<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION 14(D)(1) OR 13(E)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ___)
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)
U.S. Realty Partners Limited Partnership
- --------------------------------------------------------------------------------
(Name of Subject Company (Issuer)
AIMCO Properties, L.P. -- Offeror
- --------------------------------------------------------------------------------
(Names of Filing Persons (Identifying Status as Offeror,
Issuer or Other Person))
Limited Partnership Units
- --------------------------------------------------------------------------------
(Title of Class Securities)
None
- --------------------------------------------------------------------------------
(CUSIP Number of Class Securities)
Patrick J. Foye
Apartment Investment And Management Company
Colorado Center, Tower Two
2000 South Colorado Boulevard, Suite 2-1000
Denver, Colorado 80222
(303) 757-8101
- --------------------------------------------------------------------------------
Name, address, and telephone numbers of person authorized
to receive notices and communications on behalf of filing persons)
Copy To:
Jonathan L. Friedman
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, 34th Floor
Los Angeles, California 90071
(213) 687-5000
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Calculation of Filing Fee
- --------------------------------------------------------------------------------
Transaction valuation* Amount of filing fee
- --------------------------------------------------------------------------------
$4,258,898.00 $851.78
- --------------------------------------------------------------------------------
* For purposes of calculating the fee only. This amount assumes the purchase
of 608,414 units of limited partnership interest of the subject partnership
for $7.00 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 the 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 Party:
---------------- ------------------------
Form or Registration No.: Date Filed:
---------------- --------------------------
----------------------------------------------
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[X] third-party tender offer subject to Rule 14d-1
[ ] issuer tender offer subject to Rule 13e-4
[ ] going-private transaction subject to Rule 13e-3
[X] amendment to Schedule 13D under Rule 13d-2
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [ ]
2
<PAGE> 3
CUSIP No. NONE
1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
AIMCO PROPERTIES, L.P.
84-1275721
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(d)
OR 2(e)) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
7. SOLE VOTING POWER
--
8. SHARED VOTING POWER
243,831
9. SOLE DISPOSITIVE POWER
--
10. SHARED DISPOSITIVE POWER
243,831
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
243,831
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
Approximately 19.95%
14. TYPE OF REPORTING PERSON
PN
3
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CUSIP No. NONE
1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
AIMCO-GP, INC.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP
(a) [ ]
(b) [X]
3. SEC USE ONLY
4. SOURCE OF FUNDS
Not Applicable
5. (CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
7. SOLE VOTING POWER
--
8. SHARED VOTING POWER
243,831
9. SOLE DISPOSITIVE POWER
--
10. SHARED DISPOSITIVE POWER
243,831
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
243,831
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
Approximately 19.95%
14. TYPE OF REPORTING PERSON
CO
4
<PAGE> 5
CUSIP No. NONE
1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
84-129577
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP
(a) [ ]
(b) [X]
3. SEC USE ONLY
4. SOURCE OF FUNDS
Not Applicable
5. (CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
OR 2(e)) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Maryland
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
7. SOLE VOTING POWER
--
8. SHARED VOTING POWER
243,831
9. SOLE DISPOSITIVE POWER
--
10. SHARED DISPOSITIVE POWER
243,831
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
243,831
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
Approximately 19.95%
14. TYPE OF REPORTING PERSON
CO
5
<PAGE> 6
TENDER OFFER STATEMENT/AMENDMENT NO. 3 TO SCHEDULE 13D
This Statement (the "Statement") constitutes (a) the Tender Offer Statement
on Schedule TO of AIMCO Properties, L.P. (the "AIMCO OP"), relating to an offer
to purchase units of limited partnership interest ("Units") of U.S. Realty
Partners Limited Partnership (the "Partnership"); and (b) Amendment No. 3 to the
Schedule 13D (the "Schedule 13D") originally filed with the Securities and
Exchange Commission (the "Commission") on February 19, 1999, by Apartment
Investment and Management Company ("AIMCO") and Insignia Properties Trust
("IPT"), as amended by (i) Amendment No. 1, filed with the Commission on August
13, 1998, by AIMCO and (ii) Amendment No. 3, filed with the Commission on April
9, 1999, by AIMCO. The item numbers and responses thereto are set forth below in
accordance with the requirements of Schedule TO.
-----------------------------------
The information in the "Offer to Purchase" of AIMCO Properties, L.P., dated
May 15, 2000 (the "Offer"), Exhibit (a)(1) hereto, is incorporated herein by
reference in answer to all of the Items of this Schedule TO except as otherwise
set forth below:
Item 3. Identity and Background of Filing Person.
(a) This Statement is being filed by AIMCO Properties, L.P., a Delaware
limited partnership, and, insofar as this Statement constitutes Amendment No. 3
to the Schedule 13D, by AIMCO Properties, L.P., a Delaware limited partnership,
AIMCO-GP, Inc., a Delaware corporation, and Apartment Investments and Management
Company, a Maryland corporation (collectively, the "Reporting Persons"). The
principal business of the Reporting Persons is the ownership, acquisition,
development, expansion and management of multi-family apartment properties. The
principal executive offices and telephone number of the Reporting Persons are
located at Colorado Center, Tower Two, 2000 South Colorado Boulevard, Suite
2-1000, Denver, Colorado 80222; (303) 757-8101.
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 to the Offer (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.
Item 5. Past Contacts, Transactions, Negotiations and Agreements.
Except as described in the Offer, none of the events set forth in Item
1005(b) of Regulation S-K has occurred.
Item 6. Purposes of the Transaction and Plans or Proposals.
Except as set forth in the Offer, none of the events set forth in Item 1006
(c) of Regulations S-K is planned, proposed or being negotiated.
6
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Item 7. Source and Amount of Funds or Other Consideration.
Except as set forth in the Offer, there are no alternative plans to finance
the tender offer and no plans to repay any borrowed funds used in the tender
offer.
Item 8. Interest in Securities of the Subject Company.
AIMCO OP directly owns 243,831 Units, representing approximately 19.95% of
the outstanding Units based on the 608,414 Units outstanding at April 24, 2000.
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) 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 243,831 Units directly owned by it; (ii)
AIMCO-GP is reporting that it shares the power to vote or direct the disposition
of the 243,831 Units owned by AIMCO OP; and (iii) 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 243,831 Units directly owned by AIMCO OP.
Item 10. Financial Statements.
The financial statements included in AIMCO OP's Annual Report on Form 10-K
for the year ended December 31, 1999, which are listed on the Index to Financial
Statements on page F-1 of such Report, are incorporated herein by reference.
Such report 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.
Item 12. Exhibits.
(a)(1) Offer to Purchase, dated May 15, 2000
(a)(2)(i) Letter of Transmittal and related Instructions (Annex II to
Exhibit (a)(1).)
(a)(2)(ii) Acknowledgement and Agreement.
(a)(3) Letter, dated May 15, 2000, from AIMCO OP to the limited
partners of the Partnership
(b)(1) 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.)
(b)(2) Amended and Restated Credit Agreement, dated as of March 15,
2000, among AIMCO Properties, L.P., Bank of America, Bank
Boston, N.A., and First Union National Bank. (Exhibit 10.20 to
AIMCO Properties, L.P.'s Annual Report on Form 10-K for the year
ended December 31, 1999, is incorporated herein by this
reference.)
(b)(3) First Amendment to $345,000,000 Amended and Restated Credit
Agreement, dated as of April 14, 2000, among AIMCO Properties,
L.P., Bank of America, as
7
<PAGE> 8
Administrative Agent, and U.S. Bank National Association, as
Lender. (Exhibit 10.4 to AIMCO's Current Report on Form 10-Q for
quarter ended March 31, 2000, is incorporated herein by this
reference.)
(d) Not applicable.
(g) Not applicable.
(h) Not applicable.
(z)(1) Agreement of Joint Filing, dated May 15, 2000, among AIMCO OP,
AIMCO-GP and AIMCO.
Item 13. Information Required by Schedule 13E-3.
Not applicable.
8
<PAGE> 9
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.
Date May 15, 2000
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
9
<PAGE> 10
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
(a)(1) Offer to Purchase, dated May 15, 2000
(a)(2)(i) Letter of Transmittal and related Instructions (Annex II to
Exhibit (a)(1).)
(a)(2)(ii) Acknowledgement and Agreement.
(a)(3) Letter, dated May 15, 2000, from AIMCO OP to the limited
partners of the Partnership
(b)(1) 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.)
(b)(2) Amended and Restated Credit Agreement, dated as of March 15,
2000, among AIMCO Properties, L.P., Bank of America, Bank
Boston, N.A., and First Union National Bank. (Exhibit 10.20 to
AIMCO Properties, L.P.'s Annual Report on Form 10-K for the
year ended December 31, 1999, is incorporated herein by this
reference.)
(b)(3) First Amendment to $345,000,000 Amended and Restated Credit
Agreement, dated as of April 14, 2000, among AIMCO Properties,
L.P., Bank of America, as Agent, and U.S. Bank National
Association, as Lender. (Exhibit 10.4 to AIMCO's Current
Report on Form 10-Q for quarter ended March 31, 2000, is
incorporated herein by this reference.)
(d) Not applicable.
(g) Not applicable.
(h) Not applicable.
(z)(1) Agreement of Joint Filing, dated May 15, 2000, among AIMCO OP,
AIMCO-GP and AIMCO.
</TABLE>
<PAGE> 1
OFFER TO PURCHASE FOR CASH
AIMCO
AIMCO PROPERTIES, L.P.
is offering to purchase any and all units of limited partnership interest in
U.S. REALTY PARTNERS LIMITED PARTNERSHIP
FOR $7.00 PER UNIT IN CASH
Upon the terms and subject to the conditions set forth herein, we will accept
any and all units validly tendered 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 and your withdrawal rights will expire at 5:00 P.M., New York City
time, on June 13, 2000, 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.
Our offer price will be reduced for any distributions subsequently made by your
partnership prior to the expiration of our offer.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 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 $7.00 per unit without any
arms-length negotiations. Accordingly, our offer price may not reflect
the fair market value of your units.
o Your general partner and the property manager of the properties 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.
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.
