<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant |X| Filed by a party other than the registrant |_| Check
the appropriate box:
<TABLE>
<S> <C>
|X| Preliminary proxy statement |_| Confidential, For Use of the Commission Only
|_| Definitive proxy statement (as permitted by Rule 14a-6(e)(2))
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
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Windsor Park Properties 5, A California Limited Partnership
-------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------
(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:
Units of limited partner interest
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:/1/
$9,017,000
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(4) Proposed maximum aggregate value of transaction:
$9,017,000
--------------------------------------------------------------------------------
(5) Total fee paid:
$1,803
--------------------------------------------------------------------------------
|_| 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:
--------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
--------------------------------------------------------------------------------
(3) Filing party:
--------------------------------------------------------------------------------
(4) Date filed:
--------------------------------------------------------------------------------
-----------------------
/1/ Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
CONSENT SOLICITATION STATEMENT
Windsor Park Properties 5,
A California Limited Partnership
6160 South Syracuse Way
Greenwood Village, Colorado 80111
---------------------
Summary Term Sheet
---------------------
This summary term sheet highlights selected information from this
consent solicitation statement and may not contain all of the information that
is important to you. To understand fully the proposals relating to, and for a
more detailed description of the terms of, the sales and the plan of
liquidation, you should carefully read this entire consent solicitation
statement, as well as the additional documents that we may refer you to. We have
included page references in parentheses to direct you to a more complete
description of the topics presented in this summary term sheet. This consent
solicitation statement is first being mailed to you and the other limited
partners on or about ___________, 2000.
Sales and Plan of Liquidation (p. 17)
o Windsor Park Properties 5. We are a California limited partnership
which was formed in June 1987 for the purpose of acquiring and holding
investments in existing manufactured home communities for an anticipated
investment period of four to six years. We were funded through a public offering
of our units of limited partner interest which commenced in September 1987 and
was completed in September 1988. Our investment portfolio currently consists of
two wholly-owned properties and partial ownership interests in five other
properties. Our general partners are The Windsor Corporation, which is also our
managing general partner, and John A. Coseo, Jr. Our principal executive offices
are located at 6160 South Syracuse Way, Greenwood Village, Colorado 80111 and
our telephone number is (303) 741-3707.
o Background. When we were formed, it was expected that we would sell
our properties and, in accordance with our partnership agreement, liquidate
following the expiration of our anticipated investment period. However, we did
not sell our properties and liquidate as planned and, as a result, have held our
properties beyond the time that you may have reasonably expected to receive
liquidating distributions from your investment in our units. We have also held
our properties beyond our formal term, as originally contemplated by our
partnership agreement of December 31, 1998, which has been extended once to
December 31, 2001. The sales and plan of liquidation which are being proposed in
this consent solicitation statement are intended to provide you with liquidity
in your investment in the partnership.
o Sales to N'Tandem Trust and Plan of Liquidation. Our general partners
have approved and recommend a plan to sell our properties to N'Tandem Trust, a
California business trust, for cash. The terms of the sales are set forth in a
purchase and sale agreement. Upon completion of the sales, we will liquidate, in
accordance with the terms of our partnership agreement, pursuant to a plan of
liquidation adopted by our general partners. Upon completion of the plan of
liquidation, you will receive final liquidating distributions of approximately
$23.77 per unit.
<PAGE>
o N'Tandem Trust. Both N'Tandem and our managing general partner are
under common control of Chateau Communities, Inc. Additionally, our managing
general partner's two directors also serve as Chief Executive Officer and
President of Chateau and our managing general partner serves as external
investment advisor to N'Tandem. N'Tandem, rather than Chateau, will be
purchasing our properties because our properties are more in line with the kind
of assets N'Tandem typically invests in. N'Tandem already has a partial
ownership interest in all five of the properties in which we hold a partial
ownership interest and, upon completion of the sales, will own 100% of three of
these properties and will hold a majority ownership interest in the other two
properties.
o Requisite Approval. If each of the proposals is approved by our limited
partners holding a majority of our units, our general partners will proceed with
the sales and the plan of liquidation. Each of the proposals is conditioned upon
the approval of the other proposal. Accordingly, if you would like our general
partners proceed with the sales and the plan of liquidation you must vote for
both proposals.
Risk Factors (p. 16)
o The sales and plan of liquidation are subject to material risks,
conflicts of interest and other considerations which are discussed in this
consent solicitation statement. They include the following:
o Due to our managing general partner being under common control
with N'Tandem as well as being N'Tandem's external investment
advisor, the sales, and the recommendations and views of our
general partners, could be deemed to involve conflicts of
interest between our managing general partner and our limited
partners;
o Due to our general partners' potential conflicts of interests,
our managing general partner engaged an independent special
counsel to represent the interests of our limited partners in
connection with the sales and the plan of liquidation. In light
of the nature of these potential conflicts of interest, the
purchase prices for our properties and other terms of the sales,
however, may not be considered to be the result of arm's-length
negotiations and bargaining between independent parties despite
the efforts of the independent special counsel;
o Our general partners have not engaged in any marketing efforts
with respect to the sale of our properties to third parties;
o The purchase prices for our properties are based upon appraisals
that were rendered in April and May of 2000 and have not been
updated since that time. Accordingly, the appraisals may not
reflect the current fair market values of our properties; and
o If the sales and plan of liquidation are approved, you will be
foregoing any current or future benefits associated with the
ownership of our properties.
Valuation of Our Properties (p.22)
o Based upon appraisals rendered in April and May of 2000, the aggregate
value of our properties, after deducting attributable debt and the discount
being applied to our partial ownership interests, is $5,666,100.
ii
<PAGE>
Recommendation of the General Partners (p. 25)
o Our general partners considered the material positive and negative
aspects of the sales and the plan of liquidation and concluded that both
proposals are consistent with our original objectives and that the terms of the
sales are fair to you from both a financial and procedural point of view.
Accordingly, our general partners recommend that you approve and adopt both the
sales and the plan of liquidation.
o Financial Fairness. In reaching the conclusion that the sales are fair to
you from a financial point of view, our general partners considered the
following factors:
o N'Tandem is willing to purchase all of our properties and will
pay the full appraised value for our wholly-owned properties and
will apply only a 6.7% discount to the appraised value of our
partial ownership interests for the fact that we own a minority
interest in the underlying properties. Our general partners
believe that any third-party purchaser of our partial ownership
interests would have applied a higher discount;
o The aggregate net consideration to be paid exceeds the net book
value of our assets by $1,734,500;
o N'Tandem is willing to purchase the properties "as is" and will
not require us to make representations and warranties in
connection with the sales;
o Due to the nature of the transaction, our general partners will
be able to wind up our operations and make full liquidating
distributions to you and the other limited partners promptly upon
the receipt of the requisite approval of the proposals;
o The estimated liquidating distributions ($23.77 per unit) are
substantially higher than the weighted average trading price of
our units in the secondary markets ($14.43 per unit);
o We will not have to pay any brokerage fees in connection with the
sales; and
o Legg Mason Wood Walker, Incorporated has delivered a fairness
opinion stating that the aggregate purchase price is fair, from a
financial point of view, to you and the other limited partners.
o In reaching the conclusion that the sales are fair to you from a
financial point of view, our general partners also considered the following
potentially negative aspects of the sales:
o The purchase prices for the properties are based on appraisals
that were rendered in April and May of 2000 and have not been
updated since that time;
o The remaining interests in the properties underlying our partial
ownership interests are held by N'Tandem and/or a limited
partnership which is affiliated with our managing general partner
and N'Tandem;
o Third-party purchasers may be willing to pay more for our
properties in the future; and
iii
<PAGE>
o It is possible that you might earn a higher return on your
investment, through continuing distributions and other benefits
of ownership, if we retained ownership of our assets.
o The above described factors are all of the material factors considered by
our general partners in determining that the sales and the plan of liquidation
are fair to our affiliated and unaffiliated limited partners from a financial
point of view. In reaching their determination that the sales and the plan of
liquidation are fair to our affiliated and unaffiliated limited partners from a
financial point of view, our general partners did not assign relative weights to
the above factors or determine that any factor was of particular importance;
rather, our general partners viewed the positive factors as a totality and the
negative factors as a totality and concluded that the positive factors
outweighed the negative factors. Accordingly, our general partners determined
that the sales and the plan of liquidation are fair to our affiliated and
unaffiliated limited partners from a financial point of view.
o Procedural Fairness. In reaching the conclusion that the sales are fair
to you from a procedural point of view, our general partners considered the
following factors:
o Our properties have been appraised by an independent appraiser;
o In assessing the discount being applied to our partial ownership
interests, our managing general partner had the appraiser analyze
the applicability of a discount in valuing a partial ownership
interest in a manufactured home community and, based on its
analysis, the appraiser concluded that an appropriate discount
for a minority ownership interest would be approximately 25%;
o The proposals must be approved by majority-in-interest of our
unaffiliated limited partners;
o Our managing general partner engaged the law firm of Wolf
Haldenstein Adler Freeman & Herz LLP to act as independent
special counsel for the purpose of representing the interests of
you and the other unaffiliated limited partners in connection
with the sales and plan of liquidation; and
o Our managing partner retained Legg Mason to render an independent
fairness opinion.
o In reaching the conclusion that the sales are fair to you from a
procedural point of view, our general partners also considered the following
potentially negative aspects of the sales:
o The sales were negotiated on our behalf by our managing general
partner, which is under common control with N'Tandem, and, as
such, may be subject to potential conflicts of interest;
o The sales and plan of liquidation have not been approved on
behalf of our managing general partner by directors who are not
affiliated with N'Tandem;
o The appraisals were rendered in April and May of 2000 and have
not been updated since that time; and
iv
<PAGE>
o Our general partners have not engaged in any marketing efforts
with respect to our properties and do not intend to take any
actions to market or sell our properties pending the results of
this consent solicitation.
o The above described factors are all of the material factors considered by
our general partners in determining that the sales and the plan of liquidation
are fair to our affiliated and unaffiliated limited partners from a procedural
point of view. In reaching their determination that the sales and the plan of
liquidation are fair to our affiliated and unaffiliated limited partners from a
procedural point of view, our general partners concluded that the approval of
the proposals by a majority-in-interest of our unaffiliated limited partners is
sufficient to insure that procedural fairness has been preserved for our limited
partners. Our general partners also believe that the potentially negative
factors influencing procedural fairness were in each case mitigated by the
following other factors or considerations:
o Although our managing general partner and N'Tandem are under
common control, our general partners concluded that the common
control did not adversely affect the terms of the sales for our
limited partners and allowed N'Tandem to offer terms that they
believed would not be available from third parties;
o Our managing general partner arranged for the independent special
counsel to represent the interests of our unaffiliated limited
partners;
o Our managing general partner retained Legg Mason to assess the
fairness of the aggregate purchase price to be paid to us in the
sales;
o Even though the appraisals were rendered in April and May of
2000, our general partners believe that no material changes have
occurred in our properties or in the conditions of the market for
manufactured home communities since those dates that would result
in higher values for our properties; and
o Our general partners believe that marketing our properties would
not have provided a better transaction for you and our other
limited partners and would have ultimately delayed the timing of
the sales and the distribution of liquidating proceeds to you and
the other limited partners.
Fairness Opinion (p. 28)
o On August 29, 2000, Legg Mason delivered an oral and written fairness
opinion to our managing general partner to the effect that the aggregate
purchase price to be paid to us by N'Tandem for our properties is fair to you
and the other limited partners from a financial point of view. The fairness
opinion, which is attached as Appendix A to this consent solicitation statement,
should be read in its entirety for a description of the procedures followed,
assumptions and qualifications made, matters considered and the limits of the
review undertaken by Legg Mason.
Independent Representation of the Unaffiliated Limited Partners (p. 32)
o In an effort to address any potential conflicts of interest, our managing
general partner, on our behalf, engaged the law firm of Wolf Haldenstein Adler
Freeman & Herz LLP to act as independent special counsel for the purpose of
representing the interests of you and the other unaffiliated limited partners in
connection with the sales and the plan of liquidation. On August 23, 2000, the
independent special counsel delivered a written report addressed to our managing
general partner for the benefit of our limited partners describing the results
of its review of, and negotiations with our managing general partner
v
<PAGE>
and N'Tandem with respect to, the sales and the plan of liquidation. As a result
of these negotiations, our managing general partner and N'Tandem agreed to make
certain changes to the sales and the plan of liquidation for the benefit of our
limited partners. As described in the report, the parties agreed that the
discount being applied to our partial ownership interests would be reduced from
10%, which was the percentage discount originally agreed to by the parties, to
6.7%. As a result of such reduction, the aggregate amount of the net proceeds to
be paid to our limited partners in connection with the sales and the plan of
liquidation increased by $192,900. In addition, the parties also agreed to
include certain additional disclosure in this consent solicitation statement
relating to the rights of our limited partners under our partnership agreement
with respect to a transaction between an affiliate of our managing general
partner and us. The report of the independent special counsel, which is attached
as Appendix B to this consent solicitation statement, should be read in its
entirety for a description of the procedures followed, matters considered and
the limits of the review undertaken by the independent special counsel.
Alternatives Considered (p. 33)
o In addition to considering the sales and plan of liquidation, our
general partners also identified and considered the following alternative
courses of action for us:
o Continuation of Our Operations. Because most of our limited
partners have held their investments in us for more than
twelve years and we have held our properties for six years
beyond both the end of our anticipated investment period and
the time in which you and the other limited partners had a
reasonable expectation to receive liquidating distributions,
our managing general partner believes that you and the other
limited partners expect to achieve the near-term liquidation
of your investments. Our managing general partner also
believes that continuing to own and operate our properties is
not in our best interests or the best interests of you and the
other limited partners, especially in view of the opportunity
to sell our properties to N'Tandem on the terms outlined in
this consent solicitation statement. Additionally, while our
continuation would have resulted in you and the other limited
partners receiving the benefits of continued ownership of our
properties, you would have also remained subject to the risks
of continuing such ownership and would continue to be unable
to liquidate your investments at fair value since no formal
trading market for our units exists.
o Sale of Our Properties to Third Parties. Our general partners
concluded that the sale of our properties to third-party
purchasers would not be likely to result in the distribution
of greater liquidating proceeds to you and the other limited
partners than the amounts being distributed in connection with
the sales and plan of liquidation. Our managing general
partner believes that (i) the appraisals of our properties
continue to reflect their fair market values, (ii) you and the
other limited partners would receive greater liquidating
proceeds in a third-party transaction only if such third-party
purchaser was willing to pay in excess of the purchase prices
for our properties being paid by N'Tandem, something our
general partners believe few, if any, third-party purchasers
would be willing to do, especially with respect to our partial
ownership interests, (iii) our partial ownership interests
would have the effect of deterring potential third-party
purchasers because of their minority status, and (iv) the
expenses of the sales are lower than they would be in
connection with the sale of our properties to an unaffiliated
third-party purchaser (principally due to the fact that we are
not paying any brokerage commissions, which results in
estimated savings of between $270,500 and $541,000 based upon
prevailing commission rates).
vi
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o Consolidation. Our general partners also considered and
analyzed a proposed consolidation in which we, together with
three other partnerships affiliated with us, would have been
merged with and into N'Tandem. In the proposed consolidation,
you and the other limited partners would have had the right to
exchange your units of limited partner interest for common
shares or other securities of N'Tandem. As part of its
analysis of the sales and plan of liquidation, our managing
general partner compared the estimated price per unit expected
to be paid by N'Tandem in the sales to the estimated range of
values per unit that were expected to be received upon
completion of the proposed consolidation assuming that the
units were converted into N'Tandem's common shares of
beneficial interest and concluded that the proposed
consolidation would not have resulted in our limited partners
receiving a price per unit, on a post-consolidation basis,
greater than the estimated price per unit proposed to be paid
to you and the other limited partners following the completion
of the sales and plan of liquidation.
N'Tandem's and Chateau's Belief as to the Fairness of the Proposed Transactions;
N'Tandem's and Chateau's Reasons for Engaging in the Proposed Transactions (p.
36)
o N'Tandem and Chateau believe that the sales are fair to you and
the other limited partners from both a financial and a procedural point of view.
In reaching this determination, N'Tandem and Chateau considered the same factors
and aspects with respect to the sales as our general partners and have adopted
their analyses and conclusions.
Appraisals (p. 36)
o Our managing general partner retained Whitcomb Real Estate to
independently appraise our properties and determine the current fair market
value for each of the properties. The appraiser is certified as a Master
Appraiser and was selected based on its appraisal expertise and experience in
valuing manufacture home communities.
o A summary description of each appraisal, including the values of
the properties, is included elsewhere in this consent solicitation statement.
The appraisals are based on conditions as of their respective dates. Subsequent
developments could have a material effect on the valuations stated therein.
Certain Federal Income Tax Considerations (p. 50)
o Tax Consequences of the Sales. The sales should result in the
recognition of gain by us and, therefore, should result in recognition of gain
by you and the other limited partners. The amount of gain recognized by us with
respect to each of our properties will equal the difference between (i) the
amount realized by us (i.e., the amount of cash received increased by the amount
of our liabilities assumed or taken subject to by N'Tandem) and (ii) the
adjusted tax basis in each of our properties. The aggregate gain expected to be
recognized by us on the sales is approximately $2,504,200.
o Allocation of Gain. The $2,504,200 gain expected to be
recognized by us in the year of the sales will be allocated among our partners
in accordance with the terms of our partnership agreement. These provisions will
result in an allocation of approximately $2,479,100 of taxable gain on the sales
to you and the other limited partners (or an average of $10.85 per unit). The
gain per unit resulting from the sales is primarily caused by the fact that we
generated tax losses in certain prior years that were allocated to you and the
other limited partners.
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o Tax Consequences of Liquidation. Upon liquidation, you and the
other limited partners will recognize gain or loss equal to the difference
between the cash received by you (including your share of partnership
liabilities under Section 752 of the Internal Revenue Code of 1986) and the
adjusted tax basis of your units, adjusted by your allocable share of income,
gain or loss arising from normal partnership operations for the year of
liquidation and the sale of our properties in the year of liquidation. It is
expected that you and the other limited partners will recognize an average loss
of approximately $11.10 per unit on liquidation.
Consent Procedures; Transactions Authorized by Consents (p. 52)
o The consents being solicited in connection with this consent
solicitation statement will authorize our general partners to complete the sales
at any time on or prior to ____________, 2000 and to proceed with the plan of
liquidation and to take all actions necessary or appropriate, as determined by
our general partners, to complete such transactions. As provided in our
partnership agreement, we are not permitted to sell or lease property to any one
who sponsored us, which includes our general partners or any of their
affiliates. Our partnership agreement, however, permits this provision to be
amended so as to allow sales of our property to an affiliate of our general
partners with the consent of a majority-in-interest of our limited partners. The
authorization granted to our general partners by consenting to the sales and the
plan of liquidation will include, without limitation, the adoption of any
amendments to our partnership agreement that may be required to effectuate the
sales and the plan of liquidation or to amend any provision of our partnership
agreement which may be construed as restricting the sale of our properties to
affiliates.
o The procedures relating to consenting to the proposals are as
follows:
o You may make your election on your consent only during the
solicitation period commencing upon the date of delivery of
this consent solicitation statement and continuing until the
earlier of (i) ________, 2000 or such later date as may be
determined by our general partners and (ii) the date upon
which our general partners determine that unaffiliated limited
partners holding not less than a majority of all issued and
outstanding units have consented to the proposals;
o You must consent to, deny consent to, or abstain from
consenting to the proposals with respect to all of your units.
The effect of abstaining or failing to sign and return your
consent will be the same as denying consent;
o All questions as to the validity, form, eligibility (including
time of receipt), acceptance and withdrawal of a consent will
be determined by our general partners, whose determination
will be final and binding;
o Your consent may be changed or revoked prior to the expiration
of the solicitation period by delivering to us a notice of
revocation or a substitute consent, properly completed and
executed, together with a letter indicating that your prior
consent has been revoked; and
o If you submit a signed but unmarked consent, you will be
deemed to have consented to the proposals.
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Record Date; Required Consents (p. 54)
o The close of business on __________, 2000 has been fixed as the
record date for determining which of our limited partners is entitled to consent
to the sales and plan of liquidation. As of the record date, there were 230,861
units outstanding held of record by a total of 2,820 limited partners. Each of
the proposals require the approval of our unaffiliated limited partners holding
at least a majority of our outstanding units. Each unit entitles the holder
thereof to cast one vote with respect to the approval of each of the proposals.
No Appraisal or Dissenters' Rights (p. 54)
o If our limited partners owning the requisite number of units
consent to both of the proposals, you and the other limited partners will be
bound by such consent, including any of our limited partners who have not
returned their consents or who have abstained from voting on, or denied consent
to, the proposals. None of our partnership agreement, California law or the
proposed terms and conditions of the sales or the plan of liquidation provide
objecting limited partners with the right to exercise any dissenters', appraisal
or similar rights.
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WHO CAN HELP ANSWER YOUR QUESTIONS
If you would like additional copies of this consent solicitation
statement, or if you would like to ask any additional questions about the sales
and/or plan of liquidation, you should contact:
THE WINDSOR CORPORATION ARLEN CAPITAL, LLC
6160 South Syracuse Way 1650 Hotel Circle North, Suite 200
Greenwood Village, Colorado 80111 San Diego, California 92108
(303) 741-3707 (800) 553-4039
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS CONSENT SOLICITATION
STATEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS NOT
CONTAINED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
PARTNERSHIP OR THE GENERAL PARTNERS. THIS CONSENT SOLICITATION STATEMENT DOES
NOT CONSTITUTE THE SOLICITATION OF A CONSENT IN ANY JURISDICTION TO OR FROM ANY
PERSON TO OR FROM WHOM IT IS UNLAWFUL TO SOLICIT SUCH CONSENT SOLICITATION IN
SUCH JURISDICTION.
NONE OF THE SALES, THE PLAN OF LIQUIDATION OR THIS CONSENT SOLICITATION
STATEMENT HAVE BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE FAIRNESS
OR MERITS OF THE SALES OR THE PLAN OF LIQUIDATION OR THE ACCURACY OR ADEQUACY OF
THIS CONSENT SOLICITATION STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Consent Solicitation Statement is dated ________, 2000.
x
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TABLE OF CONTENTS
<TABLE>
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Page
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SUMMARY ............................................................................................ 1
Purpose of the Consent Solicitation; Proposals 1 and 2 ............................................ 1
Background of the Proposed Transactions ............................................................ 2
Relationship of the Various Parties to the Proposed Transactions ................................... 4
Summary Risk Factors ............................................................................... 5
Valuation of Properties ............................................................................ 6
Recommendation of the General Partners ............................................................. 7
Fairness Opinion ................................................................................... 10
Independent Representation of the Unaffiliated Limited Partners .................................... 10
Alternatives Considered ............................................................................ 10
N'Tandem's and Chateau's Belief as to the Fairness of the Proposed Transactions;
N'Tandem's and Chateau's Reasons for Engaging in the Proposed
Transactions .............................................................................. 12
Appraisals ......................................................................................... 12
Certain Federal Income Tax Considerations .......................................................... 13
Consent Procedures; Transactions Authorized by Consents ............................................ 13
Record Date; Required Consents ..................................................................... 14
No Appraisal or Dissenters' Rights ................................................................. 14
Historical Distributions ........................................................................... 14
No Established Trading Market for Units ............................................................ 15
SUMMARY HISTORICAL FINANCIAL DATA .................................................................. 15
MATERIAL RISK FACTORS AND OTHER CONSIDERATIONS ..................................................... 16
Conflicts of Interest .............................................................................. 16
Purchase Prices May Not Be Considered the Result of Arm's-Length Negotiations ...................... 16
The General Partners Have Not Engaged in Marketing Efforts with Respect to the Properties .......... 17
Appraisals May Not Reflect the Current Fair Market Values of the Properties ........................ 17
Loss of Opportunity to Benefit from Future Events .................................................. 17
DESCRIPTION OF THE PROPOSED TRANSACTIONS ........................................................... 17
Purpose of the Consent Solicitation; Proposals 1 and 2 ............................................ 17
Background of the Proposed Transactions ............................................................ 18
Information Concerning N'Tandem and Chateau ........................................................ 21
The Purchase and Sale Agreement .................................................................... 21
Solicitation Expenses .............................................................................. 23
Estimate of Liquidating Distributions Payable to Limited Partners .................................. 23
Ownership of Properties by N'Tandem Following the Sales ............................................ 24
SPECIAL FACTORS .................................................................................... 25
Fairness of the Proposed Transactions; Recommendation of the General Partners ...................... 25
Fairness Opinion ................................................................................... 28
Independent Representation of the Unaffiliated Limited Partners .................................... 32
Alternatives Considered ............................................................................ 33
N'Tandem's and Chateau's Belief as to the Fairness of the Proposed Transactions;
N'Tandem's and Chateau's Reasons for Engaging in the Proposed
Transactions .............................................................................. 36
Appraisals ......................................................................................... 36
Discount for Ownership Interests in Properties ..................................................... 44
</TABLE>
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TABLE OF CONTENTS
(continued)
Page
SUMMARY OF SELECTED TERMS OF THE PARTNERSHIP AGREEMENT.......................45
Net Proceeds from the Sales..................................................45
Allocation of Profit or Loss on the Sales....................................45
Voting Rights of Limited Partners............................................46
Limitation of Liability and Indemnification of the General Partners..........47
THE PARTNERSHIP'S PROPERTIES.................................................48
Nature of Ownership Interests in Properties..................................48
Description of the Properties; Appraised Values and Ownership Interests......49
FEDERAL INCOME TAX CONSIDERATIONS............................................50
Overview.....................................................................50
Taxation on the Sales........................................................51
Liquidation of the Partnership...............................................52
Income Tax Rates/Taxation of Gains and Losses................................52
CONSENT PROCEDURES; TRANSACTIONS AUTHORIZED BY CONSENTS......................52
Solicitation of Consents.....................................................54
Record Date; Required Vote...................................................54
No Appraisal or Dissenters' Rights...........................................54
Consequences If Consents Are Not Obtained....................................55
REGULATORY AND OTHER APPROVALS...............................................55
FINANCIAL STATEMENTS.........................................................55
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..............................55
AVAILABLE INFORMATION........................................................56
APPENDIX A Fairness Opinion................................................A-1
APPENDIX B Report of Independent Special Counsel...........................B-1
APPENDIX C Information Concerning
Officers and Directors of the
Managing General Partner,
N'Tandem and Chateau...................................................C-1
APPENDIX D Financial and Operating
Forecasts and Projections
for the Partnership Prepared by the
Managing General Partner...............................................D-1
xii
<PAGE>
SUMMARY
The following summarizes information contained elsewhere in this
Consent Solicitation Statement. While the purpose of this Summary is to discuss
and disclose the material aspects of the Sales and the Plan of Liquidation, this
Summary is not intended to be complete and is qualified in its entirety by
reference to the more detailed information contained elsewhere herein.
Purpose of the Consent Solicitation; Proposals 1 and 2
Windsor Park Properties 5, A California Limited Partnership (the
"Partnership"), which was formed for the purpose of acquiring and holding
investments in existing manufactured home communities for an anticipated
investment period of four to six years, was funded through a public offering of
units of limited partner interest (the "Units") which commenced in September
1987 and was completed in September 1988. Following the expiration of the
anticipated investment period, which was originally contemplated to occur at the
latest in September 1994, it was expected that the investments of the
Partnership would be sold and, thereafter, the Partnership liquidated in
accordance with the terms of its Agreement of Limited Partnership (the
"Partnership Agreement"). As of the date of this Consent Solicitation Statement,
the Partnership has held its current investments for a number of years beyond
both the anticipated investment period for such investments and the time in
which the holders of Units (the "Limited Partners") had a reasonable expectation
to receive distributions from the liquidation of their investments in the
Partnership. In addition, the Partnership has also held its current investments
beyond its formal term, as originally contemplated in its Partnership Agreement,
of December 31, 1998 (which term has already been extended once to December 31,
2001).
The purpose of this Consent Solicitation is to obtain the consent of
the Limited Partners to the two proposals described herein (the "Proposals").
Upon approval of both of the Proposals by the Limited Partners, The Windsor
Corporation, the managing general partner of the Partnership (the "Managing
General Partner"), and John A. Coseo, Jr., the other general partner of the
Partnership (together, with the Managing General Partner, the "General
Partners") will cause the Partnership to sell (the "Sales") its two wholly-owned
properties and its partial ownership interests in five other properties (the
"Ownership Interests" and, together with the two wholly-owned properties, the
"Properties") to N'Tandem Trust, a California business trust ("N'Tandem"), and,
thereafter, make liquidating distributions to the partners, in accordance with
the terms of the Partnership Agreement, pursuant to a plan of liquidation
adopted by the General Partners (the "Plan of Liquidation"). The terms of the
Sales are set forth in a Purchase and Sale Agreement between N'Tandem and the
Partnership (the "Purchase and Sale Agreement"). Upon completion of the Plan of
Liquidation, final liquidating distributions (estimated to be approximately
$23.77 per Unit) will be made to Limited Partners in accordance with the terms
of the Partnership Agreement.
Two Proposals are being proposed in this Consent Solicitation Statement
for approval by the Limited Partners. The first Proposal is for the General
Partners to proceed with the Sales to N'Tandem pursuant to the Purchase and Sale
Agreement ("Proposal 1"). The second Proposal is for the General Partners to
proceed with the Plan of Liquidation following the consummation of the Sales
("Proposal 2").
If each of the two Proposals is approved by a majority-in-interest of
the Limited Partners, the General Partners will proceed with the Sales and the
Plan of Liquidation. Each of the Proposals is conditioned upon the approval of
the other Proposal by the Limited Partners. Accordingly, any Limited Partner
desiring to have the General Partners proceed with the Sales and the Plan of
Liquidation needs to vote for both Proposal 1 and Proposal 2.
----
<PAGE>
The Managing General Partner is a wholly-owned subsidiary of Chateau
Communities, Inc. ("Chateau") and the Managing General Partner and N'Tandem are
under common control of Chateau. Gary P. McDaniel and C.G. Kellogg, the
Directors of the Managing General Partner, are the Chief Executive Officer and
the President, respectively, of Chateau. The Managing General Partner of the
Partnership is also the external investment advisor to N'Tandem. Chateau is one
of the largest publicly held companies in the United States engaged in the
acquisition, ownership and operation of manufactured home communities. N'Tandem,
rather than Chateau, will be purchasing the Properties because the Properties
are more in line with the type and quality of assets sought by N'Tandem. In
general, Chateau seeks to invest in large, institutional manufactured home
communities containing a full complement of amenities, including clubhouses,
pools, tennis and basketball courts, shuffleboard, playgrounds, curbed streets,
landscaping and off-street parking, and consisting primarily of multi-section
sites. In contrast, N'Tandem seeks to invest in lower profile manufactured home
communities which, like the Properties, are located in tertiary demographic and
geographic markets, are smaller in size with fewer amenities and contain a
greater proportion of single-wide spaces. Additionally, N'Tandem also has a
partial ownership interest in all of the manufactured home communities in which
the Partnership holds an Ownership Interest and, upon completion of the Sales,
will hold a 100% ownership interest in the Rancho Margate, Town & Country
Estates and Winter Haven Properties and will hold a 74% ownership interest in
the Apache East and Denali Park Estates Properties.
Background of the Proposed Transactions
In September 1997, Chateau purchased 644,842 shares of common stock of
the Managing General Partner, constituting all of the outstanding capital stock
of the Managing General Partner, in exchange for 101,239 shares of Chateau's
common stock and $750,000 in cash (the "Windsor Acquisition").
Following the Windsor Acquisition, the General Partners began to
analyze the short-term and long-term business objectives of the Partnership and
the other four limited partnerships managed by the General Partners
(collectively, the "Windsor Limited Partnerships"). In connection with their
analysis, the General Partners reviewed each of the agreements of limited
partnership of, and other operative documents relating to, the Windsor Limited
Partnerships in order to ascertain, and to factor into their analysis, the
expiration date of the stated term and the anticipated investment period of each
Windsor Limited Partnership. In addition, the General Partners also ordered
appraisals for each of the properties held by three of the five Windsor Limited
Partnerships. As a result of their analysis, the General Partners determined to
develop a plan to liquidate one of the other Windsor Limited Partnerships as
well as to begin selectively marketing for sale several of the properties and
partial ownership interests held by two of the other Windsor Limited
Partnerships.
