<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 9)
DAVIDSON GROWTH PLUS, L.P.
(Name of Subject Company)
AIMCO PROPERTIES, L.P.
(Bidder)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
NONE
(CUSIP Number of Class of Securities)
PATRICK J. FOYE
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
1873 SOUTH BELLAIRE STREET, 17TH FLOOR
DENVER, COLORADO 80222
(303) 757-8101
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
COPY TO:
JONATHAN L. FRIEDMAN
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
300 SOUTH GRAND, 34TH FLOOR
LOS ANGELES, CALIFORNIA 90071
(213) 687-5000
<PAGE> 2
CALCULATION OF FILING FEE
- -------------------------------------------------------------------------------
Transaction Valuation* $9,243,900.97 Amount of Filing Fee: $1,848.78
- -------------------------------------------------------------------------------
* For purposes of calculating the fee only. This amount assumes the
purchase of 20,359.67 units of limited partnership interest of the
subject partnership for $454.03 per unit. The amount of the filing
fee, calculated in accordance with Section 14(g)(1)(B)(3) and Rule 0-
11(d) under the Securities Exchange Act of 1934, as amended, equals
1/50th of one percent of the aggregate of the cash offered by the
bidder.
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number or the form or schedule and the date of its filing.
Amount Previously Paid: Filing Parties:
Form or Registration No.: Date Filed:
(Continued on following pages)
Page 1 of 10 Pages
<PAGE> 3
CUSIP No. NONE 14D-1 AND 13D/A
1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
AIMCO PROPERTIES, L.P.
84-1275621
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP
(a) [ ]
(b) [X]
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC, BK
5. (CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(e) OR 2(f) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,592.25
8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
Approximately 5.40%
10. TYPE OF REPORTING PERSON
PN
Page 2 of 10 Pages
<PAGE> 4
CUSIP No. NONE 14D-1 AND 13D/A
1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
AIMCO-GP, INC.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
3. SEC USE ONLY
4. SOURCES OF FUNDS
Not Applicable
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(e) OR 2(f) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,592.25
8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
Approximately 5.40%
10. TYPE OF REPORTING PERSON
CO
Page 3 of 10 Pages
<PAGE> 5
CUSIP No. NONE 14D-1 AND 13D/A
1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
84-129577
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
3. SEC USE ONLY
4. SOURCES OF FUNDS
Not Applicable
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(e) OR 2(f)
[ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Maryland
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,012.08
8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
Approximately 27.16%
10. TYPE OF REPORTING PERSON
CO
Page 4 of 10 Pages
<PAGE> 6
SCHEDULE 14D-1/AMENDMENT NO. 9 TO SCHEDULE 13D
This Statement (the "Statement") constitutes (a) the initial
Schedule 14D-1 of AIMCO Properties, L.P. (the "AIMCO OP"), relating to AIMCO
OP's Litigation Settlement Offer to purchase units of limited partnership
interest ("Units") of Davidson Growth Plus, L.P. (the "Partnership"); and (b)
Amendment No. 9 to the Schedule 13D (the "Schedule 13D") originally filed with
the Securities and Exchange Commission (the "Commission") on January 18, 1996,
by Insignia Properties, L.P. ("IPLP"), Insignia Properties Trust ("IPT"),
Insignia Financial Group, Inc. ("Insignia"), Andrew L. Farkas, Riverdale
Investors Corp., Inc., whose successor in interest is Riverdale L.L.C.
("Riverdale"), and Carl C. Icahn, as amended by (i) Amendment No. 1, filed with
the Securities and Exchange Commission (the "Commission") on April 25, 1997, by
IPLP, IPT, Insignia, Andrew L. Farkas, and DGP Acquisition, L.L.C.
("Acquisition"), (ii) Amendment No. 2, filed with the Commission on July 7,
1997, by IPLP, IPT, Acquisition, Insignia, IB Holding, Inc. ("Holding") and
Andrew L. Farkas, (iii) Amendment No. 3, filed with the Commission on August
27, 1998, by Cooper River Properties, L.L.C. ("Cooper River"), IPLP, IPT,
Insignia and Andrew L. Farkas, (iv) Amendment No. 4, filed with the Commission
on September 26, 1998, by AIMCO OP, AIMCO-GP, Inc. ("AIMCO-GP"), and Apartment
Investment and Management Company ("AIMCO"), (v) Amendment No. 5, filed with
the Commission on January 29, 1999, by Cooper River, IPLP, IPT, AIMCO OP,
AIMCO-GP, and AIMCO, (vi) Amendment No. 6, filed with the Commission on May 14,
1999, by Cooper River, AIMCO/IPT, Inc. ("AIMCO/IPT"), IPLP, AIMCO OP, AIMCO-GP
and AIMCO, (vii) Amendment No. 7, filed with the Commission on July 1, 1999, by
Cooper River, AIMCO/IPT, IPLP, AIMCO OP, AIMCO-GP and AIMCO, and (viii)
Amendment No. 8, filed with the Commission on August 6, 1999, by Cooper River,
AIMCO/IPT, IPLP, AIMCO OP, AIMCO-GP and AIMCO. The terms and responses thereto
are set forth below in accordance with the requirements of Schedule 14D-1.
(1) SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Davidson Growth Plus,
L.P., a Delaware limited partnership. The address of the Partnership's
principal executive offices is 1873 South Bellaire Street, 17th Floor, Denver,
Colorado 80222 (on and after November 24, 1999: Colorado Center, Tower Two,
2000 South Colorado Boulevard, Suite 2-1000, Denver, Colorado 80222).
(b) This Statement relates to an offer by AIMCO OP to
purchase, subject to the terms of the Litigation Settlement Offer, all of the
outstanding units of limited partnership interest (the "Units") of the
Partnership at a purchase price per Unit, net to the seller, of $454.03 in cash
(less the amount of any distributions paid by the Partnership on and after
November 11, 1999), upon the terms and subject to the conditions set forth in a
Litigation Settlement Offer, dated November 11, 1999 (as amended or
supplemented from time to time, the "Litigation Settlement Offer"), and the
related Letter of Transmittal and Instructions thereto (as amended or
supplemented from time to time, the "Letter of Transmittal"), copies of which
are filed as Exhibits (a)(1) and (a)(2) hereto, respectively. Approximately 5%
of the offer price per Units represents a payment from a settlement fund that
has been established, which will be paid only if the court approves the
proposed settlement in the lawsuit in the Superior Court of the State of
California, County of San Mateo, entitled Nuanes et al. v. Insignia Financial
Group, Inc., et al., and the seller of the Units does not request exclusion
from the settlement class.
(c) The information set forth in the Litigation Settlement
Offer under "The Offer -- Section 9. Background and Reasons for the Offer --
Prices on Secondary Market" is incorporated herein by reference.
(2) IDENTITY AND BACKGROUND.
Page 5 of 10 Pages
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(a)-(d), (g) This Statement is being filed by AIMCO
Properties, L.P., a Delaware limited partnership, and, insofar as this
Statement constitutes Amendment No. 9 to the Schedule 13D, by Cooper River
Properties, L.L.C., a Delaware limited liability company, Insignia Properties,
L.P., a Delaware limited partnership, AIMCO/IPT, Inc., a Delaware corporation,
AIMCO-GP, Inc., a Delaware corporation, and Apartment Investment and Management
Company, a Maryland corporation. The sole general partner of AIMCO OP is
AIMCO-GP. AIMCO-GP is a wholly owned subsidiary of AIMCO. On February 26, 1999,
IPT was merged into AIMCO, and AIMCO contributed IPT's interest in IPLP to
AIMCO's wholly owned subsidiary, AIMCO/IPT. AIMCO/IPT also replaced IPT as the
sole general partner of IPLP. The principal business of the Reporting Persons
is the ownership, acquisition, development, expansion and management of
multi-family apartment properties. The principal executive offices of the
Reporting Persons are located at 1873 South Bellaire Street, 17th Floor,
Denver, Colorado 80222 (on and after November 24, 1999: Colorado Center, Tower
Two, 2000 South Colorado Boulevard, Suite 2-1000, Denver, Colorado 80222). The
information set forth in the Litigation Settlement Offer under "The Offer --
Section 8. Information Concerning Us and Certain of Our Affiliates" is
incorporated herein by reference. The executive officers and directors of
AIMCO, AIMCO-GP and AIMCO/IPT are listed on Annex I to the Litigation
Settlement Offer ("Annex I"), which is incorporated herein by reference.
(e)-(f) During the last five years, none of the Reporting
Persons nor, to the best of their knowledge, any of the persons listed in Annex
I (i) has been convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) or (ii) was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order
enjoining further violations of or prohibiting activities subject to federal or
state securities laws or finding any violation with respect to such laws.
(3) PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT
COMPANY.
(a)-(b) The information set forth in Part III of the
Partnership's Form 10-KSB for the year ended December 31, 1998, and the
Partnership's Form 10-QSB for the nine months ended September 30, 1999, and the
financial statements and notes thereto included therein, and the information
set forth in the Litigation Settlement Offer under "The Offer -- Section 9.
Background and Reasons for the Offer -- General," "The Offer -- Section 9.
Background and Reasons for the Offer -- Prior Tender Offers," "The Offer -
Section 11. Conflicts of Interest and Transactions with Affiliates," "The Offer
- -- Section 13. Certain Information Concerning Your Partnership --
Distributions" and "The Offer -- Section 13. Certain Information Concerning
Your Partnership -- Compensation Paid to the General Partner and Its
Affiliates" is incorporated herein by reference.
(4) SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in the Litigation
Settlement Offer under "The Offer -- Section 15. Source of Funds" is
incorporated herein by reference.
(5) PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) The information set forth in the Litigation
Settlement Offer under "The Offer -- Section 9. Background and Reasons for the
Offer," "The Offer -- Section 12. Future Plans of the Purchaser" and "The Offer
- -- Section 7. Effects of the Offer" is incorporated herein by reference.
(6) INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
Page 6 of 10 Pages
<PAGE> 8
(a) Cooper River directly owns 3,937 Units, IPLP owns
2,482.83 Units and AIMCO OP directly owns 1,592.25 Units (for an aggregate of
8,012.08 Units), representing Approximately 13.35%, 8.42% and 5.40%,
respectively, or a total of Approximately 27.16% of the outstanding Units based
on the 28,371.75 Units outstanding at January 1, 1999.
IPLP, AIMCO/IPT and AIMCO may be deemed to beneficially own
the Units directly owned by Cooper River by reason of each of their
relationship with Cooper River. AIMCO/IPT and AIMCO may be deemed to
beneficially own the Units directly owned by IPLP by reason of each of their
relationships with IPLP. Cooper River is a wholly owned subsidiary of IPLP, and
AIMCO/IPT is the sole general partner of IPLP (owning approximately 66.17% of
the total equity interests). AIMCO/IPT is a wholly owned subsidiary of AIMCO.
AIMCO-GP and AIMCO may be deemed to beneficially own the
Units, owned by AIMCO OP by each of their relationships with AIMCO OP. AIMCO-GP
is the sole general partner of AIMCO OP (owning approximately 1% of the total
equity). AIMCO-GP is a wholly owned subsidiary of AIMCO.
Accordingly, for purposes of this Statement: (i) Cooper River
is reporting that it shares the power to vote or direct the vote and the power
to dispose or direct the disposition of the 3,937 Units directly owned by it;
(ii) IPLP is reporting that it shares the power to vote or direct the vote and
the power to dispose and direct the disposition of the 2,482.83 Units owned by
it; (iii) AIMCO/IPT is reporting that it shares the power to vote or direct the
vote and the power to dispose or direct the disposition of the 3,937 Units
directly owned by Cooper River and the 2,482.83 Units directly owned by IPLP;
(iv) AIMCO OP is reporting that it shares the power to vote or direct the vote
and the power to dispose the disposition of the 1,592.3 Units directly owned by
it; (v) AIMCO-GP is reporting that it shares the power to vote or direct the
vote and the power to dispose of the 1,592.3 Units directly owned by AIMCO-OP;
and (vi) AIMCO is reporting that it shares the power to vote or direct the vote
and the power to dispose or direct the disposition of the 3,937 Units directly
owned by Cooper River, and the 2,482.83 Units owned directly by IPLP and the
1.592.3 Units directly owned by AIMCO OP.
(b) The information set forth in the Litigation Settlement
Offer under "The Offer -- Section 9. Background and Reasons for the Offer --
Prior Tender Offers" and "The Offer - Section 9. Background and Reasons for the
Offer -- Our Prior Tender Offer" is incorporated herein by reference.
(7) CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SUBJECT COMPANY'S SECURITIES.
Not applicable.
(8) PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Litigation Settlement Offer
under "The Offer -- Fees and Expenses" is incorporated herein by reference.
(9) FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The financial statements included in AIMCO OP's Annual Report
on Form 10-KSB for the year ended December 31, 1998, which are listed on the
Index to Financial Statements on page F-1 of such report, and on Form 10-QSB
dated September 30, 1999, are incorporated herein by reference. Such reports may
be inspected at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; Citicorp
Center, 500 West Madison Street, Chicago, Illinois 60661; and 7 World Trade
Center, 13th Floor, New York, New York 10048. Copies
Page 7 of 10 Pages
<PAGE> 9
of such material can also be obtained from the Public Reference Room of the
Commission in Washington, D.C. at prescribed rates and from the Commission's web
site at www.sec.gov.
(10) ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(d) The information set forth in the Litigation
Settlement Offer under "The Offer -- Section 18. Certain Legal Matters" is
incorporated herein by reference.
(e) The information set forth in the Litigation Settlement
Offer under "The Offer -- Section 9. Background and Reasons for the Offer --
Certain Litigation" is incorporated herein by reference
(f) The Litigation Settlement Offer is hereby incorporated by
reference.
(11) MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Litigation Settlement Offer, dated November 11, 1999.
(a)(2) Letter of Transmittal and related Instructions.
(a)(3) Letter, dated November 11, 1999, from AIMCO OP to
the Limited Partners of the Partnership.
(b) Credit Agreement (Secured Revolving Credit
Facility), dated as of August 16, 1999, among AIMCO
Properties, L.P., Bank of America, Bank Boston,
N.A., and First Union National Bank. (Exhibit 10.1
to AIMCO's Current Report on Form 8-K, dated August
16, 1999, is incorporated herein by this reference.)
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(z)(1) Agreement of Joint Filing, dated November 11, 1999,
among AIMCO, AIMCO-GP, AIMCO OP, AIMCO/IPT, IPLP,
and Cooper River.
Page 8 of 10 Pages
<PAGE> 10
SIGNATURE
After due inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
Dated: November 11, 1999
COOPER RIVER PROPERTIES, L.L.C.
By: /s/ Patrick J. Foye
---------------------------------
Executive Vice President
AIMCO/IPT, INC.
By: /s/ Patrick J. Foye
---------------------------------
Executive Vice President
INSIGNIA PROPERTIES, L.P.
By: AIMCO/IPT, INC.
(General Partner)
By: /s/ Patrick J. Foye
---------------------------------
Executive Vice President
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, INC.
(General Partner)
By: /s/ Patrick J. Foye
---------------------------------
Executive Vice President
AIMCO-GP, INC.
By: /s/ Patrick J. Foye
---------------------------------
Executive Vice President
APARTMENT INVESTMENT
AND MANAGEMENT COMPANY
By: /s/ Patrick J. Foye
---------------------------------
Executive Vice President
Page 9 of 10 Pages
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ---------- -----------
<S> <C>
(a)(1) Litigation Settlement Offer, dated November 11, 1999.
(a)(2) Letter of Transmittal and related Instructions.
(a)(3) Letter, dated November 11, 1999, from AIMCO OP to the
Limited Partners of the Partnership.
(b) Credit Agreement (Secured Revolving Credit
Facility), dated as of August 16, 1999, among AIMCO
Properties, L.P., Bank of America, Bank Boston,
N.A., and First Union National Bank. (Exhibit 10.1
to AIMCO's Current Report on Form 8-K, dated August
16, 1999, is incorporated herein by this reference.)
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(z)(1) Agreement of Joint Filing, dated November 11, 1999,
among AIMCO, AIMCO-GP, AIMCO OP, AIMCO/IPT, IPLP,
and Cooper River.
</TABLE>
Page 10 of 10 Pages
<PAGE> 1
EXHIBIT 8(a)(1)
AIMCO
LITIGATION SETTLEMENT OFFER
AIMCO PROPERTIES, L.P.
IS OFFERING TO PURCHASE ANY AND ALL
UNITS OF LIMITED PARTNERSHIP
INTEREST IN DAVIDSON GROWTH PLUS, L.P.
FOR $454.03 PER UNIT IN CASH
This Litigation Settlement Offer is being made as part of a proposed
settlement of a class action and derivative lawsuit brought on behalf of limited
partners in your partnership. PRELIMINARY COURT APPROVAL HAS BEEN OBTAINED. The
settlement is subject to final court approval. The method of determining the
offer price and other terms of the offer were negotiated at arm's length with
settlement class counsel and incorporated into the settlement. Approximately 5%
of our offer price represents a payment from a settlement fund that we have
established, which you will be entitled to receive if we receive court approval
and you do not request exclusion from the settlement class. ROBERT A. STANGER
AND CO., INC., AN INDEPENDENT INVESTMENT BANKING FIRM, HAS DELIVERED AN OPINION
THAT OUR CASH OFFER PRICE IS FAIR TO YOU FROM A FINANCIAL POINT OF VIEW.
If units tendered for cash in this and other offers made as part of the
settlement exceed $50 million (exclusive of amounts payable out of the
settlement fund), we will accept only $50 million of units on a pro rata basis
according to the value of units tendered by each person.
Our offer and your withdrawal rights will expire at 5:00 p.m., New York
City time, on December 30, 1999, unless we extend the deadline.
--------------------------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 2 OF THIS LITIGATION SETTLEMENT OFFER FOR A
DESCRIPTION OF RISK FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH OUR
OFFER, INCLUDING THE FOLLOWING:
o We determined our offer price in accordance with a method
agreed upon by counsel representing the settlement class. The
price per unit reflects an amount to be paid to tendering
unitholders after taking into account amounts for estimated
attorney fees, costs, and expenses which class counsel is
permitted to seek in connection with the settlement. Our offer
price may not reflect the fair market value of your units.
o Stanger in analyzing our offer, has estimated the net asset
value, liquidation value and going concern value of your
partnership units to be $486.00, $463.00 and $427.00 per unit.
o As of June 30, 1998, your general partner (which is our
subsidiary) estimated the net asset value of your units to be
$578 per unit and an affiliate estimated the net liquidation
value of your units to be $555.27 per unit.
--------------------------------------------------
If you desire to accept our offer, you should complete and sign the
enclosed letter of transmittal in accordance with the instructions thereto and
mail or deliver the signed letter of transmittal and any other required
documents to River Oaks Partnership Services, Inc., which is acting as
Information Agent in connection with our offer, at one of its addresses set
forth on the back cover of this Litigation Settlement Offer. 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.
November 11, 1999
(continued on next page)
<PAGE> 2
(continued from cover page)
o Although your partnership's agreement of limited partnership
provides for termination in the year 2011, the prospectus
pursuant to which the units were sold in October 1986
indicated that the properties owned by your partnership might
be sold within 5 to 7 years of their acquisition if conditions
permitted.
o Continuation of your partnership will result in our affiliates
continuing to receive management fees from your partnership.
Such fees would not be payable if your partnership was
liquidated.
o 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 Although our offer price has been determined based on
negotiations with counsel for the settlement class, 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 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.
o Under the settlement, we will be required to make an
additional offer to purchase units within 18 months at a price
which may be higher than this offer.
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.
---------------------
Our offer price will be reduced for any distributions subsequently made
by your partnership prior to the expiration of our offer. We will notify you of
any such reduction.
You will not pay any partnership transfer fees if you tender your units.
However, you may incur transfer taxes, brokerage fees and other costs.
Our offer is not subject to any minimum number of units being tendered.
2
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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Page
----
<S> <C> <C>
INTRODUCTION.......................................................................................................1
RISK FACTORS.......................................................................................................2
Offer Price Not Based Upon Third Party Valuation or Appraisal...............................................2
Offer Price May Not Represent Fair Market Value.............................................................2
Offer Price Does Not Reflect Future Prospects...............................................................2
Offer Price May Not Represent Liquidation Value.............................................................2
Fairness Opinion of Third Party Relied on Information We Provided...........................................2
Continuation of the Partnership; No Time Frame Regarding Sale of Properties.................................2
Holding Units May Result in Greater Future Value............................................................3
Conflicts of Interest With Respect to the Offer; No General Partner Recommendation..........................3
Conflicts of Interest Relating to Management Fees...........................................................3
Recognition of Taxable Gain on a Sale of Your Units.........................................................3
Tax Consequences of the Settlement Fund..................................................................3
Loss of Future Distributions from Your Partnership..........................................................4
Possible Increase in Control of Your Partnership by Us......................................................4
Recognition of Gain Resulting from Possible Future Reduction in Your Partnership Liabilities................4
Potential Delay in Payment..................................................................................4
Balloon Payments............................................................................................4
THE OFFER..........................................................................................................5
Section 1. Terms of the Offer; Expiration Date; Proration..................................................5
Section 2. Acceptance for Payment and Payment for Units....................................................6
Section 3. Procedure for Tendering Units...................................................................7
Section 4. Withdrawal Rights...............................................................................9
Section 5. Extension of Tender Period; Termination; Amendment..............................................9
Section 6. Certain Federal Income Tax Matters.............................................................10
Section 7. Effects of the Offer...........................................................................13
Section 8. Information Concerning Us and Certain of Our Affiliates........................................14
Section 9. Background and Reasons for the Offer...........................................................15
Section 10. Position of the General Partner of Your Partnership With Respect to the Offer..................28
Section 11. Conflicts of Interest and Transactions with Affiliates.........................................29
Section 12. Future Plans of the Purchaser..................................................................30
Section 13. Certain Information Concerning Your Partnership................................................31
Section 14. Voting Power...................................................................................36
Section 15. Source of Funds................................................................................36
Section 16. Dissenters' Rights.............................................................................37
Section 17. Conditions of the Offer........................................................................37
Section 18. Certain Legal Matters..........................................................................38
Section 19. Fees and Expenses..............................................................................39
ANNEX I..........................................................................................................I-1
ANNEX II.........................................................................................................I-1
</TABLE>
i
<PAGE> 4
INTRODUCTION
This Litigation Settlement Offer is being made as part of a proposed
settlement of a class action and derivative lawsuit in the Superior Court of the
State of California, County of San Mateo, entitled Nuanes et al. v. Insignia
Financial Group, Inc., et al. The terms and conditions of the proposed
settlement are set forth in a stipulation of settlement (the "Stipulation").
