SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 1)
Berkshire Realty Company, Inc.
_____________________________________________________________________________
(Name of Issuer)
Common Stock, par value $.01 per share
_____________________________________________________________________________
(Title of Class of Securities)
084710 10 2
_____________________________________________________________________________
(CUSIP Number)
Thomas J. Saylak
Blackstone Real Estate Acquisitions III L.L.C.
345 Park Avenue
New York, New York 10154
(212) 583-5000
_____________________________________________________________________________
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
March 5, 1999
_____________________________________________________________________________
(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box / /.
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 11 Pages
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SCHEDULE 13D
CUSIP No. 084710 10 2 Page 2 of 11 Pages
_____________ ______ _______
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Blackstone Real Estate Acquisitions III L.L.C.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO (see Item 3)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER REPORTING
WITH 0
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
14 TYPE OF REPORTING PERSON*
OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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SCHEDULE 13D
CUSIP No. 084710 10 2 Page 3 of 11 Pages
_____________ ______ _______
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Blackstone Real Estate Advisors III L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO (see Item 3)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER REPORTING
WITH 0
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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SCHEDULE 13D
CUSIP No. 084710 10 2 Page 4 of 11 Pages
_____________ ______ _______
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
BRE Advisors III L.L.C.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO (see Item 3)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER REPORTING
WITH 0
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
14 TYPE OF REPORTING PERSON*
00
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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SCHEDULE 13D
CUSIP No. 084710 10 2 Page 5 of 11 Pages
_____________ ______ _______
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Peter G. Peterson
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO (see Item 3)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER REPORTING
WITH 0
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
<PAGE>
SCHEDULE 13D
CUSIP No. 084710 10 2 Page 6 of 11 Pages
_____________ ______ _______
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Stephen A. Schwarzman
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO (see Item 3)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER REPORTING
WITH 0
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
<PAGE>
AMENDMENT NO. 1 TO
STATEMENT PURSUANT TO RULE 13d-1
OF THE
GENERAL RULES AND REGULATIONS
UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
This Amendment No. 1 to Schedule 13D is being filed jointly by
Blackstone Real Estate Acquisitions III L.L.C., a Delaware limited liability
company ("BREA III L.L.C."), Blackstone Real Estate Advisors III L.P., a
Delaware limited partnership, BRE Advisors III L.L.C., a Delaware limited
liability company, Mr. Peter G. Peterson and Mr. Stephen A. Schwarzman (the
foregoing, collectively, the "Reporting Persons"). This Amendment No. 1
amends the Schedule 13D filed on March 4, 1999 (the "Schedule 13D") which
relates to shares of common stock, par value $.01 per share, of Berkshire
Realty Company, Inc., a Delaware corporation. Capitalized terms used
herein but not defined shall have the meanings attributed to them in the
Schedule 13D.
Items 2, 3, 4, 6 and 7 of the Schedule 13D are hereby amended and
supplemented as follows:
Item 3 of the Schedule 13D is hereby amended by adding the
following paragraph:
On March 5, 1999, the Reporting Persons, Whitehall and Douglas
Krupp (on behalf of himself and the Krupp Affiliates) amended the
Formation Letter by amending and restating the "Summary of Terms"
attached thereto. Such amended and restated Summary of Terms (the
"Amended and Restated Summary of Terms") is attached hereto as Exhibit 6,
and the information set forth herein is qualified in its entirety by
reference to the Amended and Restated Summary of Terms, which is
expressly incorporated herein by reference.