In the fourth quarter of 1998, the General Partners began to explore
possible strategic alternatives for the Partnership with a view towards
providing the Limited Partners with an opportunity to achieve liquidity in their
investments in the Partnership. Accordingly, in November 1998, the General
Partners began to consider the possibility of merging the Partnership, together
with three of the other Windsor Limited Partnerships, into N'Tandem (the
"Proposed Consolidation"). In the Proposed Consolidation, the Limited Partners
would have exchanged their Units for common shares of beneficial interest or
other securities in N'Tandem. In contemplation of the Proposed Consolidation,
the Managing General Partner (i) retained Whitcomb Real Estate (the "Appraiser")
to render appraisals with respect to the properties of the Partnership and the
other three Windsor Limited Partnerships and (ii) engaged Legg Mason Wood
Walker, Incorporated ("Legg Mason") to act as financial advisor to the
Partnership and the other three Windsor Limited Partnerships and, if the
Managing General Partner elected to proceed with the Proposed Consolidation, to
deliver a fairness opinion with respect to the Proposed Consolidation. The
General Partners considered and actively pursued the Proposed Consolidation
involving the Partnership and the
2
<PAGE>
other three Windsor Limited Partnerships through August 1999. For a discussion
of the Managing General Partner's analysis of the Proposed Consolidation, see
"SPECIAL FACTORS -- Alternatives Considered."
In September 1999, the General Partners concluded that the best course
of action for the Partnership and its Limited Partners would be for the
Partnership to sell its Properties to N'Tandem. Following the completion of two
similar transactions involving two of the other Windsor Limited Partnerships in
April 2000, the General Partners began to develop a plan to liquidate the
Partnership. In making their determination to develop and implement the Sales
and the Plan of Liquidation, the General Partners considered that most of the
Limited Partners have held their investments in the Partnership for more than
twelve years and that the Partnership has held its current investments for six
years beyond both the anticipated investment period for such investments and the
time in which the Limited Partners had a reasonable expectation to receive
distributions from the liquidation of their investments in the Partnership. In
addition, the General Partners decided not to attempt to market the
Partnership's Properties for sales to parties other than N'Tandem based, in
part, on their belief (i) that the price offered to be paid by N'Tandem for the
wholly-owned Properties, which is equal to the full Appraised Values for such
Properties, would be greater than the price which would be paid by any
prospective third-party purchaser, given the results of the General Partners'
previous experience in marketing manufactured home communities similar in nature
to those held by the Partnership and (ii) that very limited demand for the
Ownership Interests exists and that any prospective third-party purchaser of
these interests would not be willing to pay the Partnership the price being
offered by N'Tandem for such interests, given that control and management of the
underlying properties and the power to sell or dispose of the underlying
properties is vested solely in the Managing General Partner, an affiliate of
N'Tandem, and that N'Tandem owns all of the other partial ownership interests in
three of the underlying properties and a 65% partial ownership interest in the
other two underlying properties.
In determining whether to pursue the Sales, the General Partners
analyzed various alternatives for the Partnership, including the Proposed
Consolidation, and the terms and provisions of the Sales. In connection with its
analysis of the Sales and the Plan of Liquidation, the Managing General Partner,
on behalf of the Partnership, engaged Legg Mason to render a written opinion as
to the fairness, from a financial point of view, to the Limited Partners of the
aggregate purchase price to be paid by N'Tandem to the Partnership for the
Properties. On August 29, 2000, Legg Mason delivered an oral and written
fairness opinion to the Managing General Partner stating that the aggregate
purchase price to be paid by N'Tandem for the Properties was fair to the Limited
Partners from a financial point of view. In addition, in connection with its
analysis of the Sales, the Managing General Partner also retained the Appraiser
to render current appraisals (the "Appraisals") with respect to, and determine
the appraised values (the "Appraised Values") of, the Partnership's Properties.
In an effort to address the potential conflicts of interest between the
General Partners and the Limited Partners, the Managing General Partner, on
behalf of the Partnership, engaged the law firm of Wolf Haldenstein Adler
Freeman & Herz LLP (the "Independent Special Counsel") in June 2000 to act as
independent special counsel to the unaffiliated Limited Partners for the purpose
of representing the interests of such Limited Partners in connection with the
Sales and the Plan of Liquidation. On August 23, 2000, the Independent Special
Counsel delivered a written report addressed to the Limited Partners describing
the results of its review of, and negotiations with N'Tandem and its affiliates
with respect to, the Sales and the Plan of Liquidation. As a result of these
negotiations, N'Tandem and its affiliates agreed to make certain changes to the
underlying terms of the Sales and the Plan of Liquidation for the benefit of the
Limited Partners. For a discussion of the Independent Special Counsel's report
and the results of its negotiations with respect to the Sales and the Plan of
Liquidation, see "SPECIAL FACTORS -- Independent Representation of the
Unaffiliated Limited Partners."
3
<PAGE>
Relationship of the Various Parties to the Proposed Transactions
The relationships of the various parties to the proposed transactions
are set forth in the diagram below and described elsewhere in this Consent
Solicitation Statement under "MATERIAL RISK FACTORS AND OTHER CONSIDERATIONS --
Conflicts of Interest."
<TABLE>
<CAPTION>
<S> <C>
--------------------------------------------------------
| Chateau Communities, Inc. |
| |
| (Parent entity of The Windsor Corporation and |
| direct or indirect holder of 9.8% of the outstanding |
| capital stock of N'Tandem) |
| |
| (Gary P. McDaniel, the Chief Executive Officer |
| and a Director of Chateau, is a Director of The |
| Windsor Corporation and the Chairman of the |
| Board of Trustees of N'Tandem) |
--------------------------------------------------------
| |
| |
| |
| |
| |
| |
| ---------------------------------------------------
| | The Windsor Corporation | ---------------------------------------------------
| | (Managing General Partner of the | | John A. Coseo, Jr. |
| | Partnership, external advisor to N'Tandem, | | (Co-General Partner of the Partnership) |
| | and wholly-owned subsidiary of Chateau) | ---------------------------------------------------
| --------------------------------------------------- |
| | | |
| | | |
| | | |
| | | |
| | | |
---------------------------------------- -----------------------------------------
| N'Tandem Trust | | |
| | | Windsor Park Properties 5, |
| (9.8% of the outstanding capital | | A California Limited Partnership |
| stock of N'Tandem is directly or | | |
| indirectly held by Chateau) | | |
---------------------------------------- -----------------------------------------
</TABLE>
<PAGE>
Summary Risk Factors
The Sales involve material risks, conflicts of interest and other
considerations which are discussed elsewhere in this Consent Solicitation
Statement. They include the following:
Conflicts of Interest. The Sales, and the recommendation of the General
Partners set forth herein, could be deemed to involve conflicts of interest
between the Managing General Partner and the Limited Partners. The Managing
General Partner and N'Tandem are under the common control of Chateau. Chateau
owns all of the issued and outstanding capital stock of the Managing General
Partner and Chateau's Chief Executive Officer and President are the sole
Directors of the Managing General Partner.
The Managing General Partner is also the external investment advisor of
N'Tandem. In connection with the Sales, pursuant to the advisory agreement
between such parties (the "Advisory Agreement"), the Managing General Partner
will receive an aggregate acquisition fee of $270,500 from N'Tandem, which is
equal to 3% of the total purchase price paid by N'Tandem for the Properties. In
addition, the Sales will result in an increase in the annual and other fees and
compensation payable to the Managing General Partner under the Advisory
Agreement. As a result of the economic benefits accruing to the Managing General
Partner in connection with the Sales, the Sales and the recommendation and views
of the Managing General Partner are subject to potential conflicts of interest.
Purchase Prices May Not Be Considered the Result of Arm's-Length
Negotiations. Due to the potential conflicts of interests of the General
Partners, the Managing General Partner engaged the Independent Special Counsel
to represent the interests of the unaffiliated Limited Partners in connection
with the Sales and the Plan of Liquidation. See "SPECIAL FACTORS -- Independent
Representation of the Unaffiliated Limited Partners." In light of the nature of
these potential conflicts of interest, the purchase prices for the Properties
and other terms of the Sales, however, may not be considered to be the result of
arm's-length negotiations and bargaining between independent parties despite the
efforts of the Independent Special Counsel and, as a result, may not be as
favorable as those that might have been obtained had the purchase prices and
terms of the Sales been the result of such arm's-length negotiations.
The General Partners Have Not Engaged in Marketing Efforts with Respect
to the Properties. The General Partners have not engaged in any marketing
efforts with respect to the Properties. Marketing the Properties to third
parties could conceivably result in higher purchase prices being paid for the
Properties than those that are being paid by N'Tandem in connection with the
Sales.
Appraisals May Not Reflect the Current Fair Market Values of the
Properties. The Appraisals were rendered in April and May of 2000. The General
Partners do not intend to update the Appraisals or to order new appraisals for
the Properties. Accordingly, the Appraisals may not reflect the current fair
market values of the Properties.
Loss of Opportunity to Benefit from Future Events. It is possible that
the future performance of the Properties will improve or that prospective
third-party purchasers may be willing to pay more for the Properties in the
future. It is possible that Limited Partners might earn a higher return on their
investment if the Partnership retained ownership of the Properties. By approving
the Sales, Limited Partners will also be forgoing current benefits of ownership
of the Properties, such as continuing distributions.
5
<PAGE>
Valuation of Properties
The following table sets forth information regarding the Partnership's
Properties and their respective values (based on the Appraised Values), the
discount being applied to the Ownership Interests, the debt attributable to the
Properties as of June 30, 2000 and the value of the Properties after deducting
attributable debt and applicable discount:
<TABLE>
<CAPTION>
Value, Based on Discount Debt
Affiliate Appraised on Attributable
Percentage Percentage Date Value, Before Ownership as of Net
Name of Property Ownership Ownership(1) Acquired Debt(2) Interests(2) 6/30/2000(2) Value(2)
----------------- ---------- ------------ -------- --------------- ------------ -------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Lakeside
Lithia Springs,
GA .............. 100% -- 7/1988 $1,660,000 -- -- $1,660,000
Plantation Estates
Lithia Springs,
GA .............. 100% -- 12/1988 1,900,000 -- $1,097,000 803,000
Town & Country
Estates
Tucson, AZ ...... 42% 58%(4) 1/1989 2,562,000 $ 171,700 651,000 1,739,300
Rancho Margate
Margate, FL ..... 26% 74%(5) 9/1995 1,664,000 111,500 928,800 623,700
Winter Haven
Winter Haven, FL 26% 74%(5) 10/1995 1,092,000 73,200 408,300 610,500
Apache East
Apache Junction,
AZ .............. 9% 91%(6) 2/1997 193,800(7) 13,000 97,000 83,800
Denali Park Estates
Apache Junction,
AZ .............. 9% 91%(6) 2/1997 337,200(7) 22,600 168,800 145,800
---------- ---------- ---------- ----------
Total ....... $9,409,000 $ 392,000 $3,350,900 $5,666,100
========== ========== ========== ==========
</TABLE>
------------------------------
(1) Represents the ownership percentage held by affiliates of the Managing
General Partner, other than the Partnership, in the properties
underlying the Ownership Interests.
(2) With respect to the five Ownership Interests, such amount represents
the Partnership's allocable share based upon its ownership percentage
in the underlying property.
(3) With respect to the five Ownership Interests, N'Tandem is applying a
6.7% discount for the fact that the Partnership only owns a minority
interest in the underlying property. For a discussion of the discount
being applied to the Ownership Interests, see "SPECIAL FACTORS --
Discount for Ownership Interests in Properties."
(4) The 58% interest in this Property is held by N'Tandem as tenant in
common with the Partnership.
(5) Each of these Properties is owned by Windsor Park 456,
A California Limited Partnership ("Windsor 456"). The Partnership is a
26% limited partner in Windsor 456. In addition to being the sole
general partner of Windsor Park 456, the Managing General Partner is
also the external investment advisor to N'Tandem, which owns the
remaining 74% limited partner interest in Windsor Park 456.
(6) Each of these Properties is owned by Windsor Park 345, An Arizona
Limited Partnership ("Windsor Park 345"). The Partnership is a 9%
limited partner in Windsor Park 345. In addition to being the sole
general partner of Windsor Park 345, the Managing General Partner is
also the sole managing general partner of Windsor Park Properties 7, A
California Limited Partnership ("Windsor 7"), and is the external
investment advisor to N'Tandem, which together own all of the remaining
limited partner interests in Windsor Park 345. N'Tandem and Windsor 7
have a 65% and 26% limited partner interest, respectively, in Windsor
Park 345.
(7) The Apache East and Denali Park Estates Properties are contiguous
properties with similar characteristics. Accordingly, the Appraiser
appraised both Properties together and, in its Appraisal, stated that
the aggregate Appraised Value of both Properties was $5,900,000. For
purposes of this table, the Managing General Partner allocated 36.5% of
the aggregate Appraised Value to Apache East and 63.5% of the aggregate
Appraised Value to Denali Park Estates.
6
<PAGE>
Recommendation of the General Partners
The General Partners believe that the Sales and the Plan of Liquidation
are consistent with the original objectives of the Partnership. In addition, the
General Partners believe that the terms of the Sales are fair, from a financial
point of view and from a procedural point of view, to the affiliated and
unaffiliated Limited Partners. Accordingly, the General Partners have approved
the Sales and the Plan of Liquidation and recommend their approval and adoption
by the Limited Partners.
In reaching the determination that the Sales and the Plan of
Liquidation are fair to the unaffiliated Limited Partners from a financial point
of view, the General Partners considered the following factors:
o N'Tandem is willing to purchase all of the Properties and is
paying the full Appraised Value for the two wholly-owned
Properties and is only applying a 6.7% discount to the
Appraised Value of the Ownership Interests for the fact that
the Partnership owns a minority interest in the underlying
properties. The General Partners believe that the discount
being applied in connection with the Sales is substantially
less than the 25% discount that, in the opinion of the
Appraiser, would have been applied had the Ownership Interests
been sold to a third-party purchaser. See "SPECIAL FACTORS --
Discount for Ownership Interests in Properties";
o The aggregate net consideration of approximately $5,666,100
being paid in connection with the proposed transactions
exceeds the net book value of the Partnership's assets of
$3,931,600 as of June 30, 2000 by $1,734,500;
o Due to the familiarity of N'Tandem's external investment
advisor with the Properties, N'Tandem is willing to purchase
the Properties "as-is" and without representations and
warranties from the Partnership;
o Because N'Tandem is buying the Properties in a single
transaction and is buying such Properties without
representations and warranties from the Partnership, the
General Partners will be able to wind up the Partnership and
make full liquidating distributions promptly upon the approval
of the Sales and the Plan of Liquidation by the Limited
Partners;
o The estimated net liquidating proceeds payable in connection
with the Sales ($23.77 per Unit) are substantially higher than
the weighted average trading price of $14.43 per Unit in the
secondary markets, as reported by The Partnership Spectrum,
for the period of May 1, 1999 through June 30, 2000;
o The Sales do not involve any brokerage fees payable by the
Partnership, resulting in a savings to the Partnership
estimated to be between $270,500 and $541,000 (based upon
brokerage fees of 3% to 6% typically paid by sellers of real
properties); and
o Legg Mason has delivered the Fairness Opinion to the effect
that the aggregate purchase price to be paid to the
Partnership for the Properties is fair, from a financial point
of view, to the Limited Partners. The General Partners have
adopted, in its entirety, the Fairness Opinion, including its
underlying analysis, prepared by Legg Mason as part of their
analysis of the Sales and the Plan of Liquidation. The General
Partners did not undertake to perform their own analysis with
respect to the matters considered by the Fairness
7
<PAGE>
Opinion. For a discussion of the Fairness Opinion, see
"SPECIAL FACTORS -- Fairness Opinion."
In reaching their determination that the Sales and the Plan of
Liquidation are fair from a financial point of view to the affiliated and
unaffiliated Limited Partners, the General Partners also considered the
following potentially negative aspects of the Sales:
o The purchase prices for the Properties are based upon
independent Appraisals rendered in April and May of 2000 which
have not been updated and, thus, may not reflect the current
fair market values of the Properties;
o With respect to the Ownership Interests held by the
Partnership, the remaining interests in the properties
underlying such Ownership Interests are held by (i) N'Tandem,
which together with the Managing General Partner is under
common control of Chateau, (ii) Windsor Park 345, an
affiliated limited partnership which has the Managing General
Partner as its sole general partner and N'Tandem and Windsor
7, an affiliated limited partnership, as its other limited
partners, or (iii) Windsor Park 456, an affiliated limited
partnership which has the Managing General Partner as its sole
general partner and N'Tandem as its other limited partner;
o It is possible that the future performance of the Properties
will improve or that prospective third-party buyers may be
willing to pay more for the Properties in the future; and
o It is possible that Limited Partners might earn a higher
return on their investment if the Partnership retained
ownership of the Properties. By approving the Sales and the
Plan of Liquidation, Limited Partners will also be forgoing
current benefits of the ownership of the Properties such as
continuing distributions.
The above described factors are all of the material factors considered
by the General Partners in determining that the Sales and the Plan of
Liquidation are fair to the affiliated and unaffiliated Limited Partners from a
financial point of view. In reaching their determination that the Sales and the
Plan of Liquidation are fair to the affiliated and unaffiliated Limited Partners
from a financial point of view, the General Partners did not assign relative
weights to the above factors or determine that any factor was of particular
importance; rather, the General Partners viewed the positive factors as a
totality and the negative factors as a totality and concluded that the positive
factors outweighed the negative factors. Accordingly, the General Partners
determined that the Sales and the Plan of Liquidation are fair to the affiliated
and unaffiliated Limited Partners from a financial point of view.
The General Partners also determined that the Sales and the Plan of
Liquidation are fair to the Limited Partners from a procedural point of view
based on the following factors:
o The Properties have been independently appraised by the
Appraiser;
o In assessing the discount being applied to the Ownership
Interests by N'Tandem, the Managing General Partner had the
Appraiser, which concluded that in its estimation the
application of a discount of approximately 25% would be
appropriate for a minority interest in real estate, analyze
the applicability of a discount in valuing a partial ownership
interest in a manufactured home community. See "SPECIAL
FACTORS -- Discount for Ownership Interests in Properties";
8
<PAGE>
o The Sales are subject to the approval of unaffiliated Limited
Partners holding not less than a majority of the issued and
outstanding Units;
o The Managing General Partner engaged the Independent Special
Counsel to represent the interests of the unaffiliated Limited
Partners in connection with the Sales and the Plan of
Liquidation. See "SPECIAL FACTORS -- Independent
Representation of the Unaffiliated Limited Partners"; and
o The Managing General Partner in connection with the Sales
retained Legg Mason to render its Fairness Opinion.
In reaching their determination that the Sales and the Plan of
Liquidation are fair from a procedural point of view to the affiliated and
unaffiliated Limited Partners, the General Partners also considered the
following potentially negative aspects of the Sales:
o The Sales were negotiated on behalf of the Partnership by the
Managing General Partner, which is under common control with
N'Tandem and is receiving substantial economic benefits from
the proposed transactions (including acquisition fees of
$270,500 that are being paid by N'Tandem). Accordingly, the
Sales may be subject to potential conflicts of interest;
o Gary P. McDaniel and C.G. Kellogg, the sole Directors of the
Managing General Partner, are the Chief Executive Officer and
the President, respectively, of Chateau and, as a result, the
Sales and the Plan of Liquidation have not been approved on
behalf of the Managing General Partner by directors who are
not affiliated with N'Tandem;
o The Appraisals were rendered in April and May of 2000 and no
updates or new appraisals have been or will be ordered in
connection with the Sales; and
o The General Partners have not engaged in any marketing efforts
on behalf of the Partnership with respect to the Properties.
The General Partners do not intend to take any actions to
market or sell the Properties pending the results of this
Consent Solicitation.
The above described factors are all of the material factors considered
by the General Partners in determining that the Sales and the Plan of
Liquidation are fair to the affiliated and unaffiliated Limited Partners from a
procedural point of view. In reaching their determination that the Sales and the
Plan of Liquidation are fair to the affiliated and unaffiliated Limited Partners
from a procedural point of view, the General Partners concluded that the
approval of the Proposals by a majority-in-interest of the unaffiliated Limited
Partners is sufficient to insure that procedural fairness has been preserved for
the Limited Partners. The General Partners also believe that the potentially
negative factors influencing procedural fairness were in each case mitigated by
the following other factors or considerations: (i) although the Managing General
Partner and N'Tandem are under common control, the General Partners concluded
that the common control (a) did not adversely affect the terms of the Sales for
Limited Partners and (b) allowed N'Tandem to offer terms of the Sales that they
believed would not be available from third parties; (ii) the Managing General
Partner arranged for the Independent Special Counsel to represent the interests
of the unaffiliated Limited Partners; (iii) the Managing General Partner
retained Legg Mason to assess the fairness of the aggregate purchase price to be
paid to the Partnership in the Sales; (iv) even though the Appraisals were
rendered in April and May of 2000, the General Partners believe that no material
changes have occurred in the Properties or in the conditions of the market for
manufactured home communities since those dates that would result in higher
values for the Properties; and (v) the General Partners' belief that marketing
the Properties held by the Partnership would not have provided a
9
<PAGE>
better transaction for the Limited Partners and would have ultimately delayed
the timing of the Sales and the distribution of liquidating proceeds to the
Limited Partners.
Fairness Opinion
On August 29, 2000, Legg Mason delivered an oral and written fairness
opinion to the Managing General Partner to the effect that, as of such date, the
aggregate purchase price to be paid to the Partnership by N'Tandem for the
Properties is fair, from a financial point of view, to the Limited Partners. In
rendering the Fairness Opinion, Legg Mason conducted (i) a liquidation analysis
assuming that the Properties were sold to third-party purchasers, (ii) a
comparable company analysis to establish an implied equity value for the Units
and (iii) a continuation analysis assuming that the Partnership extended its
stated term and the Properties continued to be held by the Partnership until
December 31, 2004. The Fairness Opinion, which is set forth in Appendix A to
this Consent Solicitation Statement, should be read in its entirety for a
description of the procedures followed, assumptions and qualifications made,
matters considered and the limits of the review undertaken by Legg Mason. The
Fairness Opinion is based on conditions as of its date and, although subsequent
developments could have a material effect on the opinion stated, the Fairness
Opinion will not be updated.
Independent Representation of the Unaffiliated Limited Partners
In an effort to address the potential conflicts of interest between the
General Partners and the Limited Partners, the Managing General Partner, on
behalf of the Partnership, engaged the Independent Special Counsel for the
purpose of representing the interests of the unaffiliated Limited Partners in
connection with the Sales and the Plan of Liquidation. On August 23, 2000, the
Independent Special Counsel delivered a written report addressed to the Managing
General Partner for the benefit of the Limited Partners describing the results
of its review of, and negotiations with the Managing General Partner and
N'Tandem with respect to, the Sales and the Plan of Liquidation. As a result of
these negotiations, the Managing General Partner and N'Tandem agreed to make
certain changes to the underlying terms of the Sales and the Plan of Liquidation
for the benefit of the Limited Partners. As described in the report, the parties
agreed that the discount being applied to the Appraised Values of the Ownership
Interests would be reduced from 10%, which was the percentage discount
originally agreed to by the parties, to 6.7%. As a result of such reduction, the
aggregate amount of the net proceeds to be paid to the Limited Partners in
connection with the Sales and the Plan of Liquidation increased by $192,900. In
addition, the parties also agreed to include certain additional disclosure in
this Consent Solicitation Statement relating to the rights of the Limited
Partners under the Partnership Agreement with respect to a transaction between
the Partnership and an affiliate of the Managing General Partner. The report of
the Independent Special Counsel, which is attached as Appendix B to this Consent
Solicitation Statement, should be read in its entirety for a description of the
procedures followed, matters considered and the limits of the review undertaken
by the Independent Special Counsel.
Alternatives Considered
In addition to considering the Sales and the Plan of Liquidation, the
General Partners also identified and considered the following alternative
courses of action for the Partnership:
Continuation of the Partnership. The Partnership, which was formed for
the purpose of acquiring and holding investments in existing manufactured home
communities for an anticipated investment period of four to six years, was
funded through a public offering of Units which commenced in September 1987 and
was completed in September 1988. Following the expiration of the anticipated
investment period, which was originally contemplated to occur at the latest in
September 1994, it was expected that the investments of the Partnership would be
sold and, thereafter, the Partnership liquidated
10
<PAGE>
in accordance with the terms of the Partnership Agreement. As of the date of
this Consent Solicitation Statement, most of the Limited Partners have held
their investments in the Partnership for more than twelve years and the
Partnership has held its current investments for six years beyond both the
anticipated investment period for such investments and the time in which the
Limited Partners had a reasonable expectation to receive distributions from the
liquidation of their investments in the Partnership. In addition, the
Partnership has also held its current investments beyond its formal term, as
originally contemplated in its Partnership Agreement, of December 31, 1998
(which term has already been extended once to December 31, 2001). As a result,
the Managing General Partner believes that Limited Partners expect to achieve
the near-term liquidation of their investments in the Partnership. In addition,
the Managing General Partner believes that continuing to own and operate the
Properties is not in the best interests of the Partnership and its Limited
Partners, especially in view of the opportunity to sell the Properties to
N'Tandem on the terms outlined herein. Additionally, while continuing the
Partnership would have resulted in the Limited Partners receiving the benefits
of continued ownership of the Properties, the Limited Partners would have also
remained subject to the risks of continuing such ownership and would continue to
be unable to liquidate their investments at fair value since no formal trading
market for the Units exists.
Sale of the Properties to Third-Party Purchasers. While the General
Partners did consider the possibility of selling the Properties to purchasers
other than N'Tandem, the General Partners ultimately concluded that such sale of
the Properties would not be likely to result in the distribution of greater
liquidating proceeds to the Limited Partners than the amounts being distributed
in connection with the Sales and the Plan of Liquidation. The principal reasons
for this conclusion are that the Managing General Partner believes that (i) the
Appraisals continue to reflect the fair market values of the Properties, (ii)
the Limited Partners would receive greater liquidating proceeds in a third-party
transaction only if such third party was willing to pay in excess of the
purchase prices for the Properties being paid by N'Tandem, something the General
Partners believe few, if any, third-party purchasers would be willing to do,
especially with respect to the partial Ownership Interests, (iii) the Ownership
Interests would have the effect of deterring potential third-party purchasers
because of their minority status, and (iv) the expenses of the Sales are lower
than they would be in connection with the sale of the Properties to an
unaffiliated third-party purchaser (principally due to the fact that no
brokerage commissions are being paid by the Partnership in connection with the
Sales, which results in estimated savings of between $270,500 and $541,000 based
upon prevailing commission rates).
While the General Partners do not believe, at this time, that the sale
of the Properties to a third-party purchaser would be more beneficial to the
Partnership and the Limited Partners than the Sales and the Plan of Liquidation
proposed herein, the General Partners do recognize that a third-party purchaser
could propose a superior or competing offer to that proposed by N'Tandem during
the course of this Consent Solicitation and will not allow this Consent
Solicitation to preclude the Partnership from entertaining such a transaction
should one emerge prior to the end of the solicitation period for this Consent
Solicitation.
Proposed Consolidation. The General Partners also considered and
analyzed the Proposed Consolidation in which the Partnership, together with
three of the other Windsor Limited Partnerships, would have been merged with and
into N'Tandem. In the Proposed Consolidation, the Limited Partners would have
had the right to exchange their Units for common shares of beneficial interest
or other securities of N'Tandem. As part of its analysis of the Sales and the
Plan of Liquidation, the Managing General Partner compared the estimated price
per Unit of approximately $23.77 expected to be paid by N'Tandem in the Sales to
the estimated range of values per Unit that were expected to be received upon
completion of the Proposed Consolidation assuming that the Units were converted
into N'Tandem's common shares of beneficial interest and concluded that the
Proposed Consolidation would not have resulted in the Limited Partners receiving
a price per Unit, on a post-consolidation basis, greater than the
11
<PAGE>
estimated price per Unit proposed to be paid to Limited Partners following the
completion of the Sales and the Plan of Liquidation. For a discussion of the
Managing General Partner's analysis of the Proposed Consolidation, see "SPECIAL
FACTORS -- Alternatives Considered." In analyzing the Proposed Consolidation,
the Managing General Partner also considered that (i) the anticipated time
period for the completion of the Proposed Consolidation was likely to be quite
lengthy and (ii) the estimate of the value of the Units assuming their
conversion into N'Tandem's common shares in the Proposed Consolidation was not
based on any established trading price for the common shares, but was instead
based on an analysis of companies that the Managing General Partner considered
to be comparable to N'Tandem on a post-consolidation basis that sought to
anticipate the market price of N'Tandem's common shares following the Proposed
Consolidation by reference to the current trading prices of the securities of
such comparative companies.
N'Tandem's and Chateau's Belief as to the Fairness of the Proposed Transactions;
N'Tandem's and Chateau's Reasons for Engaging in the Proposed Transactions
N'Tandem and Chateau believe that the Sales are fair to the Limited
Partners from both a financial point of view and a procedural point of view. In
reaching such determination, N'Tandem and Chateau considered the same factors
and positive and negative aspects of the Sales as were considered by the General
Partners, as described in this Consent Solicitation Statement under "SPECIAL
FACTORS -- Fairness of the Proposed Transactions; Recommendation of the General
Partners," and have specifically adopted the analyses and conclusions of the
General Partners described herein.
In October 1998, N'Tandem amended and restated N'Tandem's Declaration
of Trust and By-laws to convert N'Tandem from a finite-life entity to an
infinite-life entity in order to enable it to begin implementing a
growth-oriented business plan intended to cause N'Tandem to attain greater size
and asset diversity. The acquisition by N'Tandem of the Properties is being
engaged in by N'Tandem as part of such growth-oriented business plan.
Appraisals
The Appraiser, Whitcomb Real Estate located in Tampa, Florida, was
retained by the Managing General Partner to render the Appraisals with respect
to the Partnership's Properties. The Appraiser is certified as a Master
Appraiser by the Appraisal Institute and was selected based upon its expertise
as well as its familiarity with valuing manufactured home communities.
A summary description of the Appraisals, including the values of the
Properties, is included elsewhere in this Consent Solicitation Statement under
the caption "SPECIAL FACTORS -- Appraisals." The Appraisals are based on
conditions as of their respective dates. Subsequent developments could have a
material effect on the valuations stated therein.
The purpose of the Appraisals was, and the Appraiser was instructed by
the Managing General Partner, to determine the fair market value of each
Property. In connection with the Appraisals, no fair market values or value
ranges were suggested by the Managing General Partner. Only one Appraisal was
sought with respect to each Property. If more than one Appraisal had been sought
with respect to each Property, the other appraisal values might have been higher
or lower than the Appraised Values determined by the Appraiser.
The Appraisals were rendered in April and May of 2000 and, therefore,
may no longer reflect the fair market values of the Properties. Accordingly, the
value of the Properties may have increased since that time. However, the
Managing General Partner (i) does not believe that any significant events have
occurred since that time which would cause the conclusions reached by the
Appraiser in the Appraisals
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<PAGE>
and the Appraised Values to be different had the Appraisals been rendered as of
a more recent date, (ii) is not aware of any material developments, trends or
other uncertainties that relate to the conclusions expressed in the Appraisals
or that are reasonably likely to materially affect such conclusions and (iii)
does not intend to update the Appraisals or order new appraisals for the
Properties in connection with the Sales.
Copies of the Appraisals are filed as exhibits to the Schedule 13E-3
(as hereinafter defined) and are available for inspection and copying at the
Partnership's principal executive offices during regular business hours by any
interested Limited Partner or any representative of a Limited Partner who has
been designated in writing. Copies may also be obtained through the written
request of any Limited Partner made to the Managing General Partner at 6160
South Syracuse Way, Greenwood Village, Colorado 80111.
