SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) Securities
Exchange Act of 1934
Filed by the Registrant |_|
Filed by a party other than the Registrant XX
Check the appropriate box:
XX Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SECURED INVESTMENT RESOURCES FUND, L.P. III
(Name of Registrant as Specified in Its Charter)
NICHOLS RESOURCES, LTD,
a General Partner of the Registrant
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
XX No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee paid:
|_| Fee paid previously with preliminary materials
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
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SECURED INVESTMENT RESOURCES FUND, L.P. III
1100 Main, Suite 2100
Kansas City, Missouri 64105
CONSENT STATEMENT
To the Limited Partners:
Nichols Resources, Ltd. ("Nichols"), a general partner of Secured
Investment Resources Fund, L.P. III (the "Partnership"), is recommending that
each limited partner of the Partnership ("Limited Partner") consent to (i) the
assignment of James R. Hoyt's and SIR Partners III, L.P.'s general partner
interests to Nichols and (ii) the appointment of Nichols as successor Managing
General Partner. Nichols does not anticipate that any of the other general
partners of the Partnership will make a recommendation with respect to these
proposals.
THIS CONSENT STATEMENT IS BEING MAILED TO LIMITED PARTNERS ON OR ABOUT
APRIL ___, 1999. TO BE COUNTED, A PROPERLY SIGNED CONSENT FORM MUST BE RECEIVED
BY NICHOLS RESOURCES, LTD. (A GENERAL PARTNER) AT 1100 MAIN, SUITE 2100, KANSAS
CITY, MISSOURI 64105, ON OR BEFORE _______________, 1999.
SETTLEMENT AGREEMENT
On July 21, 1998, Nichols, Bond Purchase, L.L.C. ("Bond"), David L.
Johnson ("Johnson") and other affiliates of Johnson, together with the
Partnership, SIR Partners III, L.P., a general partner of the Partnership ("SIR
Partners III"), SPECS, Inc., the company which provides management and investor
services to the Partnership ("SPECS"), and James R. Hoyt, the current Managing
General Partner of the Partnership ("Hoyt"), entered into a Settlement Agreement
and Mutual Release (the "Settlement Agreement").
Hoyt is the general partner of SIR Partners III.
Dispute Among General Partners of the Partnership
The Settlement Agreement settled a dispute which had arisen between
Nichols, SIR Partners III and Hoyt, being all of the general partners of the
Partnership, over the proper course of action to be taken for the Partnership.
Hoyt wanted to sell all the Partnership's properties and liquidate the
Partnership. Nichols did not believe that the immediate liquidation of the
Partnership without full disclosure to the Limited Partners was in the
Partnership's best interests. This dispute resulted in the filing of a civil
action by Nichols, as plaintiff, against Hoyt, SIR Partners III, the Hoyt Group,
Ltd. and Hoyt S. Partnership,
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L.P. in the Circuit Court of Jackson County, Missouri on January 27, 1998 (the
"Lawsuit").
Nichols alleged in the petition that the defendants had (i) failed to
make the books and records of the Partnership available to Nichols as required
by law and the Partnership's limited partnership agreement and (ii) breached a
settlement agreement that had been previously entered into between, among
others, Nichols, Hoyt and certain Hoyt affiliates pursuant to which Hoyt had
agreed to effectuate a change in management of the properties of the Partnership
as requested by Nichols. The relief sought by Nichols was (i) a preliminary
order in mandamus directing the defendants to file an answer to the petition or
take a judgment by default, (ii) damages, both actual and punitive, along with
interest, costs and attorneys' fees, (iii) a restraining order and an injunction
restraining the defendants from selling any asset of the Partnership without the
consent of the limited partners and the co-general partners of the Partnership
and (iv) a judgment that Nichols is entitled to inspect the books and records of
the Partnership and that the change in management of the assets of the
Partnership requested by Nichols be effected.
Terms of the Settlement Agreement
As part of the negotiations that led to the Settlement Agreement,
Nichols raised its concern over a receivable that was owed by Hoyt and other
affiliates to the Partnership. The receivable owed by Hoyt and other affiliates
of the Partnership was for syndication costs and expenses that the Partnership
had paid to Hoyt and other affiliates of the Partnership related to the issuance
of limited partnership interests. The syndication costs and expenses paid by the
Partnership exceeded the amount of such costs and expenses that were allowed by
the Partnership Agreement. Therefore, Hoyt and the affiliates owed the
Partnership for the excess syndication costs and expenses. Hoyt in turn
discussed selling the assets of the Partnership and liquidating the Partnership.
