SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
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SECURED INCOME L.P.
(Name of Subject Company)
WEST PUTNAM HOUSING INVESTORS LLC
(Bidder)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
813901105
(CUSIP Number of Class of Securities)
------------------------------------
GINA S. SCOTTI
VICE PRESIDENT AND SECRETARY
WEST PUTNAM HOUSING INVESTORS LLC
599 WEST PUTNAM AVENUE
GREENWICH, CT 06830
(203) 869-0900
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
COPY TO:
PETER G. SMITH, ESQ.
KRAMER, LEVIN, NAFTALIS & FRANKEL
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 715-9100
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CALCULATION OF FILING FEE
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Transaction Valuation*: $2,561,000 Amount of Filing Fee: $512.20
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* For purposes of calculating the fee only. This amount assumes the
purchase of 394,000 units of limited partnership interest ("Units") of
the subject partnership for $6.50 per Unit. The amount of the filing
fee, calculated in accordance with Section 14(g)(3) and Rule 0-11(d)
under the Securities Exchange Act of 1934, as amended, equals 1/50th of
one percent of the aggregate consideration 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: Not Applicable Filing Party: Not Applicable
Form or Registration No.: Not Applicable Date Filed: Not Applicable
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Exhibit Index is located on page 6
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14D-1 PAGE 2 OF 6 PAGES
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1 NAMES OF REPORTING PERSONS
WEST PUTNAM HOUSING INVESTORS LLC
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
[ ] (a)
[ ] (b)
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3 SEC USE ONLY
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4 SOURCES OF FUNDS
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
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8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES
[ ]
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0%
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10 TYPE OF REPORTING PERSON
OO
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<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Secured Income L.P., a Delaware
limited partnership (the "Partnership"). The address of the Partnership's
principal executive offices is 599 West Putnam Avenue, Greenwich, CT 06830.
(b) This Tender Offer Statement on Schedule 14D-1 (the "Statement")
relates to an offer by West Putnam Housing Investors LLC, a Delaware limited
liability company (the "Purchaser"), to purchase up to 394,000 of the
outstanding units of limited partnership interest ("Units") of the Partnership
at a purchase price of $6.50 per Unit, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated July 24,
1998 (the "Offer to Purchase") and the related Assignment of Partnership
Interest (which, together with any supplements or amendments, collectively
constitute the "Offer"), copies of which are filed as Exhibits (a)(1) and (a)(2)
hereto, respectively. The information set forth in the Offer to Purchase under
"Introduction" is incorporated herein by reference.
(c) The information set forth in the Offer to Purchase in Section 13
("Background of the Offer") is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is being filed by the Purchaser. The
information set forth in the Offer to Purchase under "Introduction," in Section
11 ("Certain Information Concerning the Purchaser") and in Schedule I to the
Offer to Purchase is incorporated herein by reference.
(e)-(f) During the last five years, neither the Purchaser nor, to the best
of its knowledge, any of the persons listed in Schedule I to the Offer to
Purchase (i) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) was a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
further violations of or prohibiting activities subject to federal or state
securities laws or finding any violation with respect to such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Offer to Purchase under
"Introduction," in Section 10 ("Conflicts of Interest and Transactions with
Affiliates") and in Section 13 ("Background of the Offer") is incorporated
herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in the Offer to Purchase in Section 10
("Conflicts of Interest and Transactions with Affiliates") and in Section 12
("Source of Funds") is incorporated herein by reference.
(b)-(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(b), (e) The information set forth in the Offer to Purchase under
"Introduction" and in Section 8 ("Future Plans of the Purchaser") is
incorporated herein by reference.
(c) The information set forth in the Offer to Purchase in Section 8
("Future Plans of the Bidder"), in Section 10 ("Conflicts of Interest and
Transactions with Affiliates") and in Section 13 ("Background of the Offer") is
incorporated herein by reference.
3
<PAGE>
(d) Not applicable.
(f)-(g) The information set forth in the Offer to Purchase in Section 7
("Effects of the Offer") is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Offer to Purchase under
"Introduction" and in Section 11 ("Certain Information Concerning the
Purchaser") is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Offer to Purchase under "Introduction,"
in Section 7 ("Effects of the Offer"), Section 10 ("Conflicts of Interest and
Transactions with Affiliates"), Section 11 ("Certain Information Concerning the
Purchaser") and Section 13 ("Background of the Offer") is incorporated herein by
reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Offer to Purchase under "Introduction"
and in Section 16 ("Fees and Expenses") is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in the Offer to Purchase in Section 11 ("Certain
Information Concerning the Purchaser") is incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(d) The information set forth in the Offer to Purchase in Section 15
("Certain Legal Matters") is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the related
Assignment of Partnership Interest, copies of which are filed as Exhibits (a)(1)
and (a)(2) hereto, respectively, is incorporated herein by reference in its
entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated July 24, 1998.
(a)(2) Assignment of Partnership Interest and Related Instructions.
(a)(3) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(4) Notice, dated July 24, 1998, from the Purchaser to the Limited
Partners of the Partnership.
(a)(5) Form of Notice of Withdrawal
(b)-(f) Not applicable.
4
<PAGE>
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: July 24, 1998
West Putnam Housing Investors LLC
By: /s/ GINA SCOTTI
---------------
NAME: Gina S. Scotti
TITLE: Vice President and Secretary
5
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
(a)(1) Offer to Purchase, dated July 24, 1998.
(a)(2) Assignment of Partnership Interest and Related Instructions.
(a)(3) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(4) Notice, dated July 24, 1998, from the Purchaser to the
Limited Partners of the Partnership.
(a)(5) Form of Notice of Withdrawal
6
Offer to Purchase for Cash
Up to 394,000 Units of Limited Partnership Interest
in
SECURED INCOME L.P.,
a Delaware limited partnership,
for
$6.50 Net Per Unit
by
WEST PUTNAM HOUSING INVESTORS LLC
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THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK TIME, ON AUGUST 20, 1998,
UNLESS THE OFFER IS EXTENDED.
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IMPORTANT
West Putnam Housing Investors LLC, a Delaware limited liability
company (the "Purchaser"), is offering to purchase up to 394,000 of the
outstanding units of limited partnership interest ("Units") in Secured Income
L.P., a Delaware limited partnership (the "Partnership"), at a purchase price of
$6.50 per Unit (the "Purchase Price"), net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in this Offer
to Purchase and in the related Assignment of Partnership Interest (which,
together with any supplements or amendments, collectively constitute the
"Offer"). The Purchase Price and the number of Units the Purchaser is offering
to purchase are subject to adjustment under certain circumstances, as described
herein. Holders of Units (each, a "Unit Holder") who tender their Units in
response to the Offer will not be obligated to pay any commissions or
partnership transfer fees. The Purchaser is an affiliate of Wilder Richman
Resources Corporation and WRC-87A Corporation, each of which is a corporate
general partner of the Partnership.
Unit Holders are urged to consider the following factors:
o The Purchaser is owned by Messrs. Richard P. Richman and Robert
H. Wilder, Jr., who have direct and indirect beneficial ownership
interests in two of the three general partners of the
Partnership.
o The net liquidation value per Unit (the "Estimated Liquidation
Value") estimated by the Purchaser (which as noted is an
affiliate of two of the three general partners of the
Partnership) in connection with the Offer is approximately
$12.55. The Purchaser does not believe, however, that the
Estimated Liquidation Value represents a fair estimate of the
current market value of a Unit, primarily due to the fact that
such estimate does not take into account certain restrictions on
cash flow distributions, market uncertainties and timing
considerations in connection with any actual liquidation of the
Partnership. See Section 13. Accordingly, the Purchaser does not
believe that such estimate should be viewed as representative of
the amount a Unit Holder can realistically expect to obtain on a
sale of a Unit in the near term.
o ON JUNE 29, 1998, A TENDER OFFER TO PURCHASE UP TO 196,875 UNITS
WAS ANNOUNCED BY A GROUP OF PURCHASERS INCLUDING AFFILIATES OF
MACKENZIE PARTNERS, INC. (THE "MACKENZIE OFFER") FOR A PRICE OF
$5.00 PER UNIT. THE PRESENT OFFER BY THE
<PAGE>
PURCHASER AFFORDS UNIT HOLDERS AN OPPORTUNITY TO DISPOSE OF THEIR
UNITS AT A MUCH HIGHER PRICE THAN THE PRICE OFFERED IN THE
MACKENZIE OFFER. TO WITHDRAW UNITS ALREADY TENDERED IN THE
MACKENZIE OFFER, COMPLETE AND SIGN THE ENCLOSED WITHDRAWAL FORM
AND FAX IT TO (925) 631-9119 BEFORE 12:00 MIDNIGHT, PACIFIC
DAYLIGHT TIME, ON JULY 31, 1998. FOR MORE INFORMATION, PLEASE SEE
SECTION 3.
o The Purchaser will have the right to vote all Units acquired
pursuant to the Offer. Accordingly, if the Purchaser is
successful in acquiring a significant number of Units, it will be
able to significantly influence all voting decisions with respect
to the Partnership, including decisions regarding dissolution,
amendments to the Partnership's Amended and Restated Agreement of
Limited Partnership (the "Limited Partnership Agreement"),
removal and replacement of the general partners of the
Partnership and mergers, consolidations and other extraordinary
transactions.
o The Purchaser is making the Offer with a view to realizing a
profit. Accordingly, there is a conflict between the desire of
the Purchaser to purchase Units at a low price and the desire of
the Unit Holders to sell their Units at a high price.
THE OFFER IS NOT CONDITIONED ON FINANCING OR ANY MINIMUM AGGREGATE
NUMBER OF UNITS BEING TENDERED.
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Any Unit Holder desiring to tender Units should complete and sign the
Assignment of Partnership Interest in accordance with the Instructions to the
Assignment of Partnership Interest and mail or deliver his or her certificates
representing the Units being tendered, together with the signed Assignment of
Partnership Interest, to Service Data Corporation, the depositary for the Offer.
A Unit Holder may tender any or all of the Units owned by that Unit Holder;
provided, however, that because of restrictions in the Limited Partnership
Agreement, in order for a partial tender of a Unit Holder's Units to be valid,
after the sale of Units pursuant to the Offer, a Unit Holder must continue to
hold a minimum of 250 Units, which represent a capital contribution in the
Partnership of $5,000 (or, in the case of Unit Holders who hold Units in an
Individual Retirement Account, Keogh or Qualified Plan, at least 100 Units,
which represent a capital contribution in the Partnership of $2,000). Tenders of
fractional Units will not be permitted, except by a Unit Holder who is tendering
all of the Units owned by that Unit Holder.
Questions and requests for assistance or for additional copies of this
Offer to Purchase and the Assignment of Partnership Interest may be directed to
the Information Agent at the address and telephone numbers set forth below and
on the back cover of this Offer to Purchase. No soliciting dealer fees or other
payments to brokers for tenders are being paid by the Purchaser.
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For More Information or for Further Assistance Please Call:
Shareholder Communications Corporation
at
(800) 733-8481, Ext. 415
July 24, 1998
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<PAGE>
TABLE OF CONTENTS
PAGE
INTRODUCTION ................................................................ 1
The Purchaser; Affiliation with the General Partners.................. 1
Some Factors to Be Considered by Unit Holders......................... 2
Reasons for and Effects of the Offer.................................. 4
Certain Tax Considerations............................................ 4
Originally Anticipated Holding Period for Partnership Investments;
Alternatives ....................................................... 4
Conditions ....................................................... 5
Distributions ....................................................... 5
Recent Operating Results.............................................. 6
Outstanding Units..................................................... 6
THE OFFER.................................................................... 7
Section 1. Terms of the Offer; Expiration Date; Reduction of the
Number of Shares to be Purchased; Proration............... 7
Section 2. Acceptance for Payment and Payment for Units.............. 8
Section 3. Procedure for Tendering Units............................. 8
Valid Tender.............................................. 8
Withdrawal of Units Tendered in the MacKenzie Offer....... 9
Signature Requirements.................................... 9
Delivery of Assignment of Partnership Interest............ 9
Appointment as Proxy; Power of Attorney................... 10
Assignment of Interest in Future Distributions............ 10
Determination of Validity; Rejection of Units; Waiver of
Defects; No Obligation to Give Notice of Defects........ 10
Backup Federal Income Tax Withholding..................... 11
FIRPTA Withholding........................................ 11
Binding Obligation........................................ 11
Section 4. Withdrawal Rights......................................... 11
Section 5. Extension of Tender Period; Termination; Amendment........ 11
Section 6. Certain Federal Income Tax Matters........................ 12
General................................................... 12
Gain or Loss Generally.................................... 12
Unrealized Receivables and Certain Inventory.............. 13
Passive Activity Loss Limitation.......................... 13
Partnership Termination................................... 14
Backup Withholding and FIRPTA Withholding................. 15
Section 7. Effects of the Offer...................................... 15
Limitations on Resales.................................... 15
Effect on Trading Market; Registration Under
Section 12(g) of the Exchange Act........................ 15
Control of Unit Holder Voting Decisions
by Purchaser; Effect of Relationship with
General Partners......................................... 16
Section 8. Future Plans of the Purchaser............................. 16
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<PAGE>
Section 9. Certain Information Concerning the Partnership............ 17
General................................................... 17
Originally Anticipated Holding Period for
Partnership Investments; Alternatives................... 17
Selected Financial and Property-Related Data.............. 18
Selected Financial Data................................... 18
Schedule of Mortgages .................................... 19
Schedule of Real Estate Taxes and Rates................... 19
Cash Distributions History................................ 19
Operating Budgets of the Partnership...................... 19
Other Information......................................... 20
Section 10. Conflicts of Interest and Transactions with Affiliates.... 20
Conflicts of Interest with Respect to the Offer........... 20
Voting by the Purchaser................................... 21
Financing Arrangements.................................... 21
Transactions with Affiliates.............................. 21
Section 11. Certain Information Concerning the Purchaser.............. 22
The Purchaser............................................. 22
Section 12. Source of Funds........................................... 22
Section 13. Background of the Offer................................... 22
General Background........................................ 22
Determination of Purchase Price........................... 23
Trading History of Units.................................. 23
Purchaser's Pro Forma Estimate of Net Liquidation
Value per Unit.......................................... 24
Section 14. Conditions of the Offer................................... 25
Section 15. Certain Legal Matters..................................... 26
General................................................... 26
Antitrust................................................. 26
Margin Requirements....................................... 26
Section 16. Fees and Expenses......................................... 26
Section 17. Miscellaneous............................................. 26
SCHEDULE I Information Regarding the Members of the Purchaser........ 28
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<PAGE>
TO THE UNIT HOLDERS OF SECURED INCOME L.P.
INTRODUCTION
West Putnam Housing Investors LLC (the "Purchaser"), which is a
Delaware limited liability company and an affiliate of two of the three general
partners of the Partnership, hereby offers to purchase up to 394,000 Units,
representing approximately 40% of the Units outstanding on the date hereof, in
Secured Income L.P., a Delaware limited partnership (the "Partnership"), at a
purchase price of $6.50 per Unit (the "Purchase Price"), net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in this Offer to Purchase and in the related Assignment of Partnership Interest
(which, together with any supplements or amendments, collectively constitute the
"Offer"). The Offer is not conditioned on any aggregate minimum number of Units
being tendered. A Unit Holder may tender any or all of the Units owned by that
Unit Holder; provided, however, that because of restrictions in the
Partnership's Amended and Restated Agreement of Limited Partnership (the
"Limited Partnership Agreement"), in order for a partial tender to be valid,
after the sale of Units pursuant to the Offer, the Unit Holder must continue to
hold a minimum of 250 Units, which represent a capital contribution in the
Partnership of $5,000 (or, in the case of Unit Holders who hold Units in an
Individual Retirement Account ("IRA"), Keogh or Qualified Plan, at least 100
Units, which represent a capital contribution of $2,000). Tenders of fractional
Units will not be permitted, except by a Unit Holder who is tendering all of the
Units owned by that Unit Holder. The Purchaser will pay all charges and expenses
of Shareholder Communications Corporation, which will serve as the Purchaser's
information agent for the Offer (the "Information Agent"), and Service Data
Corporation, which will act as depositary for the Offer (the "Depositary").
THE PURCHASER; AFFILIATION WITH THE GENERAL PARTNERS. The Purchaser is
a newly formed entity whose sole managing member is Mr. Richard P. Richman.
Approximately 75% of the equity interest in the Purchaser is owned by Mr.
Richman, and the remaining approximately 25% equity interest in the Purchaser is
beneficially owned by Mr. Robert H. Wilder, Jr. Wilder Richman Resources
Corporation, a Delaware corporation ("WRRC"), WRC-87A Corporation , a Delaware
corporation ("WRC-87A"), and Real Estate Equity Partners L.P., a Delaware
limited partnership ("REEP") (WRRC and WRC-87A are together referred to as the
"Affiliated General Partners," and the Affiliated General Partners and REEP are
collectively referred to as the "General Partners"), are the three general
partners of the Partnership. Mr. Richman beneficially owns approximately 50% of
the equity interest in WRRC and is president and a director of that corporation.
Mr. Wilder beneficially owns approximately 50% of the equity interest in WRRC
and is executive vice president and a director of that corporation. WRC-87A is
owned one-half by WRRC and one-half by Real Estate Equity Partners Inc.
("REEPI"), the corporate general partner of REEP. Mr. Richman is executive vice
president, secretary, treasurer and a director of WRC-87A. Mr. Richman, Mr.
Wilder and the other holders of equity interests in the Purchaser are
collectively referred to as the "Purchaser Affiliates." REEP is an affiliate of
Lehman Brothers Inc. ("Lehman"). Since the commencement of operations of the
Partnership, Wilder Richman Management Corp. ("WRMC"), an affiliate of the
Purchaser and the Affiliated General Partners, has provided property management
services to the Carrollton Partnership (as defined below) and has been
compensated therefor. WRC-87A is also a special limited partner of the operating
partnerships in which the Partnership has invested. See Section 10. By reason of
these relationships, the Affiliated General Partners have conflicts of interest
in considering the Offer. In the case of WRC-87A, this conflict is limited to
the beneficial interests of Messrs. Richman and Wilder in WRRC, which owns 50%
of WRC-87A, since Lehman, which owns (through its interest in REEPI) half of the
equity interest in WRC-87A, has no interest in the Purchaser or in the Offer.
