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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 Only (as
permitted by Rule 14a-
6(e)(2))
[X] Definitive proxy statement
[_] Definitive additional materials
[_] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Windsor Park Properties 7, A California Limited Partnership
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(Name of Registrant as Specified in Its Charter)
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(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
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:/1/ $32,265,000
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(4) Proposed maximum aggregate value of transaction: $32,265,000
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(5) Total fee paid: $6,453
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[X] Fee paid previously with preliminary materials: $6,453
[_] 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.:
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(3) Filing party:
-------------------------------------------------------------------------
(4) Date filed:
-------------------------------------------------------------------------
________________
/1/ Set forth the amount on which the filing fee is calculated and state how it
was determined.
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CONSENT SOLICITATION STATEMENT
Windsor Park Properties 7,
A California Limited Partnership
6160 South Syracuse Way
Greenwood Village, Colorado 80111
__________________
Summary Term Sheet
__________________
This summary term sheet highlights selected information from this consent
solicitation statement and may not contain all of the information that is
important to you. To understand fully the proposals relating to, and for a more
detailed description of the terms of, the sales and the plan of liquidation, you
should carefully read this entire consent solicitation statement, as well as the
additional documents that we may refer you to. We have included page references
in parentheses to direct you to a more complete description of the topics
presented in this summary term sheet. This consent solicitation statement is
first being mailed to you and the other limited partners on or about September
27, 2000.
Sales and Plan of Liquidation (p. 19)
. Windsor Park Properties 7. We are a California limited partnership
which was formed in June 1989 for the purpose of acquiring and holding
investments in existing manufactured home communities for an anticipated
investment period of four to seven years. We were funded through a public
offering of our units of limited partner interest which commenced in March 1990
and was completed in January 1992. Our investment portfolio currently consists
of five wholly-owned properties and partial ownership interests in five other
properties. Our general partners are The Windsor Corporation, which is also our
managing general partner, and John A. Coseo, Jr. Our principal executive offices
are located at 6160 South Syracuse Way, Greenwood Village, Colorado 80111 and
our telephone number is (303) 741-3707.
. Background. When we were formed, it was expected that we would sell
our properties and, in accordance with our partnership agreement, liquidate
following the expiration of our anticipated investment period. However, we did
not sell our properties and liquidate as planned and, as a result, have held our
properties beyond the time that you may have reasonably expected to receive
liquidating distributions from your investment in our units. The sales and plan
of liquidation which are being proposed in this consent solicitation statement
are intended to provide you with liquidity in your investment in the
partnership.
. Sales to N'Tandem Trust and Plan of Liquidation. Our general partners
have approved and recommend a plan to sell our properties to N'Tandem Trust, a
California business trust, for cash. The terms of the sales are set forth in a
purchase and sale agreement. Upon completion of the sales, we will liquidate, in
accordance with the terms of our partnership agreement, pursuant to a plan of
liquidation adopted by our general partners. Upon completion of the plan of
liquidation, you will receive final liquidating distributions of approximately
$100.82 per unit.
. N'Tandem Trust. Both N'Tandem and our managing general partner are
under common control of Chateau Communities, Inc. Additionally, our managing
general partner's two directors also serve as Chief Executive Officer and
President of Chateau and our managing general partner serves as external
investment advisor to N'Tandem. N'Tandem, rather than Chateau, will be
purchasing our properties because our properties are more in line with the kind
of assets N'Tandem typically invests in.
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N'Tandem already has a partial ownership interest in all five of the
properties in which we hold a partial ownership interest and, upon completion of
the sales, will own 100% of three of these properties and will hold a majority
ownership interest in the other two properties.
. Requisite Approval. If each of the proposals is approved by our
limited partners holding a majority of our units, our 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. Accordingly, if you would
like our general partners proceed with the sales and the plan of liquidation you
must vote for both proposals.
----
Risk Factors (p. 17)
. The sales and plan of liquidation are subject to material risks,
conflicts of interest and other considerations which are discussed in this
consent solicitation statement. They include the following:
. Due to our managing general partner being under common control
with N'Tandem as well as being N'Tandem's external investment
advisor, the sales, and the recommendations and views of our
general partners, could be deemed to involve conflicts of
interest between our managing general partner and our limited
partners;
. Due to our general partners' potential conflicts of interests,
our managing general partner engaged an independent special
counsel to represent the interests of our limited partners in
connection with the sales and the plan of liquidation. In light
of the nature of these potential conflicts of interest, the
purchase prices for our properties and other terms of the sales,
however, may not be considered to be the result of arm's-length
negotiations and bargaining between independent parties despite
the efforts of the independent special counsel;
. Our general partners have not engaged in any marketing efforts
with respect to the sale of our properties to third parties;
. The purchase prices for our properties are based upon appraisals
that were rendered in May 2000 and have not been updated since
that time. Accordingly, the appraisals may not reflect the
current fair market values of our properties; and
. If the sales and plan of liquidation are approved, you will be
foregoing any current or future benefits associated with the
ownership of our properties.
Valuation of Our Properties (p. 23)
. Based upon appraisals rendered in May 2000, the aggregate value of our
properties, after deducting attributable debt and the discount being applied to
our partial ownership interests, is $17,435,300.
Recommendation of the General Partners (p. 26)
. Our general partners considered the material positive and negative
aspects of the sales and the plan of liquidation and concluded that both
proposals are consistent with our original objectives and that the terms of the
sales are fair to you from both a financial and procedural point of view.
Accordingly, our general partners recommend that you approve and adopt both the
sales and the plan of liquidation.
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. Financial Fairness. In reaching the conclusion that the sales are fair
to you from a financial point of view, our general partners considered the
following factors:
. N'Tandem is willing to purchase all of our properties and will
pay the full appraised value for our wholly-owned properties and
will apply only a 3.4% discount or a 6.7% discount, as the case
may be, to the appraised value of our partial ownership interests
for the fact that we own a majority or a minority interest in the
underlying properties. Our general partners believe that any
third-party purchaser of our partial ownership interests would
have applied a higher discount;
. The aggregate net consideration to be paid exceeds the net book
value of our assets by $10,357,200;
. N'Tandem is willing to purchase the properties "as is" and will
not require us to make representations and warranties in
connection with the sales;
. Due to the nature of the transaction, our general partners will
be able to wind up our operations and make full liquidating
distributions to you and the other limited partners promptly upon
the receipt of the requisite approval of the proposals;
. The estimated liquidating distributions ($100.82 per unit) are
substantially higher than the weighted average trading price of
our units in the secondary markets ($79.47 per unit);
. We will not have to pay any third-party brokerage fees in
connection with the sales; and
. Legg Mason Wood Walker, Incorporated has delivered a fairness
opinion stating that the aggregate purchase price is fair, from a
financial point of view, to you and the other limited partners.
. In reaching the conclusion that the sales are fair to you from a
financial point of view, our general partners also considered the
following potentially negative aspects of the sales:
. The purchase prices for the properties are based on appraisals
that were rendered in May 2000 and have not been updated since
that time;
. The remaining interests in the properties underlying our partial
ownership interests are held by N'Tandem and/or a limited
partnership which is affiliated with our managing general partner
and N'Tandem;
. Third-party purchasers may be willing to pay more for our
properties in the future; and
. It is possible that you might earn a higher return on your
investment, through continuing distributions and other benefits
of ownership, if we retained ownership of our assets.
. The above described factors are all of the material factors considered
by our general partners in determining that the sales and the plan of
liquidation are fair to our affiliated and unaffiliated limited partners from a
financial point of view. In reaching their determination that the sales and the
plan
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of liquidation are fair to our affiliated and unaffiliated limited partners from
a financial point of view, our general partners did not assign relative weights
to the above factors or determine that any factor was of particular importance;
rather, our 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, our general partners determined
that the sales and the plan of liquidation are fair to our affiliated and
unaffiliated limited partners from a financial point of view.
. Procedural Fairness. In reaching the conclusion that the sales are
fair to you from a procedural point of view, our general partners considered the
following factors:
. Our properties have been appraised by an independent appraiser;
. In assessing the discount being applied to our partial ownership
interests, our managing general partner had the appraiser analyze
the applicability of a discount in valuing a partial ownership
interest in a manufactured home community and, based on its
analysis, the appraiser concluded that an appropriate discount
for a minority ownership interest would be approximately 25%;
. The proposals must be approved by majority-in-interest of our
unaffiliated limited partners;
. Our managing general partner engaged the law firm of Wolf
Haldenstein Adler Freeman & Herz LLP to act as independent
special counsel for the purpose of representing the interests of
the unaffiliated limited partners in connection with the sales
and plan of liquidation; and
. Our managing partner retained Legg Mason to render an independent
fairness opinion.
. In reaching the conclusion that the sales are fair to you from a
procedural point of view, our general partners also considered the following
potentially negative aspects of the sales:
. The sales were negotiated on our behalf by our managing general
partner, which is under common control with N'Tandem, and, as
such, may be subject to potential conflicts of interest;
. The sales and plan of liquidation have not been approved on
behalf of our managing general partner by directors who are not
affiliated with N'Tandem;
. The appraisals were rendered in May 2000 and have not been
updated since that time; and
. Our general partners have not engaged in any marketing efforts
with respect to our properties and do not intend to take any
actions to market or sell our properties pending the results of
this consent solicitation.
. The above described factors are all of the material factors considered
by our general partners in determining that the sales and the plan of
liquidation are fair to our 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 our affiliated and unaffiliated limited partners
from a procedural point of view, our general partners concluded that the
approval of the proposals by a majority-in-interest of our unaffiliated limited
partners is sufficient to insure that procedural fairness has been preserved for
our
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limited partners. Our general partners also believe that the potentially
negative factors influencing procedural fairness were in each case mitigated by
the following other factors or considerations:
. Although our managing general partner and N'Tandem are under
common control, our general partners concluded that the common
control did not adversely affect the terms of the sales for our
limited partners and allowed N'Tandem to offer terms that they
believed would not be available from third parties;
. Our managing general partner arranged for the independent special
counsel to represent the interests of our unaffiliated limited
partners;
. Our managing general partner retained Legg Mason to assess the
fairness of the aggregate purchase price to be paid to us in the
sales;
. Even though the appraisals were rendered in May 2000, our general
partners believe that no material changes have occurred in our
properties or in the conditions of the market for manufactured
home communities since those dates that would result in higher
values for our properties; and
. Our general partners believe that marketing our properties would
not have provided a better transaction for you and our other
limited partners and would have ultimately delayed the timing of
the sales and the distribution of liquidating proceeds to you and
the other limited partners.
Fairness Opinion (p. 29)
. On August 29, 2000, Legg Mason delivered an oral and written fairness
opinion to our managing general partner to the effect that the aggregate
purchase price to be paid to us by N'Tandem for our properties is fair to you
and the other limited partners from a financial point of view. The fairness
opinion, which is attached as 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.
Independent Representation of the Unaffiliated Limited Partners (p. 33)
. In an effort to address any potential conflicts of interest, our
managing general partner, on our behalf, engaged the law firm of Wolf
Haldenstein Adler Freeman & Herz LLP to act as independent special counsel for
the purpose of representing the interests of you and the other unaffiliated
limited partners in connection with the sales and the plan of liquidation. On
August 23, 2000, the independent special counsel delivered a written report
addressed to our managing general partner for the benefit of our limited
partners describing the results of its review of, and negotiations with our
managing general partner and N'Tandem with respect to, the sales and the plan of
liquidation. As a result of these negotiations, our managing general partner and
N'Tandem agreed to make certain changes to the sales and the plan of liquidation
for the benefit of our limited partners. As described in the report, the parties
agreed that (i) the discounts being applied to our partial ownership interests
would be reduced from 10%, which was the percentage discount originally agreed
to by the parties, to 6.7% for the properties in which we own a minority
ownership interest and from 5%, which was the percentage discount originally
agreed to by the parties, to 3.4% for the properties in which we own a majority
ownership interest and (ii) the sales commission being paid to our managing
general partner would be reduced from 3%, which is the percentage commission
that our managing general partner is entitled to receive pursuant to the terms
of our partnership agreement, to 2.5%. As a result of the reduction of such
discounts and sales commission, the aggregate amount of the net proceeds to be
paid to our limited partners in connection with the sales
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and the plan of liquidation increased by $428,000. In addition, the parties also
agreed to include certain additional disclosure in this consent solicitation
statement relating to the rights of our limited partners under our partnership
agreement with respect to a transaction between an affiliate of our managing
general partner and us. The report of the independent special counsel, which is
attached as Appendix B to this consent solicitation statement, should be read in
its entirety for a description of the procedures followed, matters considered
and the limits of the review undertaken by the independent special counsel.
Alternatives Considered (p. 35)
. In addition to considering the sales and plan of liquidation, our
general partners also identified and considered the following alternative
courses of action for us:
. Continuation of Our Operations. Because most of our limited
partners have held their investments in us for more than eight
years and we have held our properties for one year beyond both
the end of our anticipated investment period and the time in
which you and the other limited partners had a reasonable
expectation to receive liquidating distributions, our managing
general partner believes that you and the other limited partners
expect to achieve the near-term liquidation of your investments.
Our managing general partner also believes that continuing to own
and operate our properties is not in our best interests or the
best interests of you and the other limited partners, especially
in view of the opportunity to sell our properties to N'Tandem on
the terms outlined in this consent solicitation statement.
Additionally, while continuation of our operations would have
resulted in you and the other limited partners receiving the
benefits of continued ownership of our properties, you would have
also remained subject to the risks of continuing such ownership
and would continue to be unable to liquidate your investments at
fair value since no formal trading market for our units exists.
. Sale of Our Properties to Third Parties. Our general partners
concluded that the sale of our properties to third-party
purchasers would likely not result in the distribution of greater
liquidating proceeds to you and the other limited partners than
the amounts being distributed in connection with the sales and
plan of liquidation. Our managing general partner believes that
(i) the appraisals of our properties continue to reflect their
fair market values, (ii) you and the other limited partners would
receive greater liquidating proceeds in a third-party transaction
only if such third-party purchaser was willing to pay in excess
of the purchase prices for our properties being paid by N'Tandem,
something our general partners believe few, if any, third-party
purchasers would be willing to do, especially with respect to our
partial ownership interests, (iii) our partial 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 our properties to an unaffiliated third-party
purchaser (principally due to the fact that we are not paying any
third-party brokerage commissions, which results in estimated
savings of up to $1,129,300 based upon prevailing commission
rates).
. Consolidation. Our general partners also considered and analyzed
a proposed consolidation in which we, together with three other
partnerships affiliated with us, would have been merged with and
into N'Tandem. In the proposed consolidation, you and the other
limited partners would have had the right to exchange your units
of limited partner interest for common shares or other
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securities of N'Tandem. As part of its analysis of the sales and
plan of liquidation, our managing general partner compared the
estimated price per unit expected to be paid by N'Tandem in the
sales to the estimated range of values per unit that were
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 and concluded
that the proposed consolidation would not have resulted in our
limited partners receiving a price per unit, on a post-
consolidation basis, greater than the estimated price per unit
proposed to be paid to you and the other limited partners
following the completion of the sales and plan of liquidation.
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 (p.
36)
. N'Tandem and Chateau believe that the sales are fair to you and the
other limited partners from both a financial and a procedural point of view. In
reaching this determination, N'Tandem and Chateau considered the same factors
and aspects with respect to the sales as our general partners and have adopted
their analyses and conclusions.
Appraisals (p. 37)
. Our managing general partner retained Whitcomb Real Estate to
independently appraise our properties and determine the current fair market
value of each of the properties. The appraiser is certified as a Master
Appraiser and was selected based on its appraisal expertise and experience in
valuing manufactured home communities.
. A summary description of each appraisal, including the values of the
properties, is included elsewhere in this consent solicitation statement. The
appraisals are based on conditions as of their respective dates. Subsequent
developments could have a material effect on the valuations stated in the
appraisals.
Certain Federal Income Tax Considerations (p. 54)
. Tax Consequences of the Sales. The sales should result in recognition
of gain by us and, therefore, should result in recognition of gain by you and
the other limited partners. The amount of gain recognized by us with respect to
each of our properties will equal the difference between (i) the amount realized
by us (i.e., the amount of cash received increased by the amount of our
liabilities assumed or taken subject to by N'Tandem) and (ii) the adjusted tax
basis in each of our properties. The aggregate gain expected to be recognized by
us on the sales is approximately $10,155,500.
. Allocation of Gain. The $10,155,500 gain expected to be recognized by
us in the year of the sales will be allocated among our partners in accordance
with the terms of our partnership agreement. These provisions will result in an
allocation of approximately $10,054,000 of taxable gain on the sales to you and
the other limited partners (or an average of $66.78 per unit). The gain per unit
resulting from the sales is primarily caused by the fact that we generated tax
losses in certain prior years that were allocated to you and the other limited
partners.
. Tax Consequences of Liquidation. Upon liquidation, you and the other
limited partners will recognize gain or loss equal to the difference between the
cash you receive (including your share of partnership liabilities under Section
752 of the Internal Revenue Code of 1986) and the adjusted tax basis of your
units, adjusted by your allocable share of income, gain or loss arising from
normal partnership operations for the year of liquidation and the sale of our
properties in the year of liquidation. It is expected that you and the other
limited partners will recognize an average loss of approximately $14.62 per unit
on liquidation.
