<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. 7)
MULTI-BENEFIT REALTY FUND '87-1
(Name of Subject Company)
AIMCO PROPERTIES, L.P.
(Bidder)
CLASS A 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* $5,570,025.20 Amount of Filing Fee: $1,114.01
* For purposes of calculating the fee only. This amount assumes the
purchase of 60,223 units of limited partnership interest of the subject
partnership for $92.49 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
7,178
8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
Approximately 7.38%
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
7,178
8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
Approximately 7.38%
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
36,061
8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[ ]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
Approximately 37.08%
10. TYPE OF REPORTING PERSON
CO
Page 4 of 10 Pages
<PAGE> 6
SCHEDULE 14D-1/AMENDMENT NO. 7 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 for Class A units of limited partnership
interest ("Units") of Multi-Benefit Realty Fund '87-1 (the "Partnership"); and
(b) Amendment No. 7 to the Schedule 13D (the "Schedule 13D") originally filed
with the Securities and Exchange Commission (the "Commission") on March 11,
1998, by Madison River Properties, L.L.C. ("Madison River"), Insignia
Properties, L.P. ("IPLP"), Insignia Properties Trust ("IPT"), Insignia Financial
Group, Inc. ("Insignia") and Andrew L. Farkas, as amended by (i) Amendment No.
1, filed with the Commission on September 23, 1998, by Madison River, IPLP, IPT,
Insignia and Andrew L. Farkas, (ii) Amendment No. 2, filed with the Commission
on October 26 1998, by Madison River, IPLP, IPT, AIMCO OP, AIMCO-GP, Inc.
("AIMCO-GP") and Apartment Investment and Management Company ("AIMCO"), (iii)
Amendment No. 3, filed with the Commission on January 22, 1999, by Cooper River,
Madison River, IPLP, IPT, AIMCO OP, AIMCO-GP and AIMCO, (iv) Amendment No. 4,
filed with the Commission on May 27, 1999, by Cooper River, Madison River,
AIMCO/IPT, Inc. ("AIMCO/IPT"), IPLP, AIMCO OP, AIMCO-GP and AIMCO, (v) Amendment
No. 5, filed with the Commission on July 1, 1999, by Cooper River, Madison
River, AIMCO/PT, IPLP, AIMCO, AIMCO-GP and AIMCO, and (vi) Amendment No. 6,
filed with the Commission on August 6, 1999, by Cooper River, Madison River,
AIMCO/IPT, IPLP, AIMCO OP, AIMCO-GP, and AIMCO. The item numbers and responses
thereto are set forth below in accordance with the requirements of Schedule
14D-1.
(1) SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Multi-Benefit Realty
Fund '87-1, a California limited partnership. The address of the Partnership's
principal executive offices is 1873 South Bellaire Street, 17th Floor, Denver,
Colorado 80222.
(b) This Statement relates to an offer by AIMCO OP to
purchase, 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 $92.49 in cash
(less the amount of any distributions paid by the Partnership on and after
November 15, 1999), upon the terms and subject to the conditions set forth in a
Litigation Settlement Offer, dated November 15, 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.
(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. 7 to the Schedule 13D, by Cooper River Properties,
L.L.C., a Delaware limited liability company, Madison River Properties, L.L.C.,
a Delaware limited liability company, Insignia Properties, L.P., a Delaware
limited partnership,
Page 5 of 10 Pages
<PAGE> 7
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. 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.
(a) Cooper River directly owns 5,183 Units, Madison River
directly owns 21,457 Units, IPLP directly owns 2,243 Units, and AIMCO OP
directly owns 7,178 Units (for an aggregate of 36,061 Units), representing
approximately 5.33%, 22.06%, 2.31% and 7.38%, respectively, or a total of
approximately 37.08% of the outstanding Units based on the 96,284 Units
outstanding at December 31, 1998.
Page 6 of 10 Pages
<PAGE> 8
IPLP, AIMCO/IPT and AIMCO may be deemed to beneficially own
the Units directly owned by Cooper River and Madison River by reason of each of
their relationship with Cooper River and Madison River. AIMCO/IPT and AIMCO may
be deemed to beneficially own the units directly owned by IPLP by reason of each
of their relationships with IPLP. Madison River and Cooper River are wholly
owned subsidiaries of IPLP, and AIMCO/IPT is the sole general partner of IPLP
(owning approximately 66.17% of the total equity interests). AIMCO/IPT is a
wholly owned subsidiary of AIMCO.
AIMCO-GP and AIMCO may be deemed to beneficially own the Units
directly owned by AIMCO OP by each of their relationship with AIMCO OP. AIMCO-GP
is the sole general partner of AIMCO OP (owning approximately 1% of the total
equity interests). AIMCO-GP is a wholly owned subsidiary of AIMCO.
Accordingly, for purposes of this Statement: (i) 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 5,183 Units directly owned by it;
(ii) Madison River is reporting that it shares the power to vote or direct the
vote and the power to dispose or direct the disposition of the 21,457 Units
directly owned by it; (iii) 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
2,243 Units owned by it; (iv) 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 5,183 Units directly owned by Cooper River, the 21,457 Units directly owned
by Madison River and the 2,243 Units directly owned by IPLP; (v) AIMCO OP is
reporting that it shares the power to vote or direct the power to vote and the
power to dispose or direct the disposition of the 7,178 Units directly owned by
it; (vi) AIMCO-GP is reporting that it shares the power to vote or direct the
disposition of the 7,178 Units owned by AIMCO OP; and (vii) 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 5,183 Units directly owned by Cooper River, the
2,243 Units directly owned by IPLP, the 21,457 Units owned by Madison River and
the 7,178 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.
Page 7 of 10 Pages
<PAGE> 9
Copies of such material can also be obtained from the Public Reference Room of
the Commission in Washington, D.C. at prescribed rates and from the Commission's
web site at www.sec.gov.
(10) ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(d) The information set forth in the 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 15, 1999.
(a)(2) Letter of Transmittal and related Instructions.
(a)(3) Letter, dated November 15, 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 15, 1999,
among AIMCO, AIMCO- GP, AIMCO OP, AIMCO/IPT, IPLP,
Madison River 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 15, 1999
COOPER RIVER PROPERTIES, L.L.C.
By: /s/ Patrick J. Foye
------------------------------------
Executive Vice President
MADISON RIVER PROPERTIES, L.L.C.
By: /s/ Patrick J. Foye
------------------------------------
Executive Vice President
AIMCO/IPT, INC.
By: /s/ Patrick J. Foye
------------------------------------
Executive Vice President
INSIGNIA PROPERTIES, L.P.
By: AIMCO/IPT, INC.
(General Partner)
By: /s/ Patrick J. Foye
------------------------------------
Executive Vice President
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, INC.