Certain Federal Income Tax Considerations
The following is a brief summary of United States federal income tax
consequences to Limited Partners arising from the Sales and liquidation of the
Partnership:
Tax Consequences of the Sales. The Sales should result in the
recognition of gain by the Partnership and, therefore, should result in
recognition of gain by the Limited Partners. The amount of gain recognized by
the Partnership with respect to each of the Properties will equal the difference
between (i) the Partnership's amount realized (i.e., the amount of cash received
increased by the amount of liabilities of the Partnership assumed or taken
subject to by N'Tandem) and (ii) the Partnership's adjusted tax basis in each of
the Properties. The aggregate gain expected to be recognized by the Partnership
on the Sales is approximately $2,504,200.
Allocation of Gain. The $2,504,200 gain expected to be recognized by
the Partnership in the year of the Sales will be allocated among the partners in
accordance with the terms of the Partnership Agreement. These provisions will
result in an allocation of approximately $2,479,100 of taxable gain on the Sales
to Limited Partners (or an average of $10.85 per Unit). The gain per Unit
resulting from the Sales is primarily caused by the fact that the Partnership
generated tax losses in certain prior years that were allocated to Limited
Partners.
Tax Consequences of Liquidation. Upon liquidation of the Partnership, a
Limited Partner will recognize gain or loss equal to the difference between the
cash received by such Limited Partner (including the Limited Partner's share of
partnership liabilities under Section 752 of the Internal Revenue Code of 1986,
as amended (the "Code")) and the adjusted tax basis of the Limited Partner's
Units, adjusted by such Limited Partner's allocable share of income, gain or
loss arising from normal Partnership operations for the year of liquidation and
the sale of the Properties in the year of liquidation. See "-- Allocation of
Gain" above. It is expected that a Limited Partner will recognize an average
loss of approximately $11.10 per Unit on liquidation of the Partnership.
Consent Procedures; Transactions Authorized by Consents
The consents being solicited hereby will authorize the General
Partners: (i) to complete the Sales at any time on or prior to ____________,
2000 and to proceed with the Plan of Liquidation; and (ii) to take all actions
necessary or appropriate, as determined by the General Partners, to complete the
Sales and to proceed with the Plan of Liquidation. As provided in Section
2.01(d) of the Partnership Agreement, the Partnership is not permitted to sell
or lease property to a sponsor of the Partnership, which includes the General
Partners or any of their affiliates. The Partnership Agreement, however, permits
this provision to be amended so as to allow sales of Partnership property to an
affiliate of the General Partners
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<PAGE>
with the consent of a majority-in-interest of the Limited Partners. The
authorization granted to the General Partners by consenting to the Sales and the
Plan of Liquidation will include, without limitation, the adoption of any
amendments to the Partnership Agreement that may be required to effectuate the
Sales and the Plan of Liquidation or to amend any provision of the Partnership
Agreement which may be construed as restricting the sale of the Properties to
affiliates.
Consents are being solicited from the Limited Partners in accordance
with the requirements of the Partnership Agreement.
Record Date; Required Consents
The close of business on __________, 2000 has been fixed as the record
date (the "Record Date") for determining Limited Partners entitled to consent to
the Sales and the Plan of Liquidation. As of the Record Date, there were 230,861
Units outstanding held of record by a total of 2,820 Limited Partners. Each of
the Proposals require the approval of unaffiliated Limited Partners holding at
least a majority of the outstanding Units. Each Unit entitles the holder thereof
to cast one vote with respect to the approval of each of the Proposals. As of
the Record Date, the General Partners and their affiliates owned 1,000 Units (or
approximately 0.4% of total outstanding Units), but have agreed to abstain from
voting on the Proposals with respect to all such Units.
No Appraisal or Dissenters' Rights
If Limited Partners owning the requisite number of Units in the
Partnership consent to the Sales and the Plan of Liquidation, all Limited
Partners of the Partnership will be bound by such consent, including Limited
Partners who have not returned their consents or who have abstained from voting
on, or denied consent to, the Proposals. None of the Partnership Agreement,
California law or the proposed terms and conditions of the Sales or the Plan of
Liquidation provide objecting Limited Partners with the right to exercise any
dissenters', appraisal or similar rights. Under California law, the general
partner of a California limited partnership owes fiduciary duties to its limited
partners. To the extent that a general partner has engaged in a transaction in
breach of its fiduciary duties to limited partners, a damages remedy may be
available to such limited partners.
Historical Distributions
Set forth below is information relating to distributions made by the
Partnership since January 1, 1995:
<TABLE>
<CAPTION>
Aggregate to Aggregate to Per Unit to
Year All Partners(1) Limited Partners(1) Limited Partners(1)
-------------------------------------- --------------- ------------------- -------------------
<S> <C> <C> <C>
2000(2)............................... $ 96,300 $ 95,300 $ .41
1999.................................. 194,900 192,900 .83
1998.................................. 196,400 194,400 .82
1997.................................. 202,000 200,000 .83
1996.................................. 202,000 200,000 .83
1995.................................. 151,500 150,000 .62
---------- ---------- -----
Total.......................... $1,043,100 $1,032,600 $4.34
========== ========== =====
</TABLE>
------------------------------------
(1) The portion of such distribution representing a return of capital to
the Limited Partners is as follows: 43% in 2000, 15% in 1999, 50% in
1998, 95% in 1997, 100% in 1996 and 46% in 1995.
(2) Represents disbributions through June 30, 2000.
The Partnership typically makes distributions to its partners on a
semiannual basis. There are no restrictions on the Partnership's present or
future ability to make distributions. The Partnership is not in
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<PAGE>
arrears with respect to any dividends or distributions and has made all
distributions required to be made by it under the Partnership Agreement.
No Established Trading Market for Units
The Units are not listed on any securities exchange and no established
trading market for the Units exists.
SUMMARY HISTORICAL FINANCIAL DATA
The following summary historical financial data, insofar as it relates
to each of the years ended December 31, 1995 through 1999, has been derived from
the annual financial statements of the Partnership, including the balance sheet
at December 31, 1999 and the related statements of income for the two years
ended December 31, 1998 and 1999, and the notes thereto as included in the
Partnership's Annual Report on Form 10-KSB for the year ended December 31, 1999.
The data for the six months ended June 30, 2000 has been derived from unaudited
financial statements as included in the Partnership's Quarterly Report on Form
10-QSB for the quarter ended June 30, 2000, which, in the opinion of the
Managing General Partner, include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of the results for the
unaudited interim periods.
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year Ended December 31,
June 30, -----------------------------------------------------------------
2000 1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues....................... $ 366,500 $ 736,200 $ 661,400 $ 571,600 $ 568,000 $ 536,200
Net income (loss).............. $ 54,600 $ 165,400 $ 98,300 $ 9,200 $ (23,600) $ 81,800
Earnings (loss) per Unit....... $ .23 $ 0.70 $ 0.41 $ 0.04 $ (0.10) $ 0.33
Balance Sheet Data:
Total assets................... $ 5,235,500 $ 5,251,700 $ 5,305,000 $ 5,417,100 $ 5,534,900 $ 5,759,100
Long-term debt................. $ 1,097,000 $ 1,097,000 $ 1,097,000 $ 1,097,000 $ 1,097,000 $ 1,097,000
Other Data:
Distributions per Unit......... $ 0.41 $ 0.83 $ 0.82 $ 0.83 $ 0.83 $ 0.62
</TABLE>
15
<PAGE>
MATERIAL RISK FACTORS AND OTHER CONSIDERATIONS
The Sales involve material risks, conflicts of interest and other
considerations that are discussed below. Limited Partners are urged to consider
such factors and considerations and to consult with their independent legal,
financial and tax advisors before consenting to the Sales and the Plan of
Liquidation.
Conflicts of Interest
Managing General Partner and N'Tandem are Under Common Control of
Chateau. The Sales and the Plan of Liquidation, and the recommendation of the
General Partners set forth herein, could be deemed to involve conflicts of
interest between the Managing General Partner and the Limited Partners. The
Managing General Partner and N'Tandem are under the common control of Chateau.
Chateau owns all of the issued and outstanding capital stock of the Managing
General Partner and the Chief Executive Officer and the President of Chateau are
the sole Directors of the Managing General Partner. Chateau, which effectively
controls N'Tandem, currently owns approximately 9.8% of the outstanding capital
stock of N'Tandem and currently holds approximately $19.9 million of
indebtedness in N'Tandem. Chateau and N'Tandem have discussed the possibility of
converting all or a portion of the principal amount of such indebtedness into
common or preferred shares of beneficial interest of N'Tandem. However, there is
no agreement or understanding between Chateau and N'Tandem relating to any such
conversion.
Managing General Partner to Receive $270,500 in Acquisition Fees From
N'Tandem and Other Economic Benefits From the Proposed Transactions. The
Managing General Partner is also the external investment advisor of N'Tandem. In
connection with the Sales, pursuant to the Advisory Agreement between such
parties, the Managing General Partner will receive an aggregate acquisition fee
of $270,500 from N'Tandem equal to 3% of the total purchase price for the
Properties. On a Property-by-Property basis, this acquisition fee is estimated
to be $49,800 for the Lakeside Property, $57,000 for the Plantation Estates
Property, $71,700 for the Town & Country Estates Property, $46,600 for the
Rancho Margate Property, $30,600 for the Winter Haven Property, $5,400 for the
Apache East Property and $9,400 for the Denali Park Estates Property. Under the
Advisory Agreement, the Managing General Partner is entitled to the following
fees: (i) annual subordinated advisory fees of up to 1% of invested assets and
.05% of uninvested assets of N'Tandem, (ii) acquisition fees in connection with
the acquisition of properties by N'Tandem equal to 3% of the sales price, and
(iii) a subordinated incentive fee on the disposition of N'Tandem's assets equal
to 15% of cash remaining from sales or financing of N'Tandem's assets after
holders of shares of beneficial interest of N'Tandem have received specified
preferred returns. The Sales will result in an increase of invested assets of
N'Tandem by approximately $9.0 million and, accordingly, will increase the
annual subordinated advisory fee payable by N'Tandem by approximately $90,200
per year. To the extent that N'Tandem is able to generate returns to its
shareholders in excess of 9% per annum over the life of N'Tandem (the "Excess
Returns"), the Managing General Partner will be entitled to a subordinated
incentive fee equal to 15% of the Excess Returns. As a result of the economic
benefits accruing to the Managing General Partner in connection with the Sales,
the Sales and the recommendation and views of the Managing General Partner are
subject to potential conflicts of interest.
Purchase Prices May Not Be Considered the Result of Arm's-Length Negotiations
Due to the potential conflicts of interests of the General Partners,
the Managing General Partner engaged the Independent Special Counsel to
represent the interests of the unaffiliated Limited Partners in connection with
the Sales and the Plan of Liquidation. See "SPECIAL FACTORS -- Independent
Representation of the Unaffiliated Limited Partners." In light of the nature of
these potential conflicts of interest, the aggregate purchase price being paid
by N'Tandem for the Properties and other terms of the Sales, however, may not be
considered to be the result of arm's-length negotiations and bargaining
16
<PAGE>
between independent parties despite the efforts of the Independent Special
Counsel and, as a result, may not be as favorable as those that might have been
obtained had the purchase prices and terms of the Sales been the result of such
arm's-length negotiations.
The General Partners Have Not Engaged in Marketing Efforts with Respect to the
Properties
The General Partners have not engaged in any marketing efforts with
respect to the Properties. Additionally, the General Partners do not intend to
take any actions to market or sell the Properties pending the results of this
Consent Solicitation; however, if a superior or competing offer were to emerge
prior to the end of the solicitation period for this Consent Solicitation, the
General Partners would entertain any such offer. Marketing the Properties to
third parties could conceivably result in higher purchase prices being paid for
the Properties than those that are being paid by N'Tandem in connection with the
Sales.
Appraisals May Not Reflect the Current Fair Market Values of the Properties
All of the Appraisals were rendered in April and May of 2000. The
General Partners do not intend to update the Appraisals or to order new
appraisals for the Properties. Accordingly, the Appraisals may not reflect the
current fair market values of the Properties.
Loss of Opportunity to Benefit from Future Events
It is possible that the future performance of the Properties will
improve or that prospective third-party purchasers may be willing to pay more
for the Properties in the future. It is possible that Limited Partners might
earn a higher return on their investment if the Partnership retained ownership
of the Properties. By approving the Sales and the Plan of Liquidation, Limited
Partners will also be forgoing current benefits of ownership of the Properties,
such as continuing distributions.
DESCRIPTION OF THE PROPOSED TRANSACTIONS
Purpose of the Consent Solicitation; Proposals 1 and 2
The Partnership, which was formed for the purpose of acquiring and
holding investments in existing manufactured home communities for an anticipated
investment period of four to six years, was funded through a public offering of
its Units which commenced in September 1987 and was completed in September 1988.
Following the expiration of the anticipated investment period, which was
originally contemplated to occur at the latest in September 1994, it was
expected that the investments of the Partnership would be sold and, thereafter,
the Partnership liquidated in accordance with the terms of the Partnership
Agreement. As of the date of this Consent Solicitation Statement, the
Partnership has held its current investments for a number of years beyond both
the anticipated investment period for such investments and the time in which the
Limited Partners had a reasonable expectation to receive distributions from the
liquidation of their investments in the Partnership. In addition, the
Partnership has also held its current investments beyond its formal term, as
originally contemplated in its Partnership Agreement, of December 31, 1998
(which term has already been extended once to December 31, 2001).
The purpose of this Consent Solicitation is to obtain the consent of
the Limited Partners to the two Proposals described herein. Upon approval of
both of the Proposals by the Limited Partners, the General Partners will cause
the Partnership to sell its two wholly-owned Properties and its Ownership
Interests in five other properties to N'Tandem and, thereafter, make liquidating
distributions to the partners, in accordance with the terms of the Partnership
Agreement, pursuant to the Plan of Liquidation. The terms of the Sales are set
forth in a Purchase and Sale Agreement between N'Tandem and the
17
<PAGE>
Partnership. See "-- The Purchase and Sale Agreement." Upon completion
of the Plan of Liquidation, final liquidating distributions (estimated to be
approximately $23.77 per Unit) will be made to Limited Partners in accordance
with the terms of the Partnership Agreement.
Two Proposals are being proposed in this Consent Solicitation Statement
for approval by the Limited Partners. Proposal 1 is for the General Partners to
proceed with the Sales to N'Tandem pursuant to the Purchase and Sale Agreement.
Proposal 2 is for the General Partners to proceed with the Plan of Liquidation
following the consummation of the Sales.
If each of the two Proposals is approved by a majority-in-interest of
the Limited Partners, the General Partners will proceed with the Sales and the
Plan of Liquidation. Each of the Proposals is conditioned upon the approval of
the other Proposal by the Limited Partners. Accordingly, any Limited Partner
desiring to have the General Partners proceed with the Sales and the Plan of
Liquidation needs to vote for both Proposal 1 and Proposal 2.
The Managing General Partner is a wholly-owned subsidiary of Chateau
and the Managing General Partner and N'Tandem are under common control of
Chateau. Gary P. McDaniel and C.G. Kellogg, the Directors of the Managing
General Partner, are the Chief Executive Officer and the President,
respectively, of Chateau. The Managing General Partner of the Partnership is
also the external investment advisor to N'Tandem. Chateau is one of the largest
publicly held companies in the United States engaged in the acquisition,
ownership and operation of manufactured home communities. N'Tandem, rather than
Chateau, will be purchasing the Properties because the Properties are more in
line with the type and quality of assets sought by N'Tandem. In general, Chateau
seeks to invest in large, institutional manufactured home communities containing
a full complement of amenities, including clubhouses, pools, tennis and
basketball courts, shuffleboard, playgrounds, curbed streets, landscaping and
off-street parking, and consisting primarily of multi-section sites. In
contrast, N'Tandem seeks to invest in lower profile manufactured home
communities which, like the Properties, are located in tertiary demographic and
geographic markets, are smaller in size with fewer amenities and contain a
greater proportion of single-wide spaces. Additionally, N'Tandem also has a
partial ownership interest in all of the manufactured home communities in which
the Partnership holds an Ownership Interest and, upon completion of the Sales,
will hold a 100% ownership interest in the Rancho Margate, Town & Country
Estates and Winter Haven Properties and will hold a 74% ownership interest in
the Apache East and Denali Park Estates Properties.
Background of the Proposed Transactions
The Partnership was formed in June 1987 pursuant to the provisions of
the California Revised Limited Partnership Act. The Partnership was organized as
a finite-life entity to acquire and hold existing manufactured home communities
for investment for an anticipated investment period of four to six years. Its
principal investment objectives were to provide to Limited Partners: (i)
distributions of cash from operations; (ii) preservation, protection and
eventual return of the Limited Partners' investment; and (iii) realization of
appreciation in the value of the properties acquired (collectively, the
"Original Objectives"). Following the expiration of the anticipated investment
period, which was originally contemplated to occur at the latest in September
1994, it was expected that the investments of the Partnership would be sold and,
thereafter, the Partnership liquidated in accordance with the terms of the
Partnership Agreement.
In September 1997, Chateau completed the Windsor Transaction by
purchasing 644,842 shares of common stock of the Managing General Partner,
constituting all of the outstanding capital stock of the Managing General
Partner, in exchange for 101,239 shares of Chateau's common stock and $750,000
in cash. The total value of the Windsor Acquisition, based on the trading prices
of Chateau's shares of
18
<PAGE>
common stock at the time of the acquisition, was approximately $4.0 million.
Following the Windsor Acquisition, at the request of Chateau, the sole
stockholder of The Windsor Corporation, the Trustees of N'Tandem voluntarily
resigned and, in connection with such resignation, appointed three new Trustees
proposed by Chateau. These appointed Trustees were re-elected as N'Tandem's
Trustees at a special meeting of stockholders of N'Tandem held on October 23,
1998 and, then again, at N'Tandem's 1999 and 2000 annual meeting of
stockholders. In accordance with N'Tandem's Declaration of Trust, two of the
appointed Trustees of N'Tandem are "independent trustees." An "independent
trustee" is a Trustee who is not affiliated, directly or indirectly, with
N'Tandem or an advisor of N'Tandem, whether by ownership of, ownership in,
employment by, or any material business or professional relationship with,
N'Tandem or such advisor or an affiliate of N'Tandem or such advisor, or by
virtue of serving as an officer or director of N'Tandem or any advisor or
affiliate of N'Tandem or such advisor. As a result of the Windsor Acquisition,
Chateau became the indirect owner of 1,000 Units in the Partnership. No
particular value was attributed or allocated to such Units in connection with
the Windsor Acquisition. Since February 1997, Chateau has provided property
management services to N'Tandem and the Partnership, pursuant to a management
agreement between the Partnership and the Managing General Partner. The total
amount received by Chateau in respect of services rendered pursuant to such
management agreement was approximately $14,600 for the first six months of 2000,
approximately $27,600 in 1999 and approximately $26,500 in 1998.
Following the Windsor Acquisition, the General Partners began to
analyze the short-term and long-term business objectives of each of the Windsor
Limited Partnerships, including the Partnership. In connection with their
analysis, the General Partners reviewed each of the agreements of limited
partnership of, and other operative documents relating to, the Windsor Limited
Partnerships in order to ascertain, and to factor into their analysis, the
expiration date of the stated term and the anticipated investment period of each
Windsor Limited Partnership. In addition, the General Partners also ordered
appraisals for each of the properties held by three of the five Windsor Limited
Partnerships. As a result of their analysis, the General Partners determined to
develop a plan to liquidate Windsor Park Properties 4, A California Limited
Partnership ("Windsor 4"), following the expiration of its stated term in
December 1997 as well as to begin selectively marketing for sale several of the
properties and partial ownership interests held by Windsor Park Properties 3, A
California Limited Partnership ("Windsor 3"), and Windsor Park Properties 6, A
California Limited Partnership ("Windsor 6").
The General Partners promptly began developing and implementing their
plan of liquidation for Windsor 4. In accordance with their plan of liquidation,
the General Partners (i) sold one of Windsor 4's wholly-owned properties in May
1998 to a third-party purchaser and (ii) in June 1999, completed a transaction
(the "Windsor 4 Transaction") in which Windsor 4 sold all of its remaining
assets to N'Tandem and, thereafter, made liquidating distributions to its
partners in accordance with the terms of its agreement of limited partnership.
Prior to its liquidation, Windsor 4 held partial ownership interests in four
Properties, the Apache East, Denali Park Estates, Rancho Margate and Winter
Haven Properties, in common with the Partnership and, like the Partnership, had
the General Partners as its two general partners.
Following the Windsor Acquisition, the General Partners also began to
explore possible strategic alternatives for the Partnership with a view towards
providing the Limited Partners with an opportunity to achieve liquidity in their
investments in the Partnership. Accordingly, in November 1998, the General
Partners began to consider the possibility of merging the Partnership, together
with three of the other Windsor Limited Partnerships, into N'Tandem. In the
Proposed Consolidation, the Limited Partners would have exchanged their Units
for common shares of beneficial interest or other securities in N'Tandem. In
contemplation of the Proposed Consolidation, the Managing General Partner (i)
retained the Appraiser to render the appraisals with respect to the properties
of the Partnership and the other three Windsor Limited Partnerships and (ii)
engaged Legg Mason to act as financial advisor to the Partnership
19
<PAGE>
and the other three Windsor Limited Partnerships and, if the Managing General
Partner elected to proceed with the Proposed Consolidation, to deliver a
fairness opinion with respect to the Proposed Consolidation. The General
Partners considered and actively pursued the Proposed Consolidation involving
the Partnership and the other three Windsor Limited Partnerships through August
1999. For a discussion of the Managing General Partner's analysis of the
Proposed Consolidation, see "SPECIAL FACTORS -- Alternatives Considered."
In September 1999, the General Partners concluded that the best course
of action for the Partnership and the other three Windsor Limited Partnerships
and their respective limited partners would be for such partnerships to sell
their properties to N'Tandem in transactions similar to the one that was
completed with Windsor 4. Because of the near-term expiration of the stated term
of Windsor 3 and Windsor 6 in December 1999, the General Partners immediately
began to develop and implement a plan to separately liquidate each of Windsor 3
and Windsor 6. In accordance with the plans of liquidation developed for Windsor
3 and Windsor 6, the General Partners completed two separate transactions (the
"Windsor 3 and Windsor 6 Transactions") in which each of Windsor 3 and Windsor 6
sold all of its assets to N'Tandem in April 2000 and made final liquidating
distributions to its respective partners in accordance with the terms of its
agreement of limited partnership on July 21, 2000. Prior to their liquidation,
(i) Windsor 3 held partial ownership interests in two Properties, the Apache
East and Denali Park Estates Properties, in common with the Partnership and,
like the Partnership, had the General Partners as its two general partners and
(ii) Windsor 6 held partial ownership interests in three Properties, the Rancho
Margate, Winter Haven and Town & Country Properties, in common with the
Partnership and, like the Partnership, had the General Partners as its two
general partners.
Following the completion of the Windsor 3 and Windsor 6 Transactions,
the General Partners began to develop a plan to liquidate the Partnership. In
making their determination to develop and implement the Sales and the Plan of
Liquidation, the General Partners considered that most of the Limited Partners
have held their investments in the Partnership for more than twelve years and
that the Partnership has held its current investments for six years beyond both
the anticipated investment period for such investments and the time in which the
Limited Partners had a reasonable expectation to receive distributions from the
liquidation of their investments in the Partnership. In addition, the General
Partners decided not to attempt to market the Partnership's Properties for sales
to parties other than N'Tandem based, in part, on their belief (i) that the
price offered to be paid by N'Tandem for the wholly-owned Properties, which is
equal to the full Appraised Values for such Properties, would be greater than
the price which would be paid by any prospective third-party purchaser, given
the results of the General Partners' previous experience in marketing
manufactured home communities similar in nature to those held by the Partnership
and (ii) that very limited demand for the Ownership Interests exists and that
any prospective third-party purchaser of these interests would not be willing to
pay the Partnership the price being offered by N'Tandem for such interests,
given that control and management of the underlying properties and the power to
sell or dispose of the underlying properties is vested solely in the Managing
General Partner, an affiliate of N'Tandem, and that N'Tandem owns all of the
other partial ownership interests in three of the underlying properties and a
65% partial ownership interest in the other two underlying properties.
In determining whether to pursue the Sales, the General Partners
analyzed various alternatives for the Partnership, including the Proposed
Consolidation, and the terms and provisions of the Sales. In connection with its
analysis of the Sales and the Plan of Liquidation, the Managing General Partner,
on behalf of the Partnership, engaged Legg Mason to render a written opinion as
to the fairness, from a financial point of view, to the Limited Partners of the
aggregate purchase price to be paid by N'Tandem to the Partnership for the
Properties. On August 29, 2000, Legg Mason delivered an oral and written
fairness opinion to the Managing General Partner stating that the aggregate
purchase price to be paid by N'Tandem for the Properties was fair to the Limited
Partners from a financial point of view. In addition,
20
<PAGE>
in connection with its analysis of the Sales, the Managing General Partner also
retained the Appraiser to render the Appraisals with respect to, and determine
the Appraised Values of, the Partnership's Properties.
In an effort to address the potential conflicts of interest between the
General Partners and the Limited Partners, the Managing General Partner, on
behalf of the Partnership, engaged the Independent Special Counsel in June 2000
for the purpose of representing the interests of the unaffiliated Limited
Partners in connection with the Sales and the Plan of Liquidation. On August 23,
2000, the Independent Special Counsel delivered a written report addressed to
the Limited Partners describing the results of its review of, and negotiations
with N'Tandem and its affiliates with respect to, the Sales and the Plan of
Liquidation. As a result of these negotiations, N'Tandem and its affiliates
agreed to make certain changes to the underlying terms of the Sales and the Plan
of Liquidation for the benefit of the Limited Partners. For a discussion of the
Independent Special Counsel's report and the results of its negotiations with
respect to the Sales and the Plan of Liquidation, see "SPECIAL FACTORS --
Independent Representation of the Unaffiliated Limited Partners."
It is currently anticipated that the Sales will occur as soon as
practicable following the approval of the Proposals by a majority-in-interest of
the Limited Partners. If sufficient consents to proceed with the Proposals are
not obtained, the General Partners intend to explore, consider and pursue such
alternatives as may be available to the Partnership.
Information Concerning N'Tandem and Chateau
N'Tandem is an unincorporated California business trust with principal
executive offices at 6160 South Syracuse Way, Greenwood Village, Colorado 80111.
The principal business of N'Tandem is the acquisition, ownership and operation
of manufactured home communities. Chateau owns all of the capital stock of the
Managing General Partner and effectively controls N'Tandem through its 9.8%
equity ownership interest in N'Tandem and its representation on N'Tandem's Board
of Trustees. Gary P. McDaniel, the Chief Executive Officer of Chateau, is
Chairman of, and one of three Trustees on, the Board of Trustees of N'Tandem.
Following the Sales, it is anticipated that Chateau will also hold approximately
$19.9 million of indebtedness in N'Tandem. Chateau's principal executive offices
are at 6160 South Syracuse Way, Greenwood Village, Colorado 80111. Chateau is
one of the largest publicly held real estate investment trusts principally
engaged in the acquisition, ownership and operation of manufactured home
communities and is one of the largest owner/operators of manufactured home
communities in the United States. The Managing General Partner, which is
wholly-owned by Chateau, is also the external investment advisor to N'Tandem.
Gary P. McDaniel, the Chief Executive Officer of Chateau, and Jeff Kellogg, the
President of Chateau, are the sole directors of the Managing General Partner.
Information concerning the Trustees of N'Tandem and the executive officers and
directors of Chateau and the Managing General Partner is set forth in Appendix C
to this Consent Solicitation Statement and is incorporated herein by reference.
The Purchase and Sale Agreement
General. The Purchase and Sale Agreement does not contain any seller
representations and warranties. As a result, following the closing of the Sales,
N'Tandem will have no recourse against the Partnership in connection with the
condition of, or other matters affecting, the Properties.
21
<PAGE>
Purchase Prices. The following table sets forth information regarding the
Partnership's Properties and their respective values (based on the Appraised
Values), the discount being applied to the Ownership Interests, the debt
attributable to the Properties as of June 30, 2000 and the value of the
Properties after deducting attributable debt and applicable discount:
<TABLE>
<CAPTION>
Value, Based on Discount Debt
Affiliate Appraised on Attributable
Percentage Percentage Date Value, Before Ownership as of Net
Name of Property Ownership Ownership(1) Acquired Debt(2) Interests(2) 6/30/2000(2) Value(2)
---------------- --------- ------------ -------- ------- ------------ -------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Lakeside
Lithia Springs, GA 100% -- 7/1988 $1,660,000 -- -- $1,660,000
Plantation Estates
Lithia Springs, GA 100% -- 12/1988 1,900,000 -- $ 1,097,000 803,000
Town & Country
Estates
Tucson, AZ 42% 58%(4) 1/1989 2,562,000 $171,700 651,000 1,739,300
Rancho Margate
Margate, FL 26% 74%(5) 9/1995 1,664,000 111,500 928,800 623,700
Winter Haven
Winter Haven, FL 26% 74%(5) 10/1995 1,092,000 73,200 408,300 610,500
Apache East
Apache Junction, AZ 9% 91%(6) 2/1997 193,800(7) 13,000 97,000 83,800
Denali Park Estates
Apache Junction, AZ 9% 91%(6) 2/1997 337,200(7) 22,600 168,800 145,800
---------- -------- ---------- ----------
Total $9,409,000 $392,000 $3,350,900 $5,666,100
========== ======== ========== ==========
</TABLE>
------------------------------
(1) Represents the ownership percentage held by affiliates of the Managing
General Partner, other than the Partnership, in the properties
underlying the Ownership Interests.
(2) With respect to the five Ownership Interests, such amount represents
the Partnership's allocable share based upon its ownership percentage
in the underlying property.
(3) With respect to the five Ownership Interests, N'Tandem is applying a
6.7% discount for the fact that the Partnership only owns a minority
interest in the underlying property. For a discussion of the discount
being applied to the Ownership Interests, see "SPECIAL FACTORS --
Discount for Ownership Interests in Properties."
(4) The 58% interest in this Property is held by N'Tandem as tenant in
common with the Partnership.
(5) Each of these Properties is owned by Windsor Park 456. The Partnership
is a 26% limited partner in Windsor 456. In addition to being the sole
general partner of Windsor Park 456, the Managing General Partner is
also the external investment advisor to N'Tandem, which owns the
remaining 74% limited partner interest in Windsor Park 456.
(6) Each of these Properties is owned by Windsor Park 345. The Partnership
is a 9% limited partner in Windsor Park 345. In addition to being the
sole general partner of Windsor Park 345, the Managing General Partner
is also the sole managing general partner of Windsor 7 and is the
external investment advisor to N'Tandem, which together own all of the
remaining limited partner interests in Windsor Park 345. N'Tandem and
Windsor 7 have a 65% and 26% limited partner interest, respectively, in
Windsor Park 345.
(7) The Apache East and Denali Park Estates Properties are contiguous
properties with similar characteristics. Accordingly, the Appraiser
appraised both Properties together and, in its Appraisal, stated that
the aggregate Appraised Value of both Properties was $5,900,000. For
purposes of this table, the Managing General Partner allocated 36.5% of
the aggregate Appraised Value to Apache East and 63.5% of the aggregate
Appraised Value to Denali Park Estates.