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Consent Procedures; Transactions Authorized by Consents (p. 57)
. The consents being solicited in connection with this consent
solicitation statement will authorize our general partners to complete the sales
at any time on or prior to December 31, 2000 and to proceed with the plan of
liquidation and to take all actions necessary or appropriate, as determined by
our general partners, to complete such transactions. As provided in our
partnership agreement, we are not permitted to sell or lease property to any one
who sponsored us, which includes our general partners or any of their
affiliates. Our partnership agreement, however, permits this provision to be
amended so as to allow sales of our property to an affiliate of our general
partners with the consent of a majority-in-interest of our limited partners. The
authorization granted to our general partners by consenting to the sales and the
plan of liquidation will include, without limitation, the adoption of any
amendments to our partnership agreement that may be required to effectuate the
sales and the plan of liquidation or to amend any provision of our partnership
agreement which may be construed as restricting the sale of our properties to
affiliates.
. The procedures relating to consenting to the proposals are as follows:
. You may make your election on your consent only during the
solicitation period commencing upon the date of delivery of this
consent solicitation statement and continuing until the earlier
of (i) November 15, 2000 or such later date as may be determined
by our general partners and (ii) the date upon which our general
partners determine that unaffiliated limited partners holding not
less than a majority of all issued and outstanding units have
consented to the proposals;
. You must consent to, deny consent to, or abstain from consenting
to the proposals with respect to all of your units. The effect of
abstaining or failing to sign and return your consent will be the
same as denying consent;
. All questions as to the validity, form, eligibility (including
time of receipt), acceptance and withdrawal of a consent will be
determined by our general partners, whose determination will be
final and binding;
. Your consent may be changed or revoked prior to the expiration of
the solicitation period by delivering to us a notice of
revocation or a substitute consent, properly completed and
executed, together with a letter indicating that your prior
consent has been revoked; and
. If you submit a signed but unmarked consent, you will be deemed
to have consented to the proposals.
Record Date; Required Consents (p. 58)
. The close of business on September 18, 2000 has been fixed as the
record date for determining which of our limited partners is entitled to consent
to the sales and plan of liquidation. As of the record date, there were 151,918
units outstanding held of record by a total of 1,696 limited partners. Each of
the proposals require the approval of our unaffiliated limited partners holding
at least a majority of our outstanding units. Each unit entitles the holder of
the unit to cast one vote with respect to the approval of each of the proposals.
No Appraisal or Dissenters' Rights (p. 58)
. If our limited partners owning the requisite number of units consent
to both of the proposals, you and the other limited partners, including any of
our limited partners who have not returned
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their consents or who have abstained from voting on, or denied consent to, the
proposals, will be bound by such consent. None of our 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.
WHO CAN HELP ANSWER YOUR QUESTIONS
If you would like additional copies of this consent solicitation statement,
or if you would like to ask any additional questions about the sales and/or plan
of liquidation, you should contact:
THE WINDSOR CORPORATION ARLEN CAPITAL, LLC
6160 South Syracuse Way 1650 Hotel Circle North, Suite 200
Greenwood Village, Colorado 80111 San Diego, California 92108
(303) 741-3707 (800) 553-4039
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.
This Consent Solicitation Statement is dated September 27, 2000.
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TABLE OF CONTENTS
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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
Independent Representation of the Unaffiliated Limited Partners................................................................ 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................................................................................................. 13
No Appraisal or Dissenters' Rights............................................................................................. 14
Historical Distributions....................................................................................................... 14
Adjusted Invested Capital...................................................................................................... 14
No Established Trading Market for Units........................................................................................ 15
SUMMARY HISTORICAL FINANCIAL DATA.............................................................................................. 16
MATERIAL RISK FACTORS AND OTHER CONSIDERATIONS................................................................................. 17
Conflicts of Interest.......................................................................................................... 17
Purchase Prices May Not Be Considered the Result of Arm's-Length Negotiations.................................................. 18
The General Partners Have Not Engaged in Marketing Efforts with Respect to the Properties...................................... 18
Appraisals May Not Reflect the Current Fair Market Values of the Properties.................................................... 18
Loss of Opportunity to Benefit from Future Events.............................................................................. 18
DESCRIPTION OF THE PROPOSED TRANSACTIONS....................................................................................... 19
Purpose of the Consent Solicitation; Proposals 1 and 2......................................................................... 19
Background of the Proposed Transactions........................................................................................ 20
Information Concerning N'Tandem and Chateau.................................................................................... 22
The Purchase and Sale Agreement................................................................................................ 23
Solicitation Expenses.......................................................................................................... 24
Estimate of Liquidating Distributions Payable to Limited Partners.............................................................. 24
Ownership of Properties by N'Tandem Following the Sales........................................................................ 25
SPECIAL FACTORS................................................................................................................ 26
Fairness of the Proposed Transactions; Recommendation of the General Partners.................................................. 26
Fairness Opinion............................................................................................................... 29
Independent Representation of the Unaffiliated Limited Partners................................................................ 33
Alternatives Considered........................................................................................................ 35
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.................................................................................................. 36
Appraisals..................................................................................................................... 37
Discounts for Ownership Interests in Properties................................................................................ 49
</TABLE>
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TABLE OF CONTENTS
(continued)
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<S> <C>
SUMMARY OF SELECTED TERMS OF THE PARTNERSHIP AGREEMENT......................................................................... 49
Net Proceeds from the Sales.................................................................................................... 49
Allocation of Profit or Loss on the Sales...................................................................................... 50
Voting Rights of Limited Partners.............................................................................................. 50
Limitation of Liability and Indemnification of the General Partners............................................................ 51
Sales Commission Payable to General Partners................................................................................... 51
THE PARTNERSHIP'S PROPERTIES................................................................................................... 52
Nature of Ownership Interests in Properties.................................................................................... 52
Description of the Properties; Appraised Values and Ownership Interests........................................................ 53
FEDERAL INCOME TAX CONSIDERATIONS.............................................................................................. 54
Overview....................................................................................................................... 55
Taxation on the Sales.......................................................................................................... 55
Liquidation of the Partnership................................................................................................. 56
Income Tax Rates/Taxation of Gains and Losses.................................................................................. 56
CONSENT PROCEDURES; TRANSACTIONS AUTHORIZED BY CONSENTS........................................................................ 57
Solicitation of Consents....................................................................................................... 58
Record Date; Required Vote..................................................................................................... 58
No Appraisal or Dissenters' Rights............................................................................................. 58
Consequences If Consents Are Not Obtained...................................................................................... 59
REGULATORY AND OTHER APPROVALS................................................................................................. 59
FINANCIAL STATEMENTS........................................................................................................... 59
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE................................................................................ 59
AVAILABLE INFORMATION.......................................................................................................... 60
APPENDIX A Fairness Opinion.................................................................................................... A-1
APPENDIX B Report of Independent Special Counsel............................................................................... B-1
APPENDIX C Information Concerning Officers and Directors of the Managing General Partner, N'Tandem and Chateau................. C-1
APPENDIX D Financial and Operating Forecasts and Projections for the Partnership Prepared by the Managing General Partner...... D-1
</TABLE>
xi
<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
Windsor Park Properties 7, A California Limited Partnership (the
"Partnership"), which was formed for the purpose of acquiring and holding
investments in existing manufactured home communities for an anticipated
investment period of four to seven years, was funded through a public offering
of units of limited partner interest (the "Units") which commenced in March 1990
and was completed in January 1992. Following the expiration of the anticipated
investment period, which was originally contemplated to occur at the latest in
January 1999, it was expected that the investments of the Partnership would be
sold and, thereafter, the Partnership liquidated in accordance with the terms of
its Agreement of Limited Partnership (the "Partnership Agreement"). As of the
date of this Consent Solicitation Statement, the Partnership has held its
current investments for several years beyond both the anticipated investment
period for such investments and the time in which the holders of Units (the
"Limited Partners") had a reasonable expectation to receive distributions from
the liquidation of their investments in the Partnership.
The purpose of this Consent Solicitation is to obtain the consent of the
Limited Partners to the two proposals described herein (the "Proposals"). Upon
approval of both of the Proposals by the Limited Partners, 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") will cause the Partnership to sell (the "Sales") its five wholly-
owned properties and its partial ownership interests in five other properties
(the "Ownership Interests" and, together with the five wholly-owned properties,
the "Properties") to N'Tandem Trust, a California business trust ("N'Tandem"),
and, thereafter, make liquidating distributions to the partners, in accordance
with the terms of the Partnership Agreement, pursuant to a plan of liquidation
adopted by the General Partners (the "Plan of Liquidation"). 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
$100.82 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 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
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
<PAGE>
held companies in the United States engaged in the acquisition, 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 all
of the manufactured home communities in which the Partnership holds an Ownership
Interest and, upon completion of the Sales, will hold a 100% ownership interest
in the Carefree Village, Garden Walk and Long Lake Properties and will hold a
91% ownership interest in the Apache East and Denali Park Estates Properties.
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, and
other operative documents relating to, the Windsor Limited Partnerships in order
to ascertain, and to factor into their analysis, the expiration date of the
stated term and the anticipated investment period 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. As a
result of their analysis, the General Partners determined to develop a plan to
liquidate one of the other Windsor Limited Partnerships as well as to begin
selectively marketing for sale several of the properties and partial ownership
interests held by two of the other Windsor Limited Partnerships.
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
investments in the Partnership. 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 appraisals with respect to the properties of the Partnership and the
other three Windsor Limited Partnerships and (ii) engaged Legg Mason Wood
Walker, Incorporated ("Legg Mason") to act as financial advisor to the
Partnership and the other three 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 Properties to N'Tandem.
2
<PAGE>
Following the completion of two similar transactions involving two of the other
Windsor Limited Partnerships in April 2000, the General Partners began to
develop a plan to liquidate the Partnership. In making their determination to
develop and implement the Sales and the Plan of Liquidation, the General
Partners considered that most of the Limited Partners have held their
investments in the Partnership for more than eight years and that the
Partnership has held its current investments for one year beyond both the
anticipated investment period for such investments and the time in which the
Limited Partners had a reasonable expectation to receive distributions from the
liquidation of their investments in the Partnership. In addition, the General
Partners decided not to attempt to market the Partnership's Properties for sales
to parties other than N'Tandem based, in part, on their belief (i) that the
price offered to be paid by N'Tandem for the wholly-owned Properties, which is
equal to the full Appraised Values for such Properties, would be greater than
the price which would be paid by any prospective third-party purchaser, given
the results of the General Partners' previous experience in marketing
manufactured home communities similar in nature to those held by the Partnership
and (ii) that 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 all of the
other partial ownership interests in three of the underlying properties and a
65% partial ownership interest in the other two 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 the 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 August 29, 2000, 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. In addition, in connection with its
analysis of the Sales, the Managing General Partner also retained the Appraiser
to render current appraisals (the "Appraisals") with respect to, and determine
the appraised values (the "Appraised Values") of, the Partnership's Properties.
In an effort to address the potential conflicts of interest between the
General Partners and the Limited Partners, the Managing General Partner, on
behalf of the Partnership, engaged the law firm of Wolf Haldenstein Adler
Freeman & Herz LLP (the "Independent Special Counsel") in June 2000 to act as
independent special counsel to the unaffiliated Limited Partners for the purpose
of representing the interests of such Limited Partners in connection with the
Sales and the Plan of Liquidation. On August 23, 2000, the Independent Special
Counsel delivered a written report addressed to the Limited Partners describing
the results of its review of, and negotiations with N'Tandem and its affiliates
with respect to, the Sales and the Plan of Liquidation. As a result of these
negotiations, N'Tandem and its affiliates agreed to make certain changes to the
underlying terms of the Sales and the Plan of Liquidation for the benefit of the
Limited Partners. For a discussion of the Independent Special Counsel's report
and the results of its negotiations with respect to the Sales and the Plan of
Liquidation, see "SPECIAL FACTORS -- Independent Representation of the
Unaffiliated Limited Partners."
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."
------------------------------------------------
Chateau Communities, Inc.
(Parent entity of The Windsor Corporation and
direct or indirect holder of 9.8% of the outstanding
capital stock of N'Tandem)
(Gary P. McDaniel, the Chief Executive Officer
and a Director of Chateau, is a Director of The
Windsor Corporation and the Chairman of the
Board of Trustees of N'Tandem)
------------------------------------------------ -------------------------
The Windsor Corporation
John A. Coseo, Jr.
(Managing General Partner of the
Partnership, external advisor to N'Tandem, (Co-General Partner of
and wholly-owned subsidiary of Chateau) the Partnership)
------------------------------------------------ -------------------------
N'Tandem Trust
Windsor Park Properties 7,
(9.8% of the outstanding capital A California Limited
stock of N'Tandem is directly or Partnership
indirectly held by Chateau)
------------------------------------------------ -------------------------
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 recommendation of the General
Partners set forth herein, could be deemed to involve conflicts of interest
between the General Partners and the Limited Partners. Pursuant to the
Partnership Agreement, the General Partners will receive, upon completion of the
Sales, an aggregate sales commission of $806,600 from the Partnership in
compensation for their services rendered in connection with the Sales, which is
equal to 2.5% of the total gross sales price paid by N'Tandem for the
Properties. See "SUMMARY OF SELECTED TERMS OF THE PARTNERSHIP AGREEMENT--Sales
Commission Payable to General Partners" and "SPECIAL FACTORS--Independent
Representation of the Unaffiliated Limited Partners."
In addition, the Sales and the Plan of Liquidation, and the recommendation
of the General Partners set forth herein, could also 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 $968,000 from N'Tandem, which is 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 General Partners in
connection with the Sales, the Sales and the recommendation and views of the
General Partners are subject to potential conflicts of interest.
Purchase Prices May Not Be Considered the Result of Arm's-Length
Negotiations. Due to the potential conflicts of interests of the General
Partners, the Managing General Partner engaged the Independent Special Counsel
to represent the interests of the unaffiliated Limited Partners in connection
with the Sales and the Plan of Liquidation. See "SPECIAL FACTORS -- Independent
Representation of the Unaffiliated Limited Partners." In light of the nature of
these potential conflicts of interest, the purchase prices for the Properties
and other terms of the Sales, however, may not be considered to be the result of
arm's-length negotiations and bargaining between independent parties despite the
efforts of the Independent Special Counsel 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 Have Not Engaged in Marketing Efforts with Respect to
the Properties. The General Partners have not engaged in any 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 May 2000. 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
5
<PAGE>
the Partnership 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.
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 June 30, 2000 and the value of the Properties after deducting
attributable debt and applicable discount:
<TABLE>
<CAPTION>
Affiliate Value, Based on Discount on Debt
Percentage Percentage Date Appraised Value, Ownership Attributable as
Name of Property Ownership Ownership(1) Acquired Before Debt(2) Interests(2)(3) of 6/30/2000(2) Net Value(2)
---------------- ---------- ------------ -------- ---------------- --------------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Kings & Queens
Lakeland, FL 100% -- 02/1992 $ 1,900,000 -- $ 489,600 $ 1,410,400
Lucerne Lakeside
Winter Haven, FL 100% -- 06/1995 2,600,000 -- 1,100,000 1,500,000
North Glen
Westfield, IN 100% -- 10/1991 6,100,000 -- 2,470,100 3,629,900
The Hills
Richland, WA 100% -- 12/1992 4,100,000 -- 1,660,300 2,439,700
Village Glen
Melbourne, FL 100% -- 10/1995 3,000,000 -- 1,500,000 1,500,000
Garden Walk
Palm Beach
Gardens, FL 69% 31%(4) 08/1995 8,073,000 $270,400 3,933,000 3,869,600
Long Lake
West Palm Beach, FL 60% 40%(5) 06/1995 2,100,000 70,400 960,000 1,069,600
Carefree Village
Tampa, FL 56% 44%(6) 07/1990 3,416,000 114,400 1,948,700 1,352,900
Apache East
Apache Junction, AZ 26% 74%(7) 02/1997 559,900(8) 37,500 280,300 242,100
Denali Park Estates
Apache Junction, AZ 26% 74%(7) 02/1997 974,100(8) 65,300 487,700 421,100
Total $32,823,000 $558,000 $14,829,700 $17,435,300
=========== ======== =========== ===========
</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
3.4% discount for the fact that the Partnership only owns a majority
interest in the Carefree Village, Garden Walk and Long Lake Properties and
(ii) a 6.7% discount for the fact that the Partnership only owns a minority
interest in the Apache East and Denali Park Estates Properties. For a
discussion of the discount being applied to the Ownership Interests, see
"SPECIAL FACTORS -- Discounts for Ownership Interests in Properties."
(4) The 31% interest in this Property is held by N'Tandem, as tenant in common
with the Partnership.
(5) The 40% interest in this Property is held by N'Tandem, as tenant in common
with the Partnership.
(6) The 44% interest in this Property is held by N'Tandem, as tenant in common
with the Partnership.
(7) Each of these Properties is owned by Windsor Park 345, An Arizona Limited
Partnership ("Windsor Park 345"). The Partnership is a 26% limited partner
in Windsor Park 345. In addition to being the sole general partner of
Windsor Park 345, the Managing General Partner is also the sole managing
general partner of Windsor Park Properties 5, A California Limited
Partnership ("Windsor 5"), and is the external investment advisor to
N'Tandem, which together own all of the remaining limited partner interests
in Windsor Park 345. N'Tandem and Windsor 5 have a 65% and 9% limited
partner interest, respectively, in Windsor Park 345.
(8) The Apache East and Denali Park Estates Properties are contiguous properties
with similar characteristics. Accordingly, the Appraiser appraised both
Properties together and, in its Appraisal, stated that the aggregate
Appraised Value of both Properties
6
<PAGE>
was $5,900,000. For purposes of this table, the Managing General Partner
allocated 36.5% of the aggregate Appraised Value to Apache East and 63.5% of
the aggregate Appraised Value to Denali Park Estates.
