SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
Solicitation/Recommendation Statement under
Section 14(d)(4) of the Securities Exchange Act of 1934
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Brown-Benchmark Properties Limited Partnership
(Name of Subject Company)
Brown-Benchmark Properties Limited Partnership
(Name of Person(s) Filing Statement)
Assignee Units of Limited Partnership Interest
(Title of Class of Securities)
None
(Cusip Number of Class of Securities)
John M. Prugh with a copy to:
Brown-Benchmark AGP, Inc. John B. Watkins, Esq.
c/o Alex Brown Realty, Inc. Wilmer, Cutler & Pickering
225 East Redwood Street 100 Light Street, Suite 1300
Baltimore, Maryland 21202 Baltimore, Maryland 21202
(410) 727-4083 (410) 986-2800
(Name, address and telephone number of person
authorized to receive notice and communications on
behalf of the person(s) filing statement)
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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Item 1. Subject Company Information
The name of the subject company is Brown-Benchmark Properties
Limited Partnership (the Partnership). The address of the principal executive
offices of Partnership is 225 East Redwood Street, Baltimore, Maryland 21202 and
the telephone number is 410-727-4083.
The title of the class of equity securities to which this
Schedule 14D-9 relates are assignee units of limited partnership interests in
Partnership (units). There were 500,000 units outstanding as of December 31,
1999.
Item 2. Identity and Background of Filing Person
The filing person is the subject company, the Partnership,
whose name, business address and business telephone number are set forth in Item
1 above.
This statement relates to the offer by certain entities
(collectively, the offer or) controlled by MacKenzie Patterson, Inc. (MPI) to
purchase for cash up to 125,000 units at a purchase price of $12 per unit upon
the terms and subject to the conditions set forth in MPI's Offer to Purchase,
dated May 5, 2000 and related Letter of Transmittal and letter to unit holders
dated May 5, 2000 (collectively, as each may be amended and supplemented from
time to time, the tender offer). The tender offer is described in a Tender Offer
Statement on Schedule TO (as amended and supplemented from time to time, the
Schedule TO), which was filed with the SEC on May 5, 2000. As set forth in the
Schedule TO, the address of the offeror is MacKenzie Patterson, Inc., 1640
School Street, Moraga, California 94556, Attn: Christine Simpson.
Item 3. Past Contacts, Transactions, Negotiations and Agreements
To the knowledge of the Partnership, as of the date of this
statement, there are no material agreements, arrangements or understandings or
any actual or potential conflicts of interest between the Partnership and its
executive officers, general partners or affiliates, or between the Partnership
or its affiliates and the offeror, its executive officers, directors or
affiliates.
Item 4. The Solicitation or Recommendation
The Partnership's Administrative General Partner, Brown-Benchmark AGP,
Inc., and its Development General Partner, Benchmark Equities, Inc.
(collectively, the general partners), recommend that unit holders reject the
tender offer and not tender their units pursuant to the tender offer.
This tender offer appears to be part of a trend among certain
investor groups whose objective is to acquire interests in public real estate
limited partnerships. By making purchase offers at prices below the
Partnership's liquidation value and below recent trade levels of such interests
that may have occurred in secondary markets, these groups seek to acquire
partnership interests in public real estate limited partnerships at discounted
prices.
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The general partners believe that the tender offer price
reflects an undervaluation of the assets of the Partnership and offers
considerably less than that which would be realized from an orderly sale of the
Partnership's assets.
The Partnership was formed in 1987 and raised an initial
capital investment of $12,500,000 by selling 500,00 units of interest in the
Partnership at $25 per unit. The Partnership's assets consist of 590 apartment
units within three apartment communities in Ohio. They consist of 186 units at
Woodhills Apartments in Dayton, 181 units at Oakbrook Apartments in Columbus,
and 223 units at Deerfield Apartments in Cincinnati.
As a standard business practice at the Partnership, the
general partners value the Partnership's assets on an annual, year-end basis.
The value of the assets is based on the cumulative results of operations of all
three apartment communities. The general partners' valuation was established as
follows:
1. Net operating income (NOI) was determined by subtracting
property operating expenses from gross property income. Property operating
expenses do not include interest expenses, depreciation, amortization, capital
expenses or partnership expenses. NOI for all partnership assets for 1999 was
$2,233,448 ($4,002,369 gross property income less $1,768,921 property operating
expenses).
2. The general partners established an appropriate
capitalization rate based on the age and quality of the properties, geographic
locations, financial market conditions and types of assets. The Partnership also
reviewed real estate investor survey information for the first quarter of 2000
which indicates that the national average capitalization rate for
institutional-grade apartments is approximately 8.83%. Based upon the foregoing
factors and after taking into account the site specific conditions that exist in
the Ohio multifamily market, the general partners established a 9.5%
capitalization rate for its assets.
3. The adjusted NOI was divided by the capitalization rate
to determine a preliminary value. The preliminary value at 12/31/99 was
calculated to be $23,509,979.
4. The cost of an orderly sale, i.e., one between a willing
seller and buyer, not based on factors of duress, was subtracted from the
preliminary value to derive a net value. Based on a preliminary value of
$23,509,979, sales costs were estimated to be $587,749, resulting in a net value
of $22,922,230.
