<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
Amendment No. 8
Capital Realty Investors Tax Exempt Fund Limited Partnership ("CRITEF")
Capital Realty Investors Tax Exempt Fund III Limited Partnership ("CRITEF III")
- -------------------------------------------------------------------------------
(Names of Issuers)
Capital Realty Investors Tax Exempt Fund Limited Partnership
CRITEF Associates Limited Partnership
Capital Realty Investors Tax Exempt Fund III Limited Partnership
CRITEF III Associates Limited Partnership
-----------------------------------------
(Names of Persons Filing Statement)
Beneficial Assignee Certificates, CRITEF, Series I and II
Beneficial Assignee Certificates, CRITEF III
--------------------------------------------
(Titles of Classes of Securities)
140 437 10 4, CRITEF, Series I
140 437 20 3, CRITEF, Series II
140 438 10 2, CRITEF III
------------------------------------------
(CUSIP Numbers of Classes of Securities)
CRI, Inc.
William B. Dockser
Chairman of the Board
The CRI Building
11200 Rockville Pike
Rockville, Maryland 20852
(301) 468-9200
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of Persons Filing Statement)
Copies to:
----------
Robert B. Hirsch, Esq.
ARENT FOX KINTNER PLOTKIN & KAHN
1050 Connecticut Avenue
Washington, D.C. 20036
This statement is filed in connection with (check the appropriate
box):
a. [X] 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. [_] A tender offer.
d. [_] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies. [_]
Calculation of Filing Fee
Transaction valuation* Amount of filing fee
$162,301,663 $32,461
* Pursuant to the proposed merger, the public holders of beneficial assignee
certificates ("BACs") in CRITEF and CRITEF III, who hold in the aggregate
2,280,000 BACs in CRITEF, Series I, 3,238,760 BACs in CRITEF, Series II,
and 5,258,268 BACs in CRITEF III, will be entitled to receive $15.00 per
BAC in CRITEF, Series I, $14.68 per BAC in CRITEF, Series II, and $15.32
per BAC in CRITEF III, in each case, subject to adjustment.
[X] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount previously Paid: $32,461
Form or Registration No: Schedule 14A
Filing Party: CRITEF and CRITEF III
Dates Filed: March 18, 1996, August 26, 1996
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
Amendment No. 8
Capital Realty Investors Tax Exempt Fund Limited Partnership ("CRITEF")
Capital Realty Investors Tax Exempt Fund III Limited Partnership ("CRITEF III")
- -------------------------------------------------------------------------------
(Names of Issuers)
Watermark Partners, L.P.
Watermark III Partners, L.P.
Capital Apartment Properties, Inc.
Apollo Real Estate Advisors, L.P.
----------------------------------
(Names of Persons Filing Statement)
Beneficial Assignee Certificates, CRITEF, Series I and II
Beneficial Assignee Certificates, CRITEF III
--------------------------------------------
(Title of Classes of Securities)
140 437 10 4, CRITEF, Series I
140 437 20 3, CRITEF, Series II
140 438 10 2, CRITEF III
------------------------------------------
(CUSIP Numbers of Classes of Securities)
Capital Apartment Properties, Inc.
Richard L. Kadish
The CRI Building
11200 Rockville Pike
Rockville, Maryland 20852
(301) 268-8700
and
Apollo Real Estate Advisors, L.P.
Michael D. Weiner
1999 Avenue of the Stars
Los Angeles, California 90057
(310) 201-4100
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of Persons Filing Statement)
Copies to:
----------
Janet C. Walden, Esq.
