<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 29549
---------------------------------
AMENDMENT NO. 2 TO
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED INVESTORS INCOME PROPERTIES
(Name of Subject Company)
AIMCO PROPERTIES, L.P.
(Bidder)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
NONE
(CUSIP Number of Class of Securities)
PATRICK J. FOYE
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
1873 SOUTH BELLAIRE STREET, 17TH FLOOR
DENVER, COLORADO 80222
(303) 757-8101
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
COPY TO:
JONATHAN L. FRIEDMAN
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
300 SOUTH GRAND, 34TH FLOOR
LOS ANGELES, CALIFORNIA 90071
(213) 687-5000
---------------------------------
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
Transaction Valuation* $4,409,994 Amount of Filing Fee: $882.00
- --------------------------------------------------------------------------------
* For purposes of calculating the fee only. This amount assumes the purchase
of 27,055.18 units of limited partnership interest of the subject
partnership for $163 per unit. The amount of the filing fee, calculated in
accordance with Section 14(g)(1)(B)(3) and Rule 0- 11(d) under the
Securities Exchange Act of 1934, as amended, equals 1/50th of one percent
of the aggregate of the cash offered by the bidder.
[ ] 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: $882.00 Filing Parties: AIMCO Properties, L.P.
Form or Registration No.: Schedule 14D Date Filed: June 10, 1999
(Continued on following pages)
Page 1 of 4
<PAGE> 2
AMENDMENT NO. 2 TO SCHEDULE 14D-1
This Statement (the "Statement") constitutes Amendment No. 2 to the
Schedule 14D-1, originally filed May 27, 1999, of AIMCO Properties, L.P. (the
"AIMCO OP"), relating to AIMCO OP's offer to purchase units of limited
partnership interest ("Units") of United Investors Income Properties (the
"Partnership"), as amended by Amendment No. 1, filed with the Securities and
Exchange Commission on June 10, 1999, by AIMCO OP, AIMCO-GP, Inc. ("AIMCO-GP")
and Apartment Investment and Management Company ("AIMCO"). The item numbers and
responses thereto are set forth below in accordance with the requirements of
Schedule 14D-1.
(11) MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated May 19, 1999.
(a)(2) Letter of Transmittal and related Instructions (previously
filed).
(a)(3) Letter, dated May 19, 1999, from AIMCO OP to the Limited
Partners of the Partnership (previously filed).
(a)(4) Supplement to Offer to Purchase, dated June 15, 1999.
(b) Amended and Restated Credit Agreement (Unsecured
Revolver-to-Term Facility), dated as of October 1, 1998, among
AIMCO OP, Bank of America National Trust and Savings
Association, and BankBoston, N.A. (Exhibit 10.1 to AIMCO's
Current Report on Form 8-K, dated October l, 1998, is
incorporated herein by this reference).
(b)(2) First Amendment to Credit Agreement, dated as of November 6,
1998, by and among AIMCO OP, the financial institutions listed
on the signature pages thereof and Bank of America National
Trust and Savings Association (Exhibit 10.2 to AIMCO's Annual
Report on Form 10-K for the fiscal year ended December 31,
1998, is incorporated herein by this reference).
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
Page 2 of 4
<PAGE> 3
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.
Dated: June 15, 1999
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, INC.
(General Partner)
By: /s/ Patrick J. Foye
------------------------------
Executive Vice President
AIMCO-GP, INC.
By: /s/ Patrick J. Foye
------------------------------
Executive Vice President
APARTMENT INVESTMENT
AND MANAGEMENT COMPANY
By: /s/ Patrick J. Foye
------------------------------
Executive Vice President
Page 3 of 4
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
(a)(1) Offer to Purchase, dated May 19, 1999.
(a)(2) Letter of Transmittal and related Instructions (previously
filed).
(a)(3) Letter, dated May 19, 1999, from AIMCO OP to the Limited
Partners of the Partnership (previously filed).
(a)(4) Supplement to Offer to Purchase, dated June 15, 1999.
(b) Amended and Restated Credit Agreement (Unsecured
Revolver-to-Term Facility), dated as of October 1, 1998, among
AIMCO OP, Bank of America National Trust and Savings
Association, and BankBoston, N.A. (Exhibit 10.1 to AIMCO's
Current Report on Form 8-K, dated October l, 1998, is
incorporated herein by this reference).
(b)(2) First Amendment to Credit Agreement, dated as of November 6,
1998, by and among AIMCO OP, the financial institutions listed
on the signature pages thereof and Bank of America National
Trust and Savings Association (Exhibit 10.2 to AIMCO's Annual
Report on Form 10-K for the fiscal year ended December 31,
1998, is incorporated herein by this reference).
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
Page 4 of 4
<PAGE> 1
OFFER TO PURCHASE FOR CASH
AIMCO PROPERTIES, L.P.
IS OFFERING TO PURCHASE UP TO 27,055.18 UNITS OF LIMITED PARTNERSHIP INTEREST IN
UNITED INVESTORS INCOME PROPERTIES
FOR $157 PER UNIT IN CASH
Our offer price will be reduced for any distributions subsequently made by your
partnership prior to the expiration of our offer.
We will only accept a maximum of 44.31% of the outstanding units in response to
our offer. If more units are tendered to us, we will generally accept units on a
pro rata basis according to the number of units tendered by each person.
Our offer and your withdrawal rights will expire at 5:00 p.m., New York City
time, on June 29, 1999, unless we extend the deadline.
YOU WILL NOT PAY ANY FEES OR COMMISSIONS IF YOU TENDER YOUR UNITS.
Our offer is not subject to any minimum number of units being tendered.
SEE "RISK FACTORS" BEGINNING ON PAGE 1 OF THIS OFFER TO PURCHASE FOR A
DESCRIPTION OF RISK FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH OUR
OFFER, INCLUDING THE FOLLOWING:
- We determined the offer price of $157 per unit without any arms-length
negotiations. Accordingly, our offer price may not reflect the fair
market value of your units.
- As of December 31, 1997, your general partner (which is our subsidiary)
estimated the net asset value of your units to be $162 per unit.
- Although your partnership's agreement of limited partnership provides for
termination in the year 2018, the prospectus pursuant to which the units
were sold in 1988 indicated that the properties owned by your partnership
might be sold within 5 to 10 years of their acquisition if conditions
permitted.
- Your general partner and the property manager of the residential
properties are subsidiaries of ours and, therefore, the general partner
has substantial conflicts of interest with respect to our offer.
- We are making this offer with a view to making a profit and, therefore,
there is a conflict between our desire to purchase your units at a low
price and your desire to sell your units at a high price.
- Continuation of your partnership will result in our affiliates continuing
to receive management fees from your partnership. Such fees would not be
payable if your partnership was liquidated.
- It is possible that we may conduct a subsequent offer at a higher price.
- For any units that we acquire from you, you will not receive any future
distributions from operating cash flow of your partnership or upon a sale
or refinancing of properties owned by your partnership.
- If we acquire a substantial number of units, we will increase our ability
to influence voting decisions with respect to your partnership and may
control such voting decisions.
If you desire to accept our offer, you should complete and sign the letter
of transmittal in accordance with the instructions thereto and mail or deliver
the signed letter of transmittal and any other required documents to River Oaks
Partnership Services, Inc., which is acting as Information Agent in connection
with our offer, at one of its addresses set forth on the back cover of this
offer to purchase. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL
COPIES OF THIS OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL MAY ALSO BE
DIRECTED TO THE INFORMATION AGENT AT (888) 349-2005.
May 19, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION................................................ 1
RISK FACTORS................................................ 1
No Third Party Valuation or Appraisal; No Arms-Length
Negotiation............................................ 1
No Fairness Opinion From a Third Party.................... 1
Offer Price May Not Represent Fair Market Value........... 1
Offer Price Does Not Reflect Future Prospects............. 2
Offer Price Based on Our Estimate of Liquidation
Proceeds............................................... 2
Offer Price May Not Represent Liquidation Value........... 2
Continuation of the Partnership; No Time Frame Regarding
Sale of Properties..................................... 2
Holding Units May Result in Greater Future Value.......... 2
Conflicts of Interest With Respect to the Offer; No
General Partner Recommendation......................... 2
Conflicts of Interest Relating to Management Fees......... 3
Possible Subsequent Offer at a Higher Price............... 3
Recognition of Taxable Gain on a Sale of Your Units....... 3
Loss of Future Distributions from Your Partnership........ 3
Possible Increase in Control of Your Partnership by Us.... 3
Recognition of Gain Resulting from Possible Future
Reduction in Your Partnership Liabilities.............. 3
Risk of Inability to Transfer Units for 12-Month Period... 4
THE OFFER................................................... 4
Section 1. Terms of the Offer; Expiration Date;
Proration.............................................. 4
Section 2. Acceptance for Payment and Payment for Units... 5
Section 3. Procedure for Tendering Units.................. 5
Section 4. Withdrawal Rights.............................. 7
Section 5. Extension of Tender Period; Termination;
Amendment.............................................. 8
Section 6. Certain Federal Income Tax Matters............. 8
Section 7. Effects of the Offer........................... 11
Section 8. Information Concerning Us and Certain of Our
Affiliates............................................. 12
Section 9. Background and Reasons for the Offer........... 13
Section 10. Position of the General Partner of Your
Partnership With Respect to the Offer.................. 20
Section 11. Conflicts of Interest and Transactions with
Affiliates............................................. 21
Section 12. Future Plans of the Purchaser................. 22
Section 13. Certain Information Concerning Your
Partnership............................................ 23
Section 14. Voting Power.................................. 28
Section 15. Source of Funds............................... 28
Section 16. Dissenters' Rights............................ 29
Section 17. Conditions of the Offer....................... 29
Section 18. Certain Legal Matters......................... 31
Section 19. Fees and Expenses............................. 31
ANNEX I -- OFFICERS AND DIRECTORS........................... I-1
</TABLE>
i
<PAGE> 3
INTRODUCTION
We are offering to purchase up to 27,055.18 units, representing
approximately 44.31% of the outstanding units of limited partnership interest in
your partnership, for the purchase price of $157 per unit, net to the seller in
cash, without interest, less the amount of distributions, if any, made by your
partnership in respect of any unit from the date hereof until the expiration
date. Our offer is made upon the terms and subject to the conditions set forth
in this offer to purchase and in the accompanying letter of transmittal.
If you tender your units in response to our offer you will not be obligated
to pay any commissions or partnership transfer fees but will be obligated to pay
any transfer taxes (see Instruction 8 to the letter of transmittal). We have
retained River Oaks Partnership Services, Inc. to act as the Information Agent
in connection with our offer. We will pay all charges and expenses in connection
with the services of the Information Agent. The offer is not conditioned on any
minimum number of units being tendered. However, certain other conditions do
apply. See "The Offer -- Section 17." You may tender all or any portion of the
units that you own. Under no circumstances will we be required to accept any
unit if the transfer of that unit to us would be prohibited by the agreement of
limited partnership of your partnership.
Our offer will expire at 5:00 p.m., New York City time, on June 29, 1999,
unless extended. If you desire to accept our offer, you must complete and sign
the letter of transmittal in accordance with the instructions contained therein
and forward or hand deliver it, together with any other required documents, to
the Information Agent, either with your units to be tendered or in compliance
with the specified procedures for guaranteed delivery of units. You may withdraw
your tender of units pursuant to the offer at any time prior to the expiration
date of our offer and, if we have not accepted such units for payment, on or
after July 17, 1999.
We are AIMCO Properties, L.P., a Delaware limited partnership. Together
with our subsidiaries, we conduct substantially all of the operations of
Apartment Investment and Management Company, or AIMCO. AIMCO is a
self-administered and self-managed real estate investment trust engaged in the
ownership, acquisition, development, expansion and management of multifamily
apartment properties. As of March 31, 1999, AIMCO owned or managed 373,409
apartment units in 2,071 properties located in 49 states, the District of
Columbia and Puerto Rico. AIMCO's Class A Common Stock is listed and traded on
the New York Stock Exchange under the symbol "AIV."
As a result of our October 1, 1998 merger with Insignia Financial Group,
Inc. and our February 26, 1999 merger with Insignia Properties Trust, we
acquired a 100% ownership interest in the general partner of your partnership
and the company that manages the residential properties owned by your
partnership.
RISK FACTORS
Before deciding whether or not to tender any of your units, you should
consider carefully the following risks and disadvantages of the offer:
NO THIRD PARTY VALUATION OR APPRAISAL; NO ARMS-LENGTH NEGOTIATION
We did not base our valuation of the properties owned by your partnership
on any third-party appraisal or valuation. We established the terms of our offer
without any arms-length negotiation. The terms of the offer could differ if they
were subject to independent third party negotiations. It is uncertain whether
our offer price reflects the value which would be realized upon a sale of your
units to a third party.
NO FAIRNESS OPINION FROM A THIRD PARTY
We did not obtain an opinion from a third party that our offer price is
fair from a financial point of view.
OFFER PRICE MAY NOT REPRESENT FAIR MARKET VALUE
There is no established or regular trading market for your units, nor is
there another reliable standard for determining the fair market value of the
units. Our offer price does not necessarily reflect the price that you would
receive in an open market for your units. Such prices could be higher than our
offer price.
1
<PAGE> 4
OFFER PRICE DOES NOT REFLECT FUTURE PROSPECTS
Except for the three residential properties, our offer price is based on
your partnership's historical property income. It does not ascribe any value to
potential future improvements in the operating performance of your partnership's
residential properties. The value of the commercial properties is based on
offers for such properties.
OFFER PRICE BASED ON OUR ESTIMATE OF LIQUIDATION PROCEEDS
The offer price represents only our estimate of the amount you would
receive if we liquidated the partnership. In determining the liquidation value,
we used the direct capitalization method to estimate the value of your
partnership's residential properties because we think a prospective purchaser of
the properties would value the properties using this method. In doing so, we
applied a capitalization rate to your partnership's property income for the year
ended December 31, 1998. If property income for a different period or a
different capitalization rate was used, a higher valuation could result. Other
methods of valuing your units could also result in a higher valuation.
OFFER PRICE MAY NOT REPRESENT LIQUIDATION VALUE
The actual proceeds obtained from a liquidation are highly uncertain and
could be more than our estimate. Accordingly, our offer price could be less than
the net proceeds that you would realize upon an actual liquidation of your
partnership.
CONTINUATION OF THE PARTNERSHIP; NO TIME FRAME REGARDING SALE OF PROPERTIES
Your general partner (which is our subsidiary) is proposing to continue to
operate your partnership and not to attempt to liquidate it at the present time.
Thus, our offer does not satisfy any expectation that you would receive the
return of your investment in the partnership through a sale of any property.
Your partnership currently holds one commercial property and a 35% interest in a
joint venture, holding one commercial property. Both properties are currently
being marketed for sale. While offers have been received for the purchase of
such properties, it is unknown whether or not such properties will be sold or
for what price. The general partner of your partnership believes that the market
for the sale of commercial properties is favorable at this time. However, it is
not known when the residential properties owned by your partnership may be sold.
There may be no way to liquidate your investment in the partnership in the
future until the residential properties are sold and the partnership is
liquidated. The general partner of your partnership continually considers
whether a property should be sold or otherwise disposed of after consideration
of relevant factors, including prevailing economic conditions, availability of
favorable financing and tax considerations, with a view to achieving maximum
capital appreciation for your partnership. At the current time the general
partner of your partnership believes that a sale of the residential properties
would not be advantageous given market conditions, the condition of the
properties and tax considerations. In particular, the general partner considered
the changes in the local rental market, the potential for appreciation in the
value of the properties and the tax consequences to you and your partners on a
sale of the properties. We cannot predict when any property will be sold or
otherwise disposed of.
HOLDING UNITS MAY RESULT IN GREATER FUTURE VALUE
You might receive more value if you retain your units until your
partnership is liquidated.
CONFLICTS OF INTEREST WITH RESPECT TO THE OFFER; NO GENERAL PARTNER
RECOMMENDATION
The general partner of your partnership is our subsidiary and, therefore,
has substantial conflicts of interest with respect to our offer. We are making
this offer with a view to making a profit. There is a conflict between our
desire to purchase your units at a low price and your desire to sell your units
at a high price. We determined our offer price without negotiation with any
other party, including any general or limited partner. Because of our
affiliation with the general partner of your partnership, your general partner
makes no recommendation as to whether you should tender your units.
