SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. ___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BRAUVIN INCOME PROPERTIES L.P. 6
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[X] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies: Units of Limited Partnership Interest
(2) Aggregate number of securities to which transaction applies:
7,842.5 Units
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state
how it was determined):
$3,490
(bona fide estimate of the fair market value of the
Properties x 1/50 x 1%)
(4) Proposed maximum aggregate value of transaction:
$17,450,000
(5) Total fee paid:
$3,490
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
BRAUVIN INCOME PROPERTIES L.P. 6
30 North LaSalle Street
Suite 3100
Chicago, Illinois 60602
312-759-7660
SOLICITATION OF VOTE OF LIMITED PARTNERS
Dear Limited Partner:
As discussed more fully in the attached Solicitation Statement, we are
soliciting the vote of Limited Partners to authorize the sale of all the
Partnership's existing properties and a subsequent liquidation of the
Partnership. Please read the Solicitation Statement carefully before
filling out the enclosed Ballot.
Holders of more than 50% of the outstanding Units must approve the sale
of all or substantially all of the Partnership's assets. Only Limited
Partners of record at the close of business on ________________, 1999
will be entitled to notice of, and to participate in, the vote. Failure
of a Limited Partner to return a Ballot by _______________, 1999 will
constitute a vote AGAINST the proposed sale.
If Limited Partners holding a majority of outstanding Units approve the
sale, we will aggressively pursue the sale of the properties on the terms
described in the Solicitation Statement.
Your vote is important. Please sign and date the enclosed Ballot and
return it promptly to the Partnership in the enclosed return envelope.
Very truly yours,
BRAUVIN INCOME PROPERTIES L.P. 6
By: /s/ Jerome J. Brault
Jerome J. Brault
Managing General Partner
_______________, 1999
BRAUVIN INCOME PROPERTIES L.P. 6
30 North LaSalle Street
Suite 3100
Chicago, Illinois 60602
312-759-7660
SOLICITATION STATEMENT
________________, 1999
This Solicitation Statement is being furnished to the Limited Partners
of Brauvin Income Properties L.P. 6, a Delaware limited partnership (the
"Partnership"), in connection with the General Partners' solicitation of
the votes of the Limited Partners to approve a sale of all of the
Partnership's properties either on an individual or group basis (the
"Proposed Transaction"), and to subsequently liquidate the Partnership.
This authorization is the only authorization that will be solicited by
the General Partners in connection with the sale of the Properties
(as hereinafter defined). No meeting will be held in connection with
this solicitation of votes from the Limited Partners. To be counted,
a properly completed Ballot must be received by the Partnership at
30 North LaSalle Street, Suite 3100, Chicago, Illinois 60602 on or before
_____________, 1999. Failure of a Limited Partner to return a Ballot by
______________, 1999 will constitute a vote AGAINST the Proposed
Transaction. Ballots will not be deemed to have been returned until
actually received by the Partnership at the foregoing address.
This Solicitation Statement is made by the General Partners, Brauvin 6,
Inc. and Jerome J. Brault, on behalf of the Partnership. Solicitation
of votes other than by mail may be made by telephone, facsimile or in
person by regularly employed officers, agents and employees of the
General Partners who will not receive additional compensation for their
efforts. The total cost of soliciting votes will be borne by the
Partnership.
The General Partners have set _____________, 1999 as the record date for
determining the Limited Partners entitled to a Ballot and to vote on the
Proposed Transaction. Only the Limited Partners of record at the close of
business on _____________, 1999 will be entitled to vote on the Proposed
Transaction. A Limited Partner holding Units (as hereinafter defined) of
record as of the record date will retain the right to vote on the Proposed
Transaction even if such Limited Partner sells or transfers such Units
after such date.
The total number of outstanding Units and economic interests as of
December 31, 1998 was 7,842.5. Each Limited Partner is entitled to cast
one vote for each Unit owned of record on the record date. There is no
established trading market for the Units.
A Limited Partner may revoke its Ballot at any time prior to
______________, 1999 by mailing a properly executed Ballot bearing
a later date or by mailing a signed, written notice of revocation to
the attention of the General Partners. Revocation of a Ballot will
be effective upon receipt by the General Partners of either:
(i) an instrument revoking the Ballot; or (ii) a duly executed Ballot
bearing a later date. This Solicitation Statement and
Ballot were first mailed to Limited Partners on or about
_______________, 1999. Votes will be tallied within ten days of
_______________, 1999, and within ten days of the final tally, the
General Partners will notify each of the Limited Partners of the
outcome of the vote by mail.
INTRODUCTION
General Information
If the Proposed Transaction is consummated and all of the Properties are
sold, the gross sales price of the Partnership's assets will be no less
than $12,215,000. This minimum sales price represents approximately 70%
of the cumulative appraised value of the Properties, before deducting any
expenses incurred to close the transaction. However, the General Partners
will endeavor to maximize the value of the Properties in the marketplace.
See "Description of the Proposed Transaction - Description of the
Properties" for the appraised market value of each Property and the
respective appraisal date.
The General Partners intend to sell all of the Properties, as well as the
retail properties of those owned by two affiliated limited partnerships,
Brauvin Real Estate Fund L.P. 4 and Brauvin Real Estate Fund L.P. 5, in a
single sale. However, if the General Partners believe it is in the best
interest of the Limited Partners, the Properties may be sold individually
or in any combination provided that the total sales price for the
Properties included in the transaction equals or exceeds 70% of the
aggregate appraised value for such Properties. The General Partners will
not receive any fees in connection with the Proposed Transaction.
