<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:
[ ] Preliminary proxy statement [ ] Confidential, For Use of the Commission
[X] Definitive proxy statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
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:
$3,088
________________________________________________________________________________
[X] Fee paid previously with preliminary materials:
$3,088
________________________________________________________________________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
________________________________________________________________________________
(2) Form, schedule or registration statement no.:
________________________________________________________________________________
(3) Filing party:
________________________________________________________________________________
(4) Date filed:
________________________________________________________________________________
________________________________
/1/ Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
CONSENT SOLICITATION STATEMENT
Windsor Park Properties 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 expired 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'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 approved, and recommend that the Partnership
proceed with, a plan of liquidation (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 $32.15 per Unit) will be made to Limited 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";
. 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
<PAGE>
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 not engaged in any 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 the Plan of Liquidation are fair,
from both a financial and a procedural point of view, to the 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.
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 the 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 March 15, 2000 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 April 28, 2000.
This Consent Solicitation Statement was first mailed to Limited Partners on
or about March 22, 2000.
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 APRIL 28, 2000.
This Consent Solicitation Statement is dated March 22, 2000.
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>
<S> <C>
Page
----
SUMMARY........................................................................................................................ 1
Purpose of the Consent Solicitation; Proposals 1 and 2......................................................................... 1
Background of the Proposed Transactions........................................................................................ 2
Relationship of the Various Parties to the Proposed Transactions............................................................... 4
Summary Risk Factors........................................................................................................... 5
Valuation of Properties........................................................................................................ 6
Recommendation of the General Partners......................................................................................... 7
Fairness Opinion............................................................................................................... 10
Alternatives Considered........................................................................................................ 10
N'Tandem's and Chateau's Belief as to the Fairness of the Proposed Transactions; N'Tandem's and Chateau's Reasons for Engaging
in the Proposed Transactions.................................................................................................. 12
Appraisals..................................................................................................................... 12
Certain Federal Income Tax Considerations...................................................................................... 13
Consent Procedures; Transactions Authorized by Consents........................................................................ 13
Record Date; Required Consents................................................................................................. 14
No Appraisal or Dissenters' Rights............................................................................................. 14
Historical Distributions....................................................................................................... 14
No Established Trading Market for Units........................................................................................ 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 Not Engaged in Marketing Efforts with Respect to the Properties...................................... 17
Appraisals May Not Reflect the Current Fair Market Values of the Properties.................................................... 17
Loss of Opportunity to Benefit from Future Events.............................................................................. 17
DESCRIPTION OF THE PROPOSED TRANSACTIONS....................................................................................... 17
Purpose of the Consent Solicitation; Proposals 1 and 2......................................................................... 17
Background of the Proposed Transactions........................................................................................ 18
Information Concerning N'Tandem and Chateau.................................................................................... 21
The Purchase and Sale Agreement................................................................................................ 22
Solicitation Expenses.......................................................................................................... 23
Estimate of Liquidating Distributions Payable to Limited Partners.............................................................. 23
Ownership of Properties by N'Tandem Following the Sales........................................................................ 25
SPECIAL FACTORS................................................................................................................ 25
Fairness of the Proposed Transactions; Recommendation of the General Partners.................................................. 25
Fairness Opinion............................................................................................................... 28
Alternatives Considered........................................................................................................ 33
N'Tandem's and Chateau's Belief as to the Fairness of the Proposed Transactions; N'Tandem's and Chateau's Reasons for Engaging
in the Proposed Transactions.................................................................................................. 35
Appraisals..................................................................................................................... 35
Discount for Ownership Interests in Properties................................................................................. 43
SUMMARY OF SELECTED TERMS OF THE PARTNERSHIP AGREEMENT......................................................................... 44
Net Proceeds from the Sales.................................................................................................... 44
</TABLE>
iv
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Page
----
Allocation of Profit or Loss on the Sales...................................................................................... 44
Voting Rights of Limited Partners.............................................................................................. 45
Limitation of Liability and Indemnification of the General Partners............................................................ 46
THE PARTNERSHIP'S PROPERTIES................................................................................................... 46
Nature of Ownership Interests in Properties.................................................................................... 46
Description of the Properties; Appraised Values and Ownership Interests........................................................ 47
FEDERAL INCOME TAX CONSIDERATIONS.............................................................................................. 48
Overview....................................................................................................................... 48
Taxation on the Sales.......................................................................................................... 49
Liquidation of the Partnership................................................................................................. 50
Income Tax Rates/Taxation of Gains and Losses.................................................................................. 50
CONSENT PROCEDURES; TRANSACTIONS AUTHORIZED BY CONSENTS........................................................................ 51
Solicitation of Consents....................................................................................................... 52
Record Date; Required Vote..................................................................................................... 52
No Appraisal or Dissenters' Rights............................................................................................. 52
Consequences If Consents Are Not Obtained...................................................................................... 53
FINANCIAL STATEMENTS........................................................................................................... 53
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE................................................................................ 53
APPENDIX A Fairness Opinion.................................................................................................... A-1
APPENDIX B Information Concerning Officers and Directors of the Managing General Partner, N'Tandem and Chateau................ B-1
APPENDIX C Financial and Operating Forecasts and Projections for the Partnership Prepared by the Managing General Partner..... C-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 expired 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 $32.15 per Unit) will be made to
Limited Partners in accordance with the terms of the Partnership Agreement.
Two Proposals are being proposed in this Consent Solicitation Statement for
approval by the Limited Partners. The first Proposal is for the General
Partners to proceed with the Sales to N'Tandem pursuant to the Purchase and Sale
Agreement ("Proposal 1"). The second Proposal is for the General Partners to
proceed with the Plan of Liquidation following the consummation of the Sales
("Proposal 2").
If each of the two Proposals is approved by a majority-in-interest of the
Limited Partners, the General Partners will proceed with the Sales and the Plan
of Liquidation. Each of the Proposals is conditioned upon 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 invest in large, institutional, manufactured home communities
containing a full complement of amenities,
<PAGE>
including clubhouses, pools, tennis and basketball courts, shuffleboard,
playgrounds, curbed streets, landscaping and off-street parking, and consisting
primarily of multi-section sites. In contrast, N'Tandem seeks to invest in lower
profile manufactured home communities which, like the Properties, are located in
tertiary demographic and geographic markets, are smaller in size with fewer
amenities and contain a greater proportion of single-wide spaces. Additionally,
N'Tandem also has a partial ownership interest in the Rancho Margate and Winter
Haven Properties, 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 begin selectively marketing for sale several of the properties and
partial ownership interests held by the Windsor Limited Partnerships.
As part of its analysis of the Partnership following the Windsor
Acquisition, the General Partners ordered appraisals for the one property which
was 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.
In the fourth quarter of 1998, the General Partners began to explore
possible strategic alternatives for the Partnership with a view towards
providing the Limited Partners with an opportunity to achieve liquidity in their
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
Consolidation"). In the Proposed Consolidation, the Limited Partners would have
exchanged their Units for common shares of beneficial interest or other
securities in N'Tandem. In contemplation of the Proposed Consolidation, the
Managing General Partner (i) retained Whitcomb Real Estate (the "Appraiser") to
render 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 the best course of
action for the Partnership and its Limited Partners would be for the Partnership
to sell its remaining Properties to N'Tandem. 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
2
<PAGE>
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 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 an oral and written
fairness opinion to the Managing General Partner stating that the aggregate
purchase price to be paid by N'Tandem for the Properties was fair to the Limited
Partners from a financial point of view. On March 1, 2000, Legg Mason
reconfirmed its earlier opinion by delivering an oral and written fairness
opinion (the "Fairness Opinion"), which amended and supplanted such earlier
opinion.
3
<PAGE>
Relationship of the Various Parties to the Proposed Transactions
The relationships of the various parties to the proposed transactions are
set forth in the diagram below and described elsewhere in this Consent
Solicitation Statement under "MATERIAL RISK FACTORS AND OTHER CONSIDERATIONS --
Conflicts of Interest."
[FLOW 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 aggregate acquisition fee of $463,100 from N'Tandem equal to 3%
of the total purchase price paid by N'Tandem for the Properties. In addition,
the Sales will result in an increase in the annual and other fees and
compensation payable to the Managing General Partner under the Advisory
Agreement. As a result of the economic benefits accruing to the Managing
General Partner in connection with the Sales, the Sales and the recommendation
and views of the Managing General Partner are subject to potential conflicts of
interest.
Purchase Prices 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 Not Engaged in Marketing Efforts with Respect to
the Properties. The General Partners have not engaged in marketing efforts with
respect to the Properties. Marketing the Properties to third parties could
conceivably result in higher purchase prices being paid for the Properties than
those that are being paid by N'Tandem in connection with the Sales.
Appraisals May Not Reflect the Current Fair Market Values of the
Properties. The Appraisals were rendered in 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, Limited Partners will also be forgoing
current benefits of ownership of the Properties, such as continuing
distributions.
5
<PAGE>
Valuation of Properties
The following table sets forth information regarding the Partnership's
Properties and their respective values (based on the Appraised Values), the
discount being applied to the Ownership Interests, the debt attributable to the
Properties as of September 30, 1999, and the value of the Properties after
deducting attributable debt and applicable discount:
<TABLE>
<CAPTION>
Percentage Affiliate Percentage
Name of Property Ownership Ownership(1) Date Acquired
- ---------------- --------- ------------ -------------
<S> <C> <C> <C>
Chisolm Creek
Wichita, KS 100% -- 7/1989
Town and Country
Estates 58% 42%(4) 1/1989
Tucson, AZ
Carefree Village
Tampa, FL 44% 56%(5) 7/1990
Rancho Margate
Margate, FL 41% 59%(6) 9/1995
Winter Haven Winter
Haven, FL 41% 59%(6) 10/1995
Garden Walk
Palm Beach
Garden, FL 31% 69%(7) 8/1995
Total
<CAPTION>
Value, Based on Discount on Debt
Appraised Value, Ownership Attributable as
Name of Property Before Debt(2) Interest(2)(3) of 9/30/99(2) Net Value(2)
---------------- -------------- -------------- ------------- ------------
<S> <C> <C> <C> <C>
Chisolm Creek
Wichita, KS $ 2,940,000 -- -- $2,940,000
Town and Country
Estates $ 3,132,000 $156,600 $ 899,000 $2,076,400
Tucson, AZ
Carefree Village
Tampa, FL $ 2,917,200 $291,700 $1,531,200 $1,094,300
Rancho Margate
Margate, FL $ 2,624,000 $262,400 $1,313,100 $1,048,500
Winter Haven Winter
Haven, FL $ 1,521,100 $152,100 $ 814,700 $ 554,300
Garden Walk
Palm Beach
Garden, FL $ 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) Represents the ownership percentage held by affiliates of the Managing
General Partner, other than the Partnership, in properties underlying the
Ownership Interests.
(2) With respect to the five Ownership Interests, such amount represents the
Partnership's allocable share based upon its ownership percentage in the
underlying property.
(3) With respect to the five Ownership Interests, N'Tandem is applying (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. In a similar
transaction which was completed in June 1999 involving N'Tandem and the
General Partners, no discount was applied to the purchase price paid for
any of the properties acquired by N'Tandem in that transaction. For a
discussion of the discount being applied to the Ownership Interests, see
"SPECIAL FACTORS -- Discount for Ownership Interests in Properties."
(4) The 42% interest in this Property is held by Windsor Park Properties 5, A
California Limited Partnership ("Windsor 5"), as tenant in common with the
Partnership. The Managing General Partner is also the sole managing general
partner of Windsor 5.
(5) The 56% interest in this Property is held by Windsor Park Properties 7, A
California Limited Partnership ("Windsor 7"), as tenant in common with the
Partnership. The Managing General Partner is also the sole managing general
partner of Windsor 7.
(6) Each of these Properties is owned by Windsor Park 456, An Arizona Limited
Partnership ("Windsor Park 456"). 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 5 and is the external investment advisor to
N'Tandem, which together own all of the remaining limited partner interests
in Windsor Park 456. N'Tandem and Windsor 5 have a 33% and 26% limited
partner interest, respectively, in Windsor Park 456.
(7) The 69% interest in this Property is held by Windsor 7 as tenant in common
with the Partnership. The Managing General Partner is also the sole
managing general partner of Windsor 7.
6
<PAGE>
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 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, based upon the
opinion of the Appraiser, that the discounts being applied in
connection with the Sales are substantially less than the discounts
that would have been applied had the Ownership Interests been sold to
a third-party purchaser. See "SPECIAL FACTORS -- Discount for
Ownership Interests in Properties";
. As an additional amount distributable to Limited Partners, an
aggregate of approximately $789,555, less attorney's fees and
expenses, shall be paid to Limited Partners in connection with the
proposed settlement of an existing class action and derivative
lawsuit. As a result, if the proposed settlement is approved, the
General Partners estimate that those Limited Partners who do not elect
to exclude themselves from the class will receive, after payment of
estimated attorney's fees and expenses to plaintiffs' counsel, an
additional amount of approximately $1.85 per Unit. This additional
amount per Unit distributable to Limited Partners has been included in
the estimated $32.15 to be paid to Limited Partners upon final
liquidation of the Partnership. See "DESCRIPTION OF THE PROPOSED
TRANSACTIONS -- Background of the Proposed Transactions" and "--
Estimate of Liquidating Distributions Payable to Limited Partners";
. The aggregate consideration of approximately $9,902,655 (which
includes the amount payable in settlement of the lawsuit) being paid
in connection with the proposed transactions exceeds the net book
value of the Partnership's assets of $6,473,200 as of September 30,
1999 by $3,429,455;
. 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 ($32.15 per Unit) are higher than (i) the $25.00 per Unit
offered to Limited Partners on September 25, 1999 in
7
<PAGE>
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 $27.49 per Unit in the secondary markets, as
reported by The Partnership Spectrum, for the period of May 1, 1999
through December 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 $463,100 and $926,300 (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 for the
Properties is fair, from a financial point of view, to the Limited
Partners. The General Partners have adopted, in its entirety, the
Fairness Opinion, including its underlying analysis, prepared by Legg
Mason as part of their analysis of the Sales and Plan of Liquidation.
The General Partners did not undertake to perform their own analysis
with respect to the matters considered by the Fairness Opinion, For a
discussion of the Fairness Opinion, see "SPECIAL FACTORS -- Fairness
Opinion."
