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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
RETAIL EQUITY PARTNERS LIMITED PARTNERSHIP
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined.)
$7,950,000 - sales price of assets to be sold by Registrant
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4) Proposed maximum aggregate value of transaction:
$7,950,000
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5) Total fee paid:
$1,590.00
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[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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RETAIL EQUITY PARTNERS LIMITED PARTNERSHIP
A NORTH CAROLINA LIMITED PARTNERSHIP
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PROXY STATEMENT
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This Proxy Statement contains forward-looking statements within the
meaning of Federal securities law. Such statements can be identified by the use
of forward-looking terminology, such as "may," "will," "expect," "anticipate,"
"estimate," "continue" or other similar words. These statements discuss future
expectations, contain projections of results of operations or of financial
conditions or state other "forward-looking" information. Although the General
Partner believes that the expectations reflected in such forward-looking
statements are based on reasonable assumptions, there are certain factors, such
as general economic conditions, local real estate conditions, or weather
conditions, that might cause a difference between actual results and those
forward-looking statements.
SUMMARY OF THE PROPOSAL TO BE CONSIDERED
Retail Equity Partners Limited Partnership, a North Carolina limited
partnership (the "Partnership"), seeks consent, by the affirmative vote of
Limited Partners of record holding more than 50% of the Limited Partnership
Interests held by all Limited Partners of record ("Majority Interest"), to sell
substantially all of the assets of the Partnership for a minimum aggregate sales
price of $7,500,000. Boddie Investment Company, the General Partner of the
Partnership (the "General Partner"), has received, on behalf of the Partnership,
executed Purchase and Sales Agreements ("Purchase Agreement") from unrelated
entities relating to the purchase of substantially all of the Partnership's
assets for an aggregate price of $7,950,000. While the General Partner has every
reason to believe that the Partnership's assets will be sold pursuant to the
Purchase Agreements, each is subject to the satisfaction of certain conditions
prior to consummation of the sale. Accordingly, as is discussed in greater
detail herein, the General Partner believes that it is in the best interests of
the Partnership to sell substantially all of the Partnership's assets for a
minimum aggregate price of $7,500,000. Therefore, the General Partner seeks the
consent of the Limited Partners to sell the Partnership's assets for a minimum
aggregate price of $7,500,000. If the Partnership's assets are not sold pursuant
to the Purchase Agreements, or either of them, the General Partner will continue
to solicit offers to purchase the assets for a minimum aggregate price of
$7,500,000. If the General Partner does not receive a final offer to purchase
the Partnership's assets for an aggregate purchase price of at least $7,500,000,
it will not sell the Partnership's assets without resoliciting the consent of
the Limited Partners.
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The Partnership currently owns two shopping centers, Plaza West
Shopping Center in Raleigh, North Carolina ("Plaza West") and Cape Henry Plaza
in Virginia Beach, Virginia ("Cape Henry" and, together with Plaza West, the
"Shopping Centers" or the "Partnership Assets"). The Shopping Centers comprise
substantially all of the assets of the Partnership and, following the sale
thereof, the assets of the Partnership will consist solely of cash and accounts
receivable. Pursuant to the terms of the Agreement of Limited Partnership dated
June 15, 1987 (the "Partnership Agreement"), the sale of all or substantially
all of the Partnership Assets results in the automatic dissolution of the
Partnership. Following dissolution, the General Partner will liquidate all
liabilities of the Partnership and distribute the remaining cash assets to the
Limited Partners in accordance with the terms of the Partnership Agreement.
Thereafter, the Partnership will be terminated by the filing of a Certificate of
Cancellation with the Secretary of State of North Carolina.
The Shopping Centers are encumbered by mortgage loans from financial
institutions. At March 31, 1998, the end of the Partnership's most recent fiscal
quarter, the aggregate outstanding indebtedness to the mortgage lenders was
$6,796,006. The maturity date of each of the Partnership's outstanding mortgage
loans occurs in August 1998, and it is unlikely that the Partnership will have
the financial ability to meet its loan maturity obligations on such date.
Accordingly, in such event, it will be necessary for the Partnership to
refinance the Partnership's indebtedness upon the maturity of its currently
outstanding mortgage loans. There can be no assurance, however, that replacement
loans will be available with terms and conditions that will enable the
Partnership to refinance successfully. Given the historical results of operation
of the Partnership, the General Partner believes that it is in the best
interests of the Limited Partners to sell the Partnership Assets if a sale can
be effected for an aggregate purchase price of not less than $7,500,000, rather
than to attempt to refinance the indebtedness on the Partnership Assets.
Capitalized terms not otherwise defined in this Proxy Statement shall
have the meanings given them in the Partnership Agreement.