N'Tandem has agreed to pay cash for the Properties. The aggregate
purchase price to be paid by N'Tandem for the Properties is expected to be
$9,017,000, which includes $5,666,100 to be paid in cash to the Partnership and
$3,350,900 representing debt attributable to the Properties being refinanced by
N'Tandem at the closing of the Sales. In order to fund the acquisition of the
Properties, N'Tandem will borrow $7,510,300 from SunAmerica Life Insurance
Company ("SunAmerica") and will draw down the remaining $1,506,700 from its
existing $20 million acquisition line of credit with US Bank N.A. (the "Credit
Facility"). N'Tandem will borrow the funds from SunAmerica pursuant to mortgage
indebtedness which will bear interest at a rate equal to the five-year treasury
rate plus 190 basis points, will have a term
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<PAGE>
of five years and will be secured by the Properties being acquired. The Credit
Facility bears interest at a rate equal to LIBOR plus 100 basis points and has a
two-year term which expires in November 2001. To the extent that N'Tandem is
unable to fully fund the acquisition of the Properties through SunAmerica and
the Credit Facility, the remaining funds required by N'Tandem to complete the
acquisition will be supplied by Chateau in exchange for the issuance by N'Tandem
of an unsecured promissory note, which will bear interest at an annual rate
equal to 1% per annum above the prime rate established by Bank One, N.A.
Sales Expenses. The Partnership will pay certain closing costs
customarily paid by sellers in the respective jurisdictions in which the
Properties are located, including the seller's portion of title insurance and
escrow fees. There are no acquisition fees payable by the Partnership in
connection with the Sales.
Solicitation Expenses
The Partnership will bear the costs incurred in connection with this
Consent Solicitation.
Estimate of Liquidating Distributions Payable to Limited Partners
The following table sets forth the basis of the General Partners'
estimate of the liquidating distributions payable to Limited Partners. The table
assumes the Sales occurred as of June 30, 2000. The actual liquidating
distributions will vary from the amount shown below depending upon the operating
results of the Properties, the level of distributions, if any, to partners, the
capital expenditures for the Properties for the period of July 1, 2000 through
the closing date and the amount of any closing adjustments or expenses.
23
<PAGE>
<TABLE>
<S> <C>
Aggregate Purchase Price for the Properties $ 9,017,000
Less: Outstanding Mortgage Indebtedness(1) $ (3,350,900)
Current Liabilities(2) $ (302,000)
Partnership Liquidation Expenses(3) $ (75,000)
Estimated Transactional Expenses Payable by the Partnership(4):
Prepayment Penalties $ (8,000)
Legal Fees (200,000)
Accounting Fees (15,000)
Fairness Opinion (50,000)
Surveys (24,200)
Closing Costs (36,700)
Solicitation Expenses (25,000)
Printing Costs (40,000)
----------------
Total Estimated Transactional Expenses Payable by the Partnership $ (398,900)
-------------
Plus: Cash, Cash Equivalents and Other Current Assets(2) $ 653,300
-------------
Cash Available for Distribution $ 5,543,500
=============
Allocable to General Partners $ 55,400
=============
Allocable to Limited Partners $ 5,488,100
=============
Estimated Cash Available for Distribution per Unit(5) $ 23.77
=============
</TABLE>
--------------------------
(1) Based on amounts outstanding, including accrued interest, as of June
30, 2000, on debt attributable to the Ownership Interests.
(2) As of June 30, 2000.
(3) Estimated expenses required to wind up and liquidate the Partnership,
including, without limitation, transfer agent and accountants fees.
(4) See "-- The Purchase and Sale Agreement-- Sales Expenses" and
"-- Solicitation Expenses" above.
(5) Based on 230,861 Units outstanding as of the Record Date.
Since the organization of the Partnership, total distributions to
Limited Partners have amounted to approximately $26,607,900 (or an average of
approximately $112.80 per Unit). If the Sales are completed and the liquidating
distributions estimated above are paid to Limited Partners, total distributions
to Limited Partners will amount to approximately $32,096,000 (or approximately
$136.57 per Unit), compared to an initial purchase price for each Unit of
$100.00.
As the Partnership is not making any representations and warranties
under the Purchase and Sale Agreement, the General Partners do not intend to
reserve any funds out of the cash available for liquidating distributions to
fund contingent liabilities arising out of potential claims or litigation which
might arise after the Sales are consummated. The full amount of the net proceeds
from the Sales will be distributed to the partners of the Partnership as soon as
practicable following the closing.
Ownership of Properties by N'Tandem Following the Sales
Following the consummation of the Sales, N'Tandem will be entitled to
all of the benefits of ownership of the Properties, including future cash flows,
earnings and increases in the values of the Properties, if any.
24
<PAGE>
SPECIAL FACTORS
Fairness of the Proposed Transactions; Recommendation of the General Partners
The General Partners believe that the Sales and the Plan of Liquidation
are consistent with the Original Objectives of the Partnership. In addition, the
General Partners believe that the terms of the Sales are fair, from a financial
point of view and from a procedural point of view, to the affiliated and
unaffiliated Limited Partners. Accordingly, the General Partners have approved
the Sales and the Plan of Liquidation and recommend their approval and adoption
by the Limited Partners.
In reaching the determination that the Sales and the Plan of
Liquidation are fair to the unaffiliated Limited Partners from a financial point
of view, the General Partners considered the following factors:
o N'Tandem is willing to purchase all of the Properties and is
paying the full Appraised Value for the two wholly-owned
Properties and is only applying a 6.7% discount to the
Appraised Value of the Ownership Interests for the fact that
the Partnership owns a minority interest in the underlying
properties. The General Partners believe that the discount
being applied in connection with the Sales is substantially
less than the 25% discount that, in the opinion of the
Appraiser, would have been applied had the Ownership Interests
been sold to a third-party purchaser. See "-- Discount for
Ownership Interests in Properties";
o The aggregate net consideration of approximately $5,666,100
being paid in connection with the proposed transactions
exceeds the net book value of the Partnership's assets of
$3,931,600 as of June 30, 2000 by $1,734,500;
o Due to the familiarity of N'Tandem's external investment
advisor with the Properties, N'Tandem is willing to purchase
the Properties "as-is" and without representations and
warranties from the Partnership;
o Because N'Tandem is buying the Properties in a single
transaction and is buying such Properties without
representations and warranties from the Partnership, the
General Partners will be able to wind up the Partnership and
make full liquidating distributions promptly upon the approval
of the Sales and the Plan of Liquidation by the Limited
Partners;
o The estimated net liquidating proceeds payable in connection
with the Sales ($23.77 per Unit) are substantially higher than
the weighted average trading price of $14.43 per Unit in the
secondary markets, as reported by The Partnership Spectrum, a
nationally recognized publication focusing exclusively on
limited partnerships, for the period of May 1, 1999 through
June 30, 2000;
o The Sales do not involve any brokerage fees payable by the
Partnership, resulting in a savings to the Partnership
estimated to be between $270,500 and $541,000 (based upon
brokerage fees of 3% to 6% typically paid by sellers of real
properties); and
o Legg Mason has delivered the Fairness Opinion to the effect
that the aggregate purchase price to be paid to the
Partnership for the Properties is fair, from a financial point
of view, to the Limited Partners. The General Partners have
adopted, in its entirety, the Fairness Opinion, including its
underlying analysis, prepared by Legg Mason as part of their
analysis of the Sales and Plan of Liquidation. The General
Partners did not undertake to
25
<PAGE>
perform their own analysis with respect to the matters
considered by the Fairness Opinion. For a discussion of the
Fairness Opinion, see "-- Fairness Opinion."
In reaching their determination that the Sales and the Plan of
Liquidation are fair from a financial point of view to the affiliated and
unaffiliated Limited Partners, the General Partners also considered the
following potentially negative aspects of the Sales:
o The purchase prices for the Properties are based upon
independent Appraisals rendered in April and May of 2000 which
have not been updated and, thus, may not reflect the current
fair market values of the Properties;
o With respect to the Ownership Interests held by the
Partnership, the remaining interests in the properties
underlying such Ownership Interests are held by (i) N'Tandem,
which together with the Managing General Partner is under
common control of Chateau, (ii) Windsor Park 345, an
affiliated limited partnership which has the Managing General
Partner as its sole general partner and N'Tandem and Windsor
7, an affiliated limited partnership, as its other limited
partners, or (iii) Windsor Park 456, an affiliated limited
partnership which has the Managing General Partner as its sole
general partner and N'Tandem as its other limited partner;
o It is possible that the future performance of the Properties
will improve or that prospective third-party buyers may be
willing to pay more for the Properties in the future; and
o It is possible that Limited Partners might earn a higher
return on their investment if the Partnership retained
ownership of the Properties. By approving the Sales and the
Plan of Liquidation, Limited Partners will also be forgoing
current benefits of the ownership of the Properties such as
continuing distributions.
The above described factors are all of the material factors considered
by the General Partners in determining that the Sales and the Plan of
Liquidation are fair to the affiliated and unaffiliated Limited Partners from a
financial point of view. In reaching their determination that the Sales and the
Plan of Liquidation are fair to the affiliated and unaffiliated Limited Partners
from a financial point of view, the General Partners did not assign relative
weights to the above factors or determine that any factor was of particular
importance; rather, the General Partners viewed the positive factors as a
totality and the negative factors as a totality and concluded that the positive
factors outweighed the negative factors. Accordingly, the General Partners
determined that the Sales and the Plan of Liquidation are fair to the affiliated
and unaffiliated Limited Partners from a financial point of view.
The General Partners also determined that the Sales and the Plan of
Liquidation are fair to the Limited Partners from a procedural point of view
based on the following factors:
o The Properties have been independently appraised by the
Appraiser;
o In assessing the discount being applied to the Ownership
Interests by N'Tandem, the Managing General Partner had the
Appraiser, which concluded that in its estimation the
application of a discount of approximately 25% would be
appropriate for a minority interest in real estate, analyze
the applicability of a discount in valuing a partial ownership
interest in a manufactured home community. See "-- Discount
for Ownership Interests in Properties";
26
<PAGE>
o The Sales are subject to the approval of unaffiliated Limited
Partners holding not less than a majority of the issued and
outstanding Units;
o The Managing General Partner engaged the Independent Special
Counsel to represent the interests of the unaffiliated Limited
Partners in connection with the Sales and the Plan of
Liquidation. See "--Independent Representation of the
Unaffiliated Limited Partners"; and
o The Managing General Partner in connection with the Sales
retained Legg Mason to render its Fairness Opinion.
In reaching their determination that the Sales and the Plan of
Liquidation are fair from a procedural point of view to the affiliated and
unaffiliated Limited Partners, the General Partners also considered the
following potentially negative aspects of the Sales:
o The Sales were negotiated on behalf of the Partnership by the
Managing General Partner, which is under common control with
N'Tandem and is receiving substantial economic benefits from
the proposed transactions (including acquisition fees of
$270,500 that are being paid by N'Tandem). Accordingly, the
Sales may be subject to potential conflicts of interest;
o Gary P. McDaniel and C.G. Kellogg, the sole Directors of the
Managing General Partner, are the Chief Executive Officer and
the President, respectively, of Chateau and, as a result, the
Sales and the Plan of Liquidation have not been approved on
behalf of the Managing General Partner by directors who are
not affiliated with N'Tandem;
o The Appraisals were rendered in April and May of 2000 and no
updates or new appraisals have been or will be ordered in
connection with the Sales; and
o The General Partners have not engaged in any marketing efforts
on behalf of the Partnership with respect to the Properties.
The General Partners do not intend to take any actions to
market or sell the Properties pending the results of this
Consent Solicitation.
The above described factors are all of the material factors considered
by the General Partners in determining that the Sales and the Plan of
Liquidation are fair to the affiliated and unaffiliated Limited Partners from a
procedural point of view. In reaching their determination that the Sales and the
Plan of Liquidation are fair to the affiliated and unaffiliated Limited Partners
from a procedural point of view, the General Partners concluded that the
approval of the Proposals by a majority-in-interest of the unaffiliated Limited
Partners is sufficient to insure that procedural fairness has been preserved for
the Limited Partners. The General Partners also believe that the potentially
negative factors influencing procedural fairness were in each case mitigated by
the following other factors or considerations: (i) although the Managing General
Partner and N'Tandem are under common control, the General Partners concluded
that the common control (a) did not adversely affect the terms of the Sales for
Limited Partners and (b) allowed N'Tandem to offer terms of the Sales that they
believed would not be available from third parties; (ii) the Managing General
Partner arranged for the Independent Special Counsel to represent the interests
of the unaffiliated Limited Partners; (iii) the Managing General Partner
retained Legg Mason to assess the fairness of the aggregate purchase price to be
paid to the Partnership in the Sales; (iv) even though the Appraisals were
rendered in April and May of 2000, the General Partners believe that no material
changes have occurred in the Properties or in the conditions of the market for
manufactured home communities since those dates that would result in higher
values for the Properties; and (v) the General Partners' belief that marketing
the Properties held by the Partnership would not have provided a
27
<PAGE>
better transaction for the Limited Partners and would have ultimately delayed
the timing of the Sales and the distribution of liquidating proceeds to the
Limited Partners.
Fairness Opinion
The Managing General Partner, on behalf of the Partnership, engaged
Legg Mason to render a written opinion as to the fairness, from a financial
point of view, to the Limited Partners of the aggregate purchase price to be
paid by N'Tandem to the Partnership for the Properties. Legg Mason delivered an
oral and written fairness opinion to the Managing General Partner on August 29,
2000. A copy of the Fairness Opinion, setting forth the matters considered,
procedures followed and the scope of review by Legg Mason, is set forth in
Appendix A to this Consent Solicitation Statement and is incorporated herein by
reference. Limited Partners are urged to read the Fairness Opinion in its
entirety.
The Managing General Partner selected Legg Mason based upon Legg
Mason's experience and reputation and the fee charged for its services. Legg
Mason, as a part of its investment banking business, is regularly engaged in the
valuation of businesses and securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes.
Legg Mason was initially engaged by the Managing General Partner to
render a fairness opinion with respect to the Proposed Consolidation; however,
because the General Partners determined to proceed with the Sales and Plan of
Liquidation, no fairness opinion was ever rendered with respect to the Proposed
Consolidation. Subsequently, the Managing General Partner engaged Legg Mason to
render separate fairness opinions with respect to the Windsor 3 and Windsor 6
Transactions and, in March 2000, Legg Mason delivered such fairness opinions to
the General Partners with respect to such transactions for which it received an
aggregate fee of $100,000. Neither of the General Partners nor any of their
affiliates have any material relationship with Legg Mason.
In arriving at its Fairness Opinion and the basis therefor, Legg Mason,
among other things, reviewed:
(i) the management agreement between the Partnership and the Managing
General Partner and other agreements pertaining to the operation and
management of the Properties;
(ii) the Partnership Agreement of the Partnership;
(iii) the financial statements and the related filings of the Partnership on
Form 10-KSB for the year ended December 31, 1999 and Form 10-QSB for
the quarter ended June 30, 2000;
(iv) the NAREIT Index, the Morgan Stanley REIT Index, capital flows to
public real estate investment trusts and other similar measures of
operating performance and trading data of real estate investment
trusts;
(v) an analysis of comparable publicly traded real estate investment
trusts;
(vi) a draft of this Consent Solicitation Statement;
(vii) financial and operating forecasts and projections relating to the
Partnership and schedules setting forth information relating to the
outstanding debt attributable to
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the Properties and the number of outstanding Units prepared by the
Managing General Partner or its representatives; and
(viii) the Appraisals of the Properties prepared by the Appraiser.
The financial and operating forecasts and projections prepared by the Managing
General Partner and its representatives for use by Legg Mason in connection with
the preparation of its Fairness Opinion are set forth in Appendix D to this
Consent Solicitation Statement and are incorporated herein by reference.
Legg Mason also visited a number of the Properties and held discussions
with various members of management and representatives of the Managing General
Partner concerning the Properties' historical and current operations, financial
condition and prospects. In addition, Legg Mason conducted such other
investigations, financial analyses and studies and reviewed such other
information and factors as it deemed appropriate for the purposes of its
Fairness Opinion. In connection with this engagement, Legg Mason was not asked
to, and did not, advise the Managing General Partner or the Partnership with
respect to the determination of the aggregate purchase price for the Properties,
make any recommendations to the Managing General Partner or the Partnership with
respect to the Sales or the Plan of Liquidation, assess any alternatives to the
Proposals or make any recommendation as to how Limited Partners should vote on
the Proposals. In addition, Legg Mason was not asked to solicit, and did not
solicit, third party indications of interest from any party with respect to an
acquisition of the Units, the Properties or any part thereof. Legg Mason did
also note that the Managing General Partner is owned by Chateau, the parent
company of N'Tandem.
In rendering its Fairness Opinion, Legg Mason relied, without assuming
responsibility for independent verification, on the accuracy and completeness of
all financial and operating data, financial analyses, financial and operating
forecasts, reports and other information that were publicly available or
furnished or otherwise communicated to Legg Mason by or on behalf of the
Managing General Partner. With respect to forecasts regarding the Properties'
future financial condition and operating results, Legg Mason assumed, without
taking any responsibility for independent verification, that such forecasts were
reasonably prepared on bases reflecting the best currently available
information, estimates and judgment of the Managing General Partner. Legg Mason
also assumed that the Appraisals were reasonably prepared by, and reflected the
good faith judgments of, the Appraiser and did not take any responsibility for
their accuracy or completeness. Legg Mason did not make an independent appraisal
of the assets or liabilities (contingent or otherwise) of the Partnership. No
limitations were imposed by the Managing General Partner on Legg Mason with
respect to the investigation made or procedures followed by Legg Mason. Legg
Mason also assumed that the allocation of consideration provided by the Managing
General Partner between the General Partners and the Limited Partners has been
determined in accordance with, and complies with the terms and conditions of,
the Partnership Agreement. Furthermore, Legg Mason did not opine to the fairness
of the allocation of consideration between the General Partners and Limited
Partners.
The Fairness Opinion addresses only the fairness, from a financial
point of view, of the aggregate purchase price to be paid to the Partnership by
N'Tandem for the Properties. In connection with the preparation of its Fairness
Opinion, Legg Mason noted that the aggregate consideration offered by N'Tandem
for the Properties and the net current assets on a per Unit basis was $23.77.
The following paragraphs summarize the significant quantitative and
qualitative analyses performed by Legg Mason in arriving at its Fairness
Opinion. Legg Mason considered all such quantitative and qualitative analyses in
connection with its valuation analysis, and no one method of analysis was given
particular emphasis.
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Valuation of the Partnership
Liquidation Analysis. Legg Mason estimated the liquidation value of the
Partnership assuming that the Partnership sold the Properties, as stand alone
assets, to third-party purchasers and liquidated the Partnership on June 30,
2000. In estimating the liquidation value of the Units, Legg Mason first
calculated the net equity value for each of the Properties by (i) subtracting
from each Property's Appraised Value the amount of indebtedness attributable to
such Property and (ii) in the case of the Ownership Interests, applying a 10%
discount to the Appraised Value attributable to the Ownership Interests to
account for the fact that the Partnership only owns a minority interest in the
underlying property. In determining the discount to be applied to the Appraised
Value attributable to the Ownership Interests, Legg Mason applied the same
discount being used by N'Tandem and did not independently determine whether the
discount being used was fair. Legg Mason then adjusted the aggregate net equity
value of the Properties by (i) subtracting the estimated liquidation costs
associated with selling the Properties, (ii) subtracting the net assets of the
Partnership, and (iii) subtracting 1% of the remaining net equity value to
reflect the General Partners' interest in the Partnership. Legg Mason then
divided the remaining net equity value by the number of Units outstanding in
order to arrive at a liquidation equity value for each Unit. Legg Mason's
analysis indicated a liquidation equity value of $23.09 per Unit and Legg Mason
noted that the aggregate consideration offered by N'Tandem for the Properties
and the net current assets on a per Unit basis was $23.77. Legg Mason believed
that its liquidation analysis supported its fairness determination because the
aggregate net purchase price offered by N'Tandem for the Properties on a per
Unit basis was in excess of the liquidation value indicated by such analysis.
In making its assessment of the liquidation value, Legg Mason relied,
without independent verification of the accuracy, on the Appraised Value in the
Appraisal as provided by the Appraiser. In addition, Legg Mason's estimated
liquidation costs associated with selling the Properties did not include general
and administrative expenses of the Partnership during the liquidation period,
liquidation costs associated with a prolonged marketing period or the time value
of the proceeds from the sale of the Properties.
Comparable Company Analysis. Legg Mason employed a comparable company
analysis to establish an implied equity value for the Units. Legg Mason reviewed
and compared financial information for the following publicly traded real estate
investment trusts: Chateau, Manufactured Home Communities, Inc., Sun
Communities, Inc., United Mobile Homes, Inc. and American Land Lease, Inc. (the
"Comparable Companies"). The Comparable Companies represent all of the publicly
traded real estate investment trusts whose principal business, like that of the
Partnership's, is the ownership and operation of manufactured home communities
in the United States. All of the trading multiples of the Comparable Companies
were based on the closing stock prices on August 28, 2000 and all funds from
operations ("FFO") per share estimates were based on information published by
First Call Corporation. The estimates published by First Call Corporation were
not prepared in connection with the Sales or at the request of Legg Mason. Legg
Mason noted that certain factors differentiated the Partnership from the
Comparable Companies, including (i) the absence of an actively traded public
market for the Units, (ii) the fact that the Partnership is externally managed
and advised, (iii) the fact that the Partnership owns a minority interest in
certain of the underlying properties and (iv) certain other economic and general
market data that Legg Mason deemed appropriate. To reflect these factors, Legg
Mason deemed it appropriate to discount the Comparable Companies' trading
multiples by 20%. Legg Mason believed that this discount was a reasonable
estimate of the discount which the market might have applied to the Comparative
Companies' trading multiples to reflect these factors. In order to derive an
implied equity value for the Units, Legg Mason deducted 1% from the implied
equity value of the Partnership to reflect the General Partners' interest in the
Partnership.
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Based on its review, Legg Mason observed that the discounted trading
multiples for the Comparable Companies (i) ranged from 8.3x to 6.1x for the 2000
FFO per share estimates, (ii) ranged from 7.6x to 5.5x for the 2001 FFO per
share estimates and (iii) ranged from 8.1x to 6.6x for the trailing twelve
months earnings before interest, taxes, depreciation and amortization per share
estimates ("EBITDA"). Based on the Managing General Partner's financial and
operating forecasts and projections and Legg Mason's estimates of the
Partnership's 2000 and 2001 FFO, including potential cost savings and
operational efficiencies associated with general and administrative cost
reductions and the subtraction of the net assets of the Partnership and
estimated transaction costs and the range of discounted trading multiples for
the Comparable Companies of 8.3x to 6.1x and 7.6x to 5.5x, respectively, for
2000 and 2001, Legg Mason's analysis indicated an implied value range per Unit
of $17.84 to $13.31 based on 2000 FFO multiples and $18.02 to $13.32 based on
2001 FFO multiples. In addition, based on the Managing General Partner's
financial and operating forecasts and projections and Legg Mason's estimate of
the Partnership's trailing twelve months EBITDA, including potential cost
savings and operational efficiencies associated with general and administrative
cost reductions and the subtraction of the net assets of the Partnership and
estimated transaction costs and the range of discounted trading multiples for
the Comparable Companies of 8.1x to 6.6x, Legg Mason's analysis indicated an
implied value range per Unit of $10.98 to $6.55. Legg Mason believed that its
comparable company analysis supported its fairness determination because the
aggregate net purchase price offered by N'Tandem for the Properties on a per
Unit basis was in excess of the high end of the range for each of the implied
equity values of the Units indicated by such analysis.
Discounted Cash Flow Analysis. Legg Mason estimated the continuation
equity value of the Units assuming that the term of the Partnership was extended
and the Properties were held by the Partnership until December 31, 2004. Legg
Mason performed a discounted cash flow analysis (i.e., an analysis utilizing a
range of discount rates) of (i) the present value of the forecasted cash flows
from the Properties' future operations and (ii) the present value of the
forecasted proceeds of a sale of the Properties, on an aggregate basis, less the
General Partners' 1% interest in the Partnership, assuming a sale to third-party
purchasers at the conclusion of the forecast period. In completing its analysis,
Legg Mason utilized the financial and operating forecasts and projections
provided by the Managing General Partner and the Partnership's cash flow to
equity for the forecasted period of January 1, 2000 to December 31, 2004
prepared by Legg Mason and applied discount rates of 14.6% to 19.2% to the
forecasted equity cash flows and the forecasted residual equity value.
Forecasted residual equity value was based upon applying the Comparable
Companies' discounted trading multiples of 6.2x to 8.7x for the trailing twelve
months to the Partnership's forecasted FFO for the year 2004, less the net
assets of the Partnership and estimated transaction costs. Legg Mason's analysis
indicated a range of continuation equity values based upon the discounted cash
flow and discounted residual equity value of $17.95 to $12.28 per Unit. Legg
Mason believed that its continuation analysis supported its fairness
determination because the aggregate net purchase price offered by N'Tandem for
the Properties was in excess of the high end of the range of implied equity
values of the Units indicated by such analysis.
The preparation of a fairness opinion involves various determinations
as to the most appropriate and relevant quantitative and qualitative methods of
financial analyses and the application of those methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to
partial analyses or summary description. Accordingly, Legg Mason believes that
its analyses must be considered as a whole and that considering any portion of
such analyses and of the factors considered, without considering all analyses
and factors, could create a misleading or incomplete view of the process
underlying its opinion. The analyses underlying the Fairness Opinion were based
on information, other than the share prices of the Comparable Companies,
available as of March 31, 2000. Any estimates contained in these analyses are
not necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than the values
developed by Legg Mason. In addition, analyses relating to the value of the
Properties do not purport to be appraisals or to reflect the
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prices at which the Properties may actually be sold. The Fairness Opinion is
based on conditions as of its date and, although subsequent developments could
have a material effect on the opinion stated, the Fairness Opinion will not be
updated.
A copy of the Fairness Opinion is set forth in Appendix A to this
Consent Solicitation Statement and is available for inspection and copying at
the Partnership's principal executive offices during regular business hours by
any interested Limited Partner or any representative of a Limited Partner who
has been designated by a Limited Partner in writing. Copies may also be obtained
through the written request of any Limited Partner made to the Managing General
Partner at 6160 South Syracuse Way, Greenwood Village, Colorado 80111.
As compensation for rendering its Fairness Opinion to the Partnership,
Legg Mason will receive a fee of $50,000.
Independent Representation of the Unaffiliated Limited Partners
In an effort to address the potential conflicts of interest between the
General Partners and the Limited Partners, the Managing General Partner, on
behalf of the Partnership, engaged Wolf Haldenstein Adler Freeman & Herz LLP to
act as the Independent Special Counsel for the purpose of representing the
interests of the unaffiliated Limited Partners in connection with the Sales and
the Plan of Liquidation. On August 23, 2000, the Independent Special Counsel
delivered a written report addressed to the Managing General Partner for the
benefit of the Limited Partners describing the results of its review of, and
negotiations with the Managing General Partner and N'Tandem with respect to, the
Sales and the Plan of Liquidation. A copy of the report of the Independent
Special Counsel, setting forth the matters considered and procedures followed,
is set forth in Appendix B to this Consent Solicitation Statement and is
incorporated herein by reference. Limited Partners are urged to read the report
of the Independent Special Counsel in its entirety.
The Managing General Partner selected the Independent Special Counsel
based upon its belief that the Independent Special Counsel was uniquely
qualified to act in this role of by virtue of the Independent Special Counsel
previously having brought and settled, on behalf of the limited partners of
Windsor 3, Windsor 4 and Windsor 6, a class-action lawsuit in the Superior Court
of the State of California involving, among other things, allegations of
potential conflicts of interest relating to the Windsor 4 Transaction and the
Windsor 3 and Windsor 6 Transactions.
In analyzing the Sales and the Plan of Liquidation, the Independent
Special Counsel, among other things, reviewed (i) the organizational documents,
including the Partnership Agreement, of the Partnership, (ii) the financial
statements and the related filings of the Partnership on Form 10-KSB for the
year ended December 31, 1999 and Form 10-QSB for the quarter ended June 30,
2000, (iii) a draft of this Consent Solicitation Statement, (iv) the Appraisals
and (v) a draft of the Fairness Opinion. In addition, the Independent Special
Counsel also reviewed the proposed form of the Purchase and Sale Agreement that
is expected to be utilized in connection with the Sales, received certain
additional information relating to the Partnership requested from the Managing
General Partner, independently evaluated the methodology utilized by the
Appraiser with respect to the Appraisals and performed research of applicable
law. In addition, prior to its engagement on behalf of the Partnership, the
Independent Special Counsel had become familiar with the facts relevant to the
background of the Sales and the Plan of Liquidation in the course of its
representation of the limited partners of Windsor 4 in connection with the
Windsor 4 Transaction and the limited partners of Windsor 3 and Windsor 6 in
connection with the Windsor 3 and Windsor 6 Transactions.
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Following its review and analysis of such information, the Independent
Special Counsel engaged in negotiations, on behalf of the Limited Partners, with
the Managing General Partner and N'Tandem with respect to the underlying terms
of the Sales and the Plan of Liquidation. The purpose of these negotiations was
to represent, from a legal point of view, the interests of the Limited Partners
and, thereby, ensure that there was independent legal representation of the
interests of the Limited Partners in connection with the Sales and the Plan of
Liquidation. As a result of these negotiations, the parties agreed to make
certain changes to the underlying terms of the Sales and the Plan of Liquidation
for the benefit of the Limited Partners.
As described in the report of the Independent Special Counsel, the
parties agreed that the discount being applied to the Appraised Values of the
Ownership Interests would be reduced from 10%, which was the percentage discount
originally agreed to by the parties, to 6.7%. As a result of this reduction, the
aggregate amount of the net proceeds to be paid to the Limited Partners in
connection with the Sales and the Plan of Liquidation increased by $192,900. In
addition, the parties also agreed to include certain additional disclosure in
this Consent Solicitation Statement relating to the rights of the Limited
Partners under the Partnership Agreement with respect to a transaction between
the Partnership and an affiliate of the Managing General Partner.
As described in its report, the Independent Special Counsel is of the
opinion that the results of its review and negotiations relating to the Sales
and the Plan of Liquidation, when combined with the opinions expressed in the
Fairness Opinion, have provided significant procedural safeguards with respect
to the interests of the unaffiliated Limited Partners in light of the lack of
arm's-length negotiations and bargaining between independent parties in
connection with the Sales and the Plan of Liquidation. Moreover, the Independent
Special Counsel believes that its representation of the interests of the
unaffiliated Limited Partner in connection with the Sales and the Plan of
Liquidation has resulted in the substantive benefits to such Limited Partners
described above.
In connection with its representation of the interests of the
unaffiliated Limited Partners, no limitations were imposed by the Managing
General Partner on the Independent Special Counsel with respect to the
investigation made or procedures followed by the Independent Special Counsel and
the payment of the fees of the Independent Special Counsel were not contingent
upon the results of its review of, or negotiations with the Managing General
Partner and N'Tandem with respect to, the Sales and the Plan of Liquidation.
A copy of the report of the Independent Special Counsel is set forth in
Appendix B to this Consent Solicitation Statement and is available for
inspection and copying at the Partnership's principal executive offices during
regular business hours by any interested Limited Partner or any representative
of a Limited Partner who has been designated by a Limited Partner in writing.
Copies may also be obtained through the written request of any Limited Partner
made to the Managing General Partner at 6160 South Syracuse Way, Greenwood
Village, Colorado 80111.
As compensation for representing the interests of the unaffiliated
Limited Partners in connection with the Sales and the Plan of Liquidation, the
Managing General Partner paid the Independent Special Counsel a fee of
approximately $31,000, which was determined on a time-and-disbursements basis at
the Independent Special Counsel's customary hourly rates.
