SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Rule 13-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
Amendment No. 2
DECADE'S MONTHLY INCOME & APPRECIATION FUND -- A LIMITED PARTNERSHIP
(Name of the Issuer)
DECADE'S MONTHLY INCOME & APPRECIATION FUND -- A LIMITED PARTNERSHIP
(Name of Person Filing Statement)
Limited Partnership Interests
(Title of Class of Securities)
None
(CUSIP Number of Class of Securities)
Jeffrey Keierleber
c/o Decade Companies
Decade's Monthly Income & Appreciation Fund--A Limited Partnership
250 Patrick Boulevard, Suite 140
Brookfield, Wisconsin 53045-5864
with copies to
Conrad G. Goodkind, Esq.
Quarles & Brady
411 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202-4497
(Names, Addresses and Telephone Numbers of Persons Authorized to
Receive Notices and Communications
on Behalf of Person Filing Statement.)
This Statement is filed in connection with (check the appropriate
box):
a. [ ] The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C or Rule
13e-3(c) under the Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities
Act of 1933.
c. [X] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information
statement referred to are preliminary copies:
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This Amendment No. 2 to Rule 13e-3 Transaction Statement (the
"Statement") relates to an issuer tender offer by Decade's Monthly
Income & Appreciation Fund -- a Limited Partnership (the "Partnership") to
purchase outstanding limited partnership interests (the "Interests") upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
November 21, 1995 (including the annexes thereto, the "Offer to Purchase"),
and in the related Letter of Acceptance (which together constitute the
"Offer"), copies of which have already been filed as Exhibits (d)(1) and
(d)(2) hereto, respectively. This Statement is being filed by the
Partnership.
Capitalized terms used in this Statement and not defined herein
shall have the meanings set forth in the Offer to Purchase.
Concurrently with the filing of this Statement, the Partnership is
filing with the Securities and Exchange Commission, an Amendment to the
Schedule 13E-4 Issuer Tender Offer Statement. A copy of the Offer to
Purchase was attached as Exhibit 1 thereto. The information contained
in the Offer to Purchase is incorporated by reference in answer to the
items of this Statement and the Cross Reference Sheet set forth below
shows the location in the Offer to Purchase of the information required
to be included in response to the items of this Statement. The information
contained in the Offer to Purchase, including all exhibits and annexes
thereto, is hereby expressly incorporated by reference and the responses
to each item herein are qualified in their entirety by reference to the
information contained in the Offer to Purchase and the exhibits and annexes
thereto.
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CROSS REFERENCE SHEET
(Pursuant to General Instruction to Schedule 13E-3)
Item of Location in Offer to Repurchase Schedule 13E-3
(for incorporation by reference)
Item 1. Issuer and Class of Security Subject to the Transaction.
(a) "The Partnership--Background of the Partnership."
(b) "The Partnership--Background of the Partnership."
(c) "Lack of Market and Distributions."
(d) "Lack of Market and Distributions."
(e) Not Applicable.
(f) Not Applicable.
Item 2. Identity and Background.
This Schedule 13E-3 is being filed only by the Partnership, the issuer of
the class of securities which is the subject of this Rule 13e-3 transaction.
(a)-(d) "The Partnership--Background of the Partnership."
(e)-(f) During the past five years, neither the Partnership nor
any of the persons enumerated in General Instruction C
to Schedule 13E-3 has been (i) convicted in a criminal
proceeding (excluding traffic violations or similar
misdemeanors) or (ii) a party to a civil proceeding of
a judicial or administrative body of competent
jurisdiction, and, as a result of such proceeding, was
or is subject to a judgment, decree or final order
enjoining further violation of, or prohibiting
activities subject to, federal or state securities laws
or finding any violation of such laws.
(g) All relevant persons are citizens of the United States of
America.
Item 3. Past Contacts, Transactions or Negotiations.
(a) Not Applicable as the Schedule is being filed by the issuer
alone.
(b) "The Partnership--Interests of Certain Persons in the Offer."
Item 4. Terms of the Transaction.
(a) "The Offer."
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(b) "The Offer--Proration Rights."
Item 5. Plans or Proposals of the Issuer or Affiliate.