SCHULTE ROTH & ZABEL
900 Third Avenue
New York, New York 10021
This statement is filed in connection with (check the appropriate
box):
a. [X] 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. [_] A tender offer.
d. [_] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies. [_]
Calculation of Filing Fee
Transaction valuation* Amount of filing fee
$162,301,663 $32,461
* Pursuant to the proposed merger, the public holders of beneficial assignee
certificates ("BACs") in CRITEF and CRITEF III, who hold in the aggregate
2,280,000 BACs in CRITEF, Series I, 3,238,760 BACs in CRITEF, Series II,
and 5,258,268 BACs in CRITEF III, will be entitled to receive $15.00 per
BAC in CRITEF, Series I, $14.68 per BAC in CRITEF, Series II, and $15.32
per BAC in CRITEF III, in each case, subject to adjustment.
[X] Check box if any part of the fee is offset as provided by Rule 0-1(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount previously Paid: $32,461
Form or Registration No: Schedule 14A
Filing Party: CRITEF and CRITEF III
Dates Filed: March 18, 1996, August 26, 1996
<PAGE>
INTRODUCTION
This Amendment No. 8 to the Rule 13e-3 Transaction Statement is being filed
by Capital Realty Investors Tax Exempt Fund Limited Partnership ("Fund I-II"),
Capital Realty Investors Tax Exempt Fund III Limited Partnership ("Fund III"
and, together with Fund I-II, the "Funds"), CRITEF Associates Limited
Partnership, the general partner of Fund I-II ("Fund I-II GP"), CRITEF III
Associates Limited Partnership, (the general partner of Fund III and, together
with Fund I-II GP, the "General Partners"), Watermark Partners, L.P.
("Watermark"), Watermark III Partners, L.P. ("Watermark III"), Capital Apartment
Properties, Inc., the general partner of Watermark and Watermark III
("CAPREIT"), and Apollo Real Estate Advisors, L.P., the beneficial owner of
99.83% of the outstanding capital stock of CAPREIT ("Apollo"), in connection
with the proposed mergers of Watermark and Watermark III with and into Fund I-II
and Fund III, respectively, and related transactions. Fund I-II and Fund III are
the issuers of the classes of securities which are the subject of the Rule 13e-3
transaction.
On September 23, 1995, Fund I-II and Fund III filed with the Securities and
Exchange Commission their definitive Proxy Statement relating to the
solicitation of proxies by Fund I-II and Fund III to vote upon: (1) a proposal
to approve and adopt (a) with respect to Fund I-II, the Fourth Amended and
Restated Agreement and Plan of Merger, dated as of August 21, 1996, among Fund
I-II, CRITEF Associates Limited Partnership and Watermark, and others, and (b)
with respect to Fund III, the Fourth Amended and Restated Agreement and Plan of
Merger, dated as of August 21, 1996, among Fund III, CRITEF III Associates
Limited Partnership and Watermark III, and others, and in each case, to approve
certain amendments to the Agreements of Limited Partnership of each of the Funds
to authorize expressly the foregoing, (2) a proposal to approve, with respect to
each Fund, (i) the sale of the 1.01% general partner interest by such Fund's
general partner to CAPREIT GP, Inc., a newly-formed, wholly-owned subsidiary of
CAPREIT ("CAPREIT GP"), in exchange for $500,000, and the substitution of
CAPREIT GP as the general partner of such Fund in its stead, and (ii) the
issuance of limited partner interests in each of the Funds to CAPREIT or its
designees in exchange for the contribution of real property or other assets, and
the admission of CAPREIT or its designees as limited partners of each of the
Funds, and, in each case, certain amendments to the Agreements of Limited
Partnership of each of the Funds to authorize expressly the foregoing, (3) any
adjournments of the Special Meetings to allow for the additional solicitation of
BAC Holder votes in order to obtain more votes in favor of the foregoing
proposals, and (4) any other business as may properly come before the Special
Meetings or any adjournments or postponements thereof.
A copy of the definitive Proxy Statement was attached as Exhibit 17(d)
to Amendment No. 3 to the Rule 13e-3 Transaction Statement. The sole purpose of
this Amendment No. 8 to the Rule 13e-3 Transaction Statement is to amend Item 10
"Interests in Securities of the Issuers" and Item 17 "Material to be Filed as
Exhibits" by filing certain additional exhibits.
