<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [_]
Check the appropriate box:
[X] Preliminary proxy statement [_] Confidential, For Use of the
Commission Only (as permitted
[_] Definitive proxy statement by 14a-6(e)(2))Rule
[_] Definitive additional materials
[_] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
- --------------------------------------------------------------------------------
Windsor Park Properties 6, A California Limited Partnership
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[_] No Fee Required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Units of limited partner interest
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11: /1/
$15,438,100
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
$15,438,100
- --------------------------------------------------------------------------------
(5) Total fee paid:
$3,087.62
- --------------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
______________
/1/ Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
"Promptly upon receiving the consents
of the limited partners in WPP 6 holding
a majority-in-interest of the units, WPP
6 will proceed with the proposed Sales
and Plan of Liquidation resulting in cash
distributions to limited partners of
approximately $30 per unit."
WINDSOR PARK PROPERTIES 6
THE WINDSOR CORPORATION
VERY IMPORTANT NOTICE
PLEASE READ AND RESPOND IMMEDIATELY
_____________, 1999
Dear Limited Partner:
In response to the requests of many of the limited partners for an
opportunity to achieve liquidity in their investment in Windsor Park Properties
6, A California Limited Partnership (the "Partnership"), and in anticipation of
the near-term expiration of the stated term of the Partnership, we have worked
diligently to develop a plan which would liquidate and dissolve the Partnership.
Accordingly, we are pleased to announce that N'Tandem Trust, a real estate
investment trust managed by the managing general partner of the Partnership, has
offered to acquire immediately all of the assets of the Partnership for cash
which will enable the Partnership to proceed with a plan of liquidation whereby
limited partners will receive liquidating distributions estimated to be $30.42
per unit (the "Sales and Plan of Liquidation").
We have enclosed in this package for your review the following documents
relating to the proposed Sales and Plan of Liquidation: (i) a Consent
Solicitation Statement; (ii) a Consent Form; and (iii) a Question and Answer
Memo.
In order to proceed with the Sales and Plan of Liquidation, limited
partners holding a majority-in-interest of the Partnership's units of limited
partner interest must consent to both proposals relating to the Sales and Plan
of Liquidation. Limited partners may consent to the proposed Sales and Plan of
Liquidation by completing and returning the enclosed Consent Form provided for
that purpose on or before ________, 2000. Promptly upon receiving the consents
of limited partners holding a majority-in-interest of the units of limited
partner interest, the Partnership will proceed with the proposed Sales and Plan
of Liquidation.
Failure to consent and/or an abstention count as "no" votes. Please make
your desires count and "consent" to the proposed transactions.
We urge you to take the time to read the enclosed Consent Solicitation
Statement which describes in substantial detail the proposed Sales and Plan of
Liquidation and to complete and return your Consent Form in the postage-paid
envelope provided. Please remember, failure to consent and/or an abstention
count as "no" votes. This is your opportunity to liquidate your investment in
the Partnership for cash.
Should you have any questions about the Sales and Plan of Liquidation,
please do not hesitate to call Arlen Capital, the Partnership's solicitation
agent for the proposed transactions, at (___) _________.
Very truly yours,
Steven G. Waite
President
Enclosures
<PAGE>
CONSENT SOLICITATION STATEMENT
Windsor Park Properties 6,
A California Limited Partnership
6160 South Syracuse Way
Greenwood Village, Colorado 80111
Pursuant to the Agreement of Limited Partnership (the "Partnership
Agreement") of Windsor Park Properties 6, A California Limited Partnership (the
"Partnership"), the term of the Partnership will expire on December 31, 1999. As
a result, in accordance with the terms of the Partnership Agreement and
California law, The Windsor Corporation, the managing general partner of the
Partnership (the "Managing General Partner"), and John A. Cosco, Jr., the other
general partner of the Partnership (together, with the Managing General Partner,
the "General Partners"), are required (i) to develop a plan of liquidation for
the Partnership's assets and to liquidate and dissolve the Partnership or (ii)
to take such steps as are necessary to extend the term of the Partnership in
order to enable it to continue as a going concern.
The General Partners have determined that it is in the best interests of
the Partnership and its partners to proceed with a plan of liquidation that has
been adopted by the General Partners (the "Plan of Liquidation"), pursuant to
which the Partnership will sell (the "Sales") its one wholly-owned property and
its partial ownership interests in five other properties (collectively, the
"Properties") to N'Tandem Trust, a California business trust ("N'Tandem"), and
make liquidating distributions to the partners in accordance with the terms of
the Partnership Agreement.
The Managing General Partner is a wholly-owned subsidiary of Chateau
Communities, Inc. ("Chateau") and the Managing General Partner and N'Tandem are
under common control of Chateau. Gary P. McDaniel and C.G. Kellogg, the
Directors of the Managing General Partner, are also the Chief Executive Officer
and the President, respectively, of Chateau. The Managing General Partner, in
addition to serving as the managing general partner of the Partnership, also
serves as the external investment advisor to N'Tandem.
The purpose of this Consent Solicitation Statement is to obtain the consent
of the holders (the "Limited Partners") of units of limited partner interest in
the Partnership (the "Units") to two proposals described herein (the
"Proposals"). The approval of the Proposals by the Limited Partners will enable
the Partnership to proceed with the Sales and the Plan of Liquidation.
Upon completion of the Plan of Liquidation, final liquidating distributions
(estimated to be approximately $30.42 per Unit) will be made to the partners in
accordance with the terms of the Partnership Agreement.
The proposed transactions are subject to material risk factors described
herein, including the following:
. The Sales, and the recommendations and views of the Managing General
Partner with respect to the Sales, are subject to potential conflicts
of interest more particularly described herein. See "MATERIAL RISK
FACTORS AND OTHER CONSIDERATIONS --Conflicts of Interest";
<PAGE>
. Due to the potential conflicts of interests of the Managing General
Partner, the purchase prices for the Properties and other terms of the
Sales cannot be considered to be the result of arm's-length
negotiations and bargaining between independent parties and, as a
result, may not be as favorable as those that might have been obtained
had the purchase prices and terms of the Sales been the result of such
arm's-length negotiations;
. The General Partners did not retain an independent and disinterested
third party to represent the unaffiliated Limited Partners in
connection with the Sales or to negotiate the terms of the Sales;
. The General Partners have engaged in limited marketing efforts with
respect to the sale of the Properties to third parties;
. The purchase prices for the Properties are based upon appraisals
rendered in August 1999 and September 1999 and such appraisals have
not been updated. Accordingly, such appraisals may not reflect the
current fair market values of the Properties; and
. The Limited Partners will lose the opportunity to benefit from
potential increases in the market values of the Properties.
Consents to the Proposals are being solicited by the General Partners. The
General Partners believe that the Sales and Plan of Liquidation are fair to, and
in the best interest of, the Limited Partners. Accordingly, the General Partners
have approved the Sales and Plan of Liquidation and recommend their approval and
adoption by the Limited Partners. However, before deciding whether to consent to
the Proposals, Limited Partners are urged to consider carefully the basis of the
General Partners' recommendation described herein and the conflicts of interest
and risk factors present in the Sales and Plan of Liquidation described herein
under "MATERIAL RISK FACTORS AND OTHER CONSIDERATIONS" and to consult with their
independent legal, financial and tax advisors.
The close of business on _________, 1999 has been fixed as the record date
for determining Limited Partners entitled to give written consent to the Sales
and the Plan of Liquidation. In order to be valid, a consent must be received on
or prior to ________, 2000.
This Consent Solicitation Statement was first mailed to Limited Partners on
or about _________, 1999.
LIMITED PARTNERS ARE URGED TO COMPLETE, SIGN AND DATE THE ENCLOSED CONSENT
FORM AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES, TO BE RECEIVED NO LATER THAN ___________, 2000.
This Consent Solicitation Statement is dated _________, 1999.
ii
<PAGE>
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS CONSENT SOLICITATION
STATEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS NOT
CONTAINED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
PARTNERSHIP OR THE GENERAL PARTNERS. THIS CONSENT SOLICITATION STATEMENT DOES
NOT CONSTITUTE THE SOLICITATION OF A CONSENT IN ANY JURISDICTION TO OR FROM ANY
PERSON TO OR FROM WHOM IT IS UNLAWFUL TO SOLICIT SUCH CONSENT SOLICITATION IN
SUCH JURISDICTION.
NONE OF THE SALES, THE PLAN OF LIQUIDATION OR THIS CONSENT SOLICITATION
STATEMENT HAVE BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE FAIRNESS
OR MERITS OF THE SALES OR THE PLAN OF LIQUIDATION OR THE ACCURACY OR ADEQUACY OF
THIS CONSENT SOLICITATION STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
AVAILABLE INFORMATION
The Partnership is subject to informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files, reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of
the Commission at 7 World Trade Center, New York, New York 10048, and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can be obtained from the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The Commission maintains a site on the Internet
at http://www.sec.gov that contains reports, proxy statements and other
information regarding registrants that file electronically with the Commission.
Pursuant to Rule 13e-3 under the Exchange Act, N'Tandem, Chateau and the
Partnership have jointly filed with the Commission a Rule 13e-3 Transaction
Statement on Schedule 13E-3 (including any amendments thereto, the "Schedule
13E-3"), together with exhibits thereto, furnishing certain additional
information with respect to the Sales and the Plan of Liquidation. This Consent
Solicitation Statement does not contain all the information required to be
included in the Schedule 13E-3 and the exhibits thereto, certain portions of
which are omitted from this Consent Solicitation Statement as permitted by the
rules and regulations of the Commission.
Statements contained herein concerning the provisions of documents are
summaries of such documents and, as such, each statement is not necessarily
complete and is qualified in its entirety by reference to the copy of the
applicable document if attached as an appendix hereto or filed as an exhibit to
the Schedule 13E-3.
All reports from outside parties filed as exhibits to the Schedule 13E-3
filed with the Commission in connection with the proposed transactions also will
be made available for inspection and copying at the principal executive offices
of the Partnership during its regular business hours by any Limited Partner or
representative thereof who has been so designated in writing.
iii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY........................................................... 1
Purpose of the Consent Solicitation; Proposals 1 and 2........ 1
Background of the Proposed Transactions....................... 2
Relationship of the Various Parties to the Proposed
Transactions.............................................. 4
Summary Risk Factors.......................................... 5
Valuation of Properties....................................... 6
Recommendation of the General Partners........................ 6
Fairness Opinion.............................................. 9
Alternatives Considered....................................... 10
N'Tandem's and Chateau's Belief as to the Fairness of
the Proposed
Transactions; N'Tandem's and Chateau's Reasons
for Engaging in the Proposed Transactions................. 11
Appraisals.................................................... 11
Certain Federal Income Tax Considerations..................... 12
Consent Procedures; Transactions Authorized by Consents....... 13
Record Date; Required Consents................................ 13
No Appraisal or Dissenters' Rights............................ 13
Historical Distributions...................................... 14
No Established Trading Market For Units....................... 14
SUMMARY HISTORICAL FINANCIAL DATA................................. 15
MATERIAL RISK FACTORS AND OTHER CONSIDERATIONS.................... 16
Conflicts of Interest......................................... 16
Purchase Prices Are Not the Result of Arm's-Length
Negotiations................................................. 16
No Appointment of Independent Representative.................. 17
The General Partners Have Engaged in Limited Marketing
Efforts with
Respect to the Properties..................................... 17
Appraisals May Not Reflect the Current
Fair Market Values of the Properties...................... 17
Loss of Opportunity to Benefit
from Future Events............................................ 17
DESCRIPTION OF THE PROPOSED TRANSACTIONS.......................... 17
Purpose of the Consent Solicitation; Proposals 1 and 2........ 17
Background of the Proposed Transactions....................... 18
Information Concerning N'Tandem and Chateau................... 21
The Purchase and Sale Agreement............................... 21
Solicitation Expenses......................................... 22
Estimate of Liquidating Distributions Payable to
Limited Partners.......................................... 22
Ownership of Properties by N'Tandem Following Sales........... 23
SPECIAL FACTORS................................................... 24
Fairness of the Proposed Transactions; Recommendation
of the General Partners................................... 24
Fairness Opinion.............................................. 27
Alternatives Considered....................................... 30
N'Tandem's and Chateau's Belief as to the Fairness
of the Proposed Transactions; N'Tandem's and Chateau's
Reasons for Engaging in the Proposed Transactions......... 32
</TABLE>
iv
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
Appraisals.................................................... 33
Discount for Ownership Interests in Properties................ 42
SUMMARY OF SELECTED TERMS OF THE PARTNERSHIP AGREEMENT............ 42
Net Proceeds from the Sales................................... 42
Allocation of Profit or Loss on the Sales..................... 43
Voting Rights of Limited Partners............................. 43
Limitation of Liability and Indemnification of the
General Partners.......................................... 44
THE PARTNERSHIP'S PROPERTIES...................................... 45
Nature of Ownership Interests in Properties................... 45
Description of the Properties, Appraised Values and
Ownership Interests....................................... 46
FEDERAL INCOME TAX CONSIDERATIONS................................. 46
Overview...................................................... 47
Taxation on the Sales......................................... 47
Liquidation of the Partnership................................ 48
Income Tax Rates/Taxation of Gains and Losses................. 48
CONSENT PROCEDURES; TRANSACTIONS AUTHORIZED BY CONSENTS........... 49
Solicitation of Consents...................................... 50
Record Date; Required Vote.................................... 50
No Appraisal or Dissenters' Rights............................ 51
Consequences If Consents Are Not Obtained..................... 51
FINANCIAL STATEMENTS.............................................. 51
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE................... 51
APPENDIX A Fairness Opinion...................................... A-1
APPENDIX B Information Concerning Officers and Directors
of the Managing General N'Tandem and Chateau.............. B-1
</TABLE>
v
<PAGE>
SUMMARY
The following summarizes information contained elsewhere in this
Consent Solicitation Statement. While the purpose of this Summary is to discuss
and disclose the material aspects of the Sales and the Plan of Liquidation, this
Summary is not intended to be complete and is qualified in its entirety by
reference to the more detailed information contained elsewhere herein.
Purpose of the Consent Solicitation; Proposals 1 and 2
In accordance with the Agreement of Limited Partnership (the
"Partnership Agreement") of Windsor Park Properties 6, A California Limited
Partnership (the "Partnership"), the term of the Partnership will expire on
December 31, 1999. As a result, in accordance with the terms of the Partnership
Agreement and California law, The Windsor Corporation, the managing general
partner of the Partnership (the "Managing General Partner"), and John A. Coseo,
Jr., the other general partner of the Partnership (together, with the Managing
General Partner, the "General Partners"), are required (i) to develop a plan of
liquidation for the Partnership and to liquidate and dissolve the Partnership or
(ii) to take such steps as are necessary to extend the term of the Partnership
in order to enable it to continue as a going concern.
The purpose of this Consent Solicitation is to obtain the consent of
the holders (the "Limited Partners") of units of limited partner interest in the
Partnership (the "Units") to the two proposals described herein (the
"Proposals"). Upon approval of both of the Proposals by the Limited Partners,
the General Partners will proceed with a plan of liquidation that has been
adopted by the General Partners (the "Plan of Liquidation") pursuant to which
the Partnership will sell (the "Sales") to N'Tandem Trust, a California business
trust ("N'Tandem"), its one wholly-owned property and its partial ownership
interests in five other properties (the "Ownership Interests" and, together with
the one wholly-owned property, the "Properties"), and make liquidating
distributions to the partners in accordance with the terms of the Partnership
Agreement. The terms of the Sales are set forth in a Purchase and Sale Agreement
between N'Tandem and the Partnership (the "Purchase and Sale Agreement"). Upon
completion of the Plan of Liquidation, final liquidating distributions
(estimated to be approximately $30.42 per Unit) will be made to the partners in
accordance with the terms of the Partnership Agreement.
Two Proposals are being proposed in this Consent Solicitation Statement
for approval by the Limited Partners. The first Proposal is for the General
Partners to proceed with the Sales to N'Tandem pursuant to the Purchase and Sale
Agreement ("Proposal 1"). The second Proposal is for the General Partners to
proceed with the Plan of Liquidation following the consummation of the Sales
("Proposal 2").
If each of the two Proposals is approved by a majority-in-interest of
the Limited Partners, the General Partners will proceed with the Sales and the
Plan of Liquidation. Each of the Proposals is conditioned upon approval of the
other Proposal by the Limited Partners. Accordingly, any Limited Partner
desiring to have the General Partners proceed with the Sales and the Plan of
Liquidation needs to vote for both Proposal 1 and Proposal 2.
The Managing General Partner is a wholly-owned subsidiary of Chateau
Communities, Inc. ("Chateau") and the Managing General Partner and N'Tandem are
under common control of Chateau. Gary P. McDaniel and C.G. Kellogg, the
Directors of the Managing General Partner, are the Chief Executive Officer and
the President, respectively, of Chateau. The Managing General Partner of the
Partnership is also the external investment advisor to N'Tandem. Chateau is one
of the largest publicly held companies in the United States engaged in the
ownership and operation of manufactured home communities. N'Tandem, rather than
Chateau, will be purchasing the Properties because the Properties are more in
line with the type and quality of assets sought by N'Tandem. In general, Chateau
seeks to
<PAGE>
invest in large, institutional, fully amenitized manufactured home communities.
In contrast, N'Tandem seeks to invest in lower profile manufactured home
communities which, like the Properties, are located in tertiary demographic and
geographic markets, are smaller in size with fewer amenities and contain a
greater proportion of single-wide spaces. Additionally, N'Tandem also has a
partial ownership interest in two of the manufactured home communities in which
the Partnership holds an Ownership Interest and, upon completion of the Sales,
will hold a 74% ownership interest in these communities.
Background of the Proposed Transactions
In September 1997, Chateau purchased 644,842 shares of common stock of
the Managing General Partner, constituting all of the outstanding capital stock
of the Managing General Partner, in exchange for 101,239 shares of Chateau's
common stock and $750,000 in cash (the "Windsor Acquisition").
Following the Windsor Acquisition, the General Partners began to
analyze the short-term and long-term business objectives of the Partnership and
the other four limited partnerships managed by the General Partners
(collectively, the "Windsor Limited Partnerships"). In connection with their
analysis, the General Partners reviewed each of the agreements of limited
partnership of the Windsor Limited Partnerships in order to ascertain, and to
factor into their analysis, the expiration date of the stated term of each
Windsor Limited Partnership. In addition, the General Partners also ordered
appraisals for each of the properties held by three of the five Windsor Limited
Partnerships, including the Partnership. As a result of their analysis, the
General Partners determined to develop a plan to liquidate Windsor Park
Properties 4, A California Limited Partnership ("Windsor 4"), following the
expiration of its stated term in December 1997 as well as to begin selectively
marketing for sale several of the properties and partial ownership interests
held by the other Windsor Limited Partnerships.
The General Partners promptly began developing and implementing their
plan of liquidation for Windsor 4. In accordance with their plan of liquidation,
the General Partners (i) sold one of Windsor 4's wholly-owned properties in May
1998 to a third-party purchaser and (ii) in June 1999, following the
overwhelming approval by the limited partners of Windsor 4, completed a
transaction in which Windsor 4 sold all of its remaining assets to N'Tandem and,
thereafter, made liquidating distributions to its partners in accordance with
the terms of its agreement of limited partnership. Prior to its liquidation,
Windsor 4 held partial ownership interests in two Properties, the Rancho Margate
and the Winter Haven Properties, in common with the Partnership and, like the
Partnership, had the General Partners as its sole general partners.
As part of its analysis of the Partnership following the Windsor
Acquisition, the General Partners ordered appraisals for the two properties
which were wholly-owned by the Partnership and the five manufactured home
communities in which the Partnership held Ownership Interests. The General
Partners received these appraisals in late 1997 and early 1998 and, after
reviewing the appraisals, developed a plan for the marketing for sale of the
Circle K Property held by the Partnership.
Beginning in the second quarter of 1998, the General Partners began to
market for sale the Partnership's Circle K Property to third parties. As a
result of such efforts, the General Partners closed on the sale of the Circle K
Property for $1,200,000 in November 1998.
Upon completion of their marketing efforts with respect to the Circle K
Property, the General Partners began to explore possible strategic alternatives
for the Partnership with a view towards providing the Limited Partners with an
opportunity to achieve liquidity in their investment. Accordingly, in November
1998, the General Partners began to consider the possibility of merging the
Partnership, together with three of the other Windsor Limited Partnerships, into
N'Tandem (the "Proposed
2
<PAGE>
Consolidation"). In the Proposed Consolidation, the Limited Partners would have
exchanged their Units for common shares of beneficial interest or other
securities in N'Tandem. In contemplation of the Proposed Consolidation, the
Managing General Partner (i) retained Whitcomb Real Estate, Inc. (the
"Appraiser") to render the appraisals (the "Appraisals"), which updated the 1997
appraisals, with respect to the Partnership's Properties and (ii) engaged Legg
Mason Wood Walker Incorporated ("Legg Mason") to act as financial advisor to the
Partnership and the other Windsor Limited Partnerships and, if the Managing
General Partner elected to proceed with the Proposed Consolidation, to deliver a
fairness opinion with respect to the Proposed Consolidation. The General
Partners considered and actively pursued the Proposed Consolidation involving
the Partnership and the other three Windsor Limited Partnerships through August
1999. For a discussion of the Managing General Partner's analysis of the
Proposed Consolidation, see "SPECIAL FACTORS --Alternatives Considered."
In September 1999, the General Partners concluded that in light of the
near-term expiration of the stated term of the Partnership the best course
action for the Partnership and its Limited Partners would be for the Partnership
to sell its remaining Properties to N'Tandem in a transaction similar to the one
that was completed with Windsor 4. The General Partners decided not to attempt
to market the Partnership's remaining Properties for sale to parties other than
N'Tandem based, in part, on their belief that (i) the price offered to be paid
by N'Tandem for the one wholly-owned Property, which is equal to the full
appraised value set forth in the Appraisal for such Property (the "Appraised
Value"), would be greater than the price which would be paid by any prospective
third-party purchaser, given the General Partners' previous experience in
marketing manufactured have communities similar in nature to those held by the
Partnership and (ii) very limited demand for the Ownership Interests exists and
that any prospective third-party purchaser of these interests would not be
willing to pay the Partnership the price being offered by N'Tandem for such
interests, given that control and management of the underlying properties and
the power to sell or dispose of the underlying properties is vested solely in
the Managing General Partner, an affiliate of N'Tandem, and that N'Tandem owns a
33% partial ownership interest in two of the underlying properties.
In determining whether to pursue the Sales, the General Partners
analyzed various alternatives for the Partnership, including the Proposed
Consolidation, and the terms and provisions of the Sales. In connection with its
analysis of the Sales and Plan of Liquidation, the Managing General Partner, on
behalf of the Partnership, engaged Legg Mason to render a written opinion (the
"Fairness Opinion") as to the fairness, from a financial point of view, to the
Limited Partners of the aggregate purchase price to be paid by N'Tandem to the
Partnership for the Properties. On November 15, 1999, Legg Mason delivered its
oral and written Fairness Opinion to the Managing General Partner stating that
the aggregate purchase price to be paid by N'Tandem for the Properties was fair
to the Limited Partners from a financial point of view.
3
<PAGE>
Relationship of the Various Parties to the Proposed Transactions
The relationships of the various parties to the proposed transactions
are set forth in the diagram below and described elsewhere in this Consent
Solicitation Statement under "RISK FACTORS -- Conflicts of Interest."