End of Summary
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THE PARTNERSHIP
History
The Partnership is a North Carolina limited partnership which was
organized in 1987 for the purpose of acquiring, holding, operating and managing
three neighborhood shopping centers. The General Partner of the Partnership is a
North Carolina corporation with its principal office in Rocky Mount, North
Carolina.
The Partnership offered a minimum of 50,000 and a maximum of 1,000,000
Beneficial Assignment Certificates ("BACs"), representing beneficial assignments
of limited partnership interests in the Partnership, at $20 per BAC, on a best
efforts basis through Planned Management Company, the dealer/manager. The
Partnership received aggregate subscription funds of $6,671,543 in such
offering, and the offering was closed on April 2, 1990.
The Partnership made cash and leveraged investments in three
neighborhood shopping centers located in Burlington, North Carolina (New Market
Square), Raleigh, North Carolina (Plaza West), and Virginia Beach, Virginia
(Cape Henry). In October 1991, the ownership of New Market Square was
transferred to New Market Square Limited Partnership ("NMS"), a newly formed
partnership. The Partnership was the sole general partner holding a 99.99
percent interest in NMS. In February 1992, NMS filed a voluntary petition for
relief under Chapter 11 of the United States Bankruptcy Code. This action was
taken after negotiations to refinance NMS's outstanding mortgage loan in the
amount of $6,400,000 failed and alternative financing could not be obtained. NMS
received court approval to continue normal operations. In May 1993, NMS
successfully completed restructuring of its outstanding mortgage loan with the
lender and emerged from bankruptcy. The principal balance of the mortgage loan
was increased to $6,425,000, the additional $25,000 being attributed to legal
fees incurred in connection with restructuring the loan. In May 1993, a $100,000
principal payment was due and paid.
In August 1994, Rose's, Inc., an anchor tenant at New Market Square,
renounced its lease pursuant to a Chapter 11 bankruptcy filing, vacated the
rental space and ceased making rental payments. Rose's filed a post petition
rent claim against NMS that was settled in February 1995 for $20,000. NMS filed
a claim against Rose's for unpaid future rent. An agreement to fix the claim at
$512,808 was reached in January 1995 and the claim was sold by NMS in March 1995
to an unrelated party for an immediate cash payment of $82,049.
Due to the departure of Rose's, NMS was unable to generate sufficient
cash flow to make full payments required under the mortgage loan that was
restructured in May 1993. The lender and NMS entered into a forbearance
agreement under which NMS agreed to remit to the lender its net cash flow, after
payment of monthly operating expenses. In June 1995, the forbearance agreement
was terminated and the NMS mortgage loan was brought current by using
substantially all of NMS's cash reserves. During the last half of 1995, the
General Partner advanced NMS sufficient funds to cover operating shortfalls.
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In February 1996, the New Market Square land, building and personal
property were sold to an unrelated party for a contract price of $6,558,000,
resulting in a net loss of $499,000. (See discussion in Notes to Financial
Statements included in Item 14 of the Partnership's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997 (the "Annual Report"), which
accompanies this Proxy Statement and is incorporated by reference herein.)
Proceeds from the sale were used to retire the outstanding indebtedness on New
Market Square and, in July 1996, NMS was dissolved and a distribution in the
aggregate amount of $297,985 was made to the Limited Partners. In addition, the
Partnership recorded an extraordinary loss of $30,163 in connection with the
sale of the shopping center as a result of write-offs of deferred financing
costs related to the mortgage loan on the property.
As a result of the sale of New Market Square, the Partnership now
operates two neighborhood shopping centers, Plaza West, a 63,800 square foot
property in Raleigh, North Carolina, and Cape Henry, a 50,000 square foot
property in Virginia Beach, Virginia. The Shopping Centers are encumbered by
mortgage loans to financial institutions, having an aggregate indebtedness at
March 31, 1998 of $6,796,006. The Shopping Centers were constructed in 1986 and
acquired by the Partnership in May 1988. In 1997, rental revenue derived from
the Shopping Centers came from net leases of shopping center space to
approximately 24 tenants and from an out-parcel ground lease to a bank. The
Partnership is reimbursed for substantially all common area maintenance and
certain other costs incurred.
Historically, a significant portion of rental revenue from the Shopping
Centers has been derived from anchor tenants. During 1997, the Partnership
received lease payments (including common area maintenance charges) in the
amount of $12,346 from Harris Teeter, which leases 25,000 square feet at Plaza
West, and $15,467 from Food Lion, which leases 33,000 square feet at Cape Henry.