ITEM 10 INTERESTS IN SECURITIES OF THE ISSUER
Item 10 is hereby amended and restated as follows:
(a)........................ SECURITY OWNERSHIP OF BENEFICIAL HOLDERS AND
MANAGEMENT.
CAPREIT beneficially owns 1,000 BACs in Series I
of Fund I-II, 1,000 BACs in Series II of Fund I-II
and 1,000 BACs in Fund III. None of Watermark,
Watermark III, or Apollo beneficially owns any
BACs in either of the Funds. As described in the
Proxy Statement (see "Security Ownership of
Beneficial Holders and Management"), CAPREIT has
the right to obtain a proxy to vote the 100 BACs
in Series I of Fund I-II, 200 BACs in Series II of
Fund I-II and 200 BACs in Fund III, in each case
representing less than .01% of the total number of
BACs outstanding in each such Fund, beneficially
owned by Mr. Martin C. Schwartzberg.
(b)........................ On October 25, 1996 CAPREIT purchased, in
open-market transactions on the American Stock
Exchange, 500 BACs in Series I of Fund I-II at a
price of $14.25 per BAC, 500 BACs in Series I of
Fund I-II at a price of $14.125 per BAC, 1,000 BACs
in Series II of Fund I-II at a price of $13.75 per
BAC and 1,000 BACs in Fund III at a price of $14.50
per BAC. In connection with these purchases,
CAPREIT paid approximately $814 in commissions and
fees.
<PAGE>
Item 17 MATERIAL TO BE FILED AS EXHIBITS
Item 17 is hereby amended and restated as follows:
(a)............... Commitment Letter, dated as of March 29, 1996,
between CAPREIT and CentRe Mortgage Capital L.L.C.
(b)(1)............ Fairness Opinion of Oppenheimer & Co., Inc.
delivered to Fund I- II, Series I, dated March 14,
1996, appears as Appendix B-1 to the preliminary
Proxy Statement filed as Exhibit 17(d) to Amendment
No.3 to the Rule 13e-3 Transaction Statement.
(b)(2)............ Fairness Opinion of Oppenheimer & Co., Inc.
delivered to Fund I-II, Series II, dated March 14,
1996, appears as Appendix B-2 to the preliminary
Proxy Statement filed as Exhibit 17(d) to
Amendment No.3 to to the Rule 13e-3 Transaction
Statement.
(b)(3)............ Fairness Opinion of the Oppenheimer & Co., Inc.
delivered to Fund III, dated March 14, 1996,
appears as Appendix B-3 to the preliminary Proxy
Statement filed as Exhibit 17(d) to Amendment No.3
to the Rule 13e-3 Transaction Statement.
(b)(4)............ Report of Oppenheimer & Co., Inc. in connection
with its Fairness Opinions of March 14, 1996.
(b)(5)............ Fairness Opinion of Oppenheimer & Co., Inc.
delivered to Fund I-II, Series I, dated September
20, 1996, appears as Appendix B-1 to the definitive
Proxy Statement filed as Exhibit 17(d) to Amendment
No. 3 to the Rule 13e-3 Transaction Statement.
(b)(6)............ Fairness Opinion of Oppenheimer & Co., Inc.
delivered to Fund I-II, Series II, dated September
20, 1996, appears as Appendix B-2 to the definitive
Proxy Statement filed as Exhibit 17(d) to Amendment
No. 3 to the Rule 13e-3 Transaction Statement.
(b)(7)............ Fairness Opinion of Oppenheimer & Co., Inc.
delivered to Fund III, dated September 20, 1996,
appears as Appendix B-3 to the definitive Proxy
Statement filed as Exhibit 17(d) to Amendment No. 3
to the Rule 13e-3 Transaction Statement.