(a)-(g) "The Partnership--Certain Effects of the Offer;" "The
Partnership--Conduct of the Partnership After the
Offer."
Item 6. Source and Amount of Funds or Other Consideration.
(a)-(d) "Financing the Offer."
Item 7. Purposes, Alternatives, Reasons and Effects.
(a)-(c) "The Partnership--Background for the Offer."
(d) "The Partnership--Certain Effects of the Offer."
Item 8. Fairness of the Transaction.
(a)-(f) "The Partnership--Determination of the Offer Price."
Item 9. Reports, Opinions, Appraisals and Certain Negotiations.
(a)-(c) "The Partnership--November 1994 Appraisal of The
Meadows I;" "The Partnership--Opinion of The Valuations
Group."
Item 10. Interest in Securities of the Issuer.
(a)-(b) "Security Ownership."
Item 11. Contracts, Arrangements or Understandings with Respect to the
Issuer's Securities.
"The Partnership--Interests of Certain Persons in the Offer."
Item 12. Present Intention and Recommendation of Certain Persons with
Regard to the Transaction.
(a) "The Partnership--Interests of Certain Persons in the Offer."
(b) "Security Ownership;" "The Offer."
Item 13. Other Provisions of the Transaction.
(a) "The Offer."
(b)-(c) Not Applicable.
Item 14. Financial Information.
(a) "Financial Statements."
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(b) "Pro Forma Financial Data."
Item 15. Persons and Assets Employed, Retained or Utilized.
(a)-(b) "The Offer;" "Financing the Offer--Estimated Costs and
Fees."
Item 16. Additional Information.
The Offer, the Annex and Exhibits attached hereto.
Item 17. Material to be filed as Exhibits
(a) Not Applicable
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Page
Number is
Sequentially
Numbered in
(b) (1) Fairness opinion of The Valuations Group Amendment No.
(attached as Annex B to the Offer to 1 to Schedule
Purchase). *
(2) Appraisal of The Meadows I, Report Letter *
dated November 18, 1994, of T.M. Warner MAI,
SRA (attached as Annex A to the Offer to
Purchase).
(3) Analysis of The Valuations Group forwarded to *
the Partnership supporting fairness opinion.
(4) The Partnership's Cover Letter to Limited *
Partners, with the Offer to Purchase.
(5) Supplemental Letter to Limited Partners.
(6) Cover Letter to Limited Partners, dated
December 7, 1995.
(c) Not Applicable.
(d) (1) Offer To Purchase, dated November 21, 1995. *
(2) Letter of Acceptance. *
(e) Not Applicable.
(f) Not Applicable.
*Previously Filed
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete
and correct.
Dated: December 6, 1995.
DECADE'S MONTHLY INCOME & APPRECIATION
FUND -- A LIMITED PARTNERSHIP
BY: /s/Jeffrey Keierleber
Jeffrey Keierleber, General
Partner of Decade Companies,
General Partner of the Partnership
DECADE'S MONTHLY INCOME & APPRECIATION FUND
--A LIMITED PARTNERSHIP
SUPPLEMENTAL LETTER TO ALL LIMITED PARTNERS
Introduction
In addition to the information set forth in the Offer to
Purchase Limited Partnership Interests, dated November 21, 1995,
and the Annexes and Exhibits thereto, Limited Partners of
Decade's Monthly Income & Appreciation Fund--A Limited
Partnership (the "Partnership") should carefully consider the
following information in deciding whether to tender limited
partnership interests ("Interests") upon the terms and subject to
the conditions set forth in this Offer to Purchase and in the
related Letter of Acceptance (which together constitute the
"Offer"). The Offer, proration period, and withdrawal rights
will expire at 12:00 midnight, Milwaukee time, on December 21,
1995, unless extended by the Partnership.
November 1994 Appraisal of The Meadows I
In arriving at the $3,075,000 appraised November 1994 market
value of The Meadows I apartment complex owned by the
Partnership, T. M. Warner, the appraiser, utilized three methods,
each of which derived a different value.