Alternatives Considered
In addition to considering the Sales and the Plan of Liquidation, the
General Partners also identified and considered the following alternative
courses of action for the Partnership:
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Continuation of the Partnership. The Partnership, which was formed for
the purpose of acquiring and holding investments in existing manufactured home
communities for an anticipated investment period of four to six years, was
funded through a public offering of Units which commenced in September 1987 and
was completed in September 1988. Following the expiration of the anticipated
investment period, which was originally contemplated to occur at the latest in
September 1994, it was expected that the investments of the Partnership would be
sold and, thereafter, the Partnership liquidated in accordance with the terms of
the Partnership Agreement. As of the date of this Consent Solicitation
Statement, most of the Limited Partners have held their investments in the
Partnership for more than twelve years and the Partnership has held its current
investments for six years beyond both the anticipated investment period for such
investments and the time in which the Limited Partners had a reasonable
expectation to receive distributions from the liquidation of their investments
in the Partnership. In addition, the Partnership has also held its current
investments beyond its formal term, as originally contemplated in its
Partnership Agreement, of December 31, 1998 (which term has already been
extended once to December 31, 2001). As a result, the Managing General Partner
believes that Limited Partners expect to achieve the near-term liquidation of
their investments in the Partnership. In addition, the Managing General Partner
believes that continuing to own and operate the Properties is not in the best
interests of the Partnership and its Limited Partners, especially in view of the
opportunity to sell the Properties to N'Tandem on the terms outlined herein.
Additionally, while continuing the Partnership would have resulted in the
Limited Partners receiving the benefits of continued ownership of the
Properties, the Limited Partners would have also remained subject to the risks
of continuing such ownership and would continue to be unable to liquidate their
investments at fair value since no formal trading market for the Units exists.
Sale of the Properties to Third-Party Purchasers. While the General
Partners did consider the possibility of selling the Properties to purchasers
other than N'Tandem, the General Partners ultimately concluded that such sale of
the Properties would not be likely to result in the distribution of greater
liquidating proceeds to the Limited Partners than the amounts being distributed
in connection with the Sales and the Plan of Liquidation. The principal reasons
for this conclusion are that the Managing General Partner believes that (i) the
Appraisals continue to reflect the fair market values of the Properties, (ii)
the Limited Partners would receive greater liquidating proceeds in a third-party
transaction only if such third party was willing to pay in excess of the
purchase prices for the Properties being paid by N'Tandem, something the General
Partners believe few, if any, third-party purchasers would be willing to do,
especially with respect to the partial Ownership Interests, (iii) the Ownership
Interests would have the effect of deterring potential third-party purchasers
because of their minority status, and (iv) the expenses of the Sales are lower
than they would be in connection with the sale of the Properties to an
unaffiliated third-party purchaser (principally due to the fact that no
brokerage commissions are being paid by the Partnership in connection with the
Sales, which results in estimated savings of between $270,500 and $541,000 based
upon prevailing commission rates). With respect to the Managing General
Partner's belief that the Appraisals continue to reflect the fair market value
of the Properties, even though the Appraisals were rendered in April and May of
2000, it is noted that the Managing General Partner (i) does not believe that
any significant events have occurred since that time which would cause the
conclusions reached in the Appraisals, including the Appraised Values, to be
different had the Appraisals been rendered as of a more recent date and (ii) is
not aware of any material developments, trends or other uncertainties that
relate to the conclusions expressed in the Appraisals, or that are reasonably
likely to materially affect such conclusions.
While the General Partners do not believe, at this time, that the sale
of the Properties to a third-party purchaser would be more beneficial to the
Partnership and the Limited Partners than the Sales and Plan of Liquidation
proposed herein, the General Partners do recognize that a third-party purchaser
could propose a superior or competing offer to that proposed by N'Tandem during
the course of this Consent
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Solicitation and will not allow this Consent Solicitation to preclude the
Partnership from entertaining such a transaction should one emerge prior to the
end of the solicitation period for this Consent Solicitation.
Proposed Consolidation. The General Partners also considered and
analyzed the Proposed Consolidation in which the Partnership, together with
three of the other Windsor Limited Partnerships, would have been merged with and
into N'Tandem. In the Proposed Consolidation, the Limited Partners would have
had the right to exchange their Units for common shares of beneficial interest
or other securities of N'Tandem.
As part of its analysis of the Sales and the Plan of Liquidation, the
Managing General Partner compared the estimated price per Unit of approximately
$23.77 expected to be paid by N'Tandem in the Sales to the estimated range of
values per Unit that were expected to be received upon completion of the
Proposed Consolidation assuming that the Units were converted into N'Tandem's
common shares of beneficial interest. The Managing General Partner's
consolidation analysis had indicated that the estimated range of values per Unit
following the Proposed Consolidation was $13.30 to $17.42.
In preparing its consolidation analysis, the Managing General Partner
applied the forecasted funds from operations per share of N'Tandem for the year
2000, which assumed completion of the Proposed Consolidation, to a range of
forecasted funds from operations per share multiples for the Comparative
Companies for the year 2000. The Comparative Companies selected by the Managing
General Partner were: Chateau, Manufactured Home Communities, Inc., Sun
Communities, Inc., United Mobile Homes, Inc. and Asset Investors Corporation. By
applying the forecasted funds from operations per share of N'Tandem for the year
2000 to a range of forecasted funds from operations per share multiples for the
Comparative Companies, the Managing General Partner was able to estimate ranges
of values for N'Tandem's common shares following the completion of the Proposed
Consolidation. The Managing General Partner determined the range of forecasted
funds from operations per share multiples for the Comparative Companies by
applying a discount, which ranged from 0% to 10%, to the multiples of the
Comparative Companies in order to account for the difference in N'Tandem's size,
percentage of leverage and operational history as compared to the Comparative
Companies. The Managing General Partner then multiplied these estimated ranges
by the exchange ratio per Unit for each Windsor Limited Partnership
participating in the Proposed Consolidation to determine the estimated value of
the Units assuming they were converted into N'Tandem's common shares.
In analyzing of the Proposed Consolidation, the Managing General
Partner also considered that (i) the anticipated time period for the completion
of the Proposed Consolidation was likely to be quite lengthy and (ii) the
estimate of the value of the Units assuming their conversion into N'Tandem's
common shares in the Proposed Consolidation was not based on any established
trading price for the common shares, but was instead based on an analysis of the
Comparative Companies that sought to anticipate the market price of N'Tandem's
common shares following the Proposed Consolidation by reference to the current
trading prices of the securities of the Comparative Companies.
In assessing the Proposed Consolidation described above, the Managing
General Partner recognized that the valuation estimates used in its analysis are
subject to significant uncertainties, variables and assumptions, as well as
varying market conditions, and no assurance can be given that the estimated
values indicated could ever be realized. The analysis relating to the Proposed
Consolidation was based on information available as of October 15, 1999. The
General Partners do not anticipate updating the analyses or other information
relating to the foregoing alternatives.
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N'Tandem's and Chateau's Belief as to the Fairness of the Proposed Transactions;
N'Tandem's and Chateau's Reasons for Engaging in the Proposed Transactions
N'Tandem and Chateau believe that the Sales are fair to the affiliated
and unaffiliated Limited Partners from both a financial point of view and a
procedural point of view. In reaching such determination, N'Tandem and Chateau
considered the same factors and positive and negative aspects of the Sales as
were considered by the General Partners, as described above under "-- Fairness
of the Proposed Transactions; Recommendation of the General Partners" and have
specifically adopted the analyses and conclusions of the General Partners
described therein.
In October 1998, N'Tandem amended and restated N'Tandem's Declaration
of Trust and By-laws to convert N'Tandem from a finite-life entity to an
infinite-life entity in order to enable it to begin implementing a
growth-oriented business plan intended to cause N'Tandem to attain greater size
and asset diversity. The acquisition by N'Tandem of the Properties is being
engaged in by N'Tandem as part of such growth-oriented business plan.
Appraisals
Overview of Appraisals. The Appraiser, Whitcomb Real Estate located in
Tampa, Florida, was retained by the Managing General Partner to render the
Appraisals with respect to the Partnership's Properties. The Appraiser is
certified as a Master Appraiser by the Appraisal Institute and was selected
based upon its expertise as well as its familiarity with valuing manufactured
home communities. The Appraisals set forth the Appraised Values of the two
wholly-owned Properties and the five manufactured home communities in which the
Partnership holds Ownership Interests as of various dates in April and May of
2000.
The purpose of the Appraisals was, and the Appraiser was instructed by
the Managing General Partner, to determine the fair market value of each
Property. In connection with the Appraisals, no fair market values or value
ranges were suggested by the Managing General Partner. Each of the Properties
was appraised in accordance with the Uniform Standards of Professional Appraisal
Practice. Only one Appraisal was sought with respect to each Property. If more
than one appraisal had been sought with respect to each Property, the values
determined for the Properties might have been higher or lower than the Appraised
Values determined by the Appraiser.
In conducting the Appraisals, the Appraiser utilized two approaches,
the income capitalization approach and the sales comparison approach. In the
income capitalization approach, an appraiser calculates an estimate of net
operating income for the subject property ("NOI"). The appraiser then determines
an appropriate capitalization rate for the subject property based upon
capitalization rates for comparable properties sold in the same geographic area
as the subject property. The appraised value of the subject property is then
determined by the appraiser by dividing the NOI by the appropriate
capitalization rate. In utilizing the sales comparison approach, an appraiser
determines the market value of the subject property by comparing such property
against other properties deemed comparable to the subject property and sold
within a specified time period and then adjusting the market value of the
comparable properties to account for material differences between the subject
property and the comparable properties.
The Appraisals were rendered in April and May of 2000 and, therefore,
may no longer reflect the fair market values of the Properties. Accordingly, the
value of the Properties may have increased since that time. However, the
Managing General Partner (i) does not believe that any significant events have
occurred since that time which would cause the conclusions reached by the
Appraiser in the Appraisals and the Appraised Values to be different had the
Appraisals been rendered as of a more recent date, (ii) is
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not aware of any material developments, trends or other uncertainties that
relate to the conclusions expressed in the Appraisals or that are reasonably
likely to materially affect such conclusions and (iii) does not intend to update
the Appraisals or order new appraisals for the Properties in connection with the
Sales.
The Appraisals have been based in part upon information supplied to the
Appraiser by the Managing General Partner, including, but not limited to: rent
rolls; building reports; lease information; financial schedules of current lease
rates, income, expenses, cash flow and related financial information; and
property descriptive information. The Appraiser relied upon such information and
assumed that the information provided by the Managing General Partner was
accurate and complete and generally did not attempt to independently verify such
information. The Appraiser also interviewed and relied upon the Managing General
Partner to obtain information relating to the condition of each Property,
including any deferred maintenance, capital budgets, environmental conditions,
status of ongoing or newly planned expansions and other factors affecting the
physical condition of the Property improvements. The Appraiser also (i)
interviewed the Managing General Partner's management personnel regarding
competitive conditions in property markets, trends affecting the Properties,
certain lease and financing factors and historical and anticipated lease
revenues and expenses and (ii) reviewed historical operating statements for the
Properties.
Copies of the Appraisals are filed as exhibits to the Schedule 13E-3
and are available for inspection and copying at the Partnership's principal
executive offices during regular business hours by any interested Limited
Partner or any representative of a Limited Partner who has been designated by a
Limited Partner in writing. Copies may also be obtained through the written
request of any Limited Partner made to the Managing General Partner at 6160
South Syracuse Way, Greenwood Village, Colorado 80111.
The Appraiser and its Methodology.
Information with respect to Whitcomb Real Estate. The Appraiser was
founded in 1986, and currently has four full-time appraisers on its staff. Each
of the Properties was appraised by John Whitcomb, the President of the
Appraiser. Mr. Whitcomb is certified as a Master Appraiser by the Appraisal
Institute, is a Certified Commercial Investment Member, has been in the real
estate appraisal business since 1985, and has conducted in excess of a thousand
property appraisals since that time. Mr. Whitcomb has extensive experience
appraising manufactured home communities, having conducted in excess of 250 such
appraisals since 1993. The Managing General Partner previously engaged the
Appraiser to render additional or updated appraisals, in addition to the
Appraisals, on several properties in which the Windsor Limited Partnerships
currently hold, or have in the past held, interests, including the Town &
Country Estates, Rancho Margate and Winter Haven Properties. The Appraiser was
paid usual and customary market based fees in connection with its appraisals.
Neither of the General Partners nor any of their affiliates have any material
relationship with the Appraiser. The Appraiser received $30,600 in connection
with rendering the Appraisals. Total fees and compensation paid to the Appraiser
by the Partnership, the General Partners and their respective affiliates since
January 1, 1997 has been $135,800. No additional compensation is mutually
understood to be contemplated to be paid to the Appraiser in connection with the
Appraisals or otherwise.
Assumption and Limitations of the Whitcomb Appraisals. Each of the
Appraisals were based upon assumptions and limiting conditions, including the
following: (i) that the factual information contained in each Appraisal upon
which the analysis and conclusions are based was true and correct; (ii) that the
information, estimates and opinions furnished to the Appraiser in connection
with the Appraisals were true and correct; (iii) each Property was appraised as
though it were free and clear of mortgages, liens, leases, servitudes and
encumbrances, except as identified in the Appraisals; (iv) that
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each Appraisal applies to the real estate only and does not include personal
property or other non-realty items located at or on the Property; (v) that there
is good and marketable title to the Property; (vi) that the Property is free of
encroachments and zoning or other violations or problems; (vii) that management
of the Property is competent; (viii) that there are no material hidden or
unapparent problems of the soil, subsoil or structures of the Property; (ix)
that all of the improvements, equipment, and building services are structurally
sound and suffer no latent defects or inadequacies; (x) that the subject
improvements are free of insect infestation or rot or damage due to such
infestation or rot; (xi) that there are no environmental problems with respect
to the Property or its improvements; (xii) that no adverse events, conditions or
circumstances materially affecting the Property have taken place subsequent to
the date of the field inspection; and (xiii) that there have been no material
changes in economic conditions affecting the Property following the date of the
Appraisal.
The Appraiser also noted that (i) the estimates of value stated in the
Appraisals apply only to the effective dates of value stated in the Appraisals,
(ii) value is affected by many related and unrelated economic conditions within
a local, regional, national and/or worldwide context, which might necessarily
affect the prospective value of the subject property, (iii) the Appraiser
assumes no liability for any unforeseen changes in the economy or at the subject
property, (iv) the underlying assumptions and conditions provide a reasonable
basis for the value estimate stated in the Appraisals, (v) some assumptions or
projections inevitably will not materialize and unanticipated events and
circumstances may occur during the forecast period, and (vi) the actual results
achieved during the projected holding period and investor requirements relative
to anticipated annual returns and overall yields could vary from the projection
and that such variations could be material and have an impact on the individual
value conclusions stated in the Appraisals.
Summary of Appraisals. A summary description of the Appraisals,
including the Appraised Values of the Properties, is set forth below. The
Appraisals are based on conditions as of their respective dates. Subsequent
developments could have a material effect on the valuations stated therein.
Summary of Lakeside Property Appraisal. In utilizing the income
capitalization approach in connection with appraising the Lakeside Property, the
Appraiser first projected 12 months of income for the Property based upon the
then current rent levels. The potential gross income from the rentals was
calculated at $276,864 per year. Vacancy and credit loss was estimated at 5.0%
of potential gross income, or $13,843. Additional income, based on historical
numbers, was calculated at $35.00 per site, leaving an effective gross income
estimate of $275,381 for the Property. Total annual operating expenses for the
Property were estimated to be $107,754, leaving NOI of $167,627. In determining
a capitalization rate for the Lakeside Property, the Appraiser looked at
capitalization rates for recently sold comparable communities, which ranged from
9.15% to 12.15%. Based on the Property's location and physical characteristics
and the current interest rate environment, the Appraiser determined that a
capitalization rate of 10.0% for the Property was appropriate. Utilizing the
10.0% capitalization rate, the Appraiser was able to calculate a market value of
$1,680,000 for the Lakeside Property. The Appraiser also used the debt coverage
ratio method, which yielded a capitalization rate equal to approximately 9.8%,
to verify the accuracy of the utilized capitalization rate.
In utilizing the sales comparison approach in connection with
appraising the Lakeside Property, the Appraiser compared the Property to five
other manufactured home communities sold in the same general geographic area as
the Property. The sales prices of the five comparable properties ranged from a
low of $1,350,000 to a high of $8,525,000. Total sites ranged from 115 to 401
and occupancy ranged from 94.7% to 99%. The average price per site ranged from
$11,739 to $21,259 and the average site rent ranged from $160.00 to $268.00. All
of the comparable sales were fee simple transactions with atypical acquisition
financing reflected in the cash equivalent price. There were no atypical sale
conditions known to have occurred.
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The Appraiser also employed the effective gross income multiplier
("EGIM") in the sales comparison analysis. In applying the EGIM analysis, the
Appraiser determined that (i) the EGIM for the comparable sale properties ranged
from 4.58 to 7.74, (ii) the EGIM was essentially a function of the average site
rent, (iii) average site rent reflects, in most cases, the market perception of
a property's position in the marketplace, (iv) typically, increases in site rent
contribute to increases in NOI, (v) average site rent is a function of the
physical aspects of the property, such as age and condition, location and
amenities, and (vi) the EGIM also reflects the market's perception of the
potential for future rent increases.
The Appraiser also noted that (i) the Property is an all age community
in a good location, (ii) the Property has an expense ratio near the high end of
the range of the comparable sale properties and (iii) the Property is similar in
quality to most of the comparable sale properties. Based on these
considerations, the Appraiser concluded that an EGIM of 5.5, which was at the
low end of the indicated range for the comparable properties, was appropriate
for the Property. Based upon the Property's effective gross income of $275,381
and an EGIM of 5.5, the Appraiser calculated the market value of the Property to
be $1,510,000, representing $14,660 per site. The Appraiser then used price per
space analysis to verify the EGIM calculation. The price per space analysis
yielded a market value of $1,490,000. The Appraiser noted that values were
mutually supportive and concluded a market value of $1,510,000 via the sales
comparison approach.
In reconciling the income capitalization approach and the sales
comparison approach, the Appraiser (i) reviewed each approach to ascertain the
reliability of the data, (ii) weighted the approach that best represented the
actions of typical users and investors in the marketplace, (iii) determined that
in the current instance, the availability of sufficient, reliable and
supportable historical data for the Property made the income capitalization
approach a reliable gauge of the market value of the Property, (iv) determined
that the sales comparison approach was reliable, (v) determined that the two
approaches reflected a narrow range of value, (vi) determined that the opinion
of value should be based on the income capitalization approach because buyers
are most concerned with cash flow to service debt, and (vii) concluded that the
market value of the Property, based on a reasonable exposure period of six
months, as of April 18, 2000 was $1,660,000.
Summary of Plantation Estates Property Appraisal. In utilizing the
income capitalization approach in connection with appraising the Plantation
Property, the Appraiser first projected 12 months of income for the Property
based upon the then current rent levels. The potential gross income from the
rentals was calculated at $329,700 per year. Vacancy and credit loss was
estimated at 10.0% of potential gross income, or $32,970. Additional income,
based on historical numbers, was calculated at $36.00 per site, leaving an
effective gross income estimate of $332,766 for the Property. Total annual
operating expenses for the Property were estimated to be $142,972, leaving NOI
of $189,794. In determining a capitalization rate for the Plantation Property,
the Appraiser looked at capitalization rates for recently sold comparable
communities, which ranged from 9.15% to 12.15%. Based on the comparison of the
sale data to the Property and considering the current investor and interest rate
environment, the Appraiser determined that a capitalization rate of 10.0% for
the Property was appropriate. Utilizing the 10.0% capitalization rate, the
Appraiser was able to calculate a market value for Plantation Property of
$1,900,000. The Appraiser also used the debt coverage ratio method, which
yielded a capitalization rate equal to approximately 9.8%, to verify the
accuracy of the utilized capitalization rate.
In utilizing the sales comparison approach in connection with
appraising Plantation Property, the Appraiser compared the Property to five
other manufactured home communities recently sold in the same general geographic
area as the Property. The sales prices of the four comparable properties ranged
from a low of $1,350,000 to a high of $8,525,000. Total site ranged from 115 to
401 and occupancy ranged from 94.7% to 99%. The average price per site ranged
from $11,739 to $21,259 and average site rent ranged
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from $160.00 to $268.00. All of the sales were fee simple transactions with
typical acquisition financing. There were no atypical sale conditions known to
have occurred.
The Appraiser also employed an EGIM in the sales comparison analysis.
In applying the EGIM analysis, the Appraiser determined that (i) the EGIM for
the comparable sale properties ranged from 4.58 to 7.74, (ii) that EGIM was
essentially a function of the average site rent, (iii) average site rent
reflects, in most cases, the market perception of a property's position in the
marketplace, (iv) typically, increases in site rent contribute to increases in
NOI, (v) average site rent is a function of the physical aspects of the
property, such as age and condition, location and amenities, and (vi) the EGIM
also reflects the market's perception of the potential for future rent
increases.
The Appraiser also noted that (i) the Property is an all age community
in a good location, (ii) the Property has an expense ratio near the high end of
the comparable sale properties and (iii) the subject is similar in quality to
most of the comparable properties. Based on these considerations, the Appraiser
concluded that an EGIM of 5.5, which was at the low end of the indicated range
for the comparable properties, was appropriate for the Property. Based upon the
Property's effective gross income of $332,766 and an EGIM of 5.5 the Appraiser
calculated the market value of the Property to be $1,830,000, representing
$14,524 per site. The Appraiser then used price per space analysis to verify the
EGIM calculation. The price per space analysis yielded a market value of
$1,760,000. The Appraiser noted that values were mutually supportive and
concluded a market value of $1,800,000 via the sales comparison approach.
In reconciling the income capitalization approach and the sales
comparison approach, the Appraiser (i) reviewed each approach to ascertain the
reliability of the data, (ii) weighted the approach that best represented the
actions of typical users and investors in the marketplace, (iii) determined that
in the current instance, the availability of sufficient, reliable and
supportable historical data for the Property made the income capitalization
approach a reliable gauge of the market value of the Property, (iv) determined
that the sales comparison approach was reliable, (v) determined that the two
approaches reflected a narrow range of value, (vi) determined that the opinion
of value should be based on the income capitalization approach because buyers
are most concerned with cash flow to service debt, and (vii) concluded that the
market value of the Property, based on a reasonable exposure period of six
months, as of April 18, 2000 was $1,900,000.
Summary of Town & Country Estates Property Appraisal. In utilizing the
income capitalization approach in connection with appraising the Town & Country
Estates Property, the Appraiser first projected 12 months of income for the
Property based upon the then current rent levels. The potential gross income
from the rentals was calculated at $990,720 per year. Vacancy and credit loss
was estimated at 7.0% of potential gross income, or $69,350. Additional income,
based on historical numbers, was calculated at $30.00 per site, leaving an
effective gross income estimate of $930,970 for the Property. Total annual
operating expenses for the Property were estimated to be $377,598, leaving NOI
of $553,371. In determining a capitalization rate for the Town & Country Estates
Property, the Appraiser looked at capitalization rates for recently sold
comparable communities, which ranged from 8.22% to 10.30%. Based on the market
data, the Appraiser determined that a capitalization rate of 9.0% for the
Property was appropriate. Utilizing the 9.0% capitalization rate, the Appraiser
was able to calculate a market value of $6,150,000 for the Town & Country
Estates Property. The Appraiser also used the debt coverage ratio method, which
yielded a capitalization rate equal to approximately 9.4%, to verify the
accuracy of the utilized capitalization rate.
In utilizing the sales comparison approach in connection with
appraising the Town & Country Estates Property, the Appraiser compared the
Property to five other manufactured home communities sold in the same general
geographic area as the Property within the nine-month period prior to the date
of the
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Appraisal. The sales prices of the five comparable properties ranged from a low
of $1,675,000 to a high of $9,500,000. Total sites ranged from 75 to 451 and
occupancy ranged from 93% to 100%. The average price per site ranged from
$16,262 to $22,467 and the average site rent ranged from $140.00 to $250.00. All
of the comparable sales were fee simple transactions with typical acquisition
financing. There were no atypical sale conditions known to have occurred and all
of the sales represented transactions that took place in the nine-month period
prior to the date of the Appraisal and traded under similar market conditions.
The Appraiser also employed an EGIM in the sales comparison analysis.
In applying the EGIM analysis, the Appraiser determined that (i) the EGIM for
the comparable sale properties ranged from 6.32 to 7.22, (ii) the EGIM was
essentially a function of the average site rent, (iii) average site rent
reflects, in most cases, the market perception of a property's position in the
marketplace, (iv) typically, increases in site rent contribute to increases in
NOI, (v) average site rent is a function of the physical aspects of the
property, such as age and condition, location and amenities, and (vi) the EGIM
also reflects the market's perception of the potential for future rent
increases.
The Appraiser also noted that (i) the Property is an all age community
with a 5.0% physical vacancy, (ii) the Property was observed to be in good
condition and with a good location near Interstate 10 and Valencia Road in
Southeast Tucson, Arizona, and (iii) all the comparables had a lower expense
ratio than the Property, ranging from 29.5% to 35.0%. By comparison, the
Property has a forecast expense ratio of 40.56%. Based on these considerations,
the Appraiser concluded that an EGIM of 6.3, which was at the lower end of the
indicated range for the comparable properties, was appropriate for the Property.
Based upon the Property's effective gross income of $930,970 and an EGIM of 6.3,
the Appraiser calculated the market value of the Property to be $6,050,000,
representing $18,906 per site.
In reconciling the income capitalization approach and the sales
comparison approach, the Appraiser (i) reviewed each approach to ascertain the
reliability of the data, (ii) weighted the approach that best represented the
actions of typical users and investors in the marketplace, (iii) determined that
in the current instance, the availability of sufficient, reliable and
supportable historical data for the Property made the income capitalization
approach a reliable gauge of the market value of the Property, (iv) determined
that the sales comparison approach was reliable, (v) determined that the two
approaches reflected a narrow range of value, (vi) determined that the opinion
of value should be based on the income capitalization approach because buyers
are most concerned with cash flow to service debt, and (vii) concluded that the
market value of the Property, based on a reasonable exposure period of six
months, as of May 1, 2000, was $6,100,000.
Summary of Rancho Margate Property Appraisal. In utilizing the income
capitalization approach in connection with appraising the Rancho Margate
Property, the Appraiser first projected 12 months of income for the Property
based upon the then current rent levels. The potential gross income from the
rentals was calculated at $1,185,300 per year. Vacancy and credit loss was
estimated at 15.0% of potential gross income, or $177,795. Additional income,
based on historical numbers, was calculated at $5.00 per site, leaving an
effective gross income estimate of $1,060,180 for the Property. Total annual
operating expenses for the Property were estimated to be $499,888, leaving NOI
of $560,292. In determining a capitalization rate for the Rancho Margate
Property, the Appraiser looked at capitalization rates for recently sold
comparable communities, which ranged from 7.44% to 9.83%. The Appraiser noted
that the Property has an economic vacancy of 13.5% and was observed to be in
good overall condition. The Appraiser also noted that the market has been
competitive in recent years, indicating increased risk and increasing the
going-in capitalization rate. Based on these considerations, the Appraiser
determined that a capitalization rate of 8.75% was appropriate. Utilizing the
8.75% capitalization rate, the Appraiser was able to calculate a market value
for the Rancho Margate Property of
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$6,400,000. The Appraiser also used the debt coverage ratio method, which
yielded a capitalization rate equal to approximately 9.0%, to verify the
accuracy of the utilized capitalization rate.
In utilizing the sales comparison approach in connection with
appraising the Rancho Margate Property, the Appraiser compared the Property to
five other manufactured home communities sold in the same general geographic
area as the Property within the two-year period prior to the date of the
Appraisal. The sales prices of the five comparable properties ranged from a low
of $4,000,000 to a high of $16,600,000. Total sites ranged from 206 to 585 and
occupancy ranged from 94.5% to 100%. The average price per site ranged from
$19,417 to $36,797 and average site rent ranged from $217.00 to $391.41. All of
the sales were fee simple transactions with atypical acquisition financing
reflected in the cash equivalent price. There were no typical sale conditions
known to have occurred and all of the sales represented transactions that took
place in the two-year period prior to the date of the Appraisal and traded under
similar market conditions.
The Appraiser also employed an EGIM in the sales comparison analysis.
In applying the EGIM, the Appraiser determined that the EGIM for the comparable
sale properties ranged from 6.50 to 9.40. The Appraiser noted that the Property
has a higher vacancy level and expense ratio than all of the comparable
properties. Based on these considerations, the Appraiser concluded that an EGIM
of 6.0, which was below the indicated range for the comparable properties, was
appropriate for the Property. Based upon the Property's effective gross income
of $1,060,180 and an EGIM of 6.0, the Appraiser calculated the fair market value
of the Property to be $6,400,000, representing $26,122 per site.
In reconciling the income capitalization approach and the sales
comparison approach, the Appraiser (i) reviewed each approach to ascertain the
reliability of the data, (ii) weighted the approach that best represented the
actions of typical users and investors in the marketplace, (iii) determined that
in the current instance, the availability of sufficient, reliable and
supportable historical data for the Property made the income capitalization
approach a reliable gauge of the market value of the Property, (iv) determined
that the sales comparison approach was reliable, (v) emphasized the sales
comparison approach given the relative homogeneity of the locations and
availability of market data, (vi) determined that the two approaches reflected
the same value and (vii) concluded that the market value of the Property, based
on a reasonable exposure period of six months, as of May 1, 2000, was
$6,400,000.
Summary of Winter Haven Property Appraisal. In utilizing the income
capitalization approach in connection with appraising the Winter Haven Property,
the Appraiser first projected 12 months of income for the Property based upon
the then current rent levels. The potential gross income from the rentals was
calculated at $691,152 per year. Vacancy and credit loss was estimated at 5.0%
of potential gross income, or $34,558. Additional income, based on historical
numbers, was calculated at $5.00 per site, leaving an effective gross income
estimate of $657,784 for the Property. Total annual operating expenses for the
Property were estimated to be $276,954, leaving NOI of $380,831. In determining
a capitalization rate for the Winter Haven Property, the Appraiser looked at
capitalization rates for recently sold comparable communities, which ranged from
7.98% to 9.48%. The Appraiser noted that the Property has a physical vacancy of
2.1% and was observed to be in good overall condition. The Appraiser also noted
that the market has been competitive in recent years, indicating increased risk
and increasing the going-in capitalization rate. Based on these considerations,
the Appraiser determined that a capitalization rate of 9.0% for the Property was
appropriate. Utilizing the 9.0% capitalization rate, the Appraiser was able to
calculate a market value of $4,200,000 for the Winter Haven Property. The
Appraiser also used the debt coverage ratio method, which yielded a
capitalization rate equal to approximately 9.0%, to verify the accuracy of the
utilized capitalization rate.
In utilizing the sales comparison approach in connection with
appraising the Winter Haven Estates Property, the Appraiser compared the
Property to five other manufactured home communities sold
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in the same general geographic area as the Property within the two-year period
prior to the date of the Appraisal. The sales prices of the five comparable
properties ranged from a low of $2,200,000 to a high of $8,600,000. Total sites
ranged from 110 to 337 and occupancy ranged from 96.9% to 100%. The average
price per site ranged from $18,846 to $25,519 and average site rent ranged from
$217.00 to $290.00. All of the sales were fee simple transactions with atypical
acquisition financing reflected in the cash equivalent price. There were no
atypical sale conditions known to have occurred and all of the sales represented
transactions that took place in the two-year period prior to the date of the
Appraisal and traded under similar market conditions.
The Appraiser also employed an EGIM in the sales comparison analysis.
In applying the EGIM analysis, the Appraiser determined that (i) the EGIM for
the comparable sale properties ranged from 5.56 to 7.89, (ii) the EGIM was
essentially a function of the average site rent, (iii) average site rent is a
function of the physical aspects of the property, such as age and condition,
location and amenities, and (iv) the EGIM also reflects the market's perception
of the potential for future rent increases.
The Appraiser also noted that (i) the Property is an older, fully
developed, age-restricted community located just South of the Winter Haven City
Limits, (ii) all of the comparable sale properties are fully developed,
stabilized properties and any additional potential income is available only from
rent increases and (iii) the Property's rents are well supported in the
marketplace. Based on these considerations, the Appraiser concluded that an EGIM
of 6.40, which was in the middle portion of the indicated range for the
comparable properties, was appropriate for the Property. Based upon the
Property's effective gross income of $657,784 and an EGIM of 6.40, the Appraiser
calculated the fair market value to be $4,200,000, representing $17,647 per
site.