Item 4 of the Schedule 13D is hereby amended by adding the
following paragraph:
On March 5, 1999, Aptco delivered a letter to the Company's financial
advisor which amended the proposal contained in the Offer Letter (the
"Offer Letter Amendment") by (i) increasing the Cash Price from $11.05
to $12.05 per share of Common Stock/OP Unit, (ii) increasing from 6% per
annum to 7-1/2% per annum the rate at which the cumulative preferred
distributions of available cash payable to holders of OP Units who
elect to receive senior preferred equity interests in Aptco ("Class A
Interests") in exchange for their OP Units would accrue, (iii) providing
Page 7 of 11 Pages
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that holders of OP Units electing to receive Class A Interests in Aptco
will have the right to cause Aptco to purchase such Class A Interests at
any time after the fifth anniversary of the closing of the Proposed
Transactions at a price equal to the liquidation preference thereof
(i.e., the Cash Price) and (iv) extending the expiration time of the
proposal set forth in the Offer Letter (as so amended) to 5:00 p.m.
on March 8, 1999. Such Offer Letter Amendment is attached hereto
as Exhibit 7, and the information set forth herein is qualified in its
entirety by reference to the Offer Letter Amendment, which is expressly
incorporated herein by reference.
Item 7 of the Schedule 13D is amended by adding the following:
6. Amended and Restated Summary of Terms, dated March 5, 1999, among
BREA III L.L.C., Whitehall and Douglas Krupp.
7. Offer Letter Amendment, dated March 5, 1999.
Page 8 of 11 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
BLACKSTONE REAL ESTATE ACQUISITIONS
III L.L.C.
By: /s/ Gary Sumers
---------------------------------
Name: Gary Sumers
Title: Vice President
BLACKSTONE REAL ESTATE ADVISORS III
L.P.
By: BRE ADVISORS III L.L.C.
By: /s/ Gary Sumers
---------------------------------
Name: Gary Sumers
Title: Vice President
BRE ADVISORS III L.L.C.
By: /s/ Gary Sumers
---------------------------------
Name: Gary Sumers
Title: Vice President
Page 9 of 11 Pages
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<PAGE>
/s/ Gary Sumers
--------------------------------------
Peter G. Peterson
By: Gary Sumers, Attorney-in-Fact
/s/ Gary Sumers
--------------------------------------
Stephen A. Schwarzman
By: Gary Sumers, Attorney-in-Fact
Dated: March 8, 1999
Page 10 of 11 Pages
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Exhibit Index
6. Amended and Restated Summary of Terms, dated March 5, 1999, among
BREA III L.L.C., Whitehall and Douglas Krupp.
7. Offer Letter Amendment, dated March 5, 1999.
Page 11 of 11 Pages
Exhibit 6
March 5, 1999
Douglas S. Krupp
The Berkshire Group
One Beacon Street, Suite 1550
Boston, MA 02108
Dear Douglas:
Reference is made to the letter dated February 22, 1999 among the
three of us (the "Term Sheet Letter").
This is to confirm our agreement that the "Summary of Terms"
attached to the Term Sheet Letter is hereby amended and replaced in its
entirety with the attached "Summary of Terms." All other provisions of the
Term Sheet Letter shall remain in full force and effect.
[Signatures on next page]
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This letter may be executed in one or more counterparts, each of
which shall be considered an original, but all of which taken together shall
constitute one and the same letter.
Very truly yours,
WHITEHALL STREET REAL ESTATE
LIMITED PARTNERSHIP XI
By: WH Advisors, L.L.C. XI
By: /s/ Steven M. Feldman
------------------------------
BLACKSTONE REAL ESTATE
ACQUISITIONS III L.L.C.
By: /s/ Thomas J. Saylak
------------------------------
Agreed as of the date
set forth above:
/s/ Douglas S. Krupp
- ------------------------------------
Douglas S. Krupp, on behalf of
himself and his affiliates who
will be members of Aptco, LLC
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3/5/99
SUMMARY OF TERMS
The following sets forth an outline of discussions concerning a possible
joint venture involving Blackstone Real Estate Acquisitions III L.L.C. or one
of its affiliates ("Blackstone"), The Berkshire Companies Limited Partnership
("Berkshire Group") and Whitehall Street Real Estate Limited Partnership XI
("Whitehall" and, together with Blackstone and Berkshire Group, the
"Investors").