2
<PAGE> 5
CONFLICTS OF INTEREST RELATING TO MANAGEMENT FEES
Since our subsidiaries receive fees for managing your partnership and its
residential properties, a conflict of interest exists between our continuing the
partnership and receiving such fees, and the liquidation of the partnership and
the termination of such fees. Another conflict is the fact that a decision of
the limited partners of your partnership to remove, for any reason, the general
partner of your partnership or the property manager of any [residential]
property owned by your partnership would result in a decrease or elimination of
the substantial fees paid to them for services provided to your partnership.
POSSIBLE SUBSEQUENT OFFER AT A HIGHER PRICE
It is possible that we may conduct a subsequent offer at a higher price.
Such a decision will depend on, among other things, the performance of the
partnership, prevailing economic conditions, and our interest in acquiring
additional limited partnership interests.
RECOGNITION OF TAXABLE GAIN ON A SALE OF YOUR UNITS
Your sale of units for cash will be a taxable sale, with the result that
you will recognize gain or loss measured by the difference between the amount
realized on the sale and your adjusted tax basis in the units of limited
partnership interest of your partnership you transfer to us. The particular tax
consequences for you of our offer will depend upon a number of factors related
to your tax situation, including your tax basis in your units of limited
partnership interest of your partnership you transfer to us, whether you dispose
of all of your units and whether you are no longer subject to the "passive loss"
rules with respect to your partnership. Because the income tax consequences of
tendering units will not be the same for everyone, you should consult your own
tax advisor with specific reference to your own tax situation.
LOSS OF FUTURE DISTRIBUTIONS FROM YOUR PARTNERSHIP
If you tender your units in response to our offer, you will transfer to us
all right, title and interest in and to all of the units we accept, and the
right to receive all distributions in respect of such units on and after the
date on which we accept such units for purchase. Accordingly, for any units that
we acquire from you, you will not receive any future distributions from
operating cash flow of your partnership or upon a sale or refinancing of
properties owned by your partnership.
POSSIBLE INCREASE IN CONTROL OF YOUR PARTNERSHIP BY US
Because the general partner of your partnership is our subsidiary, we
control the management of your partnership. In addition, if we acquire more
units, we will increase our ability to influence voting decisions with respect
to your partnership and may control such voting decisions. Furthermore, in the
event that we acquire a substantial number of units pursuant to our offer,
removal of a general partner without our consent may become more difficult or
impossible. We also own a majority of the company that manages the residential
properties owned by your partnership. In the event that we acquire a substantial
number of units pursuant to our offer, removal of any property manager without
our consent may become more difficult or even impossible.
RECOGNITION OF GAIN RESULTING FROM POSSIBLE FUTURE REDUCTION IN YOUR PARTNERSHIP
LIABILITIES
Generally, a decrease in your share of partnership liabilities is treated,
for Federal income tax purposes, as a deemed cash distribution. Although no
general partner of your partnership has any current plan or intention to reduce
the liabilities of your partnership, it is possible that future economic,
market, legal, tax or other considerations may cause a general partner to reduce
the liabilities of your partnership. If you retain all or a portion of your
units of limited partnership interest of your partnership and the liabilities of
your partnership were to be reduced, you will be treated as receiving a
hypothetical distribution of cash resulting from a decrease in your share of the
liabilities of the partnership. Any such hypothetical distribution of cash would
be treated as a nontaxable return of capital to the extent of your adjusted tax
basis in your units and thereafter as gain.
3
<PAGE> 6
RISK OF INABILITY TO TRANSFER UNITS FOR 12-MONTH PERIOD
Your partnership's agreement of limited partnership prohibits any transfer
of an interest if such transfer, together with all other transfers during the
preceding 12 months, would cause 50% or more of the total interest in capital
and profits of your partnership to be transferred within such 12-month period.
If we acquire a significant percentage of the interest in your partnership, you
may not be able to transfer your units for a 12-month period following our
offer.
THE OFFER
SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE; PRORATION.
Upon the terms and subject to the conditions of the offer, we will accept
(and thereby purchase) up to 27,055.18 units that are validly tendered on or
prior to the expiration date and not withdrawn in accordance with the procedures
set forth in "The Offer -- Section 4." For purposes of the offer, the term
"expiration date" shall mean 5:00 p.m., New York City time, on June 29, 1999,
unless we in our sole discretion shall have extended the period of time for
which the offer is open, in which event the term "expiration date" shall mean
the latest time and date on which the offer, as extended by us, shall expire.
See "The Offer -- Section 5" for a description of our right to extend the period
of time during which the offer is open and to amend or terminate the offer.
The purchase price per unit will automatically be reduced by the aggregate
amount of distributions per unit, if any, made by your partnership to you on or
after the commencement of our offer and prior to the date on which we acquire
your units pursuant to our offer.
If, prior to the expiration date, we increase the consideration offered to
limited partners pursuant to the offer, the increased consideration will be paid
for all units accepted for payment pursuant to the offer, whether or not the
units were tendered prior to the increase in consideration.
If more than 27,055.18 units are validly tendered prior to the expiration
date and not properly withdrawn prior to the expiration date in accordance with
the procedures specified in Section 4, we will, upon the terms and subject to
the conditions of the offer, accept for payment and pay for an aggregate of
27,055.18 of the units so tendered, pro rata according to the number of units
validly tendered by each limited partner and not properly withdrawn on or prior
to the expiration date, with appropriate adjustments to avoid purchases of
fractional units. If the number of units validly tendered and not properly
withdrawn on or prior to the expiration date is less than or equal to 27,055.18
units, we will purchase all units so tendered and not withdrawn, upon the terms
and subject to the conditions of the offer.
If proration of tendered units is required, then, subject to our obligation
under Rule 14e-1(c) under the Securities Exchange Act of 1934 (the "Exchange
Act") to pay limited partners the purchase price in respect of units tendered or
return those units promptly after termination or withdrawal of the offer, we do
not intend to pay for any units accepted for payment pursuant to the offer until
the final proration results are known. Notwithstanding any such delay in
payment, no interest will be paid on the cash offer price.
The offer is conditioned on satisfaction of certain conditions. THE OFFER
IS NOT CONDITIONED UPON ANY MINIMUM AMOUNT OF UNITS BEING TENDERED. See "The
Offer -- Section 17," which sets forth in full the conditions of the offer. We
reserve the right (but in no event shall we be obligated), in our reasonable
discretion, to waive any or all of those conditions. If, on or prior to the
expiration date, any or all of the conditions have not been satisfied or waived,
we reserve the right to (i) decline to purchase any of the units tendered,
terminate the offer and return all tendered units to tendering limited partners,
(ii) waive all the unsatisfied conditions and purchase all units validly
tendered, (iii) extend the offer and, subject to the withdrawal rights of
limited partners, retain the units that have been tendered during the period or
periods for which the offer is extended, or (iv) amend the offer. The transfer
of units will be effective March 1, 1999.
4
<PAGE> 7
This offer is being mailed to the persons shown by your partnership's
records to have been limited partners or, in the case of units owned of record
by Individual Retirement Accounts and qualified plans, beneficial owners of
units, as of May 19, 1999.
SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS.
Upon the terms and subject to the conditions of the offer, we will
purchase, by accepting for payment, and will pay for, up to 27,055.18 units
validly tendered as promptly as practicable following the expiration date. A
tendering beneficial owner of units whose units are owned of record by an
Individual Retirement Account or other qualified plan will not receive direct
payment of the offer price; rather, payment will be made to the custodian of
such account or plan. In all cases, payment for units purchased pursuant to the
offer will be made only after timely receipt by the Information Agent of a
properly completed and duly executed letter of transmittal and other documents
required by the letter of transmittal. See "The Offer -- Section 3." UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE OFFER PRICE BY REASON OF ANY DELAY IN
MAKING SUCH PAYMENT.
For purposes of the offer, we will be deemed to have accepted for payment
pursuant to the offer, and thereby purchased, validly tendered units, if, as and
when we give verbal or written notice to the Information Agent of our acceptance
of those units for payment pursuant to the offer. Payment for units accepted for
payment pursuant to the offer will be made through the Information Agent, which
will act as agent for tendering limited partners for the purpose of receiving
cash payments from us and transmitting cash payments to tendering limited
partners.
If any tendered units are not accepted for payment by us for any reason,
the letter of transmittal with respect to such units not purchased may be
destroyed by us or the Information Agent. If, for any reason, acceptance for
payment of, or payment for, any units tendered pursuant to the offer is delayed
or we are unable to accept for payment, purchase or pay for units tendered
pursuant to the offer, then, without prejudice to our rights under "The
Offer -- Section 17," the Information Agent may, nevertheless, on our behalf
retain tendered units, and those units may not be withdrawn except to the extent
that the tendering limited partners are entitled to withdrawal rights as
described in "The Offer -- Section 4;" subject, however, to our obligation under
Rule 14e-1(c) under the Exchange Act, to pay you the offer price in respect of
units tendered or return those units promptly after termination or withdrawal of
the offer.
We reserve the right to transfer or assign, in whole or in part, to one or
more of our affiliates, the right to purchase units tendered pursuant to the
offer, but no such transfer or assignment will relieve us of our obligations
under the offer or prejudice your rights to receive payment for units validly
tendered and accepted for payment pursuant to the offer.
SECTION 3. PROCEDURE FOR TENDERING UNITS.
Valid Tender. To validly tender units pursuant to the offer, a properly
completed and duly executed letter of transmittal and any other documents
required by such letter of transmittal must be received by the Information
Agent, at one of its addresses set forth on the back cover of this offer to
purchase, on or prior to the expiration date. You may tender all or any portion
of your units. No alternative, conditional or contingent tenders will be
accepted.
Signature Requirements. If the letter of transmittal is signed by the
registered holder of a unit and payment is to be made directly to that holder,
then no signature guarantee is required on the letter of transmittal. Similarly,
if a unit is tendered for the account of a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc. or a commercial bank, savings bank, credit union, savings and loan
association or trust company having an office, branch or agency in the United
States (each an "Eligible Institution"), no signature guarantee is required on
the letter of transmittal. However, in all other cases, all signatures on the
letter of transmittal must be guaranteed by an Eligible Institution.
5
<PAGE> 8
In order for you to tender in the offer, your units must be validly
tendered and not withdrawn on or prior to the expiration date.
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS IS AT YOUR OPTION AND RISK AND DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE INFORMATION AGENT. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
Appointment as Proxy; Power of Attorney. By executing the letter of
transmittal, you are irrevocably appointing us and our designees as your proxy,
in the manner set forth in the letter of transmittal, each with full power of
substitution, to the fullest extent of the your rights with respect to the units
tendered by and accepted for payment by you. Each such proxy shall be considered
coupled with an interest in the tendered units. Such appointment will be
effective when, and only to the extent that, we accept the tendered unit for
payment. Upon such acceptance for payment, all prior proxies given by you with
respect to the units will, without further action, be revoked, and no subsequent
proxies may be given (and if given will not be effective). We and our designees
will, as to those units, be empowered to exercise all voting and other rights as
a limited partner as we, in our sole discretion, may deem proper at any meeting
of limited partners, by written consent or otherwise. We reserve the right to
require that, in order for units to be deemed validly tendered, immediately upon
our acceptance for payment for the units, we must be able to exercise full
voting rights with respect to the units, including voting at any meeting of
limited partners then scheduled or acting by written consent without a meeting.
By executing the letter of transmittal, you agree to execute all such documents
and take such other actions as shall be reasonably required to enable the units
tendered to be voted in accordance with our directions. The proxy and power of
attorney granted by you to us upon your execution of the letter of transmittal
will remain effective and be irrevocable for a period of ten years following the
termination of our offer.
By executing the letter of transmittal, you also irrevocably constitute and
appoint us and our managers and designees as your attorneys-in-fact, each with
full power of substitution, to the full extent of your rights with respect to
the units tendered by you and accepted for payment by us. Such appointment will
be effective when, and only to the extent that, we pay for your units. You agree
not to exercise any rights pertaining to the tendered units without our prior
consent. Upon such payment, all prior powers of attorney granted by you with
respect to such units will, without further action, be revoked, and no
subsequent powers of attorney may be granted (and if granted will not be
effective). Pursuant to such appointment as attorneys-in-fact, we and our
managers and designees each will have the power, among other things, (i) to
transfer ownership of such units on the partnership books maintained by your
general partner (and execute and deliver any accompanying evidences of transfer
and authenticity it may deem necessary or appropriate in connection therewith),
(ii) upon receipt by the Information Agent of the offer consideration, to become
a substituted limited partner, to receive any and all distributions made by your
partnership on or after the date on which we acquire such units, and to receive
all benefits and otherwise exercise all rights of beneficial ownership of such
units in accordance with the terms of our offer, (iii) to execute and deliver to
the general partner of your partnership a change of address form instructing the
general partner to send any and all future distributions to which we are
entitled pursuant to the terms of the offer in respect of tendered units to the
address specified in such form, and (iv) to endorse any check payable to you or
upon your order representing a distribution to which we are entitled pursuant to
the terms of our offer, in each case, in your name and on your behalf.
Assignment of Interest in Future Distributions. By executing the letter of
transmittal, you will irrevocably assign to us and our assigns all of your
right, title and interest in and to any and all distributions made by your
partnership from any source and of any nature, including, without limitation,
distributions in the ordinary course, distributions from sales of assets,
distributions upon liquidation, winding-up, or dissolution, payments in
settlement of existing or future litigation, and all other distributions and
payments from and after the expiration date of our offer, in respect of the
units tendered by you and accepted for payment and thereby purchased by us. If,
after the unit is accepted for payment and purchased by us, you receive any
distribution from any source and of any nature, including, without limitation,
distributions in the ordinary course, distributions from sales of assets,
distributions upon liquidation, winding-up or dissolution, payments in
6
<PAGE> 9
settlement of existing or future litigation and all other distributions and
payments, from your partnership in respect of such unit, you will agree to
forward promptly such distribution to us.
Determination of Validity; Rejection of Units; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of units pursuant to our offer will be determined by us, in our reasonable
discretion, which determination shall be final and binding on all parties. We
reserve the absolute right to reject any or all tenders of any particular unit
determined by us not to be in proper form or if the acceptance of or payment for
that unit may, in the opinion of our counsel, be unlawful. We also reserve the
absolute right to waive or amend any of the conditions of the offer that we are
legally permitted to waive as to the tender of any particular unit and to waive
any defect or irregularity in any tender with respect to any particular unit of
any particular limited partner. Our interpretation of the terms and conditions
of the offer (including the letter of transmittal) will be final and binding on
all parties. No tender of units will be deemed to have been validly made unless
and until all defects and irregularities have been cured or waived. Neither us,
the Information Agent, nor any other person will be under any duty to give
notification of any defects or irregularities in the tender of any unit or will
incur any liability for failure to give any such notification.
Backup Federal Income Tax Withholding. To prevent the possible application
of back-up Federal income tax withholding of 31% with respect to payment of the
offer price, you may have to provide us with your correct taxpayer
identification number. See the instructions to the letter of transmittal and
"The Offer -- Section 6."
FIRPTA Withholding. To prevent the withholding of Federal income tax in an
amount equal to 10% of the amount realized on the disposition (the amount
realized is generally the offer price plus the partnership liabilities allocable
to each unit purchased), you must certify that the you are not a foreign person
if you tender units. See the instructions to the letter of transmittal and "The
Offer -- Section 6."
Transfer Taxes. The amount of any transfer taxes (whether imposed on the
registered holder of units or any person) payable on account of the transfer to
such person will be deducted from the purchase price unless satisfactory
evidence of the such taxes or exemption therefrom is submitted.
Binding Agreement. A tender of a unit pursuant to any of the procedures
described above and the acceptance for payment of such unit will constitute a
binding agreement between the tendering unitholder and us on the terms set forth
in this offer to purchase and the related letter of transmittal.
SECTION 4. WITHDRAWAL RIGHTS.
You may withdraw tendered units at any time prior to the expiration date or
on or after July 17, 1999, if the units have not been previously accepted for
payment.
For a withdrawal to be effective, a written notice of withdrawal must be
timely received by the Information Agent at one of its addresses set forth on
the back cover of the offer to purchase. Any such notice of withdrawal must
specify the name of the person who tendered, the number of units to be withdrawn
and the name of the registered holder of such units, if different from the
person who tendered. In addition, the notice of withdrawal must be signed by the
person who signed the letter of transmittal in the same manner as the letter of
transmittal was signed.
