain from the sale of your units of limited
partnership interest of your partnership pursuant to the offer with passive
losses in the manner described below. If you sell all or a portion of your units
of limited partnership interest of your partnership pursuant to the offer and
recognize a gain on your sale, you will generally be entitled to use your
current and "suspended" passive activity losses (if any) from your partnership
and other passive sources to offset that gain. In general, if you sell all or a
portion of your units of limited partnership interest of your partnership
pursuant to the offer and recognize a loss on such sale, you will be entitled to
deduct that loss currently (subject to other applicable limitations) against the
sum of your passive activity income from your partnership for that year (if any)
plus any passive activity income from other sources for that year. If you sell
all of your units pursuant to the offer, the balance of any "suspended" losses
from your partnership that were not otherwise utilized against passive activity
income as described in the two preceding sentences will generally no longer be
suspended and will generally therefore be deductible (subject to any other
applicable limitations) by you against any other income for that year,
regardless of the character of that income. You are urged to consult your tax
advisor concerning whether, and the extent to which, you have available
"suspended" passive activity losses from your partnership or other investments
that may be used to reduce gain from the sale of units pursuant to the offer.
INFORMATION REPORTING, BACKUP WITHHOLDING AND FIRPTA. If you tender any
units, you must report the transaction by filing a statement with your United
States federal income tax return for the year of the tender which provides
certain required information to the IRS. To prevent the possible application of
back-up United States federal income tax withholding of 31% with respect to the
payment of the offer consideration, you are generally required to provide us
with your correct taxpayer identification number. See the instructions to the
letter of transmittal.
Gain realized by a foreign person on the sale of a unit pursuant to the
offer will be subject to federal income tax under the Foreign Investment in Real
Property Tax Act of 1980. Under these provisions of the Internal Revenue Code,
the transferee of an interest held by a foreign person in a partnership which
owns United States real property generally is required to deduct and withhold
10% of the amount realized on the disposition. Amounts withheld would be
creditable against a foreign person's United States federal income tax liability
and, if in excess thereof, a refund could be claimed from the Internal Revenue
Service by filing a United States income tax return. See the instructions to the
letter of transmittal.
TAX CONSEQUENCES TO NON-TENDERING AND PARTIALLY-TENDERING LIMITED
PARTNERS. Section 708 of the Internal Revenue Code provides that if there is a
sale or exchange of 50% or more of the total interest in capital and profits of
a partnership within any 12-month period, such partnership terminates for United
States federal income tax purposes. It is possible that our acquisition of units
pursuant to the offer alone or in combination with other transfers of interests
in your partnership could result in such a termination of your partnership. If
your partnership is deemed to terminate for tax purposes, the following Federal
income tax events will be deemed to occur: the terminated partnership will be
deemed to have contributed all of its assets (subject to its liabilities) to a
new partnership in exchange for an interest in the new partnership and,
immediately thereafter, the old partnership will be deemed to have distributed
interests in the new partnership to the remaining limited partners in proportion
to their respective interests in the old partnership in liquidation of the old
partnership.
A remaining limited partner will generally not recognize any gain or
loss upon the deemed distribution or upon the deemed contribution and the
capital accounts of the remaining limited partners in the old partnership will
carry over intact into the new partnership. A termination may change (and
possibly shorten) a remaining partner's holding period with respect to its
retained units in your partnership for United States federal income tax
purposes.
12
<PAGE> 16
The new partnership's adjusted tax basis in its assets will be the same
as the old partnership's basis in such assets immediately before the
termination. A termination may also subject the assets of the new partnership to
depreciable lives in excess of those currently applicable to the old
partnership. This would generally decrease the annual average depreciation
deductions allocable to the remaining limited partners for a number of years
following consummation of the offer (thereby increasing the taxable income
allocable to their units in each such year), but would have no effect on the
total depreciation deductions available over the useful lives of the assets of
your partnership.
Elections as to certain tax matters previously made by the old
partnership prior to termination will not be applicable to the new partnership
unless the new partnership chooses to make the same elections.
Additionally, upon a termination for tax purposes, the old
partnership's taxable year will close for all limited partners. In the case of a
remaining limited partner or a partially tendering limited partner reporting on
a tax year other than a calendar year, the closing of the partnership's taxable
year may result in more than 12 months' taxable income or loss of the old
partnership being includible in such limited partner's taxable income for the
year of termination.
SECTION 7. EFFECTS OF THE OFFER.
FUTURE CONTROL BY AIMCO. Because the general partner of your
partnership is our subsidiary, we have control over the management of your
partnership. If we are successful in acquiring more than 24,269.5 units pursuant
to the offer, we will own more than 50% of the outstanding units and, as a
result, will be able to control the outcome of all voting decisions with respect
to your partnership. Even if we acquire a lesser number of units pursuant to the
offer, however, because we currently own approximately 31.2% of the outstanding
units, we will be able to significantly influence the outcome of all voting
decisions with respect to your partnership. In general, we will vote the units
owned by us in whatever manner we deem to be in our best interests, which may
not be in the interest of other limited partners. This could (1) prevent
non-tendering limited partners from taking action they desire but that we oppose
and (2) enable us to take action desired by us but opposed by non-tendering
limited partners. We also own the company that manages the residential property
owned by your partnership. In the event that we acquire a substantial number of
units pursuant to the offer, removal of a property manager may become more
difficult or impossible.
DISTRIBUTIONS TO US. If we acquire units in the offer, we will
participate in any subsequent distributions to limited partners to the extent of
the units purchased.
PARTNERSHIP STATUS. We believe our purchase of units should not
adversely affect the issue of whether your partnership is classified as a
partnership for Federal income tax purposes.
BUSINESS. Our offer will not affect the operation of the properties
owned by your partnership. We will continue to control the general partner of
your partnership and the residential property manager, both of which will remain
the same. Consummation of the offer will not affect your agreement of limited
partnership, the operations of any partnership, the business and properties
owned by your partnership, the management compensation payable to your general
partner or any other matter relating to your partnership, except it would result
in us increasing our ownership of units. We have no current intention of
changing the fee structure for your general partner or the manager of your
partnership's residential property.
EFFECT ON TRADING MARKET; REGISTRATION UNDER 12(g) OF THE EXCHANGE ACT.
If a substantial number of units are purchased pursuant to the offer, the result
will be a reduction in the number of limited partners in your partnership. In
the case of certain kinds of equity securities, a reduction in the number of
securityholders might be expected to result in a reduction in the liquidity and
volume of activity in the trading market for the security. In the case of your
partnership, however, there is no established public trading market for the
units and, therefore,
13
<PAGE> 17
we do not believe a reduction in the number of limited partners will materially
further restrict your ability to find purchasers for your units through
secondary market transactions.
The units are registered under Section 12(g) of the Exchange Act, which
means, among other things, that your partnership is required to file periodic
reports with the Securities and Exchange Commission ("SEC") and to comply with
the SEC's proxy rules. We do not expect or intend that consummation of the offer
will cause the units to cease to be registered under Section 12(g) of the
Exchange Act. If the units were to be held by fewer than 300 persons, your
partnership could apply to de-register the units under the Exchange Act. Because
the units are widely held, however, we believe that, even if we purchase the
maximum number of units in the offer, the units will be held of record by more
than 300 person. Your partnership currently has 2,185 unitholders of record. If
units are tendered which would result in less than 320 unitholders, we will
purchase no more than 99% of the units tendered by each unitholder to assure
that there are more than 300 unitholders after the offer. See "The Offer --
Section 1. Terms of the Offer; Expiration Date."
SECTION 8. INFORMATION CONCERNING US AND CERTAIN OF OUR AFFILIATES.
We are AIMCO Properties, L.P., a Delaware limited partnership. Together
with our subsidiaries, we conduct substantially all of the operations of
Apartment Investment and Management Company, a Maryland corporation ("AIMCO").
AIMCO is a real estate investment trust that owns and manages multifamily
apartment properties throughout the United States. Based on apartment unit data
compiled by the National Multi-Housing Council, we believe that, as of June 30,
1999, AIMCO was one of the largest owners and managers of multifamily apartment
properties in the United States, with a total portfolio of 369,404 apartment
units in 2,037 properties located in 49 states, the District of Columbia and
Puerto Rico. AIMCO's Class A Common Stock is listed and traded on the New York
Stock Exchange under the symbol "AIV." As of June 30, 1999, AIMCO:
o owned or controlled 64,640 units in 240 apartment properties;
o held an equity interest in 168,817 units in 887 apartment
properties; and
o managed 136,523 units in 940 apartment properties for third
party owners and affiliates.
Our general partner is AIMCO-GP, Inc., which is a wholly-owned
subsidiary of AIMCO. Our principal executive offices are located at 1873 South
Bellaire Street, Denver, Colorado 80222, and our telephone number is (303)
757-8101.
The names, positions and business addresses of the directors and
executive officers of AIMCO and your general partner (which is our subsidiary)
as well as a biographical summary of the experience of such persons for the past
five years or more, are set forth on Annex I attached hereto and are
incorporated herein by reference.
We and AIMCO are both subject to the information and reporting
requirements of the Exchange Act and, in accordance therewith, file reports and
other information with the Securities and Exchange Commission relating to our
business, financial condition and other matters. Such reports and other
information may be inspected at the public reference facilities maintained by
the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549;
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661; and 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material can
also be obtained from the Public Reference Room of the SEC in Washington, D.C.
at prescribed rates. The SEC also maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
In addition, information filed by AIMCO with the New York Stock Exchange may be
inspected at the offices of the New York Stock Exchange at 20 Broad Street, New
York, New York 10005.
14
<PAGE> 18
For more information regarding AIMCO Properties, L.P., please refer to
the Annual Report on Form 10-K for the year ended December 31, 1998 and the
Quarterly Report for the quarterly periods ended March 31, 1999 and June 30,
1999 (particularly the management's discussion and analysis of financial
condition and results of operations) and other reports and documents filed by it
with the SEC.
Except as described below in "The Offer -- Section 9" and "The Offer --
Section 11", neither we nor, to the best of our knowledge, any of the persons
listed on Annex I attached hereto, (i) beneficially own or have a right to
acquire any units, (ii) has effected any transaction in the units in the past 60
days, or (iii) have 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 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 (except for previous tender offers we
may have conducted for units).
SECTION 9. BACKGROUND AND REASONS FOR THE OFFER.
GENERAL. We are in the business of acquiring direct and indirect
interests in apartment properties such as the properties owned by your
partnership. Our offer provides us with an opportunity to increase our ownership
interest in your partnership's properties while providing you and other
investors with an opportunity to liquidate your current investment.
On October 1, 1998, AIMCO merged (the "Insignia Merger") with Insignia
Financial Group, Inc. ("Insignia"). As a result of the Insignia Merger, AIMCO
acquired approximately 51% of the outstanding common shares of beneficial
interest of Insignia Properties Trust ("IPT"). The general partner of your
partnership is a wholly owned subsidiary of IPT. Through the Insignia Merger,
AIMCO also acquired a majority ownership interest in the entity that manages the
residential property owned by your partnership. On October 31, 1998, IPT and
AIMCO entered into an agreement and plan of merger, dated as of October 1, 1998,
pursuant to which IPT merged with AIMCO on February 26, 1999 (the "IPT Merger").
Together with its subsidiaries, AIMCO currently owns, in the aggregate,
approximately 31.2% of your partnership's outstanding limited partnership units.
During our negotiations with Insignia in early 1998, we decided that if
the merger with Insignia were consummated, we could also benefit from making
offers for limited partnership interests of some of the limited partnerships
formerly controlled or managed by Insignia (the "Insignia Partnerships"). Such
offers would provide liquidity for the limited partners of the Insignia
Partnerships, and would provide AIMCO Properties, L.P. with a larger asset and
capital base and increased diversification. While some of the Insignia
Partnerships are public partnerships and information is publicly available on
such partnerships for weighing the benefits of making a tender offer, many of
the partnerships are private partnerships and information about such
partnerships comes principally from the general partner. Our control of the
general partner makes it possible for us to obtain access to such information.
Further, such control also means that we control the operations of the
partnerships and their properties. Insignia did not propose that we conduct such
tender offers, rather we initiated the offers on our own. As of the date of this
offering, AIMCO Properties, L.P. has made offers to approximately 105 of the
Insignia Partnerships, including your partnership.
PRIOR TENDER OFFERS. Prior to the Insignia Merger, a number of tender
offers had been made to acquire units of your partnership. On December 1997, IPT
, then an affiliate of Insignia and now our affiliate, commenced a tender offer
for $68 per unit. On May 19, 1999, we commenced a tender offer for $86 per unit.
A total of 9,891 units, representing 7.68% of the outstanding units, were
validly tendered at such price pursuant to the offer and thereafter.
On April 23,1999, Everest Investors 12, L.L.C., then an affiliate of
Insignia and now our affiliate, together with Insignia Properties, L.P.,
Insignia Properties Trust, and Insignia Financial Group, Inc., commenced
15
<PAGE> 19
a tender offer for $40 per unit. Recently, Madison Liquidity Investors 104,
L.L.C. commenced a tender offer for up to 4.9% of the outstanding units at $50
per unit.
We are aware that tender offers may have been made by unaffiliated
third parties to acquire units in your partnership in exchange for cash. We are
unaware of the amounts offered, terms, tendering parties or number of units
involved in these tender offers. In connection with tender offers made by
Insignia affiliates with respect to partnerships for which we are making offers,
some limited partners filed lawsuits. We are not aware of any merger,
consolidation or other combination involving any of the Insignia Partnerships,
or any acquisitions of any of such partnerships or a material amount of the
assets of such partnerships.
CERTAIN LITIGATION. On March 24, 1998, certain persons claiming to own
limited partner interests in certain of the limited partnerships for which our
subsidiaries act as general partner (including your partnership) filed a
purported class and derivative action in California Superior Court in the County
of San Mateo against AIMCO, Insignia, the general partners of the partnerships,
certain persons and entities who purportedly formerly controlled the general
partners, and additional entities affiliated with and individuals who are
officers, directors and/or principals of several of the defendants. The
complaint contains allegations that, among other things, (i) the defendants
breached fiduciary duties owed to the plaintiffs, or aided and abetted in those
purported breaches, by selling or agreeing to sell their "fiduciary positions"
as stockholders, officers and directors of the general partners for a profit and
retaining said profit rather than distributing it to the plaintiffs; (ii) the
defendants breached fiduciary duties, or aided and abetted in those purported
breaches, by mismanaging the partnerships and misappropriating assets of the
partnerships by (a) manipulating the operations of the partnerships to depress
the trading price of limited partnership units of the partnerships; (b) coercing
and fraudulently inducing unitholders to sell units to certain of the defendants
at depressed prices; and (c) using the voting control obtained by purchasing
units at depressed prices to entrench certain of the defendants' positions of
control over the partnerships; and (iii) the defendants breached their fiduciary
duties to the plaintiffs by (a) selling assets of the partnerships such as
mailing lists of unitholders and (b) causing the general partners to enter into
exclusive arrangements with their affiliates to sell goods and services to the
general partners, the unitholders and tenants of properties owned by the
partnerships. The complaint also alleges that the foregoing allegations
constitute violations of various California securities, corporate and
partnership statutes, as well as conversion and common law fraud. The complaint
seeks unspecified compensatory and punitive damages, an injunction blocking the
sale of control of the general partners and a court order directing the
defendants to discharge their fiduciary duties to the plaintiffs. On June 25,
1998, the defendants filed motions seeking dismissal of the action. In lieu of
responding to the motion, plaintiffs have filed an amended complaint. On October
14, 1998, the AIMCO and Insignia defendants filed demurrers to the amended
complaint. The demurrers (which are requests to dismiss the action as a matter
of law) were heard on February 8, 1999, but no decision has been reached by the
Court. While no assurances can be given, we believe that the ultimate outcome of
this litigation will not have a material adverse effect on us.