(b)(8)............ Report of Oppenheimer & Co., Inc. in connection
with its Fairness Opinions of September 20, 1996.
(c)(1)............ Fourth Amended and Restated Agreement and Plan of
Merger, dated as of August 21, 1996, among Fund
I-II, CRITEF Associates Limited Partnership,
Watermark and others, appears as Appendix A-1 to
the definitive Proxy Statement filed as Exhibit
17(d) to Amendment No. 3 to the Rule 13e-3
Transaction Statement.
(c)(2)............ Fourth Amended and Restated Agreement and Plan of
Merger, dated as of August 21, 1996, among Fund
III, CRITEF III Associates Limited Partnership and
Watermark III, and others, appears as Appendix A-2
to the definitive Proxy Statement filed as Exhibit
17(d) to Amendment No. 3 to the Rule 13e-3
Transaction Statement.
<PAGE>
(c)(3)............ Complaint for Breach of Fiduciary Duty in the case
styled Zakin v. Dockser, et al. (C.A. No. 14558)
(c)(4)............ Complaint for Breach of Fiduciary Duty in the case
styled Wingard v. Dockser, et al. (C.A. No. 14604)
(c)(5)............ Stipulation of Settlement, dated as of May 13,
1996, relating to the cases styled Zakin v.
Dockser, et al. and Wingard v. Dockser, et al.
(c)(6)............ Amendment to Stipulation of Settlement, dated
August 13, 1996, relating to the cases styled
Zakin v. Dockser, et al. and Wingard v. Dockser,
et al.
(c)(7)............ Final Order and Judgment of the Court of Chancery
of the State of Delaware in and for New Castle
County, dated August 14, 1996, approving the
Stipulation of Settlement as amended in the cases
styled Zakin v. Dockser, et al. and Wingard v.
Dockser, et al.
(c)(8)............ Complaint for False or Misleading Statements in the
case styled Dominium Tax Exempt Fund, L.L.P. v.
-----------------------------------
Dockser, et al.
---------------
(c)(9)............ Complaint for Preliminary and Permanent Injuncture
Relief against unlawful Proxy solicitation in the
case styled Capital Realty Investors Tax Exempt
-----------------------------------
Fund Limited Partnership, et al. v. Dominium Tax
------------------------------------------------
Exempt Fund L.L.P.
------------------
(c)(10)........... Defendants' Emergency Motion to Enforce Court's
Final Order In Re Capital Realty Investors Tax
----------------------------------
Exempt Fund Limited Partnership's Litigation.
---------------------------------------------
(c)(11)........... Memorandum Opinion in the case styled Capital
-------
Realty Investors Tax Exempt Fund Limited
----------------------------------------
Partnership, et al. v. Dominium Tax Exempt Fund
-----------------------------------------------
L.L.P.
------
(c)(12)........... Order and Memorandum of Judge Lebedoff in the case
styled Dominium Tax Exempt Fund, L.L.P. v.
-----------------------------------
Dockser, et. al.
----------------
(d)(1)............ Letters to BAC Holders, Notice of Special
Meetings, definitive Proxy Statement and forms of
Proxy.
(d)(2)............ October 3, 1996 Letter to BAC Holders from the
Funds
(d)(3)............ October 4, 1996 Press Release issued by the Funds
(d)(4)............ October 3, 1996 Press Release issued by CARPREIT
(d)(5)............ October 11, 1996 Letter to BAC Holders from the
Funds
(d)(6)............ October 14, 1996 Press Release issued by CARPREIT
(d)(7)............ October 16, 1996 Press Release issued by CARPREIT
(d)(8)............ October 18, 1996 Letter to BAC Holders from the
Funds
(d)(9)............ October 18, 1996 Press Release issued by CAPREIT
(d)(10)........... October 22, 1996 Letter to Bac Holders From the
Funds
(d)(11)........... October 28, 1995 Press Release issued by the Funds.