The Partnership's Restated Limited Partnership Agreement (the
"Partnership Agreement") provides in Section P.2(e) that the General
Partners may not sell or dispose of all, or substantially all, of the
Properties without the approval of the Limited Partners owning a
majority of the limited partnership interests (excluding non-voting
economic interests) of the Partnership (the "Units"), except the sale
or disposition of the final Property. For purposes hereof, "Properties"
means the real estate, together with the buildings, improvements,
equipment, furniture, fixtures and personal property associated
therewith, used by the Partnership in the conduct of its
business.
As of December 31, 1998, the Partnership had approximately 565 Limited
Partners and economic interest holders. Neither the General Partners,
nor any of the officers or directors of Brauvin 6, Inc., are the
beneficial owners of any Units.
Forward-Looking Statements
This Solicitation Statement contains forward-looking statements.
Discussions containing such forward-looking statements may be found in the
material set forth under "Description of the Proposed Transaction" and "Pro
Forma Unaudited Financial Data" as well as within the Solicitation Statement
generally. In addition, when used in this Solicitation Statement, the words
"believes," "anticipates," "expects" and similar expressions are intended to
identify forward-looking statements; however, not all forward-looking
statements will contain such expressions. Such statements are subject to a
number of risks and uncertainties. Actual results or events in the
future could differ materially from those described in the forward-looking
statements as a result of the inability of the General Partners to find a
suitable buyer for the Properties, the inability to agree on an acceptable
purchase price or contract terms, a decrease in the financial performance
of the Properties, the discovery of an environmental condition impacting
one or more of the Properties, an economic downturn in the markets in
which the Properties are located and other factors set forth in this
Solicitation Statement. The Partnership undertakes no obligation to
publicly release any revisions to these forward-looking statements to
reflect any future events or circumstances.
DESCRIPTION OF THE PROPOSED TRANSACTION
Background and Recommendation of the General Partners
The General Partners have been reviewing potential sale strategies,
including both aggregate sales possibilities and single-property sales, to
determine the most profitable and efficient manner to sell the Properties.
While the General Partners' marketing efforts have not been aggressive to
date, the General Partners intend to increase their efforts upon a majority
vote of the Limited Partners in favor of the Proposed Transaction. To that
end, the General Partners retained Landauer Associates, Inc. ("Landauer")
to assist in the marketing process.
The Partnership has entered into an engagement letter (the "Marketing
Contract") with Landauer for the various Properties owned by the
Partnership. The Marketing Contract is structured in two phases: (i)
Phase I: due diligence and market pricing analysis; and (ii) Phase II:
marketing of the Properties. Phase II is further sub-divided into three
sub-phases: (i) pre-marketing; (ii) marketing; and (iii) post-marketing.
The fee for appraisals of two of the Partnership's properties and
completion of Phase I of the Marketing Contract was $14,300. The fee for
Phase II of the Marketing Contract is contingent on the closing of the
sale of the Properties (the "Placement Fee") and the Placement Fee shall
be an amount equal to 2% of the gross sales price (sales
price without deduction for closing expenses, adjustments or costs) of the
Properties. Landauer will provide a credit against the Placement Fee for
any fees it received in connection with Phase I of the engagement. Under
the Marketing Contract, Landauer has the exclusive right to represent the
Partnership in the sale of the Properties for a period of 12 months.
However, the Marketing Contract may be terminated at anytime by either
party upon 30 days written notice to the other party.
Copies of the Marketing Contract with Landauer will be made available to
the Limited Partners upon request.
Landauer, founded in 1946, is an international real estate advisory
organization with professionals in the appraisal, consulting and investment
banking areas of the commercial real estate industry. The Capital Market
Group of Landauer represents clients in structuring their real estate
initiatives including the disposition of selected real estate assets, such
as retail centers, hotels, office and industrial buildings. Landauer's
investor database contains a current list of the most active investors,
many of whom are clients of Landauer's many practice areas.
Landauer will employ a marketing plan to attempt to achieve the optimum
value for the assets. Initially, Landauer will conduct due diligence on
the Properties and prepare a confidential offering memorandum. Once the
offering memorandum has been approved, Landauer will embark on marketing
the Properties including, but not limited to, print advertising, press
releases and contacting current buyers from its investor database.
Interest will be sought directly from private investors and firms,
insurance and pension funds and publicly owned real estate companies.
Landauer will inform the Partnership of any serious interest in the
Properties and will work with both buyer and seller to arrive at an
agreeable purchase and sale contract. While it is the intent of Landauer
to sell all of the retail properties to one buyer, Landauer may
recommend to divide the portfolio should it be more prudent.
Landauer appraised two of the Properties. Landauer represents that it
prepared the appraisal reports in conformity with the Uniform Standards of
Professional Practice and in accordance with the requirements of the Code
of Professional Ethics and the Standards of Professional Practice of the
Appraisal Institute. Landauer reviewed lease abstracts, rent rolls,
operating budgets and other property data provided by the Partnership.
Landauer also conducted an on-site investigation of each Property and
its surrounding area.