Pursuant to the Settlement Agreement, Nichols agreed (i) to pay $100,000 in cash
to SIR Partners III and Hoyt, $21,751 of which will be paid by Hoyt to the
Partnership to pay a receivable owed by affiliates of the Partnership to the
Partnership for unpaid excess syndication costs and expenses that were shown on
the Partnership's 1997 year-end financial statements, (ii) to clarify or
withdraw the statements that it filed electronically with the Securities and
Exchange Commission (the "SEC") on April 2, 1998 (SEC File No. 0-18475) in which
Johnson and Bond indicated that Hoyt had failed to provide financial and other
information with respect to the Partnership and Hoyt had a conflict of interest
as a general partner of the Partnership in certain actions taken by Hoyt and
(iii) to dismiss the civil actions filed. In exchange therefor, SIR Partners III
and Hoyt have agreed to transfer their General Partner interests to Nichols, and
Hoyt has agreed to withdraw as Managing General Partner. Under the Partnership
Agreement, such transfers are subject to the majority vote of the Limited
Partners as is the appointment of a successor Managing General Partner.
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Johnson and Bond withdrew the statements filed with the SEC on April 2,
1998, by filing a statement electronically with the SEC on August 3, 1998 (SEC
File No. 0-18475). Limited Partners may read and copy the statements that were
filed electronically on April 2, 1998 and August 3, 1998, and any other
materials the Partnership has filed, without charge at, or obtain copies upon
payment of prescribed fees from, the Public Reference Section of the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549. Limited Partners may obtain
information on the operation of the SEC's Public Reference Report by calling the
SEC at 1-800-SEC-0330. The SEC also maintains a website that contains the
above-referenced statements and the Partnership's reports, proxy and information
statements and other information regarding the Partnership, and the address is
http://www.sec.gov.
Hoyt and SIR Partners III have also agreed in the Settlement Agreement
that Nichols, as a General Partner of the Partnership, shall have the right to
designate the management company to manage the assets of the Partnership and to
execute all documents to effectuate the release of the current management
contract. Nichols named Maxus Properties, Inc., a Missouri corporation that
specializes in commercial property management for affiliated owners ("Maxus"),
as the new management company to manage the properties held by the Partnership
effective as of January 1, 1999. Johnson, who is the principal shareholder and
an officer and director of MJS Associates, Inc., a Missouri corporation that is
the sole shareholder of Nichols ("MJS"), is also a majority shareholder and an
officer of Maxus. Maxus employs more than 250 people to manage 45 commercial
properties, including more than 7,500 apartment units and 300,000 square feet of
retail and office space. Nichols anticipates paying management fees to Maxus of
5% of the gross revenues of the properties owned by the Partnership, which is
the same fee that is currently paid by the Partnership for management fees.
PROPOSAL 1
ASSIGNMENT OF GENERAL PARTNERSHIP INTERESTS
The Partnership currently has three general partners: Nichols, SIR
Partners III and Hoyt. Hoyt is the current Managing General Partner. Nichols, as
a General Partner of the Partnership, is seeking the consent of the Limited
Partners to the transfer of the General Partner interests of the Partnership
from Hoyt and SIR Partners to Nichols.
Information Regarding the General Partners
Nichols has three directors: Johnson, John W. Alvey and Daniel W.
Pishny. Christine A. Robinson is Nichols' President, and Mr. Pishny and Mr.
Alvey are Nichols' Vice President and Secretary/Treasurer, respectively. Nichols
was formed on August 22, 1988 for the purpose of acting as a general partner of
public real estate programs and otherwise investing in and dealing with limited
partnerships, property management and real estate syndications. Currently,
Nichols' sole business is acting as general partner of the
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Partnership. Prior to January, 1998, Nichols was a wholly-owned subsidiary of
the J.C. Nichols Company. In January, 1998, MJS acquired all the issued and
outstanding shares of common stock of Nichols from the J.C. Nichols Company.
Besides its ownership of stock of Nichols and other real estate companies, MJS
oversees construction relating to the rehabilitation of properties, but has no
employees. As indicated above, Johnson is the principal shareholder and an
officer and director of MJS.
Ms. Robinson, age 32, has served as President of Nichols since January,
1998. As such, Ms. Robinson manages the day-to-day administrative functions of
Nichols. Ms. Robinson also is currently Vice President and a minority
shareholder of Maxus. Ms. Robinson has served as Vice President of Maxus since
September 1997. Prior to September 1997, Ms. Robinson served as Sales/Marketing
/Financial Analyst for American Italian Pasta Company, a retail pasta
manufacturing and sales company, and also worked as an independent contractor
for American Management Association, a company that provides management, finance
and inventory seminars. Ms. Robinson graduated Magna Cum Laude from Kansas State
University in 1990 where she received a degree in accounting.