If purchase of, or payment for, a unit is delayed for any reason, or if we
are unable to purchase or pay for a unit for any reason, then, without prejudice
to our rights under the offer, tendered units may be retained by the Information
Agent; subject, however, to our obligation, pursuant to Rule 14e-1(c) under the
Exchange Act, to pay the offer price in respect of units tendered or return
those units promptly after termination or withdrawal of our offer.
Any units properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of our offer. However, withdrawn units may be
re-tendered at any time prior to the expiration date by following the procedures
described in "The Offer -- Section 3."
7
<PAGE> 10
All questions as to the validity and form (including time of receipt) of
notices of withdrawal will be determined by us in our reasonable discretion,
which determination shall be final and binding on all parties. Neither we, the
Information Agent, nor any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT.
We expressly reserve the right, in our reasonable discretion, at any time
and from time to time, (i) to extend the period of time during which our offer
is open and thereby delay acceptance for payment of, and the payment for, any
unit, (ii) to terminate our offer and not accept for payment any units not
theretofore accepted for payment or paid for, (iii) upon the occurrence of any
of the conditions specified in "The Offer -- Section 17," to delay the
acceptance for payment of, or payment for, any units not already accepted for
payment or paid for, and (iv) to amend our offer in any respect (including,
without limitation, by increasing the consideration offered, increasing or
decreasing the units being sought, or both). Notice of any such extension,
termination or amendment will promptly be disseminated to you in a manner
reasonably designed to inform you of such change. In the case of an extension of
the offer, the extension will be followed by a press release or public
announcement which will be issued no later than 9:00 a.m., New York City time,
on the next business day after the scheduled expiration date of our offer, in
accordance with Rule 14e-1(d) under the Exchange Act.
If we extend the offer, or if we delay payment for a unit (whether before
or after its acceptance for payment) or are unable to pay for a unit pursuant to
our offer for any reason, then, without prejudice to our rights under the offer,
the Information Agent may retain tendered units and those units may not be
withdrawn except to the extent tendering unitholders are entitled to withdrawal
rights as described in "The Offer -- Section 4;" subject, however, to our
obligation, pursuant to Rule 14e-1(c) under the Exchange Act, to pay the offer
price in respect of units tendered or return those units promptly after
termination or withdrawal of the offer.
If we make a material change in the terms of our offer, or if we waive a
material condition to our offer, we will extend the offer and disseminate
additional tender offer materials to the extent required by Rule 14e-1 under the
Exchange Act. The minimum period during which the offer must remain open
following any material change in the terms of the offer, other than a change in
price or a change in percentage of securities sought or a change in any dealer's
soliciting fee, if any, will depend upon the facts and circumstances, including
the materiality of the change. With respect to a change in price or, subject to
certain limitations, a change in the percentage of securities sought or a change
in any dealer's soliciting fee, if any, a minimum of ten business days from the
date of such change is generally required to allow for adequate dissemination to
unitholders. Accordingly, if prior to the expiration date, we increase (other
than increases of not more than two percent of the outstanding units) or
decrease the number of units being sought, or increase or decrease the offer
price, and if the offer is scheduled to expire at any time earlier than the
tenth business day after the date that notice of such increase or decrease is
first published, sent or given to unitholders, the offer will be extended at
least until the expiration of such ten business days. As used in the offer to
purchase, "business day" means any day other than a Saturday, Sunday or a
Federal holiday, and consists of the time period from 12:01 a.m. through 12:00
midnight, New York City time.
SECTION 6. CERTAIN FEDERAL INCOME TAX MATTERS.
The following summary is a general discussion of certain of the Federal
income tax consequences of the offer that may be relevant to (i) unitholders who
tender some or all of their units for cash pursuant to our offer, and (ii)
unitholders who do not tender any of their units pursuant to our offer. This
discussion is based on the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"), Treasury Regulations, rulings issued by the Internal
Revenue Service (the "IRS"), and judicial decisions, all as of the date of this
offer to purchase. All of the foregoing are subject to change or alternative
construction with possible retroactive effect, and any such change or
alternative construction could affect the continuing accuracy of this summary.
Such summary is based on the assumption that your partnership will be operated
in accordance
8
<PAGE> 11
with its organizational documents including its certificate of limited
partnership and agreement of limited partnership. This summary is for general
information only and does not purport to discuss all aspects of Federal income
taxation which may be important to a particular person in light of its
investment or tax circumstances, or to certain types of investors subject to
special tax rules (including financial institutions, broker-dealers, insurance
companies, and, except to the extent discussed below, tax-exempt organizations
and foreign investors, as determined for United States Federal income tax
purposes), nor (except as otherwise expressly indicated) does it describe any
aspect of state, local, foreign or other tax laws. This summary assumes that the
units constitute capital assets in the hands of the unitholders (generally,
property held for investment). No advance ruling has been or will be sought from
the IRS regarding any matter discussed in this offer to purchase. Further, no
opinion of tax counsel has been obtained with regard to the offer.
THE FEDERAL INCOME TAX TREATMENT OF A UNITHOLDER PARTICIPATING IN THE OFFER
DEPENDS IN SOME INSTANCES ON DETERMINATIONS OF FACT AND INTERPRETATIONS OF
COMPLEX PROVISIONS OF FEDERAL INCOME TAX LAW FOR WHICH NO CLEAR PRECEDENT OR
AUTHORITY MAY BE AVAILABLE. ACCORDINGLY, YOU SHOULD CONSULT YOUR TAX ADVISOR
REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF SELLING THE
LIMITED PARTNERSHIP INTERESTS IN YOUR PARTNERSHIP REPRESENTED BY UNITS PURSUANT
TO OUR OFFER OR OF A DECISION NOT TO SELL IN LIGHT OF YOUR SPECIFIC TAX
SITUATION.
Tax Consequences to Limited Partners Tendering Units for Cash. You will
recognize gain or loss on a sale of a unit of limited partnership of your
partnership pursuant to the offer equal to the difference between (i) your
"amount realized" on the sale and (ii) your adjusted tax basis in the unit sold.
The "amount realized" with respect to a unit of limited partnership of your
partnership will be equal to the sum of the amount of cash received by you for
the unit sold pursuant to the offer plus the amount of partnership liabilities
allocable to the unit (as determined under Section 752 of the Internal Revenue
Code). Thus, your tax liability resulting from a sale of a unit of limited
partnership of your partnership could exceed the cash received upon such sale.
Adjusted Tax Basis. If you acquired your units of limited partnership of
your partnership for cash, your initial tax basis in such units is generally
equal to the cash investment in your partnership increased by your share of
partnership liabilities at the time you acquired such units. Your initial tax
basis generally has been increased by (i) your share of partnership income and
gains, and (ii) any increases in your share of partnership liabilities, and has
been decreased (but not below zero) by (i) your share of partnership cash
distributions, (ii) any decreases in your share of partnership liabilities,
(iii) your share of partnership losses, and (iv) your share of nondeductible
partnership expenditures that are not chargeable to capital. For purposes of
determining your adjusted tax basis in units of limited partnership of your
partnership immediately prior to a disposition of your units, your adjusted tax
basis in your units will include your allocable share of partnership income,
gain or loss for the taxable year of disposition. If your adjusted tax basis is
less than your share of partnership liabilities (e.g., as a result of the effect
of net loss allocations and/or distributions exceeding the cost of your unit),
your gain recognized with respect to a unit of limited partnership of your
partnership pursuant to the offer will exceed the cash proceeds realized upon
the sale of such unit.
Character of Gain or Loss Recognized Pursuant to the Offer. Except as
described below, the gain or loss recognized by you on a sale of a unit of
limited partnership of your partnership pursuant to the offer generally will be
treated as a long-term capital gain or loss if you held the unit for more than
one year. Long-term capital gains recognized by individuals and certain other
noncorporate taxpayers generally will be subject to a maximum Federal income tax
rate of 20%. If the amount realized with respect to a unit of limited
partnership of your partnership that is attributable to your share of
"unrealized receivables" of your partnership exceeds the tax basis attributable
to those assets, such excess will be treated as ordinary income. Among other
things, "unrealized receivables" include depreciation recapture for certain
types of property. In addition, the maximum Federal income tax rate applicable
to persons who are noncorporate taxpayers for net capital gains attributable to
the sale of depreciable real property (which may be determined to include an
interest in a partnership such as your units) held for more than one year is
currently 25% (rather than 20%) to the extent of previously claimed depreciation
deductions that would not be treated as "unrealized receivables."
If you tender a unit of limited partnership interest of your partnership in
the offer, you will be allocated a share of partnership taxable income or loss
for the year of tender with respect to any units sold. You will not
9
<PAGE> 12
receive any future distributions on units of limited partnership interest of
your partnership tendered on or after the date on which such units are accepted
for purchase and, accordingly, you may not receive any distributions with
respect to such accreted income. Such allocation and any partnership cash
distributions to you for that year will affect your adjusted tax basis in your
unit of limited partnership interest of your partnership and, therefore, the
amount of your taxable gain or loss upon a sale of a unit pursuant to the offer.
Passive Activity Losses. The passive activity loss rules of the Internal
Revenue Code limit the use of losses derived from passive activities, which
generally include investments in limited partnership interests such as the units
of limited partnership interest of your partnership. An individual, as well as
certain other types of investors, generally cannot use losses from passive
activities to offset nonpassive activity income received during the taxable
year. Passive losses that are disallowed for a particular tax year are
"suspended" and may be carried forward to offset passive activity income earned
by the investor in future taxable years. In addition, such suspended losses may
be claimed as a deduction, subject to other applicable limitations, upon a
taxable disposition of the investor's interest in such activity.
Accordingly, if your investment in your units is treated as a passive
activity, you may be able to shelter gain from the sale of your units of limited
partnership interest of your partnership pursuant to the offer with passive
losses in the manner described below. If you sell all or a portion of your units
of limited partnership interest of your partnership pursuant to the offer and
recognize a gain on your sale, you will be entitled to use your current and
"suspended" passive activity losses (if any) from your partnership and other
passive sources to offset that gain. In general, if you sell all or a portion of
your units of limited partnership interest of your partnership pursuant to the
offer and recognize a loss on such sale, you will be entitled to deduct that
loss currently (subject to other applicable limitations) against the sum of your
passive activity income from your partnership for that year (if any) plus any
passive activity income from other sources for that year. If you sell all of
your units pursuant to the offer, the balance of any "suspended" losses from
your partnership that were not otherwise utilized against passive activity
income as described in the two preceding sentences will no longer be suspended
and will therefore be deductible (subject to any other applicable limitations)
by you against any other income for that year, regardless of the character of
that income. Accordingly, you should consult your tax advisor concerning
whether, and the extent to which, you have available "suspended" passive
activity losses from your partnership or other investments that may be used to
offset gain from the sale of units pursuant to the offer.
Information Reporting, Backup Withholding and FIRPTA. If you tender any
units, you must report the transaction by filing a statement with your Federal
income tax return for the year of the tender which provides certain required
information to the IRS. To prevent the possible application of back-up Federal
income tax withholding of 31% with respect to the payment of the offer
consideration, you may have to provide us with your correct taxpayer
identification number. See the instructions to the letter of transmittal.
Gain realized by a foreign person on the sale of a unit pursuant to the
offer will be subject to Federal income tax under the Foreign Investment in Real
Property Tax Act. Under these provisions of the Internal Revenue Code, the
transferee of an interest held by a foreign person in a partnership which owns
United States real property generally is required to deduct and withhold 10% of
the amount realized on the disposition. Amounts withheld would be creditable
against a foreign person's Federal income tax liability and, if in excess
thereof, a refund could be obtained from the Internal Revenue Service by filing
a U.S. income tax return. See the instructions to the letter of transmittal.
Tax Consequences to Non-Tendering and Partially-Tendering Limited
Partners. Section 708 of the Internal Revenue Code provides that if there is a
sale or exchange of 50% or more of the total interest in capital and profits of
a partnership within any 12-month period, such partnership terminates for
Federal income tax purposes. It is possible that our acquisition of units
pursuant to the offer could result in such a termination of your partnership.
Notwithstanding the fact that the agreement of limited partnership of your
partnership may prohibit a transfer of ownership of an interest that would cause
a tax termination, the assignment to us of rights to distributions with respect
to units may cause a termination of your partnership for Federal income tax
purposes. If your partnership is deemed to terminate for tax purposes, the
following Federal income tax events will be deemed to occur: the terminated
partnership will be deemed to have
10
<PAGE> 13
contributed all of its assets (subject to its liabilities) to a new partnership
in exchange for an interest in the new partnership and, immediately thereafter,
the old partnership will be deemed to have distributed interests in the new
partnership to the remaining limited partners in proportion to their respective
interests in the old partnership in liquidation of the old partnership.
A remaining limited partner will not recognize any gain or loss upon the
deemed distribution or upon the deemed contribution and the capital accounts of
the remaining limited partners in the old partnership will carry over intact
into the new partnership. A termination will change (and possibly shorten) a
remaining partner's holding period with respect to its retained units in your
partnership for federal income tax purposes.
The new partnership's adjusted tax basis in its assets will be the same as
the old partnership's basis in such assets immediately before the termination. A
termination may also subject the assets of the new partnership to depreciable
lives in excess of those currently applicable to the old partnership. This would
generally decrease the annual average depreciation deductions allocable to the
remaining limited partners for a number of years following consummation of the
offer (thereby increasing the taxable income allocable to their units in each
such year), but would have no effect on the total depreciation deductions
available over the useful lives of the assets of your partnership.
Elections as to certain tax matters previously made by the old partnership
prior to termination will not be applicable to the new partnership unless the
new partnership chooses to make the same elections.
Additionally, upon a termination for tax purposes, the old partnership's
taxable year will close for all limited partners. In the case of a remaining
limited partner or a partially tendering limited partner reporting on a tax year
other than a calendar year, the closing of the partnership's taxable year may
result in more than 12 months' taxable income or loss of the old partnership
being includible in such limited partner's taxable income for the year of
termination.
SECTION 7. EFFECTS OF THE OFFER.
Future Control by AIMCO. Because the general partner of your partnership is
our subsidiary, we have control over the management of your partnership. If we
are successful in acquiring 44.31% of the units pursuant to the offer, we will
be able to significantly influence or control the outcome of all voting
decisions with respect to your partnership. In general, we will vote the units
owned by us in whatever manner we deem to be in our best interests, which may
not be in the interest of other limited partners. This could (1) prevent
non-tendering limited partners from taking action they desire but that we oppose
and (2) enable us to take action desired by us but opposed by non-tendering
limited partners. We also own the company that manages the residential
properties owned by your partnership. In the event that we acquire a substantial
number of units pursuant to the offer, removal of a property manager may become
more difficult or impossible.
Distributions to Us. If we acquire units in the offer, we will participate
in any subsequent distributions to limited partners to the extent of the units
purchased.
Partnership Status. We believe our purchase of units should not adversely
affect the issue of whether your partnership is classified as a partnership for
Federal income tax purposes.
Business. Our offer will not affect the operation of the properties owned
by your partnership. We will continue to control the general partner of your
partnership and the residential property manager, both of which will remain the
same. Consummation of the offer will not affect any agreement of limited
partnership, the operations of any partnership, the business and properties
owned by any partnership, the management compensation payable to any general
partner or any other matter relating to your partnership, except it would result
in us increasing our ownership of units. We have no current intention of
changing the fee structure for your general partner or the manager of your
partnership's residential properties.
Effect on Trading Market; Registration Under 12(g) of the Exchange Act. If
a substantial number of units are purchased pursuant to the offer, the result
will be a reduction in the number of limited partners in your partnership. In
the case of certain kinds of equity securities, a reduction in the number of
securityholders might be expected to result in a reduction in the liquidity and
volume of activity in the trading market for the
11
<PAGE> 14
security. In this case, however, there is no established public trading market
for the units and, therefore, we do not believe a reduction in the number of
limited partners will materially further restrict your ability to find
purchasers for your units through secondary market transactions.
The units are registered under Section 12(g) of the Exchange Act, which
means, among other things, that your partnership is required to file periodic
reports with the SEC and to comply with the SEC's proxy rules. We do not expect
or intend that consummation of the offer will cause the units to cease to be
registered under Section 12(g) of the Exchange Act. If the units were to be held
by fewer than 300 persons, your partnership could apply to de-register the units
under the Exchange Act. Because the units are widely-held, however, we believe
that, even if we purchase the maximum number of units in the offer, the units
will be held of record by more than 300 persons.
SECTION 8. INFORMATION CONCERNING US AND CERTAIN OF OUR AFFILIATES.