<PAGE>
SOME FACTORS TO BE CONSIDERED BY UNIT HOLDERS. In considering the
Offer, Unit Holders may wish to consider the following factors:
Potential Adverse Aspects of the Offer for Unit Holders
o The Purchaser is owned by Messrs. Richman and Wilder, who have
direct and indirect beneficial ownership interests in the
Affiliated General Partners. The Affiliated General Partners have
conflicts of interest in considering the Offer because of this
relationship. It is in the interest of the Purchaser Affiliates,
who collectively own all of the equity interest in the Purchaser,
and the Affiliated General Partners, for the Purchaser to
purchase Units at a low price in order to maximize their
potential profit. It is in the interest of the Unit Holders who
desire to sell Units, to maximize the price they receive. Also,
if the Offer is consummated and the Purchaser acquires a
substantial interest in the Partnership, it may have different
considerations with respect to maximizing the value of its
interest in the Partnership than the other Unit Holders. This
could result in conflicts of interest for the Affiliated General
Partners in the future. See Section 10.
o The net liquidation value per Unit (the "Estimated Liquidation
Value") estimated by the Purchaser in connection with the Offer
is approximately $12.55. See Section 13 for a discussion of the
bases of such estimate and of why the Purchaser believes that
such estimate is not necessarily indicative of the current fair
market value of a Unit.
The Purchase Price represents the price that the Purchaser is
willing to pay for the Units. No independent third party has been
retained by the Purchaser to evaluate or render an opinion with
respect to the fairness of the Purchase Price, and no appraisals
of any of the properties owned by the Partnership have been
obtained by the Purchaser.
THE PURCHASER (WHICH IS AN AFFILIATE OF THE AFFILIATED GENERAL
PARTNERS) MAKES NO REPRESENTATION AND EXPRESSES NO OPINION AS TO
THE FAIRNESS OR ADEQUACY OF THE PURCHASE PRICE.
o As with any rational investment decision, the Purchaser is making
the Offer with a view to making a profit. Accordingly, there is a
conflict between the desire of the Purchaser to purchase Units at
a low price and the desire of the Unit Holders to sell their
Units at a high price.
o If the Purchaser is successful in acquiring a significant number
of Units pursuant to the Offer, the Purchaser will have the right
to vote those Units and thereby significantly influence all
voting decisions with respect to the Partnership, including
decisions concerning dissolution, amendments to the Limited
Partnership Agreement, removal and replacement of the General
Partners and mergers, consolidations and other extraordinary
transactions involving the Partnership. This means that (i)
non-tendering Unit Holders could be prevented from taking action
they desire but that the Purchaser opposes and (ii) the Purchaser
may be able to take action desired by it but opposed by the
non-tendering Unit Holders. As used herein, the term "non-
tendering Unit Holders" includes both those Unit Holders not all
of whose Units were tendered by the Unit Holder in the Offer and
those Unit Holders not all of whose Units were purchased by the
Purchaser in the Offer because of proration.
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<PAGE>
Potentially Beneficial Aspects of the Offer for Unit Holders
o ON JUNE 29, 1998, THE MACKENZIE OFFER TO PURCHASE UP TO 196,875
UNITS FOR A PRICE OF $5.00 PER UNIT WAS ANNOUNCED. ON MARCH 26,
1998, A TENDER OFFER TO PURCHASE UP TO 42,234 UNITS WAS ANNOUNCED
BY EVEREST MANAGEMENT, LLC (THE "EVEREST OFFER") FOR A PRICE OF
$3.50 PER UNIT. THE PRESENT OFFER BY THE PURCHASER AFFORDS UNIT
HOLDERS AN OPPORTUNITY TO DISPOSE OF THEIR UNITS AT A MUCH HIGHER
PRICE THAN THE PRICE OFFERED IN THE EVEREST OFFER AND THE
MACKENZIE OFFER (APPROXIMATELY 85% AND 30%, RESPECTIVELY). TO
WITHDRAW UNITS ALREADY TENDERED IN THE MACKENZIE OFFER, COMPLETE
AND SIGN THE ENCLOSED WITHDRAWAL FORM AND FAX IT TO (925)
631-9119 BEFORE 12:00 MIDNIGHT, PACIFIC DAYLIGHT TIME, ON JULY
31, 1998. FOR MORE INFORMATION, PLEASE SEE SECTION 3.
o Although there are some limited resale mechanisms available to
Unit Holders wishing to sell their Units, there is no formal
trading market for Units. Accordingly, the offer affords Unit
Holders an opportunity to dispose of their Units for a cash price
which otherwise might not be available to them.
o The offer may be attractive to Unit Holders who have an immediate
wish for cash. The Purchase Price is approximately 2.6 times
greater than the highest reported sales price of Unit during the
past 12 months (based on published information and information
provided by the Partnership), except for sales, if any, pursuant
to the other tender offers for Units referred to above. However,
reported secondary market sales prices do not take into account
commissions and transfer fees typically payable by a Unit Holder
in connection therewith. Therefore, the net proceeds received by
a Unit Holder who sells Units in the secondary market are
typically significantly less than the reported sales prices.
o Unit Holders who sell Units pursuant to the Offer will not be
charged any sales commissions or partnership transfer fees (which
are typically $150 per transfer). The Purchaser will pay all
transfer fees imposed by the Partnership in connection with sales
of Units pursuant to the Offer.
o Real estate markets in the eastern United States (where the
properties owned by the Partnership are located) generally have
recovered and experienced an upward trend since the end of the
last recession. That recovery and upward trend might continue. On
the other hand, those markets also may be adversely affected by a
variety of factors, including possible fluctuations in interest
rates, economic slowdowns and overbuilding. Accordingly,
ownership of Units continues to be a speculative investment. The
Offer may provide Limited Partners with the opportunity to
liquidate their interests in the Partnership and replace them
with investments that are less speculative and more liquid.
o The Offer may be attractive to Unit Holders who wish to avoid in
the future the expenses, delays and complications in reflecting
ownership of Units in personal income tax returns.
o A Unit Holder who sells 100% of his or her Units pursuant to the
Offer will no longer be subject to the passive activity loss
limitation with respect to "suspended" losses attributable to
those Units and, therefore, will be able to utilize fully any
such losses.
- 3 -
<PAGE>
o The Offer may be attractive to those Unit Holders who have become
disenchanted with real estate investments generally, and in
particular with the perceived illiquidity of investments made
through limited partnerships, because the Offer affords an
immediate opportunity for those Unit Holders to liquidate some or
all of their investments in the Partnership. On the other hand,
Unit Holders who tender their Units will be giving up the
opportunity to participate in any potential future benefits
represented by the ownership of those Units, including, for
example, the right to participate in any future distributions of
cash or property, whether from operations, the proceeds of a sale
or refinancing with respect to one or both of the operating
partnership interests in which the Partnership is invested or in
connection with any future liquidation of the Partnership.
Instead, any such distributions of cash or property with respect
to Units tendered in the Offer and purchased by the Purchaser
will be paid to the Purchaser.
The Purchaser makes no recommendations to any Unit Holder as to
whether to tender or refrain from tendering Units. Each Unit Holder must make
his or her own decision, based on the Unit Holder's particular circumstances, as
to whether to tender Units and, if so, how many Units to tender. UNIT HOLDERS
SHOULD CONSULT WITH THEIR RESPECTIVE ADVISORS REGARDING THE FINANCIAL, TAX,
LEGAL AND OTHER IMPLICATIONS OF ACCEPTING THE OFFER. UNIT HOLDERS ARE URGED TO
READ THIS OFFER TO PURCHASE AND THE RELATED MATERIALS CAREFULLY IN THEIR
ENTIRETY BEFORE DECIDING WHETHER TO TENDER THEIR UNITS.
REASONS FOR AND EFFECTS OF THE OFFER. The Purchaser's purpose in
making the Offer is to acquire a significant equity interest in the Partnership,
primarily for investment purposes and with a view to realizing a profit.
Although the number of Units sought in the Offer will not give the Purchaser
(which is an affiliate of the Affiliated General Partners) absolute control over
the Partnership, if the Purchaser is successful in acquiring all or a
substantial portion of the Units it is tendering for, it will be in a position
to exercise significant influence over the outcome of any vote by Unit Holders.
See Sections 7, 8 and 13.
In addition, another purpose of the Offer is to provide Unit Holders
with a competing offer against which any other offer for Units can be measured
and judged.
CERTAIN TAX CONSIDERATIONS. A sale by a Unit Holder pursuant to the
Offer will result in taxable gain (or loss) equal to the excess (deficit) of the
amount realized by the Unit Holder for the Units sold over such Unit Holder's
adjusted tax basis in those Units. If a Unit Holder has suspended "passive
losses" from the Partnership or other passive activity investments, such Unit
Holder generally may deduct these losses up to the amount of any gain from the
sale and may deduct such losses in excess of such gain if the Unit Holder sells
100% of its interest in the Partnership. A sale pursuant to the Offer of all of
a Unit Holder's Units will terminate such Units Holder's investment in the
Partnership and, commencing with the year following the year of sale, the Unit
Holder will no longer receive Partnership tax information or have to report the
complicated tax information currently required of Unit Holders. See Section 6.
ORIGINALLY ANTICIPATED HOLDING PERIOD FOR PARTNERSHIP INVESTMENTS;
ALTERNATIVES. The Partnership owns 99% of the limited partnership interests in
two operating limited partnerships (the "Operating Partnerships"), one of which,
Carrollton X Associates Limited Partnership (the "Carrollton Partnership"), owns
a 252 unit apartment complex in Frederick, Maryland and the other of which,
Columbia Associates (the "Columbia Partnership"), owns a 163 unit apartment
complex in New York City (together, the "Complexes"). According to the
Partnership's Prospectus dated March 5, 1987 (the "Partnership Prospectus"), the
Partnership anticipated that the holding period with respect to the
Partnership's interests in the Operating Partnerships would be approximately ten
years from the date of acquisition of such interests or, if longer, ten years
from the date of commencement of operation of the Complexes. However, the
Partnership indicated that the precise holding period for the interests in the
Operating Partnerships would depend upon the financial and operating
circumstances of the Complexes, opportunities to take advantage of capital
appreciation in the Complexes, the objectives of the general partners of the
Operating Partnerships and other circumstances particular to each
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investment. The Partnership Prospectus also stated the then current intention of
the Partnership that its investments in an Operating Partnership would be
liquidated and the proceeds distributed in accordance with the Limited
Partnership Agreement between 8-12 years after the initial acquisition of such
Operating Partnership interest. The Partnership presently has the right in the
case of the Carrollton Partnership and will have the right in the case of the
Columbia Partnership beginning in December 1998 to commence the process of
liquidating its investment in each of the Complexes and, in connection
therewith, require the general partner of the respective Operating Partnership
to obtain an offer for sale of the Complex acceptable to the Partnership. Sale
of one or both of the Complexes, however, would require, among other things, the
consent of any applicable housing finance authority, the consent of WRC-87A, the
special limited partner of each of the Operating Partnerships, and in certain
instances, the consent of a majority of the Unit Holders of the Partnership.
Under the Limited Partnership Agreement, the term of the Partnership
will continue until December 31, 2036, unless sooner dissolved as provided in
the Limited Partnership Agreement or by law. Unit Holders could, as an
alternative to tendering their Units and without the concurrence of the General
Partners, take a variety of possible actions, including voting to dissolve the
Partnership or causing the Partnership to remove or replace any or all of the
General Partners, direct WRC-87A, as special limited partner of the Operating
Partnerships, to remove any general partner of the Operating Partnerships, with
or without cause, or to sell all or substantially all of its assets.
CONDITIONS. The Offer is not conditioned on financing or on any
aggregate minimum number of Units being tendered. Certain other conditions do
apply, however. See Section 14.
DISTRIBUTIONS. In order to provide Unit Holders with 7% guaranteed
cash distributions required to be made through December 31, 1993 and to pay
investor services fees, the Partnership purchased guaranteed investment
contracts. The last such cash distributions were made in January 1995. In total,
original investors in the Partnership have received distributions of $468.50 per
$1,000 investment since 1987, virtually all of which were generated by payments
under the guaranteed investment contracts. According to the Partnership's public
filings, significant cash flow distributions from the property held by the
Columbia Partnership, because of the restrictions on cash flow distributions
under the terms of the Columbia Partnership's refinanced mortgage obligations,
are not likely to occur. If, however, the Columbia Partnership was successful in
renegotiating the terms of or replacing its mortgage indebtedness to permit cash
flow distributions, such cash flow could be available for distributions to the
Unit Holders. In this connection, the Purchaser notes that it has been informed
by the Columbia Partnership that, consistent with previous discussions in the
Partnership's quarterly and annual reports to Unit Holders, the Columbia
Partnership has had discussions with its current and alternative lenders with
the goal of refinancing or restructuring the Columbia Partnership's current
financing. Given the perceived strength of the New York rental market and
increasingly favorable climate for refinancing, the local general partners of
the Columbia Partnership believe there is a significant prospect that the
current financing can be refinanced or restructured with a view to, among other
things, reducing, or eliminating altogether, prohibitions on the distribution of
cash flow or sale or refinancing proceeds. The Partnership believes that any
such refinancing or restructuring, if it occurs at all, may be able to be
completed within approximately the next six to twelve months. In the event of
any such refinancing, the Columbia Partnership anticipates that the fees charged
by its management firm will increase from approximately $80,000 per year (which
fees are believed to be generally lower than comparable fees for similar
services charged by other management firms) to approximately $200,000 per year
(which fees are believed to be generally competitive with fees charged by other
management firms for similar services). There can be no assurance that any such
refinancing or restructuring will be completed.
The potential for future distributions was considered by the Purchaser
when establishing the Purchase Price. Unit Holders who tender their Units in
response to the Offer will retain any distributions made to date and will be
entitled to receive and retain any subsequent distributions made by the
Partnership prior to the date on which the Purchaser pays for tendered Units
pursuant to the Offer, although any such subsequent distribution will result in
a reduction of the Purchase Price. See Section 1. However, tendering Unit
Holders will not be entitled to receive or retain any distributions in respect
of tendered Units which are made on or after the date on which the Purchaser
pays for such Units pursuant to the Offer, regardless of the fact that the
record
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date (as opposed to the payment date) for any such distribution may be a date
prior to the date of purchase. See Section 3.
RECENT OPERATING RESULTS. The Partnership's results of operations
improved immediately upon the refinancing of the respective mortgages of each of
the Complexes during 1993, and have continued to improve primarily due to
increased rental revenues. During 1997, the Columbia Partnership and the
Carrollton Partnership generated income from operating activities of
approximately $3,121,000 and approximately $949,000, respectively. Mortgage
principal payments during 1997 for the Columbia Partnership and the Carrollton
Partnership were approximately $758,000 and approximately $113,000,
respectively. Deposits to required mortgage escrow accounts pursuant to the
Colombia Partnership's mortgages amounted to approximately $691,000 during 1997.
Pursuant to the terms of the Columbia Partnership's mortgages, the lender is
entitled to a credit enhancement fee of 2.5% per annum based on the outstanding
loan balance commencing February 1, 1997. During 1997, the Columbia Partnership
incurred $582,229 in connection with such fee. After considering the respective
mandatory mortgage principal payments, required deposits to mortgage escrows,
accelerated principal payments on the Columbia Partnership's mortgages and
payments for the credit enhancement fee, among other things, the Complexes
generated combined cash flow of approximately $344,000 during 1997. Any savings
realized on the difference between the initial note rate on the Columbia
Partnership's mortgages of 4.66% and the actual low floater rate (approximately
3.56% weighted average rate during 1997) are deposited into specified mortgage
escrow accounts including, in certain circumstances to a mortgage escrow account
designated for making additional mortgage principal payments. Such additional
mortgage principal payments amounted to $400,000 during the year ended December
31, 1997. However, there can be no assurance that the level of cash flow
generated by the Complexes in 1997 will continue in future years.
Although the Complexes generated cash flow during 1997, results of
operations declined as compared to 1996 primarily as a result of (i) the
commencement of the credit enhancement fee in connection with the Columbia
Partnership's mortgages, (ii) costs incurred by the Columbia Partnership in
connection with attempts to refinance or replace its mortgages and (iii) an
increase in the weighted average interest rate on the Columbia Partnership's
mortgages from 3.29% to 3.56%. Operating and maintenance expenses increased for
the year ended December 31, 1997 primarily due to scheduled maintenance.
Interest revenue for the year ended December 31, 1997 was comparable to the year
ended December 31, 1996 and was generated primarily from Partnership deposits
and escrows established in connection with the Columbia Partnership's mortgages.
OUTSTANDING UNITS. According to information supplied by the
Partnership, as of July 7, 1998, there were 984,369 Units issued and
outstanding, which were held of record by approximately 1,372 Unit Holders.
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THE OFFER
SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE; REDUCTION OF NUMBER OF
SHARES TO BE PURCHASED; PRORATION. Upon the terms and subject to the conditions
of the Offer, the Purchaser will accept for payment (and thereby purchase) up to
394,000 Units, or approximately 40% of the Units outstanding, that are validly
tendered prior to the Expiration Date (as defined hereinafter) and not withdrawn
in accordance with the procedures set forth in Section 4. For purposes of the
Offer, the term "Expiration Date" shall mean 12:00 midnight, New York City time,
on August 20, 1998, unless the Purchaser in its 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 the Purchaser, shall expire. See Section 5 for a description of the
Purchaser's right to extend the period of time during which the Offer is open
and to amend or terminate the Offer.
THE PURCHASE PRICE WILL AUTOMATICALLY BE REDUCED BY THE AGGREGATE
AMOUNT OF DISTRIBUTIONS PER UNIT, IF ANY, MADE BY THE PARTNERSHIP TO UNIT
HOLDERS ON OR AFTER THE DATE HEREOF AND PRIOR TO THE DATE ON WHICH THE PURCHASER
PAYS FOR UNITS PURCHASED PURSUANT TO THE OFFER.