Harris Teeter and Food Lion are the partnership's only tenants that lease more
than 10,000 square feet, and their respective leases have terms extending until
2006.
Both Raleigh and Virginia Beach have strong economies and rapidly
growing populations. The Shopping Centers have been well maintained. Cape Henry
was painted in 1995 and roof repairs were completed in 1996. The parking lot at
Plaza West was repaired in 1996. As a result of these repairs, the Shopping
Centers are in reasonably good physical condition.
Occupancy remains high at both Shopping Centers. At December 31, 1997,
and December 31, 1996, occupancy rates at Cape Henry and Plaza West were 100
percent and 97 percent and 100 percent and 96 percent, respectively. At March
31, 1998, occupancy rates at Cape Henry and Plaza West were 97% and 98%,
respectively. Rental rates for local tenant renewals and new local tenant leases
improved during 1997 at both properties. This improvement is attributable to the
combined effect of an improving economy, good locations and a lack of new
construction of similar type centers.
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Results of Operations for the Year Ended December 31, 1997
The following discussion should be read in conjunction with the
Financial Statements and Notes thereto included in Item 14 of the Annual Report
which accompanies this Proxy Statement and is incorporated by reference herein.
Revenues. Rental revenues in 1997 decreased by 6% from 1996 and by 38%
in 1996 from 1995, primarily attributable, in each case, to the sale of New
Market Square in February 1996. Although total rental revenues decreased,
revenues derived from Cape Henry and Plaza West were consistent in 1997 compared
to 1996, and increased by 4% in 1996 compared to 1995. Occupancy levels at Cape
Henry and Plaza West have remained consistently high.
In 1995, the Partnership recognized approximately $82,000 in other
income related to the sale of its claim against Rose's for unpaid future rent.
There were no other significant income items in 1997, 1996 or 1995.
Expenses. Decreases in operating expenses in 1997 compared to 1996, and
in 1996 compared to 1995, generally reflect the impact of the sale of New Market
Square. For Cape Henry and Plaza West, operating expenses decreased by 10% in
1997 compared to 1996, primarily due to repairs at Plaza West in 1996. For these
two centers, 1996 operating expenses increased approximately 20% compared to
1995 (this increase also reflects repairs at Plaza West in 1996). Depreciation
and amortization were generally unchanged in 1997 compared to 1996. The decrease
in depreciation and amortization in 1996 compared to 1995 reflects the sale of
New Market Square. The decrease in interest expense in 1997 compared to 1996,
and the decrease in 1996 compared to 1995, was again attributable to the sale of
New Market Square.
In late December 1995, the Partnership entered into an agreement to
sell New Market Square Shopping Center, which sale was completed in February
1996. In conjunction with this sale, the Partnership recorded a provision of
$510,000 in 1995 (subsequently reduced by $11,000 in 1996) to reduce the
recorded net book value of New Market Square assets to estimated net realizable
value (contract sale price of $6,558,000 less direct costs of the sale totaling
approximately $214,000). (See discussion in Notes to Financial Statements
included in Item 14 of the Annual Report which accompanies this Proxy Statement
and is incorporated by reference herein.)
Results of Operations for the Period Ended March 31, 1998
Revenues. Rental revenue for the first quarter of 1998 was $257,000, a
decease of 3.2% compared to the first quarter of 1997. During the first quarter
of 1998, Plaza West was 98% occupied, and Cape Henry was 97% occupied. During
the first quarter of 1997, both centers were 100% occupied.
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Expenses. Total expenses for the first quarter of 1998 were $234,000, a
decrease of 19.4% compared to the first quarter of 1997. The primary reason for
this decrease is that no depreciation was recorded in the first quarter of 1998,
compared to a $44,000 depreciation charge in the first quarter of 1997. In
January 1998, both Cape Henry and Plaza West were listed for sale. In accordance
with generally accepted accounting principles, no depreciation is recorded on
assets held for sale. Operating and administrative expenses were generally in
line with management's expectations.
Net Income. Net income for the first quarter of 1998 was $25,000,
compared to a loss of $22,000 for the first quarter of 1997. Again, the increase
in net income is primarily due to the fact that no depreciation was charged in
the first quarter of 1998.
Liquidity and Capital Resources
Cape Henry and Plaza West continue to generate nominal positive cash
flow from operations. The leases held by the Partnership are generally
long-term, with substantially all increases in operating expenses, taxes and
insurance passed through to, and paid by, tenants. In addition, most leases
include built-in rent increases based on changes in the consumer price index or
percentage rents based on total sales.