In reconciling the income capitalization approach and the sales
comparison approach, the Appraiser (i) reviewed each approach to ascertain the
reliability of the data, (ii) weighted the approach that best represented the
actions of typical users and investors in the marketplace, (iii) determined that
in the current instance, the availability of sufficient, reliable and
supportable historical data for the Property made the income capitalization
approach a reliable gauge of the market value of the Property, (iv) determined
that the sales comparison approach was reliable, (v) emphasized the sales
comparison approach given the relative homogeneity of the locations and the
availability of market data, (vi) determined that the two approaches reflected
the same value and (vii) concluded that the market value of the Property, based
on a reasonable exposure period of six months, as of May 1, 2000, was
$4,200,000.
Summary of Apache East and Denali Park Properties Appraisal. The Apache
East and Denali Park Estates Properties are contiguous Properties with similar
characteristics. Accordingly, the Appraisals of these Properties were combined
in a single Appraisal report. In utilizing the income capitalization approach in
connection with appraising the Properties, the Appraiser first projected 12
months of income for the Properties based upon the then current rent levels. The
potential gross income from the rentals was calculated at $808,200 per year.
Vacancy and credit loss was estimated at 5.0% of potential gross income, or
$40,410. Additional income, based on historical numbers, was calculated at
$25.00 per site, leaving an effective gross income estimate of $831,915 for the
Properties. Total annual operating expenses for the Properties were estimated to
be $337,396, leaving NOI of $494,519. In determining a capitalization rate for
the Properties, the Appraiser looked at capitalization rates for recently sold
comparable communities, which ranged from 8.22% to 10.30%. The Appraiser noted
that the Properties have a market vacancy and expense ratio. Based on these
considerations, the Appraiser determined that a capitalization rate of 9.0% for
the Properties was appropriate. Utilizing the 9.0% capitalization rate, the
Appraiser was able to calculate an aggregate market value of $5,494,658 for the
Properties. The market value with excess vacant land valued at $390,000 was
calculated to be $5,900,000. The Appraiser also used the debt coverage ratio
method, which yielded a capitalization rate equal to approximately 9.0%, to
verify the accuracy of the utilized capitalization rate.
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In utilizing the sales comparison approach in connection with
appraising the Properties, the Appraiser compared the Properties to five other
manufactured home communities sold in the same general geographic area as the
Properties within the nine-month period prior to the date of Appraisal. The
sales prices of the five comparable properties ranged from a low of $1,685,000
to a high of $9,500,000. Total sites ranged from 75 to 451 and occupancy ranged
from 93.0% to 98.04%. The average price per site ranged from $16,262 to $30,270
and average site rent ranged from $200.00 to $278.00. All of the sales were fee
simple transactions with typical acquisition financing. There were no atypical
sale conditions known to have occurred and all of the sales represented
transactions that took place in the nine-month period prior to the date of the
Appraisal and traded under similar market conditions.
The Appraiser also employed an EGIM in the sales comparison analysis.
In applying the EGIM analysis, the Appraiser determined that (i) the EGIM for
the comparable sale properties ranged from 6.84 to 8.27, (ii) the EGIM was
essentially a function of the average site rent, and (iii) average site rent
reflects, in most cases, the market perception of a property's position in the
marketplace, (iv) typically, site rent increases contribute to increases in NOI,
(v) average site rent is a function of the physical aspects of the property,
such as age and condition, location and amenities, and (vi) the EGIM also
reflects the market's perception of the potential for future rent increases.
The Appraiser also determined that (i) each of the Properties is an all
age community with a 3.5% physical vacancy, (ii) the Properties were observed to
be in excellent condition and with a good location near Superstition Freeway in
Apache Junction, Arizona, and (iii) the comparable properties all had a much
higher occupancy rate than the Properties and had lower expense ratios, ranging
from 25.55% to 35.62%. By comparison, the Properties had a forecast expense
ratio of 40.56%. Based on these considerations, the Appraiser concluded that an
EGIM of 6.5, which was slightly below the indicated range for the comparable
properties, was appropriate for the Properties. Based upon the Properties'
effective gross income of $831,915 and an EGIM of 6.5, the Appraiser concluded
the aggregate market value of the Properties to be $5,406,798, representing
$18,971 per site. The aggregate market value of the Properties, with excess
vacant land valued at $390,000, was calculated to be $5,800,000.
In reconciling the income capitalization approach and the sales
comparison approach, the Appraiser (i) reviewed each approach to ascertain the
reliability of the data, (ii) weighted the approach that best represented the
actions of typical users and investors in the marketplace, (iii) determined that
in the current instance, the availability of sufficient, reliable and
supportable historical data for the Properties made the income capitalization
approach a reliable gauge of the market value of the Properties, (iv) determined
that the sales comparison approach was reliable, (v) determined that the two
approaches reflected a narrow range of value, (vi) determined that the opinion
of value should be based on the income capitalization approach because buyers
are most concerned with cash flow to service debt, and (vii) concluded that the
aggregate market value of the Properties with excess vacant land, based on a
reasonable exposure period of six months, as of May 1, 2000, was $5,900,000.
Discount for Ownership Interests in Properties
The Appraiser advised the Managing General Partner, and subsequently
confirmed in writing, that in its estimation the application of a discount of
approximately 25% would be appropriate in the context of valuing a minority
ownership interest in a manufactured home community. In determining the purchase
price to be paid for each of the Ownership Interests, N'Tandem applied a 6.7%
discount to the Appraised Value of each Ownership Interest for the fact that the
Partnership only owns a minority interest in the underlying property.
Accordingly, based upon the information provided by the Appraiser, the General
Partners believe that the discount being applied by N'Tandem in connection with
the Sales is substantially less than the discount which would have been applied
in the market had the Ownership Interests been sold to a third-party purchaser.
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The purpose of the Appraiser's report was, and the Appraiser was
instructed by the Managing General Partner, to determine the applicable
valuation procedures for a partial ownership interest in a manufactured home
community. In analyzing this issue, the Appraiser (i) surveyed real estate
brokers and owners regarding their experience with sales of partial ownership
interests in properties, (ii) surveyed real estate lenders regarding their
experience with financings of, and underwriting criteria relating to, partial
ownership interests in properties, and (iii) reviewed articles and treatises
relating to the sale and valuation of partial ownership interests and
partnership interests in general. Based upon the Appraiser's review of available
information, the Appraiser determined that discounts, ranging from 21% to 40%
depending on the type of partnership, are commonly applied in the sale of
partnership interests and that, while the discount applied in the sale of a
partial ownership interest in real estate would not be as high as the discount
applied in the sale of a partnership interest, an average discount of 25% to the
sale price would be appropriate in the valuation of a minority ownership
interest in a manufactured home community. In connection with the report, no
percentage discount or ranges of percentage discounts were suggested by the
Managing General Partner. A copy of the Appraiser's written report is filed as
an exhibit to the Schedule 13E-3 and is available for inspection and copying at
the Partnership's principal executive offices during regular business hours by
any interested Limited Partner or any representative of a Limited Partner who
has been designated by a Limited Partner in writing. A copy may also be obtained
through the written request of any Limited Partner made to the Managing General
Partner at 6160 South Syracuse Way, Greenwood Village, Colorado 80111.
SUMMARY OF SELECTED TERMS OF THE PARTNERSHIP AGREEMENT
The rights and obligations of the partners in the Partnership are
governed by the Partnership Agreement which is set out in its entirety as an
exhibit to the Schedule 13E-3. The following statements and other statements in
this solicitation concerning the Partnership Agreement and related matters are
merely a selected summary of the terms of the Partnership Agreement and do not
purport to be complete and in no way modify or amend the Partnership Agreement.
Net Proceeds from the Sales
Pursuant to the Partnership Agreement upon the consummation of the
Sales and a liquidation of the Partnership, net proceeds from the Sales, after
providing for the debts and liabilities of the Partnership, will be distributed
in the following order of priority:
(i) To the Limited Partners, an amount equal to the sum of:
(i) Adjusted Invested Capital (as defined below) attributable to each
Limited Partner and (ii) the excess, if any, of an amount equal to a 9%
per annum cumulative (but not compounded) return on Adjusted Invested
Capital, calculated from each Limited Partner's respective date of
admission to the Partnership, over total prior distributions of cash
from operations with respect to the Units; and
(ii) To the extent of any balance remaining, 85% of the
Limited Partners to be shared on a pro rata basis in accordance with
their respective ownership of Units and 15% to the General Partners.
The above notwithstanding, the General Partners will receive at least
1% of the distributions of net proceeds from the Sales in accordance with the
Partnership Agreement.
Allocation of Profit or Loss on the Sales
Profit or loss in connection with the Sales and a liquidation of the
Partnership will be allocated to and among the partners, after providing for the
debts and liabilities of the Partnership, as follows:
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(i) The profit on the Sales first shall be allocated to each
partner with a negative capital account pro ratably in an amount equal
to (or in proportion to if less than) the amount of the negative
capital account of each partner;
(ii) Profit on the Sales shall next be allocated to the
Limited Partners until each Limited Partner's capital account shall
equal a positive amount equal to the sum of: (i) the Adjusted Invested
Capital attributable to each Limited Partner and (ii) the excess, if
any, of an amount equal to a 9% per annum cumulative (but not
compounded) return on Adjusted Invested Capital, calculated from each
Limited Partner's respective date of admission to the Partnership, over
total prior distributions of cash from operations with respect to the
Units;
(iii) To the extent of any balance remaining, 85% of the
profit on the Sales will be allocated to the Limited Partners on a pro
rata basis in accordance with their respective ownership of Units and
15% will be allocated to the General Partners; and
(iv) To the extent there is a loss on the Sales, such loss
shall be allocated among the partners with positive balances in their
capital accounts pro rata in accordance with their respective positive
balances until the aggregate positive balance of their capital accounts
is reduced to zero and any balance shall be allocated in accordance
with the allocation of net profits and losses for each fiscal year.
Notwithstanding the foregoing, the General Partners shall be allocated
at least 1% of the profit or loss on the Sales, and, to the extent possible, in
characterizing the allocated profit on the Sales, that portion which constitutes
ordinary income by reason of recapture of depreciation, shall be allocated among
the partners such that a partner (or successor) who realized the benefit of the
deduction or credit will bear the tax burden of the corresponding recapture.
"Adjusted Invested Capital" means the original capital contribution
paid for each Unit reduced by the total cash distributed from net proceeds from
refinancing and net proceeds from the sale of properties with respect to each
Unit. Thus, distributions of cash from operations do not reduce Adjusted
Invested Capital.
Voting Rights of Limited Partners
The Limited Partners have the right to vote upon the following matters:
(i) The dissolution and winding up of the Partnership;
(ii) The sale, exchange, lease, mortgage, pledge, or other
transfer of all or a substantial part of the assets of the Partnership
other than in the ordinary course of its business;
(iii) The incurrence of indebtedness by the Partnership other
than in the ordinary course of its business;
(iv) A change in the nature of the business of the
Partnership;
(v) Transactions in which the General Partners have an actual
or potential conflict of interest with the Limited Partners or the
Partnership;
(vi) The removal of a General Partner, and the election of a
General Partner;
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(vii) An election to continue the business of the Partnership
other than under the circumstances described in (ix) or (x) below;
(viii) The admission of a General Partner other than under the
circumstances described in (ix) or (x) below;
(ix) The admission of a General Partner or an election to
continue the business of the Partnership after a General Partner ceases
to be a General Partner other than by removal where there is no
remaining or surviving General Partner; and
(x) The admission of a General Partner or an election to
continue the business of the Partnership after the removal of a General
Partner where there is no remaining or surviving General Partner.
The voting rights described above are effected by the vote or consent
of a majority in interest of Limited Partners without the necessity for
concurrence by the General Partners.
Limitation of Liability and Indemnification of the General Partners
The Partnership Agreement provides for a limitation of liability and
the indemnification of the General Partners as follows:
(i) except in the case of negligence or misconduct, the
General Partners and their affiliates shall not be liable in damages or
otherwise to the Partnership (in a Partnership derivative suit) or to
any Limited Partner for the doing of any act or the failure to do any
act, the effect of which may cause or result in loss or damage to the
Partnership if done in good faith to promote the best interests of the
Partnership;
(ii) the General Partners are entitled to be indemnified by
the Partnership, from the assets of the Partnership but not from the
Limited Partners, against any loss, judgment, liability, expense or
amounts paid in settlement of any claims sustained by them in
connection with the Partnership (including all liabilities under
federal and state securities acts as permitted by law), except in the
case where the General Partners or their affiliates are guilty of
negligence or misconduct, provided such act or omission was done in
good faith to promote the best interests of the Partnership; and
Notwithstanding the foregoing, the General Partners, and any person
acting as a broker-dealer, shall not be indemnified for liabilities arising
under federal securities laws unless (i) there has been a successful
adjudication on the merits of each count involving securities law violations or
(ii) such claims have been dismissed with prejudice on the merits by a court of
competent jurisdiction, and provided that a court either (A) approves any
settlement and finds that indemnification of the settlement and related costs
should be made or (B) approves indemnification and litigation costs if a
successful defense is made and, in this regard, a dismissal with prejudice is
considered a successful defense.
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THE PARTNERSHIP'S PROPERTIES
Nature of Ownership Interests in Properties
Properties Owned by Limited Partnerships in which the Partnership is a
Limited Partner.
Windsor Park 345. Each of the Apache East and Denali Park Estates
Properties is owned by Windsor Park 345 and each of the Ownership Interests of
the Partnership in such properties is in the form of a limited partner interest
in Windsor Park 345. Under the agreement of limited partnership of Windsor Park
345, virtually all management, business and other decisions relating to the
properties owned by Windsor Park 345 are within the control and discretion of
the Managing General Partner and the limited partners in Windsor Park 345 have
no control over the management of, and decisions with respect to, the properties
owned by Windsor Park 345, including, without limitation, any disposition of any
such properties.
Although the limited partners in Windsor Park 345 (including the
Partnership) can legally sell their limited partner interests, the transferee of
any such limited partner interest will be entitled to the full benefits relating
to the limited partner interest only if the Managing General Partner, as general
partner of Windsor Park 345, in its sole discretion, determines to admit such
transferee as a limited partner of Windsor Park 345. If the Managing General
Partner fails to do so, the transferee generally will be entitled only to the
economic benefits relating to the transferred limited partner interest, but
would not be entitled to certain other rights (such as voting rights) conferred
upon such limited partners under the agreement of limited partnership of Windsor
Park 345 and by law.
The Partnership holds a 9% limited partner interest in Windsor Park
345. In addition to being the sole general partner of Windsor Park 345, the
Managing General Partner is also the sole managing general partner of Windsor 7
and is the external investment advisor to N'Tandem, which together own all of
the remaining limited partner interests in Windsor Park 345. N'Tandem and
Windsor 7 have a 65% and 26% limited partner interest, respectively, in Windsor
Park 345.
Windsor Park 456. Each of the Rancho Margate and Winter Haven
Properties is owned by Windsor Park 456 and each of the Ownership Interests of
the Partnership in such properties is in the form of a limited partner interest
in Windsor Park 456. Under the agreement of limited partnership of Windsor Park
456, virtually all management, business and other decisions relating to the
properties owned by Windsor Park 456 have no control over the management of, and
decisions with respect to, the properties owned by Windsor Park 456, including,
without limitation, any disposition of any such properties.
Although the limited partners in Windsor Park 456 (including the
Partnership) can legally sell their limited partner interests, the transferee of
any such limited partner interest will be entitled to the full benefits relating
to the limited partner interest only if the Managing General Partner, as general
partner of Windsor Park 456, in its sole discretion, determines to admit such
transferee as a limited partner of Windsor Park 456. If the Managing General
Partner fails to do so, the transferee generally will be entitled only to the
economic benefits relating to the transferred limited partner interest, but
would not be entitled to certain other rights (such as voting rights) conferred
upon such limited partners under the agreement of limited partnership of Windsor
Park 456 and by law.
The Partnership holds a 26% limited partner interest Windsor Park 456.
In addition to being the sole general partner of Windsor Park 456, the Managing
General Partner is also the external investment advisor to N'Tandem, which owns
the remaining 74% limited partner interest in Windsor Park 456.
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Properties Owned Pursuant to Joint Venture Agreements. The Partnership
owns a 42% undivided interest in the Town & Country Estates Property as a tenant
in common with N'Tandem, which owns the remaining 58% interest in this Property.
Pursuant to the Purchase and Sale Agreement, the Partnership will assign all of
its rights, title and interest in the Town & Country Property to N'Tandem at the
closing of the Sales.
Difficulty of Selling Ownership Interests to Third-Party Buyers. Given
the fact that the control and management of the properties underlying the
Ownership Interests is vested in the Managing General Partner and the
Partnership, as a holder of the Ownership Interests, has no control over the
disposition of the underlying properties, the General Partners believe that (i)
finding third-party purchasers willing to pay full value for the Ownership
Interests based on the Appraised Values of the underlying properties would be
extremely difficult, (ii) efforts to sell such Ownership Interests to
third-party purchasers would be likely to result in the application of a 25%
discount to the purchase prices to be paid for such Ownership Interests, which
is greater than the 6.7% discount being applied to the purchase prices offered
by N'Tandem for the Ownership Interests, and (iii) the sale of such Ownership
Interests would likely result in substantially higher selling expenses and,
ultimately, lower liquidating distributions to the Limited Partners. See
"SPECIAL FACTORS--Discount for Ownership Interests in Properties."
Description of the Properties; Appraised Values and Ownership Interests
Lakeside. Lakeside is a 103-site manufactured home community located at
3291 Bankhead Highway in Lithia Springs, Georgia. The Appraisal for this
Property was prepared as of April 18, 2000. The "as-is" Appraised Value of this
Property is $1,660,000. The Partnership has a 100% ownership interest in this
Property. There is no mortgage on this Property.
Plantation Estates. Plantation Estates is a 126-site manufactured home
community located at 3461 Bankhead Highway in Lithia Springs, Georgia. Amenities
include an office and a swimming pool. The Appraisal for this Property was
prepared as of April 18, 2000. The "as-is" Appraised Value of this Property is
$1,900,000. The Partnership has a 100% ownership interest in this Property.
There is an outstanding mortgage on this Property securing $1,097,000 of
indebtedness.
Town & Country Estates. Town & Country Estates is a 320-site
manufactured home community located at 4444 East Benson Highway in Tucson,
Arizona. Amenities include a clubhouse, two swimming pools, a jacuzzi, a
playground and four shuffleboard courts. The Appraisal for this Property was
prepared as of May 1, 2000. The "as-is" Appraised Value of this Property is
$6,100,000. The Partnership has a 42% Ownership Interest in this Property. There
is an outstanding mortgage on this Property securing $1,550,000 of indebtedness.
Rancho Margate. Rancho Margate is a 245-site manufactured home
community located at 2900 North State Road 7 in Margate, Florida. Amenities
include an office, a clubhouse, a swimming pool, a laundry room and shuffleboard
courts. The Appraisal for this Property was prepared as of May 1, 2000. The
"as-is" Appraised Value of this Property is $6,400,000. The Partnership has a
26% Ownership Interest in this Property. There is an outstanding mortgage on
this Property securing $3,572,300 of indebtedness.
Winter Haven. Winter Haven is a 238-site manufactured home community
located at 50 Charlotte Drive in Winter Haven, Florida. Amenities include an
office, a clubhouse, swimming pool, a laundry room and shuffleboard courts. The
Appraisal for this Property was prepared as of May 1, 2000. The "as-is"
Appraised Value of this Property is $4,200,000. The Partnership has a 26%
Ownership Interest in this Property. There is an outstanding mortgage on this
Property securing $1,570,400 of indebtedness.
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Apache East. Apache East is a 123-site adult manufactured home
community located at 3800 South Tomahawk Road in Apache Junction, Arizona.
Amenities include two clubhouses, a laundry room, two swimming pools with spas
and eight shuffleboard courts. This Property is adjacent to Denali Park Estates.
Accordingly, the two Properties were appraised together and the aggregate
Appraised Value was included in a single Appraisal. The Appraisal for these
Properties was prepared as of May 1, 2000. The combined "as-is" Appraised Value
of the Apache East and Denali Park Estates Properties is $5,900,000. The
Partnership has a 9% Ownership Interest in this Property. There is a single
mortgage covering both Properties securing $2,953,800 of indebtedness. For
purposes of calculating the value of the Partnership's Ownership Interests in
these two Properties, the Managing General Partner has assumed that 36.5% of
such indebtedness, or $1,078,100, is allocable to the Apache East Property and
that 63.5% of such indebtedness, or $1,875,700, is allocable to the Denali Park
Estates Property.
Denali Park Estates. Denali Park Estates is a 162-site adult
manufactured home community located at 3405 South Tomahawk Road in Apache
Junction, Arizona. Amenities include two clubhouses, a laundry room, two
swimming pools with spas and eight shuffleboard courts. In addition, excess land
at Denali Park Estates is currently being used as a desert golf course. This
Property is adjacent to Apache East. Accordingly, the two Properties were
appraised together and the aggregate Appraised Value was included in a single
Appraisal. The Appraisal for these Properties was prepared as of May 1, 2000.
The combined "as-is" Appraised Value of the Denali Park Estates and Apache East
Properties is $5,900,000. The Partnership has a 9% Ownership Interest in this
Property. There is a single mortgage covering both Properties securing
$2,953,800 of indebtedness. For purposes of calculating the value of the
Partnership's Ownership Interests in these two Properties, the Managing General
Partner has assumed that 63.5% of such indebtedness, or $1,875,700, is allocable
to the Denali Park Estates Property and that 36.5% of such indebtedness, or
$1,078,100, is allocable to the Apache East Property.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a brief summary of United States federal income tax
consequences to Limited Partners arising from the Sales and liquidation of the
Partnership. This summary is based upon the Code, as currently in effect,
applicable Treasury Regulations adopted thereunder, reported judicial decisions
and Internal Revenue Service ("IRS") rulings all as of the date hereof, all of
which are subject to prospective or retroactive change in a manner which could
adversely affect Limited Partners.
This summary is based on the assumption that Units in the Partnership
are held as capital assets and have been held since the Partnership's inception,
and does not purport to address Limited Partners in special tax situations such
as insurance companies, financial institutions, tax-exempt entities, nonresident
aliens, foreign corporations and Limited Partners who acquired their Units after
the original offering. Moreover, this summary does not address the possible
consequences to Limited Partners under any state, local or foreign tax laws of
the states and localities where they reside or otherwise do business or where
the Partnership operates. AS SUCH, EACH LIMITED PARTNER SHOULD CONSULT HIS OR
HER OWN TAX ADVISOR CONCERNING THE CONSEQUENCES TO HIM OR HER OF THE SALE OF THE
PROPERTIES AND OWNERSHIP INTERESTS AND LIQUIDATION OF THE PARTNERSHIP.
Overview
The Sales should result in the recognition of gain by the Partnership
and, therefore, should result in recognition of gain by Limited Partners. The
amount of gain recognized by the Partnership with respect to each of the
Properties will equal the difference between (i) the amount realized by the
Partnership (i.e., the amount of cash received plus the amount of liabilities of
the Partnership assumed or taken subject to by N'Tandem) and (ii) the
Partnership's adjusted tax basis in each of the Properties. The aggregate gain
expected to be recognized by the Partnership on the Sales is approximately
$2,504,200.
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This gain will be allocated among the partners of the Partnership in accordance
with the terms of the Partnership Agreement. These provisions will result in the
allocation of approximately $2,479,100 of taxable gain on the Sales to Limited
Partners (or an average of $10.85 per Unit). Upon liquidation of the
Partnership, a Limited Partner will recognize gain or loss equal to the
difference between the cash received by such Limited Partner (including the
Limited Partner's share of Partnership Liabilities under Section 752 of the
Code) and the adjusted tax basis of such Limited Partner's Units. It is expected
that a Limited Partner will recognize an average of approximately $11.10 of loss
per Unit on liquidation. The gain per Unit resulting from the Sales is primarily
caused by the fact that the Partnership generated tax losses in certain prior
years that were allocated to Limited Partners. Limited Partners should be aware
that all of the per Unit amounts stated above may vary for each Limited Partner
depending on the historical losses allocated and cash distributions to such
Limited Partner.
Taxation on the Sales
Tax Consequences of the Sales. The Sales should result in the
recognition of gain by the Partnership and, therefore, should result in
recognition of gain by Limited Partners. The amount of gain recognized by the
Partnership with respect to each of the Properties will equal the difference
between (i) the Partnership's amount realized (i.e., the amount of cash received
increased by the amount of liabilities of the Partnership assumed or taken
subject to by N'Tandem) and (ii) the Partnership's adjusted tax basis in each of
the Properties. The aggregate gain expected to be recognized by the Partnership
on the Sales is approximately $2,504,200.
Allocation of Gain. The $2,504,200 gain expected to be recognized by
the Partnership in the year of Sales will be allocated among the partners in
accordance with the terms of the Partnership Agreement. These provisions will
result in an allocation of approximately $2,479,100 of taxable gain on the Sales
to Limited Partners (or an average of $10.85 per Unit). The gain per Unit
resulting from the Sales is primarily caused by the fact that the Partnership
generated tax losses in prior years that were allocated to Limited Partners. See
"-- Income Tax Rates/Taxation of Gains and Losses," below.
Characterization of Gain or Loss. In general, gains (other than the
amount of gain attributable to certain depreciation recapture, which would be
classified as ordinary income, and gain attributable to Ownership Interests that
are partnership interests) recognized with respect to the Sales should be
treated as recognized from the sale of a "Section 1231" asset (i.e., real
property and depreciable assets used in a trade or business and held for more
than one year). A portion of such gain should be attributable to the recapture
of depreciation with respect to real property and taxed at the 25% rate
discussed below. A Limited Partner's share of gains from the sale of Section
1231 assets of a Partnership will be combined with any other Section 1231 gains
and losses recognized by such Limited Partner in that year. If the result is a
net loss, such loss is characterized as an ordinary loss. If the result is a net
gain, such gain is characterized as a capital gain; provided, however, that such
gain will be treated as ordinary income to the extent the Limited Partner has
"non-recaptured" Section 1231 losses. For these purposes, "non-recaptured"
Section 1231 losses means a Limited Partner's aggregate Section 1231 losses for
the five most recent prior years that have not previously been recaptured.
In general, gain or loss recognized with respect to the Sale of
Ownership Interests that are partnership interests will be gain or loss from the
sale or exchange of a capital asset. However, any amount received in exchange
for a partnership interest attributable to a partnership's "unrealized
receivables" (including certain depreciation recapture) or "inventory items"
will be considered to be gain or loss from the sale or exchange of property
other than a capital asset.
For purposes of the passive activity loss limitations of Section 469 of
the Code, gains recognized from the Sales generally will be treated as passive
activity income.
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Liquidation of the Partnership
Tax Consequences of Liquidation. Upon liquidation of the Partnership, a
Limited Partner will recognize gain or loss equal to the difference between the
cash received by such Limited Partner (including the Limited Partner's share of
partnership liabilities under Section 752 of the Code) and the adjusted tax
basis of the Limited Partner's Units, adjusted by such Limited Partner's
allocable share of income, gain or loss arising from normal Partnership
operations for the year of liquidation and the sale of the Properties in the
year of liquidation. See "-- Taxation on Sales -- Allocation of Gain" above. It
is expected that a Limited Partner will recognize an average of approximately
$11.10 of loss per Unit on liquidation of the Partnership.
Characterization of Gain or Loss. Any gain or loss recognized by a
Limited Partner on liquidation of the Partnership should be treated as gain or
loss from the sale of a capital asset if the Units are held as a capital asset
by the Limited Partner. Such gain or loss generally will be treated as passive
gain or loss pursuant to Section 469 of the Code.
The combined effect of the Sales and the liquidation of the Partnership
should result in a net taxable loss to Limited Partners of approximately $0.25
per Unit. However, the treatment of the gains and losses recognized by the
Limited Partners (as capital or ordinary gain or loss and the ability to offset
the two) may differ depending on whether Limited Partners have any
non-recaptured Section 1231 losses or other items recaptured at ordinary income
rates as discussed above. See "-- Income Tax Rates/Taxation of Capital Gains and
Losses" below regarding limitations with respect to the deductibility of capital
losses against ordinary income.
Income Tax Rates/Taxation of Gains and Losses
The maximum rate of tax on net capital gains of individuals, trusts and
estates from the sale or exchange of capital assets held for more than one year
is 20%, and the maximum rate for net capital gains attributable to the sale of
depreciable real property held for more than one year (other than certain
depreciation recapture taxable as ordinary income) is 25% to the extent of the
deductions for depreciation with respect to such property. The current maximum
tax rate on ordinary income of individuals is 39.6%. This disparity in tax rates
could be beneficial to individual Limited Partners with suspended losses
attributable to the Partnership. Since a Limited Partner will be considered to
have disposed of his or her entire interest in the Partnership, such Limited
Partner will be entitled to deduct all suspended passive losses from the
Partnership against any ordinary income earned by such Limited Partner in the
year of liquidation of the Partnership or use such suspended losses to offset
any gain allocable to such Limited Partner on the Sales. Capital gains of
individuals and corporate taxpayers can be offset by capital losses. However,
capital losses can be deducted, in any year, only to the extent of a Limited
Partner's capital gains plus, in the case of an individual, taxable income of up
to $3,000. A corporation may be allowed to carry back unused capital losses to
the three preceding tax years and to carry over losses to the five following tax
years. Individuals and other noncorporate taxpayers may carry over net capital
loss for an unlimited time until the loss has been exhausted.
CONSENT PROCEDURES; TRANSACTIONS AUTHORIZED BY CONSENTS
The consents being solicited hereby (the "Consents") will authorize the
General Partners: (i) to complete the Sales at any time on or prior to
____________, 2000 and to proceed with the Plan of Liquidation; and (ii) to take
all actions necessary or appropriate, as determined by the General Partners, to
complete the Sales and to proceed with the Plan of Liquidation; provided,
however, that following approval of the Proposals by a majority-in-interest of
the Limited Partners, no change or modification will be made to the Purchase and
Sale Agreement. As provided in Section 2.01(d) of the Partnership
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Agreement, the Partnership is not permitted to sell or lease property to a
sponsor of the Partnership, which includes the General Partners or any of their
affiliates. The Partnership Agreement, however, permits this provision to be
amended so as to allow sales of Partnership property to an affiliate of the
General Partners with the consent of a majority-in-interest of the Limited
Partners. The authorization granted to the General Partners by consenting to the
Sales and the Plan of Liquidation will include, without limitation, the adoption
of any amendments to the Partnership Agreement that may be required to
effectuate the Sales and the Plan of Liquidation or to amend any provision of
the Partnership Agreement which may be construed as restricting the sale of the
Properties to affiliates.
Consents are being solicited from the Limited Partners as required by
the Partnership Agreement which provides that transactions such as the Sales and
the Plan of Liquidation must be approved by Limited Partners owning a majority
of the issued and outstanding Units.
The Consents being sought are for approval of the Proposals, including
the Sales and the Plan of Liquidation, and not for the approval of any
individual or particular Sale. If sufficient Consents approving the Proposals
are received, the Partnership intends to consummate the Sales and proceed with
the Plan of Liquidation. If sufficient Consents are not received, the
Partnership intends to explore such alternatives as may be available to it.