ALTERNATIVES CONSIDERED BY YOUR GENERAL PARTNER. Before we commenced
this offer, your general partner (which is our subsidiary) considered a number
of alternative transactions. The following is a brief discussion of the
advantages and disadvantages of the alternatives considered by your general
partner.
LIQUIDATION
One alternative would be for the partnership to sell its assets,
distribute the net liquidation proceeds to its partners in accordance with the
agreement of limited partnership, and thereafter dissolve. Partners would be at
liberty to use the net liquidation proceeds after taxes for investment,
business, personal or other purposes, at their option. If your partnership were
to sell its assets and liquidate, you and your partners would not need to rely
upon capitalization of income or other valuation methods to estimate the fair
market value of partnership assets. Instead, such assets would be valued through
negotiations with prospective purchasers (in many cases unrelated third
parties). Currently, your partnership is marketing for sale of its two
commercial properties.
16
<PAGE> 20
However, in the opinion of your general partner (which is our
subsidiary), the present time may not be the most desirable time to sell the
residential real estate assets of your partnership in a private transaction, and
the proceeds realized from any such sale would be uncertain. Liquidation of the
partnership assets may trigger a substantial prepayment penalty under the
mortgages for the properties. Your general partner believes it currently is in
the best interest of your partnership to continue holding its real estate
assets. Although there might be a prepayment penalty of approximately 1 to 2% of
the outstanding balance of the mortgages depending on when and under what
circumstances they are prepaid, such prepayment penalties are not a significant
factor in determining when a property may be sold. See "The Offer -- Section 13.
Certain Information Concerning Your Partnership -- Investment Objectives and
Policies; Sale or Financing of Investments."
CONTINUATION OF THE PARTNERSHIP WITHOUT THE OFFER
A second alternative would be for your partnership to continue as a
separate legal entity, with its own assets and liabilities and continue to be
governed by its existing agreement of limited partnership, without our offer. A
number of advantages could result from the continued operation of your
partnership. Given improving rental market conditions, the level of
distributions might increase over time. It is possible that the private resale
market for properties could improve over time, making a sale of the
partnership's properties in a private transaction at some point in the future a
more attractive option than it is currently. The continuation of your
partnership will allow you to continue to participate in the net income and any
increases in revenue of your partnership and any net proceeds from the sale of
any property owned by your partnership. However, no assurance can be given as to
future operating results or as to the results of any attempts to sell any
property owned by your partnership. Currently, your partnership is marketing its
two commercial properties for sale and has received offers for such property.
There are several risks and disadvantages that result from continuing
the operations of your partnership without our offer. If your partnership were
continue operating as presently structured, your partnership could be forced to
borrow on terms that could result in net losses from operations. In addition,
continuation of your partnership without our offer would deny you and your
partners the benefits of our offer. For example, you would have no opportunity
for liquidity unless you were to sell your units in a private transaction. Any
such sale would likely be at a discount from your pro rata share of the fair
market value of the properties owned by your partnership.
SALE OF ASSETS
Your partnership could sell the properties it owns and not liquidate.
Your general partner (which is our subsidiary) considers the sale of partnership
properties from time to time. However, any such sale would likely be a taxable
transaction, and, without a liquidating distribution, would not provide limited
partners with any cash to pay any tax liabilities arising as a result thereof.
ALTERNATIVE TRANSACTIONS CONSIDERED BY US. Before we decided to make
our offer, we considered a number of alternative transactions, including
purchasing some or all of your partnership's properties or merging your
partnership with us. However, both of these alternatives would require a vote of
all the limited partners. If the transaction was approved, all limited partners,
including those who wish to continue to participate in the ownership of your
partnership's properties, would be forced to participate in the transaction. If
the transaction was not approved, all limited partners, including those who
would like to dispose of their investment in your partnership's properties,
would be forced to retain their investment. We also considered an offer to
exchange units in your partnership for units of AIMCO Properties, L.P. However,
because of the expense and delay associated with making such an exchange offer,
we decided to make an offer for cash only. In addition, our historical
experience has been that most holders of limited partnership units, when given a
choice, prefer cash.
17
<PAGE> 21
DETERMINATION OF OFFER PRICE. In establishing the offer price, we
reviewed certain publicly available information and certain information made
available to us by the general partner (which is our subsidiary) and our other
affiliates, including among other things: (i) the agreement of limited
partnership, as amended to date; (ii) the partnership's Annual Report on Form
10-KSB for the year ended December 31, 1998; (iii) unaudited results of
operations of the partnership's properties for the period since the beginning of
the partnership's current fiscal year and to date in 1999; (iv) the operating
budgets prepared by the residential property manager with respect to the
partnership's properties for the year ending December 31, 1999; and (v) tender
offer statements, solicitation/recommendation statements and beneficial
ownership reports on Schedules 14D-1, 14D-9 and 13D. Our determination of the
offer price was based on our review and analysis of the foregoing information,
the other financial information and the analyses concerning the partnership
summarized below.
VALUATION OF UNITS. We determined our offer price by estimating the
value of each property owned by your partnership using the direct capitalization
method. This method involves applying a capitalization rate to your
partnership's annual property income. A capitalization rate is a percentage
(rate of return), commonly applied by purchasers of residential real estate to
property income to determine the present value of income property. The lower the
capitalization rate utilized the higher the value produced, and the higher the
capitalization rate utilized the lower the value produced. We used your
partnership's property income for the year ended December 31, 1998. Our method
for selecting a capitalization rate begins with each property being assigned a
location and condition rating (e.g., "A" for excellent, "B" for good, "C" for
fair, and "D" for poor). We then adjust the capitalization rate based on whether
the property's mortgage debt bears interest at a rate above or below 7.5% per
annum. Generally, for every 0.5% in excess of 7.5%, the capitalization rate
would be increased by 0.25% The evaluation of a property's location and
condition, and the determination of an appropriate capitalization rate for a
property, is subjective in nature, and others evaluating the same property might
use a different capitalization rate and derive a different property value.
Property income is the difference between the revenues from the
property and related costs and expenses, excluding income derived from sources
other than its regular activities and before income deductions. Income
deductions include interest, income taxes, prior-year adjustments, charges to
reserves, write-off of intangibles, adjustments arising from major changes in
accounting methods and other material and nonrecurring items. In this respect,
property income differs from net income disclosed in the partnership's financial
statements, which does not exclude these income sources and deductions. The
following is a reconciliation of your partnership's property income for the year
ended December 31, 1998, to your partnership's net operating income for the same
period:
<TABLE>
<S> <C>
Net Income (Loss)........................... $ 639,000
Other Non-Operating Expense................. 8,073,000
Depreciation................................ 537,000
Interest.................................... 185,000
----------
Property Income............................. $9,434,000
</TABLE>
Although the direct capitalization method is a widely accepted way of
valuing real estate, there are a number of other methods available to value real
estate, each of which may result in different valuations of a property. Further,
in applying the direct capitalization method, others may make different
assumptions and obtain different results. The proceeds that you would receive if
you sold your units to someone else or if your partnership were actually
liquidated might be higher than our offer price. We determined our offer price
as follows:
o First, we estimated the value of the residential property owned by your
partnership using the direct capitalization method. We selected
capitalization rates based on our experience in valuing similar
properties. The lower the capitalization rate applied to a property's
income, the higher its value. We considered local market sales
information for comparable properties, estimated actual capitalization
rates (property income less capital reserves divided by sales price)
and then evaluated each property in light of its relative competitive
position, taking into account property location, occupancy rate,
overall property
18
<PAGE> 22
condition and other relevant factors. We believe that arms-length
purchasers would base their purchase offers on capitalization rates
comparable to those used by us, however there is no single correct
capitalization rate and others might use different rates. We divided
the fiscal 1998 property income by the property's capitalization rate
to derive an estimated gross property value as described in the
following table. Your partnership currently holds two commercial
properties, Phoenix Business Campus located in Atlanta, Georgia, and
Florida #1 Mini-Warehouse located in Davie, Florida. These properties
are currently being marketed for sale and the table below reflects the
current offers to purchase the properties. If we have received any
offers to purchase a property, the value we used is the highest offer,
which is then discounted to reflect the uncertainty of the actual
closing price for a sale and the likelihood of price negotiations up
until the closing date.
<TABLE>
<CAPTION>
Property Offer Price
-------- -----------
<S> <C>
Phoenix Business Campus......................... $5,300,000
Florida #11 Min-Warehouse....................... 5,300,000
</TABLE>
<TABLE>
<CAPTION>
ESTIMATED FISCAL
1999 PROPERTY CAPITALIZATION ESTIMATED GROSS
PROPERTY INCOME RATE PROPERTY VALUE
-------- ---------------- -------------- --------------
<S> <C> <C> <C>
Cedar Brooke Apartments $424,000 10.50% $ 4,035,000
Pheonix Business Campus N/A N/A 4,505,000
Florida #11 Mini-Warehouse N/A N/A 4,505,000
-----------
Estimated Total Gross Property Value $13,045,000
</TABLE>
o Second, we calculated the value of the equity of your
partnership by adding to the aggregate gross property value of
all properties owned by your partnership, the value of the
non-real estate assets of your partnership, and deducting the
liabilities of your partnership, including mortgage debt and
debt owed by your partnership to its general partner (which is
our subsidiary) or its affiliates after consideration of any
applicable subordination provisions affecting payment of such
debt. We deducted from this value certain other costs,
including required capital expenditures, deferred maintenance,
and closing costs, to derive a net equity value for your
partnership of $11,165,168. Closing costs, which are estimated
to be 5% of the gross property value, include legal and
accounting fees, real property transfer taxes, title and
escrow costs and broker's fees.
o Third, using this net equity value, we determined the proceeds
that would be paid to holders of units in the event of a
liquidation of your partnership, based on the terms of your
partnership's agreement of limited partnership. Accordingly,
99.19% of the estimated liquidation proceeds are assumed to be
distributed to holders of units. Our offer price represents
the per unit liquidation proceeds determined in this manner.
<TABLE>
<S> <C>
Gross valuation of partnership properties ............................. $13,045,000
Plus: Cash and cash equivalents....................................... 1,753,751
Plus: Other partnership assets, net of security deposits.............. 490,495
Less: Mortgage debt, including accrued interest....................... (2,339,202)
Less: Accounts payable and accrued expenses........................... (13,870)
Less: Other liabilities............................................... (143,829)
-----------
Partnership valuation before taxes and certain costs................... $12,792,344
</TABLE>
19
<PAGE> 23
<TABLE>
<S> <C>
Less: Disposition fees.................................................... (391,350)
Less: Extraordinary capital expenditures for deferred maintenance......... (583,576)
Less: Closing costs....................................................... (652,250)
------------------
Estimated net valuation of your partnership................................ $11,165,168
Percentage of estimated net valuation allocated to holders of units........ 99.19%
------------------
Estimated net valuation of units........................................... $11,074,337
Total number of units............................................ 128,810
------------------
Estimated valuation per unit............................................... $ 86
------------------
Cash consideration per unit................................................ $ 86
------------------
</TABLE>
COMPARISON OF CONSIDERATION TO ALTERNATIVE CONSIDERATION. To assist
holders of units in evaluating the offer, your general partner (which is our
subsidiary) has attempted to compare the offer price against: (a) prices at
which the units have sold in the secondary market; (b) estimates of the value of
the units on a liquidation basis; (c) your general partner's estimate of net
asset value; (d) an affiliate's estimate of net liquidation value; and (e) the
recent appraisals of your partnership's properties. The general partner of your
partnership believes that analyzing the alternatives in terms of estimated
value, based upon currently available data and, where appropriate, reasonable
assumptions made in good faith, establishes a reasonable framework for comparing
alternatives. Since the value of the consideration for alternatives to the offer
is dependent upon varying market conditions, no assurance can be given that the
estimated values reflect the range of possible values.
The results of these comparative analyses are summarized in the chart
below. You should bear in mind that some of the alternative values are based on
a variety of assumptions that have been made by us. These assumptions relate to,
among other things, the operating results, if any since December 31, 1999 as to
income and expenses of the property, other projected amounts and the
capitalization rates that may be used by prospective buyers if your partnership
assets were to be liquidated.
In addition, these estimates are based upon certain information
available to your general partner (which is our subsidiary) at the time the
estimates were computed, and no assurance can be given that the same conditions
analyzed by it in arriving at the estimates of value would exist at the time of
the offer. The assumptions used have been determined by the general partner of
your partnership in good faith, and, where appropriate, are based upon current
and historical information regarding your partnership and current real estate
markets, and have been highlighted below to the extent critical to the
conclusions of the general partner of your partnership. Actual results may vary
from those set forth below based on numerous factors, including interest rate
fluctuations, tax law changes, supply and demand for similar apartment
properties, the manner in which your partnership's properties is sold and
changes in availability of capital to finance acquisitions of apartment
properties.
Under your partnership's agreement of limited partnership, the term of
the partnership will continue until 2035, unless sooner terminated as provided
in the agreement or by law. Limited partners could, as an alternative to
tendering their units, take a variety of possible actions, including voting to
liquidate the partnership or amending the agreement of limited partnership to
authorize limited partners to cause the partnership to merge with another entity
or engage in a "roll-up" or similar transaction.
COMPARISON TABLE
<TABLE>
<CAPTION>
PER UNIT
--------
<S> <C>
Cash offer price .................................... $ 86.00
Alternatives
Prior cash offer price............................ $ 86.00
Prices on secondary market........................ $ 57.00-86.00
Estimated liquidation proceeds.................... $ 86.00
General partner's estimate of net asset value..... $ 101.00
Affiliate's estimate of net liquidation value..... $ 89.27
Madison's Competing Tender Offers................. $ 50.00
</TABLE>
20
<PAGE> 24
PRICES ON SECONDARY MARKET
Secondary market sales information is not a reliable measure of value
because of the limited amount of any known trades. At present, privately
negotiated sales and sales through intermediaries are the only means which may
be available to a limited partner to liquidate an investment in units (other
than our offer) because the units are not listed or traded on any exchange or
quoted on NASDAQ, on the Electronic Bulletin Board, or in "pink sheets."
Secondary sales activity for the units, including privately negotiated sales,
has been limited and sporadic.