[ORGANIZATIONAL CHART APPEARS HERE]
4
<PAGE>
Summary Risk Factors
The Sales involve material risks, conflicts of interest and other
considerations which are discussed elsewhere in this Consent Solicitation
Statement. They include the following:
Conflicts of Interest. The Sales and the Plan of Liquidation, and the
recommendation of the General Partners set forth herein, could be deemed to
involve conflicts of interest between the Managing General Partner and the
Limited Partners. The Managing General Partner and N'Tandem are under the common
control of Chateau. Chateau owns all of the issued and outstanding capital stock
of the Managing General Partner and Chateau's Chief Executive Officer and
President are the sole Directors of the Managing General Partner.
The Managing General Partner is also the external investment advisor of
N'Tandem. In connection with the Sales, pursuant to the advisory agreement
between such parties (the "Advisory Agreement"), the Managing General Partner
will receive an acquisition fee from N'Tandem equal to 3% of the purchase price
paid by N'Tandem for the Properties. This acquisition fee is estimated to be
$88,200 for the Chisolm Creek Property, $89,260 for the Town & Country Estates
Property, $78,770 for the Carefree Village Property, $70,850 for the Rancho
Margate Property, $41,070 for the Winter Haven Property and $95,000 for the
Garden Walk Property. In addition, the Sales will result in an increase in the
annual and other fees and compensation payable to the Managing General Partner
under the Advisory Agreement. As a result of the economic benefits accruing to
the Managing General Partner in connection with the Sales, the Sales and the
recommendation and views of the Managing General Partner are subject to
potential conflicts of interest.
Purchase Prices Are Not the Result of Arm's-Length Negotiations. Due to
the potential conflicts of interests of the Managing General Partner, the
purchase prices for the Properties and other terms of the Sales cannot be
considered to be the result of arm's-length negotiations and bargaining between
independent parties and, as a result, may not be as favorable as those that
might have been obtained had the purchase prices and terms of the Sales been the
result of such arm's-length negotiations.
No Appointment of Independent Representative. The General Partners have
not appointed an independent representative to represent the unaffiliated
Limited Partners in connection with the Sales or to negotiate the terms of the
Sales. If such a representative had been appointed, the purchase prices for the
Properties and the other terms of the Sales might have been different and
possibly more favorable to the Partnership and the Limited Partners.
The General Partners Have Engaged in Limited Marketing Efforts with
Respect to the Properties. The General Partners have engaged in limited
marketing efforts with respect to the Properties, with only one of the seven
Properties held by the Partnership immediately following the Windsor Acquisition
having been marketed for sale to third-party purchasers to date. Marketing the
Properties to third parties could conceivably result in higher purchase prices
being paid for the Properties than those that are being paid by N'Tandem in
connection with the Sales.
Appraisals May Not Reflect the Current Fair Market Values of the
Properties. The Appraisals were rendered in August 1999 and September 1999. The
General Partners do not intend to update the Appraisals or to order new
appraisals for the Properties. Accordingly, the Appraisals may not reflect the
current fair market values of the Properties.
Loss of Opportunity to Benefit from Future Events. It is possible that
the future performance of the Properties will improve or that prospective
third-party purchasers may be willing to pay more for the Properties in the
future. It is possible that Limited Partners might earn a higher return on their
investment
5
<PAGE>
if the Partnership extended its stated term and retained ownership of the
Properties. By approving the Sales, Limited Partners will also be foregoing
current benefits of ownership of the Properties, such as continuing
distributions.
Valuation of Properties
The following table sets forth information regarding the Partnership's
Properties and their respective values (based on the Appraised Values), the
discount being applied to the Ownership Interests, the debt attributable to the
Properties as of September 30, 1999, and the value of the Properties after
deducting attributable debt and applicable discount:
<TABLE>
<CAPTION>
Value, Based on Discount on Debt
% Date Appraised Value, Ownership Attributable
Name of Property Ownership Acquired Before Debt(1) Interest(1)(2) as of 9/30/99(1) Net Value(1)
---------------------- --------- -------- ---------------- -------------- ----------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Chisholm Creek
Wichita, KS 100% 7/1989 $ 2,940,000 -- -- $2,940,000
Town & Country
Estates
Tucson, AZ 58% 1/1989 $ 3,132,000 $ 156,600 $ 899,000 $2,076,400
Carefree Village
Tampa, FL 44% 7/1990 $ 2,917,200 $ 291,700 $1,531,200 $1,094,300
Rancho Margate
Margate, FL 41% 9/1995 $ 2,624,000 $ 262,400 $1,313,100 $1,048,500
Winter Haven
Winter Haven, FL 41% 10/1995 $ 1,521,100 $ 152,100 $ 814,700 $ 554,300
Garden Walk
Palm Beach
Gardens, FL 31% 8/1995 $ 3,518,500 $ 351,900 $1,767,000 $1,399,600
---------------- -------------- ---------------- ------------
Total $16,652,800 $1,214,700 $6,325,000 $9,113,100
================ ============== ================ ============
</TABLE>
- --------------------------
(1) With respect to the five Ownership Interests, such amount represents
the Partnership's allocable share based upon its ownership percentage
in the underlying property.
(2) With respect to the five Ownership Interests, N'Tandem is applying (i)
a 5% discount for the fact that the Partnership only owns a majority
interest in the Town & Country Estates Property and (ii) a 10%
discount for the fact that the Partnership only owns a minority
interest in the Carefree Village, Rancho Margate, Winter Haven and
Garden Walk Properties. For a discussion of the discount being applied
to the Ownership Interests, see "SPECIAL FACTORS -- Discount for
Ownership Interests in Properties."
Recommendation of the General Partners
The General Partners believe that the Sales and the Plan of Liquidation
are (i) consistent with the original objectives of the Partnership and (ii)
contemplated by the terms of the Partnership Agreement. In addition, the General
Partners believe that the terms of the Sales are fair, from a financial point of
view and from a procedural point of view, to the affiliated and unaffiliated
Limited Partners. Accordingly, the General Partners have approved the Sales and
the Plan of Liquidation and recommend their approval and adoption by the Limited
Partners.
In reaching the determination that the Sales and the Plan of
Liquidation are fair to the unaffiliated Limited Partners from a financial point
of view, the General Partners considered the following factors:
. N'Tandem is willing to purchase all of the Properties and is
paying the full Appraised Value for the one wholly-owned Property
and is only applying (i) a
6
<PAGE>
5% discount to the Appraised Value of the Ownership Interest in
the Town & Country Estates Property for the fact that the
Partnership owns a majority interest in this property and (ii) a
10% discount to the Appraised Value of the other four Ownership
Interests for the fact that the Partnership owns a minority
interest in the underlying properties. The General Partners
believe that the discount being applied in connection with the
Sales is substantially less than the 25% discount that, in the
opinion of the Appraiser, would have been applied had the
Ownership Interests been sold to a third-party purchaser. See
"SPECIAL FACTORS-- Discount for Ownership Interests in
Properties";
. The aggregate net purchase price of $9,113,100 being paid by
N'Tandem exceeds the net book value of the Partnership's assets
of $6,473,200 as of September 30, 1999 by $2,639,900;
. Due to the familiarity of N'Tandem's external investment advisor
with the Properties, N'Tandem is willing to purchase the
Properties "as-is" and without representations and warranties
from the Partnership;
. Because N'Tandem is buying the Properties in a single transaction
and is buying such Properties without representations and
warranties from the Partnership, the General Partners will be
able to wind up the Partnership and make full liquidating
distributions promptly upon the approval of the Sales and the
Plan of Liquidation by the Limited Partners;
. The estimated net liquidating proceeds payable in connection with
the Sales ($30.42 per Unit) are higher than (i) the $25.00 per
Unit offered to Limited Partners on September 25, 1999 in
connection with a tender offer for up to 4.9% of the
Partnership's outstanding Units made by CMG Partners, LLC and
(ii) the weighted average trading price of $29.10 per Unit in the
secondary markets, as reported by The Partnership Spectrum, for
the period of April 1, 1999 through July 31, 1999;
. The Sales do not involve any brokerage fees payable by the
Partnership, resulting in a savings to the Partnership estimated
to be between $463,000 and $926,000 (based upon brokerage fees of
3% to 6% typically paid by sellers of real properties); and
. Legg Mason has delivered the Fairness Opinion to the effect that
the aggregate purchase price to be paid to the Partnership is
fair, from a financial point of view, to the Limited Partners.
See "SPECIAL FACTORS -- Fairness Opinion."
In reaching their determination that the Sales and the Plan of
Liquidation are fair from a financial point of view to the affiliated and
unaffiliated Limited Partners, the General Partners also considered the
following potentially negative aspects of the Sales:
. The purchase prices for the Properties are based upon independent
Appraisals rendered in August 1999 and September 1999 which have
not been updated and, thus, may not reflect the current fair
market values of the Properties;
7
<PAGE>
. It is possible that the future performance of the Properties will
improve or that prospective third-party buyers may be willing to
pay more for the Properties in the future; and
. It is possible that Limited Partners might earn a higher return
on their investment if the Partnership extended its stated term
and retained ownership of the Properties. By approving the Sales
and the Plan of Liquidation, Limited Partners will also be
foregoing current benefits of the ownership of the Properties
such as continuing distributions.
The above described factors are all of the material factors considered
by the General Partners in determining that the Sales and the Plan of
Liquidation are fair to the affiliated and unaffiliated Limited Partners from a
financial point of view. In reaching their determination that the Sales and the
Plan of Liquidation are fair to the affiliated and unaffiliated Limited Partners
from a financial point of view, the General Partners did not assign relative
weights to the above factors or determine that any factor was of particular
importance; rather, the General Partners viewed the positive factors as a
totality and the negative factors as a totality and concluded that the positive
factors outweighed the negative factors. Accordingly, the General Partners
determined that the Sales and the Plan of Liquidation are fair to the affiliated
and unaffiliated Limited Partners from a financial point of view.
The General Partners also determined that the Sales and the Plan of
Liquidation are fair to the Limited Partners from a procedural point of view
based on the following factors:
. The Properties have been independently appraised by the
Appraiser;
. In assessing the discounts being applied to the Ownership
Interests by N'Tandem, the Managing General Partner had the
Appraiser, which concluded that in its estimation the application
of a discount of approximately 25% would be appropriate, analyze
the applicability of a discount in valuing a partial ownership
interest in a manufactured home community. See
"SPECIAL FACTORS--Discount for Ownership Interests in
Properties";
. The Sales are subject to the approval of unaffiliated Limited
Partners holding not less than a majority of the issued and
outstanding Units; and
. The Managing General Partner in connection with the Sales
retained Legg Mason to render its Fairness Opinion.
In reaching their determination that the Sales and the Plan of
Liquidation are fair from a procedural point of view to the affiliated and
unaffiliated Limited Partners, the General Partners also considered the
following potentially negative aspects of the Sales:
. The Sales were negotiated on behalf of the Partnership by the
Managing General Partner, which is under common control with
N'Tandem and is receiving substantial economic benefits from the
proposed transactions (including acquisition fees of $463,000
that are being paid by N'Tandem), and, accordingly, may be
subject to potential conflicts of interest;
. Gary P. McDaniel and C.G. Kellogg, the sole Directors of the
Managing General Partner, are the Chief Executive Officer and the
President, respectively, of Chateau and, as a result, the Sales
and the Plan of Liquidation have not been
8
<PAGE>
approved on behalf of the Managing General Partner by directors
who are not affiliated with N'Tandem;
. No independent representatives or disinterested third party was
appointed or retained to negotiate the terms of the Sales on
behalf of the Partnership or the unaffiliated Limited Partners or
to otherwise represent the interests of the unaffiliated Limited
Partners in connection with the Sales;
. The Appraisals were rendered in August 1999 and September 1999
and no updates or new appraisals have been or will be ordered in
connection with the Sales; and
. The General Partners have engaged in limited marketing efforts on
behalf of the Partnership with respect to the Properties, with
only one of the seven Properties held by the Partnership
immediately following the Windsor Acquisition having been
marketed for sale to third-party purchasers to date. The General
Partners do not intend to take significant actions to market or
sell the Properties pending the results of this Consent
Solicitation.
The above described factors are all of the material factors considered
by the General Partners in determining that the Sales and the Plan of
Liquidation are fair to the affiliated and unaffiliated Limited Partners from a
procedural point of view. In reaching their determination that the Sales and the
Plan of Liquidation are fair to the affiliated and unaffiliated Limited Partners
from a procedural point of view, the General Partners concluded that the
approval of the Proposals by a majority-in-interest of the unaffiliated Limited
Partners is sufficient to insure that procedural fairness has been preserved for
the Limited Partners. The General Partners also believe that the potentially
negative factors influencing procedural fairness were in each case mitigated by
the following other factors or considerations: (i) although the Managing General
Partner and N'Tandem are under common control, the General Partners concluded
that the common control (a) did not adversely affect the terms of the Sales for
Limited Partners and (b) allowed N'Tandem to offer terms of the Sales that they
believed would not be available from third parties; (ii) although no independent
or disinterested third party was appointed to represent the Limited Partners in
connection with, or to negotiate the terms of, the Sales, the Managing General
Partner did retain Legg Mason to assess the fairness of the aggregate purchase
price to be paid to the Partnership in the Sales; (iii) even though the
Appraisals were rendered in August 1999 and September 1999, the General Partners
believe that no material changes have occurred in the Properties or in the
conditions of the market for manufactured home communities since those dates
that would result in higher values for the Properties; and (iv) the General
Partner's belief that marketing the Properties held by the Partnership would not
have provided a better transaction for the Limited Partners and would have
ultimately delayed the timing of the Sales and the distribution of liquidating
proceeds to the Limited Partners.
Fairness Opinion
On November 15, 1999, Legg Mason delivered the Fairness Opinion to the
Managing General Partner to the effect that, as of such date, the aggregate
purchase price to be paid to the Partnership by N'Tandem for the Properties is
fair, from a financial point of view, to the Limited Partners. In rendering such
opinion, Legg Mason conducted (i) a liquidation analysis assuming that the
Properties were sold to third-party purchasers, (ii) a comparable company
analysis to establish an implied equity value for the Units and (iii) a
continuation analysis assuming that the Partnership extended its stated term and
the Properties continued to be held by the Partnership until December 31, 2004.
The Fairness Opinion, which is set forth in Appendix A to this Consent
Solicitation Statement, should be read in its entirety for a description of the
procedures followed, assumptions and qualifications made, matters considered and
the
9
<PAGE>
limits of the review undertaken by Legg Mason. The Fairness Opinion is based
on conditions as of its date and, although subsequent developments could have a
material effect on the opinion stated, the Fairness Opinion will not be updated.
Alternatives Considered
In addition to considering the Sales and the Plan of Liquidation, the
General Partners also identified other alternative courses of action for the
Partnership, including the following:
Continuation of the Partnership. The General Partners did not consider
extending the stated term of the Partnership, which would have required the
consent of the holders of a majority of the issued and outstanding Units. The
reason this option was not considered was that the Managing General Partner
believes that Limited Partners desire to achieve the near-term liquidation of
their investments in the Partnership. This belief is based on certain
discussions between the Managing General Partner and several of the Limited
Partners and the Managing General Partner's observation that most Limited
Partners have held their investments in the Partnership for more than ten years.
In addition, the Managing General Partner believes that continuing to own and
operate the Properties is not in the best interests of the Partnership and its
Limited Partners, especially in view of the opportunity to sell the Properties
to N'Tandem on the terms outlined herein. Additionally, while extending the term
of the Partnership would have resulted in the Limited Partners receiving the
benefits of continued ownership of the Properties, the Limited Partners would
have also remained subject to the risks of continuing such ownership and would
continue to be unable to liquidate their investments at fair value since no
formal trading market for the Units exists.
Sale of the Properties to Third-Party Purchasers. While the General
Partners did consider the possibility of selling the Properties to purchasers
other than N'Tandem, the General Partners ultimately concluded that such sale of
the Properties would not be likely to result in the distribution of greater
liquidating proceeds to the Limited Partners than the amounts being distributed
in connection with the Sales and the Plan of Liquidation. The principal reasons
for this conclusion are that the Managing General Partner believes that (i) the
Appraisals continue to reflect the fair market values of the Properties, (ii)
the Limited Partners would receive greater liquidating proceeds in a third-party
transaction only if such third party was willing to pay in excess of the
purchase prices for the Properties being paid by N'Tandem, something the General
Partners believe few, if any, third-party purchasers would be willing to do,
especially with respect to the partial Ownership Interests, (iii) the Ownership
Interests representing minority interests in the underlying properties would
have the effect of deterring potential third-party purchasers because of their
minority status, and (iv) the expenses of the Sales are lower than they would be
in connection with the sale of the Properties to an unaffiliated third-party
purchaser (principally due to the fact that no brokerage commissions are being
paid by the Partnership in connection with the Sales, which results in estimated
savings of between $463,000 and $926,000 based upon prevailing commission
rates).
While the General Partners do not believe, at this time, that the sale
of the Properties to a third-party purchaser would be more beneficial to the
Partnership and the Limited Partners than the Sales and Plan of Liquidation
proposed herein, the General Partners do recognize that a third-party purchaser
could propose a superior or competing offer to that proposed by N'Tandem during
the course of this Consent Solicitation and will not allow this Consent
Solicitation to preclude the Partnership from entertaining such a transaction
should one emerge prior to the end of the solicitation period for this Consent
Solicitation.
Proposed Consolidation. The General Partners also considered and
analyzed the Proposed Consolidation in which the Partnership, together with
three of the other Windsor Limited Partnerships, would have been merged with and
into N'Tandem. In the Proposed Consolidation, the Limited Partners
10
<PAGE>
would have had the right to exchange their Units for common shares of beneficial
interest or other securities of N'Tandem. Based upon the Managing General
Partner's analysis of the Proposed Consolidation, the General Partners have
concluded that the Proposed Consolidation would not result in the Limited
Partners receiving a price per Unit, on a post-consolidation basis, greater than
the estimated price per Unit proposed to be paid to Limited Partners by
N'Tandem. For a discussion of the Managing General Partner's analysis of the
Proposed Consolidation, see "SPECIAL FACTORS -- Alternatives Considered." In
analyzing of the Proposed Consolidation, the Managing General Partner also
considered that (i) the anticipated time period for the completion of the
Proposed Consolidation was likely to be quite lengthy and would more than likely
close well after both the expiration date of the Partnership's stated term and
the completion of the Sales and (ii) the estimate of the value of the Units
assuming their conversion into N'Tandem's common shares in the Proposed
Consolidation was not based on any established trading price for the common
shares, but was instead based on an analysis of companies that the Managing
General Partner considered to be comparable to N'Tandem on a post-consolidation
basis that sought to anticipate the market price of N'Tandem's common shares
following the Proposed Consolidation by reference to the current trading prices
of the securities of such comparative companies.
N'Tandem and the Managing General Partner did not consider any other
alternative ways to acquire the Properties from the Partnership due to their
belief that the holders of a majority of Units desire to achieve near-term
liquidation of their investments in the Partnership.
N'Tandem's and Chateau's Belief as to the Fairness of the Proposed Transactions;
N'Tandem's and Chateau's Reasons for Engaging in the Proposed Transactions
N'Tandem and Chateau believe that the Sales are fair to the Limited
Partners from both a financial point of view and a procedural point of view. In
reaching such determination, N'Tandem and Chateau considered the same factors
and positive and negative aspects of the Sales as were considered by the General
Partners, as described in this Consent Solicitation Statement under "SPECIAL
FACTORS -- Fairness of the Proposed Transactions; Recommendation of the General
Partners," and have specifically adopted the analyses and conclusions of the
General Partners described herein.
In October 1998, N'Tandem amended and restated N'Tandem's Declaration
of Trust and By-laws to convert N'Tandem from a finite-life entity to an
infinite-life entity in order to enable it to begin implementing a
growth-oriented business plan intended to cause N'Tandem to attain greater size
and asset diversity. The acquisition by N'Tandem of the Properties is being
engaged in by N'Tandem as part of such growth-oriented business plan.
Appraisals
The Appraiser, Whitcomb Real Estate, Inc. located in Tampa, Florida,
was retained by the Managing General Partner to render the Appraisals with
respect to the Partnership's Properties. The Appraiser is certified as a Master
Appraiser by the Appraisal Institute and was selected based upon its expertise
as well as its familiarity with valuing real estate underlying manufactured home
communities.
A summary description of the Appraisals, including the values of the
Properties, is included elsewhere in this Consent Solicitation Statement under
the caption "SPECIAL FACTORS -- Appraisals." The Appraisals are based on
conditions as of their respective dates. Subsequent developments could have a
material effect on the valuations stated therein.
The purpose of the Appraisals was, and the Appraiser was instructed by
the Managing General Partner, to determine the fair market value of each
Property. In connection with the Appraisals, no fair market values or value
ranges were suggested by the Managing General Partner. Only one Appraisal was
11
<PAGE>
sought with respect to each Property. If more than one Appraisal had been sought
with respect to each Property, the other appraisal values might have been higher
or lower than the Appraised Values determined by the Appraiser.
The Appraisals were rendered in August 1999 and September 1999 and,
therefore, may no longer reflect the fair market values of the Properties.
Accordingly, the value of the Properties may have increased since that time.
However, the Managing General Partner (i) does not believe that any significant
events have occurred since that time which would cause the conclusions reached
by the Appraiser in the Appraisals and Appraised Values to be different had the
Appraisals been rendered as of a more recent date, (ii) is not aware of any
material developments, trends or other uncertainties that relate to the
conclusions expressed in the Appraisals or that are reasonably likely to
materially affect such conclusions and (iii) does not intend to update the
Appraisals or order new appraisals for the Properties in connection with the
Sales.
Copies of the Appraisals are filed as exhibits to the Schedule 13E-3
and are available for inspection and copying at the Partnership's principal
executive offices during regular business hours by any interested Limited
Partner or any representative of a Limited Partner who has been designated in
writing. Copies may also be obtained through the written request of any Limited
Partner made to the Managing General Partner at 6160 South Syracuse Way,
Greenwood Village, Colorado 80111.
Certain Federal Income Tax Considerations
The following is a brief summary of United States federal income tax
consequences to Limited Partners arising from the Sales and liquidation of the
Partnership:
Tax Consequences of the Sales. The Sales should result in the
recognition of gain by the Partnership and, therefore, should result in
recognition of gain by the Limited Partners. The amount of gain recognized by
the Partnership with respect to each of the Properties will equal the difference
between (i) the Partnership's amount realized (i.e., the amount of cash received
increased by the amount of liabilities of the Partnership assumed or taken
subject to by N'Tandem) and (ii) the Partnership's adjusted tax basis in each of
the Properties. The aggregate gain expected to be recognized by the Partnership
on the Sales is approximately $2,975,500.
Allocation of Gain. The $2,975,500 gain expected to be recognized by
the Partnership in the year of the Sales will be allocated among the partners in
accordance with the terms of the Partnership Agreement. These provisions will
result in an allocation of approximately $2,945,700 of taxable gain on the Sales
to Limited Partners (or an average of $10.24 per Unit). The gain per Unit
resulting from the Sales is primarily caused by the fact that the Partnership
generated tax losses in certain prior years that were allocated to Limited
Partners.
Tax Consequences of Liquidation. Upon liquidation of the Partnership, a
Limited Partner will recognize gain or loss equal to the difference between the
cash received by such Limited Partner (including the Limited Partner's share of
partnership liabilities under Section 752 of the Internal Revenue Code of 1986,
as amended (the "Code")) and the adjusted tax basis of the Limited Partner's
Units, adjusted by such Limited Partner's allocable share of income, gain or
loss arising from normal Partnership operations for the year of liquidation and
the sale of the Properties in the year of liquidation. See "-- Allocation of
Gain" above. It is expected that a Limited Partner will recognize an average
loss of approximately $11.94 per Unit on liquidation of the Partnership.
12
<PAGE>
Consent Procedures; Transactions Authorized by Consents
The consents being solicited hereby will authorize the General
Partners: (i) to complete the Sales at any time on or prior to _____________,
2000 and to proceed with the Plan of Liquidation and (ii) to take all actions
necessary or appropriate, as determined by the General Partners, to complete the
Sales and to proceed with the Plan of Liquidation, including, without
limitation, the adoption of any amendments to the Partnership Agreement that may
be required to effectuate the Sales and Plan of Liquidation. Consents may be
revoked by Limited Partners at any time prior to receipt by the General Partners
of consents from unaffiliated Limited Partners holding a majority of the
outstanding Units.
Consents are being solicited from the Limited Partners in accordance
with the requirements of the Partnership Agreement.
Record Date; Required Consents
The close of business on __________, 1999 has been fixed as the record
date (the "Record Date") for determining Limited Partners entitled to consent to
the Sales and the Plan of Liquidation. As of the Record Date, there were
_________ Units outstanding held of record by a total of _________ Limited
Partners. Each of the Proposals require the approval of unaffiliated Limited
Partners holding at least a majority of the outstanding Units. Each Unit
entitles the holder thereof to cast one vote with respect to the approval of
each of the Proposals. As of the Record Date, the General Partners and their
affiliates own approximately _____ Units (or approximately _____% of total
outstanding Units), but have agreed to abstain from voting on the Proposals with
respect to all such Units.
No Appraisal or Dissenters' Rights
If Limited Partners owning the requisite number of Units in the
Partnership consent to the Sales and Plan of Liquidation, all Limited Partners
of the Partnership will be bound by such consent, including Limited Partners who
have not returned their consents or who have abstained from voting on, or denied
consent to, the Proposals. None of the Partnership Agreement, California law or
the proposed terms and conditions of the Sales or the Plan of Liquidation
provide objecting Limited Partners with the right to exercise any dissenters',
appraisal or similar rights. Under California law, the general partner of a
California limited partnership owes fiduciary duties to its limited partners. To
the extent that a general partner has engaged in a transaction in breach of its
fiduciary duties to limited partners, a damages remedy may be available to such
limited partners.
13
<PAGE>
Historical Distributions
Set forth below is information relating to distributions made by the
Partnership since January 1, 1993:
<TABLE>
<CAPTION>
Total Aggregate Total Aggregate Per Unit to
Year To all Partners(1) to Limited Partners(1) Limited Partners(1)
- -------------------------------------- ------------------ ---------------------- -------------------
<S> <C> <C> <C>
1999(2)............................... $ 303,000 $ 300,000 $ 1.04
1998.................................. 591,200 585,100 2.01
1997.................................. 606,100 600,000 2.04
1996.................................. 606,000 600,000 2.02
1995.................................. 454,500 450,000 1.51
1994.................................. 606,100 600,000 2.01
1993.................................. 17,914,400 17,735,300 59.28
---------------- -------------------- -----------------
Total.......................... $ 21,081,300 $ 20,870,400 $ 69.91
================ ==================== =================
</TABLE>
- ------------------
(1) The portion of such distribution representing a return of capital to the
Limited Partners is as follows: 18% in 1999, 0% in 1998, 77% in 1997, 69%
in 1996, 56% in 1995, 77% in 1994 and 82% in 1993.
(2) Represents distributions through September 30, 1999.
The Partnership typically makes distributions to its partners on a
semi-annual basis. There are no restrictions on the Partnership's present or
future ability to make distributions. The Partnership is not in arrears with
respect to any dividends or distributions and has made all distributions
required to be made by it under the Partnership Agreement.
No Established Trading Market For Units
The Units are not listed on any securities exchange and no established
trading market for the Units exists.
14
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA
The following summary historical financial data, insofar as it relates
to each of the years ended December 31, 1994 through 1998, has been derived from
the annual financial statements of the Partnership, including the balance sheet
at December 31, 1998 and the related statements of income for the two years
ended December 31, 1997 and 1998, and the notes thereto as included in the
Partnership's Annual Report on Form 10-KSB for the year ended December 31, 1998.
The data for the nine months ended September 30, 1999 has been derived from
unaudited financial statements as included in the Partnership's Quarterly Report
on Form 10-QSB for the quarter ended September 30, 1999, which, in the opinion
of the Managing General Partner, include all adjustments, consisting only of
normal recurring adjustments, necessary for a fair statement of the results for
the unaudited interim periods.
<TABLE>
<CAPTION>
For the Nine For the Year Ended December 31,
-------------------------------------------------------------------
Months Ended
September 30,
1999 1998 1997 1996 1995 1994
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues....................... $ 689,300 $ 1,341,900 $ 881,400 $ 883,600 $ 807,700 $ 706,000
Net income..................... $ 344,300 $ 609,700 $ 138,400 $ 187,600 $ 198,300 $ (136,700)
Earnings per Unit.............. $ 1.18 $ 2.07 $ 0.47 $ 0.63 $ 0.66 $ (0.45)
Balance Sheet Data:
Total assets................... $ 6,606,700 $ 6,898,000 $ 8,334,700 $ 8,343,300 $ 9,308,100 $ 8,230,700
Long-term debt................. -- -- $ 1,340,000 $ 1,340,000 -- --
Other Data:
Distributions per Unit......... $ 2.04 $ 2.01 $ 2.04 $ 2.02 $ 1.51 $ 2.01
</TABLE>
15
<PAGE>
MATERIAL RISK FACTORS AND OTHER CONSIDERATIONS
The Sales involve material risks, conflicts of interest and other
considerations which are discussed below. Limited Partners are urged to consider
such factors and considerations and to consult with their independent legal,
financial and tax advisors before consenting to the Sales and the Plan of
Liquidation.
Conflicts of Interest
Managing General Partner and N'Tandem are Under Common Control of
Chateau. The Sales and the Plan of Liquidation, and the recommendation of the
General Partners set forth herein, could be deemed to involve conflicts of
interest between the Managing General Partner and the Limited Partners. The
Managing General Partner and N'Tandem are under the common control of Chateau.
Chateau owns all of the issued and outstanding capital stock of the Managing
General Partner and the Chief Executive Officer and the President of Chateau are
the sole Directors of the Managing General Partner. Chateau, which effectively
controls N'Tandem, currently owns approximately 9.8% of the outstanding capital
stock of N'Tandem and, following the consummation of the Sales, will hold
approximately $51.2 million of indebtedness in N'Tandem. Chateau and N'Tandem
have discussed the possibility of converting all or a portion of the principal
amount of such indebtedness into common or preferred shares of beneficial
interest of N'Tandem. However, there is no agreement or understanding between
Chateau and N'Tandem relating to any such conversion.
Managing General Partner to Receive Acquisition Fees From N'Tandem and
Other Economic Benefits From the Proposed Transactions. The Managing General
Partner is also the external investment advisor of N'Tandem. In connection with
the Sales, pursuant to the Advisory Agreement between such parties, the Managing
General Partner will receive an acquisition fee from N'Tandem equal to 3% of the
gross purchase price for each of the Properties. This acquisition fee is
estimated to be $88,200 for the Chisolm Creek Property, $89,260 for the Town &
Country Estates Property, $78,770 for the Carefree Village Property, $70,850 for
the Rancho Margate Property, $41,070 for the Winter Haven Property and $95,000
for the Garden Walk Property. Under the Advisory Agreement, the Managing General
Partner is entitled to the following fees: (i) annual subordinated advisory fees
of up to 1% of invested assets and .05% of uninvested assets of N'Tandem, (ii)
acquisition fees in connection with the acquisition of properties by N'Tandem
equal to 3% of the sales price, and (iii) a subordinated incentive fee on the
disposition of N'Tandem's assets equal to 15% of cash remaining from sales or
financing of N'Tandem's assets after holders of shares of beneficial interest of
N'Tandem have received specified preferred returns. The Sales will result in an
increase of invested assets of N'Tandem by approximately $15.4 million and,
accordingly, will increase the annual subordinated advisory fee payable by
N'Tandem by approximately $154,000 per year. To the extent that N'Tandem is able
to generate returns to its shareholders in excess of 9% per annum over the life
of N'Tandem (the "Excess Returns"), the Managing General Partner will be
entitled to a subordinated incentive fee equal to 15% of the Excess Returns. As
a result of the economic benefits accruing to the Managing General Partner in
connection with the Sales, the Sales and the recommendation and views of the
Managing General Partner, are subject to potential conflicts of interest.
Purchase Prices Are Not the Result of Arm's-Length Negotiations
Due to the potential conflicts of interests of the Managing General
Partner, the aggregate purchase price being paid by N'Tandem for the Properties
and other deal terms cannot be considered to be the result of arm's-length
negotiations and bargaining between independent parties and, as a result, may
not be as favorable as those that might have been obtained had the terms of the
Sales been the result of such arm's-length negotiations.
16
<PAGE>
No Appointment of Independent Representative
The General Partners have not appointed an independent representative
to represent the unaffiliated Limited Partners in connection with the Sales or
to negotiate the terms of the Sales. If an independent representative had been
appointed, the purchase prices for the Properties and the other terms of the
Sales might have been different and possibly more favorable to the Partnership
and the Limited Partners.
The General Partners Have Engaged in Limited Marketing Efforts with Respect to
the Properties
The General Partners have engaged in only limited marketing efforts
with respect to the Properties. The only marketing activities engaged in by the
General Partners with respect to the Properties was to market and sell the
Partnership's Circle K Property to a third-party purchaser in 1998.
Additionally, the General Partners do not intend to take significant actions to
market or sell the Properties pending the results of this Consent Solicitation;
however, if a superior or competing offer were to emerge prior to the end of the
solicitation period for this Consent Statement, the General Partners would
entertain any such offer. Marketing the Properties to third parties could
conceivably result in higher purchase prices being paid for the Properties than
those that are being paid by N'Tandem in connection with the Sales.
Appraisals May Not Reflect the Current Fair Market Values of the Properties
All of the Appraisals were rendered in August 1999 and September 1999.
The General Partners do not intend to update the Appraisals or to order new
appraisals for the Properties. Accordingly, the Appraisals may not reflect the
current fair market values of the Properties.
Loss of Opportunity to Benefit from Future Events
It is possible that the future performance of the Properties will
improve or that prospective third-party purchasers may be willing to pay more
for the Properties in the future. It is possible that Limited Partners might
earn a higher return on their investment if the Partnership extended its stated
term and retained ownership of the Properties. By approving the Sales and the
Plan of Liquidation, Limited Partners will also be foregoing current benefits of
ownership of the Properties, such as continuing distributions.
DESCRIPTION OF THE PROPOSED TRANSACTIONS
Purpose of the Consent Solicitation; Proposals 1 and 2
In accordance with the Partnership Agreement, the term of the
Partnership will expire on December 31, 1999. As a result, in accordance with
the terms of the Partnership Agreement and California law, the General Partners
are required (i) to develop a plan of liquidation for the Partnership's assets
and to liquidate and dissolve the Partnership or (ii) to take such actions as
are necessary to extend the Partnership term in order to enable it to continue
as a going concern.
The purpose of this Consent Solicitation is to obtain the consent of
the Limited Partners to the two Proposals described herein. Upon approval of
both of the Proposals by the Limited Partners, the General Partners will proceed
with the Plan of Liquidation pursuant to which the Partnership will sell its one
wholly-owned Property and its Ownership Interests in five other Properties to
N'Tandem. The terms of the Sales are set forth in a Purchase and Sale Agreement
between N'Tandem and the Partnership. See "DESCRIPTION OF THE PROPOSED
TRANSACTIONS -- The Purchase and Sale Agreement." Upon
17
<PAGE>
completion of the Plan of Liquidation, final liquidating distributions
(estimated to be approximately $30.42 per Unit) will be made to the partners in
accordance with the terms of the Partnership Agreement.
Two Proposals are being proposed in this Consent Solicitation Statement
for approval by the Limited Partners. Proposal 1 is for the General Partners to
proceed with the Sales to N'Tandem pursuant to the Purchase and Sale Agreement.
Proposal 2 is for the General Partners to proceed with the Plan of Liquidation
following the consummation of the Sales.
If each of the two Proposals is approved by a majority-in-interest of
the Limited Partners, the General Partners will proceed with the Sales and the
Plan of Liquidation. Each of the Proposals is conditioned upon the approval of
the other Proposal by the Limited Partners. Accordingly, any Limited Partner
desiring to have the General Partners proceed with the Sales and the Plan of
Liquidation needs to vote for both Proposal 1 and Proposal 2.
The Managing General Partner is a wholly-owned subsidiary of Chateau
and the Managing General Partner and N'Tandem are under common control of
Chateau. Gary P. McDaniel and C.G. Kellogg, the Directors of the Managing
General Partner, are the Chief Executive Officer and the President,
respectively, of Chateau. The Managing General Partner of the Partnership is
also the external investment advisor to N'Tandem. Chateau is one of the largest
publicly held companies in the United States engaged in the ownership and
operation of manufactured home communities. N'Tandem, rather than Chateau, will
be purchasing the Properties because the Properties are more in line with the
type and quality of assets sought by N'Tandem. In general, Chateau seeks to
invest in large, institutional, fully amenitized manufactured home communities.
In contrast, N'Tandem seeks to invest in lower profile manufactured home
communities which, like the Properties, are located in tertiary demographic and
geographic markets, are smaller in size with fewer amenities and contain a
greater proportion of single-wide spaces. Additionally, N'Tandem also has a
partial ownership interest in two of the manufactured home communities in which
the Partnership holds an Ownership Interest and, upon completion of the Sales,
will hold a 74% ownership interest in these communities.
Background of the Proposed Transactions
The Partnership was formed in June 1988 pursuant to the provisions of
the California Revised Limited Partnership Act. The Partnership was organized as
a finite-life entity to acquire and hold existing manufactured home communities
for investment for a limited period of time. Its principal investment objectives
were to provide to Limited Partners: (i) distributions of cash from operations;
(ii) preservation, protection and eventual return of the Limited Partners'
investment; and (iii) realization of appreciation in the value of the properties
acquired (collectively, the "Original Objectives").
In September 1997, Chateau purchased 644,842 shares of common stock of
the Managing General Partner, constituting all of the outstanding capital stock
of the Managing General Partner, in exchange for 101,239 shares of Chateau's
common stock and $750,000 in cash (the "Windsor Acquisition"). The total value
of the Windsor Acquisition, based on the trading prices of Chateau's shares of
common stock at the time of the acquisition, was approximately $4.0 million.
Following the Windsor Acquisition, at the request of Chateau, the sole
stockholder of The Windsor Corporation, the Trustees of N'Tandem voluntarily
resigned and, in connection with such resignation, appointed three new Trustees
proposed by Chateau. These appointed Trustees were re-elected as N'Tandem's
Trustees at a special meeting of stockholders of N'Tandem held on October 23,
1998 and, then again, at N'Tandem's 1999 annual meeting of stockholders held on
June 15, 1999. In accordance with N'Tandem's Declaration of Trust, two of the
appointed Trustees of N'Tandem are "independent trustees." An "independent
trustee" is a Trustee who is not affiliated, directly or indirectly, with
N'Tandem or an advisor of N'Tandem, whether by ownership of, ownership in,
employment by, or any material business or professional relationship with
18
<PAGE>
N'Tandem or such advisor or an affiliate of N'Tandem or such advisor, or by
virtue of serving as an officer or director of N'Tandem or any advisor or
affiliate of N'Tandem or such advisor. Since February 1997, Chateau has provided
property management services to N'Tandem and the Partnership, pursuant to a
management agreement between the Partnership and the Managing General Partner.
The total amount received by Chateau in respect of services rendered pursuant to
such management agreement was approximately $19,200 for the first nine months of
1999, approximately $33,500 in 1998 and approximately $32,300 in 1997.
Following the Windsor Acquisition, the General Partners began to
analyze the short-term and long-term business objectives of each of the Windsor
Limited Partnerships, including the Partnership. In connection with their
analysis, the General Partners reviewed each of the agreements of limited
partnership of the Windsor Limited Partnerships in order to ascertain, and to
factor into their analysis, the expiration date of the stated term of each
Windsor Limited Partnership. In addition, the General Partners also ordered
appraisals for each of the properties held by three of the five Windsor Limited
Partnerships, including the Partnership. As a result of their analysis, the
General Partners determined to develop a plan to liquidate Windsor 4 following
the expiration of its stated term in December 1997 as well as to begin
selectively marketing for sale several of the properties and partial ownership
interests held by the other Windsor Limited Partnerships.
The General Partners promptly began developing and implementing their
plan of liquidation for Windsor 4. In accordance with their plan of liquidation,
the General Partners (i) sold one of Windsor 4's wholly-owned properties in May
1998 to a third-party purchaser and (ii) in June 1999, following the
overwhelming approval by the limited partners of Windsor 4, completed a
transaction (the "Windsor 4 Transaction") in which Windsor 4 sold all of its
remaining assets to N'Tandem and, thereafter, made liquidating distributions to
its partners in accordance with the terms of its agreement of limited
partnership. The results of the General Partners' solicitation relating to the
Windsor 4 Transaction were as follows: (i) limited partners holding 155,757
units of limited partner interest in Windsor 4, representing 77.52% of all
issued and outstanding units, returned valid consent forms; (ii) limited
partners holding 93.58% of all units for which valid consent forms were received
consented to the sale of assets to N'Tandem; and (iii) limited partners holding
93.81% of all units for which valid consent forms were received consented to the
plan of liquidation for Windsor 4. Prior to its liquidation, Windsor 4 held
partial ownership interests in two Properties, the Rancho Margate and Winter
Haven Properties, in common with the Partnership and, like the Partnership, had
the General Partners as its sole general partners.
As part of its analysis of the Partnership following the Windsor
Acquisition, the General Partners ordered appraisals for the two properties
which were wholly-owned by the Partnership and the five manufactured home
communities in which the Partnership held Ownership Interests. The General
Partners received these appraisals in late 1997 and early 1998, which reported
on the appraised values of the wholly-owned and partially-owned properties held
by the Partnership. After reviewing the 1997 appraisals, the General Partners
developed a plan for the marketing for sale of the Circle K Property held by the
Partnership.
Beginning in the second quarter of 1998, the General Partners began to
market for sale the Partnership's Circle K Property to third parties. In this
regard, the General Partners directly tried to market the Circle K Property to
potential third-party purchasers known to the Managing General Partner to have
an interest in such property. As a result of such efforts, the General Partners
entered into a purchase and sale with Mathew N. Follett relating to the Circle K
Property and, in November 1998, closed on the sale of the Circle K Property for
$1,200,000.
19
<PAGE>
Upon completion of their marketing efforts with respect to the Circle K
Property, the General Partners began to explore possible strategic alternatives
for the Partnership with a view towards providing the Limited Partners with an
opportunity to achieve liquidity in their investment. Accordingly, in November
1998, the General Partners began to consider the possibility of merging the
Partnership, together with three of the other Windsor Limited Partnerships, into
N'Tandem. In the Proposed Consolidation, the Limited Partners would have
exchanged their Units for common shares of beneficial interest or other
securities in N'Tandem. In contemplation of the Proposed Consolidation, the
Managing General Partner (i) retained the Appraiser to render the Appraisals,
which updated the 1997 appraisals, with respect to the Partnership's Properties
and (ii) engaged Legg Mason to act as financial advisor to the Partnership and
the other Windsor Limited Partnerships and, if the Managing General Partner
elected to proceed with the Proposed Consolidation, to deliver a fairness
opinion with respect to the Proposed Consolidation. The General Partners
considered and actively pursued the Proposed Consolidation involving the
Partnership and the other three Windsor Limited Partnerships through August
1999. For a discussion of the Managing General Partner's analysis of the
Proposed Consolidation, see "SPECIAL FACTORS -- Alternatives Considered."
In September 1999, the General Partners concluded that in light of the
near-term expiration of the stated term of the Partnership the best course
action for the Partnership and its Limited Partners would be for the Partnership
to sell its remaining Properties to N'Tandem in a transaction similar to the one
that was completed with Windsor 4. The General Partners decided not to attempt
to market, the Partnership's remaining Properties for sales to parties other
than N'Tandem based, in part, on their belief that (i) the price offered to be
paid by N'Tandem for the wholly-owned Property, which is equal to the full
Appraised Value for such Property, would be greater than the price which would
be paid by any prospective third-party purchaser, given the General Partners'
previous experience in marketing manufactured home communities similar in nature
to those held by the Partnership and (ii) very limited demand for the Ownership
Interests exists and that any prospective third-party purchaser of these
interests would not be willing to pay the Partnership the price being offered by
N'Tandem for such interests, given that control and management of the underlying
properties and the power to sell or dispose of the underlying properties is
vested solely in the Managing General Partner, an affiliate of N'Tandem, and
that N'Tandem owns a 33% partial ownership interest in two of the underlying
properties.
In determining whether to pursue the Sales, the General Partners
analyzed various alternatives for the Partnership, including the Proposed
Consolidation, and the terms and provisions of the Sales. In connection with its
analysis of the Sales and Plan of Liquidation, the Managing General Partner, on
behalf of the Partnership, engaged Legg Mason to render the Fairness Opinion as
to the fairness, from a financial point of view, to the Limited Partners of the
aggregate purchase price to be paid by N'Tandem to the Partnership for the
Properties. On November 15, 1999, Legg Mason delivered its oral and written
Fairness Opinion to the Managing General Partner stating that the aggregate
purchase price to be paid by N'Tandem for the Properties was fair to the Limited
Partners from a financial point of view.
On May 10, 1999, Ira Gaines, a limited partner of Windsor 4, filed a
purported class action and derivative complaint (the "Complaint"), on behalf of
himself and other similarly situated limited partners, against the General
Partners, in their capacity as the general partners of Windsor 4, and the
Directors and the President of the Managing General Partner, in the Superior
Court of the State of California, County of San Diego. The Complaint asserts
causes of action arising out of the Windsor 4 Transaction and alleges the
following: (i) wrongful failure to liquidate timely Windsor 4 in that its term
expired on December 31, 1997 and to engage in sustained efforts to liquidate
Windsor 4's remaining properties, thus allegedly tying up the limited partners'
money for longer than was contemplated or allowed under the agreement of limited
partnership of Windsor 4, (ii) breach of fiduciary duty owed by the defendants
to Windsor 4 and its limited partners in that the defendants allegedly failed to
take steps to ensure the entire fairness of the transaction and that the selling
prices for Windsor 4's assets allegedly do not fairly and adequately
20
<PAGE>
represent their present value, and (iii) breach of the defendants' contractual
duties owed to Windsor 4 and its limited partners in that the agreement of
limited partnership of Windsor 4 prohibits sales of property to a Windsor 4
sponsor. In the Complaint, the plaintiff is seeking relief in the form of
monetary damages and an award of expenses and a dissolution of Windsor 4 and the
appointment of an independent liquidating trustee to liquidate Windsor 4's
assets. Although the Windsor 4 Transaction was overwhelmingly approved by the
limited partners of Windsor 4 and the assets of Windsor 4 have since been sold
to N'Tandem and liquidating distributions made to limited partners, the
Complaint is still pending. The General Partners dispute each claim set forth in
the Complaint and intend to defend the Complaint vigorously.
It is currently anticipated that the Sales will occur as soon as
practicable following the approval by Limited Partners of the Proposals. If
sufficient consents to proceed with the Proposals are not obtained, the General
Partners intend to explore, consider and pursue such alternatives as may be
available to the Partnership.
Information Concerning N'Tandem and Chateau
N'Tandem is an unincorporated California business trust with principal
executive offices at 6160 South Syracuse Way, Greenwood Village, Colorado 80111.
The principal business of N'Tandem is the acquisition, ownership and operation
of manufactured home communities. Chateau owns all of the capital stock of the
Managing General Partner and effectively controls N'Tandem through its 9.8%
equity ownership interest in N'Tandem and its representation on N'Tandem's Board
of Trustees. Gary P. McDaniel, the Chief Executive Officer of Chateau, is
Chairman, and one of three Trustees, of the Board of Trustees of N'Tandem.
Following the Sales, it is anticipated that Chateau will also hold approximately
$51.2 million of indebtedness in N'Tandem. Chateau's principal executive offices
are at 6160 South Syracuse Way, Greenwood Village, Colorado 80111. Chateau is
one of the largest publicly held real estate investment trusts principally
engaged in the acquisition, ownership and operation of manufactured home
communities and is one of the largest owner/operators of manufactured home
communities in the United States. The Managing General Partner, which is
wholly-owned by Chateau, is also the external investment advisor to N'Tandem.
Gary P. McDaniel, the Chief Executive Officer of Chateau, and Jeff Kellogg, the
President of Chateau, are the sole directors of the Managing General Partner.
Information concerning the Trustees of N'Tandem and the executive officers and
directors of Chateau and the Managing General Partner is set forth in Appendix B
to this Consent Solicitation Statement and is incorporated herein by reference.
The Purchase and Sale Agreement
General. The Purchase and Sale Agreement does not contain any seller
representations and warranties. As a result, following the closing of the Sales,
N'Tandem will have no recourse against the Partnership in connection with the
condition of, or other matters affecting, the Properties.
Purchase Prices. The following table sets forth information regarding
the Partnership's Properties and their respective values (based on the Appraised
Values), the discount being applied to the Ownership Interests, the debt
attributable to the Properties as of September 30, 1999, and the value of the
Properties after deducting attributable debt and applicable discount:
21
<PAGE>
<TABLE>
<CAPTION>
Debt
Value, Based on Discount on Attributable
% Date Appraised Value, Ownership as of
Name of Property Ownership Acquired Before Debt(1) Interests(1)(2) 9/30/99(1) Net Value(1)
- ------------------- ----------- ---------- ---------------- ---------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Chisholm Creek
Wichita, KS 100% 7/1989 $ 2,940,000 -- -- $2,940,000
Town & Country
Estates
Tucson, AZ 58% 1/1989 $ 3,132,000 $ 156,600 $ 899,000 $2,076,400
Carefree Village
Tampa, FL 44% 7/1990 $ 2,917,200 $ 291,700 $1,531,200 $1,094,300
Rancho Margate
Margate, FL 41% 9/1995 $ 2,624,000 $ 262,400 $1,313,100 $1,048,500
Winter Haven
Winter Haven, FL 41% 10/1995 $ 1,521,100 $ 152,100 $1,814,700 $ 554,300
Garden Walk
Palm Beach
Gardens, FL 31% 8/1995 $ 3,518,500 $ 351,900 $1,767,000 $1,399,600
----------- ---------- ---------- ----------
Total $16,652,800 $1,214,700 $6,325,000 $9,113,100
=========== ========== ========== ==========
</TABLE>
- --------------------------
(1) With respect to the five Ownership Interests, such amount represents the
Partnership's allocable share based upon its ownership percentage in the
underlying property.
(2) With respect to the five Ownership Interests, N'Tandem is applying (i) a 5%
discount for the fact that the Partnership only owns a majority interest in
the Town & Country Estates Property and (ii) a 10% discount for the fact
that the Partnership only owns a minority interest in the Carefree Village,
Rancho Margate, Winter Haven and Garden Walk Properties. For a discussion
of the discount being applied to the Ownership Interests, see "SPECIAL
FACTORS -- Discount for Ownership Interests in Properties."
N'Tandem has agreed to pay cash for the Properties. The aggregate
purchase price to be paid by N'Tandem for the Properties is expected to be
$15,438,100, which includes $9,113,100 to be paid in cash and $6,325,000
representing debt attributable to the Properties being assumed by N'Tandem. All
of the funds required by N'Tandem to complete the acquisition of the Properties
will be supplied by Chateau in exchange for the issuance by N'Tandem of an
unsecured promissory note (the "Promissory Note"). The Promissory Note will be
in a principal amount of $9,113,100, will bear interest at an annual rate equal
to 1% per annum above the prime rate established by Bank One, N.A. and will be
payable in full on March 31, 2001. Chateau and N'Tandem have discussed the
possibility of converting all or a portion of the principal amount of the
Promissory Note into common or preferred shares of beneficial interest of
N'Tandem. However, there is no agreement or understanding between Chateau and
N'Tandem relating to any such conversion.
Sales Expenses. The Partnership will pay certain closing costs
customarily paid by sellers in the respective jurisdictions in which the
Properties are located, including the seller's portion of title insurance and
escrow fees. There are no acquisition fees payable by the Partnership in
connection with the Sales.
Solicitation Expenses
The Partnership will bear the costs incurred in connection with this
Consent Solicitation.
Estimate of Liquidating Distributions Payable to Limited Partners
The following table sets forth the basis of the General Partners'
estimate of the liquidating distributions payable to Limited Partners. The table
assumes the Sales occurred as of September 30,
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<PAGE>
1999. The actual liquidating distributions will vary from the amount shown below
depending upon the operating results of the Properties, the level of
distributions, if any, to partners, capital expenditures for the Properties for
the period January 1, 1999 through the closing date, and the amount of closing
adjustments.
<TABLE>
<S> <C>
Aggregate Purchase Price for the Properties $ 15,438,100
Less: Outstanding Mortgage Indebtedness(1) $ (6,325,000)
Current Liabilities $ (113,000)
Estimated Transactional Expenses Payable by the Partnership(2)
Prepayment Penalties $ (63,300)
Legal Fees $ (200,000)
Accounting Fees $ (15,000)
Fairness Opinion $ (50,000)
Surveys $ (23,600)
Closing Costs $ (140,000)
Solicitation Expenses $ (25,000)
Printing Costs $ (25,000)
-------------
Total Estimated Transactional Expenses Payable by the Partnership $ (541,900)
=============
Plus: Cash, Cash Equivalents and Other Current Assets $ 350,400
-------------
Total Cash Available for Distribution $ 8,808,600
=============
Allocable to Limited Partners(3) $ 8,720,500
Allocable to the General Partners $ 88,100
Estimated Cash Available for Distribution per Unit(3) $ 30.42
</TABLE>
- -----------------------
(1) Based on amounts outstanding, including accrued interest, as of September
30, 1999, on debt attributable to the Ownership Interests.
(2) See "-- The Purchase and Sale Agreement -- Sales Expenses" and "--
Solicitation Expenses" above.
(3) Based on _______ Units outstanding as of the Record Date.
Since the organization of the Partnership, total distributions to
Limited Partners have amounted to approximately $27,988,100 (or an average of
approximately $97.42 per Unit). If the Sales are completed and the liquidating
distributions estimated above are paid to Limited Partners, total distributions
to Limited Partners will amount to approximately $36,708,600 (or approximately
$127.84 per Unit), compared to an initial purchase price for each Unit of
$100.00.
As the Partnership is not making any representations and warranties
under the Purchase and Sale Agreement, the General Partners do not intend to
reserve any funds out of the cash available for liquidating distributions to
fund contingent liabilities arising out of potential claims or litigation which
might arise after the Sales are consummated. The full amount of the net proceeds
from the Sales will be distributed to the partners of the Partnership as soon as
practicable following the closing.
Ownership of Properties by N'Tandem Following Sales
Following the consummation of the Sales, N'Tandem will be entitled to
all of the benefits of ownership of the Properties, including future cash flows,
earnings and increases in the values of the Properties, if any.
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<PAGE>
SPECIAL FACTORS
Fairness of the Proposed Transactions; Recommendation of the General Partners
The General Partners believe that the Sales and the Plan of Liquidation
are (i) consistent with the Original Objectives of the Partnership and (ii)
contemplated by the terms of the Partnership Agreement. In addition, the General
Partners believe that the terms of the Sales are fair, from a financial point of
view and from a procedural point of view, to the affiliated and unaffiliated
Limited Partners. Accordingly, the General Partners have approved the Sales and
the Plan of Liquidation and recommend their approval and adoption by the Limited
Partners.
In reaching the determination that the Sales and the Plan of
Liquidation are fair to the unaffiliated Limited Partners from a financial point
of view, the General Partners considered the following factors:
. N'Tandem is willing to purchase all of the Properties and is
paying the full Appraised Value for the one wholly-owned Property
and is only applying (i) a 5% discount to the Appraised Value of
the Ownership Interest in the Town & Country Estates for the fact
that the Partnership owns a majority interest in this property
and (ii) a 10% discount to the Appraised Value of the other four
Ownership Interests for the fact that the Partnership owns a
minority interest in the underlying properties. The General
Partners believe that the discount being applied in connection
with the Sales is substantially less than the 25% discount that,
in the opinion of the Appraiser, would have been applied had the
Ownership Interests been sold to a third-party purchaser. See "--
Discount for Ownership Interests in Properties";
. The aggregate net purchase price of $9,113,100 being paid by
N'Tandem exceeds the net book value of the Partnership's assets
of $6,473,200 as of September 30, 1999 by $2,639,900;
. Due to the familiarity of N'Tandem's external investment advisor
with the Properties, N'Tandem is willing to purchase the
Properties "as-is" and without representations and warranties
from the Partnership;
. Because N'Tandem is buying the Properties in a single transaction
and is buying such Properties without representations and
warranties from the Partnership, the General Partners will be
able to wind up the Partnership and make full liquidating
distributions promptly upon the approval of the Sales and the
Plan of Liquidation by the Limited Partners;
. The estimated net liquidating proceeds payable in connection with
the Sales ($30.42 per Unit) are higher than (i) the $25.00 per
Unit offered to Limited Partners on September 25, 1999 in
connection with a tender offer for up to 4.9% of the
Partnership's outstanding Units made by CMG Partners, LLC and
(ii) the weighted average trading price of $29.10 per Unit in the
secondary markets, as reported by The Partnership Spectrum, a
nationally recognized publication focusing exclusively on limited
partnerships, for the period of April 1, 1999 through July 31,
1999;
. The Sales do not involve any brokerage fees payable by the
Partnership, resulting in a savings to the Partnership estimated
to be between $463,000 and $926,000
24
<PAGE>
(based upon brokerage fees of 3% to 6% typically paid by sellers
of real properties); and
. Legg Mason has delivered the Fairness Opinion to the effect that
the aggregate purchase price to be paid to the Partnership is
fair, from a financial point of view, to the Limited Partners.
See "-- Fairness Opinion."
In reaching their determination that the Sales and the Plan of
Liquidation are fair from a financial point of view to the affiliated and
unaffiliated Limited Partners, the General Partners also considered the
following potentially negative aspects of the Sales:
. The purchase prices for the Properties are based upon independent
Appraisals rendered in August 1999 and September 1999 which have
not been updated and, thus, may not reflect the current fair
market values of the Properties;
. It is possible that the future performance of the Properties will
improve or that prospective third-party buyers may be willing to
pay more for the Properties in the future; and
. It is possible that Limited Partners might earn a higher return
on their investment if the Partnership extended its stated term
and retained ownership of the Properties. By approving the Sales
and the Plan of Liquidation, Limited Partners will also be
foregoing current benefits of the ownership of the Properties
such as continuing distributions.
The above described factors are all of the material factors considered
by the General Partners in determining that the Sales and the Plan of
Liquidation are fair to the affiliated and unaffiliated Limited Partners from a
financial point of view. In reaching their determination that the Sales and the
Plan of Liquidation are fair to the affiliated and unaffiliated Limited Partners
from a financial point of view, the General Partners did not assign relative
weights to the above factors or determine that any factor was of particular
importance; rather, the General Partners viewed the positive factors as a
totality and the negative factors as a totality and concluded that the positive
factors outweighed the negative factors. Accordingly, the General Partners
determined that the Sales and the Plan of Liquidation are fair to the affiliated
and unaffiliated Limited Partners from a financial point of view.
The General Partners also determined that the Sales and the Plan of
Liquidation are fair to the Limited Partners from a procedural point of view
based on the following factors:
. The Properties have been independently appraised by the
Appraiser;
. In assessing the discounts being applied to the Ownership
Interests by N'Tandem, the Managing General Partner had the
Appraiser, which concluded that in its estimation the application
of a discount of approximately 25% would be appropriate, analyze
the applicability of a discount in valuing a partial ownership
interest in a manufactured home community. See "-- Discount for
Ownership Interests in Properties";
. The Sales are subject to the approval of unaffiliated Limited
Partners holding not less than a majority of the issued and
outstanding Units; and
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. The Managing General Partner in connection with the Sales
retained Legg Mason to render its Fairness Opinion.
In reaching their determination that the Sales and the Plan of
Liquidation are fair from a procedural point of view to the affiliated and
unaffiliated Limited Partners, the General Partners also considered the
following potentially negative aspects of the Sales:
. The Sales were negotiated on behalf of the Partnership by the
Managing General Partner, which is under common control with
N'Tandem and is receiving substantial economic benefits from the
proposed transactions (including acquisition fees of $463,000
that are being paid by N'Tandem), and, accordingly, may be
subject to potential conflicts of interest;
. Gary P. McDaniel and C.G. Kellogg, the sole Directors of the
Managing General Partner, are the Chief Executive Officer and the
President, respectively, of Chateau and, as a result, the Sales
and the Plan of Liquidation have not been approved on behalf of
the Managing General Partner by directors who are not affiliated
with N'Tandem;
. No independent representatives or disinterested third party was
appointed or retained to negotiate the terms of the Sales on
behalf of the Partnership, or the unaffiliated Limited Partners
or to otherwise represent the interests of the unaffiliated
Limited Partners in connection with the Sales;
. The Appraisals were rendered in August 1999 and September 1999
and no updates or new appraisals have been or will be ordered in
connection with the Sales; and
. The General Partners have engaged in limited marketing efforts on
behalf of the Partnership with respect to the Properties, with
only one of the seven Properties held by the Partnership
immediately following the Windsor Acquisition having been
marketed for sale to third-party purchasers to date. The General
Partners do not intend to take significant actions to market or
sell the Properties pending the results of this Consent
Solicitation.
The above described factors are all of the material factors considered
by the General Partners in determining that the Sales and the Plan of
Liquidation are fair to the affiliated and unaffiliated Limited Partners from a
procedural point of view. In reaching their determination that the Sales and the
Plan of Liquidation are fair to the affiliated and unaffiliated Limited Partners
from a procedural point of view, the General Partners concluded that the
approval of the Proposals by a majority-in-interest of the unaffiliated Limited
Partners is sufficient to insure that procedural fairness has been preserved for
the Limited Partners. The General Partners also believe that the potentially
negative factors influencing procedural fairness were in each case mitigated by
the following other factors or considerations: (i) although the Managing General
Partner and N'Tandem are under common control, the General Partners concluded
that the common control (a) did not adversely affect the terms of the Sales for
Limited Partners and (b) allowed N'Tandem to offer terms of the Sales that they
believed would not be available from third parties; (ii) although no independent
or disinterested third party was appointed to represent the Limited Partners in
connection with, or to negotiate the terms of, the Sales, the Managing General
Partner did retain Legg Mason to assess the fairness of the aggregate purchase
price to be paid to the Partnership in the Sales; (iii) even though the
Appraisals were rendered in August 1999 and September 1999, the General Partners
believe that no material changes have occurred in the Properties or in the
conditions of the market for
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manufactured home communities since those dates that would result in higher
values for the Properties; and (iv) the General Partner's belief that marketing
the Properties held by the Partnership would not have provided a better
transaction for the Limited Partners and would have ultimately delayed the
timing of the Sales and the distribution of liquidating proceeds to the Limited
Partners.
Fairness Opinion
The Managing General Partner, on behalf of the Partnership, engaged
Legg Mason to render the Fairness Opinion as to the fairness, from a financial
point of view, to the Limited Partners of the aggregate purchase price to be
paid by N'Tandem to the Partnership for the Properties. Legg Mason delivered its
oral and written Fairness Opinion to the Managing General Partner on November
15, 1999. A copy of the Fairness Opinion, setting forth the matters considered,
procedures followed and the scope of review by Legg Mason, is set forth in
Appendix A to this Consent Solicitation Statement and is incorporated herein by
reference. Limited Partners are urged to read the Fairness Opinion in its
entirety.
The Managing General Partner selected Legg Mason based upon Legg
Mason's experience and reputation and the fee charged for its services. Legg
Mason, as a part of its investment banking business, is regularly engaged in the
valuation of businesses and securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes.
Legg Mason was initially engaged by the Managing General Partner to
render a fairness opinion with respect to the Proposed Consolidation; however,
because the General Partners determined to proceed with the Sales and Plan of
Liquidation, no fairness opinion was ever rendered with respect to the Proposed
Consolidation. Neither of the General Partners nor any of their affiliates have
any material relationship with Legg Mason.
In arriving at its Fairness Opinion and the basis therefor, Legg Mason,
among other things, reviewed:
(i) the management agreement between the Partnership and the
Managing General Partner and other agreements pertaining
to the operation and management of the Properties;
(ii) the Partnership Agreement of the Partnership;
(iii) the financial statements and the related filings of the
Partnership on Form 10-K for the year ended December 31,
1998 and Form 10-Q for the six months ended June 30, 1999;
(iv) certain market and economic data applicable to the Sales;
(v) an analysis of comparable publicly traded real estate
investment trusts;
(vi) a draft of this Consent Solicitation Statement;
(vii) certain financial and other information relating to the
Partnership and the Properties that was furnished to Legg
Mason by the Managing General Partner, including certain
internal financial analyses, financial and operating
forecasts and reports and other information prepared by
the Managing General Partner or its representatives; and
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(viii) the Appraisals of the Properties prepared by the
Appraiser.
Legg Mason also visited a number of the Properties and held discussions
with various members of management and representatives of the Managing General
Partner concerning the Properties' historical and current operations, financial
condition and prospects. In addition, Legg Mason conducted such other
investigations, financial analyses and studies and reviewed such other
information and factors as it deemed appropriate for the purposes of its
Fairness Opinion. In connection with this engagement, Legg Mason was not asked
to, and did not, advise the Managing General Partner or the Partnership with
respect to the determination of the aggregate purchase price for the Properties,
make any recommendations to the Managing General Partner or the Partnership with
respect to the proposed Sales or Plan of Liquidation, assess any alternatives to
the Proposals or make any recommendation as to how Limited Partners should vote
on the Proposals. In addition, Legg Mason was not asked to solicit, and did not
solicit, third party indications of interest from any party with respect to an
acquisition of the Units, the Properties or any part thereof. Legg Mason did
also note that the Managing General Partner is owned by Chateau, the parent
company of N'Tandem.
In rendering its Fairness Opinion, Legg Mason relied, without assuming
responsibility for independent verification, on the accuracy and completeness of
all financial and operating data, financial analyses, financial and operating
forecasts, reports and other information that were publicly available or
furnished or otherwise communicated to Legg Mason by or on behalf of the
Managing General Partner. With respect to forecasts regarding the Properties'
future financial condition and operating results, Legg Mason assumed, without
taking any responsibility for independent verification, that such forecasts were
reasonably prepared on bases reflecting the best currently available
information, estimates and judgment of the Managing General Partner. Legg Mason
also assumed that the Appraisals were reasonably prepared by the Appraiser and
reflected the good faith judgments of the Appraiser and did not take any
responsibility for their accuracy or completeness. Legg Mason did not make an
independent appraisal of the assets or liabilities (contingent or otherwise) of
the Partnership. No limitations were imposed by the Managing General Partner on
Legg Mason with respect to the investigation made or procedures followed by Legg
Mason. Legg Mason also assumed that the allocation of consideration provided by
the Managing General Partner between the General Partners and the Limited
Partners has been determined in accordance with, and complies with the terms and
conditions of, the Partnership Agreement. Furthermore, Legg Mason did not opine
to the fairness of the allocation of consideration between the General Partners
and Limited Partners.
The following paragraphs summarize the significant quantitative and
qualitative analyses performed by Legg Mason in arriving at its Fairness
Opinion. Legg Mason considered all such quantitative and qualitative analyses in
connection with its valuation analysis, and no one method of analysis was given
particular emphasis.
Valuation of the Partnership
Liquidation Analysis. Legg Mason estimated the liquidation value of the
--------------------
Partnership assuming that the Partnership sold the Properties, as stand alone
assets, to third-party purchasers and liquidated the Partnership on December 31,
1999. In estimating the liquidation value of the Units, Legg Mason first
calculated the net equity value for each of the Properties by (i) subtracting
from each Property's Appraised Value the amount of indebtedness attributable to
such Property and (ii) in the case of the Ownership Interests, applying a 5% or
10% discount, as the case may be, to the Appraised Value attributable to the
Ownership Interests to account for the fact that the Partnership owns either a
majority or minority interest in the underlying property. Legg Mason then
adjusted the aggregate net equity value of the Properties by (i) subtracting the
estimated liquidation costs associated with selling the Properties, (ii) adding
the net assets of the Partnership, and (iii) subtracting 1% of the remaining net
equity value to
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<PAGE>
reflect the General Partners' interest in the Partnership. Legg Mason then
divided the remaining net equity value by the number of Units outstanding in
order to arrive at a liquidation equity value for each Unit. Legg Mason's
analysis indicated a liquidation equity value of $29.48 per Unit and Legg Mason
noted that the aggregate consideration offered by N'Tandem for the Properties
and the net current assets on a per Unit basis was $30.42. Legg Mason believed
that its liquidation analysis supported its fairness determination because the
aggregate net purchase price offered by N'Tandem on a per Unit basis was in
excess of the liquidation value indicated by such analysis.
In making its assessment of the liquidation value, Legg Mason relied,
without independent verification of the accuracy, on the Appraised Value in the
Appraisal as provided by the Appraiser. In addition, Legg Mason's estimated
liquidation costs associated with selling the Properties did not include general
and administrative expenses of the Partnership during the liquidation period,
liquidation costs associated with a prolonged marketing period or the time value
of the proceeds from the sale of the Properties.
Comparable Company Analysis. Legg Mason employed a comparable company
---------------------------
analysis to establish an implied equity value for the Units. Legg Mason reviewed
and compared financial information for the following publicly traded real estate
investment trusts: Chateau, Manufactured Home Communities, Inc., Sun
Communities, Inc., United Mobile Homes, Inc. and Assets Investors Corporation
(the "Comparable Companies"). All of the trading multiples of the Comparable
Companies were based on the closing stock prices on November 11, 1999 and all
funds from operations ("FFO") per share estimates were based on information
published by First Call Corporation. The estimates published by First Call
Corporation were not prepared in connection with the Sales or at the request of
Legg Mason. Legg Mason noted that certain factors differentiated the Partnership
from the Comparable Companies, including (i) the absence of an actively traded
public market for the Units, (ii) the fact that the Partnership is externally
managed and advised, (iii) the fact that the Partnership owns a minority
interest in certain of the underlying properties, and (iv) certain other
economic and general market data that Legg Mason deemed appropriate. To reflect
these factors, Legg Mason deemed it appropriate to discount the Comparable
Companies' trading multiples by 20%. In order to derive an implied equity value
for the Units, Legg Mason deducted 1% from the implied equity value of the
Partnership to reflect General Partners' interest in the Partnership.
Based on its review, Legg Mason observed that the discounted trading
multiples for the Comparable Companies (i) ranged from 6.7x to 8.8x for the 1999
FFO per share estimates, (ii) ranged from 5,8x to 8.3x for the 2000 FFO per
share estimates and (iii) ranged from 8.5x to 9.6x for the trailing twelve
months earnings before interest, taxes, depreciation and amortization per share
estimates ("EBITDA"). Based on the Managing General Partner's estimates of the
Partnership's 1999 and 2000 FFO, including potential cost savings and
operational efficiencies associated with general and administrative cost
reductions and the addition of the net assets of the Partnership and the
subtraction of the estimated transaction costs, and the range of discounted
trading multiples for the Comparable Companies of 6.7x to 8.8x and 5.8x to 8.3x,
respectively, for 1999 and 2000, Legg Mason's analysis indicated an implied
value range per Unit of $28.43 to $21.57 based on 1999 FFO multiples and $27.70
to $19.42 based on 2000 FFO multiples. In addition, based on the Managing
General Partner's estimate of the Partnership's trailing twelve months EBITDA,
including potential cost savings and operational efficiencies associated with
general and administrative cost reductions and the addition of the net assets of
the Partnership and the subtraction of the estimated transaction costs and the
range of discounted trading multiples for the Comparable Companies of 8.5x to
9.6x, Legg Mason's analysis indicated an implied value range per Unit of $27.44
to $21.96. Legg Mason believed that its comparable company analysis supported
its fairness determination because the aggregate net purchase price offered by
N'Tandem on a per Unit basis was in excess of the high end of the range for each
of the implied equity values of the Units indicated by such analysis.
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<PAGE>
Discounted Cash Flow Analysis. Legg Mason estimated the continuation
-----------------------------
equity value of the Units assuming that the term of the Partnership was extended
and the Properties were held by the Partnership until December 31, 2004. Legg
Mason performed a discounted cash flow analysis (i.e., an analysis utilizing a
range of discount rates) of (i) the present value of the forecasted cash flows
from the Properties' future operations and (ii) the present value of the
forecasted proceeds of a sale of the Properties, on an aggregate basis, less the
General Partners' 1% interest in the Partnership, assuming a sale to third-party
purchasers at the conclusion of the forecast period. In completing its analysis,
Legg Mason utilized the financial and operating forecasts of the Partnership's
cash flow to equity for the forecasted period of January 1, 2000 to December 31,
2004 provided by the Managing General Partner and applied discount rates of
14.4% to 17.0% to the forecasted equity cash flows and the forecasted residual
equity value. Forecasted residual equity value was based upon applying the
Comparable Companies' discounted trading multiples of 7.1x to 8.8x for the
trailing twelve months to the Partnership's forecasted FFO for the year 2004,
plus the net assets of the Partnership and less the estimated transaction costs.
Legg Mason's analysis indicated a range of continuation equity values based upon
the discounted cash flow and discounted residual equity value of $30.14 to
$23.77 per Unit. Legg Mason believed that its continuation analysis supported
its fairness determination because the aggregate net purchase price offered by
N'Tandem was in excess of the high end of the range of implied equity values of
the Units indicated by such analysis.
The preparation of a fairness opinion involves various determinations
as to the most appropriate and relevant quantitative and qualitative methods of
financial analyses and the application of those methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to
partial analyses or summary description. Accordingly, Legg Mason believes that
its analyses must be considered as a whole and that considering any portion of
such analyses and of the factors considered, without considering all analyses
and factors, could create a misleading or incomplete view of the process
underlying its opinion. The analyses underlying the Fairness Opinion were based
on information, other than the share prices of the Comparable Companies,
available as of June 30, 1999. Any estimates contained in these analyses are not
necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than the values
developed by Legg Mason. In addition, analyses relating to the value of the
Properties do not purport to be appraisals or to reflect the prices at which the
Properties may actually be sold. The Fairness Opinion is based on conditions as
of its date and, although subsequent developments could have a material effect
on the opinion stated, the Fairness Opinion will not be updated.
A copy of the Fairness Opinion is set forth in Appendix A to this
Consent Solicitation Statement and is available for inspection and copying at
the Partnership's principal executive offices during regular business hours by
any interested Limited Partner or any representative of a Limited Partner who
has been designated by a Limited Partner in writing. Copies may also be obtained
through the written request of any Limited Partner made to the Managing General
Partner at 6160 South Syracuse Way, Greenwood Village, Colorado 80111.
As compensation for rendering its Fairness Opinion to the Partnership,
Legg Mason received a fee of $50,000.
Alternatives Considered
In addition to considering the Sales and the Plan of Liquidation, the
General Partners also identified other alternative courses of action for the
Partnership, including the following:
Continuation of the Partnership. The General Partners did not consider
extending the stated term of the Partnership, which would have required the
consent of the holders of a majority of the issued
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<PAGE>
and outstanding Units. The reason this option was not considered was that the
Managing General Partner believes that Limited Partners desire to achieve the
near-term liquidation of their investments in the Partnership. This belief is
based on certain discussions between the Managing General Partner and several of
the Limited Partners and the Managing General Partner's observation that most
Limited Partners have held their investments in the Partnership for more than
ten years. In addition, the Managing General Partner believes that continuing to
own and operate the Properties is not in the best interests of the Partnership
and its Limited Partners, especially in view of the opportunity to sell the
Properties to N'Tandem on the terms outlined herein. Additionally, while
extending the term of the Partnership would have resulted in the Limited
Partners receiving the benefits of continued ownership of the Properties, would
have also remained subject to the risks of continuing such ownership and the
Limited Partners would continue to be unable to liquidate their investments at
fair value since no formal trading market for the Units exists.
Sale of the Properties to Third-Party Purchasers. While the General
Partners did consider the possibility of selling the Properties to purchasers
other than N'Tandem, the General Partners ultimately concluded that such sale of
the Properties would not be likely to result in the distribution of greater
liquidating proceeds to the Limited Partners than the amounts being distributed
in connection with the Sales and the Plan of Liquidation. The principal reasons
for this conclusion are that the Managing General Partner believes that (i) the
Appraisals continue to reflect the fair market values of the Properties, (ii)
the Limited Partners would receive greater liquidating proceeds in a third-party
transaction only if such third party was willing to pay in excess of the
purchase prices for the Properties being paid by N'Tandem, something the General
Partners believe few, if any, third-party purchasers would be willing to do,
especially with respect to the partial Ownership Interests, (iii) the Ownership
Interests representing minority interests in the underlying properties would
have the effect of deterring potential third-party purchasers because of their
minority status, and (iv) the expenses of the Sales are lower than they would be
in connection with the sale of the Properties to an unaffiliated third-party
purchaser (principally due to the fact that no brokerage commissions are being
paid by the Partnership in connection with the Sales, which results in estimated
savings of between $463,000 and $926,000 based upon prevailing commission
rates). With respect to the Managing General Partner's belief that the
Appraisals continue to reflect the fair market value of the Properties, even
though the Appraisals were rendered in August 1999 and September 1999, it is
noted that the Managing General Partner (i) does not believe that any
significant events have occurred since that time which would cause the
conclusions reached in the Appraisals, including the Appraised Values, to be
different had the Appraisals been rendered as of a more recent date and (ii) is
not aware of any material developments, trends or other uncertainties that
relate to the conclusions expressed in the Appraisals, or that are reasonably
likely to materially affect such conclusions.
While the General Partners do not believe, at this time, that the sale
of the Properties to a third-party purchaser would be more beneficial to the
Partnership and the Limited Partners than the Sales and Plan of Liquidation
proposed herein, the General Partners do recognize that a third-party purchaser
could propose a superior or competing offer to that proposed by N'Tandem during
the course of this Consent Solicitation and will not allow this Consent
Solicitation to preclude the Partnership from entertaining such a transaction
should one emerge prior to the end of the solicitation period for this Consent
Solicitation.
Proposed Consolidation. The General Partners also considered and
analyzed the Proposed Consolidation in which the Partnership, together with
three of the other Windsor Limited Partnerships, would have been merged with and
into N'Tandem. In the Proposed Consolidation, the Limited Partners would have
had the right to exchange their Units for common shares of beneficial interest
or other securities of N'Tandem.
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As part of its analysis of the Proposed Consolidation, the Managing
General Partner compared the estimated price per Unit of approximately $30.42
expected to be paid by N'Tandem in the Sales to the estimated range of values
per Unit expected to be received upon completion of the Proposed Consolidation
assuming that the Units were converted into N'Tandem's common shares of
beneficial interest. The Managing General Partner's analysis indicated that the
estimated range of values per Unit following the Proposed Consolidation was
$27.45 to $30.50.
In preparing its consolidation analysis, the Managing General Partner
applied the forecasted funds from operations per share of N'Tandem for the year
2000, which assumed completion of the Proposed Consolidation, to a range of
forecasted funds from operations per share multiples for the Comparative
Companies for the year 2000. The Comparative Companies selected by the Managing
General Partner were: Chateau, Manufactured Home Communities, Inc., Sun
Communities, Inc., United Mobile Homes, Inc. and Asset Investors Corporation. By
applying the forecasted funds from operations per share of N'Tandem for the year
2000 to a range of forecasted funds from operations per share multiples for the
Comparative Companies, the Managing General Partner was able to estimate ranges
of values for N'Tandem's common shares following the completion of the Proposed
Consolidation. The Managing General Partner determined the range of forecasted
funds from operations per share multiples for the Comparative Companies by
applying a discount, which ranged from 0% to 10%, to the multiples of the
Comparative Companies in order to account for the difference in N'Tandem's size,
percentage of leverage and operational history as compared to the Comparative
Companies. The Managing General Partner then multiplied these estimated ranges
by the exchange ratio per Unit for each Windsor Limited Partnership
participating in the Proposed Consolidation to determine the estimated value of
the Units assuming they were converted into N'Tandem's common shares.
In analyzing of the Proposed Consolidation, the Managing General
Partner also considered that (i) the anticipated time period for the completion
of the Proposed Consolidation was likely to be quite lengthy and would more than
likely close well after both the expiration date of the Partnership's stated
term and the completion of the Sales and (ii) the estimate of the value of the
Units assuming their conversion into N'Tandem's common shares in the Proposed
Consolidation was not based on any established trading price for the common
shares, but was instead based on an analysis of the Comparative Companies that
sought to anticipate the market price of N'Tandem's common shares following the
Proposed Consolidation by reference to the current trading prices of the
securities of the Comparative Companies.
In assessing the Proposed Consolidation described above, the Managing
General Partner recognized that the valuation estimates used in its analysis are
subject to significant uncertainties, variables and assumptions, as well as
varying market conditions, and no assurance can be given that the estimated
values indicated could ever be realized. The analysis relating to the Proposed
Consolidation was based on information available as of October 15, 1999. The
General Partners do not anticipate updating the analyses or other information
relating to the foregoing alternatives. In addition, N'Tandem and the Managing
General Partner did not consider any other alternative ways to acquire the
Properties from the Partnership, due to their belief that the holders of a
majority of Units desire to achieve near-term liquidation of their investments
in the Partnership.
N'Tandem's and Chateau's Belief as to the Fairness of the Proposed Transactions;
N'Tandem's and Chateau's Reasons for Engaging in the Proposed Transactions
N'Tandem and Chateau believe that the Sales are fair to the affiliated
and unaffiliated Limited Partners from both a financial point of view and a
procedural point of view. In reaching such determination, N'Tandem and Chateau
considered the same factors and positive and negative aspects of the Sales as
were considered by the General Partners, as described above under "-- Fairness
of the
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<PAGE>
Proposed Transactions; Recommendation of the General Partners" and have
specifically adopted the analyses and conclusions of the General Partners
described therein.
In October 1998, N'Tandem amended and restated N'Tandem's Declaration
of Trust and By-laws to convert N'Tandem from a finite-life entity to an
infinite-life entity in order to enable it to begin implementing a
growth-oriented business plan intended to cause N'Tandem to attain greater size
and asset diversity. The acquisition by N'Tandem of the Properties is being
engaged in by N'Tandem as part of such growth-oriented business plan.
Appraisals
Overview of Appraisals. The Appraiser, Whitcomb Real Estate, Inc.
located in Tampa, Florida, was retained by the Managing General Partner to
render the Appraisals with respect to the Partnership's Properties. The
Appraiser is certified as a Master Appraiser by the Appraisal Institute and was
selected based upon its expertise as well as its familiarity with valuing real
estate underlying manufactured home communities. The Appraisals set forth the
Appraised Values of the one wholly-owned Property and the five manufactured home
communities in which the Partnership holds Ownership Interests as of various
dates in August 1999 and September 1999.
The purpose of the Appraisals was, and the Appraiser was instructed by
the Managing General Partner, to determine the fair market value of each
Property. In connection with the Appraisals, no fair market values or value
ranges were suggested by the Managing General Partner. Each of the Properties
was appraised in accordance with the Uniform Standards of Professional Appraisal
Practice. Only one Appraisal was sought with respect to each Property. If more
than one appraisal had been sought with respect to each Property, the values
determined for the Properties might have been higher or lower than the Appraised
Values determined by the Appraiser.
In conducting the Appraisals, the Appraiser utilized two approaches,
the income capitalization approach and the sales comparison approach. In the
income capitalization approach, an appraiser calculates an estimate of net
operating income for the subject property ("NOI"). The appraiser then determines
an appropriate capitalization rate for the subject property based upon
capitalization rates for comparable properties sold in the same geographic area
as the subject property. The appraised value of the subject property is then
determined by the appraiser by dividing the NOI by the appropriate
capitalization rate. In utilizing the sales comparison approach, an appraiser
determines the market value of the subject property by comparing such property
against other properties deemed comparable to the subject property and sold
within a specified time period and then adjusting the market value of the
comparable properties to account for material differences between the subject
property and the comparable properties.
The Appraisals were rendered in August 1999 and September 1999 and,
therefore, may no longer reflect the fair market values of the Properties.
Accordingly, the value of the Properties may have increased since that time.
However, the Managing General Partner (i) does not believe that any significant
events have occurred since that time which would cause the conclusions reached
by the Appraiser in the Appraisals and the Appraised Values to be different had
the Appraisals been rendered as of a more recent date, (ii) is not aware of any
material developments, trends or other uncertainties that relate to the
conclusions expressed in the Appraisals or that are reasonably likely to
materially affect such conclusions, and (iii) does not intend to update the
Appraisals or order new appraisals for the Properties in connection with the
Sales.
The Appraisals have been based in part upon information supplied to the
Appraiser by the Managing General Partner, including, but not limited to: rent
rolls; building reports; lease information;
33
<PAGE>
financial schedules of current lease rates, income, expenses, cash flow and
related financial information; and property descriptive information. The
Appraiser relied upon such information and assumed that the information provided
by the Managing General Partner was accurate and complete and generally did not
attempt to independently verify such information. The Appraiser also interviewed
and relied upon the Managing General Partner to obtain information relating to
the condition of each Property, including any deferred maintenance, capital
budgets, environmental conditions, status of ongoing or newly planned
expansions, and other factors affecting the physical condition of the Property
improvements. The Appraiser also interviewed the Managing General Partner's
management personnel regarding competitive conditions in property markets,
trends affecting the Properties, certain lease and financing factors, and
historical and anticipated lease revenues and expenses and reviewed historical
operating statements for the Properties.
Copies of the Appraisals are filed as exhibits to the Schedule 13E-3
and are available for inspection and copying at the Partnership's principal
executive offices during regular business hours by any interested Limited
Partner or any representative of a Limited Partner who has been designated by a
Limited Partner in writing. Copies may also be obtained through the written
request of any Limited Partner made to the Managing General Partner at 6160
South Syracuse Way, Greenwood Village, Colorado 80111.
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The Appraiser and its Methodology.
Information with respect to Whitcomb Real Estate, Inc. The Appraiser
-----------------------------------------------------
was founded in 1986, and currently has four full-time appraisers on its staff.
Each of the Properties was appraised by John Whitcomb, the President of the
Appraiser. Mr. Whitcomb is certified as a Master Appraiser by the Appraisal
Institute, is a Certified Commercial Investment Member, has been in the real
estate appraisal business since 1985, and has conducted in excess of a thousand
property appraisals since that time. Mr. Whitcomb has extensive experience
appraising manufactured home communities, having conducted in excess of 250 such
appraisals since 1993. The Managing General Partner previously engaged the
Appraiser to render additional or updated appraisals, in addition to the
Appraisals, on several properties in which the Windsor Limited Partnerships
currently hold, or have in the past held, interests, including the Winter Haven
and Rancho Margate Properties. The Appraiser was paid usual and customary market
based fees in connection with its appraisals. Neither of the General Partners
nor any of their affiliates have any material relationship with the Appraiser.
The Appraiser received $17,500 in connection with rendering the Appraisals.
Total fees and compensation paid to the Appraiser by the Partnership, the
General Partners, and their respective affiliates since January 1, 1997 has been
$104,600. No additional compensation is mutually understood to be contemplated
to be paid to the Appraiser in connection with the Appraisals or otherwise.
Assumption and Limitations of the Whitcomb Appraisals. Each of the
-----------------------------------------------------
Appraisals were based upon assumptions and limiting conditions, including the
following: (i) that the factual information contained in each Appraisal upon
which the analysis and conclusions are based was true and correct; (ii) that the
information, estimates and opinions furnished to the Appraiser in connection
with the Appraisals were true and correct; (iii) each Property was appraised as
though it were free and clear of mortgages, liens, leases, servitudes and
encumbrances, except as identified in the Appraisals; (iv) that each Appraisal
applies to the real estate only and does not include personal property or other
non-realty items located at or on the Property; (v) that there is good and
marketable title to the Property; (vi) that the Property is free of
encroachments and zoning or other violations or problems; (vii) that management
of the Property is competent; (viii) that there are no material hidden or
unapparent problems of the soil, subsoil or structures of the Property; (ix)
that all of the improvements, equipment, and building services are structurally
sound and suffer no latent defects or inadequacies; (x) that the subject
improvements are free of insect infestation or rot or damage due to such
infestation or rot; (xi) that there are no environmental problems with respect
to the Property or its improvements; (xii) that no adverse events, conditions or
circumstances materially affecting the Property have taken place subsequent to
the date of the field inspection; and (xiii) that there have been no material
changes in economic conditions affecting the Property following the date of the
Appraisal.
The Appraiser also noted that (i) the estimates of value stated in the
Appraisals apply only to the effective dates of value stated in the Appraisals,
(ii) value is affected by many related and unrelated economic conditions within
a local, regional, national and/or worldwide context, which might necessarily
affect the prospective value of the subject property, (iii) the Appraiser
assumes no liability for any unforeseen changes in the economy or at the subject
property, (iv) the underlying assumptions and conditions provide a reasonable
basis for the value estimate stated in the Appraisals, (v) some assumptions or
projections inevitably will not materialize and unanticipated events and
circumstances may occur during the forecast period, and (vi) the actual results
achieved during the projected holding period and investor requirements relative
to anticipated annual returns and overall yields could vary from the projection
and that such variations could be material and have an impact on the individual
value conclusions stated in the Appraisals.
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Summary of Appraisals. A summary description of the Appraisals,
including the Appraised Values of the Properties, is set forth below. The
Appraisals are based on conditions as of their respective dates. Subsequent
developments could have a material effect on the valuations stated therein.
Summary of Town & Country Estates Property Appraisal. In utilizing the
----------------------------------------------------
income capitalization approach in connection with appraising the Town & Country
Estates Property, the Appraiser first projected 12 months of income for the
Property based upon the then current rent levels. The potential gross income
from the rentals was calculated at $913,920 per year. Vacancy and credit loss
was estimated at 5% of potential gross income, or $45,696. Additional income,
based on historical numbers, was calculated at $30.00 per site, leaving an
effective gross income estimate of $877,824 for the Property. Total annual
operating expenses for the Property were estimated to be $363,092, leaving NOI
of $514,732. In determining a capitalization rate for the Town & Country Estates
Property, the Appraiser looked at capitalization rates for recently sold
comparable communities, which ranged from 8.22% to 10.30%. Based on the market
data, the Appraiser determined that a capitalization rate of 9.5% for the
Property was appropriate. Utilizing the 9.5% capitalization rate, the Appraiser
was able to calculate a market value for the Town & Country Estates Property of
$5,400,000. The Appraiser also performed a debt coverage ratio analysis, which
yielded a capitalization rate equal to approximately 9.4%, to verify the
accuracy of the utilized capitalization rate.
In utilizing the sales comparison approach in connection with
appraising the Town & Country Estates Property, the Appraiser compared the
Property to five other manufactured home communities sold in the same general
geographic area as the Property within the nine-month period prior to the date
of the Appraisal. The sales prices of the five comparable properties ranged from
a low of $1,675,000 to a high of $9,500,000. Total sites ranged from 75 to 451
and occupancy ranged from 93% to 100%. The average price per site ranged from
$16,262 to $22,467 and the average site rent ranged from $140.00 to $250.00. All
of the comparable sales were fee simple transactions with typical acquisition
financing. There were no atypical sale conditions known to have occurred and all
of the sales represented transactions that took place in the nine-month period
prior to the date of the Appraisal and traded under similar market conditions.
The Appraiser also employed the effective gross income multiplier
("EGIM") in the sales comparison analysis. In applying the EGIM analysis, the
Appraiser determined that (i) the EGIM for the comparable sale properties ranged
from 6.32 to 7.22, (ii) the EGIM was essentially a function of the average site
rent, (iii) average site rent reflects, in most cases, the market perception of
a property's position in the marketplace, (iv) typically, increases in site rent
contribute to increases in NOI, (v) average site rent is a function of the
physical aspects of the property, such as age and condition, location and
amenities, and (vi) the EGIM also reflects the market's perception of the
potential for future rent increases.
The Appraiser also noted that (i) the Property is an all age community
with a 1.2% physical vacancy, (ii) the Property was observed to be in good
condition and with a good location near Interstate 10 and Valencia Road in
Southeast Tucson, Arizona, and (iii) all the comparables had a lower expense
ratio than the Property, ranging from 29.5% to 35.0%. By comparison, the
Property has a forecast expense ratio of 41.36%. Based on these considerations,
the Appraiser concluded that an EGIM of 6.3, which was at the lower end of the
indicated range for the comparable properties, was appropriate for the Property.
Based upon the Property's effective gross income of $877,824 and an EGIM of 6.3,
the Appraiser calculated the market value of the Property to be $5,500,000,
representing $17,188 per site.
In reconciling the income capitalization approach and the sales
comparison approach, the Appraiser (i) reviewed each approach to ascertain the
reliability of the data, (ii) weighted the approach that best represented the
actions of typical users and investors in the marketplace, (iii) determined that
in
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the current instance, the availability of sufficient, reliable and supportable
historical data for the Property made the income capitalization approach a
reliable gauge of the market value of the Property, (iv) determined that the
sales comparison approach was reliable, (v) determined that the two approaches
reflected a narrow range of value, (vi) determined that the opinion of value
should be based on the income capitalization approach because buyers are most
concerned with cash flow to service debt, and (vii) concluded that the market
value of the Property, based on a reasonable exposure period of six months, as
of September 1, 1999, was $5,400,000.
Summary of Chisholm Creek Property Appraisal. In utilizing the income
-------------------------------------------
capitalization approach in connection with appraising the Chisholm Creek
Property, the Appraiser first projected 12 months of income for the Property
based upon the then current rent levels. The potential gross income from the
rentals was calculated at $513,744 per year. Vacancy and credit loss was
estimated at 5% of potential gross income, or $25,687. Additional income, based
on historical numbers, was calculated at $55.00 per site, leaving an effective
gross income estimate of $519,400 for the Property. Total annual operating
expenses for the Property were estimated to be $225,498 leaving NOI of $293,903.
In determining a capitalization rate for the Chisholm Creek Property, the
Appraiser looked at capitalization rates for recently sold comparable
communities, which ranged from 8.90% to 12.23%. The Appraiser noted that the
Property has a market vacancy and expense ratio. Based on the market data, the
Appraiser determined that a capitalization rate of 10% for the Property was
appropriate. Utilizing the 10% capitalization rate, the Appraiser was able to
calculate a market value for the Chisholm Creek Property of $2,940,000. The
Appraiser also performed a debt coverage ratio analysis, which yielded a
capitalization rate equal to approximately 9.5%, to verify the accuracy of the
utilized capitalization rate.
In utilizing the sales comparison approach in connection with
appraising the Chisholm Creek Property, the Appraiser compared the Property to
five other manufactured home communities sold in the same general geographic
area as the Property within the nine-month period prior to the date of the
Appraisal. The sales prices of the five comparable properties ranged from a low
of $1,880,000 to a high of $4,417,900. Total sites ranged from 160 to 441 and
occupancy ranged from 77% to 99.3%. The average price per sites ranged from
$7,236 to $12,635 and average site rent ranged from $145.00 to $200.00. All of
the sales were fee simple transactions with typical acquisition financing. There
were no atypical sale conditions known to have occurred and all of the sales
represented transactions that took place in the nine-month period prior to the
date of the Appraisal, and traded under similar market conditions.
The Appraiser also employed the EGIM in the sales comparison analysis.
In applying the EGIM analysis, the Appraiser determined that (i) the EGIM for
the comparable sale properties ranged from 4.23 to 6.66, (ii) that EGIM was
essentially a function of the average site rent, (iii) average site rent
reflects, in most cases, the market perception of a property's position in the
marketplace, (iv) typically, increases in site rent contribute to increases in
NOI, (v) average site rent is a function of the physical aspects of the
property, such as age and condition, location and amenities, and (vi) the EGIM
also reflects the market's perception of the potential for future rent
increases.
The Appraiser also noted that (i) the Property is an all age community
with a 5.91% physical vacancy, (ii) the Property was observed to be in average
condition and with a good location in Sedgwick County, Kansas, and (iii) all the
comparable properties had lower expense ratios than the Property, ranging from
39.7% to 48.2%. By comparison, the Property has a forecast expense ratio of
43.42%. Based on these considerations, the Appraiser concluded that an EGIM of
expense ratio 5.50, which was in the middle of the indicated range for the
comparable properties, was appropriate for the Property. Based upon the
Property's effective gross income of $519,400 and an EGIM of 5.50 the Appraiser
calculated the market value of the Property to be $2,860,000, representing
$11,260 per site.
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In reconciling the income capitalization approach and the sales
comparison approach, the Appraiser (i) reviewed each approach to ascertain the
reliability of the data, (ii) weighted the approach that best represented the
actions of typical users and investors in the marketplace, (iii) determined that
in the current instance, the availability of sufficient, reliable and
supportable historical data for the Property made the income capitalization
approach a reliable gauge of the market value of the Property, (iv) determined
that the sales comparison approach was reliable, (v) determined that the two
approaches reflected a narrow range of value, (vi) determined that the opinion
of value should be based on the income capitalization approach because buyers
are most concerned with cash flow to service debt, and (vii) concluded that the
market value of the Property, based on a reasonable exposure period of six
months, as of September 1, 1999, was $2,940,000.
Summary of Carefree Village Property Appraisal. In utilizing the income
----------------------------------------------
capitalization approach in connection with appraising the Carefree Village
Property, the Appraiser first projected 12 months of income for the Property
based upon the then current rent levels. The potential gross income from the
rentals was calculated at $1,415,446 per year. Vacancy and credit loss was
estimated at 18% of potential gross income, or $254,780. Additional income,
based on historical numbers, was calculated at $200.00 per site, leaving an
effective gross income estimate of $1,355,545 for the Property. Total annual
operating expenses for the Property were estimated to be $692,576, leaving NOI
of $662,969. In determining a capitalization rate for the Carefree Village
Property, the Appraiser first looked at capitalization rates for recently sold
comparable communities, which ranged from 8.51% to 9.79%. The Appraiser noted
that the Property has an above market vacancy and expense ratio, but that there
is upside potential from increased revenue from water and sewage charges. Based
on these considerations, the Appraiser determined that a capitalization rate of
10.0% for the Property was appropriate. Utilizing the 10.0% capitalization rate
the Appraiser was able to calculate a market value for the Carefree Village
Property of $6,630,000. The Appraiser also performed a debt coverage ratio
analysis, which yielded a capitalization rate equal to approximately 10.3%, to
verify the accuracy of the utilized capitalization rate.
In utilizing the sales comparison approach in connection with
appraising the Carefree Village Property, the Appraiser compared the Property to
five other manufactured home communities sold in the same general geographic
area as the Property within the two and a half-year period prior to the date of
the Appraisal. The sales prices of the five comparable properties ranged from a
low of $2,160,000 to a high of $15,400,000. Total sites ranged from 185 to 499
and occupancy ranged from 89.2% to 96.9%. The average price per site ranged from
$11,676 to $30,651 and average site rent ranged from $159.39 to $382.80. All of
the sales were fee simple transactions with typical acquisition financing. There
were no atypical sale conditions known to have occurred and all of the sales
represented transactions that took place in the two and a half-year period prior
to the date of the Appraisal and traded under similar market conditions.
The Appraiser also employed the EGIM in the sales comparison analysis.
In applying the EGIM, the Appraiser determined that the EGIM for the comparable
sale properties ranged from 4.97 to 7.35. The Appraiser noted that (i) the
Property is an all age community with a 14% physical vacancy, (ii) the Property
was observed to be in average condition and with a good location in Hillsborough
County, Florida, and (iii) the comparable properties all had a much higher
occupancy rate than the Property and, with the exception of one property, all
had lower expense ratios, ranging from 32.8% to 40.7%. By comparison, the
Property has a forecast expense ratio of 51.09%. Based on these considerations,
the Appraiser concluded that an EGIM of 4.90, which was below the indicated
range, was appropriate for the Property. Based upon the Property's effective
gross income of $1,355,545 and an EGIM of 4.90, the Appraiser calculated the
market value of the Property to be $6,640,000, representing $16,355 per site.
In reconciling the income capitalization approach and the sales
comparison approach, the Appraiser (i) reviewed each approach to ascertain the
reliability of the data, (ii) weighted the approach
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that best represented the actions of typical users and investors in the
marketplace, (iii) determined that in the current instance, the availability of
sufficient, reliable and supportable historical data for the Property made the
income capitalization approach a reliable gauge of the market value of the
Property, (iv) determined that the sales comparison approach was reliable, (v)
determined that the two approaches reflected a narrow range of value, (vi)
determined that the opinion of value should be based on the income
capitalization approach because buyers are most concerned with cash flow to
service debt, and (vii) concluded that the market value of the Property, based
on a reasonable exposure period of six months, as of August 15, 1999, was
$6,630,000.
Summary of Rancho Margate Property Appraisal. In utilizing the income
--------------------------------------------
capitalization approach in connection with appraising the Rancho Margate
Property, the Appraiser first projected 12 months of income for the Property
based upon the then current rent levels. The potential gross income from the
rentals was calculated at $1,102,980 per year. Vacancy and credit loss was
estimated at 9% of potential gross income, or $99,268. Additional income, based
on historical numbers, was calculated at $5.00 per site, leaving an effective
gross income estimate of $1,049,037 for the Property. Total annual operating
expenses for the Property were estimated to be $488,843, leaving NOI of
$560,194. In determining a capitalization rate for the Rancho Margate Property,
the Appraiser looked at capitalization rates for recently sold comparable
communities, which ranged from 7.44% to 9.83%. The Appraiser noted that the
Property has an economic vacancy of 9.0% and was observed to be in good overall
condition. The Appraiser also noted that the market has been competitive in
recent years, indicating increased risk and increasing the going-in
capitalization rate. Based on these considerations, the Appraiser determined
that a capitalization rate of 8.75% was appropriate. Utilizing the 8.75%
capitalization rate, the Appraiser was able to calculate a market value for the
Trailmont Property of $6,400,000. The Appraiser also performed a debt coverage
ratio analysis, which yielded a capitalization rate equal to approximately 9%,
to verify the accuracy of the utilized capitalization rate.
In utilizing the sales comparison approach in connection with
appraising the Rancho Margate Property, the Appraiser compared the Property to
five other manufactured home communities sold in the same general geographic
area as the Property within the two-year period prior to the date of the
Appraisal. The sales prices of the five comparable properties ranged from a low
of $4,450,000 to a high of $16,600,000. Total sites ranged from 231 to 585 and
occupancy ranged from 94.5% to 100%. The average price per site ranged from
$17,451 to $36,797 and average site rent ranged from $196.94 to $391.41. All of
the sales were fee simple transactions with typical acquisition financing. There
were no atypical sale conditions known to have occurred and all of the sales
represented transactions that took place in the two-year period prior to the
date of the Appraisal and traded under similar market conditions.
The Appraiser also employed the EGIM in the sales comparison analysis.
In applying the EGIM, the Appraiser determined that the EGIM for the comparable
sale properties ranged from 6.50 to 9.40. The Appraiser noted that the Property
has a higher vacancy level and expense ratio than all of the comparable
properties. Based on these considerations, the Appraiser concluded that an EGIM
of 6.20, which was just below the indicated range for the comparable properties,
was appropriate for the Property. Based upon the Property's effective gross
income of $1,049,037 and an EGIM of 6.20, the Appraiser calculated the fair
market value of the Property to be $6,500,000, representing $26,531 per site.
In reconciling the income capitalization approach and the sales
comparison approach, the Appraiser (i) reviewed each approach to ascertain the
reliability of the data, (ii) weighted the approach that best represented the
actions of typical users and investors in the marketplace, (iii) determined that
in the current instance, the availability of sufficient, reliable and
supportable historical data for the Property made the income capitalization
approach a reliable gauge of the market value of the Property, (iv) determined
that the sales comparison approach was reliable, (v) determined that the two
approaches reflected a narrow range of value, (vi) emphasized the sales
comparison approach given the relative
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homogeneity of the locations and availability of market data and (vii) concluded
that the market value of the Property, based on a reasonable exposure period of
six months, as of September 1, 1999, was $6,400,000.
Summary of Winter Haven Property Appraisal. In utilizing the income
------------------------------------------
capitalization approach in connection with appraising the Winter Haven Property,
the Appraiser first projected 12 months of income for the Property based upon
the then current rent levels. The potential gross income from the rentals was
calculated at $662,592 per year. Vacancy and credit loss was estimated at 5% of
potential gross income, or $33,130. Additional income, based on historical
numbers, was calculated at $8.00 per site, leaving an effective gross income
estimate of $631,366 for the Property. Total annual operating expenses for the
Property were estimated to be $297,307, leaving NOI of $334,060. In determining
a capitalization rate for the Winter Haven Property, the Appraiser looked at
capitalization rates for recently sold comparable communities, which ranged from
8.24% to 10.04%. The Appraiser noted that the Property has a physical vacancy of
1.3% and was observed to be in good overall condition. The Appraiser also noted
that the market has been competitive in recent years, indicating increased risk,
and that this has increased the going-in capitalization rate. Based on these
considerations, the Appraiser determined that a capitalization rate of 9% for
the Property was appropriate. Utilizing the 9% capitalization rate, the
Appraiser was able to calculate a market value for the Winter Haven Property of
$3,710,000. The Appraiser also performed a debt coverage ratio analysis, which
yielded a capitalization rate equal to approximately 9%, to verify the accuracy
of the utilized capitalization rate.
In utilizing the sales comparison approach in connection with
appraising the Winter Haven Estates Property, the Appraiser compared the
Property to five other manufactured home communities sold in the same general
geographic area as the Property within the ten-month period prior to the date of
the Appraisal. The sales prices of the five comparable properties ranged from a
low of $2,200,000 to a high of $8,000,000. Total sites ranged from 110 to 312
and occupancy ranged from 89.1% to 100%. The average price per site ranged from
$10,497 to $26,059 and average site rent ranged from $184.19 to $391.41. All of
the sales were fee simple transactions with atypical acquisition financing
reflected in the cash equivalent price. There were no atypical sale conditions
known to have occurred and all of the sales represented transactions that took
place in the ten-month period prior to the date of the Appraisal and traded
under similar market conditions.
The Appraiser also employed the EGIM in the sales comparison analysis.
In applying the EGIM analysis, the Appraiser determined that (i) the EGIM for
the comparable sale properties ranged from 5.21 to 7.89, (ii) the EGIM was
essentially a function of the average site rent, (iii) average site rent
reflects, in most cases, the market perception of a property's position in the
marketplace, (iv) typically, site rent increases contribute to increases in NOI,
(v) average site rent is a function of the physical aspects of the property,
such as age and condition, location and amenities, and (vi) the EGIM also
reflects the market's perception of the potential for future rent increases.
The Appraiser also noted that the Property is an older age restricted
community located just South of the Winter Haven City Limits. Like the Property,
all of the comparable sales are fully developed, stabilized properties and any
additional potential income is available only from rent increases. The Appraiser
noted that Property's rents are well supported in the marketplace. Based on
these considerations, the Appraiser concluded that an EGIM of 6.0, which was at
the lower end of the indicated range for the comparable properties, was
appropriate for the Property. Based upon the Property's effective gross income
of $631,366 and an EGIM of 6.0, the Appraiser calculated the fair market value
to be $3,790,000, representing $15,294 per site.
In reconciling the income capitalization approach and the sales
comparison approach, the Appraiser (i) reviewed each approach to ascertain the
reliability of the data, (ii) weighted the approach
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that best represented the actions of typical users and investors in the
marketplace, (iii) determined that in the current instance, the availability of
sufficient, reliable and supportable historical data for the Property made the
income capitalization approach a reliable gauge of the market value of the
Property, (iv) determined that the sales comparison approach was reliable, (v)
determined that the two approaches reflected a narrow range of value, (vi)
emphasized the sales comparison approach given the relative homogeneity of the
locations and the availability of market data and (vii) concluded that the
market value of the Property, based on a reasonable exposure period of six
months, as of August15, 1999, was $3,710,000.
Summary of Garden Walk Property Appraisal. In utilizing the income
-----------------------------------------
capitalization approach in connection with appraising the Garden Walk Property,
the Appraiser first projected 12 months of income for the Property based upon
the then current rent levels. The potential gross income from the rentals was
calculated at $2,147,184 per year. Vacancy and credit loss was estimated at 12%
of potential gross income, or $257,662. Additional income, based on historical
numbers, was calculated at $35.00 per site, leaving an effective gross income
estimate of $1,906,462 for the Property. Total annual operating expenses for the
Property was estimated to be $884,892, leaving NOI of $1,021,570. In determining
a capitalization rate for the Property, the Appraiser looked at capitalization
rates for recently sold comparable communities, which ranged from 7.44% to
9.83%. Based on the comparison of the sale data to the Property and considering
the current investor and interest rate environment, the Appraiser determined
that a capitalization rate of 9% for the Property was appropriate. Utilizing the
9% capitalization rate, the Appraiser was able to calculate an market value for
the Property of $11,350,000. The Appraiser also performed a debt coverage ratio
analysis, which yielded a capitalization rate equal to approximately 9.2%, to
verify the accuracy of the utilized capitalization rate.
In utilizing the sales comparison approach in connection with
appraising the Property, the Appraiser compared the Property to five other
manufactured home communities sold in the same general geographic area as the
Property within the two-year period prior to the date of Appraisal. The sales
prices of the five comparable properties ranged from a low of $4,450,000 to a
high of $16,600,000. Total sites ranged from 231 to 585 and occupancy ranged
from 94.5% to 100%. The average price per site ranged from $17,451 to $36,797
and average site rent ranged from $196.94 to $391.41. All of the sales were fee
simple transactions with atypical acquisition financing reflected in the cash
equivalent price. There were no atypical sale conditions known to have occurred
and all of the sales represented transactions that took place in the two-year
period prior to the date of the Appraisal and traded under similar market
conditions.
The Appraiser also employed the EGIM in the sales comparison analysis.
In applying the EGIM analysis, the Appraiser determined that (i) the EGIM for
the comparable sale properties ranged from 6.50 to 9.40, (ii) the EGIM was
essentially a function of the average site rent, and (iii) average site rent
reflects, in most cases, the market perception of a property's position in the
marketplace, (iv) typically, site rent increases contribute to increases in NOI,
(v) average site rent is a function of the physical aspects of the property,
such as age and condition, location and amenities, and (vi) the EGIM also
reflects the market's perception of the potential for future rent increases.
The Appraiser also determined that (i) the Property is an age
restricted community with an 8.9% physical vacancy, (ii) the Property was
observed to be in average condition and with a good location in Palm Beach
County, Florida, and (iii) the comparable properties all had a higher occupancy
rate than the Property and had lower expense ratios, ranging from 26.7% to
36.1%. By comparison, the Property had a forecast expense ratio of 46.42%. Based
on these considerations, the Appraiser concluded that an EGIM of 6.0, which was
below the indicated range for the comparable properties, was appropriate for the
Property. Based upon the Property's effective gross income of $1,906,462, and an
EGIM of 6.0, the Appraiser concluded the market value of the Property to be
$11,400,000, representing $23,554 per site.
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In reconciling the income capitalization approach and the sales
comparison approach, the Appraiser (i) reviewed each approach to ascertain the
reliability of the data, (ii) weighted the approach that best represented the
actions of typical users and investors in the marketplace, (iii) determined that
in the current instance, the availability of sufficient, reliable and
supportable historical data for the Properties made the income capitalization
approach a reliable gauge of the market value of the Properties, (iv) determined
that the sales comparison approach was reliable, (v) determined that the two
approaches reflected a narrow range of value, (vi) determined that the opinion
of value should be based on the income capitalization approach because buyers
are most concerned with cash flow to service debt, and (vii) concluded that the
market value of the Property based on a reasonable exposure period of six
months, as of August 27, 1999, was $11,350,000.
Discount for Ownership Interests in Properties
The Appraiser advised the Managing General Partner that in its
estimation the application of a discount of approximately 25% would be
appropriate in the context of valuing a partial ownership interest in a
manufactured home community. In analyzing this issue, the Appraiser (i) surveyed
real estate brokers and owners regarding their experience with sales of partial
ownership interests in properties, (ii) surveyed real estate lenders regarding
their experience with financings of, and underwriting criteria relating to,
partial ownership interests in properties, and (iii) reviewed articles and
treatises relating to the sale and valuation of partial ownership interests and
partnership interests in general. In determining the purchase price to be paid
for each of the Ownership Interests, N'Tandem applied (i) a 5% discount to the
Appraised Value of the Ownership Interest in the Town & Country Estates Property
for the fact that the Partnership only owns a majority interest in this Property
and (ii) a 10% discount to the Appraised Values of the Ownership Interests in
the Carefree Village, Rancho Margate, Winter Haven and Garden Walk Properties
for the fact that the Partnership only owns a minority interest in these
Properties. Accordingly, based upon the information provided by the Appraiser,
the General Partners believe that the discounts being applied by N'Tandem in
connection with the Sales are substantially less than the discounts which would
have been applied in the marketplace had the Ownership Interests been sold to a
third-party purchaser.
SUMMARY OF SELECTED TERMS OF THE PARTNERSHIP AGREEMENT
The rights and obligations of the partners in the Partnership are
governed by the Partnership Agreement which is set out in its entirety as an
exhibit to the Schedule 13E-3. The following statements and other statements in
this solicitation concerning the Partnership Agreement and related matters are
merely a selected summary of the terms of the Partnership Agreement and do not
purport to be complete and in no way modify or amend the Partnership Agreement.
Net Proceeds from the Sales
Pursuant to the Partnership Agreement upon the consummation of the
Sales and a liquidation of the Partnership, net proceeds from the Sales, after
providing for the debts and liabilities of the Partnership, will be distributed
in the following order of priority:
(i) To the Limited Partners, an amount equal to the sum of:
(i) Adjusted Invested Capital (as defined below) attributable to each
Limited Partner and (ii) the excess, if any, of an amount equal to a 9%
per annum cumulative (but not compounded) return on Adjusted Invested
Capital, calculated from each Limited Partner's respective date of
admission to the Partnership, over total prior distributions of cash
from operations with respect to the Units; and
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(ii) To the extent of any balance remaining, 85% of the
Limited Partners to be shared on a pro rata basis in accordance with
their respective ownership of Units and 15% to the General Partners.
The above notwithstanding, the General Partners will receive at least
1% of the distributions of net proceeds from the Sales in accordance with the
Partnership Agreement.
Allocation of Profit or Loss on the Sales
Profit or loss in connection with the Sales and a liquidation of the
Partnership will be allocated to and among the partners, after providing for the
debts and liabilities of the Partnership, as follows:
(i) The profit on the Sales first shall be allocated to each
partner with a negative capital account pro ratably in an amount equal
to the amount of the negative capital account of each partner;
(ii) Profit on the Sales next shall be allocated to the
Limited Partners until each Limited Partner's capital account shall
equal a positive amount equal to the sum of: (i) the Adjusted Invested
Capital attributable to each Limited Partner and (ii) the excess, if
any, of an amount equal to a 9% per annum cumulative (but not
compounded) return on Adjusted Invested Capital, calculated from each
Limited Partner's respective date of admission to the Partnership, over
total prior distributions of cash from operations with respect to the
Units; and
(iii) To the extent of any balance remaining, 85% of the
profit on the Sales will be allocated to the Limited Partners on a pro
rata basis in accordance with their respective ownership of Units and
15% will be allocated to the General Partners.
Notwithstanding the foregoing, the General Partners shall be allocated
at least 1% of the profit or loss on the Sales, and, to the extent possible, in
characterizing the allocated profit on the Sales, that portion which constitutes
ordinary income by reason of recapture of depreciation or investment tax credit
recapture, shall be allocated among the partners such that a partner (or
successor) who realized the benefit of the deduction or credit will bear the tax
burden of the corresponding recapture.
"Adjusted Invested Capital" means the original capital contribution
paid for each Unit reduced by any return of capital and further reduced by the
total cash distributed from net proceeds from refinancing and net proceeds from
the sale of properties with respect to each Unit. Thus, distributions of cash
from operations do not reduce Adjusted Invested Capital.
Voting Rights of Limited Partners
The Limited Partners have the right to vote upon the following matters:
(i) The dissolution and winding up of the Partnership;
(ii) The sale, exchange, lease, mortgage, pledge, or other
transfer of all or a substantial part of the assets of the Partnership
other than in the ordinary course of its business;
(iii) The incurrence of indebtedness by the Partnership other
than in the ordinary course of its business;
(iv) A change in the nature of the business of the Partnership;
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(v) Transactions in which the General Partners have an actual
or potential conflict of interest with the Limited Partners or the
Partnership;
(vi) The removal of a General Partner, and the election of a
General Partner;
(vii) An election to continue the business of the Partnership
other than under the circumstances described in (ix) or (x) below;
(viii) The admission of a General Partner other than under the
circumstances described in (ix) or (x) below;
(ix) The admission of a General Partner or an election to
continue the business of the Partnership after a General Partner ceases
to be a General Partner other than by removal where there is no
remaining or surviving General Partner; and
(x) The admission of a General Partner or an election to
continue the business of the Partnership after the removal of a General
Partner where there is no remaining or surviving General Partner.
The voting rights described above are effected by the vote or consent
of a majority in interest of Limited Partners without the necessity for
concurrence by the General Partners.
Limitation of Liability and Indemnification of the General Partners
The Partnership Agreement provides for a limitation of liability and
the indemnification of the General Partners as follows:
(i) Except in the case of negligence or misconduct, the
General Partners and their affiliates shall have no liability to the
Partnership or to any Partner for any loss suffered by the Partnership
which arises out of any action or inaction of the General Partners and
their agents if the General Partners, in good faith, determined that
such course of conduct was in the best interests of the Partnership;
(ii) Except in the case of negligence or misconduct, the
General Partners and their affiliates shall be indemnified by the
Partnership against any losses, judgments, liabilities, expenses, and
amounts paid in settlement of any claims sustained by them in
connection with the Partnership, provided that the General Partners
acted in good faith; and
(iii) Notwithstanding the above, the General Partners and
their affiliates shall not be indemnified for liabilities arising under
federal and state securities laws unless (1) there has been a
successful adjudication on the merits of each count involving
securities law violations, or (2) such claims have been dismissed with
prejudice on the merits, and provided that a court either (A) approves
any settlement and finds that indemnification of the settlement and
related costs should be made or (B) approves indemnification of
litigation costs if a successful defense is made (in this regard, a
dismissal with prejudice is considered a successful defense).
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THE PARTNERSHIP'S PROPERTIES
Nature of Ownership Interests in Properties
Properties Owned by Limited Partnerships in which the Partnership is a
Limited Partner. Each of the Rancho Margate and Winter Haven Properties is owned
by Windsor Park 456, An Arizona Limited Partnership ("Windsor Park 456"), and
each of the Ownership Interests of the Partnership in such properties is in the
form of a limited partner interest in Windsor Park 456. Under the agreement of
limited partnership of Windsor Park 456, virtually all management, business and
other decisions relating to the properties owned by Windsor Park 456 are within
the control and discretion of the Managing General Partner and the limited
partners in Windsor Park 456 have no control over the management of, and
decisions with respect to, the properties owned by Windsor Park 456, including,
without limitation, any disposition of any such properties.
Although the limited partners in Windsor Park 456 (including the
Partnership) can legally sell their limited partner interests, the transferee of
any such limited partner interest will be entitled to the full benefits relating
to the limited partner interest only if the Managing General Partner, as general
partner of Windsor Park 456, in its sole discretion, determines to admit such
transferee as a limited partner of Windsor Park 456. If the Managing General
Partner fails to do so, the transferee generally will be entitled only to the
economic benefits relating to the transferred limited partner interest, but
would not be entitled to certain other rights (such as voting rights) conferred
upon such limited partners under the agreement of limited partnership of Windsor
Park 456 and by law.
The Partnership is a 41% limited partner in Windsor Park 456. In
addition to being the sole general partner of Windsor Park 456, the Managing
General Partner is also the sole managing general partner of Windsor Park
Properties 5, A California Limited Partnership ("Windsor 5"), and is the
external investment advisor to N'Tandem, which together own the remaining
limited partner interests in Windsor Park 456. N'Tandem has a 33% limited
partner interest in Windsor Park 456.
Properties Owned Pursuant to Joint Venture Agreements. The Partnership
owns (i) a 58% undivided interest in the Town & Country Estates Property as a
tenant in common with Windsor 5, which owns the remaining 42% interest in this
Property, (ii) a 44% undivided interest in Carefree Village as a tenant in
common with Windsor Park Properties 7, A California Limited Partnership
("Windsor 7"), which owns the remaining 56% interest in this Property, and (iii)
a 31% undivided interest in Garden Walk as a tenant in common with Windsor 7,
which owns the remaining 69% interest in this Property. Each of the
Partnership's Ownership Interests in the Town & Country Estates, Carefree
Village and Garden Walk Properties are subject to separate joint venture
agreements relating to such Properties between the Partnership and the
applicable Windsor Limited Partnership. Pursuant to the Purchase and Sale
Agreement, the Partnership will assign all of its rights under the respective
joint venture agreements to N'Tandem at the closing of the Sales.
Difficulty of Selling Ownership Interests to Third-Party Buyers. Given
the fact that the control and management of the properties underlying the
Ownership Interests is vested in the Managing General Partner and the
Partnership, as a holder of the Ownership Interests, has no control over the
disposition of the underlying properties, the General Partners believe that (i)
finding third-party purchasers willing to pay full value for the Ownership
Interests based on the Appraised Values of the underlying properties would be
extremely difficult, (ii) efforts to sell such Ownership Interests to third-
party purchasers would be likely to result in the application of a 25% discount
to the purchase prices to be paid for such Ownership Interests, which is greater
than the 5% or 10% discount being applied to the purchase prices offered by
N'Tandem for the Ownership Interests and (iii) the sale of such Ownership
Interests would
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likely result in substantially higher selling expenses and, ultimately, lower
liquidating distributions to the Limited Partners. See "SPECIAL FACTORS --
Discounts for Ownership Interests in Properties."
Description of the Properties, Appraised Values and Ownership Interests
Chisholm Creek. Chisholm Creek is a 254-site manufactured home
community located at 501 E. 63rd Street in Wichita, Kansas. Amenities include an
office, a clubhouse and a playground/recreation area. The Appraisal was prepared
as of September 1, 1999. The "as-is" Appraised Value of the Property is
$2,940,000. The Partnership has a 100% ownership interest in this Property.
There is no mortgage on this Property.
Town & Country Estates. Town & Country Estates is a 320-site
manufactured home community located at 4444 East Benson Highway in Tucson,
Arizona. Amenities include a clubhouse, two swimming pools, a jacuzzi, a
playground and four shuffleboard courts. The Appraisal was prepared as of
September 1, 1999. The "as-is" Appraised Value of the Property is $5,400,000.
The Partnership has a 58% Ownership Interest in this Property. There is an
outstanding mortgage on this Property securing $1,550,000 which is expected to
continue following the Sales.
Carefree Village. Carefree Village is a 406-site manufactured home
community located at 8000 Sheldon Road in Tampa, Florida. Amenities include a
clubhouse, tennis and shuffleboard courts, a laundry room, swimming pool and a
playground/recreation area. The Appraisal was prepared as of August 15, 1999.
The "as-is" Appraised Value of the Property is $6,630,000. The Partnership has a
44% Ownership Interest in this Property. There is an outstanding mortgage on
this Property securing $3,480,000 which is expected to continue following the
Sales.
Rancho Margate. Rancho Margate is a 245-site manufactured home
community located at 2900 North State Road 7 in Margate, Florida. Amenities
include a clubhouse, swimming pool, a laundry room, shuffleboard courts and an
on-site office. The Appraisal was prepared as of September 1, 1999. The "as-is"
Appraised Value of the Property is $6,400,000. The Partnership has a 41%
Ownership Interest in this Property. There is an outstanding mortgage on this
Property securing $3,202,700 which is expected to continue following the Sales.
Winter Haven. Winter Haven is a 238-site manufactured home community
located at 50 Charlotte Drive in Winter Haven, Florida. Amenities include an
office, a clubhouse, a laundry room, a pool and shuffleboard courts. The
Appraisal was prepared as of August 15, 1999. The "as-is" appraised value of the
Property is $3,710,000. The Partnership has a 41% Ownership Interest in this
Property. There is an outstanding mortgage on this Property securing $1,987,100
which is expected to continue following the Sales.
Garden Walk. Garden Walk is a 484-site manufactured home community
located at 8200 North Military Trail in Palm Beach Gardens, Florida. Amenities
include a clubhouse, a pavilion, tennis and shuffleboard courts, horseshoe pits
and two swimming pools. The Appraisal was prepared as of September 1, 1999. The
"as-is" Appraised Value of the Property is $11,350,000. The Partnership has a
31% Ownership Interest in this Property. There is an outstanding mortgage on
this Property securing $5,700,000 which is expected to continue following the
Sales.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a brief summary of United States federal income tax
consequences to Limited Partners arising from the Sales and liquidation of the
Partnership. This summary is based upon the Code, as currently in effect,
applicable Treasury Regulations adopted thereunder, reported judicial decisions
and
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Internal Revenue Service ("IRS") rulings all as of the date hereof, all of
which are subject to prospective or retroactive change in a manner which could
adversely affect Limited Partners.
This summary is based on the assumption that Units in the Partnership
are held as capital assets and have been held since the Partnership's inception,
and does not purport to address Limited Partners in special tax situations such
as insurance companies, financial institutions, tax-exempt entities, nonresident
aliens, foreign corporations and Limited Partners who acquired their Units after
the original offering. Moreover, this summary does not address the possible
consequences to Limited Partners under any state, local or foreign tax laws of
the states and localities where they reside or otherwise do business or where
the Partnership operates. AS SUCH, EACH LIMITED PARTNER SHOULD CONSULT HIS OR
HER OWN TAX ADVISOR CONCERNING THE CONSEQUENCES TO HIM OR HER OF THE SALE OF THE
PROPERTIES AND OWNERSHIP INTERESTS AND LIQUIDATION OF THE PARTNERSHIP.
Overview
The Sales should result in the recognition of gain by the Partnership
and, therefore, should result in recognition of gain by Limited Partners. The
amount of gain recognized by the Partnership with respect to each of the
Properties will equal the difference between (i) the amount realized by the
Partnership (i.e., the amount of cash received plus the amount of liabilities of
the Partnership assumed or taken subject to by N'Tandem) and (ii) the
Partnership's adjusted tax basis in each of the Properties. The aggregate gain
expected to be recognized by the Partnership on the Sales is approximately
$2,975,500. This gain will be allocated among the partners of the Partnership in
accordance with the terms of the Partnership Agreement. These provisions will
result in the allocation of approximately $2,945,700 of taxable gain on the
Sales to Limited Partners (or an average of $10.24 per Unit). Upon liquidation
of the Partnership, a Limited Partner will recognize gain or loss equal to the
difference between the cash received by such Limited Partner (including the
Limited Partner's share of Partnership Liabilities under Section 752 of the
Code) and the adjusted tax basis of such Limited Partner's Units. It is expected
that a Limited Partner will recognize an average of approximately $11.94 of loss
per Unit on liquidation. The gain per Unit resulting from the Sales is primarily
caused by the fact that the Partnership generated tax losses in certain prior
years that were allocated to Limited Partners. Limited Partners should be aware
that all of the per-Unit amounts stated above may vary for each Limited Partner
depending on the historical losses allocated and cash distributions to such
Limited Partner.
Taxation on the Sales
Tax Consequences of the Sales. The Sales should result in the
recognition of gain by the Partnership and, therefore, should result in
recognition of gain by Limited Partners. The amount of gain recognized by the
Partnership with respect to each of the Properties will equal the difference
between (i) the Partnership's amount realized (i.e., the amount of cash received
increased by the amount of liabilities of the Partnership assumed or taken
subject to by N'Tandem) and (ii) the Partnership's adjusted tax basis in each of
the Properties. The aggregate gain expected to be recognized by the Partnership
on the Sales is approximately $2,975,500.
Allocation of Gain. The $2,975,500 gain expected to be recognized by
the Partnership in the year of Sales will be allocated among the partners in
accordance with the terms of the Partnership Agreement. These provisions will
result in an allocation of approximately $2,945,700 of taxable gain on the Sales
to Limited Partners (or an average of $10.24 per Unit). The gain per Unit
resulting from the Sales is primarily caused by the fact that the Partnership
generated tax losses in prior years that were allocated to Limited Partners. See
"-- Income Tax Rates/Taxation of Gains and Losses," below.
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Characterization of Gain or Loss. In general, gains (other than the
amount of gain attributable to certain depreciation recapture, which would be
classified as ordinary income, and gain attributable to Ownership Interests that
are partnership interests) recognized with respect to the Sales should be
treated as recognized from the sale of a "Section 1231" asset (i.e., real
property and depreciable assets used in a trade or business and held for more
than one year). A portion of such gain should be attributable to the recapture
of depreciation with respect to real property and taxed at the 25% rate
discussed below. A Limited Partner's share of gains from the sale of Section
1231 assets of a Partnership will be combined with any other Section 1231 gains
and losses recognized by such Limited Partner in that year. If the result is a
net loss, such loss is characterized as an ordinary loss. If the result is a net
gain, such gain is characterized as a capital gain; provided, however, that such
gain will be treated as ordinary income to the extent the Limited Partner has
"non-recaptured" Section 1231 losses. For these purposes, "non-recaptured"
Section 1231 losses means a Limited Partner's aggregate Section 1231 losses for
the five most recent prior years that have not previously been recaptured.
In general, gain or loss recognized with respect to the Sale of
Ownership Interests that are partnership interests will be gain or loss from the
sale or exchange of a capital asset. However, any amount received in exchange
for a partnership interest attributable to a partnership's "unrealized
receivables" (including certain depreciation recapture) or "inventory items"
will be considered to be gain or loss from the sale or exchange of property
other than a capital asset.
For purposes of the passive activity loss limitations of Section 469 of
the Code, gains recognized from the Sales generally will be treated as passive
activity income.
Liquidation of the Partnership
Tax Consequences of Liquidation. Upon liquidation of the Partnership, a
Limited Partner will recognize gain or loss equal to the difference between the
cash received by such Limited Partner (including the Limited Partner's share of
partnership liabilities under Section 752 of the Code) and the adjusted tax
basis of the Limited Partner's Units, adjusted by such Limited Partner's
allocable share of income, gain or loss arising from normal Partnership
operations for the year of liquidation and the sale of the Properties in the
year of liquidation. See "-- Taxation on Sales -- Allocation of Gain" above. It
is expected that a Limited Partner will recognize an average of approximately
$11.94 of loss per Unit on liquidation of the Partnership.
Characterization of Gain or Loss. Any gain or loss recognized by a
Limited Partner on liquidation of the Partnership should be treated as gain or
loss from the sale of a capital asset if the Units are held as a capital asset
by the Limited Partner. Such gain or loss generally will be treated as passive
gain or loss pursuant to Section 469 of the Code.
The combined effect of the Sales and the liquidation of the Partnership
should result in a net taxable loss to Limited Partners of approximately $1.70
per Unit. However, the treatment of the gains and losses recognized by the
Limited Partners (as capital or ordinary gain or loss and the ability to offset
the two) may differ depending on whether Limited Partners have any
non-recaptured Section 1231 losses or other items recaptured at ordinary income
rates as discussed above. See "-- Income Tax Rates/Taxation of Capital Gains and
Losses" below regarding limitations with respect to the deductibility of capital
losses against ordinary income.
Income Tax Rates/Taxation of Gains and Losses
The Taxpayer Relief Act of 1997 and the IRS Restructuring and Reform
Act of 1998 contain significant changes to the taxation of capital gains of
individuals, trusts and estates. The maximum rate of
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tax on net capital gains of individuals, trusts and estates from the sale or
exchange of capital assets held for more than one year has been reduced to 20%,
and the maximum rate for net capital gains attributable to the sale of
depreciable real property held for more than one year (other than certain
depreciation recapture taxable as ordinary income) is 25% to the extent of the
deductions for depreciation with respect to such property. The current maximum
tax rate on ordinary income of individuals is 39.6%. This disparity in tax rates
could be beneficial to individual Limited Partners with suspended losses
attributable to the Partnership. Since a Limited Partner will be considered to
have disposed of his or her entire interest in the Partnership, such Limited
Partner will be entitled to deduct all suspended passive losses from the
Partnership against any ordinary income earned by such Limited Partner in the
year of liquidation of the Partnership or use such suspended losses to offset
any gain allocable to such Limited Partner on the Sales. Capital gains of
individuals and corporate taxpayers can be offset by capital losses. However,
capital losses can be deducted, in any year, only to the extent of a Limited
Partner's capital gains plus, in the case of an individual, taxable income of up
to $3,000.
CONSENT PROCEDURES; TRANSACTIONS AUTHORIZED BY CONSENTS
The consents to the Proposals being solicited hereby (the "Consents")
will authorize the General Partners: (i) to complete the Sales at any time on or
prior to _________, 2000 and to proceed with the Plan of Liquidation; and (ii)
to take all actions necessary or appropriate, as determined by the General
Partners, to complete the Sales and to proceed with the Plan of Liquidation,
including, without limitation, the adoption of any amendments to the Partnership
Agreement that may be required to effectuate the Sales and Plan of Liquidation;
provided, however, that following approval of the Proposals by the Limited
Partners, no change or modification will be made to the Purchase and Sale
Agreement.
Consents are being solicited from the Limited Partners as required by
the Partnership Agreement which provides that transactions such as the Sales and
Plan of Liquidation must be approved by Limited Partners owning a majority of
the issued and outstanding Units.
The Consents being sought are for approval of the Proposals, including
the Sales and the Plan of Liquidation, and not for the approval of any
individual or particular Sale. If sufficient Consents approving the Proposals
are received, the Partnership intends to consummate the Sales and proceed with
the Plan of Liquidation. If sufficient Consents are not received, the
Partnership intends to explore such alternatives as may be available to it.
Set forth below are the procedures to be followed by Limited Partners
in order to consent to, deny consent to, or abstain from consenting to the
Proposals. A form of Consent was mailed to Limited Partners along with this
Consent Solicitation Statement. These procedures must be strictly followed in
order for the instructions of a Limited Partners as marked on such Consent to be
effective:
(i) A Limited Partner may make his or her election on the
Consent only during the solicitation period commencing upon the date of
delivery of this Consent Solicitation Statement and continuing until
the earlier of (i) _______, 2000 or such later date as may be
determined by the General Partners and (ii) the date upon which the
General Partners determine that holders of not less than a majority of
all issued and outstanding Units have consented to the Proposals (the
"Solicitation Period").
(ii) Each Limited Partner must consent to, deny consent to, or
abstain from consenting to the Proposals with respect to all Units held
by such Limited Partner. The effect of abstaining or failing to sign
and return the Consent will be the same as denying consent.
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(iii) All questions as to the validity, form, eligibility
(including time of receipt), acceptance and withdrawal of the Consent
will be determined by the General Partners, whose determination will be
final and binding. The General Partners reserve the absolute right to
reject any or all Consents that are not in proper form or the
acceptance of which, in the opinion of the General Partners, would be
unlawful. The General Partners also reserve the right to waive any
irregularities or conditions of the Consent as to particular Units.
Unless waived, any irregularities in connection with the Consents must
be cured within such time as the General Partners shall determine.
(iv) A Consent delivered by a Limited Partner may be changed
or revoked prior to the expiration of the Solicitation Period by
delivering to the Partnership a notice of revocation or a substitute
Consent, properly completed and executed, together with a letter
indicating that the Limited Partner's prior Consent has been revoked.
(v) Limited Partners are encouraged to return a properly
completed and executed Consent in the enclosed envelope prior to the
expiration of the Solicitation Period.
(vi) A Limited Partner submitting a signed but unmarked
Consent will be deemed to have consented to the Proposals.
Each Limited Partner is requested to complete, date and sign the
accompanying form of Consent and return such Consent to Arlen Capital, LLC, 1650
Hotel Circle North, Suite 200, San Diego, California 92108, which has been
appointed to serve as the solicitation agent for the proposed transactions (the
"Solicitation Agent"). If the Solicitation Period is extended, the General
Partners will give written notice of such extension to all Limited Partners. For
more information concerning this Consent Solicitation, Limited Partners may call
the Solicitation Agent at __________. The costs of this Consent Solicitation,
including fees payable to the Solicitation Agent, will be borne by the
Partnership.
Solicitation of Consents
In addition to soliciting consents by mail, consents may be solicited
by directors, officers and employees of the General Partners and their
affiliates, who will not receive additional compensation for such services, by
personal interview, telephone, telegram, courier service or other similar means
of communication. Arlen Capital, LLC has been engaged as Solicitation Agent to
solicit Consents to the Proposals from Limited Partners, administer the delivery
of information to Limited Partners and receive and tally votes.
Under the solicitation agreement between the Partnership and the
Solicitation Agent (the "Solicitation Agreement"), the Partnership has agreed to
pay the Solicitation Agent a base fee of $9,900 plus an additional per Unit fee
for re-mails and incoming and outgoing phone calls, plus expenses. The General
Partners expect that the total amount payable under the Solicitation Agreement
will not exceed $25,000.
Record Date; Required Vote
The close of business on _________, 1999 has been fixed as the Record
Date for determining Limited Partners entitled to Consent to the Proposals. As
of the Record Date, there were ________ Units outstanding held of record by a
total of ________ Limited Partners. Each of the Proposals require approval of
unaffiliated Limited Partners holding at least a majority of the outstanding
Units. Each Unit entitles the holder thereof to cast one vote with respect to
the approval of each of the Proposals.
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As of the Record Date, the General Partners and/or their affiliates
held and are entitled to exercise voting rights with respect to an aggregate of
______ Units, representing approximately _____% of the outstanding Units of the
Partnership. The General Partners and their affiliates have agreed to abstain
from voting on the Proposals with respect to all Units for which they hold
voting rights. Approval of the Proposals by unaffiliated Limited Partners
holding _______ Units, representing a majority of all outstanding Units, is
required to proceed with the Sales and the Plan of Liquidation. Neither N'Tandem
nor any affiliate of N'Tandem (other than the Managing General Partner) owns, or
has voting rights, with respect to any Units.
No Appraisal or Dissenters' Rights
If Limited Partners owning the requisite number of Units in the
Partnership consent to the Proposals, all Limited Partners of the Partnership
will be bound by such consent, including Limited Partners who have not returned
their Consents or who have abstained from or denied consent. None of the
Partnership Agreement, California law or the proposed terms and conditions of
the Sales or the Plan of Liquidation provide objecting Limited Partners with the
right to exercise any dissenters', appraisal or similar rights. Under California
law, the general partner of a California limited partnership owes fiduciary
duties to its limited partners. To the extent that a general partner has engaged
in a transaction in breach of its fiduciary duties to limited partners, a
damages remedy may be available to such limited partners.
Consequences If Consents Are Not Obtained
If sufficient Consents to proceed with the Sales and the Plan of
Liquidation are not obtained, the General Partners intend to proceed to explore
such alternatives as may be available to the Partnership.
FINANCIAL STATEMENTS
The financial information contained in the Partnership's Annual Report
on Form 10-KSB for the year ended December 31, 1998 and the Partnership's
Quarterly Report on Form 10-QSB for the quarter ended September 30, 1999
identified in "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" below is
incorporated herein by reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents (or portions thereof) filed with the Commission
by the Partnership (File No. 0-17576) pursuant to the Exchange Act are
incorporated herein by reference:
(i) Item 6, "Management's Discussion and Analysis," contained
in the Partnership's Annual Report on Form 10-KSB for the year ended
December 31, 1998, as filed with the Commission on March 31, 1999;
(ii) Item 7, "Financial Statements" contained in the
Partnership's Annual Report on Form 10-KSB for the year ended December
31, 1998, as filed with the Commission on March 31, 1999;
(iii) Item 2, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained in the
Partnership's Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1999; and
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(iv) Item 1, "Financial Statements" contained in the
Partnership's Form 10-QSB Quarterly Report for the quarter ended
September 30, 1999.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for the purposes of this Consent
Solicitation Statement to the extent that a statement contained herein or in any
other subsequently filed document that is incorporated by reference herein
modifies or supersedes such earlier statement. Any such statements modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Consent Solicitation Statement.
Copies of any or all of the documents specifically incorporated herein
by reference (not including the exhibits to such documents, unless such exhibits
are specifically incorporated by reference in such documents) will be furnished
without charge to each person, including any beneficial owner, to whom a copy of
this Consent Solicitation Statement is delivered upon written or oral request.
Requests should be made to: Windsor Park Properties 6 -- Investor Relations,
6160 South Syracuse Way, Greenwood Village, Colorado 80111.
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APPENDIX A
Fairness Opinion
<PAGE>
LEGG MASON
Corporate Finance
Legg Mason Wood Walker, Incoporated
100 Light Street, 34/th/ Floor, Baltimore, MD 21202
410-539-0000 Fax: 410-454-4508
Member New York Stock Exchange, Inc./Member SIPC
November 15, 1999
The General Partners of
Windsor Park Properties 6, A California Limited Partnership
c/o The Windsor Corporation
6160 South Syracuse Way
Greenwood Village, Colorado 80111
General Partners:
We have been advised by the managing general partner (the
"Managing General Partner") of Windsor Park Properties 6, A California Limited
Partnership (the "Partnership"), that the Partnership intends to sell its one
wholly-owned property and its partial ownership interests in five other
properties (collectively, the "Properties") to N'Tandem Trust, a California
business trust ("N'Tandem"), for a net aggregate amount of $9,113,100 on terms
and conditions more fully described in the consent solicitation statement (the
"Consent Solicitation Statement") relating to the purchase and sale of the
Properties (the transaction is referred to herein as the "Sale").
You have requested our opinion, as investment bankers, as to
the fairness to the limited partners (the "Limited Partners") of the
Partnership, from a financial point of view, of the aggregate purchase price to
be paid by N'Tandem in the Sale.
In connection with our opinion, we have, among other things,
reviewed:
(i) the management agreement between the Partnership and the
Managing General Partner and other agreements pertaining
to the operation and management of the Properties;
(ii) the partnership agreement of the Partnership;
(iii) the financial statements and the related filings of the
Partnership on Form 10-K for the year ended December 31,
1998 and Form 10-Q for the six months ended June 30,
1999;
(iv) certain market and economic data applicable to the Sale;
(v) an analysis of comparable publicly traded real estate
investment trusts;
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(vi) the draft Consent Solicitation Statement;
(vii) certain financial and other information relating to the
Partnership and the Properties that was furnished to
Legg Mason by the Managing General Partner, including
certain internal financial analyses, financial and
operating forecasts and reports and other information
prepared by the Managing General Partner or its
representatives;
(viii) the appraisals of the Properties prepared by Whitcomb
Real Estate, Inc; and
(ix) conducted such other financial studies, analyses and
investigations and considered such other information as
we deemed appropriate.
In connection with our review, we relied, without independent
verification, on the accuracy and completeness of all information that was
publicly available, supplied or otherwise communicated to Legg Mason on behalf
of the Partnership and we have further relied upon the assurances of the
Managing General Partner that it is unaware of any facts that would make the
information provided to us incomplete or misleading.
Legg Mason has also relied upon the Managing General Partner as
to the reasonableness and achievability of the financial forecasts and
projections (and the assumptions and bases therein) provided to us for the
Partnership, and we have assumed such forecasts and projections were reasonably
prepared on bases reflecting the best currently available estimates and
judgments of management as to the future operating performance of the
Partnership. Neither the Managing General Partner nor the Partnership publicly
discloses internal management forecasts and projections of the type provided to
Legg Mason. Such forecasts and projections were not prepared with the
expectation of public disclosure. The forecasts and projections were based on
numerous variables and assumptions that are inherently uncertain, including,
without limitation, facts related to general economic conditions. Accordingly,
actual results could vary significantly from those set forth in such forecasts
and projections. Legg Mason has relied on these forecasts and does not in any
respect assume any responsibility for the accuracy or completeness thereof.
Legg Mason has not been requested to make, and has not made, an
independent evaluation or appraisal of the assets, properties, facilities, or
liabilities (contingent or otherwise) of the Partnership and, with the exception
of the appraisal of the underlying properties of the Partnership referred to
above, we have not been furnished with any such appraisals or evaluations.
Estimates of value of the Partnership and its assets do not purport to be
appraisals or necessarily reflect the prices at which the Partnership and assets
may actually be sold. Because such estimates are inherently subject to
uncertainty, Legg Mason assumes no responsibility for their accuracy. We note
that the Managing General Partner and N'Tandem are under common control of the
parent of the Managing General Partner, and we have assumed that this potential
conflict of interest had no effect on the Sale. Our opinion is necessarily based
upon financial, economic, market and other conditions and circumstances existing
and disclosed to us on the date hereof. We were not requested to, nor did we,
solicit the interest of any other party in acquiring interests in the
Partnership or its assets. We have also assumed that the Sale will be
consummated on the terms and conditions described in the Consent Solicitation
Statement, without any waiver of material terms or conditions by the
Partnership.
It is understood that this letter is directed to the General
Partners. The opinion expressed herein is provided for the use of the General
Partners in their evaluation of the Sale and our opinion does not constitute a
recommendation to the General Partners or to any Limited Partner as to how such
partners should vote or otherwise respond on the Sale. In addition, this letter
does not constitute a
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recommendation of the Sale over any other alternative transaction which may be
available to the Partnership and does not address the underlying business
decision of the Managing General Partner to proceed with or effect the Sale.
This letter is not to be quoted or referred to, in whole or in part, in any
registration statement, prospectus, or in any other document used in connection
with the offering or sale of securities, nor shall this letter be used for any
other purposes, without the prior written consent of Legg Mason; provided that
this opinion may be included in its entirety in any filing made by the
Partnership or N'Tandem with the Securities and Exchange Commission with respect
to the Sale.
Legg Mason will receive a fee for providing this opinion to the
General Partners.
Based upon and subject to the foregoing, we are of the opinion
that, as of the date hereof, the aggregate amount of consideration to be paid by
N'Tandem in the Sale is fair to the Limited Partners from a financial point of
view.
Very truly yours,
/s/ Legg Mason Wood Walker, Incorporated
Legg Mason Wood Walker, Incorporated
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APPENDIX B
Information Concerning Officers and
Directors of the Managing General Partner,
N'Tandem and Chateau
A. The Managing General Partner
The Windsor Corporation is the Managing General Partner of the
Partnership. The Directors and executive officers of The Windsor Corporation are
as follows:
Gary P. McDaniel, 53, became a Director of The Windsor Corporation in
September 1997. Mr. McDaniel's biographical information is set forth below under
"C. Chateau Communities, Inc."
C. G. Kellogg, 55, became a Director of The Windsor Corporation in
September 1997. Mr. Kellogg's biographical information is set forth below under
"C. Chateau Communities, Inc."
Steven G. Waite, 44, has been President of The Windsor Corporation
since September 1997. From 1990 through the date he accepted his position at The
Windsor Corporation, Mr. Waite was Vice President/General Manager of Communities
at Clayton Homes, Inc., a company which owns and operates manufactured home
factories, sales centers, financing and insurance units and communities (NYSE:
CMH). Mr. Waite holds a B.S. from the University of Colorado and an M.B.A. from
the University of Alabama.
Each of Messrs. McDaniel, Kellogg and Waite is a United States citizen.
B. N'Tandem Trust
As an unincorporated business trust, N'Tandem Trust is managed by its
Trustees. The Trustees of N'Tandem are as follows:
Gary P. McDaniel, 53, became a Trustee of N'Tandem in September of
1997. Mr. McDaniel's biographical information is set forth below under "C.
Chateau Communities, Inc."
Richard B. Ray, 58, became a Trustee of N'Tandem in September of 1997.
Since 1995 he has been Co-Chairman of the Board and Chief Financial Officer of
21st Century Mortgage Corporation, (a lender to the manufactured home industry)
and a director of the following companies: BankFirst, Radio Systems Corporation
and Knox Housing Partnership (a not for profit developer of low income housing
in Knox County, Tennessee). Previously, he was Executive Vice President, Chief
Financial Officer, and Director of Clayton Homes Inc. (a vertically integrated
manufactured housing company) from 1982-1994 and a Director of Palm Harbor
Homes, Inc. (a national producer of manufactured homes) from 1994-1995.
Kenneth G. Pinder, 62, became a Trustee of N'Tandem in September of
1997. Mr. Pinder entered the manufactured housing business in 1970 managing a
manufactured housing site rental community and formed American Living Homes
Inc., a manufactured housing dealership, in 1974; he continues to be the owner
and president of that corporation. He is also sole owner of Able Mobile Housing
Inc., a temporary housing company for fire loss victims and has developed
manufactured home sites and purchased and sold numerous communities over the
past twenty years. Mr. Pinder has been a member of the Michigan Manufactured
Housing Association for over 35 years. In 1992 he was elected to the Michigan
Manufactured Housing Board of Directors, and serves on its Executive Committee.
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Each of Messrs. McDaniel, Ray and Pinder is a United States citizen.
C. Chateau Communities, Inc.
Chateau Communities, Inc. owns all of the capital stock of The Windsor
Corporation, the Managing General Partner of the Partnership and the advisor to
N'Tandem Trust. Chateau also owns a 9.8% equity ownership interest in N'Tandem.
The Directors and executive officers of Chateau are as follows:
Gary P. McDaniel, 53, has been Chief Executive Officer and a Director
of Chateau since February 1997. He served as the Chairman of the Board,
President and Chief Executive Officer of ROC Communities, Inc. ("ROC"), a
publicly held real estate investment trust specializing in owning and operating
manufactured home communities since 1993 and had been a principal of ROC's
predecessors since 1979. He has been active in the manufactured home industry
since 1972. He is a Trustee of N'Tandem Trust and a Director of The Windsor
Corporation. Mr. McDaniel has been active in several state and national
manufactured home associations, including associations in Florida and Colorado.
In 1996, he was named "Industry Person of the Year" by the National Manufactured
Housing Industry Association. Mr. McDaniel is on the Board of Directors of the
Manufactured Housing Institute. He is a graduate of the University of Wyoming
and served as a Captain in the United States Air Force.
Gebran S. Anton, Jr., 65, first became a Director of Chateau in 1993.
He is the owner of Gebran Anton Development Co. and Anton, Zorn & Associates,
Inc., a commercial and industrial real estate broker and former owner of
Anton's, a men's retail chain. He is an incorporator and Director of Community
Central Bank, and a former Chairman of the Board for First National Bank, St.
Joseph Hospital, and Downtown Development Committee.
James M. Lane, 68, first became a Director of Chateau in 1993. He
retired as the Senior Vice President and Chief Investment Officer of the
Investment Management Division, NBD Bank, Detroit, where he served for
approximately thirteen years. Mr. Lane was associated with the Chase Manhattan
Corporation from 1953 to 1978, attaining the position of Executive Vice
President while also serving as President and Chief Executive Officer of Chase
Investors Management Corporation. He has a B.A. degree in economics from Wheaton
College and an MBA in finance from the University of Chicago.
Rhonda G. Hogan, 45, has served as Director of Chateau since March
1997. Ms. Hogan is presently a partner of Tishman Speyer Properties. She
recently served on the Board of Directors and as President of The Water Club
Condominium Association, Inc. and is on the Silver Council of the Urban Land
Institute. In addition, she served on the Board of Directors of Barnett Bank of
South Florida, N.A. from 1986 to 1996. Ms. Hogan has also served or currently
serves on several other Boards of Directors and as a member of several councils
or institutes, including appointments to State Boards by the Governor and
Cabinet of the State of Florida. Ms. Hogan received her B.B.A. from the
University of Iowa.
C.G. ("Jeff") Kellogg, 54, has been President and a Director of Chateau
since its inception, and was Chief Executive Officer of Chateau from its
inception to February 1997. For the five years preceding the formation of
Chateau, Mr. Kellogg was President and Chief Operating Officer of Chateau
Estates. Mr. Kellogg is a Director of The Windsor Corporation. He is extremely
active in local and national industry associations, often in leadership
positions. Mr. Kellogg is a past President of the Michigan Manufactured Housing
Association and served on the Manufactured Housing Institute's Community
Operations Committee. He is a graduate of Michigan Technological University with
a B.S. in Civil Engineering. Mr. Kellogg is the husband of Tamara D. Fischer,
who is Chateau's Executive Vice President and Chief Financial Officer.
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Edward R. Allen, 57, has served as a director of Chateau since 1993. He
was, for the five years preceding the formation of Chateau, Chairman and Chief
Executive Officer of InterCoastal Communities, Inc., a Florida corporation which
was engaged in operating seven manufactured home communities in Florida. Prior
to joining InterCoastal, Mr. Allen developed a chain of steak houses which he
and his partner sold in 1977 to Green Giant Corporation. He remained as
President for two years, and expanded the chain nearly doubling the number of
restaurants. Mr. Allen is a graduate of Cornell University.
James M. Hankins, 63, served as a director of ROC from August 1993
until ROC's merger with Chateau on February 11, 1997 (the "Merger"). Since the
Merger, he has served as a director of Chateau. He is managing general partner
of a partnership which owns and operates destination RV resorts in Arizona.
Prior to organizing the partnership in 1985, Mr. Hankins was a founder of Mobile
Home Communities, Inc. in 1969, and served as President and Chief Executive
Officer from 1973 to 1984. He holds a B.S. from the University of South Carolina
and an MBA from Harvard University, and has served as a Captain in the United
States Air Force.
Donald E. Miller, 67, served as a director of ROC from August 1993 to
February 1997, and has served as a director of Chateau since February 1997. In
May 1994, Mr. Miller was appointed Vice Chairman of the Board of Directors of
The Gates Corporation. Form 1987 to May 1994, he was President, Chief Operating
Officer and director of The Gates Corporation and The Gates Rubber Company,
which engage in the production and manufacture of rubber products, primarily for
automotive needs. Mr. Miller is a graduate of the Colorado School of Mines.
John A. Boll, 68, has been Chairman of the Board of Directors of
Chateau since its inception in 1993. Prior to the formation of Chateau, Mr. Boll
was the co-founder, partner and Chief Executive Officer of Chateau Estates,
which was formed in 1966. He was inducted in the MH/RV Hall of Fame in 1992 for
his outstanding contributions to the manufactured housing industry. Mr. Boll was
appointed by the Governor of the State of Michigan to become the first Chairman
of the Michigan Mobile Home Commission, which is the principal Michigan
authority regulating manufactured housing, a position he held for six years.
James L. Clayton, 64, served as a director of ROC from August 1993
until February 1997 and as a director of Chateau since February 1997. He is the
founder, and since 1966 has been the Chairman of the Board and Chief Executive
Officer of Clayton Homes, Inc. ("Clayton Homes"), a company which owns and
operates manufactured home factories, sales centers, financing and insurance
units and communities (NYSE: CMH). Mr. Clayton is a director of Dollar General
Stores and Chairman of the Board of BankFirst. In 1992, Mr. Clayton was inducted
into the MH/RV Hall of Fame. Mr. Clayton received an undergraduate degree in
electrical engineering and a law degree from the University of Tennessee.
Steven G. Davis, 48, has served as a director of Chateau since February
1997. He is currently the owner of East Silent Advisors, a real estate
consulting firm. He served as Chief Financial Officer, Executive Vice President
and a director of ROC from 1993 to 1997. From 1990 to 1993, Mr. Davis served as
an officer and director of The Windsor Group, an owner/operator of 42
manufactured home communities, and, from 1991 through March 1993, as that
company's President. Mr. Davis served as a director of ASR Investments, a REIT
owning apartments in the Southwest, and is currently on the advisory boards of
Arlen Capital Advisors and Leroc Partners, Inc. Mr. Davis is a Certified Public
Accountant and is a graduate of the University of San Diego.
Tamara D. Fischer, 42, is Executive Vice President, Chief Financial
Officer of Chateau, having served in these roles since Chateau's formation.
Prior to joining Chateau, Ms. Fischer was employed by
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Coopers & Lybrand for 11 years. Ms. Fischer is a CPA and a graduate of Case
Western Reserve University. Ms. Fischer is the wife of Mr. Kellogg who is the
President and a Director of Chateau.
Rees F. Davis, Jr., 39, is Executive Vice President-Acquisitions of
Chateau, having served in such capacity since February 1997. He served as
Executive Vice President of Acquisitions and Sales for ROC from 1993 to February
1997. Prior to that, Mr. Davis previously served as Vice President of
Acquisitions and Sales and a director for ROC's predecessors since 1986. Mr.
Davis is a two-term past officer of the Colorado Manufactured Housing
Association. He is also an active member of The Manufactured Housing Institute.
Mr. Davis is a graduate of Colorado State University.
Each of the executive officers and Directors of Chateau is a United
States citizen.
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CONSENT FORM CONSENT FORM
WINDSOR PARK PROPERTIES 6, A CALIFORNIA LIMITED PARTNERSHIP
THIS CONSENT is solicited by the General Partners of Windsor Park Properties 6,
A California Limited Partnership (the "Partnership"), in connection with an
action by written consent to be taken on or about _____________, 2000 to approve
(i) the proposed Sales of the Partnership's Properties to N'Tandem Trust, a
California business trust ("N'Tandem"), and (ii) the proposed Plan of
Liquidation that has been adopted by the General Partners, pursuant to which the
Partnership will, following the consummation of the Sales, make liquidating
distributions to the partners in accordance with the terms of the Agreement of
Limited Partnership, all as more fully described in the Consent Solicitation
Statement, dated _____________, 1999, accompanying this Consent Form.
Capitalized terms used but not defined herein have the meanings described in the
Consent Solicitation Statement. For additional information regarding this
consent see the Consent Solicitation Statement under the heading "CONSENT
PROCEDURES; TRANSACTIONS AUTHORIZED BY CONSENTS."
YOUR VOTE WILL BE RECORDED IN ACCORDANCE WITH THE INSTRUCTIONS BELOW. IF NO
INSTRUCTIONS ARE INDICATED ON THIS CONSENT FORM, BY YOUR SIGNATURE BELOW YOU
WILL BE DEEMED TO HAVE CONSENTED TO THE SALES AND PLAN OF LIQUIDATION AS SET
FORTH HEREIN AND IN THE CONSENT SOLICITATION STATEMENT WITH RESPECT TO ALL UNITS
IN THE PARTNERSHIP HELD BY YOU. ABSTAINING OR FAILING TO SIGN AND RETURN THE
CONSENT FORM WILL HAVE THE EFFECT OF VOTING AGAINST THE SALES AND PLAN OF
LIQUIDATION, SO THE GENERAL PARTNERS URGE YOU TO COMPLETE AND RETURN THIS FORM
AS DESCRIBED BELOW.
THE GENERAL PARTNERS RECOMMEND VOTING FOR THE SALES AND PLAN OF LIQUIDATION.
---
Proposal 1 -- Proposal 1 is for the General Partners to proceed with the Sales
to N'Tandem in accordance with the Purchase and Sale Agreement.
[_] CONSENT [_] WITHHOLD CONSENT [_] ABSTAIN
Proposal 2 -- Proposal 2 is for the General Partners to proceed with the Plan of
Liquidation following the consummation of the Sales.
[_] CONSENT [_] WITHHOLD CONSENT [_] ABSTAIN
Each of Proposal 1 and Proposal 2 is conditioned upon approval of the other
Proposal by the Limited Partners. Accordingly, any Limited Partner desiring to
have the General Partners proceed with the Sales and the Plan of Liquidation
needs to consent to both Proposal 1 and Proposal 2.
----
PLEASE CHECK THE APPROPRIATE BOX ABOVE WITH RESPECT TO EACH PROPOSAL.
The undersigned acknowledges receipt of the Consent Solicitation Statement
pertaining to the Sales and Plan of Liquidation and affirms that he/she has read
such Consent Solicitation Statement in its entirety. Please sign this Consent
Form in the space provided below. Execution by Limited Partners who are not
individuals must be made by an authorized signatory.
Dated: ______________________, 2000
_____________________________________________
Name of Limited Partner
_____________________________________________
Signature
Title:
_____________________________________________
Signature if held jointly
Please sign exactly as your name appears. When Units
are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee
or guardian, please give full title as such. If a
corporation, please sign in full corporation name, by
President or other authorized officer. If a
partnership, please sign a partnership name by
authorized person.
TO BE VALID THIS CONSENT FORM MUST BE RECEIVED BY _____________, 2000. Please
complete, sign, date and return this Consent Form using the enclosed postage-
prepaid envelope or deliver to: Arlen Capital, LLC, 1650 Hotel Circle North,
Suite 200, San Diego, California 92108, Attention: ___________. Facsimile copies
of this Consent Form, properly completed and duly executed, will be accepted by
Arlen Capital, LLC at ________. If you have any questions, please call Arlen
Capital, LLC at ___________.
<PAGE>
ROGERS & WELLS LLP
200 Park Avenue New York, NY 10166-0153
TELEPHONE 212 878-8000 FACSIMILE 212 878-8375
November 19, 1999
VIA EDGAR
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Consent Solicitation Statement on Schedule 14A
Dear Ladies and Gentlemen:
On behalf of Windsor Park Properties 6, A California Limited Partnership (the
"Partnership"), and pursuant to Regulation 14A of the Securities Exchange Act of
1934, as amended, attached please find a Consent Solicitation Statement on
Schedule 14A of the Partnership. Also attached is a copy of the cover letter
and the Consent Form to be sent to limited partners in connection with this
transaction.
Please note that the transaction described in the Partnership's Consent
Solicitation Statement is similar to a transaction completed during the second
quarter of 1999 by Windsor Park Properties 4, A California Limited Partnership
("WPP 4"), an affiliate of the Partnership. Accordingly, we have made every
effort to prepare the Partnership's Consent Solicitation Statement and other
solicitation documents in compliance with the comments issued by the Staff of
the Securities and Exchange Commission ("SEC") in connection with its review of
the solicitation documents relating to the WPP 4 transaction.
In addition, a corresponding Rule 13e-3 Transaction Statement on Schedule 13e-3
relating to the transaction described in the Partnership's Consent Solicitation
Statement has also been filed today with the SEC.
The filing fee relating to the Partnership's Consent Solicitation Statement has
been wire transferred to the SEC pursuant to Rule 3a, Part 202.
Please direct any questions or comments concerning the enclosed materials to Tim
Korth at (212) 878-8223 or to the undersigned at (212) 878-3458.
Very truly yours,
/s/ Jeffrey P. Travers
Jeffrey P. Travers
enclosures
cc: Gary P. McDaniel
Steven G. Waite
Jay L. Bernstein, Esq.
Timothy W. Korth, Esq.