The Partnership currently generates sufficient cash flow to meet its
immediate operating and capital needs. However, any adverse development, such as
the loss of a major tenant, the loss of multiple smaller tenants, or the failure
of a significant tenant to pay rent, could create a material deficiency in the
Partnership's short-term liquidity. In addition, the Partnership may not
generate sufficient cash flow to make significant repairs, improvements or
modifications to the Shopping Centers, if such needs arise.
During 1997, the Partnership made capital repairs to Plaza West
totaling approximately $115,000. A distribution of approximately $298,000 was
made to the Limited Partners in 1996 from the net proceeds of the sale of New
Market Square. The Partnership made no distributions in 1997 or 1995.
Distributions have been suspended until property operations allow.
In January 1998, both Shopping Centers were listed for sale. As of
March 31, 1998, the General Partner had entered into a contract for sale of
Plaza West, subject to a vote by the Limited Partners. As of such date,
negotiations for the sale of Cape Henry were in final stages, again subject to a
vote by the Limited Partners.
The Partnership's two mortgage loans mature in August 1998. In the
event the Partnership's properties have not been sold prior to that date, it is
unlikely that the Partnership will have the financial ability to meet the loan
maturity obligations and, therefore, the Partnership will be required to
refinance these loans. The General Partner can offer no assurance that, at that
time, replacement financing will be obtainable.
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Recently Issued Accounting Standards
In 1997, the Financial Accounting Standards Board issued Statement No.
131, Disclosures About Segments of an Enterprise and Related Information.
Statement 131 establishes standards for the way that public entities report
information about operating segments in annual financial statements and requires
that those entities report selected information about operating segments in
interim financial statements. The Partnership will be required to disclose
segment information in accordance with Statement 131 beginning in its 1998
annual report. The Partnership expects that adoption of Statement 131 will not
have a material impact on its financial statements.
Further information concerning the business and operations of the
Partnership is included in the Annual Report and the Partnership's Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 1998 (the
"Quarterly Report"), each of which is enclosed herewith and incorporated by
reference herein.
REASONS FOR THE PROPOSED TRANSACTION
The Partnership was formed in 1987 with the objectives of quarterly
cash distributions and capital appreciation. To date, the Partnership has not
achieved these objectives. Accordingly, the General Partner believes that now is
the time for the Limited Partners to determine the future of the Partnership.
The Partnership has two options: (i) sell the Shopping Centers, which
will result in the automatic dissolution of the Partnership, and distribute the
remaining assets to the Limited Partners, or (ii) continue to own and operate
the Shopping Centers in the hope that, in time, the performance and value of the
Shopping Centers will improve. For the reasons stated below, the General Partner
believes that the best course of action is for the Partnership to sell the
Shopping Centers, distribute the net proceeds and other assets of the
Partnership and terminate the Partnership.
Loan Maturity. The existing loans on the Shopping Centers mature in
August 1998, and it is unlikely that the Partnership will have the financial
ability to meet its loan maturity obligations on such date. The General Partner
currently is unaware of any loan program that would allow the Partnership to
refinance the current loans without a substantial contribution of new equity
capital. Because the Partnership has no available source of new equity capital,
the General Partner believes that the Partnership will be unable to refinance
the outstanding loans. As a result, the Partnership will be faced with default
when the current loans mature in August of this year. In such event, the
Partnership would be forced to seek the protection of the bankruptcy court to
avoid loss of the Shopping Centers through foreclosure, but there can be no
assurance that such a course of action would be successful. If it were
successful, the Partnership would be allowed to continue to operate the Shopping
Centers for some period of time. If it
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were not successful, the Partnership would lose the Shopping Centers and have
incurred significant expenses in the unsuccessful bankruptcy proceeding. The
General Partner believes that the costs and risks associated with a bankruptcy
proceeding, coupled with the slim prospects of ever refinancing the Shopping
Centers, are too high to justify this course of action.
Financial Condition. Even if the Partnership were able to continue to
operate the Shopping Centers, the partnership would be in a very precarious
financial position. The Partnership has minimal capital reserves and any
negative event, such as a loss of a major tenant in either Shopping Center or
the occurrence of a major maintenance expenditure, could result in the
Partnership being unable to meet its current financial obligations. In order to
reduce this risk, which exists today and will continue to get worse, the
Partnership would have to retain all available cash until sufficient capital
reserves have been established. This will result in no distributions to the
Limited Partners for the foreseeable future.
Current Market Conditions. The market values of the Shopping Centers,
as evidenced by the purchase prices set forth in the Purchase Agreements,
represent a significant improvement over the past several years. Even if the
Partnership were to continue to own and operate the Shopping Centers, there can
be no assurance that the market value of the Shopping Centers would improve
substantially above the current level. To achieve a substantial improvement in
the market value of the Shopping Centers, in the opinion of the General Partner,
would take a number of years of strong economic performance.