Prior to our acquisition of the general partner, the general partner
received from time to time information on the prices at which units were sold;
however, it did not regularly receive or maintain information regarding the bid
or asked quotations of secondary market makers, if any. The prices in the table
below are based solely on information provided to the general partner by sellers
and buyers of units transferred in sale transactions (i.e., excluding
transactions believed to result from the death of a limited partner, rollover to
an IRA account, establishment of a trust, trustee to trustee transfers,
termination of a benefit plan, distributions from a qualified or nonqualified
plan, uniform gifts to minors, abandonment of units or similar non-sale
transactions). The transfer paperwork submitted to the general partner often did
not include the requested price information or contained conflicting information
as to the actual sales price. Sale prices not reported or disclosed could exceed
the reported prices. According to information obtained from your general partner
(which is our subsidiary) from January 1, 1996 to September 30, 1998, an
aggregate of 43,406.50 units (representing approximately 33.71% of the total
outstanding units) were transferred (including any tender offers) in sale
transactions. Set forth in the table below are the high and low sales prices of
units for the quarterly periods from January 1, 1996 to September 30, 1998, as
reported by your general partner:
SALES PRICES OF PARTNERSHIP UNITS, AS REPORTED BY THE GENERAL PARTNER
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
Fiscal Year Ended December 31, 1998:
Third Quarter........................................................ $65.00 $55.00
Second Quarter....................................................... 69.13 31.17
First Quarter........................................................ 74.00 49.00
Fiscal Year Ended December 31, 1997:
Fourth Quarter....................................................... 65.00 35.00
Third Quarter........................................................ 96.00 31.00
Second Quarter....................................................... 72.00 35.00
First Quarter........................................................ 170.00 35.00
Fiscal Year Ended December 31, 1996:
Fourth Quarter....................................................... 71.00 45.00
Third Quarter........................................................ 65.00 17.00
Second Quarter....................................................... 67.00 35.00
First Quarter........................................................ 87.00 35.00
</TABLE>
Set forth below are the high and low sale prices of units for the years
ended December 31, 1996, 1997, 1998 and the seven months ended July 31, 1999, as
reported by The Partnership Spectrum, which is an independent, third-party
source. The gross sales prices reported by The Partnership Spectrum do not
necessarily reflect the net sales proceeds received by sellers of units, which
typically are reduced by commissions and other secondary market transaction
costs to amounts less than the reported price. The Partnership Spectrum
represents only one source of secondary sales information, and other services
may contain prices for the units that equal or exceed sales prices reported in
The Partnership Spectrum. We do not know whether the information compiled by The
Partnership Spectrum is accurate or complete.
21
<PAGE> 25
SALES PRICES OF PARTNERSHIP UNITS, AS REPORTED BY THE PARTNERSHIP SPECTRUM
<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
9 Months Ended July 31, 1999:................................ 86.00 60.00
Fiscal Year Ended December 31, 1998:......................... 66.80 57.00
Fiscal Year Ended December 31, 1997:......................... 67.00 57.00
Fiscal Year Ended December 31, 1996:......................... ----- -----
</TABLE>
Set forth in the table below are the high and low sales prices of units
for the year ended December 31, 1998 and the 9 months ended September 30, 1999,
as reported by the American Partnership Board, which is an independent,
third-party source. The gross sales prices reported by American Partnership
Board do not necessarily reflect the net sales proceeds received by sellers of
units, which typically are reduced by commissions and other secondary market
transaction costs to amounts less than the reported prices. The American
Partnership Board represents one source of secondary sales information, and the
other services may contain prices for units that equal or exceed sales prices
reported by the American Partnership Board. We do not know whether the
information compiled by the American Partnership Board is accurate or complete.
SALES PRICES OF PARTNERSHIP UNITS, AS REPORTED BY THE AMERICAN PARTNERSHIP
BOARD
<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
9 Months Ended September 30, 1999:................................... 86.00 60.00
Fiscal Year Ended December 31, 1998:................................. 66.80 57.00
</TABLE>
APPRAISALS
Certain of your partnership's properties were appraised in 1996 by an
independent third party appraiser, Koeppel Tener Real Estate Services, Inc. (the
"Appraiser"), in connection with a requirement in your partnership's agreement
of limited partnership and not in connection with this offer. According to the
appraisal reports, the scope of the appraisals included an inspection of the
properties and an analysis of the surrounding market. The Appraiser relied
principally on the income capitalization approach to valuation and secondarily
on the sales comparison approach, and represented that its report was prepared
in accordance with the Code of Professional Ethics and Standards of Professional
Appraisal Practice of the Appraisal Institute and the Uniform Standards of
Professional Appraisal Practice, and in compliance with the Appraisal Standards
set forth in the Financial Institutions Reform, Recovery and Enforcement Act of
1989 (known as "FIRREA"). The estimated market value of the fee simple estate of
each such property is as follows:
<TABLE>
<CAPTION>
Property Name Appraised Value
----------------------- ---------------
<S> <C>
Cedar Brooke Apartments $3,600,000
</TABLE>
The total appraised value of the property is $3,600,000. However, the
appraisals do not reflect the mortgage encumbering each property, other assets
and liabilities of the partnership or any costs of sale of the property. Using
the appraisal amounts instead of the "Estimated gross valuation of partnership
properties" in the table in "Valuation of Units" would result in a higher amount
per unit than our offer.
We believe that, based on the condition of the property, the appraisals
substantially overstate their value. The appraisals did not take into account
the deferred maintenance costs of the partnership's property. Therefore, we
believe that the appraisals are less meaningful than our valuation analysis
described above.
22
<PAGE> 26
ESTIMATED LIQUIDATION PROCEEDS
Liquidation value is a measure of the price at which the
assets of your partnership would sell if disposed of in an arms-length
transaction between a willing buyer and your partnership, each having access to
relevant information regarding the historical revenues and expenses of the
business. Your general partner (which is our subsidiary) estimated the
liquidation value of units using the same direct capitalization method and
assumptions as we did in valuing the units for the offer price. The liquidation
analysis assumes that your partnership's properties are sold to an independent
third-party buyer at the current property value and that other balance sheet
assets (excluding amortizing assets) and liabilities of your partnership are
sold at their book value, and that the net proceeds of sale are allocated to
your partners in accordance with your partnership's agreement of limited
partnership.
The liquidation analysis assumes that the assets of your
partnership are sold in a single transaction. Should the assets be liquidated
over time, even at prices equal to those projected, distributions to limited
partners from cash flow from operations might be reduced because your
partnership's fixed costs, such as general and administrative expenses, are not
proportionately reduced with the liquidation of assets. However, for
simplification purposes, the sales of the assets are assumed to occur
concurrently. The liquidation analysis assumes that the assets are disposed of
in an orderly manner and are not sold in forced or distressed sales where
sellers might be expected to dispose of their interests at substantial discounts
to their actual fair market value.
GENERAL PARTNER'S ANNUAL ESTIMATES OF NET ASSET VALUE
Your general partner (which is our subsidiary) prepared an
estimate of your partnership's net asset value per unit in connection with an
offer to purchase up to 30% of the outstanding units commenced by an
unaffiliated party in 1996. That estimate of your partnership's net asset value
per unit as of 1996 was $101. This estimated net asset value is based on a
hypothetical sale of the partnership's properties and the joint venture's
property and the distribution to the limited partners and the general partner of
the gross proceeds of such sales, net of related indebtedness, together with the
cash, proceeds from temporary investments, and all other assets that are
believed to have liquidation value, after provision in full for all of the other
known liabilities of your partnership and the joint venture. This net asset
value does not take into account (i) timing considerations, (ii) costs
associated with winding up the partnership and the joint venture, or (iii) the
distribution paid by your partnership of 7.68 per unit for the fiscal year ended
December 31, 1998. Therefore, we believe that this estimate of net asset value
per unit does not necessarily represent either the fair market value of a unit
or the amount a limited partner reasonably could expect to receive if the
partnership's properties were sold and the partnership was liquidated. For this
reason, we considered this net asset value estimate to be less meaningful in
determining the offer price than the valuation analysis described above.
AFFILIATE'S ESTIMATE OF NET LIQUIDATION VALUE
An affiliate of your general partner which is now an affiliate
of ours, prepared an estimate of your partnership's net liquidation value per
unit in connection with a tender offer by an unaffiliated party to purchase
units for $68 each which closed in December 1997. That estimate of your
partnership's net liquidation value per unit as of December 1997 was $89.27.
This estimated net liquidation value is based on an income capitalization
approached similar to the one we used, adjusted for your partnership's other
assets and liabilities (excluding prepaid and deferred expenses and security
deposits). Four percent was then deducted from the resulting amount to cover the
estimated costs of selling the properties. This final amount was then divided by
the number of units outstanding to obtain the $86 per unit. While this value is
higher than our offer price per unit, because different income and
capitalization rates were used and we believe that the income capitalization
amounts used overstate the value of the properties.
ALLOCATION OF CONSIDERATION. We have allocated to the limited
partners the amount of the estimated net valuation of your partnership based on
your partnership's agreement of limited partnership as if your partnership was
being liquidated at the current time.
23
<PAGE> 27
SECTION 10. POSITION OF THE GENERAL PARTNER OF YOUR PARTNERSHIP WITH
RESPECT TO THE OFFER.
The general partner of your partnership believes the offer
price and the structure of the transaction are fair to the limited partners. In
making such determination, the general partner considered all of the factors and
information set forth below, but did not quantify or otherwise attach particular
weight to any such factors or information:
o The offer gives you an opportunity to make an
individual decision on whether to tender your units
or to continue to hold them.
o Our offer price, and the method we used to determine
our offer price.
o The fact that the price offered for your units is
based on an estimated value of your partnership's
properties that has been determined using a method
believed to reflect the valuation of such assets by
buyers in the market for similar assets.
o Prices at which the units have recently sold, to the
extent such information is available.
o The absence of an established trading market for your
units.
o An analysis of possible alternative transactions,
including liquidation and continuation without the
option of the offer.
o An evaluation of the financial condition and results
of operations of your partnership including the
increase/decrease in property income of your
partnership from $9,434,000 for the year ended
December 31, 1997 to $5,564,687 for the year ended
December 31, 1998.
The general partner of your partnership makes no
recommendation as to whether you should tender or refrain from tendering your
units. Although the general partner believes the offer is fair, you must make
your own decision whether or not to participate in the offer, based upon a
number of factors, including your financial position, your need or desire for
liquidity, other financial opportunities available to you, and your tax position
and the tax consequences to you of selling your units.
SECTION 11. CONFLICTS OF INTEREST AND TRANSACTIONS WITH AFFILIATES.
CONFLICTS OF INTEREST WITH RESPECT TO THE OFFER. The general
partner of your partnership became a majority-owned subsidiary of AIMCO on
October 1, 1998, when AIMCO merged with Insignia. Your general partner became a
wholly owned subsidiary of AIMCO on February 26, 1999 when IPT merged with
AIMCO. Accordingly, the general partner of your partnership has substantial
conflicts of interest with respect to the offer. The general partner of your
partnership has a fiduciary obligation to obtain a fair offer price for you,
even as a subsidiary of AIMCO. As a consequence of our ownership of units, we
may have incentives to seek to maximize the value of our ownership of units,
which in turn may result in a conflict for your general partner in attempting to
reconcile our interests with the interests of the other limited partners.
Additionally, we desire to purchase units at a low price and you desire to sell
units at a high price. The general partner of your partnership makes no
recommendation as to whether you should tender or refrain from tendering your
units. Such conflicts of interest in connection with the offer and the operation
of AIMCO differ from those conflicts of interest that currently exist for your
partnership. See "Risk Factors -- Conflicts of Interest With Respect to the
Offer." Your general partner has filed a Solicitation/Recommendation Statement
on Schedule 14D-9 with the SEC, which indicates that it is remaining neutral and
making no recommendation as to whether limited partners should tender their
units pursuant to the offer. LIMITED PARTNERS ARE URGED TO READ THIS OFFER TO
PURCHASE AND THE SCHEDULE 14D-9 AND THE RELATED MATERIALS CAREFULLY AND IN THEIR
ENTIRETY BEFORE DECIDING WHETHER TO TENDER THEIR UNITS.
CONFLICTS OF INTEREST THAT CURRENTLY EXIST FOR YOUR
PARTNERSHIP. We own both the general partner of your partnership and the
property manager of your partnership's residential property. The general partner
of your partnership received total fees and reimbursements of $237,00 in 1996,
$293,000 in 1997 and $282,000
24
<PAGE> 28
in 1998. The property manager for the residential property received management
fees of $95,000 in 1996, $108,000 in 1997 and $110,000 in 1998. We have no
current intention of changing the fee structure for your general partner or the
manager of your partnership's residential property.
COMPETITION AMONG PROPERTIES. Because AIMCO and your
partnership both invest in apartment properties, these properties may compete
with one another for tenants. Furthermore, you should bear in mind that AIMCO
may acquire properties in general market areas where your partnership properties
are located. It is believed that this concentration of properties in a general
market area will facilitate overall operations through collective advertising
efforts and other operational efficiencies. In managing AIMCO's properties, we
will attempt to reduce conflicts between competing properties by referring
prospective customers to the property considered to be most conveniently located
for the customer's needs.
FUTURE OFFERS. Although we have no current plans to conduct
future tender offers for your units, our plans may change based on future
circumstances. Any such future offers that we might make could be for
consideration that is more or less than the consideration we are currently
offering.
SECTION 12. FUTURE PLANS OF THE PURCHASER.
As described above under "The Offer -- Section 9. Background
and Reasons for the Offer," we own the general partner and thereby control the
management of your partnership. In addition, we own the manager of the
residential property. We currently intend that, upon consummation of the offer,
your partnership will continue its business and operations substantially as they
are currently being conducted. The offer is not expected to have any effect on
partnership operations.
Although we have no present intention to do so, we may acquire
additional units or sell units after completion or termination of the offer. Any
acquisition may be made through private purchases, through one or more future
tender or exchange offers, by merger, consolidation or by any other means deemed
advisable. Any acquisition may be at a price higher or lower than the price to
be paid for the units purchased pursuant to this offer, and may be for cash,
limited partnership interests in AIMCO Properties, L.P. or other consideration.
We also may consider selling some or all of the units we acquire pursuant to the
offer to persons not yet determined, which may include our affiliates. We may
also buy your partnership's properties, although we have no present intention to
do so. There can be no assurance, however, that we will initiate or complete, or
will cause your partnership to initiate or complete, any subsequent transaction
during any specific time period following the expiration of the offer or at all.
Except as set forth herein, we do not have any present plans
or proposals which relate to or would result in an extraordinary transaction,
such as a merger, reorganization or liquidation, involving your partnership or
any of your partnership's subsidiaries; a sale or transfer of a material amount
of your partnership's assets (or assets of the partnership's subsidiaries); any
changes in composition of your partnership's senior management or personnel or
their compensation; any changes in your partnership's present capitalization or
distribution policy; or any other material changes in your partnership's
structure or business. We or our affiliates may loan funds to your partnership
which may be secured by your partnership's properties. If any such loans are
made, upon default of such loans, the lender could seek to foreclose on the loan
and related mortgage or security interest. However, we expect that consistent
with your general partner's fiduciary obligations, the general partner will seek
and review opportunities (including opportunities identified by us) to engage in
transactions which could benefit your partnership, such as sales or refinancings
of assets or a combination of the partnership with one or more other entities,
with the objective of seeking to maximize returns to limited partners.