We are AIMCO Properties, L.P., a Delaware limited partnership. Together
with our subsidiaries, we conduct substantially all of the operations of
Apartment Investment and Management Company, a Maryland corporation ("AIMCO").
AIMCO is a real estate investment trust that owns and manages multifamily
apartment properties throughout the United States. Based on apartment unit data
compiled by the National Multi-Housing Council, we believe that, as of March 31,
1999, AIMCO was one of the largest owners and managers of multifamily apartment
properties in the United States, with a total portfolio of 373,409 apartment
units in 2,071 properties located in 49 states, the District of Columbia and
Puerto Rico. AIMCO's Class A Common Stock is listed and traded on the New York
Stock Exchange under the symbol "AIV." As of March 31, 1999, AIMCO:
- owned or controlled 63,069 units in 240 apartment properties;
- held an equity interest in 168,817 units in 891 apartment properties; and
- managed 141,523 units in 940 apartment properties for third party owners
and affiliates.
Our general partner is AIMCO-GP, Inc., which is a wholly owned subsidiary
of AIMCO. Our principal executive offices are located at 1873 South Bellaire
Street, Denver, Colorado 80222, and our telephone number is (303) 757-8101.
The names, positions and business addresses of the directors and executive
officers of AIMCO and your general partner (which is our subsidiary) as well as
a biographical summary of the experience of such persons for the past five years
or more, are set forth on Annex I attached hereto and are incorporated herein by
reference.
We and AIMCO are both subject to the information and reporting requirements
of the Exchange Act and, in accordance therewith, file reports and other
information with the Securities and Exchange Commission relating to our
business, financial condition and other matters. Such reports and other
information may be inspected at the public reference facilities maintained by
the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549;
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661; and 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material can
also be obtained from the Public Reference Room of the SEC in Washington, D.C.
at prescribed rates. The SEC also maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
In addition, information filed by AIMCO with the New York Stock Exchange may be
inspected at the offices of the New York Stock Exchange at 20 Broad Street, New
York, New York 10005.
For more information regarding AIMCO Properties, L.P., please refer to the
Annual Report on Form 10-K for the year ended December 31, 1998 (particularly
the management's discussion and analysis of financial condition and results of
operations) and other reports and documents filed by it with the SEC.
Neither we nor, to the best of our knowledge, any of the persons listed on
Annex I attached hereto, (i) beneficially own or have a right to acquire any
units, (ii) have effected any transaction in the units in the
12
<PAGE> 15
past 60 days, or (iii) have any contract, arrangement, understanding or
relationship with any other person with respect to any securities of your
partnership, including, but not limited to, contracts, arrangements,
understandings or relationships concerning transfer or voting thereof, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies (except for
previous tender offers we may have conducted for units).
SECTION 9. BACKGROUND AND REASONS FOR THE OFFER.
General. We are in the business of acquiring direct and indirect interests
in apartment properties such as the properties owned by your partnership. Our
offer provides us with an opportunity to increase our ownership interest in your
partnership's properties while providing you and other investors with an
opportunity to liquidate your current investment.
On October 1, 1998, AIMCO merged (the "Insignia Merger") with Insignia
Financial Group, Inc. ("Insignia"). As a result of the Insignia Merger, AIMCO
acquired approximately 51% of the outstanding common shares of beneficial
interest of Insignia Properties Trust ("IPT"). The general partner of your
partnership is a wholly owned subsidiary of IPT. Through the Insignia Merger,
AIMCO also acquired a majority ownership interest in the entity that manages the
residential properties owned by your partnership. On October 31, 1998, IPT and
AIMCO entered into an agreement and plan of merger, dated as of October 1, 1998,
pursuant to which IPT merged with AIMCO on February 26, 1999 (the "IPT Merger").
Together with its subsidiaries, AIMCO currently owns, in the aggregate,
approximately 1.54% of the outstanding limited partnership units of your
partnership.
One of the reasons we chose to acquire Insignia is that we would be able to
make the tender offers to acquire limited partnership interests of some of the
limited partnerships formerly controlled or managed by Insignia (the "Insignia
Partnerships"). Such offers would provide liquidity for the limited partners of
the Insignia Partnerships, and would provide AIMCO Properties, L.P. with a
larger asset and capital base and increased diversification. As of the date of
this offering, AIMCO Properties, L.P. proposes to make offers to approximately
90 of the Insignia Partnerships, including your partnership.
During our negotiations with Insignia in early 1998, we decided that if the
merger with Insignia were consummated, we could also benefit from making offers
for limited partnership interests in the Insignia Partnerships. While some of
the Insignia Partnerships are public partnerships and information is publicly
available on such partnerships for weighing the benefits of making a tender
offer, many of the partnerships are private partnerships and information about
such partnerships comes principally from the general partner. Our control of the
general partner makes it possible to obtain access to such information. Further,
such control also means that we control the operations of the partnerships and
their properties. Insignia did not propose that we conduct such tender offers,
rather we initiated the offers on our own. We determined in June of 1998 that if
the merger with Insignia were consummated, we would offer to limited partners of
certain of the Insignia Partnerships limited partnership units of AIMCO
Properties, L.P. and/or cash.
Prior Tender Offers. Prior to the Insignia Merger, a number of tender
offers had been made to acquire units of your partnership.
On April 30, 1999, Everest Investors 12, LLC, which was unaffiliated with
Insignia and is not affiliated with AIMCO, commenced a tender offer for $90 per
unit.
We are aware that tender offers may have been made by unaffiliated third
parties to acquire units in your partnership in exchange for cash. We are
unaware of the amounts offered, terms, tendering parties or number of units
involved in these tender offers. In connection with tender offers made by
Insignia affiliates with respect to partnerships for which we are making offers,
some limited partners filed lawsuits. We are not aware of any merger,
consolidation or other combination involving any of the Insignia Partnerships,
or any acquisitions of any of such partnerships or a material amount of the
assets of such partnerships.
Certain Litigation. On March 24, 1998, certain persons claiming to own
limited partner interests in certain of the limited partnerships for which our
subsidiaries act as general partner (excluding your partnership) filed a
purported class and derivative action in California Superior Court in the County
of San
13
<PAGE> 16
Mateo against AIMCO, Insignia, the general partners of the partnerships, certain
persons and entities who purportedly formerly controlled the general partners,
and additional entities affiliated with and individuals who are officers,
directors and/or principals of several of the defendants. The complaint contains
allegations that, among other things, (i) the defendants breached fiduciary
duties owed to the plaintiffs, or aided and abetted in those purported breaches,
by selling or agreeing to sell their "fiduciary positions" as stockholders,
officers and directors of the general partners for a profit and retaining said
profit rather than distributing it to the plaintiffs; (ii) the defendants
breached fiduciary duties, or aided and abetted in those purported breaches, by
mismanaging the partnerships and misappropriating assets of the partnerships by
(a) manipulating the operations of the partnerships to depress the trading price
of limited partnership units of the partnerships; (b) coercing and fraudulently
inducing unitholders to sell units to certain of the defendants at depressed
prices; and (c) using the voting control obtained by purchasing units at
depressed prices to entrench certain of the defendants' positions of control
over the partnerships; and (iii) the defendants breached their fiduciary duties
to the plaintiffs by (a) selling assets of the partnerships such as mailing
lists of unitholders and (b) causing the general partners to enter into
exclusive arrangements with their affiliates to sell goods and services to the
general partners, the unitholders and tenants of properties owned by the
partnerships. The complaint also alleges that the foregoing allegations
constitute violations of various California securities, corporate and
partnership statutes, as well as conversion and common law fraud. The complaint
seeks unspecified compensatory and punitive damages, an injunction blocking the
sale of control of the general partners and a court order directing the
defendants to discharge their fiduciary duties to the plaintiffs. On June 25,
1998, the defendants filed motions seeking dismissal of the action. In lieu of
responding to the motion, plaintiffs have filed an amended complaint. On October
14, 1998, the AIMCO and Insignia defendants filed demurrers to the amended
complaint. The demurrers (which are requests to dismiss the action as a matter
of law) were heard on February 8, 1999, but no decision has been reached by the
Court. While no assurances can be given, we believe that the ultimate outcome of
this litigation will not have a material adverse effect on us.
Alternatives Considered by Your General Partner. Before we commenced this
offer, your general partner (which is our subsidiary) considered a number of
alternative transactions. The following is a brief discussion of the advantages
and disadvantages of the alternatives considered by your general partner.
Liquidation
One alternative would be for the partnership to sell its assets, distribute
the net liquidation proceeds to its partners in accordance with the agreement of
limited partnership, and thereafter dissolve. Partners would be at liberty to
use the net liquidation proceeds after taxes for investment, business, personal
or other purposes, at their option. If your partnership were to sell its assets
and liquidate, you and your partners would not need to rely upon capitalization
of income or other valuation methods to estimate the fair market value of
partnership assets. Instead, such assets would be valued through negotiations
with prospective purchasers (in many cases unrelated third parties). Currently,
your partnership is marketing for sale its two commercial properties.
However, in the opinion of your general partner (which is our subsidiary),
the present time may not be the most desirable time to sell the residential real
estate assets of your partnership in private transactions, and any liquidation
sale would be uncertain. Liquidation of the partnership assets may trigger a
substantial prepayment penalty under the mortgages for the properties. Your
general partner believes it currently is in the best interest of your
partnership to continue holding its residential real estate assets.
Continuation of the Partnership Without the Offer
A second alternative would be for your partnership to continue as a
separate legal entity, with its own assets and liabilities and continue to be
governed by its existing agreement of limited partnership, without our offer. A
number of advantages could result from the continued operation of your
partnership. Given improving rental market conditions, the level of
distributions might increase over time. It is possible that the private resale
market for properties could improve over time, making a sale of the
partnership's properties in a private transaction at some point in the future a
more attractive option than it is currently. The continuation of your
partnership will allow you to continue to participate in the net income and any
increases in revenue of your
14
<PAGE> 17
partnership and any net proceeds from the sale of any property owned by your
partnership. However, no assurance can be given as to future operating results
or as to the results of any attempts to sell any property owned by your
partnership. Currently, your partnership is marketing its two commercial
properties for sale and has received offers for such properties.
There are several risks and disadvantages that result from continuing the
operations of your partnership without our offer. If your partnership were
continue operating as presently structured, your partnership could be forced to
borrow on terms that could result in net losses from operations. In addition,
continuation of your partnership without our offer would deny you and your
partners the benefits of our offer. For example, you would have no opportunity
for liquidity unless you were to sell your units in a private transaction. Any
such sale would likely be at a discount from your pro rata share of the fair
market value of the properties owned by your partnership.
Sale of Assets
Your partnership could sell the properties it owns and not liquidate. Your
general partner (which is our subsidiary) considers the sale of partnership
properties from time to time and is currently marketing its two commercial
properties for sale. However, any such sale would likely be a taxable
transaction and, without a liquidating distribution, would not provide limited
partners with any cash to pay any tax liabilities arising as a result thereof.
Alternative Transactions Considered by Us. Before we decided to make our
offer, we considered a number of alternative transactions, including purchasing
some or all of your partnership's properties or merging your partnership with
us. However, both of these alternatives would require a vote of all the limited
partners. If the transaction was approved, all limited partners, including those
who wish to continue to participate in the ownership of your partnership's
properties, would be forced to participate in the transaction. If the
transaction was not approved, all limited partners, including those who would
like to dispose of their investment in your partnership's properties, would be
forced to retain their investment. We also considered an offer to exchange units
in your partnership for units of AIMCO Properties, L.P. However because of the
expense and delay associated with making such an exchange offer, we decided to
make an offer for cash only. In addition, our historical experience has been
that most holders of limited partnership units, when given a choice, prefer
cash.
Determination of Offer Price. In establishing the offer price, we reviewed
certain publicly available information and certain information made available to
us by the general partner (which is our subsidiary) and our other affiliates,
including among other things: (i) the agreement of limited partnership, as
amended to date; (ii) the partnership's Annual Report on Form 10-KSB for the
year ended December 31, 1998; (iii) unaudited results of operations of the
partnership's properties for the period since the beginning of the partnership's
current fiscal year and to date in 1999; (iv) the operating budgets prepared by
the residential property manager with respect to the partnership's properties
for the year ending December 31, 1999; and (v) tender offer statements,
solicitation/recommendation statements and beneficial ownership reports on
Schedules 14D-1, 14D-9 and 13D. Our determination of the offer price was based
on our review and analysis of the foregoing information, the other financial
information and the analyses concerning the partnership summarized below.
Valuation of Units. We determined our offer price by estimating the value
of each property owned by your partnership. For the residential properties, we
used the direct capitalization method. This method involves applying a
capitalization rate to your partnership's annual property income. A
capitalization rate is a percentage (rate of return), commonly applied by
purchasers of residential real estate to property income to determine the
present value of income property. The lower the capitalization rate utilized the
higher the value produced, and the higher the capitalization rate utilized the
lower the value produced. We used your partnership's property income for the
fiscal year ended December 31, 1998. Our method for selecting a capitalization
rate begins with each property being assigned a location and condition rating
(e.g., "A" for excellent, "B" for good, "C" for fair, and "D" for poor). We then
adjust the capitalization rate based on whether the mortgage debt that the
property is subject to bears interest at a rate above or below 7.5% per
15
<PAGE> 18
annum. Generally, for every 0.5% in excess of 7.5%, the capitalization rate
would be increased by 0.25%. The evaluation of a property's location and
condition, and the determination of an appropriate capitalization rate for a
property, is subjective in nature, and others evaluating the same property might
use a different capitalization rate and derive a different property value.
Property income is the difference between the revenues from the property
and related costs and expenses, excluding income derived from sources other than
its regular activities and before income deductions. Income deductions include
interest, income taxes, prior-year adjustments, charges to reserves, write-off
of intangibles, adjustments arising from major changes in accounting methods and
other material and nonrecurring items. In this respect, property income differs
from net income disclosed in the partnership's financial statements, which does
not exclude these income sources and deductions. The following is a
reconciliation of your partnership's property income for the year ended December
31, 1998, to your partnership's net operating income for the same period.
<TABLE>
<S> <C>
Net Income (Loss)........................................ $ 566,000
Other Non-Operating Expenses............................. 2,272,750
Depreciation............................................. 402,000
Equity in Net Income of Joint Venture.................... (20,000)
Interest................................................. 0
----------
Property Income.......................................... $3,220,750
==========
</TABLE>
Although the direct capitalization method is a widely accepted way of
valuing real estate, there are a number of other methods available to value real
estate, each of which may result in different valuations of a property. Further,
in applying the direct capitalization method, others may make different
assumptions and obtain different results. The proceeds that you would receive if
you sold your units to someone else or if your partnership were actually
liquidated might be higher than our offer price. We determined our offer price
as follows:
Your partnership currently holds one commercial property and a 35% interest
in a joint venture, which holds one commercial property. Peachtree Medical is
located in Norcross, Georgia and Corinth Square is located in Prairie Village,
Kansas. These properties are currently being marketed for sale and the table
below reflects the current offers to purchase the property. There can be no
assurance, however, that such properties will be sold or the price or costs of
any sale. If we have received any offers to purchase a property, the value we
ascribed to such property is the highest offer, which is then discounted to
reflect the uncertainty of the actual closing price for a sale and the
likelihood of price negotiations up until the closing date.
<TABLE>
<CAPTION>
PROPERTY OFFER PRICE(S)
- -------- --------------
<S> <C>
Peachtree Medical Building.............................. $ 985,000
Corinth Square Professional Building.................... $1,850,000
$1,100,000
</TABLE>
- First, we estimated the value of each property owned by your partnership.
We valued residential properties using the direct capitalization method.
We selected capitalization rates based on our experience in valuing
similar properties. The lower the capitalization rate applied to a
property's income, the higher its value. We considered local market sales
information for comparable properties, estimated actual capitalization
rates (property income less capital reserves divided by sales price) and
then evaluated each property in light of its relative competitive
position, taking into account property location, occupancy rate, overall
property condition and other relevant factors. We believe that arms-
length purchasers would base their purchase offers on capitalization
rates comparable to those used by us, however there is no single correct
capitalization rate and others might use different rates. We divided the
fiscal 1998 property income by the property's capitalization rate to
derive an estimated
16
<PAGE> 19
gross property value as described in the following table. For the
commercial properties, we used the highest offer price, discounted to
reflect the uncertainties in closing a sale.