(General Partner)
By: /s/ Patrick J. Foye
------------------------------------
Executive Vice President
AIMCO-GP, INC.
By: /s/ Patrick J. Foye
------------------------------------
Executive Vice President
APARTMENT INVESTMENT
AND MANAGEMENT COMPANY
By: /s/ Patrick J. Foye
------------------------------------
Executive Vice President
Page 9 of 10 Pages
<PAGE> 11
EXHIBIT INDEX
<TABLE>
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EXHIBIT NO. DESCRIPTION
----------- -----------
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(a)(1) Litigation Settlement Offer, dated November 15, 1999.
(a)(2) Letter of Transmittal and related Instructions.
(a)(3) Letter, dated November 15, 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 15, 1999,
among AIMCO, AIMCO-GP, AIMCO OP, AIMCO/IPT, IPLP,
Madison River and Cooper River.
</TABLE>
Page 10 of 10 Pages
<PAGE> 1
EXHIBIT (a)(1)
AIMCO
LITIGATION SETTLEMENT OFFER
AIMCO PROPERTIES, L.P.
IS OFFERING TO PURCHASE ANY AND ALL UNITS OF LIMITED PARTNERSHIP
INTEREST IN CLASS A UNITS AND CLASS B UNITS
MULTI BENEFIT REALTY FUND 87-1
FOR $92.49 PER CLASS A UNIT IN CASH AND FOR $45.19 PER CLASS B 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 (EXCLUDING THE
SETTLEMENT FUND PAYMENT) 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 prices 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, of your partnership units to be $100 per unit for "A"
units and $57 per unit for "B" units. Stanger has estimated
the liquidation value at $96 per unit for "A" units and $53
per unit for "B" units, and going concern value at $94 per
unit for "A" units and $47 per unit for "B" units.
o As of June 30, 1998, your general partner (which is our
subsidiary) estimated the net asset value of your Class A
units to be $89 per unit and the Class B units to be $68 per
unit. Affiliate estimated the net liquidation value of the
Class A units to be $86.85 per unit and the Class B units to
be $65.84 per unit. An affiliate estimated the net
liquidation value of the Class A units to be $86.85 per unit
and the Class B units to be $65.84 per unit. Further, in
September 1998 an entity which we have acquired tendered for
the Class A units for $55 per unit, and the Class B units for
$38 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.
(continued on next page)
November 15, 1999
<PAGE> 2
(continued from cover page)
o In 1996, properties owned by your partnership were appraised
at $16,506,000. Based on this appraised value, your units
have a liquidation value of $86.85 per Class A unit and
$65.84 per Class B unit.
o Although your partnership's agreement of limited partnership
provides for termination in the year 2036, the prospectus
pursuant to which the units were sold in 1986 indicated that
the properties owned by your partnership might be sold within
5 to 8 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 prices have 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 prices 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
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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 Amount................................................................4
Loss of Future Distributions from Your Partnership............................................................4
Possible Increase in Control of Your Partnership by Us........................................................4
Recognition of Gain Resulting from Possible Future Reduction in Your Partnership Liabilities..................4
Risk of Inability to Transfer Units for 12-Month Period.......................................................5
Potential Delay in Payment....................................................................................5
Balloon Payment...............................................................................................5
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...................31
Section 11. Conflicts of Interest and Transactions with Affiliates..........................................32
Section 12. Future Plans of the Purchaser...................................................................33
Section 13. Certain Information Concerning Your Partnership.................................................34
Section 14. Voting Power....................................................................................38
Section 15. Source of Funds.................................................................................39
Section 16. Dissenters' Rights..............................................................................40
Section 17. Conditions of the Offer.........................................................................40
Section 18. Certain Legal Matters...........................................................................41
Section 19. Fees and Expenses...............................................................................42
ANNEX I............................................................................................................I-1
ANNEX II..........................................................................................................II-1
</TABLE>
i
<PAGE> 4
INTRODUCTION
The units you own are units of depositary receipts and not direct
interests in the partnership. Your units represent beneficial ownership of
either Class A or Class B limited partnership interests. Through a depositary
agreement with the limited partner you control the voting and other rights
granted to the limited partner by the partnership agreement of limited
partnership.
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 $92.49 per Class A unit and $45.19 per Class
B 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.
<PAGE> 5
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 15,
2000.
We are AIMCO Properties, L.P., a Delaware limited partnership. Together
with our subsidiaries, we conduct substantially all of the operations of
Apartment Investment and Management Company, or AIMCO. AIMCO is a
self-administered and self-managed real estate investment trust engaged in the
ownership, acquisition, development, expansion and management of multifamily
apartment properties. As of 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 $92.49 per Class A unit and $45.19 Class B 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
evaluating 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.
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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 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
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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. 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 13,175.60 additional Class A units 19,075.27 additional Class B units,
we will be in a position to influence or 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.
RISK OF INABILITY TO TRANSFER UNITS FOR 12-MONTH PERIOD
Your partnership's agreement of limited partnership prohibits any
transfer of an interest if such transfer, together with all other transfers
during the preceding 12 months, would cause 50% or more of the total interest
in capital and profits of your partnership to be transferred within such
12-month period. If we acquire a significant percentage of the interest in
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<PAGE> 8
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 PAYMENT
Your partnership has balloon payments of approximately $3,575,000 and
$8,500,000 due on mortgage debt in October 2000 and November 2003,
respectively. Your partnership will have to refinance such debt or sell its
properties prior to the balloon payment date, or it will be in default and
could lose the properties to foreclosure.
THE OFFER
SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE; PRORATION.
Upon the terms and subject to the conditions of this Litigation
Settlement Offer, we will accept (and thereby purchase) all Class A units and
Class B 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."
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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.
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 Class A units and
Class B 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.
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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 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
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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 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
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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.
SECTION 4. WITHDRAWAL RIGHTS.
You may withdraw tendered units at any time prior to the expiration
date or on or after January 15, 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.
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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 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),
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nor (except as otherwise expressly indicated) does it describe any aspect of
state, local, foreign or other tax laws. This summary assumes that the units
constitute capital assets in the hands of the unitholders (generally, property
held for investment). No advance ruling has been or will be sought from the IRS
regarding any matter discussed in this offer to purchase. Further, no opinion
of counsel has been obtained with regard to the offer.
The United States federal income tax treatment of a unitholder
participating in the offer depends in some instances on determinations of fact
and interpretations of complex provisions of United States federal income tax
law for which no clear precedent or authority may be available. Accordingly,
you should consult your tax advisor regarding the United States federal, state,
local and foreign tax consequences of selling the limited partnership interests
in your partnership represented by units pursuant to our offer or of a decision
not to sell in light of your specific tax situation.