In reaching their determination that the Sales and the Plan of Liquidation
are fair from a financial point of view to the affiliated and unaffiliated
Limited Partners, the General Partners also considered the following potentially
negative aspects of the Sales:
. 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;
. With respect to the Ownership Interests held by the Partnership, the
remaining interests in the properties underlying such Ownership
Interests are held by Windsor 5 and Windsor 7, two affiliated limited
partnerships having the General Partners as their sole general
partners, or Windsor Park 456, an affiliated limited partnership which
has the Managing General Partner as its sole general partner and
Windsor 5 and N'Tandem as its other limited partners;
. With respect to the discounts being applied by N'Tandem to the
Ownership Interests held by the Partnership, no discount was applied
to the purchase price paid for any of the properties acquired by
N'Tandem in a similar transaction which was completed in June 1999
involving N'Tandem and the General Partners;
. 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 forgoing current
benefits of the ownership of the Properties such as continuing
distributions.
The above described factors are all of the material factors considered by
the General Partners in determining that the Sales and the Plan of Liquidation
are fair to the affiliated and unaffiliated Limited Partners from a financial
point of view. In reaching their determination that the Sales and the Plan of
Liquidation are fair to the affiliated and unaffiliated Limited Partners from a
financial point of view, the General Partners did not assign relative weights to
the above factors or determine that any factor was of particular importance;
rather, the General Partners viewed the positive factors as a totality and the
8
<PAGE>
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 for a minority interest in real
estate, analyze the applicability of a discount in valuing a partial
ownership interest in a manufactured home community. See "SPECIAL
FACTORS -- Discount for Ownership Interests in Properties";
. 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 $463,100 that are being paid by
N'Tandem), and were not the result of arm's-length negotiations and
bargaining between independent parties. Accordingly, the Sales 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 not engaged in marketing efforts on behalf
of the Partnership with respect to the Properties. The General
Partners do not intend to take any actions to market or sell the
Properties pending the results of this Consent Solicitation.
9
<PAGE>
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 an oral and written fairness
opinion to the Managing General Partner to the effect that, as of such date, the
aggregate purchase price to be paid to the Partnership by N'Tandem for the
Properties is fair, from a financial point of view, to the Limited Partners. On
March 1, 2000, Legg Mason reconfirmed its earlier opinion by delivering the
Fairness Opinion, which amended and supplanted such earlier opinion. In
rendering the Fairness Opinion, Legg Mason conducted (i) a liquidation analysis
assuming that the Properties were sold to third-party purchasers, (ii) a
comparable company analysis to establish an implied equity value for the Units
and (iii) a continuation analysis assuming that the Partnership extended its
stated term and the Properties continued to be held by the Partnership until
December 31, 2004. The Fairness Opinion addresses only the fairness, from a
financial point of view, of aggregate purchase price to be paid to the
Partnership by N'Tandem for the Properties and does not account for or factor
into its analysis the additional consideration distributable to Limited Partners
in connection with the proposed settlement of an existing class action and
derivative lawsuit. See "DESCRIPTION OF THE PROPOSED TRANSACTIONS -- Background
of the Proposed Transactions" and "-- Estimate of Liquidating Distributions
Payable to Limited Partners." The Fairness Opinion, which is set forth in
Appendix A to this Consent Solicitation Statement, should be read in its
entirety for a description of the procedures followed, assumptions and
qualifications made, matters considered and the limits of the review undertaken
by Legg Mason. The Fairness Opinion is based on conditions as of its date and,
although subsequent developments could have a material effect on the opinion
stated, the Fairness Opinion will not be updated.
Alternatives Considered
In addition to considering the Sales and the Plan of Liquidation, the
General Partners also identified and considered the following alternative
courses of action for the Partnership:
Continuation of the Partnership. The 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
10
<PAGE>
believes that Limited Partners desire to achieve the near-term liquidation of
their investment in the Partnership. This belief is based on unsolicited
inquiries received from time to time by the Managing General Partner from
Limited Partners regarding the status of their investment in the Partnership
following the expiration of its stated term 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 $463,100 and $926,300 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 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
11
<PAGE>
established trading price for the common shares, but was instead based on an
analysis of companies that the Managing General Partner considered to be
comparable to N'Tandem on a post-consolidation basis that sought to anticipate
the market price of N'Tandem's common shares following the Proposed
Consolidation by reference to the current trading prices of the securities of
such comparative companies.
N'Tandem's and Chateau's Belief as to the Fairness of the Proposed Transactions;
N'Tandem's and Chateau's Reasons for Engaging in the Proposed Transactions
N'Tandem and Chateau believe that the Sales are fair to the Limited
Partners from both a financial point of view and a procedural point of view. In
reaching such determination, N'Tandem and Chateau considered the same factors
and positive and negative aspects of the Sales as were considered by the General
Partners, as described in this Consent Solicitation Statement under "SPECIAL
FACTORS -- Fairness of the Proposed Transactions; Recommendation of the General
Partners," and have specifically adopted the analyses and conclusions of the
General Partners described herein.
In October 1998, N'Tandem amended and restated N'Tandem's Declaration of
Trust and By-laws to convert N'Tandem from a finite-life entity to an infinite-
life entity in order to enable it to begin implementing a growth-oriented
business plan intended to cause N'Tandem to attain greater size and asset
diversity. The acquisition by N'Tandem of the Properties is being engaged in by
N'Tandem as part of such growth-oriented business plan.
Appraisals
The Appraiser, Whitcomb Real Estate located in Tampa, Florida, was retained
by the Managing General Partner to render the Appraisals with respect to the
Partnership's Properties. The Appraiser is certified as a Master Appraiser by
the Appraisal Institute and was selected based upon its expertise as well as its
familiarity with valuing 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 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.
12
<PAGE>
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 $3,504,500.
Allocation of Gain. The $3,504,500 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 $3,469,500 of taxable gain on the Sales
to Limited Partners (or an average of $12.10 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 $11.98 per Unit on liquidation of the Partnership.
Consent Procedures; Transactions Authorized by Consents
The consents being solicited hereby will authorize the General Partners:
(i) to complete the Sales at any time on or prior to May 31, 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.
13
<PAGE>
Record Date; Required Consents
The close of business on March 15, 2000 has been fixed as the record date
(the "Record Date") for determining Limited Partners entitled to consent to the
Sales and the Plan of Liquidation. As of the Record Date, there were 286,564
Units outstanding held of record by a total of 3,297 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 10 Units,
but have agreed to abstain from voting on the Proposals with respect to 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.
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.............. $ 593,400 $ 587,400 $ 2.04
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.............. $21,371,700 $21,157,800 $70.91
=========== =========== ======
</TABLE>
- ---------------------------
(1) The portion of such distribution representing a return of capital to the
Limited Partners is as follows: 42% in 1999, 0% in 1998, 77% in 1997, 69%
in 1996, 56% in 1995, 77% in 1994 and 82% in 1993.
The Partnership typically makes distributions to its partners on a
semiannual basis. There are no restrictions on the Partnership's present or
future ability to make distributions. The Partnership is not in 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
Months Ended For the Year Ended December 31,
September 30, ----------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ----
Statement of Operations
Data:
<S> <C> <C> <C> <C> <C> <C>
Revenues...................... $ 689,300 $1,341,900 $ 881,400 $ 883,600 $ 807,700 $ 706,000
Net income (loss)............. $ 344,300 $ 609,700 $ 138,400 $ 187,600 $ 198,300 $ (136,700)
Earnings (loss) 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 $8,344,700 $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 that are discussed below. Limited Partners are urged to consider
such factors and considerations and to consult with their independent legal,
financial and tax advisors before consenting to the Sales and the Plan of
Liquidation.
Conflicts of Interest
Managing General Partner and N'Tandem are Under Common Control of Chateau.
The Sales and the Plan of Liquidation, and the recommendation of the General
Partners set forth herein, could be deemed to involve conflicts of interest
between the Managing General Partner and the Limited Partners. The Managing
General Partner and N'Tandem are under the common control of Chateau. Chateau
owns all of the issued and outstanding capital stock of the Managing General
Partner and the Chief Executive Officer and the President of Chateau are the
sole Directors of the Managing General Partner. Chateau, which effectively
controls N'Tandem, currently owns approximately 9.8% of the outstanding capital
stock of N'Tandem and, 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 $463,100 in Acquisition Fees From
N'Tandem and Other Economic Benefits From the Proposed Transactions. The
Managing General Partner is also the external investment advisor of N'Tandem.
In connection with the Sales, pursuant to the Advisory Agreement between such
parties, the Managing General Partner will receive an aggregate acquisition fee
of $463,100 from N'Tandem equal to 3% of the total purchase price for each of
the Properties. On a Property-by-Property basis, this acquisition fee is
estimated to be $88,200 for the Chisolm Creek Property, $89,300 for the Town &
Country Estates Property, $78,800 for the Carefree Village Property, $70,800 for
the Rancho Margate Property, $41,000 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 $154,400 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 Not Engaged in Marketing Efforts with Respect to the
Properties
The General Partners have not engaged in marketing efforts with respect to
the Properties. Additionally, the General Partners do not intend to take any
actions to market or sell the Properties pending the results of this Consent
Solicitation; however, if a superior or competing offer were to emerge prior to
the end of the solicitation period for this Consent Solicitation 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 forgoing current benefits of
ownership of the Properties, such as continuing distributions.
DESCRIPTION OF THE PROPOSED TRANSACTIONS
Purpose of the Consent Solicitation; Proposals 1 and 2
In accordance with the Partnership Agreement, the term of the Partnership
expired 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 "-- The Purchase and Sale Agreement."
Upon completion of the Plan of Liquidation, final liquidating
17
<PAGE>
distributions (estimated to be approximately $32.15 per Unit) will be made to
Limited Partners in accordance with the terms of the Partnership Agreement.
Two Proposals are being proposed in this Consent Solicitation Statement for
approval by the Limited Partners. Proposal 1 is for the General Partners to
proceed with the Sales to N'Tandem pursuant to the Purchase and Sale Agreement.
Proposal 2 is for the General Partners to proceed with the Plan of Liquidation
following the consummation of the Sales.
If each of the two Proposals is approved by a majority-in-interest of the
Limited Partners, the General Partners will proceed with the Sales and the Plan
of Liquidation. Each of the Proposals is conditioned upon the approval of the
other Proposal by the Limited Partners. Accordingly, any Limited Partner
desiring to have the General Partners proceed with the Sales and the Plan of
Liquidation needs to vote for both Proposal 1 and Proposal 2.
-- ----
The Managing General Partner is a wholly-owned subsidiary of Chateau and
the Managing General Partner and N'Tandem are under common control of Chateau.
Gary P. McDaniel and C.G. Kellogg, the Directors of the Managing General
Partner, are the Chief Executive Officer and the President, respectively, of
Chateau. The Managing General Partner of the Partnership is also the external
investment advisor to N'Tandem. Chateau is one of the largest publicly held
companies in the United States engaged in the ownership and operation of
manufactured home communities. N'Tandem, rather than Chateau, will be
purchasing the Properties because the Properties are more in line with the type
and quality of assets sought by N'Tandem. In general, Chateau seeks to invest
in large, institutional, manufactured home communities containing a full
complement of amenities, including clubhouses, pools, tennis and basketball
courts, shuffleboard, playgrounds, curbed streets, landscaping and off-street
parking, and consisting primarily of multi-section sites. In contrast, N'Tandem
seeks to invest in lower profile manufactured home communities which, like the
Properties, are located in tertiary demographic and geographic markets, are
smaller in size with fewer amenities and contain a greater proportion of single-
wide spaces. Additionally, N'Tandem also has a partial ownership interest in
the Rancho Margate and Winter Haven Properties, 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
18
<PAGE>
Trust, two of the appointed Trustees of N'Tandem are "independent trustees." An
"independent trustee" is a Trustee who is not affiliated, directly or
indirectly, with N'Tandem or an advisor of N'Tandem, whether by ownership of,
ownership in, employment by, or any material business or professional
relationship with, N'Tandem or such advisor or an affiliate of N'Tandem or such
advisor, or by virtue of serving as an officer or director of N'Tandem or any
advisor or affiliate of N'Tandem or such advisor. 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-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, completed a transaction (the
"Windsor 4 Transaction") in which Windsor 4 sold all of its remaining assets to
N'Tandem and, thereafter, made liquidating distributions to its partners in
accordance with the terms of its agreement of limited partnership. Prior to its
liquidation, Windsor 4 held partial ownership interests in 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 one property that
was wholly-owned by the Partnership and the five manufactured home communities
in which the Partnership held Ownership Interests. The General Partners
received these appraisals, which reported on the appraised values of the wholly-
owned and partially-owned properties held by the Partnership, in late 1997 and
early 1998.
In the fourth quarter of 1998, the General Partners began to explore
possible strategic alternatives for the Partnership with a view towards
providing the Limited Partners with an opportunity to achieve liquidity in their
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."
19
<PAGE>
In September 1999, the General Partners concluded that the best course of
action for the Partnership and its Limited Partners would be for the Partnership
to sell its 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 a written opinion as to the
fairness, from a financial point of view, to the Limited Partners of the
aggregate purchase price to be paid by N'Tandem to the Partnership for the
Properties. On November 15, 1999, Legg Mason delivered an oral and written
fairness opinion to the Managing General Partner stating that the aggregate
purchase price to be paid by N'Tandem for the Properties was fair to the Limited
Partners from a financial point of view. On March 1, 2000, Legg Mason
reconfirmed its earlier opinion by delivering the Fairness Opinion, which
amended and supplanted such earlier opinion.
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 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.
On December 3, 1999, Mr. Gaines, also a limited partner of the Partnership
and Windsor Park Properties 3, A California Limited Partnership ("Windsor 3"),
amended the Compliant by filing an amended purported class action and derivative
complaint (the "Amended Complaint"), on behalf of himself and other similarly
situated limited partners, against the General Partners, in their capacity as
the general partners of the Partnership, Windsor 3 and 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. In addition to the
original allegations set forth in the Complaint, the Amended Complaint also
alleges generally breach of fiduciary duty and contractual duties owed by the
defendants to the Partnership and
20
<PAGE>
Windsor 3 and their limited partners in that the defendants allegedly failed to
take steps to ensure the entire fairness of the transactions by proposing to
sell the partnerships' assets at prices that were improperly discounted from the
appraisal values and without taking steps to seek out alternative purchasers or
otherwise maximize value to the limited partners.