<TABLE>
<CAPTION>
FISCAL 1998 ESTIMATED
PROPERTY CAPITALIZATION GROSS PROPERTY
PROPERTY INCOME RATE VALUE
- -------- ----------- -------------- --------------
<S> <C> <C> <C>
Bronson Place........................... $291,000 10.25% $2,839,000
Defoors Crossing........................ 225,000 10.00% 2,247,000
Meadow Wood............................. 295,000 10.25% 2,879,000
Peachtree Medical....................... N/A N/A 837,250
Corinth Square (JV)..................... N/A N/A 524,933
----------
Estimated Total Gross Property Value.... $9,327,183
</TABLE>
- Second, we calculated the value of the equity of your partnership by
adding to the aggregate gross property value of all properties owned by
your partnership, the value of the non-real estate assets of your
partnership, and deducting the liabilities of your partnership, including
mortgage debt and debt owed by your partnership to its general partner
(which is our subsidiary) or its affiliates after consideration of any
applicable subordination provisions affecting payment of such debt. We
deducted from this value certain other costs including required capital
expenditures, deferred maintenance, and closing costs to derive a net
equity value for your partnership of $9,575,087. Closing costs, which are
estimated to be 5% of the gross property value, include legal and
accounting fees, real property, transfer taxes, title and escrow costs
and broker's fees.
- Third, using this net equity value, we determined the proceeds that would
be paid to holders of units in the event of a liquidation of your
partnership, based on the terms of your partnership's agreement of
limited partnership. Accordingly, 100% of the estimated liquidation
proceeds are assumed to be distributed to holders of units. Our offer
price represents the per unit liquidation proceeds determined in this
manner.
<TABLE>
<S> <C>
Gross valuation of partnership properties................... $ 9,327,183
Plus: Cash and cash equivalents............................. 927,989
Plus: Other partnership assets, net of security deposits.... 253,268
Less: Mortgage debt, including accrued interest............. 0
Less: Accounts payable and expenses......................... (24,928)
Less: Other liabilities..................................... (138,068)
-----------
Partnership valuation before taxes and certain costs........ $10,345,443
Less: Disposition fees...................................... 0
Less: Extraordinary capital expenditures and deferred
maintenance............................................... (330,244)
Less: Closing costs......................................... (440,113)
-----------
Estimated net valuation of your partnership................. $ 9,575,087
Percentage of estimated net valuation allocated to holders
of units.................................................. 100%
-----------
Estimated net valuation of units............................ $ 9,575,087
Total number of units............................. 61,063
-----------
Estimated valuation per unit................................ $ 157
===========
Cash consideration per unit................................. $ 157
-----------
</TABLE>
Comparison of Consideration to Alternative Consideration. To assist holders
of units in evaluating the offer, your general partner (which is our subsidiary)
has attempted to compare the offer price against: (a) prices at which the units
have sold in the secondary market; (b) estimates of the value of the units on a
liquidation basis; (c) your general partner's estimate of net asset value; and
(d) the recent appraisals of your partnership's properties. The general partner
of your partnership believes that analyzing the alternatives in terms of
estimated value, based upon currently available data and, where appropriate,
reasonable assumptions
17
<PAGE> 20
made in good faith, establishes a reasonable framework for comparing
alternatives. Since the value of the consideration for alternatives to the offer
is dependent upon varying market conditions, no assurance can be given that the
estimated values reflect the range of possible values.
The results of these comparative analyses are summarized in the following
chart. You should bear in mind that the estimated values assigned to the
alternate forms of consideration are based on a variety of assumptions that have
been made by us. These assumptions relate to, among other things: the operating
results, if any, since December 31, 1998 as to income and expenses of each
property, other projected amounts and the capitalization rates that may be used
by prospective buyers if your partnership assets were to be liquidated.
In addition, these estimates are based upon certain information available
to your general partner (which is our subsidiary) at the time the estimates were
computed, and no assurance can be given that the same conditions analyzed by it
in arriving at the estimates of value would exist at the time of the offer. The
assumptions used have been determined by the general partner of your partnership
in good faith, and, where appropriate, are based upon current and historical
information regarding your partnership and current real estate markets, and have
been highlighted below to the extent critical to the conclusions of the general
partner of your partnership. Actual results may vary from those set forth below
based on numerous factors, including interest rate fluctuations, tax law
changes, supply and demand for similar apartment properties, the manner in which
your partnership's properties are sold and changes in availability of capital to
finance acquisitions of apartment properties.
Under your partnership's agreement of limited partnership, the term of the
partnership will continue until December 31, 2018, unless sooner terminated as
provided in the agreement or by law. Limited partners could, as an alternative
to tendering their units, take a variety of possible actions, including voting
to liquidate the partnership or amending the agreement of limited partnership to
authorize limited partners to cause the partnership to merge with another entity
or engage in a "roll-up" or similar transaction.
COMPARISON TABLE
<TABLE>
<CAPTION>
PER UNIT
-----------
<S> <C>
Cash offer price............................................ $ 157
Alternatives:
Prices on secondary market................................ $90 to $135
Estimated liquidation proceeds............................ $ 157
General partner's estimate of net asset value............. $ 162
</TABLE>
Prices on Secondary Market
Secondary market sales activity for the units, including privately
negotiated sales, has been limited and sporadic. Set forth in the table below
are the high and low sales prices of units for the quarterly periods from
January 1, 1996 to March 31, 1999 as reported by The Partnership Spectrum, which
is an independent, third-party source. The gross sales prices reported by The
Partnership Spectrum do not necessarily reflect the net sales proceeds received
by sellers of units, which typically are reduced by commissions and other
secondary market transaction costs to amounts less than the reported prices;
thus, we do not know whether the information complied by The Partnership
Spectrum is accurate and complete. The transfer paperwork submitted to the
general partner often does not include the requested price information or
contains conflicting
18
<PAGE> 21
information as to the actual sales price. Accordingly, you should not rely upon
this information as being completely accurate.
REPORTED SALES PRICES OF PARTNERSHIP UNITS
<TABLE>
<CAPTION>
AS REPORTED BY THE
PARTNERSHIP SPECTRUM(a)
------------------------
LOW SALES HIGH SALES
PRICE PRICE
PER UNIT PER UNIT
---------- -----------
<S> <C> <C>
Fiscal Year Ended December 31, 1999:
First Quarter............................................. $110.00 $127.75
Fiscal Year Ended December 31, 1998:
Fourth Quarter............................................ 96.67 128.00
Third Quarter............................................. 115.00 126.81
Second Quarter............................................ 90.00 135.00
First Quarter............................................. 90.00 90.00
Fiscal Year Ended December 31, 1997:
Fourth Quarter............................................ 90.00 90.00
Third Quarter............................................. 107.88 112.00
Second Quarter............................................ -- --
First Quarter............................................. -- --
Fiscal Year Ended December 31, 1996:
Fourth Quarter............................................ -- --
Third Quarter............................................. -- --
Second Quarter............................................ -- --
First Quarter............................................. -- --
</TABLE>
- ---------------
(a) The gross sales prices reported by The Partnership Spectrum do not
necessarily reflect the net sales proceeds received by sellers of units,
which typically are reduced by commissions and other secondary market
transaction costs to amounts less than the reported prices. We do not know
whether the information compiled by The Partnership Spectrum is accurate or
complete.
We believe that, although secondary market sales information probably is
not a reliable measure of value because of the limited and inefficient nature of
the market for units, this information may be relevant to a limited partner's
decision as to whether to tender his or her units pursuant to the offer. At
present, privately negotiated sales and sales through intermediaries are the
only means available to a limited partner to liquidate an investment in units
(other than the offer) because the units are not listed or traded on any
exchange or quoted on NASDAQ.
APPRAISALS
Certain of your partnership's properties were appraised in 1999 by an
independent third party appraiser, Cushman & Wakefield of Georgia, Inc. (the
"Appraiser"), in connection with a requirement in your partnership's agreement
of limited partnership and not in connection with the offer. According to the
appraisal reports, the scope of the appraisals included an inspection of the
properties and an analysis of the surrounding market. The Appraiser relied
principally on the income capitalization approach to valuation and secondarily
on the sales comparison approach, and represented that its report was prepared
in accordance with the Code of Professional Ethics and Standards of Professional
Appraisal Practice of the Appraisal Institute and the Uniform Standards of
Professional Appraisal Practice, and in compliance with the Appraisal Standards
set forth in the Financial Institutions Reform, Recovery and Enforcement Act of
1989 (known as "FIRREA"). The estimated market value of the fee simple estate of
the properties are as follows:
<TABLE>
<CAPTION>
PROPERTY APPRAISED VALUE
- -------- ---------------
<S> <C>
Peachtree Medical Building.................................. $990,000
</TABLE>
19
<PAGE> 22
ESTIMATED LIQUIDATION PROCEEDS
Liquidation value is a measure of the price at which the assets of your
partnership would sell if disposed of in an arms-length transaction between a
willing buyer and your partnership, each having access to relevant information
regarding the historical revenues and expenses of the business. Your general
partner (which is our subsidiary) estimated the liquidation value of units using
the same direct capitalization method and assumptions as we did in valuing the
units for the offer price. The liquidation analysis also assumed that your
partnership's properties were sold to an independent third-party buyer at the
current property value and that other balance sheet assets (excluding amortizing
assets) and liabilities of your partnership were sold at their book value, and
that the net proceeds of sale were allocated to your partners in accordance with
your partnership's agreement of limited partnership.
The liquidation analysis assumes that the assets of your partnership are
sold in a single transaction. Should the assets be liquidated over time, even at
prices equal to those projected, distributions to limited partners from cash
flow from operations might be reduced because your partnership's relatively
fixed costs, such as general and administrative expenses, are not
proportionately reduced with the liquidation of assets. However, for
simplification purposes, the sales of the assets are assumed to occur
concurrently. The liquidation analysis assumes that the assets would be disposed
of in an orderly manner and not sold in forced or distressed sales where sellers
might be expected to dispose of their interests at substantial discounts to
their actual fair market value.
GENERAL PARTNER'S ANNUAL ESTIMATES OF NET ASSET VALUE
Your general partner (which is our subsidiary) prepared an estimate of your
partnership's net asset value per unit in connection with its first quarter
report of 1998. That estimate of your partnership's net asset value per unit as
of December 31, 1997 was $162. This estimated net asset value is based on a
hypothetical sale of the partnership's properties and the distribution to the
limited partners and the general partner of the gross proceeds of such sales,
net of related indebtedness, together with the cash, proceeds from temporary
investments, and all other assets that are believed to have liquidation value,
after provision in full for all of the other known liabilities of your
partnership. This net asset value does not take into account (i) timing
considerations, (ii) costs associated with winding up the partnership, (iii) the
distribution paid by your partnership of $10.01 per unit for the fiscal year
ended December 31, 1998, or (iv) $112,180 in deferred maintenance costs.
Therefore, we believe that this estimate of net asset value per unit does not
necessarily represent either the fair market value of a unit or the amount a
limited partner reasonably could expect to receive if the partnership's
properties were sold and the partnership was liquidated. For this reason, we
considered this net asset value estimate to be less meaningful in determining
the offer price than our analysis described above.
Allocation of Consideration. We have allocated to the limited partners the
amount of the estimated net valuation of your partnership based on your
partnership's agreement of limited partnership as if your partnership was being
liquidated at the current time. In valuing your units, we have assumed that 100%
of the estimated liquidation proceeds are distributed to holders of units.
SECTION 10. POSITION OF THE GENERAL PARTNER OF YOUR PARTNERSHIP WITH RESPECT TO
THE OFFER.
Your general partner is our subsidiary. Therefore, the general partner of
your partnership has substantial conflicts of interest with regard to the offer
and makes no recommendation as to whether you should tender or refrain from
tendering your units. You must make your own decision whether or not to
participate in the offer, based upon a number of factors, including your
financial position, need or desire for liquidity, other financial opportunities
and tax position.
Your general partner has not retained an unaffiliated representative to act
on behalf of the limited partners in negotiating the terms of the offer since
each individual limited partner can make his or her own decision as to whether
or not to tender. Unlike a merger or other form of partnership reorganization,
the preferences of other limited partners in your partnership cannot bind you.
If an unaffiliated representative had
20
<PAGE> 23
been obtained, it is possible that such representative could have negotiated a
higher price for your units than we are offering.
The terms of our offer have been established by us and are not the result
of arms-length negotiations. In determining the terms of the offer, we
considered the following factors and information:
1. The opportunity for you to make an individual decision on whether
to tender your units in the offer and that the offer allows each investor
to continue to hold his or her units.
2. The estimated value of your partnership's properties has been
determined based on a method believed to reflect the valuation of such
assets by buyers in the market.
3. An analysis of the possible alternatives including liquidation and
continuation without the option of the offer. See "The Offer -- Section 9.
Background and Reasons for the Offer -- Alternatives Considered."
4. An evaluation of the financial condition and results of operations
of your partnership and its anticipated level of operating results. The
offer is not expected to have an effect on your partnership's financial
condition or results of operations. The report of the independent public
accountants for the year ended December 31, 1998 reflects doubts about your
partnership's ability to continue as a going concern. The net income of
your partnership has increased from $1,703,602 for the year ended December
31, 1997 to $3,220,750 for the year ended December 31, 1998. These factors
are reflected in our valuation of your partnership.
5. The method of determining the offer price which is substantially
the financial equivalent to your interest in your partnership. See "The
Offer -- Section 9. Background and Reasons for the Offer Valuation of
Units."
6. The fact that the units are illiquid and the offer provides holders
of units with liquidity. However, we did review whether trading information
was available.
7. The estimated unit value of $157, based on a total estimated value
of your partnership's properties of $10,374,750. Your general partner
(which is our subsidiary) has no present intention to liquidate your
partnership or to sell or refinance your partnership's properties, except
for the commercial properties. See "The Offer -- Section 9. Background and
Reasons for the Offer -- Valuation of Units" for a detailed explanation of
the methods we used to value your partnership.
8. The offer price in light of any previous tender offers and the
results of such offers since the results of the offer indicate a price at
which some limited partners sold their units. See "The Offer -- Section 9.
Background and Reasons for the Offer -- Prior Tender Offers."
9. The fact that if your partnership was liquidated rather than
continuing, the general partner would not receive the substantial
management fees it currently receives. We do not believe that liquidation
of the partnership is in the best interests of the unitholders. We are not
proposing to change the current management fee arrangement.
In evaluating these factors, we did not quantify or otherwise attach
particular weight to any of them.
SECTION 11. CONFLICTS OF INTEREST AND TRANSACTIONS WITH AFFILIATES.
Conflicts of Interest With Respect to the Offer. The general partner of
your partnership became a majority-owned subsidiary of AIMCO on October 1, 1998,
when AIMCO merged with Insignia. Your general partner became a wholly owned
subsidiary of AIMCO on February 26, 1999 when IPT merged with AIMCO.
Accordingly, the general partner of your partnership has substantial conflicts
of interest with respect to the offer. The general partner of your partnership
has a fiduciary obligation to obtain a fair offer price for you, even as a
subsidiary of AIMCO. It also has a duty to remove the property manager for your
partnership's residential properties, under certain circumstances, even though
the property manager is also an affiliate of AIMCO. The conflicts of interest
include: (1) the fact that a decision to remove, for any reason, the general
partner of your
21
<PAGE> 24
partnership from its current position as a general partner of your partnership
would result in a decrease or elimination of the substantial management fees
paid to an affiliate of the general partner of your partnership for managing
your partnership's properties; and (2) as a consequence of our ownership of
units, because we may have incentives to seek to maximize the value of our
ownership of units, which in turn may result in a conflict for your general
partner in attempting to reconcile our interests with the interests of the other
limited partners. Additionally, we desire to purchase units at a low price and
you desire to sell units at a high price. The general partner of your
partnership makes no recommendation as to whether you should tender or refrain
from tendering your units. Such conflicts of interest in connection with the
offer and the operation of AIMCO differ from those conflicts of interest that
currently exist for your partnership. See "Risk Factors -- Conflicts of Interest
With Respect to the Offer." Your general partner has filed a
Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC, which
indicates that it is remaining neutral and making no recommendation as to
whether limited partners should tender their units pursuant to the offer.
LIMITED PARTNERS ARE URGED TO READ THIS OFFER TO PURCHASE AND THE SCHEDULE 14D-9
AND THE RELATED MATERIALS CAREFULLY AND IN THEIR ENTIRETY BEFORE DECIDING
WHETHER TO TENDER THEIR UNITS.