Tax Consequences to Limited Partners Tendering Units for Cash. You will
recognize gain or loss on a sale of a unit of limited partnership of your
partnership equal to the difference between (i) your "amount realized" on the
sale and (ii) your adjusted tax basis in the unit sold. The "amount realized"
with respect to a unit of limited partnership of your partnership will be equal
to the sum of the amount of cash received by you for the unit sold pursuant to
the offer plus the amount of partnership liabilities allocable to the unit (as
determined under Section 752 of the Internal Revenue Code). Thus, your taxable
gain and tax liability resulting from a sale of a unit of limited partnership
of your partnership could exceed the cash received upon such sale.
Adjusted Tax Basis. If you acquired your units of limited partnership
of your partnership for cash, your initial tax basis in such units was
generally equal to your cash investment in your partnership increased by your
share of partnership liabilities at the time you acquired such units. Your
initial tax basis generally has been increased by (i) your share of partnership
income and gains, and (ii) any increases in your share of partnership
liabilities, and has been decreased (but not below zero) by (i) your share of
partnership cash distributions, (ii) any decreases in your share of partnership
liabilities, (iii) your share of partnership losses, and (iv) your share of
nondeductible partnership expenditures that are not chargeable to capital. For
purposes of determining your adjusted tax basis in units of limited partnership
of your partnership immediately prior to a disposition of your units, your
adjusted tax basis in your units will include your allocable share of
partnership income, gain or loss for the taxable year of disposition. If your
adjusted tax basis is less than your share of partnership liabilities (e.g., as
a result of the effect of net loss allocations and/or distributions exceeding
the cost of your unit), your gain recognized with respect to a unit of limited
partnership of your partnership pursuant to the offer will exceed the cash
proceeds realized upon the sale of such unit.
Character of Gain or Loss Recognized Pursuant to the Offer. Except as
described below, the gain or loss recognized by you on a sale of a unit of
limited partnership of your partnership pursuant to the offer generally will be
treated as a long-term capital gain or loss if you held the unit for more than
one year. Long-term capital gains recognized by individuals and certain other
noncorporate taxpayers generally will be subject to a maximum United States
federal income tax rate of 20%. If the amount realized with respect to a unit
of limited partnership of your partnership that is attributable to your share
of "unrealized receivables" of your partnership exceeds the tax basis
attributable to those assets, such excess will be treated as ordinary income.
Among other things, "unrealized receivables" include depreciation recapture for
certain types of property. In addition, the maximum United States 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
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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.
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
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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.
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 13.55% of the Class A
units or more than 25.13% of the Class B 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 37.08% of the outstanding Class A units
and 25.61% of the outstanding Class B 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.
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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 584 unitholders of record. If units are tendered
which would result in less than 320 unitholders, we will purchase no more than
99% of the units tendered by each unitholder to assure that there are more than
300 unitholders after the offer. See "The Offer -- Section 1. Terms of the
Offer; Expiration Date."
SECTION 8. INFORMATION CONCERNING US AND CERTAIN OF OUR AFFILIATES.
We are AIMCO Properties, L.P., a Delaware limited partnership. Together
with our subsidiaries, we conduct substantially all of the operations of
Apartment Investment and Management Company, a Maryland corporation ("AIMCO").
AIMCO is a real estate investment trust that owns and manages multifamily
apartment properties throughout the United States. Based on apartment unit data
compiled by the National Multi-Housing Council, we believe that, as of June 30,
1999, AIMCO was one of the largest owners and managers of multifamily apartment
properties in the United States, with a total portfolio of 369,404 apartment
units in 2,037 properties located in 49 states, the District of Columbia and
Puerto Rico. AIMCO's Class A Common Stock is listed and traded on the New York
Stock Exchange under the symbol "AIV." As of June 30, 1999, AIMCO:
o owned or controlled 64,640 units in 240 apartment
properties;
o held an equity interest in 168,817 units in 887 apartment
properties; and
o managed 136,523 units in 940 apartment properties for
third party owners and affiliates.
Our general partner is AIMCO-GP, Inc., which is a wholly owned
subsidiary of AIMCO. Our principal executive offices are located at 1873 South
Bellaire Street, Denver, Colorado 80222 (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
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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, 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).
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 37.08% of
the outstanding Class A units and 25.61% of the Class B 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
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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 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 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, the
plaintiff settlement class counsel, and their clients 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 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 plaintiffs ultimately prevailed on their claims, there can be no assurance
that the settlement class members
16
<PAGE> 20
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,
(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
17
<PAGE> 21
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 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
18
<PAGE> 22
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 7.5%, the
capitalization rate would be increased by 0.25%. The evaluation of a property's
location and condition, and the determination of an appropriate capitalization
rate for a property, is subjective in nature, and others evaluating the same
property might use a different capitalization rate and derive a different
property value.
Property income is the difference between the revenues from the
property and related costs and expenses, excluding income derived from sources
other than its regular activities and before income deductions. Income
deductions include interest, income taxes, prior-year adjustments, charges to
reserves, write-off of intangibles, adjustments arising from major changes in
accounting methods and other material and nonrecurring items. In this respect,
property income differs from net income disclosed in the partnership's
financial statements, which does not exclude these income sources and
deductions. The following is a reconciliation of your partnership's annualized
property income to your partnership's net income based upon the nine month
period ended September 30, 1999:
<TABLE>
<S> <C>
Net Income (Loss)........................... $ 457,333
Other Non-Operating Expenses............... (93,667)
Depreciation................................ 1,014,667
Interest.................................... 994,667
-----------
Property Income............................. $ 2,373,000
===========
</TABLE>
Although the direct capitalization method is a widely accepted way of
valuing real estate, there are a number of other methods available to value
real estate, each of which may result in different valuations of a property.
Further, in applying the direct capitalization method, others may make
different assumptions and obtain different results. The proceeds that you would
receive if you sold your units to someone else or if your partnership were
actually liquidated might be higher than our offer price. We determined our
offer price as follows:
o First, we estimated the value of 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.