There are three traditional approaches to value: The Income Approach, the
Sales Comparison Approach and the Cost Approach. The applicability of each
depends on the characteristics of the subject property and the behavior of
market participants as of the date of value. Investment-grade properties,
such as the Properties, typically possess detailed and complex physical,
legal, locational and economic characteristics. The primary valuation
approach employed by buyers and sellers of such properties is the Income
Approach. The Income Approach converts the anticipated future benefits of
ownership to an expression of present value. For multi-tenant properties
such as the two Properties appraised by Landauer, the discounted cash flow
analysis technique is typically employed. This technique first projects
the anticipated cash flows for the properties over a holding period
(normally ten years). The projected cash flows and net residual value are
then discounted to an expression of present value at a market-oriented
discount rate. In arriving at the appraised market value for these
properties, Landauer placed its greatest reliance on the Income Approach.
The appraisal report for the Ponderosa restaurant in Garfield Heights,
Ohio, was prepared by Valuation Research Corporation ("Valuation Research").
Valuation Research represents that it prepared the appraisal report in
conformity with the Uniform Standards of Professional Practice and in
accordance with the requirements of the Code of Professional Ethics and the
Standards of Professional Practice of the Appraisal Institute. The
appraisal included a personal inspection of the Ponderosa Property
(as hereinafter defined) and an analysis of recent comparable sales and
rentals of similar types of property in the area. Valuation Research
limited its analysis to the Income Approach in establishing the appraised
market-value of the Ponderosa Property.
Copies of the appraisal reports for the Properties will be made available
to the Limited Partners upon request.
The General Partners believe the Proposed Transaction is in the best
interests of the Limited Partners at this time and strongly recommend a
vote in favor of the Proposed Transaction due to the: (1) improved
conditions for the sale of the Properties; (2) lack of an established
trading market for the Units; (3) limited representations and warranties
anticipated to be made to the buyers; (4) majority approval requirement;
and (5) return of a portion of the outstanding capital contribution. See
"Description of the Proposed Transaction -- Advantages to the Limited
Partners."
Description of the Properties
For the purpose of the information disclosed in this section, the
following terms are defined as follows:
Occupancy Rate: The occupancy rate is defined as the occupied square
footage as of December 31, divided by the total square footage excluding
square footage of outparcels, if any.
Average Annual Base Rent Per Square Footage: The average annual base rent
per square footage is defined as the total effective base rental income
for the year divided by the Average Square Footage Occupied excluding
outparcels, if any.
Average Square Footage Occupied: The average square footage occupied is
calculated by averaging the occupied square footage at the beginning of
the year with the occupied square footage at the end of the year
excluding outparcels, if any.
The Partnership currently owns the Properties described below:
(a) Delchamps Plaza North Shopping Center ("Delchamps")
On November 12, 1987, the Partnership acquired Delchamps located in
Tuscaloosa, Alabama, for approximately $4,058,000. Delchamps is a community
shopping center constructed in 1986 with approximately 59,400 rentable
square footage on a seven acre site. Delchamps is anchored by a regional
grocer named Delchamps and Harco Drug, a Tuscaloosa-based drug store chain.
Delchamps has eight stores and was 100% occupied at December 31, 1998.
Delchamps had an appraised market value of $4,900,000, as of October 18,
1998.
Delchamps is secured by a first mortgage loan in the amount of $2,925,000
(the "Delchamps First Mortgage Loan") from NationsBanc Mortgage Capital
Corporation ("NationsBanc"). The Delchamps First Mortgage Loan bears
interest at the rate of 9.03% per annum, is amortized over a 25 year
period, requires monthly payments of principal and interest of
approximately $24,600 and matures on February 1, 2002. The outstanding
mortgage balance encumbered by this property was $2,869,312 at December 31,
1998.
At any time between February 1, 1999 and August 1, 2001, the Partnership
has the right to prepay the Delchamps First Mortgage Loan in whole (but
not in part) provided that the Partnership: (i) provides NationsBanc 60
days prior written notice; and (ii) pays to NationsBanc a prepayment
premium equal to the greater of : (a) 1% of the unpaid principal balance
of the Delchamps First Mortgage Loan; or (b) a yield maintenance fee,
computed at the time of the prepayment, in an amount equal to the present
value of the difference between the interest which would have accrued over
the remaining term of the Delchamps First Mortgage Loan, and the interest
which would be earned on a 14.25% U.S. Treasury Security with the same
maturity as the Delchamps First Mortgage Loan.
The occupancy rate and average annual base rent per square foot at
December 31 for the last two years were as follows:
1998 1997
Occupancy Rate 100% 100%
Average Annual Base
Rent Per Square Foot $7.92 $7.84
Delchamps has two tenants which individually occupy 10% or more of the
rentable square footage. The following is a summary of the tenant rent
roll at December 31, 1998:
Annual Lease
Square Base Expiration Renewal Nature of
Tenant Footage Rent Date Options Business
Delchamps 42,057 $315,427 1/2007 4/5 years ea. Grocery
Store
Harco Drugs 9,800 73,500 1/2002 4/5 years ea. Drug
Store
Others 7,532 81,222 Various Various
59,389 $470,149
(b) Shoppes on the Parkway ("Shoppes")
On March 31, 1988, the Partnership purchased Shoppes, a shopping center
located in Hilton Head, South Carolina, for approximately $7,360,000.