In the Amended Complaint, the plaintiff asserts causes of action for breach
of contract, breach of fiduciary duty and a derivative claim for breach of
fiduciary duty and seeks 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 General
Partners dispute each claim set forth in the Amended Complaint, they have
concluded that the further defense of this action would be protracted, expensive
and distracting to their operations. To that end, the General Partners have
reached an agreement in principle that would settle all claims in the action,
subject to court approval of a definitive signed agreement. The proposed
settlement, if approved, provides for the total payment of more than $1 million
by the defendants, plus the costs of administering the settlement fund
(including the mailing of notice to class members), in return for releases from
all actual and potential claims concerning the management or operation of the
Partnership, Windsor 3 and Windsor 4 against all of the defendants and any
affiliated persons or entities. Accordingly, there would be available for
distribution to Limited Partners an aggregate of approximately $789,555 as
additional compensation if the proposed settlement is approved. In connection
with the proposed settlement, the defendants have agreed not to object to the
application by plaintiffs' counsel to the court for an award of up to one-third
of the aggregate settlement amount to be paid as attorney's fees and expenses.
As a result, if the proposed settlement is approved, the General Partners
estimate that those Limited Partners who do not elect to exclude themselves from
the class will receive, after payment of estimated attorney's fees and expenses
to plaintiffs' counsel, an additional amount of approximately $1.85 per Unit.
Pursuant to the terms of the proposed settlement agreement, the General Partners
have the right, but not the obligation, to terminate the proposed settlement if
the Limited Partners fail to approve the Proposals or the limited partners of
Windsor 3, who are voting on proposals similar to those set forth in this
Consent Statement, fail to approve such similar proposals.
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 of, and one of three Trustees on, the Board of Trustees of N'Tandem.
Following the Sales, it is anticipated that Chateau will also hold approximately
$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.
21
<PAGE>
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:
<TABLE>
<CAPTION>
Percentage Affiliate Percentage
Name of Property Ownership Ownership(1) Date Acquired
---------------- --------- ------------ -------------
<S> <C> <C> <C>
Chisolm Creek
Wichita, KS 100% -- 7/1989
Town and Country
Estates 58% 42%(4) 1/1989
Tucson, AZ
Carefree Village
Tampa, FL 44% 56%(5) 7/1990
Rancho Margate
Margate, FL 41% 59%(6) 9/1995
Winter Haven Winter
Haven, FL 41% 59%(6) 10/1995
Garden Walk
Palm Beach, FL
Garden, FL 31% 69%(7) 8/1995
Total
<CAPTION>
Value, Based on Discount on Debt
Appraised Value, Ownership Attributable as
Name of Property Before Debt(2) Interest(2)(3) of 9/30/99(2) Net Value(2)
---------------- -------------- -------------- ------------- ------------
<S> <C> <C> <C> <C>
Chisolm Creek
Wichita, KS $ 2,940,000 -- -- $2,940,000
Town and Country
Estates $ 3,132,000 $156,600 $ 899,000 $2,076,400
Tucson, AZ
Carefree Village
Tampa, FL $ 2,917,200 $291,700 $1,531,200 $1,094,300
Rancho Margate
Margate, FL $ 2,624,000 $262,400 $1,313,100 $1,048,500
Winter Haven Winter
Haven, FL $ 1,521,100 $152,100 $ 814,700 $ 554,300
Garden Walk
Palm Beach, FL
Garden, FL $ 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) Represents the ownership percentage held by affiliates of the Managing
General Partner, other than the Partnership, in properties underlying the
Ownership Interests.
(2) With respect to the five Ownership Interests, such amount represents the
Partnership's allocable share based upon its ownership percentage in the
underlying property.
(3) With respect to the five Ownership Interests, N'Tandem is applying (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. In a similar
transaction which was completed in June 1999 involving N'Tandem and the
General Partners, no discount was applied to the purchase price paid for
any of the properties acquired by N'Tandem in that transaction. For a
discussion of the discount being applied to the Ownership Interests, see
"SPECIAL FACTORS -- Discount for Ownership Interests in Properties."
(4) The 42% interest in this Property is held by Windsor 5 as tenant in common
with the Partnership. The Managing General Partner is also the sole
managing general partner of Windsor 5.
(5) The 56% interest in this Property is held by Windsor 7 as tenant in common
with the Partnership. The Managing General Partner is also the sole
managing general partner of Windsor 7.
(6) Each of these Properties is owned by Windsor Park 456. 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 5 and is the external
investment advisor to N'Tandem, which together own all of the remaining
limited partner interests in Windsor Park 456. N'Tandem and Windsor 5 have
a 33% and 26% limited partner interest, respectively, in Windsor Park 456.
(7) The 69% interest in this Property is held by Windsor 7 as tenant in common
with the Partnership. The Managing General Partner is also the sole
managing general partner of Windsor 7.
22
<PAGE>
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. In the event that only a portion of the principal amount
of the Promissory Note is converted into shares of beneficial interest, N'Tandem
anticipates that it will finance the remainder of the Promissory Note primarily
through third-party equity and debt sources and/or advances under its existing
$20 million acquisition line of credit.
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 December 31, 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, the
capital expenditures for the Properties for the period January 1, 2000 through
the closing date, the amount of closing adjustments and, with respect to each
Limited Partner, whether such Limited Partners elects to be excluded from the
class entitled to receive a distribution in connection with the proposed
settlement of the Amended Complaint.
23
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Aggregate Purchase Price for the Properties $ 15,438,100
Less: Outstanding Mortgage Indebtedness(1) $ (6,325,000)
Current Liabilities $ (125,700)
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 $ 326,400
------------
Cash Available for Distribution $ 8,771,900
============
Allocable to General Partners $ 87,700
Allocable to Limited Partners $ 8,684,200
Additional Compensation Payable to Limited Partners(3) $ 529,000
------------
Total Cash Available for Distribution to Limited Partners $ 9,213,200
============
Estimated Cash Available for Distribution per Unit(4)(5) $ 32.15
</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) Assumes (i) execution and court approval of a definitive settlement
agreement, (ii) an award of one-third of $789,555, the portion of aggregate
settlement amount allocable to the Limited Partners of the Partnership, to
be paid to plaintiffs' counsel as attorney's fees and expenses and (iii)
that no Limited Partner elects to be excluded from the class entitled to
receive a distribution in connection with the proposed settlement of the
Amended Complaint. See "-- Background of the Proposed Transactions" above.
(4) Based on 286,564 Units outstanding as of the Record Date.
(5) Includes additional amount (estimated to be approximately $1.85 per Unit)
payable to Limited Partners upon liquidation of the Partnership as a result
of the proposed settlement. Limited Partners electing to be excluded from
the class participating in the proposed settlement will not be entitled to
receive any portion of such additional amount.
Since the organization of the Partnership, total distributions to Limited
Partners have amounted to approximately $27,995,400 (or an average of
approximately $98.42 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 $37,208,600 (or approximately
$130.57 per Unit), compared to an initial purchase price for each Unit of
$100.00.
As the Partnership is not making any representations and warranties under
the Purchase and Sale Agreement, the General Partners do not intend to reserve
any funds out of the cash available for liquidating distributions to fund
contingent liabilities arising out of potential claims or litigation which might
arise after the Sales are consummated. The full amount of the net proceeds from
the Sales will be distributed to the partners of the Partnership as soon as
practicable following the closing.
24
<PAGE>
Ownership of Properties by N'Tandem Following the Sales
Following the consummation of the Sales, N'Tandem will be entitled to all
of the benefits of ownership of the Properties, including future cash flows,
earnings and increases in the values of the Properties, if any.
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, based upon the
opinion of the Appraiser, that the discounts being applied in
connection with the Sales are substantially less than the discounts
that would have been applied had the Ownership Interests been sold to
a third-party purchaser. This additional amount per Unit distributable
to Limited Partnership has been included in the estimated $32.15 to be
paid to Limited Partners upon final liquidation of the Partnership.
See "-- Discount for Ownership Interests in Properties";
. As an additional amount distributable to Limited Partners, an
aggregate of approximately $789,555, less attorney's fees and
expenses, shall be paid to Limited Partners in connection with the
proposed settlement of the Amended Complaint. As a result, if the
proposed settlement is approved, the General Partners estimate that
those Limited Partners who do not elect to exclude themselves from the
class will receive, after payment of estimated attorney's fees and
expenses to plaintiffs' counsel, an additional amount of approximately
$1.85 per Unit. This additional amount per Unit distributable to
Limited Partners has been included in the estimated $32.15 to be paid
to Limited Partners upon final liquidation of the Partnership. See
"DESCRIPTION OF THE PROPOSED TRANSACTIONS -- Background of the
Proposed Transactions" and "-- Estimate of Liquidating Distributions
Payable to Limited Partners";
. The aggregate consideration of approximately $9,902,655 (which
includes the amount payable in settlement of the Amended Complaint)
being paid in connection with the proposed transactions exceeds the
net book value of the Partnership's assets of $6,473,200 as of
September 30, 1999 by $3,429,455;
25
<PAGE>
. 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 ($32.15 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 $27.49 per Unit in the secondary markets, as reported by The
Partnership Spectrum, a nationally recognized publication focusing
exclusively on limited partnerships, for the period of May 1, 1999
through December 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 $463,100 and $926,300 (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 for the
Properties is fair, from a financial point of view, to the Limited
Partners. The General Partners have adopted, in its entirety, the
Fairness Opinion, including its underlying analysis, prepared by Legg
Mason as part of their analysis of the Sales and Plan of Liquidation.
The General Partners did not undertake to perform their own analysis
with respect to the matters considered by the Fairness Opinion. For a
discussion of the Fairness Opinion, see "-- Fairness Opinion."
In reaching their determination that the Sales and the Plan of Liquidation
are fair from a financial point of view to the affiliated and unaffiliated
Limited Partners, the General Partners also considered the following potentially
negative aspects of the Sales:
. 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;
. With respect to the Ownership Interests held by the Partnership, the
remaining interests in the properties underlying such Ownership
Interests are held by Windsor 5 and Windsor 7, two affiliated limited
partnerships having the General Partners as their sole general
partners, or Windsor Park 456, an affiliated limited partnership which
has the Managing General Partner as its sole general partner and
Windsor 5 and N'Tandem as its other limited partners;
. With respect to the discounts being applied by N'Tandem to the
Ownership Interests held by the Partnership, no discount was applied
to the purchase price paid for any of the properties acquired by
N'Tandem in the Windsor 4 Transaction which was completed in June 1999
involving N'Tandem and the General Partners;
26
<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 forgoing current
benefits of the ownership of the Properties such as continuing
distributions.
The above described factors are all of the material factors considered by
the General Partners in determining that the Sales and the Plan of Liquidation
are fair to the affiliated and unaffiliated Limited Partners from a financial
point of view. In reaching their determination that the Sales and the Plan of
Liquidation are fair to the affiliated and unaffiliated Limited Partners from a
financial point of view, the General Partners did not assign relative weights to
the above factors or determine that any factor was of particular importance;
rather, the General Partners viewed the positive factors as a totality and the
negative factors as a totality and concluded that the positive factors
outweighed the negative factors. Accordingly, the General Partners determined
that the Sales and the Plan of Liquidation are fair to the affiliated and
unaffiliated Limited Partners from a financial point of view.
The General Partners also determined that the Sales and the Plan of
Liquidation are fair to the Limited Partners from a procedural point of view
based on the following factors:
. 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 for a minority interest in real
estate, analyze the applicability of a discount in valuing a partial
ownership interest in a manufactured home community. See "-- Discount
for Ownership Interests in Properties";
. 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 $463,100 that are being paid by
N'Tandem), and, were not the result of arm's-length negotiations and
bargaining between independent parties. Accordingly, the Sales 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
27
<PAGE>
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 not engaged in marketing efforts on behalf
of the Partnership with respect to the Properties. The General
Partners do not intend to take any actions to market or sell the
Properties pending the results of this Consent Solicitation.
The above described factors are all of the material factors considered by
the General Partners in determining that the Sales and the Plan of Liquidation
are fair to the affiliated and unaffiliated Limited Partners from a procedural
point of view. In reaching their determination that the Sales and the Plan of
Liquidation are fair to the affiliated and unaffiliated Limited Partners from a
procedural point of view, the General Partners concluded that the approval of
the Proposals by a majority-in-interest of the unaffiliated Limited Partners is
sufficient to insure that procedural fairness has been preserved for the Limited
Partners. The General Partners also believe that the potentially negative
factors influencing procedural fairness were in each case mitigated by the
following other factors or considerations: (i) although the Managing General
Partner and N'Tandem are under common control, the General Partners concluded
that the common control (a) did not adversely affect the terms of the Sales for
Limited Partners and (b) allowed N'Tandem to offer terms of the Sales that they
believed would not be available from third parties; (ii) 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
Partners' belief that marketing the Properties held by the Partnership would not
have provided a better transaction for the Limited Partners and would have
ultimately delayed the timing of the Sales and the distribution of liquidating
proceeds to the Limited Partners.
Fairness Opinion
The Managing General Partner, on behalf of the Partnership, engaged Legg
Mason to render a written opinion as to the fairness, from a financial point of
view, to the Limited Partners of the aggregate purchase price to be paid by
N'Tandem to the Partnership for the Properties. Legg Mason delivered an oral
and written fairness opinion to the Managing General Partner on November 15,
1999 and subsequently reconfirmed this opinion by delivering the Fairness
Opinion, which amended and supplanted its earlier opinion, on March 1, 2000. A
copy of the Fairness Opinion, setting forth the matters considered, procedures
followed and the scope of review by Legg Mason, is set forth in Appendix A to
this Consent Solicitation Statement and is incorporated herein by reference.
Limited Partners are urged to read the Fairness Opinion in its entirety.
The Managing General Partner selected Legg Mason based upon Legg Mason's
experience and reputation and the fee charged for its services. Legg Mason, as
a part of its investment banking business,
28
<PAGE>
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 nine months ended September 30, 1999;
(iv) the NAREIT Index, the Morgan Stanley REIT Index, capital flows to
public real estate investment trusts and other similar measures of
operating performance and trading data of real estate investment
trusts;
(v) an analysis of comparable publicly traded real estate investment
trusts;
(vi) a draft of this Consent Solicitation Statement;
(vii) financial and operating forecasts and projections relating to the
Partnership and schedules setting forth information relating to the
outstanding debt attributable to the Properties and the number of
outstanding Units prepared by the Managing General Partner or its
representatives; and
(viii) the Appraisals of the Properties prepared by the Appraiser.
The financial and operating forecasts and projections prepared by the Managing
General Partner and its representatives for use by Legg Mason in connection with
the preparation of its Fairness Opinion are set forth in Appendix C to this
Consent Solicitation Statement and are incorporated herein by reference.