19
<PAGE> 23
<TABLE>
<CAPTION>
PROPERTY 1999 PROPERTY CAPITALIZATION RATE ESTIMATED GROSS
- -------- INCOME* ------------------- PROPERTY VALUE
------------- ---------------
<S> <C> <C> <C>
Carlin Manor....................... $ 772,000 10.00% $ 7,723,000
Hunt Club.......................... 351,000 10.02% 3,500,000
Shadow Brook....................... 1,250,176 10.00% 12,503,000
---------- -----------
Total.............................. $2,373,000 $23,726,000
========== ===========
</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 $11,719,223. 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, 72.25% of the estimated
liquidation proceeds are assumed to be distributed to
holders of Class A units and 27.29% of the estimated
liquidation proceeds are assumed to be distributed to
holders of Class B units. Our offer price represents the
per unit liquidation proceeds determined in this manner:
<TABLE>
<S> <C> <C> <C>
Gross valuation of partnership properties $ 23,726,000
Plus: Cash and cash equivalents 2,002,180
Plus: Other partnership assets, net of security deposits 589,765
Less: Mortgage debt, including accrued interest (12,235,870)
Less: Accounts payable and accrued expenses (253,533)
Less: Other liabilities (594,820)
------------
Partnership valuation before taxes and certain costs 13,233,722
Less: Disposition fees (355,890)
Less: Extraordinary capital expenditures and deferred maintenance (819,651)
Less: Closing costs (284,712) Class A Class B
------------ ------------ ------------
Estimated net valuation of your partnership 11,773,469 11,773,469 11,773,469
Percentage of estimated net valuation allocated to holders of units 94,54% 72.25% 27.29%
------------ ------------ ------------
Estimated net valuation of units 11,719,223 8,506,790 3,212,433
Total number of units 96,284 75,152
------------ ------------
Estimated valuation per unit 88 43
============ ============
Settlement Fund 4.49 2.19
============ ============
Cash consideration per unit 92.49 45.19
------------ ------------
</TABLE>
- ---------------------
* Payable only upon court approval of the settlement and if you do not opt
out of the settlement class.
20
<PAGE> 24
COMPARISON OF CONSIDERATION TO ALTERNATIVE CONSIDERATION
To assist holders of units in evaluating the offer, your general partner
(which is our subsidiary) has attempted to compare the offer price against: (a)
prices at which the units have sold in the secondary market; (b) estimates of
the value of the units on a liquidation basis; (c) your general partner's
estimate of net asset value; (d) an affiliate's estimate of net liquidation
value; and (e) the recent appraisals of your partnership's properties. The
general partner of your partnership believes that analyzing the alternatives in
terms of estimated value, based upon currently available data and, where
appropriate, reasonable assumptions made in good faith, establishes a reasonable
framework for comparing alternatives. Since the value of the consideration for
alternatives to the offer is dependent upon varying market conditions, no
assurance can be given that the estimated values reflect the range of possible
values.
The results of these comparative analyses are summarized in the chart
below. You should bear in mind that 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 December 31, 2036, unless sooner terminated as
provided in the agreement or by law. Limited partners could, as an alternative
to tendering their units, take a variety of possible actions, including voting
to liquidate the partnership or amending the agreement of limited partnership to
authorize limited partners to cause the partnership to merge with another entity
or engage in a "roll-up" or similar transaction.
COMPARISON TABLE
<TABLE>
<CAPTION>
PER CLASS A UNIT PER CLASS B UNIT
---------------- ----------------
<S> <C> <C>
Cash offer price......................................... $ 92.49 $ 45.19
Alternatives:
Prior tender offer....................................... $62.00, 55.00, 25.50 $10.00, 30.00, 32.00,
20.00, 25.50
Prices on secondary market............................... $ 20.00-71.00 $ 0.10-88.00
Stanger's estimate of liquidation value.................. $ 96.00 $ 53.00
Stanger's estimate of net asset value.................... $ 100.00 $ 57.00
Stanger's estimate of going concern value................ $ 94.00 $ 47.00
Estimated liquidation proceeds........................... $ 92.49 $ 45.19
General partner's estimate of net asset value............ $ 89.00 $ 68.00
Affiliate's estimate of net liquidation value............ $ 86.85 $ 65.84
</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.
21
<PAGE> 25
Prior Tender Offers. In our May 19, 1999 tender offer, the original offer
prices of $62 per Class A unit and $10 per Class B unit were determined based
upon our calculation of the liquidation value of your partnership. Such offer
price, were 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 rates (10.25% to 11.00%) 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 6,488 Class A units at $62 per Class A unit and 543 Class B units at
$10 per Class B unit.
Prior to the Insignia Merger, tender offers had been made to acquire
units of your partnership. On September 23, 1998, IPT, then an affiliate of
Insignia and now our affiliate, commenced a tender offer pursuant to which it
acquired 3,783 Class A units and 4,670 Class B units at a cash purchase price
of $55 per Class A unit and $38 per Class B unit. On December 23, 1997, IPT
commenced a tender offer for $50 per Class A unit and $25 per Class B unit.
On April 7, 1999, Everest Investors 12, L.L.C., which was unaffiliated
with Insignia and is not affiliated with AIMCO, commenced a tender offer for
$55 per Class A unit. On April 30, 1999, Everest Management, L.L.C. commenced a
tender offer for $30 per Class B unit.
On October 8, 1998, Madison Liquidity Investors 100, L.L.C. ("Madison"),
which was unaffiliated with Insignia and is not affiliated with AIMCO,
commenced a tender offer for $25.50 per Class A unit. On October 12, 1998,
Madison commenced a tender offer for $25.50 per Class B unit.
We are aware that tender offers may have been made by unaffiliated third
parties to acquire units in your partnership in exchange for cash. We are
unaware of the amounts offered, terms, tendering parties or number of units
involved in these tender offers. In connection with tender offers made by
Insignia affiliates with respect to partnerships for which we are making
offers, some limited partners filed 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 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:
22
<PAGE> 26
SALES PRICES OF PARTNERSHIP UNITS, AS REPORTED BY THE GENERAL PARTNER
<TABLE>
<CAPTION>
CLASS A UNITS CLASS B UNITS
---------------------------------- ------------------------------
HIGH LOW HIGH LOW
--------------- --------------- ------------ --------------
<S> <C> <C> <C> <C>
Fiscal Year Ended December 31, 1998:
Third Quarter.............................. $49.66 $32.00 $30.00 $27.00
Second Quarter............................. - - 26.00 26.00
First Quarter.............................. 55.00 41.00 88.00 40.15
Fiscal Year Ended December 31, 1997:
Fourth Quarter............................. 66.00 32.00 15.00 4.00
Third Quarter.............................. 60.00 44.00 36.00 0.10
Second Quarter............................. 65.00 29.00 20.00 20.00
First Quarter.............................. 53.00 40.00 - -
Fiscal Year Ended December 31, 1996:
Fourth Quarter............................. 40.00 23.00 - -
Third Quarter.............................. 52.00 42.00 1.00 10.00
Second Quarter............................. 64.00 32.00 10.00 8.00
First Quarter.............................. - - 10.00 10.00
</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 GENERAL PARTNER
<TABLE>
<CAPTION>
HIGH LOW
--------------- --------------
<S> <C> <C>
Seven Months Ended July 31, 1999: 62.00 20.00
Fiscal Year Ended December 31, 1998:
Fourth Quarter.............................. 45.00 20.00
Third Quarter............................... 40.00 27.00
Second Quarter.............................. 41.00 27.00
First Quarter 45.00 42.00
Fiscal Year Ended December 31, 1997:
Fourth Quarter.............................. 38.00 38.00
Third Quarter............................... 65.81 28.50
Second Quarter.............................. 65.00 36.00
First Quarter...............................