The results of these three approaches are
Cost $3,200,000
Market or Sales Comparison $3,100,000
Income $3,075,000
The appraiser's underlying analysis, supporting documents
and additional information on each of these three approaches is
set forth in the appraisal, which is attached in its entirety as
Annex A to the Offer to Purchase. For further information on the
Cost Approach, Limited Partners should review the section of the
appraisal captioned "Cost Approach." For further information on
the Market or Sales Comparison, Limited Partners should review
the section captioned "Market or Direct Sales Comparison." For
information on the income approach, including the estimates and
assumptions thereunder, including the discount rate, Limited
Partners should review the section of the appraisal captioned
"Income Approach."
Opinion of the Valuations Group
The Partnership retained The Valuations Group to prepare and
submit an opinion in connection with the fairness of the Offer
Price, and such opinion has been rendered. A complete copy of
the opinion is attached as Annex B to the Offer to Purchase and
Limited Partners are urged to review the opinion in its entirety.
Prior to the Partnership retaining The Valuations Group in August
1995, The Valuations Group estimated the fair market value of an
Interest to be $415 for an unrelated client. With two
exceptions, the August 1995 valuation utilized methodology
similar to that described in the Offer to Purchase: (a) the
August 1995 fair market value estimate was for the market value
of a fractional interest in the Partnership, whereas this Offer
is for all Interests, subject to proration and other terms and
conditions of the Offer; and (b) the August 1995 valuation
utilized June 30, 1995, data, whereas the fairness opinion in
this Offer utilized September 30, 1995. The Valuations Group has
opined that an Offer Price of $800 is fair to holders from a
financial point of view.
The Partnership has been informed that in deriving the cash
flow for part of its analysis supporting the fairness opinion
(described on page 7 of the Offer to Purchase), The Valuations
Group derived an estimate of cash flow of $22.44 per Interest,
utilizing the following method: First, The Valuations Group
estimated revenues by assuming that 24 apartments were rented at
$510 per month and 64 apartments were rented at $595 (this is the
midrange of the rent revenue for The Meadows I). In deriving the
net revenue, The Valuations Group assumed a 7.5% vacancy rate.
The Valuations Group then assumed a 4% increase in the amount of
other income of $15,910 reported in the Partnership's 1994
financial statement. In order to determine total property costs,
The Valuations Group then estimated expenses to be $3.92 per
square foot (utilizing Institute of Real Estate Management
statistics for the Madison, Wisconsin area). (The Valuations
Group calculated the Partnership's 1994 property expenses at
approximately $3.82 per square foot.) Utilizing these
assumptions, The Valuations Group estimated the property's net
operating income to be $296,142 and, after eliminating $22,000 in
capital replacement reserve (an estimate of the reserve based
upon approximately $250 per apartment unit), calculated an
adjusted property net operating income of $274,142 for the
property. The Valuations Group then eliminated interest expense
on acquisition fees (based upon the 1994 amount of $21,850) and
subtracted $150,000 of estimated administrative expenses (based
upon an estimate by The Valuations Group of expected
administrative expense based upon its review of prior historic
averages and an absence of litigation costs) and derived a cash
flow of $112,241, which is cash flow before consideration of
General Partner's distributive share. Under the Limited
Partnership Agreement, Limited Partners would receive 95% of the
derived cash flow; therefore, net cash flow to the Limited
Partners was estimated to be $106,629, or $22.44 per Interest.
Utilizing the average cash flow multiplier described in the Offer
to Purchase of 9.0X, The Valuations Group derived a $202 per
Interest estimate under this approach.