(d)(12)........... October 29, 1996 Letter to BAC Holders from the
Funds.
(e)............... Not applicable.
(f)............... At this time no written instruction, form or other
material currently exists with respect to any oral
solicitation or recommendation that may be made
(on behalf of the persons filing this statement)
to security holders in connection with the Rule
13e-3 transaction. Should any such written
instruction, form or material be generated, it
will be supplied to the Commission as a
supplemental filing.
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: October 29, 1996
CAPITAL REALTY INVESTORS TAX EXEMPT FUND LIMITED PARTNERSHIP
By: CRITEF Associates Limited Partnership,
its General Partner
By: C.R.I., Inc.,
its Managing General Partner
By:/s/ William B. Dockser
-----------------------------
William B. Dockser
Chairman of the Board
CAPITAL REALTY INVESTORS TAX EXEMPT FUND III LIMITED PARTNERSHIP
By: CRITEF III Associates Limited Partnership,
its General Partner
By: C.R.I., Inc.,
its General Partner
By:/s/ William B. Dockser
-----------------------------
William B. Dockser
Chairman of the Board
CRITEF ASSOCIATES LIMITED PARTNERSHIP
By: C.R.I., Inc.,
its Managing General Partner
By:/s/ William B. Dockser
-----------------------------
William B. Dockser
Chairman of the Board
CRITEF III ASSOCIATES LIMITED PARTNERSHIP
By: C.R.I., Inc.,
its General Partner
By:/s/ William B. Dockser
-----------------------------
William B. Dockser
Chairman of the Board
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: October 29, 1996
WATERMARK PARTNERS, L.P.
By: Capital Apartment Properties, Inc.,
its General Partner
By:/s/ Richard L. Kadish
-----------------------------
Richard L. Kadish
President and Chief Executive Officer
WATERMARK III PARTNERS, L.P.
By: Capital Apartment Properties, Inc.,
its General Partner
By:/s/ Richard L. Kadish
-----------------------------
Richard L. Kadish
President and Chief Executive Officer
CAPITAL APARTMENT PROPERTIES, INC.
By:/s/ Richard L. Kadish
-----------------------------
Richard L. Kadish
President and Chief Executive Officer
APOLLO REAL ESTATE ADVISORS, L.P.
By: Apollo Real Estate Management, Inc.,
its General Partner
By:/s/ Michael D. Weiner
-----------------------------
Michael D. Weiner
Vice President
<PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Title
- ----------- -----
17(a) Commitment Letter, dated as of March 29, 1996, between CAPREIT
and CentRe Mortgage Capital L.L.C.*
17(b)(4) Report of Oppenheimer & Co., Inc. in connection with its
Fairness Opinions of March 14, 1996.*
17(b)(8) Report of Oppenheimer & Co., Inc. in connection with its
Fairness Opinions of September 20, 1996.
17(c)(3) Complaint for Breach of Fidudiary Duty in the case styled
Zakin v. Dockser, et al. (C.A. No. 14558)*
------------------------
17(c)(4) Complaint for Breach of Fiduciary Duty in the case styled
Wingard v. Dockser, et al. (C.A. No. 14604)*
--------------------------
17(c)(5) Stipulation of Settlement, dated as of May 13, 1996, relating
to the cases styled Zakin v. Dockser, et al. and Wingard v.
----------------------- ----------
Dockser, et al. *
--------------
17(c)(6) Amendment to Stipulation of Settlement, dated August 13, 1996,
relating to the cases styled Zakin v. Dockser, et al. and
----------------------------
Wingard v. Dockser, et al.*
--------------------------
17(c)(7) Final Order and Judgement of the Court and Chancery of the
State of Delaware in and for Newcastle County, dated August
14, 1996, approving the Stipulation of Settlement, as amended,
in the cases styled Zakin v. Dockser, et al. and Wingard v.