Shoppes is a factory outlet retail center constructed in 1986 with
approximately 86,900 rentable square footage situated on a 9.43 acre
site. Shoppes was 92% occupied at December 31, 1998. To retain tenants
and to attract customers to Shoppes, the Partnership completed various
improvements to the property in 1997. These improvements included
landscaping, benches, canopies, exterior painting and refurbished
restrooms.
Shoppes had an appraised market value of $11,300,000, as of November 1,
1998.
Shoppes is secured by a first mortgage loan in the amount of $6,100,000
(the "Shoppes First Mortgage Loan") from Morgan Stanley Mortgage Capital,
Inc. ("Morgan Stanley"). The Shoppes First Mortgage Loan bears interest
at the rate of 9.55% per annum, amortizes over a 25 year period, requires
monthly payments of principal and interest of approximately $53,500 and
matures on May 1, 2002. The outstanding mortgage balance encumbered by
this property was $5,846,777 at December 31, 1998.
The Partnership may prepay the Shoppes First Mortgage Loan without
premium or penalty at any time after 78 months upon five days' prior
written notice to Morgan Stanley. In addition, the Partnership may
prepay the principal of the Shoppes First Mortgage Loan in whole or in
part on any first business day of each month after 36 months upon 45 days'
prior written notice provided that the Partnership also pays a prepayment
premium in an amount equal to the product of: (i) the difference between
(a) the present value, as of the date of such prepayment, of the remaining
scheduled payments of principal and interest due under the Shoppes First
Mortgage Loan (such present value being determined by discounting such
payments using a treasury rate yield for the week ending prior to the date
of the relevant prepayment of U.S. Treasury constant maturities with a
maturity date (one longer and one shorter) most nearly approximating the
mortgage rate of the Shoppes First Mortgage Loan), and (b) the
then-outstanding principal balance of the Shoppes First Mortgage Loan
as of the date of such prepayment; multiplied by (ii) a fraction, the
numerator of which is the amount of that portion of the principal balance
of the Shoppes First Mortgage Loan being prepaid and the denominator of
which is the entire outstanding principal balance of the Shoppes First
Mortgage Loan on the date of such prepayment. The calculation of any
and all prepayment premiums will be made by Morgan Stanley.
The occupancy rate and average annual base rent per square foot at
December 31 for the last two years were as follows:
1998 1997
Occupancy Rate 92% 95%
Average Annual Base
Rent Per Square Foot $15.15 $14.36
Shoppes has no tenants which individually occupy 10% or more of the
rentable square footage. The following is a summary of the tenant rent
roll at December 31, 1998:
Annual Lease
Square Base Expiration Renewal
Tenant Footage Rent Date Options
All Tenants 79,588 $1,229,379 Various Various
Vacant 7,278 --
86,866 $1,229,379
(c) Ponderosa Restaurant ("Ponderosa Property")
On September 28, 1988, the Partnership purchased the land and building
occupied by a Ponderosa restaurant located in Garfield Heights, Ohio. The
building was constructed in 1981 and contains 5,400 square footage of space.
The cost of the restaurant was $1,075,000, plus closing costs paid in cash.
The Ponderosa Property had an appraised market value of $1,250,000, as
of November 1, 1998, as prepared by Valuation Research.
The Ponderosa Property was purchased from Ponderosa, Inc. ("Ponderosa"),
a wholly-owned subsidiary of Metromedia Company. The Ponderosa Property
is operated by Ponderosa in accordance with the terms of a triple-net
lease under which Ponderosa must pay all taxes, insurance premiums and
operating costs. The lease has a base term of 15 lease years (as defined
in the lease), terminates on September 22, 2003 and contains four
five-year renewal options. The Partnership is the landlord and does not
participate in the operations of the restaurant.
Ponderosa is obligated to pay a minimum base rental amount every four
calendar weeks. In addition to the base rent, percentage rent is paid
based on the average gross sales of the first two lease years (the
"Percentage Base"). The percentage rent is 6.5% of the amount by which
the gross sales in any year exceeds this Percentage Base.
Ponderosa has the right to repurchase the Ponderosa Property at the end
of the lease term (2003) and every five years thereafter at the fair market
value of the real estate at the time of repurchase (assuming that the
extension option has been exercised). In 1998, Ponderosa declined to
exercise its right to repurchase the Ponderosa Property; however, Ponderosa
still maintains its ability to repurchase this property in 2003. In
addition, the Partnership has a right of first offer on the Ponderosa
Property.
The Ponderosa Property has been occupied since its purchase and the
average annual base rent per square foot at December 31 for the last
two years are as follows:
1998 1997
Average Annual Base Rent
Per Square Foot $23.64 $24.00
Terms and Consideration
If the Proposed Transaction is consummated for all of the Properties, the
consideration will be at least $12,215,000 (the "Minimum Price"), before
deducting all closing fees and other necessary expenses, the sum of which
is estimated at 6% of the final sales price. Any potential buyer will
agree, subject to the terms and conditions set by the Partnership in its
bid package, to acquire either: (i) all the Properties set forth above
for an aggregate purchase price equal to at least the Minimum Price; or
(ii) less than all the Properties for a purchase price at least equal to
70% of the cumulative sum of the appraised value for such Properties.
The General Partners intend to sell the Properties under a closed bid
process. Such a process will include identification of target buyers with
proven financing ability and performance of certain evaluations of the
Properties, such as environmental testing. Potential buyers will be
requested to sign confidentiality agreements to safeguard the
Partnership's confidential and proprietary information. Sealed bids will
be requested. Each bid must be all cash, completely unconditional and
accompanied by a substantial deposit.