Recommendation of the General Partners
The General Partners believe that the Sales and the Plan of Liquidation are
consistent with the original objectives of the Partnership. 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 five wholly-owned Properties and is only
applying (i) a 3.4% discount to the Appraised Value of the Ownership
Interests in the Carefree Village, Garden Walk and Long Lake Properties
for the fact that the Partnership owns a majority interest in the
underlying properties and (ii) a 6.7% discount to the Appraised Value of
the Ownership Interests in the Apache East and Denali Park Estates
Properties 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";
. The aggregate net consideration of approximately $17,435,300 being paid
in connection with the proposed transactions exceeds the net book value
of the Partnership's assets of $7,078,100 as of June 30, 2000 by
$10,357,200;
. 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 ($100.82 per Unit) are substantially higher than the weighted
average trading price of $79.47 per Unit in the secondary markets, as
reported by The Partnership Spectrum, for the period of May 1, 1999
through June 30, 2000;
. The Sales do not involve any third-party brokerage fees payable by the
Partnership, resulting in an estimated savings to the Partnership of up
to $1,129,300 (based upon brokerage fees of 3% to 6% typically paid by
sellers of real properties less the sales commission of $806,600 payable
to the Managing General Partner in connection with the Sales under the
Partnership Agreement); 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,
7
<PAGE>
including its underlying analysis, prepared by Legg Mason as part of
their analysis of the Sales and the 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 May 2000 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 (i) N'Tandem, which together with the Managing
General Partner is under common control of Chateau, or (ii) Windsor Park
345, an affiliated limited partnership which has the Managing General
Partner as its sole general partner and N'Tandem and Windsor 5, an
affiliated limited partnership, as its other limited partners;
. The General Partners will receive, pursuant to the Partnership
Agreement, an aggregate sales commission of $806,600 from the
Partnership in compensation for their services rendered in connection
with the Sales;
. 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 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 "SPECIAL
FACTORS -- Discount for Ownership Interests in Properties";
8
<PAGE>
. The Sales are subject to the approval of unaffiliated Limited Partners
holding not less than a majority of the issued and outstanding Units;
. The Managing General Partner engaged the Independent Special Counsel to
represent the interests of the unaffiliated Limited Partners in
connection with the Sales and the Plan of Liquidation. See "SPECIAL
FACTORS Independent Representation of the Unaffiliated Limited
Partners"; 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 $968,000 that are being paid by
N'Tandem). 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;
. The Appraisals were rendered in May 2000 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 any 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) the Managing General
Partner arranged for the Independent Special Counsel to represent the interests
of the unaffiliated Limited Partners; (iii) the Managing General Partner
retained Legg Mason to assess the fairness of the aggregate purchase price to be
paid to the Partnership in the Sales; (iv) even though the Appraisals were
rendered in May 2000, 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 (v) 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.
9
<PAGE>
Fairness Opinion
On August 29, 2000, 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. 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, 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.
Independent Representation of the Unaffiliated Limited Partners
In an effort to address the potential conflicts of interest between the
General Partners and the Limited Partners, the Managing General Partner, on
behalf of the Partnership, engaged the Independent Special Counsel for the
purpose of representing the interests of the unaffiliated Limited Partners in
connection with the Sales and the Plan of Liquidation. On August 23, 2000, the
Independent Special Counsel delivered a written report addressed to the Managing
General Partner for the benefit of the Limited Partners describing the results
of its review of, and negotiations with the Managing General Partner and
N'Tandem with respect to, the Sales and the Plan of Liquidation. As a result of
these negotiations, the Managing General Partner and N'Tandem agreed to make
certain changes to the underlying terms of the Sales and the Plan of Liquidation
for the benefit of the Limited Partners. As described in the report, the
parties agreed that (i) the discounts being applied to the Appraised Values of
the Ownership Interests would be reduced from 10%, which was the percentage
discount originally agreed to by the parties, to 6.7% for the Ownership
Interests in which the Partnership owns a minority interest in the underlying
property and from 5%, which was the percentage discount originally agreed to by
the parties, to 3.4% for the Ownership Interests in which the Partnership owns a
majority interest in the underlying property and (ii) the sales commission being
paid to the Managing General Partner would be reduced from 3%, which is the
percentage commission that the Managing General Partner is entitled to receive
pursuant to the Partnership Agreement, to 2.5%. As a result of the reduction of
such discounts and sales commission, the aggregate amount of the net proceeds to
be paid to the Limited Partners in connection with the Sales and the Plan of
Liquidation increased by $428,000. In addition, the parties also agreed to
include certain additional disclosure in this Consent Solicitation Statement
relating to the rights of the Limited Partners under the Partnership Agreement
with respect to a transaction between the Partnership and an affiliate of the
Managing General Partner. The report of the Independent Special Counsel, which
is attached as Appendix B to this Consent Solicitation Statement, should be read
in its entirety for a description of the procedures followed, matters considered
and the limits of the review undertaken by the Independent Special Counsel.
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 Partnership, which was formed for the
purpose of acquiring and holding investments in existing manufactured home
communities for an anticipated investment period of four to seven years, was
funded through a public offering of Units which commenced in March 1990 and was
completed in January 1992. Following the expiration of the anticipated
investment period, which was originally contemplated to occur at the latest in
January 1999, it was expected that the investments of the Partnership would be
sold and, thereafter, the Partnership liquidated in accordance with the terms of
the
10
<PAGE>
Partnership Agreement. As of the date of this Consent Solicitation Statement,
most of the Limited Partners have held their investments in the Partnership for
more than eight years and the Partnership has held its current investments for
one year beyond both the anticipated investment period for such investments and
the time in which the Limited Partners had a reasonable expectation to receive
distributions from the liquidation of their investments in the Partnership. As a
result, the Managing General Partner believes that Limited Partners expect to
achieve the near-term liquidation of their investments in the Partnership. 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 continuing 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 third-party brokerage commissions
are being paid by the Partnership in connection with the Sales, which results in
estimated savings of up to $1,129,300 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 the 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. As part of its analysis of the Sales and the Plan
of Liquidation, the Managing General Partner compared the estimated price per
Unit of approximately $100.82 expected to be paid by N'Tandem in the Sales to
the estimated range of values per Unit that were 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 and concluded that the
Proposed Consolidation would not have resulted 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 following the completion
of the Sales and the Plan of Liquidation. For a discussion of the Managing
General Partner's analysis of the Proposed Consolidation, see "SPECIAL FACTORS -
- Alternatives Considered." In analyzing 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 (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
11
<PAGE>
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 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 May 2000 and, therefore, may no longer
reflect the fair market values of the Properties. Accordingly, the value of the
Properties may have increased since that time. However, the Managing General
Partner (i) does not believe that any significant events have occurred since
that time which would cause the conclusions reached by the Appraiser in the
Appraisals and the Appraised Values to be different had the Appraisals been
rendered as of a more recent date, (ii) is not aware of any material
developments, trends or other uncertainties that relate to the conclusions
expressed in the Appraisals or that are reasonably likely to materially affect
such conclusions and (iii) does not intend to update the Appraisals or order new
appraisals for the Properties in connection with the Sales.
Copies of the Appraisals are filed as exhibits to the Schedule 13E-3 (as
hereinafter defined) 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.
12
<PAGE>
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 $10,155,500.
Allocation of Gain. The $10,155,500 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 $10,054,000 of taxable gain on the
Sales to Limited Partners (or an average of $66.78 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 $14.62 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 December 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. As provided in Section 2.01(d) of the
Partnership Agreement, the Partnership is not permitted to sell or lease
property to a sponsor of the Partnership, which includes the General Partners or
any of their affiliates. The Partnership Agreement, however, permits this
provision to be amended so as to allow sales of Partnership property to an
affiliate of the General Partners with the consent of a majority-in-interest of
the Limited Partners. The authorization granted to the General Partners by
consenting to the Sales and the Plan of Liquidation will include, without
limitation, the adoption of any amendments to the Partnership Agreement that may
be required to effectuate the Sales and the Plan of Liquidation or to amend any
provision of the Partnership Agreement which may be construed as restricting the
sale of the Properties to affiliates.
Consents are being solicited from the Limited Partners in accordance with
the requirements of the Partnership Agreement.
Record Date; Required Consents
The close of business on September 18, 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
151,918 Units outstanding held of record by a total of 1,696 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
13
<PAGE>
of the Proposals. As of the Record Date, the General Partners and their
affiliates owned 200 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 the 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, 1995:
<TABLE>
<CAPTION>
Aggregate to Aggregate to Per Unit to
Year All Partners(1) Limited Partners(1) Limited Partners(1)
-------------------------- ------------------------- ------------------------- -------------------------
<S> <C> <C> <C>
2000(2).................... $ 577,100 $ 574,100 $ 3.75
1999....................... 1,168,000 1,156,100 7.50
1998....................... 1,183,800 1,171,900 7.52
1997....................... 1,198,100 1,186,200 7.53
1996....................... 1,170,500 1,158,800 7.33
1995....................... 1,135,600 1,124,200 7.08
---------- ---------- ------
Total................... $6,433,100 $6,371,300 $40.71
========== ========== ======
</TABLE>
__________________________
(1) The portion of such distribution representing a return of capital to the
Limited Partners is as follows: 70% in 2000, 64% in 1999, 74% in 1998, 83%
in 1997, 70% in 1996 and 45% in 1995.
(2) Represents distributions through June 30, 2000.
The Partnership typically makes distributions to its partners on a
quarterly or monthly basis (depending on the payment schedule elected by each
individual partner). 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.
Adjusted Invested Capital
In accordance with the Partnership Agreement, the General Partners will
receive, upon completion of the Sales, an aggregate sales commission of $806,600
from the Partnership in compensation for their services rendered in connection
with the Sales; provided, however, that each Limited Partner has received an
amount equal to its original capital contribution to the Partnership from the
net proceeds of the Sales plus an amount (the "Targeted Return") equal to 6% of
its Adjusted Invested Capital (as defined below) per annum, cumulative, non-
compounded, commencing at the time of its admittance to the Partnership. For a
discussion of the sales commission payable to the General Partners, see "SUMMARY
OF SELECTED TERMS OF THE PARTNERSHIP AGREEMENT -- Sales Commission Payable to
General Partners" and "SPECIAL FACTORS -- Independent Representation of the
Unaffiliated Limited Partners." The following table sets forth information
regarding the Adjusted Invested Capital of the Partnership since March 14, 1990,
the aggregate Targeted Return of the Limited Partners, the aggregate annual
distributions to the Limited Partners and a numerical and percentage
14
<PAGE>
comparison of the aggregate Targeted Return and the aggregate annual
distributions to the Limited Partners:
<TABLE>
<CAPTION>
Comparative Return
Adjusted Aggregate Comparative Return (2) Percentage (3)
Invested Targeted ------------------------- -------------------------
Year Capital(1) Return Distributions Annual Cumulative Annual Cumulative
----------- ------------- ------------- ---------------- ----------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
1990(4) $ 2,553,925 $ 89,530 $ 61,875 $ (27,655) $ (27,655) 2.42% --
1991 11,404,739 692,052 573,561 (118,491) (146,146) 5.03% 4.51%
1992 15,553,514 933,211 1,139,586 206,375 60,229 7.33% 5.91%
1993 15,827,880 949,673 995,820 46,147 106,376 6.29% 6.03%
1994 15,829,590 949,775 1,095,410 145,635 252,011 6.92% 6.25%
1995 15,871,700 952,302 1,124,200 171,898 423,909 7.08% 6.41%
1996 15,709,900 942,594 1,158,800 216,206 640,115 7.38% 6.56%
1997 15,545,800 932,748 1,186,200 253,452 893,567 7.63% 6.69%
1998 15,680,800 940,848 1,171,900 231,052 1,124,619 7.47% 6.77%
1999 15,816,100 948,966 1,156,100 207,134 1,331,753 7.31% 6.83%
2000(5) 15,839,300 475,179 574,100 98,721 1,430,674 7.25% 7.23%
-----------
Total $10,237,552
===========
</TABLE>
_______________________
(1) "Adjusted Invested Capital" means the original capital contribution paid
for each Unit reduced by any return of capital (defined as a return of cash
invested or cash distributions in excess of funds generated from
operations, should this occur) 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. Distributions of cash from
operations do not reduce Adjusted Invested Capital.
(2) Represents the difference between the aggregate Targeted Return to the
Limited Partners and the actual annual distributions to Limited Partners on
an annual and a cumulative basis.
(3) Represents the percentage difference between the aggregate Targeted Return
to the Limited Partners and the actual annual distributions to Limited
Partners on an annual (annualized for partial periods) and a cumulative
basis.
(4) Represents information from March 14, 1990 through December 31, 1990.
(5) Represents information through June 30, 2000.
In connection with the Sales and the Plan of Liquidation, an aggregate
consideration of approximately $17,435,300 will be paid by N'Tandem to the
Partnership for the Properties and, as a result, each Limited Partner will be
entitled to receive liquidating distributions of approximately $100.82 per Unit.
Such liquidating distributions exceed the initial purchase price for each such
Unit of $100 by $0.82 per Unit. In addition, as provided in the foregoing
table, at June 30, 2000, the Limited Partners will have received over the term
of the Partnership cumulative annual distributions in excess of the cumulative
Targeted Return equal to $1,430,674, which is equal to a 7.23% return on the
aggregate Adjusted Invested Capital of the Limited Partners. Thus, following
the closing of the Sales and the Plan of Liquidation, each Limited Partner will
have received an amount in excess of their original capital contribution to the
Partnership plus an amount in excess of 6% of its Adjusted Invested Capital per
annum, cumulative, non-compounded, commencing at the time of its admittance to
the Partnership. Accordingly, the General Partners are entitled, pursuant to
the terms of the Partnership Agreement, to receive a sales commission from the
Partnership in connection with the Sales.
No Established Trading Market for Units
The Units are not listed on any securities exchange and no established
trading market for the Units exists.
15
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA
The following summary historical financial data, insofar as it relates to
each of the years ended December 31, 1995 through 1999, has been derived from
the annual financial statements of the Partnership, including the balance sheet
at December 31, 1999 and the related statements of income for the two years
ended December 31, 1998 and 1999, and the notes thereto as included in the
Partnership's Annual Report on Form 10-KSB for the year ended December 31, 1999.
The data for the six months ended June 30, 2000 has been derived from unaudited
financial statements as included in the Partnership's Quarterly Report on Form
10-QSB for the quarter ended June 30, 2000, 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 Six
Months Ended
June 30, For the Year Ended December 31,
----------------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
---------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenues.................. $ 1,547,000 $ 2,975,500 $ 2,800,500 $ 2,704,500 $ 2,728,000 $ 2,140,900
Net income................ $ 174,500 $ 421,100 $ 309,500 $ 197,800 $ 353,400 $ 626,700
Earnings per Unit......... $ 1.13 $ 2.71 $ 1.97 $ 1.24 $ 2.21 $ 3.91
Balance Sheet Data:
Total assets.............. $15,061,600 $15,180,400 $15,943,600 $17,197,100 $18,062,500 $18,883,700
Long-term debt............ $ 7,220,000 $ 7,220,000 $ 7,220,000 $ 7,420,000 $ 7,220,000 $ 7,220,000
Other Data:
Distributions per Unit.... $ 3.75 $ 7.50 $ 7.52 $ 7.53 $ 7.33 $ 7.08
</TABLE>
16
<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
General Partners to Receive $806,600 in Sales Commissions from the
Partnership in Connection with the Sales. The Sales, and the recommendation of
the General Partners set forth herein, could be deemed to involve conflicts of
interest between the General Partner and the Limited Partners. In accordance
with the Partnership Agreement, the General Partners will to receive, upon
completion of the Sales, an aggregate sales commission of $806,600 from the
Partnership in compensation for their services rendered in connection with the
Sales. On a Property-by-Property basis, this sales commission is estimated to
be $152,500 for the North Glen Property, $47,500 for the Kings & Queens
Property, $102,500 for The Hills Property, $65,000 for the Lucerne Lakeside
Property; $75,000 for the Village Glen Property, $195,100 for the Garden Walk
Property, $50,700 for the Long Lake Property, $82,500 for the Carefree Village
Property, $13,100 for the Apache East Property and $22,700 for the Denali Park
Estates Property. The sales commission payable to the General Partners is equal
to 2.5% of the total gross sales price paid by N'Tandem for the Properties See
"SUMMARY OF SELECTED TERMS OF THE PARTNERSHIP AGREEMENT -- Sales Commission
Payable to General Partners" and "SPECIAL FACTORS -- Independent Representation
of the Unaffiliated Limited Partners."
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 currently holds approximately $19.9 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 $968,000 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 $968,000 from N'Tandem equal to 3% of the total purchase price for the
Properties. On a Property-by-Property basis, this acquisition fee is estimated
to be $183,000 for the North Glen Property, $57,000 for the Kings & Queens
Property, $123,000 for The Hills Property, $78,000 for the Lucerne Lakeside
Property; $90,000 for the Village Glen Property, $234,100 for the Garden Walk
Property, $60,900 for the Long Lake Property, $99,000 for the Carefree Village
Property, $15,700 for the Apache East Property and $27,300 for the Denali Park
Estates 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 $32.3 million and,
accordingly, will increase the annual subordinated advisory fee payable by
N'Tandem by approximately
17
<PAGE>
$322,700 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 May Not Be Considered the Result of Arm's-Length Negotiations
Due to the potential conflicts of interests of the General Partners, the
Managing General Partner engaged the Independent Special Counsel to represent
the interests of the unaffiliated Limited Partners in connection with the Sales
and the Plan of Liquidation. See "SPECIAL FACTORS -- Independent Representation
of the Unaffiliated Limited Partners." In light of the nature of these
potential conflicts of interest, the aggregate purchase price being paid by
N'Tandem for the Properties and other terms of the Sales, however, may not be
considered to be the result of arm's-length negotiations and bargaining between
independent parties despite the efforts of the Independent Special Counsel 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 Have Not Engaged in Marketing Efforts with Respect to the
Properties
The General Partners have not engaged in any 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, 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 May 2000. 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 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.