---------------------------------------
Dockser, et al.*
---------------
17(c)(8) Complaint for False or Misleading Statements in the case
styled Dominium Tax Exempt Fund, L.L.P. v. Dockser, et al.*
---------------------------------------------------
17(c)(9) Complaint for Preliminary and Permanent Injuncture Relief
against unlawful Proxy solicitation in the case styled Capital
-------
Realty Investors Tax Exempt Fund Limited Partnership et al. v.
--------------------------------------------------------------
Dominium Tax Exempt Fund L.L.P.*
-------------------------------
17(c)(10) Defendants' Emergency Motion to Enforce Court's Final Order In
--
Re Capital Realty Investors Tax Exempt Fund Limited
---------------------------------------------------
Partnership's Litigation.*
-------------------------
17(c)(11) Memorandum Opinion in the case style Capital Realty Investors
Tax Exempt Fund Limited Partnership, et al. v. Dominium Tax
Exempt Fund L.L.P.*
17(c)(12) Order and Memorandum of Magistrate Judge Lebedoff in the case
style Dominium Tax Exempt Fund, L.L.P. v. Dockser et. al.*
----------------------------------------------------
17(d)(1) Letters to BAC Holders, Notice of Special Meetings, definitive
Proxy Statement and forms of Proxy.*
17(d)(2) October 3, 1996 Letter to BAC Holders from the Funds*
17(d)(3) October 4, 1996 Press Release issued by the Funds*
17(d)(4) October 3, 1996 Press Release issued by CARPREIT*
17(d)(5) October 11, 1996 Letter to BAC Holders from the Funds*
17(d)(6) October 14, 1996 Press Release issued by CARPREIT*
17(d)(7) October 16, 1996 Press Release issued by CARPREIT*
17(d)(8) October 18, 1996 Letter to BAC Holders from the Funds*
17(d)(9) October 18, 1996 Press Release issued by CAPREIT*
17(d)(10) October 22, 1996 Letter to BAC Holders from the Funds*
17(d)(11) October 28, Press Release issued by the Funds
17(d)(12) October 29, 1996 Letter to BAC Holders
* Previously filed.
<PAGE>
Exhibit 17(d)(11)
CRI, Inc.
The CRI Building
11200 Rockville Pike Facsimile: (301) 231-0296
Rockville, Maryland 20852 Telex: (91025000099)
NEWS RELEASE
FOR IMMEDIATE RELEASE
CONTACT: James T. Pastore Susan Backman
Pastore Communications Group CRI
202-546-6451 for the CRITEF Partnerships
fax 202-547-2764 301-231-0231
e-mail [email protected]
CRITEF GENERAL PARTNERS POSTPONE MEETINGS TO NOV. 8
ROCKVILLE, MD, Oct. 28, 1996 -- (AMEX: CRA, CRB, CRL) -- The General Partners
of the CRITEF partnerships have postponed the meetings to approve the proposed
mergers between the CRITEF partnerships and affiliates of Capital Apartment
Properties, Inc. (CAPREIT) from Tue., Oct. 29 to Fri., Nov. 8, 1996 "in order to
give investors more opportunity to vote their interests."
In a letter to the holders of Beneficial Assignee Certificates (BACs), the
CRITEF General Partners said: "The barrage of misinformation disseminated by
Dominium in its self-serving effort to block the mergers appears to have
confused some BAC Holders and may have caused them to withhold their votes.
Accordingly, the CRITEF Funds have not yet received the approval of a majority
of the outstanding BACs."
There are two CRITEF partnerships with three series of securities that trade on
the American Stock Exchange. Together, the CRITEF partnerships hold 18 tax-
exempt mortgage revenue bonds used to finance multifamily housing communities in
eight states. Formed by private real estate investment firm CRI, Inc. in 1986
and 1987, the partnerships began trading on the American Stock Exchange on July
1, 1993.