Duration of the Partnership, Lack of Liquidity and Availability of Tax
Benefits. The most fundamental reason for selling the Shopping Centers at this
time is that the Partnership has been in existence for ten years, is not making
cash distributions to the Limited Partners, all tax losses are treated as
passive losses, and there is no market for an investment in the Partnership. In
short, Limited Partners are unable to enjoy any current benefits from their
investment in the Partnership. Sale of the Shopping Centers and distribution of
the net assets of the Partnership, while resulting in a substantial loss, will
at least provide some cash to the Limited Partners. Additionally, the sale of
the Shopping Centers will enable the Limited Partners to offset current tax
liability with accrued passive losses.
Summary. As a result of the purchase prices set forth in the Purchase
Agreements, the General Partner believes that the benefits to be derived from
the sale of the Shopping Centers greatly outweigh the risks associated with the
continued ownership and operation of the Shopping Centers. The General Partner
also believes that such benefits outweigh such risks in the event the Shopping
Centers could be sold for a minimum of $7,500,000 were the sales contemplated by
the Purchase Agreements, or either of them, not to close. Accordingly, the
General Partner recommends that the Limited Partners vote FOR the sale of the
Shopping Centers.
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USE OF PROCEEDS AND
DISTRIBUTION TO LIMITED PARTNERS
The following table shows the projected use of proceeds and estimated
distribution for each unit of Limited Partnership Interests outstanding
("Units"). The exact amount of the proceeds available for distribution to the
Limited Partners may be more or less than the estimate set forth below,
depending on the outcome of the final accounting for the sale of the Partnership
Assets. Factors which may affect the distribution to the Limited Partners
include, but are not limited to, the final sales price for the Shopping Centers,
legal fees in connection with the sale of the Shopping Centers and this
solicitation, accounting fees, maintenance requirements of the Shopping Centers
and the operation of the Shopping Centers pending closing of the sale of the
Shopping Centers.
Use of Proceeds and Distribution
(Estimated)
<TABLE>
<S> <C> <C>
Sales Price $ 7,950,000 $ 7,500,000
Cost of Sale (314,000) (300,000)
(including real estate commissions
payable to third parties, taxes
legal, accounting, partnership
termination expenses and contingency)
Payoff of Outstanding Property Loans (6,796,000) (6,796,000)
Other Assets, net of other Liabilities 122,000 122,000
Net Proceeds 962,000 526,000
Outstanding Units 333,577 333,577
Estimated Distribution per Unit $ 2.88 $ 1.57
</TABLE>
The original cost of a Unit was $20.00. On average, Limited Partners
have already received $5.80 per Unit; however, the amount received varies among
Limited Partners based upon the time at which each Limited Partner made his or
her investment in the Partnership. To calculate the estimated amount of your
total distribution upon the sale of the Partnership Assets at an aggregate
purchase price of $7,950,000 and $7,500,000, respectively, divide your initial
investment by $20.00 and multiply the result by the Estimated Distribution per
Unit of $2.88 and $1.57. (Example: If you invested $10,000 in Units, your
estimated total distribution upon a sale of the Partnership Assets at an
aggregate purchase price of $7,950,000 would be $1,440, or $10,000/$20 = 500
Units x $2.88 = $1,440, and your estimated total distribution upon a sale of the
Partnership's Assets at an aggregate purchase price of $7,500,000 would be $785,
or $10,000/$20 = 500 Units x $1.57 = $785.)
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The above information constitutes only the best estimates of the
Partnership's management as to the results of the proposed sale of the
Partnership Assets and distribution to Limited Partners and, therefore, are
subject to change. Actual results of the proposed sale of the Partnership Assets
could differ substantially from such projections and there is no assurance that
Limited Partners will receive the distribution estimated above upon the sale of
the Partnership Assets.
EFFECT OF THE TRANSACTION ON LIMITED PARTNERS
Pursuant to the terms of the Purchase Agreements, the total proceeds
estimated to be received by the Partnership in connection with the sale of the
Shopping Centers is $7,950,000. After payment of the outstanding debt of the
Partnership and costs associated with the sale of the Shopping Centers, net
proceeds from the sale of the Shopping Centers are estimated to be $962,000. The
Partnership's adjusted basis in the Shopping Centers currently is estimated to
be $8,543,565. Thus, the Partnership is expected to recognize a loss of
approximately $593,565.00 as a result of the sale of the Shopping Centers. Since
the Partnership is a partnership for federal and state income tax purposes, the
Partnership will not be able to recognize the loss but such loss will be passed
through to the Limited Partners in proportion to their ownership of the units in
the Partnership. Thus, based on the foregoing estimates, each Unit will be
allocated approximately $1.78 of loss arising from the sale of the Shopping
Centers. The General Partner will provide further information as it becomes
available.