Johnson, age 43, is Chairman, Chief Executive Officer, and majority
shareholder of Maxus. Mr. Johnson is also currently Vice President of KelCor,
Inc., a Missouri corporation ("KelCor") that specializes in the acquisition of
commercial real estate and the purchase of loans and apartments from lending
institutions and agencies of the federal government. In addition, KelCor acts as
a general partner in approximately ten real estate limited partnerships. Mr.
Johnson and his wife own all of the issued and outstanding stock of KelCor and
80 percent of the issued and outstanding stock of MJS. Mr. Johnson is also a
member of, and majority owner of the outstanding interests in, Bond, which is a
member-managed limited liability company. Mr. Johnson is a 1978 graduate of the
University of Missouri-Columbia. Upon graduation, Mr. Johnson joined the
international accounting firm of Arthur Andersen & Co., where he was promoted to
Tax Manager in 1982. At Arthur Andersen, Mr. Johnson specialized in structuring
real estate transactions for clients. In 1988, Mr. Johnson left Arthur Andersen
to pursue a career in the development, syndication and management of commercial
and multi-family real estate projects. Mr. Johnson is a licensed real estate
broker and a certified public accountant in the State of Missouri. As of the
date of this Proxy Statement, Mr. Johnson is a beneficial owner of 20 Limited
Partner Units owned by Bond. Nichols, MJS, Maxus, KelCor and Bond are all
affiliated companies that are involved in the commercial real estate business.
These entities are affiliated because Johnson has either a direct or indirect
majority ownership interest in each entity and is an officer of each entity.
Besides his office of Vice President of Nichols, Daniel W. Pishny, age
36, is President, Chief Operating Officer and a minority shareholder of Maxus.
Mr. Pishny graduated with highest distinction from the University of Kansas in
1984 where he obtained a degree in business administration. After graduating,
he joined the Kansas City
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office of KPMG Peat Marwick, an international accounting firm. At KPMG Peat
Marwick, Mr. Pishny was promoted to Audit Manager, specializing in the auditing
offinancial institutions. From 1990 to 1995, Mr. Pishny worked in the commercial
real estate lending departments of two major Kansas City financial institutions.
Mr. Pishny joined Maxus in 1995 and is responsible for the day-to-day operations
of Maxus and its managed properties.
Besides his office of Secretary/Treasurer of Nichols, John W. Alvey,
age 40, is Executive Vice President, Chief Financial Officer and a minority
shareholder of Maxus and President of KelCor. Mr. Alvey holds a degree from
Rockhurst College and a Masters of Accountancy from Kansas State University. In
1982, Mr. Alvey joined Arthur Andersen & Co., where he was promoted to Tax
Manager working primarily on real estate matters for individual clients. Mr.
Alvey joined Maxus in 1988 after spending one year working with a Kansas
City-area real estate company. Mr. Alvey became President of KelCor in 1992.
Mr. Alvey is responsible for the day-to-day accounting functions, risk
management and taxes for Maxus and its managed properties.
James R. Hoyt, age 60, holds a bachelor's degree in business
administration and is a licensed real estate broker in two states. Mr. Hoyt has
been actively involved for more than the past 20 years in various real estates
endeavors including development, syndication, property management and brokerage.
Since 1983, Mr. Hoyt has been involved as a general partner in ten real estate
private placement offerings. As of December 31, 1997, these partnerships,
including the Partnership, have raised a total of $60,709,750.
SIR Partners III, formerly known as Hoyt Partners III, L.P., is a
Missouri limited partnership organized on February 23, 1988. Mr. Hoyt is the
general partner. SIR Partners III was formed for the purpose of acting as a
general partner and acquisition agent of the Partnership.
In the event that the Limited Partners consent to the assignment of the
General Partner interests, Nichols will own by itself the 1% General Partner
interest. This change in ownership in the General Partner interests in the
Partnership will not in any manner alter or affect the amount or percentage of
income or profits or losses for tax purposes distributed or allocated to the
Limited Partners.
PROPOSAL 2
APPOINTMENT OF A SUCCESSOR MANAGING GENERAL PARTNER
Nichols, as a General Partner of the Partnership, is also seeking the
consent of the Limited Partners to the appointment of Nichols as the successor
Managing General Partner of the Partnership. In connection with the Settlement
Agreement, as indicated above, Mr.