General
Berkshire Group, Blackstone and Whitehall would form a new entity
(Aptco) to acquire all the equity securities (including common stock,
preferred stock and operating partnership units) of Berkshire Realty Company,
Inc. and subsidiaries ("Berkshire"). It is initially envisioned that Aptco
would be organized as an LLC. Aptco would focus on the ownership,
acquisition, management, renovation and existing development of multifamily
properties, primarily value-added/repositioning opportunities.
Pricing
The price to be offered by Aptco would be unanimously determined by
Berkshire Group, Blackstone and Whitehall.
Structure
Upon execution of a definitive agreement between Aptco and Berkshire,
the Investors would commit to contribute cash, Berkshire common stock and/or
operating partnership units to Aptco to fund the acquisition of Berkshire.
Berkshire Group would contribute to Aptco as common equity all of its
stock and operating partnership units (which shall be not less than 5,416,000
shares and units) valued at the bid price, and Blackstone and Whitehall would
each provide 50% of the balance of the required equity (initially to be at
least $106 million, increasing at the time the bridge financing is refinanced
as provided below, but not in excess of $125.5 million each) as preferred
equity. Cash equity required in excess of $251 million shall be contributed
as provided below. It is expected that some or all of the third party owners
of limited partnership interests in BRI OP Limited Partnership (the "OP")
will exchange their interests in the OP for equity interests in Aptco on the
terms set forth in the draft merger agreements to be submitted by Aptco with
its bid to Berkshire.
In the event cash equity in excess of $251 million is required by Aptco,
such excess, not to exceed $30 million in the aggregate, would be funded one
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third each by Blackstone, Whitehall and Berkshire Group. Any such amounts
funded by the Investors pursuant to the immediately preceding sentence shall
be treated as preferred equity with respect to distribution rights (i.e.
shall be pari passu with the other preferred equity held by Blackstone and
Whitehall). As an alternative to providing additional equity above $212
million, with the consent of each of the Investors, Aptco may secure
subordinated debt upon terms acceptable to each of the Investors. Any
Investor not funding its share of any portion of the $30 million of
additional required capital calls (described in the first sentence of this
paragraph) will be diluted on a 2 for 1 basis (based on book equity).
Governance
Aptco would be governed by a three member Board of Directors (Board).
Whitehall, Blackstone and Berkshire Group would each have one seat on the
Board. Douglas Krupp (DK) would be Chairman of the Board (as Berkshire
Group's designee) and Chief Executive Officer (CEO). Berkshire Group would
lose its Board seat in the event that (i) it transfers any portion of its
initial ownership interest in Aptco in violation of Aptco's Operating
Agreement, (ii) Aptco acquires the interest of Berkshire Group, (iii) DK is
removed as CEO for cause (as defined in Annex A), company cause (as defined
in Annex A), or if he resigns prior to the fifth anniversary of closing or
(iv) upon DK's or Berkshire Group's default of a loan that is secured by a
pledge of its interest in Aptco, but only if such loan becomes due, whether
as a result of an acceleration or maturity of such loan. Except for those
decisions described in this Summary of Terms that require unanimous approval,
do not require any Board approval (i.e., can be decided by DK) or can be
decided unilaterally by either Blackstone or Whitehall, all decisions (such
as all annual budget and business plan approvals, acquisitions of any assets
within the parameters set forth on Exhibit 1, etc.) would be approved by a 2
out of 3 vote of the Board. If Aptco is organized as a limited partnership
instead of a limited liability company, Whitehall, Blackstone and Berkshire
Group would each have the right to have a subsidiary act as a co-general
partner of Aptco and the governance provisions would be modified accordingly
(e.g., decisions that are described below as requiring a unanimous vote of
the Board would instead require unanimous approval of the general partners).