Legg Mason also visited a number of the Properties and held discussions
with various members of management and representatives of the Managing General
Partner concerning the Properties' historical and current operations, financial
condition and prospects. In addition, Legg Mason conducted such other
investigations, financial analyses and studies and reviewed such other
information and factors as it deemed appropriate for the purposes of its
Fairness Opinion. In connection with this engagement, Legg Mason was not asked
to, and did not, advise the Managing General Partner or the Partnership with
respect to the determination of the aggregate purchase price for the Properties,
make any recommendations to the Managing General Partner or the Partnership with
respect to the 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
29
<PAGE>
indications of interest from any party with respect to an acquisition of the
Units, the Properties or any part thereof. Legg Mason did also note that the
Managing General Partner is owned by Chateau, the parent company of N'Tandem.
In rendering its Fairness Opinion, Legg Mason relied, without assuming
responsibility for independent verification, on the accuracy and completeness of
all financial and operating data, financial analyses, financial and operating
forecasts, reports and other information that were publicly available or
furnished or otherwise communicated to Legg Mason by or on behalf of the
Managing General Partner. With respect to forecasts regarding the Properties'
future financial condition and operating results, Legg Mason assumed, without
taking any responsibility for independent verification, that such forecasts were
reasonably prepared on bases reflecting the best currently available
information, estimates and judgment of the Managing General Partner. Legg Mason
also assumed that the Appraisals were reasonably prepared by, and reflected the
good faith judgments of, the Appraiser and did not take any responsibility for
their accuracy or completeness. Legg Mason did not make an independent
appraisal of the assets or liabilities (contingent or otherwise) of the
Partnership. No limitations were imposed by the Managing General Partner on
Legg Mason with respect to the investigation made or procedures followed by Legg
Mason. Legg Mason also assumed that the allocation of consideration provided by
the Managing General Partner between the General Partners and the Limited
Partners has been determined in accordance with, and complies with the terms and
conditions of, the Partnership Agreement. Furthermore, Legg Mason did not opine
to the fairness of the allocation of consideration between the General Partners
and Limited Partners.
The Fairness Opinion addresses only the fairness, from a financial point of
view, of the aggregate purchase price to be paid to the Partnership by N'Tandem
for the Properties and does not account for or factor into its analysis the
additional consideration distributable to Limited Partners in connection with
the proposed settlement of the Amended Complaint. In connection with the
preparation of its Fairness Opinion, Legg Mason noted that the aggregate
consideration offered by N'Tandem for the Properties and the net current assets
on a per Unit basis was $30.30.
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. In determining the
discounts to be applied to the Appraised Value attributable to the Ownership
Interests, Legg Mason applied the same discounts being used by N'Tandem and did
not independently determine whether the discounts being used were fair. Legg
Mason then adjusted the aggregate net equity value of the Properties by (i)
subtracting the estimated liquidation costs associated with selling the
Properties, (ii) adding the net assets of the Partnership, and (iii) subtracting
1% of the remaining net equity value to reflect the General Partners' interest
in the Partnership. Legg Mason then divided the remaining net equity value by
the number of Units outstanding in order to arrive at a liquidation equity value
for each Unit. Legg Mason's analysis indicated a
30
<PAGE>
liquidation equity value of $29.60 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 $30.30. Legg Mason believed that its
liquidation analysis supported its fairness determination because the aggregate
net purchase price offered by N'Tandem for the Properties on a per Unit basis
was in excess of the liquidation value indicated by such analysis.
In making its assessment of the liquidation value, Legg Mason relied,
without independent verification of the accuracy, on the Appraised Value in the
Appraisal as provided by the Appraiser. In addition, Legg Mason's estimated
liquidation costs associated with selling the Properties did not include general
and administrative expenses of the Partnership during the liquidation period,
liquidation costs associated with a prolonged marketing period or the time value
of the proceeds from the sale of the Properties.
Comparable Company Analysis. Legg Mason employed a comparable company
---------------------------
analysis to establish an implied equity value for the Units. Legg Mason
reviewed and compared financial information for the following publicly traded
real estate investment trusts: Chateau, Manufactured Home Communities, Inc., Sun
Communities, Inc., United Mobile Homes, Inc. and Assets Investors Corporation
(the "Comparable Companies"). The Comparable Companies represent all of the
publicly-traded real estate investment trusts whose principal business, like
that of the Partnership's, is the ownership and operation of manufactured home
communities in the United States. All of the trading multiples of the
Comparable Companies were based on the closing stock prices on February 28, 2000
and all funds from operations ("FFO") per share estimates were based on
information published by First Call Corporation. The estimates published by
First Call Corporation were not prepared in connection with the Sales or at the
request of Legg Mason. Legg Mason noted that certain factors differentiated the
Partnership from the Comparable Companies, including (i) the absence of an
actively traded public market for the Units, (ii) the fact that the Partnership
is externally managed and advised, (iii) the fact that the Partnership owns a
minority interest in certain of the underlying properties, and (iv) certain
other economic and general market data that Legg Mason deemed appropriate. To
reflect these factors, Legg Mason deemed it appropriate to discount the
Comparable Companies' trading multiples by 20%. Legg Mason believed that this
discount was a reasonable estimate of the discount which the market might have
applied to the Comparative Companies' trading multiples to reflect these
factors. In order to derive an implied equity value for the Units, Legg Mason
deducted 1% from the implied equity value of the Partnership to reflect 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 5.8x to 7.9x for the 2000
FFO per share estimates, (ii) ranged from 5.2x to 7.2x for the 2001 FFO per
share estimates and (iii) ranged from 7.8x to 9.3x for the trailing twelve
months earnings before interest, taxes, depreciation and amortization per share
estimates ("EBITDA"). Based on the Managing General Partner's financial and
operating forecasts and projections and Legg Mason's estimates of the
Partnership's 2000 and 2001 FFO, including potential cost savings and
operational efficiencies associated with general and administrative cost
reductions and the 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 5.8x to 7.9x and 5.2x to 7.2x,
respectively, for 2000 and 2001, Legg Mason's analysis indicated an implied
value range per Unit of $26.38 to $19.54 based on 2000 FFO multiples and $25.58
to $18.53 based on 2001 FFO multiples. In addition, based on the Managing
General Partner's financial and operating forecasts and projections and Legg
Mason's estimate of the Partnership's trailing twelve months EBITDA, including
potential cost savings and operational efficiencies associated with general and
administrative cost reductions and the 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 7.8x to 9.3x,
Legg Mason's analysis indicated an implied value range per Unit of $25.58 to
$18.20. Legg Mason believed that its
31
<PAGE>
comparable company analysis supported its fairness determination because the
aggregate net purchase price offered by N'Tandem for the Properties on a per
Unit basis was in excess of the high end of the range for each of the implied
equity values of the Units indicated by such analysis.
Discounted Cash Flow Analysis. Legg Mason estimated the continuation
-----------------------------
equity value of the Units assuming that the term of the Partnership was extended
and the Properties were held by the Partnership until December 31, 2004. Legg
Mason performed a discounted cash flow analysis (i.e., an analysis utilizing a
range of discount rates) of (i) the present value of the forecasted cash flows
from the Properties' future operations and (ii) the present value of the
forecasted proceeds of a sale of the Properties, on an aggregate basis, less the
General Partners' 1% interest in the Partnership, assuming a sale to third-party
purchasers at the conclusion of the forecast period. In completing its
analysis, Legg Mason utilized the financial and operating forecasts and
projections provided by the Managing General Partner and the Partnership's cash
flow to equity for the forecasted period of January 1, 2000 to December 31, 2004
prepared by Legg Mason and applied discount rates of 14.9% to 18.6% to the
forecasted equity cash flows and the forecasted residual equity value.
Forecasted residual equity value was based upon applying the Comparable
Companies' discounted trading multiples of 6.4x to 8.4x 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 $28.62 to $21.78
per Unit. Legg Mason believed that its continuation analysis supported its
fairness determination because the aggregate net purchase price offered by
N'Tandem for the Properties was in excess of the high end of the range of
implied equity values of the Units indicated by such analysis.
The preparation of a fairness opinion involves various determinations as to
the most appropriate and relevant quantitative and qualitative methods of
financial analyses and the application of those methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to
partial analyses or summary description. Accordingly, Legg Mason believes that
its analyses must be considered as a whole and that considering any portion of
such analyses and of the factors considered, without considering all analyses
and factors, could create a misleading or incomplete view of the process
underlying its opinion. The analyses underlying the Fairness Opinion were based
on information, other than the share prices of the Comparable Companies,
available as of September 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 will receive a fee of $50,000.
32
<PAGE>
Alternatives Considered
In addition to considering the Sales and the Plan of Liquidation, the
General Partners also identified and considered the following alternative
courses of action for the Partnership:
Continuation of the Partnership. The 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 unsolicited
inquiries received from time to time by the Managing General Partner from
Limited Partners regarding the status of their investment in the Partnership
following the expiration of its stated term 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 $463,100 and $926,300 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.
33
<PAGE>
Proposed Consolidation. The General Partners also considered and analyzed
the Proposed Consolidation in which the Partnership, together with three of the
other Windsor Limited Partnerships, would have been merged with and into
N'Tandem. In the Proposed Consolidation, the Limited Partners would have had
the right to exchange their Units for common shares of beneficial interest or
other securities of N'Tandem.
As part of its analysis of the Proposed Consolidation, the Managing General
Partner compared the estimated price per Unit of approximately $32.15 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.
34
<PAGE>
N'Tandem's and Chateau's Belief as to the Fairness of the Proposed Transactions;
N'Tandem's and Chateau's Reasons for Engaging in the Proposed Transactions
N'Tandem and Chateau believe that the Sales are fair to the affiliated and
unaffiliated Limited Partners from both a financial point of view and a
procedural point of view. In reaching such determination, N'Tandem and Chateau
considered the same factors and positive and negative aspects of the Sales as
were considered by the General Partners, as described above under "-- Fairness
of the Proposed Transactions; Recommendation of the General Partners" and have
specifically adopted the analyses and conclusions of the General Partners
described therein.
In October 1998, N'Tandem amended and restated N'Tandem's Declaration of
Trust and By-laws to convert N'Tandem from a finite-life entity to an infinite-
life entity in order to enable it to begin implementing a growth-oriented
business plan intended to cause N'Tandem to attain greater size and asset
diversity. The acquisition by N'Tandem of the Properties is being engaged in by
N'Tandem as part of such growth-oriented business plan.
Appraisals
Overview of Appraisals. The Appraiser, Whitcomb Real Estate located in
Tampa, Florida, was retained by the Managing General Partner to render the
Appraisals with respect to the Partnership's Properties. The Appraiser is
certified as a Master Appraiser by the Appraisal Institute and was selected
based upon its expertise as well as its familiarity with valuing 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
35
<PAGE>
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; 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.
The Appraiser and its Methodology.
Information with respect to Whitcomb Real Estate. The Appraiser was
-------------------------------------------------
founded in 1986, and currently has four full-time appraisers on its staff. Each
of the Properties was appraised by John Whitcomb, the President of the
Appraiser. Mr. Whitcomb is certified as a Master Appraiser by the Appraisal
Institute, is a Certified Commercial Investment Member, has been in the real
estate appraisal business since 1985, and has conducted in excess of a thousand
property appraisals since that time. Mr. Whitcomb has extensive experience
appraising manufactured home communities, having conducted in excess of 250 such
appraisals since 1993. The Managing General Partner previously engaged the
Appraiser to render additional or updated appraisals, in addition to the
Appraisals, on several properties in which the Windsor Limited Partnerships
currently hold, or have in the past held, interests, including the 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
36
<PAGE>
each Appraisal applies to the real estate only and does not include personal
property or other non-realty items located at or on the Property; (v) that there
is good and marketable title to the Property; (vi) that the Property is free of
encroachments and zoning or other violations or problems; (vii) that management
of the Property is competent; (viii) that there are no material hidden or
unapparent problems of the soil, subsoil or structures of the Property; (ix)
that all of the improvements, equipment, and building services are structurally
sound and suffer no latent defects or inadequacies; (x) that the subject
improvements are free of insect infestation or rot or damage due to such
infestation or rot; (xi) that there are no environmental problems with respect
to the Property or its improvements; (xii) that no adverse events, conditions or
circumstances materially affecting the Property have taken place subsequent to
the date of the field inspection; and (xiii) that there have been no material
changes in economic conditions affecting the Property following the date of the
Appraisal.
The Appraiser also noted that (i) the estimates of value stated in the
Appraisals apply only to the effective dates of value stated in the Appraisals,
(ii) value is affected by many related and unrelated economic conditions within
a local, regional, national and/or worldwide context, which might necessarily
affect the prospective value of the subject property, (iii) the Appraiser
assumes no liability for any unforeseen changes in the economy or at the subject
property, (iv) the underlying assumptions and conditions provide a reasonable
basis for the value estimate stated in the Appraisals, (v) some assumptions or
projections inevitably will not materialize and unanticipated events and
circumstances may occur during the forecast period, and (vi) the actual results
achieved during the projected holding period and investor requirements relative
to anticipated annual returns and overall yields could vary from the projection
and that such variations could be material and have an impact on the individual
value conclusions stated in the Appraisals.
Summary of Appraisals. A summary description of the Appraisals, including
the Appraised Values of the Properties, is set forth below. The Appraisals are
based on conditions as of their respective dates. Subsequent developments could
have a material effect on the valuations stated therein.
Summary of 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
37
<PAGE>
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 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 Chisolm Creek Property Appraisal. In utilizing the income
-------------------------------------------
capitalization approach in connection with appraising the Chisolm 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 Chisolm 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 Chisolm 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 Chisolm 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
38
<PAGE>
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.
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.
39
<PAGE>
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 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.
40
<PAGE>
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 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
41
<PAGE>
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 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 August 15, 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
42
<PAGE>
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.
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, and subsequently
confirmed in writing, that in its estimation the application of a discount of
approximately 25% would be appropriate in the context of valuing a minority
ownership interest in a manufactured home community. In determining the
purchase price to be paid for each of the Ownership Interests, N'Tandem applied
(i) a 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 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 market had the Ownership
Interests been sold to a third-party purchaser.
43
<PAGE>
The purpose of the Appraiser's report was, and the Appraiser was instructed
by the Managing General Partner, to determine the applicable valuation
procedures for a partial ownership interest in a manufactured home community.