Preliminary court approval has been obtained. However, the settlement is subject
to final court approval after a hearing in which all class members may
participate. The method of determining the offer price is the result of
arms-length negotiations between us and counsel representing a group of the
limited partners in your partnership and sixty other partnerships formerly
managed by Insignia Financial Group, Inc. and/or its affiliates. The offer price
per unit reflects an amount to be paid to tendering unitholders after taking
into account amounts for estimated attorney's fees, costs, and expenses which
class counsel is permitted to seek in connection with the settlement.
Approximately 5% of our offer price represents a payment from a settlement fund
that we have established, which you will be entitled to receive if we receive
court approval and you do not request exclusion from the settlement class. If
units tendered for cash in this offer and other tender offers made as part of
the settlement exceed $50 million in value (exclusive of amounts payable out of
the settlement fund), we will accept only $50 million of units on a pro rata
basis, according to the value of units tendered by each person.
Subject to the $50 million limitation and the terms and conditions set
forth herein, we are offering to purchase all outstanding units validly tendered
for the purchase price of $454.03 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; provided,
that approximately 5% of our offer price represents a payment from a settlement
fund that we have established, which you will be entitled to receive if we
receive court approval and you do not request exclusion from the settlement
class. 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.
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 (subject to any necessary adjustments
for fractional units.) If more units are validly tendered and not withdrawn in
response to our offer than we have indicated we are willing or able to purchase,
we will accept units pro rata according to the value of units validly tendered
and not withdrawn by each limited partner. Any such proration would reduce the
number of units that we purchase from you, with a corresponding reduction in the
amount payable to you.
We will pay any transfer fees imposed for the transfer of units by your
partnership. However, you will be responsible for 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 if some of your units are not accepted by
us (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--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 December 30,
1999, unless extended. If you desire to accept our offer, you must complete and
sign the letter of transmittal in accordance with the instructions contained
therein and forward or hand deliver it, together with any other required
documents, to the Information Agent. You may withdraw your tender of units
pursuant to the offer at any time prior to the expiration date of our offer and,
if we have not accepted such units for payment, on or after January 11, 2000.
We are AIMCO Properties, L.P., a Delaware limited partnership. Together
with our subsidiaries, we conduct
<PAGE> 5
substantially all of the operations of Apartment Investment and Management
Company, or AIMCO. AIMCO is a self-administered and self-managed real estate
investment trust engaged in the ownership, acquisition, development, expansion
and management of multifamily apartment properties. As of June 30, 1999, AIMCO
owned or managed 369,404 apartment units in 2,037 properties located in 49
states, the District of Columbia and Puerto Rico. AIMCO's Class A Common Stock
is listed and traded on the New York Stock Exchange under the symbol "AIV."
RISK FACTORS
Before deciding whether or not to tender any of your units, you should
consider carefully the following risks and disadvantages of the offer:
OFFER PRICE NOT BASED UPON THIRD PARTY VALUATION OR APPRAISAL
The offer price of $454.03 per unit was determined by using a method
negotiated at arms-length between us and counsel for plaintiffs in a class
action lawsuit brought on behalf of the limited partners in your partnership and
forty-eight other partnerships. Approximately 5% of our offer price represents a
payment from a settlement fund that we have established, which you will be
entitled to receive court approval and you do not request exclusion from the
settlement class. Nevertheless, our offer consideration may not reflect the fair
market value of your units, the liquidation value of your partnership or any
other traditional methods of valuating partnership units. We did not use any
third-party appraisal or valuation to determine the value of your partnership's
properties. It is uncertain whether our offer consideration reflects the value
which would be realized upon a sale of your units or a liquidation of your
partnership's assets. Your general partner makes no recommendation to you as to
whether or not you should tender your units. We have retained Robert A. Stanger
& Co., Inc., an independent investment banking firm, to conduct an analysis of
the offer and to render an opinion as the fairness to you of the offer price
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 MAY NOT REPRESENT LIQUIDATION VALUE
The actual proceeds obtained from a liquidation are highly uncertain and
could be more than our offer price. Accordingly, our offer price could be less
than the net proceeds that you would realize upon an actual liquidation of your
partnership.
FAIRNESS OPINION OF THIRD PARTY RELIED ON INFORMATION WE PROVIDED
Robert A. Stanger & Co., Inc.'s analysis of our offer and opinion as to
the fairness to you of our offer consideration from a financial point of view
relies on information prepared by the general partner of your partnership (which
is our subsidiary). No tests of the underlying data were performed, and no
independent appraisal was conducted. Because the fairness opinion will not be
updated, changes may occur from the date of the fairness opinion that might
affect the conclusions expressed in the opinion.
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.
Thus, our offer does not satisfy any expectation that you would receive the
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<PAGE> 6
return of your investment in the partnership through a property sale. It is not
known when the properties owned by your partnership may be sold. There may be no
way to liquidate your investment in the partnership in the future until the
properties are sold and the partnership is liquidated. The 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 considerations. In
particular, the general partner considered the changes in the local rental
market, the potential for appreciation in the value of the properties and the
tax consequences to you and your partners on a sale of the properties. 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; NO GENERAL PARTNER
RECOMMENDATION
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 to settle the lawsuit and 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. 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 you own decision whether or not to participate in the offer,
based upon a number of factors, including your financial position, your need or
desire for liquidity, other financial opportunities available to you, and your
tax position and the tax consequences to you of selling your units.
CONFLICTS OF INTEREST RELATING TO MANAGEMENT FEES
Since our subsidiary receives 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.
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 you transfer to us. The "amount realized" with respect to a
unit of limited partnership interest of your partnership 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.
TAX CONSEQUENCES OF THE SETTLEMENT FUND AMOUNT
Approximately 5% of our offer price represents a payment from a settlement
fund that we have established, which you will be entitled to receive if we
receive court approval and you do not request exclusion from the settlement
class.
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<PAGE> 7
The proper treatment for federal income tax purposes of your receipt of such
amount is uncertain. While we believe that such amount should be treated as
additional consideration for the units pursuant to this offer, no assurance can
be given that the Internal Revenue Service will not assert that such amount
should be treated as a payment in exchange for your release of the defendants
from current and future claims and taxed as ordinary income. You should consult
your own tax advisor regarding the tax consequences to you with respect to your
right to, and your receipt of, such amount, including the possibility of
reporting such a amount under the installment method of reporting.
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
property 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 7,008.24 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.
Your partnership's agreement of limited partnership prohibits any transfer
of an interest if such transfer, together with all other transfers during the
preceding 12 months, would cause 50% or more of the total interest in capital
and profits of your partnership to be transferred within such 12-month period.
If we acquire a significant percentage of the interest in your partnership, you
may not be able to transfer your units for a 12-month period following our
offer.
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 PAYMENTS
Your partnership has balloon payments of approximately $7,473,000 and
$3,277,000 due on mortgage debts in October, 2003 and November, 2002,
respectively. For each such mortgage debt, your partnership will have to
refinance such debt or sell the property or properties securing that mortgage
debt prior to the balloon payment date, or it will become in default on the debt
and could lose the property or properties to foreclosure.
4
<PAGE> 8
THE OFFER
SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE; PRORATION.
Upon the terms and subject to the conditions of this Litigation Settlement
Offer, we will accept (and thereby purchase) 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 December 30, 1999, unless we in our sole discretion shall have
extended the period of time for which the offer is open, in which event the term
"expiration date" shall mean the latest time and date on which the offer, as
extended by us, shall expire. See "The Offer -- Section 5. Extension of Tender
Period; Termination; Amendment" 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.
Concurrently with this offer, we are also making similar tender offers to
the limited partners of 48 additional partnerships involved in the lawsuit. The
total amount being offered for the units in all such partnerships (exclusive of
amounts owned by us and our affiliates) is approximately $480 million. However,
pursuant to the Stipulation, we are not required to pay a cash consideration of
more than $50 million (excluding any amounts payable under the settlement fund)
pursuant to all such tender offers. If more than $50 million of units are
validly tendered for cash, we will accept units on a pro rata basis for all such
partnerships according to the value of units validly tendered by each person and
not properly withdrawn on or prior to the expiration date, with appropriate
adjustments to avoid purchases of fractional units. We may increase the $50
million cash limit in our sole and absolute discretion and if we do so, we will
send you a notice.
In addition, 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). 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."
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.
The offer is conditioned on satisfaction of certain conditions. THE OFFER
IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS BEING TENDERED. See "The
Offer -- Section 17. Conditions of 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 or are not reasonably expected to be
satisfied, we reserve the right to (i) decline to purchase any of the units
tendered, terminate the offer and return all tendered units to tendering limited
partners, (ii) waive all the unsatisfied conditions and purchase all units
validly tendered, (iii) extend the offer and, subject to the withdrawal rights
of limited partners, retain the units that have been tendered during the period
or periods for which the offer is extended, or (iv) amend the offer.
5
<PAGE> 9
This offer is being mailed to the persons shown by your partnership's
records to have been limited partners or, in the case of units owned of record
by Individual Retirement Accounts and qualified plans, beneficial owners of
units, as of October 1, 1999. The transfer of units will be effective October 1,
1999.
SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS.
Upon the terms and subject to the conditions of the offer, we will
purchase, by accepting for payment, and will pay for 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
(including the $50 million cash limitation), accept for payment and pay for all
units, 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 in respect of the units
and an irrevocable proxy to vote the units, and defer, perhaps indefinitely, the
transfer of ownership of units on the partnership's books. In other
circumstances 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.
Subject to the other terms and conditions of the offer, 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 or the terms and conditions of this offer, we will
purchase all units so tendered and not withdrawn, upon the terms and subject to
the conditions of the offer.
For purposes of the offer, we will be deemed to have accepted for payment
pursuant to the offer, and thereby purchased, validly tendered units, if, as and
when we give verbal or written notice to the Information Agent of our acceptance
of those units for payment pursuant to the offer. Payment for units accepted for
payment pursuant to the offer will be made through the Information Agent, which
will act as agent for tendering limited partners for the purpose of receiving
cash payments from us and transmitting cash payments to tendering limited
partners.
If any tendered units are not accepted for payment by us for any reason,
the letter of transmittal with respect to such units not purchased may be
destroyed by us or the Information Agent. If, for any reason, acceptance for
payment of, or payment for, any units tendered pursuant to the offer is delayed
or we are unable to accept for payment, purchase or pay for units tendered
pursuant to the offer, then, without prejudice to our rights under "The Offer --
Section 17. Conditions of the Offer," the Information Agent may, nevertheless,
on our behalf retain tendered units, and those units may not be withdrawn except
to the extent that the tendering limited partners are entitled to withdrawal
rights as described in "The Offer -- Section 4. Withdrawal Rights" 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
6
<PAGE> 10
or prejudice your rights to receive payment for units validly tendered and
accepted for payment pursuant to the offer.
SECTION 3. PROCEDURE FOR TENDERING UNITS.
Valid Tender. To validly tender units pursuant to the offer, a properly
completed and duly executed letter of transmittal and any other documents
required by such letter of transmittal must be received by the Information
Agent, at one of its addresses set forth on the back cover of this offer to
purchase, on or prior to the expiration date. You may tender all or any portion
of your units. No alternative, conditional or contingent tenders will be
accepted.
Signature Requirements. If the letter of transmittal is signed by the
registered holder of a unit and payment is to be made directly to that holder,
then no signature guarantee is required on the letter of transmittal. Similarly,
if a unit is tendered for the account of a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc. or a commercial bank, savings bank, credit union, savings and loan
association or trust company having an office, branch or agency in the United
States (each an "Eligible Institution"), no signature guarantee is required on
the letter of transmittal. However, in all other cases, all signatures on the
letter of transmittal must be guaranteed by an Eligible Institution.
In order for you to tender in the offer, your units must be validly
tendered and not withdrawn on or prior to the expiration date.
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS IS AT YOUR OPTION AND RISK AND DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE INFORMATION AGENT. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
Appointment as Proxy; Power of Attorney. By executing the letter of
transmittal, you are irrevocably appointing us and our designees as your proxy,
in the manner set forth in the letter of transmittal, each with full power of
substitution, to the fullest extent of the your rights with respect to the units
tendered by you and accepted for payment by us. Each such proxy shall be
considered coupled with an interest in the tendered units. Such appointment will
be effective when, and only to the extent that, we accept the tendered unit for
payment. Upon such acceptance for payment, all prior proxies given by you with
respect to the units will, without further action, be revoked, and no subsequent
proxies may be given (and if given will not be effective). We and our designees
will, as to those units, be empowered to exercise all voting and other rights as
a limited partner as we, in our sole discretion, may deem proper at any meeting
of limited partners, by written consent or otherwise. We reserve the right to
require that, in order for units to be deemed validly tendered, immediately upon
our acceptance for payment of the units, we must be able to exercise full voting
rights with respect to the units, including voting at any meeting of limited
partners then scheduled or acting by written consent without a meeting. By
executing the letter of transmittal, you agree to execute all such documents and
take such other actions as shall be reasonably required to enable the units
tendered to be voted in accordance with our directions. The proxy and power of
attorney granted by you to us upon your execution of the letter of transmittal
will remain effective and be irrevocable for a period of ten years following the
termination of our offer.
By executing the letter of transmittal, you also irrevocably constitute
and appoint us and our designees as your attorneys-in-fact, each with full power
of substitution, to the full extent of your rights with respect to the units
tendered by you and accepted for payment by us. Such appointment will be
effective when, and only to the extent that, we pay for your units. You will
agree not to exercise any rights pertaining to the tendered units without our
prior consent. Upon such payment, all prior powers of attorney granted by you
with respect to such units will, without further action, be revoked, and no
subsequent powers of attorney may be granted (and if granted will not be
effective). Pursuant to such appointment as attorneys-in-fact, we and our
designees will each 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
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<PAGE> 11
partner to send any and all future distributions to which we are entitled
pursuant to the terms of the offer in respect of tendered units to the address
specified in such form, and (iv) to endorse any check payable to you or upon
your order representing a distribution to which we are entitled pursuant to the
terms of our offer, in each case, in your name and on your behalf.
If you tender units through the enclosed letter of transmittal you will
irrevocably constitute and appoint us and any of our designees as your true and
lawful agent and attorney-in-fact with respect to such units, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to withdraw any or all of such units that have been
previously tendered in response to any other tender or exchange offer, provided
that the price per unit we are offering is equal to or higher than the price per
unit being offered in the other tender or exchange offer. Such appointment is
effective upon the receipt of such letter of transmittal and shall continue to
be effective unless and until you withdraw such units from this offer prior to
the expiration date.
Assignment of Interest in Future Distributions. By executing the letter of
transmittal, you will irrevocably assign to us and our assigns all of your
right, title and interest in and to any and all distributions made by your
partnership from any source and of any nature, including, without limitation,
distributions in the ordinary course, distributions from sales of assets,
distributions upon liquidation, winding-up, or dissolution, payments in
settlement of existing or future litigation, and all other distributions and
payments from and after the expiration date of our offer, in respect of the
units tendered by you and accepted for payment and thereby purchased by us. If,
after the unit is accepted for payment and purchased by us, you receive any
distribution from any source and of any nature, including, without limitation,
distributions in the ordinary course, distributions from sales of assets,
distributions upon liquidation, winding-up or dissolution, payments in
settlement of existing or future litigation and all other distributions and
payments, from your partnership in respect of such unit, you will agree to
forward promptly such distribution to us.
Determination of Validity; Rejection of Units; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of units pursuant to our offer will be determined by us, in our reasonable
discretion, which determination shall be final and binding on all parties. We
reserve the absolute right to reject any or all tenders of any particular unit
determined by us not to be in proper form or if the acceptance of or payment for
that unit may, in the opinion of our counsel, be unlawful. We also reserve the
absolute right to waive or amend any of the conditions of the offer that we are
legally permitted to waive as to the tender of any particular unit and to waive
any defect or irregularity in any tender with respect to any particular unit of
any particular limited partner. Our interpretation of the terms and conditions
of the offer (including the letter of transmittal) will be final and binding on
all parties. No tender of units will be deemed to have been validly made unless
and until all defects and irregularities have been cured or waived. Neither us,
the Information Agent, nor any other person will be under any duty to give
notification of any defects or irregularities in the tender of any unit or will
incur any liability for failure to give any such notification.
Backup Federal Income Tax Withholding. To prevent the possible application
of back-up Federal income tax withholding of 31% with respect to payment of the
offer price, you may have to provide us with your correct taxpayer
identification number. See the instructions to the letter of transmittal and
"The Offer -- Section 6. 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.
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SECTION 4. WITHDRAWAL RIGHTS.
You may withdraw tendered units at any time prior to the expiration date
or on or after January 11, 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. Procedure 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.
SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT.
We expressly reserve the right, in our reasonable discretion, at any time
and from time to time, (i) to extend the period of time during which our offer
is open and thereby delay acceptance for payment of, and 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 of 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 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 will be followed by a press release or public
announcement which will be issued no later than 9:00 a.m., New York City time,
on the next business day after the scheduled expiration date of our offer, in
accordance with Rule 14e-1(d) under the Exchange Act.
If we extend the offer, or if we delay payment for a unit (whether before
or after its acceptance for payment) or are unable to pay for a unit pursuant to
our offer for any reason, then, without prejudice to our rights under the offer,
the Information Agent may retain tendered units and those units may not be
withdrawn except to the extent tendering unitholders are entitled to withdrawal
rights as described in "The Offer -- Section 4. Withdrawal Rights," subject,
however, to our obligation, pursuant to Rule 14e-1(c) under the Exchange Act, to
pay the offer price in respect of units tendered or return those units promptly
after termination or withdrawal of the offer.
If we make a material change in the terms of our offer, or if we waive a
material condition to our offer, we will extend the offer and disseminate
additional tender offer materials to the extent required by Rule 14e-1 under the
Exchange Act. The minimum period during which the offer must remain open
following any material change in the terms of the offer, other than a change in
price or a change in percentage of securities sought or a change in any dealer's
soliciting fee, if any, will depend upon the facts and circumstances, including
the materiality of the change. With respect to a change in price or, subject to
certain limitations, a change in the percentage of securities sought or a change
in any
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dealer's soliciting fee, if any, a minimum of ten business days from the date of
such change is generally required to allow for adequate dissemination to
unitholders. Accordingly, if, prior to the expiration date, we increase (other
than increases of not more than two percent of the outstanding units) or
decrease the number of units being sought, or increase or decrease the offer
price, and if the offer is scheduled to expire at any time earlier than the
tenth business day after the date that notice of such increase or decrease is
first published, sent or given to unitholders, the offer will be extended at
least until the expiration of such ten business days. As used in the offer to
purchase, "business day" means any day other than a Saturday, Sunday or a
Federal holiday, and consists of the time period from 12:01 a.m. through 12:00
midnight, New York City time.
SECTION 6. CERTAIN FEDERAL INCOME TAX MATTERS.
The following summary is a general discussion of certain of the United
States federal income tax consequences of the offer that may be relevant to (i)
unitholders who tender some or all of their units for cash pursuant to our
offer, and (ii) unitholders who do not tender any of their units pursuant to our
offer. This discussion is based on the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code"), Treasury regulations, rulings issued by the
Internal Revenue Service (the "IRS"), and judicial decisions, all as of the date
of this offer to purchase. All of the foregoing are subject to change or
alternative construction, possibly with retroactive effect, and any such change
or alternative construction could affect the continuing accuracy of this
summary. This summary is based on the assumption that your partnership is
operated in accordance with its organizational documents including its
certificate of limited partnership and agreement of limited partnership. This
summary is for general information only and does not purport to discuss all
aspects of United States 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, 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.
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Character of Gain or Loss Recognized Pursuant to the Offer. Except as
described below, the gain or loss recognized by you on a sale of a unit of
limited partnership of your partnership pursuant to the offer generally will be
treated as a long-term capital gain or loss if you held the unit for more than
one year. Long-term capital gains recognized by individuals and certain other
noncorporate taxpayers generally will be subject to a maximum United States
federal income tax rate of 20%. If the amount realized with respect to a unit of
limited partnership of your partnership that is attributable to your share of
"unrealized receivables" of your partnership exceeds the tax basis attributable
to those assets, such excess will be treated as ordinary income. Among other
things, "unrealized receivables" include depreciation recapture for certain
types of property. In addition, the maximum United States federal income tax
rate applicable to persons who are noncorporate taxpayers for net capital gains
attributable to the sale of depreciable real property (which may be determined
to include an interest in a partnership such as your units) held for more than
one year is currently 25% (rather than 20%) with respect to that portion of the
gain attributable to depreciation deductions previously taken on the property.
If you tender a unit of limited partnership interest of your partnership
in the offer, you will be allocated a share of partnership taxable income or
loss for the year of tender with respect to any units sold. You will not receive
any future distributions on units of limited partnership interest of your
partnership tendered on or after the date on which such units are accepted for
purchase and, accordingly, you may not receive any distributions with respect to
such accreted income. Such allocation and any partnership cash distributions to
you for that year will affect your adjusted tax basis in your unit of limited
partnership interest of your partnership and, therefore, the amount of your
taxable gain or loss upon a sale of a unit pursuant to the offer.
Passive Activity Losses. The passive activity loss rules of the Internal
Revenue Code limit the use of losses derived from passive activities, which
generally include investments in limited partnership interests such as the units
of limited partnership interest of your partnership. An individual, as well as
certain other types of investors, generally cannot use losses from passive
activities to offset nonpassive activity income received during the taxable
year. Passive losses that are disallowed for a particular tax year are
"suspended" and may be carried 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.
Tax Consequences of the Settlement Fund Amount. Approximately 5% of our
offer price represents a payment from a settlement fund (the "Settlement Fund
Amount") that we have established, which you will be entitled to receive if we
receive court approval and you do not request exclusion from the settlement
class. The proper treatment for federal income tax purposes of your receipt of
the Settlement Fund Amount is uncertain. While we believe that the Settlement
Fund Amount should be treated as additional consideration for the units pursuant
to this offer, no assurance can be given that the IRS will not assert that the
Settlement Fund Amount should be treated as a payment in exchange for your
release of the defendants from current and future claims and taxed as ordinary
income. You should consult your own tax advisor regarding the tax consequences
to you with respect to your right to, and your receipt of, the Settlement Fund
Amount, including the possibility of reporting the Settlement Fund Amount under
the installment method of reporting.