18
<PAGE>
DESCRIPTION OF THE PROPOSED TRANSACTIONS
Purpose of the Consent Solicitation; Proposals 1 and 2
The Partnership, which was formed for the purpose of acquiring and holding
investments in existing manufactured home communities for an anticipated
investment period of four to seven years, was funded through a public offering
of its Units which commenced in March 1990 and was completed in January 1992.
Following the expiration of the anticipated investment period, which was
originally contemplated to occur at the latest in January 1999, it was expected
that the investments of the Partnership would be sold and, thereafter, the
Partnership liquidated in accordance with the terms of the Partnership
Agreement. As of the date of this Consent Solicitation Statement, the
Partnership has held its current investments for several years beyond both the
anticipated investment period for such investments and the time in which the
Limited Partners had a reasonable expectation to receive distributions from the
liquidation of their investments in the Partnership.
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 cause the
Partnership to sell its five wholly-owned Properties and its Ownership Interests
in five other properties to N'Tandem and, thereafter, make liquidating
distributions to the partners, in accordance with the terms of the Partnership
Agreement, pursuant to the Plan of Liquidation. 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 distributions (estimated to be approximately
$100.82 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 acquisition, 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
all of the manufactured home communities in which the Partnership holds an
Ownership Interest and, upon completion of the Sales, will hold a 100% ownership
interest in the Carefree Village, Garden Walk and
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<PAGE>
Long Lake Properties and will hold a 91% ownership interest in the Apache East
and Denali Park Estates Properties.
Background of the Proposed Transactions
The Partnership was formed in June 1989 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 an anticipated investment period of four to six years. 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"). Following the expiration of the anticipated investment
period, which was originally contemplated to occur at the latest in January
1998, it was expected that the investments of the Partnership would be sold and,
thereafter, the Partnership liquidated in accordance with the terms of the
Partnership Agreement.
In September 1997, Chateau completed the Windsor Transaction by purchasing
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 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 and 2000 annual meeting of
stockholders. In accordance with N'Tandem's Declaration of Trust, two of the
appointed Trustees of N'Tandem are "independent trustees." An "independent
trustee" is a Trustee who is not affiliated, directly or indirectly, with
N'Tandem or an advisor of N'Tandem, whether by ownership of, ownership in,
employment by, or any material business or professional relationship with,
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. As a result of the Windsor Acquisition,
Chateau became the indirect owner of 200 Units in the Partnership. No
particular value was attributed or allocated to such Units in connection with
the Windsor Acquisition. 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 $71,600 for the first six months of 2000,
approximately $118,400 in 1999 and approximately $112,300 in 1998.
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, and
other operative documents relating to, the Windsor Limited Partnerships in order
to ascertain, and to factor into their analysis, the expiration date of the
stated term and the anticipated investment period 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. As a
result of their analysis, the General Partners determined to develop a plan to
liquidate Windsor Park Properties 4, A California Limited Partnership ("Windsor
4"), following the expiration of its stated term in December 1997 as well as to
begin selectively marketing for sale several of the properties and partial
ownership interests held by Windsor Park Properties 3, A California Limited
Partnership ("Windsor 3"), and Windsor Park Properties 6, A California Limited
Partnership ("Windsor 6").
20
<PAGE>
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
Apache East and Denali Park Estates Properties, in common with the Partnership
and, like the Partnership, had the General Partners as its two general partners.
Following the Windsor Acquisition, the General Partners also 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
investments in the Partnership. 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 with respect to the properties
of the Partnership and the other three Windsor Limited Partnerships and (ii)
engaged Legg Mason to act as financial advisor to the Partnership and the other
three 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 the other three Windsor Limited Partnerships and
their respective limited partners would be for such partnerships to sell their
properties to N'Tandem in transactions similar to the one that was completed
with Windsor 4. Because of the near-term expiration of the stated term of
Windsor 3 and Windsor 6 in December 1999, the General Partners immediately began
to develop and implement a plan to separately liquidate each of Windsor 3 and
Windsor 6. In accordance with the plans of liquidation developed for Windsor 3
and Windsor 6, the General Partners completed two separate transactions (the
"Windsor 3 and Windsor 6 Transactions") in which each of Windsor 3 and Windsor 6
sold all of its assets to N'Tandem in April 2000 and made final liquidating
distributions to its respective partners in accordance with the terms of its
agreement of limited partnership on July 21, 2000. Prior to their liquidation,
(i) Windsor 3 held partial ownership interests in two Properties, the Apache
East and Denali Park Estates Properties, in common with the Partnership and,
like the Partnership, had the General Partners as its two general partners and
(ii) Windsor 6 held partial ownership interests in three Properties, the
Carefree Village and Garden Walk Properties, in common with the Partnership and,
like the Partnership, had the General Partners as its two general partners.
Following the completion of the Windsor 3 and Windsor 6 Transactions, the
General Partners began to develop a plan to liquidate the Partnership. In
making their determination to develop and implement the Sales and the Plan of
Liquidation, the General Partners considered that most of the Limited Partners
have held their investments in the Partnership for more than eight years and
that the Partnership has held its current investments for one year beyond both
the anticipated investment period for such investments and the time in which the
Limited Partners had a reasonable expectation to receive distributions from the
liquidation of their investments in the Partnership. In addition, the General
Partners decided not to attempt to market the Partnership's Properties for sales
to parties other than N'Tandem based, in part, on their belief (i) that the
price offered to be paid by N'Tandem for the wholly-owned Properties, which is
equal to the full Appraised Values for such Properties, would be greater than
the price which would be paid by any prospective third-party purchaser, given
the results of the General
21
<PAGE>
Partners' previous experience in marketing manufactured home communities similar
in nature to those held by the Partnership and (ii) that 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 all of the other partial ownership interests in
three of the underlying properties and a 65% partial ownership interest in the
other two 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 the 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 August 29, 2000, 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. In addition, in connection with its
analysis of the Sales, the Managing General Partner also retained the Appraiser
to render the Appraisals with respect to, and determine the Appraised Values of,
the Partnership's Properties.
In an effort to address the potential conflicts of interest between the
General Partners and the Limited Partners, the Managing General Partner, on
behalf of the Partnership, engaged the Independent Special Counsel in June 2000
for the purpose of representing the interests of the unaffiliated Limited
Partners in connection with the Sales and the Plan of Liquidation. On August
23, 2000, the Independent Special Counsel delivered a written report addressed
to the Limited Partners describing the results of its review of, and
negotiations with N'Tandem and its affiliates with respect to, the Sales and the
Plan of Liquidation. As a result of these negotiations, N'Tandem and its
affiliates agreed to make certain changes to the underlying terms of the Sales
and the Plan of Liquidation for the benefit of the Limited Partners. For a
discussion of the Independent Special Counsel's report and the results of its
negotiations with respect to the Sales and the Plan of Liquidation, see "SPECIAL
-- FACTORS Independent Representation of the Unaffiliated Limited Partners."
It is currently anticipated that the Sales will occur as soon as
practicable following the approval of the Proposals by a majority-in-interest
of the Limited Partners. 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
$19.9 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
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<PAGE>
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 C to this Consent Solicitation Statement and is
incorporated herein by reference.
The Purchase and Sale Agreement
General. The Purchase and Sale Agreement does not contain any seller
representations and warranties. As a result, following the closing of the Sales,
N'Tandem will have no recourse against the Partnership in connection with the
condition of, or other matters affecting, the Properties.
Purchase Prices. The following table sets forth information regarding the
Partnership's Properties and their respective values (based on the Appraised
Values), the discount being applied to the Ownership Interests, the debt
attributable to the Properties as of June 30, 2000 and the value of the
Properties after deducting attributable debt and applicable discount:
<TABLE>
<CAPTION>
Affiliate Value, Based on Discount on Debt
Percentage Percentage Appraised Value, Ownership Attributable as
Name of Property Ownership Ownership(1) Date Acquired Before Debt(2) Interests(2)(3) of 6/30/2000(2) Net Value(2)
---------------- --------- ------------ ------------- ------------- --------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Kings & Queens
Lakeland, FL 100% -- 02/1992 $ 1,900,000 -- $ 489,600 $ 1,410,400
Lucerne Lakeside
Winter Haven, FL 100% -- 06/1995 2,600,000 -- 1,100,000 1,500,000
North Glen
Westfield, IN 100% -- 10/1991 6,100,000 -- 2,470,100 3,629,900
The Hills
Richland, WA 100% -- 12/1992 4,100,000 -- 1,660,300 2,439,700
Village Glen
Melbourne, FL 100% -- 10/1995 3,000,000 -- 1,500,000 1,500,000
Garden Walk
Palm Beach Gardens, FL 69% 31%(4) 08/1995 8,073,000 $270,400 3,933,000 3,869,600
Long Lake 960,000 1,069,600
West Palm Beach, FL 60% 40%(5) 06/1995 2,100,000 70,400
Carefree Village 1,948,700 1,352,900
Tampa, FL 56% 44%(6) 07/1990 3,416,000 114,400
Apache East
Apache Junction, AZ 26% 74%(7) 02/1997 559,900(8) 37,500 280,300 242,100
Denali Park Estates
Apache Junction, AZ 26% 74%(7) 02/1997 974,100(8) 65,300 487,700 421,100
----------- -------- ------------ -----------
Total $32,823,000 $558,000 $ 14,829,700 $17,435,300
=========== ======== ============ ===========
</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
3.4% discount for the fact that the Partnership only owns a majority
interest in the Carefree Village, Garden Walk and Long Lake Properties and
(ii) a 6.7% discount for the fact that the Partnership only owns a minority
interest in the Apache East and Denali Park Estates Properties. For a
discussion of the discount being applied to the Ownership Interests, see
"SPECIAL FACTORS -- Discounts for Ownership Interests in Properties."
(4) The 31% interest in this Property is held by N'Tandem, as tenant in common
with the Partnership.
(5) The 40% interest in this Property is held by N'Tandem, as tenant in common
with the Partnership.
(6) The 44% interest in this Property is held by N'Tandem, as tenant in common
with the Partnership.
(7) Each of these Properties is owned by Windsor Park 345. The Partnership is a
26% limited partner in Windsor Park 345. In addition to being the sole
general partner of Windsor Park 345, the Managing General Partner is also
the sole managing
23
<PAGE>
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 345. N'Tandem and Windsor 5 have a 65% and 9% limited
partner interest, respectively, in Windsor Park 345.
(8) The Apache East and Denali Park Estates Properties are contiguous properties
with similar characteristics. Accordingly, the Appraiser appraised both
Properties together and, in its Appraisal, stated that the aggregate
Appraised Value of both Properties was $5,980,000. For purposes of this
table, the Managing General Partner allocated 36.5% of the aggregate
Appraised Value to Apache East and 63.5% of the aggregate Appraised Value to
Denali Park Estates.
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 $32,265,000,
which includes $17,435,300 to be paid in cash to the Partnership and $14,829,700
representing debt attributable to the Properties being refinanced by N'Tandem at
the closing of the Sales. In order to fund the acquisition of the Properties,
N'Tandem will borrow $27,491,800 from SunAmerica Life Insurance Company
("SunAmerica") and will draw down the remaining $4,773,200 from its existing $20
million acquisition line of credit with US Bank N.A. (the "Credit Facility").
N'Tandem will borrow the funds from SunAmerica pursuant to mortgage indebtedness
which will bear interest at a rate equal to the five-year treasury rate plus 190
basis points, will have a term of five years and will be secured by the
Properties being acquired. The Credit Facility bears interest at a rate equal
to LIBOR plus 100 basis points and has a two-year term which expires in November
2001. To the extent that N'Tandem is unable to fully fund the acquisition of
the Properties through SunAmerica and the Credit Facility, the remaining funds
required by N'Tandem to complete the acquisition will be supplied by Chateau in
exchange for the issuance by N'Tandem of an unsecured promissory note, which
will bear interest at an annual rate equal to 1% per annum above the prime rate
established by Bank One, N.A.
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 June 30, 2000. 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 of July 1, 2000 through the
closing date and the amount of any closing adjustments or expenses.
24
<PAGE>
<TABLE>
<S> <C>
Aggregate Purchase Price for the Properties $ 32,265,000
Less: Outstanding Mortgage Indebtedness(1) $(14,829,700)
Current Liabilities (2) $ (919,400)
Partnership Liquidation Expenses (3) $ (75,000)
Estimated Transactional Expenses Payable by the Partnership(4):
Prepayment Penalties $ ( 23,000)
Sales Commission(5) (806,600)
Legal Fees (200,000)
Accounting Fees (15,000)
Fairness Opinion (50,000)
Surveys (56,900)
Closing Costs (299,800)
Solicitation Expenses (25,000)
Printing Costs (40,000)
------------
Total Estimated Transactional Expenses Payable by
the Partnership $ (1,516,300)
------------
Plus: Cash, Cash Equivalents and Other Current Assets(2) $ 546,400
------------
Cash Available for Distribution $ 15,471,000
============
Allocable to General Partners $ 154,700
============
Allocable to Limited Partners $ 15,316,300
============
Estimated Cash Available for Distribution per Unit(6) $ 100.82
</TABLE>
___________________________________
(1) Based on amounts outstanding, including accrued interest, as of June 30,
2000, on debt attributable to the Ownership Interests.
(2) As of June 30, 2000.
(3) Estimated expenses required to wind up and liquidate the Partnership,
including, without limitation, transfer agent and accountants fees.
(4) See "-- The Purchase and Sale Agreement -- Sales Expenses" and "--
Solicitation Expenses" above.
(5) See "MATERIAL RISK FACTORS AND OTHER CONSIDERATIONS -- Conflicts Of
Interest" and "SUMMARY OF SELECTED TERMS OF THE PARTNERSHIP AGREEMENT --
Sales Commission to General Partners."
(6) Based on 151,918 Units outstanding as of the Record Date.
Since the organization of the Partnership, total distributions to Limited
Partners have amounted to approximately $10,237,600 (or an average of
approximately $68.36 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 $25,553,900 (or approximately
$169.18 per Unit), compared to an initial purchase price for each Unit of
$100.00.
As the Partnership is not making any representations and warranties under
the Purchase and Sale Agreement, the General Partners do not intend to reserve
any funds out of the cash available for liquidating distributions to fund
contingent liabilities arising out of potential claims or litigation which might
arise after the Sales are consummated. The full amount of the net proceeds from
the Sales will be distributed to the partners of the Partnership as soon as
practicable following the closing.
Ownership of Properties by N'Tandem Following 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.
25
<PAGE>
SPECIAL FACTORS
Fairness of the Proposed Transactions; Recommendation of the General Partners
The General Partners believe that the Sales and the Plan of Liquidation are
consistent with the Original Objectives of the Partnership. 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 five wholly-owned Properties and is only
applying (i) a 3.4% discount to the Appraised Value of the Ownership
Interests in the Carefree Village, Garden Walk and Long Lake Properties
for the fact that the Partnership owns a majority interest in the
underlying properties and (ii) a 6.7% discount to the Appraised Value of
the Ownership Interests in the Apache East and Denali Park Estates
Properties 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 "-- Discount for Ownership Interests in Properties";
. The aggregate net consideration of approximately $17,435,300 being paid
in connection with the proposed transactions exceeds the net book value
of the Partnership's assets of $7,078,100 as of June 30, 2000 by
$10,357,200;
. 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 ($100.82 per Unit) are substantially higher than the weighted
average trading price of $79.47 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 June 30, 2000;
. The Sales do not involve any third-party brokerage fees payable by the
Partnership, resulting in an estimated savings to the Partnership of up
to $1,129,300 (based upon brokerage fees of 3% to 6% typically paid by
sellers of real properties less the sales commission of $806,600 payable
to the Managing General Partner in connection with the Sales under the
Partnership Agreement); and
26
<PAGE>
. 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 May 2000 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 (i) N'Tandem, which together with the Managing General
Partner is under common control of Chateau, or (ii) Windsor Park 345, an
affiliated limited partnership which has the Managing General Partner as
its sole general partner and N'Tandem and Windsor 5, an affiliated
limited partnership, as its other limited partners;
. The General Partners will receive, pursuant to the Partnership Agreement,
an aggregate sales commission of $806,600 from the Partnership in
compensation for their services rendered in connection with the Sales;
. 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 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;
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. 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;
. The Managing General Partner engaged the Independent Special Counsel to
represent the interests of the unaffiliated Limited Partners in
connection with the Sales and the Plan of Liquidation. See " Independent
Representation of the Unaffiliated Limited Partners"; 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 $968,000 that are being paid by N'Tandem).