CAPREIT owns, develops and manages multifamily garden-style and townhome
communities through the Midwest, Mid-Atlantic, Northwest and Southeast United
States. CAPREIT currently owns and manages 30 properties with 8,942 housing
units. CAPREIT manages an additional 39 apartment communities on behalf of
third party owners.
<PAGE>
Exhibit 17(d)(12)
CAPITAL REALTY INVESTORS TAX EXEMPT FUND
LIMITED PARTNERSHIP,
SERIES I & SERIES 11
CAPITAL REALTY INVESTORS TAX EXEMPT FUND III
LIMITED PARTNERSHIP
c/o C.R.I., Inc.
11200 Rockville Pike
Rockville, Maryland 20852
October 29, 1996
Dear BAC Holder:
We are pleased to inform you that nearly 70% of the proxies we have
received through Friday, October 25, have been voted in favor of the proposed
CRITEF-CAPREIT mergers. Unfortunately, the barrage of misinformation
disseminated by Dominium in its self-serving effort to block the mergers appears
to have confused some BAC Holders and may have caused them to withhold their
votes. Accordingly, the CRITEF Funds have not yet received the approval of a
majority of the outstanding BACS.
In order to give investors more opportunity to vote their interests,
the CRITEF Funds have postponed the scheduled meetings from Tuesday, October 29,
to Friday, November 8, 1996. The November 8th meetings will be held at the
Doubletree Hotel, 1750 Rockville Pike, Rockville, Maryland at 9:00 and 10:00
a.m. EST.
GENERAL PARTNERS' RECOMMENDATION
The General Partners of the CRITEF Funds repeat their recommendations
and urge each of you who have not voted to do so immediately. We wish to remind
you:
. YOU CAN REINVEST YOUR MERGER REDEMPTION PROCEEDS IN OTHER TAX EXEMPT BOND
FUNDS that would generate a comparable or HIGHER tax-free yield, and also
provide you with a much more liquid investment./1/
. The proposed merger prices constitute a 26% TO 32% PREMIUM over the
trading prices for the BACs prior to the announcement of the mergers.
. Terminating the mergers would, in all likelihood, drive down the trading
prices of the BACs significantly.
- ----------------------
/1/ The gross yields currently paid by the Funds, based on the merger prices,
range from 7.6% for Series 1, 8.0% for Series II and 7.9% for CRITEF III.
The current average annual gross yield of the following three comparable
funds, based on 10/25/96 closing prices, is 8.24%; 1) America First Tax
Exempt Mortgage Fund--current yield 8.31%, 2) America First Tax Exempt
Mortgage Fund 2--current yield 8.7%, and 3) Summit Tax Exempt Bond Fund--
current yield 7.72%. Please consult your investment advisor before making
any investment decision.
<PAGE>
. NO FIRM HIGHER BIDS FOR THE FUNDS HAVE BEEN RECEIVED FROM ANY PARTY,
despite eight months of active solicitation by class counsel representing
the BAC Holders.
. A nationally-recognized independent investment banking firm has determined
that the redemption prices offered to BAC Holders by CAPREIT are FAIR
FROM A FINANCIAL POINT OF VIEW.
. The Delaware Chancery Court approved the class action settlement
concerning the mergers, finding it to be FAIR, REASONABLE AND IN THE BEST
INTERESTS OF BAC HOLDERS.
. An investor who purchased BACs at the original offering price generally
will receive a material Federal income tax benefit in addition to the
merger redemption price.
These reasons strongly suggest that you should take advantage of the
opportunity to sell at these premium prices.
DOMINIUM'S INTERESTS AND INTENT
For weeks, Dominium has pelted you with distortions,
misrepresentations and baseless allegations about the proposed mergers. Decide
for yourself if Dominium speaks for you:
. Dominium admits in its proxy statement that it only owns 300 BACS, which
were only recently acquired. This represents an aggregate financial
investment in the Funds of less than $4,500. The U.S. District Court for
the Southern District of New York stated that Dominium "... MAY HAVE
CREATED THE IMPRESSION IN SOME MINDS THAT DOMINIUM'S INTEREST WAS AS A
FELLOW INVESTOR. YET DOMINIUM HAS NO MEANINGFUL OWNERSHIP INTEREST ..."