</TABLE>
NOTE: The Partnership Spectrum published values do not separate between
Class A and B Units.
23
<PAGE> 27
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 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>
CLASS A UNITS CLASS B UNITS
----------------------------- ------------------------------
HIGH LOW HIGH LOW
------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
Nine Months Ended September 31, 1999: $62.00 $62.00 $ $
----- -----
Fiscal Year Ended December 31, 1998............. $51.13 $51.00 $31.00 $ 28.00
Fiscal Year Ended December 31, 1997............. 71.00 36.00
----- -----
Fiscal Year Ended December 31, 1996............. 53.00 40.00
----- -----
</TABLE>
Appraisals. Certain of your partnership's properties were appraised in
1996 by an independent third party appraiser, Koeppel Tener Real Estate
Services, Inc. (the "Appraiser"), in connection with a requirement in your
partnership's agreement of limited partnership and not in connection with this
offer. According to the appraisal reports, the scope of the appraisals included
an inspection of the properties and an analysis of the surrounding market. The
Appraiser relied principally on the income capitalization approach to valuation
and secondarily on the sales comparison approach, and represented that its
report was prepared in accordance with the Code of Professional Ethics and
Standards of Professional Appraisal Practice of the Appraisal Institute and the
Uniform Standards of Professional Appraisal Practice, and in compliance with
the Appraisal Standards set forth in the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 (known as "FIRREA"). The estimated market
value of the fee simple estate of each property is as follows:
<TABLE>
<CAPTION>
PROPERTY APPRAISED VALUE
-------- ---------------
<S> <C>
Carlin Manor Apartments.....................................$ 4,750,000
Shadow Brook Apartments.....................................$11,756,000
</TABLE>
However, the appraisals do not reflect the mortgage encumbering the
properties, which total $12,214,000 (including interest), other assets and
liabilities of the partnership or any costs of sale of the properties. Using
the appraisal amounts instead of the "Estimated gross valuation of partnership
properties" in the table in "Valuation of Units" would result in a higher
amount per unit than our offer. Previously, an affiliate of your general
partner relied on such appraisal amounts to calculate an estimated net
liquidation value of $86.85 per Class A unit and $65.84 per Class B unit.
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
24
<PAGE> 28
your partnership's properties are sold to an independent third-party buyer at
the current property value and that other balance sheet assets (excluding
amortizing assets) and liabilities of your partnership are sold at their book
value, and that the net proceeds of sale are allocated to your partners in
accordance with your partnership's agreement of limited partnership.
The liquidation analysis assumes that the assets of your partnership are
sold in a single transaction. Should the assets be liquidated over time, even
at prices equal to those projected, distributions to limited partners from cash
flow from operations might be reduced because your partnership's fixed costs,
such as general and administrative expenses, are not proportionately reduced
with the liquidation of assets. However, for simplification purposes, the sales
of the assets are assumed to occur concurrently. The liquidation analysis
assumes that the assets are disposed of in an orderly manner and are not sold
in forced or distressed sales where sellers might be expected to dispose of
their interests at substantial discounts to their actual fair market value.
General Partner's Annual Estimates of Net Asset Value. Your general
partner (which is our subsidiary) prepared estimates 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 September 1998. The
estimates of your partnership's net asset value per unit as of June 30, 1998
were $89 for Class U units and $68 for Class B units. These estimated net asset
values are 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. These net asset values do not take into
account (i) timing considerations, (ii) costs associated with winding up the
partnership, or (iii) the distribution paid by your partnership of $6.12 per
unit for the fiscal year ended December 31, 1998. Therefore, we believe that
these estimate of net asset values 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 these net
asset value estimates 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 estimates of your
partnership's net liquidation value per unit in connection with a tender offer.
The estimates of your partnership's net liquidation value per unit as of June
30, 1998 was $86.50. These estimated net liquidation values are based on
appraisals set forth above, adjusted for your partnership's other assets and
liabilities (excluding prepaid and deferred expenses and security deposits).
Four percent was then deducted from the resulting amount to cover the estimated
costs of selling the properties. This final amount was then divided by the
number of units outstanding to obtain the $86.85 per Class A unit and 65.84 per
Class B unit. While this value is higher than our offer price per unit, we
believe that the appraisals on which it is based 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 $100
per unit for "A" units and $57 per unit for "B" units, its going concern value
to be $94 per unit for "A" units and $47 per unit of for "B" units and its
liquidation value to be $96 per unit for "A" units and $53 per unit for "B"
units. For an explanation of how Stanger determined such values see "--Stanger
Analysis -- Summary of Reviews -- Comparison of Offer Price."
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.
25
<PAGE> 29
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
Qualifications." 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 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
26
<PAGE> 30
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
----------------------------
MULTI-BENEFIT REALTY FUND '87-1
<TABLE>
<CAPTION>
CARLIN HUNT
MANOR CLUB SHADOWBROOK
-------------- ------------- -----------
<S> <C> <C> <C>
Total Revenues 1,650,986 1,469,438 2,180,512
Operating Expenses (750,530) (860,192) (768,600)
---------- --------- ---------
Net Operating Income Before
Replacement Reserves 900,456 609,246 1,411,912
---------- --------- ---------
</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 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
27
<PAGE> 31
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 $88 per unit for "A" units and $43
per unit for "B" units 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 9.5% to
10.25%, transaction costs of 3% to 5%, growth rates of 3% and a terminal
capitalization rate range of 10.0% to 10.75%. 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 investment. The 16.5% discount rate was
based upon the property's estimated internal rate of return derived from the
discounted cash flow analysis, (12.3% as described above), plus a premium
reflecting the additional risk associated with mortgage debt equal to more than
45% of property value. Stanger's estimates were based in part upon information
provided by us. Stanger relied upon the deferred
28
<PAGE> 32
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 "A" unit were $100, $94
and $96 representing premiums to the offer price (excluding the settlement fund
payment for the "A" unit) of 14%, 7% and 9%. Stanger's estimate of net asset
value, going concern value and liquidation value per "B" unit were $57, $47 and
$53 representing premiums to the offer price (excluding the settlement fund
payment) for the "B" unit of 33%, 9% and 23%. 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 12% discount to Stanger's estimate of
net asset value for the "A" units and 24.6% discount for the "B" units.
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 "A" units and the "B" 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
29
<PAGE> 33
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 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
30
<PAGE> 34
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
o An evaluation of the financial condition and results of
operations of your partnership including the increase in
property income of your partnership from $2,245,000 for the
year ended 1998 (based on annualizing the net income for
the nine months ended September 30, 1998) compared to an
estimated $2,373,000 for the year ending 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 received
total fees and reimbursements of $219,000 in 1996, $247,000 in 1997 and
$166,000 in 1998. The property manager received management fees of $240,000 in
1996, $248,000 in 1997 and $260,000 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
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<PAGE> 35
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.