In deriving its opinion, The Valuations Group also
considered that fractional, non-controlling interests in limited
partnerships typically trade at discounts to the partnership's
net asset value and has prepared a report based upon its own
methodology. These discounts are often substantial and reflect
investor preferences for a partnership's unique investment
characteristics. The Valuations Group has applied discounts and
premiums to net asset value based upon internally derived
weightings, which represent The Valuations Group's subjective
judgment as to the relative influence of a number of key factors
on the value of a non-controlling, minority interest in the
Partnership. These relative influences are reflected as
additions to or subtractions from net asset value and are
expressed as premiums or discounts applied thereto. In deriving
the applicable discount for a non-controlling, minority interest
in the Partnership, The Valuations Group considered the following
factors: secondary market liquidity and investment control, cash
flow and distributions, asset type and quality, management
capabilities and fee structure, market capitalization, portfolio
diversification, capital structure (debt vs. equity), liquidation
time horizon, goodwill, recent historical performance, and
analytical complexity. Factors which figured most prominently in
deriving the discount appropriate to estimate the price for a
non-controlling interest in the Partnership were (i) the absence
of meaningful trading activity for Interests in the Partnership
and lack of control associated with minority interests (a 30%
discount) and small market capitalization (a 1.25% discount);
(ii) lack of current distributions (a 2.5% discount); (iii) the
recent weakening of Partnership operating fundamentals (which
included the reduction in property net operating income from 1992
to 1994, and the first quarter of 1995 reduction in occupancy,
resulting in a 5% discount in the model); (iv) prospects for a
lengthy holding period (which arises from the lack of recent
offers and the General Partner's intentions to hold the property,
resulting in a 2.5% discount in the model); (v) high general
administrative costs arising from the lawsuit and other matters
(a 7.5% discount); and (vi) lack of diversification (2.5%). The
Valuations Group, applying the fractional interest discount
approach derived a value of $419 per Interest, which represents a
net 51.25% discount from the Partnership's net asset value.
Proration
In the event that more than 1,313 Interests are tendered by
the Expiration Date and the Partnership does not have sufficient
funds to purchase all of the Interests tendered by that date, the
Partnership will prorate purchases from the Limited Partners as
follows:
1. The Partnership will first accept all of the tenders
from Limited Partners who own less than 100 Interests and who
tender all of their Interests by the Expiration Date. If this
amount is in excess of 1,313 and the Partnership does not, or
cannot borrow additional funds, the Partnership will prorate
purchases based upon the amount of Interests the Partnership can
purchase (a minimum of 1,313) times the ratio of (a) the number
of Interests tendered by each Limited Partner who owns less than
100 Interests and tendered all of their Interests to (b) the
total number of Interests tendered by all Limited Partners who
own less than 100 Interests and tender all of their Interests (up
to the 1,313 or the maximum, if higher, the Partnership can
purchase, if applicable). The General Partner will prorate such
that every Limited Partner who has prorated Interests will not
hold Fractional Interests and will not hold less than three
Interests.
2. If the above category of tendering Limited Partners has
been satisfied and if there are funds to purchase other Interests
tendered, the Partnership will do so. This second category will
consist of those (i) Limited Partners who own more than 100
Interests and (ii) Limited Partners who own less than 100
Interests and who tendered some, but not all of their Interests.
If necessary, the Partnership will prorate tenders based upon the
ratio of the number of Interests tendered by each Limited Partner
in this second category to the total number of Interests tendered
by the remaining Limited Partners in this second category (up to
the maximum it can purchase), provided that the Partnership may
round the prorated amount such that a Limited Partner who tenders
Interests does not hold any Fractional Interest and must hold at
least three Interests. If a Limited Partner decides to tender
some, but not all, Interests, such Limited Partner must tender an
amount such that the Limited Partner does not hold Fractional
Interests and holds at least three Interests.
December 6, 1995
Re: Decade's Monthly Income & Appreciation Fund
Offer to Purchase Limited Partnership Interests
Dear Investor:
Enclosed with this letter is a Supplemental Letter to all
Limited Partners to provide additional information with respect
to the Offer to Purchase Limited Partnership Interests dated
November 21, 1995. The Supplemental Letter provides additional
information with respect to the November 1994 Appraisal of The
Meadows I, the Opinion of the Valuations Group, and the Proration
procedure.
Reminder. The Offer by the Partnership to purchase your
Limited Partnership Interests for cash expires at 12:00 midnight,
Milwaukee, Wisconsin time on Thursday, December 21, 1995 (unless
otherwise extended by the Partnership). If you have not already
accepted the Offer, and wish to do so, you must sign and timely
return the Letter of Acceptance.
Please note that our office will be open until 5:00 p.m.,
Milwaukee, Wisconsin time, on Thursday, December 21, 1995. Our
fax machine (414-792-0808) will be available to receive your
Letter of Acceptance after office hours through 12:00 midnight,
Milwaukee, Wisconsin time.
Should you have any questions, please feel free to call me.
Very truly yours,
Michael Sweet
Partnership Manager
Enclosure