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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 United States federal income tax under the Foreign
Investment in Real Property Tax Act of 1980. Under these provisions of the
Internal Revenue Code, the transferee of an interest held by a foreign person in
a partnership which owns United States real property generally is required to
deduct and withhold 10% of the amount realized on the disposition. Amounts
withheld would be creditable against a foreign person's United States federal
income tax liability and, if in excess thereof, a refund could be claimed from
the Internal Revenue Service by filing a United States income tax return. See
the instructions to the letter of transmittal.
Tax Consequences to Non-Tendering and Partially-Tendering Limited
Partners. Section 708 of the Internal Revenue Code provides that if there is a
sale or exchange of 50% or more of the total interest in capital and profits of
a partnership within any 12-month period, such partnership terminates for United
States federal income tax purposes. It is possible that our acquisition of units
pursuant to the offer alone or in combinations 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 United
States federal income tax events will be deemed to occur: the terminated
partnership will be deemed to have contributed all of its assets (subject to its
liabilities) to a new partnership in exchange for an interest in the new
partnership and, immediately thereafter, the old partnership will be deemed to
have distributed interests in the new partnership to the remaining limited
partners in proportion to their respective interests in the old partnership in
liquidation of the old partnership.
A remaining limited partner will generally not recognize any gain or loss
upon the deemed distribution or upon the deemed contribution and the capital
accounts of the remaining limited partners in the old partnership will carry
over intact into the new partnership. A termination may change (and possibly
shorten) a remaining partner's holding period with respect to its retained units
in your partnership for United States federal income tax purposes.
The new partnership's adjusted tax basis in its assets will be the same as
the old partnership's basis in such assets immediately before the termination. A
termination may also subject the assets of the new partnership to depreciable
lives in excess of those currently applicable to the old partnership. This would
generally decrease the annual average depreciation deductions allocable to the
remaining limited partners for a number of years following consummation of the
offer (thereby increasing the taxable income allocable to their units in each
such year), but would have no effect on the total depreciation deductions
available over the useful lives of the assets of your partnership.
Elections as to certain tax matters previously made by the old partnership
prior to termination generally will not be applicable to the new partnership
unless the new partnership chooses to make the same elections.
Additionally, upon a termination for tax purposes, the old partnership's
taxable year will close for all limited partners. In the case of a remaining
limited partner or a partially tendering limited partner reporting on a tax year
other than a calendar year, the closing of the partnership's taxable year may
result in more than 12 months' taxable income or loss of the old partnership
being includible in such limited partner's taxable income for the year of
termination.
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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 23.76% of the units pursuant to the
offer, we will own more than 50% of the total outstanding units and, as a
result, will be able to control the outcome of all voting decisions with respect
to your partnership. Even if we acquire a lesser number of units pursuant to the
offer, because we currently own approximately 27.16% 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. Notwithstanding the above, we have agreed in connection with the
settlement to certain limitations in connection with our voting rights. See "The
Offer -- Section 14. Voting Power."
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 your partnership, the business and properties owned by your
partnership, the management compensation payable to your general partner or any
other matter relating to your partnership, except that 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
may 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
security holders 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 Securities and Exchange Commission (the "SEC") and to comply
with the proxy rules of the SEC. 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 2,208 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."
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SECTION 8. INFORMATION CONCERNING US AND CERTAIN OF OUR AFFILIATES.
We are AIMCO Properties, L.P., a Delaware limited partnership. Together
with our subsidiaries, we conduct substantially all of the operations of
Apartment Investment and Management Company, a Maryland corporation ("AIMCO").
AIMCO is a real estate investment trust that owns and manages multifamily
apartment properties throughout the United States. Based on apartment unit data
compiled by the National Multi-Housing Council, we believe that, as of June 30,
1999, AIMCO was one of the largest owners and managers of multifamily apartment
properties in the United States, with a total portfolio of 369,404 apartment
units in 2,037 properties located in 49 states, the District of Columbia and
Puerto Rico. AIMCO's Class A Common Stock is listed and traded on the New York
Stock Exchange under the symbol "AIV." As of June 30, 1999, AIMCO:
o owned or controlled 64,640 units in 240 apartment properties;
o held an equity interest in 168,817 units in 887 apartment
properties; and
o managed 136,523 units in 940 apartment properties for third party
owners and affiliates.
Our general partner is AIMCO-GP, Inc., which is a wholly owned subsidiary
of AIMCO. Our principal executive offices are located at 1873 South Bellaire
Street, Denver, Colorado 80222, (on and after November 24, 1999: 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 II attached hereto and are incorporated herein
by reference.
We and AIMCO are both subject to the information and reporting
requirements of the Exchange Act and, in accordance therewith, file reports and
other information with the Securities and Exchange Commission relating to our
business, financial condition and other matters. Such reports and other
information may be inspected at the public reference facilities maintained by
the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549;
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661; and 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material can
also be obtained from the Public Reference Room of the SEC in Washington, D.C.
at prescribed rates. The SEC also maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
In addition, information filed by AIMCO with the New York Stock Exchange may be
inspected at the offices of the New York Stock Exchange at 20 Broad Street, New
York, New York 10005.
For more information regarding AIMCO Properties, L.P., please refer to the
Annual Report on Form 10-K for the year ended December 31, 1998 and the
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999, and June
30, 1999, and September 30, 1999 (particularly the management's discussion and
analysis of financial condition and results of operations) and other reports and
documents filed by it with the SEC.
Except as set forth in "The Offer -- Section 9. Background and Reasons for
the Offer" and "The Offer -- Section 11. Conflicts of Interests and Transaction
with Affiliates," neither we nor, to the best of our knowledge, any of the
persons listed on Annex II attached hereto, (i) beneficially own or have a right
to acquire any units, (ii) have effected any transaction in the units in the
past 60 days, or (iii) have any contract, arrangement, understanding or
relationship with any other person with respect to any securities of your
partnership, including, but not limited to, contracts, arrangements,
understandings or relationships concerning transfer or voting thereof, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies (except for
previous tender offers we may have conducted for units).
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SECTION 9. BACKGROUND AND REASONS FOR THE OFFER.
GENERAL
We are in the business of acquiring direct and indirect interests in
apartment properties such as the properties owned by your partnership. Our offer
provides us with an opportunity to increase our ownership interest in your
partnership's properties while providing you and other investors with an
opportunity to liquidate your current investment.
On October 1, 1998, AIMCO merged (the "Insignia Merger") with Insignia
Financial Group, Inc. ("Insignia"). As a result of the Insignia Merger, AIMCO
acquired approximately 51% of the outstanding common shares of beneficial
interest of Insignia Properties Trust ("IPT"). The general partner of your
partnership is a wholly owned subsidiary of IPT. Through the Insignia Merger,
AIMCO also acquired a majority ownership interest in the entity that manages the
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. Together with its
subsidiaries, AIMCO currently owns, in the aggregate, approximately 27.16% of
the outstanding limited partnership units of your partnership.
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 90 of the
Insignia Partnerships, including your partnership.
THE LAWSUIT AND THE PROPOSED SETTLEMENT
This Litigation Settlement Offer is being made as part of a proposed
settlement of a class action and derivative lawsuit pending in the Superior
Court of the State of California, County of San Mateo, entitled Nuanes et al. v.
Insignia Financial Group, Inc., et al., Case No. 404228, brought on behalf of
limited partners in your partnership and sixty other partnerships formerly
managed by Insignia Financial Group, Inc., and/or its affiliates.
The Lawsuit. On March 24, 1998, certain persons claiming to own limited
partner interests in certain of the limited partnerships for which our
subsidiaries act as general partner (including your partnership) filed the
purported class and derivative action against Insignia Financial Group, Inc.,
AIMCO, the general partners of the partnerships, certain persons and entities
who purportedly formerly controlled the general partners, and additional
entities affiliated with and individuals who are officers, directors and/or
principals of several of the defendants. The complaint contains allegations
that, among other things, (i) the defendants breached fiduciary duties owed to
the plaintiffs, or aided and abetted in those purported breaches, by selling or
agreeing to sell their "fiduciary positions" as stockholders, officers and
directors of the general partners for a profit and retaining said profit rather
than distributing it to the plaintiffs; (ii) the defendants breached fiduciary
duties, or aided and abetted in those purported breaches, by mismanaging the
partnerships and misappropriating assets of the partnerships by (a) manipulating
the operations of the partnerships to depress the trading price of limited
partnership units of the partnerships; (b) coercing and fraudulently inducing
unitholders to sell units to certain of the defendants at depressed prices; and
(c) using the voting control obtained by purchasing units at depressed prices to
entrench certain of the defendants' positions of control over the partnerships;
and (iii) the defendants breached their fiduciary duties to the plaintiffs by
(a) selling assets of the partnerships such as mailing lists of unitholders and
(b) causing the general partners to enter into exclusive arrangements with their
affiliates to sell goods and services to the general partners, the unitholders
and tenants of properties owned by the partnerships. The complaint also alleges
that the foregoing allegations constitute violations of various California
securities, corporate and partnership statutes, as well as conversion and common
law fraud. The complaint seeks unspecified compensatory and punitive damages, an
injunction
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blocking the sale of control of the general partners and a court order directing
the defendants to discharge their fiduciary duties to the plaintiffs. On June
25, 1998, the defendants filed motions seeking dismissal of the action. In lieu
of responding to the motion, plaintiffs filed an amended complaint. On October
14, 1998, the AIMCO and Insignia defendants filed demurrers to the amended
complaint. The demurrers (which are requests to dismiss the action as a matter
of law) were heard on February 8, 1999, but no decision has been reached by the
Court.
Pending decision on defendants' motions, the parties began arm's length
negotiations relating to a potential settlement of the lawsuit. The parties
reached agreement upon the principal terms of the settlement by executing
Memorandum of Understanding on October 22, 1999. On November 1, 1999, the
parties executed a Stipulation of Settlement setting forth the terms of the
settlement.
The settlement was reached only after conducting substantial discovery in
the lawsuit. The discovery included settlement class counsel inspecting various
documents produced by the defendants, including copies of the operative
partnership agreements for each of the partnerships. Settlement class counsel
also reviewed and analyzed publicly-available information and performed other
factual investigations. In addition, settlement class counsel also investigated
and researched the law applicable to their claims and to the defenses raised by
the defendants.
Based on their investigation of the facts and the applicable law,
plaintiffs' settlement class counsel and their client have concluded that it is
in the best interests of the members of the settlement class and the
partnerships that the action be settled on the terms and conditions set forth in
the Stipulation. The named plaintiffs and settlement class counsel have reached
their conclusion concerning the fairness of the settlement after considering the
factual and legal issues in the lawsuit, the risks and uncertainties of
continued litigation, the expense, difficulties and delays inherent in
prosecuting the lawsuit through trial and through any appeals that might be
taken, and the likelihood of success at trial, including the fact that even if
the named plaintiffs ultimately prevailed on their claims, there can be no
assurance that the settlement class members or the partnerships would receive
any greater recovery than they will receive from the settlement embodied in the
Stipulation.
The defendants have concluded that it is in their best interests that the
lawsuit be settled on the terms and conditions set forth in the Stipulation. The
defendants have reached this conclusion after considering the legal and factual
issues in the lawsuit, the substantial benefits in final resolution of the
lawsuit, the risks and uncertainties of continued litigation, and the expenses
associated with, and difficulties and delays inherent in, defending such
litigation through trial and any appeals that might be taken.
The proposed settlement of the lawsuit is the product of good faith, arm's
length negotiations between settlement class counsel and counsel for the
defendants. These negotiations resulted in the settlement set forth in the
Stipulation.
Terms of the Settlement. Pursuant to the Stipulation, not later than 30
days after final approval of the settlement, we are obligated to commence offers
to purchase the outstanding units of substantially all of the partnerships
subject to the lawsuit. This offer is being made to satisfy the requirements of
the Stipulation.
The price offered for your units in the partnership is a key provision of
the settlement. Approximately 5% of our offer price represents a payment from a
settlement fund that we have established, which you will be entitled to receive
if we receive court approval and you do not request exclusion from the
settlement class. The offer price per unit reflects an amount to be paid to
tendering unitholders after taking into account amounts for estimated attorney's
fees, costs, and expenses which class counsel is permitted to seek in connection
with the settlement.
The Stipulation provides that the price per unit to be paid in the offer
for each partnership (without taking into account the amount paid from the
settlement fund) will be based upon an estimate of the liquidation value of the
limited partners' interest in the equity of such partnership, divided by the
number of units in such partnership. The estimated liquidation value of each
partnership is equal to the estimated fair market value of the partnership's
properties and other assets, plus any cash or cash equivalents owned by the
partnership and any receivables payable to the partnership, less (i) all
mortgage debt and other debt, payables and obligations of the partnership,
together with accrued interest and any applicable pre-payment or similar
penalties, (ii) all fees or other liabilities that would be payable by the
partnership in the event of a sale of its assets and liquidation of the
partnership, including, but not limited to, any disposition or similar fees,
16
<PAGE> 20
(iii) accounts payable, accrued expenses and other existing liabilities, (iv) an
estimate of the applicable "transaction costs" that would be paid in a
hypothetical liquidation in an amount equal to a percentage of the estimated
gross fair market valuation of the partnership's properties that is equal to, or
less than, five (5%) percent of such estimated value, (v) extraordinary capital
expenditures and deferred maintenance expenditures that have been budgeted to be
or actually are paid by the partnership in the fiscal year in which the tender
offer is commenced, (vi) the amount of the partnership's cash reserves that are
distributed to unitholders after determination of the tender offer prices, but
prior to the closing of any particular tender offer, and (vii) the amount of the
hypothetical liquidation proceeds that would be required to be allocated to the
general partner, if any. The Stipulation provides that the estimated fair market
value of each partnership's properties is to be determined, in good faith, by
the general partner of the partnership, calculating for each residential
property net operating income for each property, less a per-apartment unit
reserve in an amount, if any, that is deemed appropriate and acceptable to an
independent appraiser and taking into account all income and expenses of such
property, including without limitation, general and administrative expenses,
where deemed appropriate, and thereafter applying a capitalization rate. The
general partner is to consider and take into account the valuations of the
properties contained in any appraisals of the properties that have been prepared
since January 1996 by persons other than the general partner and the prices
contained in any offers to purchase properties that were received by the general
partner since January 1997. For commercial properties, the fair market value
will be determined by the general partner, in good faith after considering any
current offers to purchase or contracts for sale of the property received for
such properties, or by using the discounted cash flow method of evaluating
commercial properties if no such offers have been received or contracts have
been entered into.
The Stipulation provides that the general partner of your partnership
retain Robert A. Stanger & Co., Inc. as an independent valuation firm to render
an opinion that our offer price (without taking into account the amount paid
from the settlement fund) is fair from a financial point of view to the holders
of the units. The Stipulation also provides that in determining whether each of
the tender offer prices is fair from a financial point of view, Stanger is
expressly directed to consider the following factors: (i) any and all appraisals
of the value of the partnership, its properties or any of its other assets that
have been prepared since January 1996, (ii) any offers to purchase properties
that have been received by the general partner since January 1997, and (iii) all
other factors that the independent appraiser deems relevant. The reasonable fees
of, and reimbursement of expenses incurred by, the independent appraiser in
connection with the settlement will be paid by the partnerships. See"--Stanger
Analysis."
In accordance with the Stipulation, we have established a settlement fund
equal to 6% of the aggregate purchase price of all units sought in this offer.
If the Court finally approves the settlement and you tender units in this offer
and do not opt out of the settlement, we will make a payment to you from the
settlement fund. The payment from the settlement fund represents approximately
5% of our offer price. We will also pay settlement class counsel an amount equal
to less than 1% of the price of the units we purchase from you in this offer.
We are not required to pay more than $50 million in cash (exclusive of
amounts payable out of the settlement fund), in the aggregate, to purchase units
in this offer and the other offers made as part of the settlement. We may waive
or increase this $50 million cash limitation in our sole and absolute
discretion, in which case we will so notify you.
Under the Stipulation, AIMCO or the AIMCO operating partnership is to
conduct an additional tender offer for the same partnerships no later than
eighteen months after the effective date of the settlement upon the same terms
and conditions set forth above. In these tender offers, we will not be required
to pay more than $50 million in cash (exclusive of amounts payable out of the
settlement fund), but we may increase such amount in our sole and absolute
discretion. The $50 million cash limit for these latter tender offers is in
addition to the $50 million cash limit applicable to this tender offer and the
other tender offers being made concurrently under the Stipulation. Further, if
you tender units in the offer contemplated by this paragraph and if you did not
opt out of the settlement class, the Stipulation provides that, subject to court
approval, we will pay you an additional amount estimated at 5.7% of the offer
price per unit in this offer (less the amount paid from the settlement fund)
times the number of units we purchased from you in the additional offer and we
will pay settlement class counsel an amount estimated at 0.3% of the offer price
of the units in this offer (less the amount paid from the settlement fund) times
the number of units we purchase from you in the additional offer.
Subject to court approval, under the Stipulation, settlement class counsel
will seek an order awarding appropriate attorneys' fees and the reimbursement of
all reasonable expenses incurred in the lawsuit of up to $2 million, plus the
17
<PAGE> 21
amounts payable to settlement class counsel provided for in the previous two
paragraphs. Any such amounts allowed by the Court to the settlement class
counsel will be paid by 49 partnerships on a pro rata basis based upon the
estimated liquidation value of the partnerships, except for the amounts payable
to settlement class counsel provided for in the previous two paragraphs.
Under the Stipulation, the partnerships and the members of the settlement
class will release the defendants from claims related to the lawsuit and the
Stipulation.
In addition, under the Stipulation, AIMCO and its affiliates will agree to
certain other restrictions on the operation of your partnership, as described in
"The Offer -- Section 14. Voting Power."
Court Approval of the Settlement. While preliminary court approval has
been obtained, the terms and conditions of the settlement are subject to final
court approval. However, we are making this offer prior to obtaining such court
approval because obtaining court approval may take several months. If more than
$50 million of units are tendered in this and the other offers, and we do not
purchase all of such units, our parent corporation, Apartment Investment and
Management Company, a New York Stock Exchange-listed company, will seek an
exemption from the registration requirements of the Securities Act of 1933 under
Section 3(a)(10) of such Act in order to offer shares of its stock in exchange
for your units tendered that exceed the $50 million cash limit. Section 3(a)(10)
provides such an exemption for the exchange of securities where the terms and
conditions of the issuance and exchange are approved by a court after a hearing
upon the fairness of such terms and conditions at which all persons to whom it
is proposed to issue such securities in the exchange have an opportunity to
appear. If the Section 3(a)(10) exemption is not available, AIMCO may register
the shares.
DETERMINATION OF OFFER PRICE
Valuation of Units. In accordance with the Stipulation, we determined our
offer price by estimating the estimated liquidation value of your partnership.
First, we estimated the value of each property owned by your partnership. For
the residential properties, we used 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 annualized your partnership's
property income for the nine months ended September 30, 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 8%, 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 annualized property income to your
partnership's annualized net income based upon the nine month period ended
September 30, 1999.
<TABLE>
<S> <C>
Net Income (loss) 970,667
Other Non-Operating Expenses (81,000)
Minority Interest Income of Jt. Venture 90,667
Depreciation 814,667
Interest 1,032,000
Property income 2,827,000
</TABLE>
18
<PAGE> 22
Although the direct capitalization method is a widely accepted way of
valuing real estate, there are a number of other methods available to value real
estate, each of which may result in different valuations of a property. Further,
in applying the direct capitalization method, others may make different
assumptions and obtain different results. The proceeds that you would receive if
you sold your units to someone else or if your partnership were actually
liquidated might be higher than our offer price. We determined our offer price
as follows:
o First, we estimated the value of each property owned by your
partnership. We valued properties 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 annualized the property income for the
first nine months of 1999 and then divided such amount by the
property's capitalization rate to derive an estimated gross property
value.
Based on the above, we estimated the gross property value of each property
as follows:
<TABLE>
<CAPTION>
1999
PROPERTY ESTIMATED GROSS
PROPERTY INCOME* CAPITALIZATION RATE PROPERTY VALUE
- -------- ---------- ------------------- ---------------
<S> <C> <C> <C>
Brighton Crest Apts. $1,393,000 10.31% $ 13,518,000
The Fairway Apts. 944,000 10.72% 8,802,000
The Village Apts. 490,000 10.76% 4,551,000
Total ............................. $ 2,827,000 $ 26,871,000
=========== ==============
</TABLE>
* Property income for the nine months ended September 30, 1999 has been
annualized by multiplying by 1.33. Actual 1999 property income could be higher
or lower.
o Second, we calculated the value of the equity of your partnership by
adding to the aggregate gross property value of all properties owned
by your partnership, the value of the non-real estate assets of your
partnership, and deducting the liabilities of your partnership,
including mortgage debt and debt owed by your partnership to its
general partner (which is our subsidiary) or its affiliates. Pursuant
to the Stipulation, we deducted from this value certain other costs,
including required capital expenditures, deferred maintenance,
closing costs, the cost of the Stanger opinion for your partnership
and your partnership's share of the estimated legal fees payable to
settlement class counsel, to derive a net equity value for your
partnership of $12,249,647. Closing costs include, but are not
limited to 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, 46.85% 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:
19
<PAGE> 23
<TABLE>
<S> <C>
Gross valuation of partnership properties $ 26,871,000
Plus: Cash and cash equivalents 540,269
Plus: Other partnership assets, net of security deposits 6,487,793
Less: Mortgage debt, including accrued interest (5,684,595)
Less: Accounts payable and accrued expenses (62,443)
Less: Other liabilities (604,338)
------------
Partnership valuation before taxes and certain costs 27,547,685
Less: Disposition fees 0
Less: Extraordinary capital expenditures and deferred maintenance (578,359)
Less: Closing costs (821,491)
------------
Estimated net valuation of your partnership 26,147,835
Percentage of estimated net valuation allocated to holders of units 46 85%
------------
Estimated net valuation of units 12,249,647
Total number of units 28,371.75
------------
Estimated valuation per unit 432.00
============
Settlement Fund (5.1%)* 22.03
------------
Cash consideration per unit 454.03
------------
</TABLE>
* Payable only upon court approval of the settlement and if you do not opt out
of the settlement class.