A unanimous vote of the Board would be required for (i) amending the
Operating Agreement of Aptco, (ii) admitting any new members, (iii) capital
calls in excess of the $281 million required above (except that 2 out of 3
Board members may approve capital calls ("Mandatory Capital Calls") for debt
service shortfalls, health and safety items, taxes and similar necessary
expenditures as long as Berkshire Group's share of such capital calls does
not exceed, in the aggregate, $10 million, and any Investor not funding its
share of any required capital calls will be diluted on a 2 for 1 basis (based
on book equity)), (iv) change in the nature of Aptco's business (e.g., to
include mortgage lending), (v) except as set forth in the third paragraph
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below, any sale of Aptco or sale of all or substantially all of Aptco's
assets, in each case prior to 3 1/2 years after closing (i.e., a 2 out of 3
vote will be required to approve a sale of Aptco (and/or its subsidiaries or
substantially all of their assets) between the 3 1/2 year anniversary of
closing and the fifth anniversary of closing; provided, that if Berkshire
Group's designee on the Board does not approve such a sale and such sale
occurs between the 3 1/2 year anniversary and the 4 1/2 year anniversary of
closing, at the election of Berkshire Group, such sale may not occur unless
in connection therewith Berkshire Group receives, in exchange for its
interest in Aptco, an amount in cash equal to the greater of (A) the actual
proceeds of such sale payable to Berkshire Group in accordance with the
"Waterfall" (described in Annex A) or (B) an amount equal to the aggregate
amount of capital contributions made by Berkshire Group to Aptco prior to the
date of such sale less any prior distributions to Berkshire Group),
(vi) acquisition of any assets outside of the parameters set forth on Exhibit
1 (i.e., a 2 out of 3 vote will be required to approve acquisitions within
such parameters), (vii) changes to the bid from the terms submitted to the
Board of Berkshire on February 22, 1999, the execution of the merger
documentation, the acceptance of any closing deliveries and/or the grant of
consents or approvals or acceptance or waiver of conditions to Aptco's
obligation to close pursuant to the merger documentation and (viii) a
disposition of all or a portion of the property known as Berkshire Towers (or
of the subsidiary that owns such property) prior to the fifth anniversary of
closing, other than in a tax deferred transaction. Any equity funded by the
Investors pursuant to a Mandatory Capital Call shall be treated as preferred
equity with respect to distribution rights (i.e., shall be pari passu with
the other preferred equity of the Investors). None of the Investors shall
enter into any separate voting agreement with any other Investor in respect
of its interests. In addition, any related-party transaction involving an
Investor would require a majority vote of the non-interested Investor
designee-directors. In the event any Investor or its controlling persons
files a bankruptcy or similar proceeding with respect to Aptco without first
obtaining the prior written approval of two of the three Board members, the
ownership interest and capital account of such Investor shall be reduced to
zero.
Notwithstanding the general requirement that all financings require the
approval of at least two of the three Board members, DK, acting alone, will
have the authority to accept a financing from the Federal Home Loan Mortgage
Corporation ("Freddie Mac") or another institutional lender provided that (I)
the amount of such financing is 75% of the appraised value of the Properties
on Exhibit 2 hereto and in any event at least $650 million (the financing
amount to be reduced by 75% of the appraised value of any assets on Exhibit
3 sold at or prior to the closing), (II) such financing is not recourse in
any respect to any Investor without its approval, (III) the term of such
financing is equal to 7 years with a fixed interest rate at 8.0% per annum or
less, (IV) in order to benefit from lower interest rate spreads, the entire
-3-
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financing will be subject to yield maintenance penalties on prepayments until
the fifth anniversary of the closing of the financing (i.e., will be
prepayable during the first five years only with yield maintenance and
thereafter without yield maintenance), (V) the properties subject to such
financing will not be cross-collateralized and the loans will not be cross-
defaulted and (VI) the other terms are no less favorable to Aptco than the
terms of the "Conditional Commitment" (dated November 16, 1998) previously
provided to the Investors from Freddie Mac. Financing outside of the
foregoing parameters may be authorized by 2 out of the 3 Board members
provided (x) the Board will use commercially reasonable efforts to obtain
financing on terms as close to possible as the parameters set forth above,
(y) any such alternative financing shall be fixed rate or be subject to
appropriate hedging arrangements and (z) such financing shall not be recourse
in any respect to any Investor without its approval.