Conflicts of Interest That Currently Exist for Your Partnership. We own
both the general partner of your partnership and the manager of your
partnership's residential properties. The general partner does not receive an
annual management fee but may receive reimbursements for expenses incurred in
its capacity as general partner. The general partner of your partnership
received total fees and reimbursements of $61,000 in 1996, $36,000 in 1997 and
$38,000 in 1998. The property manager for the residential properties received
management fees of $82,000 in 1996, $86,000 in 1997 and $88,000 in 1998. We have
no current intention of changing the fee structure for your general partner or
the manager of your partnership's residential properties.
Competition Among Properties. Because AIMCO and your partnership both
invest in apartment properties, these properties may compete with one another
for tenants. Furthermore, you should bear in mind that AIMCO may acquire
properties in general market areas where your partnership properties are
located. It is believed that this concentration of properties in a general
market area will facilitate overall operations through collective advertising
efforts and other operational efficiencies. In managing AIMCO's properties, we
will attempt to reduce such conflicts between competing properties by referring
prospective customers to the property considered to be most conveniently located
for the customer's needs.
Future Offers. Although we have no current plans to conduct future tender
offers for your units, our plans may change based on future circumstances. Any
such future offers that we might make could be for consideration that is more or
less than the consideration we are currently offering.
SECTION 12. FUTURE PLANS OF THE PURCHASER.
As described above under "The Offer -- Section 9. Background and Reasons
for the Offer," we own the general partner and thereby control the management of
your partnership. In addition, we own the manager of your partnership's
residential properties. We currently intend that, upon consummation of the
offer, your partnership will continue its business and operations substantially
as they are currently being conducted. The offer is not expected to have any
effect on partnership operations.
Although we have no present intention to do so, we may acquire additional
units or sell units after completion or termination of the offer. Any
acquisition may be made through private purchases, through one or more future
tender or exchange offers, by merger, consolidation or by any other means deemed
advisable. Any acquisition may be at a price higher or lower than the price to
be paid for the units purchased pursuant to this offer, and may be for cash,
limited partnership interests in AIMCO Properties, L.P. or other consideration.
We also may consider selling some or all of the units we acquire pursuant to the
offer to persons not yet determined, which may include our affiliates. We may
also buy your partnership's properties, although we have no present intention to
do so. There can be no assurance, however, that we will initiate or complete, or
will cause your partnership to initiate or complete, any subsequent transaction
during any specific time period following the expiration of the offer or at all.
Except as set forth herein, we do not have any present plans or proposals
which relate to or would result in an extraordinary transaction, such as a
merger, reorganization or liquidation, involving your partnership or any
22
<PAGE> 25
of your partnership's subsidiaries; a sale or transfer of a material amount of
your partnership's assets (or assets of the partnership's subsidiaries); any
changes in composition of your partnership's senior management or personnel or
their compensation; any changes in your partnership's present capitalization or
distribution policy; or any other material changes in your partnership's
structure or business. However, we expect that consistent with your general
partner's fiduciary obligations, the general partner will seek and review
opportunities (including opportunities identified by us) to engage in
transactions which could benefit your partnership, such as sales or refinancings
of assets or a combination of the partnership with one or more other entities,
with the objective of seeking to maximize returns to limited partners. As noted
above, the general partner is currently marketing your partnership's commercial
properties for sale.
We have been advised that the possible future transactions the general
partner expects to consider on behalf of your partnership include: (1) payment
of extraordinary distributions; (2) refinancing, reducing or increasing existing
indebtedness of the partnership; (3) sales of assets, individually or as part of
a complete liquidation; and (4) mergers or other consolidation transactions
involving the partnership. Any such merger or consolidation transaction could
involve other limited partnerships in which your general partner or its
affiliates serve as general partners, or a combination of the partnership with
one or more existing, publicly traded entities (including, possibly, affiliates
of AIMCO), in any of which limited partners might receive cash, common stock or
other securities or consideration. There is no assurance, however, as to when or
whether any of the transactions referred to above might occur. If any such
transaction is effected by the partnership and financial benefits accrue to the
limited partners of your partnership, we will participate in those benefits to
the extent of our ownership of units. The agreement of limited partnership
prohibits limited partners from voting on actions taken by the partnership,
unless otherwise specifically permitted therein. Limited partners may vote on a
liquidation, and if we are successful in acquiring a substantial number of units
pursuant to the offer, we will be able to control the outcome of any such vote.
Our primary objective in seeking to acquire the units pursuant to the offer is
not, however, to influence the vote on any particular transaction, but rather to
generate a profit on the investment represented by those units.
SECTION 13. CERTAIN INFORMATION CONCERNING YOUR PARTNERSHIP.
General. United Investors Income Properties was organized on June 23, 1988,
under the laws of the State of Missouri. Its primary business is real estate
ownership and related operations. Your partnership was formed for the purpose of
making investments in various types of real properties which offer potential
capital appreciation and cash distributions to its limited partners.
Your partnership's investment portfolio currently includes the following
three residential apartment complexes and one commercial property: Bronson Place
Apartments, a 70-unit complex in Mountlake Terrace, Washington; Defoors Crossing
Apartments, a 60-unit complex in Atlanta, Georgia; Meadow Wood Apartments, an
85-unit complex in Medford, Oregon; and Peachtree Medical Building, a 12,260
square foot building in Norcross, Georgia. In addition, your partnership holds
Corinth Square Professional Building, a 23,149 square foot building in Prairie
Village, Kansas, through its 35% interest in Corinth Square, a joint venture
with United Investors Income Properties II.
The general partner of your partnership is United Investors Real Estate,
Inc., which is a wholly owned subsidiary of AIMCO. A wholly owned subsidiary of
AIMCO serves as manager of the residential properties owned by your partnership.
As of December 31, 1998, there were 61,063 units issued and outstanding, which
were held of record by 1,888 limited partners. Your partnership's principal
executive offices are located at 1873 South Bellaire Street, 17th Floor, Denver,
Colorado 80222, and its telephone number at that address is (303) 757-8101.
For additional information about your partnership, please refer to the
annual report prepared by your partnership which was sent to you prior to this
offer to purchase, particularly Item 2 of Form 10-KSB which contains detailed
information regarding the properties owned, including mortgages, rental rates
and taxes.
Investment Objectives and Policies; Sale or Financing of Investments. In
general, your general partner (which is our subsidiary) regularly evaluates the
partnership's properties by considering various factors, such as the
partnership's financial position and real estate and capital markets conditions.
The general partner monitors the properties' specific locale and sub-market
conditions (including stability of the surrounding
23
<PAGE> 26
neighborhood) evaluating current trends, competition, new construction and
economic changes. The general partner oversees each asset's operating
performance and continuously evaluates the physical improvement requirements. In
addition, the financing structure for each property (including any prepayment
penalties), tax implications, availability of attractive mortgage financing to a
purchaser, and the investment climate are all considered. Any of these factors,
and possibly others, could potentially contribute to any decision by the general
partner to sell, refinance, upgrade with capital improvements or hold a
particular partnership property. If rental market conditions improve, the level
of distributions might increase over time. It is possible that the private
resale market for properties could improve over time, making a sale of the
partnership's properties in a private transaction at some point in the future a
more viable option than it is currently. After taking into account the foregoing
considerations, your general partner is not currently seeking a sale of your
partnership's properties primarily because it expects the properties' operating
performance to improve in the near term. In making this assessment, your general
partner noted the occupancy and rental rates at the residential properties in
1998 compared to 1997. In particular, the general partner noted that it expects
to spend approximately $325,000 for capital improvements at the residential
properties in 1999 to repair and update the properties. Although there can be no
assurance as to future performance, however, these expenditures are expected to
improve the desirability of the property to tenants. The general partner does
not believe that a sale of the residential properties at the present time would
adequately reflect the properties' future prospects. Another significant factor
considered by your general partner is the likely tax consequences of a sale of
the residential properties for cash. Such a transaction would likely result in
tax liabilities for many limited partners. The general partner has not received
any recent indication of interest or offer to purchase the residential
properties.
The general partner believes that the market for the sale of commercial
properties is favorable at this time. Your partnership is currently marketing
its two commercial properties for sale and has received offers for such
properties.
Originally Anticipated Term of Partnership. Your partnership's prospectus,
dated May 4, 1988, pursuant to which units in your partnership were sold,
indicated that your partnership was intended to be self-liquidating and that it
was anticipated that the partnership's properties would be sold within 5 to 10
years of their acquisition, provided market conditions permit. The prospectus
also indicated that there could be no assurance that the partnership would be
able to so liquidate and that, unless sooner terminated as provided in the
partnership agreement, the existence of the partnership would continue until the
year 2018. The partnership currently owns three apartment properties, one
commercial property and a 35% interest in a joint venture, holding one
commercial property. Your general partner (which is our subsidiary) continually
considers whether a property should be sold or otherwise disposed of after
consideration of relevant factors, including prevailing economic conditions,
availability of favorable financing and tax considerations, with a view to
achieving maximum capital appreciation for your partnership. As noted above, the
general partner is currently marketing the commercial properties for sale. We
cannot predict when any of the properties will be sold or otherwise disposed of.
However, there is no current plan or intention to sell the residential
properties in the near future.
Under your partnership's agreement of limited partnership, the term of the
partnership will continue until December 31, 2018, unless sooner terminated as
provided in the agreement or by law. Limited partners could, as an alternative
to tendering their units, take a variety of possible actions, including voting
to liquidate the partnership or amending the agreement of limited partnership to
authorize limited partners to cause the partnership to merge with another entity
or engage in a "roll-up" or similar transaction.
Capital Replacement. Adjuster's International, Inc. ("AI") is a loss
consulting and public adjusting firm, which does replacement/repair costs and
work-in-process analyses. Its staff consists of consultants, senior public
adjusters and certified professional public adjusters. AI performed its analysis
of the physical condition of the properties in the ordinary course of its
business by inspecting the properties, determining the physical condition of the
properties and what repairs are needed and then estimating the cost of such
repairs based upon its experience in making such estimates. AI was retained by
us because of its experience in evaluating needed repairs of real property, and
was paid $2,500 by us for its report(s). Such payments were not contingent upon
completion of the offer. AI has no material relationship with us or our
affiliates except for such reports. AI has conducted, is currently conducting
and may in the future conduct similar analyses of
24
<PAGE> 27
other properties held by us and our affiliates in the ordinary course of
business. No limitations were imposed on AI by the general partner or us.
Your partnership has an ongoing program of capital improvements,
replacements and renovations, including roof replacements, kitchen and bath
renovations, balcony repairs (where applicable), replacement of various building
systems and other replacements and renovations in the ordinary course of
business. All capital improvement and renovation costs are expected to be paid
from operating cash flows, cash reserves, or from short-term or long-term
borrowings.
Competition. There are other residential properties within the market area
of your partnership's properties. The number and quality of competitive
properties in such an area could have a material effect on the rental market for
the apartments at your partnership's properties and the rents that may be
charged for such apartments. While we are a significant factor in the United
States in the apartment industry, competition for apartments is local. According
to data published by the National Multi-Housing Council, as of January 1, 1999,
our portfolio of 373,409 owned or managed apartment units represents
approximately 2.2% of the national stock of rental apartments in structures with
at least five apartments.
Selected Financial and Property-Related Data. The summary financial
information of United Investors Income Properties for the years ended December
1998 and 1997 is based on audited financial statements. The summary financial
information for the three months ended March 31, 1999 and 1998 is based on
unaudited financial statements. This information should be read in conjunction
with such financial statements, including notes thereto, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations of Your
Partnership" in the Annual Report on Form 10-KSB of your partnership for the
year ended December 31, 1998.
UNITED INVESTORS INCOME PROPERTIES
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED FOR THE YEAR ENDED
MARCH 31, DECEMBER 31,
----------------- -------------------
1999 1998 1998 1997
------- ------- -------- --------
(IN THOUSANDS, EXCEPT PER UNIT DATA)
<S> <C> <C> <C> <C>
OPERATING DATA:
Total Revenues........................................... $ 494 $ 449 $1,886 $1,802
Net income (Loss)........................................ 181 135 566 472
Net Income per limited partnership unit.................. 2.93 2.19 9.17 7.65
Distributions per limited partnership unit............... 2.50 2.50 10.01 10.01
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
----------------- -----------------
1999 1998 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and Cash Equivalents.............................. $ 1,077 $ 772 $ 928 $ 728
Real Estate, Net of Accumulated Depreciation........... 9,070 9,309 9,113 9,358
Total Assets........................................... 11,109 10,959 10,944 10,966
Notes Payable.......................................... 0 0 0 0
General Partners' Capital (Deficit).................... (23) (24) (24) (24)
Limited Partners' Capital (Deficit).................... 10,856 10,862 10,830 10,881
Partners' Capital (Deficit)............................ 10,833 10,838 10,806 10,857
Total Distributions.................................... (154) (154) (617) (617)
Net increase (decrease) in cash and cash equivalents... 149 44 200 95
Net cash provided by operating activities.............. 209 238 964 819
</TABLE>
25
<PAGE> 28
Description of Properties. The following shows the location, the date of
purchase, the nature of your partnership's ownership interest in and the use of
each of your partnership's properties.
<TABLE>
<CAPTION>
PROPERTY DATE OF PURCHASE TYPE OF OWNERSHIP(1) USE
-------- ---------------- -------------------- ---
<S> <C> <C> <C>
Bronson Place Apartments 11/01/88 Fee simple Apartment
Mountlake Terrace, WA 70 units
Defoors Crossing Apartments 05/01/89 Fee simple Apartment
Atlanta, GA 60 units
Meadow Wood Apartments 10/02/89 Fee simple Apartment
Medford, OR 85 units
Peachtree Corners Medical Bldg. 06/01/90 Fee simple Medical Office
Atlanta, GA Building
13,000 sq. ft.
JOINT VENTURE PROPERTY
- -------------------------------------------
Corinth Square Professional Building, 10/01/90 Joint Venture; Medical Office
Prairie Village, Kansas Partnership owns Building
a 35% interest 23,000 sq. ft.
</TABLE>
- ---------------
(1) None of the partnership's properties are encumbered by mortgage financing.
Accumulated Depreciation Schedule. The following shows the gross carrying
value, accumulated depreciation and federal tax basis of each of your
partnership's properties as of December 31, 1998.
<TABLE>
<CAPTION>
GROSS
CARRYING ACCUMULATED FEDERAL
PROPERTY VALUE DEPRECIATION RATE METHOD TAX BASIS
-------- -------- ------------ ---- ------ --------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Bronson Place.......................... $ 3,543 $1,090 5-40 yrs S/L $2,388
Defoors Crossing....................... 3,372 904 5-40 yrs S/L 2,453
Meadow Wood............................ 3,688 996 5-40 yrs S/L 2,657
Peachtree Corners...................... 1,910 410 15-40 yrs S/L 1,653
------- ------ ------
Totals....................... $12,513 $3,400 $9,151
======= ====== ======
</TABLE>
Average Annual Rental Rate and Occupancy. The following shows the average
annual rental rates and occupancy percentages for each of your partnership's
properties during the past two years.
<TABLE>
<CAPTION>
AVERAGE ANNUAL RENTAL AVERAGE ANNUAL
RATE OCCUPANCY
---------------------- --------------
PROPERTY 1998 1997 1998 1997
- -------- -------- -------- ---- ----
<S> <C> <C> <C> <C>
Bronson Place....................................... $689.67 $656.09 95% 95%
Defoors Crossing.................................... 92% 95%
Meadow Wood......................................... 89% 89%
Peachtree Medical................................... 74% 74%
Corinth Square (JV)................................. 80%
</TABLE>
26
<PAGE> 29
Schedule of Real Estate Taxes and Rates. The following shows the real
estate taxes and rates for 1998 for each of your partnership's properties.
<TABLE>
<CAPTION>
PROPERTY 1998 BILLING 1998 RATE
-------- -------------- ---------
(IN THOUSANDS)
<S> <C> <C>
Bronson Place............................................... $39,000 1.28%
Defoors Crossing............................................ 38,000 1.97%
Meadow Wood................................................. 52,000 1.41%
Peachtree Medical........................................... 13,000 1.38%
Corinth Square (JV).........................................
</TABLE>
Property Management. Your partnership's residential properties are managed
by an entity which is a wholly owned subsidiary of AIMCO. Pursuant to the
management agreement between the property manager and your partnership, the
property manager operates your partnership's residential properties, establishes
rental policies and rates and directs marketing activities. The property manager
also is responsible for maintenance, the purchase of equipment and supplies, and
the selection and engagement of all vendors, suppliers and independent
contractors.