COMPARISON OF CONSIDERATION TO ALTERNATIVE CONSIDERATION
To assist holders of units in evaluating the offer, your general partner
(which is our subsidiary) has attempted to compare the offer price against:
(a) prices at which the units have sold in the secondary market; (b) estimates
of the value of the units on a liquidation basis; (c) your general partner's
estimate of net asset value; and (d) an affiliate's estimate of net
liquidation value. 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 the estimated values assigned to the
alternative consideration (except historic market and tender offer prices) 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 September
30, 1999, as to income and expenses of each 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), and no assurance can be
given that the same conditions analyzed by us in arriving at the estimates of
value will not change. The assumptions used have been determined by the
general partner of your partnership in good faith, and, where appropriate, are
based upon current and historical information regarding your partnership and
current real estate markets, and have been highlighted below to the extent
critical to the conclusions of the general partner of your partnership. Actual
results may vary from those set forth below based on numerous factors,
including interest rate fluctuations, tax law changes, supply and demand for
similar apartment properties, the manner in which your partnership's
properties are 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 2011, 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.
20
<PAGE> 24
COMPARISON TABLE
<TABLE>
<CAPTION>
PER UNIT
--------
<S> <C>
Cash offer price.......................................... $454.03 (1)
Alternatives:
Prior tender offers....................................... $210,240,363,400
Prices on secondary market................................ $70-962.50
Stanger's estimate of liquidation value................... $463.00
Stanger's estimate of net asset value..................... $486.00
Stanger's estimate of going concern value................. $427.00
Estimated liquidation proceeds............................ $454.03
General partner's estimate of net asset value............. $578
Affiliate's estimate of net liquidation value............. $555.27
</TABLE>
----------------------
(1) Approximately 5% of our offer price represents a payment from a
Settlement Fund that we have established, which you will be entitled to
receive if we receive court approval and you do not request exclusion
from the Settlement Class.
Prior Tender Offers. In our May 13, 1999 tender offer, the original offer
price of $363 per unit was determined based upon our calculation of the
liquidation value of your partnership. Such offer price was based on (i) your
partnership's property income for each property for the year ended December
31, 1998, (ii) our estimate of an appropriate capitalization rate (10.50%) for
your partnership's properties, (iii) the then current assets of your
partnership, (iv) estimated costs and fees (including applicable state sales
taxes) for a sale on the property, and winding up of your partnership, (v)
estimated cost of deferred maintenance, (vi) the mortgages for the properties,
(vii)your partnership's other liabilities and (viii) the percentage ownership
interests of the limited partners in your partnership. Pursuant to such offer
and thereafter, we purchased 829.25 units at $363 per unit.
Prior to the Insignia Merger, a number of tender offers had been made to
acquire units of your partnership. In August 1998, Cooper River Properties,
L.L.C., then an affiliate of Insignia and now our affiliate, commenced a
tender offer to purchase up to 10,000 of the outstanding units of your
partnership at a cash purchase price of $400 per unit and 3,947 units were
purchased in the fourth quarter of 1988.
Prior to such tender offer, in August 1998, Madison Partnership Liquidity
Investors 64, L.L.C., which was unaffiliated with Insignia and is not
affiliated with AIMCO, commenced a tender offer for $210 per unit.
In December 1995, DGP Acquisition, L.L.C., then an affiliate of Insignia
and now our affiliate, commenced a tender offer pursuant to which it acquired
2,049 units (representing approximately 7.22% of the number outstanding) at a
cash purchase price of $240 per unit on January 16, 1996.
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 a lawsuit as described in "-The Lawsuit
and the Proposed Settlement." 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 lack 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.
Although the general partner had requested and sometimes received
information on the prices at which units are
21
<PAGE> 25
sold, it does not regularly receive or maintain information regarding the bid
or asked quotations of secondary market makers, if any. The prices in the
table below are based solely on information provided to the general partner by
sellers and buyers of units transferred in sale transactions (i.e., excluding
transactions believed to result from the death of a limited partner, rollover
to an IRA account, establishment of a trust, trustee to trustee transfers,
termination of a benefit plan, distributions from a qualified or nonqualified
plan, uniform gifts to minors, abandonment of units or similar non-sale
transactions). The transfer paperwork submitted to the general partner often
did not include the requested price information or contains conflicting
information as to the actual sales price. Sale prices not reported or
disclosed could exceed the reported prices. Set forth in the table below are
the high and low sales prices of units for the quarterly periods from January
1, 1996 to September 30, 1998, as reported by your general partner:
SALES PRICES OF PARTNERSHIP UNITS, AS REPORTED BY THE GENERAL PARTNER
<TABLE>
<CAPTION>
HIGH LOW
------- --------
<S> <C> <C>
Fiscal Year Ended December 31, 1998:
Third Quarter................................................... $962.50 $ 70.00
Second Quarter.................................................. 500.00 305.21
First Quarter................................................... 531.16 315.28
Fiscal Year Ended December 31, 1997:
Fourth Quarter.................................................. 500.00 328.00
Third Quarter................................................... 474.00 175.00
Second Quarter.................................................. 328.00 130.00
First Quarter................................................... 285.00 100.00
Fiscal Year Ended December 31, 1996:
Fourth Quarter.................................................. 265.00 175.00
Third Quarter................................................... 263.00 200.00
Second Quarter.................................................. 215.00 130.00
First Quarter................................................... 474.00 130.00
</TABLE>
Set forth below are the high and low sale prices of units for the years
ended December 31, 1996, 1997 and 1998 and for the seven months ended July 31,
1999, as reported by The Partnership Spectrum, which is an independent,
third-party source. The gross sales prices reported by The Partnership
Spectrum do not necessarily reflect the net sales proceeds received by sellers
of units, which typically are reduced by commissions and other secondary
market transaction costs to amounts less than the reported price. The
Partnership Spectrum represents only one source of secondary sales
information, and other services may contain prices for the units that equal or
exceed sales prices reported in The Partnership Spectrum. We do not know
whether the information compiled by The Partnership Spectrum is accurate or
complete.
SALES PRICES OF PARTNERSHIP UNITS, AS REPORTED BY THE PARTNERSHIP SPECTRUM
<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
Seven Months Ended July 31, 1999:......................... $ 340.00 $ 300.00
Fiscal Year Ended December 31, 1998:...................... 338.48 260.00
Fiscal Year Ended December 31, 1997:...................... 328.00 221.00
Fiscal Year Ended December 31, 1996....................... 312.33 200.00
</TABLE>
Set forth in the table below are the high and low sales prices of units
for the year ended December 31, 1998 and for the nine months ended September
30, 1999, as reported by the American Partnership Board, which is an
independent, third-party source. The gross sales prices reported by American
Partnership Board do not necessarily reflect the net sales proceeds received
by sellers of units, which typically are reduced by commissions and other
secondary market transaction costs to amounts less than the reported prices.
The American Partnership Board represents one source of secondary sales
information, and the other services may contain prices for units that equal or
exceed sales prices
22
<PAGE> 26
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>
Nine Months Ended September 30, 1999:............................. $347.71 $ 347.71
Fiscal Year Ended December 31, 1998:.............................. 352.00 319.35
</TABLE>
The Partnership Spectrum, which is an independent, third-party source
of information regarding sales of partnership units, reported no sales of your
partnership units for the years ended December 31, 1996, 1997, 1998 and 1999
(through June 30, 1999). The American Partnership Board, which is an
independent, third-party source of information regarding sales of partnership
units, reported no sales of your partnership units for the year ended December
21, 1998 and 1999 (through September 30, 1999).
Estimated Liquidation Proceeds. Liquidation value is a measure of the
price at which the assets of your partnership would sell if disposed of in an
arms-length transaction between a willing buyer and your partnership, each
having access to relevant information regarding the historical revenues and
expenses of the business. Your general partner (which is our subsidiary)
estimated the liquidation value of units using the same direct capitalization
method and assumptions as we did in valuing the units for the offer price. The
liquidation analysis assumes that your partnership's properties are sold to an
independent third-party buyer at the current property value and that other
balance sheet assets (excluding amortizing assets) and liabilities of your
partnership are sold at their book value, and that the net proceeds of sale
are allocated to your partners in accordance with your partnership's agreement
of limited partnership.
The liquidation analysis assumes that the assets of your partnership are
sold in a single transaction. Should the assets be liquidated over time, even
at prices equal to those projected, distributions to limited partners from
cash flow from operations might be reduced because your partnership's fixed
costs, such as general and administrative expenses, are not proportionately
reduced with the liquidation of assets. However, for simplification purposes,
the sales of the assets are assumed to occur concurrently. The liquidation
analysis assumes that the assets are disposed of in an orderly manner and are
not sold in forced or distressed sales where sellers might be expected to
dispose of their interests at substantial discounts to their actual fair
market value.
General Partner's Estimates of Net Asset Value. Your general partner
(which is our subsidiary) prepared an estimate of your partnership's net asset
value per unit in connection with an offer to purchase up to 4.9% of the
outstanding units commenced by an unaffiliated party in August 1998. That
estimate of your partnership's net asset value per unit as of June 30, 1998
was $578. This estimated net asset value is based on a hypothetical sale of
the partnership's properties and the distribution to the limited partners and
the general partner of the gross proceeds of such sales, net of related
indebtedness, together with the cash, proceeds from temporary investments, and
all other assets that are believed to have liquidation value, after provision
in full for all of the other known liabilities of your partnership. This net
asset value does not take into account (i) timing considerations, (ii) costs
associated with winding up the partnership, (iii) the distribution paid by
your partnership of $27.17 per unit for the fiscal year ended December 31,
1998, or (iv) $578,359 in deferred maintenance costs. Therefore, we believe
that this estimate of net asset value per unit does not necessarily represent
either the fair market value of a unit or the amount a limited partner
reasonably could expect to receive if the partnership's properties were sold
and the partnership was liquidated. For this reason, we considered this net
asset value estimate to be less meaningful in determining the offer price than
our valuation analysis described above.
Affiliate's Estimate of Net Liquidation Value. An affiliate of your
general partner which is now an affiliate of ours, prepared an estimate of
your partnership's net liquidation value per unit in connection with a tender
offer to purchase units for $400 each which closed in September, 1998. That
estimate of your partnership's net liquidation value per unit as of June 30,
1998 was $555.27. This estimated net liquidation value is based on the income
capitalization approached similar to the one we used, adjusted for your
partnership's other assets and liabilities (excluding prepaid and deferred
expenses and security deposits). Four percent was then deducted from the
resulting amount to cover the estimated costs
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<PAGE> 27
of selling the properties. This final amount was then divided by the number of
units outstanding to obtain the $555.27 per unit. While this value is higher
than our offer price per unit, because different income and capitalization
rates were used, and we believe that the income capitalization amounts used
overstate the value of the properties.
Stanger's Estimate of Net Asset Value, Going Concern Value and Liquidation
Value. In rendering its opinion set forth as Annex I hereto, Stanger
independently estimated your partnership's net asset value to be $486 per
unit, its going concern value to be $427 per unit and its liquidation value to
be $463 per unit. For an explanation of how Stanger determined such values see
"--Stanger Analysis -- Summary of Reviews -- Comparison of Offer Price To
Liquidation Value, Going Concern Value and Secondary Market Prices."
ALLOCATION OF CONSIDERATION
Pursuant to the Stipulation, we have deducted from the estimated net
valuation of your partnership an amount allocated to the general partner
pursuant to your partnership's agreement of limited partnership as if your
partnership was being liquidated at the current time.
STANGER ANALYSIS
Pursuant to the Stipulation, we engaged Robert A. Stanger & Co., Inc., an
independent investment banking firm, to conduct an analysis and to render an
opinion (the "Fairness Opinion") as to whether the offer price (excluding the
settlement fund payment) for the units is fair, from a financial point of
view, to the unitholders. We selected Stanger because of its experience in
providing similar services to other parties in connection with real estate
merger and sale transactions and Stanger's experience and reputation in
connection with real estate partnerships and real estate assets. No other
investment banking firm was engaged to provide any report, analysis or opinion
relating to the fairness of our offer.
Stanger has advised us that, subject to the assumptions, limitations and
qualifications contained in its Fairness Opinion, the offer price (excluding
the settlement fund payment) for the units is fair, from a financial point of
view, to the unitholders. We determined the offer price (excluding the
settlement fund payment), and Stanger did not, and was not requested to, make
any recommendations as to the form or amount of consideration to be paid in
connection with the offer.
The full text of the Fairness Opinion, which contains a description of the
matters considered and the assumptions, limitations and qualifications made,
is set forth as Annex I hereto and should be read in its entirety. Stanger has
advised us that the description of Stanger's analysis contained herein
describes the material portions of Stanger's review. The summary set forth
herein does not purport to be a complete description of the review performed
by Stanger in rendering the Fairness Opinion. Arriving at a fairness opinion
is a complex process not necessarily susceptible to partial analysis or
amenable to summary description.
We imposed no conditions or limitations on the scope of Stanger's
investigation or with respect to the methods and procedures to be followed in
arriving at the fairness opinion. See "-Assumptions, Limitations and
Qualification." We have agreed to indemnify Stanger against any losses,
claims, damages, liabilities or expenses to which Stanger may be subject,
under any applicable federal or state law, including federal and state
securities laws, arising out of Stanger's engagement to prepare and deliver
the Fairness Opinion.
Experience of Stanger. Since its founding in 1978, Stanger and its
affiliates have provided information, research, investment banking and
consulting services to clients located throughout the United States, including
major NYSE member firms, insurance companies and over seventy companies
engaged in the management and operation of partnerships and real estate
investment trusts. The investment banking activities of Stanger include
financial advisory and fairness opinion services, asset and securities
valuations, industry and company research and analysis, litigation support and
expert witness services, and due diligence investigations in connection with
both publicly registered and privately placed securities transactions.
Stanger, as part of its investment banking business, is regularly engaged
in the valuation of businesses and their
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<PAGE> 28
securities in connection with mergers, acquisitions, reorganizations and for
estate, tax, corporate and other purposes. Stanger's valuation practice
principally involves partnerships, partnership securities and the assets
typically held through partnerships, such as real estate, oil and gas
reserves, cable television systems and equipment leasing assets. Stanger was
selected because of its experience and reputation in connection with real
estate partnerships, real estate assets and mergers and acquisitions.
Summary of Materials Considered. In the course of Stanger's analysis to
render its opinion, Stanger: (i) reviewed a draft of the Offer to Purchase
related to the offer in substantially the form which will be distributed; (ii)
reviewed your partnership's audited financial statements for the years ended
December 31, 1997 and 1998, and its unaudited financial statements for the
period ended September 30, 1999, which your partnership's management has
indicated to be the most current available financial statements at the time
for your partnership; (iii) reviewed descriptive information concerning your
partnership's real estate assets (the "property") provided by management,
including location, number of units and unit mix or square footage, age, and
amenities; (iv) reviewed summary historical operating statements for your
partnership's property for 1997, 1998 and 1999; (v) reviewed operating budgets
for your partnership's property for 1999, as prepared by management; (vi)
reviewed information prepared by management relating to any debt encumbering
your partnership's property; (vii) reviewed information regarding market
rental rates and conditions for similar properties in the general market area
of your partnership's property and other information relating to acquisition
criteria for similar properties; (viii) reviewed internal financial and
forecast analyses prepared by your partnership of the estimated current net
liquidation value of your partnership; and (ix) conducted other studies,
analysis and inquiries as Stanger deemed appropriate.
A summary of the operating budgets per property for the year ended
December 31, 1999, which was supplied by your partnership to Stanger, is as
follows:
FISCAL 1999 OPERATING BUDGET
DAVIDSON GROWTH PLUS, L.P.
<TABLE>
<CAPTION>
BRIGHTON
CREST FAIRWAY VILLAGE
----------- ---------- ---------
<S> <C> <C> <C>
Total Revenues 2,557,397 1,915,283 988,092
Operating Expenses (1,012,627) (811,862) (466,032)
----------- ---------- ---------
Net Operating Income Before Replacement Reserves 1,544,770 1,103,421 522,060
</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 1999 should not necessarily be considered as indicative
of what the audited operating results for fiscal 1999 will be.
In addition, Stanger discussed with management of your partnership and
AIMCO the market conditions for the property, conditions in the market for
sales/acquisitions of properties similar to that owned by your partnership,
historical, current and projected operations and performance of your
partnership's property and your partnership, the physical condition of your
partnership's property including any deferred maintenance, and other factors
influencing
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<PAGE> 29
value of your partnership's property and your partnership. Stanger also
performed site inspections of your partnership's property, reviewed local real
estate market conditions, and discussed with property management personnel
conditions in local apartment rental markets and market conditions for sales
and acquisitions of properties similar to your partnership's property.
Summary of Reviews. The following is a summary of the material reviews
conducted by Stanger in connection with and in support of its Fairness
Opinion. The summary of the opinion and reviews of Stanger set forth in herein
is qualified in its entirety by reference to the full text of such opinion.
Property Evaluation. In preparing its Fairness Opinion, Stanger performed
a site inspection of your partnership's property during the fourth quarter of
1998. In the course of the site visit, the physical facilities of your
partnership's property were observed, current rental and occupancy information
was obtained, current local market conditions were reviewed, similar competing
properties were identified, and local property management personnel were
interviewed concerning your partnership's property and local market
conditions. Stanger also reviewed and relied upon information provided by your
partnership and AIMCO, including, but not limited to, financial schedules of
historical and current rental rates, occupancies, income, expenses, reserve
requirements, cash flow and related financial information; property
descriptive information, including unit mix or square footage; and information
relating to the condition of the property, including any deferred maintenance,
capital budgets, status of ongoing or newly planned property additions,
reconfigurations, improvements and other factors affecting the physical
condition of the property improvements.
Stanger also reviewed historical operating statements for your
partnership's property for 1997, 1998 and for the nine month period ending
September 30, 1999, the operating budget for 1999, as prepared management of
your partnership, and discussed with management the current and anticipated
operating results of your partnership's property.
In addition, Stanger interviewed management personnel of your partnership
and AIMCO. Such interviews included discussions of conditions in the local
market, economic and development trends affecting your partnership's property,
historical and budgeted operating revenues and expenses and occupancies and
the physical condition of your partnership's property (including any deferred
maintenance and other factors affecting the physical condition of the
improvements), projected capital expenditures and building improvements, the
terms of existing debt encumbering your partnership's property, and
expectations of management regarding operating results of your partnership's
property.
Stanger also reviewed the acquisition criteria used by owners and
investors in the type of real estate owned by your partnership, utilizing
available published information and information derived from interviews
conducted by Stanger with various real estate owners and investors.
Comparison of Offer Price. Stanger observed that the offer price (excluding
the settlement fund payment) of $432 per unit is equal to management's
estimate of liquidation value.
In addition to the above analysis, Stanger prepared an independent
estimate of net asset value, going concern value and liquidation value per
unit. Stanger has advised AIMCO that Stanger's estimates of net asset value,
going concern value and liquidation value are based upon Stanger's independent
estimate of property income, a direct capitalization rate range of 9.75% to
10.0%, transaction costs of 3% to 5%, growth rates of 3% and a terminal
capitalization rate range of 10.25% to 10.5%. Stanger has advised us that the
direct capitalization rate represents Stanger's estimate of the capitalization
rate applicable to its estimate of property income and is based upon Stanger's
independent estimate of the direct capitalization rate for such property based
upon such property's age, condition and location. Stanger further advised us
that the terminal capitalization rate is the capitalization rate utilized in
Stanger's going concern value estimate which is applied to Stanger's estimate
of property income in the eleventh year to establish the value of the property
at the end of the tenth year. Stanger has advised us that Stanger estimated
the terminal capitalization rate at a 50 basis point premium to the direct
capitalization rate estimate for each property. Stanger utilized deferred
maintenance estimates derived from the Adjusters International, Inc. reports
in the calculation of net asset value, going concern value and liquidation
value. Stanger advised us that Stanger adjusted its estimate of net asset
value and liquidation value for the cost of above market debt using an 8%
interest rate. With respect to the going concern value estimate prepared by
Stanger, Stanger advised AIMCO that a ten-year projection period and a
discount rate of 16.5% was utilized. Such discount rate reflects the risk
associated with real estate, leverage and a limited partnership
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<PAGE> 30
investment. The 16.5% discount rate was based upon the property's estimated
internal rate of return derived from the discounted cash flow analysis, (12.4%
as described above), plus a premium reflecting the additional risk associated
with mortgage debt equal to more than 40% of property value. Stanger's
estimates were based in part upon information provided by us. Stanger relied
upon the deferred maintenance estimates, property descriptions, unit
configurations, allocation among partners, and other data provided by us.
Stanger's analyses were based on balance sheet data as of September 30, 1999.
Stanger's estimate of net asset value, going concern value and liquidation
value per unit were $486, $427 and $463 representing premiums (discounts) to
the offer price (excluding the settlement fund payment) of 12.5 %, (1%) and
7%. See "--Comparison of Consideration to Alternative Consideration."
Stanger observed that we are tendering for units of limited partnership
interest in the Partnership and that such units represent a minority interest
in the Partnership. Additionally, Stanger observed that the Partnership is not
listed on any established securities exchange but does trade infrequently in
an informal secondary market. Stanger has advised the Partnership that during
the past 5 years, Stanger has reviewed the secondary market trading activity
of more than 500 partnerships involving more than 31,500 transactions and has
compared the price derived in such transactions to the reported net asset
value of such Partnerships where such data was reported. Stanger observed
average discounts for each of the five year periods ranging from 23.6% to
28.1% for actively traded partnerships. Stanger observed that the offer price
(excluding the settlement fund reserve) represents a 11% discount to Stanger's
estimate of net asset value.
Conclusions. Stanger concluded, based upon its analysis of the foregoing
and the assumptions, qualifications and limitations stated below, as of the
date of the Fairness Opinion, that the offer price (excluding the settlement
fund payment) to be paid for the units in connection with the offer is fair to
the unitholders from a financial point of view. Stanger has rendered similar
fairness opinions with regard to certain other tender offers being made by us.
Stanger rendered the opinions only as to the individual fairness of the offer
price (excluding the settlement fund payment) in each in such tender offer.