5. Short-term assets (cash on hand, accounts receivable,
prepaid expenses and escrows) were reduced by short-term liabilities (accounts
payable, accrued expenses and security deposits) to determine working capital.
Working capital at 12/31/99 was $236,531.
6. Working capital was subtracted from the long-term
debt balance ($13,953,098 at 12/31/99) to calculate net liabilities at 12/31/99.
Therefore, net liabilities at 12/31/99 were $13,716,567.
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7. The equity value was calculated by subtracting the
net liability balance from the net value. Thus, the equity value at 12/31/99
was calculated as $9,205, 663.
8. Equity value was divided by investment units to yield a per
unit partnership value of $18.41 as of December 31, 1999, the date of the most
recent valuation.
Accordingly, the general partners believe that the tender
offer, at a purchase price of $12 per unit, is significantly below the value of
each unit and thus, acceptance of this offer is not in the best interests of
unit holders.
The Partnership's general partners, executive officers and
affiliates do not intend to tender and sell, but intend to hold the units that
are held of record or beneficially by such persons.
Item 5. Persons/Assets, Retained, Employed, Compensated or Used
The Partnership has not employed, retained or compensated,
directly or indirectly, and does not plan to employ, retain or compensate,
directly or indirectly any person(s) to make recommendations in connection with
the tender offer.
Item 6. Interest in Securities of the Subject Company
No transactions in the units of the Partnership have been
effected during the past 60 days by the Partnership, or to the knowledge of the
Partnership, by any executive officer, partner, affiliate or subsidiary of the
Partnership.
Item 7. Purposes of the Transaction and Plans or Proposals
The Partnership is not undertaking or engaged in any
negotiations in response to the tender offer that relate to: (i) a tender offer
or other acquisition of the Partnership's securities by its subsidiaries or any
other person; (ii) any extraordinary transactions, such as a merger,
reorganization or liquidation, involving the Partnership or any of its
subsidiaries; (iii) any purchase, sale or transfer of a material amount of
assets of the Partnership or any of its subsidiaries; or (iv) any material
change in the present dividend rate or policy, or indebtedness or capitalization
of the Partnership.
There are no transactions, agreements in principle, signed
contracts or board resolutions in response to the tender offer that relate to
one or more of the events referred to in the preceding paragraph.
Item 8. Additional Information
Not applicable.
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Item 9. Exhibits
Exhibit No. Description
(a)(1) Offer to Purchase dated May 5, 2000 (1)
(a)(2) Letter of Transmittal (1)
(a)(3) Form of letter to unit holders from MPI dated May 5, 2000 (1)
(a)(4) Letter to unit holders from Jeffrey M. Terra, Assistant Asset
Manager of the Partnership, dated May 17, 2000 *
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(1) Incorporated by reference to Tender Offer Statement on Schedule TO
filed with the SEC on May 5, 2000.
* Included with the statement mailed to unit holders.
Signatures. 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.
BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
By: Brown-Benchmark AGP, Inc.,
its Administrative General Partner
By: /s/ John M. Prugh
Name: John M. Prugh
Title: President
Date: May 17, 2000
By: Benchmark Equities Inc.,
its Development General Partner
By: /s/ Daniel P. Reidel
Name: Daniel P. Reidel
Title: President
Date: May 17, 2000
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Exhibit (a)(4)
Letter to unit holders from Jeffrey M. Terra, Assistant
Asset Manager of the Partnership, dated May 17, 2000
May 17, 2000
Dear Investor:
On May 8, 2000, Brown-Benchmark Properties Limited Partnership (the
Partnership) received a copy of a Tender Offer Statement on Schedule TO, filed
with the SEC on May 5, 2000, relating to a tender offer from certain entities
controlled by MacKenzie Patterson, Inc. to purchase for cash up to 125,000 units
of limited partnership interests in the Partnership at a purchase price of $12
per unit.
Pursuant to the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder, the Partnership is required to inform you of
its position, if any, with respect to this tender offer.
Our administrative general partner and our development general partner
(collectively, the general partners) recommend that you reject the tender offer
and not tender your units.
For internal purposes, the general partners value our assets annually,
based upon market value assuming an orderly sale of the Partnership's assets.
The estimated proceeds are then allocated pursuant to our limited partnership
agreement. Using this methodology, which does not consider the lack of liquidity
of the units, each original $25 investment unit was valued by our general
partners at approximately $18 as of December 31, 1999, the date of the most
recent valuation. Accordingly, the general partners believe that the tender
offer, at a purchase price of $12 per unit, is significantly below the value of
each unit and accordingly, acceptance of this offer is not in your best
interests.
Enclosed herewith is a copy of our Solicitation/Recommendation
Statement on Schedule 14D-9, filed with the SEC on May 17, 2000, which contains
a more detailed explanation of our recommendation with respect to the tender
offer and other important information related to the tender offer. We urge you
to read the enclosed material carefully.
Should you have any questions, please contact the undersigned.
Sincerely,
Jeffrey M. Terra
Assistant Asset Manager
Enclosure