In analyzing this issue, the Appraiser (i) surveyed real estate brokers and
owners regarding their experience with sales of partial ownership interests in
properties, (ii) surveyed real estate lenders regarding their experience with
financings of, and underwriting criteria relating to, partial ownership
interests in properties, and (iii) reviewed articles and treatises relating to
the sale and valuation of partial ownership interests and partnership interests
in general. Based upon the Appraiser's review of available information, the
Appraiser determined that discounts, ranging from 14% to 46% depending on the
type of partnership, are commonly applied in the sale of partnership interests
and that, while the discount applied in the sale of a partial ownership interest
in real estate would not be as high as the discount applied in the sale of a
partnership interest, an average discount of 25% to the sale price would be
appropriate in the valuation of a minority ownership interest in a manufactured
home community. In connection with the report, no percentage discount or ranges
of percentage discounts were suggested by the Managing General Partner. A copy
of the Appraiser's written report is filed as an exhibit to the Schedule 13E-3
and is available for inspection and copying at the Partnership's principal
executive offices during regular business hours by any interested Limited
Partner or any representative of a Limited Partner who has been designated by a
Limited Partner in writing. A copy may also be obtained through the written
request of any Limited Partner made to the Managing General Partner at 6160
South Syracuse Way, Greenwood Village, Colorado 80111.
SUMMARY OF SELECTED TERMS OF THE PARTNERSHIP AGREEMENT
The rights and obligations of the partners in the Partnership are governed
by the Partnership Agreement which is set out in its entirety as an exhibit to
the Schedule 13E-3. The following statements and other statements in this
solicitation concerning the Partnership Agreement and related matters are merely
a selected summary of the terms of the Partnership Agreement and do not purport
to be complete and in no way modify or amend the Partnership Agreement.
Net Proceeds from the Sales
Pursuant to the Partnership Agreement upon the consummation of the Sales
and a liquidation of the Partnership, net proceeds from the Sales, after
providing for the debts and liabilities of the Partnership, will be distributed
in the following order of priority:
(i) To the Limited Partners, an amount equal to the sum of: (i) Adjusted
Invested Capital (as defined below) attributable to each Limited Partner and
(ii) the excess, if any, of an amount equal to a 9% per annum cumulative (but
not compounded) return on Adjusted Invested Capital, calculated from each
Limited Partner's respective date of admission to the Partnership, over total
prior distributions of cash from operations with respect to the Units; and
(ii) To the extent of any balance remaining, 85% of the Limited Partners to
be shared on a pro rata basis in accordance with their respective ownership of
Units and 15% to the General Partners.
The above notwithstanding, the General Partners will receive at least 1% of
the distributions of net proceeds from the Sales in accordance with the
Partnership Agreement.
Allocation of Profit or Loss on the Sales
Profit or loss in connection with the Sales and a liquidation of the
Partnership will be allocated to and among the partners, after providing for the
debts and liabilities of the Partnership, as follows:
44
<PAGE>
(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;
(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;
45
<PAGE>
(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 (a) there has been a successful adjudication on the
merits of each count involving securities law violations or (b) such claims have
been dismissed with prejudice on the merits, and provided that a court either
(1) approves any settlement and finds that indemnification of the settlement and
related costs should be made or (2) approves indemnification of litigation costs
if a successful defense is made (in this regard, a dismissal with prejudice is
considered a successful defense).
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 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
46
<PAGE>
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 5 and is the
external investment advisor to N'Tandem, which together own the remaining
limited partner interests in Windsor Park 456. N'Tandem and Windsor 5 have a
33% and 26% limited partner interest, respectively, 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 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 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
Chisolm Creek. Chisolm 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.
47
<PAGE>
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 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
48
<PAGE>
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
$3,504,500. 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 $3,469,500 of taxable gain on the
Sales to Limited Partners (or an average of $12.10 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 $11.98 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 $3,504,500.
Allocation of Gain. The $3,504,500 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 $3,469,500 of taxable gain on the Sales
to Limited Partners (or an average of $12.10 per Unit). The gain per Unit
resulting from the Sales is primarily caused by the fact that the Partnership
generated tax losses in prior years that were allocated to Limited Partners.
See "-- Income Tax Rates/Taxation of Gains and Losses," below.
Characterization of Gain or Loss. In general, gains (other than the amount
of gain attributable to certain depreciation recapture, which would be
classified as ordinary income, and gain attributable to Ownership Interests that
are partnership interests) recognized with respect to the Sales should be
treated as recognized from the sale of a "Section 1231" asset (i.e., real
property and depreciable assets used in a trade or business and held for more
than one year). A portion of such gain should be attributable to the recapture
of depreciation with respect to real property and taxed at the 25% rate
discussed below. A Limited Partner's share of gains from the sale of Section
1231 assets of a Partnership will be combined with any other Section 1231 gains
and losses recognized by such Limited Partner in that year. If the result is a
net loss, such loss is characterized as an ordinary loss. If the result is a
net gain, such gain is characterized as a capital gain; provided, however, that
such gain will be treated as ordinary income to the extent the Limited Partner
has "non-recaptured" Section 1231 losses. For these purposes, "non-recaptured"
Section 1231 losses means a Limited Partner's aggregate Section 1231 losses for
the five most recent prior years that have not previously been recaptured.
In general, gain or loss recognized with respect to the Sale of Ownership
Interests that are partnership interests will be gain or loss from the sale or
exchange of a capital asset. However, any amount received in exchange for a
partnership interest attributable to a partnership's "unrealized receivables"
(including certain depreciation recapture) or "inventory items" will be
considered to be gain or loss from the sale or exchange of property other than a
capital asset.
49
<PAGE>
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
$11.98 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 gain to Limited Partners of approximately $0.12
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 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 May 31, 2000 and to proceed with the Plan of
50
<PAGE>
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) April 28,
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.
(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.
51
<PAGE>
Each Limited Partner is requested to complete, date and sign the
accompanying form of Consent and return such Consent to Arlen Capital, LLC, 1650
Hotel Circle North, Suite 200, San Diego, California 92108, which has been
appointed to serve as the solicitation agent for the proposed transactions (the
"Solicitation Agent"). If the Solicitation Period is extended, the General
Partners will give written notice of such extension to all Limited Partners.
For more information concerning this Consent Solicitation, Limited Partners may
call the Solicitation Agent at (800) 553-4039. The costs of this Consent
Solicitation, including fees payable to the Solicitation Agent, will be borne by
the Partnership.
Solicitation of Consents
In addition to soliciting consents by mail, consents may be solicited by
directors, officers and employees of the 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 $38,000.
Record Date; Required Vote
The close of business on March 15, 2000 has been fixed as the Record Date
for determining Limited Partners entitled to Consent to the Proposals. As of
the Record Date, there were 286,564 Units outstanding held of record by a total
of 2,694 Limited Partners. Each of the Proposals require approval of
unaffiliated Limited Partners holding at least a majority of the outstanding
Units. Each Unit entitles the holder thereof to cast one vote with respect to
the approval of each of the Proposals.
As of the Record Date, the General Partners and/or their affiliates held
and are entitled to exercise voting rights with respect to an aggregate of 10
Units. The General Partners and their affiliates have agreed to abstain from
voting on the Proposals with respect to the Units for which they hold voting
rights. Approval of the Proposals by unaffiliated Limited Partners holding
143,283 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.
52
<PAGE>
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, as amended and restated in the Partnership's Annual Report on Form
10-KSB/A, for the year ended December 31, 1998 and the Partnership's Quarterly
Report on Form 10-QSB, as amended and restated in the Partnership's Quarterly
Report on Form 10-QSB/A, 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) the Partnership's Annual Report on Form 10-KSB for the year ended
December 31, 1998, as amended and restated by the Partnership's Annual
Report on Form 10-KSB/A filed on February 3, 2000;
(ii) the Partnership's Quarterly Report on Form 10-QSB for the quarter
ended March 31, 1999, as amended and restated by the Partnership's
Quarterly Report on Form 10-QSB/A filed on February 3, 2000;
(iii) the Partnership's Quarterly Report on Form 10-QSB for the
quarter ended June 30, 1999, as amended and restated by the Partnership's
Quarterly Report on Form 10-QSB/A filed on February 3, 2000; and
(iv) the Partnership's Quarterly Report on Form 10-QSB for the quarter
ended September 30, 1999, as amended and restated by the Partnership's
Quarterly Report on Form 10-QSB/A filed on February 3, 2000.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for the purposes of this Consent
Solicitation Statement to the extent that a statement contained herein or in any
other subsequently filed document that is incorporated by reference herein
modifies or supersedes such earlier statement. Any such statements modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Consent Solicitation Statement.
53
<PAGE>
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.
54
<PAGE>
APPENDIX A
Fairness Opinion
LEGG MASON
Corporate Finance
Legg Mason Wood Walker, Incorporated
100 Light Street, 34th Floor, Baltimore, MD 21202
410-539-0000 Fax: 410-454-4508
Member New York Stock Exchange, Inc./Member SIPC
March 1, 2000
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 an 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 nine months ended September 30, 1999;
(iv) the NAREIT Index, the Morgan Stanley REIT Index, capital flows to
public real estate investment trusts and other similar measures of
operating performance and trading data of real estate investment
trusts;
A-1
<PAGE>
(v) an analysis of comparable publicly traded real estate investment
trusts;
(vi) the draft Consent Solicitation Statement;
(vii) financial and operating forecasts and projections relating to the
Partnership and schedules setting forth information relating to the
outstanding debt attributable to the Properties and the number of
outstanding units of limited partner interest in the Partnership
prepared by the Managing General Partner or its representatives;
(viii) the appraisals of the Properties prepared by Whitcomb Real Estate,
Inc; and
(ix) conducted such other financial studies, analyses and investigations
and considered such other information as we deemed appropriate.
In connection with our review, we relied, without independent verification,
on the accuracy and completeness of all information that was publicly available,
supplied or otherwise communicated to Legg Mason on behalf of the Partnership
and we have further relied upon the assurances of the Managing General Partner
that it is unaware of any facts that would make the information provided to us
incomplete or misleading. In performing our analyses, we relied, with your
permission and without independent verification of their accuracy or fairness,
on the discounts which the Managing General Partner provided to us for
application to the appraised values of certain of the Properties to reflect the
fact that the partnership owns only a partial interest therein.
Legg Mason has also relied upon the Managing General Partner as to the
reasonableness and achievability of the financial forecasts and projections (and
the assumptions and bases therein) provided to us for the Partnership, and we
have assumed such forecasts and projections were reasonably prepared on bases
reflecting the best currently available estimates and judgments of management as
to the future operating performance of the Partnership. Neither the Managing
General Partner nor the Partnership publicly discloses internal management
forecasts and projections of the type provided to Legg Mason. Such forecasts
and projections were not prepared with the expectation of public disclosure.
The forecasts and projections were based on numerous variables and assumptions
that are inherently uncertain, including, without limitation, facts related to
general economic conditions. Accordingly, actual results could vary
significantly from those set forth in such forecasts and projections. Legg
Mason has relied on these forecasts and does not in any respect assume any
responsibility for the accuracy or completeness thereof.
Legg Mason has not been requested to make, and has not made, an independent
evaluation or appraisal of the assets, properties, facilities, or liabilities
(contingent or otherwise) of the Partnership and, with the exception of the
appraisal of the underlying properties of the Partnership referred to above, we
have not been furnished with any such appraisals or evaluations. Estimates of
value of the Partnership and its assets do not purport to be appraisals or
necessarily reflect the prices at which the Partnership and assets may actually
be sold. Because such estimates are inherently subject to uncertainty, Legg
Mason assumes no responsibility for their accuracy. We note that the Managing
General Partner and N'Tandem are under common control of the parent of the
Managing General Partner, and we have assumed that this potential conflict of
interest had no effect on the Sale. Our opinion is necessarily based upon
financial, economic, market and other conditions and circumstances existing and
disclosed to us on the date hereof. We were not requested to, nor did we,
solicit the interest of any other party in acquiring interests in the
Partnership or its assets. We have also assumed that the Sale will be
consummated on the terms and conditions described in the Consent Solicitation
Statement, without any waiver of material terms or conditions by the
Partnership.
A-2
<PAGE>
It is understood that this letter is directed to the General Partners. The
opinion expressed herein is provided for the use of the General Partners in
their evaluation of the Sale and our opinion does not constitute a
recommendation to the General Partners or to any Limited Partner as to how such
partners should vote or otherwise respond on the Sale. In addition, this letter
does not constitute a recommendation of the Sale over any other alternative
transaction which may be available to the Partnership and does not address the
underlying business decision of the Managing General Partner to proceed with or
effect the Sale. This letter is not to be quoted or referred to, in whole or in
part, in any registration statement, prospectus, or in any other document used
in connection with the offering or sale of securities, nor shall this letter be
used for any other purposes, without the prior written consent of Legg Mason;
provided that this opinion may be included in its entirety in any filing made by
the Partnership or N'Tandem with the Securities and Exchange Commission with
respect to the Sale.
Legg Mason will receive a fee for providing this Opinion to the General
Partners.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof, the amount of consideration to be paid by N'Tandem in the Sale
is fair to the Limited Partners from a financial point of view.
Very truly yours,
/s/ Legg Mason Wood Walker, Incorporated
----------------------------------------
Legg Mason Wood Walker, Incorporated
A-3
<PAGE>
APPENDIX B
Information Concerning Officers and
Directors of the Managing General Partner,
N'Tandem and Chateau
A. The Managing General Partner
The Windsor Corporation is the Managing General Partner of the Partnership.
The Directors and executive officers of The Windsor Corporation are as follows:
Gary P. McDaniel, 54, became a Director of The Windsor Corporation in
September 1997. Mr. McDaniel's biographical information is set forth below
under "C. Chateau Communities, Inc."
C. G. Kellogg, 56, became a Director of The Windsor Corporation in
September 1997. Mr. Kellogg's biographical information is set forth below under
"C. Chateau Communities, Inc."
Steven G. Waite, 44, has been President of The Windsor Corporation since
September 1997. From 1990 through the date he accepted his position at The
Windsor Corporation, Mr. Waite was Vice President/General Manager of Communities
at Clayton Homes, Inc., a company which owns and operates manufactured home
factories, sales centers, financing and insurance units and communities (NYSE:
CMH). Mr. Waite holds a B.S. from the University of Colorado and an M.B.A. from
the University of Alabama.
Each of Messrs. McDaniel, Kellogg and Waite is a United States citizen.
B. N'Tandem Trust
As an unincorporated business trust, N'Tandem Trust is managed by its
Trustees. The Trustees of N'Tandem are as follows:
Gary P. McDaniel, 54, became a Trustee of N'Tandem in September of 1997.
Mr. McDaniel's biographical information is set forth below under "C. Chateau
Communities, Inc."
Richard B. Ray, 59, became a Trustee of N'Tandem in September of 1997.
Since 1995 he has been Co-Chairman of the Board and Chief Financial Officer of
21st Century Mortgage Corporation, (a lender to the manufactured home industry)
and a director of the following companies: BankFirst, Radio Systems Corporation
and Knox Housing Partnership (a not for profit developer of low income housing
in Knox County, Tennessee). Previously, he was Executive Vice President, Chief
Financial Officer, and Director of Clayton Homes Inc. (a vertically integrated
manufactured housing company) from 1982-1994 and a Director of Palm Harbor
Homes, Inc. (a national producer of manufactured homes) from 1994-1995.