Provided that DK is still acting as chairman and CEO, DK will be
authorized without the approval of the Board (i) to carry out business plans
approved by the Board, provided that payroll expenses do not exceed 105% of
the annual amount of that item on the approved budgets, and all other
expenses do not in the aggregate exceed 105% of annual expenses (other than
payroll expenses) in the approved budgets, (ii) to sell the 10 Assets in
Exhibit 3 for prices that yield Aptco net proceeds (after all transactions
costs, taxes and debt prepayment fees and expenses) equal to at least 95% of
the amounts set forth in Exhibit 3 (provided that such net proceeds shall not
be less than 97.5% of all such amounts in the aggregate) in transactions with
third parties (unaffiliated with Berkshire Group) and in which Berkshire
Group has no continuing interest and (iii) to sell certain individual assets
in any calendar year not in excess of $100 million in gross proceeds provided
that the price for each sold asset yields Aptco net proceeds (after all
transaction costs, taxes and debt prepayment fees and expenses) equal to at
least 103% of allocated acquisition cost. If DK does not sell the 10 Assets
as provided in clause (ii) above within the time period contemplated by the
initial business plan approved by the Board, Whitehall and Blackstone, acting
together, may cause Aptco to sell such Assets during the immediately
succeeding 6-month period for the prices described in clause (ii) in
transactions with third parties (unaffiliated with either Whitehall or
Blackstone) and in which neither Whitehall nor Blackstone have any continuing
interest. If DK does not sell at least $50 million of assets in any calendar
year as provided in clause (iii), during the six months following such year
Whitehall and Blackstone, acting together, may cause Aptco to sell that
amount of assets not sold in such year, up to $50 million, for the asset
prices described in clause (iii).
Each of the Investors will be authorized unilaterally to cause a sale of
Aptco to an unaffiliated third party in a bona fide transaction (in which no
Investor has a continuing interest) to the highest bidder after the fifth
anniversary; provided that DK may not exercise such right until three months
-4-
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following such fifth anniversary; provided further that if, during such three
month period DK's Employment Agreement is terminated without cause and
Whitehall and Blackstone have not already exercised their right to cause a
sale of Aptco then DK may exercise such right. In addition, at any time
between the second anniversary and fifth anniversary of closing, DK may cause
a sale of Aptco subject to a right of first offer in favor of each of
Whitehall and Blackstone (which may be exercised by either or both of
Whitehall and Blackstone) and if such right of first offer is not exercised,
DK may cause such sale at a price equal to or higher than the price offered
to Whitehall and Blackstone as long as (i) the net proceeds from such sale
results in a 12% per annum annually compounded IRR to each of the Investors
(with Berkshire Group being permitted to use its own funds to allow such IRR
threshold to be achieved), and (ii) such sale is consummated with a bona fide
third party (unaffiliated with Berkshire Group) within 180 days after the
right of first offer is declined. If Whitehall and Blackstone each exercise
the right of first offer, they shall each acquire 50% of the offered
interests. Any sale to either or both of Whitehall or Blackstone may be
accomplished by purchasing the ownership interests in Aptco not owned by
them, rather than Aptco itself. In addition, at any time between the 3 1/2
year anniversary of closing and the fifth year anniversary of closing,
Whitehall and Blackstone, acting together, may cause a sale of Aptco;
provided that (A) such sale is consummated with a bona fide third party
(unaffiliated with either Whitehall or Blackstone) and (B) if such sale
occurs between the 3 1/2 year anniversary and the 4 1/2 year anniversary of
closing, at the election of Berkshire Group, in connection with such sale
Berkshire Group receives, in exchange for its interest in Aptco, an amount in
cash equal to the greater of (X) the actual proceeds of such sale payable to
Berkshire Group in accordance with the "Waterfall" (described in Annex A) or
(Y) an amount equal to the aggregate amount of capital contributions made by
Berkshire Group to Aptco prior to the date of such sale less any prior
distributions to Berkshire Group.