The General Partners will attempt to sell the Properties on the most
favorable terms that the General Partners are able to negotiate, but in
no event will the General Partners accept a sale price for a group sale
of all of the Properties which is less than the Minimum Price, nor a
sales price for a sale of less than all of the Properties which is less
than 70% of the cumulative appraised value of those Properties. Note that
in a group sale of two or more Properties, certain individual Properties
may be sold for less than 70% of their appraised value if other Properties
in the group can be sold at a high enough price to meet the cumulative
minimum of 70% of appraised value of all such Properties.
If the Proposed Transaction is approved, the General Partners intend to
conduct the sale in an aggressive and efficient manner, followed by timely
distributions to Limited Partners. Accordingly, the General Partners have
established the following time line goals for completion of the Proposed
Transaction:
___________, 1999 Deadline for receipt of Ballots
___________, 1999 Send bid packages to prospective buyers
___________, 1999 Deadline for receipt of bid proposals
___________, 1999 Closing of Proposed Transaction
___________, 1999 Final Distribution to Limited Partners
The foregoing are the General Partners' goals for and estimates of the
time required for each step of the Proposed Transaction. Various delays
may be encountered which could result in a later closing date or
distribution date.
Advantages to the Limited Partners
Improved Conditions for the Sale of the Properties. As the economic well-
being of consumers has increased as a result of full employment and strong
financial markets, commercial tenants have seen increased customer traffic.
As a result, in many real estate markets, prices for commercial properties
have been increasing.
Lack of an Established Trading Market. There is currently no active or
established trading market for Units. The Proposed Transaction would
provide an efficient and cost effective manner for Limited Partners to
realize the value of their Units without having to comply with the
conditions and restrictions of selling their Units individually. The
General Partners believe that the Proposed Transaction is the most
attractive opportunity for the Limited Partners to obtain the value
of their Units because the Properties will be sold in a competitive bid
process. Selling Units individually may require selling at a price below
the appraised value to attract a buyer for an illiquid investment. The
General Partners also believe that the Proposed Transaction is likely to
result in a higher value to Limited Partners than a tender offer for
Units, because such tender offers usually reflect a substantial discount
for lack of marketability of the Units and the profit requirements of the
offeror.
Limited Representations and Warranties. The Partnership will only be
required to make limited representations and warranties to the buyer as
to the condition of the Properties, thereby eliminating the need to
establish a substantial escrow of funds as is typically required in
merger transactions or asset sales in accordance with Section V.1(b) of
the Partnership Agreement. This will allow greater net proceeds to be
paid to the Limited Partners at the time of the sale and, thereafter,
to be invested by the Limited Partners in other investments.
Majority Approval Requirement. The vote of a majority of the Limited
Partners is required to approve the Proposed Transaction. As a result
of the majority approval requirement, the Proposed Transaction will
only be effected if it is approved by persons who are not affiliated
with the buyer and, therefore, not subject to a conflict of interest.
Return of Capital. The distribution of net proceeds from the Proposed
Transaction will provide the Limited Partners a cash return of a portion of
their capital contribution to the Partnership. Such proceeds can then be
reinvested by the Limited Partners in other investments that could possibly
yield a higher return than the investment in the Partnership.
Disadvantages to Limited Partners
While the General Partners believe that the Proposed Transaction would
be in the best interests of the Limited Partners, each Limited Partner
should consider the following factors in evaluating the Proposed
Transaction. Upon the completion of the liquidation, Limited Partners
will no longer be eligible to receive future distributions of cash
flows from operations since the Partnership will no longer be operating
the Properties. However, Limited Partners will receive a distribution of
the net proceeds from the sale of the Properties, after deduction of
certain expenses and fees as described above. Limited Partners will be
subject to capital gains taxes to the extent the sales price per Unit
exceeds the Limited Partner's adjusted tax basis in each Unit. Finally,
Limited Partners will not benefit from future appreciation, if any,
in the value of the Properties if the Properties are sold.
Advantages to the General Partner
The General Partners may receive a nominal distribution of the net sale
proceeds pursuant to the terms of the Partnership Agreement.
Security Ownership of Certain Beneficial Owners and Management
Everest Properties II, LLC ("Everest") is the owner of 6.9% of limited
economic rights in the Partnership ("Limited Rights"). As a owner of
Limited Rights, Everest has economic rights to receive Partnership
distributions and allocations of profits and losses subject to the
terms of the Partnership Agreement. However, Everest has no voting
privileges.
Accounting Treatment of the Proposed Transaction
If the Proposed Transaction is approved by the Limited Partners, the
Partnership will cease the operational phase of the Partnership's cycle and
begin the liquidation phase with the sale of the properties. In accordance
with generally accepted accounting principles, the Partnership's financial
statements will then be prepared on a liquidation basis. Accordingly, the
carrying value of the assets will be presented at the estimated realizable
amounts and all liabilities will be presented at estimated settlement
amounts, including estimated costs associated with carrying out the
liquidation. Preparation of the financial statements on a liquidation basis
requires significant assumptions by management, including assumptions
regarding the amount that creditors would agree to accept in settlement of
obligations due them, the estimate of liquidation costs to be incurred and
the resolution of contingent liabilities, including tax liabilities
resulting from the liquidation. There may be differences between the
assumptions and the actual results because events and circumstances
frequently do not occur as expected.