The General Partner is not in a position to advise the Limited Partners
as to the effect of the sale of the Shopping Centers on an individual Limited
Partner's federal, state, or local income tax liability, and each Limited
Partner is encouraged to consult with its own income tax advisors to determine
how the proposed transaction will affect it or its income tax liability.
INFORMATION CONCERNING THE OFFERS
In December, 1997, the General Partner engaged Berkeley Capital
Advisors, LLC, an independent real estate company, to solicit offers to purchase
the Shopping Centers. Based on the offers received, the General Partner selected
the highest offers for each property. As of the date of this Proxy Statement,
the Partnership has executed a Purchase Agreement for each of the Shopping
Centers with the offering parties, neither of whom is related to the
Partnership. The purchase prices established in the Purchase Agreements are
$3,850,000 for Plaza West and $4,100,000 for Cape Henry. Each of the prospective
Purchase Agreements provides for the payment to an Escrow Agent of escrow or
binder deposits, which deposits have been received and may be credited to the
respective purchase prices. In addition, each of the Purchase Agreements
provides for an inspection period during which time the prospective purchasers
have the right to inspect the Shopping Centers and analyze their operations, and
each Purchase Agreement requires the occurrence of certain events, including the
approval of a Majority Interest of the Limited Partners, and the delivery of
certain documents, in each case as conditions precedent to the closing of the
sales. As of the date hereof, the inspection periods
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have not expired; nevertheless, the General Partner has no reason to believe
that the conditions precedent to the sale of the Shopping Centers will not be
fulfilled or that the Shopping Centers will not be sold substantially in
accordance with the terms and conditions of the Purchase Agreements.
In the event either or both of the Shopping Centers are not sold
pursuant to the Purchase Agreements, the General Partner will solicit additional
offers to purchase the Partnership Assets. The General Partner, however, will
not accept an offer to purchase the Partnership Assets unless it, together with
any other offers to purchase the Partnership Assets, provides for the sale of
the Partnership Assets for cash consideration in the minimum aggregate amount of
$7,500,000.
CERTAIN CONDITIONS TO SALE OF THE PARTNERSHIP ASSETS
Section 10.03 of the Partnership Agreement provides that the Limited
Partners shall not exercise their voting rights to approve the sale of all or
substantially all of the assets of the Partnership unless and until the
Partnership has received an opinion of counsel, which counsel is satisfactory to
a majority in interest of the Limited Partners, to the effect that the sale (i)
is legal, (ii) may be effected without subjecting the Limited Partners to
liability as General Partners under the North Carolina Revised Uniform Limited
Partnership Act, and (iii) may be effected without changing the Partnership's
status for tax purposes. Section 10.03 further provides that, for purposes of
Section 10.03, counsel will be deemed satisfactory to the Limited Partners if
proposed by the General Partners and not disapproved in writing within 45 days
by a majority in interest of the Limited Partners.
The General Partner has engaged the services of Poyner & Spruill,
L.L.P., Rocky Mount, North Carolina ("Poyner & Spruill"), to assist in the
preparation of the proxy solicitation materials and to file the same, on behalf
of the Partnership, with the Securities and Exchange Commission. The General
Partner herein and hereby proposes to the Limited Partners that Poyner & Spruill
also be engaged by the Partnership to render the aforesaid legal opinion, and
the General Partner has engaged Poyner & Spruill, subject to disapproval by the
Limited Partners, to render said opinion. Attached as Appendix A to this Proxy
Statement is a copy of the opinion delivered by Poyner & Spruill to the
Partnership in accordance with the provisions of Section 10.03. The General
Partner does not intend to exercise the authority conferred by the Consents
returned pursuant to the solicitation contained herein until a period of 45 days
has expired from the date of this Proxy Statement. Unless the General Partner
receives the written disapproval of a Majority Interest, Poyner & Spruill shall
be deemed satisfactory to the Limited Partners and the General Partners shall
consider the provisions of Section 10.03 to have been satisfied.
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INFORMATION CONCERNING THE SOLICITATION
General
The enclosed Consent is solicited on behalf of the General Partners of
the Partnership. The Partnership's principal executive offices are located at
1021 Noell Lane, Rocky Mount, North Carolina 27802. The telephone number is
(252) 937-2800.
These solicitation materials were mailed to the Limited Partners on or
about June 2, 1998. The cost of this solicitation will be borne by the
Partnership. Certain officers and directors of the General Partner may solicit
consents personally or by telephone or telegram, without additional
compensation.