We have been advised that the possible future transactions the
general partner expects to consider on behalf of your partnership include: (1)
payment of extraordinary distributions; (2) refinancing, reducing or increasing
existing indebtedness of the partnership; (3) sales of assets, individually or
as part of a complete liquidation; and (4) mergers or other consolidation
transactions involving the partnership. Any such merger or consolidation
transaction could involve other limited partnerships in which your general
partner or its affiliates serve as general partners, or a combination of the
partnership with one or more existing, publicly traded entities
25
<PAGE> 29
(including, possibly, affiliates of AIMCO), in any of which limited partners
might receive cash, common stock or other securities or consideration. There is
no assurance, however, as to when or whether any of the transactions referred to
above might occur. If any such transaction is effected by the partnership and
financial benefits accrue to the limited partners of your partnership, we will
participate in those benefits to the extent of our ownership of units. The
agreement of limited partnership prohibits limited partners from voting on
actions taken by the partnership, unless otherwise specifically permitted
therein. Limited partners may vote on a liquidation, and if we are successful in
acquiring a substantial number of units pursuant to the offer, we will be able
to control the outcome of any such vote. Even if we acquire a lesser number of
units pursuant to the offer, however, because we currently own approximately
31.2% of the outstanding limited partnership units we will be able to
significantly influence the outcome of any such vote. Our primary objective in
seeking to acquire the units pursuant to the offer is not, however, to influence
the vote on any particular transaction, but rather to generate a profit on the
investment represented by those units.
SECTION 13. CERTAIN INFORMATION CONCERNING YOUR PARTNERSHIP.
GENERAL. Johnstown/Consolidated Income Partners was organized
on January 9, 1986, under the laws of the State of California. Its primary
business is real estate ownership and related operations. Your partnership was
formed for the purpose of making investments in various types of real properties
which offer potential capital appreciation and cash distributions to its limited
partners.
Your partnership's investment portfolio currently consists of
the following one residential property Cedar Brooke Apartments, a 158-unit
complex in Independence, Missouri. Your partnership also owns the following
commercial properties: Phoenix Business Campus, a 79,854 square foot property
located in Atlanta, Georgia, and Florida #11 Mini-Warehouse, a 64,240 square
foot storage center located in Davie, Florida.
The general partner of your partnership is ConCap Equities,
Inc., which is a wholly owned subsidiary of AIMCO. A wholly owned subsidiary of
AIMCO serves as manager of the residential property owned by your partnership.
As of December 31, 1998, there were 128,810 units issued and outstanding, which
were held of record by 2,185 limited partners. Your partnership's principal
executive offices are located at 1873 South Bellaire Street, 17th Floor, Denver,
Colorado 80222, and its telephone number at that address is (303) 757-8101.
For additional information about your partnership, please
refer to the annual report prepared by your partnership which was sent to you
prior to this offer to purchase, particularly Item 2 of Form 10-KSB which
contains detailed information regarding the properties owned, including
mortgages, rental rates and taxes.
INVESTMENT OBJECTIVES AND POLICIES; SALE OR FINANCING OF
INVESTMENTS. In general, your general partner (which is our subsidiary)
regularly evaluates the partnership's properties by considering various factors,
such as the partnership's financial position and real estate and capital markets
conditions. The general partner monitors the properties' specific locale and
sub-market conditions (including stability of the surrounding neighborhood)
evaluating current trends, competition, new construction and economic changes.
The general partner oversees each asset's operating performance and continuously
evaluates the physical improvement requirements. In addition, the financing
structure for each property (including any prepayment penalties), tax
implications, availability of attractive mortgage financing to a purchaser, and
the investment climate are all considered. Any of these factors, and possibly
others, could potentially contribute to any decision by the general partner to
sell, refinance, upgrade with capital improvements or hold a particular
partnership property. If rental market conditions improve, the level of
distributions might increase over time. It is possible that the private resale
market for properties could improve over time, making a sale of the
partnership's properties in a private transaction at some point in the future a
more viable option than it is currently. After taking into account the foregoing
considerations, your general partner is not currently seeking a sale of your
partnership's properties primarily because it expects the properties' operating
performance to improve in the near term. In making this assessment, your general
partner noted that occupancy and rental rates at the residential property were
in 1998 compared to 1997. In particular, the general partner noted that it
expects to spend approximately $615,000 for capital improvements at the
residential property in 1999 to repair and update the property's landscaping and
irrigation, parking lot and pool and exterior. Although there can be no
assurance as to future performance, however, these
26
<PAGE> 30
expenditures are expected to improve the desirability of the property to
tenants. The general partner does not believe that a sale of the residential
property at the present time would adequately reflect the property's future
prospects. Another significant factor considered by your general partner is the
likely tax consequences of a sale of the residential property for cash. Such a
transaction would likely result in tax liabilities for many limited partners.
The general partner has not received any recent indication of interest or offer
to purchase the residential property.
The general partner believes that the market for the sale of
commercial properties is strong at this time. Your partnership is currently
marketing its two commercial properties and has received one offer for such
properties.
ORIGINALLY ANTICIPATED TERM OF PARTNERSHIP. Your partnership's
prospectus, dated December 10, 1986, pursuant to which units in your partnership
were sold, indicated that your partnership was intended to be self-liquidating
and that it was anticipated that the partnership's properties would be sold
within 5 to 7 years of their acquisition, provided market conditions permit. The
prospectus also indicated that there could be no assurance that the partnership
would be able to so liquidate and that, unless sooner terminated as provided in
the partnership agreement, the existence of the partnership would continue until
the year 2017. The partnership currently owns one apartment property and two
commercial properties. Your general partner (which is our subsidiary)
continually considers whether a property should be sold or otherwise disposed of
after consideration of relevant factors, including prevailing economic
conditions, availability of favorable financing and tax considerations, with a
view to achieving maximum capital appreciation for your partnership. As noted
above, the general partner is currently marketing the commercial properties for
sale. We cannot predict when any of the properties will be sold or otherwise
disposed of. However, there is no current plan or intention to sell the
residential property in the near future.
Under your partnership's agreement of limited partnership, the
term of the partnership will continue until December 31, 2017, unless sooner
terminated as provided in the agreement or by law. Limited partners could, as an
alternative to tendering their units, take a variety of possible actions,
including voting to liquidate the partnership or amending the agreement of
limited partnership to authorize limited partners to cause the partnership to
merge with another entity or engage in a "roll-up" or similar transaction.
Your partnership has an ongoing program of capital
improvements, replacements and renovations, including roof replacements, kitchen
and bath renovations, balcony repairs (where applicable), replacement of various
building systems and other replacements and renovations in the ordinary course
of business. All capital improvement and renovation costs, which are budgeted at
$615,000 for 1999, are expected to be paid from operating cash flows, cash
reserves, or from short-term or long-term borrowings.
COMPETITION. There are other residential properties within the
market area of your partnership's property. The number and quality of
competitive properties in such an area could have a material effect on the
rental market for the apartments at your partnership's property and the rents
that may be charged for such apartments. While AIMCO is a significant factor in
the United States in the apartment industry, competition for apartments is
local. According to data published by the National Multi-Housing Council, as of
January 1, 1999 our portfolio of 373,409 owned or managed apartment units
represents approximately 2.2% of the national stock of rental apartments in
structures with at least five apartments.
FINANCIAL AND PROPERTY-RELATED DATA. The selected financial
information of your partnership set forth below for the years ended December
1998 and 1997 is based on audited financial statements. The selected financial
information set forth below for the six months ended June 30, 1999 is based on
unaudited financial statements. This information should be read in conjunction
with such financial statements, including notes thereto, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations of Your
Partnership" in the Annual Report on Form 10-KSB of your partnership for the
year ended December 31, 1998, and the Quarterly Report on Form 10-QSB for the
quarter ended June 30, 1999.
27
<PAGE> 31
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
(IN THOUSANDS, EXCEPT PER UNIT DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
---------------------- ------------------------
1998 1997 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
OPERATING DATA:
Total Revenues ............................... 2,676 2,687 1,279 1,494
Net Income (Loss) ............................ 639 541 258 470
Net Income per limited partnership unit ...... 4.91 4.16 1.98 3.61
Distributions per limited partnership unit ... 7.69 7.69 -- 7.69
<CAPTION>
DECEMBER 31, JUNE 30,
---------------------- ----------------------
1998 1997 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and Cash Equivalents .................... 1,754 2,770 2,163 1,729
Real Estate, Net of Accumulated
Depreciation ................................... 7,111 6,899 6,932 7,007
Total Assets ................................. 9,693 10,328 9,984 9,615
Notes Payable ................................ 2,325 2,325 2,325 2,325
General Partners' Capital (Deficit) .......... (175) (171) (172) (176)
Limited Partners' Capital (Deficit) .......... 7,310 7,667 7,565 7,142
Partners' Capital (Deficit) .................. 7,135 7,496 7,393 6,966
Total Distributions ..........................(1,000) (1,000) -- (1,000)
Net increase (decrease) in cash and
cash equivalents ............................(1,106) 1,187 409 (1,041)
Net cash provided by operating
activities .................................. 641 692 566 263
</TABLE>
DESCRIPTION OF PROPERTIES. The following shows the location, the date
of purchase, the nature of your partnership's ownership interest in and the use
of each of your partnership's properties.
<TABLE>
<CAPTION>
Date of
Property Purchase Type of Ownership Use
-------- -------- ----------------- ---
<S> <C> <C> <C>
Cedar Brooke Apartments,
Independence, Missouri................ 02/27/87 Fee ownership subject to first Apartment
Florida #11 Mini-Warehouse, mortgage 158 units
Davie, Florida........................ 10/15/90 Fee ownership Storage Center
Phoenix Business Campus, 64,240 sq. ft.
Atlanta, Georgia...................... 08/26/86 Fee ownership Office Building
79,854 sq. ft.
</TABLE>
28
<PAGE> 32
ACCUMULATED DEPRECIATION SCHEDULE. The following shows the gross
carrying value, accumulated depreciation and federal tax basis of each of your
partnership's properties as of December 31, 1998.
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
-------- -------------- ------------ ---------- ------ --------------
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Cedar Brooke Apartments............ $ 4,437 $ 2,749 5-19 years S/L $ 2,490
Florida #11 Mini-Warehouse......... 2,751 739 5-20 years S/L 2,302
Phoenix Business Campus............ 6,532 3,121 5-28 years S/L 2,743
-------------- ------------ --------------
$ 13,720 $ 6,609 $ 7,535
============== ============ ==============
</TABLE>
SCHEDULE OF MORTGAGES. The following shows certain information
regarding the outstanding mortgages encumbering each of your partnership's
properties as of December 31, 1998.
<TABLE>
<CAPTION>
Principal
Principal Stated Balance
Balance At Interest Period Maturity Due At
Property December 31, 1998 Rate Amortized Date Maturity
-------- ----------------- -------- --------- -------- --------------
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Cedar Brooke Apartments
1st Mortgage......................... $2,325 7.33% (1) 11/03 $2,325
</TABLE>
- ---------------------------
(1) Monthly payments of interest only at the stated rate until maturity.
AVERAGE ANNUAL RENTAL RATES AND OCCUPANCY. The following shows the
average annual rental rates and occupancy percentages for each of your
partnership's properties during the past two years.
<TABLE>
<CAPTION>
Average Annual Rental Rates Average Annual Occupancy
---------------------------- ------------------------
Property 1998 1997 1998 1997
-------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Cedar Brooke Apartments................ $6,486 $5,856 94% 97%
Phoenix Business Campus................ 71% 67%
Florida #11 Mini-Warehouse............. 97% 98%
</TABLE>
SCHEDULE OF REAL ESTATE TAXES AND RATES. The following shows the real
estate taxes and rates for 1998 for each of your partnership's properties.
<TABLE>
<CAPTION>
Property 1998 Billing 1998 Rate
-------- -------------- ---------
(in thousands)
<S> <C> <C>
Cedar Brooke Apartments $49,000 63.40%
Phoenix Business Campus 46,000 1.00%
Florida #1 Mini-Warehouse 71,000 2.50%
</TABLE>
PROPERTY MANAGEMENT. Your partnership's residential property is managed
by an entity which is a wholly owned subsidiary of AIMCO. Pursuant to the
management agreement between the property manager and your partnership, the
property manager operates your partnership's residential property, establishes
rental policies and rates
29
<PAGE> 33
and directs marketing activities. The property manager also is responsible for
maintenance, the purchase of equipment and supplies, and the selection and
engagement of all vendors, suppliers and independent contractors.
DISTRIBUTIONS. The following table shows, for each of the years
indicated, the distributions paid per unit for such years.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 AMOUNT
---------------------- -----------
<S> <C>
1995..................... $ 7.68
1996..................... 7.69
1997..................... 7.68
1998..................... 7.68
-----------
Total.......... $ 30.73
===========
</TABLE>
OPERATING BUDGETS OF THE PARTNERSHIP. A summary of the operating
budgets of your partnership's properties for the year ending on December 31,
1999 is as follows:
FISCAL 1999 OPERATING BUDGET
<TABLE>
<CAPTION>
OPERATING REPLACEMENT DEBT CAPITAL NET
PROPERTIES REVENUES EXPENSES RESERVES SERVICE EXPENDITURES CASH FLOW
- ---------- ---------- ---------- ----------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Cedar Brooke Apartments $1,028,850 $ (471,366) $ 59,256 (170,424) (377,280) $ 69,036
Florida #11 Mini-Warehouse 762,054 (301,332) -- -- (14,485) $ 446,237
</TABLE>
The above budget, at the time it was made, was forward-looking
information developed by the general partner of your partnership. Therefore, the
budget was dependent upon future events with respect to the ability of your
partnership to meet such budget. The budget incorporated various assumptions
including, but not limited to, lease revenue (including occupancy rates),
various operating expenses, general and administrative expenses, depreciation
expenses, capital expenditures, and working capital levels. While the general
partner deemed such budget to be reasonable and valid at the date made, there is
no assurance that the assumed facts will be validated or that the budgeted
results will actually occur. Any estimate of the future performance of a
business, such as your partnership's business, is forward-looking and based on
assumptions some of which inevitably will prove to be incorrect.
The budget amounts provided above are figures that were not computed in
accordance with GAAP. In particular, items that are categorized as capital
expenditures for purposes of preparing the operating budget are often
re-categorized as expenses when the financial statements are audited and
presented in accordance with GAAP. Therefore, the summary operating budget
presented for fiscal 1999 should not necessarily be considered as indicative of
what the audited operating results for fiscal 1999 will be.
BENEFICIAL OWNERSHIP OF INTERESTS IN YOUR PARTNERSHIP. Together with
our subsidiaries, we currently own, in the aggregate, approximately 31.2% your
partnership's limited partnership units. Except as set forth above, neither we,
nor, to the best of our knowledge, any of our affiliates, (i) beneficially own
or have a right to acquire any units, (ii) has effected any transactions in the
units in the past 60 days, or (iii) have 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 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.
COMPENSATION PAID TO THE GENERAL PARTNER AND ITS AFFILIATES. The
following table shows, for each of the years indicated, compensation paid to
your general partner and its affiliates on a historical basis.
30
<PAGE> 34
<TABLE>
<CAPTION>
PARTNERSHIP PROPERTY
FEES AND MANAGEMENT
YEAR EXPENSES FEES
---- -------- ----------
<S> <C> <C>
1995 $234,000 $ 115,000
1996 237,000 95,000
1997 293,000 108,000
1998 282,000 110,000
</TABLE>
LEGAL PROCEEDINGS. Your partnership may be a party to a variety of
legal proceedings related to its ownership of the partnership's properties,
arising in the ordinary course of the business, which are not expected to have a
material adverse effect on your partnership.
ADDITIONAL INFORMATION CONCERNING YOUR PARTNERSHIP. Your partnership
files annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document your partnership
files at the SEC's public reference rooms in Washington, D.C., New York, New
York, and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Your partnership's SEC filings are
also available to the public at the SEC's web site at http://www.sec.gov.
SECTION 14. VOTING POWER.