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;
. The Appraisals were rendered in May 2000 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 any 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) the Managing General
Partner arranged for the Independent Special Counsel to represent the
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interests of the unaffiliated Limited Partners; (iii) the Managing General
Partner retained Legg Mason to assess the fairness of the aggregate purchase
price to be paid to the Partnership in the Sales; (iv) even though the
Appraisals were rendered in May 2000, 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 (v) 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 August 29, 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, 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. Subsequently, the Managing General Partner engaged Legg Mason to
render separate fairness opinions with respect to the Windsor 3 and Windsor 6
Transactions and, in March 2000, Legg Mason delivered such fairness opinions to
the General Partners with respect to such transactions for which it received an
aggregate fee of $100,000. 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-KSB for the year ended December 31, 1999 and Form 10-QSB
for the quarter ended June 30, 2000;
(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
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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 D 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 Sales or the Plan of Liquidation, assess any alternatives to the
Proposals or make any recommendation as to how Limited Partners should vote on
the Proposals. In addition, Legg Mason was not asked to solicit, and did not
solicit, third party indications of interest from any party with respect to an
acquisition of the Units, the Properties or any part thereof. Legg Mason did
also note that the Managing General Partner is owned by Chateau, the parent
company of N'Tandem.
In rendering its Fairness Opinion, Legg Mason relied, without assuming
responsibility for independent verification, on the accuracy and completeness of
all financial and operating data, financial analyses, financial and operating
forecasts, reports and other information that were publicly available or
furnished or otherwise communicated to Legg Mason by or on behalf of the
Managing General Partner. With respect to forecasts regarding the Properties'
future financial condition and operating results, Legg Mason assumed, without
taking any responsibility for independent verification, that such forecasts were
reasonably prepared on bases reflecting the best currently available
information, estimates and judgment of the Managing General Partner. Legg Mason
also assumed that the Appraisals were reasonably prepared by, 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. 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 $100.82.
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.
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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 June 30,
2000. 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 liquidation equity value of
$98.88 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
$100.82. 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 American Land Lease, Inc.
(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 August 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 the General Partners'
interest in the Partnership.
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Based on its review, Legg Mason observed that the discounted trading
multiples for the Comparable Companies (i) ranged from 8.3x to 6.1x for the 2000
FFO per share estimates, (ii) ranged from 7.6x to 5.5x for the 2001 FFO per
share estimates and (iii) ranged from 8.1x to 6.6x 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 8.3x to 6.1x and 7.6x to 5.5x,
respectively, for 2000 and 2001, Legg Mason's analysis indicated an implied
value range per Unit of $75.27 to $53.42 based on 2000 FFO multiples and $74.39
to $52.19 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 8.1x to 6.6x,
Legg Mason's analysis indicated an implied value range per Unit of $41.70 to
$15.56. Legg Mason believed that its 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 14.6% to 19.2% 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 6.2x to 8.7x 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 $90.35 to $63.91
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 March 31, 2000. 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
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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.
Independent Representation of the Unaffiliated Limited Partners
In an effort to address the potential conflicts of interest between the
General Partners and the Limited Partners, the Managing General Partner, on
behalf of the Partnership, engaged Wolf Haldenstein Adler Freeman & Herz LLP to
act as the Independent Special Counsel for the purpose of representing the
interests of the unaffiliated Limited Partners in connection with the Sales and
the Plan of Liquidation. On August 23, 2000, the Independent Special Counsel
delivered a written report addressed to the Managing General Partner for the
benefit of the Limited Partners describing the results of its review of, and
negotiations with the Managing General Partner and N'Tandem with respect to, the
Sales and the Plan of Liquidation. A copy of the report of the Independent
Special Counsel, setting forth the matters considered and procedures followed,
is set forth in Appendix B to this Consent Solicitation Statement and is
incorporated herein by reference. Limited Partners are urged to read the report
of the Independent Special Counsel in its entirety.
The Managing General Partner selected the Independent Special Counsel based
upon its belief that the Independent Special Counsel was uniquely qualified to
act in this role by virtue of the Independent Special Counsel previously having
brought and settled, on behalf of the limited partners of Windsor 3, Windsor 4
and Windsor 6, a class-action lawsuit in the Superior Court of the State of
California involving, among other things, allegations of potential conflicts of
interest relating to the Windsor 4 Transaction and the Windsor 3 and Windsor 6
Transactions.
In analyzing the Sales and the Plan of Liquidation, the Independent Special
Counsel, among other things, reviewed (i) the organizational documents,
including the Partnership Agreement, of the Partnership, (ii) the financial
statements and the related filings of the Partnership on Form 10-KSB for the
year ended December 31, 1999 and Form 10-QSB for the quarter ended June 30,
2000, (iii) a draft of this Consent Solicitation Statement, (iv) the Appraisals
and (v) a draft of the Fairness Opinion. In addition, the Independent Special
Counsel also reviewed the proposed form of the Purchase and Sale Agreement that
is expected to be utilized in connection with the Sales, received certain
additional information relating to the Partnership requested from the Managing
General Partner, independently evaluated the methodology utilized by the
Appraiser with respect to the Appraisals and performed research of applicable
law. In addition, prior to its engagement on behalf of the Partnership, the
Independent Special Counsel had become familiar with the facts relevant to the
background of the Sales and the Plan of Liquidation in the course of its
representation of the limited partners of Windsor 4 in connection with the
Windsor 4 Transaction and the limited partners of Windsor 3 and Windsor 6 in
connection with the Windsor 3 and Windsor 6 Transactions.
Following its review and analysis of such information, the Independent
Special Counsel engaged in negotiations, on behalf of the Limited Partners, with
the Managing General Partner and N'Tandem with respect to the underlying terms
of the Sales and the Plan of Liquidation. The purpose of these
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negotiations was to represent, from a legal point of view, the interests of the
Limited Partners and, thereby, ensure that there was independent legal
representation of the interests of the Limited Partners in connection with the
Sales and the Plan of Liquidation. As a result of these negotiations, the
parties agreed to make certain changes to the underlying terms of the Sales and
the Plan of Liquidation for the benefit of the Limited Partners.
As described in the report of the Independent Special Counsel, the parties
agreed that:
(i) the discounts being applied to the Appraised Values of the Ownership
Interests would be reduced from 10%, which was the percentage discount
originally agreed to by the parties, to 6.7% for the Ownership Interests in
which the Partnership owns a minority interest in the underlying property
and from 5%, which was the percentage discount originally agreed to by the
parties, to 3.4% for the Ownership Interests in which the Partnership owns
a majority interest in the underlying property; and
(ii) the sales commission being paid to the Managing General Partner would
be reduced from 3%, which is the percentage commission that the Managing
General Partner is entitled to receive pursuant to the Partnership
Agreement, to 2.5%.
As a result of the reduction of such discounts and sales commission, the
aggregate amount of the net proceeds to be paid to the Limited Partners in
connection with the Sales and the Plan of Liquidation increased by $428,000. In
addition, the parties also agreed to include certain additional disclosure in
this Consent Solicitation Statement relating to the rights of the Limited
Partners under the Partnership Agreement with respect to a transaction between
the Partnership and an affiliate of the Managing General Partner.
As described in its report, the Independent Special Counsel is of the
opinion that the results of its review and negotiations relating to the Sales
and the Plan of Liquidation, when combined with the opinions expressed in the
Fairness Opinion, have provided significant procedural safeguards with respect
to the interests of the unaffiliated Limited Partners in light of the lack of
arm's-length negotiations and bargaining between independent parties in
connection with the Sales and the Plan of Liquidation. Moreover, the
Independent Special Counsel believes that its representation of the interests of
the unaffiliated Limited Partner in connection with the Sales and the Plan of
Liquidation has resulted in the substantive benefits to such Limited Partners
described above.
In connection with its representation of the interests of the unaffiliated
Limited Partners, no limitations were imposed by the Managing General Partner on
the Independent Special Counsel with respect to the investigation made or
procedures followed by the Independent Special Counsel and the payment of the
fees of the Independent Special Counsel were not contingent upon the results of
its review of, or negotiations with the Managing General Partner and N'Tandem
with respect to, the Sales and the Plan of Liquidation.
A copy of the report of the Independent Special Counsel is set forth in
Appendix B 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 representing the interests of the unaffiliated Limited
Partners in connection with the Sales and the Plan of Liquidation, the Managing
General Partner paid the Independent Special Counsel a fee of approximately
$31,000, which was determined on a time-and-disbursements basis at the
Independent Special Counsel's customary hourly rates.
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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 Partnership, which was formed for the
purpose of acquiring and holding investments in existing manufactured home
communities for an anticipated investment period of four to seven years, was
funded through a public offering of Units which commenced in March 1990 and was
completed in January 1992. Following the expiration of the anticipated
investment period, which was originally contemplated to occur at the latest in
January 1999, it was expected that the investments of the Partnership would be
sold and, thereafter, the Partnership liquidated in accordance with the terms of
the Partnership Agreement. As of the date of this Consent Solicitation
Statement, most of the Limited Partners have held their investments in the
Partnership for more than eight years and the Partnership has held its current
investments for one year beyond both the anticipated investment period for such
investments and the time in which the Limited Partners had a reasonable
expectation to receive distributions from the liquidation of their investments
in the Partnership. As a result, the Managing General Partner believes that
Limited Partners expect to achieve the near-term liquidation of their
investments in the Partnership. 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 continuing 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 third-party brokerage commissions
are being paid by the Partnership in connection with the Sales, which results in
estimated savings of up to $1,129,300 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 May 2000, 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
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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.
As part of its analysis of the Sales and the Plan of Liquidation, the
Managing General Partner compared the estimated price per Unit of approximately
$100.82 expected to be paid by N'Tandem in the Sales to the estimated range of
values per Unit that were 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
consolidation analysis had indicated that the estimated range of values per Unit
following the Proposed Consolidation was $72.01 to $95.96.
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 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 (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.
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
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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 manufactured
home communities. The Appraisals set forth the Appraised Values of the five
wholly-owned Properties and the five manufactured home communities in which the
Partnership holds Ownership Interests as of various dates in May 2000.
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 May 2000 and, therefore, may no longer
reflect the fair market values of the Properties. Accordingly, the value of the
Properties may have increased since that time. However, the Managing General
Partner (i) does not believe that any significant events have occurred since
that time which would cause the conclusions reached by the Appraiser in the
Appraisals and the Appraised Values to be different had the Appraisals been
rendered as of a more recent date, (ii) is not aware of any material
developments, trends or other uncertainties that relate to the conclusions
expressed in the Appraisals or that are reasonably likely to materially affect
such conclusions and (iii) does not intend to update the Appraisals or order new
appraisals for the Properties in connection with the Sales.
The Appraisals have been based in part upon information supplied to the
Appraiser by the Managing General Partner, including, but not limited to: rent
rolls; building reports; lease information; 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
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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 (i) 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
(ii) 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
such 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 (i) certified as a Master Appraiser by the Appraisal
Institute, (ii) is a Certified Commercial Investment Member, (iii) has been in
the real estate appraisal business since 1985 (iv) 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 Long Lake
Property. 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 $46,900 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
$135,800. No additional compensation is mutually understood to be contemplated
to be paid to the Appraiser in connection with the Appraisals or otherwise.
Assumption and Limitations of the Whitcomb Appraisals. Each of the
-----------------------------------------------------
Appraisals were based upon assumptions and limiting conditions, including the
following: (i) that the factual information contained in each Appraisal upon
which the analysis and conclusions are based was true and correct; (ii) that the
information, estimates and opinions furnished to the Appraiser in connection
with the Appraisals were true and correct; (iii) each Property was appraised as
though it were free and clear of mortgages, liens, leases, servitudes and
encumbrances, except as identified in the Appraisals; (iv) that each Appraisal
applies to the real estate only and does not include personal property or other
non-realty items located at or on the Property; (v) that there is good and
marketable title to the Property; (vi) that the Property is free of
encroachments and zoning or other violations or problems; (vii) that management
of the Property is competent; (viii) that there are no material hidden or
unapparent problems of the soil, subsoil or structures of the Property; (ix)
that all of the improvements, equipment, and building services are structurally
sound and suffer no latent defects or inadequacies; (x) that the subject
improvements are free of insect infestation or rot or damage due to such
infestation or rot; (xi) that there are no environmental problems with respect
to the Property or its improvements; (xii) that no adverse events, conditions or
circumstances materially affecting the Property have taken place subsequent to
the date of
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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 Kings & Queens Property Appraisal. In utilizing the income
--------------------------------------------
capitalization approach in connection with appraising the Kings & Queens
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 $329,728 per year. Vacancy and credit loss was
estimated at 5% of potential gross income for manufactured home sites and 60%
for recreational vehicle spaces, or $23,878 in the aggregate. Additional
income, based on historical numbers, was calculated at $10.00 per site, leaving
an effective gross income estimate of $306,959 for the Property. Total annual
operating expenses for the Property were estimated to be $132,695 leaving an
estimated NOI of $174,264. In determining a capitalization rate for the Kings &
Queens Property, the Appraiser looked at capitalization rates for recently sold
comparable communities, which ranged from 7.98% to 9.48%. The Appraiser noted
that the Property is a well-occupied community, located in a sophisticated
market area and that it would appeal to a large number of potential purchasers.
Based on the market data, 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 of $1,900,000 for the Kings &
Queens Property. The Appraiser also used the debt coverage ratio method, which
yielded a capitalization rate equal to approximately 9.1%, to verify the
accuracy of the utilized capitalization rate.
In utilizing the sales comparison approach in connection with appraising
the Kings & Queens 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 $2,200,000
to a high of $8,600,000. Total sites ranged from 110 to 337 and occupancy
ranged from 96.9% to 100%. The average price per site ranged from $18,846 to
$25,519 and average site rent ranged from $217.00 to $290.00. All of the sales
were fee simple transactions with typical 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 an effective gross income multiplier (an
"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 5.56 to 7.89, (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
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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 established, age-
restricted community with a good location and access, (ii) the Property has a
history of good occupancy and both the Property and improvements are in good
overall condition and (iii) there is adequate maintenance to maintain the
current condition of the Property. A $15.00 per site rent increase effective as
of January 1, 2000, was incorporated into the Appraisal. Based on these
considerations, the Appraiser concluded that an EGIM of 6.5, which was at the
low end of the indicated range for the comparable properties, was appropriate
for the Property. Based upon the Property's effective gross income of $306,959
and an EGIM of 6.5 the Appraiser calculated the market value of the Property to
be $2,000,000, representing $18,018 per site. The Appraiser then used price per
space analysis to verify the EGIM calculation. The price per space analysis
yielded a market value of $2,000,000. The Appraiser noted that the two methods
indicated the same value and concluded a market value of $2,000,000 via the
sales comparison approach.
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 purchasers 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 May 1, 2000, was $1,900,000.
Summary of Lucerne Lakeside Property Appraisal. In utilizing the income
----------------------------------------------
capitalization approach in connection with appraising the Lucerne Lakeside
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 $403,099 per year. Vacancy and credit loss was
estimated at 5% of potential gross income, or $20,155. Additional income, based
on historical numbers, was calculated at $4.00 per site, leaving an effective
gross income estimate of $383,504 for the Property. Total annual operating
expenses for the Property were estimated to be $152,131, leaving an estimated
NOI of $231,374. In determining a capitalization rate for the Lucerne Lakeside
Property, the Appraiser looked at capitalization rates for recently sold
comparable communities, which ranged from 7.98% to 9.48%. The Appraiser noted
that the Property is a well-occupied community, located in a sophisticated
market area and that it would appeal to a large number of potential purchasers.
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 of $2,600,000 for the
Lucerne Lakeside Property. The Appraiser also used the debt coverage ratio
method, which yielded a capitalization rate equal to approximately 9.1%, to
verify the accuracy of the utilized capitalization rate.
In utilizing the sales comparison approach in connection with appraising
the Lucerne Lakeside Property, the Appraiser compared the Property to five other
manufactured home communities sold in the same general geographic area as the
Property within the eighteen-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 $8,600,000. Total sites ranged from 110 to 337 and
occupancy ranged from 96.9% to 100%. The average price per site ranged from
$18,846 to $25,519 and average site rent ranged from $217.00 to $290.00. All of
the sales were fee simple transactions with typical 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 eighteen-month period prior to the date of the Appraisal and traded
under similar market conditions.
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The Appraiser also employed an 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 5.56 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
market place, (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 noted that (i) the Property is an established, age-restricted
community with a good location and access, (ii) the Property has a history of
good occupancy and the Property and improvements are in good overall condition
and (iii) there is adequate maintenance to maintain the current condition of the
Property. A $10.00 per site rent increase, effective as of March 1, 2000, was
incorporated into the Appraisal. The Appraiser noted that the Property's rents
were shown to be in the indicated range. Based on these considerations, the
Appraiser concluded that an EGIM of 6.80, which was in the middle portion of the
indicated range for the comparable properties, was appropriate for the Property.
Based upon the Property's effective gross income of $383,504 and an EGIM of
6.80, the Appraiser calculated the fair market value to be $2,600,000,
representing $18,571 per site. The Appraiser then used price per space analysis
to verify the EGIM calculation. The price per space analysis yielded a market
value of $2,700,000. The Appraiser noted that this value was slightly higher
than the indication from the EGIM method but considered the values mutually
supportive. The Appraiser ultimately concluded a market value of $2,650,000 via
the sales comparison approach.
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 purchasers 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 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 May 1, 2000, was $2,600,000.
Summary of North Glen Property Appraisal. In utilizing the income
----------------------------------------
capitalization approach in connection with appraising the North Glen 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 $825,384 per year. Vacancy and credit loss was estimated at 3% of
potential gross income, or $24,762. Additional income, based on historical
numbers, was calculated at $475.00 per site, leaving an effective gross income
estimate of $937,897 for the Property. Total annual operating expenses for the
Property were estimated to be $355,285, leaving an estimated NOI of $582,613.