The Fairness Opinion does not address the fairness of all possible
acquisitions of interests in your partnership. In addition, the Fairness
Opinion will not be revised to reflect the actual participation in the offer.
Assumptions, Limitations and Qualifications. In rendering the Fairness
Opinion, Stanger relied upon and assumed, without independent verification,
the accuracy and completeness of all financial information and data, and all
other reports and information contained herein or that were provided, made
available, or otherwise communicated to Stanger by your partnership, AIMCO, or
the management of the partnership's property. Stanger has not performed an
independent appraisal, engineering study or environmental study of the assets
and liabilities of your partnership. Stanger relied upon the representations
of your partnership and AIMCO concerning, among other things, any
environmental liabilities, deferred maintenance and estimated capital
expenditure and replacement reserve requirements, the determination and
valuation of non-real estate assets and liabilities of your partnership, the
allocation of your partnership's net values between your general partner
(which is our subsidiary) and limited partners of your partnership, the terms
and conditions of any debt encumbering the partnership's property, and the
transaction costs and fees associated with a sale of the property. Stanger
also relied upon the assurance of your partnership, AIMCO, and the management
of the partnership's property that any financial statements, budgets, pro
forma statements, projections, capital expenditure estimates, debt, value
estimates and other information contained herein or provided or communicated
to Stanger were reasonably prepared and adjusted on bases consistent with
actual historical experience, are consistent with the terms of your
partnership's agreement of limited partnership, and reflect the best currently
available estimates and good faith judgments; that no material changes have
occurred in the value of the partnership's property or other balance sheet
assets and liabilities or other information reviewed between the date of such
information provided and the date of the Fairness Opinion; that your
partnership, AIMCO, and the management of the partnership's property are not
aware of any information or facts that would cause the information supplied to
Stanger to be incomplete or misleading; that the highest and best use of the
partnership's property is as improved; and that all calculations were made in
accordance with the terms of your partnership's agreement of limited
partnership.
Stanger was not requested to, and therefore did not: (i) select the offer
price or the offer price (excluding the settlement fund payment); (ii) make
any recommendation to your partnership or its partners with respect to whether
to accept or reject the proposed offer; (iii) solicit any third party
indications of interest in acquiring the assets of your partnership or all or
any part of your partnership; or (iv) express any opinion as to (a) the tax
consequences of the offer to unitholders, (b) the terms of your partnership's
agreement of limited partnership or the terms of any agreements or contracts
between your partnership and AIMCO; (c) AIMCO's or the general partner's
business decision to effect the
27
<PAGE> 31
offer, or alternatives to the offer, (d) the amount or allocation of expenses
relating to the offer between AIMCO and your partnership or tendering
unitholders; (e) the amount or derivation of liquidation values per unit of
limited partnership interests in your partnership by us: and (f) any
adjustments made to determine the offer price or the offer price (excluding
the settlement fund payment) and the net amounts distributable to the
unitholders, including but not limited to, balance sheet adjustments to
reflect your partnership's estimate of the value of current net working
capital balances, reserve accounts, and liabilities, and adjustments to the
offer consideration for distributions made by your partnership subsequent to
the date of the offer.
Stanger is not expressing any opinions as to the fairness of any terms of
the offer other than the offer price (excluding the settlement fund payment)
for the units, nor did Stanger address the fairness of all possible
acquisitions of interests in the partnership. The opinion will not be revised
to reflect the actual results of the offer. Stanger's opinion is based on
business, economic, real estate and capital market, and other conditions as of
the date of its analysis and addresses the offer in the context of information
available as of the date of its analysis. Events occurring after such date and
before the closing of the proposed offer could affect value of the
partnership's property or the assumptions used in preparing the Fairness
Opinion. Stanger has no obligation to update the Fairness Opinion on the basis
of subsequent events.
In connection with preparing the Fairness Opinion, Stanger was not engaged
to, and consequently did not, prepare any written or oral report or compendium
of its analysis for internal or external use beyond the report set forth in
Annex I.
Compensation and Material Relationships. Stanger has been retained by
AIMCO to provide fairness opinions with respect to your partnership and other
partnerships which are or will be the subject of similar offers under the
settlement. Pursuant to the Stipulation, Stanger's fee of $17,000 with respect
to its Fairness Opinion for your partnership will be paid by your partnership.
The estimated aggregate fee payable to Stanger in connection with all
affiliated partnerships is estimated at $1,500,000. In addition, Stanger is
entitled to reimbursement for reasonable legal, travel and out-of-pocket
expenses incurred in making the site visits and preparing the Fairness
Opinion, and is entitled to indemnification against certain liabilities,
including certain liabilities under Federal securities laws. No portion of
Stanger's fee is contingent upon consummation of the offer or the content of
Stanger's opinion. Stanger was engaged by AIMCO during 1997 to represent AIMCO
in negotiations to acquire interests in a real estate limited partnership.
Such transaction was never consummated and no fee was ever paid to Stanger in
connection with such proposed transaction. Stanger was also engaged in and did
render certain fairness opinions in 1998 and 1999 for certain exchange offers
we made and received fees and expenses of approximately $317,000. AIMCO and
its affiliates may retain the services of Stanger in the future. Any such
future services could relate to this offer, some or all of the concurrent
offers, or a completely separate transaction.
SECTION 10. POSITION OF THE GENERAL PARTNER OF YOUR PARTNERSHIP WITH
RESPECT TO THE OFFER.
The general partner of your partnership believes the offer price and the
structure of the transaction are fair to the limited partners. In making such
determination, the general partner considered all of the factors and
information set forth below, but did not quantify or otherwise attach
particular weight to any such factors or information:
o The offer gives you an opportunity to make an individual
decision on whether to tender your units or to continue to hold
them.
o Our offer price, the method we used to determine our offer price
and the fact that such method was determined by arms-length
negotiations in connection with the settlement of the lawsuit.
o The Fairness Opinion of Robert A. Stanger & Co., Inc.
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.
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<PAGE> 32
o An evaluation of the financial condition and results of
operations of your partnership including the increase in
property income of your partnership from $2,429,000 for the year
ended 1998 (based on annualizing the net income for the nine
months ended September 30, 1998) compared to an estimated
$2,827,000 for the year ending December 31, 1999 (based on
annualizing net income for the nine months ended September 30,
1999). Actual 1999 taxes could be higher or lower.
The general partner of your partnership makes no recommendation as to
whether you should tender or refrain from tendering your units. Although the
general partner believes the offer is fair, you must make your own decision
whether or not to participate in the offer, based upon a number of factors,
including your financial position, your need or desire for liquidity, other
financial opportunities available to you, and your tax position and the tax
consequences to you of selling your units.
SECTION 11. CONFLICTS OF INTEREST AND TRANSACTIONS WITH AFFILIATES.
Conflicts of Interest With Respect to the Offer. The general partner of
your partnership became a majority-owned subsidiary of AIMCO on October 1,
1998, when AIMCO merged with Insignia. Your general partner became a wholly
owned subsidiary of AIMCO on February 26, 1999 when IPT merged with AIMCO.
Accordingly, the general partner of your partnership has substantial conflicts
of interest with respect to the offer. The general partner of your partnership
has a fiduciary obligation to obtain a fair offer price for you, even as a
subsidiary of AIMCO. As a consequence of our ownership of units, we may have
incentives to seek to maximize the value of our ownership of units, which in
turn may result in a conflict for your general partner in attempting to
reconcile our interests with the interests of the other limited partners.
Additionally, we desire to purchase units at a low price and you desire to
sell units at a high price. The general partner of your partnership makes no
recommendation as to whether you should tender or refrain from tendering your
units. Such conflicts of interest in connection with the offer and the
operation of AIMCO differ from those conflicts of interest that currently
exist for your partnership. See "Risk Factors -- Conflicts of Interest With
Respect to the Offer." Your general partner has filed a
Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC, which
indicates that it is remaining neutral and making no recommendation as to
whether limited partners should tender their units pursuant to the offer.
LIMITED PARTNERS ARE URGED TO READ THIS OFFER TO PURCHASE AND THE SCHEDULE
14D-9 AND THE RELATED MATERIALS CAREFULLY AND IN THEIR ENTIRETY BEFORE
DECIDING WHETHER TO TENDER THEIR UNITS.
Conflicts of Interest That Currently Exist for Your Partnership. We own
both the general partner of your partnership and the property manager of your
partnership's properties. The general partner of your partnership is entitled
to receive an annual management fee equal to 2% of adjusted cash from
operations (as defined in your partnership's agreement of limited partnership)
provided that the limited partners have received distributions equal to 10% of
their capital invested in your partnership. The general partner of your
partnership received total fees and reimbursements of $143,000 in 1996,
$149,000 in 1997 and $131,000 in 1998. The reimbursement amount to your
general partner for the 1998 fiscal year included $20,000 which was paid to an
affiliate of your general partner for costs incurred in connection with
construction oversight services. The property manager received management fees
of $259,000 in 1996, $258,000 in 1997 and $274,000 in 1998. 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 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. Except as contemplated by the Stipulation, we have no
current plans to conduct future tender offers for your units. However, our
plans may change based on future circumstances, including third party tender
offers. Any such future offers that we might make could be for consideration
that is more or less than the consideration we are currently offering.
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<PAGE> 33
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 your partnership's
properties. We currently intend that, upon consummation of the offer, your
partnership will continue its business and operations substantially as they
are currently being conducted. The offer is not expected to have any effect on
partnership operations.
Although we have no present intention to do so (except as provided in the
Stipulation), we may acquire additional units or sell units after completion
or termination of the offer. Any acquisition may be made through private
purchases, through one or more future tender or exchange offers, by merger,
consolidation or by any other means deemed advisable. Any acquisition may be
at a price higher or lower than the price to be paid for the units purchased
pursuant to this offer, and may be for cash, limited partnership interests in
AIMCO Properties, L.P. or other consideration. We also may consider selling
some or all of the units we acquire pursuant to the offer to persons not yet
determined, which may include our affiliates. We may also buy your
partnership's properties, although we have no present intention to do so.
There can be no assurance, however, that we will initiate or complete, or will
cause your partnership to initiate or complete, any subsequent transaction
during any specific time period following the expiration of the offer or at
all.
Except as set forth herein, we do not have any present plans or proposals
which relate to or would result in an extraordinary transaction, such as a
merger, reorganization or liquidation, involving your partnership or any of
your partnership's subsidiaries; a sale or transfer of a material amount of
your partnership's assets (or assets of the partnership's subsidiaries); any
changes in composition of your partnership's senior management or personnel or
their compensation; any changes in your partnership's present capitalization
or distribution policy; or any other material changes in your partnership's
structure or business. We or our affiliates may loan funds to your partnership
which may be secured by your partnership's property. If any such loans are
made, upon default of such loans, the lender could seek to foreclose on the
loan and related mortgage or security interest. However, we expect that
consistent with your general partner's fiduciary obligations, the general
partner will seek and review opportunities (including opportunities identified
by us) to engage in transactions which could benefit your partnership, such as
sales or refinances 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 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 27.16% of the outstanding 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.
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<PAGE> 34
SECTION 13. CERTAIN INFORMATION CONCERNING YOUR PARTNERSHIP.
General. Davidson Growth Plus, L.P. was organized on May 22, 1986, under
the laws of the State of Delaware. 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 and an interest in a joint
venture: The Fairway Apartments, a 256-unit complex in Plano, Texas and The
Village Apartments, a 112-unit complex in Brandon, Florida; and an 82.5%
interest in a joint venture, which owns Brighton Crest Apartments, a 320-unit
complex in Marietta, Georgia.
The general partner of your partnership is David Growth Plus GP
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 October 26, 1999, there were 28,371.75 units issued and
outstanding, which were held of record by 2,208 limited partners. Your
partnership's principal executive offices are located at 1873 South Bellaire
Street, 17th Floor, Denver, Colorado 80222, and its telephone number at that
address is (303) 757-8101.
For additional information about your partnership, please refer to the
annual report prepared by your partnership which was sent to you prior to this
offer to purchase, particularly Item 2 of Form 10-KSB which contains detailed
information regarding the properties owned, including mortgages, rental rates
and taxes.
INVESTMENT OBJECTIVES AND POLICIES; SALE OR FINANCING OF INVESTMENTS. In
general, your general partner (which is our subsidiary) regularly evaluates
the partnership's properties by considering various factors, such as the
partnership's financial position and real estate and capital markets
conditions. The general partner monitors the properties' specific locale and
sub-market conditions (including stability of the surrounding neighborhood)
evaluating current trends, competition, new construction and economic changes.
The general partner oversees each asset's operating performance and
continuously evaluates the physical improvement requirements. In addition, the
financing structure for each property (including any prepayment penalties),
tax implications, availability of attractive mortgage financing to a
purchaser, and the investment climate are all considered. Any of these
factors, and possibly others, could potentially contribute to any decision by
the general partner to sell, refinance, upgrade with capital improvements or
hold a particular partnership property. If rental market conditions improve,
the level of distributions might increase over time. It is possible that the
private resale market for properties could improve over time, making a sale of
the partnership's properties in a private transaction at some point in the
future a more viable option than it is currently. After taking into account
the foregoing considerations, your general partner is not currently seeking a
sale of your partnership's properties primarily because it expects the
properties' operating performance to improve in the near term. The general
partner noted that it expects to spend approximately $902,000 for capital
improvements at the properties in 1999 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 residential
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.
Originally Anticipated Term of Partnership. Your partnership's prospectus,
dated August 13, 1986, pursuant to which units in your partnership were sold,
indicated that your partnership was intended to be self-liquidating and that
it was anticipated that the partnership's properties would be sold within 5 to
7 years of their acquisition, provided market conditions permit. The
prospectus also indicated that there could be no assurance that the
partnership would be able to so liquidate and that, unless sooner terminated
as provided in the partnership agreement, the existence of the partnership
would continue until the year 2011. The partnership currently owns two
apartment properties and an 82.5% interest in a joint venture, which owns one
residential property. Your general partner (which is our subsidiary)
continually considers whether a property should be sold or otherwise disposed
of after consideration of relevant factors, including prevailing economic
conditions, availability of favorable financing and tax considerations, with a
view to achieving
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<PAGE> 35
maximum capital appreciation for your partnership. We cannot predict when any
of the properties will be sold or otherwise disposed of. However, there is no
current plan or intention to sell the properties in the near future.
Under your partnership's agreement of limited partnership, the term of the
partnership will continue until December 31, 2011, 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 Replacement. 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 are
expected to be paid from operating cash flows, cash reserves, or from
short-term or long-term borrowings.
Competition. There are other residential properties within the market area
of your partnership's 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 we are a significant factor in the United
States in the apartment industry, competition for apartments is local.
According to data published by the National Multi-Housing Council, as of
January 1, 1999, our portfolio of 373,409 owned or managed apartment units
represents approximately 2.2% of the national stock of rental apartments in
structures with at least five apartments.
Financial and Property-Related Data. The selected financial information
for your partnership set forth below for the years ended December 31, 1998 and
1997, is based on audited financial statements. The selected financial
information for your partnership set forth below for the six months ended June
30, 1999 and 1998, is based on unaudited financial statements. This
information should be read in conjunction with such financial statements,
including notes thereto, and "Management's Discussion and Analysis of
Financial Condition and Results of Operations of Your Partnership" in the
Annual Report on Form 10-KSB of your partnership for the year ended December
31, 1998 and the Quarterly Report on Form 10-QSB for the quarter ended June
30, 1999.
DAVIDSON GROWTH PLUS, L.P.
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, DECEMBER 31,
--------------------------------- -----------------------------
1999 1998 1998 1997
---------------- --------------- ------------- --------------
(in thousands, except per unit data)
<S> <C> <C> <C> <C>
OPERATING DATA:
Total Revenues................................. $ 2,793 $ 2,617 $ 5,318 $ 5,086
Net income (Loss).............................. 506 247 669 155
Net Income per limited partnership unit........ 17.31 8.46 22.87 5.29
Distributions per limited partnership unit..... 31.47 11.91 27.17 24.57
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
---------------------- ----------------------
1999 1998 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and Cash Equivalents ....................... $ 956 $ 1,005 $ 1,186 $ 1,080
Real Estate, Net of Accumulated Depreciation .... 13,879 14,363 14,101 14,596
Total Assets .................................... 15,901 16,612 16,422 16,889
Notes Payable ................................... 11,696 11,895 11,798 11,987
General Partners' Capital (Deficit) ............. (719) (705) (706) (702)
Limited Partners' Capital (Deficit) ............. 4,056 4,482 4,458 4,580
Partners' Capital (Deficit) ..................... 3,337 3,777 3,752 3,878
Total Distributions ............................. 921 348 795 718
Net increase (decrease) in cash and cash
equivalents ..................................... (230) (75) 106 (28)
Net cash provided by operating activities ....... 974 626 1,585 1,188
</TABLE>
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<PAGE> 36
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>
PROPERTY DATE OF PURCHASE TYPE OF OWNERSHIP USE
-------- ---------------- ----------------- ---
<S> <C> <C> <C>
Brighton Crest Apts. Phase I Your partnership holds an Apartment -
Marietta, Georgia 09/25/87 82.5% interest in the joint 320 units
Phase II venture which has fee
12/15/87 ownership subject to first
and second mortgages.
The Fairway Apts. (1) 05/18/88 Fee ownership subject to Apartment -
Plano, Texas first and second mortgages 256 units
The Village Apts. 05/31/88 Fee ownership subject to Apartment
Brandon, Florida first and second mortgages 112 units
</TABLE>
----------------------------------------
(1) Property is held by a Limited Partnership in which your partnership owns
a 99% interest.
Accumulated Depreciation Schedule. The following shows the gross carrying
value, accumulated depreciation and federal tax basis of each of your
partnership's properties as of December 31, 1998.
<TABLE>
<CAPTION>
GROSS
CARRYING ACCUMULATED FEDERAL
PROPERTY VALUE DEPRECIATION USEFUL LIFE METHOD TAX BASIS
-------- -------------- ------------ ----------- ------ ---------
(in thousands)
<S> <C> <C> <C> <C> <C>
Brighton Apts. $ 13,000 $ 5,721 5-25 years S/L $ 11,704
The Fairway Apts. 6,731 2,385 5-25 years S/L 5,517
The Village Apts. 4,327 1,851 5-25 years S/L 3,373
Totals $ 24,058 $ 9,957 $ 20,594
============== ============ =========
</TABLE>
Schedule of Mortgages. The following shows certain information regarding
the outstanding mortgages encumbering each of your partnership's properties as
of December 31, 1998.
33
<PAGE> 37
<TABLE>
<CAPTION>
PRINCIPAL
BALANCE AT STATED PRINCIPAL
DECEMBER 31, INTEREST PERIOD MATURITY BALANCE DUE
PROPERTY 1998 RATE AMORTIZED DATE AT MATURITY
-------- ------------ -------- --------- -------- -----------
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Brighton Crest Apartments
1st mortgage $ 6,048 7.83% 28.67 yrs 10/15/03 $ 5,516
2nd mortgage 199 7.83% (1) 10/15/03 199
The Fairway Apts.
1st mortgage 3,730 7.60% 21.42 yrs 11/15/02 3,142
2nd mortgage 135 7.60% (1) 11/15/02 135
The Village Apts.
1st mortgage 1,860 7.83% 28.67 yrs 10/15/03 1,697
2nd mortgage 61 7.83% (1) 10/15/03 61
Total 12,033
Less unamortized
Discounts (235)
-----------
Total $ 11,798
===========
</TABLE>
(1) Interest only payments
Average Annual Rent and Occupancy Rates. The following shows the average
annual rent amounts and occupancy rates for each of your partnership's
properties during the year ended December 31, 1998 and the nine months ended
September 30, 1999.
<TABLE>
<CAPTION>
AVERAGE ANNUAL RENT AVERAGE ANNUAL OCCUPANCY RATE
---------------------------- ----------------------------------
PROPERTY 1999* 1998 1999* 1998
-------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Brighton Crest Apts. $7,576/unit $8,384/unit 94% 96%
The Fairway Apts. 7,265/unit 7,572/unit 94% 92%
The Village Apts. 8,570/unit 8,758/unit 97% 99%
</TABLE>
-------------------------
* Based on annualizing the average annual rent and occupancy rate for the nine
months ended September 30, 1999, by multiplying such averages by 1.33. Actual
1999 average annual rent and occupancy rate could be higher or lower.
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 TAXES* 1999 TAX RATE
-------- ----------- -------------
<S> <C> <C>
Brighton Crest Apts. 141,300 2.93%
The Fairway Apts. 145,414 2.36%
The Village Apts. 68,040 2.45%
</TABLE>
-------------------------
* Based on annualizing the taxes for the nine months ended September 30, 1999
by multiplying such taxes by 1.33. Actual 1999 taxes could be higher or lower.
Property Management. Your partnership's properties are managed by an
entity which is a wholly owned
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<PAGE> 38
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. The following table shows, for each of the years indicated,
the distributions paid per unit in such years.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31 AMOUNT
----------- --------
<S> <C>
1995................................... $ 47.47
1996................................... 25.98
1997................................... 24.57
1998................................... 27.16
1999*.................................. 48.05
--------
Total........................ $ 173.23
========
</TABLE>
------------------------
* Based on annualizing the fees and expenses for the nine months ended
September 30, 1999 by multiplying such fees and expenses by 1.33. Actual 1999
fees and expenses could be higher or lower.
Beneficial Ownership of Interests in Your Partnership. Together with its
subsidiaries, we currently beneficially own, in the aggregate, approximately
27.16% of the interests in your partnership. 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) have 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:
<TABLE>
<CAPTION>
PARTNERSHIP FEES PROPERTY
YEAR AND EXPENSES MANAGEMENT FEES
---- ---------------- ---------------
<S> <C> <C>
1995 ...................................... $ 149,569 $ 242,834
1996 ...................................... 143,000 259,000
1997 ...................................... 149,000 258,000
1998 ...................................... 131,000 274,000
1999 (through September 30, 1999).......... 141,333 284,000
</TABLE>
Legal Proceedings. Your partnership may be party to a variety of legal
proceedings arising in the ordinary course of the business related to its
ownership of the partnership's properties, 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.
35
<PAGE> 39
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 7,008.24 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.