Decisions with respect to the day-to-day management of your partnership
are the responsibility of the general partner. Because the general partner of
your partnership is our affiliate, we control the management of your
partnership. Under your partnership's agreement of limited partnership, limited
partners holding a majority of the outstanding units must approve certain
extraordinary transactions, including the removal of the general partner, the
addition of a new general partner, most amendments to the partnership agreement
and the sale of all or substantially all of your partnership's assets. If we
acquire 24,269.5 additional units that we are offering to purchase, we will own
a majority of the outstanding units and will have the ability to control any
vote of the limited partners.
SECTION 15. SOURCE OF FUNDS.
We expect that approximately $7,625,921 will be required to purchase
any and all of the limited partnership units that we are seeking in this offer
(exclusive of fees and expenses estimated to be $10,000). For more information
regarding fees and expenses, see "The Offer -- Section 19. Fees and Expenses"
below.
Under our secured $300 million revolving credit facility with Bank of
America, BankBoston, N.A. and First Union National Bank, AIMCO Properties, L.P.
is the borrower and all obligations thereunder are guaranteed by AIMCO and
certain of its subsidiaries. The credit facility includes a swing line of up to
$30 million. The obligations under the credit facility are secured by AIMCO
Properties, L.P.'s pledge of its stock ownership in certain subsidiaries of
AIMCO as well as a pledge of its interests in notes issued by it to certain
subsidiaries of AIMCO. The annual interest rate under the credit facility is
based on either LIBOR or a base rate which is the higher of Bank of America's
reference rate or 0.5% over the federal funds rate, plus, in either case, an
applicable margin. The margin ranges between 2.05% and 2.55% in the case of
LIBOR-based loans and between 0.55% and 1.05% in the case of base rate loans,
based upon a fixed charge coverage ratio. The credit facility expires on July
31, 2001 unless extended at the discretion of AIMCO Properties, L.P., at which
time the revolving facility would be converted into a term loan for up to two
successive one-year periods. The financial covenants contained in the credit
facility require us to maintain a ratio of debt to gross asset value of no more
than 0.55 to 1.0, and an interest coverage ratio of 2.25 to 1.0, and a fixed
charge coverage ratio of at least 1.7 to 1.0 through September 31, 1999 and 1.75
to 1.0 thereafter. In addition, the credit facility limits us from distributing
more than 80% of our Funds From Operations (as defined) (or such amounts as may
be necessary for us to maintain our status as a REIT), imposes minimum net worth
requirements and provides other financial covenants related to certain of our
assets and obligations.
SECTION 16. DISSENTERS' RIGHTS.
Neither the agreement of limited partnership of your partnership nor
applicable law provides any right for you to have your units appraised or
redeemed in connection with, or as a result of, our offer. You have the
opportunity to make an individual decision on whether or not to tender your
units in the offer.
31
<PAGE> 35
SECTION 17. CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of our offer, we will not be
required to accept for payment and pay for any units tendered pursuant to our
offer, may postpone the purchase of, and payment for, units tendered, and may
terminate or amend our offer if at any time on or after the date of this offer
to purchase and at or before the expiration of our offer (including any
extension thereof), any of the following shall occur or may be reasonably
expected to occur:
(a) any change (or any condition, event or development involving a
prospective change) shall have occurred or been threatened in the business,
properties, assets, liabilities, indebtedness, capitalization, condition
(financial or otherwise), operations, licenses or franchises, management
contract, or results of operations or prospects of your partnership or local
markets in which your partnership owns property, including any fire, flood,
natural disaster, casualty loss, or act of God that, in our reasonable judgment,
are or may be materially adverse to your partnership or the value of the units
to us, or we shall have become aware of any facts relating to your partnership,
its indebtedness or its operations which, in our reasonable judgment, has or may
have material significance with respect to the value of your partnership or the
value of the units to us; or
(b) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange or
the over-the-counter market in the United States, (ii) a decline in the closing
price of a share of AIMCO's Class A Common Stock of more than 7.5% from the date
hereof, (iii) any extraordinary or material adverse change in the financial,
real estate or money markets or major equity security indices in the United
States such that there shall have occurred at least a 25 basis point increase in
LIBOR the price of the 10-year Treasury Bond or the 30-year Treasury Bond, or at
least a 7.5% decrease in the S&P 500 Index, the Morgan Stanley REIT Index, in
each case, from the date hereof, (iii) any material adverse change in the
commercial mortgage financing markets, (iv) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (not existing on the date hereof), (vi) a commencement of a war,
conflict, armed hostilities or other national or international calamity directly
or indirectly involving the United States (not existing on the date hereof),
(vii) any limitation (whether or not mandatory) by any governmental authority
on, or any other event which, in our reasonable judgment, might affect the
extension of credit by banks or other lending institutions, or (viii) in the
case of any of the foregoing existing at the time of the commencement of the
offer, in our reasonable judgment, a material acceleration or worsening thereof;
or
(c) there shall have been threatened, instituted or pending any action,
proceeding, application or counterclaim by any Federal, state, local or foreign
government, governmental authority or governmental agency, or by any other
person, before any governmental authority, court or regulatory or administrative
agency, authority or tribunal, which (i) challenges or seeks to challenge our
purchase of the units, restrains, prohibits or delays the making or consummation
of our offer, prohibits the performance of any of the contracts or other
arrangements entered into by us (or any affiliates of ours), seeks to obtain any
material amount of damages as a result of the transactions contemplated by our
offer, (ii) seeks to make the purchase of, or payment for, some or all of the
units pursuant to our offer illegal or results in a delay in our ability to
accept for payment or pay for some or all of the units, (iii) seeks to prohibit
or limit the ownership or operation by us or any of our affiliates of the entity
serving as general partner of the partnership or to remove such entity as
general partner of your partnership, or seeks to impose any material limitation
on our ability or the ability of any affiliate of ours to conduct your
partnership's business or own such assets, (iv) seeks to impose material
limitations on our ability to acquire or hold or to exercise full rights of
ownership of the units including, but not limited to, the right to vote the
units purchased by us on all matters properly presented to the limited partners,
or (v) might result, in our reasonable judgment, in a diminution in the value of
your partnership or a limitation of the benefits expected to be derived by us as
a result of the transactions contemplated by our offer or the value of the units
to us; or
(d) there shall be any action taken, or any statute, rule, regulation,
order or injunction shall be sought, proposed, enacted, promulgated, entered,
enforced or deemed applicable to our offer, your partnership, any general
partner of your partnership, us or any affiliate of ours or your partnership, or
any other action shall have been taken, proposed or threatened, by any
government, governmental authority or court, that, in our reasonable judgment,
might, directly or indirectly, result in any of the consequences referred to in
clauses (i) through (vi) of paragraph (c) above; or
32
<PAGE> 36
(e) your partnership shall have (i) changed, or authorized a change of,
the units or your partnership's capitalization, (ii) issued, distributed, sold
or pledged, or authorized, proposed or announced the issuance, distribution,
sale or pledge of (A) any equity interests (including, without limitation,
units), or securities convertible into any such equity interests or any rights,
warrants or options to acquire any such equity interests or convertible
securities, or (B) any other securities in respect of, in lieu of, or in
substitution for units outstanding on the date hereof, (iii) purchased or
otherwise acquired, or proposed or offered to purchase or otherwise acquire, any
outstanding units or other securities, (iv) declared or paid any dividend or
distribution on any units or issued, authorized, recommended or proposed the
issuance of any other distribution in respect of the units, whether payable in
cash, securities or other property, (v) authorized, recommended, proposed or
announced an agreement, or intention to enter into an agreement, with respect to
any merger, consolidation, liquidation or business combination, any acquisition
or disposition of a material amount of assets or securities, or any release or
relinquishment of any material contract rights, or any comparable event, not in
the ordinary course of business, (vi) taken any action to implement such a
transaction previously authorized, recommended, proposed or publicly announced,
(vii) issued, or announced its intention to issue, any debt securities, or
securities convertible into, or rights, warrants or options to acquire, any debt
securities, or incurred, or announced its intention to incur, any debt other
than in the ordinary course of business and consistent with past practice,
(viii) authorized, recommended or proposed, or entered into, any transaction
which, in our reasonable judgment, has or could have an adverse affect on the
value of your partnership or the units, (ix) proposed, adopted or authorized any
amendment of its organizational documents, (x) agreed in writing or otherwise to
take any of the foregoing actions or (xi) been notified that any debt of your
partnership or any of its subsidiaries secured by any of its or their assets is
in default or has been accelerated; or
(f) a tender or exchange offer for any units shall have been commenced
or publicly proposed to be made by another person or "group" (as defined in
Section 13(d)(3) of the Exchange Act), or it shall have been publicly disclosed
or we shall have otherwise learned that (i) any person or group shall have
acquired or proposed or be attempting to acquire beneficial ownership of more
than five percent of the units, or shall have been granted any option, warrant
or right, conditional or otherwise, to acquire beneficial ownership of more than
five percent of the units, other than acquisitions for bona fide arbitrage
purposes, or (ii) any person or group shall have entered into a definitive
agreement or an agreement in principle or made a proposal with respect to a
merger, consolidation or other business combination with or involving your
partnership; or
(g) we shall not have adequate cash or financing commitments available
to pay the for the units validly tendered; or
(h) the offer to purchase may have an adverse effect on AIMCO's status
as a REIT.
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
reasonable discretion. The failure by us at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to any particular facts or circumstances shall not
be deemed a waiver with respect to any other facts or circumstances and each
right shall be deemed a continuing right which may be asserted at any time and
from time to time.
SECTION 18. CERTAIN LEGAL MATTERS.
GENERAL. Except as set forth in this Section 18, we are not, based on
information provided by your general partner (which is our subsidiary), aware of
any licenses or regulatory permits that would be material to the business of
your partnership, taken as a whole, and that might be adversely affected by our
acquisition of units as contemplated herein, or any filings, approvals or other
actions by or with any domestic or foreign governmental authority or
administrative or regulatory agency that would be required prior to the
acquisition of units by us pursuant to the offer, other than the filing of a
Tender Offer Statement on Schedule 14D-1 with the SEC (which has already been
filed) and any required amendments thereto. While there is no present intent to
delay the purchase of units tendered pursuant to the 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 or its business, or that certain parts of its
business might not have to
33
<PAGE> 37
be disposed of or other substantial conditions complied with in order to obtain
such approval or action, any of which could cause us to elect to terminate the
offer without purchasing units thereunder. Our obligation to purchase and pay
for units is subject to certain conditions, including conditions related to the
legal matters discussed in this Section 18.
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 generally are not applicable to our offer.
STATE LAWS. 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, the offer
will not be made to (nor will tenders be accepted from or on behalf of)
unitholders residing in such jurisdiction. In those jurisdictions with
securities or blue sky laws that require the offer to be made by a licensed
broker or dealer, the offer shall be made on behalf of us, if at all, only by
one or more registered brokers or dealers licensed under the laws of that
jurisdiction.
SECTION 19. FEES AND EXPENSES.
Except as set forth in this Section 19, 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 River Oaks Partnership Services,
Inc. to act as Information Agent in connection with our offer. The Information
Agent may contact holders of units by mail, telephone, telex, telegraph and
personal interview and may request brokers, dealers and other nominee limited
partners to forward materials relating to the offer to beneficial owners of the
units. We will pay the Information Agent reasonable and customary compensation
for its services in connection with the offer, plus reimbursement for
out-of-pocket expenses, and will indemnify it against certain liabilities and
expenses in connection therewith, including liabilities under the Federal
securities laws. We will also pay all costs and expenses of printing and mailing
the offer and its legal fees and expenses.
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 Tender Offer Statement on Schedule
14D-1, pursuant to Section 14(d)(1) and 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
place and in the same manner as described in "The Offer -- Section 13" under
"Additional Information Concerning Your Partnership."
AIMCO PROPERTIES, L.P.
34
<PAGE> 38
ANNEX I
OFFICERS AND DIRECTORS
The names and positions of the executive officers of Apartment
Investment and Management Company ("AIMCO"), AIMCO-GP, Inc. ("AIMCO-GP") and the
directors of AIMCO are set forth below. The two directors of AIMCO-GP are Terry
Considine and Peter Kompaniez. The two directors of the general partner of your
partnership are Peter K. Kompaniez and Patrick J. Foye. The two executive
officers of the general partner of your partnership are Patrick J. Foye,
Executive Vice President, and Carla R. Stoner, Senior Vice President - Real
Estate Accounting. Unless otherwise indicated, the business address of each
executive officer and director is 1873 South Bellaire Street, 17th Floor,
Denver, Colorado 80222. Each executive officer and director is a citizen of the
United States of America.
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
Terry Considine.............................. Chairman of the Board of Directors and Chief Executive Officer
Peter K. Kompaniez........................... Vice Chairman, President and Director
Thomas W. Toomey............................. Executive Vice President -- Finance and Administration
Joel F. Bonder............................... Executive Vice President, General Counsel and Secretary
Patrick J. Foye.............................. Executive Vice President
Paul J. McAuliffe............................ Executive Vice President--Capital Markets and Chief Financial Officer
Steven D. Ira................................ Executive Vice President and Co-Founder
Harry G. Alcock.............................. Senior Vice President -- Acquisitions
Richard S. Ellwood........................... Director
J. Landis Martin............................. Director
Thomas L. Rhodes............................. Director
John D. Smith................................ Director
</TABLE>
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
Terry Considine................... Chief Executive Officer of AIMCO and
AIMCO-GP since July 1994. He is the sole
owner of Considine Investment Co. and prior
to July 1994 was owner of approximately 75%
of Property Asset Management, L.L.C.,
Limited Liability Company, a Colorado
limited liability company, and its related
entities (collectively, "PAM"), one of
AIMCO's predecessors. On October 1, 1996,
Mr. Considine was appointed Co-Chairman and
director of Asset Investors Corp. and
Commercial Asset Investors, Inc., two other
public real estate investment trusts, and
appointed as a director of Financial Assets
Management, LLC, a real estate investment
trust manager. Mr. Considine has been
involved as a principal in a variety of real
estate activities, including the
acquisition, renovation, development and
disposition of properties. Mr. Considine
has also controlled entities engaged in
other businesses such as television
broadcasting, gasoline distribution and
environmental laboratories. Mr. Considine
received a B.A. from Harvard College, a J.D.
from Harvard Law School and was formerly
admitted as a member of the Massachusetts
Bar (inactive).
</TABLE>
I-1
<PAGE> 39
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
Peter K. Kompaniez................ Mr. Kompaniez has been Vice Chairman and a
director of AIMCO since July 1994 and was
appointed President of AIMCO in July 1997.
Mr. Kompaniez has served as Vice President
of AIMCO-GP from July 1994 through July 1998
and was appointed President in July 1998.
Mr. Kompaniez has been a director of
AIMCO-GP since July 1994. Since September
1993, Mr. Kompaniez has owned 75% of PDI
Realty Enterprises, Inc., a Delaware
corporation ("PDI"), one of AIMCO's
predecessors, and serves as its President
and Chief Executive Officer. From 1986 to
1993, he served as President and Chief
Executive OFficer of Heron Financial
Corporation ("HFC"), a United States holding
company for Heron International, N.V.'s real
estate and related assets. While at HFC, Mr.
Kompaniez administered the acquisition,
development and disposition of approximately
8,150 apartment units (including 6,217 units
that have been acquired by the AIMCO) and
3.1 million square feet of commercial real
estate. Prior to joining HFC, Mr. Kompaniez
was a senior partner with the law firm of
Loeb and Loeb where he had extensive real
estate and REIT experience. Mr. Kompaniez
received a B.A. from Yale College and a J.D.
from the University of California (Boalt
Hall).