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Hoyt has agreed to withdraw as Managing General Partner, subject to the Limited
Partners' appointment of Nichols as the Managing General Partner.
ORGANIZATIONAL CHART
In the event that the limited partners vote in favor of proposals 1 and
2, the following is an organizational chart of the Partnership that shows the
relationship of some of the entities discussed in this Consent Statement:
MJS Associates, Inc.
(the sole shareholder of
Nichols Resources, Ltd.)
|
|
Nichols Resources, Ltd.
(the sole general partner of
the Partnership)
|
|
Secured Investment Maxus Properties, Inc.
Resources Fund, L.P., III --------------- (the Partnership's
(the "Partnership") management company)
|
|
The Limited Partners
of the Partnership
In voting (i) to consent to the assignment of General Partner interests
in the Partnership from Hoyt and SIR Partners III to Nichols and (ii) to appoint
Nichols as the successor Managing General Partner, Limited Partners should
consider the following:
REASONS FOR VOTING FOR
PROPOSALS 1 AND 2
1. The consent to the assignment of General Partner interests in
the Partnership from Hoyt and SIR Partners III to Nichols and
the appointment of Nichols as the successor Managing General
Partner of the Partnership would resolve the dispute over the
management of the Partnership among the General Partners.
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2. Hoyt, as Managing General Partner, was unable to devote
adequate attention to the management of the Partnership,
including failing to make timely SEC filings.
3. The management team of Nichols has substantial experience in
the management of real estate properties.
REASONS FOR VOTING AGAINST
PROPOSALS 1 AND 2
1. The management team of Nichols does not have extensive
experience managing a publicly-traded company.
2. If limited partners are satisfied with the current management
and operation of the Partnership, such limited partners should
vote against the proposals.
The only other alternatives that have been discussed by the general
partners is the sale of all of the properties of the Partnership and the
subsequent liquidation of the Partnership. Otherwise, no other proposals have
been considered. Nichols does not anticipate that the limited partners'
investment in the Partnership and the operations will materially differ as a
result of the proposals.
The views and recommendations of the Partnership contained in this
Proxy Statement are only those of Nichols, a General Partner of the
Partnership..
FORECLOSURE OF KC CLUB APARTMENTS
The cash generated from operations for the KC Club Apartments, one of
the properties held by the Partnership, was insufficient to service the mortgage
under the current payment requirements. Hoyt, as the Managing General Partner,
had ongoing negotiations with the lender concerning a complete restructure of
the mortgage and related debt service. The negotiations were unsuccessful, and
on January 7, 1998 the property was lost to foreclosure. Less than three weeks
later, the Lawsuit was filed. The Lawsuit was filed as a result of (i) Hoyt's
mismanagement of the Partnership and (ii) Hoyt's desire to sell all the
Partnership's properties and to liquidate the Partnership without the full
disclosure of the Limited Partners.
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VOTING PROCEDURES
Voting by Limited Partners on the proposals is based on units of
limited partnership issued by the Partnership ("Units"). On October 20, 1998,
there were issued and outstanding and entitled to vote 9,685 Units representing
$4,842,500 of capital contributions. Each Limited Partner is entitled to one
vote per Unit owned, which represents a $500 capital contribution to the
Partnership.
Pursuant to the second paragraph of Paragraph 16.2.8 of the Amended and
Restated Agreement of Limited Partnership of the Partnership, dated December 6,
1988 (the "Partnership Agreement"), the Limited Partners must approve by a
Majority Vote the assignment of a General Partner's interest in the Partnership.
Pursuant to Paragraph 17.6 of the Partnership Agreement, the Limited Partners
may only appoint a successor Managing General Partner of the Partnership by a
Majority Vote. A "Majority Vote" means the vote of Limited Partners who own more
than 50% of the total number of Units currently issued and outstanding.
Therefore, Limited Partners holding at least 4843 Units must approve (i) the
assignment of James R. Hoyt's and SIR Partners III, L.P.'s General Partner
interests to Nichols and (ii) the appointment of Nichols as successor Managing
General Partner. Because abstentions and brokers non-votes will not be counted
as a vote for the assignment of the General Partner interests or the appointment
of Nichols as successor Managing General Partner, it will thus have the same
effect as if the Units represented thereby were voted against the assignment of
the General Partner interests and the nominee for successor Managing General
Partner.