If we acquire a substantial number of additional units pursuant to our
offer, we may be in a position to influence or control voting decisions with
respect to the limited partners of your partnership. See "The Offer -- Section
7. Effect of the Offer."
However, in connection with the settlement, we have agreed that:
o We will not propose, or cause to have proposed, for a period of
at least five years after the effective date of the settlement,
any amendments to your partnership agreement of limited
partnership which relate to an increase in the various fees that
are payable to the general partner and/or its affiliates under
the terms of such partnership agreement or existing management
contracts.
o We will vote any units that we own in your partnership in the
same manner (and percentages) as do unaffiliated limited
partners with respect to any proposal to increase the various
fees that are payable to the general partner or its affiliates
under the terms of such partnership agreement or existing
management contracts.
o We will obtain a fairness opinion from an independent appraiser
with respect to the consideration offered unaffiliated limited
partners in the event of a sale or merger of your partnership to
or with us or our affiliates.
SECTION 15. SOURCE OF FUNDS.
We expect that approximately $9,240,000 will be required to purchase all
of the limited partnership units that we are seeking in this offer (exclusive
of fees and expenses estimated to be $40,000). 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
interests in approximately 48 other limited partnerships pursuant to the
Stipulation. If all such offers were fully subscribed for cash, we would be
required to pay approximately $480 million for all such units (except that
with respect to all of such offers we are not obligated to pay more than $50
million). 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 of June 30, 1999, we had $51,658,000 of cash on hand and $300 million
available for borrowing under our existing lines of credit.
Under our $300 million secured revolving credit facility with Bank of
America, BankBoston, N.A. and First Union National Bank, AIMCO Properties,
L.P. is the borrower and all obligations thereunder are guaranteed by AIMCO
and certain of its subsidiaries. The credit facility includes a swing line of
up to $30 million. The obligations under the credit facility are secured by
AIMCO Properties, L.P.'s pledge of its stock ownership in certain subsidiaries
of AIMCO as well as a pledge of its interests in notes issued by it to certain
subsidiaries of AIMCO. The annual interest rate under the credit facility is
based on either LIBOR or a base rate which is the higher of Bank of America's
reference rate or 0.5% over the federal funds rate, plus, in either case, an
applicable margin. The margin ranges between 2.05% and 2.55% in the case of
LIBOR-based loans and between 0.55% and 1.05% in the case of base rate loans,
based upon a fixed charge coverage ratio. The credit facility expires on July
31, 2001 unless extended at the discretion of AIMCO
36
<PAGE> 40
Properties, L.P., at which time the revolving facility would be converted into
a term loan for up to two successive one-year periods. The financial covenants
contained in the credit facility require us to maintain a ratio of debt to
gross asset value of no more than 0.55 to 1.0, and an interest coverage ratio
of 2.25 to 1.0, and a fixed charge coverage ratio of at least 1.7 to 1.0
through September 30, 1999 and 1.75 to 1.0 thereafter. In addition, the credit
facility limits us from distributing more than 80% of our Funds From
Operations (as defined) (or such amounts as may be necessary for us to
maintain our status as a REIT), imposes minimum net worth requirements and
provides other financial covenants related to certain of our assets and
obligations.
SECTION 16. DISSENTERS' RIGHTS.
Neither the agreement of limited partnership of your partnership nor
applicable law provides any right for you to have your units appraised or
redeemed in connection with, or as a result of, our offer. You have the
opportunity to make an individual decision on whether or not to tender your
units in the offer.
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 30-day LIBOR or the price of the 10-year Treasury Bond or
the 30-year Treasury Bond, or at least a 7.5% decrease in the S&P 500 Index,
the Morgan Stanley REIT Index, in each case, from the date hereof, (iii) any
material adverse change in the commercial mortgage financing markets, (iv) a
declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States, (vi) a commencement of a war, conflict, armed
hostilities or other national or international calamity directly or indirectly
involving the United States, (vii) any limitation (whether or not mandatory)
by any governmental authority on, or any other event which, in our reasonable
judgment, might affect the extension of credit by banks or other lending
institutions, or (viii) in the case of any of the foregoing existing at the
time of the commencement of the offer, in our reasonable judgment, a material
acceleration or worsening thereof; or
(c) there shall have been threatened, instituted or pending any action,
proceeding, application or counterclaim by any Federal, state, local or
foreign government, governmental authority or governmental agency, or by any
other person, before any governmental authority, court or regulatory or
administrative agency, authority or tribunal, which (i) challenges or seeks to
challenge our purchase of the units, restrains, prohibits or delays the making
or consummation of our offer, prohibits the performance of any of the
contracts or other arrangements entered into by us (or any affiliates of
ours), seeks to obtain any material amount of damages as a result of the
transactions contemplated by our offer, (ii) seeks to make the purchase of, or
payment for, some or all of the units pursuant to our offer illegal or results
in a delay in our ability to accept for payment or pay for some or all of the
units, (iii) seeks to prohibit or limit the ownership or operation by us or
any of our affiliates of the entity serving as general partner of the
partnership or to remove such entity as general partner of your partnership,
or seeks to impose any material limitation on our ability or the ability of
37
<PAGE> 41
any affiliate of ours to conduct your partnership's business or own such
assets, (iv) seeks to impose material limitations on our ability to acquire or
hold or to exercise full rights of ownership of the units including, but not
limited to, the right to vote the units purchased by us on all matters
properly presented to the limited partners, or (v) might result, in our
reasonable judgment, in a diminution in the value of your partnership or a
limitation of the benefits expected to be derived by us as a result of the
transactions contemplated by our offer or the value of the units to us; or
(d) there shall be any action taken, or any statute, rule, regulation,
order or injunction shall be sought, proposed, enacted, promulgated, entered,
enforced or deemed applicable to our offer, your partnership, any general
partner of your partnership, us or any affiliate of ours or your partnership,
or any other action shall have been taken, proposed or threatened, by any
government, governmental authority or court, that, in our reasonable judgment,
might, directly or indirectly, result in any of the consequences referred to
in clauses (i) through (vi) of paragraph (c) above; or
(e) your partnership shall have (i) changed, or authorized a change of,
its 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 Securities Exchange Act of 1934), 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, 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 debt refinancing,
merger, consolidation, purchase or lease of assets 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
(h) we shall not have adequate cash or financing commitments available to
pay the offer price; or
(i) the Court shall fail to approve the settlement contemplated by the
Stipulation by December 31, 1999, the parties terminate the settlement or such
settlement shall otherwise terminate.
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
38
<PAGE> 42
regulatory agency that would be required prior to the acquisition of units by
us pursuant to the offer, other than the filing of a Tender Offer Statement on
Schedule 14D-1 with the SEC (which has already been filed) and any required
amendments thereto. While there is no present intent to delay the purchase of
units tendered pursuant to the offer pending receipt of any such additional
approval or the taking of any such action, there can be no assurance that any
such additional approval or action, if needed, would be obtained without
substantial conditions or that adverse consequences might not result to your
partnership or its business, or that certain parts of its business might not
have to be disposed of or other substantial conditions complied with in order
to obtain such approval or action, any of which could cause us to elect to
terminate the offer without purchasing units thereunder. Our obligation to
purchase and pay for units is subject to certain conditions, including
conditions related to the legal matters discussed in this Section 18.
Antitrust. We do not believe that the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, is applicable to the acquisition of
units contemplated by our offer.
Margin Requirements. The units are not "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly, those regulations generally are not applicable to our offer.
State Laws. We are not aware of any jurisdiction in which the making of
our offer is not in compliance with applicable law. If we become aware of any
jurisdiction in which the making of the offer would not be in compliance with
applicable law, we will make a good faith effort to comply with any such law.
If, after such good faith effort, we cannot comply with any such law, the
offer will not be made to (nor will tenders be accepted from or on behalf of)
unitholders residing in such jurisdiction. In those jurisdictions with
securities or blue sky laws that require the offer to be made by a licensed
broker or dealer, the offer shall be made on behalf of us, if at all, only by
one or more registered brokers or dealers licensed under the laws of that
jurisdiction.
SECTION 19. FEES AND EXPENSES.
Except as set forth in this Section 19, we will not pay any fees or
commissions to any broker, dealer or other person or soliciting tenders of
units pursuant to the offer. We have retained River Oaks Partnership Services,
Inc. to act as Information Agent in connection with our offer. The Information
Agent may contact holders of units by mail, telephone, telex, telegraph and
personal interview and may request brokers, dealers and other nominee limited
partners to forward materials relating to the offer to beneficial owners of
the units. We will pay the Information Agent reasonable and customary
compensation for its services in connection with the offer, plus reimbursement
for out-of-pocket expenses, and will indemnify it against certain liabilities
and expenses in connection therewith, including liabilities under the Federal
securities laws. We will also pay all costs and expenses of printing and
mailing the offer and its legal fees and expenses.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF US NOT CONTAINED HEREIN OR IN THE LETTER OF
TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED.
We have filed with the Commission a Tender Offer Statement on Schedule
14D-1, pursuant to Section 14(d)(1) and Rule 14d-3 under the Exchange Act,
furnishing certain additional information with respect to our offer, and may
file amendments thereto. The Schedule 14D-1 and any amendments thereto,
including exhibits, may be inspected and copies may be obtained at the same
place and in the same manner as described in "The Offer -- Section 13. Certain
Information Concerning Your Partnership--Additional Information Concerning
Your Partnership."
AIMCO PROPERTIES, L.P.
39
<PAGE> 43
ANNEX I
- --------------------------------------------------------------------------------
1129 Broad Street
Shrewsbury, NJ 07702-4314
ROBERT A. STANGER & CO., INC. (732) 389-3600
INVESTMENT BANKING FAX: (732) 389-1751
(732) 544-0779
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AIMCO Properties, L.P.
1873 South Bellaire -- Suite 1700
Denver, Colorado 80222
Re: Davidson Growth Plus, LP
Gentlemen:
You have advised us that AIMCO Properties, L.P. (the "Purchaser"), a
subsidiary of Apartment Investment and Management Company ("AIMCO"), which
directly or indirectly owns the general partner (the "General Partner") of
Davidson Growth Plus, LP (the "Partnership") (the Purchaser, AIMCO, the
General Partner and other affiliates and subsidiaries of AIMCO are referred to
herein collectively as the "Company"), is contemplating a transaction (the
"Offer") in which limited partnership interests in the Partnership (the
"Units") will be acquired by the Purchaser in exchange for an offer price per
Unit of $454.03 in cash (the "Offer Price"). Approximately 5% of the Offer
Price represents a payment from a settlement fund established by AIMCO which
will be paid to limited partners under certain circumstances. The limited
partners of the Partnership (the "Limited Partners") will have the choice to
maintain their current interest in the Partnership or exchange their Units for
cash.
You have requested that Robert A. Stanger & Co., Inc. ("Stanger")
provide its opinion as to whether the Offer Price (excluding the settlement
fund payment) (the "Offer Price Excluding the Settlement Fund Payment") per
Unit of $432 is fair to the Limited Partners of the Partnership from a
financial point of view.
Since its founding in 1978, Stanger and its affiliates have provided
information, research, investment banking and consulting services to clients
located throughout the United States, including major New York Stock Exchange
member firms, insurance companies and over seventy companies engaged in the
management and operation of partnerships and real estate investment trusts.
The investment banking activities of Stanger include financial advisory and
fairness opinion services, asset and securities valuations, industry and
company research and analysis, litigation support and expert witness services,
and due diligence investigations in connection with both publicly registered
and privately placed securities transactions.
Stanger, as part of its investment banking business, is regularly
engaged in the valuation of businesses and their securities in connection with
mergers, acquisitions, reorganizations and for estate, tax, corporation and
other purposes. Stanger's valuation practice principally involves
partnerships, partnership securities and the assets typically held through
partnerships, such as real estate, oil and gas reserves, cable television
systems and equipment leasing assets.
In the course of our analysis for rendering this opinion, we have,
among other things:
1. Reviewed a draft of the Offer to Purchase related to the Offer
in a form management has represented to be substantially the same as will be
distributed to the Limited Partners;
2. Reviewed the Partnership's financial statements for the years
ended December 31, 1997 and 1998, and the quarterly reports for the period
ending September 30, 1999, which the Partnership's management has indicted to
be the most current available financial statements;
40
<PAGE> 44
3. Reviewed descriptive information concerning the real property
owned by the Partnership (the "Property"), including location, number of units
and unit mix, age, amenities and land acreage.
4. Reviewed summary historical operating statements for the
Property, for the years ended December 31, 1997 and 1998, and the nine months
ending September 30, 1999;
5. Reviewed the 1999 operating budget for the Property prepared by
the Partnership's management. Such budgets are summarized in the Offer to
Purchase in "The Offer-Item 9. Background and Reasons for the Offer-Stanger
Analysis-Summary of Materials Considered."
6. Reviewed the estimate of liquidation provided by the general
partner to Stanger. Such estimates are described in the Offer to Purchase in
"The Offer-Item 9. Background and Reasons for the Offer-Comparison of
Consideration to Alternative Consideration."
7. Discussed with management the market conditions for the
Property; conditions in the market for sales/acquisitions of properties
similar to that owned by the Partnership; historical, current and expected
operations and performance of the Property and the Partnership; the physical
condition of the Property including any deferred maintenance; and other
factors influencing value of the Property and the Partnership;
8. Performed a site inspection of the Property;
9. Reviewed data and discussed with local sources real estate
rental market conditions in the market of the Property, and reviewed available
information relating to acquisition criteria for income-producing properties
similar to the Property;
10. Reviewed information provided by the Company relating to debt
encumbering the Property; and
11. Conducted such other studies, analyses, inquiries and
investigations as we deemed appropriate.
In rendering this opinion, we have relied upon and assumed, without
independent verification, the accuracy and completeness of all financial
information and management reports and data, and all other reports and
information contained in the Offer to Purchase or that were provided, made
available or otherwise communicated to us by the Partnership and the Company.
We have not performed an independent appraisal, engineering study or
environmental study of the assets and liabilities of the Partnership. We have
relied upon the representations of the Partnership and the Company concerning,
among other things, any environmental liabilities, deferred maintenance and
estimated capital expenditures and replacement reserve requirements, the
determination and valuation of non-real estate assets and liabilities of the
Partnership, the terms and conditions of any debt encumbering the Property,
the allocation of net Partnership values between the General Partner and
Limited Partners, and the transaction costs and fees associated with a sale of
the Property. We have also relied upon the assurance of the Partnership and
the Company that any financial statements, projections, capital expenditure
estimates, debt summaries, value estimates and other information contained in
the Offer to Purchase or otherwise provided or communicated to us were
reasonably prepared and adjusted on bases consistent with actual historical
experience, are consistent with the terms of the Partnership Agreement, and
reflect the best currently available estimates and good faith judgments; that
no material changes have occurred in the value of the Property or other
information reviewed between the date such information was provided and date
of this letter; that the Partnership and the Company are not aware of any
information or facts that would cause the information supplied to us to be
incomplete or misleading; that the highest and best use of the Property is as
improved; and that all calculations were made in accordance with the terms of
the Partnership Agreement.
In addition, you have advised us that upon consummation of the Offer,
the Partnership will continue its business and operations substantially as
they are currently being conducted and that the Partnership and the Company do
not have any present plans, proposals or intentions which relate to or would
result in an extraordinary transaction, such as a merger, reorganization or
liquidation involving the Partnership; a sale of the Partnership's Properties
or the sale or transfer of a material amount of the Partnership's other
assets; any changes to the Partnership's senior
41
<PAGE> 45
management or personnel or their compensation; any changes in the
Partnership's present capitalization or distribution policy; or any other
material changes in the Partnership's structure or business.
We have not been requested to, and therefore did not: (i) select the
Offer Price or the Offer Price Excluding the Settlement Fund Payment or the
method of determining the Offer Price or the Offer Price Excluding the
Settlement Fund Payment in connection with the Offer; (ii) make any
recommendation to the Partnership or its partners with respect to whether to
accept or reject the Offer; (iii) solicit any third party indications of
interest in acquiring the assets of the Partnership or all or any part of the
Partnership; or (iv) express any opinion as to (a) the tax consequences of the
proposed Offer to the Limited Partners, (b) the terms of the Partnership
Agreement or of any agreements or contracts between the Partnership and the
Company, (c) the Company's business decision to affect the Offer or
alternatives to the Offer, (d) the amount of expenses relating to the Offer or
their allocation between the Company and the Partnership or tendering Limited
Partners; (e) the amount or derivation of liquidation values per Unit of
limited partnership interests in the Partnership by the Purchaser: and (f) any
adjustments made to determine the Offer Price or the Offer Price Excluding the
Settlement Fund Payment and the net amounts distributable to the Limited
Partners, including, but not limited to, balance sheet adjustments to reflect
the Partnership's estimate of the value of current net working capital
balances, reserve accounts and liabilities, and adjustments to the Offer Price
and the Offer Price (Excluding the Settlement Fund Payment) for distributions
made by the Partnership subsequent to the date of the initial Offer. We are
not expressing any opinion as to the fairness of any terms of the Offer other
than the Offer Price (Excluding the Settlement Fund Payment) for the Units.
Our opinion is based on business, economic, real estate and capital
market, and other conditions as they existed and could be evaluated as of the
date of our analyses and addresses the Offer in the context of information
available as of the date of our analysis. Events occurring after that date
could affect the assumptions used in preparing the opinion.
The summary of the opinion set forth in the Offer to Purchase does not
purport to be a complete description of the analyses performed, or the matters
considered, in rendering our opinion. The analyses and the summary set forth
must be considered as a whole, and selecting portions of such summary or
analyses, without considering all factors and analyses, would create an
incomplete view of the processes underlying this opinion. In rendering this
opinion, judgment was applied to a variety of complex analyses and
assumptions. The assumptions made, and the judgments applied, in rendering the
opinion are not readily susceptible to partial analysis or summary
description. The fact that any specific analysis is referred to in the Offer
to Purchase is not meant to indicate that such analysis was given greater
weight than any other analysis.
Based upon and subject to the foregoing, it is our opinion that as of
the date of this letter the Offer Price (Excluding the Settlement Fund
Payment) is fair to the Limited Partners of the Partnership from a financial
point of view.
Yours truly,
Robert A. Stanger & Co., Inc.
Shrewsbury, New Jersey
November 11, 1999
42
<PAGE> 46
ANNEX II
OFFICERS AND DIRECTORS
The names and positions of the executive officers of Apartment
Investment and Management Company ("AIMCO"), AIMCO-GP, Inc. ("AIMCO-GP") and the
directors of AIMCO are set forth below. The two directors of AIMCO-GP are Terry
Considine and Peter Kompaniez. The two directors of the general partner of your
partnership are Peter K. Kompaniez and Patrick J. Foye. The two executive
officers of the general partner of your partnership are Patrick J. Foye,
Executive Vice President, and Carla Stoner, Senior Vice President - Real Estate
Accounting. Unless otherwise indicated, the business address of each executive
officer and director is 1873 South Bellaire Street, 17th Floor, Denver, Colorado
80222. Each executive officer and director is a citizen of the United States of
America.
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
Terry Considine........................Chairman of the Board of Directors and Chief Executive Officer
Peter K. Kompaniez.....................Vice Chairman, President and Director
Thomas W. Toomey.......................Executive Vice President -- Finance and Administration
Joel F. Bonder.........................Executive Vice President, General Counsel and Secretary
Patrick J. Foye........................Executive Vice President
Paul J. McAuliffe......................Executive Vice President--Capital Markets and Chief Financial Officer
Steven D. Ira..........................Executive Vice President and Co-Founder
Harry G. Alcock........................Executive Vice President and Chief Investment Officer
Lance J. Graber........................Executive Vice President--Acquisitions
Richard S. Ellwood.....................Director
J. Landis Martin.......................Director
Thomas L. Rhodes.......................Director
John D. Smith..........................Director
</TABLE>
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
Terry Considine.............. Chief Executive Officer of AIMCO and AIMCO-GP since July 1994. He is the sole owner of
Considine Investment Co. and prior to July 1994 was owner of approximately 75% of
Property Asset Management, L.L.C., Limited Liability Company, a Colorado limited
liability company, and its related entities (collectively, "PAM"), one of AIMCO's
predecessors. On October 1, 1996, Mr. Considine was appointed Co-Chairman and director
of Asset Investors Corp. and Commercial Asset Investors, Inc., two other public real
estate investment trusts, and appointed as a director of Financial Assets Management,
LLC, a real estate investment trust manager. Mr. Considine has been involved as a
principal in a variety of real estate activities, including the acquisition,
renovation, development and disposition of properties. Mr. Considine has also
controlled entities engaged in other businesses such as television broadcasting,
gasoline distribution and environmental laboratories. Mr. Considine received a B.A.
from Harvard College, a J.D. from Harvard Law School and was formerly admitted as a
member of the Massachusetts Bar (inactive).
Peter K. Kompaniez........... Mr. Kompaniez has been Vice Chairman and a director of
</TABLE>
I-1
<PAGE> 47
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
AIMCO since July 1994 and was appointed President of AIMCO in July 1997. Mr. Kompaniez
has served as Vice President of AIMCO-GP from July 1994 through July 1998 and was
appointed President in July 1998. Mr. Kompaniez has been a director of AIMCO-GP since
July 1994. Since September 1993, Mr. Kompaniez has owned 75% of PDI Realty Enterprises,
Inc., a Delaware corporation ("PDI"), one of AIMCO's predecessors, and serves as its
President and Chief Executive Officer. From 1986 to 1993, he served as President and
Chief Executive Officer of Heron Financial Corporation ("HFC"), a United States holding
company for Heron International, N.V.'s real estate and related assets. While at HFC,
Mr. Kompaniez administered the acquisition, development and disposition of
approximately 8,150 apartment units (including 6,217 units that have been acquired by
the AIMCO) and 3.1 million square feet of commercial real estate. Prior to joining HFC,
Mr. Kompaniez was a senior partner with the law firm of Loeb and Loeb where he had
extensive real estate and REIT experience. Mr. Kompaniez received a B.A. from Yale
College and a J.D. from the University of California (Boalt Hall).