If, prior to the Expiration Date, the Purchaser increases the
consideration offered to Unit Holders pursuant to the Offer, the increased
consideration will be paid for all Units accepted for payment pursuant to the
Offer, regardless of whether the Units were tendered prior to the increase in
the consideration offered.
The Limited Partnership Agreement prohibits transfers of Units if a
transfer, when considered with all other transfers during the same applicable
twelve-month period, would cause a termination of the Partnership for federal or
any applicable state income tax purposes. The Partnership has advised the
Purchaser that it will not process any requests for recognition of substitution
of Unit Holders upon a transfer of Units during such twelve-month period which
the Partnership believes may cause a tax termination in contravention of the
Limited Partnership Agreement. If the Partnership determines that the number of
Units to be Purchased by the Purchaser in the Offer will cause a tax termination
in contravention to the Limited Partnership Agreement, the Purchaser will reduce
the number of Units purchased in the Offer to the maximum number allowed in
accordance with such provisions of the Limited Partnership Agreement.
If more than 394,000 Units (or such lower number as may be determined
in accordance with the preceding paragraph) are validly tendered prior to the
Expiration Date and not properly withdrawn prior to the Expiration Date in
accordance with the procedures specified in Section 4, the Purchaser will, upon
the terms and subject to the conditions of the Offer, accept for payment and pay
for an aggregate of 394,000 (or such lower number as may be determined in
accordance with the preceding paragraph) of the Units so tendered, pro rata
according to the number of Units validly tendered by each Unit Holder and not
properly withdrawn prior to the Expiration Date, with appropriate adjustments to
avoid (i) purchases of fractional Units and (ii) purchases that would violate
Section 7.1(b)(iii) of the Limited Partnership Agreement (which generally
requires that, in order for a partial tender to be valid, a Unit Holder must
continue to hold a minimum of 250 Units representing in the aggregate a capital
contribution in the Partnership of $5,000). If the number of Units validly
tendered and not properly withdrawn prior to the Expiration Date is less than or
equal to 394,000 Units (or such lower number as may be determined in accordance
with the preceding paragraph), the Purchaser will purchase all Units so tendered
and not withdrawn, upon the terms and subject to the conditions of the Offer.
If proration of tendered Units is required, then, subject to the
Purchaser's obligation under Rule 14e-1(c) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), to pay Unit Holders the Purchase Price in
respect of Units tendered or return those Units promptly after the termination
or withdrawal of the Offer, the Purchaser does 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 PURCHASE PRICE.
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The Offer is conditioned on satisfaction of certain conditions. See
Section 14, which sets forth in full the conditions of the Offer. The Purchaser
reserves the right (but in no event shall be obligated), in its sole discretion,
to waive any or all of those conditions. If, prior to the Expiration Date, any
or all of the conditions have not been satisfied or waived, the Purchaser
reserves the right to (i) decline to purchase any of the Units tendered and
terminate the Offer, (ii) waive all of the unsatisfied conditions and, subject
to complying with applicable rules and regulations of the Commission, purchase
all Units validly tendered, (iii) extend the Offer and, subject to the right of
Unit Holders to withdraw Units until the Expiration Date, retain the Units that
have been tendered during the period or periods for which the Offer is extended,
and/or (iv) amend the Offer.
This Offer to Purchase and the related Assignment of Partnership
Interest are being mailed by the Purchaser to the persons shown by the
Partnership's records to have been Unit Holders or, in the case of Units owned
of record by IRAs, Keoghs and Qualified Plans, beneficial owners of Units as of
July 22, 1998.
SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS. Upon the
terms and subject to the conditions of the Offer, the Purchaser will accept for
payment (and thereby purchase) and will pay for all Units validly tendered and
not withdrawn in accordance with the procedures specified in Section 4, as
promptly as practicable following the Expiration Date. A tendering beneficial
owner of Units whose Units are owned of record by an IRA, Keogh or Qualified
Plan will not receive direct payment of the Purchase 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 Depositary of certificates representing tendered Units and a properly
completed and duly executed Assignment of Partnership Interest and any other
documents required by the Assignment of Partnership Interest. See Section 3.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE BY REASON OF
ANY DELAY IN MAKING SUCH PAYMENT.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment pursuant to the Offer, and thereby purchased, validly
tendered Units if, as and when the Purchaser gives written notice to the
Depositary of the Purchaser's acceptance of those Units for payment pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Units accepted for payment pursuant to the Offer will be made by deposit of
the Purchase Price with the Depositary, which will act as agent for tendering
Unit Holders for the purpose of receiving payments from the Purchaser and
transmitting those payments to Unit Holders whose Units have been accepted for
payment.
If any tendered Units are not purchased for any reason, the
certificates representing such Units will be returned to the Unit Holder and the
Assignment of Partnership Interest with respect to such Units will be destroyed
by the Depositary or the Purchaser. If for any reason acceptance for payment of,
or payment for, any Units tendered pursuant to the Offer is delayed or the
Purchaser is unable to accept for payment, purchase or pay for Units tendered
pursuant to the Offer, then, without prejudice to the Purchaser's rights under
Section 14, the Depositary may, nevertheless, on behalf of the Purchaser retain
tendered Units, but such Units may be withdrawn to the extent that the tendering
Unit Holders are entitled to withdrawal rights as described in Section 4. The
foregoing is subject, however, to the Purchaser's obligation under Rule 14e-1(c)
under the Exchange Act to pay Unit Holders the Purchase Price in respect of
Units tendered or return those Units promptly after termination or withdrawal of
the Offer.
The Purchaser reserves the right to transfer or assign, in whole or
from time to time in part, to one or more of the Purchaser's 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 Unit Holders to receive payment for Units
validly tendered and accepted for payment pursuant to the Offer.
SECTION 3. PROCEDURE FOR TENDERING UNITS.
VALID TENDER. In order for a tendering Unit Holder to participate in
the Offer, its Units must be validly tendered and not withdrawn prior to the
Expiration Date. To validly tender Units, certificates
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representing such tendered Units, a properly completed and duly executed
Assignment of Partnership Interest and any other documents required by the
Assignment of Partnership Interest must be received by the Depositary, at its
address set forth on the back cover of this Offer to Purchase, prior to the
Expiration Date. A Unit Holder may tender any or all of the Units owned by that
Unit Holder; provided, however, that because of restrictions in the Limited
Partnership Agreement, in order for a partial tender to be valid, after the sale
of Units pursuant to the Offer, the Unit Holder must continue to hold a minimum
of 250 Units, representing a capital contribution in the Partnership of $5,000
(or, in the case of Unit Holders who hold Units in an IRA, Keogh or Qualified
Plans at least 100 Units, representing a capital contribution in the Partnership
of $2,000). Tenders of fractional Units will not be permitted, except by a Unit
Holder who is tendering all of the Units owned by that Unit Holder. No
alternative, conditional or contingent tenders will be accepted.
WITHDRAWAL OF SHARES TENDERED IN THE MACKENZIE OFFER. Units previously
tendered in the MacKenzie Offer must be withdrawn prior to July 31, the
expiration date of the MacKenzie Offer, in order to be validly tendered in this
Offer. Withdrawal procedures appear under the section titled "Withdrawal Rights"
in the MacKenzie Offer's offer to purchase (the "MacKenzie Offer to Purchase").
According to the MacKenzie Offer to Purchase, for a withdrawal of Units tendered
in the MacKenzie Offer to be effective, a written or facsimile transmission
notice of withdrawal must be received by the depositary for the MacKenzie Offer
prior to 12:00 midnight, Pacific Standard Time, on July 31, 1998 (the expiration
date of the MacKenzie Offer, unless such expiration date in extended, in which
case withdrawals may be made prior to such extended expiration date). UNIT
HOLDERS WHO WISH TO WITHDRAW UNITS ALREADY TENDERED IN THE MACKENZIE OFFER
SHOULD COMPLETE AND SIGN THE ENCLOSED WITHDRAWAL FORM AND FAX IT TO (925)
631-9119 BEFORE 12:00 MIDNIGHT, PACIFIC DAYLIGHT TIME, ON JULY 31, 1998. FOR
FURTHER DETAILS ON HOW TO WITHDRAW YOUR UNITS FROM THE MACKENZIE OFFER, PLEASE
SEE THE MACKENZIE OFFER TO PURCHASE. UNIT HOLDERS WHO DESIRE ASSISTANCE WITH
WITHDRAWING UNITS TENDERED PURSUANT TO THE MACKENZIE OFFER MAY CONTACT THE
INFORMATION AGENT AT THE ADDRESS AND TELEPHONE NUMBER SET FORTH ON THE BACK
COVER OF THIS OFFER TO PURCHASE.
SIGNATURE REQUIREMENTS.
No signature guarantee is required on the Assignment of Partnership
Interest (i) if such Assignment of Partnership Interest is signed by the
registered holder of the Units tendered therewith, unless such holder has
completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" in the Assignment of Partnership
Interest, or (ii) if Units are tendered for the account of a firm that is a
member in good standing of the Security Transfer Agent's Medallion Program, the
New York Stock Exchange Medallion Signature Program or the Stock Exchange
Medallion Program (such a firm being hereinafter referred to as an "Eligible
Institution").
If a certificate representing Units is registered in the name of a
person other than the person(s) signing the Assignment of Partnership Interest
(or a facsimile thereof), or if payment is to be made, or Units not accepted for
payment or not tendered are to be returned, to a person other than the
registered holder, the certificate must be endorsed or accompanied by an
appropriate stock power, in either case signed exactly as the name(s) of the
registered holder(s) appears on the certificate, with the signature(s) on the
certificate or stock power guaranteed by an Eligible Institution. If the
Assignment of Partnership Interest or stock powers are signed or any certificate
is endorsed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing and,
unless waived by the Purchaser, proper evidence satisfactory to the Purchaser of
their authority so to act must be submitted.
DELIVERY OF ASSIGNMENT OF PARTNERSHIP INTEREST. The method of delivery
of the Assignment of Partnership Interest and all other required documents is at
the option and risk of the tendering Unit Holder, and delivery will be deemed
made only when actually received by the Depositary. In all cases, sufficient
time should be allowed to assure timely delivery.
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<PAGE>
APPOINTMENT AS PROXY; POWER OF ATTORNEY. By executing an Assignment of
Partnership Interest, a tendering Unit Holder irrevocably appoints the Purchaser
and its managing member, officers and designees as the Unit Holder's proxies, in
the manner set forth in the Assignment of Partnership Interest, each with full
power of substitution, to the full extent of the Unit Holder's rights with
respect to the Units tendered by the Unit Holder and accepted for payment by the
Purchaser. 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, the Purchaser accepts the tendered Units for payment. Upon such acceptance
for payment, all prior proxies given by the Unit Holder 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). The Purchaser and its managing
member, officers and designees will, as to those Units, be empowered to exercise
all voting and other rights of the Unit Holder as they in their sole discretion
may deem proper at any meeting of Unit Holders, by written consent or otherwise.
The Purchaser reserves the right to require that, in order for Units to be
deemed validly tendered, immediately upon the Purchaser's acceptance for payment
of the Units, the Purchaser must be able to exercise full voting rights with
respect to the Units, including voting at any meeting of Unit Holders then
scheduled or acting by written consent without a meeting.
Pursuant to such appointment as attorneys-in-fact, the Purchaser and
its managing member and designees each will have the power, among other things,
(i) to transfer ownership of such Units on the partnership books maintained by
the Partnership (and execute and deliver any accompanying evidences of transfer
and authenticity any General Partner may deem necessary or appropriate in
connection therewith), (ii) upon receipt by the Depositary (as the tendering
Unit Holder's agent) of the Purchase Price, to become a substituted Unit Holder,
to receive any and all distributions made by the Partnership on or after the
date on which the Purchaser purchases such Units, and to receive all benefits
and otherwise exercise all rights of beneficial ownership of such Units in
accordance with the terms of the Offer, (iii) to execute and deliver to the
Partnership a change of address form instructing them to send any and all future
distributions to which the Purchaser is 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 or upon the order of such Unit Holder
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 Unit
Holder.
ASSIGNMENT OF INTEREST IN FUTURE DISTRIBUTIONS. By executing an
Assignment of Partnership Interest, a tendering Unit Holder irrevocably assigns
to the Purchaser and its assigns all of the right, title and interest of the
Unit Holder in and to any and all distributions made by the Partnership on or
after the date on which the Purchaser purchases such Units, in respect of the
Units tendered by such Unit Holder and accepted for payment by the Purchaser,
regardless of the fact that the record date for any such distribution may be a
date prior to the date of such purchase. The Purchaser will seek to be admitted
to the Partnership as a substituted Unit Holder upon consummation of the Offer.
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 the Offer will be determined by the Purchaser, in its sole
discretion, which determination shall be final and binding. The Purchaser
reserves the absolute right to reject any or all tenders of any particular Units
determined by it not to be in proper form or if the acceptance of or payment for
those Units may, in the opinion of the Purchaser's counsel, be unlawful. The
Purchaser also reserves the absolute right to waive or amend any of the
conditions of the Offer that it is legally permitted to waive as to the tender
of any particular Units and to waive any defect or irregularity in any tender
with respect to any particular Units of any particular Unit Holder. The
Purchaser's interpretation of the terms and conditions of the Offer (including
the Assignment of Partnership Interest and the Instructions thereto) will be
final and binding. No tender of Units will be deemed to have been validly made
until all defects and irregularities have been cured or waived. None of the
Purchaser, the Information Agent, the Depositary or any other person will be
under any duty to give notification of any defects or irregularities in the
tender of any Units or will incur any liability for failure to give any such
notification.
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BACKUP FEDERAL INCOME TAX WITHHOLDING. To prevent the possible
application of backup federal income tax withholding of 31% with respect to
payment of the Purchase Price, each tendering Unit Holder must provide the
Purchaser with the Unit Holder's correct taxpayer identification number by
completing the Substitute Form W-9 included in the Assignment of Partnership
Interest. See the Instructions to the Assignment of Partnership Interest and
Section 6.
FIRPTA WITHHOLDING. To prevent the withholding of federal income tax
in an amount equal to 10% of the amount realized in the sale, each tendering
Unit Holder must complete the FIRPTA Affidavit included in the Assignment of
Partnership Interest certifying the Unit Holder's taxpayer identification number
and address and that such Unit Holder is not a foreign person. See the
Instructions to the Assignment of Partnership Interest and Section 6.
BINDING OBLIGATION. A tender of Units pursuant to and in accordance
with the procedures described in this Section 3 and the acceptance for payment
of such Units will constitute a binding agreement between the tendering Unit
Holder and the Purchaser on the terms set forth in this Offer to Purchase and in
the Assignment of Partnership Interest.
SECTION 4. WITHDRAWAL RIGHTS. Tenders of Units pursuant to the Offer
are irrevocable, except that Units tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless already accepted
for payment as provided in this Offer to Purchase, may also be withdrawn at any
time after September 21, 1998. For withdrawal to be effective, a written or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at its address set forth on the back cover of this Offer to Purchase.
Any such notice of withdrawal must specify the name of the person who tendered
the Units to be withdrawn and must be signed by the person(s) who signed the
Assignment of Partnership Interest in the same manner as the Assignment of
Partnership Interest was signed (including signature guarantees by an Eligible
Institution). Units properly withdrawn will be deemed not to be validly tendered
for purposes of the Offer. Withdrawn Units may be re-tendered, however, by
following the procedures described in Section 3 at any time prior to the
Expiration Date.
If payment for Units is delayed for any reason or if the Purchaser is
unable to pay for Units for any reason, then, without prejudice to the
Purchaser's rights under the Offer, tendered Units may be retained by the
Depositary, but such Units may be withdrawn to the extent that tendering Unit
Holders are entitled to withdrawal rights as set forth in this Section 4. The
foregoing is subject, however, to the Purchaser's obligation, pursuant to Rule
14e-1(c) under the Exchange Act, to pay Unit Holders the Purchase Price in
respect of Units tendered or return those Units promptly after termination or
withdrawal of the Offer.
All questions as to the validity and form (including time of receipt)
of notices of withdrawal will be determined by the Purchaser, in its sole
discretion, which determination shall be final and binding. None of the
Purchaser, the Information Agent, the Depositary or any other person will be
under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT. The
Purchaser expressly reserves the right, in its sole discretion, at any time and
from time to time, (i) to extend the period of time during which the Offer is
open and thereby delay acceptance for payment of, and the payment for, validly
tendered Units, (ii) to terminate the Offer and not accept for payment any Units
not already accepted for payment or paid for, (iii) upon the occurrence of any
of the conditions specified in Section 14, to delay the acceptance for payment
of, or payment for, any Units not already accepted for payment or paid for, and
(iv) to amend the Offer in any respect (including, without limitation, by
increasing the consideration offered, increasing or decreasing the number of
Units being sought, or both). Notice of any such extension, termination or
amendment will be disseminated promptly to Unit Holders in a manner reasonably
designed to inform Unit Holders of such change in compliance with Rule 14d-4(c)
under the Exchange Act. In the case of an extension of the Offer, the extension
will be followed by a press release or public announcement which will
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<PAGE>
be issued no later than 9:00 a.m., New York City time, on the next business day
after the then scheduled Expiration Date, in accordance with Rule 14e-1(d) under
the Exchange Act.
If the Purchaser extends the Offer, or if the Purchaser is delayed in
its payment for Units or is unable to pay for Units pursuant to the Offer for
any reason, then, without prejudice to the Purchaser's rights under the Offer,
the Depositary may retain tendered Units but such Units may be withdrawn to the
extent tendering Unit Holders are entitled to withdrawal rights as described in
Section 4. The foregoing is subject, however, to the Purchaser's obligation,
pursuant to Rule 14e-1(c) under the Exchange Act, to pay Unit Holders the
Purchase Price in respect of Units tendered or return those Units promptly after
termination or withdrawal of the Offer.