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
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<PAGE> 36
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 37.08% of the outstanding Class A units and approximately 25.61%
of the outstanding Class B units we will be able to significantly influence the
outcome of any such vote. Our primary objective in seeking to acquire the units
pursuant to the offer is not, however, to influence the vote on any particular
transaction, but rather to generate a profit on the investment represented by
those units.
SECTION 13. CERTAIN INFORMATION CONCERNING YOUR PARTNERSHIP.
General. Multi-Benefit Realty Fund '87-1 was organized on September 8,
1986, under the laws of the State of California. Its primary business is real
estate ownership and related operations. Your partnership was formed for the
purpose of making investments in various types of real properties which offer
potential capital appreciation and cash distributions to its limited partners.
Your partnership's investment portfolio currently consists of the
following three residential apartment complexes: Hunt Club Apartments, a
200-unit complex in Indianapolis, Indiana; Carlin Manor Apartments, a 278-unit
complex in Columbus, Ohio; and Shadowbrook Apartments, a 300-unit complex in
West Valley City, Utah.
The general partner of your partnership is ConCap Equities, Inc., which
is a wholly owned subsidiary of AIMCO. A wholly owned subsidiary of AIMCO
serves as manager of the properties owned by your partnership. As of October
26, 1999, there were 96,284 Class A units and 75,152 Class B units issued and
outstanding, which were held of record by 584 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 $1,083,000 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 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
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<PAGE> 37
offer to purchase the properties.
Originally Anticipated Term of Partnership. Your partnership's
prospectus, dated December 10, 1986, pursuant to which units in your
partnership were sold, indicated that your partnership was intended to be
self-liquidating and that it was anticipated that the partnership's properties
would be sold within 5 to 8 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 2036. The partnership currently
owns three apartment properties. Your general partner (which is our subsidiary)
continually considers whether a property should be sold or otherwise disposed
of after consideration of relevant factors, including prevailing economic
conditions, availability of favorable financing and tax considerations, with a
view to achieving maximum capital appreciation for your partnership. 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, 2036, 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 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.
34
<PAGE> 38
MULTI-BENEFIT REALTY FUND '87-1
<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................................. $2,627 $2,600 $5,195 $5,008
Net income (Loss).............................. 220 199 246 15
Net Income per limited partnership Class A and
Class B unit................................... 1.27 1.15 1.42 .09
Distributions per limited partnership Class A
unit........................................... -- 3.54 6.11 14.16
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
---------------------------- ----------------------------
1999 1998 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and Cash Equivalents...................... $ 1,819 $ 1,343 $1,291 $ 1,139
Real Estate, Net of Accumulated Depreciation... 12,406 12,677 12,477 13,030
Total Assets................................... 15,010 14,946 14,684 15,116
Notes Payable.................................. 12,177 12,251 12,214 12,285
General Partners' Capital (Deficit)............ (134) (133) (136) (132)
Limited Partners' Capital (Deficit)............ 2,120 2,102 1,902 2,246
Partners' Capital (Deficit).................... 1,986 1,969 1,766 2,114
Total Distributions............................ -- 344 1,487 1,000
Net increase (decrease) in cash and cash
equivalents.................................... 528 204 152 (721)
Net cash provided by operating activities...... 926 727 1,317 1,226
</TABLE>
Description of Properties. The following shows the location, the date of
purchase, the nature of your partnership's ownership interest in and the use of
each of your partnership's properties.
<TABLE>
<CAPTION>
PROPERTY DATE OF PURCHASE TYPE OF OWNERSHIP USE
- -------- ---------------- ----------------- ---
<S> <C> <C> <C>
Carlin Manor Apartments
Columbus OH Fee ownership, subject to
278 units Nov-87 a first mortgage Apartment
Hunt Club Apartments
Indianapolis, IN Fee ownership, subject to
200 units May-87 a first mortgage(1) Apartment
Shadow Brook Apartments
W. Valley City, UT Fee ownership, subject to
300 units May-87 a first mortgage Apartment
</TABLE>
- -------------------------------
(1) Property is held by a limited partnership in which the partnership
owns a 99% interest.
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<PAGE> 39
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 ACCUMULATED FEDERAL
PROPERTY CARRYING VALUE DEPRECIATION RATE METHOD TAX BASIS
-------- -------------- ------------ ---- ------ ---------
(in thousands)
<S> <C> <C> <C> <C> <C>
Carlin Manor Apartments............. $ 6,900 $ 3,782 5-30 yrs SL $ 5,319
Hunt Club Apartments................ 7,005 3,801 5-30 yrs SL 4,060
Shadow Brook Apartments............. 10,506 4,351 5-30 yrs SL 6,256
-------- ------- -------
Total $ 24,411 $11,934 $15,635
======== ======= =======
</TABLE>
Schedule of Mortgages. The following shows certain information regarding
the outstanding mortgages encumbering each of your partnership's properties as
of December 31, 1998.
<TABLE>
<CAPTION>
PRINCIPAL
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>
Carlin Manor Apartments............. $ 2,500 7.33% (1) 11/03 $ 2,500
1st mortgage
Hunt Club Apartments................ $ 3,714 8.30% 84 mo. 10/00 $ 3,575
1st mortgage
Shadow Brook Apartments............. $ 6,000 7.33% (1) 11/03 $ 6,000
1st mortgage -------- --------
$ 12,214 $ 12,075
======== ========
</TABLE>
(1) Payments consist of interest only.
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.
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<PAGE> 40
<TABLE>
<CAPTION>
AVERAGE ANNUAL RENT AVERAGE ANNUAL OCCUPANCY RATE
--------------------------------- ----------------------------------------
PROPERTY 1999* 1998 1999* 1998
-------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Carlin Manor................ $5,514/unit $5,847/unit 95% 92%
Hunt Club................... 6,743/unit 7,504/unit 92% 95%
Shadow Brook................ 6,920/unit 7,156/unit 98% 96%
</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>
Carlin Manor..................... $ 83,655 5.70%
Hunt Club........................ 150,914 10.01%
Shadow Brook..................... 61,634 1.30%
</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 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................................ $ 9.44
1996................................ 4.72
1997................................ 14.16
1998................................ 6.12
1999 (through September 30, 1999)... 0.00
-------
Total..................... $ 34.44
=======
</TABLE>
Beneficial Ownership of Interests in Your Partnership. Together with its
subsidiaries, we currently beneficially own, in the aggregate, approximately
37.08%and 25.61% of the Class A units and Class B units, respectively, 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
37
<PAGE> 41
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>
1994....................................