Distributions. The following table shows, for each of the years indicated,
the distributions paid per unit in such years.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31 AMOUNT
----------- ------
<S> <C>
1995........................................................ $10.00
1996........................................................ 10.01
1997........................................................ 10.01
1998........................................................ 10.01
------
Total............................................. $40.03
</TABLE>
Operating Budgets of the Partnership. A summary of the operating budgets of
your partnership's properties for the year ending on December 31, 1999 is as
follows:
FISCAL 1999 OPERATING BUDGETS
<TABLE>
<CAPTION>
BRONSON DEFOORS MEADOW PEACHTREE
PLACE CROSSING WOOD MEDICAL
--------- -------- -------- ---------
<S> <C> <C> <C> <C>
Total Revenues............................ $ 641,023 $523,939 $595,364 $194,425
Operating Expenses........................ (104,904) (77,663) (38,823) (12,109)
Replacement Reserves -- Net............... -- -- -- --
Debt Service.............................. -- (42,108) -- --
Capital Expenditures...................... (18,756) (27,000) (76,110) --
--------- -------- -------- --------
Net Cash Flow................... $ 517,363 $377,168 $480,431 $182,316
========= ======== ======== ========
</TABLE>
The above budgets at the time they were made were forward-looking
information developed by your general partner (which is our subsidiary).
Therefore, the budgets were dependent upon future events with respect to the
ability of your partnership to meet such budget. The budgets incorporated
various assumptions including, but not limited to, lease revenue (including
occupancy rates), various operating expenses, general and administrative
expenses, depreciation expenses, capital expenditures, and working capital
levels. While we deemed such budgets to be reasonable and valid at the date
made, there is no assurance that the assumed facts will be validated or that the
circumstances will actually occur. Any estimate of the future performance of a
business, such as your partnership's business, is forward-looking and based on
assumptions some of which inevitably will prove to be incorrect.
The budget amounts provided above are figures that were not computed in
accordance with GAAP. In particular, items that are categorized as capital
expenditures for purposes of preparing the operating budget
27
<PAGE> 30
are often re-categorized as expenses when the financial statements are audited
and presented in accordance with GAAP. Therefore, the summary operating budget
presented for fiscal 1999 should not necessarily be considered as indicative of
what the audited operating results for fiscal 1999 will be. For the year ended
December 31, 1998, the partnership reported revenues of $1,688,003, operating
expenses of $812,730 and replacement reserves and capital expenditures of
$65,000.
Beneficial Ownership of Interests in Your Partnership. Together with its
subsidiaries, we currently own, in the aggregate, approximately 1.54% of the
outstanding limited partnership units of your partnership. Except as set forth
above, neither we, nor, to the best of our knowledge, any of our affiliates, (i)
beneficially own or have a right to acquire any units, (ii) have effected any
transactions in the units in the past 60 days, or (iii) have any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of your partnership, including, but not limited to, contracts,
arrangements, understandings or relationships concerning transfer or voting
thereof, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies.
Compensation Paid to the General Partner and its Affiliates. The following
table shows, for each of the years indicated, compensation paid to your general
partner and its affiliates:
<TABLE>
<CAPTION>
PARTNERSHIP PROPERTY
FEES AND MANAGEMENT
YEAR EXPENSES FEES
- ---- ----------- ----------
<S> <C> <C>
1995........................................................ $30,000 $78,000
1996........................................................ 61,000 82,000
1997........................................................ 36,000 86,000
1998........................................................ 38,000 88,000
</TABLE>
Legal Proceedings. Your partnership may be party to a variety of legal
proceedings related to its ownership of the partnership's properties and
management and leasing business, respectively, arising in the ordinary course of
the business, which are not expected to have a material adverse effect on your
partnership.
Additional Information Concerning Your Partnership. Your partnership files
annual, quarterly and special reports, proxy statements and other information
with the SEC. You may read and copy any document your partnership files at the
SEC's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Your partnership's SEC filings are also available
to the public at the SEC's web site at http://www.sec.gov.
SECTION 14. VOTING POWER.
If we acquire a substantial number of additional units pursuant to our
offer, we may be in a position to influence or control voting decisions with
respect to the limited partners of your partnership. See "The Offer -- Section
7. Effects of the Offer."
SECTION 15. SOURCE OF FUNDS.
We expect that approximately $4,242,434 will be required to purchase all of
the 27,055.18 limited partnership units that we are seeking in this offer
(exclusive of fees and expenses estimated to be $11,000). For more information
regarding fees and expenses, see "The Offer -- Section 19." We will obtain all
necessary funds from working capital or from our $100 million revolving credit
facility with Bank of America National Trust and Savings Association ("Bank of
America") and BankBoston, N.A. AIMCO Properties, L.P. is the borrower under the
credit facility, and all obligations thereunder are guaranteed by AIMCO and
certain of its subsidiaries. The annual interest rate under the credit facility
is based on either LIBOR or Bank of America's reference rate, at our election,
plus, an applicable margin. We elect which interest rate will be applicable to
particular borrowings under the credit facility. The margin ranges between 2.25%
and 2.75% in the case of LIBOR-based loans and between 0.75% and 1.25% in the
case of base rate loans, depending upon a ratio of our consolidated unsecured
indebtedness to the value of certain unencumbered assets. The credit
28
<PAGE> 31
facility matures on September 30, 1999 unless extended, at the discretion of the
lenders. The credit facility provides for the conversion of the revolving
facility into a three year term loan. The availability of funds to us under the
credit facility is subject to certain borrowing base restrictions and other
customary restrictions, including compliance with financial and other covenants
thereunder. The financial covenants require us to maintain a ratio of debt to
gross asset value of no more than 0.55 to 1.0, an interest coverage ratio of
2.25 to 1.0 and a fixed charge coverage ratio of at least 1.7 to 1.0 from
January 1, 1999 through June 30, 1999, and 1.8 to 1.0 thereafter. In addition,
the credit facility limits us from distributing more than 80% of our Funds From
Operations (as defined) to holders of our units, imposes minimum net worth
requirements and provides other financial covenants related to certain
unencumbered assets.
SECTION 16. DISSENTERS' RIGHTS.
Neither the agreement of limited partnership of your partnership nor
applicable law provides any right for you to have your units appraised or
redeemed in connection with, or as a result of, our offer. You have the
opportunity to make an individual decision on whether or not to tender your
units in the offer.
SECTION 17. CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of our offer, we will not be required
to accept for payment and pay for any units tendered pursuant to our offer, may
postpone the purchase of, and payment for, units tendered, and may terminate or
amend our offer if at any time on or after the date of this offer to purchase,
and at or before the expiration of our offer (including any extension thereof),
any of the following shall occur:
(a) any change (or any condition, event or development involving a
prospective change) shall have occurred or been threatened in the business,
properties, assets, liabilities, indebtedness, capitalization, condition
(financial or otherwise), operations, licenses or franchises, management
contract, or results of operations or prospects of your partnership or
local markets in which your partnership owns property, including any fire,
flood, natural disaster, casualty loss, or act of God that, in our
reasonable judgment, are or may be materially adverse to your partnership
or the value of the units to us, or we shall have become aware of any facts
relating to your partnership, its indebtedness or its operations which, in
our reasonable judgment, has or may have material significance with respect
to the value of your partnership or the value of the units to us; or
(b) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or the over-the-counter market in the United States, (ii) a
decline in the closing price of a share of AIMCO's Class A Common Stock of
more than 7.5% from the date hereof, (iii) any extraordinary or material
adverse change in the financial, real estate or money markets or major
equity security indices in the United States such that there shall have
occurred at least a 7.5% increase in LIBOR or at least a 7.5% decrease in
the S&P 500 Index, the Morgan Stanley REIT Index, or the price of the
10-year Treasury Bond or the 30-year Treasury Bond, in each case from the
date hereof, (iii) any material adverse change in the commercial mortgage
financing markets, (iv) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (vi) a
commencement of a war, conflict, armed hostilities or other national or
international calamity directly or indirectly involving the United States,
(vii) any limitation (whether or not mandatory) by any governmental
authority on, or any other event which, in our reasonable judgment, might
affect the extension of credit by banks or other lending institutions, or
(viii) in the case of any of the foregoing existing at the time of the
commencement of the offer, in our reasonable judgment, a material
acceleration or worsening thereof; or
(c) there shall have been threatened, instituted or pending any
action, proceeding, application or counterclaim by any Federal, state,
local or foreign government, governmental authority or governmental agency,
or by any other person, before any governmental authority, court or
regulatory or administrative agency, authority or tribunal, which (i)
challenges or seeks to challenge our purchase of the units, restrains,
prohibits or delays the making or consummation of our offer, prohibits the
performance of any of the contracts or other arrangements entered into by
us (or any affiliates of ours), seeks to obtain any
29
<PAGE> 32
material amount of damages as a result of the transactions contemplated by
our offer, (ii) seeks to make the purchase of, or payment for, some or all
of the units pursuant to our offer illegal or results in a delay in our
ability to accept for payment or pay for some or all of the units, (iii)
seeks to prohibit or limit the ownership or operation by us or any of our
affiliates of the entity serving as general partner of the partnership or
to remove such entity as general partner of your partnership, or seeks to
impose any material limitation on our ability or the ability of any
affiliate of ours to conduct your partnership's business or own such
assets, (iv) seeks to impose material limitations on our ability to acquire
or hold or to exercise full rights of ownership of the units including, but
not limited to, the right to vote the units purchased by us on all matters
properly presented to the limited partners, or (v) might result, in our
reasonable judgment, in a diminution in the value of your partnership or a
limitation of the benefits expected to be derived by us as a result of the
transactions contemplated by our offer or the value of the units to us; or
(d) there shall be any action taken, or any statute, rule, regulation,
order or injunction shall be sought, proposed, enacted, promulgated,
entered, enforced or deemed applicable to our offer, your partnership, any
general partner of your partnership, us or any affiliate of ours or your
partnership, or any other action shall have been taken, proposed or
threatened, by any government, governmental authority or court, that, in
our reasonable judgment, might, directly or indirectly, result in any of
the consequences referred to in clauses (i) through (vi) of paragraph (c)
above; or
(e) your partnership shall have (i) changed, or authorized a change
of, the units or your partnership's capitalization, (ii) issued,
distributed, sold or pledged, or authorized, proposed or announced the
issuance, distribution, sale or pledge of (A) any equity interests
(including, without limitation, units), or securities convertible into any
such equity interests or any rights, warrants or options to acquire any
such equity interests or convertible securities, or (B) any other
securities in respect of, in lieu of, or in substitution for units
outstanding on the date hereof, (iii) purchased or otherwise acquired, or
proposed or offered to purchase or otherwise acquire, any outstanding units
or other securities, (iv) declared or paid any dividend or distribution on
any units or issued, authorized, recommended or proposed the issuance of
any other distribution in respect of the units, whether payable in cash,
securities or other property, (v) authorized, recommended, proposed or
announced an agreement, or intention to enter into an agreement, with
respect to any merger, consolidation, liquidation or business combination,
any acquisition or disposition of a material amount of assets or
securities, or any release or relinquishment of any material contract
rights, or any comparable event, not in the ordinary course of business,
(vi) taken any action to implement such a transaction previously
authorized, recommended, proposed or publicly announced, (vii) issued, or
announced its intention to issue, any debt securities, or securities
convertible into, or rights, warrants or options to acquire, any debt
securities, or incurred, or announced its intention to incur, any debt
other than in the ordinary course of business and consistent with past
practice, (viii) authorized, recommended or proposed, or entered into, any
transaction which, in our reasonable judgment, has or could have an adverse
affect on the value of your partnership or the units, (ix) proposed,
adopted or authorized any amendment of its organizational documents, (x)
agreed in writing or otherwise to take any of the foregoing actions or (xi)
been notified that any debt of your partnership or any of its subsidiaries
secured by any of its or their assets is in default or has been
accelerated; or
(f) a tender or exchange offer for any units shall have been commenced
or publicly proposed to be made by another person or "group" (as defined in
Section 13(d)(3) of the Exchange Act), or it shall have been publicly
disclosed or we shall have otherwise learned that (i) any person or group
shall have acquired or proposed or be attempting to acquire beneficial
ownership of more than five percent of the units, or shall have been
granted any option, warrant or right, conditional or otherwise, to acquire
beneficial ownership of more than five percent of the units, other than
acquisitions for bona fide arbitrage purposes, or (ii) any person or group
shall have entered into a definitive agreement or an agreement in principle
or made a proposal with respect to a merger, consolidation or other
business combination with or involving your partnership; or
(g) we shall not have adequate cash or financing commitments available
to pay the for the units validly tendered; or
30
<PAGE> 33
(h) the offer to purchase may have an adverse effect on AIMCO's status
as a REIT.
The foregoing conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to such conditions or may be waived
by us in whole or in part at any time and from time to time in our reasonable
discretion. The failure by us at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right, the waiver of any such
right with respect to any particular facts or circumstances shall not be deemed
a waiver with respect to any other facts or circumstances and each right shall
be deemed a continuing right which may be asserted at any time and from time to
time.
SECTION 18. CERTAIN LEGAL MATTERS.
General. Except as set forth in this Section 18, we are not, based on
information provided by your general partner (which is our subsidiary), aware of
any licenses or regulatory permits that would be material to the business of
your partnership, taken as a whole, and that might be adversely affected by our
acquisition of units as contemplated herein, or any filings, approvals or other
actions by or with any domestic or foreign governmental authority or
administrative or regulatory agency that would be required prior to the
acquisition of units by us pursuant to the offer, other than the filing of a
Tender Offer Statement on Schedule 14D-1 with the SEC (which has already been
filed) and any required amendments thereto. While there is no present intent to
delay the purchase of units tendered pursuant to the offer pending receipt of
any such additional approval or the taking of any such action, there can be no
assurance that any such additional approval or action, if needed, would be
obtained without substantial conditions or that adverse consequences might not
result to your partnership or its business, or that certain parts of its
business might not have to be disposed of or other substantial conditions
complied with in order to obtain such approval or action, any of which could
cause us to elect to terminate the offer without purchasing units thereunder.
Our obligation to purchase and pay for units is subject to certain conditions,
including conditions related to the legal matters discussed in this Section 18.
Antitrust. We do not believe that the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, is applicable to the acquisition of units
contemplated by our offer.
Margin Requirements. The units are not "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly, those regulations generally are not applicable to our offer.
State Laws. We are not aware of any jurisdiction in which the making of our
offer is not in compliance with applicable law. If we become aware of any
jurisdiction in which the making of the offer would not be in compliance with
applicable law, we will make a good faith effort to comply with any such law.
If, after such good faith effort, we cannot comply with any such law, the offer
will not be made to (nor will tenders be accepted from or on behalf of)
unitholders residing in such jurisdiction. In those jurisdictions with
securities or blue sky laws that require the offer to be made by a licensed
broker or dealer, the offer shall be made on behalf of us, if at all, only by
one or more registered brokers or dealers licensed under the laws of that
jurisdiction.
SECTION 19. FEES AND EXPENSES.
Except as set forth in this Section 19, we will not pay any fees or
commissions to any broker, dealer or other person for soliciting tenders of
units pursuant to the offer. We have retained River Oaks Partnership Services,
Inc. to act as Information Agent in connection with our offer. The Information
Agent may contact holders of units by mail, telephone, telex, telegraph and
personal interview and may request brokers, dealers and other nominee limited
partners to forward materials relating to the offer to beneficial owners of the
units. We will pay the Information Agent reasonable and customary compensation
for its services in connection with the offer, plus reimbursement for
out-of-pocket expenses, and will indemnify it against certain liabilities and
expenses in connection therewith, including liabilities under the Federal
securities laws. We will also pay all costs and expenses of printing and mailing
the offer and its legal fees and expenses.
---------------------
31
<PAGE> 34
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF US NOT CONTAINED HEREIN OR IN THE LETTER OF
TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED.
We have filed with the Commission a Tender Offer Statement on Schedule
14D-1, pursuant to Section 14(d)(1) and Rule 14d-3 under the Exchange Act,
furnishing certain additional information with respect to our offer, and may
file amendments thereto. The Schedule 14D-1 and any amendments thereto,
including exhibits, may be inspected and copies may be obtained at the same
place and in the same manner as described in "The Offer -- Section 13" under
"Additional Information Concerning Your Partnership."
AIMCO PROPERTIES, L.P.