If the Purchaser makes a material change in the terms of the Offer or
the information concerning the Offer or waives a material condition of the
Offer, the Purchaser will extend the Offer and disseminate additional tender
offer materials to the extent required by Rules 14d-4(c) and 14d-6(d) under the
Exchange Act. The minimum period during which an offer must remain open
following a material change in the terms of the offer or information concerning
the offer will depend upon the facts and circumstances, including the relative
materiality of the change in the terms or information. In the Commission's view,
an offer should remain open for a minimum of five business days from the date
the material change is first published, sent or given to security holders, and
if material changes are made with respect to information that approaches the
significance of price or the percentage of securities sought, a minimum of ten
business days may be required to allow for adequate dissemination to security
holders and investor response. With respect to a change in price or, subject to
certain limitations, a change in the percentage of securities sought or
inclusion of or change to a dealer's soliciting fee, a minimum ten business day
period from the date of such change is generally required to allow for adequate
dissemination to security holders. Accordingly, if, prior to the Expiration
Date, the Purchaser decreases the number of Units being sought or increases or
decreases the consideration offered pursuant to the Offer, and if the Offer is
scheduled to expire at any time earlier than the period ending on the tenth
business day from the date that notice of such increase or decrease is first
published, sent or given to holders of Units, the Offer will be extended at
least until the expiration of such ten business day period. As used in this
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.
GENERAL. The following summary is a general discussion of certain of
the federal income tax consequences of a sale of Units pursuant to the Offer.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), applicable Treasury regulations thereunder, administrative rulings,
practice and procedures and judicial authority, all as of the date of the Offer.
All of the foregoing are subject to change, and any such change could affect the
continuing accuracy of this summary. The following discussion assumes that the
Partnership is, and has always been, treated as a partnership, and not a
corporation, for federal income tax purposes. This summary does not discuss all
aspects of federal income taxation that may be relevant to a particular Unit
Holder in light of such Unit Holder's specific circumstances or to certain types
of Unit Holders subject to special treatment under the federal income tax laws
(for example, foreign persons, dealers in securities, banks, insurance
companies, tax exempt trusts or accounts and tax-exempt organizations), nor
(except as otherwise expressly indicated) does it describe any aspect of state,
local, foreign or other tax laws. Sales of Units pursuant to the Offer will be
taxable transactions for federal income tax purposes, and also may be taxable
transactions under applicable state, local, foreign and other tax laws. EACH
UNIT HOLDER SHOULD CONSULT SUCH UNIT HOLDERS OWN TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH UNIT HOLDER OF SELLING UNITS PURSUANT TO THE
OFFER.
GAIN OR LOSS GENERALLY. In general, a Unit Holder will recognize gain
or loss on a sale of Units pursuant to the Offer equal to the difference between
(i) the Unit Holder's "amount realized" on the sale and (ii) the Unit Holder's
adjusted tax basis in the Units sold. Generally, a Unit Holder's adjusted tax
basis with respect to a Unit equals its cost, increased by the amount of income
and the amount of Partnership liabilities (as determined under Code Section 752)
allocated to the Unit, and decreased by (i) any distributions
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<PAGE>
made with respect to such Unit, (ii) the amount of deductions or losses
allocated to the Unit and (iii) any decrease in the amount of Partnership
liabilities (as determined under Code Section 752) allocated to the Unit. Thus,
the amount of a Unit Holder's adjusted tax basis in tendered Units will vary
depending upon the Unit Holder's particular circumstances. The "amount realized"
with respect to a Unit will be a sum equal to the amount of cash received by the
Unit Holder for the Unit pursuant to the Offer, plus the amount of the
Partnership's liabilities allocable to the Unit at the time of the sale (as
determined under Code Section 752).
A portion of the gain or loss recognized by a Unit Holder on a sale of
a Unit pursuant to the Offer generally will be treated as a capital gain or
loss, if (as is generally expected to be the case) the Unit was held by the Unit
Holder as a capital asset, and will be long term capital gain or loss if the
Unit Holder's holding period for the Units was more than one year. Long term
capital gain is generally taxed at a maximum rate of 20%. However, while not
extremely clear, it appears that the maximum rate of any such long term gain
from the sale of a Unit will be 25% to the extent attributable to the recapture
of depreciation deductions taken with respect to real property held by the
Partnership. Capital losses are deductible only to the extent of capital gains,
except that, subject to the passive activity loss limitations discussed below,
non-corporate taxpayers may deduct up to $3,000 of capital losses in excess of
the amount of their capital gains against ordinary income. Excess capital losses
generally can be carried forward to succeeding years (a corporation's
carryforward period is five years and a non-corporate taxpayer can carry forward
such losses indefinitely), and a corporation is permitted to carry back excess
capital losses to the three preceding taxable years, provided the carryback does
not increase or produce a net operating loss for any of those years.
A tendering Unit Holder will be allocated a pro rata share of the
Partnership's taxable income or loss for the year of sale with respect to the
Units sold in accordance with the provisions of the Limited Partnership
Agreement concerning transfers of Units. Such allocation and any cash
distributed by the Partnership to the Unit Holder for that year will affect the
Unit Holder's adjusted tax basis in Units and, therefore, the amount of such
Unit Holder's taxable gain or loss upon a sale of Units pursuant to the Offer.
UNREALIZED RECEIVABLES AND CERTAIN INVENTORY. If any portion of the
amount of gain realized by a Unit Holder is attributable to "unrealized
receivables" or "inventory" as defined in Code Section 751, then a portion of
the Unit Holder's gain or loss may be ordinary rather than capital. A Unit
Holder who tenders Units which are purchased pursuant to the Offer must file an
information statement with such Unit Holder's federal income tax return for the
year of the sale which provides the information specified in Treasury Regulation
ss. 1.751-1(a)(3).
PASSIVE ACTIVITY LOSS LIMITATION. Under Code Section 469, a
non-corporate taxpayer or personal service corporation generally can deduct
"passive losses" in any year only to the extent of the person's passive income
for that year. In certain circumstances, individuals with adjusted gross incomes
of less than $150,000 may also deduct a portion of such losses against
non-passive income. A closely held C corporation (generally, a C corporation of
which more than 50% in value of its outstanding stock is directly or indirectly
owned by not more than five individuals) (other than personal service
corporations) may offset such losses against active income as well as passive
activity income for that year. A substantial portion of any losses of Unit
Holders from the Partnership would have been passive losses. Thus, Unit Holders
may have "suspended" passive losses from the Partnership (i.e., net taxable
passive losses which have not been used to offset income from other passive
activities or from the Partnership or, to the extent permitted, from non-passive
activities). Substantially all gain or loss from a sale of Units pursuant to the
Offer will be passive income or loss.
If a Unit Holder sells less than all of his or her Units pursuant to
the Offer, suspended passive losses, if any (including a portion of any loss
recognized on the sale of Units), can be currently deducted (subject to other
applicable limitations) to the extent of the Unit Holder's passive income from
the Partnership for that year (including any gain recognized on the sale of
Units) plus any other passive income for that year. In addition, if a Unit
Holder sells 100% of his or her Units pursuant to the Offer, any "suspended"
losses and any losses recognized upon the sale of the Units will be offset first
against any other net passive gain to the Unit Holder from the sale of the Units
and any other net passive activity income from other passive activity
investments, and the balance of any "suspended" net losses from the Units will
no longer be subject to the
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<PAGE>
passive activity loss limitation and, therefore, will be deductible by such Unit
Holder from its other income (subject to any other applicable limitations),
including ordinary income. Thus, if a tendering Unit Holder has suspended
passive losses from the Partnership in excess of gain from the sale, such Unit
Holder must sell all of its Units to currently deduct such excess. If more than
394,000 of the outstanding Units are tendered, none of tendering Unit Holders
would be able to sell 100% of their Units pursuant to the Offer because of
proration of the number of Units to be purchased by the Purchaser. See Section
1.
Summarized below is a hypothetical example of the potential after tax
results of a sale of Units pursuant to this Offer. This is only an illustration,
based on certain assumptions and subject to certain qualifications including
those discussed in Section 6. Actual tax consequences to any Unit Holder may
vary, and Unit Holders should consult their own tax advisors. Under the
following example, a Unit Holder who invested $20,000 and who now sells all of
their Units at a price of $6.50 per Unit, would receive approximately $9,674,
after tax, calculated as follows:
Cash on Sale $6,500
Capital Gain (1) 9,208
x25%
-----
Tax Liability @ 25% Rate (2,302)
Suspended Losses through 12/31/97 15,210
x36%
------
Tax Savings @ 36% Rate 5,476
Net After Tax Benefit (2) 3,174
-----
Total Benefit on Sale $9,674
- ---------------------------
(1) Capital gain was estimated to equal the sale price in the
Offer of $6,500 plus negative capital account balance as of
December 31, 1997 of $2,708. The actual capital gain may vary.
(2) The estimated tax results are based on a $20,000 original
investment for a Unit Holder admitted in the First Closing of
the Partnership. Capital account balances would vary for Unit
Holders admitted to the Partnership in the Second or Third
Partnership Closings, or later. The estimates do not reflect
potential tax results for 1998 up to the time of sale. The
estimate assumes that no passive losses from the Units are
utilized prior to the date of sale. It also assumes a 36%
federal ordinary income tax rate and a 25% capital gains rate,
and that the Unit Holder is not subject to the alternative
minimum tax. No consideration is given to state and local
taxes. The foregoing discussion is based on the Purchaser's
understanding of current federal tax laws, which (particularly
as they relate to passive losses) are complex and subject to
change.
PARTNERSHIP TERMINATION. Section 708(b) of the Code provides that a
partnership terminates for income tax purposes if there is a sale or exchange of
50% or more of the total interests in partnership capital and profits within a
twelve-month period (although successive transfers of the same interest within a
twelve-month period will be treated as a single transfer for this purpose). In
the event of a termination, the Partnership's tax year would close and the
Partnership would be treated for income tax purposes as if it had contributed
all of its assets and liabilities to a "new" partnership in exchange for an
interest in the "new" partnership. The Partnership would then be treated as
making a distribution of the interests in the "new" partnership to the new
partners and the remaining partners, followed by the liquidation of the
Partnership. A tax termination of the Partnership would also terminate any
partnership in which the Partnership holds a majority interest (50% or more). As
a result, a new depreciation recovery period would begin on such date with
respect to property held by such lower tier partnership (without an increase in
the depreciable basis of such property), the Partnership's annual depreciation
deductions over the next few years would be substantially
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<PAGE>
reduced, and the Partnership would have greater taxable income (or less tax
loss) than if no tax termination occurred.
The Limited Partnership Agreement prohibits transfer of Units if a
transfer, when considered with all other transfers during the same applicable
twelve-month period, would cause a termination of the Partnership for tax
purposes. The Purchaser will reduce the number of Units purchased in the Offer
as necessary to avoid a tax termination of the Partnership.
BACKUP WITHHOLDING AND FIRPTA WITHHOLDING. Unit Holders (other than
tax-exempt persons, corporations and certain foreign individuals) who tender
Units may be subject to 31% backup withholding unless those Unit Holders provide
a taxpayer identification number ("TIN") and certify that the TIN is correct or
properly certify that they are awaiting a TIN. A Unit Holder may avoid backup
withholding by properly completing and signing the Substitute Form W-9 included
as part of the Assignment of Partnership Interest. If a Unit Holder who is
subject to backup withholding does not properly complete and sign the Substitute
Form W-9, the Purchaser may withhold 31% from payments to such Unit Holder.
Gain realized by a foreign Unit Holder on the sale of a Unit pursuant
to the Offer will be subject to federal income tax. Under Code Section 1445, 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 a tax
equal to 10% of the amount realized on the disposition. In order to comply with
this requirement, the Purchaser will withhold 10% of the amount realized by a
tendering Unit Holder unless the Unit Holder properly completes and signs the
FIRPTA Affidavit included as part of the Assignment of Partnership Interest
certifying the Unit Holder's TIN and address, and that such Unit Holder is not a
foreign person. Amounts withheld would be creditable against a foreign Unit
Holder's federal income tax liability and, if in excess thereof, a refund could
be obtained from the Internal Revenue Service by filing a U.S. income tax
return.
SECTION 7. EFFECTS OF THE OFFER.
LIMITATIONS ON RESALES. The Limited Partnership Agreement prohibits
transfers of Units if a transfer, when considered with all other transfers
during the same applicable twelve-month period, would cause a termination of the
Partnership for federal or any applicable state income tax purposes. This
provision may limit sales of Units in the secondary market and in private
transactions for the twelve-month period following completion of the Offer. The
Partnership has advised the Purchaser that it will not process any requests for
recognition of substitution of Unit Holders upon a transfer of Units during such
twelve-month period which the Partnership believes may cause a tax termination
in contravention of the Limited Partnership Agreement.
EFFECT ON TRADING MARKET; REGISTRATION UNDER SECTION 12(G) OF THE
EXCHANGE ACT. If a substantial number of Units are purchased pursuant to the
Offer, the result will be a reduction in the number of Unit Holders. 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 this case, however, there
is no established public trading market for the Units and, therefore, the
Purchaser does not believe a reduction in the number of Unit Holders will
materially further restrict the Unit Holders' ability to find purchasers for
their Units through secondary market transactions. See Section 13 for certain
limited information regarding recent secondary market sales of the Units.
The Units are registered under Section 12(g) of the Exchange Act,
which means, among other things, that the Partnership is required to file
periodic reports with the Commission and to comply with the Commission's proxy
rules. The Purchaser does 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, the
Partnership could apply to de-register the Units under the Exchange Act. Because
the Units are widely held, however, the Purchaser believes that, even if it
purchases the maximum number of Units in the Offer, after that purchase the
Units will be held of record by more than 300 persons.
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<PAGE>
CONTROL OF UNIT HOLDER VOTING DECISIONS BY PURCHASER; EFFECT OF
RELATIONSHIP WITH THE GENERAL PARTNERS. The Limited Partnership Agreement
provides that the General Partners have the discretion (which must be
reasonable) as to whether to admit an assignee of Units to the Partnership as a
substituted Unit Holder. The Purchaser will seek to be admitted to the
Partnership as a substituted Unit Holder upon consummation of the Offer and, if
admitted, will have the right to vote each Unit purchased pursuant to the Offer.
Even if the Purchaser is not admitted to the Partnership as a substituted Unit
Holder, however, the Purchaser nonetheless will have the right to vote each Unit
purchased in the Offer pursuant to the irrevocable appointment by tendering Unit
Holders of the Purchaser and its managing member and designees as proxies with
respect to the Units tendered by such Unit Holders and accepted for payment by
the Purchaser. See Section 3. As a result, the Purchaser could be in a position
to significantly influence all voting decisions with respect to the Partnership.
In general, the Purchaser (which is an affiliate of the Affiliated General
Partners) will vote the Units owned by it in whatever manner it deems to be in
its best interests, which, because of its relationship with the Affiliated
General Partners, also may be in the interest of the Affiliated General
Partners, but may not be in the interest of other Unit Holders. This could (i)
prevent non-tendering Unit Holders from taking action they desire but that the
Purchaser opposes and (ii) enable the Purchaser to take action desired by it but
opposed by non-tendering Unit Holders. For purposes of the foregoing sentence,
the term "non-tendering Unit Holders" includes those Unit Holders not all of
whose Units were purchased in the Offer. Under the Limited Partnership
Agreement, Unit Holders holding a majority of the Units are entitled to take
action (without concurrence of the General Partners) with respect to a variety
of matters, including: removal of a General Partner and in certain circumstances
election of new or successor general partners; dissolution of the Partnership;
the sale of all or substantially all of the assets of the Partnership; and most
types of amendments to the Limited Partnership Agreement.
The Offer will not result in any change in the compensation payable to
the Affiliated General Partners or their affiliates. However, as a result of the
Offer, the Purchaser will participate, in its capacity as a Unit Holder, in any
subsequent distributions to Unit Holders to the extent of the Units purchased
pursuant to the Offer.
SECTION 8. FUTURE PLANS OF PURCHASER. The Purchaser is seeking to
acquire Units pursuant to the Offer primarily for investment purposes and with a
view to making a profit. Following the completion of the Offer, the Purchaser
and/or persons related to or affiliated with it may acquire additional Units.
Any such acquisition may be made through private purchases, through one or more
future tender or exchange offers or by any other means deemed advisable. Any
such acquisition may be at a price higher or lower than the price to be paid for
the Units purchased pursuant to the Offer, and may be for cash or other
consideration. The Purchaser also may consider disposing of some or all of the
Units it acquires pursuant to the Offer, either directly or by a sale or other
disposition of equity interests in the Purchaser, depending among other things
on the requirements from time to time of the Purchaser Affiliates and their
affiliates in light of liquidity, strategic, tax and other considerations.
The Purchaser has no present plans or intentions with respect to a
liquidation of the Partnership or to seek to effect a sale of assets or, except
as discussed below, refinancing of any of the Complexes. However, the Purchaser
expects that, consistent with the General Partners' fiduciary obligations, they
will consider opportunities (including opportunities identified by the
Purchaser) to engage, or to seek to cause the Operating Partnerships to engage,
in transactions which could benefit the Partnership, such as sales or
refinancings of assets or a combination of the Partnership with one or more
other entities, with the objective of seeking to maximize returns to Unit
Holders. Any such merger or consolidation transaction could involve other
limited partnerships in which the General Partners or their affiliates serve as
general partners, or a combination of the Partnership with one or more existing,
publicly traded entities, in any of which Unit Holders might receive cash,
common stock or other securities or consideration. See also "Introduction --
Distributions" for information on the possible refinancing of the Columbia
Partnership's mortgage obligations.
There is no assurance, however, as to when or whether any of the
transactions referred to in the paragraphs above might occur. If any such
transaction is effected and financial benefits accrue to the Unit Holders of the
Partnership, the Purchaser (and thus the Purchaser Affiliates) will participate
in those benefits to
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<PAGE>
the extent of its ownership of Units. A merger or other consolidation
transaction and certain kinds of other extraordinary transactions would require
a vote of the Unit Holders, and if the Purchaser is successful in acquiring a
significant number of Units pursuant to the Offer (or otherwise), it will be
able to significantly influence the outcome of any such vote. The Purchaser
Affiliates' primary objective in seeking to acquire the Units through the
Purchaser 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 9. CERTAIN INFORMATION CONCERNING THE PARTNERSHIP. Except as
otherwise indicated, information contained in this Section 9 is based upon
documents and reports publicly filed by the Partnership with the Commission.