FEDERAL INCOME TAX CONSEQUENCES OF THE PROPOSED TRANSACTION
The following is a summary of the material federal income tax
consequences to a Limited Partner which may result from the Proposed
Transaction. This summary is not intended as a substitute for careful tax
planning, and consequences may vary according to each Limited Partner's
individual circumstances.
This summary is based on the Internal Revenue Code of 1986, as amended
(the "Code"), as well as currently existing regulations thereunder,
judicial decisions and current administrative rules and practices. The
following discussion does not discuss the impact, if any, that state,
local or foreign taxes may have on the Proposed Transaction. Furthermore,
no assurance can be given as to the accuracy or completeness of this
summary.
Taxation of Partnerships in General
An entity classified as a partnership for federal income tax purposes is
not subject to federal income tax. Rather, income or loss "flows through"
the partnership to the partners, who are taxed individually on their
allocable shares of partnership income, gain, loss or deduction. However,
the partnership is a tax reporting entity that must file an annual return
disclosing the partnership's gain or loss. The tax treatment of partnership
items of taxable income or loss is generally determined at the partnership
level. Each partner is required to treat partnership items on its tax
return in a manner consistent with the treatment of such items on the
partnership return and may be penalized for intentional disregard of
the consistency requirement. Each partner must account for its allocable
share of partnership taxable income or loss in computing its income tax,
whether or not any actual cash distribution is made to such partner during
its taxable year.
Basis of Partnership Interests
A partner's basis in its Unit is equal to its cost for such Unit, reduced
by its allocable share of: (i) partnership distributions, (ii) taxable
losses and (iii) expenditures of the partnership not deductible in
computing its taxable income and not properly chargeable to its capital
account, and increased by its allocable share of: (i) partnership
taxable profits, (ii) income of the partnership exempt from tax and
(iii) additional contributions to the partnership. For purposes of
determining basis, an increase in a partner's share of partnership
liability is treated as a contribution of money by that partner to the
partnership. Conversely, a decrease in its share of partnership
liability is treated as distribution of money from the partnership.
Generally, a partner may not take non-recourse liabilities into account
in determining its basis except to the extent of any additional capital
contribution it is required to make under the partnership agreement.
However, if a partnership asset is subject to a liability for which no
partner has any personal liability, in general, the partner's allocable
share of the non-recourse liability will be taken into account to
determine basis.
Effect of the Proposed Transaction
The Proposed Transaction will be a taxable event to the Limited Partners.
Gain or loss on a sale generally will be measured by the difference between
the amount realized and the adjusted basis of the assets that are sold.
Generally the amount realized is the sum of any money received, plus the
fair market value of any property received, plus the amount of liability
from which the partnership is discharged as a result of the sale. The
adjusted basis of property is generally the initial tax basis less
deductions, allowed or allowable, for depreciation.
A substantial portion of the assets to be sold, including buildings, land
and equipment, which were held for more than one year are expected to be
treated as "section 1231 assets." Section 1231 assets are property used
in the trade or business of a character which is subject to the allowance
for depreciation, held for more than one year, and real property used in
the trade or business held for more than one year. Gains or losses from
the sale of section 1231 assets would be combined with any other section
1231 gains or losses incurred by the Partnership in that year, and the
section 1231 gains or losses would be allocated to the Limited Partners
as provided in the Partnership Agreement.
Effect of Liquidation
Generally, upon the liquidation of a partnership, gain will be recognized
by and taxable to a partner to the extent that the amount of cash, plus
the fair market value of any marketable securities, distributed to it
exceeds the partner's basis in its Units at the time of distribution.
Any gain or loss which a Limited Partner recognizes from a liquidating
distribution is generally taxed as capital gain or loss. However, any
income or loss received from the normal operations of the partnership
during the year of liquidation may constitute ordinary income or loss.
Any capital gain or loss will be treated as long-term if the Limited
Partner has held its Units for more than one year when the liquidation
is consummated. For non-corporate Limited Partners, long-term capital
gains are generally taxed at a 20% rate. If the Limited Partner has
held its Units for one year or less, any gain will be a short-term
capital gain. Short-term capital gains are taxed as ordinary income.
Capital losses generally are deductible only to the extent of capital
gains plus, in the case of a non-corporate Limited Partner, up to
$3,000 of ordinary income. Capital losses realized upon the liquidation
may be utilized to offset capital gains from other sources and may be
carried forward, subject to applicable limitations.
Exempt Employee Trusts and Individual Retirement Accounts
Tax-exempt organizations, including trusts which hold assets of employee
benefit plans, although not generally subject to federal income tax, are
subject to tax on certain income derived from a trade or business carried
on by the organization which is unrelated to its exempt activities. However,
such unrelated business taxable income does not in general include income
from real property, gain from the sale of property other than inventory,
interest, dividends and certain other types of passive investment income
that are not derived from "debt-financed property" as defined in Section
514 of the Code. If, as the Partnership believes, the Properties are not
characterized as "inventory," and are not held primarily for sale to
customers in the ordinary course of the Partnership's business, the income
from the sale of the Properties should not constitute unrelated business
taxable income. Finally, the Partnership's temporary investment of funds
in interest-bearing instruments and deposits also should not give rise to
unrelated business taxable income.