Kenneth G. Pinder, 62, became a Trustee of N'Tandem in September of 1997.
Mr. Pinder entered the manufactured housing business in 1970 managing a
manufactured housing site rental community and formed American Living Homes
Inc., a manufactured housing dealership, in 1974; he continues to be the owner
and president of that corporation. He is also sole owner of Able Mobile Housing
Inc., a temporary housing company for fire loss victims and has developed
manufactured home sites and purchased and sold numerous communities over the
past twenty years. Mr. Pinder has been a member of the Michigan Manufactured
Housing Association for over 35 years. In 1992 he was elected to the Michigan
Manufactured Housing Board of Directors, and serves on its Executive Committee.
Each of Messrs. McDaniel, Ray and Pinder is a United States citizen.
B-1
<PAGE>
C. Chateau Communities, Inc.
Chateau Communities, Inc. owns all of the capital stock of The Windsor
Corporation, the Managing General Partner of the Partnership and the advisor to
N'Tandem Trust. Chateau also owns a 9.8% equity ownership interest in N'Tandem.
The Directors and executive officers of Chateau are as follows:
Gary P. McDaniel, 54, has been Chief Executive Officer and a Director of
Chateau since February 1997. He served as the Chairman of the Board, President
and Chief Executive Officer of ROC Communities, Inc. ("ROC"), a publicly held
real estate investment trust specializing in owning and operating manufactured
home communities since 1993 and had been a principal of ROC's predecessors since
1979. He has been active in the manufactured home industry since 1972. He is a
Trustee of N'Tandem Trust and a Director of The Windsor Corporation. Mr.
McDaniel has been active in several state and national manufactured home
associations, including associations in Florida and Colorado. In 1996, he was
named "Industry Person of the Year" by the National Manufactured Housing
Industry Association. Mr. McDaniel is on the Board of Directors of the
Manufactured Housing Institute. He is a graduate of the University of Wyoming
and served as a Captain in the United States Air Force.
Gebran S. Anton, Jr., 67, first became a Director of Chateau in 1993. He
is the owner of Gebran Anton Development Co. and Anton, Zorn & Associates, Inc.,
a commercial and industrial real estate broker and former owner of Anton's, a
men's retail chain. He is an incorporator and Director of Community Central
Bank, and a former Chairman of the Board for First National Bank, St. Joseph
Hospital, and Downtown Development Committee.
James M. Lane, 70, first became a Director of Chateau in 1993. He retired
as the Senior Vice President and Chief Investment Officer of the Investment
Management Division, NBD Bank, Detroit, where he served for approximately
thirteen years. Mr. Lane was associated with the Chase Manhattan Corporation
from 1953 to 1978, attaining the position of Executive Vice President while also
serving as President and Chief Executive Officer of Chase Investors Management
Corporation. He has a B.A. degree in economics from Wheaton College and an MBA
in finance from the University of Chicago.
Rhonda G. Hogan, 46, has served as Director of Chateau since March 1997.
Ms. Hogan is presently a partner of Tishman Speyer Properties. She recently
served on the Board of Directors and as President of The Water Club Condominium
Association, Inc. and is on the Silver Council of the Urban Land Institute. In
addition, she served on the Board of Directors of Barnett Bank of South Florida,
N.A. from 1986 to 1996. Ms. Hogan has also served or currently serves on
several other Boards of Directors and as a member of several councils or
institutes, including appointments to State Boards by the Governor and Cabinet
of the State of Florida. Ms. Hogan received her B.B.A. from the University of
Iowa.
C.G. Kellogg, 56, has been President and a Director of Chateau since its
inception, and was Chief Executive Officer of Chateau from its inception to
February 1997. For the five years preceding the formation of Chateau, Mr.
Kellogg was President and Chief Operating Officer of Chateau Estates. Mr.
Kellogg is a Director of The Windsor Corporation. He is extremely active in
local and national industry associations, often in leadership positions. Mr.
Kellogg is a past President of the Michigan Manufactured Housing Association and
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.
B-2
<PAGE>
Edward R. Allen, 58, 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, 65, served as a director of ROC from August 1993 until
ROC's merger with Chateau on February 11, 1997 (the "Merger"). Since the
Merger, he has served as a director of Chateau. He is managing general partner
of 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, 69, 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, 70, has been Chairman of the Board of Directors of Chateau
since its inception in 1993. Prior to the formation of Chateau, Mr. Boll was
the co-founder, partner and Chief Executive Officer of Chateau Estates, which
was formed in 1966. He was inducted in the MH/RV Hall of Fame in 1992 for his
outstanding contributions to the manufactured housing industry. Mr. Boll was
appointed by the Governor of the State of Michigan to become the first Chairman
of the Michigan Mobile Home Commission, which is the principal Michigan
authority regulating manufactured housing, a position he held for six years.
James L. Clayton, 65, 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, 50, 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, 44, is Executive Vice President, Chief Financial Officer
of Chateau, having served in these roles since Chateau's formation. Prior to
joining Chateau, Ms. Fischer was employed by
B-3
<PAGE>
Coopers & Lybrand for 11 years. Ms. Fischer is a CPA and a graduate of Case
Western Reserve University. Ms. Fischer is the wife of Mr. Kellogg who is the
President and a Director of Chateau.
Rees F. Davis, Jr., 41, is Executive Vice President-Acquisitions of
Chateau, having served in such capacity since February 1997. He served as
Executive Vice President of Acquisitions and Sales for ROC from 1993 to February
1997. Prior to that, Mr. Davis previously served as Vice President of
Acquisitions and Sales and a director for ROC's predecessors since 1986. Mr.
Davis is a two-term past officer of the Colorado Manufactured Housing
Association. He is also an active member of The Manufactured Housing Institute.
Mr. Davis is a graduate of Colorado State University.
Each of the executive officers and Directors of Chateau is a United States
citizen.
B-4
<PAGE>
APPENDIX C
Financial and Operating Forecasts and Projections for
the Partnership Prepared by the Managing General Partner
The following financial and operating forecasts and projections were
prepared by the Managing General Partner and its representatives for use by Legg
Mason in connection with the preparation of its Fairness Opinion relating to the
Sales. These financial and operating forecasts and projections, which relate to
the Partnership and certain of its Properties, involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
and achievements of the Partnership and such Properties to be materially
different from future results, performance and achievements expressed or implied
by such forecasts or projections. The actual financial and operating results,
including net income, of the Partnership and certain of its Properties will
depend to a large extent on a number of factors that cannot be predicted with
certainty or which may be outside of the control of the Managing General Partner
and its representatives, including general business, market and economic
conditions, market factors affecting manufactured home communities, supply and
demand for homesites at the Properties, changes in tax laws and other factors.
C-1
<PAGE>
<TABLE>
<CAPTION>
Windsor Park Properties 6 Projections
Revenues: 1999 2000 2001 2002 2003 2004
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Rent and utilities 515,966 531,445 547,388 563,810 580,724 598,146
Equity in earnings (losses) of
joint ventures and limited partnerships 339,777 353,185 387,275 421,891 457,039 492,727
Interest 6,500 6,500 6,695 6,896 7,103 7,316
Other 10,020 10,020 10,321 10,630 10,949 11,278
---------------------------------------------------------------------
Total Revenues 872,263 901,150 951,679 1,003,227 1,055,815 1,109,467
---------------------------------------------------------------------
Operating costs and expenses:
Property operating 217,110 223,623 230,332 237,242 244,359 251,690
Interest -- -- -- -- -- --
Depreciation and amortization 130,148 131,450 132,764 134,092 135,433 136,787
General and
administrative:
Related parties 33,667 35,350 37,118 38,974 40,922 42,968
Other 74,954 78,701 82,636 86,768 91,107 95,662
---------------------------------------------------------------------
Total operating
costs and expenses 455,878 469,124 482,850 497,075 511,820 527,107
---------------------------------------------------------------------
---------------------------------------------------------------------
Net Income (loss) 416,385 432,026 468,830 506,152 543,995 582,360
=====================================================================
Projected capital expenditures $ 96,331
=====================================================================
($100 per site)
</TABLE>
- --------------------------------------------------------------------------------
Notes:
1. Projections assume 3% revenue growth and 3% expense growth
C-2
<PAGE>
<TABLE>
<CAPTION>
Projections for joint venture property - GardenWalk
Revenues: 1997 1998 1999 2000 2001 2002 2003 2004
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rent and utilities 1,821,558 1,880,481 1,954,962 2,013,611 2,074,019 2,136,240 2,200,327 2,266,337
Interest 5,367 4,122
Other 32,781 15,365 17,940
-----------------------------------------------------------------------------------------------
Total Revenues 1,859,705 1,899,968 1,972,902 2,013,611 2,074,019 2,136,240 2,200,327 2,266,337
-----------------------------------------------------------------------------------------------
Operating costs and expenses:
Property operating 821,188 829,045 888,431 915,084 942,537 970,813 999,937 1,029,935
Interest 524,519 516,614 508,827 501,158 493,605 486,166 478,839 471,622
Depreciation and amortization 192,132 204,181 216,986 230,593 245,054 260,422 276,754 294,110
General and
administrative:
Related 30,492
parties
Other 7
-----------------------------------------------------------------------------------------------
Total operating costs and
expenses 1,537,839 1,580,338 1,614,244 1,646,836 1,681,196 1,717,401 1,755,530 1,795,667
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
Net Income (loss) 321,866 319,630 358,658 366,775 392,823 418,839 444,797 470,670
===============================================================================================
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
Projections for joint venture Windsor Park Properties 456
Rancho Margate, Winter Haven
Revenues: 1997 1998 1999 2000 2001 2002 2003 2004
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rent and utilities 1,653,003 1,706,541 1,760,166 1,812,971 1,867,360 1,923,381 1,981,082 2,040,515
Interest 4,425 5,376
Other 6,668 9,212 1,980 - - - - -
--------------------------------------------------------------------------------------
Total Revenues 1,664,095 1,721,129 1,762,146 1,812,971 1,867,360 1,923,381 1,981,082 2,040,515
--------------------------------------------------------------------------------------
Operating costs and expenses:
Property operating 783,158 788,378 773,098 796,290 820,179 844,785 870,128 896,232
Interest 488,666 485,321 481,999 478,700 475,423 472,169 468,937 465,727
Depreciation and amortization 255,800 255,418 255,037 254,656 254,276 253,896 253,517 253,138
General and
administrative:
Related parties 4 0
Other 8,030 8,014
--------------------------------------------------------------------------------------
Total operating costs and
expenses 1,535,658 1,537,132 1,510,133 1,529,646 1,549,878 1,570,850 1,592,582 1,615,097
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Net Income (loss) 128,437 183,997 252,013 283,325 317,482 352,531 388,500 425,417
======================================================================================
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
Projections for joint venture property - Town & Country Estates
Revenues: 1997 1998 1999 2000 2001 2002 2003 2004
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rent and utilities 732,672 785,827 867,274 893,292 920,091 947,694 976,125 1,005,408
Interest 340 339
Other 10,354 7,520 8,760
--------------------------------------------------------------------------
Total Revenues 743,366 793,686 876,034 893,292 920,091 947,694 976,125 1,005,408
--------------------------------------------------------------------------
Operating costs and expenses:
Property operating 352,105 341,201 371,795 382,949 394,437 406,270 418,458 431,012
Interest 144,140 142,071 140,032 138,022 136,041 134,088 132,163 130,266
Depreciation and amortization 138,340 142,211 146,190 150,281 154,486 158,809 163,253 167,821
General and
administrative:
Related
parties
Other 7
--------------------------------------------------------------------------
Total operating costs and
expenses 634,585 625,490 658,017 671,252 684,964 699,167 713,875 729,099
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Net Income (loss) 108,781 168,196 218,017 222,040 235,127 248,526 262,250 276,309
==========================================================================
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
Projections for joint venture property - Carefree Village
Revenues: 1997 1998 1999 2000 2001 2002 2003 2004
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rent and utilities 1,194,113 1,201,096 1,329,030 1,368,901 1,409,968 1,452,267 1,495,835 1,540,710
Interest 2,342 1,773
Other 18,115 31,076 19,800
-------------------------------------------------------------------------------------------
Total Revenues 1,214,571 1,233,945 1,348,830 1,368,901 1,409,968 1,452,267 1,495,835 1,540,710
-------------------------------------------------------------------------------------------
Operating costs and expenses:
Property operating 626,035 699,007 733,217 755,213 777,869 801,206 825,242 849,999
Interest 322,993 318,356 313,785 309,279 304,839 300,462 296,148 291,896
Depreciation and amortization 281,318 292,687 304,515 316,822 329,626 342,947 356,807 371,226
General and
administrative:
Related parties
Other 7
-------------------------------------------------------------------------------------------
Total operating costs and
expenses 1,230,346 1,310,056 1,351,517 1,381,314 1,412,334 1,444,614 1,478,196 1,513,121
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net Income (loss) (15,776) (76,111) (2,686) (12,413) (2,365) 7,653 17,639 27,590
===========================================================================================
</TABLE>
C-6
<PAGE>
"Promptly upon receiving the consents of [LOGO] Windsor
the limited partners in WPP 6 holding a Corporation
majority-in-interest of the units, WPP 6 SPECIALIZING IN
will proceed with the proposed Sales and MANUFACTURED HOME
Plan of Liquidation resulting in cash COMMUNITIES
distributions to limited partners of
approximately $32 per unit." NYA
VERY IMPORTANT NOTICE
PLEASE READ AND RESPOND IMMEDIATELY
March 22, 2000
Dear Limited Partner:
In order to provide limited partners with an opportunity to achieve
liquidity in their investment in Windsor Park Properties 6, A California Limited
Partnership (the "Partnership"), and in connection with the 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
final liquidating distributions estimated to be $32.15 per unit (the "Sales and
Plan of Liquidation").
We have enclosed in this package for your review the following documents
relating to the proposed Sales and Plan of Liquidation: (i) a Consent
Solicitation Statement and (ii) a Consent Form.
In order to proceed with the Sales and Plan of Liquidation, limited
partners holding a majority-in-interest of the Partnership's units of limited
partner interest must consent to both proposals relating to the Sales and Plan
----
of Liquidation. Limited partners may consent to the proposed Sales and Plan of
Liquidation by completing and returning the enclosed Consent Form provided for
that purpose on or before April 28, 2000. Promptly upon receiving the consents
of limited partners holding a majority-in-interest of the units of limited
partner interest, the Partnership will proceed with the proposed Sales and Plan
of Liquidation.