General. The Partnership was organized on October 10, 1986 under the
laws of the State of Delaware. Its principal executive offices are located at
c/o Wilder Richman Resources Corporation, 599 W. Putnam Avenue, Greenwich, CT
06830, and its telephone number at that address is (203) 869-0900.
The Partnership's primary business is real estate ownership and
related operations. The Partnership was formed for the purpose of investing in
luxury multi-family residential complexes which offer the potential for
appreciation in value and cash distributions to the Unit Holders from
operations.
The Partnership's investment portfolio currently consists of a 99%
limited partnership interest in each of the Operating Partnerships.
Fieldpointe Apartments, which is owned by the Carrollton Partnership,
is located in Frederick, Maryland. It is comprised of 252 apartment units
totalling approximately 235,000 square feet with approximately 500 parking
spaces. On-site amenities include a clubhouse building with locker room and
on-site management office, a swimming pool and two tennis courts. Monthly
rentals range from $560 for a one-bedroom apartment to $800 for a three-bedroom
apartment. Based on information known to the Purchaser or its affiliates, the
occupancy rate for this Complex was 98% as of March 31, 1998. The Partnership
acquired its interest in the Carrollton Partnership in October, 1987.
The Westmont, which is owned by the Columbia Partnership, is located
in New York City. It contains 163 apartment units, 9,415 square feet of
commercial space, 46 garage spaces and a penthouse with an exercise center and
health club offering exercise equipment, steam room, sauna jacuzzi and a large
terrace. Monthly rentals range form $1,576 for a studio apartment to $4,100 for
a three-bedroom apartment (with the exception of certain units rented for low
and moderate income rental rates). Based on information known to the Purchaser
or its affiliates, the occupancy rate for this Complex was approximately 98% as
to residential units and 100% as to commercial space as of March 31, 1998. The
Partnership acquired its interest in the Columbia Partnership in December, 1988.
ORIGINALLY ANTICIPATED HOLDING PERIOD FOR PARTNERSHIP INVESTMENTS;
ALTERNATIVES. According to the Partnership Prospectus, the Partnership
anticipated that the holding period with respect to the Partnership's interests
in the Operating Partnerships would be approximately ten years from the date of
acquisition of such interests or, if longer, ten years from the date of
commencement of operation of the Complexes. However, the Partnership indicated
that the precise holding period for the interests in the Operating Partnerships
would depend upon the financial and operating circumstances of the Complexes, in
the case of the Carrollton Partnership and opportunities to take advantage of
capital appreciation in the Complexes, the objectives of the general partners of
the Operating Partnerships and other circumstances particular to each
investment. The Partnership Prospectus also stated the then current intention of
the Partnership that its investments in an Operating Partnership would be
liquidated and the proceeds distributed in accordance with the Partnership
Agreement between 8-12 years after the initial acquisition of such Operating
Partnership interest. The Partnership presently has the right in the case of the
Carrollton Partnership and will have the right in the case of the Columbia
Partnership beginning in December 1998 to commence the process of liquidating
its investment in each of the Complexes and, in connection therewith, require
the general partner of the respective Operating Partnership to obtain an offer
for sale of the Complex acceptable to the Partnership. Sale of one or
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both of the Complexes, however, would require, among other things, the consent
of any applicable housing finance authority, the consent of WRC-87A, the special
limited partner of each of the Operating Partnerships, and in certain instances,
the consent of a majority of the Unit Holders of the Partnership.
Factors that could contribute to decision of the General Partners to
seek to liquidate the Partnership investment in one or both of the Operating
Partnerships or to seek to effect a sale or refinancing of one or both of the
Complexes that could result in distributions to the Unit Holders include cash
flow and other aspects of the financial condition of the Operating Partnerships,
the ability to refinance or otherwise modify the terms of the existing mortgage
financing for the Complexes, tax considerations, and general conditions in the
real estate and capital markets.
Unit Holders could, as an alternative to tendering their Units and
without the concurrence of the General Partners, take a variety of possible
actions, including voting to dissolve the Partnership or causing the Partnership
to remove or replace any or all of the General Partners, direct WRC-87A, as
special limited partner of the Operating Partnerships, to remove any general
partner of the Operating Partnerships, with or without cause, or to sell all or
substantially all of its assets.
SELECTED FINANCIAL AND PROPERTY-RELATED DATA. Set forth below is a
summary of certain financial and statistical information with respect to the
Partnership and its properties, all of which has been excerpted or derived from
the Partnership's Annual Report on Form 10-K for the year ended December 31,
1997 (the "Form 10-K") and the Partnership's Quarterly Report on Form 10-Q for
the period ended March 31, 1998 (the "Form 10-Q"). This information is not
necessarily indicative of the financial performance to be expected of the
Partnership in the future. More comprehensive financial and other information is
included in such reports and other documents filed by the Partnership with the
Commission, and the following summary is qualified in its entirety by reference
to such reports and other documents and all the financial information and
related notes contained therein. See also "Introduction -- Recent Operating
Results."
<TABLE>
<CAPTION>
SECURED INCOME L.P.
SELECTED FINANCIAL DATA
(in thousands, except per Unit data)
FISCAL YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
1997 1996 1995 1998 1997
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Total Revenues $ 6,787 $ 6,435 $ 6,093 $ 1,704 $ 1,666
Net Loss (596) (70) (398) (6) (59)
Net Loss per Unit(1) - - - - -
Balance Sheet Data:
Total Assets 38,149 39,322 37,856
Total Liabilities 39,566 40,144 39,279
Unit Holders' Equity
(Deficit) - - -
</TABLE>
- ------------------------------
(1) In accordance with generally accepted accounting principles (GAAP), since
the Unit Holders' equity is zero as a result of cumulative losses, future loses
are allocated to the General Partner for financial reporting purposes.
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<PAGE>
SCHEDULE OF MORTGAGES. Set forth below is a table showing certain
information regarding the outstanding mortgages encumbering each of the
Complexes as of March 31, 1998 ($ amounts in thousands). The information is
provided based on information known to the Purchaser or its affiliates.
<TABLE>
<CAPTION>
PRINCIPAL
PRINCIPAL BALANCE
BALANCE AT STATED PERIOD DUE AT
MARCH 31, 1998 INTEREST RATE AMORTIZED MATURITY DATE MATURITY
<S> <C> <C> <C> <C> <C>
Westmont $24,282 4.66%(1) (1) February, 2007 (1)
Fieldpointe $10,051 6.09% 40 Years February, 2028 0
</TABLE>
- ------------------------------
(1) The 4.66% stated interest rate is subject to low floater interest rate
which averaged 3.56% during 1997, plus a letter of credit fee of 2.5%.
Monthly payments are therefore subject to such rates plus fixed monthly
principal payments of approximately $29,500. The principal balance due at
maturity will be subject to optional prepayments under the terms of the
financing. For further details, refer to Note 6 to the Partnership's
audited financial statements included in the Form 10-K.
SCHEDULE OF REAL ESTATE TAXES AND RATES. Set forth below is a table
showing the real estate taxes and rates for 1997 for each of the Complexes. This
data is based upon information known to the Purchaser or its affiliates.
EXPENSE INCURRED FOR THE RATE FOR THE
YEAR ENDED YEAR ENDED
PROPERTY DECEMBER 31, 1997 DECEMBER 31, 1997
- -------------------------------------------------------------------------------
Westmont 578,372 (1)
Fieldpointe 174,072 $4.26 per $100 of assessed value
- ----------------------------
(1) Real estate taxes for Westmont have historically been determined pursuant
to special tax programs of the City of New York.
CASH DISTRIBUTIONS HISTORY. In order to provide Unit Holders with 7%
guaranteed cash distributions required to be made through December 31, 1993 and
to pay investor services fees, the Partnership purchased guaranteed investment
contracts. The last such cash distributions were made in 1995. In total,
original investors in the Partnership have received distributions of $468.50 per
$1,000 investment since 1987, virtually all of which were generated by payments
under the guaranteed investment contracts. According to the Partnership's public
filings, significant cash flow distributions from the property held by the
Columbia Partnership, because of the restrictions on cash flow distributions
under the terms of the Columbia Partnership's refinanced mortgage obligations,
are not likely to occur. If, however, the Columbia Partnerships was successful
in renegotiating the terms of or replacing its mortgage indebtedness to permit
cash flow distributions, such cash flow could be available for distributions to
the Unit Holders. For information on the potential refinancing of the Columbia
Partnership's mortgage obligations, please see "Introduction -- Distributions."
OPERATING BUDGETS OF THE PARTNERSHIP. A summary of the operating
budgets for 1997 and 1998 and the audited results of operations for fiscal 1997
of the Partnership, on a consolidated basis, are set forth in the table below.
The budget information is based upon information furnished by the Partnership to
the Purchaser. The budgeted amounts provided below are figures that were not
computed in accordance with generally accepted accounting principles ("GAAP").
Historically, budgeted operating results of operations for a particular fiscal
year have differed significantly in certain respects from the audited operating
results for that year. In particular, items that are categorized as capital
expenditures for purposes of preparing the operating budgets are often
re-categorized as expenses when the financial statements are audited and
presented in accordance with GAAP. Therefore, the summary operating budgets
presented for 1998 should not necessarily be considered as indicative
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of what the audited operating results for that year will be. Furthermore, any
estimate of the future performance of a business, such as the Partnership's
business, is forward-looking and based on numerous assumptions, some of which
inevitably will prove to be incorrect. Among the factors that could cause actual
operating results to differ from projected results are a decline in occupancy
rates at the Complexes, any casualty or other event requiring unanticipated
capital improvements at the Complexes or that could result in defaults under the
mortgage financing for the Complexes, mismanagement by the general partners of
the Operating Partnerships, changes in applicable law or regulations that could
increase the costs of regulatory compliance and general market and economic
conditions. For this reason, it is probable that the Partnership's future
operating results will differ from those projected in the operating budget, and
those differences may be material. Therefore, the accuracy of such information
should not be relied on by Unit Holders.
<TABLE>
<CAPTION>
FISCAL 1998 FISCAL 1997 FISCAL 1997
BUDGETED AUDITED BUDGETED
-------- ------- --------
<S> <C> <C> <C>
Total Revenues from Property Operations $6,537 $6,626 $6,395
Total Operating Expenses 2,841 2,555 2,720
Net Operating Income 3,696 4,071 3,675
Capital Expenditures 315 18 317
</TABLE>
OTHER INFORMATION. The Partnership is subject to the information
reporting requirements of the Exchange Act and accordingly is required to file
reports and other information with the Commission relating to its business,
financial results and other matters. Such reports and other documents may be
inspected at the Commission's Public Reference Section, Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, where copies may be obtained at prescribed
rates, and at the regional offices of the Commission located in the Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and 7
World Trade Center, New York, New York 10048. Copies should be available by mail
upon payment of the Commission's customary charges by writing to the
Commission's principal offices at 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission also maintains a web site that contains reports, proxy and
other information filed electronically with the Commission, the address of which
is http://www.sec.gov.
SECTION 10. CONFLICTS OF INTEREST AND TRANSACTIONS WITH AFFILIATES.
The Affiliated General Partners and their affiliates have conflicts of
interest with respect to the Offer as set forth below.
CONFLICTS OF INTEREST WITH RESPECT TO THE OFFER. The Affiliated
General Partners have conflicts of interest with respect to the Offer, resulting
from their affiliation with the Purchaser. In the case of WRC-87A, this conflict
is limited to the interests of Messrs. Richman and Wilder in WRRC, which owns
50% of WRC- 87A, since Lehman, which owns (through its interest in REEPI) half
of the equity interest in WRC-87A, has no interest in the Purchaser or in the
Offer. The Purchaser is making the Offer with a view towards realizing a profit
for the benefit of the Purchaser Affiliates, which collectively own all equity
interest in the Purchaser. Messrs. Richman and Wilder, who also control or share
control over the Affiliated General Partners, and the other Purchaser Affiliates
may be expected to realize a greater profit on the Purchaser's investment in the
Units to the extent that the Purchaser is able to acquire the Units in the Offer
at a lower price. It is in the interest of the Unit Holders desiring to sell
their Units to receive the highest possible price for such Units available in
the circumstances. This may result in a conflict between the fiduciary
obligations of the Affiliated General Partners to act in the best interests of
the holders of Units and the desire of the persons controlling the Affiliated
General Partners to further their own economic interests.
If the Offer is consummated, the Purchaser may own a substantial
equity interest and voting power in the Partnership. Because of different
financial, tax and other circumstances of affiliates of the Purchaser and
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the other Unit Holders, it may be in the interest the Purchaser to cause the
liquidation of the Partnership, or the sale or refinancing of the assets in
which the Partnership is invested through the Operating Partnerships, at a time
when such action is not in the best interest of the other Unit Holders, or vice
versa. This could result in a conflict for the Affiliated General Partners in
attempting to reconcile the interests of the Purchaser and its controlling
persons with whom they are affiliated and the interests of the other Unit
Holders.
VOTING BY THE PURCHASER. The Purchaser will seek to be admitted to the
Partnership as a substituted Unit Holder upon consummation of the Offer and,
when admitted, will have the right to vote each Unit purchased pursuant to the
Offer. Even if the Purchaser is not admitted to the Partnership as a substituted
Unit Holder, the Purchaser will have the right to vote each Unit purchased in
the Offer pursuant to the irrevocable appointment by tendering Unit Holders of
the Purchaser and its managing member and designees as proxies with respect to
the Units tendered by such Unit Holders and accepted for payment by the
Purchaser. See Section 3. As a result, if the Purchaser is successful in
acquiring a significant number of Units pursuant to the Offer, the Purchaser
will have the right to vote those Units and thereby significantly influence all
voting decisions of the Unit Holders with respect to the Partnership. In
general, the Purchaser will vote the Units owned by it in whatever manner it
deems to be in its and the Purchaser Affiliates' best interests, which, because
of their relationship with the Affiliated General Partners, also may be in the
interest of the Affiliated General Partners, but may not be in the interest of
other Unit Holders. This could (i) prevent non-tendering Unit Holders from
taking action they desire but that the Purchaser opposes, and (ii) enable the
Purchaser to take action desired but opposed by non-tendering Unit Holders. For
purposes of the preceding sentence, the term "non-tendering Unit Holders"
includes both those Unit Holders not all of whose Units were tendered by the
Unit Holder in the Offer and those Unit Holders not all of whose Units were
purchased by the Purchaser in the Offer because of proration. Under the Limited
Partnership Agreement, Unit Holders holding a majority of the Units are entitled
to take action (without concurrence of the General Partners) with respect to a
variety of matters, including: removal of a General Partner and in certain
circumstances election of new or successor General Partners; dissolution of the
Partnership; the sale of all or substantially all of the assets of the
Partnership; and most types of amendments to the Limited Partnership Agreement.
See Section 7.
FINANCING ARRANGEMENTS. The Purchaser expects to pay for the Units it
purchases pursuant to the Offer with funds provided by Purchaser Affiliates as a
capital contribution. See Section 12. It is possible, however, that in
connection with its future financing activities, the Purchaser may pledge the
Units as collateral for loans, or otherwise agree to terms which provide the
Purchaser with incentives to generate substantial near-term cash flow from the
Purchaser's investment in the Units. This could be the case, for example, if a
loan has a "balloon" maturity after a relatively short time or bears a high or
increasing interest rate. In such a situation, the Affiliated General Partners
may experience a conflict of interest in seeking to reconcile the best interests
of the Partnership with the need of its affiliates for cash flow from the
Partnership's activities. See "Conflicts of Interest with Respect to the Offer"
above.
TRANSACTIONS WITH AFFILIATES. WRMC, an affiliate of the Purchaser, is
the management agent for the Fieldpointe Complex owned by the Carrollton
Partnership. The Carrollton Partnership paid or accrued fees for property
management and other services provided by WRMC in the amounts of approximately
$86,040, $83,958 and $82,012 for the years ended December 31, 1997, 1996 and
1995, respectively. WRMC was owed by the Carrollton Partnership accrued fees in
the amount of $35,659 at March 31, 1998. In addition, at March 31, 1998, WRMC
was owed by the Carrollton Partnership $166,000 for past years' operating
advances.
WRC-87A, a General Partner and an affiliate of the Purchaser, is
entitled to an annual investor services fee, to the extent that such investor
services are not provided by an independent third party. Investor services
include maintenance of Partnership books and records and the preparation and
distribution to Unit Holders of reports and other information. The Partnership
and/or the Operating Partnerships paid or accrued fees for investor services
provided by WRC-87A during 1997, 1996 and 1995 in the amounts of $65,873,
$65,971 and $83,975, respectively, and, in the amount of $15,468 during the
three month period ended March 31, 1998.
LaMere Associates, Inc., an entity in which an affiliate of the
Purchaser owns a 20% interest, receives premiums in connection with property,
workers compensation, liability and umbrella insurance coverage
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provided to the Carrollton Partnership. The Carrollton Partnership incurred
premiums in connection with such insurance coverage during 1997, 1996 and 1995
of $45,864 , $47,303 and $49,104, respectively.
As of March 31, 1998, the Carrollton Partnership owed its general
partners and their affiliates $65,154 relating to prior years' advances.
SECTION 11. CERTAIN INFORMATION CONCERNING THE PURCHASER.
THE PURCHASER. The Purchaser is a newly formed Delaware limited
liability company organized for the purpose of making the Offer and which sole
managing member is Mr. Richman. The Purchaser has not engaged in any business
activity other than in connection with the Offer and has no significant assets
or liabilities at the present time, other than amounts it expects to receive
from Purchaser Affiliates as a capital contribution. Upon consummation of the
Offer, the Purchaser's only significant assets will be the Units it acquires
pursuant to the Offer and the remaining cash, if any.
The principal executive offices of the Purchaser are located at 599 W.
Putnam Avenue, Greenwich, Connecticut 06830, and its telephone number is (203)
869-0900. For certain information concerning the members of the Purchaser, see
Schedule I to this Offer to Purchase.