1995.................................... $202,000 $223,000
1996.................................... 219,000 240,000
1997.................................... 247,000 248,000
1998.................................... 166,000 260,000
1999*................................... 105,333 265,333
</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.
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.
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 13,175.60 additional Class A units and 19,075.27 additional Class B
units that we are offering to purchase, we will be in a position to influence
or 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.
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<PAGE> 42
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 $8,087,515 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 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.
39
<PAGE> 43
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 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
40
<PAGE> 44
(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.
41
<PAGE> 45
SECTION 18. CERTAIN LEGAL MATTERS.
General. Except as set forth in this Section 18, we are not, based on
information provided by your general partner (which is our subsidiary), aware
of any licenses or regulatory permits that would be material to the business of
your partnership, taken as a whole, and that might be adversely affected by our
acquisition of units as contemplated herein, or any filings, approvals or other
actions by or with any domestic or foreign governmental authority or
administrative or regulatory agency that would be required prior to the
acquisition of units by us pursuant to the offer, other than the filing of a
Tender Offer Statement on Schedule 14D-1 with the SEC (which has already been
filed) and any required amendments thereto. While there is no present intent to
delay the purchase of units tendered pursuant to the offer pending receipt of
any such additional approval or the taking of any such action, there can be no
assurance that any such additional approval or action, if needed, would be
obtained without substantial conditions or that adverse consequences might not
result to your partnership or its business, or that certain parts of its
business might not have to be disposed of or other substantial conditions
complied with in order to obtain such approval or action, any of which could
cause us to elect to terminate the offer without purchasing units thereunder.
Our obligation to purchase and pay for units is subject to certain conditions,
including conditions related to the legal matters discussed in this Section 18.
Antitrust. We do not believe that the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, is applicable to the acquisition of units
contemplated by our offer.
Margin Requirements. The units are not "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly, those regulations generally are not applicable to our offer.
State Laws. We are not aware of any jurisdiction in which the making of
our offer is not in compliance with applicable law. If we become aware of any
jurisdiction in which the making of the offer would not be in compliance with
applicable law, we will make a good faith effort to comply with any such law.
If, after such good faith effort, we cannot comply with any such law, the offer
will not be made to (nor will tenders be accepted from or on behalf of)
unitholders residing in such jurisdiction. In those jurisdictions with
securities or blue sky laws that require the offer to be made by a licensed
broker or dealer, the offer shall be made on behalf of us, if at all, only by
one or more registered brokers or dealers licensed under the laws of that
jurisdiction.
SECTION 19. FEES AND EXPENSES.
Except as set forth in this Section 19, we will not pay any fees or
commissions to any broker, dealer or other person for soliciting tenders of
units pursuant to the offer. We have retained River Oaks Partnership Services,
Inc. to act as Information Agent in connection with our offer. The Information
Agent may contact holders of units by mail, telephone, telex, telegraph and
personal interview and may request brokers, dealers and other nominee limited
partners to forward materials relating to the offer to beneficial owners of the
units. We will pay the Information Agent reasonable and customary compensation
for its services in connection with the offer, plus reimbursement for
out-of-pocket expenses, and will indemnify it against certain liabilities and
expenses in connection therewith, including liabilities under the Federal
securities laws. We will also pay all costs and expenses of printing and
mailing the offer and its legal fees and expenses.
- -------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF US NOT CONTAINED HEREIN OR IN THE LETTER OF
TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED.
We have filed with the Commission a Tender Offer Statement on Schedule
14D-1, pursuant to Section 14(d)(1) and Rule 14d-3 under the Exchange Act,
furnishing certain additional information with respect to our offer, and may
file amendments thereto. The Schedule 14D-1 and any amendments thereto,
including exhibits, may be
42
<PAGE> 46
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.
43
<PAGE> 47
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: Multi-Benefit Realty Fund `87-1
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
Multi-Benefit Realty Fund `87-1 (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 `"A"
Units and "B" Units') will be acquired by the Purchaser in exchange for an
offer price per "A" Unit of $92.49 and per "B" Unit of $45.19 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 "A"
Unit of $88 and per "B" Unit of $43 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;
I-1
<PAGE> 48
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 indicated to
be the most current available financial statements;
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
I-2
<PAGE> 49
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 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
on the "A" units and the "B" units 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
I-3
<PAGE> 50
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
</TABLE>
II-1
<PAGE> 51
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
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 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
</TABLE>
II-2
<PAGE> 52
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
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.
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
</TABLE>
II-3
<PAGE> 53
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
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 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
12 Auldwood Lane Director of AIMCO in July 1994 and
Rumson, NJ 07660 is currently Chairman of the Audit
Committee. Mr. Ellwood is the
founder and President of R.S.
Ellwood & Co., Incorporated, a
real estate investment banking
firm. Prior to forming R.S.
Ellwood & Co., Incorporated in
1987, Mr. Ellwood had 31 years
experience on Wall Street as an
investment banker, serving as:
Managing Director and senior
banker at Merrill Lynch Capital
Markets from 1984 to 1987;
Managing Director at Warburg
Paribas Becker from 1978 to 1984;
general partner and then Senior
Vice President and a director at
White, Weld & Co. from 1968 to
1978; and in various capacities at
J.P. Morgan & Co. from 1955 to
1968. Mr. Ellwood currently serves
as a director of FelCor Suite
Hotels, Inc. and Florida East
Coast Industries, Inc.
J. Landis Martin............. Mr. Martin was appointed a
199 Broadway Director of AIMCO in July 1994 and
Suite 4300 became Chairman of the
Denver, CO 80202 Compensation Committee in March
1998. Mr. Martin has served as
President and Chief Executive
Officer and a Director of NL
Industries, Inc., a manufacturer
of titanium dioxide, since 1987.
Mr. Martin has served as Chairman
of Tremont Corporation, a holding
company operating through its
affiliates Titanium Metals
Corporation ("TIMET") and NL
Industries, Inc., since 1990 and
as Chief
</TABLE>
II-4
<PAGE> 54
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
Executive Officer and a director
of Tremont since 1998. Mr. Martin
has served as Chairman of Timet,
an integrated producer of
titanium, since 1987 and Chief
Executive Officer since January
1995. From 1990 until its
acquisition by Dresser Industries,
Inc. ("Dresser") in 1994, Mr.
Martin served as Chairman of the
Board and Chief Executive Officer
of Baroid Corporation, an oilfield
services company. In addition to
Tremont, NL and TIMET, Mr. Martin
is a director of Dresser, which is
engaged in the petroleum services,
hydrocarbon and engineering
industries.
Carla R. Stoner.............. Ms. Stoner joined AIMCO in July
1997 as Vice President of Finance
and Administration and became
Senior Vice President - Real
Estate Accounting in November
1998. Prior to joining AIMCO, Ms.
Stoner was with National Housing
Partners since 1989. While at
National Housing Partners, Ms.