Thomas W. Toomey.................. Mr. Toomey has served as Senior Vice
President -- Finance and Administration of
AIMCO since January 1996 and was promoted to
Executive Vice-President -- Finance and
Administration in March 1997. Mr. Toomey has
been Executive Vice President -- Finance and
Administration of AIMCO-GP similar capacity
with Lincoln Property Company ("LPC") as
well as Vice President/Senior Controller and
Director of Administrative Services of
Lincoln Property Services where he was
responsible for LPC's computer systems,
accounting, tax, treasury services and
benefits administration. From 1984 to 1990,
he was an audit manager with Arthur Andersen
& Co. where he served real estate and
banking clients. From 1981 to 1983, Mr.
Toomey was on the audit staff of Kenneth
Leventhal & Company. Mr. Toomey received a
B.S. in Business Administration/Finance from
Oregon State University and is a Certified
Public Accountant.
Joel F. Bonder.................... Mr. Bonder has served as Executive Vice
President and General Counsel of AIMCO since
December 8, 1997. Mr. Bonder has been
Executive Vice President and General Counsel
of AIMCO-GP since July 1998. Prior to
joining AIMCO, Mr. Bonder served as Senior
Vice President and General Counsel of NHP
Incorporated from April 1994 until December
1997. Mr. Bonder served as Vice President
and Deputy General Counsel of NHP
Incorporated from June 1991 to March 1994
and as Associate General Counsel of NHP from
1986 to 1991. From 1983 to 1985, Mr. Bonder
was with the Washington, D.C. law firm of
Lane & Edson, P.C. From 1979 to 1983, Mr.
Bonder practiced with the Chicago law firm
of Ross and Hardies. Mr. Bonder received an
A.B. from the University of Rochester and a
J.D. from Washington University School of
Law.
</TABLE>
I-2
<PAGE> 40
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
Patrick J. Foye................... Mr. Foye has served as Executive Vice
President of AIMCO and AIMCO-GP since May
1998. Prior to joining AIMCO, Mr. Foye was a
partner in the law firm of Skadden, Arps,
Slate, Meagher & Flom LLP from 1989 to 1998
and was Managing Partner of the firm's
Brussels, Budapest and Moscow offices from
1992 through 1994. Mr. Foye is also Deputy
Chairman of the Long Island Power Authority
and serves as a member of the New York State
Privatization Council. He received a B.A.
from Fordham College and a J.D. from Fordham
University Law School.
Paul J. McAuliffe................. Mr. McAuliffe was appointed Executive Vice
President -- Capital Markets in February
1999, and Chief Financial Officer in October
1999. Prior to joining AIMCO, Mr. McAuliffe
was Senior Managing Director of Secured
Capital Corporation and prior to that time
had been a Managing Director of Smith
Barney, Inc. from 1993 to 1996, where he was
a key member of the underwriting team that
led AIMCO's initial public offering in 1994.
Mr. McAuliffe was also a Managing Director
and head of the real estate group at CS
First Boston from 1990 to 1993 and he was a
Principal in the real estate group at Morgan
Stanley & Co., Inc. from 1983 to 1990. Mr.
McAuliffe received a B.A. from Columbia
College and an MBA from University of
Virginia, Darden School.
Steven D. Ira..................... Mr. Ira is a Co-Founder of AIMCO and has
served as Executive Vice President of AIMCO
since July 1994. Mr. Ira has been Executive
Vice President of AIMCO-GP since July 1998.
From 1987 until July 1994, he served as
President of PAM. Prior to merging his firm
with PAM in 1987, Mr. Ira acquired extensive
experience in property management. Between
1977 and 1981 he supervised the property
management of over 3,000 apartment and
mobile home units in Colorado, Michigan,
Pennsylvania and Florida, and in 1981 he
joined with others to form the property
management firm of McDermott, Stein and Ira.
Mr. Ira served for several years on the
National Apartment Manager Accreditation
Board and is a former president of both the
National Apartment Association and the
Colorado Apartment Association. Mr. Ira is
the sixth individual elected to the Hall of
Fame of the National Apartment Association
in its 54-year history. He holds a Certified
Apartment Property Supervisor (CAPS) and a
Certified Apartment Manager designation
from the National Apartment Association, a
Certified Property Manager (CPM) designation
from the National Institute of Real Estate
Management (IREM) and he is a member of the
Board of Directors of the National
Multi-Housing Council, the National
Apartment Association and the Apartment
Association of Metro Denver. Mr. Ira
received a B.S. from Metropolitan State
College in 1975.
Harry G. Alcock................... Mr. Alcock has served as Vice President of
AIMCO and AIMCO-GP since July 1996, and was
promoted to Senior Vice President --
Acquisitions in October 1997, with
responsibility for acquisition and financing
activities since July 1994. From June 1992
until July 1994, Mr. Alcock served as Senior
Financial Analyst for PDI and HFC. From 1988
to 1992, Mr. Alcock worked for Larwin
Development Corp., a Los Angeles based real
estate developer, with responsibility for
raising debt and joint venture equity to
fund land acquisitions and development. From
1987 to 1988, Mr. Alcock worked for Ford
Aerospace Corp. He received his B.S. from
San Jose State University.
</TABLE>
I-3
<PAGE> 41
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
Richard S. Ellwood................ Mr. Ellwood was appointed a Director of
12 Auldwood Lane AIMCO in July 1994 and is currently Chairman
Rumson, NJ 07660 of the Audit Committee. Mr. Ellwood is the
founder and President of R.S. Ellwood & Co.,
Incorporated, a real estate investment
banking firm. Prior to forming R.S. Ellwood
& Co., Incorporated in 1987, Mr. Ellwood had
31 years experience on Wall Street as an
investment banker, serving as: Managing
Director and senior banker at Merrill Lynch
Capital Markets from 1984 to 1987; Managing
Director at Warburg Paribas Becker from 1978
to 1984; general partner and then Senior
Vice President and a director at White, Weld
& Co. from 1968 to 1978; and in various
capacities at J.P. Morgan & Co. from 1955 to
1968. Mr. Ellwood currently serves as a
director of FelCor Suite Hotels, Inc. and
Florida East Coast Industries, Inc.
J. Landis Martin.................. Mr. Martin was appointed a Director of AIMCO
199 Broadway in July 1994 and became Chairman of the
Suite 4300 Compensation Committee in March 1998. Mr.
Denver, CO 80202 Martin has served as President and Chief
Executive Officer and a Director of NL
Industries, Inc., a manufacturer of titanium
dioxide, since 1987. Mr. Martin has served
as Chairman of Tremont Corporation, a
holding company operating through its
affiliates Titanium Metals Corporation
("TIMET") and NL Industries, Inc., since
1990 and as Chief Executive Officer and a
director of Tremont since 1998. Mr. Martin
has served as Chairman of Timet, an
integrated producer of titanium, since 1987
and Chief Executive Officer since January
1995. From 1990 until its acquisition by
Dresser Industries, Inc. ("Dresser") in
1994, Mr. Martin served as Chairman of the
Board and Chief Executive Officer of Baroid
Corporation, an oilfield services company.
In addition to Tremont, NL and TIMET, Mr.
Martin is a director of Dresser, which is
engaged in the petroleum services,
hydrocarbon and engineering industries.
Carla R. Stoner................... Ms. Stoner joined AIMCO in July 1997 as Vice
President of Finance and Administration and
became Senior Vice President - Real Estate
Accounting in November 1998. Prior to
joining AIMCO, Ms. Stoner was with National
Housing Partners since 1989. While at
National Housing Partners, Ms. Stoner served
as a real estate controller from 1989 to
1992, as Vice President of Accounting from
1992 to 1995 and as Interim Chief
Information Officer from 1995 to July 1997.
Prior to joining National Housing Partners,
Ms. Stoner was a Senior Auditor with
Deloitte & Touche from 1984 to 1989. Ms.
Stoner received a B.A. in accounting from
Virginia Tech.
</TABLE>
I-4
<PAGE> 42
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
Thomas L. Rhodes.................. Mr. Rhodes was appointed a Director of AIMCO
215 Lexington Avenue in July 1994. Mr. Rhodes has served as the
4th Floor President and a Director of National Review
New York, NY 10016 magazine since November 30, 1992, where he
has also served as a Director since 1998.
From 1976 to 1992 , he held various
positions at Goldman, Sachs & Co. and was
elected a General Partner in 1986 and served
as a General Partner from 1987 until
November 27, 1992. He is currently
Co-Chairman of the Board , Co-Chief
Executive Officer and a Director of
Commercial Assets Inc. and Asset Investors
Corporation. He also serves as a Director of
Delphi Financial Group, Inc. and its
subsidiaries, Delphi International Ltd.,
Oracle Reinsurance Company, and the Lynde
and Harry Bradley Foundation. Mr. Rhodes is
Chairman of the Empire Foundation for Policy
Research, a Founder and Trustee of Change
NY, a Trustee of The Heritage Foundation,
and a Trustee of the Manhattan Institute.
John D. Smith..................... Mr. Smith was appointed a Director of AIMCO
3400 Peachtree Road in November 1994. Mr. Smith is Principal and
Suite 8311994 President of John D. Smith Developments. Mr.
Atlanta, GA 30326 Smith has been a shopping center developer,
owner and consultant for over 8.6 million
square feet of shopping center projects
including Lenox Square in Atlanta, Georgia.
Mr. Smith is a Trustee and former President
of the International Council of Shop ping
Centers and was selected to be a member of
the American Society of Real Estate
Counselors. Mr. Smith served as a Director
for Pan-American Properties, Inc. (National
Coal Board of Great Britain) formerly known
as Continental Illinois Properties. He also
serves as a director of American Fidelity
Assurance Companies and is retained as an
advisor by Shop System Study Society, Tokyo,
Japan.
</TABLE>
I-5
<PAGE> 43
The letter of transmittal and any other required documents should be
sent or delivered by each unitholder or such unitholder's broker, dealer, bank,
trust company or other nominee to the Information Agent at one of its addresses
set forth below.
THE INFORMATION AGENT FOR THE OFFER IS:
RIVER OAKS PARTNERSHIP SERVICES, INC.
<TABLE>
<CAPTION>
By Mail: By Overnight Courier: By Hand:
<S> <C> <C>
P.O. Box 2065 111 Commerce Road 111 Commerce Road
S. Hackensack, N.J. 07606-2065 Carlstadt, N.J. 07072 Carlstadt, N.J. 07072
Attn.: Reorganization Dept. Attn.: Reorganization Dept.
</TABLE>
For information, please call:
TOLL FREE: (888) 349-2005
<PAGE> 1
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER UNITS OF LIMITED PARTNERSHIP IN
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS (THE "PARTNERSHIP")
PURSUANT TO AN OFFER TO PURCHASE
DATED OCTOBER 25, 1999 (THE "OFFER DATE")
BY
AIMCO PROPERTIES, L.P.
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT MIDNIGHT, NEW YORK TIME,
ON NOVEMBER 22, 1999, UNLESS EXTENDED (THE "EXPIRATION DATE")
- -------------------------------------------------------------------------------
WE ARE OFFERING TO PURCHASE UNITS IN YOUR PARTNERSHIP FOR $86 PER UNIT.
The Information Agent for the offer is:
RIVER OAKS PARTNERSHIP SERVICES, INC.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
P.O. Box 2065 111 Commerce Road 111 Commerce Road
S. Hackensack, N.J. 07606-2065 Carlstadt, N.J. 07072 Carlstadt, N.J. 07072
Attn.: Reorganization Dept. Attn.: Reorganization Dept.
By Telephone:
TOLL FREE (888) 349-2005
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF UNITS TENDERED
- ------------------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s) (Please indicate Units in Johnstown/Consolidated Income Partners
changes or corrections to the name, address and tax
identification number printed below.)
- ------------------------------------------------------------------------------------------------------------------------
1. Total Number of Units 2. Total Number of Units
Owned Tendered
(#) (#)
------------------------ -------------------------
<S> <C> <C>
[ ] Check box if the units have been tendered in another tender offer.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
To participate in the offer, you must send a duly completed and executed copy
of this Letter of Transmittal and any other documents required by this Letter
of Transmittal so that such documents are received by River Oaks Partnership
Services, Inc., the Information Agent, on or prior to the Expiration Date,
unless extended. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT YOUR OPTION AND RISK, AND DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE INFORMATION AGENT. IF DELIVERY
IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
DELIVERY OF THIS LETTER OF TRANSMITTAL OR ANY OTHER REQUIRED DOCUMENTS TO AN
ADDRESS OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE VALID DELIVERY.
--------------------------
IF YOU HAVE THE CERTIFICATE ORIGINALLY ISSUED TO REPRESENT YOUR
INTEREST IN THE PARTNERSHIP PLEASE SEND IT TO THE INFORMATION
AGENT WITH THIS LETTER OF TRANSMITTAL.
---------------------------
FOR INFORMATION OR ASSISTANCE IN CONNECTION WITH THE OFFER OR THE
COMPLETION OF THIS LETTER OF TRANSMITTAL, PLEASE CONTACT THE INFORMATION AGENT
AT (888) 349-2005 (TOLL FREE).
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE
READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 2, 4 AND 9)
To be completed ONLY if the consideration for the purchase price of
Units accepted for payment is to be issued in the name of someone other than
the undersigned.
[ ] Issue consideration to:
Name
-------------------------------------------------------------------------
(Please Type or Print)
Address
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Include Zip Code)
- -------------------------------------------------------------------------------
(Tax Identification or Social Security No.)
(See Substitute Form W-9)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 2, 4 AND 9)
To be completed ONLY if the consideration for the purchase price of
Units accepted for payment is to be sent to someone other than the undersigned
or to the undersigned at an address other than that shown above.
[ ] Mail consideration to:
Name
-------------------------------------------------------------------------
(Please Type or Print)
Address
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Include Zip Code)
- -------------------------------------------------------------------------------
NOTE: SIGANTURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
2
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby acknowledges that he or she has received and
reviewed (i) the Purchaser's Offer to Purchase relating to the offer by AIMCO
Properties, L.P. (the "Purchaser") to purchase Limited Partnership Interests
(the "Units") in the Partnership and (ii) this Letter of Transmittal and the
Instructions hereto, as each may be supplemented or amended from time to time
(collectively, the "Offer").
Upon the terms and subject to the conditions set forth in the Offer to
Purchase, and this Letter of Transmittal, the undersigned hereby tenders to the
Purchaser the Units set forth in the box above entitled "Description of Units
Tendered," including all interests in any limited partnership represented by
such units (collectively, the "Units"), at the price indicated on the Offer to
Purchase, less the amount of distributions, if any, made by the Partnership
from the Offer Date until the Expiration Date (the "Offer Price"), net to the
undersigned in cash, without interest.