Consent Required
Approval of the proposal set forth in the accompanying Notice of
Solicitation of Consents of Limited Partners and described herein requires the
affirmative vote of a Majority Interest of the Partnership. Returning the
Consent without indicating a choice will be deemed by the General Partner as
CONSENT to the sale of the Shopping Centers. All Consents are required to be
returned not later than the close of business on July 17, 1998, in order to be
effective. Failure to return a Consent will have the effect of a vote against
the proposal.
Any Limited Partner who executes and delivers a Consent has the right
to revoke it at any time before the authority conferred therein is exercised by
the Partnership by filing with Douglas E. Anderson, Vice President and Secretary
of the General Partner, an instrument revoking such Consent.
Limited Partners of record at the close of business on May 6, 1998 (the
"Record Date") are entitled to notice of the solicitation and to submit
Consents. On May 6, 1998, there were 333,577.1215 outstanding Units held by 455
Limited Partners. No Limited Partner owned or controlled more than 5% of the
Units as of the Record Date.
Effect of Approval
If the proposal is approved by a Majority Interest of the Limited
Partners and the Partnership Assets are sold pursuant to either or both of the
Purchase Agreements, or, if one or both of the Partnership Assets is not sold
pursuant to the Purchase Agreements, the Partnership receives a final offer to
purchase the Partnership Assets for a minimum aggregate price of $7,500,000, and
all conditions in connection with the closing of said offer are satisfied, the
following transactions will occur:
(1) The Partnership will transfer ownership of the Shopping
Centers to the purchasers in exchange for cash;
12
<PAGE> 14
(2) The Partnership will prepay, in full, the outstanding
principal balances of the mortgage loans encumbering the Shopping Centers
(including prepayment penalties) of approximately $6,796,006;
(3) The Partnership will collect all accounts receivable due
the Partnership and pay all other liabilities of the Partnership;
(4) The Partnership will distribute all remaining assets in
complete liquidation of the Partnership; and
(5) The Partnership will file a Certificate of Cancellation
with the Secretary of State of North Carolina.
Recommendation of the General Partner
The General Partner believes that the proposed sale of the Partnership
Assets pursuant to the terms and conditions of the Purchase Agreements, and the
sale of the Partnership Assets for a minimum aggregate price of $7,500,000 in
the event either or both of the Shopping Centers is not sold pursuant to the
Purchase Agreements, followed by the complete liquidation of the Partnership, is
in the best interests of the Partnership. The General Partner recommends that
the Limited Partners execute Consents FOR the approval of the transaction
proposed herein.
FINANCIAL STATEMENTS
A copy of each of the Partnership's Annual Report on Form 10-K, without
exhibits, for the fiscal year ended December 31, 1997, and the Partnership's
Quarterly Report on Form 10-Q, without exhibits, for the quarterly period ended
March 31, 1998, each as filed with the Securities and Exchange Commission, is
enclosed herewith and incorporated herein by reference.
By the General Partner
/s/ Douglas E. Anderson
------------------------------------------
Boddie Investment Company
By: Douglas E. Anderson, Vice President
Dated: June 2, 1998
Rocky Mount, North Carolina
13
<PAGE> 15
APPENDIX A
RETAIL EQUITY PARTNERS LIMITED PARTNERSHIP
A NORTH CAROLINA LIMITED PARTNERSHIP
NOTICE OF SOLICITATION OF CONSENTS OF LIMITED PARTNERS
Retail Equity Partners Limited Partnership, a North Carolina limited
partnership (the "Partnership"), hereby solicits from the Limited Partners of
the Partnership (the "Limited Partners") written consent authorizing Boddie
Investment Company, the General Partner of the Partnership (the "General
Partner"), to sell Plaza West Shopping Center, Raleigh, North Carolina, and Cape
Henry Plaza, Virginia Beach, Virginia (collectively, the "Partnership Assets")
for a minimum aggregate purchase price of $7,500,000.00 pursuant to a
transaction that will enable the Partnership to liquidate all liabilities of the
Partnership. Because the Partnership Assets comprise substantially all of the
assets of the Partnership, sale of the Partnership Assets will result in the
automatic dissolution of the Partnership in accordance with the terms and
conditions of the Agreement of Limited Partnership dated as of June 15, 1987
(the "Partnership Agreement").
The proposal is more fully described in the Proxy Statement
accompanying this Notice.
Limited Partners of record at the close of business on May 6, 1998, are
entitled to notice of the solicitation and to submit Consents.