32
<PAGE> 35
ANNEX I
OFFICERS AND DIRECTORS
The names and positions of the executive officers of Apartment Investment
and Management Company ("AIMCO"), AIMCO-GP, Inc. ("AIMCO-GP") and the directors
of AIMCO are set forth below. The two directors of AIMCO-GP are Terry Considine
and Peter Kompaniez. The two directors of the general partner of your
partnership are Peter K. Kompaniez and Patrick J. Foye. The two executive
officers of the general partner of your partnership are Patrick J. Foye,
Executive Vice President, and Carla R. Stoner, Senior Vice President -- Real
Estate Accounting. Unless otherwise indicated, the business address of each
executive officer and director is 1873 South Bellaire Street, 17th Floor,
Denver, Colorado 80222. Each executive officer and director is a citizen of the
United States of America.
<TABLE>
<CAPTION>
NAME POSITION
- ---- --------
<S> <C>
Terry Considine...................... Chairman of the Board of Directors and Chief Executive
Officer
Peter K. Kompaniez................... Vice Chairman, President and Director
Thomas W. Toomey..................... Executive Vice President -- Finance and Administration
Joel F. Bonder....................... Executive Vice President, General Counsel and Secretary
Patrick J. Foye...................... Executive Vice President
Robert Ty Howard..................... Executive Vice President -- Ancillary Services
Steven D. Ira........................ Executive Vice President and Co-Founder
Harry G. Alcock...................... Senior Vice President -- Acquisitions
Troy D. Butts........................ Senior Vice President and Chief Financial Officer
Richard S. Ellwood................... Director
J. Landis Martin..................... Director
Thomas L. Rhodes..................... Director
John D. Smith........................ Director
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
- ---- ---------------------------------------------
Terry Considine...................... Chief Executive Officer of AIMCO and AIMCO-GP since July
1994. He is the sole owner of Considine Investment Co. and
prior to July 1994 was owner of approximately 75% of
Property Asset Management, L.L.C., Limited Liability
Company, a Colorado limited liability company, and its
related entities (collectively, "PAM"), one of AIMCO's
predecessors. On October 1, 1996, Mr. Considine was
appointed Co-Chairman and director of Asset Investors Corp.
and Commercial Asset Investors, Inc., two other public real
estate investment trusts, and appointed as a director of
Financial Assets Management, LLC, a real estate investment
trust manager. Mr. Considine has been involved as a
principal in a variety of real estate activities, including
the acquisition, renovation, development and disposition of
properties. Mr. Considine has also controlled entities
engaged in other businesses such as television broadcasting,
gasoline distribution and environmental laboratories. Mr.
Considine received a B.A. from Harvard College, a J.D. from
Harvard Law School and was formerly admitted as a member of
the Massachusetts Bar (inactive).
</TABLE>
I-1
<PAGE> 36
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
- ---- ---------------------------------------------
<S> <C>
Peter K. Kompaniez................... Mr. Kompaniez has been Vice Chairman and a director of AIMCO
since July 1994 and was appointed President of AIMCO in July
1997. Mr. Kompaniez has served as Vice President of AIMCO-GP
from July 1994 through July 1998 and was appointed President
in July 1998. Mr. Kompaniez has been a director of AIMCO-GP
since July 1994. Since September 1993, Mr. Kompaniez has
owned 75% of PDI Realty Enterprises, Inc., a Delaware
corporation ("PDI"), one of AIMCO's predecessors, and serves
as its President and Chief Executive Officer. From 1986 to
1993, he served as President and Chief Executive Officer of
Heron Financial Corporation ("HFC"), a United States holding
company for Heron International, N.V.'s real estate and
related assets. While at HFC, Mr. Kompaniez administered the
acquisition, development and disposition of approximately
8,150 apartment units (including 6,217 units that have been
acquired by the AIMCO) and 3.1 million square feet of
commercial real estate. Prior to joining HFC, Mr. Kompaniez
was a senior partner with the law firm of Loeb and Loeb
where he had extensive real estate and REIT experience. Mr.
Kompaniez received a B.A. from Yale College and a J.D. from
the University of California (Boalt Hall).
Thomas W. Toomey..................... Mr. Toomey has served as Senior Vice President -- Finance
and Administration of AIMCO since January 1996 and was
promoted to Executive Vice-President-Finance and
Administration in March 1997. Mr. Toomey has been Executive
Vice President -- Finance and Administration of AIMCO-GP
similar capacity with Lincoln Property Company ("LPC") as
well as Vice President/Senior Controller and Director of
Administrative Services of Lincoln Property Services where
he was responsible for LPC's computer systems, accounting,
tax, treasury services and benefits administration. From
1984 to 1990, he was an audit manager with Arthur Andersen &
Co. where he served real estate and banking clients. From
1981 to 1983, Mr. Toomey was on the audit staff of Kenneth
Leventhal & Company. Mr. Toomey received a B.S. in Business
Administration/Finance from Oregon State University and is a
Certified Public Accountant.
Joel F. Bonder....................... Mr. Bonder has served as Executive Vice President and
General Counsel of AIMCO since December 8, 1997. Mr. Bonder
has been Executive Vice President and General Counsel of
AIMCO-GP since July 1998. Prior to joining AIMCO, Mr. Bonder
served as Senior Vice President and General Counsel of NHP
Incorporated from April 1994 until December 1997. Mr. Bonder
served as Vice President and Deputy General Counsel of NHP
Incorporated from June 1991 to March 1994 and as Associate
General Counsel of NHP from 1986 to 1991. From 1983 to 1985,
Mr. Bonder was with the Washington, D.C. law firm of Lane &
Edson, P.C. From 1979 to 1983, Mr. Bonder practiced with the
Chicago law firm of Ross and Hardies. Mr. Bonder received an
A.B. from the University of Rochester and a J.D. from
Washington University School of Law.
Patrick J. Foye...................... Mr. Foye has served as Executive Vice President of AIMCO and
AIMCO-GP since May 1998. Prior to joining AIMCO, Mr. Foye
was a partner in the law firm of Skadden, Arps, Slate,
Meagher & Flom LLP from 1989 to 1998 and was Managing
Partner of the firm's Brussels, Budapest and Moscow offices
from 1992 through 1994. Mr. Foye is also
</TABLE>
I-2
<PAGE> 37
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
- ---- ---------------------------------------------
<S> <C>
Deputy Chairman of the Long Island Power Authority and
serves as a member of the New York State Privatization
Council. He received a B.A. from Fordham College and a J.D.
from Fordham University Law School.
Robert Ty Howard..................... Mr. Howard has served as Executive Vice
President -- Ancillary Services since February 1998. Mr.
Howard was appointed Executive Vice President -- Ancillary
Services of AIMCO-GP in July 1998. Prior to joining AIMCO,
Mr. Howard served as an officer and/or director of four
affiliated companies, Hecco Ventures, Craig Corporation,
Reading Company and Decurion Corporation. Mr. Howard was
responsible for financing, mergers and acquisitions
activities, investments in commercial real estate, both
nationally and internationally, cinema development and
interest rate risk management. From 1983 to 1988, he was
employed by Spieker Properties. Mr. Howard received a B.A.
from Amherst College, a J.D. from Harvard Law School and an
M.B.A. from Stanford University Graduate School of Business.
Steven D. Ira........................ Mr. Ira is a Co-Founder of AIMCO and has served as Executive
Vice President of AIMCO since July 1994. Mr. Ira has been
Executive Vice President of AIMCO-GP since July 1998. From
1987 until July 1994, he served as President of PAM. Prior
to merging his firm with PAM in 1987, Mr. Ira acquired
extensive experience in property management. Between 1977
and 1981 he supervised the property management of over 3,000
apartment and mobile home units in Colorado, Michigan,
Pennsylvania and Florida, and in 1981 he joined with others
to form the property management firm of McDermott, Stein and
Ira. Mr. Ira served for several years on the National
Apartment Manager Accreditation Board and is a former
president of both the National Apartment Association and the
Colorado Apartment Association. Mr. Ira is the sixth
individual elected to the Hall of Fame of the National
Apartment Association in its 54-year history. He holds a
Certified Apartment Property Supervisor (CAPS) and a
Certified Apartment Manager designation from the National
Apartment Association, a Certified Property Manager (CPM)
designation from the National Institute of Real Estate
Management (IREM) and he is a member of the Board of
Directors of the National Multi-Housing Council, the
National Apartment Association and the Apartment Association
of Metro Denver. Mr. Ira received a B.S. from Metropolitan
State College in 1975.
Harry G. Alcock...................... Mr. Alcock has served as Vice President of AIMCO and
AIMCO-GP since July 1996, and was promoted to Senior Vice
President -- Acquisitions in October 1997, with
responsibility for acquisition and financing activities
since July 1994. From June 1992 until July 1994, Mr. Alcock
served as Senior Financial Analyst for PDI and HFC. From
1988 to 1992, Mr. Alcock worked for Larwin Development
Corp., a Los Angeles based real estate developer, with
responsibility for raising debt and joint venture equity to
fund land acquisitions and development. From 1987 to 1988,
Mr. Alcock worked for Ford Aerospace Corp. He received his
B.S. from San Jose State University.
Troy D. Butts........................ Mr. Butts has served as Senior Vice President and Chief
Financial Officer of AIMCO since November 1997. Mr. Butts
has been Senior Vice President and Chief Financial Officer
of AIMCO-GP since July
</TABLE>
I-3
<PAGE> 38
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
- ---- ---------------------------------------------
<S> <C>
1998. Prior to joining AIMCO, Mr. Butts served as a Senior
Manager in the audit practice of the Real Estate Services
Group for Arthur Andersen LLP in Dallas, Texas. Mr. Butts
was employed by Arthur Andersen LLP for ten years and his
clients were primarily publicly-held real estate companies,
including office and multi-family real estate investment
trusts. Mr. Butts holds a Bachelor of Business
Administration degree in Accounting from Angelo State
University and is a Certified Public Accountant.
Richard S. Ellwood................... Mr. Ellwood was appointed a Director of AIMCO in July 1994
12 Auldwood Lane and is currently Chairman of the Audit Committee. Mr.
Rumson, NJ 07660 Ellwood is the founder and President of R.S. Ellwood & Co.,
Incorporated, a real estate investment banking firm. Prior
to forming R.S. Ellwood & Co., Incorporated in 1987, Mr.
Ellwood had 31 years experience on Wall Street as an
investment banker, serving as: Managing Director and senior
banker at Merrill Lynch Capital Markets from 1984 to 1987;
Managing Director at Warburg Paribas Becker from 1978 to
1984; general partner and then Senior Vice President and a
director at White, Weld & Co. from 1968 to 1978; and in
various capacities at J.P. Morgan & Co. from 1955 to 1968.
Mr. Ellwood currently serves as a director of FelCor Suite
Hotels, Inc. and Florida East Coast Industries, Inc.
J. Landis Martin..................... Mr. Martin was appointed a Director of AIMCO in July 1994
199 Broadway and became Chairman of the Compensation Committee in March
Suite 4300 1998. Mr. Martin has served as President and Chief Executive
Denver, CO 80202 Officer and a Director of NL Industries, Inc., a
manufacturer of titanium dioxide, since 1987. Mr. Martin has
served as Chairman of Tremont Corporation, a holding company
operating through its affiliates Titanium Metals Corporation
("TIMET") and NL Industries, Inc., since 1990 and as Chief
Executive Officer and a director of Tremont since 1998. Mr.
Martin has served as Chairman of Timet, an integrated
producer of titanium, since 1987 and Chief Executive Officer
since January 1995. From 1990 until its acquisition by
Dresser Industries, Inc. ("Dresser") in 1994, Mr. Martin
served as Chairman of the Board and Chief Executive Officer
of Baroid Corporation, an oilfield services company. In
addition to Tremont, NL and TIMET, Mr. Martin is a director
of Dresser, which is engaged in the petroleum services,
hydrocarbon and engineering industries.
Carla R. Stoner...................... Ms. Stoner joined AIMCO in July 1997 as Vice President of
Finance and Administration and became Senior Vice
President -- Real Estate Accounting in November 1998. Prior
to joining AIMCO, Ms. Stoner was with National Housing
Partners since 1989. While at National Housing Partners, Ms.
Stoner served as a real estate controller from 1989 to 1992,
as Vice President of Accounting from 1992 to 1995 and as
Interim Chief Information Officer from 1995 to July 1997.
Prior to joining National Housing Partners, Ms. Stoner was a
Senior Auditor with Deloitte & Touche from 1984 to 1989. Ms.
Stoner received a B.A. in accounting from Virginia Tech.
</TABLE>
I-4
<PAGE> 39
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
- ---- ---------------------------------------------
<S> <C>
Thomas L. Rhodes..................... Mr. Rhodes was appointed a Director of AIMCO in July 1994.
215 Lexington Avenue Mr. Rhodes has served as the President and a Director of
4th Floor National Review magazine since November 30, 1992, where he
New York, NY 10016 has also served as a Director since 1998. From 1976 to 1992,
he held various positions at Goldman, Sachs & Co. and was
elected a General Partner in 1986 and served as a General
Partner from 1987 until November 27, 1992. He is currently
Co-Chairman of the Board, Co-Chief Executive Officer and a
Director of Commercial Assets Inc. and Asset Investors
Corporation. He also serves as a Director of Delphi
Financial Group, Inc. and its subsidiaries, Delphi
International Ltd., Oracle Reinsurance Company, and the
Lynde and Harry Bradley Foundation. Mr. Rhodes is Chairman
of the Empire Foundation for Policy Research, a Founder and
Trustee of Change NY, a Trustee of The Heritage Foundation,
and a Trustee of the Manhattan Institute.
John D. Smith 3400................... Mr. Smith was appointed a Director of AIMCO in November
Peachtree Road Suite 831 1994. Mr. Smith is Principal and President of John D. Smith
Atlanta, GA 30326 Developments. Mr. Smith has been a shopping center
developer, owner and consultant for over 8.6 million square
feet of shopping center projects including Lenox Square in
Atlanta, Georgia. Mr. Smith is a Trustee and former
President of the International Council of Shopping Centers
and was selected to be a member of the American Society of
Real Estate Counselors. Mr. Smith served as a Director for
Pan-American Properties, Inc. (National Coal Board of Great
Britain) formerly known as Continental Illinois Properties.
He also serves as a director of American Fidelity Assurance
Companies and is retained as an advisor by Shop System Study
Society, Tokyo, Japan.
</TABLE>
I-5
<PAGE> 40
The letter of transmittal and any other required documents should be sent
or delivered by each unitholder or such unitholder's broker, dealer, bank, trust
company or other nominee to the Information Agent at one of its addresses set
forth below.
The Information Agent for the Offer Is:
RIVER OAKS PARTNERSHIP SERVICES, INC.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
P.O. Box 2065 111 Commerce Road 111 Commerce Road
S. Hackensack, N.J. 07606-2065 Carlstadt, N.J. 07072 Carlstadt, N.J. 07072
Attn.: Reorganization Dept.
</TABLE>
For information, please call:
TOLL FREE (888) 349-2005
I-6
<PAGE> 1
SUPPLEMENT
(TO OFFER TO PURCHASE DATED MAY 19, 1999)
AIMCO PROPERTIES, L.P.
Increase in Offer Consideration
relating to
the offer to acquire units of limited partnership interest in
UNITED INVESTORS INCOME PROPERTIES
in exchange for $163 in Cash
Pursuant to an Offer to Purchase, dated May 19, 1999, we have
previously offered to acquire units of limited partnership interest in your
partnership for $157 per unit in cash. Recently, we have decided to increase
our offer price to $163 per unit. Our offer price will be reduced for any
distributions subsequently made by your partnership prior to the expiration of
our offer. You will not pay any fees or commissions if you tender your units.
We will only accept a maximum of 44.31% of the outstanding units in
response to our offer. If more units are tendered to us, we will generally
accept units on a pro rata basis according to the number of units tendered by
each person. Our offer is not subject to any minimum number of units being
tendered.
Our offer and your withdrawal rights will expire at 5:00 p.m., New
York City time, on June 29, 1999, unless we extend the deadline.
PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 1 OF THE OFFER TO PURCHASE
FOR A DESCRIPTION OF RISK FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH
OUR OFFER.
If you desire to accept our offer, you should complete and sign the
Letter of Transmittal in accordance with the instructions thereto and mail or
deliver the signed Letter of Transmittal and any other required documents to
River Oaks Partnership Services, Inc., which is acting as Information Agent in
connection with our offer, at one of its addresses set forth on the back cover
of the Offer to Purchase. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR
ADDITIONAL COPIES OF THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL MAY
ALSO BE DIRECTED TO THE INFORMATION AGENT AT (888) 349- 2005.
June 15, 1999