Set forth below are the procedures to be followed by Limited Partners
in order to consent to, deny consent to, or abstain from consenting to the
Proposals. A form of Consent was mailed to Limited Partners along with this
Consent Solicitation Statement. These procedures must be strictly followed in
order for the instructions of a Limited Partners as marked on such Consent to be
effective:
(i) A Limited Partner may make his or her election on the
Consent only during the solicitation period commencing upon the date of
delivery of this Consent Solicitation Statement and continuing until
the earlier of (i) ________, 2000 or such later date as may be
determined by the General Partners and (ii) the date upon which the
General Partners determine that unaffiliated Limited Partners holding
not less than a majority of all issued and outstanding Units have
consented to the Proposals (the "Solicitation Period");
(ii) Each Limited Partner must consent to, deny consent to, or
abstain from consenting to the Proposals with respect to all Units held
by such Limited Partner. The effect of abstaining or failing to sign
and return the Consent will be the same as denying consent;
(iii) All questions as to the validity, form, eligibility
(including time of receipt), acceptance and withdrawal of a Consent
will be determined by the General Partners, whose determination will be
final and binding. The General Partners reserve the absolute right to
reject any or all Consents that are not in proper form or the
acceptance of which, in the opinion of the General Partners, would be
unlawful. The General Partners also reserve the right to waive any
irregularities or conditions of a Consent as to particular Units.
Unless waived, any irregularities in connection with the Consents must
be cured within such time as the General Partners shall determine;
(iv) A Consent delivered by a Limited Partner may be changed
or revoked prior to the expiration of the Solicitation Period by
delivering to the Partnership a notice of revocation or a substitute
Consent, properly completed and executed, together with a letter
indicating that the Limited Partner's prior Consent has been revoked;
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(v) Limited Partners are encouraged to return a properly
completed and executed Consent in the enclosed postage-paid envelope
prior to the expiration of the Solicitation Period; and
(vi) A Limited Partner submitting a signed but unmarked
Consent will be deemed to have consented to the Proposals.
Each Limited Partner is requested to complete, date and sign the
accompanying form of Consent and return such Consent to Arlen Capital, LLC, 1650
Hotel Circle North, Suite 200, San Diego, California 92108, which has been
appointed to serve as the solicitation agent for the proposed transactions (the
"Solicitation Agent"). If the Solicitation Period is extended, the General
Partners will give written notice of such extension to all Limited Partners. For
more information concerning this Consent Solicitation, Limited Partners may call
the Solicitation Agent at (800) 553-4039. The costs of this Consent
Solicitation, including fees payable to the Solicitation Agent, will be borne by
the Partnership.
Solicitation of Consents
In addition to soliciting consents by mail, consents may be solicited
by directors, officers and employees of the Managing General Partner and its
affiliates, who will not receive additional compensation for such services, by
personal interview, telephone, telegram, courier service or other similar means
of communication. Arlen Capital, LLC has been engaged as Solicitation Agent to
solicit Consents to the Proposals from Limited Partners, administer the delivery
of information to Limited Partners and receive and tally votes.
Pursuant to the solicitation agreement between the Partnership and the
Solicitation Agent (the "Solicitation Agreement"), the Partnership has agreed to
pay the Solicitation Agent a base fee of $8,500 plus expenses and an additional
per Unit fee for re-mails and incoming and outgoing phone calls. The General
Partners expect that the total amount payable under the Solicitation Agreement
will not exceed $25,000.
Record Date; Required Vote
The close of business on ________, 2000 has been fixed as the Record
Date for determining Limited Partners entitled to Consent to the Proposals. As
of the Record Date, there were 230,861 Units outstanding held of record by a
total of 2,820 Limited Partners. Each of the Proposals require approval of
unaffiliated Limited Partners holding at least a majority of the outstanding
Units. Each Unit entitles the holder thereof to cast one vote with respect to
the approval of each of the Proposals.
As of the Record Date, the General Partners and/or their affiliates
held and are entitled to exercise voting rights with respect to an aggregate of
1,000 Units, representing approximately 0.4% of the outstanding Units of the
Partnership. The General Partners and their affiliates have agreed to abstain
from voting on the Proposals with respect to the Units for which they hold
voting rights. Approval of the Proposals by unaffiliated Limited Partners
holding 115,431 Units, representing a majority of all outstanding Units, is
required to proceed with the Sales and the Plan of Liquidation. Neither N'Tandem
nor any affiliate of N'Tandem (other than the Managing General Partner) owns, or
has voting rights, with respect to any Units.
No Appraisal or Dissenters' Rights
If Limited Partners owning the requisite number of Units in the
Partnership consent to the Proposals, all Limited Partners of the Partnership
will be bound by such consent, including Limited
54
<PAGE>
Partners who have not returned their Consents or who have abstained from or
denied consent. None of the Partnership Agreement, California law or the
proposed terms and conditions of the Sales or the Plan of Liquidation provide
objecting Limited Partners with the right to exercise any dissenters', appraisal
or similar rights. Under California law, the general partner of a California
limited partnership owes fiduciary duties to its limited partners. To the extent
that a general partner has engaged in a transaction in breach of its fiduciary
duties to limited partners, a damages remedy may be available to such limited
partners.
Consequences If Consents Are Not Obtained
If sufficient Consents to proceed with the Sales and the Plan of
Liquidation are not obtained, the General Partners intend to proceed to explore
such alternatives as may be available to the Partnership.
REGULATORY AND OTHER APPROVALS
There are no federal or state regulatory requirements which remain to
be complied with in order to consummate the Sales and Plan of Liquidation.
FINANCIAL STATEMENTS
The financial information contained in the Partnership's Annual Report
on Form 10-KSB for the year ended December 31, 1999 and the Partnership's
Quarterly Report on Form 10-QSB for the quarter ended June 30, 2000 identified
in "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" below is incorporated
herein by reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange
Commission (the "Commission") by the Partnership (File No. 0-16642) pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are
incorporated herein by reference:
(i) the Partnership's Annual Report on Form 10-KSB for the
year ended December 31, 1999;
(ii) the Partnership's Quarterly Report on Form 10-QSB for the
quarter ended March 31, 2000; and
(iii) the Partnership's Quarterly Report on Form 10-QSB for
the quarter ended June 30, 2000.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for the purposes of this Consent
Solicitation Statement to the extent that a statement contained herein or in any
other subsequently filed document that is incorporated by reference herein
modifies or supersedes such earlier statement. Any such statements modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Consent Solicitation Statement.
Copies of any or all of the documents specifically incorporated herein
by reference (not including the exhibits to such documents, unless such exhibits
are specifically incorporated by reference in such documents) will be furnished
without charge to each person, including any beneficial owner, to whom a copy of
this Consent Solicitation Statement is delivered upon written or oral request.
Requests should be
55
<PAGE>
made to: Windsor Park Properties 5 -- Investor Relations, 6160 South Syracuse
Way, Greenwood Village, Colorado 80111.
AVAILABLE INFORMATION
The Partnership is subject to informational reporting requirements of
the Exchange Act and in accordance therewith files reports, proxy statements and
other information with the Commission. Such reports, proxy statements and other
information may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the regional offices of the Commission at 7
World Trade Center, New York, New York 10048, and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can
be obtained from the Public Reference Section of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission maintains a site on the Internet at http://www.sec.gov
that contains reports, proxy statements and other information regarding
registrants that file electronically with the Commission.
Pursuant to Rule 13e-3 under the Exchange Act, N'Tandem, Chateau and
the Partnership have jointly filed with the Commission a Rule 13e-3 Transaction
Statement on Schedule 13E-3 (including any amendments thereto, the "Schedule
13E-3"), together with exhibits thereto, furnishing certain additional
information with respect to the Sales and the Plan of Liquidation. This Consent
Solicitation Statement does not contain all the information required to be
included in the Schedule 13E-3 and the exhibits thereto, certain portions of
which are omitted from this Consent Solicitation Statement as permitted by the
rules and regulations of the Commission.
Statements contained herein concerning the provisions of documents are
summaries of such documents and, as such, each statement is not necessarily
complete and is qualified in its entirety by reference to the copy of the
applicable document if attached as an appendix hereto or filed as an exhibit to
the Schedule 13E-3.
All reports from outside parties filed as exhibits to the Schedule
13E-3 filed with the Commission in connection with the proposed transactions
also will be made available for inspection and copying at the principal
executive offices of the Partnership during its regular business hours by any
Limited Partner or representative thereof who has been so designated in writing.
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<PAGE>
APPENDIX A
Fairness Opinion
LEGG MASON
Investment Banking
Legg Mason Wood Walker, Incorporated
100 Light Street, 31st Floor
Baltimore, MD 21202
Tel: 410-539-0000 Fax: 410-454-4508
Member New York Stock Exchange, Inc./Member SIPC
August 29, 2000
The General Partners of
Windsor Park Properties 5, A California Limited Partnership
c/o The Windsor Corporation
6160 South Syracuse Way
Greenwood Village, Colorado 80111
General Partners:
We have been advised by the managing general partner (the "Managing
General Partner") of Windsor Park Properties 5, a California Limited Partnership
(the "Partnership"), that the Partnership intends to sell its two wholly-owned
properties and its partial ownership interests in five other properties
(collectively, the "Properties") to N'Tandem Trust, a California business trust
("N'Tandem"), for an aggregate amount of $9,017,000 on terms and conditions more
fully described in the consent solicitation statement (the "Consent Solicitation
Statement") relating to the purchase and sale of the Properties (the transaction
is referred to herein as the "Sale").
You have requested our opinion, as investment bankers, as to the
fairness to the limited partners (the "Limited Partners") of the Partnership,
from a financial point of view, of the aggregate purchase price to be paid by
N'Tandem in the Sale.
In connection with our opinion, we have, among other things, reviewed:
(i) the management agreement between the Partnership and the
Managing General Partner and other agreements pertaining to
the operation and management of the Properties;
(ii) the partnership agreement of the Partnership;
(iii) the financial statements and the related filings of the
Partnership on Form 10-KSB for the year ended December 31,
1999 and Form 10-QSB for the quarter ended June 30, 2000;
(iv) the NAREIT Index, the Morgan Stanley REIT Index, capital flows
to public real estate investment trusts and other similar
measures of operating performance and trading data of real
estate investment trusts;
A-1
<PAGE>
(v) an analysis of comparable publicly traded real estate
investment trusts;
(vi) the draft Consent Solicitation Statement;
(vii) financial and operating forecasts and projections relating to
the Partnership and schedules setting forth information
relating to the outstanding debt attributable to the
Properties and the number of outstanding units of limited
partner interest in the Partnership prepared by the Managing
General Partner or its representatives;
(viii) the appraisals of the Properties prepared by Whitcomb Real
Estate, Inc; and
(ix) conducted such other financial studies, analyses and
investigations and considered such other information as we
deemed appropriate.
In connection with our review, we relied, without independent
verification, on the accuracy and completeness of all information that was
publicly available, supplied or otherwise communicated to Legg Mason on behalf
of the Partnership and we have further relied upon the assurances of the
Managing General Partner that it is unaware of any facts that would make the
information provided to us incomplete or misleading. In performing our analyses,
we relied, with your permission and without independent verification of their
accuracy or fairness, on the discounts which the Managing General Partner
provided to us for application to the appraised values of certain of the
Properties to reflect the fact that the partnership owns only a partial interest
therein.
Legg Mason has also relied upon the Managing General Partner as to the
reasonableness and achievability of the financial forecasts and projections (and
the assumptions and bases therein) provided to us for the Partnership, and we
have assumed such forecasts and projections were reasonably prepared on bases
reflecting the best currently available estimates and judgments of management as
to the future operating performance of the Partnership. Neither the Managing
General Partner nor the Partnership publicly discloses internal management
forecasts and projections of the type provided to Legg Mason. Such forecasts and
projections were not prepared with the expectation of public disclosure. The
forecasts and projections were based on numerous variables and assumptions that
are inherently uncertain, including, without limitation, facts related to
general economic conditions. Accordingly, actual results could vary
significantly from those set forth in such forecasts and projections. Legg Mason
has relied on these forecasts and does not in any respect assume any
responsibility for the accuracy or completeness thereof.
Legg Mason has not been requested to make, and has not made, an
independent evaluation or appraisal of the assets, properties, facilities, or
liabilities (contingent or otherwise) of the Partnership and, with the exception
of the appraisal of the underlying properties of the Partnership referred to
above, we have not been furnished with any such appraisals or evaluations.
Estimates of value of the Partnership and its assets do not purport to be
appraisals or necessarily reflect the prices at which the Partnership and assets
may actually be sold. Because such estimates are inherently subject to
uncertainty, Legg Mason assumes no responsibility for their accuracy. We note
that the Managing General Partner and N'Tandem are under common control of the
parent of the Managing General Partner, and we have assumed that this potential
conflict of interest had no effect on the Sale. Our opinion is necessarily based
upon financial, economic, market and other conditions and circumstances existing
and disclosed to us on the date hereof. We were not requested to, nor did we,
solicit the interest of any other party in acquiring interests in the
Partnership or its assets. We have also assumed that the Sale will be
consummated on the terms and conditions described in the Consent Solicitation
Statement, without any waiver of material terms or conditions by the
Partnership.
A-2
<PAGE>
It is understood that this letter is directed to the General Partners.
The opinion expressed herein is provided for the use of the General Partners in
their evaluation of the Sale and our opinion does not constitute a
recommendation to the General Partners or to any Limited Partner as to how such
partners should vote or otherwise respond on the Sale. In addition, this letter
does not constitute a recommendation of the Sale over any other alternative
transaction which may be available to the Partnership and does not address the
underlying business decision of the Managing General Partner to proceed with or
effect the Sale. This letter is not to be quoted or referred to, in whole or in
part, in any registration statement, prospectus, or in any other document used
in connection with the offering or sale of securities, nor shall this letter be
used for any other purposes, without the prior written consent of Legg Mason;
provided that this opinion may be included in its entirety in any filing made by
the Partnership or N'Tandem with the Securities and Exchange Commission with
respect to the Sale.
Legg Mason will receive a fee for providing this Opinion to the General
Partners.
Based upon and subject to the foregoing, we are of the opinion that, as
of the date hereof, the amount of consideration to be paid by N'Tandem in the
Sale is fair to the Limited Partners from a financial point of view.
Very truly yours,
/s/ Legg Mason Wood Walker, Incorporated
----------------------------------------
Legg Mason Wood Walker, Incorporated
A-3
<PAGE>
APPENDIX B
Report of Independent Special Counsel
August 23, 2000
Mr. Steven G. Waite
President
The Windsor Corporation
6160 Syracuse Way
Greenwood Village, CO 80111
Re: Windsor Park Properties 5 Sale of Assets
----------------------------------------
Dear Mr. Waite:
As agreed by our Engagement Letter dated June 15, 2000, this firm (the
"Firm") has acted as special counsel to the limited partners of Windsor Park
Properties 5, A California Partnership (the "Partnership") for the purpose of
representing the collective interests of such limited partners in the proposed
transaction (the "Transaction") for the sale of all of the Partnership assets to
N'Tandem Trust, a California business trust and an affiliate of the managing
general partner of the Partnership. This letter constitutes the written report
describing the results of the Firm's review and negotiations with respect to the
Transaction.
The firm has reviewed (i) the underlying organizational documents
relating to the Partnership, (ii) the recent financial statements of the
Partnership, (iii) the draft disclosure documents of the Partnership describing
the Transaction, (iv) the reports and opinions of the appraiser relating to the
Partnership's properties, and (v) the draft fairness opinion of the fairness
opinion provider with respect to the Transaction. We have also reviewed a form
of the asset purchase agreement that is expected to be utilized in connection
with the Transaction, received certain additional information requested from the
managing general partner, independently evaluated the methodology utilized by
the appraiser with respect to the appraisals of the Partnership's properties,
and performed research of applicable law. In addition, prior to our engagement,
we had become familiar with facts relevant to the background of the Transaction
in the course of our representation of the limited partners of certain other
limited partnerships related to the Partnership and managed by the same managing
general partner.
Following our review and analysis of the foregoing information, we
engaged in negotiations with the managing general partner on behalf of the
Partnership's limited partners. The purpose of these negotiations was to
represent from a legal point of view the interests of the limited partners and
thereby ensure that there was independent legal representation of the limited
partners' interests in connection with the Transaction. As a result of these
negotiations, the managing general partner has agreed to make certain changes to
the Transaction for the benefit of the limited partners. Specifically, the
managing general partner agreed to do the following:
B-1
<PAGE>
1. The discounts to the appraised evaluation of the
partially-owned properties has been reduced from 10% to 6.7% for the
properties in which the Partnership owns a minority interest and from
5% to 3.4% for the properties in which the Partnership owns a majority
interest, resulting in an increase in the proposed purchase price in
the amount of $192,900; and
2. The managing general partner has agreed to add to the
disclosure document describing the Transaction additional information
relative to the limited partners' rights under the Partnership's
partnership agreement with respect to a transaction between the
Partnership and an affiliate of the managing general partner.
In our opinion, the foregoing, as well as the work of the fairness
opinion provider with respect to this Transaction, has added significant
procedural safeguards of the interests of the limited partners in light of the
lack of arms'-length negotiations between the Partnership and the managing
general partner in the Transaction. Moreover, this procedure has resulted in the
substantive benefits set forth above.
Finally, it should be noted that the managing general partner has paid
for our legal services, which have therefore been performed for the limited
partners without cost to them or to the Partnership. As was agreed prior to our
retainer, payment of our fees was not contingent upon the results of this Firm's
review and negotiations.
Very truly yours,
Wolf Haldenstein Adler Freeman & Herz LLP
/s/ Lawrence P.Kolker
-----------------------------------------
By: Lawrence P. Kolker
B-2
<PAGE>
APPENDIX C
Information Concerning Officers and
Directors of the Managing General Partner,
N'Tandem and Chateau
A. The Managing General Partner
The Windsor Corporation is the Managing General Partner of the
Partnership. The Directors and executive officers of The Windsor Corporation are
as follows:
Gary P. McDaniel, 54, became a Director of The Windsor Corporation in
September 1997. Mr. McDaniel's biographical information is set forth below under
"C. Chateau Communities, Inc."
C. G. Kellogg, 56, became a Director of The Windsor Corporation in
September 1997. Mr. Kellogg's biographical information is set forth below under
"C. Chateau Communities, Inc."
Steven G. Waite, 44, has been President of The Windsor Corporation
since September 1997. From 1990 through the date he accepted his position at The
Windsor Corporation, Mr. Waite was Vice President/General Manager of Communities
at Clayton Homes, Inc., a company which owns and operates manufactured home
factories, sales centers, financing and insurance units and communities (NYSE:
CMH). Mr. Waite holds a B.S. from the University of Colorado and an M.B.A. from
the University of Alabama.
Each of Messrs. McDaniel, Kellogg and Waite is a United States citizen.
B. N'Tandem Trust
As an unincorporated business trust, N'Tandem Trust is managed by its
Trustees. The Trustees of N'Tandem are as follows:
Gary P. McDaniel, 54, became a Trustee of N'Tandem in September of
1997. Mr. McDaniel's biographical information is set forth below under "C.
Chateau Communities, Inc."
Richard B. Ray, 59, became a Trustee of N'Tandem in September of 1997.
Since 1995 he has been Co-Chairman of the Board and Chief Financial Officer of
21st Century Mortgage Corporation, (a lender to the manufactured home industry)
and a director of the following companies: BankFirst, Radio Systems Corporation
and Knox Housing Partnership (a not for profit developer of low income housing
in Knox County, Tennessee). Previously, he was Executive Vice President, Chief
Financial Officer, and Director of Clayton Homes Inc. (a vertically integrated
manufactured housing company) from 1982-1994 and a Director of Palm Harbor
Homes, Inc. (a national producer of manufactured homes) from 1994-1995.
Kenneth G. Pinder, 62, became a Trustee of N'Tandem in September of
1997. Mr. Pinder entered the manufactured housing business in 1970, managing a
manufactured housing site rental community and formed American Living Homes
Inc., a manufactured housing dealership, in 1974; he continues to be the owner
and president of that corporation. He is also sole owner of Able Mobile Housing
Inc., a temporary housing company for fire loss victims and has developed
manufactured home sites and purchased and sold numerous communities over the
past twenty years. Mr. Pinder has been a member of the Michigan
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Manufactured Housing Association for over 35 years. In 1992 he was elected to
the Michigan Manufactured Housing Board of Directors, and serves on its
Executive Committee.
Each of Messrs. McDaniel, Ray and Pinder is a United States citizen.
C. Chateau Communities, Inc.
Chateau Communities, Inc. owns all of the capital stock of The Windsor
Corporation, the Managing General Partner of the Partnership and the advisor to
N'Tandem Trust. Chateau also owns a 9.8% equity ownership interest in N'Tandem.
The Directors and executive officers of Chateau are as follows:
Gary P. McDaniel, 54, has been Chief Executive Officer and a director
of Chateau since February 1997. He served as the Chairman of the Board,
President and Chief Executive Officer of ROC Communities, Inc. ("ROC"), a
publicly held real estate investment trust specializing in owning and operating
manufactured home communities since 1993 and had been a principal of ROC's
predecessors since 1979. He has been active in the manufactured home industry
since 1972. He is a Trustee of N'Tandem Trust and a Director of The Windsor
Corporation. Mr. McDaniel has been active in several state and national
manufactured home associations, including associations in Florida and Colorado.
In 1996, he was named "Industry Person of the Year" by the National Manufactured
Housing Industry Association. Mr. McDaniel is on the Board of Directors of the
Manufactured Housing Institute. He is a graduate of the University of Wyoming
and served as a Captain in the United States Air Force.
Gebran S. Anton, Jr., 67, first became a director of Chateau in 1993.
He is the owner of Gebran Anton Development Co. and Anton, Zorn & Associates,
Inc., a commercial and industrial real estate broker and former owner of
Anton's, a men's retail chain. He is an incorporator and Director of Community
Central Bank, and a former Chairman of the Board for First National Bank, St.
Joseph Hospital, and Downtown Development Committee.
James M. Lane, 70, first became a director of Chateau in 1993. He
retired as the Senior Vice President and Chief Investment Officer of the
Investment Management Division, NBD Bank, Detroit, where he served for
approximately thirteen years. Mr. Lane was associated with the Chase Manhattan
Corporation from 1953 to 1978, attaining the position of Executive Vice
President while also serving as President and Chief Executive Officer of Chase
Investors Management Corporation. He has a B.A. degree in economics from Wheaton
College and an MBA in finance from the University of Chicago.
Rhonda G. Hogan, 47, has served as director of Chateau since March
1997. Ms. Hogan is presently a partner of Tishman Speyer Properties. She
recently served on the Board of Directors and as President of The Water Club
Condominium Association, Inc. and is on the Silver Council of the Urban Land
Institute. In addition, she served on the Board of Directors of Barnett Bank of
South Florida, N.A. from 1986 to 1996. Ms. Hogan has also served or currently
serves on several other Boards of Directors and as a member of several councils
or institutes, including appointments to State Boards by the Governor and
Cabinet of the State of Florida. Ms. Hogan received her B.B.A. from the
University of Iowa.
C.G. Kellogg, 56, has been President and a director of Chateau since
its inception, and was Chief Executive Officer of Chateau from its inception to
February 1997. For the five years preceding the formation of Chateau, Mr.
Kellogg was President and Chief Operating Officer of Chateau Estates. Mr.
Kellogg is a Director of The Windsor Corporation. He is extremely active in
local and national industry associations, often in leadership positions. Mr.
Kellogg is a past President of the Michigan Manufactured Housing Association and
is an active member of the Manufactured Housing Institute's National Communities
Council. He is a graduate of Michigan Technological University with a B.S. in
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Civil Engineering. Mr. Kellogg is the husband of Tamara D. Fischer, who is
Chateau's Executive Vice President and Chief Financial Officer.
Edward R. Allen, 59, has served as a director of Chateau since 1993.
Mr. Allen is the Chief Executive Officer and a director of Give Kids the World.
Mr. Allen was, for the five years preceding the formation of Chateau, Chairman
and Chief Executive Officer of InterCoastal Communities, Inc., a Florida
corporation which was engaged in operating seven manufactured home communities
in Florida. Prior to joining InterCoastal, Mr. Allen developed a chain of steak
houses which he and his partner sold in 1977 to Green Giant Corporation. He
remained as President for two years, and expanded the chain, nearly doubling the
number of restaurants. Mr. Allen is a graduate of Cornell University.
James M. Hankins, 65, served as a director of ROC from August 1993
until ROC's merger with Chateau on February 11, 1997 (the "Merger"). Since the
Merger, he has served as a director of Chateau. He is managing general partner
of Hankins Enterprises, which owns and operates destination RV resorts in
Arizona. Prior to organizing the partnership in 1985, Mr. Hankins was a founder
of Mobile Home Communities, Inc. in 1969, and served as President and Chief
Executive Officer from 1973 to 1984. He holds a B.S. from the University of
South Carolina and an MBA from Harvard University, and has served as a Captain
in the United States Air Force.
Donald E. Miller, 69, served as a director of ROC from August 1993 to
February 1997, and has served as a director of Chateau since February 1997. From
May 1994 through July 1996, Mr. Miller was Vice Chairman of the Board of
Directors of The Gates Corporation. From 1982 to May 1994, he was President,
Chief Operating Officer and director of The Gates Corporation and The Gates
Rubber Company, which engage in the production and manufacture of rubber
products, primarily for automotive needs. Mr. Miller is a director of Sentry
Insurance Company, OEA, Inc., CoorsTek and Lennox Industries, International. Mr.
Miller is a graduate of the Colorado School of Mines.
John A. Boll, 70, has been Chairman of the Board of Directors of
Chateau since its inception in 1993. Prior to the formation of Chateau, Mr. Boll
was the co-founder, partner and Chief Executive Officer of Chateau Estates,
which was formed in 1966. He was inducted in the MH/RV Hall of Fame in 1992 for
his outstanding contributions to the manufactured housing industry. Mr. Boll was
appointed by the Governor of the State of Michigan to become the first Chairman
of the Michigan Mobile Home Commission, which is the principal Michigan
authority regulating manufactured housing, a position he held for six years.
James L. Clayton, 66, served as a director of ROC from August 1993
until February 1997 and as a director of Chateau since February 1997. He is the
founder, and since 1966 has been the Chairman of the Board and Chief Executive
Officer of Clayton Homes, Inc. ("Clayton Homes"), a company which owns and
operates manufactured home factories, sales centers, financing and insurance
units and communities (NYSE: CMH). Mr. Clayton is a director of Dollar General
Stores and Chairman of the Board of BankFirst Corp. In 1992, Mr. Clayton was
inducted into the MH/RV Hall of Fame. Mr. Clayton received an undergraduate
degree in electrical engineering and a law degree from the University of
Tennessee.
Steven G. Davis, 50, served as a director of ROC from August 1993 to
February 1997, and has served as a director of Chateau since February 1997. He
is currently the owner of East Silent Advisors, a real estate consulting firm.
He served as Chief Financial Officer, Executive Vice President and a director of
ROC from 1993 to 1997. From 1990 to 1993, Mr. Davis served as an officer and
director of The Windsor Group, an owner/operator of 42 manufactured home
communities, and, from 1991 through March 1993, as that company's President. Mr.
Davis currently serves as a director of Bidland.Com, an internet auction
company. Mr. Davis served as a director of ASR Investments, a REIT owning
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apartments in the Southwest, until 1999. Mr. Davis is a Certified Public
Accountant and is a graduate of the University of San Diego.
Tamara D. Fischer, 44, is Executive Vice President, Chief Financial
Officer of Chateau, having served in these roles since Chateau's formation.
Prior to joining Chateau, Ms. Fischer was employed by Coopers & Lybrand for 11
years. Ms. Fischer is a CPA and a graduate of Case Western Reserve University.
Ms. Fischer is the wife of Mr. Kellogg who is the President and a Director of
Chateau.
Rees F. Davis, Jr., 41, is Executive Vice President-Acquisitions of
Chateau, having served in such capacity since February 1997. He served as
Executive Vice President of Acquisitions and Sales for ROC from 1993 to February
1997. Prior to that, Mr. Davis previously served as Vice President of
Acquisitions and Sales and a director for ROC's predecessors since 1986. Mr.
Davis is a two-term past officer of the Colorado Manufactured Housing
Association. He is also an active member of The Manufactured Housing Institute.
Mr. Davis is a graduate of Colorado State University.
Each of the executive officers and Directors of Chateau is a United
States citizen.
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APPENDIX D
Financial and Operating Forecasts and Projections for
the Partnership Prepared by the Managing General Partner
The following financial and operating forecasts and projections were
prepared by the Managing General Partner and its representatives for use by Legg
Mason in connection with the preparation of its Fairness Opinion relating to the
Sales. These financial and operating forecasts and projections, which relate to
the Partnership and certain of its Properties, involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
and achievements of the Partnership and such Properties to be materially
different from future results, performance and achievements expressed or implied
by such forecasts or projections. The actual financial and operating results,
including net income, of the Partnership and certain of its Properties will
depend to a large extent on a number of factors that cannot be predicted with
certainty or which may be outside of the control of the Managing General Partner
and its representatives, including general business, market and economic
conditions, market factors affecting manufactured home communities, supply and
demand for homesites at the Properties, changes in tax laws and other factors.