YOUR CONSENT IS IMPORTANT, REGARDLESS OF THE NUMBER OF LIMITED
PARTNERSHIP INTERESTS YOU OWN. TO ASSURE THAT YOUR CONSENT WILL BE CONSIDERED,
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED CONSENT AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE NO LATER THAN THE CLOSE OF BUSINESS ON JULY 17, 1998.
By the General Partner
/s/ Douglas E. Anderson
------------------------------------------
Boddie Investment Company
By: Douglas E. Anderson, Vice President
June 2, 1998
<PAGE> 16
APPENDIX B
RETAIL EQUITY PARTNERS LIMITED PARTNERSHIP
1021 NOELL LANE, ROCKY MOUNT, NORTH CAROLINA 27802
CONSENT OF LIMITED PARTNERS
The undersigned Limited Partner of Retail Equity Partners Limited
Partnership (the "Partnership") hereby:
________ CONSENTS to the sale of Cape Henry Plaza and Plaza
West Shopping Center, which constitute substantially
all of the assets of the Partnership, for a minimum
of $7,500,000, which will result in the automatic
dissolution of the Partnership.
________ DOES NOT CONSENT to the sale of Cape Henry Plaza and
Plaza West Shopping Center, which constitute
substantially all of the assets of the Partnership,
for a minimum of $7,500,000, which will result in the
automatic dissolution of the Partnership.
Please indicate your choice by checking one of the above. Failure to indicate a
choice will be deemed by the General Partner as CONSENT to the sale of the
Partnership's assets.
Date: , 1998
--------------------------------
-------------------------------------------
Name of Limited Partner (please print)
-------------------------------------------
Signature of Limited Partner
THIS CONSENT IS SOLICITED ON BEHALF
OF THE PARTNERSHIP BY THE GENERAL PARTNER
AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
PLEASE MARK, SIGN, DATE AND RETURN
THIS CONSENT PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE> 17
APPENDIX C
[Letterhead of Poyner & Spruill, L.L.P.]
Michael S. Colo
Direct Dial: 919/972-7105
Direct Fax: 919/972-7014
E-Mail: [email protected]
June 2, 1998
Retail Equity Partners Limited Partnership
c/o Boddie Investment Company, General Partner
1021 Noell Lane
Rocky Mount, North Carolina 27802
Gentlemen:
The foregoing opinion is rendered pursuant to the provisions of Section
10.03 of the Agreement of Limited Partnership among the Limited Partners and
General Partner (the "Partnership Agreement") of Retail Equity Partners Limited
Partnership (the "Partnership"). Unless otherwise defined herein, capitalized
terms shall have meanings ascribed to them in the Partnership Agreement.
In rendering our opinion, we have (i) examined the Partnership
Agreement, (ii) had discussions with management of the General Partner in
connection with the transaction for which the consent of the Limited Partners of
the Partnership is being solicited, (iii) reviewed applicable law, and (iv)
examined such other laws and documents as we have deemed necessary or
appropriate for purposes of this opinion.
Based upon the foregoing, we are of the opinion that:
1. The sale of substantially all of the assets of the
Partnership, in the manner contemplated by the Proxy Statement
dated June 2, 1998 (the "Proxy Statement"), resulting in the
automatic dissolution of the Partnership, is legal;
2. The sale of substantially all of the assets of the
Partnership, in the manner contemplated by the Proxy
Statement, may be effected without subjecting the Limited
Partners and BAC holders to liability as general partners
under North Carolina Revised Uniform Limited Partnership Act;
and
3. The sale of substantially all of the assets of the
Partnership, in the manner contemplated by the Proxy
Statement, can be effected without changing the Partnership's
status for tax purposes.
<PAGE> 18
Retail Equity Partners Limited Partnership
June 2, 1998
Page 2
Please be advised that we are members of the Bar of the State of North
Carolina and do not purport to be experts in the laws of any jurisdiction other
than the State of North Carolina. Accordingly, this opinion is limited in all
respects to the laws of the State of North Carolina and Federal law. This
opinion is solely for the benefit of the Limited Partners and General Partner of
the Partnership in connection with the transaction contemplated by the
aforementioned Proxy Statement. It may not be otherwise distributed or relied
upon by any person or quoted or reproduced, in whole or in part, in any document
other than the aforementioned Proxy Statement, or filed with any governmental
agency, except in connection with the aforementioned Proxy Statement, without
our prior written consent.
This opinion is specifically limited to the matters expressed herein,
effective as of the date hereof. We assume no duty to inform you of any change
in our opinion hereafter due to any change in law or facts which may hereafter
occur or come to our attention.
Kindest personal regards.
Yours very truly
/s/ Poyner & Spruill, L.L.P.
MSC/s