Except as otherwise set forth herein, none of the Purchaser, Purchaser
Affiliates or, to the best of the Purchaser's knowledge, any of the persons
listed on Schedule I hereto, or any affiliate of the foregoing, (i) beneficially
owns or has a right to acquire any Units, (ii) has effected any transaction in
the Units in the last 60 days, or (iii) has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Partnership, including, but not limited to, contracts,
arrangements, understandings or relationships concerning the 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.
SECTION 12. SOURCE OF FUNDS. The Purchaser expects that approximately
$2,561,000 plus fees and expenses will be required to purchase 394,000 Units, if
tendered, and to pay related fees and expenses. The Purchaser expects to receive
such amount from Purchaser Affiliates as a capital contribution.
SECTION 13. BACKGROUND OF THE OFFER.
GENERAL BACKGROUND. The Partnership was organized by the General
Partners in 1987 to invest in luxury multi-family residential complexes.
Pursuant to the Partnership Prospectus, as supplemented, the Partnership offered
up to $50 million of Units at an offering price of $20 per Unit. The offering of
Units was terminated in February 1988 after raising $19,687,380 from the sale of
984,369 Units. With the proceeds of the offering the Partnership purchased its
interests in the Operating Partnerships. In order to provide Unit Holders with
7% guaranteed cash distributions required to be made through December 31, 1993,
the Partnership utilized a portion of the proceeds of the offering to purchase
guaranteed investment contracts. The last such cash distributions were made in
January 1995. In total, original investors in the Partnership have received
distributions of $468.50 per $1,000 investment since 1987, virtually all of
which were generated by payments under the guaranteed investment contracts. The
guaranteed investment contracts have also been used for the payment of investor
services fees. According to the Partnership's public filings, significant cash
flow distributions from the property held by the Columbia Partnership, because
of the restrictions on cash flow distributions under the terms of the Columbia
Partnership's refinanced mortgage obligations, are not likely to occur. If,
however, the Columbia Partnership was successful in renegotiating the terms of
or replacing its mortgage indebtedness to permit cash flow distributions, such
cash flow could be available for distributions to the Unit Holders. For
information on the potential refinancing of the Columbia Partnership's mortgage
obligations, please see "Introduction -- Distributions".
Prior to the third quarter of 1993, the Operating Partnerships
experienced significant cash flow problems because of the high cost of debt
service on the mortgage financing for the Complexes. During the
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second and third quarters of 1993, the mortgages for the Complexes were
refinanced. As a result, the Partnership's results of operation improved
considerably, due primarily to a significant decrease in interest expense and
the ability to sustain high occupancy rates.
The Units are highly illiquid. The Units do not trade on any
securities exchange or in any other organized trading market, and the secondary
market sales activity for the Units has been limited and sporadic. See "Trading
History of Units" below. The trading prices for the Units in the secondary
market has been steeply discounted compared to the offering price of the Units
and the other measures of value discussed below, particularly after the
expiration of the Partnership's obligation to pay to Unit holders an annual 7%
return through December 31, 1993. The Purchaser believes that these steeply
discounted trading prices do not reflect the value of the underlying investment
interests of the Partnership in the Operating Partnerships, especially in light
of the improved operations of the Operating Partnerships following the
refinancing of their mortgage indebtedness in 1993.
The MacKenzie Offer was commenced on June 29, 1998. Prior to the
Partnership's filing of its Schedule 14D-9 in connection with the MacKenzie
Offer, WRRC advised the Partnership that affiliates of WRRC were considering
making an offer to acquire Units for cash. While no definitive decision to make
such an offer was reached at that time, WRRC indicated that if such an offer
were to proceed, that offer would be commenced prior to the scheduled July 31,
1998 expiration date of the MacKenzie Offer so that Unit Holders would have an
opportunity to review and consider such additional offer before deciding whether
to tender any Units in response to the MacKenzie Offer. WRRC is an Affiliated
General Partner and is beneficially owned by Messrs. Richman and Wilder, who
also control the Purchaser.
The Purchaser believes that an offer for the Units at the Purchase
Price affords those Unit Holders who do not wish to continue to bear the
investment risk of the ownership of Units or who otherwise desire to dispose of
their Units at this time an opportunity to sell their Units at a price that is
substantially above recent trading prices for the Units and above the Everest
and MacKenzie Offers. The Purchaser is not making any recommendation to Unit
Holders to sell their Units, however, and the Purchaser hopes to realize a
profit at a later time on its purchase of Units in the Offer through future cash
flow or liquidating distributions from the Partnership, through a future
disposition of the Units or otherwise. Other than as set forth in this Offer to
Purchase, the Purchaser has no current plans to cause the Partnership to effect
any distributions or to dispose of or otherwise transfer any Units acquired by
the Purchaser in the Offer.
DETERMINATION OF PURCHASE PRICE. In establishing the Purchase Price,
the Purchaser reviewed certain publicly available information and certain
information known to it and its affiliates, including among other things: (i)
the Limited Partnership Agreement of the Partnership, as amended to date, and
the limited partnership agreements of the Operating Partnerships, each as
amended to date; (ii) the Partnership's Form 10-K; (iii) the operating budgets
with respect to the Complexes for 1998; (iv) the MacKenzie and Everest Offers
and (v) other information obtained by the affiliates of the Purchaser in their
capacities as providers of property management, asset management and partnership
administration services to the Partnership. Based on that information, the
Purchaser considered the factors discussed below.
TRADING HISTORY OF UNITS. Secondary market sales activity for the
Units, including privately negotiated sales, has been limited and sporadic.
According to information obtained from the Partnership, from July 1, 1997 to
July 1, 1998 an aggregate of 25,203 Units (representing approximately 2.56% of
the total weighted outstanding Units) were transferred in sale transactions.
Gross sales prices during this period, as reported by the Partnership, ranged
from $1.00 per Unit to $2.50 per Unit. The gross sales prices 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; thus the Purchaser does not know whether the
information is complete. Moreover, the transfer documentation submitted to the
General Partners often does not include the requested price information or
contains conflicting information as to the actual sales price. Accordingly, Unit
Holders should not rely upon the accuracy of this information. In addition, the
Everest Offer was for $3.50 per Unit for up to 42,234 Units and the MacKenzie
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<PAGE>
Offer is for $5.00 per Unit for up to 196,875 Units. Responses to such Offers
are not yet known by the Partnership.
The Purchaser believes that, although secondary market sales
information may not be a reliable measure of value because of the limited and
inefficient nature of the market for Units, this information may be relevant to
a Unit Holder's decision as to whether to tender its Units pursuant to the
Offer. At present, privately negotiated sales, tender offers for Units and sales
through intermediaries (e.g., through the trading system operated by American
Partnership Board, Inc., which publishes sell offers by Unit Holders) are the
only means available to a Unit Holder to liquidate an investment in Units (other
than the Offer) because the Units are not listed or traded on any exchange or
quoted on The Nasdaq Stock Market.
PURCHASER'S PRO FORMA ESTIMATE OF NET LIQUIDATION VALUE PER UNIT. The
Purchaser is offering to purchase Units, which are a relatively illiquid
investment, and is not offering to purchase the Partnership's underlying assets
or assume any of its liabilities. Consequently, the Purchaser does not believe
that the per-Unit amount which might be distributed to Unit Holders following a
future sale of the Complexes necessarily reflects the present fair value of a
Unit. Conversely, the realizable value of the Partnership's assets clearly is a
relevant factor in determining the price a prudent purchaser would offer for
Units. In considering this factor, the Purchaser made a pro forma calculation of
the amount each Unit Holder might receive in a theoretical orderly liquidation
of the Partnership (which may not be realistically possible, particularly in the
near term, due to the general difficulty of disposing of real estate in a short
period of time, and other factors, including the restrictions on cash flow
distribution on the Westmont property owned by the Columbia Partnership and the
Federal Housing Administration's (the "FHA") regulations applicable to the
Fieldpointe property owned by the Carrollton Partnership), based upon
capitalizing at a rate of 8.5% the combined net operating income of the
Complexes, totalling approximately $4,070,000, as disclosed in the Form 10-K
(such capitalized combined net operating income, the "Gross Real Estate Value
Estimate"). The Purchaser based its pro forma liquidation analysis on the Gross
Real Estate Value Estimate because the Purchaser believes that the Gross Real
Estate Value Estimate represents a reasonable estimate, based on currently
available information, of the values of the Complexes.
In estimating the pro forma net liquidation value per Unit, the
Purchaser adjusted its Gross Real Estate Value Estimate of approximately
$48,000,000 by deducting (i) mortgages payable of approximately $34,450,000,
(ii) amounts due to General Partners and affiliates of approximately $4,100,000
and (iii) assumed closing costs and brokerage expenses of approximately
$1,675,000 (3.5% of the Gross Real Estate Value Estimate), and by adding
approximately $4,700,000 in cash and reserves. The result, approximately
$12,350,000, represents the Purchaser's pro forma estimate of the aggregate net
liquidation proceeds which could be realized on an orderly liquidation of the
Partnership, based on the assumptions implicit in the calculations described
above.
To complete its pro forma estimate of the amount of the theoretical
liquidation proceeds that would be distributable per Unit, the Purchaser divided
the estimated aggregate net liquidation proceeds of $12,350,000 by the 984,369
Units outstanding as of July 7, 1998. The resulting estimated pro forma
liquidation value was approximately $12.55 per Unit (the "Estimated Liquidation
Value").
The Purchaser's pro forma liquidation analysis described above is
merely theoretical and does not itself reflect the value of the Units because
(i) there is no assurance that any such liquidation in fact will occur in the
foreseeable future, (ii) any liquidation in which the estimated fair market
values described above might be realized would take a period of time, during
which time the Partnership and its partners would continue to be exposed to the
risk of fluctuations in asset values because of changing market conditions and
other factors and (iii) the Westmont property owned by the Columbia Partnership
is subject to certain restrictions on cash flow distributions and the
Fieldpointe property owned by the Carrollton Partnership is subject to FHA
regulations. In light of these factors, the Purchaser believes the actual
current value of the Units is substantially less than its estimate of the
Estimated Liquidation Value. Conversely, there is a substantial possibility that
the per-Unit value realized in an orderly liquidation could be greater than the
Estimated Liquidation Value. For example, the Purchaser's calculation of the
Gross Real Estate Value Estimate
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is based on the 1997 year end audited results of the Operating Partnerships. As
the real estate market in the eastern United States during 1998 has continued to
improve, it is reasonably likely that the 1998 audited results of operations of
the Operating Partnerships would show increased net operating income for the
Complexes, and possibly a reduced capitalization rate resulting from decreases
in interest rates generally, as compared to 1997. Furthermore, the analysis
described above is based on a series of assumptions, some of which may not be
correct. Accordingly, this analysis should be viewed merely as indicative of the
Purchaser's approach to valuing Units and not as any way predictive of the
likely result of any future transactions.
The Purchase Price represents the price that the Purchaser is willing
to pay for the Units. No independent third party has been retained by the
Purchaser to evaluate or render an opinion with respect to the fairness of the
Purchase Price, and no appraisals of any of the properties owned by the
Partnership have been obtained by the Purchaser.
SECTION 14. CONDITIONS OF THE OFFER. Notwithstanding any other term of
the Offer, the Purchaser will not be required to accept for payment or to pay
for any Units tendered if all authorizations, consents, orders or approvals of,
or declarations or filings with, or expirations of waiting periods imposed by,
any court, administrative agency or commission or other governmental authority
or instrumentality, domestic or foreign, necessary for the consummation of the
transactions contemplated by the Offer shall not have been filed, occurred or
been obtained prior to the Expiration Date. Furthermore, notwithstanding any
other term of the Offer and in addition to the Purchaser's right to withdraw the
Offer at any time before the Expiration Date, the Purchaser will not be required
to accept for payment or pay for any Units not theretofore accepted for payment
or paid for and may terminate or amend the Offer as to such Units if, at any
time on or after the date of the Offer and before the Expiration Date, any of
the following conditions exists:
(a) a preliminary or permanent injunction or other order of any
federal or state court, government or governmental authority or agency shall
have been issued and shall remain in effect which (i) makes illegal, delays or
otherwise directly or indirectly restrains or prohibits the making of the Offer
or the acceptance for payment, purchase of or payment for any Units by the
Purchaser, (ii) imposes or confirms limitations on the ability of the Purchaser
effectively to exercise full rights of ownership of any Units, including without
limitation the right to vote any Units acquired by the Purchaser pursuant to the
Offer or otherwise on all matters properly presented to the Partnership's Unit
Holders, (iii) requires divestiture by the Purchaser of any Units, (iv) causes
any material diminution of the benefits to be derived by the Purchaser as a
result of the transactions contemplated by the Offer, or (v) might materially
adversely affect the business, properties, assets, liabilities, financial
condition, operations, results of operations or prospects of the Purchaser or
the Partnership;
(b) there shall be any action taken, or any statute, rule, regulation
or order proposed, enacted, enforced, promulgated, issued or deemed applicable
to the Offer by any federal or state court, government or governmental authority
or agency, which might, directly or indirectly, result in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;
(c) any change or development shall have occurred or been threatened
since the date of this Offer to Purchase, in the business, properties, assets,
liabilities, financial condition, operations, results of operations or prospects
of the Partnership, which is or may be materially adverse to the Partnership, or
the Purchaser shall have become aware of any fact that does or may have a
material adverse effect on the value of the Units;
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market in the United States, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation by any governmental authority on, or other
event which might affect, the extension of credit by lending institutions or
result in any imposition of currency controls in the United States, (iv) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States, (v) a material
change in United States or other currency exchange rates or a
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<PAGE>
suspension of, or imposition of a limitation on, the markets thereof, or (vi) in
the case of any of the foregoing existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof; or
(e) it shall have been publicly disclosed or the Purchaser shall have
otherwise learned that, except for or as a result of the MacKenzie or Everest
Offers, (i) more than five percent of the outstanding Units have been or are
proposed to be acquired by another person (including a "group" within the
meaning of Section 13(d)(3) of the Exchange Act), or (ii) any person or group
that prior to such date had filed a Statement with the Commission pursuant to
Section 13(d) or (g) of the Exchange Act has increased or proposes to increase
the number of Units beneficially owned by such person or group as disclosed in
such Statement by two percent or more of the outstanding Units.
The foregoing conditions are for the sole benefit of the Purchaser and
may be asserted by the Purchaser regardless of the circumstances giving rise to
such conditions or may be waived by the Purchaser in whole or in part at any
time and from time to time in its sole discretion. Any determination by the
Purchaser concerning the events described above will be final and binding upon
all parties.
SECTION 15. CERTAIN LEGAL MATTERS.
GENERAL. The Purchaser is not aware of any filings with, or approvals
or other actions by, any domestic or foreign governmental or administrative
agency that would be required prior to the acquisition of Units by the Purchaser
pursuant to the Offer, other than the filing of a Tender Offer Statement on
Schedule 14D-1 with the Commission (which has already been filed) and any
required amendments thereto. Should any such approval or other action be
required, it is the Purchaser's present intention that such additional approval
or action would be sought. Although 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
the Partnership's business, or that certain parts of the Partnership's 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 the
Purchaser to elect to terminate the Offer without purchasing Units thereunder.
ANTITRUST. The Purchaser does not believe that the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, is applicable to the acquisition
of Units contemplated by the 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 the Offer.
SECTION 16. FEES AND EXPENSES. Except as set forth in this Section 16,
the Purchaser will not pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of Units pursuant to the Offer. The
Purchaser has retained Shareholder Communications Corporation to act as
Information Agent and Service Data Corporation to act as Depositary in
connection with the Offer. The Purchaser will pay the Information Agent and the
Depositary reasonable and customary compensation for their respective services
in connection with the Offer, plus reimbursement for out-of-pocket expenses, and
has agreed to indemnify the Information Agent and the Depositary against certain
liabilities and expenses in connection therewith, including liabilities under
the federal securities laws. The Purchaser will also pay all costs and expenses
of printing and mailing the Offer and its legal fees and expenses.
SECTION 17. MISCELLANEOUS. The Purchaser is not aware of any
jurisdiction in which the making of the Offer is not in compliance with
applicable law. If the Purchaser becomes aware of any jurisdiction in which the
making of the Offer would not be in compliance with applicable law, the
Purchaser will make a good faith effort to comply with any such law. If, after
such good faith effort, the Purchaser cannot comply with any such law, the Offer
will not be made to (nor will tenders be accepted from or on behalf of) Unit
Holders residing in such jurisdiction. In those jurisdictions whose securities
or blue sky laws require
- 26 -
<PAGE>
the Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of the Purchaser by one or more registered brokers or dealers
licensed under the laws of that jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser not contained in this Offer to
Purchase or in the Assignment of Partnership Interest and, if given or made,
such information or representation must not be relied upon as having been
authorized.
The Purchaser has filed with the Commission a Tender Offer Statement
on Schedule 14D-1, pursuant to Rule 14d-3 under the Exchange Act, furnishing
certain additional information with respect to the Offer, and may file
amendments thereto. The Schedule 14D-1 and any amendments thereto, including
exhibits, may be inspected and copies may be obtained at the same places and in
the same manner as set forth in Section 9 (except that they will not be
available at the regional offices of the Commission).
West Putnam Housing Investors LLC
July 24, 1998
- 27 -
<PAGE>
SCHEDULE I
INFORMATION REGARDING THE MEMBERS OF THE PURCHASER
Set forth in the table below are the name and the present principal occupations
or employment and the name, principal business and address of any corporation or
other organization in which such occupation or employment is conducted, and the
five-year employment history of the members of the Purchaser. Each person
identified below is a United States citizen. The principal business address of
the Purchaser and, unless otherwise indicated, the business address of each
person identified below, is c/o Wilder Richman Resources Corporation, 599 West
Putnam Avenue, Greenwich, CT 06830.