Stoner served as a real estate
controller from 1989 to 1992, as
Vice President of Accounting from
1992 to 1995 and as Interim Chief
Information Officer from 1995 to
July 1997. Prior to joining
National Housing Partners, Ms.
Stoner was a Senior Auditor with
Deloitte & Touche from 1984 to
1989. Ms. Stoner received a B.A.
in accounting from Virginia Tech.
Thomas L. Rhodes............. Mr. Rhodes was appointed a
215 Lexington Avenue Director of AIMCO in July 1994.
4th Floor Mr. Rhodes has served as the
New York, NY 10016 President and a Director of
National Review magazine since
November 30, 1992, where he has
also served as a Director since
1998. From 1976 to 1992 , he held
various positions at Goldman,
Sachs & Co. and was elected a
General Partner in 1986 and served
as a General Partner from 1987
until November 27, 1992. He is
currently Co-Chairman of the
Board, Co-Chief Executive Officer
and a Director of Commercial
Assets Inc. and Asset Investors
Corporation. He also serves as a
Director of Delphi Financial
Group, Inc. and its subsidiaries,
Delphi International Ltd., Oracle
Reinsurance Company, and the Lynde
and Harry Bradley Foundation. Mr.
Rhodes is Chairman of the Empire
Foundation for Policy Research, a
Founder and Trustee of Change NY,
a Trustee of The Heritage
Foundation, and a Trustee of the
Manhattan Institute
John D. Smith................ Mr. Smith was appointed a Director
3400 Peachtree Road of AIMCO in November 1994. Mr.
Suite 8311994 Smith is Principal and President
Atlanta, GA 30326 of John D. Smith Developments. Mr.
Smith has been a shopping center
developer, owner and consultant
for over 8.6 million square feet
of shopping center projects
including Lenox Square in Atlanta,
Georgia. Mr. Smith is a Trustee
and former President of the
International Council of Shop ping
Centers and was selected to be a
member of the American Society of
Real Estate Counselors. Mr. Smith
served as a Director for
Pan-American Properties, Inc.
(National Coal Board of Great
Britain) formerly known as
</TABLE>
II-5
<PAGE> 55
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
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>
II-6
<PAGE> 56
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
MULTI-BENEFIT REALTY FUND 87-1 (CLASS A) (THE "PARTNERSHIP")
PURSUANT TO A LITIGATION SETTLEMENT OFFER (THE "OFFER")
DATED NOVEMBER 15, 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 31, 1999, UNLESS EXTENDED (THE "EXPIRATION DATE")
- --------------------------------------------------------------------------------
WE ARE OFFERING TO PURCHASE UNITS IN YOUR PARTNERSHIP FOR $92.49 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) Units in Multi Benefit Realty Fund 87-1
(Please indicate changes or corrections to the name, (Class "A")
address and tax
identification number printed below.)
- ---------------------------------------------------------------------------------------------------------------
1. Total Number of Units 2. Total Number of
Owned Units 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).
In addition to and without limiting the generality of the foregoing, the
undersigned hereby irrevocably (i) requests
3
<PAGE> 4
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.
The undersigned hereby represents and warrants for the benefit of the
Partnership and the Purchaser that the
4
<PAGE> 5
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.
================================================================================
7
<PAGE> 8
================================================================================
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.
================================================================================
8
<PAGE> 9
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.
9
<PAGE> 10
DECEASED OWNER (JOINT TENANT) -- Copy of death certificate.
DECEASED OWNER (OTHERS) -- Copy of death certificate (see
also Executor/Administrator/
Guardian below).
EXECUTOR/ADMINISTRATOR/GUARDIAN -- Copy of court appointment
documents for executor or
administrator; and (a) a copy of
applicable provisions of the
will (title page, executor(s)'
powers, asset distribution); or
(b) estate distribution
documents.
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.
10
<PAGE> 11
IRA custodial accounts - should reflect the TIN of the custodian (not
necessary to provide).
Custodial accounts for the benefit of minors - should reflect the TIN of
the minor.
Corporations, partnership or other business entities - should reflect the
TIN assigned to that entity.
By signing the Signature Box, the unitholder(s) certifies that the TIN as
printed (or corrected) on the front of the 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.
11
<PAGE> 12
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 (joint account) The actual owner of the account or, if 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 to The minor (2)
Minors Act)
5. Adult and minor (joint account) The adult or, if the minor is the only contributor,
the minor (1)
6. Account in the name of guardian or committee for The ward, minor or incompetent person (3)
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 organization The organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of Agriculture in the The public entity
name of a public entity (such as a State or
local government, school district, or
prison) that receives agricultural program
payments
</TABLE>
12
<PAGE> 13
- --------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's or incompetent person's name and furnish such person's
social security number or employer identification number.
(4) Show your individual name. You may also enter your business name. You may
use your social security number or employer identification number.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments
include the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States,
or any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government,
or any agency or instrumentality thereof.
- An international organization or any agency or instrumentality
thereof.
- A registered dealer in securities or commodities registered in the
U.S. or a possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a) of the
Code.
- An exempt charitable remainder trust, or a non-exempt trust described
in section 4947 (a)(1).
- An entity registered at all times under the Investment Company Act of
1940.
- A foreign central bank of issue.
- A futures commission merchant registered with the Commodity Futures
Trading Commission.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section
1441 of the Code.
- Payments to Partnerships not engaged in a trade or business in the
U.S. and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid
in money.
13
<PAGE> 14
- 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.
14
<PAGE> 15
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
15
<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 15, 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 Multi-Benefit Real Estate, L.P.
(Class A), at $92.49 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 $4.49 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 $92.49 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.
<PAGE> 2
Our offer is not subject to any minimum number of units being
tendered. 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., Madison 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. 7 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 15, 1999
COOPER RIVER PROPERTIES, L.L.C.
By: /s/ Patrick J. Foye
------------------------------------
Executive Vice President
MADISON RIVER PROPERTIES, L.L.C.
By: /s/ Patrick J. Foye
------------------------------------
Executive Vice President
AIMCO/IPT, INC.
By: /s/ Patrick J. Foye
------------------------------------
Executive Vice President
INSIGNIA PROPERTIES, L.P.
By: AIMCO/IPT, INC.
(General Partner)
By: /s/ Patrick J. Foye
------------------------------------
Executive Vice President
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, INC.
(General Partner)
By: /s/ Patrick J. Foye
------------------------------------
Executive Vice President
AIMCO-GP, INC.
By: /s/ Patrick J. Foye
------------------------------------
Executive Vice President
APARTMENT INVESTMENT
AND MANAGEMENT COMPANY
By: /s/ Patrick J. Foye
------------------------------------
Executive Vice President