Failure to consent and/or an abstention count as "no" votes. Please make
your desires count and "consent" to the proposed transactions.
We urge you to take the time to read the enclosed Consent Solicitation
Statement which describes in substantial detail the proposed Sales and Plan of
Liquidation and to complete and return your Consent Form in the postage-paid
envelope provided. Please remember, failure to consent and/or an abstention
count as "no" votes. This is your opportunity to liquidate your investment in
the Partnership for cash.
Should you have any questions about the Sales and Plan of Liquidation,
please do not hesitate to call Arlen Capital, the Partnership's solicitation
agent for the proposed transactions, at (800) 553-4039.
Very truly yours,
/s/ Steven G. Waite
Steven G. Waite
President
Enclosures
<PAGE>
[LOGO] Windsor
Corporation
SPECIALIZING IN
MANUFACTURED HOME
COMMUNITIES
--------------------------------------
6160 SOUTH SYRACUSE WAY
GREENWOOD VILLAGE, CO 80111
(303) 741-3707
Steven G. Waite
President
March 22, 2000
Re: Liquidation of Windsor Park Properties 6 ("WPP6")
-------------------------------------------------
Dear Broker:
Enclosed you will find the Consent Solicitation Statement and related proxy
materials that are being sent to the unit holders of WPP6. The Consent
Solicitation Statement outlines a proposed transaction whereby all of the assets
held by WPP6 will be acquired by N'Tandem Trust and, subsequently, WPP6 will be
liquidated. Upon receiving the approval from a majority-in-interest of the units
to both of the proposals described in the Consent Solicitation Statement, we
will finalize the transaction, liquidate WPP6 in accordance with its partnership
agreement and, as described in the Consent Solicitation Statement, make a final
liquidating distribution to unit holders of approximately $32.15 per unit. This
liquidating distribution is substantially in excess of recent tender offers
received by unit holders.
As you may recall, the WPP6 investors paid $100 per partnership unit in 1988.
There was a distribution to the limited partners in 1993 of approximately $59.00
per unit as five properties in the portfolio were sold. Semi-annual
distributions have been made to unit holders of approximately $1.02 per unit.
Upon receiving the final liquidating distribution of $32.15 per unit, unit
holders will have received approximately $130.57 per unit in total over the term
of their investment.
We encourage you to speak to your investors, answer their questions and
recommend that they consent to both of the proposals described in the Consent
Solicitation Statement. Also enclosed is a Questions and Answers Supplement that
we hope will be helpful in answering any questions that you or your investors
may have regarding the proposed transaction. If you have any questions or
comments, please feel free to call me at the above-listed number. We appreciate
your support of the proposed transaction.
Sincerely,
/s/ Steven G. Waite
Steven G. Waite
President
Enclosures
<PAGE>
THIS CONSENT IS SOLICITED BY THE GENERAL PARTNERS
OF
WINDSOR PARK PROPERTIES 6
The undersigned represents that he or she is the holder of Units in Windsor
Park Properties 6, A California Limited Partnership. The undersigned
acknowledges receipt from the General Partners of the Consent Solicitation
Statement, dated March 22, 2000. Capitalized terms used in this consent have
the meanings given to them in the Consent Solicitation Statement. The General
Partners request that the Limited Partners consent to the following Proposals:
Proposal 1 -- Proposal 1 is for the General Partners to proceed with the Sales
to N'Tandem in accordance with the Purchase and Sale Agreement.
[ ] CONSENT [ ] WITHHOLD CONSENT [ ] ABSTAIN
Proposal 2 -- Proposal 2 is for the General Partners to proceed with the Plan
of Liquidation following such Sales.
[ ] CONSENT [ ] WITHHOLD CONSENT [ ] ABSTAIN
Each of Proposal 1 and Proposal 2 is conditioned upon approval of the other
Proposal by the Limited Partners. Accordingly, any Limited Partner desiring to
have the General Partners proceed with the Sales and the Plan of Liquidation
needs to consent to both Proposal 1 and Proposal 2.
----
PLEASE FILL IN THE APPROPRIATE BOX ABOVE WITH RESPECT TO EACH PROPOSAL AND SIGN
ON THE REVERSE SIDE.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Please sign exactly as your name appears on this consent. When Units are held
by joint tenants, both should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give full title of such. If a
corporation, please have this consent signed by an authorized officer. If a
partnership, please have this consent signed by a general partner. PLEASE FILL
IN THE DATE OF THIS CONSENT AS CONSENTS MUST BE DATED TO BE VALID. UNITHOLDERS
WHO SIGN AND DATE THIS CONSENT BUT FAIL TO OTHERWISE MARK THIS CONSENT WILL BE
DEEMED TO HAVE CONSENTED TO THE PROPOSALS.
PLEASE FILL OUT, SIGN AND RETURN THIS FORM BY 5:00 P.M. (EASTERN DAYLIGHT TIME)
ON APRIL 28, 2000.
--------------------------------------------
Signature
--------------------------------------------
Signature (if held jointly)
--------------------------------------------
Dated
<PAGE>
WINDSOR PARK PROPERTIES 6
CONSENT SOLICITATION STATEMENT
QUESTIONS & ANSWERS SUPPLEMENT
1. Q. What are the Proposals that I am being asked to vote on?
A. Two Proposals are being proposed in the Consent Solicitation Statement
for approval by the Limited Partners. Proposal 1 is for the General
Partners to proceed with the Sales to N'Tandem Trust, an affiliate of
the Partnership, pursuant to the Purchase and Sale Agreement.
Proposal 2 is for the General Partners to proceed with the Plan of
Liquidation following the consummation of the Sales.
2. Q. What happens if these Proposals are approved?
A. Approval of both of the Proposals will permit the General Partners to
----
proceed with the liquidation of the Partnership by selling the
Partnership's one wholly-owned property and its partial Ownership
Interests in five other properties to N'Tandem Trust and to make
distributions of approximately $32.15 per Unit to the Limited
Partners.
3. Q. What happens if these Proposals are not approved?
A. If Limited Partners holding of a majority of the Units fail to consent
to both of the Proposals, the General Partners intend to proceed to
----
explore such alternatives as may be available to the Partnership.
These alternatives may include selling the Partnership's Properties to
unaffiliated third parties or the merger of the Partnership with
another entity, each as further described in the Consent Solicitation
Statement. The General Partners anticipate that selling such
interests and winding up the Partnership would take at least one year
and probably longer. Additionally, the General Partners believe it is
likely that the prices paid by such third parties would be
substantially discounted due to the fact that the Partnership owns
only partial interests in five of the six Properties it has interests
in and that such sales are also likely to involve the payment of
brokerage fees, thereby reducing liquidating distributions to Limited
Partners.
4. Q. What are the consequences if I do not vote?
A. The consent of Limited Partners holding at least a majority of the
Units is necessary to approve the Proposals. If you do not vote, you
will be considered to have abstained from consenting to the Proposals,
which has the same effect as voting "no" on the Proposals. In doing
so, you are effectively leaving the decision to consent or not to
consent to the Proposals in the hands of the other Limited Partners,
but as a Limited Partner you will be bound by the results of the
Consent Solicitation regardless of whether you send in your consent
form. It is very important, therefore, that you vote on the
Proposals.
5. Q. How much are you going to pay for my Units?
A. No one is actually buying your Units in the proposed transactions.
N'Tandem has agreed to buy all of the assets currently held by the
Partnership. N'Tandem is willing to purchase all of the Properties
and is paying the full Appraised Value for the one wholly-owned
Property and is only applying (i) a 5% to the Appraised Value of the
Ownership Interest in the Town & Country Estates Property for the fact
that the Partnership owns a
<PAGE>
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. As an additional amount distributable to Limited Partners,
an aggregate of approximately $789,555, less attorney's fees and
expenses, shall be paid to Limited Partners in connection with the
proposed settlement of an existing class action and derivative
lawsuit. See Answer 26 below. The Partnership will then pay off its
remaining liabilities and make final distributions to Limited
Partners. The General Partners estimate that the final distributions
on the Units, including amounts distributable in connection with the
proposed settlement, will be approximately $32.15 per Unit.
6. Q. Why is a discount being applied to the Appraised Value of the
Ownership Interests?
A. In determining the purchase price to be paid for each of the Ownership
Interests, N'Tandem applied a 5% or 10% discount, as the case may be,
to the Appraised Value of each Ownership Interest for the fact that
the Partnership only owns either a majority or minority interest in
the underlying properties. See Answer 5 above. Generally, discounts
are applied to the sale of partial interests in real estate because,
by their nature, partial interests are more difficult to sell than
wholly-owned properties due to (i) the lack of control of the
underlying property associated with such interests, (ii) an increased
difficulty in arranging future financing for such interests and (iii)
the disproportionately high costs associated with the purchase and
management of such interests. The General Partners believe that the
discounts being applied in connection with the Sales, based upon the
opinion of the Appraiser, are substantially less than the discounts
that would have been applied had such Ownership Interests been sold to
a third-party purchaser. All of the remaining interests in the
properties underlying the Ownership Interests not held by the
Partnership are held, directly or indirectly, by entities, including
N'Tandem, affiliated with the Managing General Partner. Details
relating to the discounts being applied to the Ownership Interests are
described on pages 43 and 44 of the Consent Solicitation Statement.
7. Q. Why is a discount being applied in this transaction when no discount
was applied in the Windsor 4 transaction?
A. Following the Windsor 4 Transaction, N'Tandem determined that a
discount to the Appraised Value of the Ownership Interests would be
necessary in order to offset the difficulties and additional costs
associated with the ownership of a partial interest in five of the
Properties. In particular, following the Windsor 4 Transaction,
N'Tandem has found it more difficult to arrange acceptable financing
for the properties in which it holds partial ownership interests and,
as a result, has not been able to fully execute its business plan with
respect to such interests. With respect to the Ownership Interests,
all of the remaining interests in the properties underlying the
Ownership Interests not held by the Partnership are held, directly or
indirectly, by entities, including N'Tandem, affiliated with the
Managing General Partner. Also see Answer 6 above. In connection
with the application of the discount, N'Tandem believes that the
benefits to the Partnership and the Limited Partners of not having to
give N'Tandem any representations or warranties with respect to the
Properties as well as the cost savings associated with not having to
pay any brokerage fees or commissions should more than offset the
costs associated with the application of the discount.
2
<PAGE>
8. Q. What does it mean to liquidate the Partnership?
A. All partnerships are finite-life entities, which means that they are
created to conduct business for a specified period of time. This
specified period of time is known as the partnership term. Following
the end of the term, the general partners of a partnership generally
will proceed to sell all of the partnership's assets, which is known
as a liquidation, if the term of the partnership is not otherwise
extended and, thereafter, to make liquidating or final distributions
of cash to its partners.
9. Q. When will I get paid?
A. It is expected that the Sales will take place within 30 days of the
Limited Partners' consenting to the Proposals and that liquidating
distributions will be paid to the Limited Partners within 30 days of
the Sales. If the Limited Partners consent by the specified consent
date, it is expected that final distributions will be paid to Limited
Partners in June 2000.
10. Q. What risks are involved?
A. The Proposals are subject to material risks, conflicts of interest and
other considerations which are set forth on pages 16 and 17 of the
Consent Solicitation Statement and page 5 in the Summary section of
the Consent Solicitation Statement. They include 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;
. 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 not engaged in any marketing efforts
with respect to the sale of the Properties to third parties;
. The purchase prices for the Properties are based upon appraisals
rendered between June 1999 and October 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.
11. Q. What other options do I have?
A. As a practical matter, you only have a couple of options. First, you
can consent to, withhold consent to, or abstain with respect to, the
Proposals. If the holders of a majority of the Units consent to both
----
Proposals, the General Partners will proceed with a
3
<PAGE>
liquidation of the Partnership and make liquidating distributions to
the Limited Partners estimated to be approximately $32.15 per Unit.
If holders of a majority of the Units fail to consent to either of the
Proposals, the General Partners intend to proceed to explore such
alternatives as may be available to the Partnership. These
alternatives may include selling the Partnership's Properties to
unaffiliated third parties or the merger of the Partnership with
another entity, each as further described in the Consent Solicitation
Statement.
Lastly, you can try to sell your Units in the Partnership.
Unfortunately, no established trading market for the Units exists.
Given the limited trading activity and limited demand for the Units
and recent sales prices of which we are aware, we don't think that's a
very attractive option.
12. Q. What happened to my initial investment of $100? Why am I getting less
than this amount now?
A. Total distributions to the Limited Partners since the Partnership's
inception have amounted to $98.42 per Unit. As you may recall, in
1993, five of the Partnership's manufactured home communities were
sold and proceeds of $59.28 per Unit were distributed to Limited
Partners. Final liquidating distributions to Limited Partners if the
Proposals are approved are estimated to be approximately $32.15 per
Unit, resulting in total distributions to Limited Partners of
approximately $130.57 per Unit versus an initial investment of $100
per Unit.
13. Q. What about all of the Risk Factors and negative factors described in
the Consent Solicitation Statement? How can the proposed transactions
be fair given these factors?
A. The General Partners considered both positive and negative factors
(all of which are described on pages 25 through 28 of the Consent
Solicitation Statement) in reaching their determination that the Sales
and the Plan of Liquidation are fair to the Limited Partners from both
a financial point of view and from a procedural point of view.
In reaching their determination that the Sales and the Plan of
Liquidation are fair to the affiliated and unaffiliated Limited
Partners from a financial point of view, the General Partners did not
assign relative weights to the positive and negative factors relating
the financial fairness of the Sales and the Plan of Liquidation or
determine that any one factor was of particular importance; rather,
the General Partners viewed the positive factors as a totality and the
negative factors as a totality and concluded that the positive factors
outweighed the negative factors. Accordingly, the General Partners
determined that the Sales and the Plan of Liquidation are fair to the
affiliated and unaffiliated Limited Partners from a financial point of
view.
In reaching their determination that the Proposals are fair to the
Limited Partners from a procedural point of view, the General Partners
concluded that the approval of the Proposals by a majority-in-interest
of the unaffiliated Limited Partners is sufficient to insure that
procedural fairness has been preserved for the Limited Partners.
The General Partners also believe that the potentially negative
factors influencing procedural fairness were in each case mitigated by
other factors or considerations, including the following:
4
<PAGE>
. Although the Managing General Partner and N'Tandem are under
common control, the General Partners concluded that the common
control did not adversely affect the terms of the Sales for
Limited Partners and allowed N'Tandem to offer terms of the Sales
that they believed would not be available from third parties;
. 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;
. 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
. The General Partners' belief that marketing the Properties held
by the Partnership would not have provided a better transaction
for the Limited Partners and would have ultimately delayed the
timing of the Sales and the distribution of liquidating proceeds
to the Limited Partners.