Accompanying this Consent Statement is a Consent Form for each Limited
Partner with respect to his/her unit ownership in the Partnership. By checking
the appropriate box, each Limited Partner can indicate whether he/she votes FOR
or AGAINST or ABSTAINS as to the two proposals. IF ANY INVESTOR RETURNS A
CONSENT FORM DULY SIGNED WITHOUT CHECKING ANY BOX, HE/SHE WILL BE DEEMED TO HAVE
VOTED FOR BOTH THE ASSIGNMENT OF THE GENERAL PARTNER INTERESTS AND THE
APPOINTMENT OF NICHOLS AS SUCCESSOR MANAGING GENERAL PARTNER.
No Dissenters' Rights
A Limited Partner who votes against or abstains does not have
dissenters', appraisal or similar rights under Missouri law.
Record Date
The General Partners have fixed the close of business on January 20,
1999 as the record date for the determination of the Limited Partners entitled
to notice of and to vote on the assignment of the General Partner interests and
the appointment of Nichols as
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successor Managing General Partner, the close of business on _____________, 1999
as the date by which Consent Forms must be received by Nichols in order to be
counted, and ______________, 1999 as the date on which the consents are to be
counted. A Limited Partner may revoke his/her consent at any time prior to
____________, 1999, provided written revocation is received by Nichols prior to
that date.
COSTS ASSOCIATED WITH THE CONSENT STATEMENT
The Partnership will pay all costs of preparing and soliciting
consents. In addition to solicitation by mail, the Partnership may solicit
proxies from Limited Partners personally or by telephone. This Consent Statement
was first mailed to Limited Partners on or about April ___, 1999. Staff of
Nichols will be available by telephone to answer any questions concerning this
Consent.
BENEFICIAL OWNERSHIP OF UNITS OF THE PARTNERSHIP
To the knowledge of the Partnership, no person is the beneficial owner
of more than 5 percent of the outstanding Units and none of the General Partners
is the beneficial owner, directly or indirectly, of any Units, except for 20
Units beneficially owned by David L. Johnson, who is a director of Nichols.
EMPLOYEES
The Partnership has no employees. The Managing General Partner of the
Partnership, currently Mr. Hoyt, is responsible for all aspects of the
Partnership's operations.
MANAGEMENT FEES
Property management services for the Partnership's investment
properties have been provided by SPECS, for which it has received a management
fee based on the gross revenues of the properties owned by the Partnership.
During 1997, the Partnership paid SPECS a property management fee of $137,445,
plus $42,707 for certain professional services (such as tax accounting, audit
preparation, preparation of Securities and Exchange Commission annual and
quarterly reports and investor services). Pursuant to the Partnership Agreement,
the Partnership also pays 5 percent of Cash Flow From Operations to the General
Partners and their designees, but no such fee has been due for the last three
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years due to the lack of positive net cash flow. The General Partners also hold
an aggregate one percent interest in the profits and losses of the Partnership.
BY ORDER OF THE BOARD OF DIRECTORS
OF NICHOLS RESOURCES, LTD.
/s/ Christine A. Robinson
Christine A. Robinson
President
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APPENDIX A
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSENT OF LIMITED PARTNERS
This consent is solicited by the Board of Directors
of Nichols Resources, Ltd., a General Partner
The undersigned, a Limited Partner of Secured Investment Resources
Fund, L.P. III (the "Partnership"), hereby consents (unless otherwise directed
below) to the assignment of the General Partner interests and the appointment of
Nichols as successor Managing General Partner, as more fully described in the
Consent Statement (the "Proposals").
Please date and sign this Consent below and return it in the enclosed,
postage paid envelope. To be counted, this Consent must be received not later
than the close of business on _____________, 1999.
NICHOLS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:
1. THE ASSIGNMENT OF JAMES R. HOYT'S AND SIR PARTNERS
III, L.P.'S GENERAL PARTNER INTERESTS TO NICHOLS
RESOURCES, LTD.
FOR the Assignment to Nichols Resources, Ltd. [ ]
AGAINST the Assignment to Nichols Resources,
Ltd. [ ]
2. APPOINTMENT OF A SUCCESSOR MANAGING GENERAL
PARTNER
FOR the Appointment of Nichols Resources, Ltd. [ ]
AGAINST the Appointment of Nichols Resources,
Ltd. [ ]
The Partnership Units held by the signing Limited Partner will be voted
as directed. They will be voted "FOR" the Proposal if no box is checked.
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Please sign exactly as your name appears below. When Partnership Units
are held by joint tenants, both owners should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS CONSENT BY _____________, 1999.
____________________________________
Date
____________________________________
Signature
____________________________________
Print Name
____________________________________
Signature, if held jointly
____________________________________
Print Name
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