NAME, PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
Mr. Richman graduated from the Columbia University Law School with a
Juris Doctor degree, the Columbia University Graduate School of Business
Administration with a Master of Business Administration degree and Syracuse
University with a Bachelor of Arts degree in Political Science. Mr. Richman has
nearly twenty years of extensive experience in the syndication, development and
management of residential properties. From March 1988 to date, Mr. Richman has
been the President and a Director and a shareholder of Wilder Richman
Corporation, also an affiliate of WRRC. From 1986 to date, Mr. Richman has been
the President and a director of WRRC. From 1973 until 1979, Mr. Richman
practiced corporate law in New York City. Mr. Richman is the Senior Vice
President and a member of the Board of Directors of the Affordable Housing
Coalition and has been a member of the National Advisory Board of the Housing
and Development Reporter, a bi-weekly publication, a frequent speaker on real
estate syndication, a member of the National Leased Housing Association, and has
appeared on National Public Radio and American Broadcasting Company's
"Nightline" program.
Robert H. Wilder, Jr., is the Executive Vice President and a Director
of WRRC. Mr. Wilder received an M.B.A. degree form the Colombia University
Graduate School of Business Administration, and a B.A. degree in economics from
University of Michigan. For nearly 25 years Mr. Wilder has been one of the
leading developers of affordable housing in suburban and upstate New York. From
1979 to date Mr. Wilder has been the Chairman of the Board and a Director and a
shareholder of Wilder Richman Corporation, an affiliate of WRRC. From 1988
through 1995, Mr. Wilder was the President and sole shareholder of Wilder
Property Companies, Inc. Mr. Wilder is currently a Managing Member of Wilder
Balter Partners, L.L.C. and his principal business address is 570 Taxter Road,
Elmsford, NY 10523. Mr. Wilder is a licensed real estate broker in New York and
Connecticut.
- 28 -
<PAGE>
Manually signed facsimile copies of the Assignment of Partnership
Interest will be accepted. The Assignment of Partnership Interest and any other
required documents should be sent or delivered by each Unit Holder or such Unit
Holder's broker, dealer, bank, trust company or other nominee to the Depositary
as set forth below.
The Depositary for the Offer is:
Service Data Corporation
2424 South 130th Circle
Omaha, NE 68144
Toll Free: (800) 443-6034
Facsimile: (402) 330-8688
Questions and requests for assistance or for additional copies of this
Offer to Purchase and the Assignment of Partnership Interest may be directed to
the Information Agent at its telephone number and address listed below. You may
also contact your broker, dealer, bank, trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
Shareholder Communications Corporation
(800) 733-8481, Ext. 415
(Toll Free)
- 29 -
ASSIGNMENT OF PARTNERSHIP INTEREST
FOR THE TENDER OF UNITS OF LIMITED PARTNERSHIP INTEREST IN
SECURED INCOME L.P.
PURSUANT TO THE OFFER TO PURCHASE DATED JULY 24, 1998
- --------------------------------------------------------------------------------
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK TIME, ON AUGUST 20, 1998, UNLESS THE OFFER
IS EXTENDED
- --------------------------------------------------------------------------------
The Depositary for the Offer is:
SERVICE DATA CORPORATION
2424 South 130th Circle
Omaha, Nebraska 68144
Toll Free (800) 443-6034
Facsimile (402) 330-8688
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE IN COMPLETING THIS
ASSIGNMENT OF PARTNERSHIP INTEREST, PLEASE CALL OUR INFORMATION AGENT,
SHAREHOLDER COMMUNICATIONS CORPORATION, TOLL FREE AT (800) 733-8481, EXTENSION
415.
DELIVERY OF THIS ASSIGNMENT OF PARTNERSHIP INTEREST (OR A FACSIMILE
COPY) OR ANY OTHER REQUIRED DOCUMENTS TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE VALID DELIVERY.
PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS
Ladies and Gentlemen:
The undersigned hereby tenders to West Putnam Housing Investors LLC, a
Delaware limited liability company (the "Purchaser"), the number of the
undersigned's units of limited partnership interest ("Units") in Secured Income
L.P., a Delaware limited partnership (the "Partnership"), specified below, at a
price of $6.50 per Unit (the "Purchase Price"), net to the seller in cash, upon
the terms and subject to the conditions set forth in the offer to purchase dated
July 24, 1998 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Assignment of Partnership Interest (which, together
with any supplements or amendments, collectively constitute the "Offer'). The
undersigned understands and agrees that the Purchase Price will automatically be
reduced by the aggregate amount of distributions per Unit, if any, made by the
Partnership on or after July 24, 1998 and prior to the date on which the
Purchaser pays for the Units purchased pursuant to the Offer. Holders of Units
("Unit Holders") who tender their Units will not be obligated to pay any
commissions or Partnership transfer fees with respect to the sales of Units
pursuant to the Offer, which commissions and Partnership transfer fees, if any,
will be borne by the Purchaser. The Purchaser reserves the right to transfer or
assign, in whole or from time to time in part, to one or more of its affiliates,
the right to purchase Units tendered pursuant to the Offer.
<PAGE>
Subject to and effective upon acceptance for payment of and payment for
the Units tendered hereby, the undersigned hereby sells, assigns and transfers
to or upon the order of the Purchaser all right, title and interest in and to
all of the Units tendered hereby. The undersigned understands that upon
acceptance for payment of and payment for the tendered Units, the Purchaser will
be entitled to seek admission to the Partnership as a substituted Unit Holder in
substitution for the undersigned as to all the tendered Units.
The undersigned irrevocably appoints the Purchaser and its managing
member and designees (each, an "Agent") as the attorneys-in-fact and proxies of
the undersigned, each with full power of substitution, to exercise all voting
and other rights with respect to the Units tendered by the undersigned and
purchased by the Purchaser. Such power of attorney and proxy shall be considered
coupled with an interest in the tendered Units and is irrevocable. When the
Units tendered hereby are accepted for payment pursuant to the Offer, all prior
proxies and powers given by the undersigned with respect to the Units will,
without further action, be revoked, and no subsequent proxies or powers may be
given (and, if given, will not be effective). Each of the Agents will, with
respect to the Units, be empowered to exercise all voting and other rights of
the undersigned as they in their sole discretion may deem proper, whether at any
meeting of the Partnership's Unit Holders, by written consent or otherwise,
subject to the restrictions in the Amended and Restated Agreement of Limited
Partnership of the Partnership. The foregoing proxy and power may be exercised
by the Purchaser or any of the other persons referred to above acting alone.
In addition to and without limiting the generality of the foregoing,
the undersigned hereby irrevocably (a) appoints each of the Agents as the
undersigned's attorneys-in-fact, each with full power of substitution, with an
irrevocable instruction to each Agent to execute all or any instruments of
transfer and/or other documents in such Agent's discretion in relation to the
Units tendered hereby and accepted for payment by the Purchaser, and to take all
such other actions as may in the opinion of such Agent be necessary or expedient
for the purpose of, or in connection with, the undersigned's acceptance of the
Offer and to vest in the Purchaser, or as it may direct, those Units, effective
when and only to the extent that the Purchaser accepts the tendered Units for
payment; (b) authorizes and requests the Partnership and its general partners
(the "General Partners") to take any and all acts as may be required to effect
the transfer of the undersigned's Units to the Purchaser (or its designee) and
admit the Purchaser (or its designee) as a substituted Unit Holder in the
Partnership; (c) assigns to the Purchaser and its assigns all of the right,
title and interest of the undersigned in and to any and all distributions made
by the Partnership from and after the date on which the Purchaser pays for the
Units tendered by the undersigned; (d) grants to the Purchaser and its assigns
the right to receive any and all distributions made by the Partnership on or
after the date on which the Purchaser pays for the Units tendered by the
undersigned (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; (e) empowers any of the Agents to execute and deliver to the
General Partners a change of address form instructing the General Partners 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 Unit Holder
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 Unit
Holder; and (f) agrees not to exercise any rights pertaining to the Units
without the prior consent of the Purchaser.
The undersigned hereby represents and warrants that the undersigned
owns the Units tendered hereby and has full power and authority to validly
tender, sell, assign and transfer the Units tendered hereby and that when the
same are purchased 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. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Purchaser to be necessary or desirable to
complete the sale, assignment and transfer of the Units tendered hereby.
The undersigned understands that a tender of Units pursuant to the
procedures described in the Offer to Purchase and in the Instructions to this
Assignment of Partnership Interest will constitute a binding agreement between
the undersigned and the Purchaser upon the terms and subject to the conditions
of the Offer. All
- 2 -
<PAGE>
authority herein conferred or agreed to be conferred shall survive the death or
incapacity of the undersigned, and any obligation of the undersigned hereunder
shall be binding upon the heirs, personal representatives, successors and
assigns of the undersigned.
THIS TENDER IS IRREVOCABLE, EXCEPT THAT UNITS TENDERED PURSUANT TO THE
OFFER MAY BE WITHDRAWN AS DESCRIBED IN SECTION 4 OF THE OFFER TO PURCHASE.
- 3 -
<PAGE>
<TABLE>
<CAPTION>
PLEASE COMPLETE ALL OF THE APPLICABLE BOXES BELOW.
- ----------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF CERTIFICATE(S)
BEING TENDERED
MAILING ADDRESS (PLEASE FILL IN)
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF
NUMBER OF UNITS
UNITS BEING
NAME(S) AND ADDRESS(ES) OF REGISTERED REPRESENTED TENDERED
OWNER(S) AS SHOWN ON THE CERTIFICATE BY THE FROM EACH
RECORDS OF SECURED INCOME L.P. NUMBER(S) CERTIFICATE CERTIFICATE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
-------------------------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
(ATTACH
SEPARATE
SCHEDULE IF
NECESSARY) TOTAL:
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
DOES NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS ASSIGNMENT OF
PARTNERSHIP INTEREST IN THE APPROPRIATE SPACE THEREFOR PROVIDED BELOW AND
COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS ASSIGNMENT OF PARTNERSHIP INTEREST
SHOULD BE READ CAREFULLY BEFORE THIS ASSIGNMENT OF PARTNERSHIP INTEREST IS
COMPLETED.
- 4 -
<PAGE>
Please issue checks in the amount of the Purchase Price to which the
undersigned is entitled pursuant to the Offer in the name and to the address
indicated on the records of Secured Income L.P. unless otherwise indicated under
Special Payment Instructions or Special Delivery Instructions below.
<TABLE>
<CAPTION>
- -------------------------------------------------------------- ---------------------------------------------------------
SPECIAL PAYMENT
INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
- -------------------------------------------------------------- ---------------------------------------------------------
<S> <C>
Do not complete unless check(s) for the Do not complete unless check(s) for the
Purchase Price are to be issued to someone other than Purchase Price are to be mailed to someone other than
the registered owner(s). (See Instruction 1) the registered owner(s) or to an address different from
the address to which this Assignment of Partnership
Interest was sent. (See Instruction 1)
Issue check to: Mail check to:
Name: Name:
(Please Print) (Please Print)
Address: Address:
(Zip Code) (Zip Code)
Tax Identification or Social Security Number:
- ---------------------------------------
- -------------------------------------------------------------- ---------------------------------------------------------
</TABLE>
- 5 -
<PAGE>
- -------------------------------------------------------------------------------
SIGNATURE(S)
Dated ____________, 1998
The undersigned hereby tenders the number of Units specified above pursuant to
the terms of the Offer.
SIGN __________________________________________________________________________
HERE __________________________________________________________________________
__________________________________________________________________________
(SIGNATURE(S) OF REGISTERED HOLDER(S))
MUST BE SIGNED BY REGISTERED OWNER(S) EXACTLY AS NAME(S) APPEAR(S) ON
CERTIFICATE(S) BEING SURRENDERED OR BY PERSON(S) AUTHORIZED TO BECOME REGISTERED
OWNER(S) BY CERTIFICATES AND DOCUMENTS DELIVERED WITH THIS ASSIGNMENT OF
PARTNERSHIP INTEREST OR BY OTHER AUTHORIZED PERSON(S). IF SIGNED BY A TRUSTEE,
EXECUTOR, ADMINISTRATOR, GUARDIAN, ATTORNEY-IN-FACT, OFFICER OF A CORPORATION OR
OTHER PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE SET FORTH
FULL TITLE. (SEE INSTRUCTIONS 1 AND 5)
NAME(S) ________________________________________________________________________
________________________________________________________________________
(Please Print)
CAPACITY _____ ADDRESS ______________________________________________
Zip Code
TAX IDENTIFICATION OR SOCIAL SECURITY NO. ______________________________________
(See Form W-9)
AREA CODE AND TELEPHONE NUMBER _________________________________________________
GUARANTEE OF SIGNATURE(S)
(See Instruction 1)
AUTHORIZED SIGNATURE: __________________________________________________________
NAME: __________________________________________________________________________
NAME OF FIRM: __________________________________________________________________
TITLE: _________________________________________________________________________
ADDRESS: _______________________________________________________________________
AREA CODE AND TELEPHONE NUMBER: ________________________________________________
DATED: _________________________________________________________________________
- --------------------------------------------------------------------------------
- 6 -
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE
Form W-9 PART I -- PLEASE PROVIDE YOUR TIN IN ___________________________________
Department of the THE BOX AT RIGHT AND CERTIFY BY Social Security Number(s) or Employer
Treasury Internal Revenue SIGNING AND DATING BELOW Identification Number
Service
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
PAYER'S REQUEST
FOR TAXPAYER PART 2 -- Certification -- Under penalties of perjury, I certify that: (1) The number shown on
IDENTIFICATION this form is my correct Taxpayer Identification Number ("TIN") (or I am waiting for a number to
NUMBER (TIN) be issued to me) and (2) I am not subject to back-up withholding because I have not been notified
by the Internal Revenue Service ("IRS") that I am subject to back-up withholding as a result of
a failure to report all interest or dividends, or the IRS has notified me that I am no
longer subject to back-up withholding.
------------------------------------------------------------------------------------------------------
PART 3 -- Awaiting TIN -- You must check the box below if you are awaiting a TIN to be
assigned to you. See also the Certificate of Awaiting Taxpayer Identification Number below.
[ ] Awaiting TIN
------------------------------------------------------------------------------------------------------
Certification Instructions -- You must cross out item (2) above if you have been notified by the
IRS that you are subject to back-up withholding because of underreporting interest or dividends on
your tax return. However, if after being notified by the IRS that you were subject to back-up
withholding you received another notification from the IRS that you are no longer subject to back-up
withholding, do not cross out item (2)
SIGNATURE: __________________________ DATE: _________________
- ------------------------------------------------------------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
*(TO BE COMPLETED ONLY IF THE BOX IN PART 3 ABOVE IS CHECKED)
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within 60 days, 31 percent
of all reportable payments made to me thereafter will be withheld until I
provide such a number.
SIGNATURE: _____________________ DATE: _______________
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- 7 -
<PAGE>
- --------------------------------------------------------------------------------
FIRPTA AFFIDAVIT -- CERTIFICATE OF NON-FOREIGN STATUS
Section 1445 of the Internal Revenue Code of 1986, as amended, provides
that a transferee of a U.S. real property interest must withhold tax if the
transferor is a foreign person. To inform the Purchaser that withholding of tax
is not required upon this disposition of a U.S. real property interest, the
undersigned hereby certifies the following as or on behalf of the tendering Unit
Holder named above:
1. The Unit Holder, if an individual, is not a nonresident alien
for purposes of U.S. income taxation, and if not an
individual, is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined
in the Internal Revenue Code and Income Tax Regulations);
2. The Unit Holder's Social Security Number (for individuals) or
Employer Identification Number (for non-individuals) is (D):
___________; and
3. The Unit Holder's address is: __________________________
__________________________
__________________________
I understand that this certification may be disclosed to the Internal
Revenue Service by the transferee and that any false statement I have made here
could be punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined this
certification and, to the best of my knowledge and belief, it is true, correct
and complete.
- ----------------------------- -------------------------------
Signature Signature
Title:_________________________ Title:_________________________
- --------------------------------------------------------------------------------
- 8 -
<PAGE>
INSTRUCTIONS
TO
ASSIGNMENT OF PARTNERSHIP INTEREST
FOR
SECURED INCOME L.P.
FORMING PART OF TERMS AND CONDITIONS OF THE OFFER
- --------------------------------------------------------------------------------
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE COMPLETING THE ASSIGNMENT OF
PARTNERSHIP INTEREST, PLEASE CALL SHAREHOLDER COMMUNICATIONS CORPORATION
TOLL FREE AT (800) 733-8481, EXTENSION 415.
- --------------------------------------------------------------------------------
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Assignment of Partnership Interest (i) if such Assignment of Partnership
Interest is signed by the registered holder of the Units tendered therewith,
unless such holder has completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" in this
Assignment of Partnership Interest, or (ii) if Units are tendered for the
account of a firm that is a member in good standing of the Security Transfer
Agent's Medallion Program, the New York Stock Exchange Medallion Signature
Program or the Stock Exchange Medallion Program (such a firm being hereinafter
referred to as an "Eligible Institution").
If a certificate representing Units is registered in the name of a
person other than the person(s) signing this Assignment of Partnership Interest
(or a facsimile thereof), or if payment is to be made, or Units not accepted for
payment or not tendered are to be returned, to a person other than the
registered holder, the certificate must be endorsed or accompanied by an
appropriate stock power, in either case signed exactly as the name(s) of the
registered holder(s) appears on the certificate, with the signature(s) on the
certificate or stock power guaranteed by an Eligible Institution. If this
Assignment of Partnership Interest or stock powers are signed or any certificate
is endorsed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing and,
unless waived by the Purchaser, proper evidence satisfactory to the Purchaser of
their authority so to act must be submitted.
2. DELIVERY OF ASSIGNMENT OF PARTNERSHIP INTEREST. The Assignment of
Partnership Interest is to be completed by all Unit Holders who wish to tender
Units in response to the Offer. For a Unit Holder to validly tender Units,
certificates representing such tendered Units and a properly completed and duly
executed Assignment of Partnership Interest (or a facsimile copy), along with
the required signature guarantees by an Eligible Institution (if required) and
any other required documents, must be received by the Depositary at the address
set forth on the Assignment of Partnership Interest on or prior to the
Expiration Date (as defined in the Offer to Purchase).
THE METHOD OF DELIVERY OF THE ASSIGNMENT OF PARTNERSHIP INTEREST AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING UNIT
HOLDER AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY
DELIVERY.