(Continued on next page)
----------------------------
If you desire to accept our offer, you should complete and sign the
enclosed Acknowledgment and Agreement as instructed in the letter of transmittal
attached as Annex II hereto (collectively the "the letter of transmittal"). The
signed yellow letter of transmittal and any other required documents must be
mailed or delivered 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. It is only necessary to
return the acknowledgment and agreement part of the letter of transmittal.
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.
May 15, 2000
<PAGE> 2
(continued from cover page)
o It is possible that we may conduct a future 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.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY TERM SHEET ....................................................................... 1
INTRODUCTION ............................................................................. 3
RISK FACTORS ............................................................................. 4
No Third Party Valuation or Appraisal; No Arms-Length Negotiation ................... 4
No Fairness Opinion From a Third Party .............................................. 4
Offer Price May Not Represent Fair Market Value ..................................... 4
Offer Price Does Not Reflect Future Prospects ....................................... 4
Offer Price Based on Our Estimate of Liquidation Proceeds ........................... 4
Offer Price May Not Represent Liquidation Value ..................................... 4
Continuation of the Partnership; No Time Frame Regarding Sale of Properties ......... 4
Holding Units May Result in Greater Future Value .................................... 5
Conflicts of Interest With Respect to the Offer ..................................... 5
No General Partner Recommendation ................................................... 5
Conflicts of Interest Relating to Management Fees ................................... 5
Possible Future Offer at a Higher Price ............................................. 5
Recognition of Taxable Gain on a Sale of Your Units ................................. 5
Loss of Future Distributions from Your Partnership .................................. 6
Possible Increase in Control of Your Partnership by Us .............................. 6
Recognition of Gain Resulting from Possible Future Reduction in Your Partnership
Liabilities ......................................................................... 6
Possible Termination of Your Partnership for Federal Income Tax Purposes ............ 6
Risk of Inability to Transfer Units for 12-Month Period ............................. 6
Potential Delay in Payment .......................................................... 7
Balloon Payment ..................................................................... 7
THE OFFER ................................................................................ 7
Section 1. Terms of the Offer; Expiration Date; Proration ......................... 7
Section 2. Acceptance for Payment and Payment for Units ........................... 8
Section 3. Procedure for Tendering Units .......................................... 9
Section 4. Withdrawal Rights ...................................................... 11
Section 5. Extension of Tender Period; Termination; Amendment; Subsequent Offering
Period ................................................................. 12
Section 6. Certain Federal Income Tax Matters ..................................... 12
Section 7. Effects of the Offer ................................................... 15
Section 8. Information Concerning Us and Certain of Our Affiliates ................ 16
Section 9. Background and Reasons for the Offer ................................... 20
Section 10. Position of the General Partner of Your Partnership With Respect to the
Offer .................................................................. 26
Section 11. Conflicts of Interest and Transactions with Affiliates ................. 27
Section 12. Future Plans of the Purchaser .......................................... 28
Section 13. Certain Information Concerning Your Partnership ........................ 29
Section 14. Voting Power ........................................................... 33
Section 15. Source of Funds ........................................................ 33
Section 16. Dissenters' Rights ..................................................... 34
Section 17. Conditions of the Offer ................................................ 34
Section 18. Certain Legal Matters .................................................. 36
Section 19. Fees and Expenses ...................................................... 36
ANNEX I - OFFICERS AND DIRECTORS ......................................................... I-1
ANNEX II - LETTER OF TRANSMITTAL ......................................................... II-1
</TABLE>
<PAGE> 4
Page 1
SUMMARY TERM SHEET
This summary term sheet highlights the most material information regarding
our offer, but it does not describe all of the details thereof. We urge you to
read this entire offer to purchase which contains the full details of our offer.
We have also included in the summary term sheet references to the sections of
this offer to purchase where a more complete discussion may be found.
o THE OFFER. Subject to the terms hereof, we are offering to acquire any and
all of the limited partnership interests (units) in U.S. Realty Partners
Limited Partnership, your partnership for $7.00 per unit in cash. See "The
Offer--Section 1. Terms of the Offer; Expiration Date; Proration" and "The
Offer--Section 9. Background and Reasons for the Offer--Determination of
Offer Price."
o FACTORS IN DETERMINING THE OFFER PRICE. In determining the offering price
per unit we considered:
o The fact that we believe the per unit liquidation value of your partnership
is equal to our offer price per unit.
o There is no trading market for the units. See "The Offer--Section 9.
Background and Reasons for the Offer--Comparison of Consideration to
Alternative Consideration."
o PRORATIONS. If the purchase of all validly tendered 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. See "The
Offer--Section 1. Terms of the Offer; Expiration Date; Proration."
o EXPIRATION DATE. Our offer expires on June 13, 2000, unless extended, and
you can tender your units until our offer expires. See "The Offer--Section
1. Terms of the Offer; Expiration Date; Proration."
o RIGHT TO EXTEND THE EXPIRATION DATE. We can extend the offer in our sole
discretion, and we will send you a notice of any such extension. See "The
Offer--Section 5. Extension of Tender Period; Termination; Amendment;
Subsequent Offering Period."
o HOW TO TENDER. To tender your units, complete the accompanying letter of
transmittal and send it to the Information Agent, River Oaks Partnership,
Inc., at one of the address set forth on the back of this offer to
purchase. See "The Offer--Section 3. Procedures for Tendering."
o WITHDRAWAL RIGHTS. You can withdraw your units at any time prior to the
expiration of the offer, including any extensions. In addition, you can
withdraw your units any time on or after July 17, 2000, if we have not
already accepted units for purchase and payment. See "The Offer--Section 4.
Withdrawal Rights."
o HOW TO WITHDRAW. To withdraw your units, you need to send in a notice of
withdrawal identifying yourself and the units to be withdrawn. See "The
Offer--Section 4. Withdrawal Rights."
o TAX CONSEQUENCES. Your sale of units will be a taxable transaction for
federal income tax purposes, the consequences to each limited partner may
vary and you should consult your tax advisor on the precise tax
consequences to you. See "The Offer-Section 6. Certain Federal Income Tax
Matters."
o AVAILABILITY OF FUNDS. We currently have the necessary cash and a line of
credit to consummate the offers. See "The Offer--Section 15. Source of
Funds."
o CONDITIONS TO THE OFFER. There are a number of conditions to our offer,
including having adequate cash on hand and borrowings under a line of
credit, lack of competing tender offers, lack of certain changes in your
<PAGE> 5
Page 2
partnership, and lack of certain changes in the financial markets. See "The
Offer--Section 17. Condition to the Offer."
o REMAINING AS A LIMITED PARTNER. If you do not tender your units, you will
continue to remain a limited partner in your partnership and we have no
plans to alter the operations, business or financial position of your
partnership or to take your partnership private. See "The Offer--Section 7.
Effects of the Offer."
o WHO WE ARE. We are AIMCO Properties, L.P., the main operating partnership
of Apartment Investment and Management Company, a New York Stock Exchange
listed company. See "The Offer--Section 8. Information Concerning Us and
Certain of Our Affiliates."
o CONFLICTS OF INTEREST. The general partner of your partnership and the
property manager are our subsidiaries and we and our affiliates currently
own 45.42% of the outstanding units in your partnership. See "The
Offer--Section 11. Conflicts of Interests" and "The Offer--Section 13.
Certain Information Concerning Your Partnership."
o 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 , and believes each limited partner should make his or
her own decision whether or not to tender. See "Terms of the Offer--Section
10. Position of the General Partner of Your Partnership With Respect to the
Offer."
o NO SUBSEQUENT OFFERING PERIOD. We will not have a subsequent offering
period after the expiration date of the initial offering period (including
any extensions). See "The Offer--Extension of Tender Period; Termination;
Amendment; Subsequent Offer Period."
o ADDITIONAL INFORMATION. For more assistance in tendering your units, please
contact our Information Agent at one of the addresses or telephone numbers
set forth on the back cover page of this offer to purchase.
<PAGE> 6
Page 3
INTRODUCTION
We are offering to purchase any and all of the outstanding units of limited
partnership interest in your partnership, for the purchase price of $7.00 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 any and 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 "The
Offer--Section 4. Withdrawal Rights" 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. If we are going
to purchase only 99% of the units validly tendered, we will notify you of such
fact.
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. Conditions of the Offer."
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 5:00 P.M. New York City time, on June 13, 2000,
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 July 17, 2000.
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 December 31, 1999, AIMCO owned or controlled, held
an equity interest in or managed 363,462 apartment units in 1,942 properties
located in 48 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."
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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:
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
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 properties.
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 properties 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, 1999. 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.
It is not known when the properties owned by your partnership may be sold. There
may be no way to liquidate your investment in a partnership in the future until
the properties are sold and the partnership is liquidated. The general partner
of your partnership 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. At the current time the general partner of your partnership
believes that a sale of the properties would not be advantageous given market
conditions, the condition of the properties and tax
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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 several factors that may be personal to you, such as your financial
position, your need or desire for liquidity, your preferences regarding the
timing of when you might wish to sell your units, 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 properties, 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 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 FUTURE OFFER AT A HIGHER PRICE
It is possible that we may conduct a future 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 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.
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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
70,431.84 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.
POSSIBLE TERMINATION OF YOUR PARTNERSHIP FOR FEDERAL INCOME TAX PURPOSES
If there is a sale or exchange of 50% or more of the total interest in
capital and profits of your partnership within any 12-month period, including
sales or exchanges resulting from our offer, your partnership will terminate for
Federal income tax purposes. Any such termination may, among other things,
subject the assets of your partnership to longer depreciable lives than those
currently applicable to the assets of your partnership. This would generally
decrease the annual average depreciation deductions allocable to you for certain
years following our offer if you do not tender all of your interests in your
partnership (thereby increasing the taxable income allocable to your interests
in your partnership each such year), but would have no effect on the total
depreciation deductions available over the useful lives of the assets of your
partnership. Any such termination may also change (and possibly shorten) your
holding period with respect to interests in your partnership that you choose to
retain. 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
The limited partnership agreement prohibits transfers of units if a
transfer, when considered with all other transfers during the same applicable
twelve-month period, would cause a termination of your partnership for federal
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income tax purposes. This provision may limit sales of units in the secondary
market and in private transactions for the twelve-month period following
completion of the offer. The general partner has advised us that the partnership
will not process any requests for recognition of substitution of limited
partners upon a transfer of units during such twelve-month period which the
general partner believes may cause a tax termination in contravention of the
limited partnership agreement. In determining the number of units for which the
offer is made (representing approximately 25% of the outstanding units), we took
this restriction into account so as to permit normal historical levels of
transfers to occur following the transfers of units pursuant to the offer
without violating the restriction.