Subject to and effective upon acceptance for payment of any of the Units
tendered hereby in accordance with the terms of the Offer, the undersigned
hereby irrevocably sells, assigns, transfers, conveys and delivers to, or upon
the order of, the Purchaser all right, title and interest in and to such Units
tendered hereby that are accepted for payment pursuant to the Offer, including,
without limitation, (i) all of the undersigned's interest in the capital of the
Partnership, and the undersigned's interest in all profits, losses and
distributions of any kind to which the undersigned shall at any time be
entitled in respect of the Units, including, without limitation, distributions
in the ordinary course, distributions from sales of assets, distributions upon
liquidation, winding-up, or dissolution, payments in settlement of existing or
future litigation, and all other distributions and payments from and after the
expiration date of the Offer, in respect of the Units tendered by the
undersigned and accepted for payment and thereby purchased by the Purchaser;
(ii) all other payments, if any, due or to become due to the undersigned in
respect of the Units, under or arising out of the agreement of limited
partnership of the Partnership (the "Partnership Agreement"), or any agreement
pursuant to which the Units were sold (the "Purchase Agreement"), whether as
contractual obligations, damages, insurance proceeds, condemnation awards or
otherwise; (iii) all of the undersigned's claims, rights, powers, privileges,
authority, options, security interests, liens and remedies, if any, under or
arising out of the Partnership Agreement or Purchase Agreement or the
undersigned's ownership of the Units, including, without limitation, all voting
rights, rights of first offer, first refusal or similar rights, and rights to
be substituted as a limited partner of the Partnership; and (iv) all present
and future claims, if any, of the undersigned against the Partnership, the
other partners of the Partnership, or the general partner and its affiliates,
including the Purchaser, under or arising out of the Partnership Agreement, the
Purchase Agreement, the undersigned's status as a limited partner, or the terms
or conditions of the Offer, for monies loaned or advanced, for services
rendered, for the management of the Partnership or otherwise.
The undersigned hereby irrevocably constitutes and appoints the Purchaser
and any designees of the Purchaser as the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Units, with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to vote or act in such manner as any such attorney
and proxy or substitute shall, in its sole discretion, deem proper with respect
to such Units, to do all such acts and things necessary or expedient to deliver
such Units and transfer ownership of such Units on the partnership books
maintained by the general partner of the Partnership, together with all
accompanying evidence of transfer and authenticity to, or upon the order of,
the Purchaser, to sign any and all documents necessary to authorize the
transfer of the Units to the Purchaser including, without limitation, the
"Transferor's (Seller's) Application for Transfer" created by the National
Association of Securities Dealers, Inc., if required, and upon receipt by the
Information Agent (as the undersigned's agent) of the Offer Price, to become a
substitute limited partner, to receive any and all distributions made by the
Partnership from and after the Expiration Date of the Offer (regardless of the
record date for any such distribution), and to receive all benefits and
otherwise exercise all rights of beneficial ownership of such Units, all in
accordance with the terms of the Offer. This appointment is effective upon the
purchase of the Units by the Purchaser as provided in the Offer and shall be
irrevocable for a period of ten years following the termination of the Offer.
Upon the purchase of Units pursuant to the Offer, all prior proxies and
consents given by the undersigned with respect to such Units will be revoked
and no subsequent proxies or consents may be given (and if given will not be
deemed effective).
3
<PAGE> 4
In addition to and without limiting the generality of the foregoing, the
undersigned hereby irrevocably (i) requests and authorizes (subject to and
effective upon acceptance for payment of any Unit tendered hereby) the
Partnership and its general partners to take any and all actions as may be
required to effect the transfer of the undersigned's Units to the Purchaser (or
its designee) and to admit the Purchaser as a substitute limited partner in the
Partnership under the terms of the Partnership Agreement; (ii) empowers the
Purchaser and its agent to execute and deliver to each general partner a change
of address form instructing the general partner to send any and all future
distributions to the address specified in the form, and to endorse any check
payable to or upon the order of such unitholder representing a distribution to
which the Purchaser is entitled pursuant to the terms of the offer, in each
case, in the name and on behalf of the tendering unitholder; (iii) agrees not
to exercise any rights pertaining to the Units without the prior consent of the
Purchaser; and (iv) requests and consents to the transfer of the Units, to be
effective on the books and records of the Partnership as of the Offer Date.
The undersigned irrevocably constitutes and appoints the Purchaser and any
designees of the Purchaser as the true and lawful agent and attorney-in-fact of
the undersigned with respect to such Units, with full power of substitution
(such power of attorney being deemed to be an irrevocable power coupled with an
interest), to withdraw any or all of such Units that have been previously
tendered in response to any tender or exchange offer provided that the price
per unit being offered by the Purchaser is equal to or higher than the price
per unit being offered in the other tender or exchange offer. This appointment
is effective immediately and shall continue to be effective unless and until
such Units are withdrawn from the Offer by the undersigned prior to the
Expiration Date.
NOTWITHSTANDING ANY PROVISION IN A PARTNERSHIP AGREEMENT OR ANY PURCHASE
AGREEMENT TO THE CONTRARY, THE UNDERSIGNED HEREBY DIRECTS EACH GENERAL PARTNER
OF THE PARTNERSHIP TO MAKE ALL DISTRIBUTIONS AFTER THE PURCHASER ACCEPTS THE
TENDERED UNITS FOR PAYMENT TO THE PURCHASER OR ITS DESIGNEE. Subject to and
effective upon acceptance for payment of any Unit tendered hereby, the
undersigned hereby requests that the Purchaser be admitted to the Partnership
as a substitute limited partner under the terms of the Partnership Agreement.
Upon request, the undersigned will execute and deliver additional documents
deemed by the Information Agent or the Purchaser to be necessary or desirable
to complete the assignment, transfer and purchase of Units tendered hereby and
will hold any distributions received from the Partnership after the Expiration
Date in trust for the benefit of the Purchaser and, if necessary, will promptly
forward to the Purchaser any such distributions immediately upon receipt. The
Purchaser reserves the right to transfer or assign, in whole or in part, from
time to time, to one or more of its affiliates, the right to purchase Units
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve the Purchaser of its obligations under the Offer or prejudice the
rights of tendering unitholders to receive payment for Units validly tendered
and accepted for payment pursuant to the Offer.
By executing this Letter of Transmittal, the undersigned represents that
either (i) the undersigned is not a plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 4975
of the Internal Revenue Code of 1986, as amended (the "Code"), or an entity
deemed to hold "plan assets" within the meaning of 29 C.F.R. Section 2510.3-101
of any such plan, or (ii) the tender and acceptance of Units pursuant to the
Offer will not result in a nonexempt prohibited transaction under Section 406
of ERISA or Section 4975 of the Code.
The undersigned understands that a tender of Units to the Purchaser will
constitute a binding agreement between the undersigned and the Purchaser upon
the terms and subject to the conditions of the Offer. The undersigned
recognizes that under certain circumstances set forth in the Offer, the
Purchaser may not be required to accept for payment any of the Units tendered
hereby. In such event, the undersigned understands that any Letter of
Transmittal for Units not accepted for payment may be destroyed by the
Purchaser (or its agent). EXCEPT AS STATED IN THE OFFER, THIS TENDER IS
IRREVOCABLE, PROVIDED THAT UNITS TENDERED PURSUANT TO THE OFFER MAY BE
WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE, OR UNLESS ALREADY ACCEPTED
FOR PAYMENT, ANY TIME AFTER 60 DAYS FROM THE OFFER DATE.
THE UNDERSIGNED HAS BEEN ADVISED THAT THE PURCHASER IS AN AFFILIATE OF THE
GENERAL PARTNER OF THE PARTNERSHIP AND NO SUCH GENERAL PARTNER MAKES ANY
RECOMMENDATION AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING UNITS IN THE
OFFER. THE UNDERSIGNED HAS MADE HIS OR HER OWN DECISION TO TENDER UNITS.
4
<PAGE> 5
The undersigned hereby represents and warrants for the benefit of the
Partnership and the Purchaser that the undersigned owns the Units tendered
hereby and has full power and authority and has taken all necessary action to
validly tender, sell, assign, transfer, convey and deliver the Units tendered
hereby and that when the same 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 claims and that the transfer and
assignment contemplated herein are in compliance with all applicable laws and
regulations.
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, trustees in
bankruptcy, legal representatives, and successors and assigns of the
undersigned.
The undersigned further represents and warrants that, to the extent a
certificate evidencing the Units tendered hereby (the "original certificate")
is not delivered by the undersigned together with this Letter of Transmittal,
(i) the undersigned represents and warrants to the Purchaser that the
undersigned has not sold, transferred, conveyed, assigned, pledged, deposited
or otherwise disposed of any portion of the Units, (ii) the undersigned has
caused a diligent search of its records to be taken and has been unable to
locate the original certificate, (iii) if the undersigned shall find or recover
the original certificate evidencing the Units, the undersigned will immediately
and without consideration surrender it to the Purchaser; and (iv) the
undersigned shall at all times indemnify, defend, and save harmless the
Purchaser and the Partnership, its successors, and its assigns from and against
any and all claims, actions, and suits whether groundless or otherwise, and
from and against any and all liabilities, losses, damages, judgments, costs,
charges, counsel fees, and other expenses of every nature and character by
reason of honoring or refusing to honor the original certificate when presented
by or on behalf of a holder in due course of a holder appearing to or believed
by the partnership to be such, or by issuance or delivery of a replacement
certificate, or the making of any payment, delivery, or credit in respect of
the original certificate without surrender thereof, or in respect of the
replacement certificate.
5
<PAGE> 6
===============================================================================
SIGNATURE BOX
(SEE INSTRUCTION 2)
- -------------------------------------------------------------------------------
Please sign exactly as your name is printed on the front of this Letter of
Transmittal. For joint owners, each joint owner must sign. (See Instruction 2).
TRUSTEES, EXECUTORS, ADMINISTRATORS, GUARDIANS, ATTORNEYS-IN-FACT, OFFICERS
OF A CORPORATION OR OTHER PERSONS ACTING IN A FIDUCIARY OR REPRESENTATIVE
CAPACITY, PLEASE COMPLETE THIS BOX AND SEE INSTRUCTION 2.
The signatory hereto hereby tenders the Units indicated in this Letter of
Transmittal to the Purchaser pursuant to the terms of the Offer, and certifies
under penalties of perjury that the statements in Box A, Box B and, if
applicable, Box C and Box D are true.
X
-------------------------------------------------------------------------
(Signature of Owner)
X
-------------------------------------------------------------------------
(Signature of Joint Owner)
Name and Capacity (if other than individuals:
-----------------------------
Title:
--------------------------------------------------------------------
Address:
--------------------------------------------------------------------
---------------------------------------------------------------------------
(City) (State) (Zip)
Area Code and Telephone No. (Day):
-----------------------------------------
(Evening):
--------------------------------------
SIGNATURE GUARANTEE (IF REQUIRED)
(SEE INSTRUCTION 2)
Name and Address of Eligible Institution:
---------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Authorized Signature: X
----------------------------------------------------
Name:
---------------------------------------------------------------------
Title: Date:
----------------------------------------------- -------------
===============================================================================
6
<PAGE> 7
TAX CERTIFICATIONS
(See Instruction 4)
By signing the Letter of Transmittal in the Signature Box, the
unitholder certifies as true under penalty of perjury, the representations in
Boxes A, B and C below. Please refer to the attached Instructions for
completing this Letter of Transmittal and Boxes A, B and C below.
===============================================================================
BOX A
SUBSTITUTE FORM W-9
(SEE INSTRUCTION 4 - BOX A)
- -------------------------------------------------------------------------------
The unitholder hereby certifies the following to the Purchaser under
penalties of perjury:
(i) The Taxpayer Identification No. ("TIN") printed (or corrected) on
the front of this Letter of Transmittal is the correct TIN of the unitholder,
unless the Units are held in an Individual Retirement Account ("IRA"); or if
this box [ ] is checked, the unitholder has applied for a TIN. If the
unitholder has applied for a TIN, a TIN has not been issued to the unitholder,
and either (a) the unitholder has mailed or delivered an application to receive
a TIN to the appropriate IRS Center or Social Security Administration Office,
or (b) the unitholder intends to mail or deliver an application in the near
future (it being understood that if the unitholder does not provide a TIN to
the Purchaser, 31% of all reportable payments made to the unitholder will be
withheld); and
(ii) Unless this box [ ] is checked, the unitholder is not subject to
backup withholding either because the unitholder: (a) is exempt from backup
withholding; (b) has not been notified by the IRS that the unitholder is
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 unitholder is no
longer subject to backup withholding.
Note: Place an "X" in the box in (ii) above, only if you are unable to certify
that the unitholder is not subject to backup withholding.
===============================================================================
===============================================================================
BOX B
FIRPTA AFFIDAVIT
(SEE INSTRUCTION 4 - BOX B)
- -------------------------------------------------------------------------------
Under Section 1445(e)(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 interests plus 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 unitholder's Units 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 unitholder, 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 unitholder's U.S. social security number (for individuals) or
employer identification number (for non-individuals) is correct as furnished in
the blank provided for that purpose on the front of the Letter of Transmittal;
(iii) The unitholder's home address (for individuals), or office
address (for non-individuals), is correctly printed (or corrected) on the front
of this Letter of Transmittal.
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 - BOX C)
- -------------------------------------------------------------------------------
By checking this box [ ], the person signing this Letter of Transmittal
hereby certifies under penalties of perjury that the unitholder is an "exempt
foreign person" for purposes of the Backup Withholding rules under the U.S.
Federal income tax laws, because the unitholder has the following
characteristics:
(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.
===============================================================================
7
<PAGE> 8
INSTRUCTIONS
FOR COMPLETING LETTER OF TRANSMITTAL
1. REQUIREMENTS OF TENDER. To be effective, a duly completed and signed
Letter of Transmittal (or facsimile thereof) and any other required
documents must be received by the Information Agent at one of its
addresses (or its facsimile number) set forth herein before 5:00 p.m.,
New York Time, on the Expiration Date, unless extended. To ensure
receipt of the Letter of Transmittal and any other required documents,
it is suggested that you use overnight courier delivery or, if the
Letter of Transmittal and any other required documents are to be
delivered by United States mail, that you use certified or registered
mail, return receipt requested.
Our records indicate that the undersigned owns the number of Units
set forth in the box above entitled "Description of Units Tendered"
under the column entitled "Total Number of Units Owned." If you
would like to tender only a portion of your Units, please so
indicate in the space provided in the box above entitled
"Description of Units Tendered."
WHEN TENDERING, YOU MUST SEND ALL PAGES OF THE LETTER OF TRANSMITTAL,
INCLUDING TAX CERTIFICATIONS (BOXES A, B, AND C).
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING UNITHOLDER
AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
INFORMATION AGENT. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ASSURE TIMELY DELIVERY.
2. SIGNATURE REQUIREMENTS.
INDIVIDUAL AND JOINT OWNERS -- After carefully reading and completing
the Letter of Transmittal, to tender Units, unitholders must sign at the
"X" in the Signature Box of the Letter of Transmittal. The signature(s)
must correspond exactly with the names printed (or corrected) on the
front of the Letter of Transmittal. If the Letter of Transmittal is
signed by the unitholder (or beneficial owner in the case of an IRA), no
signature guarantee on the Letter of Transmittal is required. If any
tendered Units are registered in the names of two or more joint owners,
all such owners must sign this Letter of Transmittal.
IRAS/ELIGIBLE INSTITUTIONS -- For Units held in an IRA account, the
beneficial owner should sign in the Signature Box and no signature
guarantee is required. Similarly, if Units are tendered for the account
of a member firm of a registered national security exchange, a member
firm 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 signature guarantee
is required.