The budget and business plan for the 1999 calendar year will be approved
by each of the Investors prior to execution of the Aptco governing documents.
Management
As described above, day-to-day management would be the responsibility of
the Aptco management team. The acquisition of Berkshire would include
Berkshire's multifamily management operations. Prior to the execution of a
definitive agreement with Berkshire, the staffing, senior management and
operating budget of Aptco would be discussed and agreed.
Dispositions
The management of Aptco would develop a sale/hold/capital expenditure
analysis for each asset, which would be reviewed by the Board annually.
-5-
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Selection of sale agents would be at the Board's discretion. Prior to
closing, certain assets will be identified for sale during the first two
years after closing.
Confidentiality
Subject to requirements of law, Blackstone, Whitehall and Berkshire
Group would each keep confidential all discussions and materials prepared and
exchanged in connection with the proposed transaction. It is anticipated
that a joint press release would be issued upon execution of a definitive
agreement with Berkshire, and possibly earlier if required by law.
This summary is for discussion purposes only and constitutes only a
general non-binding expression of interest on the part of Blackstone,
Whitehall and Berkshire Group and is not intended to, and does not, create a
legally binding commitment, agreement or obligation on the part of
Blackstone, Whitehall or Berkshire Group, other than the section entitled
"Break-Up Fee; Cost Reimbursement" (set forth in Annex A).
Expiration
The obligation of the parties hereto shall automatically expire on the
earlier of (i) March 31, 1999, if the Aptco bid is not accepted by such date
by the Board of Directors of Berkshire, (ii) the date which is 210 days after
the date Aptco's bid is accepted by Berkshire's Board and (iii) the date upon
which Berkshire's Board definitively rejects Aptco's bid.
Supplementary Terms and Conditions
The supplementary terms and conditions set forth in Annex A hereto are
incorporated by reference herein.
Exhibit 7
March 5, 1999
Lazard Freres & Co., LLC
30 Rockefeller Plaza
New York, New York 10020
Attention: Matthew J. Lustig
Gary Ickowicz
Gentlemen:
This letter amends our proposal letter to you dated February 22,
1999 (the "Proposal Letter"). Capitalized terms used herein have the
respective meanings given them in the Proposal Letter.
We hereby revise our proposal from that set forth in the Proposal
Letter as follows:
1. The Cash Price is changed to $12.05 per share/OP Unit.
2. The senior preferred equity interests in Aptco (described in
clause (b) of the third paragraph of the Proposal Letter) (the "Class A
Interests") will entitle the holder to receive cumulative preferred
distributions of available cash on a senior basis equal to 7 1/2% per annum.
3. OP Unitholders electing to receive Class A Interests in Aptco
will have the right to cause the Company to purchase such Interests at any
time after the fifth anniversary of closing at a price equal to the
liquidation preference thereof (i.e., the Cash Price).
The offer described in the Proposal Letter, as revised by this
letter, will remain open until 5:00 p.m. on March 8, 1999, and will expire
at that time if not accepted.
All other terms in the Proposal Letter remain the same.
As stated in the Proposal Letter, we continue to believe that Aptco
is uniquely positioned to proceed with a transaction in the best interests of
BRI stockholders and OP Unitholders on an expeditious basis.
<PAGE>
<PAGE>
We look forward to working with you on this proposed transaction.
Very truly yours,
APTCO, LLC,
By its members:
THE BERKSHIRE COMPANIES
LIMITED PARTNERSHIP
By: KGP-1, Incorporated
By: /s/ Douglas Krupp
----------------------------
Douglas Krupp
President
WHITEHALL STREET
REAL ESTATE LIMITED
PARTNERSHIP XI
By: WH Advisors, L.L.C. XI
By: /s/ Steven M. Feldman
----------------------------
BLACKSTONE REAL ESTATE
ACQUISITIONS III L.L.C.
By: /s/ Thomas J. Saylak
----------------------------
cc: Prudential Securities Incorporated
Real Estate Investment Banking
One New York Plaza
New York, New York 10292
Attention: Scott Schaevitz
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