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 tendered
units until the expiration of the offer and acceptance of units for payment.
BALLOON PAYMENT
Your partnership has approximately $3,810,000 of balloon payments due on
its mortgage debt in August 2001; however, the balance due at maturity is
directly related to the ability of your partnership to make cash flow payments
per the mortgage agreement. Your partnership will have to refinance such debt,
sell assets or otherwise obtain additional funds prior to the balloon payment
dates, or, subject to the terms of the mortgage agreement, it will be in default
and could lose the properties to foreclosure.
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. Withdrawal Rights." For purposes of the offer,
the term "expiration date" shall mean 5:00 P.M., New York City time, on June 13,
2000, 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. Extension of Tender Period; Termination;
Amendment; Subsequent Offering Period," 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 "The Offer--Section 4. Withdrawal Rights" and the purchase of all such
units would result in (i) a "Rule 13e-3 transaction" within the meaning of the
Securities Exchange Act of 1934 (the "Exchange Act") , or (ii) there being less
than 320 unitholders, we will purchase only 99% of the total number of units so
tendered by each limited partner (subject to any necessary adjustment for
fractional units). If we are going to purchase only 99% of the units validly
tendered, we will notify you of such fact. In such case, you would continue to
be a limited partner and receive a K-1 for tax reporting purposes. See "The
Offer--Section 7. Effects of the Offer--Effect on Trading Market; Registration
Under 12(g) of the Exchange Act."
The offer is conditioned on satisfaction of certain conditions. THE OFFER
IS NOT CONDITIONED UPON ANY
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MINIMUM NUMBER OF UNITS BEING TENDERED. See "The Offer--Section 17. Conditions
to the Offer," 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, subject to the terms of the offer, any and
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 April 1, 2000.
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 May 15, 2000.
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 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. Procedure for Tendering
Units." 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 any and 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 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
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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 or returned to you. You may withdraw
tendered units until the expiration date (including any extensions). In
addition, if we have not accepted units for payment by July 17, 2000, you may
then withdraw any tendered units. After the expiration date, the Information
Agent may, on our behalf, retain tendered units, and those units may not be
otherwise withdrawn, 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.
Any such action is 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 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
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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
our directions. The proxy granted by you to us 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 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 will remain
effective and be irrevocable for a period of ten years following the termination
of our offer. 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 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.
By executing the 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 execution and receipt of the 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
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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. Certain Federal Income Tax Matters."
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. Certain Federal Income Tax Matters."
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,
including any extensions thereof, or on or after July 17, 2000, 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. Procedures for Tendering Units."
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.
<PAGE> 15
Page 12
SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT; SUBSEQUENT
OFFERING PERIOD.
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. Conditions to the Offer," 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 or decreasing 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 of such change. In the case of
an extension of the offer, the extension may 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. Withdrawal Rights"; subject,
however, to our obligation, pursuant to Rule 14e-l(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, but generally will be five business days. 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.
Pursuant to Rule 14d-11 under the Exchange Act, we may be able to provide
for a subsequent offering period in tender offers for any and all outstanding
units. A subsequent offering period is an additional period of from three to
twenty business days following the expiration date of the offer (including any
extensions), in which unitholders may continue to tender units not tendered in
the offer for the offer price. In a public release, the Securities and Exchange
Commission (the "SEC") has expressed the view that the inclusion of a subsequent
offering period would constitute a material change to the terms of the offer
requiring us to disseminate new information to unitholders in a manner
reasonably calculated to inform them of such change sufficiently in advance of
the expiration date (generally five business days). We do not plan to offer a
subsequent offering period. In the event we elect to include a subsequent
offering period, we will so notify you consistent with the requirements of the
SEC.
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
<PAGE> 16
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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 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
<PAGE> 17
Page 14
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 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.
<PAGE> 18
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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.
You will not recognize any gain or loss upon such deemed contribution of
your partnership's assets to the new partnership or upon such deemed
distribution of interests in the new partnership, and your capital account in
your partnership will carry over to the new partnership. A termination of your
partnership for Federal income tax purposes may change (and possibly shorten)
your holding period with respect to interest in you partnership that you choose
to retain. 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.
A termination of your partnership for Federal income tax purpose may also
subject the assets of your partnership to longer depreciable lives than those
currently applicable to the assets of your partnership. This would generally
decrease the annual average depreciation deductions allocable to you for certain
years following our offer if you do not tender all of your interests in your
partnership (thereby increasing the taxable income allocable to your interests
in your partnership each such year), but would have no effect on the total
depreciation deductions available over the useful lives of the assets of your
partnership. Additionally, upon a termination of your partnership, the taxable
year of your partnership will close for Federal income tax purposes.
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 5.65% of the units pursuant to the offer,
we will own more than 50% of the total outstanding units and, as a result, we
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,
because we currently own approximately 45.42% 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 properties 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 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
<PAGE> 19
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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 properties.
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, 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 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. Your partnership currently has 460 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."
ACCOUNTING TREATMENT. Upon consummation of the offer, we will account for
our investment in any acquired units under the purchase method of accounting.
There will be no effect on the accounting treatment of your partnership as a
result of the offer.
SECTION 8. INFORMATION CONCERNING US AND CERTAIN OF OUR AFFILIATES.
GENERAL. 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. AIMCO's Class A
Common Stock is listed and traded on the New York Stock Exchange under the
symbol "AIV." As of December 31, 1999, we owned or managed 363,462 apartment
units in 1,942 properties located in 48 states, the District of Columbia and
Puerto Rico. Based on apartment unit data compiled as of January 1, 1999, by the
National Multi Housing Council, we believe that we are the largest owner and
manager of multi-family apartment properties in the United States. As of
December 31, 1999, we:
- owned or controlled 106,148 units in 373 apartment properties;
- held an equity interest in 133,113 units in 751 apartment properties;
and
- managed 124,201 units in 818 apartment properties for third party
owners and affiliates.
Our general partner is AIMCO-GP, Inc., a Delaware corporation, which is a
wholly-owned subsidiary of AIMCO. Our principal executive offices are located at
Colorado Center, Tower Two, 2000 South Colorado Boulevard, Suite 2-1000, 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
<PAGE> 20
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our business, financial condition and other matters, including the complete
financial statements summarized below. 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.
For more information regarding AIMCO Properties, L.P., please refer to the
Annual Report on Form 10-K for the year ended December 31, 1999, (particularly
the management's discussion and analysis of financial condition and results of
operations) and other reports and documents filed by us with the SEC.
Except as described in "The Offer--Section 9. Background and Reasons for
the Offer," and "The Offer--Section 11. Conflicts of Interests and Transactions
with Affiliates" 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. Neither we nor our affiliates intend to
tender any units beneficially owned in this offer.
SUMMARY SELECTED FINANCIAL INFORMATION FOR AIMCO PROPERTIES, L.P. The
historical summary financial data for AIMCO Properties, L.P. for the years ended
December 31, 1999 and 1998, is based on audited financial statements. This
information should be read in conjunction with such financial statements,
including the notes thereto, and "Management's Discussion and Analysis of
Financial Condition and Results of Operations of the AIMCO Operating
Partnership" included in the AIMCO Operating Partnership's Form 10-K for the
year ended December 31, 1999.
<PAGE> 21
Page 18
<TABLE>
<CAPTION>
Year Ended
December 31,
----------------------------
1999 1998
----------- -----------
(Dollars in thousands, except per
unit data)
<S> <C> <C>
OPERATING DATA:
RENTAL PROPERTY OPERATIONS
Rental and other property revenue $ 531,883 $ 373,963
Property operating expenses (213,959) (145,966)
Owned property management expenses (15,322) (10,882)
Depreciation (131,257) (83,908)
----------- -----------
Income from property operations 171,345 133,207
----------- -----------
SERVICE COMPANY BUSINESS:
Management fees and other income 42,877 22,675
Management and other expenses (25,470) (16,960)
----------- -----------
Income from service company business 17,407 5,715
----------- -----------
General and administrative expenses (12,016) (11,418)
Interest expense (139,124) (88,208)
Interest income 62,183 29,252
Equity in earnings of unconsolidated subsidiaries(a) (2,588) 12,009
Equity in earnings (losses) of unconsolidated real estate partnerships(b) (2,400) (2,665)
Loss from IPLP exchange and assumption (684) (2,648)
Minority interest (5,788) (1,868)
Amortization of goodwill (5,860) (8,735)
----------- -----------
Income from operations 82,475 64,641
Gain on disposition of properties (1,785) 4,287
----------- -----------
Income before extraordinary item 80,690 68,928
Extraordinary item--early extinguishment of debt -- --
Net income $ 80,690 $ 68,928
=========== ===========
BALANCE SHEET INFORMATION
(end of period):
Real estate, before accumulated depreciation $ 4,508,535 $ 2,743,865
Real estate, net of accumulated depreciation 4,092,543 2,515,710
Total assets 5,684,251 4,186,764
Total mortgages and notes payable 2,584,289 1,601,730
Redeemable Partnership Units -- --
Partnership-obligated mandatory redeemable 149,500 149,500
convertible preferred securities of a subsidiary trust
Partners' capital 2,486,889 2,153,335
OTHER INFORMATION:
Total owned or controlled properties (end of period) 373 234
Total owned or controlled apartment units (end of period) 106,148 61,672
Total equity apartment units (end of period) 133,113 171,657
Units under management (end of period) 124,201 146,034
Basic earnings per Common OP Unit $ 0.39 $ 0.80
Diluted earnings per Common OP Unit $ 0.38 $ 0.78
Distributions paid per Common OP Unit $ 2.50 $ 2.25
Cash flows provided by operating activities $ 254,380 $ 144,152
Cash flows used in investing activities $ (243,078) $ (342,541)
Cash flows provided by (used in) financing activities $ 37,470 $ 214,133
Funds from operations(c) $ 320,434 $ 193,830
Weighted average number of Common OP Units outstanding 78,531 56,567
</TABLE>
- ---------------------
(a) Represents AIMCO Properties, L.P. equity earnings in unconsolidated
subsidiaries.
(b) Represents AIMCO Properties, L.P.'s share of earnings from partnerships
that own 133,113 apartment units at December 31, 1999 in which partnerships
AIMCO Properties, L.P. owns an equity interest.
<PAGE> 22
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(c) AIMCO Properties, L.P.'s management believes that the presentation of funds
from operations or "FFO", when considered with the financial data
determined in accordance with generally accepted accounting principles,
provides a useful measure of performance. However, FFO does not represent
cash flow and is not necessarily indicative of cash flow or liquidity
available to AIMCO Properties, L.P., nor should it be considered as an
alternative to net income as an indicator of operating performance. The
Board of Governors of the National Association of Real Estate Investment
Trusts ("NAREIT") defines FFO as net income (loss), computed in accordance
with generally accepted accounting principles, excluding gains and losses
from debt restructuring and sales of property, plus real estate related
depreciation and amortization (excluding amortization of financing costs),
and after adjustments for unconsolidated partnerships and joint ventures.
AIMCO Properties, L.P. calculates FFO based on the NAREIT definition, as
adjusted for the amortization of goodwill, the non-cash deferred portion of
the income tax provision for unconsolidated subsidiaries and less the
payments of dividends on preferred stock. AIMCO Properties, L.P.'s
management believes that presentation of FFO provides investors with
industry-accepted measurements which help facilitate an understanding of
its ability to make required dividend payments, capital expenditures and
principal payments on its debt. There can be no assurance that AIMCO
Properties, L.P.'s basis of computing FFO is comparable with that of other
REITs.
The following is a reconciliation of net income to funds from operations:
<TABLE>
<CAPTION>
Year Ended
December 31,
------------------------
1999 1998
--------- ---------
(in thousands)
<S> <C> <C>
Net income $ 80,690 $ 68,928
Extraordinary item -- --
Gain (loss) on disposition of property 1,785 (4,287)
Real estate depreciation, net of minority interests 121,084 79,869
Real estate depreciation related to unconsolidated entities 104,754 34,765
Amortization 36,731 26,177
Deferred taxes 1,763 9,215
Expenses associated with convertible preferred securities 6,892 --
Preferred unit distributions (33,265) (20,837)
--------- ---------
Funds from operations $ 320,434 $ 193,830
========= =========
</TABLE>
RATIOS OF EARNINGS TO FIXED CHARGES OF AIMCO PROPERTIES, L.P. The following
table shows for the AIMCO Properties, L.P. (i) the ratio of income to fixed
charges and (ii) the ratio of income to fixed charges and preferred unit
distributions.
<TABLE>
<CAPTION>
Year Ended
December 31,
1999 1998
------ -----
<S> <C> <C>
Ratio of earnings to fixed charges(1) 2.37:1 1.6:1
Ratio of earnings to combined fixed charges 1.73:1 1.7:1
and preferred unit distributions(2)
</TABLE>
<PAGE> 23
Page 20
- ---------------------------
(1) Our ratio of earnings to fixed charges was computed by dividing earnings by
fixed charges. For this purpose, "earnings" consists of income before
minority interests (which includes equity in earnings of unconsolidated
subsidiaries and partnerships only to the extent of dividends received)
plus fixed charges (other than any interest which has been capitalized);
and "fixed charges" consists of interest expense (including amortization of
loan costs) and interest which has been capitalized.
(2) Our ratio of earnings to combined fixed charges and preferred unit
distributions was computed by dividing earnings by the total of fixed
charges and preferred unit distributions. For this purpose, "earnings"
consists of income before minority interests (which includes equity in
earnings of unconsolidated subsidiaries and partnerships only to the extent
of dividends received) plus fixed charges (other than any interest which
has been capitalized); "fixed charges" consists of interest expense
(including amortization of loan costs) and interest which has been
capitalized; and "preferred unit distributions" consists of the amount of
pre-tax earnings that would be required to cover preferred unit
distributions requirements.
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"). Through the Insignia Merger,
AIMCO also acquired a majority ownership interest in the entity that manages the
properties 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. AIMCO then contributed IPT's
interest in Insignia Properties L.P., IPT's operating partnership, to AIMCO's
wholly owned subsidiary, AIMCO/IPT, Inc. AIMCO also replaced IPT as the sole
general partner of Insignia Properties L.P. As a result, the general partner of
your partnership is an indirect wholly owned subsidiary of AIMCO/IPT and the
property manager is our indirect wholly owned subsidiary. Together with its
subsidiaries, AIMCO currently owns, in the aggregate, approximately 45.42% 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 __ of the Insignia Partnerships, including your
partnership.
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.
<PAGE> 24
Page 21
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).
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 real estate
assets of your partnership in a private transaction, and the proceeds realized
from any such sale would be uncertain. Your general partner believes it
currently is in the best interest of your partnership to continue holding its
real estate assets. Liquidation of the partnership assets may trigger a
prepayment penalty under the mortgages for the properties. 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 or improved operating
performance, 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.
There are several risks and disadvantages that result from continuing the
operations of your partnership without our offer. If your partnership were to
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 might 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
<PAGE> 25
Page 22
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.
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, 1999; (iii) the operating budgets prepared by the
property manager with respect to the partnership's properties for the year
ending December 31, 2000; and (iv) tender offer statements,
solicitation/recommendation statements and beneficial ownership reports on
Schedules TO, 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, 1999. 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, 1999 to your partnership's net operating income for the same period:
<TABLE>
<S> <C>
Net Income $ 5,010,000
Other Non-Operating Expense 137,000
Depreciation 489,000
Income from Sale of Discontinued Operations (256,000)
Gain of Sale of Discontinued Operations (4,626,000)
Interest $ 967,000
-----------
Property Income $ 1,721,000
===========
</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.
<PAGE> 26
Page 23
We determined our offer price as follows:
o First, we estimated the value of the 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 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 used property income for 1999 and then divided such
amount by the property's capitalization rate to derive an estimated gross
property value as described in the following table.
Based on the above, we estimated the gross property value of each property
as follows:
<TABLE>
<CAPTION>
1999 ESTIMATED GROSS
PROPERTY PROPERTY INCOME CAPITALIZATION RATE PROPERTY VALUE
-------- --------------- ------------------- --------------
<S> <C> <C> <C>
Governor's Park Apartments $ 520,000 11.57% $ 4,490,000
Twin Lakes Apartments 976,000 10.68% 9,139,000
Total $13,629,000
===========
</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, if any, 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 $10,753,949. 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, 100.00% 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 $ 13,629,000
Plus: Cash and cash equivalents 485,019
Plus: Other partnership assets, net of security deposits 537,713
Less: Mortgage debt, including accrued interest (3,826,837)
Less: Accounts payable and accrued expenses (749,426)
Less: Other liabilities (512,119)
------------
Partnership valuation before taxes and certain costs $ 9,563,349
Less: Extraordinary capital expenditures for deferred maintenance (524,950)
Less: Closing costs (487,365)
------------
Estimated net valuation of your partnership $ 8,551,034
Percentage of estimated net valuation allocated to holders of units 100.00%
------------
Estimated net valuation of units 8,551,034
Total number of units 1,222,000
Estimated valuation per unit $ 7
============
Cash consideration per unit $ 7
============
</TABLE>
<PAGE> 27
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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; and (b) estimates of the value of the units
on a liquidation basis. 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) or an affiliate 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 or an affiliate 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 December 31, 2005, 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 $ 7.00
Alternative:
Prior cash tender offer prices $ 6.35(1)
Prices on secondary market $6.54,1.60
Estimated liquidation proceeds $ 7.00
</TABLE>
(1) Since such tender offer, your partnership sold a property for
$7,300,000 and paid off indebtedness with the net proceeds.
PRIOR TENDER OFFERS
In April 1999, we commenced a tender offer at the original offer price of
$5.50 per unit. Our offer price was increased to $6.35 per unit and pursuant to
such offer and thereafter, we purchased 312,890.00 units at $6.35 per unit. We
determined the offer price using the same basic method for the current offer but
used property income for an earlier period. Since such tender offer, your
partnership sold a property for $7,310,000 and paid off indebtedness with the
net proceeds.
<PAGE> 28
Page 25
In March 1999, and unaffiliated third party, began a tender offer for 4.9%
of the units in your partnership for $2.10 per unit. In March 1999, an
unaffiliated third party commenced a tender offer for up to 15% of the units in
your partnership for $5.00 per unit, ultimately increased to $6.25 per unit. In
April 1999, an unaffiliated third party, began a tender offer for 4.9% of the
units in your partnership for $4.00 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, all but one of which have been settled. 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.
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.
Set forth below are the high and low sale prices of units for the years
ended December 31, 1998 and 1999 and the three months ended March 31, 2000, 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.
SALES PRICES OF PARTNERSHIP UNITS, AS REPORTED BY THE PARTNERSHIP SPECTRUM
<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
Three Months Ended March 31, 2000: $5.50 $5.50
Fiscal Year Ended December 31, 1999: -- --
Fiscal Year Ended December 31, 1998: 4.80 4.60
</TABLE>
Set forth in the table below are the high and low sales prices of units for
the years ended December 31, 1998 and 1999 and the three months ended March 31,
2000, 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>
Three Months Ended March 31, 2000: $ -- $ --
Fiscal Year Ended December 31, 1999: 6.54 4.60
Fiscal Year Ended December 31, 1998: 4.77 1.60
</TABLE>
<PAGE> 29
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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.
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.
SECTION 10. POSITION OF THE GENERAL PARTNER OF YOUR PARTNERSHIP WITH RESPECT TO
THE OFFER.
The partnership and the general partner of your partnership have provided
the following information for inclusion in this Offer to Purchase:
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 The offer price and the method used to determine the 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 a property
sale, or a liquidation of the partnership.
<PAGE> 30
Page 27
o An evaluation of the financial condition and results of operations of your
partnership.
The general partner of your partnership is remaining neutral and makes no
recommendation as to whether you should tender or refrain from tendering your
units in the offer. Although the general partner believes our offer is fair, the
general partner also believes that you must make your own decision whether or
not to participate in any offer, based upon a number of factors, including
several factors that may be personal to you, such as your financial position,
your need or desire for liquidity, your preferences regarding the timing of when
you might wish to sell your units, other financial opportunities available to
you, and your tax position and the tax consequences to you of selling your
units.
Neither the general partner of your partnership or its affiliates have any
plans or arrangements to tender any units. Except as otherwise provided in "The
Offer-Section 12. Future Plans of the Purchaser," the general partner does 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; a purchase or sale or transfer of a material amount
of your partnership's assets; or any changes in your partnership's present
capitalization, indebtedness or distribution policies. For information relating
to certain relationships between your partnership and its general partner, on
one hand, and AIMCO and its affiliates, on the other and conflicts of interests
with respect to the tender offer, see "The Offer--Section 9. Background and
Reasons for the Offer" and "The Offer--Section 11. Conflicts of Interests and
Transactions with Affiliates." See also "The Offer--Section 9. Background and
Reasons for the Offer--Comparison to Alternative Consideration--Prior Tender
Offers" and "The Offer--Section 13. Certain Information Concerning Your
Partnership--Beneficial Ownership of Interests in Your Partnership," for certain
information regarding transactions in units of your partnership.
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. Your general partner has filed a Solicitation/Recommendation
Statement on Schedule 14D-9 with the SEC, which indicates that it is 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 IN ITS
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 properties. The general partner of your partnership received total
fees and reimbursements of $216,000 in 1997, $ 117,000 in 1998 and $83,000 in
1999. The residential property manager received management fees of $292,000 in
1997, $255,000 in 1998 and $153,000 in 1999. We have no current intention of
changing the fee structure for your general partner or the manager of your
partnership's properties.
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
<PAGE> 31
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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,
including tender offers made by third parties. 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 properties. We
currently intend that, upon consummation of the offer, we will hold the units
acquired and 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; a purchase or
sale or transfer of a material amount of your partnership's assets; any changes
in composition of your partnership's senior management or personnel or their
compensation; any changes in your partnership's present capitalization,
indebtedness 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, we or our affiliates 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 (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
<PAGE> 32
Page 29
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 45.42% 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. U.S. Realty Partners Limited Partnership was organized on January
23, 1986 under the laws of the State of South Carolina. 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
two residential apartment complexes: Governor's Park Apartments, a 154-unit
complex in Little Rock, Arkansas; and Twin Lakes Apartments, a 262-unit complex
in Palm Harbor, Florida.
The general partner of your partnership is U.S. Realty I Corporation, which
is a wholly owned subsidiary of AIMCO. A wholly owned subsidiary of AIMCO serves
as manager of the properties owned by your partnership. As of April 24, 2000,
there were 1,222,000 units issued and outstanding, which were held of record by
460 limited partners. Your partnership's principal executive offices are located
at Colorado Center, Tower Two, 2000 South Colorado Boulevard, Suite 2-1000,
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 particular, the general partner noted that it expects to spend
approximately $524,950 for capital improvements at the properties in 2000 to
repair and update the properties. Although there can be no assurance as to
future performance, however, these expenditures are expected to improve the
desirability of the property to tenants. The general partner does not believe
that a sale of the properties at the present time would adequately reflect the
properties' future prospects. Another significant factor considered by your
general partner is the likely tax consequences of a sale of the properties 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 properties.
<PAGE> 33
Page 30
PARTNERSHIP TERM. Under your partnership's agreement of limited
partnership, the term of the partnership will continue until December 31, 2005,
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.
CAPITAL REPLACEMENTS. 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
$524,950 for 2000, are expected to be paid from operating cash flows, cash
reserves, or from short-term or long-term borrowings.
COMPETITION. There are other properties within the market area of your
partnership's properties. 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 properties 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 DATA. The selected financial information of your partnership set
forth below for the years ended December 31, 1999 and 1998 is based on audited
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, 1999.
U.S. REALTY PARTNERS LIMITED PARTNERSHIP
(IN THOUSANDS, EXCEPT PER UNIT DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
---------------------
1999 1998
-------- --------
<S> <C> <C>
OPERATING DATA:
Total Revenues $ 3,105 $ 5,293
Net Income (Loss) 5,010 (76)
Net Income per limited partnership unit 3.73 (.06)
Distributions per limited partnership unit -- --
-------- --------
<CAPTION>
DECEMBER 31,
---------------------
1999 1998
-------- --------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and Cash Equivalents $ -- $ --
Real Estate, Net of Accumulated Depreciation 10,766 22,080
Total Assets 11,758 23,590
Notes Payable 3,810 20,582
General Partners' Capital (Deficit) 4 (447)
Limited Partners' Capital (Deficit) 6,546 1,987
Partners' Capital (Deficit) 6,550 1,540
Total Distributions -- --
Net Increase (Decrease) in Cash and Cash Equivalents -- --
Net Cash Provided by Operating Activities 1,206 735
</TABLE>
<PAGE> 34
Page 31
In July 1999, your partnership sold a property for $7,300,000, all of which
went to pay off indebtedness of the partnership.
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>
Governor's Park Apartments, 8/26/86 Fee ownership subject to Apartments
Little Rock, Arkansas mortgage 154 units
Twin Lakes Apartments,
Palm Harbor, Florida 8/28/86 Fee ownership subject to Apartments
mortgage 262 units
</TABLE>
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, 1999.
<TABLE>
<CAPTION>
Gross Accumulated Federal
Property Carrying Value Depreciation Rate Method Tax Basis
-------- -------------- ------------ ---- ------ ---------
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Governor's Park $ 6,368 $ 2,753 5-35 S/L $ 2,010
Twin Lakes 11,149 3,998 5/35 S/L 4,428
Totals $17,517 $ 6,751 $ 6,438
======= ======= =======
</TABLE>
SCHEDULE OF MORTGAGES. The following shows certain information regarding
the outstanding mortgages encumbering each of your partnership's properties as
of December 31, 1999.
<TABLE>
<CAPTION>
Principal
Principal Stated Balance
Balance At Interest Period Maturity Due At
Property December 31, 1999 Rate Amortized Date Maturity
-------- ----------------- ---- --------- ---- --------
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
$ 3,810 10.00% 95 months 8/1/01 $ (1)
</TABLE>
(1) The balance at maturity is directly related to the ability of the
Partnership to make cash flow payments per the mortgage agreement.
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>
Property Average Annual Rental Rates Average Annual Occupancy
--------------------------- ------------------------
1999 1998 1999 1998
------ ------ ---- ----
<S> <C> <C> <C> <C>
Governor's Park $6,836 $6,696 95% 91%
Twin Lakes 7,703 7,475 97% 93%
</TABLE>
<PAGE> 35
Page 32
SCHEDULE OF REAL ESTATE TAXES AND RATES. The following shows the real
estate taxes and rates for 1999 for each of your partnership's properties.
<TABLE>
<CAPTION>
Property 1999 Billing 1999 Rate
-------- ------------ ---------
(in thousands)
<S> <C> <C>
Governor's Park $ 63 6.39%
Twin Lakes 180 2.09%
</TABLE>
PROPERTY MANAGEMENT. Your partnership's properties are 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 properties, establishes rental policies and
rates 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. There have been no distributions paid.
OPERATING BUDGETS OF THE PARTNERSHIP. A summary of the operating budgets of
your partnership's properties for the year ending on December 31, 2000 is as
follows:
<TABLE>
<CAPTION>
Governor's Park Twin Lakes Total
--------------- ------------ -----------
<S> <C> <C> <C>
Total Revenues $ 1,028,979 $ 2,060,100 $ 3,089,079
Operating Expenses (335,183) (919,107) (1,254,290)
Replacement Reserves - Net
Debt Service
Capital Expenditures (294,000) (294,000)
----------- ----------- -----------
Net Cash Flow $ 693,796 $ 846,993 $ 1,540,789
=========== =========== ===========
</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, revenue (including occupancy rates), various operating expenses,
general and administrative 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 2000 should not necessarily be considered as indicative of
what the audited operating results for fiscal 2000 will be.
BENEFICIAL OWNERSHIP OF INTERESTS IN YOUR PARTNERSHIP. Together with our
subsidiaries, we currently own, in the aggregate, approximately 45.42% 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.
<PAGE> 36
Page 33
<TABLE>
<CAPTION>
PARTNERSHIP FEES PROPERTY
YEAR AND EXPENSES MANAGEMENT FEES
- ---- ------------ ---------------
<S> <C> <C>
1996 138,000 289,000
1997 216,000 292,000
1998 117,000 255,000
1999 83,000 153,000
</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
70,431.84 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 $5,354,043.20 will be required to purchase all
of the 608,414 limited partnership units that we are seeking in this offer
(exclusive of fees and expenses estimated to be $15,000). For more information
regarding fees and expenses, see "The Offer - Section 19. Fees and Expenses."
In addition to this offer, we are concurrently making offers to acquire
interest in approximately 40 other limited partnerships. If all such offers were
fully subscribed for cash, we would be required to pay approximately $187
million for all such units. If for some reason we did not have such funds
available we might extend this offer for a period of time sufficient for us to
obtain additional funds, or we might terminate this offer. However, based on our
past experience with similar offers, we do not expect all such offers to be
fully subscribed. As a result, we expect that the funds that will be necessary
to consummate all the offers will be substantially less than $187 million. We
believe that we have sufficient cash on hand and available sources of financing
to pay such amounts. As of March 31, 2000, we had $22 million of cash on hand
and $90 million available for borrowing under our existing lines of credit.
Under our secured $350 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
<PAGE> 37
Page 34
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 1.75 to 1.0. 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.
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 or 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
<PAGE> 38
Page 35
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 your 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 (v) of paragraph (c) above; or
(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) the offer to purchase may have an adverse effect on AIMCO's status as a
REIT; or
<PAGE> 39
Page 36
(h) we shall not have adequate cash or financing commitments available to
pay the for the units validly tendered.
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 TO 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 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 herein, 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, e-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 any related legal fees and expenses.
<PAGE> 40
Page 37
----------------------------------
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 SEC a Tender Offer Statement on Schedule TO,
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. Your partnership has filed with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 pursuant to Section
14(d)(4) and Rule 14d-9 under the Exchange Act, furnishing certain additional
information about your partnership's and the general partner's position
concerning our offer, and your partnership may file amendments thereto. The
Schedules TO and 14D-9 and any amendments to either Schedule, 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. Certain Information
Concerning Your Partnership--Additional Information Concerning Your
Partnership."
AIMCO PROPERTIES, L.P.
<PAGE> 41
Page 38
ANNEX I
OFFICERS AND DIRECTORS
The names and positions of the executive officers of Apartment Investment
and Management Company ("AIMCO"), and 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 sole executive
officer of the general partner of your partnership is Patrick J. Foye, Executive
Vice President. Unless otherwise indicated, the business address of each
executive officer and director is Colorado Center, Tower Two, 2000 South
Colorado Boulevard, Suite 2-1000, 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 Chief Executive Officer
Harry G. Alcock Executive Vice President and Chief Investment Officer
Joel F. Bonder Executive Vice President, General Counsel and Secretary
Patrick J. Foye Executive Vice President
Lance J. Graber Executive Vice President--Acquisitions
Steven D. Ira Co-Founder and Executive Vice President
Paul J. McAuliffe Executive Vice President and Chief Financial Officer
Richard S. Ellwood Director
J. Landis Martin Director
Thomas L. Rhodes Director
</TABLE>
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
Terry Considine Mr. Considine has been Chairman of the
Board of Directors and Chief Executive Officer
of AIMCO since July 1994. Mr. Considine serves
as Chairman and director of Asset Investors
Corporation ("Asset Investors") and Commercial
Assets, Inc. ("Commercial Assets"), two other
public real estate investment trusts. Mr.
Considine has been and remains involved as a
principal in a variety of other business
activities.
Peter K. Kompaniez Mr. Kompaniez has been Vice Chairman of the
Board of Directors of AIMCO since July 1994 and
was appointed President in July 1997. Mr.
Kompaniez has also served as Chief Operating
Officer of NHP Incorporated ("NHP"), which was
acquired by the Company in December 1997. 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 AIMCO) and 3.1
million square feet of commercial real estate.
Thomas W. Toomey Mr. Toomey served as Senior Vice President
-- Finance and Administration of AIMCO from
January 1996 to March 1997, when he was
promoted to Executive Vice President -- Finance
and Administration. Mr. Toomey served as
Executive Vice President -- Finance and
Administration until December 1999, when he was
appointed Chief Operating Officer. From 1990
until 1995, Mr. Toomey served in a similar
capacity with Lincoln Property Company ("LPC")
as Vice President/Senior Controller
</TABLE>
<PAGE> 42
Page 39
<TABLE>
<S> <C>
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. Mr.
Toomey received a B.S. in Business
Administration/Finance from Oregon State
University.
Harry G. Alcock Mr. Alcock served as a Vice President of
AIMCO from July 1996 to October 1997, when he
was promoted to Senior Vice President --
Acquisitions. Mr. Alcock served as Senior Vice
President -- Acquisitions until October 1999,
when he was promoted to Executive Vice
President and Chief Investment Officer. Mr.
Alcock has had responsibility for acquisition
and financing activities of the Company 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 acquisition and
development. From 1987 to 1988, Mr. Alcock
worked for Ford Aerospace Corp. He received his
B.S. from San Jose State University.
Joel F. Bonder Mr. Bonder was appointed Executive Vice
President, General Counsel and Secretary of
AIMCO effective December 1997. Prior to joining
AIMCO, Mr. Bonder served as Senior Vice
President and General Counsel of NHP from April
1994 until December 1997. Mr. Bonder served as
Vice President and Deputy General Counsel of
NHP from June 1991 to March 1994 and as
Associate General Counsel of NHP Incorporated
from 1986 to 1991. From 1983 to 1985, Mr.
Bonder practiced with the Washington, D.C. law
firm of Lane & Edson, P.C. and from 1979 to
1983 practiced with the Chicago law firm of
Ross and Hardies. Mr. Bonder received a B.A.
from the University of Rochester and a J.D.
from Washington University School of Law.
Patrick J. Foye Mr. Foye was appointed Executive Vice
President of AIMCO in May 1998. He is
responsible for acquisitions of partnership
securities, consolidation of minority
interests, and corporate and other
acquisitions. Prior to joining AIMCO Mr. Foye
was a Merger and Acquisitions 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 Law School and was Associate
Editor of the Fordham Law Review.
Lance J. Graber Mr. Graber was appointed Executive Vice
President -- Acquisitions of AIMCO in October
1999. His principal business function is
acquisitions. Prior to joining the Company, Mr.
Graber was an Associate from 1991 through 1992
and then a Vice President from 1992 through
1994 at Credit Suisse First Boston engaged in
real estate financial advisory services and
principal investing. He was a Director there
from 1994 to May 1999, during which time he
supervised a staff of seven in the making of
principal investments in hotel, multi-family
and assisted living properties. Mr. Graber
received a B.S. and an M.B.A. from the Wharton
School of the University of Pennsylvania.
</TABLE>
<PAGE> 43
Page 40
<TABLE>
<S> <C>
Steven D. Ira Mr. Ira is a Co-Founder of AIMCO and has
served as Executive Vice President -- Property
Operations of the Company since July 1994. From
1987 until July 1994, he served as President of
Property Asset Management ("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 (CPM)
designation from the National Institute of Real
Estate Management (IREM) and he is a member of
the Boards of Directors of the National
Multi-Housing Council, the National Apartment
Association and the Apartment Association of
Greater Orlando. Mr. Ira received a B.S. from
Metropolitan State College in 1975.
Paul J. McAuliffe Mr. McAuliffe has been Executive Vice
President of AIMCO since February 1999 and was
appointed Chief Financial Officer in October
1999. Prior to joining AIMCO, Mr. McAuliffe was
Senior Managing Director of Secured Capital
Corp and prior to that time had been a Managing
Director of Smith Barney, Inc. from 1993 to
1996, where he was senior member of the
underwriting team that lead 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. where he worked from
1983 to 1990. Mr. McAuliffe received a B.A.
from Columbia College and an M.B.A. from
University of Virginia, Darden School.
Richard S. Ellwood 12 Auldwood Lane, Rumson, NJ 07660 Mr.
Ellwood was appointed a director of AIMCO in
July 1994. Mr. Ellwood is currently Chairman of
the Audit Committee and a member of the
Compensation 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 director of Felcor Lodging Trust,
Incorporated and Florida East Coast Industries,
Inc.
J. Landis Martin 199 Broadway, Suite 4300, Denver, CO 80202,
Mr. Martin was appointed a director of AIMCO in
July 1994 and became Chairman of the
Compensation Committee on March 19, 1998. Mr.
Martin is a member of the Audit Committee. Mr.
Martin has served as President and Chief
Executive Officer of NL Industries, Inc., a
manufacturer of titanium dioxide since 1987.
Mr. Martin has served as Chairman of Tremont
Corporation
</TABLE>
<PAGE> 44
Page 41
<TABLE>
<S> <C>
("Tremont"), a holding company operating
through its affiliates Titanium Metals
Corporation ("TIMET") and NL Industries, Inc.
("NL"), since 1990 and as Chief Executive
Officer and a director of Tremont since 1988.
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 a
predecessor of Halliburton Company
("Halliburton") 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
Halliburton, which is engaged in the petroleum
services, hydrocarbon and engineering
industries, and Crown Castle International
Corporation, a communications company.
Thomas L. Rhodes 215 Lexington Avenue, 4th Floor, New York,
NY 10016 Mr. Rhodes was appointed a Director of
AIMCO in July 1994 and is currently a member of
the Audit and Compensation Committees. Mr.
Rhodes has served as the President and Director
of National Review magazine since November
1992, where he has also served as a Director
since 1988. 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
1992. He is currently Co-Chairman of the Board,
Co-Chief Executive Officer and a Director of
Asset Investors and Commercial Assets. He also
serves as a Director of Delphi Financial Group
and its subsidiaries, Delphi International
Ltd., Oracle Reinsurance Company and The Lynde
and Harry Bradley Foundation.
</TABLE>
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>
<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
ANNEX II
LETTER OF TRANSMITTAL
TO TENDER UNITS OF LIMITED PARTNERSHIP IN
U.S. REALTY PARTNERS LIMITED PARTNERSHIP (THE "PARTNERSHIP")
PURSUANT TO AN OFFER TO PURCHASE
DATED MAY 15, 2000 (THE "OFFER DATE")
BY
AIMCO PROPERTIES, L.P.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 5:00 P.M., NEW YORK TIME,
ON JUNE 13, 2000, UNLESS EXTENDED (AS EXTENDED FROM TIME TO TIME, THE
"EXPIRATION DATE")
- --------------------------------------------------------------------------------
TO PARTICIPATE IN THE OFFER, YOU MUST SEND A DULY COMPLETED AND EXECUTED COPY OF
THE ENCLOSED ACKNOWLEDGMENT AND AGREEMENT 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. 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 THE
ACKNOWLEDGMENT AND AGREEMENT OR ANY OTHER REQUIRED DOCUMENTS TO AN ADDRESS OTHER
THAN AS SET FORTH BELOW 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 THE ACKNOWLEDGMENT AND AGREEMENT.
---------------------------
FOR INFORMATION OR ASSISTANCE IN CONNECTION WITH THE OFFER OR THE
COMPLETION OF THE ACKNOWLEDGMENT AND AGREEMENT, PLEASE CONTACT THE INFORMATION
AGENT AT (888) 349-2005 (TOLL FREE).
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>
NOTE: PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. THE INSTRUCTIONS
ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THE
ACKNOWLEDGMENT AND AGREEMENT IS COMPLETED.
II-1
<PAGE> 2
Ladies and Gentlemen:
The Signatory (the "Signatory") executing the Acknowledgment and Agreement
relating to the captioned offer (the "Acknowledgment and Agreement"), which is
enclosed, upon the terms and subject to the conditions set forth in the Offer,
hereby and thereby tenders to the Purchaser the units set forth in the box
entitled "Description of Units Tendered" on the Acknowledgment and Agreement,
including all interests in any limited partnership represented by such units
(collectively, the "Units"), at the price indicated in the Offer as supplemented
or amended, less the amount of distributions, if any, made or declared by the
Partnership from the Offer Date until the Expiration Date (the "Offer Price"),
net to the Signatory in cash, without interest. Capitalized terms used herein
but not otherwise defined herein shall have the meanings ascribed thereto in
such Acknowledgment and Agreement.
Subject to and effective upon acceptance for payment of any of the Units
tendered hereby and thereby in accordance with the terms of the Offer, the
Signatory hereby and thereby 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 and thereby that are accepted for payment
pursuant to the Offer, including, without limitation, (i) all of the Signatory's
interest in the capital of the Partnership, and the Signatory's interest in all
profits, losses and distributions of any kind to which the Signatory 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, in respect of the Units tendered by
the Signatory and accepted for payment and thereby purchased by the Purchaser;
(ii) all other payments, if any, due or to become due to the Signatory in
respect of the Units, under or arising out of the agreement and certificate 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 Signatory'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
Signatory'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 Signatory against the Partnership, the other
partners of the Partnership, or the general partner and its affiliates, under or
arising out of the Partnership Agreement, the Purchase Agreement, the
Signatory'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.
NOTWITHSTANDING ANY PROVISION IN THE PARTNERSHIP AGREEMENT OR ANY PURCHASE
AGREEMENT TO THE CONTRARY, THE SIGNATORY HEREBY AND THEREBY 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 and thereby,
the Signatory 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 Signatory 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
thereby 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 the enclosed Acknowledgment and Agreement, the Signatory
represents that either (i) the Signatory 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 Signatory understands that a tender of Units to the Purchaser will
constitute a binding
II-2
<PAGE> 3
agreement between the Signatory and the Purchaser upon the terms and subject to
the conditions of the Offer. The Signatory recognizes that under certain
circumstances set forth in the Offer, the Purchaser may not be required to
accept for payment any or all of the Units tendered hereby. In such event, the
Signatory understands that any Acknowledgment and Agreement for Units not
accepted for payment may be returned to the Signatory or destroyed by the
Purchaser (or its agent). THIS TENDER IS IRREVOCABLE, EXCEPT 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 SIGNATORY 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 SIGNATORY HAS MADE HIS OR HER OWN DECISION TO TENDER UNITS.
The Signatory hereby and thereby represents and warrants for the benefit of
the Partnership and the Purchaser that the Signatory owns the Units tendered
hereby and thereby 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 thereby 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 and therein are in
compliance with all applicable laws and regulations.
All authority herein or therein conferred or agreed to be conferred shall
survive the death or incapacity of the Signatory, and any obligations of the
Signatory shall be binding upon the heirs, personal representatives, trustees in
bankruptcy, legal representatives, and successors and assigns of the Signatory.
The Signatory represents and warrants that, to the extent a certificate
evidencing the Units tendered hereby and thereby (the "original certificate") is
not delivered by the Signatory together with the Acknowledgment and Agreement,
(i) the Signatory represents and warrants to the Purchaser that the Signatory
has not sold, transferred, conveyed, assigned, pledged, deposited or otherwise
disposed of any portion of the Units, (ii) the Signatory has caused a diligent
search of its records to be taken and has been unable to locate the original
certificate, (iii) if the Signatory shall find or recover the original
certificate evidencing the Units, the Signatory will immediately and without
consideration surrender it to the Purchaser; and (iv) the Signatory 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.
II-3
<PAGE> 4
INSTRUCTIONS FOR COMPLETING THE ACKNOWLEDGMENT AND AGREEMENT
1. REQUIREMENTS OF TENDER. To be effective, a duly completed and signed
Acknowledgment and Agreement (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
Acknowledgment and Agreement and any other required documents, it is
suggested that you use overnight courier delivery or, if the Acknowledgment
and Agreement 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 you own the number of Units set forth in Box 2
entitled "Description of Units Tendered" on the Acknowledgment and
Agreement under the column entitled "Name(s), Address(es), Number of Units
Owned and Tax Identification Number of Registered Holder(s)." If you would
like to tender only a portion of your Units, please so indicate in the
space provided in the box.
THE METHOD OF DELIVERY OF THE ACKNOWLEDGMENT AND AGREEMENT 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 the Letter of
Transmittal and completing the Acknowledgment and Agreement, to tender
Units, unitholders must sign at the "X" in the Signature Box of the
Acknowledgment and Agreement. The signature(s) must correspond exactly with
the names printed (or corrected) on the front of the Acknowledgment and
Agreement. NO SIGNATURE GUARANTEE ON THE ACKNOWLEDGMENT AND AGREEMENT IS
REQUIRED IF THE ACKNOWLEDGMENT AND AGREEMENT IS SIGNED BY THE UNITHOLDER
(OR BENEFICIAL OWNER IN THE CASE OF AN IRA). If any tendered Units are
registered in the names of two or more joint owners, all such owners must
sign the Acknowledgment and Agreement.
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, no signature guarantee is required if
Units are tendered for the account of a bank, broker, dealer, credit union,
savings association, or other entity which is a member in good standing of
the Securities Agents Medallion Program or a bank, broker, dealer, credit
union, savings association, or other entity which is an "eligible guarantor
institution" as the term is defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934 (each an "Eligible Institution").
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 Box 3 in the Acknowledgment and
Agreement. If the Acknowledgment and Agreement 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 Acknowledgment and Agreement, 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.
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.
II-4
<PAGE> 5
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. 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 6 and Box 7 of the Acknowledgment
and Agreement. By signing the Signature Box, the unitholder(s) certifies
that the TIN as printed (or corrected) on Acknowledgment and Agreement in
the box entitled "Description of Units Tendered" and the representations
made in Box 6 and Box 7 of the Acknowledgment and Agreement 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 6 and Box 7 of the Acknowledgment and Agreement.
BOX 6 - SUBSTITUTE FORM W-9.
Part (i), Taxpayer Identification Number -- Tendering unitholders must
certify to the Purchaser that the TIN as printed (or corrected) on the
Acknowledgment and Agreement 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. 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).
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 Acknowledgment and Agreement is
correct.
BOX 7 - 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 claimed from the IRS.
II-5
<PAGE> 6
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 submit a
statement, signed under penalties of perjury, attesting to that
individual's exempt status. Forms for such statements can be obtained from
the Information Agent.
5. VALIDITY OF ACKNOWLEDGMENT AND AGREEMENT. All questions as to the validity,
form, eligibility (including time of receipt) and acceptance of an
Acknowledgment and Agreement 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 the Acknowledgment and Agreement)
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. The Acknowledgment and
Agreement 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 an Acknowledgment and Agreement and will
incur no liability for failure to give such notification.
6. 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.
7. 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.
8. 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 Acknowledgment and Agreement or if consideration is to be sent to
someone other than such signer or to an address other than that set forth
on the Acknowledgment and Agreement in the box entitled "Description of
Units Tendered," the appropriate boxes on the Acknowledgment and Agreement
must be completed.
II-6
<PAGE> 7
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
(joint account) combined 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 The minor(2)
to 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 The ward, minor or incompetent person(3)
committee 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
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>
II-7
<PAGE> 8
(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.
- 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.
II-8
<PAGE> 9
- 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.
II-9
<PAGE> 1
ACKNOWLEDGMENT AND AGREEMENT
TO TENDER UNITS OF LIMITED PARTNERSHIP IN
U.S. REALTY PARTNERS LIMITED PARTNERSHIP (THE "PARTNERSHIP")
PURSUANT TO AN OFFER TO PURCHASE
dated May 15, 2000 (the "Offer Date")
by
AIMCO PROPERTIES, L.P.
- --------------------------------------------------------------------------------
FOR INFORMATION OR ASSISTANCE IN CONNECTION WITH THE OFFER OR THE
COMPLETION OF THIS ACKNOWLEDGMENT AND AGREEMENT, PLEASE CONTACT THE
INFORMATION AGENT AT (888) 349-2005 (TOLL FREE).
- --------------------------------------------------------------------------------
WHEN COMPLETING THIS ACKNOWLEDGMENT AND AGREEMENT, PLEASE
REFER TO THE INSTRUCTIONS SET FORTH ON THE LAST PAGE OF THIS
ACKNOWLEDGMENT AND AGREEMENT
The undersigned hereby agrees as set forth under "ACKNOWLEDGMENT AND
AGREEMENT" below.
================================================================================
1 SIGNATURE BOX
(SEE INSTRUCTION 2 IN THE LETTER OF TRANSMITTAL)
- --------------------------------------------------------------------------------
Please sign exactly as your name is printed in Box 2 below. For joint
owners, each joint owner must sign. (See Instruction 2 in the Letter of
Transmittal).
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):
--------------------------------------
================================================================================
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
2 DESCRIPTION OF UNITS TENDERED
- ---------------------------------------------------------------------------------------------------------
Name(s), and Address(es), Number of Units Owned and Tax Identification Number
of Registered Holder(s). (Please indicate changes or corrections to the name, Total Number of
address, number of units owned and tax identification number printed below.) Units Tendered
(#)
- ---------------------------------------------------------------------------------------------------------
<S> <C>
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
Page 2
- --------------------------------------------------------------------------------
[ ] Check box if the units have been tendered in another tender offer.
================================================================================
3 SIGNATURE GUARANTEE (IF REQUIRED)
(SEE INSTRUCTION 2 IN THE LETTER OF TRANSMITTAL)
- --------------------------------------------------------------------------------
YOU DO NOT NEED TO HAVE YOUR SIGNATURE GUARANTEED UNLESS YOU ARE A TRUSTEE,
EXECUTOR, ADMINISTRATOR, GUARDIAN, ATTORNEY-IN-FACT, OFFICER OF A CORPORATION OR
OTHER PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY.
Name and Address of Eligible Institution:
----------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Authorized Signature: X
----------------------------------------------------
Name: Title: Date:
------------------------ ------------------ ---------------
================================================================================
<TABLE>
<S> <C>
======================================================== =======================================================
4 SPECIAL PAYMENT INSTRUCTIONS 5 SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 2, 7 and 8 in the Letter (SEE INSTRUCTIONS 2, 7 AND 8 IN THE LETTER
of Transmittal) OF TRANSMITTAL)
- -------------------------------------------------------- ------------------------------------------------------
To be completed ONLY if the consideration for the To be completed ONLY if the consideration for the
purchase price of Units accepted for payment is to be purchase price of Units accepted for payment is to be
issued in the name of someone other than the Signatory. sent to someone other than the Signatory or to the
Signatory at an address other than that shown in
Box 2 above.
Issue consideration to: Mail consideration to:
Name Name
---------------------------------------------------- --------------------------------------------------
(Please Type or Print) (Please Type or Print)
Address Address
------------------------------------------------- -----------------------------------------------
------------------------------------------------- -----------------------------------------------
(Include Zip Code) (Include Zip Code)
- --------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
(See Substitute Form W-9 below)
======================================================== =======================================================
</TABLE>
================================================================================
6 SUBSTITUTE FORM W-9
(SEE INSTRUCTION 4 - BOX 6 OF THE LETTER OF TRANSMITTAL)
- --------------------------------------------------------------------------------
[ ] Under penalties of perjury, the Signatory certifies that: (1) the number
shown on this form is the unitholder's correct Taxpayer Identification No.
("TIN") or the unitholder has applied for a TIN; and (2) the unitholder is not
subject to backup withholding either because the unitholder : (a) is exempt for
backup withholding; (b) has not been notified by the Internal Revenue Service
("IRS") that the unitholder is subject to back-up withholding as a result of
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.
Certification Instructions - You must cross out item (2) in the paragraph above
if you have been notified by the IRS that you are subject to back-up withholding
because of underreporting interest or dividends on your tax return. However, if
after being notified by the IRS that you were subject to back-up withholding you
received another notification from the IRS that you are no longer subject to
back-up withholding, do not cross out item (2).
Please check this box [ ] 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).
================================================================================
<PAGE> 3
Page 3
================================================================================
7 FIRPTA AFFIDAVIT
(SEE INSTRUCTION 4 - BOX 7 OF THE LETTER OF TRANSMITTAL)
- --------------------------------------------------------------------------------
Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg.1.1445-11T(d)
provide that a transferee of the U.S. real property interest must withhold tax
equal to 10% of the amount realized if the transferor is a foreign person. To
inform the Purchaser that withholding of tax is not required upon this
disposition of a U.S. real property interest, the undersigned hereby certifies
the following under penalties of perjury: (i) 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 this Acknowledgment and Agreement; and (iii) the unitholder's
home address (for individuals), or office address (for non-individuals), is
correctly printed (or corrected) on the front of this Acknowledgment and
Agreement. The person signing this Acknowledgment and Agreement 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.
[ ] Please check this box if the withholding of tax is required because the
unitholder does not satisfy all of the above conditions.
================================================================================
ACKNOWLEDGMENT AND AGREEMENT. The signatory hereto (the "Signatory") hereby
acknowledges that he or she has received and reviewed (i) the Purchaser's Offer
to Purchase, dated the Offer Date (as supplemented or amended from time to time,
the "Offer to Purchase") relating to the offer by AIMCO Properties, L.P. (the
"Purchaser") to purchase limited partnership interests in the Partnership, (ii)
the Letter of Transmittal attached as Annex III thereto (the "Letter of
Transmittal"), (iii) this Acknowledgment and Agreement, and (iv) the
Instructions hereto in the Letter of Transmittal, as each may be supplemented or
amended from time to time, and whose terms and conditions are incorporated by
reference herein (collectively, the "Offer"). Capitalized terms used herein but
not otherwise defined herein shall have the meanings ascribed thereto in the
Offer to Purchase. The Signatory hereby understands and agrees that the Letter
of Transmittal is hereby incorporated by reference herein and is hereby made a
part hereof.
The Signatory hereby makes the representations, warranties, and covenants,
and agrees to the terms and conditions, in each case set forth in the Letter of
Transmittal, and hereby tenders to the Purchaser the units set forth in the box
entitled "Description of Units Tendered" herein, including all interests in any
limited partnership represented by such units (collectively, the "Units"), on
the terms and conditions set forth in the Offer, and certifies under penalties
of perjury that the statements in Box 6 and Box 7 herein are true.
The Signatory 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 Signatory 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
on any matter submitted for the consent or approval of holders of 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
Signatory's agent) of the offer price pursuant to the terms of the Offer, to
become a substitute limited partner, to receive any and all distributions made
by the Partnership to which the Purchaser is entitled pursuant to the terms 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
shall be effective upon the purchase of the Units by the Purchaser as provided
in the Offer and shall be irrevocable for a period of the lesser of (i) five
years following the termination of the Offer, or (ii) the maximum period
permitted by applicable law. Upon the purchase of Units pursuant to the Offer,
all prior proxies and consents given by the Signatory 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).
In addition to and without limiting the generality of the foregoing, the
Signatory 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 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 certificate and agreement of partnership of the
Partnership; (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 effective date set forth in the Offer.
In addition, the Signatory irrevocably constitutes and appoints the
Purchaser and any designees of the Purchaser as the true and lawful agent and
attorney-in-fact of the Signatory with respect to such Units, with full power of
substitution (such power of
<PAGE> 4
Page 4
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 Signatory prior to the expiration date (as defined in the
Offer to Purchase).
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the Signatory, and any obligations of the Signatory shall
be binding upon the heirs, personal representatives, trustees in bankruptcy,
legal representatives, and successors and assigns of the Signatory.
<PAGE> 5
Page 5
INSTRUCTIONS
(THESE INSTRUCTIONS APPLY IF YOU DESIRE TO PARTICIPATE IN THE OFFER)
For complete instructions on completing this Acknowledgement and Agreement,
please refer to the Letter of Transmittal (Annex III in the Offer to Purchase).
IMPORTANT:
1. ALL registered owners must sign at the X in Box 1.
2. When signing as a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation, or in another fiduciary or
representative capacity, please indicate your title in Box 1, submit proper
evidence of your authority to so act, and provide a signature guarantee in
Box 3.
3. Please confirm that your name, address and tax identification number are
correct in Box 2. If there is no label in Box 2, you must fill in this
information.
4. Box 4 is to be used only if payment is to be made to someone other than the
signer.
5. Box 5 is to be used only if payment is to be mailed to someone other than
the signer or the signer at a different address from that in Box 2.
6. Please review Box 6 and Box 7. Crossing out item 2 in Box 6 and/or checking
the box in Box 7 may result in the withholding of a substantial portion of
the proceeds payable to you.
7. Please return all pages of this Acknowledgment and Agreement (along with
all other required documentation) to the Information Agent at one of its
addresses below. A postage-paid envelope is enclosed for your convenience.
FOR INFORMATION OR ASSISTANCE IN CONNECTION WITH THE OFFER OR THE COMPLETION OF
THIS ACKNOWLEDGMENT AND AGREEMENT, PLEASE CONTACT THE INFORMATION AGENT AT (888)
349-2005 (TOLL FREE).
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
IMPORTANT--TENDER OFFER
AIMCO
AIMCO PROPERTIES, L.P.
c/o River Oaks Partnership Services, Inc.
P.O. Box 2065
S. Hackensack, N.J., 07606-2065
(888) 349-2005
May 15, 2000
Dear Limited Partner:
We are pleased to announce that we are offering to purchase units in your
partnership, U.S. Realty Partners Limited Partnership, for $7.00 per unit,
pursuant to the enclosed Offer to Purchase. Our offer presents you with the
following two options, which you are free to accept or reject in any combination
you like:
1. You may tender each of your units in exchange for $7.00 in cash, in
which case you may recognize a gain or loss for federal income tax
purposes.
2. You may retain any or all of your units. If you choose to retain
any or all of your units, your rights as a holder of units will remain
unchanged. You will continue to participate in gains and losses of your
partnership(s), and you will receive distributions, if any, payable in
respect of your units.
The offer is scheduled to expire on June 13, 2000, unless otherwise
extended.
We are offering to purchase any and all units in your partnership, subject
to the terms of the offer. Our offer is not subject to any minimum number of
units being tendered. You will not be required to pay any partnership transfer
fees in connection with any disposition of your units pursuant to our offer. Our
offer price will be reduced for any distributions subsequently made by your
partnership prior to the expiration of our offer.
There are advantages and disadvantages to you of accepting or declining our
offer. The terms of the offer are more fully described in the enclosed
materials,
<PAGE> 2
May 15, 2000
Page 2
which you should read carefully. These documents describe the material risks and
opportunities associated with the offer, including certain tax considerations.
The general partner of your partnership is remaining neutral and makes no
recommendation as to whether you should tender or refrain from tendering your
units in any offer. Although the general partner believes our offer is fair, the
general partner also believes that you must make your own decision whether or
not to participate in any offer, based upon a number of factors, including
several factors that may be personal to you, such as your financial position,
your need or desire for liquidity, your preferences regarding the timing of when
you might wish to sell your units, other financial opportunities available to
you, and your tax position and the tax consequences to you of selling your
units. The general partner is our affiliate. LIMITED PARTNERS ARE URGED TO READ
OUR OFFER TO PURCHASE 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.
If you desire to tender any of your units in response to our offer, you
should complete and sign the enclosed yellow acknowledgment and agreement in
accordance with the enclosed instructions and mail or deliver the signed yellow
acknowledgment and agreement and any other required documents to River Oaks
Partnership Services, Inc., which is acting as the Information Agent in
connection with our offer, at the address set forth on the back cover of the
enclosed Offer to Purchase. The offer will expire at 5:00 p.m. New York City
time on June 13, 2000, unless extended. If you have any questions or require
further information, please call the Information Agent, toll free, at (888)
349-2005.
Very truly yours,
AIMCO PROPERTIES, L.P.
<PAGE> 1
EXHIBIT (z)(1)
AGREEMENT OF JOINT FILING
AIMCO Properties, L.P., AIMCO-GP, Inc. and Apartment Investment and
Management Company agree that the Amendment No. 3 to Schedule 13D to which this
agreement is attached as an exhibit, and all further amendments thereto, and all
filings under Schedule TO to which this agreement is attached as an exhibit, and
all further amendments thereto, shall be filed on behalf of each of them. This
agreement is intended to satisfy the requirements the requirements of Rule
13d-1(f)(1)(iii) under the Securities Exchange Act of 1934, as amended.
Dated: May 15, 2000
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, INC.
(General Partner)
By: /s/ Patrick J. Foye
-------------------------------------
Executive Vice President
APARTMENT INVESTMENT
AND MANAGEMENT COMPANY
By: /s/ Patrick J. Foye
-------------------------------------
Executive Vice President