TRUSTEES, CORPORATIONS, PARTNERSHIP AND FIDUCIARIES -- Trustees,
executors, administrators, guardians, attorneys-in-fact, officers of a
corporation, authorized partners of a partnership or other persons
acting in a fiduciary or representative capacity must sign at the "X" in
the Signature Box and have their signatures guaranteed by an Eligible
Institution by completing the signature guarantee set forth in the
Signature Box of the Letter of Transmittal. If the Letter of Transmittal
is signed by trustees, administrators, guardians, attorneys-in-fact,
officers of a corporation, authorized partners of a partnership or
others acting in a fiduciary or representative capacity, such persons
should, in addition to having their signatures guaranteed, indicate
their title in the Signature Box and must submit proper evidence
satisfactory to the Purchaser of their authority to so act (see
Instruction 3 below).
3. DOCUMENTATION REQUIREMENTS. In addition to the information required to
be completed on the Letter of Transmittal, additional documentation may
be required by the Purchaser under certain circumstances including, but
not limited to, those listed below. Questions on documentation should be
directed to the Information Agent at its telephone number set forth
herein.
DECEASED OWNER (JOINT TENANT) -- Copy of death certificate.
8
<PAGE> 9
DECEASED OWNER (OTHERS) -- Copy of death certificate
(see also
Executor/Administrator/
Guardian below).
EXECUTOR/ADMINISTRATOR/GUARDIAN -- Copy of court appointment
documents for executor or
administrator; and
(a) a copy of applicable
provisions of the will
(title page, executor(s)'
powers, asset
distribution); or
(b) estate distribution
documents.
ATTORNEY-IN-FACT -- Current power of
attorney.
CORPORATION/PARTNERSHIP -- Corporate resolution(s)
or other evidence of
authority to act.
Partnership should
furnish a copy of the
partnership agreement.
TRUST/PENSION PLANS -- Unless the trustee(s) are
named in the
registration, a copy of
the cover page of the
trust or pension plan,
along with a copy of the
section(s) setting forth
names and powers of
trustee(s) and any
amendments to such
sections or appointment
of successor trustee(s).
4. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If consideration is to be
issued in the name of a person other than the person signing the
Signature Box of the Letter of Transmittal or if consideration is to be
sent to someone other than such signer or to an address other than that
set forth on the Letter of Transmittal in the box entitled "Description
of Units Tendered," the appropriate boxes on the Letter of Transmittal
should be completed.
5. TAX CERTIFICATIONS. The unitholder(s) tendering Units to the Purchaser
pursuant to the Offer must furnish the Purchaser with the unitholder(s)'
taxpayer identification number ("TIN") and certify as true, under
penalties of perjury, the representations in Box A, Box B and, if
applicable, Box C. By signing the Signature Box, the unitholder(s)
certifies that the TIN as printed (or corrected) on this Letter of
Transmittal in the box entitled "Description of Units Tendered" and the
representations made in Box A, Box B and, if applicable, Box C, are
correct. See attached Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for guidance in determining
the proper TIN to give the Purchaser.
U.S. PERSONS. A unitholder that is a U.S. citizen or a resident alien
individual, a domestic corporation, a domestic partnership, a domestic
trust or a domestic estate (collectively, "U.S. Persons"), as those
terms are defined in the Code, should follow the instructions below with
respect to certifying Box A and Box B.
BOX A - SUBSTITUTE FORM W-9.
Part (i), Taxpayer Identification Number -- Tendering unitholders must
certify to the Purchaser that the TIN as printed (or corrected) on this
Letter of Transmittal in the box entitled "Description of Units
Tendered" is correct. If a correct TIN is not provided, penalties may be
imposed by the Internal Revenue Service (the "IRS"), in addition to the
unitholder being subject to backup withholding.
Part (ii), Backup Withholding -- In order to avoid 31% Federal income
tax backup withholding, the tendering unitholder must certify, under
penalty of perjury, that such unitholder is not subject to backup
withholding. Certain unitholders (including, among others, all
corporations and certain exempt non-profit organizations) 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. DO NOT CHECK THE BOX IN BOX A, PART (II), UNLESS
YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE SUBJECT TO BACKUP
WITHHOLDING.
When determining the TIN to be furnished, please refer to the following
as a guide:
Individual accounts - should reflect owner's TIN.
Joint accounts - should reflect the TIN of the owner whose name appears
first.
Trust accounts - should reflect the TIN assigned to the trust.
IRA custodial accounts - should reflect the TIN of the custodian (not
necessary to provide).
9
<PAGE> 10
Custodial accounts for the benefit of minors - should reflect the TIN of
the minor. Corporations, partnership or other business entities - should
reflect the TIN assigned to that entity.
By signing the Signature Box, the unitholder(s) certifies that the TIN
as printed (or corrected) on the front of the Letter of Transmittal is
correct.
BOX B - FIRPTA AFFIDAVIT -- Section 1445 of the Code requires that each
unitholder transferring interests in a partnership with real estate
assets meeting certain criteria certify under penalty of perjury the
representations made in Box B, or be subject to withholding of tax equal
to 10% of the purchase price for interests purchased. Tax withheld under
Section 1445 of the Code is not an additional tax. If withholding
results in an overpayment of tax, a refund may be obtained from the IRS.
PART (I) SHOULD BE CHECKED ONLY IF THE TENDERING UNITHOLDER IS NOT A
U.S. PERSON, AS DESCRIBED THEREIN.
BOX C - FOREIGN PERSONS -- In order for a tendering unitholder who is a
Foreign Person (i.e., not a U.S. Person, as defined above) to qualify as
exempt from 31% backup withholding, such foreign Unitholder must
certify, under penalties of perjury, the statement in Box C of this
Letter of Transmittal, attesting to that Foreign Person's status by
checking the box preceding such statement. UNLESS THE BOX IS CHECKED,
SUCH UNITHOLDER WILL BE SUBJECT TO 31% WITHHOLDING OF TAX.
6. VALIDITY OF LETTER OF TRANSMITTAL. All questions as to the validity,
form, eligibility (including time of receipt) and acceptance of a Letter
of Transmittal and other required documents will be determined by the
Purchaser and such determination will be final and binding. The
Purchaser's interpretation of the terms and conditions of the Offer
(including these Instructions for this Letter of Transmittal) will be
final and binding. The Purchaser will have the right to waive any
irregularities or conditions as to the manner of tendering. Any
irregularities in connection with tenders, unless waived, must be cured
within such time as the Purchaser shall determine. This Letter of
Transmittal will not be valid until any irregularities have been cured
or waived. Neither the Purchaser nor the Information Agent are under any
duty to give notification of defects in a Letter of Transmittal and will
incur no liability for failure to give such notification.
7. ASSIGNEE STATUS. Assignees must provide documentation to the Information
Agent which demonstrates, to the satisfaction of the Purchaser, such
person's status as an assignee.
8. TRANSFER TAXES. The amount of any transfer taxes (whether imposed on the
registered holder or such person) payable on account of the transfer to
such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is
submitted.
10
<PAGE> 11
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER - - Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
GIVE THE
TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF - -
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
1. An individual account The individual
2. Two or more individuals The actual owner of the account or, if combined
(joint account) funds, the first individual on the account
3. Husband and wife (joint account) The actual owner of the account or, if joint
funds, either person
4. Custodian account of a minor (Uniform Gift to The minor (2)
Minors Act)
5. Adult and minor (joint account) The adult or, if the minor is the only contributor,
the minor (1)
6. Account in the name of guardian or committee The ward, minor or incompetent person (3)
for a designated ward, minor or incompetent
person (3)
7.a. The usual revocable savings trust account The grantor trustee(1)
(grantor is also trustee)
b. So-called trust account that is not a legal The actual owner (1)
or valid trust under state law
8. Sole proprietorship account The owner (4)
9. A valid trust, estate or pension trust The legal entity (Do not furnish the identifying
number of the personal representative or trustee
unless the legal entity itself is not designated in
the account title.) (5)
10. Corporate account The corporation
11. Religious, charitable, or educational The organization
organization account
12. Partnership account held in the name of the The partnership
business
13. Association, club, or other tax-exempt The organization
organization
14. A broker or registered nominee The broker or nominee
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
<TABLE>
<S> <C>
15. Account with the Department of Agriculture The public entity
in the name of a public entity (such as a
State or local government, school district,
or prison) that receives agricultural
program payments
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you
furnish.
(2) Circle the minor's name and furnish the minor's social security
number.
(3) Circle the ward's or incompetent person's name and furnish such
person's social security number or employer identification number.
(4) Show your individual name. You may also enter your business name. You
may use your social security number or employer identification
number.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the
number will be considered to be that of the first name listed.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments
include the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government,
or any agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a) of the Code.
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947 (a)(1).
- An entity registered at all times under the
Investment Company Act of 1940.
- A foreign central bank of issue.
- A futures commission merchant registered with the Commodity Futures
Trading Commission.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441
of the Code.
- Payments to Partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
12
<PAGE> 13
- Payments made by certain foreign organizations.
- Payments made to an appropriate nominee.
- Section 404(k) payments made by an ESOP.
Payments of interest not generally subject to backup withholding include
the following:
- Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600
or more and is paid in the course of the payer's trade or business and
you have not provided your correct taxpayer identification number to the
payer. Payments of tax exempt interest (including exempt interest
dividends under section 852 of the Code).
- Payments described in section 6049(b)(5) of the Code to nonresident
aliens.
- Payments on tax-free covenant bonds under section 1451 of the Code.
- Payments made by certain foreign organizations.
- Payments of mortgage interest to you.
- Payments made to an appropriate nominee.
Exempt payees described above should file a substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR
PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. IF YOU ARE A NONRESIDENT
ALIEN OR A FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A
COMPLETED INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage
dividends, that are not subject to information reporting are also not subject
to backup withholding. For details, see the regulations under sections 6041,
6041A(A), 6045, and 6050A of the Code.
PRIVACY ACT NOTICE -- Section 6109 of the Code requires most recipients of
dividend, interest, or other payments to give correct taxpayer identification
numbers to payers who must report the payments to the IRS. The IRS uses the
numbers for identification purposes. Payers must be given the numbers whether
or not recipients are required to file a tax return. Payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a correct taxpayer identification number to a payer.
Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER -- If
you fail to furnish your correct taxpayer identification number to a payer, you
are subject to a penalty of $50 for each such failure unless your failure is
due to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING -- If
you make a false statement with no reasonable basis that results in no
imposition of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
13
<PAGE> 14
The Information Agent for the offer is:
RIVER OAKS PARTNERSHIP SERVICES, INC.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
P.O. Box 2065 111 Commerce Road 111 Commerce Road
S. Hackensack, N.J. 07606-2065 Carlstadt, N.J. 07072 Carlstadt, N.J. 07072
Attn.: Reorganization Dept. Attn.: Reorganization Dept.
By Telephone:
TOLL FREE (888) 349-2005
</TABLE>
<PAGE> 1
EXHIBIT (a)(3)
AIMCO PROPERTIES IS OFFERING $86, WHICH IS
THE HIGHEST PRICE CURRENTLY BEING OFFERED TO
PURCHASE UNITS OF LIMITED PARTNERSHIP INTEREST OF
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
AIMCO PROPERTIES, L.P.
1873 SOUTH BELLAIRE STREET, 17TH FLOOR
DENVER, COLORADO 80222
October 25, 1999
Dear Unitholder:
We are offering to acquire any and all limited partnership units (the
"Units") in your partnership, Johnstown/Consolidated Income Partners ("the
Partnership"), for $86, net to the seller in cash. Our offer price is HIGHER
than the price currently being offered by Madison Liquidity Investors 104,
L.L.C. ("Madison"). IF IT IS LIQUIDITY YOU DESIRE, OUR OFFER PROVIDES YOU WITH
THE GREATEST PURCHASE PRICE CURRENTLY BEING OFFERED.
GREATEST NUMBER OF UNITS: We are offering to purchase more than
fourteen (14) times the number of Units than Madison is offering to purchase.
OUR OFFER PROVIDES YOU WITH THE GREATEST CHANCE TO RECEIVE THE HIGHEST PURCHASE
PRICE CURRENTLY BEING OFFERED FOR THE GREATEST NUMBER OF UNITS.
QUICKEST PAYMENT: Our offer will expire promptly at midnight, New York
City time, on November 22, 1999 (unless further extended by us). We will pay for
accepted units promptly after expiration of our offer. YOU WILL STILL BE ABLE TO
RECEIVE OUR HIGHEST PRICE EARLIER THAN MADISON IS PERMITTED TO BUY UNDER ITS
OFFER.
FAST, COMMISSION-FREE SALE: Our offer provides you with the opportunity
to sell your units without the transfer fees or commission costs (generally, up
to 10% of the sales price, subject to a $150-$200 minimum commission per trade)
paid by the seller in typical secondary market sales. Madison will charge you a
$75 transfer fee.
The general partner of the Partnership is our affiliate. The
Partnership has indicated in a Statement on Schedule 14D-9 (the "Schedule
14D-9") filed with the Securities and Exchange Commission that it is remaining
neutral and making no recommendation as to whether its limited partners should
tender their Units in response to any offer. However, the general partner noted
that our offer is at the highest price of any current offers. If you wish to
sell your units for cash, you should do so at the highest price. LIMITED
PARTNERS ARE URGED TO READ OUR OFFER TO PURCHASE, THE ENCLOSED SCHEDULE 14D-9,
AND THE RELATED MATERIALS CAREFULLY AND IN THEIR ENTIRETY BEFORE DECIDING
WHETHER TO TENDER THEIR UNITS.
You should be aware, however, that, as with any rational investment
decision, we are making our offer with a view to making a profit. No independent
person has been retained to evaluate or render any opinion with respect to the
fairness of our offer, and no representation is made by us or any of our
affiliates as to such fairness.
<PAGE> 2
If you have any questions concerning the terms of the offer, or need
assistance in completing the forms necessary to tender your units, please
contact our Information Agent, River Oaks Partnership Services, Inc., at (888)
349-2005 or (201) 896-1900.
Very truly yours,
AIMCO PROPERTIES, L.P.
2
<PAGE> 1
Exhibit (z)(1)
AGREEMENT OF JOINT FILING
Madison River Properties, L.L.C.,/IPT, Inc., Insignia Properties,
L.P., AIMCO Properties, L.P., AIMCO-GP, Inc. and Apartment Investment and
Management Company agree that the Amendment No. 13 to Schedule 13D to which this
agreement is attached as an exhibit, and all further amendments thereto, and all
filings under Schedule 14D-1 to which this agreement is attached as an exhibit,
and all amendments thereto, shall be filed on behalf of each of them. This
agreement is intended to satisfy the requirements of Rule 13d-1(f)(1)(iii) under
the Securities Exchange Act of 1934, as amended.
Dated: October 25, 1999
MADISON RIVER PROPERTIES, L.L.C.
By: /s/ Patrick J. Foye
---------------------------
Executive Vice President
AIMCO/IPT, INC.
By: /s/ Patrick J. Foye
--------------------------
Executive Vice President
INSIGNIA PROPERTIES, L.P.
By: AIMCO/IPT, INC.
(General Partner)
By: /s/ Patrick J. Foye
---------------------------
Executive Vice President
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, INC.
(General Partner)
By: /s/ Patrick J. Foye
---------------------------
Executive Vice President
AIMCO-GP, INC.
By: /s/ Patrick J. Foye
---------------------------
Executive Vice President
APARTMENT INVESTMENT
AND MANAGEMENT COMPANY
By: /s/ Patrick J. Foye
---------------------------
Executive Vice President