No alternative, conditional or contingent tenders will be accepted, and
no fractional Units will be purchased (except from a Unit Holder who is
tendering all of the Units owned by that Unit Holder). All tendering Unit
Holders, by execution of the Assignment of Partnership Interest, waive any right
to receive any notice of the acceptance of their Units for payment.
- 9 -
<PAGE>
3. INADEQUATE SPACE. If the space provided herein is inadequate,
additional information may be provided on a separate signed schedule attached
hereto.
4. MINIMUM TENDERS. A Unit Holder may tender any or all of his or her
Units; provided, however, that because of restrictions in the Partnership's
Amended and Restated Agreement of Limited Partnership, in order for a partial
tender to be valid, after the sale of Units pursuant to the Offer, the Unit
Holder must continue to hold a minimum of 250 Units, which represent a capital
contribution in the Partnership of $5,000 (or, in the case of Unit Holders who
hold Units in an Individual Retirement Account, Keogh or Qualified Plan, at
least 100 Units, which represent a capital contribution in the Partnership of
$2,000). Tenders of fractional Units will be permitted only by a Unit Holder who
is tendering all Units owned by that Unit Holder.
5. SIGNATURES ON ASSIGNMENT OF PARTNERSHIP INTEREST. If the Assignment
of Partnership Interest is signed by the registered Unit Holder(s), the
signature(s) must correspond exactly with the name(s) as shown on the records of
the Partnership, without alteration, enlargement or any change whatsoever.
If any of the Units tendered hereby are held of record by two or more
joint owners, each such owner must sign the Assignment of Partnership Interest.
If the Assignment of Partnership Interest is signed by trustees,
executors, administrators, guardians, attorneys-in-fact, agents, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to the
Depositary of their authority to so act must be submitted.
When this Assignment of Partnership Interest is signed by the
registered holder(s) of the certificate(s) surrendered hereby, no endorsements
of certificates or separate stock powers are required, unless payment is to be
issued to a person other than the registered holder(s), in which case, the
certificate(s) surrendered hereby must be endorsed or accompanied by appropriate
stock powers, in either case signed exactly as the name(s) of the registered
holder(s) appear(s) on such certificate(s). Signatures on such certificate(s)
and stock powers must be guaranteed by an Eligible Institution.
If this Assignment of Partnership Interest is signed by a person other
than the registered holder(s) of the certificate(s) surrendered hereby, the
certificate(s) surrendered hereby must be endorsed or accompanied by appropriate
stock powers, in either case signed exactly as the name(s) of the registered
holder(s) appear on the certificate(s). Signatures on such certificates or stock
powers must be guaranteed by an Eligible Institution.
If certificates are registered in different names (e.g. "John Smith" on
one certificate and "J. Smith" on another) or different forms of ownership (e.g.
as a joint holder and as a trustee), it will be necessary to complete, sign,
date and submit as many separate Assignments of Partnership Interest as there
are different registrations.
6. WAIVER OF CONDITIONS. The Purchaser expressly reserves the absolute
right, in its sole discretion, to waive any of the specified conditions of the
Offer, in whole or in part, in the case of any Units tendered.
7. REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions or requests
for assistance may be directed to Shareholder Communications Corporation, the
Information Agent, at its address and telephone number set forth on the back
cover of the Offer to Purchase. Additional copies of the Offer to Purchase and
the Assignment of Partnership Interest may be obtained from the Information
Agent.
8. SUBSTITUTE FORM W-9. Each tendering Unit Holder is required to
provide the Depositary with a correct taxpayer identification number ("TIN"),
generally the Unit Holder's social security or federal employer identification
number, on Substitute Form W-9, which is provided in the Assignment of
Partnership
- 10 -
<PAGE>
Interest. You must cross out item (2) in the certification box on Substitute
Form W-9 if you are subject to back-up withholding. Failure to provide the
information on the form may subject the tendering Unit Holder to 31% federal
backup withholding on the payments made to the Unit Holder with respect to Units
purchased pursuant to the Offer. The box in Part 3 of the form may be checked if
the tendering Unit Holder has not been issued a TIN but has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked
and the Depositary is not provided with a TIN within sixty (60) days, thereafter
the Depositary will withhold 31% on all such payments of the purchase price
until a TIN is provided to the Depositary.
9. FIRPTA AFFIDAVIT. To avoid potential withholding of tax pursuant to
Section 1445 of the Internal Revenue Code of 1986, as amended (the "Code"), in
an amount equal to 10% of the purchase price for Units purchased pursuant to the
Offer, plus the amount of any liabilities of the Partnership allocable to such
Units, each Unit Holder who or which is a United States person must complete the
FIRPTA Affidavit contained in the Assignment of Partnership Interest stating,
under penalties of perjury, such Unit Holder's TIN and address and that such
Unit Holder is not a foreign person. 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.
IMPORTANT: THE ASSIGNMENT OF PARTNERSHIP INTEREST (OR A FACSIMILE
COPY), TOGETHER WITH CERTIFICATES REPRESENTING THE TENDERED UNITS AND ALL OTHER
REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE
EXPIRATION DATE.
----------------------
IMPORTANT TAX INFORMATION
To prevent backup withholding on payments made to a Unit Holder or
other payee with respect to Units purchased pursuant to the Offer, the Unit
Holder is required to notify the Depositary of the Unit Holder's correct TIN by
completing the form supplied as part of the Assignment of Partnership Interest,
certifying that the TIN provided on Substitute Form W-9 is correct (or that such
Unit Holder is awaiting a TIN) and that (1) the Unit Holder has not been
notified by the Internal Revenue Service (the "IRS") that the Unit Holder is
subject to backup withholding as a result of failure to report all interest or
dividends or (2) the IRS has notified the Unit Holder that the Unit Holder is no
longer subject to backup withholding. If backup withholding applies, the
Depositary is required to withhold 31% of any payments made to the Unit Holder.
Backup withholding is not an additional tax. Rather, the federal income tax
liability of persons subject to backup withholding will be reduced by the amount
of tax withheld. If withholding results in an overpayment of taxes, a refund may
be obtained from the IRS.
The Unit Holder is required to give the Depositary the TIN (e.g.,
social security number or employer identification number) of the record owner of
the Units. If the Units are registered in more than one name or are not in the
name of the actual owner, consult the "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
Certain Unit Holders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that Unit Holder must submit to the Depositary a properly
completed Internal Revenue Service Form W-8, signed under penalties of perjury,
attesting to such Unit Holder's foreign status. A Form W-8 can be obtained from
the Depositary. See the "Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9" for additional instructions.
---------------------
- 11 -
<PAGE>
INDIVIDUAL RETIREMENT ACCOUNT (IRA)
PLEASE NOTE THAT A TENDERING BENEFICIAL OWNER OF UNITS WHOSE UNITS ARE
OWNED OF RECORD BY AN INDIVIDUAL RETIREMENT ACCOUNT (IRA) OR OTHER QUALIFIED
PLAN WILL NOT RECEIVE DIRECT PAYMENT OF THE PURCHASE PRICE. RATHER, PAYMENT WILL
BE MADE TO THE CUSTODIAN OF SUCH ACCOUNT OR PLAN. IF THE UNITS ARE HELD IN AN
IRA ACCOUNT, THE CUSTODIAN OF THE ACCOUNT MUST SIGN THE ASSIGNMENT OF
PARTNERSHIP INTEREST.
- 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.
FOR THIS TYPE OF ACCOUNT:
- -------------------------
1. Individual
2. Two or more individuals
(joint account)
3. Custodian account of a minor
(Uniform Gift to Minors Act)
4. a. The usual revocable savings trust (grantor is also trustee)
b. So-called trust account that is
not a legal or valid trust
under state law
5. Sole proprietorship
GIVE THE NAME AND
SOCIAL SECURITY
NUMBER OF --
- ------------
The individual
The actual owner of
the account or, if
combined funds, the
first individual on the
account(1)
The minor(2)
The grantor-trustee(1)
The actual owner(1)
The owner(3)
FOR THIS TYPE OF ACCOUNT:
- -------------------------
6. A valid trust, estate, or pension trust
7. Corporate
8. Association, club, religious, charitable, educational or other tax-exempt
organization
9. Partnership
10. A broker or registered nominee
11. Account with the Department of Agriculture in the name of a public entity
(such as a state or local government, school district, or prison) that
receives agricultural program payments
GIVE THE NAME AND
EMPLOYER
IDENTIFICATION
NUMBER OF --
- ------------
The legal entity(4)
The corporation
The organization
The partnership
The broker or
nominee
The public entity
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the identifying number of the personal representative or
trustee unless the legal entity itself is not designated in the account
title.)
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.
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number, or Form
SS-4, Application for an Employer Identification Number, at the local office of
the Social Security Administration or the Internal Revenue Service and apply for
a number. United States resident aliens who cannot obtain a social security
number must apply for an ITIN (Individual Taxpayer Identification Number) on
Form W-7.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on payments of interest,
dividends and with respect to broker transactions include the following:
o A corporation.
o A financial institution.
o An organization exempt from tax under section 501(a), or an individual
retirement plan.
o The United States or any agency or instrumentality thereof.
<PAGE>
o A state, the District of Columbia, a possession of the United States,
or any political subdivision or instrumentality thereof.
o A foreign government, or any a political subdivision, agency or
instrumentality thereof.
o An international organization or any agency or instrumentality
thereof.
o A dealer in securities or commodities required to register in the
United States, the District of Columbia, or a possession of the United
States.
o A real estate investment trust.
o A common trust fund operated by a bank under section 584(a).
o An exempt charitable remainder trust, or a non-exempt trust described
in section 4947. o An entity registered at all times under the
Investment Company Act of 1940.
o A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
o Payments to nonresident aliens subject to withholding under section
1441.
o Payments to partnerships not engaged in a trade or business in the
United States and which have at least one nonresident alien partner.
o Payments of patronage dividends not paid in money.
o Payments made by certain foreign organizations.
o Payments made to a middleman known in the investment community as a
nominee or who is listed in the most recent publication of the
American Society of Corporate Secretaries, Inc., Nominee List.
Payments of interest not generally subject to backup withholding include the
following:
o 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.
o Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
o Payments described in section 6049(b)(5) to nonresident aliens.
o Payments on tax-free covenant bonds under section 1451.
o Payments made by certain foreign organizations.
o Payments made to a middleman known in the investment community as a
nominee or who is listed in the most recent publication of the
American Society of Corporate Secretaries, Inc., Nominee List.
Exempt payees described above should file 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.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your 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 which 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
PLEASE CONTACT SHAREHOLDER COMMUNICATIONS CORPORATION AT (800) 733-8481, EX.
415.
OFFER TO PURCHASE UNITS FOR $6.50 PER UNIT OF
SECURED INCOME L.P.
West Putnam Housing Investors LLC, an affiliate of two of the three general
partners, makes no recommendation as to whether Unit Holders should sell their
Units at this time. However, for a Unit Holder who does wish to sell now, West
Putnam is offering to purchase your Units at a price of $6.50 per Unit, which is
at least $1.50 per Unit (or 30%) higher than the MacKenzie Partners' offer, the
highest other offer of which it is aware. If you accepted the MacKenzie
Partners' offer, you are entitled to withdraw such acceptance until 12:00
midnight, pacific daylight time, on July 31, 1998 (see last page of this
notice).
Summarized below is a hypothetical example of the potential after tax results of
a sale of Units pursuant to this Offer. This is only an illustration, based on
certain assumptions and subject to certain qualifications including those
discussed in Section 6 of the Offer to Purchase. Actual tax consequences to any
Unit Holder may vary, and Unit Holders should consult their own tax advisors.
Under the following example, Unit Holders who invested $20,000 and who now sell
all of their Units in the Offer at a price of $6.50 per Unit, would receive
approximately $9,674, after tax, calculated as follows:
Cash on Sale $6,500
Capital Gain (1) 9,208
x25%
Tax Liability @ 25% Rate (2,302)
Suspended Losses through 12/31/97 15,210
x36%
Tax Savings @ 36% Rate 5,476
Net After Tax Benefit (2) 3,174
-----
Total Benefit on Sale $9,674
- ---------------------------
(1) Capital gain was estimated to equal the sale price in the
Offer of $6,500 plus a negative capital account balance as of
December 31, 1997 of $2,708. The actual capital gain may vary.
(2) The estimated tax results are based on a $20,000 original
investment for a Unit Holder admitted in the First Closing of
the Partnership. Capital account balances would vary for Unit
Holders admitted to the Partnership in the Second or Third
Partnership Closings, or later. The estimate does not reflect
potential tax results for 1998 up to the time of sale. The
estimate assumes that no passive losses from the Units are
utilized prior to the date of sale. It also assumes a 36%
federal ordinary income tax rate and a 25% capital gains rate,
and that the Unit Holder is not subject to the alternative
minimum tax. No consideration is given to state and local
taxes. The foregoing discussion is based on West Putnam's
understanding of current federal tax laws, which (particularly
as they relate to passive losses) are complex and subject to
change.
<PAGE>
Unit Holders may desire to immediately liquidate their Units for a variety of
reasons, which may include:
o Free up cash for other investment opportunities
o Eliminate K-1s after 1998
o Potentially obtain after-tax benefits by utilizing unused
suspended passive losses
Unit Holders should read the enclosed Offer in its entirety and discuss the
Offer with their tax and financial advisors.
West Putnam believes the liquidation value of the real estate properties owned
by the underlying operating partnerships in which the Partnership is invested
would be significantly higher than its offered price. However, it also believes
that existing restrictions governing these properties would impact the ability
to obtain such estimated liquidation value at this time (although as noted in
the Offer to Purchase it is possible that the applicable restrictions may be
reduced or eliminated for the Westmont property if it is refinanced). There are
no immediate plans to sell such properties. Unit Holders who do not sell their
Units in this Offer (or other offers) may be able to realize additional passive
losses (which can be used against ordinary income upon disposition of their
Units), and will maintain the potential to participate in any cash flow
distribution and/or residual value in the real estate in which the Partnership
is indirectly invested.
Unit Holders should be aware that there are other ways of valuing the Units and
of comparing the relative economic benefits of accepting an offer to purchase
now or continuing to hold the Units. The actual benefits to Unit Holders from
selling or holding their Units will depend on their individual circumstances and
may differ from the examples presented.
This notice does not purport to provide tax or investment advice. West Putnam
makes no recommendation to Unit Holders whether to accept any offer to purchase
their Units, but strongly urges Unit Holders to consult with their own tax and
financial advisors.
UNIT HOLDERS SHOULD BE AWARE THAT IF THEY HAVE ALREADY TENDERED THEIR UNITS IN
THE RECENT OFFER BY AFFILIATES OF MACKENZIE PARTNERS, INC. FOR THE LOWER PRICE
OF $5.00 PER UNIT, THE UNIT HOLDERS HAVE THE RIGHT TO WITHDRAW THEIR UNITS FROM
THE MACKENZIE OFFER AND ACCEPT THIS OFFER FOR $6.50 PER UNIT. UNIT HOLDERS WHO
WISH TO WITHDRAW UNITS ALREADY TENDERED IN THE MACKENZIE OFFER SHOULD COMPLETE
AND SIGN THE ENCLOSED WITHDRAWAL FORM AND FAX IT TO (925) 631-9119 PRIOR TO
12:00 MIDNIGHT, PACIFIC DAYLIGHT TIME, ON JULY 31, 1998.
WEST PUTNAM HOUSING INVESTORS LLC
--------------------------------------
YOU WILL NEED TO SUBMIT YOUR CERTIFICATES TO VALIDLY TENDER YOUR
UNITS. BENEFICIAL OWNERS OF UNITS SHOULD CONTACT THEIR BROKERS
REGARDING DELIVERY OF THEIR CERTIFICATES.
- 2 -
NOTICE OF WITHDRAWAL
VIA FACSIMILE: (925) 631-9119
MacKenzie Patterson, Inc.
1640 School Street
Moraga, California 94556
Gentlemen:
Reference is made to the Offer to Purchase Units of Limited Partnership
Interest of Secured Income L.P. dated June 29, 1998 by Accelerated High Yield
Pension Fund Investors, L.P. and the other Purchasers named therein and the
related Letter of Transmittal (which together constitute the "Offer").
Capitalized terms used but not otherwise defined in this Notice of Withdrawal
have the respective meanings ascribed to them in the Offer.
THE UNDERSIGNED HEREBY WITHDRAWS, EFFECTIVE IMMEDIATELY, ALL UNITS
TENDERED PURSUANT TO THE OFFER BY OR ON BEHALF OF THE UNDERSIGNED.
The undersigned hereby expressly revokes any power of attorney and
proxy granted or to be granted in connection with such tender.
- --------------------------------------------------------------------------------
SIGNATURE
Print or Type
Name:
Please sign exactly as your name is printed or typed above, and insert your
Taxpayer Identification Number or Social Security Number in the space provided
below for your signature. For joint owners, each joint owner must sign.
X_______________________________________________
(Signature of Owner) Date
X_______________________________________________
(Signature of Owner) Date
Taxpayer I.D. or Social Security #______________
Telephone No. (day)_________________________
(evening)_____________________
- --------------------------------------------------------------------------------
MEDALLION SIGNATURE GUARANTEE
Name and Address of Eligible Institution________________________________________
Authorized Signature_______________________ Title_______________________________
Name___________________________________________________Date______________, 199__
- --------------------------------------------------------------------------------
Important Note to Withdrawing Unit Holder:
o This Notice of Withdrawal should specify the name of the
person who tendered the Units to be withdrawn exactly as
stated in the Letter of Transmittal by which such Units were
originally tendered.
o This Notice of Withdrawal should be signed by the person(s)
who signed such Letter of Transmittal in exactly the same
manner as the Letter of Transmittal was signed.
o If a Medallion signature guarantee section was executed in the
Letter of Transmittal by which the Units to be withdrawn were
originally tendered, signatures on this Notice of Withdrawal
should be Medallion guaranteed by an Eligible Institution by
completing the Signature Guarantee section above. (This
recommendation is not an admission that any signature
guarantee is required for any notice of withdrawal to be
valid.)