THE FOREGOING ANALYSIS CANNOT BE, AND IS NOT INTENDED AS, A SUBSTITUTE
FOR CAREFUL TAX PLANNING. LIMITED PARTNERS ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS WITH RESPECT TO THEIR OWN TAX SITUATIONS AND THE EFFECTS OF
THIS TRANSACTION AS TO FEDERAL, STATE, LOCAL AND FOREIGN TAXES INCLUDING,
BUT NOT LIMITED TO, INCOME AND ESTATE TAXES.
DISTRIBUTION UPON LIQUIDATION OF THE PARTNERSHIP
Upon completion of the Proposed Transaction, the Partnership will be
dissolved and its business wound up in accordance with Section V of the
Partnership Agreement. The sale proceeds, after establishing any necessary
cash reserves to cover liabilities, will be distributed to the Limited
Partners and the General Partners in the manner set forth in the
Partnership Agreement.
While the Minimum Price provides a floor on the amounts to be received
in the proposed sale, the General Partners believe that there is a
reasonable likelihood that the Properties will actually be sold at or
above their appraised values. The General Partners estimate that a sale
of the Properties at the appraised values, after deducting all expenses
associated with this solicitation, the sale of Properties and establishment
of required reserves, will result in a liquidating distribution to the
Limited Partners of approximately $1,162.62 per Unit. If a final
liquidating distribution of $1,162.62 per Unit is achieved, the Limited
Partners will have received a total of $1,988.24 to $1,919.54 per Unit
in distributions over the life of the Partnership (from the first Unit
sold in 1986 to the last Unit sold in August 1987). For additional
information regarding the calculation of the estimated liquidating
distributions, if any, upon a sale at the Minimum Value, the appraised
value, and at 10% above the appraised value, see "Notes to Unaudited
Pro Forma Balance Sheet" below.
Upon completion of the distribution of the Partnership's funds and the
liquidation of the Partnership, the General Partners will execute and
record a Certificate of Cancellation of the Partnership, and the legal
existence of the Partnership will cease.
REGULATORY REQUIREMENTS
Other than the requirement under Delaware law that the Partnership file
a Certificate of Cancellation to dissolve the Partnership, there are no
federal or state regulatory requirements that apply to the Proposed
Transaction.
Available Information
The Units are registered pursuant to Section 12(g) of the Securities
Exchange Act of 1934 as amended (the "Exchange Act"). As such, the
Partnership is subject to the informational filing requirements of the
Exchange Act, and in accordance therewith, is obligated to file reports
and other information with the Securities and Exchange Commission (the
"Commission") relating to its business, financial condition and other
matters. Comprehensive financial information is included in the
Partnership's Annual Reports on Form 10-KSB, Quarterly Reports on Form
10-QSB and other documents filed by the Partnership with the Commission,
including the 1998 Annual Report on Form 10-KSB. Such reports and other
information should be available for inspection and copying
at the public reference facilities of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 and at regional offices of the Commission
located at 7 World Trade Center, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies should be available by mail upon payment of the Commission's
customary charges by writing to the Commission's principal offices at
450 Fifth Street, N.W., Washington, D.C. 20549. In addition, the
Commission maintains an internet Web site that contains reports, proxy and
information statements and other information regarding registrants that
file electronically with the Commission. The Partnership's electronic
filings are publicly available on the internet at http://www.sec.gov/.
The Corporate General Partner, Brauvin 6, Inc., is a privately held
company and is not subject to the reporting requirements of the
Exchange Act.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Partnership with the Commission are
hereby incorporated in this Solicitation Statement by reference:
Annual Report on Form 10-KSB for the year ended December 31, 1998 and
Quarterly Report on Form 10-QSB for the quarter ended March 31, 1999.
All reports and other documents filed by the Partnership after the date
of this Solicitation Statement pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act and prior to the final date on which Ballots
may be received shall be deemed to be incorporated by reference herein
and to be a part hereof from the dates of filing of such reports or
documents. Any statement contained herein or in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for the purposes of this Solicitation Statement
to the extent that a statement contained herein or in another document
that also is or is deemed to be incorporated by reference herein modifies
or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute
a part of this Solicitation Statement.
Any statement contained in a document incorporated by reference shall be
deemed to be modified or superseded for all purposes to the extent that
a statement contained in this Solicitation Statement modifies or replaces
such statement. Any such statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of
this Solicitation Statement.
The Partnership will provide, without charge, to each person to whom a
copy of this Solicitation Statement is delivered, upon the written or oral
request of any such person, a copy of any or all of the documents
incorporated herein by reference (other than exhibits to such documents,
unless such documents are specifically incorporated by reference into the
information this Solicitation Statement incorporates), as well as the
Landauer Marketing Contract and the appraisals. Written and telephone
requests for such copies should be addressed to the Partnership at its
principal executive office at 30 North LaSalle Street, Suite 3100,
Chicago, Illinois 60602, telephone number (312) 759-7660. All such
requests will be sent by first class mail or other equally prompt means
within one (1) business day of receipt of such request.
<PAGE>
PRO FORMA UNAUDITED FINANCIAL DATA
The following unaudited pro forma balance sheet assumes that as of
December 31, 1998, the Partnership had sold the Properties at the Minimum
Value, the appraised value and 10% above the appraised value, and
liquidated the Partnership. The funds available for distributions to the
Partners based on the appraised value, adjusting for payment of
liabilities of the Partnership, expenses and prorations of sale and
expenses of liquidation, are expected to total approximately $9,180,182.
The unaudited pro forma balance sheet should be read in conjunction with
the appropriate notes to the unaudited pro forma financial data.
ALL OF THE FOLLOWING UNAUDITED PRO FORMA FINANCIAL DATA IS BASED UPON
AMOUNTS AS OF DECEMBER 31, 1998. FINAL RESULTS MAY DIFFER FROM SUCH
INFORMATION.
<PAGE>
BRAUVIN INCOME PROPERTIES L.P. 6,
a Delaware limited partnership
PRO FORMA LIQUIDATION BASIS
STATEMENT OF NET ASSETS IN LIQUIDATION
December 31, 1998
(Unaudited)
Based on Based on Based on
70% of 100% of 110% of
Appraised Value Appraised Value Appraised Value
ASSETS:
Cash and cash equivalents $ 776,207 $ 776,207 $ 776,207
Real estate held for sale 11,854,125 16,958,250 18,659,625
Rent receivable
(net of allow) 175,785 175,785 175,785
Escrow and other deposits 579,082 579,082 579,082
Total Assets $13,385,199 $18,489,324 $20,190,699
LIABILITIES:
Mortgage notes payable $ 8,716,089 $ 8,716,089 $ 8,716,089
Accounts payable and accrued 248,020 248,020 248,020
Due to affiliates 9,803 9,803 9,803
Deferral on gain on
real estate 2,251,470 7,271,563 8,972,938
Estimated losses through
liquidation 405,713 321,681 321,681
Tenant security deposits 13,549 13,549 13,549
Total Liabilities 11,644,644 16,580,705 18,282,080
Net Assets in Liquidation $ 1,740,555 $ 1,908,619 $ 1,908,619
See accompanying notes to pro forma financial statements.
<PAGE>
BRAUVIN INCOME PROPERTIES L.P. 6
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
(1) Basis of Presentation
The pro forma financial statements have been prepared under
the assumption that the Limited Partners have approved the Proposed
Transaction, and in accordance with generally accepted accounting
principles, the liquidation basis of accounting has been adopted.
Accordingly, the carrying value of the assets are presented at the
estimated realizable amounts and all liabilities are presented at
estimated settlement amounts, including estimated costs associated
with completing the liquidation. Preparation of the financial
statements on a liquidation basis requires significant assumptions
by management, including assumptions regarding the amount that
creditors would agree to accept in settlement of obligations due
them, the estimate of liquidation costs to be incurred and the
resolution of contingent liabilities, including tax liabilities
resulting from the liquidation. There may be differences between
the assumptions and the actual results because events and
circumstances frequently do not occur as expected.
(2) Value assumptions
Three separate property sale scenarios, based upon the
Landauer appraisals, have been presented in the pro forma financial
statements. The scenarios represent the sale of the properties at
70%, 100% and 110% of the appraised values. Additionally, as
stated in Note 1 above, under the liquidation basis of accounting
the real estate held for sale presented in the pro forma financial
statements is recorded at the net realizable amount (which includes
the estimated amounts associated with the sale of the property).
BRAUVIN INCOME PROPERTIES L.P. 6,
a Delaware limited partnership
BALLOT
The undersigned Limited Partner acknowledges receipt of the
Solicitation Statement dated ____________, 1999 respecting the
proposed sale of the Partnership's Properties and the subsequent
liquidation of the Partnership. The undersigned Limited Partner
understands that the General Partners are seeking the approval of
the Limited Partners to a sale of the Partnership's properties at
a Minimum Sale Price of $12,215,000, to one or more buyers.
The General Partners recommend a vote FOR a sale of the
Partnership's Properties.
THIS PROPOSED SALE OF THE PARTNERSHIP'S PROPERTIES REQUIRES
THE APPROVAL BY THE HOLDERS OF MORE THAN 50% OF THE OUTSTANDING
UNITS OF THE PARTNERSHIP.
PLEASE CHECK THE APPROPRIATE BLANK BOX BELOW IN BLUE OR BLACK
INK TO INDICATE YOUR VOTE ON THIS MATTER.
Vote Regarding the Sale of the Partnership's
Properties: proposal to authorize the General
Partners to sell all of the Partnership's
Properties at a gross purchase price of not
less than $12,215,000. Approval of a sale of
the Partnership's Properties will also be
deemed a vote for the termination and
dissolution of the Partnership (upon
completion of the sale).
FOR [ ] AGAINST [ ] ABSTAIN [ ]
______________________________ Date:______________
Signature of Unit Holder
______________________________
Print Name
[LABEL]
______________________________ Date:______________
Signature of Unit Holder, if held
jointly
______________________________
Print Name
THIS BALLOT MUST BE RECEIVED BY THE GENERAL PARTNERS ON OR BEFORE
__________, 1999. ALL BALLOTS NOT RECEIVED, OR RECEIVED AFTER
__________, 1999, SHALL NOT BE COUNTED.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THE ABOVE LABEL
REPRESENTING YOUR PARTNERSHIP INTEREST(S). WHEN SUCH INTEREST(S)
ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS AN
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE HAVE SIGNED IN
FULL CORPORATE NAME BY THE PRESIDENT OR OTHER AUTHORIZED OFFICER.
IF A PARTNERSHIP, PLEASE HAVE SIGNED IN THE PARTNERSHIP'S NAME BY
AN AUTHORIZED PERSON.