In determining a capitalization rate for the North Glen Property, the Appraiser
looked at capitalization rates for recently sold comparable communities, which
ranged from 7.67% to 9.86%. Based on the market data and considering that the
Property is an older manufacturing housing community and reflects additional
investment risk, 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 of $6,100,000 for the North Glen
Property. The Appraiser also used the debt coverage ratio method, 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 North Glen Property, the Appraiser compared the Property to four other
manufactured home communities sold in the same general geographic area as the
Property within the thirty-four-month period prior to the date of the Appraisal.
The sales prices of the four comparable properties ranged from a low of
$3,560,000 to a high
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of $6,500,000. Total sites ranged from 208 to 447 and occupancy ranged from 70%
to 98.8%. The average price per site ranged from $14,541 to $19,338 and the
average site rent ranged from $150.00 to $250.00. All of the comparable sales
were fee simple transactions with typical acquisition financing. There were no
atypical sale conditions known to have occurred and all of the sales represented
transactions that took place in the thirty-four month period prior to the date
of the Appraisal and traded under similar market conditions.
The Appraiser also employed an 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 7.14 to 8.87, (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
situated in a mixed-use commercial and residential area that has exhibited a
significant amount of new development during recent years, (ii) the Property has
historically exhibited a high level of occupancy with rental increases, and
(iii) all the comparable sale properties had a lower expense ratio than the
Property, ranging from 29.6% to 32.0%. By comparison, the Property has a
forecast expense ratio of 37.88%. Based on these considerations, the Appraiser
concluded that an EGIM of 7.0, which was slightly below the indicated range for
the comparable properties, was appropriate for the Property. Based upon the
Property's effective gross income of $937,897 and an EGIM of 7.0, the Appraiser
calculated the market value of the Property to be $6,600,000, representing
$22,717 per site. After adjustments, the Appraiser determined the fair market
value to be $6,200,000. The Appraiser then used price per space analysis to
verify the EGIM calculation. The price per space analysis yielded a market
value of $6,200,000. The Appraiser noted that values reflected a narrow range
and were mutually supportive and, therefore, concluded a market value of
$6,400,000 via the sales comparison approach.
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 purchasers 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 May 12, 2000, was $6,100,000.
Summary of The Hills Property Appraisal. In utilizing the income
---------------------------------------
capitalization approach in connection with appraising The Hills 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 $664,440 per year. Vacancy and credit loss was estimated at 5% of
potential gross income, or $33,222. Additional income, based on historical
numbers, was calculated at $45.00 per site, leaving an effective gross income
estimate of $765,680 for the Property. Total annual operating expenses for the
Property were estimated to be $400,948, leaving an estimated NOI of $364,740.
In determining a capitalization rate for The Hills Property, the Appraiser
looked at capitalization rates for recently sold comparable communities, which
ranged from 9% to 10.4%. The Appraiser noted that the Property has a high
degree of vacancy that might represent upside to a potential purchaser. Based on
the market data and considering the current investor and interest rate
environment, the Appraiser determined that a capitalization rate of 9.25% was
appropriate. Utilizing the 9.25% capitalization rate, the Appraiser was
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able to calculate a market value of $3,940,000 for The Hills Property. The
market value, with excess land valued at $120,000, was calculated to be
$4,060,000. The Appraiser also used the debt coverage ratio method, which
yielded a capitalization rate equal to approximately 9.8%, to verify the
accuracy of the utilized capitalization rate.
In utilizing the sales comparison approach in connection with appraising
The Hills Property, the Appraiser compared the Property to five other
manufactured home communities sold in the same general geographic area as the
Property within the three-year period prior to the date of the Appraisal. The
sales prices of the five comparable properties ranged from a low of $875,000 to
a high of $4,322,525. Total sites ranged from 50 to 200 and occupancy ranged
from 91% to 100%. The average price per site ranged from $17,500 to $29,167 and
average site rent ranged from $190.00 to $300. 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 three-year period prior to the date of the Appraisal and
traded under similar market conditions.
The Appraiser also employed an EGIM in the sales comparison analysis. In
applying the EGIM, the Appraiser determined that the EGIM for the comparable
sale properties ranged from 6.1 to 8.2. The Appraiser noted that the Property
is an all age community and has a minimal amount of vacancy and higher expense
ratio than all of the comparable properties. Based on these considerations, the
Appraiser concluded that an EGIM of 6.1, which was at the low end of the
indicated range for the comparable properties, was appropriate for the Property.
Based upon the Property's effective gross income of $766,688 and an EGIM of 6.1,
the Appraiser calculated the fair market value of the Property, with excess
land, to be $4,670,000, representing $20,664 per site. The Appraiser then used
price per space analysis to verify the EGIM calculation. The price per space
analysis yielded a market value of $4,070,000. The Appraiser noted that the
values were mutually supportive but placed slightly more emphasis on the price
per space method and concluded a market value of $4,300,000 via the sales
comparison approach.
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 purchasers 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 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 May 10, 2000, was $4,100,000.
Summary of Village Glen Property Appraisal. In utilizing the income
------------------------------------------
capitalization approach in connection with appraising the Village Glen 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 $477,852 per year. Vacancy and credit loss was estimated at 6% of
potential gross income, or $28,671. Additional income, based on historical
numbers, was calculated at $15.00 per site, leaving an effective gross income
estimate of $451,326 for the Property. Total annual operating expenses for the
Property were estimated to be $179,188, leaving an estimated NOI of $272,138.
In determining a capitalization rate for the Village Glen Property, the
Appraiser first looked at capitalization rates for comparable communities, which
ranged from 7.98% to 9.48%. The Appraiser noted that the Property is a well-
occupied community, located in a sophisticated market area. The Appraiser
further noted that the Property would appeal to a large number of potential
purchasers. Based on these considerations, the Appraiser determined that a
capitalization rate of 9% was appropriate. Utilizing the 9% capitalization
rate, the Appraiser was able to calculate a market value of $3,000,000 for the
Village Glen Property. The Appraiser also used the debt coverage ratio method,
which yielded a capitalization rate equal to approximately 9.1%, to verify the
accuracy of the utilized capitalization rate.
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In utilizing the sales comparison approach in connection with appraising
the Village Glen Property, the Appraiser compared the Property against five
other manufactured home communities sold in the same general geographic area as
the Property in the eighteen-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 $8,600,000. Total sites ranged from 110 to 337 and
occupancy ranged from 96.9% to 100%. The average price per site ranged from
$18,846 to $25,519 and average site rent ranged from $217.00 to $290.00. All of
the sales were fee simple transactions with typical 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 eighteen-month period prior to the date of the Appraisal and traded
under similar market conditions.
The Appraiser also employed an 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 5.56 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 noted that (i) the Property is an established, age-restricted
community with a good location and access, (ii) the Property has a history of
good occupancy, (iii) the Property and improvements are in good overall
condition, and (iv) there is adequate maintenance to maintain the current
condition of the Property. A $10.00 per site rent increase, effective as of
January 1, 2000, was incorporated into the Appraisal. Based on these
considerations, the Appraiser concluded that an EGIM of 6.7, which was in the
middle portion of the indicated range for the comparable properties, was
appropriate for the Property. Based upon the Property's effective gross income
of $451,326 and an EGIM of 6.7, the Appraiser calculated the market value of the
Property to be $3,000,000, representing $20,979 per site. The Appraiser then
used price per space analysis to verify the EGIM calculation. The price per
space analysis yielded a market value of $3,000,000. The Appraiser noted that
values were mutually supportive and concluded a market value of $3,000,000 via
the sales comparison approach.
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 purchasers 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 May 1, 2000, was $3,000,000.
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 $2,193,648 per year. Vacancy and credit loss was estimated at 12%
of potential gross income, or $263,238. Additional income, based on historical
numbers, was calculated at $25.00 per site, leaving an effective gross income
estimate of $1,942,510 for the Property. Total annual operating expenses for
the Property was estimated to be $889,068, leaving an estimated NOI of
$1,053,442. 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 marketplace and interest
rate environment, the Appraiser
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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 of $11,700,000 for the Garden Walk Property. The Appraiser also
used the debt coverage ratio method, which yielded a capitalization rate equal
to approximately 9.2%, to verify the accuracy of the utilized capitalization
rate.
In utilizing the sales comparison approach in connection with appraising
the Property, the Appraiser compared the Property to five other manufactured
home communities sold in the same general geographic area as the Property within
the two-year period prior to the date of Appraisal. The sales prices of the
five comparable properties ranged from a low of $4,000,000 to a high of
$16,600,000. Total sites ranged from 206 to 585 and occupancy ranged from 94.5%
to 100%. The average price per site ranged from $19,417 to $36,797 and average
site rent ranged from $217.00 to $391.41. All of the sales were fee simple
transactions with typical 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 an 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 a 9.1% physical vacancy, (ii) the Property was observed to be in
average condition and in 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 27.4% to 36.1%. By
comparison, the Property had a forecast expense ratio of 45.78%. 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 $1,942,510, and an EGIM of
6.0, the Appraiser concluded the market value of the Property to be $11,700,000,
representing $24,173 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 purchasers 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 the same 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 May 1, 2000
was $11,700,000.
Summary of Long Lake Property Appraisal. In utilizing the income
---------------------------------------
capitalization approach in connection with appraising the Long Lake 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 $744,133 per year. Vacancy and credit loss was estimated at 15%
of potential gross income, or $80,623. Additional income, based on historical
numbers, was calculated at $60.00 per site, leaving an effective gross income
estimate of $672,510 for the Property. Total annual operating expenses for the
Property were estimated to be $358,173, leaving an estimated NOI of $314,337.
In determining a capitalization rate for the Long Lake Property, the Appraiser
first looked at capitalization rates for comparable communities, which ranged
from 8.51% to 9.79%. The Appraiser noted the Property is a well occupied
community, located in a sophisticated area and that it would appeal to a large
number of
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investors. Based on these considerations, the Appraiser determined that a
capitalization rate of 9% was appropriate. Utilizing the 9% capitalization rate,
the Appraiser was able to calculate a market value of $3,500,000 for the Long
Lake Property. The Appraiser also used the debt coverage ratio method, which
yielded a capitalization rate equal to approximately 9.1%, to verify the
accuracy of the utilized capitalization rate.
In utilizing the sales comparison approach in connection with appraising
the Long Lake Property, the Appraiser compared the Property against five other
manufactured home communities sold in the same general geographic area as the
Property within the eighteen-month 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 $30,862 and average site rent ranged from $159.39 to $382.80. All of
the sales were fee simple transactions with typical 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 eighteen-month period prior to the date of the Appraisal and traded
under similar market conditions.
The Appraiser also employed an 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 4.97 to 7.35, (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 (i) the Property is an established, age-
restricted community with a good location and access, (ii) the Property has a
history of good occupancy and is in good overall condition, (iii) there is
adequate maintenance to maintain the current condition of the Property and (iv)
the Property's expense ratio of 53.26% was just above the range of expense
ratios for the comparable properties. An $11.00 per site rent increase,
effective as of January 1, 2000, was incorporated into the Appraisal. Based on
these considerations, the Appraiser concluded that an EGIM of 5.30, which was in
the lower portion of the indicated range for the comparable properties, was
appropriate for the Property. Based upon the Property's effective gross income
of $672,510 and an EGIM of 5.30, the Appraiser calculated the market value of
the Property to be $3,600,000, representing $24,000 per site. The Appraiser then
used price per space analysis to verify the EGIM calculation. The price per
space analysis yielded a market value of $3,400,000. The Appraiser noted that
this value was slightly lower than the indication from the EGIM method but that
the values were mutually supportive. The Appraiser ultimately concluded a
market value of $1,800,000 via the sales comparison approach.
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 purchasers 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 the same 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 May 1,
2000, was $3,500,000.
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
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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 $100.00 per site, leaving an
effective gross income estimate of $1,323,065 for the Property. Total annual
operating expenses for the Property were estimated to be $716,888, leaving an
estimated NOI of $606,177. 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% for the Property was appropriate. Utilizing the 10%
capitalization rate the Appraiser was able to calculate a market value of
$6,100,000 for the Carefree Village Property. The Appraiser also used the debt
coverage ratio method, which yielded a capitalization rate equal to
approximately 10.3%, to verify the accuracy of the utilized capitalization rate.
In utilizing the sales comparison approach in connection with appraising
the Carefree Village Property, the Appraiser compared the Property to five other
manufactured home communities sold in the same general geographic area as the
Property within the three-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 three-year period prior to the date of the
Appraisal and traded under similar market conditions.
The Appraiser also employed an effective gross income multiplier ("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
15.5% 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 all had lower expense ratios, ranging from 32.8% to 40.7%. By comparison,
the Property has a forecast expense ratio of 54.18%. Based on these
considerations, the Appraiser concluded that an EGIM of 4.70, which was below
the indicated range, was appropriate for the Property. Based upon the
Property's effective gross income of $1,323,065 and an EGIM of 4.70, the
Appraiser calculated the market value of the Property to be $6,200,000,
representing $15,271 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 purchasers 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 [the same] 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 May 3,
2000, was $6,100,000.
Summary of Apache East and Denali Park Properties Appraisal. The Apache
-----------------------------------------------------------
East and Denali Park Estates Properties are contiguous Properties with similar
characteristics. Accordingly, the Appraisals of these Properties were combined
in a single Appraisal report. In utilizing the income capitalization approach
in connection with appraising the Properties, the Appraiser first projected 12
months of income for the Properties based upon the then current rent levels.
The potential gross income
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from the rentals was calculated at $808,200 per year. Vacancy and credit loss
was estimated at 5% of potential gross income, or $40,410. Additional income,
based on historical numbers, was calculated at $25.00 per site, leaving an
effective gross income estimate of $831,915 for the Properties. Total annual
operating expenses for the Properties were estimated to be $337,396, leaving an
estimated NOI of $494,519. In determining a capitalization rate for the
Properties, the Appraiser looked at capitalization rates for recently sold
comparable communities, which ranged from 8.22% to 10.30%. The Appraiser noted
that the Properties have a market vacancy and expense ratio. Based on these
considerations, the Appraiser determined that a capitalization rate of 9% for
the Properties was appropriate. Utilizing the 9% capitalization rate, the
Appraiser was able to calculate an aggregate market value of $5,494,658 for the
Properties. The market value with excess vacant land valued at $390,000 was
calculated to be $5,900,000. The Appraiser also used the debt coverage ratio
method, 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 Properties, the Appraiser compared the Properties to five other manufactured
home communities sold in the same general geographic area as the Properties
within the nine-month period prior to the date of Appraisal. The sales prices
of the five comparable properties ranged from a low of $1,685,000 to a high of
$9,500,000. Total sites ranged from 75 to 451 and occupancy ranged from 93.0%
to 98.04%. The average price per site ranged from $16,262 to $30,270 and
average site rent ranged from $200.00 to $278.00. 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 an 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 6.84 to 8.27, (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) each of the Properties is an all age
community with a 3.5% physical vacancy, (ii) the Properties were observed to be
in excellent condition and with a good location near Superstition Freeway in
Apache Junction, Arizona, and (iii) the comparable properties all had a much
higher occupancy rate than the Properties and had lower expense ratios, ranging
from 25.55% to 35.62%. By comparison, the Properties had a forecast expense
ratio of 40.56%. Based on these considerations, the Appraiser concluded that an
EGIM of 6.5, which was slightly below the indicated range for the comparable
properties, was appropriate for the Properties. Based upon the Properties'
effective gross income of $831,915 and an EGIM of 6.5, the Appraiser concluded
the aggregate market value of the Properties to be $5,406,798, representing
$18,971 per site. The aggregate market value of the Properties, with excess
vacant land valued at $390,000, was calculated to be $5,800,000.
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 purchasers 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 aggregate
market value of the Properties with excess vacant land, based on a reasonable
exposure period of six months, as of May 1, 2000, was $5,900,000.
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Discounts 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 3.4% discount to the Appraised Value of the Ownership Interests in the
Carefree Village, Garden Walk and Long Lake Properties for the fact that the
Partnership owns a majority interest in these Properties and (ii) a 6.7%
discount to the Appraised Values of the Ownership Interests in the Apache East
and Denali Park Estates 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.
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 21% to 40% 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 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
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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:
(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 (or in proportion
to if less than) he 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;
(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; and
(iv) To the extent there is a loss on the Sales, such loss shall be
allocated among the partners with positive balances in their capital accounts
pro rata in accordance with their respective positive balances until the
aggregate positive balance of their capital accounts is reduced to zero and any
balance shall be allocated in accordance with the allocation of net profits and
losses for each fiscal year.
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, 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 (defined as a return of cash
invested or cash distributions in excess of funds generated from operations,
should this occur) 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;
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(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;
(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; and
(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.
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).
Sales Commission Payable to General Partners
The Partnership Agreement provides that a sales commission may be paid to
the General Partners upon the sale of the Properties; provided, however, that
General Partners may receive a portion of the commission only if the General
Partners provided a substantial amount of the services in the sales effort. Any
such compensation payable to the General Partners shall not exceed, on the sale
of each Property, the
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lesser of: (i) 3% of the gross sales price or (ii) 50% of the standard real
estate brokerage commission. The total real estate brokerage commission paid on
resale of each of the Properties shall be limited to a competitive real estate
commission, not to exceed 6% of the contract price for the sale of the Property.
No such commission shall be paid, however, to the General Partners until each
Limited Partner has received an amount equal to its original capital
contribution to the Partnership from the net proceeds from the sale or
refinancing of Properties plus an amount equal to 6% of each Limited Partner's
Adjusted Invested Capital per annum, cumulative, non compounded, commencing at
the time each Limited Partner is admitted to the Partnership. The 6% cumulative
return may be reduced, but not below zero, by the aggregate amount of prior
distributions from Cash Available for Distribution (as such term is defined in
the Partnership Agreement).