14. Q. What is the purpose of the Fairness Opinion? What does the Fairness
Opinion say?
A. In connection with its analysis of the Sales and Plan of Liquidation,
the Managing General Partner, on behalf of the Partnership, engaged
Legg Mason to render the Fairness Opinion, which addresses the
fairness, from a financial point of view, to the Limited Partners of
the aggregate purchase price to be paid by N'Tandem to the Partnership
for the Properties.
Legg Mason delivered the Fairness Opinion to the Managing General
Partner to the effect that, as of March 1, 2000, the aggregate
purchase price to be paid to the Partnership by N'Tandem for the
Properties is fair, from a financial point of view, to the Limited
Partners. In rendering such opinion, Legg Mason conducted (i) a
liquidation analysis assuming that the Properties were sold to
third-party purchasers; (ii) a comparable company analysis to
establish an implied equity value for the Units; and (iii) a
continuation analysis assuming that the Partnership extended its
stated term and the Properties continued to be held by the Partnership
until December 31, 2004.
The Fairness Opinion, which is set forth in Appendix A to this Consent
Solicitation Statement, should be read in its entirety for a
description of the procedures followed, assumptions and qualifications
made, matters considered and the limits of the review undertaken by
Legg Mason.
15. Q. When was the last Appraisal? Why were new Appraisals not done?
A. The Appraisals were rendered in August 1999 and September 1999. The
Appraisals were not updated because the Managing General Partner (i)
believes that the Appraisals continue to reflect the fair market value
of the Properties, (ii) does not believe that any significant events
have occurred since that time which would cause the conclusions
reached by the Appraiser in the Appraisals and the Appraised Values to
be different had the Appraisals been rendered as of a more recent date
and (iii) is not aware of any material developments that are
reasonably likely to materially affect such conclusions.
5
<PAGE>
16. Q. Will I be receiving future distributions?
A. No. The purpose of the liquidating distributions following the Sales
is to distribute out to the Partners all cash remaining in the
Partnership after payment of the Partnership's remaining liabilities.
Accordingly, once such distributions are made, there will be no
further distributions by the Partnership.
17. Q. Why is N'Tandem paying over $9.1 million when Partnership's assets is
approximately $6.5 the net book value of the million?
A. The purchase prices for the Properties are based upon the Appraised
Values of the Properties, which in this case exceeds their net book
value.
18. Q. Instead of cash, can I get stock in N'Tandem?
A. No. When the General Partners structured the transaction they
structured it so that all of the Limited Partners would receive cash.
They did so because they believed that the Limited Partners would want
cash, rather than other securities.
19. Q. Why is N'Tandem willing to buy the Properties "as-is," without
representations and warranties?
A. The principal reason N'Tandem is willing to purchase the Properties
"as-is" and without representations and warranties is because of
N'Tandem's familiarity with the Properties due to the fact that The
Windsor Corporation, which is the Managing General Partner of the
Partnership, is also the external investment advisor to N'Tandem.
20. Q. Were any other third-party offers considered?
A. No, the General Partners did not engage, and are currently not
engaging, in any marketing efforts with respect to the sale of the
Properties to third parties.
21. Q. What are the advantages to me if this is approved?
A. The principal advantage to Limited Partners if the Sales and the Plan
of Liquidation are approved is that they will receive liquidating
distributions of approximately $32.15 per Unit promptly following
approval of the Proposals and that they will no longer be subject to
the risks inherent in their investment in the Partnership.
The Sales and the Plan of Liquidation also provide the Limited
Partners with the following benefits and advantages:
. N'Tandem is willing to purchase all of the Partnership's
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 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;
. As an additional amount distributable to Limited Partners, an
aggregate of approximately $789,555, less attorney's fees and
expenses, shall be paid to Limited Partners in connection with
the proposed settlement of an existing class action and
derivative lawsuit. As a result, if the proposed settlement is
approved,
6
<PAGE>
the General Partners estimate that those Limited Partners who do
not elect to exclude themselves from the class will receive,
after payment of estimated attorney's fees and expenses to
plaintiffs' counsel, an additional amount of approximately $1.85
per Unit. This additional amount per Unit distributable to
Limited Partners has been included in the estimated $32.15 to be
paid to Limited Partners upon final liquidation of the
Partnership;
. 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 Partnership's Properties in a
single transaction, and is buying the Properties without
representations and warranties from the Partnership, the General
Partners will be able to wind up the Partnership and make full
liquidating distributions promptly upon the approval of the Sales
and the Plan of Liquidation by the Limited Partners; and
. 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 $926,300 (based upon brokerage fees of
3% to 6% typically paid by sellers of real properties).
22. Q. What are the disadvantages to me if this is approved?
A. The principal disadvantages to the Limited Partners of the Sales and
the Plan of Liquidation are that:
. The Sales and Plan of Liquidation are subject to the Risk Factors
identified in the Consent Solicitation Statement. See Answer 10
above;
. With respect to the Ownership Interests held by the Partnership,
the remaining interests in the properties underlying such
Ownership Interests are held by Windsor 5 and Windsor 7, two
affiliated limited partnerships having the General Partners as
their sole general partners, or Windsor Park 456, an affiliated
limited partnership which has the Managing General Partner as its
sole general partner and Windsor 5 and N'Tandem as its other
limited partners;
. With respect to the discounts being applied by N'Tandem to the
Ownership Interests held by the Partnership, no discount was
applied to the purchase price paid for any of the properties
acquired by N'Tandem in a similar transaction which was completed
in June 1999 involving N'Tandem and the General Partners; and
. It is possible that Limited Partners might earn a higher return
on their investment if the Partnership extended its stated term
for a second time and retained ownership of the Properties. By
approving the Sales and the Plan of Liquidation, Limited Partners
will also be forgoing current benefits of the ownership of the
Properties such as continuing distributions.
23. Q. Why are the General Partners proposing the Sales and the Plan of
Liquidation? How do they benefit the General Partners?
A. The term of the Partnership expired on December 31, 1999.
Accordingly, the General Partners are required to develop a plan of
liquidation for the Partnership's assets or take
7
<PAGE>
such steps as are necessary to extend the Partnership term. After
considering the alternatives available to the Partnership, the General
Partners approved, and recommended that the Partnership proceed with,
the sale of the Properties to N'Tandem, an affiliate of the
Partnership.
If the Sales and the Plan of Liquidation are approved by the Limited
Partners, the General Partners will receive 1% of the liquidating
proceeds in accordance with the partnership agreement of the
Partnership.
Additionally, they will receive certain other benefits and fees, all
of which are described on page 16 of the Consent Solicitation
Statement.
24. Q. What are the costs involved in proceeding with the Sales and the Plan
of Liquidation?
A. The General Partners have estimated the costs in connection with the
Consent Solicitation and the Sales and the Plan of Liquidation to be
approximately $541,900. Most of these costs relate to work which will
already have been done for the Partnership at the time of the mailing
of the Consent Solicitation Statement. Accordingly, they will be
incurred by the Partnership regardless of whether the Proposals are
adopted. A breakdown of these expenses and calculations relating to
the estimate of liquidating proceeds are set forth on page 24 of the
Consent Solicitation Statement.
25. Q. What are the Complaint and the Amended Complaint?
A. On May 10, 1999, a limited partner of Windsor 4 filed a purported
class action and derivative 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. On December 3,
1999, the same person, also a limited partner of the Partnership and
Windsor 3, amended the Complaint by filing the Amended Complaint, on
behalf of himself and other similarly situated limited partners,
against the General Partners, in their capacity as the general
partners of the Partnership, Windsor 3, and 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 Amended 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 represent their
present value, (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 and (iv) breach of fiduciary duty and contractual duties owed
by the defendants to the Partnership and Windsor 3 and their limited
partners in that the defendants allegedly failed to take steps to
ensure the entire fairness of the transactions by proposing to sell
the partnerships' assets at prices that were improperly discounted
from the
8
<PAGE>
appraisal values and without taking steps to seek out alternative
purchasers or otherwise maximize value to the limited partners. In the
Amended Complaint, the plaintiff asserts causes of action for breach
of contract, breach of fiduciary duty and a derivative claim for
breach of fiduciary duty and seeks 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.
26. Q. What is the proposed settlement relating to the claims set forth in
the Amended Complaint?
A. Although the General Partners dispute each claim set forth in the
Amended Complaint, they have concluded that the further defense of
this action would be protracted, expensive and distracting to their
operations. To that end, the General Partners have reached an
agreement in principle that would settle all claims in the action,
subject to court approval of a definitive signed agreement. The
proposed settlement, if approved, provides for the total payment of
more than $1 million by the defendants, plus the costs of
administering the settlement fund (including the mailing of notice to
class members), in return for releases from all actual and potential
claims concerning the management or operation of the Partnership,
Windsor 3 and Windsor 4 against all of the defendants and any
affiliated persons or entities. Accordingly, there would be available
for distribution to Limited Partners an aggregate of approximately
$789,555 as additional compensation if the proposed settlement is
approved. As a result, if the proposed settlement is approved, the
General Partners estimate that those Limited Partners who do not elect
to exclude themselves from the class will receive, after payment of
estimated attorney's fees and expenses to plaintiffs' counsel, an
additional amount of approximately $1.85 per Unit. If approved, the
settlement will be reflected in the final distribution to Limited
Partners of $32.15 per Unit.
27. Q. How did Chateau and N'Tandem get involved with this?
A. Chateau first came into contact with the Partnership in 1992 when it
began to supply on-site management services to the Partnership and
certain affiliates of the Partnership. Further, in September 1997,
Chateau purchased all of the outstanding capital stock of The Windsor
Corporation, the Managing General Partner of the Partnership. Chateau
owns a 9.8% ownership interest in N'Tandem.
28. Q. Where can I get a copy of the Limited Partners' names and addresses?
A. A list of names and addresses of Limited Partners of the Partnership
is available to any Limited Partner who makes a request to the
Partnership for them. However, any recipient of a Limited Partner
list will need to comply with federal and state securities laws in
connection with the use of the list. Requests should be made to:
Windsor Park Properties 6 -- Investor Relations, 6160 South Syracuse
Way, Greenwood Village, Colorado 80111. In connection with any
request for a Limited Partner list, the Partnership will charge a fee
of $50.00 in order to offset certain costs associated with the
processing of such request and the copying and mailing of the list to
the requesting Limited Partner.
29. Q. What are my tax consequences?
A. The combined effect of the Sales and Plan of Liquidation for Limited
Partners who purchased Units in the original offering of Units is
expected to be a net taxable gain to Limited Partners of approximately
$0.12 per Unit.
9
<PAGE>
30. Q. What is each of my Units worth today?
A. There is no established trading market for the Units, which makes it
tough to come up with a market value for the Units. However, the
estimated net liquidating proceeds payable in connection with the
Sales ($32.15 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 $27.49 per Unit in the secondary markets, as reported by The
Partnership Spectrum, for the period of May 1, 1999 through December
31, 1999.
31. Q. How much have I received in distributions to date?
A. Since the organization of the Partnership, total distributions to
Limited Partners have amounted to approximately $27,995,400 (or an
average of approximately $98.42 per Unit). If the Sales and Plan of
Liquidation are completed, total distributions to Limited Partners
will amount to approximately $37,208,600 (or an average of
approximately $130.57 per Unit), compared to an initial purchase price
for each Unit of $100.00.
Your actual past distributions on the Units will depend upon how long
you have held such Units. Distributions by the Partnership in the
past five years are set forth on page 14 of the Consent Solicitation
Statement.
32. Q. How can I dispose of my Units now (or later)?
A. As you are probably aware, a formal trading market for the Units does
not exist. If the Proposals are approved, liquidating distributions
(of approximately $32.15 per Unit) will be paid to Limited Partners,
the Partnership will be liquidated and dissolved, and the Units will
cease to exist.
33. Q. What do you think I should do?
A. The General Partners believe that the Sales and the Plan of
Liquidation are fair, from both a financial and a procedural point of
view, to the Limited Partners and have recommended that Limited
Partners consent to the Proposals.
The reasons for their recommending that the Limited Partners consent
to the Sales and the Plan of Liquidation, and their reasons for their
belief that the Sales and the Plan of Liquidation are fair to the
Limited Partners are set forth in substantial detail on pages 25
through 28 of the Consent Solicitation Statement under the caption
"SPECIAL FACTORS -- Fairness of the Proposed Transactions;
Recommendation of the General Partners."
34. Q. The Units are in my husband's and my name -- he died last year --
what do I do?
A. The Partnership's attorneys have advised us that generally the
beneficiary of the Units under your husband's will has the right to
consent with respect to the Units on your husband's behalf if the
estate has been fully probated. If not, the executor or executrix
should be able to consent with respect to the Units on your husband's
behalf. We would urge you, however, to call the lawyer who handled
your husband's estate in order to address your particular situation.
10
<PAGE>
35. Q. I hold these Units in my IRA -- who needs to sign in order for the
consent to be valid?
A. You need to speak to your IRA custodian or trustee. They will either
execute the consent with respect to your Units for you or direct you
to sign the consent with respect to the Units yourself.
36. Q. What additional paperwork do you need for my consent to be valid?
A. If the Units are solely in your name, the only thing you need to do is
to fully fill out the consent form, sign and date it and enclose it in
the pre-paid, pre-addressed envelope and mail or Federal Express the
envelope to Arlen Capital, LLC, the Partnership's solicitation agent
with respect to the Proposals, for receipt no later than April 28,
2000.
If the Units are in multiple names, all Limited Partners need to sign
the consent form. Additionally, if someone other than the person who
is the Limited Partner of record is signing on behalf of such person,
then we need evidence of the signing person's authority to do so, such
as a copy of a power-of-attorney or letter of administration.
37. Q. What took so long? What about the related party aspects of the
proposed transactions?
A. The fact that the Partnership owns only a partial Ownership Interest
in five of the six Properties made it difficult for the Managing
General Partner to find willing third-party buyers. After reviewing
the alternatives, the General Partners determined that the best course
of action was to sell the Ownership Interests and the one wholly-owned
Property to N'Tandem. Fortunately, because of N'Tandem's familiarity
with the Properties and The Windsor Corporation, N'Tandem is willing
to purchase, without representations and warranties from the
Partnership, the one wholly-owned Property for its full value based on
the Appraisals and is only applying a 5% or 10% discount, as the case
may be, to the Appraised Value of the Ownership Interests for the fact
that the Partnership owns either a majority or minority interest in
the underlying properties.
11