D-1
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Windsor Park Properties 5 Projections
<TABLE>
<CAPTION>
1999 2000 2001
<S> <C> <C> <C>
Revenues:
Rent and utilities 544,900 561,247 578,084
Equity in earnings JV 155,300 179,554 200,316
Interest 19,200 19,776 20,369
Other 16,800 17,304 17,823
--------------------------------
Total Revenues 736,200 777,881 816,593
--------------------------------
Operating costs and expenses:
Property operating 246,000 253,380 260,981
Interest 99,800 96,556 93,417
Depreciation & amortization 112,000 110,022 111,122
G&A:
Related parties 20,600 21,630 22,712
Other 92,400 97,020 101,871
--------------------------------
Total operating costs 570,800 578,607 590,103
--------------------------------
--------------------------------
Net income (loss) 165,400 199,274 226,490
================================
<CAPTION>
2002 2003 2004
<S> <C> <C> <C>
Revenues:
Rent and utilities 595,427 613,290 631,688
Equity in earnings JV 223,273 246,112 268,876
Interest 20,980 21,610 22,258
Other 18,358 18,909 19,476
--------------------------------
Total Revenues 858,038 899,920 942,298
--------------------------------
Operating costs and expenses:
Property operating 268,811 276,875 285,181
Interest 90,380 87,443 84,600
Depreciation & amortization 112,233 113,355 114,489
G&A:
Related parties 23,847 25,039 26,291
Other 106,965 112,313 117,928
--------------------------------
Total operating costs 602,236 615,025 628,490
--------------------------------
--------------------------------
Net income (loss) 255,802 284,894 313,808
================================
Projected capital expenditures
($100 per site) $54,200
==============
</TABLE>
-----------------------------------------------------------------------
Notes:
1. Projections assume 3% revenue growth and 3% expense growth
D-2
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Projections for joint venture property -- Town & Country Estates
<TABLE>
<CAPTION>
1997 1998 1999 2000
<S> <C> <C> <C> <C>
Revenues:
Rent and utilities 732,672 785,827 874,420 900,653
Equity in earnings JV
Interest 340 339
Other 10,354 7,520 11,842
------------------------------------------------
Total Revenues 743,366 793,686 886,262 900,653
------------------------------------------------
Operating costs and expenses:
Property operating 352,105 341,201 363,950 374,868
Interest 144,140 142,071 137,246 132,584
Depreciation & amortization 138,340 142,211 140,790 139,383
G&A:
Related parties
Other 7 3,073
------------------------------------------------
Total operating costs 634,585 625,490 645,058 646,835
------------------------------------------------
------------------------------------------------
Net income (loss) 108,781 168,196 241,204 253,818
================================================
<CAPTION>
2001 2002 2003 2004
<S> <C> <C> <C> <C>
Revenues:
Rent and utilities 927,672 955,503 984,168 1,013,693
Equity in earnings JV
Interest
Other
----------------------------------------------------
Total Revenues 927,672 955,503 984,168 1,013,693
----------------------------------------------------
Operating costs and expenses:
Property operating 386,114 397,698 409,629 421,918
Interest 128,080 123,729 119,526 115,466
Depreciation & amortization 137,990 136,612 135,247 133,895
G&A:
Related parties
Other
----------------------------------------------------
Total operating costs 652,185 658,039 664,402 671,279
----------------------------------------------------
----------------------------------------------------
Net income (loss) 275,488 297,464 319,768 342,414
====================================================
</TABLE>
D-3
<PAGE>
Projections for joint venture property -- Windsor Park Properties 456
Rancho Margate, Winter Haven
<TABLE>
<CAPTION>
1997 1998 1999 2000
<S> <C> <C> <C> <C>
Revenues:
Rent and utilities 1,653,003 1,706,541 1,742,956 1,795,244
Equity in earnings JV
Interest 4,425 5,376
Other 6,668 9,212 2,928 --
----------------------------------------------------
Total Revenues 1,664,095 1,721,129 1,745,884 1,795,244
----------------------------------------------------
Operating costs and expenses:
Property operating 783,158 788,378 763,874 786,790
Interest 488,666 485,321 462,139 440,064
Depreciation & amortization 255,800 255,418 261,547 267,822
G&A:
Related parties 4 0
Other 8,030 8,014 9,324
----------------------------------------------------
Total operating costs 1,535,658 1,537,132 1,496,883 1,494,675
----------------------------------------------------
----------------------------------------------------
Net income (loss) 128,437 183,997 249,001 300,569
====================================================
<CAPTION>
2001 2002 2003 2004
<S> <C> <C> <C> <C>
Revenues:
Rent and utilities 1,849,102 1,904,575 1,961,712 2,020,563
Equity in earnings JV
Interest
Other -- -- -- --
-------------------------------------------------
Total Revenues 1,849,102 1,904,575 1,961,712 2,020,563
-------------------------------------------------
Operating costs and expenses:
Property operating 810,393 834,705 859,746 885,539
Interest 419,043 399,027 379,966 361,816
Depreciation & amortization 274,248 280,828 287,585 294,465
G&A:
Related parties
Other
-------------------------------------------------
Total operating costs 1,503,684 1,514,559 1,527,278 1,541,820
-------------------------------------------------
-------------------------------------------------
Net income (loss) 345,418 390,015 434,434 478,743
=================================================
</TABLE>
D-4
<PAGE>
Projections for joint venture property-- Windsor Park Properties 345
Apache East, Denali Park Estates
<TABLE>
<CAPTION>
1997 1998 1999 2000
<S> <C> <C> <C> <C>
Revenues:
Rent and utilities 520,676 640,865 693,151 713,946
Equity in earnings JV
Interest 349
Other 9,129 17,589 5,756 --
---------------------------------------------------
Total Revenues 530,155 658,454 698,907 713,946
---------------------------------------------------
Operating costs and expenses:
Property operating 277,012 344,998 315,147 324,602
Interest 204,912 289,853 262,374 237,500
Depreciation & amortization 156,697 190,044 199,579 209,592
G&A:
Related parties 98
Other 7,354 8,407 8,454
---------------------------------------------------
Total operating costs 646,073 833,302 785,554 771,694
---------------------------------------------------
---------------------------------------------------
Net income (loss) (115,918) (174,848) (86,647) (57,749)
===================================================
<CAPTION>
<S> <C> <C> <C> <C>
2001 2002 2003 2004
Revenues:
Rent and utilities 735,364 757,425 780,148 803,552
Equity in earnings JV
Interest
Other -- -- -- --
--------------------------------------------------
Total Revenues 735,364 757,425 780,148 803,552
--------------------------------------------------
Operating costs and expenses:
Property operating 334,340 344,370 354,701 365,342
Interest 214,984 194,603 176,154 159,454
Depreciation & amortization 220,108 231,152 242,749 254,928
G&A:
Related parties
Other
--------------------------------------------------
Total operating costs 769,432 770,125 773,604 779,724
--------------------------------------------------
--------------------------------------------------
Net income (loss) (34,068) (12,700) 6,544 23,828
==================================================
</TABLE>
D-5
<PAGE>
[LOGO OF THE WINDSOR CORPORATION]
SPECIALIZING IN
MANUFACTURED HOME
COMMUNITIES
--------------------------------
6160 SOUTH SYRACUSE WAY
GREENWOOD VILLAGE, CO 80111
(303) 741-3707
Steven G. Waite
President
____________, 2000
Re: Liquidation of Windsor Park Properties 5 ("WPP5")
-------------------------------------------------
Dear Broker:
Enclosed you will find the Consent Solicitation Statement and related proxy
materials that are being sent to the unit holders of WPP 5. The Consent
Solicitation Statement outlines a proposed transaction whereby all of the assets
held by WPP 5 will be acquired by N'Tandem Trust and, subsequently, WPP 5 will
be liquidated. Upon receiving the approval from a majority-in-interest of the
units to both of the proposals described in the Consent Solicitation Statement,
we will finalize the transaction, liquidate WPP 5 in accordance with its
partnership agreement and, as described in the Consent Solicitation Statement,
make a final liquidating distribution to unit holders of approximately $23.77
per unit. This liquidating distribution is substantially in excess of the
weighted average trading price of $14.43 per unit in the secondary markets, as
reported by The Partnership Spectrum, for the period of May 1, 1999 through June
30, 2000.
As you may recall, the WPP 5 investors paid $100 per partnership unit in our
public offering which ran from 1987 to 1988. Since the organization of WPP 5,
total distributions have been made to unit holders of approximately $112.80 per
unit. Upon receiving the final liquidating distribution of $23.77 per unit,
unit holders will have received approximately $136.57 per unit in total over the
term of their investment.
We encourage you to speak to your investors, answer their questions and
recommend that they consent to both of the proposals described in the Consent
----
Solicitation Statement. Also enclosed is a Questions and Answers Supplement
that we hope will be helpful in answering any questions that you or your
investors may have regarding the proposed transaction. If you have any
questions or comments, please feel free to call me at the above-listed number.
We appreciate your support of the proposed transaction.
Sincerely,
------------------------------
Steven G. Waite
President
Enclosures
<PAGE>
"Promptly upon receiving the consents
of the limited partners holding a
majority-in-interest of the units, the
Partnership will proceed with the [LOGO OF THE WINDSOR CORPORATION]
proposed Sales and Plan of Liquidation SPECIALIZING IN
resulting in cash distributions to limited MANUFACTURED HOME
partners of approximately $23.77 per COMMUNITIES
unit."
VERY IMPORTANT NOTICE
PLEASE READ AND RESPOND IMMEDIATELY
___________, 2000
Dear Limited Partner:
In order to provide limited partners with an opportunity to achieve
liquidity in their investment in Windsor Park Properties 5, A California Limited
Partnership (the "Partnership"), we have worked diligently to develop a plan
which would liquidate and dissolve the Partnership. Accordingly, we are pleased
to announce that N'Tandem Trust, a real estate investment trust managed by the
managing general partner of the Partnership, has offered to acquire immediately
all of the assets of the Partnership for cash which will enable the Partnership
to proceed with a plan of liquidation whereby limited partners will receive
final liquidating distributions estimated to be $23.77 per unit (the "Sales and
Plan of Liquidation").
We have enclosed in this package for your review the following documents
relating to the proposed Sales and Plan of Liquidation: (i) a Consent
Solicitation Statement and (ii) a Consent Form.
In order to proceed with the Sales and Plan of Liquidation, limited
partners holding a majority-in-interest of the Partnership's units of limited
partner interest must consent to both proposals relating to the Sales and Plan
----
of Liquidation. Limited partners may consent to the proposed Sales and Plan of
Liquidation by completing and returning the enclosed Consent Form provided for
that purpose on or before __________, 2000. Promptly upon receiving the
consents of limited partners holding a majority-in-interest of the units of
limited partner interest, the Partnership will proceed with the proposed Sales
and Plan of Liquidation.
Failure to consent and/or an abstention count as "no" votes. Please make
your desires count and "consent" to the proposed transactions.
We urge you to take the time to read the enclosed Consent Solicitation
Statement which describes in substantial detail the proposed Sales and Plan of
Liquidation and to complete and return your Consent Form in the postage-paid
envelope provided. Please remember, failure to consent and/or an abstention
count as "no" votes. This is your opportunity to liquidate your investment in
the Partnership for cash.
Should you have any questions about the Sales and Plan of Liquidation,
please do not hesitate to call Arlen Capital, the Partnership's solicitation
agent for the proposed transactions, at (800) 553-4039.
Very truly yours,
-----------------------------
Steven G. Waite
President
Enclosures
<PAGE>
WINDSOR PARK PROPERTIES 5
CONSENT SOLICITATION STATEMENT
QUESTIONS & ANSWERS SUPPLEMENT
1. Q. What are the Proposals that I am being asked to vote on?
A. Two Proposals are being proposed in the Consent Solicitation Statement
for approval by the Limited Partners. Proposal 1 is for the General
Partners to proceed with the Sales to N'Tandem Trust, an affiliate of
the Partnership, pursuant to the Purchase and Sale Agreement. Proposal
2 is for the General Partners to proceed with the Plan of Liquidation
following the consummation of the Sales.
2. Q. What happens if these Proposals are approved?
A. Approval of both of the Proposals will permit the General Partners to
----
proceed with the liquidation of the Partnership by selling the
Partnership's two wholly-owned properties and its partial Ownership
Interests in five other properties to N'Tandem Trust and to make
distributions of approximately $23.77 per Unit to the Limited
Partners.
3. Q. What happens if these Proposals are not approved?
A. If Limited Partners fail to consent to both of the Proposals, the
----
General Partners intend to explore such alternatives as may be
available to the Partnership. These alternatives may include selling
the Partnership's Properties to unaffiliated third parties or the
merger of the Partnership with another entity, each as further
described in the Consent Solicitation Statement. The General Partners
anticipate that selling such interests and winding up the Partnership
would take at least one year and probably longer. Additionally, the
General Partners believe it is likely that the prices paid by such
third parties would be substantially discounted due to the fact that
the Partnership owns only partial interests in five of the seven
Properties it has interests in and that such sales are also likely to
involve the payment of brokerage fees, thereby reducing liquidating
distributions to Limited Partners.
4. Q. What are the consequences if I do not vote?
A. The consent of Limited Partners holding at least a majority of the
Units is necessary to approve the Proposals. If you do not vote, you
will be considered to have abstained from consenting to the Proposals,
which has the same effect as voting "no" on the Proposals. In doing
so, you are effectively leaving the decision to consent or not to
consent to the Proposals in the hands of the other Limited Partners,
but as a Limited Partner you will be bound by the results of the
Consent Solicitation regardless of whether you send in your consent
form. It is very important, therefore, that you vote on the Proposals.
5. Q. How much are you going to pay for my Units?
A. No one is actually buying your Units in the proposed transactions.
N'Tandem has agreed to buy all of the assets currently held by the
Partnership. N'Tandem is willing to purchase all of the Properties
and is paying the full Appraised Value for the two wholly-owned
Properties and is only applying a 6.7% discount to the Appraised Value
of the Ownership Interests for the fact that the Partnership owns a
minority interest in the
<PAGE>
underlying properties. The Partnership will then pay off its remaining
liabilities and make final distributions to Limited Partners. The
General Partners estimate that the final distributions on the Units
will be approximately $23.77 per Unit.
6. Q. Why is a discount being applied to the Appraised Value of the
Ownership Interests?
A. In determining the purchase price to be paid for each of the Ownership
Interests, N'Tandem applied a 6.7% discount to the Appraised Value of
each Ownership Interest for the fact that the Partnership only owns a
minority interest in the underlying property. See Answer 5 above.
Generally, discounts are applied to the sale of partial interests in
real estate because, by their nature, partial interests are more
difficult to sell than wholly-owned properties due to (i) the lack of
control of the underlying property associated with such interests,
(ii) an increased difficulty in arranging future financing for such
interests and (iii) the disproportionately high costs associated with
the purchase and management of such interests. The General Partners
believe that the discount being applied in connection with the Sales,
based upon the opinion of the Appraiser, is substantially less than
the discount that would have been applied had the Ownership Interests
been sold to a third-party purchaser. All of the remaining interests
in the properties underlying the Ownership Interests not held by the
Partnership are held, directly or indirectly, by entities, including
N'Tandem, affiliated with the Managing General Partner. Details
relating to the discount being applied to the Ownership Interests are
described on pages 44 and 45 of the Consent Solicitation Statement.
7. Q. What does it mean to liquidate the Partnership?
A. All partnerships are finite-life entities, which means that they are
created to conduct business for a specified period of time. This
specified period of time is known as the partnership term. Following
the end of the term, the general partners of a partnership generally
will proceed to sell all of the partnership's assets, which is known
as a liquidation, if the term of the partnership is not otherwise
extended and, thereafter, make liquidating or final distributions of
cash to its partners.
8. Q. When will I get paid?
A. It is expected that the Sales will take place within 30 days of the
Limited Partners' consenting to the Proposals and that liquidating
distributions will be paid to the Limited Partners within 30 days of
the Sales. If the Limited Partners consent by the specified consent
date, it is expected that final distributions will be paid to Limited
Partners in _____ 2000.
9. Q. What risks are involved?
A. The Proposals are subject to material risks, conflicts of interest and
other considerations which are set forth in the Summary Term Sheet and
on pages 5, 16 and 17 of the Consent Solicitation Statement. They
include the following:
o The Sales, and the recommendations and views of the Managing
General Partner with respect to the Sales, are subject to
potential conflicts of interest;
2
<PAGE>
o Due to the potential conflicts of interests of the General
Partners, the purchase prices for the Properties and other terms
of the Sales may not be considered the result of arm's-length
negotiations and bargaining between independent parties despite
the efforts of the Independent Special Counsel and, as a result,
may not be as favorable as those that might have been obtained
had the purchase prices and terms of the Sales been the result of
such arm's-length negotiations;
o The General Partners have not engaged in any marketing efforts
with respect to the sale of the Properties to third parties;
o The purchase prices for the Properties are based upon Appraisals
rendered in April and May of 2000 and such Appraisals have not
been updated. Accordingly, such Appraisals may not reflect the
current fair market values of the Properties; and
o The Limited Partners will lose the opportunity to benefit from
potential increases in the market values of the Properties.
10. Q. What other options do I have?
A. As a practical matter, you only have a couple of options. First, you
can consent to, withhold consent to, or abstain with respect to, the
Proposals. If the holders of a majority of the Units consent to both
----
Proposals, the General Partners will proceed with a liquidation of the
Partnership and make liquidating distributions to the Limited Partners
estimated to be approximately $23.77 per Unit.
If holders of a majority of the Units fail to consent to either of the
Proposals, the General Partners intend to proceed to explore such
alternatives as may be available to the Partnership. These
alternatives may include selling the Partnership's Properties to
unaffiliated third parties or the merger of the Partnership with
another entity, each as further described in the Consent Solicitation
Statement.
Lastly, you can try to sell your Units in the Partnership.
Unfortunately, no established trading market for the Units exists.
Given the limited trading activity and limited demand for the Units
and recent sales prices of which we are aware, we don't think that's a
very attractive option.
11. Q. What happened to my initial investment of $100? Why am I getting less
than this amount now?
A. Total distributions to the Limited Partners since the Partnership's
inception have amounted to $112.80 per Unit. Final liquidating
distributions to Limited Partners if the Proposals are approved are
estimated to be approximately $23.77 per Unit, resulting in total
distributions to Limited Partners of approximately $136.57 per Unit
versus an initial investment of $100 per Unit.
12. Q. What about all of the Risk Factors and negative factors described in
the Consent Solicitation Statement? How can the proposed transactions
be fair given these factors?
A. The General Partners considered both positive and negative factors
(all of which are described on pages 25 through 28 of the Consent
Solicitation Statement) in reaching their determination that the Sales
and the Plan of Liquidation are fair to the Limited Partners from both
a financial point of view and from a procedural point of view.
3
<PAGE>
In reaching their determination that the Sales and the Plan of
Liquidation are fair to the affiliated and unaffiliated Limited
Partners from a financial point of view, the General Partners did not
assign relative weights to the positive and negative factors relating
the financial fairness of the Sales and the Plan of Liquidation or
determine that any one factor was of particular importance; rather,
the General Partners viewed the positive factors as a totality and the
negative factors as a totality and concluded that the positive factors
outweighed the negative factors. Accordingly, the General Partners
determined that the Sales and the Plan of Liquidation are fair to the
affiliated and unaffiliated Limited Partners from a financial point of
view.
In reaching their determination that the Proposals are fair to the
Limited Partners from a procedural point of view, the General Partners
concluded that the approval of the Proposals by a majority-in-interest
of the unaffiliated Limited Partners is sufficient to insure that
procedural fairness has been preserved for the Limited Partners.
The General Partners also believe that the potentially negative
factors influencing procedural fairness were in each case mitigated by
other factors or considerations, including the following:
o Although the Managing General Partner and N'Tandem are under
common control, the General Partners concluded that the common
control did not adversely affect the terms of the Sales for
Limited Partners and allowed N'Tandem to offer terms of the Sales
that they believed would not be available from third parties;
o The Managing General Partner engaged the Independent Special
Counsel to represent the interests of the unaffiliated Limited
Partners in connection with the Sales and Plan of Liquidation;
o The Managing General Partner retained Legg Mason to assess the
fairness of the aggregate purchase price to be paid to the
Partnership in the Sales;
o Even though the Appraisals were rendered in April and May of
2000, the General Partners believe that no material changes have
occurred in the Properties or in the conditions of the market for
manufactured home communities since those dates that would result
in higher values for the Properties; and
o The General Partners' belief that marketing the Properties held
by the Partnership would not have provided a better transaction
for the Limited Partners and would have ultimately delayed the
timing of the Sales and the distribution of liquidating proceeds
to the Limited Partners.
13. Q. What did the Independent Special Counsel conclude?
A. The Independent Special Counsel delivered a written report addressed
to the Managing General Partner for the benefit of the Limited
Partners describing the results of its review of, and negotiations
with, The Managing General Partner and N'Tandem. As a result of these
negotiations, The Managing General Partner and N'Tandem agreed to
modify the Sales and the Plan of Liquidation to the benefit of the
Limited Partners. The parties agreed to reduce the discount being
applied to the Appraised Values of the Ownership Interests from 10%,
the percentage discount originally agreed to by the parties, to 6.7%.
This reduction will increase the aggregate net proceeds to be paid to
the Limited Partners by $192,900. In addition, N'Tandem and its
affiliates also agreed to disclose in the
4
<PAGE>
Consent Solicitation Statement additional information relating to the
rights of the Limited Partners under the Partnership Agreement.
The report of the Independent Special Counsel is set forth in Appendix
B to the Consent Solicitation Statement.
14. Q. What is the purpose of the Fairness Opinion? What does the Fairness
Opinion say?
A. In connection with its analysis of the Sales and the Plan of
Liquidation, the Managing General Partner, on behalf of the
Partnership, engaged Legg Mason to render the Fairness Opinion, which
addresses the fairness, from a financial point of view, to the Limited
Partners of the aggregate purchase price to be paid by N'Tandem to the
Partnership for the Properties.
Legg Mason delivered the Fairness Opinion to the Managing General
Partner to the effect that, as of August 29, 2000, the aggregate
purchase price to be paid to the Partnership by N'Tandem for the
Properties is fair, from a financial point of view, to the Limited
Partners. In rendering such opinion, Legg Mason conducted (i) a
liquidation analysis assuming that the Properties were sold to
third-party purchasers; (ii) a comparable company analysis to
establish an implied equity value for the Units; and (iii) a
continuation analysis assuming that the Partnership extended its
stated term and the Properties continued to be held by the Partnership
until December 31, 2004.
The Fairness Opinion, which is set forth in Appendix A to the Consent
Solicitation Statement, should be read in its entirety for a
description of the procedures followed, assumptions and qualifications
made, matters considered and the limits of the review undertaken by
Legg Mason.
15. Q. When was the last Appraisal? Why were new Appraisals not done?
A. The Appraisals were rendered in April and May of 2000. The Appraisals
were not updated because the Managing General Partner (i) believes
that the Appraisals continue to reflect the fair market value of the
Properties, (ii) does not believe that any significant events have
occurred since that time which would cause the conclusions reached by
the Appraiser in the Appraisals and the Appraised Values to be
different had the Appraisals been rendered as of a more recent date
and (iii) is not aware of any material developments that are
reasonably likely to materially affect such conclusions.
16. Q. Will I be receiving future distributions?
A. No. The purpose of the liquidating distributions following the Sales
is to distribute out to the Partners all cash remaining in the
Partnership after payment of the Partnership's remaining liabilities.
Accordingly, once such distributions are made, there will be no
further distributions by the Partnership.
17. Q. Why is N'Tandem paying over $5.7 million when the net book value of
the Partnership's assets is approximately $3.9 million?
A. The purchase prices for the Properties are based upon the Appraised
Values of the Properties, which, in this case, exceeds their net book
value.
5
<PAGE>
18. Q. Instead of cash, can I get stock in N'Tandem?
A. No. When the General Partners structured the transaction they
structured it so that all of the Limited Partners would receive cash.
They did so because they believed that the Limited Partners would want
cash, rather than other securities.
19. Q. Why is N'Tandem willing to buy the Properties "as-is," without
representations and warranties?
A. The principal reason N'Tandem is willing to purchase the Properties
"as-is" and without representations and warranties is because of
N'Tandem's familiarity with the Properties due to the fact that The
Windsor Corporation, which is the Managing General Partner of the
Partnership, is also the external investment advisor to N'Tandem.
20. Q. Were any other third-party offers considered?
A. No, the General Partners did not engage, and are not currently
engaging, in any marketing efforts with respect to the sale of the
Properties to third parties.
21. Q. What are the advantages to me if this is approved?
A. The principal advantage to Limited Partners if the Sales and the Plan
of Liquidation are approved is that they will receive liquidating
distributions of approximately $23.77 per Unit promptly following
approval of the Proposals and that they will no longer be subject to
the risks inherent in their investment in the Partnership.
The Sales and the Plan of Liquidation also provide the Limited
Partners with the following benefits and advantages:
o N'Tandem is willing to purchase all of the Partnership's
Properties and is paying the full Appraised Value for the two
wholly-owned Properties and is only applying a 6.7% discount to
the Appraised Value of the Ownership Interests for the fact that
the Partnership owns a minority interest in the underlying
properties;
o Due to the familiarity of N'Tandem's external investment advisor
with the Properties, N'Tandem is willing to purchase the
Properties "as-is," and without representations and warranties
from the Partnership;
o Because N'Tandem is buying the Partnership's Properties in a
single transaction, and is buying the Properties without
representations and warranties from the Partnership, the General
Partners will be able to wind up the Partnership and make full
liquidating distributions promptly upon the approval of the Sales
and the Plan of Liquidation by the Limited Partners; and
o The Sales do not involve any brokerage fees payable by the
Partnership, resulting in a savings to the Partnership estimated
to be between $270,500 and $541,000 (based upon brokerage fees of
3% to 6% typically paid by sellers of real properties).
22. Q. What are the disadvantages to me if this is approved?
A. The principal disadvantages to the Limited Partners of the Sales and
the Plan of Liquidation are that:
6
<PAGE>
o The Sales and Plan of Liquidation are subject to the Risk Factors
identified in the Consent Solicitation Statement. See Answer 9
above;
o With respect to the Ownership Interests held by the Partnership,
the remaining interests in the properties underlying such
Ownership Interests are held by N'Tandem, which together with the
Managing General Partner is under common control of Chateau,
Windsor Park 345, an affiliated limited partnership which has the
Managing General Partner as its sole general partner and N'Tandem
and Windsor 7, an affiliated limited partnership, as its other
limited partners, or Windsor 456, an affiliated limited
partnership which has the Managing General Partner as its sole
general partner and N'Tandem as its other limited partner; and
o It is possible that Limited Partners might earn a higher return
on their investment if the Partnership retained ownership of the
Properties. By approving the Sales and the Plan of Liquidation,
Limited Partners will also be forgoing current benefits of the
ownership of the Properties, such as continuing distributions.
23. Q. Why are the General Partners proposing the Sales and the Plan of
Liquidation? How do they benefit the General Partners?
A. When the Partnership was formed, it was expected that the investment
period would expire no later than January 1994, and that the
Partnership's investments would then be sold and the Partnership
liquidated in accordance with the terms of the Partnership Agreement.
As of the date of the Consent Solicitation Statement, the Partnership
has held its current investments for a number of years beyond both the
anticipated investment period for the Properties and the time in which
the Limited Partners had a reasonable expectation to receive
distributions from the liquidation of their investments. In addition,
the Partnership has also held the Properties beyond its formal term,
as originally contemplated in its Partnership Agreement, of December
31, 1998 (which term has already been extended once to December 31,
2001). After considering the alternatives available to the
Partnership, the General Partners approved, and recommended that the
Partnership proceed with, the sale of the Properties to N'Tandem, an
affiliate of the Partnership, to provide the Limited Partners with
liquidity on their investments.
If the Sales and the Plan of Liquidation are approved by the Limited
Partners, the General Partners will receive 1% of the liquidating
proceeds in accordance with the Partnership Agreement.
Additionally, they will receive certain other benefits and fees, all
of which are described on pages 16 and 17 of the Consent Solicitation
Statement.
24. Q. What are the costs involved in proceeding with the Sales and the
Plan of Liquidation?
A. The General Partners have estimated the costs in connection with the
Consent Solicitation and the Sales and the Plan of Liquidation to be
approximately $398,900. Most of these costs relate to work which will
already have been done for the Partnership at the time of the mailing
of the Consent Solicitation Statement. Accordingly, they will be
incurred by the Partnership regardless of whether the Proposals are
adopted. A breakdown of these expenses and calculations relating to
the estimate of liquidating proceeds are set forth on page 24 of the
Consent Solicitation Statement.
7
<PAGE>
25. Q. How did Chateau and N'Tandem get involved with this?
A. Chateau first came into contact with the Partnership in 1992 when it
began to supply on-site management services to the Partnership and
certain affiliates of the Partnership. Further, in September 1997,
Chateau purchased all of the outstanding capital stock of The Windsor
Corporation, the Managing General Partner of the Partnership. Chateau
owns a 9.8% ownership interest in N'Tandem.
26. Q. Where can I get a copy of the Limited Partners' names and addresses?
A. A list of names and addresses of Limited Partners of the Partnership
is available to any Limited Partner who makes a request to the
Partnership for them. However, any recipient of a Limited Partner
list will need to comply with federal and state securities laws in
connection with the use of the list. Requests should be made to:
Windsor Park Properties 5 -- Investor Relations, 6160 South Syracuse
Way, Greenwood Village, Colorado 80111. In connection with any request
for a Limited Partner list, the Partnership will charge a fee of
$50.00 in order to offset certain costs associated with the processing
of such request and the copying and mailing of the list to the
requesting Limited Partner.
27. Q. What are my tax consequences?
A. The combined effect of the Sales and Plan of Liquidation for Limited
Partners who purchased Units in the original offering of Units is
expected to be a net taxable loss to Limited Partners of approximately
$0.25 per Unit.
28. Q. What is each of my Units worth today?
A. There is no established trading market for the Units, which makes it
tough to come up with a market value for the Units. However, the
estimated net liquidating proceeds payable in connection with the
Sales ($23.77 per Unit) are substantially higher than the weighted
average trading price of $14.43 per Unit in the secondary markets, as
reported by The Partnership Spectrum, for the period of May 1, 1999
through June 30, 2000.
29. Q. How much have I received in distributions to date?
A. Since the organization of the Partnership, total distributions to
Limited Partners have amounted to approximately $26,607,900 (or an
average of approximately $112.80 per Unit). If the Sales and Plan of
Liquidation are completed, total distributions to Limited Partners
will amount to approximately $32,096,000 (or an average of
approximately $136.57 per Unit), compared to an initial purchase price
for each Unit of $100.00.
Your actual past distributions on the Units will depend upon how long
you have held such Units. Distributions by the Partnership in the past
five years are set forth on page 14 of the Consent Solicitation
Statement.
30. Q. How can I dispose of my Units now (or later)?
A. As you are probably aware, a formal trading market for the Units does
not exist. If the Proposals are approved, liquidating distributions
(of approximately $23.77 per Unit) will be paid to Limited Partners,
the Partnership will be liquidated and dissolved, and the Units will
cease to exist.
8
<PAGE>
31. Q. What do you think I should do?
A. The General Partners believe that the Sales and the Plan of
Liquidation are fair, from both a financial and a procedural point of
view, to the Limited Partners and have recommended that Limited
Partners consent to the Proposals.
The reasons for their recommending that the Limited Partners consent
to the Sales and the Plan of Liquidation, and their reasons for their
belief that the Sales and the Plan of Liquidation are fair to the
Limited Partners are set forth in substantial detail on pages 25
through 28 of the Consent Solicitation Statement under the caption
"SPECIAL FACTORS -- Fairness of the Proposed Transactions;
Recommendation of the General Partners."
32. Q. The Units are in my husband's and my name -- he died last year --
what do I do?
A. The Partnership's attorneys have advised us that generally the
beneficiary of the Units under your husband's will has the right to
consent with respect to the Units on your husband's behalf if the
estate has been fully probated. If not, the executor or executrix
should be able to consent with respect to the Units on your husband's
behalf. We would urge you, however, to call the lawyer who handled
your husband's estate in order to address your particular situation.
33. Q. I hold these Units in my IRA -- who needs to sign in order for the
consent to be valid?
A. You need to speak to your IRA custodian or trustee. They will either
execute the consent with respect to your Units for you or direct you
to sign the consent with respect to the Units yourself.
34. Q. What additional paperwork do you need for my consent to be valid?
A. If the Units are solely in your name, the only thing you need to do is
to fully fill out the consent form, sign and date it and enclose it in
the pre-paid, pre-addressed envelope and mail or Federal Express the
envelope to Arlen Capital, LLC, the Partnership's solicitation agent
with respect to the Proposals, for receipt no later than _______,
2000.
If the Units are in multiple names, all Limited Partners need to sign
the consent form. Additionally, if someone other than the person who
is the Limited Partner of record is signing on behalf of such person,
then we need evidence of the signing person's authority to do so, such
as a copy of a power-of-attorney or letter of administration.
9
<PAGE>
THIS CONSENT IS SOLICITED BY THE GENERAL PARTNERS
OF
WINDSOR PARK PROPERTIES 5
The undersigned represents that he or she is the holder of Units in Windsor
Park Properties 5, A California Limited Partnership. The undersigned
acknowledges receipt from the General Partners of the Consent Solicitation
Statement, dated _________________, 2000. Capitalized terms used in this
consent have the meanings given to them in the Consent Solicitation Statement.
The General Partners request that the Limited Partners consent to the following
Proposals:
Proposal 1 -- Proposal 1 is for the General Partners to proceed with the Sales
to N'Tandem in accordance with the Purchase and Sale Agreement.
[ ] CONSENT [ ] WITHHOLD CONSENT [ ] ABSTAIN
Proposal 2 -- Proposal 2 is for the General Partners to proceed with the Plan
of Liquidation following such Sales.
[ ] CONSENT [ ] WITHHOLD CONSENT [ ] ABSTAIN
Each of Proposal 1 and Proposal 2 is conditioned upon approval of the other
Proposal by the Limited Partners. Accordingly, any Limited Partner desiring to
have the General Partners proceed with the Sales and the Plan of Liquidation
needs to consent to both Proposal 1 and Proposal 2.
----
PLEASE FILL IN THE APPROPRIATE BOX ABOVE WITH RESPECT TO EACH PROPOSAL AND SIGN
ON THE REVERSE SIDE.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Please sign exactly as your name appears on this consent. When Units are held
by joint tenants, both should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give full title of such. If a
corporation, please have this consent signed by an authorized officer. If a
partnership, please have this consent signed by a general partner. PLEASE FILL
IN THE DATE OF THIS CONSENT AS CONSENTS MUST BE DATED TO BE VALID. UNITHOLDERS
WHO SIGN AND DATE THIS CONSENT BUT FAIL TO OTHERWISE MARK THIS CONSENT WILL BE
DEEMED TO HAVE CONSENTED TO THE PROPOSALS.
PLEASE FILL OUT, SIGN AND RETURN THIS FORM BY 5:00 P.M. (EASTERN DAYLIGHT TIME)
ON ________________________, 2000.
___________________________________________
Signature
___________________________________________
Signature (if held jointly)
Dated: ____________________________________