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 Apache East and Denali Park Estates Properties is
owned by Windsor Park 345 and each of the Ownership Interests of the Partnership
in such properties is in the form of a limited partner interest in Windsor Park
345. Under the agreement of limited partnership of Windsor Park 345, virtually
all management, business and other decisions relating to the properties owned by
Windsor Park 345 are within the control and discretion of the Managing General
Partner and the limited partners in Windsor Park 345 have no control over the
management of, and decisions with respect to, the properties owned by Windsor
Park 345, including, without limitation, any disposition of any such properties.
Although the limited partners in Windsor Park 345 (including the
Partnership) can legally sell their limited partner interests, the transferee of
any such limited partner interest will be entitled to the full benefits relating
to the limited partner interest only if the Managing General Partner, as general
partner of Windsor Park 345, in its sole discretion, determines to admit such
transferee as a limited partner of Windsor Park 345. 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 345 and by law.
The Partnership holds a 26% limited partner interest in Windsor Park 345.
In addition to being the sole general partner of Windsor Park 345, 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 345. N'Tandem and Windsor 5
have a 65% and 9% limited partner interest, respectively, in Windsor Park 345.
Properties Owned Pursuant to Joint Venture Agreements. The Partnership owns
(i) a 69% undivided interest in the Garden Walk Property as a tenant in common
with N'Tandem, which owns the remaining 31% interest in this Property, (ii) a
60% undivided interest in the Long Lake Property as a tenant in common with
N'Tandem, which owns the remaining 40% interest in this Property and (iii) a 56%
undivided interest in the Carefree Village Property as a tenant in common with
N'Tandem, which owns the remaining 44% interest in this Property. Pursuant to
the Purchase and Sale Agreement, the Partnership will assign all of its rights,
title and interest in these Properties 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
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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 3.4% or 6.7% 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
Kings & Queens. Kings & Queens is a 111-site manufactured home community
located at 2908 North Florida Avenue in Lakeland, Florida. Amenities include a
clubhouse, two swimming pools, a jacuzzi, a playground and four shuffleboard
courts. The Appraisal for this Property was prepared as of May 1, 2000. The
"as-is" Appraised Value of this Property is $1,900,000. The Partnership has a
100% ownership interest in this Property. There is an outstanding mortgage on
this Property securing $489,600 of indebtedness.
Lucerne Lakeside. Lucerne Lakeside is a 140-site manufactured home
community located at 3000 State Road 544 in Winter Haven, Florida. Amenities
include an office, a clubhouse, a laundry room, a swimming pool and shuffleboard
courts. The Appraisal for this Property was prepared as of May 1, 2000. The
"as-is" Appraised Value of this Property is $2,600,000. The Partnership has a
100% ownership interest in this Property. There is an outstanding mortgage on
this Property securing $1,100,000 of indebtedness.
North Glen. North Glen is a 289-site manufactured home community located
at 18200 U.S. 31 North in Westfield, Indiana. Amenities include an office, a
clubhouse and a playground/recreation area. The Appraisal for this Property was
prepared as of May 12, 2000. The "as-is" Appraised Value of this Property is
$6,100,000. The Partnership has a 100% ownership interest in this Property.
There is an outstanding mortgage on this Property securing $2,470,100 of
indebtedness.
The Hills. The Hills is a 226-site manufactured home community located at
105 Skyline Drive in Richland, Washington. Amenities include an office, a
clubhouse, a swimming pool, a laundry room and shuffleboard courts. The
Appraisal for this Property was prepared as of May 10, 2000. The "as-is"
Appraised Value of this Property is $4,100,000. The Partnership has a 100%
ownership interest in this Property. There is an outstanding mortgage on this
Property securing $1,660,300 of indebtedness.
Village Glen. Village Glen is a 143-site manufactured home community
located at 1825 Marywood in Melbourne, Florida. Amenities include a clubhouse,
a swimming pool and shuffleboard courts. The Appraisal for this Property was
prepared as of May 1, 2000. The "as-is" Appraised Value of this Property is
$3,000,000. The Partnership has a 100% ownership interest in this Property.
There is an outstanding mortgage on this Property securing $1,500,000 of
indebtedness.
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 for this Property was prepared as of May 1, 2000.
The "as-is" Appraised Value of this Property is $11,700,000. The Partnership
has a 69% Ownership Interest in this Property. There is an outstanding mortgage
on this Property securing $5,700,000 of indebtedness.
Long Lake. Long Lake is a 134-site and 16-apartment manufactured home
community located at 4750 Carefree Trail in West Palm Beach, Florida. Amenities
include a clubhouse, a swimming pool and a playground. The Appraisal for this
Property was prepared as of May 1, 2000. The "as-is" Appraised
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Value of this Property is $3,500,000. The Partnership has a 60% Ownership
Interest in this Property. There is an outstanding mortgage on this Property
securing $1,600,000 of indebtedness.
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, a swimming pool and a
playground/recreation area. The Appraisal for this Property was prepared as of
May 3, 2000. The "as-is" Appraised Value of this Property is $6,100,000. The
Partnership has a 56% Ownership Interest in this Property. There is an
outstanding mortgage on this Property securing $3,479,800 of indebtedness.
Apache East. Apache East is a 123-site adult manufactured home community
located at 3800 South Tomahawk Road in Apache Junction, Arizona. Amenities
include two clubhouses, a laundry room, two swimming pools with spas and eight
shuffleboard courts. This Property is adjacent to Denali Park Estates.
Accordingly, the two Properties were appraised together and the aggregate
Appraised Value was included in a single Appraisal. The Appraisal for these
Properties was prepared as of May 1, 2000. The combined "as-is" Appraised Value
of the Apache East and Denali Park Estates Properties is $5,900,000. The
Partnership has a 26% Ownership Interest in this Property. There is a single
mortgage covering both Properties securing $2,953,800 of indebtedness. For
purposes of calculating the value of the Partnership's Ownership Interests in
these two Properties, the Managing General Partner has assumed that 36.5% of
such indebtedness, or $1,078,100, is allocable to the Apache East Property and
that 63.5% of such indebtedness, or $1,875,700, is allocable to the Denali Park
Estates Property.
Denali Park Estates. Denali Park Estates is a 162-site adult manufactured
home community located at 3405 South Tomahawk Road in Apache Junction, Arizona.
Amenities include two clubhouses, a laundry room, two swimming pools with spas
and eight shuffleboard courts. In addition, excess land at Denali Park Estates
is currently being used as a desert golf course. This Property is adjacent to
Apache East. Accordingly, the two Properties were appraised together and the
aggregate Appraised Value was included in a single Appraisal. The Appraisal for
these Properties was prepared as of May 1, 2000. The combined "as-is" Appraised
Value of the Denali Park Estates and Apache East Properties is $5,900,000. The
Partnership has a 26% Ownership Interest in this Property. There is a single
mortgage covering both Properties securing $2,953,800 of indebtedness. For
purposes of calculating the value of the Partnership's Ownership Interests in
these two Properties, the Managing General Partner has assumed that 63.5% of
such indebtedness, or $1,875,700, is allocable to the Denali Park Estates
Property and, that 36.5% of such indebtedness, or $1,078,100, is allocable to
the Apache East Property.
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.
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Overview
The Sales should result in the recognition of gain by the Partnership and,
therefore, should result in recognition of gain by Limited Partners. The amount
of gain recognized by the Partnership with respect to each of the Properties
will equal the difference between (i) the amount realized by the Partnership
(i.e., the amount of cash received plus the amount of liabilities of the
Partnership assumed or taken subject to by N'Tandem) and (ii) the Partnership's
adjusted tax basis in each of the Properties. The aggregate gain expected to be
recognized by the Partnership on the Sales is approximately $10,155,500. 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 $10,054,000 of taxable gain on the Sales to Limited
Partners (or an average of $66.78 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
$14.62 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 $10,155,500.
Allocation of Gain. The $10,155,500 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 $10,054,000 of taxable gain on the
Sales to Limited Partners (or an average of $66.78 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
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amount received in exchange for a partnership interest attributable to a
partnership's "unrealized receivables" (including certain depreciation
recapture) or "inventory items" will be considered to be gain or loss from the
sale or exchange of property other than a capital asset.
For purposes of the passive activity loss limitations of Section 469 of the
Code, gains recognized from the Sales generally will be treated as passive
activity income.
Liquidation of the Partnership
Tax Consequences of Liquidation. Upon liquidation of the Partnership, a
Limited Partner will recognize gain or loss equal to the difference between the
cash received by such Limited Partner (including the Limited Partner's share of
partnership liabilities under Section 752 of the Code) and the adjusted tax
basis of the Limited Partner's Units, adjusted by such Limited Partner's
allocable share of income, gain or loss arising from normal Partnership
operations for the year of liquidation and the sale of the Properties in the
year of liquidation. See "-- Taxation on Sales -- Allocation of Gain" above.
It is expected that a Limited Partner will recognize an average of approximately
$14.62 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 $52.16
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 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
is 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. A corporation may be allowed to carry back unused capital losses to
the three preceding tax years and to carry over losses to the five following tax
years. Individuals and other noncorporate taxpayers may carry over net capital
loss for an unlimited time until the loss is exhausted.
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CONSENT PROCEDURES; TRANSACTIONS AUTHORIZED BY CONSENTS
The consents being solicited hereby (the "Consents") will authorize the
General Partners: (i) to complete the Sales at any time on or prior to December
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; provided,
however, that following approval of the Proposals by a majority-in-interest of
the Limited Partners, no change or modification will be made to the Purchase and
Sale Agreement. As provided in Section 2.01(d) of the Partnership Agreement,
the Partnership is not permitted to sell or lease property to a sponsor of the
Partnership, which includes the General Partners or any of their affiliates.
The Partnership Agreement, however, permits this provision to be amended so as
to allow sales of Partnership property to an affiliate of the General Partners
with the consent of a majority-in-interest of the Limited Partners. The
authorization granted to the General Partners by consenting to the Sales and the
Plan of Liquidation will include, without limitation, the adoption of any
amendments to the Partnership Agreement that may be required to effectuate the
Sales and the Plan of Liquidation or to amend any provision of the Partnership
Agreement which may be construed as restricting the sale of the Properties to
affiliates.
Consents are being solicited from the Limited Partners as required by the
Partnership Agreement which provides that transactions such as the Sales and the
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) November 15, 2000 or such later date as may be
determined by the General Partners and (ii) the date upon which the
General Partners determine that unaffiliated Limited Partners
holding 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 a 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 a 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;
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(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 postage-paid envelope prior to the
expiration of the Solicitation Period; and
(vi) A Limited Partner submitting a signed but unmarked Consent will be
deemed to have consented to the Proposals.
Each Limited Partner is requested to complete, date and sign the
accompanying form of Consent and return such Consent to Arlen Capital, LLC, 1650
Hotel Circle North, Suite 200, San Diego, California 92108, which has been
appointed to serve as the solicitation agent for the proposed transactions (the
"Solicitation Agent"). If the Solicitation Period is extended, the General
Partners will give written notice of such extension to all Limited Partners.
For more information concerning this Consent Solicitation, Limited Partners may
call the Solicitation Agent at (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 Managing General Partner and its
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.
Pursuant to 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 $5,100 plus expenses and an additional
per Unit fee for re-mails and incoming and outgoing phone calls. The General
Partners expect that the total amount payable under the Solicitation Agreement
will not exceed $25,000.
Record Date; Required Vote
The close of business on September 18, 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 151,918 Units outstanding held of record by a
total of 1,696 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 were entitled to exercise voting rights with respect to an aggregate of 200
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
75,960 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
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Partners who have not returned their Consents or who have abstained from or
denied consent. None of the Partnership Agreement, California law or the
proposed terms and conditions of the Sales or the Plan of Liquidation provide
objecting Limited Partners with the right to exercise any dissenters', appraisal
or similar rights. Under California law, the general partner of a California
limited partnership owes fiduciary duties to its limited partners. To the extent
that a general partner has engaged in a transaction in breach of its fiduciary
duties to limited partners, a damages remedy may be available to such limited
partners.
Consequences If Consents Are Not Obtained
If sufficient Consents to proceed with the Sales and the Plan of
Liquidation are not obtained, the General Partners intend to proceed to explore
such alternatives as may be available to the Partnership.
REGULATORY AND OTHER APPROVALS
There are no federal or state regulatory requirements which remain to be
complied with in order to consummate the Sales and Plan of Liquidation.
FINANCIAL STATEMENTS
The financial information contained in the Partnership's Annual Report on
Form 10-KSB for the year ended December 31, 1999 and the Partnership's Quarterly
Report on Form 10-QSB for the quarter ended June 30, 2000 identified in
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" below is incorporated herein
by reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange Commission
(the "Commission") by the Partnership (File No. 0-21722) pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), are
incorporated herein by reference:
(i) the Partnership's Annual Report on Form 10-KSB for the year
ended December 31, 1999;
(ii) the Partnership's Quarterly Report on Form 10-QSB for the
quarter ended March 31, 2000; and
(iii) the Partnership's Quarterly Report on Form 10-QSB for the
quarter ended June 30, 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.
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
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made to: Windsor Park Properties 7 -- Investor Relations, 6160 South Syracuse
Way, Greenwood Village, Colorado 80111.
AVAILABLE INFORMATION
The Partnership is subject to informational reporting requirements of the
Exchange Act and in accordance therewith files, reports, proxy statements and
other information with 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 the 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.
60
<PAGE>
APPENDIX A
Fairness Opinion
LEGG MASON
Investment Banking
Legg Mason Wood Walker, Incorporated
100 Light Street, 31/st/ Floor
Baltimore, MD 21202
410-539-0000 Fax: 410-454-4508
Member New York Stock Exchange, Inc./Member SIPC
August 29, 2000
The General Partners of
Windsor Park Properties 7, 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 7, A California Limited Partnership (the
"Partnership"), that the Partnership intends to sell its five wholly-owned
properties 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 $32,265,000 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-KSB for the year ended December 31, 1999 and Form 10-QSB
for the quarter ended June 30, 2000;
(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;
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<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.
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
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<PAGE>
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
Report of Independent Special Counsel
August 23, 2000
(212) 545-4672
[email protected]
Mr. Steven G. Waite
President
The Windsor Corporation
6160 Syracuse Way
Greenwood Village, CO 80111
Re: Windsor Park Properties 7 Sale of Assets
----------------------------------------
Dear Mr. Waite:
As agreed by our Engagement Letter dated June 15, 2000, this firm (the
"Firm") has acted as special counsel to the limited partners of Windsor Park
Properties 7, A California Partnership (the "Partnership") for the purpose of
representing the collective interests of such limited partners in the proposed
transaction (the "Transaction") for the sale of all of the Partnership assets to
N'Tandem Trust, a California business trust and an affiliate of the managing
general partner of the Partnership. This letter constitutes the written report
describing the results of the Firm's review and negotiations with respect to the
Transaction.
The firm has reviewed (i) the underlying organizational documents relating
to the Partnership, (ii) the recent financial statements of the Partnership,
(iii) the draft disclosure documents of the Partnership describing the
Transaction, (iv) the reports and opinions of the appraiser relating to the
Partnership's properties, and (v) the draft fairness opinion of the fairness
opinion provider with respect to the Transaction. We have also reviewed a form
of the asset purchase agreement that is expected to be utilized in connection
with the Transaction, received certain additional information requested from the
managing general partner, independently evaluated the methodology utilized by
the appraiser with respect to the appraisals of the Partnership's properties,
and performed research of applicable law. In addition, prior to our engagement,
we had become familiar with facts relevant to the background of the Transaction
in the course of our representation of the limited partners of certain other
limited partnerships related to the Partnership and managed by the same managing
general partner.
Following our review and analysis of the foregoing information, we engaged
in negotiations with the managing general partner on behalf of the Partnership's
limited partners. The purpose of these negotiations was to represent from a
legal point of view the interests of the limited partners and thereby ensure
that there was independent legal representation of the limited partners'
interests in connection with the Transaction. As a result of these
negotiations, the managing general partner has agreed to make
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<PAGE>
certain changes to the Transaction for the benefit of the limited partners.
Specifically, the managing general partner agreed to do the following:
1. The discounts to the appraised evaluation of the partially-owned
properties has been reduced from 10% to 6.7% for the properties in which
the Partnership owns a minority interest and from 5% to 3.4% for the
properties in which the Partnership owns a majority interest, resulting in
an increase in the proposed purchase price in the amount of $274,900;
2. The managing general partner has agreed to reduce its brokerage
commission from 3% to 2.5%, resulting in an increase in the net aggregate
proceeds to be paid to the limited partners of $153,100; and
3. The managing general partner has agreed to add to the disclosure
document describing the Transaction additional information relative to the
limited partners' rights under the Partnership's partnership agreement with
respect to a transaction between the Partnership and an affiliate of the
managing general partner.
In our opinion, the foregoing, as well as the work of the fairness opinion
provider with respect to this Transaction, has added significant procedural
safeguards of the interests of the limited partners in light of the lack of
arms'-length negotiations between the Partnership and the managing general
partner in the Transaction. Moreover, this procedure has resulted in the
substantive benefits set forth above.
Finally, it should be noted that the managing general partner has paid for
our legal services, which have therefore been performed for the limited partners
without cost to them or to the Partnership. As was agreed prior to our
retainer, payment of our fees was not contingent upon the results of this Firm's
review and negotiations.
Very truly yours,
Wolf Haldenstein Adler Freeman & Herz LLP
/s/ Lawrence P. Kolker
----------------------
By: Lawrence P. Kolker
B-2
<PAGE>
APPENDIX C
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.