Thomas W. Toomey............. Mr. Toomey has served as Senior Vice President - Finance and Administration of AIMCO
since January 1996 and was promoted to Executive Vice-President-Finance and
Administration in March 1997. Mr. Toomey has been Executive Vice President - Finance
and Administration of AIMCO-GP similar capacity with Lincoln Property Company ("LPC")
as well as Vice President/Senior Controller and Director of Administrative Services of
Lincoln Property Services where he was responsible for LPC's computer systems,
accounting, tax, treasury services and benefits administration. From 1984 to 1990, he
was an audit manager with Arthur Andersen & Co. where he served real estate and banking
clients. From 1981 to 1983, Mr. Toomey was on the audit staff of Kenneth Leventhal &
Company. Mr. Toomey received a B.S. in Business Administration/Finance from Oregon
State University and is a Certified Public Accountant.
Joel F. Bonder............... Mr. Bonder has served as Executive Vice President and General Counsel of AIMCO since
December 8, 1997. Mr. Bonder has been Executive Vice President and General Counsel of
AIMCO-GP since July 1998. Prior to joining AIMCO, Mr. Bonder served as Senior Vice
President and General Counsel of NHP Incorporated from April 1994 until December 1997.
Mr. Bonder served as Vice President and Deputy General Counsel of NHP Incorporated from
June 1991 to March 1994 and as Associate General Counsel of NHP from 1986 to 1991. From
1983 to 1985, Mr. Bonder was with the Washington, D.C. law firm of Lane & Edson, P.C.
From 1979 to 1983, Mr. Bonder practiced with the Chicago law firm of Ross and Hardies.
Mr. Bonder received an A.B. from the University of Rochester and a J.D. from Washington
University School of Law.
</TABLE>
I-2
<PAGE> 48
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
Patrick J. Foye.............. Mr. Foye has served as Executive Vice President of AIMCO and AIMCO-GP since May 1998.
Prior to joining AIMCO, Mr. Foye was a partner in the law firm of Skadden, Arps, Slate,
Meagher & Flom LLP from 1989 to 1998 and was Managing Partner of the firm's Brussels,
Budapest and Moscow offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of
the Long Island Power Authority and serves as a member of the New York State
Privatization Council. He received a B.A. from Fordham College and a J.D. from Fordham
University Law School.
Paul J. McAuliffe............ Mr. McAuliffe was appointed Executive Vice President-- Capital Markets in February 1999
and Chief Financial Officer in October 1999. Prior to joining AIMCO, Mr. McAuliffe was
Senior Managing Director of Secured Capital Corporation and prior to that time had been
a Managing Director of Smith Barney, Inc. from 1993 to 1996, where he was a key member
of the underwriting team that led AIMCO's initial public offering in 1994. Mr.
McAuliffe was also a Managing Director and head of the real estate group at CS First
Boston from 1990 to 1993 and he was a Principal in the real estate group at Morgan
Stanley & Co., Inc. from 1983 to 1990. Mr. McAuliffe received a B.A. from Columbia
College and an MBA from University of Virginia, Darden School.
Steven D. Ira................ Mr. Ira is a Co-Founder of AIMCO and has served as Executive Vice President of AIMCO
since July 1994. Mr. Ira has been Executive Vice President of AIMCO-GP since July 1998.
From 1987 until July 1994, he served as President of PAM. Prior to merging his firm
with PAM in 1987, Mr. Ira acquired extensive experience in property management. Between
1977 and 1981 he supervised the property management of over 3,000 apartment and mobile
home units in Colorado, Michigan, Pennsylvania and Florida, and in 1981 he joined with
others to form the property management firm of McDermott, Stein and Ira. Mr. Ira served
for several years on the National Apartment Manager Accreditation Board and is a former
president of both the National Apartment Association and the Colorado Apartment
Association. Mr. Ira is the sixth individual elected to the Hall of Fame of the
National Apartment Association in its 54-year history. He holds a Certified Apartment
Property Supervisor (CAPS) and a Certified Apartment Manager designation from the
National Apartment Association, a Certified Property Manager (CPM) designation from the
National Institute of Real Estate Management (IREM) and he is a member of the Board of
Directors of the National Multi-Housing Council, the National Apartment Association and
the Apartment Association of Metro Denver. Mr. Ira received a B.S. from Metropolitan
State College in 1975.
Harry G. Alcock.............. Mr. Alcock was appointed Vice President of AIMCO and AIMCO-GP in July 1996, and was
promoted to Senior Vice President --Acquisitions in October 1997 and then Executive
Vice President and Chief Investment Officer in October 1999, with
</TABLE>
I-3
<PAGE> 49
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
responsibility for acquisition and financing activities since July 1994. From June 1992
until July 1994, Mr. Alcock served as Senior Financial Analyst for PDI and HFC. From
1988 to 1992, Mr. Alcock worked for Larwin Development Corp., a Los Angeles based real
estate developer, with responsibility for raising debt and joint venture equity to fund
land acquisitions and development. From 1987 to 1988, Mr. Alcock worked for Ford
Aerospace Corp. He received his B.S. from San Jose State University.
Lance J. Graber............. Mr. Graber was appointed Vice President-Acquisitions in October 1999. He was a Director
in the Real Estate Principal Transactions Group of Credit Suisse First Boston. Before
joining Credit Suisse First Boston in 1991, Mr. Graber was a Vice President with
Sonnenblick Goldman Company, a New York based real estate investment bank. He has a
B.S. in Economics and a M.B.A. from The Wharton School of the University of
Pennsylvania.
Richard S. Ellwood........... Mr. Ellwood was appointed a Director of AIMCO in July 1994 and is currently Chairman of
12 Auldwood Lane the Audit Committee. Mr. Ellwood is the founder and President of R.S. Ellwood & Co.,
Rumson, NJ 07660 Incorporated, a real estate investment banking firm. Prior to forming R.S. Ellwood &
Co., Incorporated in 1987, Mr. Ellwood had 31 years experience on Wall Street as an
investment banker, serving as: Managing Director and senior banker at Merrill Lynch
Capital Markets from 1984 to 1987; Managing Director at Warburg Paribas Becker from
1978 to 1984; general partner and then Senior Vice President and a director at White,
Weld & Co. from 1968 to 1978; and in various capacities at J.P. Morgan & Co. from 1955
to 1968. Mr. Ellwood currently serves as a director of FelCor Suite Hotels, Inc. and
Florida East Coast Industries, Inc.
J. Landis Martin............. Mr. Martin was appointed a Director of AIMCO in July 1994 and became Chairman of the
199 Broadway Compensation Committee in March 1998. Mr. Martin has served as President and Chief
Suite 4300 Executive Officer and a Director of NL Industries, Inc., a manufacturer of titanium
Denver, CO 80202 dioxide, since 1987. Mr. Martin has served as Chairman of Tremont Corporation, a
holding company operating through its affiliates Titanium Metals Corporation ("TIMET")
and NL Industries, Inc., since 1990 and as Chief Executive Officer and a director of
Tremont since 1998. Mr. Martin has served as Chairman of Timet, an integrated producer
of titanium, since 1987 and Chief Executive Officer since January 1995. From 1990 until
its acquisition by Dresser Industries, Inc. ("Dresser") in 1994, Mr. Martin served as
Chairman of the Board and Chief Executive Officer of Baroid Corporation, an oilfield
services company. In addition to Tremont, NL and TIMET, Mr. Martin is a director of
Dresser, which is engaged in the petroleum services, hydrocarbon and engineering
industries.
Carla R. Stoner.............. Ms. Stoner joined AIMCO in July 1997 as Vice President of Finance and Administration
and became Senior Vice President - Real Estate Accounting in November 1998. Prior to
joining AIMCO, Ms. Stoner was with National Housing Partners since 1989. While at
National Housing Partners, Ms. Stoner served as a
</TABLE>
I-4
<PAGE> 50
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
real estate controller from 1989 to 1992, as Vice President of Accounting from 1992 to
1995 and as Interim Chief Information Officer from 1995 to July 1997. Prior to joining
National Housing Partners, Ms. Stoner was a Senior Auditor with Deloitte & Touche from
1984 to 1989. Ms. Stoner received a B.A. in accounting from Virginia Tech.
Thomas L. Rhodes............. Mr. Rhodes was appointed a Director of AIMCO in July 1994. Mr. Rhodes has served as the
215 Lexington Avenue President and a Director of National Review magazine since November 30, 1992, where he
4th Floor has also served as a Director since 1998. From 1976 to 1992, he held various positions
New York, NY 10016 at Goldman, Sachs & Co. and was elected a General Partner in 1986 and served as a
General Partner from 1987 until November 27, 1992. He is currently Co-Chairman of the
Board , Co-Chief Executive Officer and a Director of Commercial Assets Inc. and Asset
Investors Corporation. He also serves as a Director of Delphi Financial Group, Inc. and
its subsidiaries, Delphi International Ltd., Oracle Reinsurance Company, and the Lynde
and Harry Bradley Foundation. Mr. Rhodes is Chairman of the Empire Foundation for
Policy Research, a Founder and Trustee of Change NY, a Trustee of The Heritage
Foundation, and a Trustee of the Manhattan Institute
John D. Smith................ Mr. Smith was appointed a Director of AIMCO in November 1994. Mr. Smith is Principal
3400 Peachtree Road and President of John D. Smith Developments. Mr. Smith has been a shopping center
Suite 8311994 developer, owner and consultant for over 8.6 million square feet of shopping center
Atlanta, GA 30326 projects including Lenox Square in Atlanta, Georgia. Mr. Smith is a Trustee and former
President of the International Council of Shop ping Centers and was selected to be a
member of the American Society of Real Estate Counselors. Mr. Smith served as a
Director for Pan-American Properties, Inc. (National Coal Board of Great Britain)
formerly known as Continental Illinois Properties. He also serves as a director of
American Fidelity Assurance Companies and is retained as an advisor by Shop System
Study Society, Tokyo, Japan.
</TABLE>
I-5
<PAGE> 51
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.
</TABLE>
For information, please call:
TOLL FREE (888) 349-2005
<PAGE> 1
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER UNITS OF LIMITED PARTNERSHIP IN
DAVIDSON GROWTH PLUS, L.P. (THE "PARTNERSHIP")
PURSUANT TO A LITIGATION SETTLEMENT OFFER (THE "OFFER")
DATED NOVEMBER 11, 1999 (THE "OFFER DATE")
BY
AIMCO PROPERTIES, L.P.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 5:00 P.M., NEW YORK TIME,
ON DECEMBER 30, 1999, UNLESS EXTENDED (THE "EXPIRATION DATE")
- --------------------------------------------------------------------------------
WE ARE OFFERING TO PURCHASE UNITS IN YOUR PARTNERSHIP FOR
$454.03 PER UNIT.
The Information Agent for the offer is:
RIVER OAKS PARTNERSHIP SERVICES, INC.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
P.O. Box 2065 111 Commerce Road 111 Commerce Road
S. Hackensack, N.J. 07606-2065 Carlstadt, N.J. 07072 Carlstadt, N.J. 07072
Attn.: Reorganization Dept. Attn.: Reorganization Dept.
</TABLE>
By Telephone:
TOLL FREE (888) 349-2005
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF UNITS TENDERED
- ---------------------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s) (Please indicate Units in Davidson Growth Plus, L.P.
changes or corrections to the name, address and tax
identification number printed below.)
- ---------------------------------------------------------------------------------------------------------------------------
1. Total Number of Units 2. Total Number of Units
Owned Tendered
(#) (#)
------------------------ ------------------------
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
[ ] Check box if the units have been tendered in another tender offer.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
To participate in the offer, you must send a duly completed and executed copy of
this Letter of Transmittal and any other documents required by this Letter of
Transmittal so that such documents are received by River Oaks Partnership
Services, Inc., the Information Agent, on or prior to the Expiration Date,
unless extended. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT YOUR OPTION AND RISK, AND DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE INFORMATION AGENT. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED IS RECOMMENDED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. DELIVERY OF
THIS LETTER OF TRANSMITTAL OR ANY OTHER REQUIRED DOCUMENTS TO AN ADDRESS OTHER
THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE VALID DELIVERY.
--------------------------
IF YOU HAVE THE CERTIFICATE ORIGINALLY ISSUED TO REPRESENT YOUR
INTEREST IN THE PARTNERSHIP PLEASE SEND IT TO THE INFORMATION
AGENT WITH THIS LETTER OF TRANSMITTAL.
---------------------------
FOR INFORMATION OR ASSISTANCE IN CONNECTION WITH THE OFFER OR THE
COMPLETION OF THIS LETTER OF TRANSMITTAL, PLEASE CONTACT THE INFORMATION AGENT
AT (888) 349-2005 (TOLL FREE).
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
- --------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 2, 4 AND 9)
To be completed ONLY if the consideration for the purchase price of Units
accepted for payment is to be issued in the name of someone other than the
undersigned.
[ ] Issue consideration to:
Name
---------------------------------------------------------------------------
(Please Type or Print)
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
- --------------------------------------------------------------------------------
(Tax Identification or Social Security No.)
(See Substitute Form W-9)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 2, 4 AND 9)
To be completed ONLY if the consideration for the purchase price of Units
accepted for payment is to be sent to someone other than the undersigned or to
the undersigned at an address other than that shown above.
[ ] Mail consideration to:
Name
---------------------------------------------------------------------------
(Please Type or Print)
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
- --------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
2
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby acknowledges that he or she has received and reviewed
(i) the Purchaser's Offer to Purchase relating to the offer by AIMCO Properties,
L.P. (the "Purchaser") to purchase Limited Partnership Interests (the "Units")
in the Partnership and (ii) this Letter of Transmittal and the Instructions
hereto, as each may be supplemented or amended from time to time (collectively,
the "Offer").
Upon the terms and subject to the conditions set forth in the Offer to
Purchase, and this Letter of Transmittal, the undersigned hereby tenders to the
Purchaser the Units set forth in the box above entitled "Description of Units
Tendered," including all interests in any limited partnership represented by
such units (collectively, the "Units"), at the price indicated on the Offer to
Purchase, less the amount of distributions, if any, made by the Partnership from
the Offer Date until the Expiration Date (the "Offer Price"), net to the
undersigned in cash, without interest.
Subject to and effective upon acceptance for payment of any of the Units
tendered hereby in accordance with the terms of the Offer, the undersigned
hereby irrevocably sells, assigns, transfers, conveys and delivers to, or upon
the order of, the Purchaser all right, title and interest in and to such Units
tendered hereby that are accepted for payment pursuant to the Offer, including,
without limitation, (i) all of the undersigned's interest in the capital of the
Partnership, and the undersigned's interest in all profits, losses and
distributions of any kind to which the undersigned shall at any time be entitled
in respect of the Units, including, without limitation, distributions in the
ordinary course, distributions from sales of assets, distributions upon
liquidation, winding-up, or dissolution, payments in settlement of existing or
future litigation, and all other distributions and payments from and after the
expiration date of the Offer, in respect of the Units tendered by the
undersigned and accepted for payment and thereby purchased by the Purchaser;
(ii) all other payments, if any, due or to become due to the undersigned in
respect of the Units, under or arising out of the agreement of limited
partnership of the Partnership (the "Partnership Agreement"), or any agreement
pursuant to which the Units were sold (the "Purchase Agreement"), whether as
contractual obligations, damages, insurance proceeds, condemnation awards or
otherwise; (iii) all of the undersigned's claims, rights, powers, privileges,
authority, options, security interests, liens and remedies, if any, under or
arising out of the Partnership Agreement or Purchase Agreement or the
undersigned's ownership of the Units, including, without limitation, all voting
rights, rights of first offer, first refusal or similar rights, and rights to be
substituted as a limited partner of the Partnership; and (iv) all present and
future claims, if any, of the undersigned against the Partnership, the other
partners of the Partnership, or the general partner and its affiliates,
including the Purchaser, under or arising out of the Partnership Agreement, the
Purchase Agreement, the undersigned's status as a limited partner, or the terms
or conditions of the Offer, for monies loaned or advanced, for services
rendered, for the management of the Partnership or otherwise.
The undersigned hereby irrevocably constitutes and appoints the Purchaser
and any designees of the Purchaser as the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Units, with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to vote or act in such manner as any such attorney
and proxy or substitute shall, in its sole discretion, deem proper with respect
to such Units, to do all such acts and things necessary or expedient to deliver
such Units and transfer ownership of such Units on the partnership books
maintained by the general partner of the Partnership, together with all
accompanying evidence of transfer and authenticity to, or upon the order of, the
Purchaser, to sign any and all documents necessary to authorize the transfer of
the Units to the Purchaser including, without limitation, the "Transferor's
(Seller's) Application for Transfer" created by the National Association of
Securities Dealers, Inc., if required, and upon receipt by the Information Agent
(as the undersigned's agent) of the Offer Price, to become a substitute limited
partner, to receive any and all distributions made by the Partnership from and
after the Expiration Date of the Offer (regardless of the record date for any
such distribution), and to receive all benefits and otherwise exercise all
rights of beneficial ownership of such Units, all in accordance with the terms
of the Offer. This appointment is effective upon the purchase of the Units by
the Purchaser as provided in the Offer and shall be irrevocable for a period of
ten years following the termination of the Offer. Upon the purchase of Units
pursuant to the Offer, all prior proxies and consents given by the undersigned
with respect to such Units will be revoked and no subsequent proxies or consents
may be given (and if given will not be deemed effective).
3
<PAGE> 4
In addition to and without limiting the generality of the foregoing, the
undersigned hereby irrevocably (i) requests and authorizes (subject to and
effective upon acceptance for payment of any Unit tendered hereby) the
Partnership and its general partners to take any and all actions as may be
required to effect the transfer of the undersigned's Units to the Purchaser (or
its designee) and to admit the Purchaser as a substitute limited partner in the
Partnership under the terms of the Partnership Agreement; (ii) empowers the
Purchaser and its agent to execute and deliver to each general partner a change
of address form instructing the general partner to send any and all future
distributions to the address specified in the form, and to endorse any check
payable to or upon the order of such unitholder representing a distribution to
which the Purchaser is entitled pursuant to the terms of the offer, in each
case, in the name and on behalf of the tendering unitholder; (iii) agrees not to
exercise any rights pertaining to the Units without the prior consent of the
Purchaser; and (iv) requests and consents to the transfer of the Units, to be
effective on the books and records of the Partnership as of the Offer Date.
The undersigned irrevocably constitutes and appoints the Purchaser and any
designees of the Purchaser as the true and lawful agent and attorney-in-fact of
the undersigned with respect to such Units, with full power of substitution
(such power of attorney being deemed to be an irrevocable power coupled with an
interest), to withdraw any or all of such Units that have been previously
tendered in response to any tender or exchange offer provided that the price per
unit being offered by the Purchaser is equal to or higher than the price per
unit being offered in the other tender or exchange offer. This appointment is
effective immediately and shall continue to be effective unless and until such
Units are withdrawn from the Offer by the undersigned prior to the Expiration
Date.
NOTWITHSTANDING ANY PROVISION IN A PARTNERSHIP AGREEMENT OR ANY PURCHASE
AGREEMENT TO THE CONTRARY, THE UNDERSIGNED HEREBY DIRECTS EACH GENERAL PARTNER
OF THE PARTNERSHIP TO MAKE ALL DISTRIBUTIONS AFTER THE PURCHASER ACCEPTS THE
TENDERED UNITS FOR PAYMENT TO THE PURCHASER OR ITS DESIGNEE. Subject to and
effective upon acceptance for payment of any Unit tendered hereby, the
undersigned hereby requests that the Purchaser be admitted to the Partnership as
a substitute limited partner under the terms of the Partnership Agreement. Upon
request, the undersigned will execute and deliver additional documents deemed by
the Information Agent or the Purchaser to be necessary or desirable to complete
the assignment, transfer and purchase of Units tendered hereby and will hold any
distributions received from the Partnership after the Expiration Date in trust
for the benefit of the Purchaser and, if necessary, will promptly forward to the
Purchaser any such distributions immediately upon receipt. The Purchaser
reserves the right to transfer or assign, in whole or in part, from time to
time, to one or more of its affiliates, the right to purchase Units tendered
pursuant to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer or prejudice the rights of
tendering unitholders to receive payment for Units validly tendered and accepted
for payment pursuant to the Offer.
By executing this Letter of Transmittal, the undersigned represents that
either (i) the undersigned is not a plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code"), or an entity deemed
to hold "plan assets" within the meaning of 29 C.F.R. Section 2510.3-101 of any
such plan, or (ii) the tender and acceptance of Units pursuant to the Offer will
not result in a nonexempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code.
The undersigned understands that a tender of Units to the Purchaser will
constitute a binding agreement between the undersigned and the Purchaser upon
the terms and subject to the conditions of the Offer. The undersigned recognizes
that under certain circumstances set forth in the Offer, the Purchaser may not
be required to accept for payment any of the Units tendered hereby. In such
event, the undersigned understands that any Letter of Transmittal for Units not
accepted for payment may be destroyed by the Purchaser (or its agent). EXCEPT AS
STATED IN THE OFFER, THIS TENDER IS IRREVOCABLE, PROVIDED THAT UNITS TENDERED
PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE,
OR UNLESS ALREADY ACCEPTED FOR PAYMENT, ANY TIME AFTER 60 DAYS FROM THE OFFER
DATE.
THE UNDERSIGNED HAS BEEN ADVISED THAT THE PURCHASER IS AN AFFILIATE OF THE
GENERAL PARTNER OF THE PARTNERSHIP AND NO SUCH GENERAL PARTNER MAKES ANY
RECOMMENDATION AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING UNITS IN THE
OFFER. THE UNDERSIGNED HAS MADE HIS OR HER OWN DECISION TO TENDER UNITS.
4
<PAGE> 5
The undersigned hereby represents and warrants for the benefit of the
Partnership and the Purchaser that the undersigned owns the Units tendered
hereby and has full power and authority and has taken all necessary action to
validly tender, sell, assign, transfer, convey and deliver the Units tendered
hereby and that when the same are accepted for payment by the Purchaser, the
Purchaser will acquire good, marketable and unencumbered title thereto, free and
clear of all liens, restrictions, charges, encumbrances, conditional sales
agreements or other obligations relating to the sale or transfer thereof, and
such Units will not be subject to any adverse claims and that the transfer and
assignment contemplated herein are in compliance with all applicable laws and
regulations.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligations of the undersigned
shall be binding upon the heirs, personal representatives, trustees in
bankruptcy, legal representatives, and successors and assigns of the
undersigned.
The undersigned further represents and warrants that, to the extent a
certificate evidencing the Units tendered hereby (the "original certificate") is
not delivered by the undersigned together with this Letter of Transmittal, (i)
the undersigned represents and warrants to the Purchaser that the undersigned
has not sold, transferred, conveyed, assigned, pledged, deposited or otherwise
disposed of any portion of the Units, (ii) the undersigned has caused a diligent
search of its records to be taken and has been unable to locate the original
certificate, (iii) if the undersigned shall find or recover the original
certificate evidencing the Units, the undersigned will immediately and without
consideration surrender it to the Purchaser; and (iv) the undersigned shall at
all times indemnify, defend, and save harmless the Purchaser and the
Partnership, its successors, and its assigns from and against any and all
claims, actions, and suits whether groundless or otherwise, and from and against
any and all liabilities, losses, damages, judgments, costs, charges, counsel
fees, and other expenses of every nature and character by reason of honoring or
refusing to honor the original certificate when presented by or on behalf of a
holder in due course of a holder appearing to or believed by the partnership to
be such, or by issuance or delivery of a replacement certificate, or the making
of any payment, delivery, or credit in respect of the original certificate
without surrender thereof, or in respect of the replacement certificate.
5
<PAGE> 6
================================================================================
SIGNATURE BOX
(SEE INSTRUCTION 2)
- --------------------------------------------------------------------------------
Please sign exactly as your name is printed on the front of this Letter of
Transmittal. For joint owners, each joint owner must sign. (See Instruction 2).
TRUSTEES, EXECUTORS, ADMINISTRATORS, GUARDIANS, ATTORNEYS-IN-FACT, OFFICERS
OF A CORPORATION OR OTHER PERSONS ACTING IN A FIDUCIARY OR REPRESENTATIVE
CAPACITY, PLEASE COMPLETE THIS BOX AND SEE INSTRUCTION 2.
The signatory hereto hereby tenders the Units indicated in this Letter of
Transmittal to the Purchaser pursuant to the terms of the Offer, and certifies
under penalties of perjury that the statements in Box A, Box B and, if
applicable, Box C and Box D are true.
X
--------------------------------------------------------------------------
(Signature of Owner)
X
--------------------------------------------------------------------------
(Signature of Joint Owner)
Name and Capacity (if other than individuals):
-----------------------------
Title:
---------------------------------------------------------------------
Address:
-------------------------------------------------------------------
---------------------------------------------------------------------------
(City) (State) (Zip)
Area Code and Telephone No. (Day):
-----------------------------------------
(Evening):
--------------------------------------
SIGNATURE GUARANTEE (IF REQUIRED)
(SEE INSTRUCTION 2)
Name and Address of Eligible Institution:
----------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Authorized Signature: X
----------------------------------------------------
Name:
----------------------------------------------------------------------
Title: Date:
------------------------------------------- -------------------
================================================================================
6
<PAGE> 7
TAX CERTIFICATIONS
(See Instruction 4)
By signing the Letter of Transmittal in the Signature Box, the
unitholder certifies as true under penalty of perjury, the representations in
Boxes A, B and C below. Please refer to the attached Instructions for completing
this Letter of Transmittal and Boxes A, B and C below.
================================================================================
BOX A
SUBSTITUTE FORM W-9
(SEE INSTRUCTION 4 - BOX A)
- --------------------------------------------------------------------------------
The unitholder hereby certifies the following to the Purchaser under
penalties of perjury:
(i) The Taxpayer Identification No. ("TIN") printed (or corrected) on
the front of this Letter of Transmittal is the correct TIN of the unitholder,
unless the Units are held in an Individual Retirement Account ("IRA"); or if
this box [ ] is checked, the unitholder has applied for a TIN. If the unitholder
has applied for a TIN, a TIN has not been issued to the unitholder, and either
(a) the unitholder has mailed or delivered an application to receive a TIN to
the appropriate IRS Center or Social Security Administration Office, or (b) the
unitholder intends to mail or deliver an application in the near future (it
being understood that if the unitholder does not provide a TIN to the Purchaser,
31% of all reportable payments made to the unitholder will be withheld); and
(ii) Unless this box [ ] is checked, the unitholder is not subject to
backup withholding either because the unitholder: (a) is exempt from backup
withholding; (b) has not been notified by the IRS that the unitholder is subject
to backup withholding as a result of a failure to report all interest or
dividends; or (c) has been notified by the IRS that such unitholder is no longer
subject to backup withholding.
Note: Place an "X" in the box in (ii) above, only if you are unable to certify
that the unitholder is not subject to backup withholding.
================================================================================
================================================================================
BOX B
FIRPTA AFFIDAVIT
(SEE INSTRUCTION 4 - BOX B)
- --------------------------------------------------------------------------------
Under Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg.
1.1445-11T(d), a transferee must withhold tax equal to 10% of the amount
realized with respect to certain transfers of an interest in a partnership if
50% or more of the value of its gross assets consists of U.S. real property
interests and 90% or more of the value of its gross assets consists of U.S. real
property interests plus cash equivalents, and the holder of the partnership
interest is a foreign person. To inform the Purchaser that no withholding is
required with respect to the unitholder's Units in the Partnership, the person
signing this Letter of Transmittal hereby certifies the following under
penalties of perjury:
(i) Unless this box [ ] is checked, the unitholder, if an individual,
is a U.S. citizen or a resident alien for purposes of U.S. income taxation, and
if other than an individual, is not a foreign corporation, foreign partnership,
foreign estate or foreign trust (as those terms are defined in the Internal
Revenue Code and Income Tax Regulations);
(ii) The unitholder's U.S. social security number (for individuals) or
employer identification number (for non-individuals) is correct as furnished in
the blank provided for that purpose on the front of the Letter of Transmittal;
(iii) The unitholder's home address (for individuals), or office
address (for non-individuals), is correctly printed (or corrected) on the front
of this Letter of Transmittal.
The person signing this Letter of Transmittal understands that this
certification may be disclosed to the IRS by the Purchaser and that any false
statements contained herein could be punished by fine, imprisonment, or both.
================================================================================
================================================================================
BOX C
SUBSTITUTE FORM W-8
(SEE INSTRUCTION 4 - BOX C)
- --------------------------------------------------------------------------------
By checking this box [ ], the person signing this Letter of Transmittal
hereby certifies under penalties of perjury that the unitholder is an "exempt
foreign person" for purposes of the Backup Withholding rules under the U.S.
Federal income tax laws, because the unitholder has the following
characteristics:
(i) Is a nonresident alien individual or a foreign corporation,
partnership, estate or trust;
(ii) If an individual, has not been and plans not to be present in
the U.S. for a total of 183 days or more during the calendar
year; and
(iii) Neither engages, nor plans to engage, in a U.S. trade or
business that has effectively connected gains from
transactions with a broker or barter exchange.
================================================================================
7
<PAGE> 8
INSTRUCTIONS
FOR COMPLETING LETTER OF TRANSMITTAL
1. REQUIREMENTS OF TENDER. To be effective, a duly completed and signed
Letter of Transmittal (or facsimile thereof) and any other required
documents must be received by the Information Agent at one of its
addresses (or its facsimile number) set forth herein before 5:00 p.m.,
New York Time, on the Expiration Date, unless extended. To ensure
receipt of the Letter of Transmittal and any other required documents,
it is suggested that you use overnight courier delivery or, if the
Letter of Transmittal and any other required documents are to be
delivered by United States mail, that you use certified or registered
mail, return receipt requested.
Our records indicate that the undersigned owns the number of Units
set forth in the box above entitled "Description of Units Tendered"
under the column entitled "Total Number of Units Owned." If you
would like to tender only a portion of your Units, please so
indicate in the space provided in the box above entitled
"Description of Units Tendered."
WHEN TENDERING, YOU MUST SEND ALL PAGES OF THE LETTER OF TRANSMITTAL,
INCLUDING TAX CERTIFICATIONS (BOXES A, B, AND C).
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING
UNITHOLDER AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED BY THE INFORMATION AGENT. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
2. SIGNATURE REQUIREMENTS.
INDIVIDUAL AND JOINT OWNERS -- After carefully reading and completing
the Letter of Transmittal, to tender Units, unitholders must sign at
the "X" in the Signature Box of the Letter of Transmittal. The
signature(s) must correspond exactly with the names printed (or
corrected) on the front of the Letter of Transmittal. If the Letter of
Transmittal is signed by the unitholder (or beneficial owner in the
case of an IRA), no signature guarantee on the Letter of Transmittal
is required. If any tendered Units are registered in the names of two
or more joint owners, all such owners must sign this Letter of
Transmittal.
IRAS/ELIGIBLE INSTITUTIONS -- For Units held in an IRA account, the
beneficial owner should sign in the Signature Box and no signature
guarantee is required. Similarly, if Units are tendered for the
account of a member firm of a registered national security exchange, a
member firm of the National Association of Securities Dealers, Inc. or
a commercial bank, savings bank, credit union, savings and loan
association or trust company having an office, branch or agency in the
United States (each an "Eligible Institution"), no signature guarantee
is required.
TRUSTEES, CORPORATIONS, PARTNERSHIP AND FIDUCIARIES -- Trustees,
executors, administrators, guardians, attorneys-in-fact, officers of a
corporation, authorized partners of a partnership or other persons
acting in a fiduciary or representative capacity must sign at the "X"
in the Signature Box and have their signatures guaranteed by an
Eligible Institution by completing the signature guarantee set forth
in the Signature Box of the Letter of Transmittal. If the Letter of
Transmittal is signed by trustees, administrators, guardians,
attorneys-in-fact, officers of a corporation, authorized partners of a
partnership or others acting in a fiduciary or representative
capacity, such persons should, in addition to having their signatures
guaranteed, indicate their title in the Signature Box and must submit
proper evidence satisfactory to the Purchaser of their authority to so
act (see Instruction 3 below).
3. DOCUMENTATION REQUIREMENTS. In addition to the information required to
be completed on the Letter of Transmittal, additional documentation
may be required by the Purchaser under certain circumstances
including, but not limited to, those listed below. Questions on
documentation should be directed to the Information Agent at its
telephone number set forth herein.
DECEASED OWNER (JOINT TENANT) -- Copy of death certificate.
8
<PAGE> 9
DECEASED OWNER (OTHERS) -- Copy of death certificate
(see also Executor/
Administrator/Guardian
below).
EXECUTOR/ADMINISTRATOR/GUARDIAN -- Copy of court appointment
documents for executor or
administrator; and (a) a
copy of applicable
provisions of the will
(title page, executor(s)'
powers, asset
distribution); or (b)
estate distribution
documents.
ATTORNEY-IN-FACT -- Current power of attorney.
CORPORATION/PARTNERSHIP -- Corporate resolution(s) or
other evidence of
authority to act.
Partnership should furnish
a copy of the partnership
agreement.
TRUST/PENSION PLANS -- Unless the trustee(s) are
named in the registration,
a copy of the cover page
of the trust or pension
plan, along with a copy of
the section(s) setting
forth names and powers of
trustee(s) and any
amendments to such
sections or appointment of
successor trustee(s).
4. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If consideration is to be issued
in the name of a person other than the person signing the Signature Box of
the Letter of Transmittal or if consideration is to be sent to someone
other than such signer or to an address other than that set forth on the
Letter of Transmittal in the box entitled "Description of Units Tendered,"
the appropriate boxes on the Letter of Transmittal should be completed.
5. TAX CERTIFICATIONS. The unitholder(s) tendering Units to the Purchaser
pursuant to the Offer must furnish the Purchaser with the unitholder(s)'
taxpayer identification number ("TIN") and certify as true, under penalties
of perjury, the representations in Box A, Box B and, if applicable, Box C.
By signing the Signature Box, the unitholder(s) certifies that the TIN as
printed (or corrected) on this Letter of Transmittal in the box entitled
"Description of Units Tendered" and the representations made in Box A, Box
B and, if applicable, Box C, are correct. See attached Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
guidance in determining the proper TIN to give the Purchaser.
U.S. PERSONS. A unitholder that is a U.S. citizen or a resident alien
individual, a domestic corporation, a domestic partnership, a domestic
trust or a domestic estate (collectively, "U.S. Persons"), as those terms
are defined in the Code, should follow the instructions below with respect
to certifying Box A and Box B.
BOX A - SUBSTITUTE FORM W-9.
Part (i), Taxpayer Identification Number -- Tendering unitholders must
certify to the Purchaser that the TIN as printed (or corrected) on this
Letter of Transmittal in the box entitled "Description of Units Tendered"
is correct. If a correct TIN is not provided, penalties may be imposed by
the Internal Revenue Service (the "IRS"), in addition to the unitholder
being subject to backup withholding.
Part (ii), Backup Withholding -- In order to avoid 31% Federal income tax
backup withholding, the tendering unitholder must certify, under penalty of
perjury, that such unitholder is not subject to backup withholding. Certain
unitholders (including, among others, all corporations and certain exempt
non-profit organizations) are not subject to backup withholding. Backup
withholding is not an additional tax. If withholding results in an
overpayment of taxes, a refund may be obtained from the IRS. DO NOT CHECK
THE BOX IN BOX A, PART (ii), UNLESS YOU HAVE BEEN NOTIFIED BY THE IRS THAT
YOU ARE SUBJECT TO BACKUP WITHHOLDING.
When determining the TIN to be furnished, please refer to the following as
a guide:
Individual accounts - should reflect owner's TIN.
Joint accounts - should reflect the TIN of the owner whose name appears
first. Trust accounts - should reflect the TIN assigned to the trust. IRA
custodial accounts - should reflect the TIN of the custodian (not
necessary to provide).
9
<PAGE> 10
Custodial accounts for the benefit of minors - should reflect the TIN of
the minor. Corporations, partnership or other business entities - should
reflect the TIN assigned to that entity.
By signing the Signature Box, the unitholder(s) certifies that the TIN as
printed (or corrected) on the front of the Letter of Transmittal is
correct.
BOX B - FIRPTA AFFIDAVIT -- Section 1445 of the Code requires that each
unitholder transferring interests in a partnership with real estate assets
meeting certain criteria certify under penalty of perjury the
representations made in Box B, or be subject to withholding of tax equal to
10% of the purchase price for interests purchased. Tax withheld under
Section 1445 of the Code is not an additional tax. If withholding results
in an overpayment of tax, a refund may be obtained from the IRS. PART (i)
SHOULD BE CHECKED ONLY IF THE TENDERING UNITHOLDER IS NOT A U.S. PERSON, AS
DESCRIBED THEREIN.
BOX C - FOREIGN PERSONS -- In order for a tendering unitholder who is a
Foreign Person (i.e., not a U.S. Person, as defined above) to qualify as
exempt from 31% backup withholding, such foreign Unitholder must certify,
under penalties of perjury, the statement in Box C of this Letter of
Transmittal, attesting to that Foreign Person's status by checking the box
preceding such statement. UNLESS THE BOX IS CHECKED, SUCH UNITHOLDER WILL
BE SUBJECT TO 31% WITHHOLDING OF TAX.
6. VALIDITY OF LETTER OF TRANSMITTAL. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of a Letter of
Transmittal and other required documents will be determined by the
Purchaser and such determination will be final and binding. The Purchaser's
interpretation of the terms and conditions of the Offer (including these
Instructions for this Letter of Transmittal) will be final and binding. The
Purchaser will have the right to waive any irregularities or conditions as
to the manner of tendering. Any irregularities in connection with tenders,
unless waived, must be cured within such time as the Purchaser shall
determine. This Letter of Transmittal will not be valid until any
irregularities have been cured or waived. Neither the Purchaser nor the
Information Agent are under any duty to give notification of defects in a
Letter of Transmittal and will incur no liability for failure to give such
notification.
7. ASSIGNEE STATUS. Assignees must provide documentation to the Information
Agent which demonstrates, to the satisfaction of the Purchaser, such
person's status as an assignee.
8. TRANSFER TAXES. The amount of any transfer taxes (whether imposed on the
registered holder or such person) payable on account of the transfer to
such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is submitted.
10
<PAGE> 11
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER - - Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
GIVE THE
TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
1. An individual account The individual
2. Two or more individuals The actual owner of the account or, if
(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>
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(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.
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- 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.
- Payments on tax-free covenant bonds under section 1451 of the Code.
- Payments made by certain foreign organizations.
- Payments of mortgage interest to you.
- Payments made to an appropriate nominee.
Exempt payees described above should file a substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM. IF YOU ARE A NONRESIDENT ALIEN OR A
FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED
INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(A),
6045, and 6050A of the Code.
PRIVACY ACT NOTICE - - Section 6109 of the Code requires most recipients of
dividend, interest, or other payments to give correct taxpayer identification
numbers to payers who must report the payments to the IRS. The IRS uses the
numbers for identification purposes. Payers must be given the numbers whether or
not recipients are required to file a tax return. Payers must generally withhold
31% of taxable interest, dividend, and certain other payments to a payee who
does not furnish a correct taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER - - If
you fail to furnish your correct taxpayer identification number to a payer, you
are subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING - - If
you make a false statement with no reasonable basis that results in no
imposition of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION - - Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
13
<PAGE> 14
The Information Agent for the offer is:
RIVER OAKS PARTNERSHIP SERVICES, INC.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
P.O. Box 2065 111 Commerce Road 111 Commerce Road
S. Hackensack, N.J. 07606-2065 Carlstadt, N.J. 07072 Carlstadt, N.J. 07072
Attn.: Reorganization Dept. Attn.: Reorganization Dept.
</TABLE>
By Telephone:
TOLL FREE (888) 349-2005
14
<PAGE> 1
EXHIBIT (a)(3)
IMPORTANT-PROPOSED LITIGATION
SETTLEMENT AND 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
November 11, 1999
Dear Limited Partner:
We are pleased to announce that we have reached a settlement, subject to
final court approval, of the class action litigation entitled Rosalie Nuanes, et
al. v. Insignia Financial Group, et al., which was brought on behalf of limited
partners in partnerships formerly managed by Insignia Financial Group, Inc.,
including yours. Pursuant to the settlement, we are offering to acquire your
units of limited partnership interest in Davidson Growth Plus, L.P., at $454.03
per unit. We determined the offer price based upon a method negotiated at arm's
length with plaintiffs' class action counsel. This price includes a payment of
$22.03 from a settlement fund which we will pay you if we receive court approval
of the settlement and you do not request exclusion from the settlement class. IN
ACCORDANCE WITH THE TERMS OF THE SETTLEMENT, ROBERT A. STANGER & CO., INC., AN
INDEPENDENT INVESTMENT BANKING FIRM, HAS DELIVERED ITS OPINION THAT THE OFFER
PRICE IS FAIR TO LIMITED PARTNERS FROM A FINANCIAL POINT OF VIEW. (A copy of
that opinion is attached as Annex I to the enclosed Litigation Settlement
Offer.)
The Court has preliminarily approved the settlement and will soon consider
whether to give its final approval. The offer price of $454.03 was calculated
after taking into account amounts for estimated attorneys' fees, costs, and
expenses which plaintiffs' counsel is permitted to seek in connection with the
settlement. These and other terms of the settlement are more fully described in
the accompanying Notice of Settlement, as well as in the Stipulation of
Settlement on file with the San Mateo Superior Court.
Our offer is not subject to any minimum number of units being tendered.
<PAGE> 2
However, under the settlement, we are not required to pay more than $50,000,000
in cash in the aggregate for all units tendered by limited partners in all of
the 49 partnerships to which we are making offers as part of the settlement. If
units tendered for cash in all of these offers exceed $50,000,000 in value, we
will accept units on a pro rata basis, according to the value of units tendered
by each person. However, in connection with the settlement, our parent
corporation, Apartment Investment and Management Company ("AIMCO'"), a New York
Stock Exchange-listed company, intends to seek Court approval to offer freely
tradeable shares of AIMCO stock in exchange for units tendered in excess of
$50,000,000. However, before we offer any such shares of AIMCO stock, the Court
must first determine that the terms are fair after holding a hearing in which
you and all other limited partners in your partnership can participate. If we do
offer AIMCO stock, we will provide you with additional information describing
the shares and how many you will receive for your units. In any event, we will
not be obligated to pay more than $50,000,000 in cash pursuant to all of the
offers, although we reserve the right to do so. If you wish to sell your units
for cash you may wish to sell pursuant to this offer.
You will not be required to pay any partnership transfer fees in connection
with any disposition of your units pursuant to our offer. However, you may have
to pay any taxes and any other fees and expenses. 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, 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, which is our
affiliate, makes no recommendation as to whether you should tender or refrain
from tendering your units. You must make your own decision whether or not to
participate in the offer, based upon a number of factors, including your
financial position, your need or desire for liquidity, other financial
opportunities available to you, and your tax position and the tax consequences
to you of selling your units.
If you desire to tender any of your units in response to our offer, you
should complete and sign the enclosed letter of transmittal in accordance with
the enclosed instructions and mail or deliver the signed letter of transmittal
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
2
<PAGE> 3
December 30, 1999, 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.
3
<PAGE> 1
EXHIBIT (z)(1)
AGREEMENT OF JOINT FILING
Cooper River Properties, L.L.C., AIMCO/IPT, Inc., Insignia Properties,
L.P., AIMCO Properties, L.P., AIMCO-GP, Inc. and Apartment Investment and
Management Company agree that the Amendment No. 9 to Schedule 13D to which this
agreement is attached as an exhibit, and all further amendments thereto, and
all filings under Schedule 14D-1 to which this agreement is attached as an
exhibit, and all amendments thereto, shall be filed on behalf of each of them.
This agreement is intended to satisfy the requirements of Rule 13d-1(f)(1)(iii)
under the Securities Exchange Act of 1934, as amended.
Dated: November 11, 1999
COOPER RIVER PROPERTIES, L.L.C.
By: /s/ Patrick J. Foye
---------------------------------
Executive Vice President
AIMCO/IPT, INC.
By: /s/ Patrick J. Foye
---------------------------------
Executive Vice President
INSIGNIA PROPERTIES, L.P.
By: AIMCO/IPT, INC.
(General Partner)
By: /s/ Patrick J. Foye
---------------------------------
Executive Vice President
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, INC.
(General Partner)
By: /s/ Patrick J. Foye
---------------------------------
Executive Vice President
AIMCO-GP, INC.
By: /s/ Patrick J. Foye
---------------------------------
Executive Vice President
APARTMENT INVESTMENT
AND MANAGEMENT COMPANY
By: /s/ Patrick J. Foye
---------------------------------
Executive Vice President