Dominium must have some other motive.
. Dominium claims the CRITEF BACs are worth "substantially more" than
CAPREIT is offering, but Dominium itself proposed a price last July only
about 3% higher than CAPREIT's offer to BAC Holders and could not even
finance that amount. In its own proxy materials, DOMINIUM MISCALCULATES
AND FALSELY OVERSTATES THE LIQUIDATION VALUES OF THE PROPERTIES BY
MILLIONS OF DOLLARS. If Dominium's estimated values are correct, why has
no other legitimate buyer made a higher offer for the Funds?
. Dominium's OWN proxy materials clearly confirm: "Dominium is not presently
pursuing financing, nor does it have any present plans to make a superior
proposal."
. As its own proxy statement further discloses, Dominium offered to withdraw
its opposition to the proposed mergers for a $3.5 GREENMAIL PAYMENT FROM
CAPREIT.
Dominium deliberately circulated to BAC Holders in all Funds an
unauthorized and flagrantly misleading quotation from a letter by brokerage
firm, Miller and Schroeder Financial, Inc., for use by its brokers to certain
BAC Holders of Series I only. The attached letter
<PAGE>
from Miller & Schroeder to the Funds shows that Dominium's use of its letter was
wrongful and incomplete.
The facts are straightforward. CAPREIT's proposal remains the ONLY
FIRM OFFER the Funds have received in nearly 14 months, despite a great deal of
publicity about the availability of the Funds and the active solicitation of
other bidders by counsel representing the BAC Holders.
Don't let Dominium's self-serving misrepresentations and distortions
persuade you to give up the cash CAPREIT is offering. If you have not already
voted, the General Partners urge you to vote in favor of the proposed mergers by
signing and returning the enclosed white proxy cards. To make sure your vote is
received in time, we encourage you to fax your proxy to (212) 929-0308, as well.
Failure to vote constitutes an investment decision by you to reject the cash
redemption price offered.
If you have questions, please call MacKenzie Partners, our information
and proxy agent, at 1-800-332-2885.
Very truly yours,
CRITEF ASSOCIATES LIMITED PARTNERSHIP and
CRITEF III ASSOCIATES LIMITED PARTNERSHIP,
General Partners
By: C.R.I., Inc., their general partner
/s/ William B. Dockser /s/ H. William Willoughby
William B. Dockser H. William Willoughby
Chairman of the Board President
<PAGE>
[LETTERHEAD OF MILLER & SCHROEDER FINANCIAL, INC. APPEARS HERE]
October 25, 1996
VIA FAX: 301-468-3150
Capital Realty Investors Tax Exempt Fund
Limited Partnership
Capital Realty Investors Tax Exempt Fund III
Limited Partnership
12000 Rockville Pike
Rockville, Maryland 20852
Gentlemen:
We have received a copy of a letter dated October 23, 1996, from Dominium Tax
Exempt Fund L.L.P. to your BAC Holders. The Dominium letter contains a
quotation attributed to Miller & Schroeder Financial, Inc. This will advise you
that such quotation is unauthorized and incomplete.
First, Miller & Schroeder's letter does not purport to address both proposed
mergers. It concerns only the CRITEF Series I properties. Second, Miller &
Schroeder's letter was not sent in any general mailing to its customers. It was
made available to Miller & Schroeder's brokers to use at each broker's
discretion. Third, Miller & Schroeder's letter noted that no assurance can be
given that a better offer will be received.
You may use and disseminate this letter.
Very truly yours,
MILLER & SCHROEDER FINANCIAL, INC.
/s/ Paul R. Ekholm
Paul R. Ekholm
Senior Vice President