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Each of Messrs. McDaniel, Ray and Pinder is a United States citizen.
C. Chateau Communities, Inc.
Chateau Communities, Inc. owns all of the capital stock of The Windsor
Corporation, the Managing General Partner of the Partnership and the advisor to
N'Tandem Trust. Chateau also owns a 9.8% equity ownership interest in N'Tandem.
The Directors and executive officers of Chateau are as follows:
Gary P. McDaniel, 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, 47, 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
is an active member of the Manufactured Housing Institute's National Communities
Council. 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.
Edward R. Allen, 59, has served as a director of Chateau since 1993. Mr.
Allen is the Chief Executive Officer and a director of Give Kids the World. Mr.
Allen was, for the five years preceding the
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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 Hankins Enterprises, 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.
From May 1994 through July 1996, Mr. Miller was Vice Chairman of the Board of
Directors of The Gates Corporation. From 1982 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 director of Sentry
Insurance Company, OEA, Inc., CoorsTek and Lennox Industries International. 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, 66, 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 Corp. 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, served as a director of ROC from August 1993 to
February 1997, and 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 currently serves as a director of Bidland.com, an internet auction
company. Mr. Davis served as a director of ASR Investments, a REIT owning
apartments in the Southwest, until 1999. 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 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.
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<PAGE>
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.
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APPENDIX D
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.
D-1
<PAGE>
Windsor Park Properties 7 Projections
<TABLE>
<CAPTION>
----------------------------------------------------------------------
1999 2000 2001 2002 2003 2004
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Rent and utilities 2,759,800 2,842,594 2,927,872 3,015,708 3,1006,179 3,199,365
Equity in earnings JV 182,800 188,834 241,243 300,045 358,531 482,334
Interest 4,000 4,080 4,202 4,328 4,458 4,592
Other 28,900 29,478 30,362 31,273 32,211 33,178
----------------------------------------------------------------------
Total Revenues 2,975,500 3,064,986 3,203,680 3,351,354 3,501,380 3,719,468
----------------------------------------------------------------------
Operating costs and expenses:
Property operating 1,170,800 1,205,924 1,242,102 1,279,365 1,317,746 1,357,278
Interest 647,600 633,692 620,082 620,082 620,082 620,082
Depreciation & amortization 617,900 625,887 633,977 642,172 650,473 658,881
G&A:
Related parties 26,200 27,510 37,118 38,974 40,922 42,968
Other 91,900 96,495 82,636 86,768 91,107 95,662
----------------------------------------------------------------------
Total operating costs 2,554,400 2,589,508 2,615,915 2,667,360 2,720,329 2,774,871
----------------------------------------------------------------------
----------------------------------------------------------------------
Net Income (loss) 421,100 475,479 587,765 683,994 781,051 944,597
======================================================================
Projected capital expenditures
($100 per site) $ 167,000
==============
</TABLE>
________________________________________________________________________________
Notes:
1. Projections assume 3% revenue growth and 3% expense growth
D-2
<PAGE>
Projections for joint venture property ---- Carefree Village
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002 2003
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Rent and utilities 1,194,113 1,201,096 1,241,442 1,278,686 1,317,046 1,356,557 1,397,254
Equity in earnings JV
Interest 2,342 1,773
Other 18,115 31,076 61,142
-----------------------------------------------------------------------------------
Total Revenues 1,214,571 1,233,945 1,302,584 1,278,686 1,317,046 1,356,557 1,379,254
-----------------------------------------------------------------------------------
Operating costs and expenses:
Property operating 626,035 699,007 740,126 762,329 785,199 808,755 833,018
Interest 322,993 318,356 307,514 297,041 286,926 277,154 267,716
Depreciation & amortization 281,318 292,687 287,998 283,384 278,844 274,377 269,981
G&A:
Related parties
Other 7 1,750
-----------------------------------------------------------------------------------
Total operating costs 1,230,346 1,310,056 1,337,387 1,342,755 1,350,969 1,360,286 1,370,715
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Net Income (loss) (15,776) (76,111) (34,803) (64,069) (33,923) (3,729) 26,539
===================================================================================
<CAPTION>
----------
2004
----------
<S> <C>
Revenues:
Rent and utilities 1,439,172
Equity in earnings JV
Interest
Other
----------
Total Revenues 1,439,172
----------
Operating costs and expenses:
Property operating 858,008
Interest 258,599
Depreciation & amortization 265,656
G&A:
Related parties
Other
----------
Total operating costs 1,382,263
----------
----------
Net Income (loss) 56,909
==========
</TABLE>
D-3
<PAGE>
<TABLE>
<CAPTION>
Projections for joint venture property -- Long Lake Village
-------------------------------------------------------------------------------
Revenues: 1997 1998 1999 2000 2001 2002 2003 2004
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rent and utilities 541,636 539,695 587,944 605,582 623,750 642,462 661,736 747,778
Equity in earnings JV
Interest 1,358 1,016 1,000
Other 15,955 10,925 16,722
-------------------------------------------------------------------------------
Total Revenues 558,949 551,636 605,666 605,582 623,750 642,462 661,736 747,778
-------------------------------------------------------------------------------
Operating costs and expenses:
Property operating 369,609 327,187 410,705 423,026 435,717 448,788 462,252 433,090
Interest 148,339 146,113 141,221 136,494 131,925 127,508 123,240 119,114
Depreciation & amortization 85,659 90,364 90,695 91,027 91,360 91,695 92,031 92,368
G&A:
Related parties 9,450
Other 7 4,366
Total operating costs 603,607 573,121 646,987 650,547 659,002 667,992 677,522 644,573
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Net Income (loss) (44,658) (21,485) (41,322) (44,965) (35,252) (25,529) (15,788) 103,206
=============================================================================
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Projections for joint venture property-- Garden Walk
--------------------------------------------------------------------------------------
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 1,935,759 1,993,832 2,053,647 2,115,256 2,178,714 2,244,075
Equity in earnings JV
Interest 5,367 4,122
Other 32,781 15,365 13,343
--------------------------------------------------------------------------------------
Total Revenues 1,859,705 1,899,968 1,949,102 1,993,832 2,053,647 2,115,256 2,178,714 2,244,075
--------------------------------------------------------------------------------------
Operating costs and expenses:
Property operating 821,188 829,045 883,152 909,647 936,936 965,044 993,996 1,023,815
Interest 524,519 516,614 499,383 482,727 466,627 451,064 436,019 421,477
Depreciation & amortization 192,132 204,181 209,485 214,927 220,510 226,238 232,115 238,145
G&A:
Related parties 30,492
Other 7 1,750
----------------------------------------------------------------------------------------
Total operating costs 1,537,839 1,580,338 1,593,770 1,607,301 1,624,073 1,642,346 1,662,130 1,683,437
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Net Income (loss) 321,866 319,630 355,331 386,531 429,574 472,910 516,584 560,638
========================================================================================
</TABLE>
D-5
<PAGE>
<TABLE>
<CAPTION>
Projections for joint venture property Windsor Park Properties 345
Apache East, Denali Park Estates
--------------------------------------------------------------------------------
Revenues: 1997 1998 1999 2000 2001 2002 2003 2004
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rent and utilities 520,676 640,865 693,151 713,946 735,364 757,425 780,148 803,552
Equity in earnings JV
Interest 349
Other 9,129 17,589 5,756 - - - - -
---------------------------------------------------------------------------------
Total Revenues 530,155 658,454 698,907 713,946 735,364 757,425 780,148 803,552
---------------------------------------------------------------------------------
Operating costs and expenses:
Property operating 277,012 344,998 315,147 324,602 334,340 344,370 354,701 365,342
Interest 204,912 289,853 262,374 237,500 214,984 194,603 176,154 159,454
Depreciation & amortization 156,697 190,044 199,579 209,592 220,108 231,152 242,749 254,928
G&A:
Related parties
Other 7,354 8,407 8,454
-------------------------------------------------------------------------------
Total operating costs 646,073 833,302 785,554 771,694 769,432 770,125 773,604 779,724
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net Income (loss) (115,918) (174,848) (86,647) (57,749) (34,068) (12,700) 6,544 23,828
================================================================================
</TABLE>
D-6
<PAGE>
[WINDSOR CORPORATION LOGO]
SPECIALIZING IN
MANUFACTURED HOME
COMMUNITIES
"Promptly upon receiving the consents of the limited partners holding a
majority-in-interest of the units, the Partnership will proceed with the
proposed Sales and Plan of Liquidation resulting in cash distributions to
limited partners of approximately $100.82 per unit."
VERY IMPORTANT NOTICE
PLEASE READ AND RESPOND IMMEDIATELY
September 27, 2000
Dear Limited Partner:
In order to provide limited partners with an opportunity to achieve
liquidity in their investment in Windsor Park Properties 7, A California Limited
Partnership (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 $100.82 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 November 15, 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>
[WINDSOR CORPORATION LOGO]
SPECIALIZING IN
MANUFACTURED HOME
COMMUNITIES
--------------------------------
6160 SOUTH SYRACUSE WAY
GREENWOOD VILLAGE, CO 80111
(303) 741-3707
Steven G. Waite
President
September 27, 2000
Re: Liquidation of Windsor Park Properties 7 ("WPP 7")
--------------------------------------------------
Dear Broker:
Enclosed you will find the Consent Solicitation Statement and related proxy
materials that are being sent to the unit holders of WPP 7. The Consent
Solicitation Statement outlines a proposed transaction whereby all of the assets
held by WPP 7 will be acquired by N'Tandem Trust and, subsequently, WPP 7 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 WPP 7 in accordance with its
partnership agreement and, as described in the Consent Solicitation Statement,
make a final liquidating distribution to unit holders of approximately $100.82
per unit. This liquidating distribution is substantially in excess of the
weighted average trading price of $79.47 per unit in the secondary markets, as
reported by The Partnership Spectrum, for the period of May 1, 1999 through June
30, 2000.
As you may recall, the WPP 7 investors paid $100 per partnership unit in our
public offering which ran from 1990 to 1992. Since the organization of WPP 7,
total distributions have been made to unit holders of approximately $68.36 per
unit. Upon receiving the final liquidating distribution of $100.82 per unit,
unit holders will have received approximately $169.18 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>
WINDSOR PARK PROPERTIES 7
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 five wholly-owned properties and its partial Ownership
Interests in five other properties to N'Tandem Trust and to make
distributions of approximately $100.82 per Unit to the Limited
Partners.
3. Q. What happens if these Proposals are not approved?
A. If Limited Partners fail to consent to both of the Proposals, the
----
General Partners intend 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 ten
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 five wholly-owned
Properties and is only applying (i) a 3.4% discount to the Appraised
Value of the Ownership Interests in the Garden Walk, Long Lake and
Carefree Village Properties for
<PAGE>
the fact that the Partnership owns a majority interest in the
underlying properties and (ii) a 6.7% discount to the Appraised Value
of the other two Ownership Interests for the fact that the Partnership
owns a minority interest in the underlying properties. 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 will be approximately $100.82 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 3.4% or 6.7% 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 page 49 of the Consent Solicitation Statement.
7. 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, make liquidating or final distributions of
cash to its partners.
8. 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 December 2000.
9. Q. What risks are involved?
A. The Proposals are subject to material risks, conflicts of interest and
other considerations which are set forth in the Summary Term Sheet and
on pages 5, 17 and 18 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;
2
<PAGE>
. Due to the potential conflicts of interests of the General
Partners, the purchase prices for the Properties and other terms
of the Sales may not be considered the result of arm's-length
negotiations and bargaining between independent parties despite
the efforts of the Independent Special Counsel 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 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 May 2000 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.
10. 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 liquidation of the
Partnership and make liquidating distributions to the Limited Partners
estimated to be approximately $100.82 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.
11. 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 26 through 29 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.
3
<PAGE>
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:
. 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;
. The Managing General Partner engaged the Independent Special
Counsel to represent the interests of the unaffiliated Limited
Partners in connection with the Sales and the Plan of
Liquidation;
. The Managing General Partner retained 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 May 2000, 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.
12. Q. What did the Independent Special Counsel conclude?
A. The Independent Special Counsel delivered a written report addressed
to the Managing General Partner for the benefit of the Limited
Partners describing the results of its review of, and negotiations
with, The Managing General Partner and N'Tandem. As a result of these
negotiations, The Managing General Partner and N'Tandem agreed to
modify the Sales and the Plan of Liquidation to the benefit of the
Limited Partners. The parties agreed that (i) the discounts being
applied to the Appraised Values of the Ownership Interests would be
reduced from 10%, the percentage discount originally agreed to by the
parties, to 6.7% for the Ownership Interests in which the Partnership
owns a minority interest in the underlying property and from 5%, the
percentage discount originally agreed to by the parties, to 3.4% for
the Ownership Interests in which the Partnership owns a majority
interest in the underlying property and (ii) the sales commission
being paid to the Managing General Partner would be reduced from 3%,
the percentage commission that the Managing General Partner is
entitled to receive under the Partnership Agreement, to 2.5%. The
reduction in discounts and sales commission will increase the
aggregate net proceeds to be paid to the Limited Partners by $428,000.
In addition, N'Tandem and its affiliates also agreed to disclose in
the Consent Solicitation Statement additional information relating to
the rights of the Limited Partners under the Partnership Agreement.
4
<PAGE>
The report of the Independent Special Counsel is set forth in Appendix
B to the Consent Solicitation Statement.
13. 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 the 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 August 29, 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 the 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.
14. Q. When was the last Appraisal? Why were new Appraisals not done?
A. The Appraisals were rendered in May 2000. 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.
15. 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.
16. Q. Why is N'Tandem paying over $17.4 million Partnership's assets is
approximately $7.1 when 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.
17. 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.
5
<PAGE>
18. 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.
19. Q. Were any other third-party offers considered?
A. No, the General Partners did not engage, and are not currently
engaging, in any marketing efforts with respect to the sale of the
Properties to third parties.
20. 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 $100.82 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 five
wholly-owned Properties and is only applying (i) a 3.4% discount
to the Appraised Value of the Ownership Interests in the Garden
Walk, Long Lake and Carefree Village Properties for the fact that
the Partnership owns a majority interest in the underlying
properties and (ii) a 6.7% discount to the Appraised Value of the
other two Ownership Interests for the fact that the Partnership
owns a minority interest in the underlying properties;
. 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 up to
$1,129,300 (based upon brokerage fees of 3% to 6% typically paid
by sellers of real properties less the sales commission of
$806,600 payable to the Managing General Partner in connection
with the Sales under the Partnership Agreement).
21. 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 9
above;
6
<PAGE>
. With respect to the Ownership Interests held by the Partnership,
the remaining interests in the properties underlying such
Ownership Interests are held by N'Tandem, which together with the
Managing General Partner is under common control of Chateau, or
Windsor Park 345, an affiliated limited partnership which has the
Managing General Partner as its sole general partner and N'Tandem
and Windsor 5, an affiliated limited partnership, as its other
limited partners;
. The General Partners will receive, pursuant to the Partnership
Agreement, an aggregate sales commission of $806,600 from the
Partnership in compensation for their services rendered in
connection with the Sales; and
. It is possible that Limited Partners might earn a higher return
on their investment if the Partnership 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.
22. Q. Why are the General Partners proposing the Sales and the Plan of
Liquidation? How do they benefit the General Partners?
A. When the Partnership was formed, it was expected that the investment
period would expire no later than January 1999, and that the
Partnership's investments would then be sold and the Partnership
liquidated in accordance with the terms of the Partnership Agreement.
As of the date of the Consent Solicitation Statement, the Partnership
has held its current investments for several years beyond both the
anticipated investment period for the Properties and the time in which
the Limited Partners had a reasonable expectation to receive
distributions from the liquidation of their investments. 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, to provide the Limited Partners with liquidity in their
investments.
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 and an aggregate
sales commission of $806,600 from the Partnership.
Additionally, they will receive certain other benefits and fees, all
of which are described on pages 17 and 18 of the Consent Solicitation
Statement.
23. 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 $1,516,300. 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 25 of the
Consent Solicitation Statement.
24. 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.
7
<PAGE>
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.
25. 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 7 -- 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.
26. 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
$52.16 per Unit.
27. 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 ($100.82 per Unit) are substantially higher than the weighted
average trading price of $79.47 per Unit in the secondary markets, as
reported by The Partnership Spectrum, for the period of May 1, 1999
through June 30, 2000.
28. 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 $10,237,600 (or an
average of approximately $68.36 per Unit). If the Sales and Plan of
Liquidation are completed, total distributions to Limited Partners
will amount to approximately $25,553,900 (or an average of
approximately $169.18 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.
29. 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 $100.82 per Unit) will be paid to Limited Partners,
the Partnership will be liquidated and dissolved, and the Units will
cease to exist.
30. 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.
8
<PAGE>
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 26
through 29 of the Consent Solicitation Statement under the caption
"SPECIAL FACTORS -- Fairness of the Proposed Transactions;
Recommendation of the General Partners."
31. 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.
32. 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.
33. 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 November 15,
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.
9
<PAGE>
THIS CONSENT IS SOLICITED BY THE GENERAL PARTNERS
OF
WINDSOR PARK PROPERTIES 7
The undersigned represents that he or she is the holder of Units in Windsor
Park Properties 7, A California Limited Partnership. The undersigned
acknowledges receipt from the General Partners of the Consent Solicitation
Statement, dated September 27, 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 NOVEMBER 15, 2000.
______________________________________
Signature
______________________________________
Signature (if held jointly)
______________________________________
Dated:
