SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
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BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
(Name of Subject Company)
OLDHAM INSTITUTIONAL TAX CREDITS LLC
(Bidder)
UNITS
(Title of Class
of Securities)
100652106
(CUSIP Number of Class
of Securities)
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Michael H. Gladstone, Esq.
c/o Boston Financial Securities, Inc.
101 Arch Street
Boston, MA 02110
(617) 439-3911
Copies to:
Joseph T. Brady, Esq.
Peabody & Brown
101 Federal Street
Boston, MA 02110
(617) 345-1000
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and
Communications on Behalf of Bidder)
Calculation of Filing Fee
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Transaction Amount of
Valuation Filing Fee
$9,420,200 $1,884.04
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*For purposes of calculating the filing fee only. This amount assumes
the purchase of 12,730 Units of limited partnership interests ("Units") of the
subject company for $740.00 per Unit in cash.
{ } Check box if any part of the fee is offset as provided by Rule 0-
11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number, or the Form or Schedule and date of its filing.
Amount previously paid:
N/A
Filing party:
N/A
Cusip No.: 100652106
14D-1
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1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
OLDHAM INSTITUTIONAL TAX CREDITS LLC
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2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) { }
(b) {X}
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3. SEC Use Only
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4. Sources of Funds (See Instructions)
AF; BK
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5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Item 2(e) or 2(f)
{ }
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6. Citizenship or Place of Organization
Massachusetts
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
The Reporting Person does not own any Units. However, the Reporting
Person is an affiliate of the general partners of the Subject Company.
Arch Street VII Limited Partnership, one of the general partners of the
Subject Company, acquired 5 Units in the Subject Company in 1992 as the
initial limited partner of the Subject Company in connection with the
Subject Company's original formation.
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8. Check Box if the Aggregate Amount in Row (7) Excludes
Certain Shares (See Instructions)
{ }
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9. Percent of Class Represented by Amount in Row (7)
Less than 1%.
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10. Type of Reporting Person (See Instructions)
OO
Cusip No.: 100652106
14D-1
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1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
WEST CEDAR MANAGING, INC.
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2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) { }
(b) {X}
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3. SEC Use Only
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4. Sources of Funds (See Instructions)
AF; BK
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5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Item 2(e) or 2(f)
{ }
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6. Citizenship or Place of Organization
Massachusetts
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
The Reporting Person does not own any Units. However, the Reporting
Person is an affiliate of the general partners of the Subject Company.
Arch Street VII Limited Partnership, one of the general partners of the
Subject Company, acquired 5 Units in the Subject Company in 1992 as the
initial limited partner of the Subject Company in connection with the
Subject Company's original formation.
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8. Check Box if the Aggregate Amount in Row (7) Excludes
Certain Shares (See Instructions)
{ }
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9. Percent of Class Represented by Amount in Row (7)
Less than 1%.
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10. Type of Reporting Person (See Instructions)
CO
Item 1. Security and Subject Company.
(a) The name of the subject company is Boston Financial Tax Credit Fund
VII, A Limited Partnership, a Massachusetts limited partnership (the
"Partnership"), which has its principal executive offices at 101 Arch Street,
Boston, Massachusetts 02110.
(b) This Schedule 14D-1 relates to the offer by Oldham Institutional Tax
Credits LLC, a Massachusetts limited liability company ("the Purchaser"), to
purchase up to 12,730 issued and outstanding Units ("Units") of limited
partnership interests in the Partnership ("Limited Partnership Interests") at
$740.00 per Unit, net to the seller in cash (the "Purchase Price"), without
interest thereon, upon the terms and subject to the conditions set forth in
the Offer to Purchase dated July 24, 1997 (the "Offer to Purchase") and the
related Letter of Transmittal, copies of which are attached hereto as Exhibits
(a)(1) and (a)(2), respectively. Information concerning the number of
outstanding Units is set forth in the Introduction to the Offer to Purchase
and is incorporated herein by reference.
(c) The information set forth in Section 13 ("Purchase Price
Considerations") of the Offer to Purchase is incorporated herein by reference.
Item 2. Identity and Background.
(a)-(d) The information set forth in Section 10 ("Certain
Information Concerning the Purchaser") and Schedule I to the Offer to Purchase
is incorporated herein by reference.
(e) and (f) During the last five years, neither the Purchaser nor, to
the best of its knowledge, any of the persons listed in Schedule I or referred
to in Section 10 ("Certain Information Concerning the Purchaser") of the Offer
to Purchase (i) have been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) were a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and
as a result of such proceeding were or are subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, Federal or state securities laws or finding any violation of such laws.
(g) The information set forth in Schedule I to the Offer to Purchase
is incorporated herein by reference.
Item 3. Past Contacts, Transactions or Negotiations With the Subject
Company.
(a) The Purchaser is an affiliate of both Arch Street, VII, Inc., the
managing general partner of the Partnership, and Arch Street VII Limited
Partnership, the other general partner of the Partnership. Accordingly, the
information contained in Section 9 ("Certain Information Concerning the
Partnership") of the Offer to Purchase, including the terms of the
Partnership's amended and restated agreement of limited partnership, as
amended to date (the "Partnership Agreement"), is incorporated herein by
reference. Additionally, the information set forth in Section 10 ("Certain
Information Concerning the Purchaser") and Schedule I to the Offer to Purchase
is incorporated herein by reference.
(b) The information set forth in Section 11 ("Background of the
Offer") of the Offer to Purchase is incorporated herein by reference.
Item 4. Source and Amount of Funds or Other Consideration.
(a)-(c) The information set forth in Section 12 ("Source of Funds")
of the Offer to Purchase is incorporated herein by reference.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
(a)-(b) The information set forth in Section 8 ("Purpose of the
Offer; Future Plans") of the Offer to Purchase is incorporated herein by
reference.
(c)-(e) Not applicable.
(f)-(g) The information set forth in Section 7 ("Effects of the
Offer") of the Offer to Purchase is incorporated herein by reference.
Item 6. Interest in Securities of the Subject Company.
(a) The information set forth in the Introduction and Section 10
("Certain Information Concerning the Purchaser") of the Offer to Purchase is
incorporated herein by reference.
(b) None.
Item 7. Contracts, Arrangements, Understandings or Relationships with
Respect to the Subject Company's Securities.
The information set forth in Section 10 ("Certain Information Concerning
the Purchaser") and Section 11 ("Background of the Offer") of the Offer to
Purchase is incorporated herein by reference.
Item 8. Persons Retained, Employed or to be Compensated.
The information set forth in Section 16 ("Certain Fees and Expenses") of
the Offer to Purchase is incorporated herein by reference.
Item 9. Financial Statements of Certain Bidders.
Not applicable.
Item 10. Additional Information.
(a) None.
(b)-(d) The information set forth in Section 15 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the related
Letter of Transmittal is incorporated herein in its entirety by reference.
Item 11. Material to be Filed as Exhibits.
(a)(1) Offer to Purchase, dated July 24, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Cover Letter, dated July 24, 1997, from Oldham Institutional
Tax Credits LLC to the Limited Partners.
(b) None.
(c) None.
(d) None.
(e) Not applicable.
(f) None.
SIGNATURES
After due 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.
Dated: July 24, 1997
OLDHAM INSTITUTIONAL TAX CREDITS LLC
By: West Cedar Managing Inc., its
managing member
By: /s/ Jenny Netzer_______
Name: Jenny Netzer
Title: President
WEST CEDAR MANAGING, INC.
By: /s/ Jenny Netzer________
Name: Jenny Netzer
Title: President
Exhibit (a)(1)
Exhibit (a)(1)
OFFER TO PURCHASE
UP TO 12,730
UNITS
in
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
for
$740.00 NET PER UNIT IN CASH
by
OLDHAM INSTITUTIONAL TAX CREDITS LLC
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THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, EASTERN TIME, ON AUGUST 21, 1997, UNLESS EXTENDED.
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Oldham Institutional Tax Credits LLC, a Massachusetts limited liability
company (the "Purchaser") and an affiliate of the general partners of the
Partnership (as defined below), hereby offers to purchase up to 12,730 of the
issued and outstanding Units ("Units") of limited partnership interests
("Limited Partnership Interests") in Boston Financial Tax Credit Fund VII, A
Limited Partnership, a Massachusetts limited partnership (the "Partnership"),
at a purchase price of $740.00 per Unit, net to the seller in cash (the
"Purchase Price"), without interest thereon, upon the terms and subject to the
conditions set forth in this Offer to Purchase (the "Offer to Purchase") and
in the related Letter of Transmittal, as each may be supplemented, modified or
amended from time to time (which together constitute the "Offer"). LIMITED
PARTNERS WHO TENDER THEIR UNITS WILL NOT BE OBLIGATED TO PAY ANY COMMISSIONS
OR PARTNERSHIP TRANSFER FEES. The 12,730 Units sought pursuant to the Offer
represent, to the best knowledge of the Purchaser, approximately 25% of the
Units outstanding as of the date of this Offer.
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THE PURCHASER AND THE GENERAL PARTNERS OF THE PARTNERSHIP ARE AFFILIATED.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS BEING TENDERED.
SEE SECTION 14 ("CONDITIONS OF THE OFFER").
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Before tendering, Limited Partners are urged to consider the following
factors:
Limited Partners who have a present or future need for the low income
housing credits and/or tax losses from the Units may prefer to retain their
Units and not tender them pursuant to the Offer, or any other tender offer.
Although the Purchaser cannot predict the future value of the Partnership's
assets on a per Unit basis, the net after-tax benefit that would be
realized from retaining ownership of Units together with any cash
distributions from operations and any net proceeds from a future sale of
the properties owned by the Partnership (the "Properties") could differ
significantly from the Purchase Price. See Section 13 ("Purchase Price
Considerations").
If the Purchaser is successful in acquiring a significant number of Units
pursuant to the Offer, the Purchaser could be in a position to
significantly influence all Partnership decisions on which Limited Partners
may vote, including decisions regarding removal of any General Partner,
certain amendments to the Partnership Agreement (as defined in the
Glossary) and dissolution of the Partnership.
IMPORTANT
Any (i) Limited Partner, (ii) beneficial owner, in the case of Units
owned by Individual Retirement Accounts or Keogh Plans (a "Beneficial Owner"),
or (iii) person who has purchased Units but has not yet been reflected on the
Partnership's books as a transferee of such Units (an "Assignee"), desiring to
tender any or all of such person's Units should either (1) complete and sign
the Letter of Transmittal, or a facsimile copy thereof, in accordance with the
instructions in the Letter of Transmittal and mail or deliver the Letter of
Transmittal, or a facsimile copy thereof, and any other required documents to
The Herman Group, Inc. (the "Administrative Agent/Depositary"), at the address
or facsimile number set forth below, or (2) request his or her broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
him or her. Unless the context requires otherwise, references to Limited
Partners in this Offer to Purchase shall be deemed to also refer to Beneficial
Owners and Assignees. Questions concerning the Offer to Purchase may be
directed to the Purchaser at the toll-free telephone number set forth below.
Questions on, or requests for assistance in, completing the documentation or
requests for additional copies of this Offer to Purchase, the Letter of
Transmittal and other related documents may be directed to the Administrative
Agent/Depositary at the address and toll-free telephone number set forth
below.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR TO PROVIDE ANY INFORMATION OTHER
THAN AS CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. NO SUCH
RECOMMENDATION, INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING
BEEN AUTHORIZED.
EACH LIMITED PARTNER IS URGED TO READ CAREFULLY THE ENTIRE OFFER TO
PURCHASE, THE LETTER OF TRANSMITTAL AND RELATED DOCUMENTS.
For Additional Information Concerning the Offer to Purchase
contact:
Oldham Institutional Tax Credits LLC
101 Arch Street
Boston, Massachusetts 02110
Telephone: (800) 829-9213, extension 12
For Assistance in Completing the Letter of Transmittal and Related
Documentation
or Additional Copies of the Offer to Purchase, Letter of Transmittal and
Related Documents contact:
The Herman Group, Inc.
2121 San Jacinto Street
26th Floor
Dallas, Texas 75201
Telephone: (800) 243-8440
Facsimile: (214) 999-9323 or (214) 999-9348
Return the Letter of Transmittal and Related Documentation to:
The Herman Group, Inc.
2121 San Jacinto Street
26th Floor
Dallas, Texas 75201
Telephone: (800) 243-8440
Facsimile: (214) 999-9323 or (214) 999-9348
TABLE OF CONTENTS
Page
INTRODUCTION 13
THE TENDER OFFER 16
1. TERMS OF THE OFFER 16
2. PRORATION; ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS. 17
3. PROCEDURES FOR TENDERING UNITS. 18
4. WITHDRAWAL RIGHTS. 20
5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT. 21
6. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. 21
7. EFFECTS OF THE OFFER. 24
8. PURPOSE OF THE OFFER; FUTURE PLANS 25
9. CERTAIN INFORMATION CONCERNING THE PARTNERSHIP. 26
10. CERTAIN INFORMATION CONCERNING THE PURCHASER. 34
11. BACKGROUND OF THE OFFER. 35
12. SOURCE OF FUNDS. 36
13. PURCHASE PRICE CONSIDERATIONS 36
14. CONDITIONS OF THE OFFER. 38
15. CERTAIN LEGAL MATTERS. 39
16. CERTAIN FEES AND EXPENSES 40
17. MISCELLANEOUS. 41
To the Limited Partners of Boston Financial Tax Credit Fund VII, A Limited
Partnership:
INTRODUCTION
Oldham Institutional Tax Credits LLC, a Massachusetts limited liability
company ("the Purchaser") and an affiliate of the General Partners of the
Partnership (as defined below), hereby offers to purchase up to 12,730 of the
issued and outstanding Units ("Units") representing limited partnership
interests in Boston Financial Tax Credit Fund VII, A Limited Partnership, a
Massachusetts limited partnership (the "Partnership"), at a purchase price of
$740.00 per Unit, net to the seller in cash (the "Purchase Price"), without
interest, upon the terms and subject to the conditions set forth in this Offer
to Purchase (the "Offer to Purchase") and in the related Letter of
Transmittal, as each may be supplemented, modified or amended from time to
time (which together constitute the "Offer"). Limited Partners who tender
their Units will not be obligated to pay any commissions or Partnership
transfer fees. The 12,730 Units sought pursuant to the Offer represent, to the
best knowledge of the Purchaser, approximately 25% of the Units issued and
outstanding as of the date of this Offer.
The Purchaser is affiliated with Arch Street VII, Inc. (the "Managing
General Partner") and Arch Street VII Limited Partnership (the "Co-General
Partner"), the general partners of the Partnership (collectively, the "General
Partners").
The Purchaser's Offer is being made to provide Limited Partners who have
a present or anticipated need for liquidity with an opportunity to sell their
Units. See Section 11 ("Background of the Offer").
The Purchaser is making this Offer because it believes that the Units
represent an attractive investment at the price offered based upon, in part,
the expected remaining Low-Income Housing Credits and tax losses. There can be
no assurance, however, that the Purchaser's judgment is correct, and, as a
result, ownership of Units (either by the Purchaser or Limited Partners who
retain their Units) will remain a speculative investment. The Purchaser is
acquiring the Units for investment purposes and does not intend to make any
effort to change current management or the operations of the Partnership.
Because the Purchaser is affiliated with the General Partners, the Purchaser's
acquisition of Units may have the effect of making any future change of
current management more difficult. The Purchaser has no current plans for any
extraordinary transaction involving the Partnership.
Factors to be considered by Limited Partners. In considering the Offer,
Limited Partners are urged to consider the following factors:
Limited Partners who have a present or future need for the Low-Income
Housing Credits and/or tax losses from the Units may prefer to retain their
Units and not tender them pursuant to the Offer, or any other tender offer.
Although the Purchaser cannot predict the future value of the Partnership's
assets on a per Unit basis, the net after-tax benefit that would be
realized from retaining ownership of the Units together with any cash
distributions from operations and any net proceeds from a future sale of
the properties owned by the Partnership (the "Properties") could differ
significantly from the Purchase Price. See Section 13 ("Purchase Price
Considerations").
There may be a conflict between the desire of the Purchaser to acquire the
Units at a low price and the desire of the Limited Partners to sell their
Units at a high price. Therefore, Limited Partners might receive greater
value if they hold their Units, rather than tender, continue to be
allocated Low-Income Housing Credits and tax losses, and receive any
distributions from operations and any proceeds, if any, from the
liquidation of the Partnership. Alternatively, Limited Partners may prefer
to receive the Purchase Price now rather than wait to be allocated future
Low-Income Housing Credits and tax losses and uncertain future cash
distributions. The return to Limited Partners could be higher or lower than
the Purchase Price for persons who retain their Units.
The Purchaser has been formed and the Offer is being made in order to
acquire Units for investment purposes. The Purchaser intends to sell
membership interests in the Purchaser to third parties with a need for the
Low-Income Housing Credits and/or tax losses attributable to the tendered
Units. The aggregate sales price of the Purchaser's membership interests
to third parties will be equal to the aggregate Purchase Price for the
tendered Units plus the Purchaser's expenses in conducting and consummating
this Offer and financing the purchase of the tendered Units. Neither the
Purchaser nor its current members will derive a profit from the sale of the
Purchaser's membership interests. Affiliates of the Purchaser, however,
expect to arrange the sale of membership interests of the Purchaser to
third parties upon conclusion of the Offer. In connection with such sales
and in consideration for structuring this transaction, it is expected that
those affiliates will earn fees. These fees will be, in part, dependent on
the amount third parties are willing to pay for membership interests and
the amount of membership interests sold. There can be no assurance,
however, that any membership interests in the Purchaser will be sold or at
what price.
If the Purchaser is successful in acquiring a significant number of Units
pursuant to the Offer, the Purchaser could be in a position to
significantly influence all Partnership decisions on which Limited Partners
may vote. Additionally, because the Purchaser is affiliated with the
General Partners, the Purchaser's acquisition of Units may have the effect
of making any future change of the Partnership's current management more
difficult. If the maximum number of Units sought by the Purchaser is
tendered and accepted for payment pursuant to the Offer, the Purchaser will
own approximately 25% of the outstanding Units. The ownership of tendered
Units by the Purchaser could effectively (i) prevent non-tendering Limited
Partners from taking actions they desire but that the Purchaser opposes and
(ii) enable the Purchaser to take actions desired by it but opposed by
certain non-tendering Limited Partners. Under the Partnership Agreement,
Limited Partners holding more than 50% of the outstanding Units are
entitled to take action with respect to a variety of matters, including:
approving the dissolution of the Partnership; approving the removal of any
General Partner and proposing and approving a replacement therefor; and
most types of amendments to the Partnership Agreement. Although the
Purchaser does not have any current intentions with regard to any of these
matters, it will vote the Units acquired pursuant to the Offer in its
interest, which may, or may not, be in the best interest of non-tendering
Limited Partners.
According to the Partnership's Form 10-K for the fiscal year ended
March 31, 1997 (the "Form 10-K"), all of the properties owned by the Local
Limited Partnerships in which the Partnership has an interest have been
placed in service and generated Low-Income Housing Credits by December 31,
1996 (the tax year end for the Local Limited Partnerships). Low-Income
Housing Credits are generally available for 10 years. The Form 10-K
indicates that the amount of the Low-Income Housing Credits claimed by the
Partnership was $146.39 per Unit for the 1996 calendar year, $136.39 per
Unit for the 1995 calendar year and $82.16 per Unit for the 1994 calendar
year. Although there can be no assurances as to whether Low-Income Housing
Credits will continue to be available, the Purchaser estimates that a total
of approximately $974 Low-Income Housing Credits per Unit will be available
during the period beginning September 1, 1997 and ending December 31, 2006.
In addition, although there can be no assurances as to whether tax losses
will continue to be available, each Unit will be allocated approximately
$236 of tax losses through August 31, 1997 and the Purchaser estimates that
each Unit will be allocated a total of approximately $409 of tax losses
from September 1, 1997 through December 31, 2010. Actual future tax
benefits may differ significantly from the foregoing estimates. Tax losses
are less valuable than Low-Income Housing Credits because tax losses can
reduce income (thereby resulting in a savings equal to the product of the
tax loss and the taxpayer's applicable tax rate) and require a reduction in
tax basis (which may cause taxable income to be recognized in subsequent
years),whereas Low-Income Housing Credits result in a dollar-for-dollar
reduction in tax liability. In addition, the use of tax losses is subject
to limitations imposed by the passive activity rules. Limited Partners
should consider whether the Purchase Price is more valuable to them than
the present value of anticipated future tax benefits.
Limited Partners may no longer wish to continue with their investment in
the Partnership for a number of reasons, including:
Although limited resale mechanisms are available to the Limited Partners
wishing to sell their Units, there is no formal or organized trading market
for the Units. The Form 10-K states: "There is no public market for the
Units, and it is not expected that a public market will develop."
Accordingly, Limited Partners who desire resale liquidity may wish to
consider the Offer. The Offer affords a significant number of Limited
Partners with an opportunity to dispose of their Units for cash, which
alternative otherwise might not be available to them.
The Offer will provide Limited Partners with an immediate opportunity to
liquidate their investment in the Partnership without the usual transaction
costs associated with secondary market sales or partnership transfer fees.
Although not necessarily an indication of value, the $740.00 Purchase Price
is competitive with the weighted average selling price for Units reported
in the limited and sporadic secondary market during the 12-month period
ended June 30, 1997. See Section 13 ("Purchase Price Considerations").
The Offer may be attractive for Limited Partners whose circumstances have
changed such that anticipated future allocation of Low-Income Housing
Credits and tax losses may no longer be beneficial to them.
Acceptance of the Offer will eliminate any future risk to the selling
Limited Partners of recapture of the Low-Income Housing Credits received,
since such risk will be borne by the Purchaser.
General disenchantment with real estate investments and with long-term
investments in limited partnerships because of, among other things, their
illiquidity.
The Offer may be attractive to certain Limited Partners who wish in the
future to avoid the continued additional expense, delay and complication in
filing income tax returns which result from an ownership of Units.
The Offer provides Limited Partners with the opportunity to liquidate their
Units and to reinvest the proceeds in other investments should they desire
to do so.
The Purchaser believes that the Units represent an attractive investment at
the Purchase Price based upon, in part, the expected remaining Low-Income
Housing Credits and tax losses. There can be no assurance, however, that
this judgment is correct. Therefore, ownership of Units will remain a
speculative investment.
Following the completion of the Offer, the Purchaser and its affiliates
may acquire additional Units. Any such acquisitions may be made through
private purchases, through one or more future tender offers or by any other
means deemed advisable, and may be at prices higher or lower than the price to
be paid for the Units purchased pursuant to the Offer. See Section 8 ("Purpose
of the Offer; Future Plans").
The Offer is not conditioned upon a minimum number of Units being
tendered. If, as of the Expiration Date, more than 12,730 Units are validly
tendered and not properly withdrawn, the Purchaser will only accept for
purchase on a pro rata basis 12,730 Units, subject to the terms and conditions
herein. See Section 14 ("Conditions of the Offer").
Limited Partners are urged to consider carefully all of the information
contained herein before accepting the Offer.
The Purchaser expressly reserves the right, in its sole discretion and
for any reason, to terminate the Offer at any time and to waive any or all of
the conditions of the Offer, although the Purchaser does not presently intend
to waive any such conditions. See Section 7 ("Effects of the Offer").
According to the Form 10-K, as of March 31, 1997 there were 50,930 Units
issued and outstanding and 2,786 record holders of Units.
Except as otherwise indicated, information contained in this Offer to
Purchase is based upon documents and reports publicly filed by the Partnership
with the Commission. Although the Purchaser has no information that any
statements contained in this Offer to Purchase are untrue, the Purchaser does
not take responsibility for the accuracy or completeness of any information
contained in this Offer to Purchase which is derived from such public
documents, or for any failure by the Partnership to disclose events which may
have occurred and may affect the significance or accuracy of any such
information but which are unknown to the Purchaser.
Each Limited Partner must make his or her own decision based on his or
her particular circumstances. Limited Partners should consult with their
respective advisors about the financial, tax, legal and other implications to
them of accepting the Offer. Limited Partners are urged to read this Offer to
Purchase, the related Letter of Transmittal and the other accompanying
materials carefully before deciding whether to tender their Units.
THE TENDER OFFER
1. Terms of the Offer.
Upon the terms of the Offer (including the terms and conditions of any
extension or amendment of the Offer), the Purchaser will accept for payment
and pay for up to 12,730 Units that are validly tendered on or prior to the
Expiration Date (as hereinafter defined) and not withdrawn in accordance with
Section 4 ("Withdrawal Rights"). The term "Expiration Date" shall mean 12:00
midnight, Eastern time, on August 21, 1997, unless the Purchaser, in its sole
discretion, shall have extended the period of time during which the Offer is
open, in which event the term "Expiration Date" shall refer to the latest time
and date at which the Offer, as so extended by the Purchaser, will expire.
IF, PRIOR TO THE EXPIRATION DATE, THE PURCHASER SHALL INCREASE THE PURCHASE
PRICE OFFERED TO LIMITED PARTNERS, SUCH INCREASED PURCHASE PRICE SHALL BE PAID
FOR ALL UNITS ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER, WHETHER OR NOT SUCH
UNITS WERE TENDERED PRIOR TO THE INCREASE IN CONSIDERATION.
The Offer is conditioned on satisfaction of certain conditions. See
Section 14 ("Conditions of the Offer"). The Purchaser reserves the right (but
shall not be obligated), in its sole discretion, to waive any or all of such
conditions. If, on or prior to the Expiration Date, any or all of such
conditions have not been satisfied or waived, the Purchaser may (i) decline to
purchase any of the Units tendered, terminate the Offer and return all
tendered Units to tendering Limited Partners, (ii) waive all the then
unsatisfied conditions and, subject to complying with applicable rules and
regulations of the Commission, purchase all Units validly tendered, (iii)
extend the Offer and, subject to the right of Limited Partners to withdraw
Units until the Expiration Date, retain the Units that have been tendered
during the period or periods for which the Offer is extended, or (iv) amend
the Offer.
This Offer to Purchase, the related Letter of Transmittal and, if
required, any other relevant materials are being mailed, at the Purchaser's
expense, by the Administrative Agent/Depositary, based on name and address
information provided by the Partnership at the Purchaser's request, to Limited
Partners, to the extent their names and addresses are reflected on the books
and records of the Partnership.
2. Proration; Acceptance for Payment and Payment for Units.
If more than 12,730 Units are validly tendered on or prior to the
Expiration Date and not properly withdrawn on or prior to the Expiration Date,
the Purchaser will only accept for payment, upon the terms and subject to the
conditions of the Offer, and pay for an aggregate of 12,730 Units so tendered,
pro rata according to the number of Units validly tendered and not properly
withdrawn on or prior to the Expiration Date, with appropriate adjustments to
avoid purchases that would violate the transfer restrictions in Section 7.1 of
the Partnership Agreement (the "Transfer Restrictions"). If the number of
Units validly tendered and not properly withdrawn on or prior to the
Expiration Date is less than or equal to 12,730 Units, the Purchaser will
purchase all Units so tendered and not properly withdrawn, upon the terms and
subject to the conditions of the Offer.
In the event that proration of tendered Units is required, and because
of the difficulty of determining the proration results, the Purchaser may not
be able to announce the final results of such proration until at least
approximately seven business days after the Expiration Date. Subject to the
Purchaser's obligation under Rule 14e-1(c) under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), to pay Limited Partners the Purchase
Price in respect of Units tendered or return those Units promptly after the
termination or withdrawal of the Offer, the Purchaser does not intend to pay
for any Units accepted for payment pursuant to the Offer until the final
proration results are known.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), the Purchaser will purchase, by accepting for
payment, and will pay for, all Units validly tendered and not withdrawn in
accordance with Section 4 on or prior to the Expiration Date as promptly as
practicable following the Expiration Date. In addition, subject to applicable
rules of the Commission, the Purchaser expressly reserves the right to delay
acceptance for payment of, or payment for, Units pending receipt of any
regulatory or governmental approvals specified in Section 15 ("Certain Legal
Matters") or pending receipt of any additional documentation required by the
Letter of Transmittal. In all cases, payment for Units accepted for payment
pursuant to the Offer will be made only after timely receipt by the
Administrative Agent/Depositary of (a) the Letter of Transmittal properly
completed and duly executed and (b) any other documents required by the Letter
of Transmittal.
For purposes of the Offer, the Purchaser shall be deemed to have
accepted for payment tendered Units when, as and if the Purchaser gives oral
or written notice to the Administrative Agent/Depositary of the Purchaser's
acceptance for payment of such Units pursuant to the Offer. No tender of Units
will be deemed to have been validly made until all defects and irregularities
with respect to such tender have been cured or waived.
If any tendered Units are not purchased pursuant to the Offer for any
reason, the Letter of Transmittal with respect to such Units will be destroyed
by the Administrative Agent/Depositary. If, for any reason whatsoever,
acceptance for payment of or payment for any Units tendered pursuant to the
Offer is delayed or the Purchaser is unable to accept for payment, purchase or
pay for Units tendered pursuant to the Offer, then, without prejudice to the
Purchaser's rights under Section 14 ("Conditions of the Offer"), the
Administrative Agent/Depositary may, nevertheless, on behalf of the Purchaser
and subject to Rule 14e-1(c) under the Exchange Act, retain tendered Units,
and such Units may not be withdrawn except to the extent that the tendering
Limited Partner is entitled to withdrawal rights as described in Section 4
("Withdrawal Rights").
3. Procedures for Tendering Units
Valid Tender and Delivery of Letter of Transmittal. For Units to be
validly tendered pursuant to the Offer, a Letter of Transmittal, properly
completed and duly executed, together with any other documents required by the
Letter of Transmittal, must be received by the Administrative Agent/Depositary
at its address on the back cover page of the Offer to Purchase on or prior to
the Expiration Date. See Instruction 1 to the Letter of Transmittal.
In order for a tendering Limited Partner to participate in the Offer,
Units must be validly tendered and not withdrawn on or prior to the Expiration
Date, which is 12:00 midnight, Eastern time, on August 21, 1997, unless
extended.
The method of delivery of the Letter of Transmittal and all other
required documents is at the option and risk of the tendering Limited Partner
and delivery will be deemed made only when actually received by the
Administrative Agent/Depositary. If delivery is by mail, registered mail with
return receipt requested is recommended. In all cases, sufficient time should
be allowed to ensure timely delivery. See Instruction 1 to the Letter of
Transmittal.
Backup Federal Income Tax Withholding. To prevent the possible
application of backup federal income tax withholding with respect to payment
of the Purchase Price pursuant to the offer, a tendering Limited Partner must
provide the Purchaser with such Limited Partner's correct taxpayer
identification number or social security number (the "TIN") by certifying in
the Substitute Form W-9 included in the Letter of Transmittal that the TIN
provided on the front cover of the Letter of Transmittal is correct or such
TIN, as corrected, is correct. See Instruction 4 to the Letter of
Transmittal. This requirement does not apply to corporations.
FIRPTA Withholding. To prevent the withholding of federal income tax in
an amount equal to 10% of the sum of the Purchase Price plus the amount of
Partnership liabilities allocable to each Unit purchased, each Limited Partner
must complete the FIRPTA Affidavit included in the Letter of Transmittal
certifying such Limited Partner's TIN and address and that the Limited Partner
is not a foreign person. See Instruction 4 to the Letter of Transmittal.
Appointment as Proxy; Power of Attorney. By executing and delivering
the Letter of Transmittal, a tendering Limited Partner irrevocably appoints
the Purchaser and the designees of the Purchaser and each of them as such
Limited Partner's proxies, in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of such
Limited Partner's rights with respect to the Units tendered by such Limited
Partner and accepted for payment by the Purchaser (and with respect to any and
all other Units or other securities issued or issuable in respect of such
Units on or after the date hereof). All such proxies shall be considered
irrevocable and coupled with an interest in the tendered Units. Such
appointment will be effective when, and only to the extent that, the Purchaser
accepts such Units for payment. Upon such acceptance for payment, all prior
proxies given by such Limited Partner with respect to such Units (and such
other Units and securities) will be revoked without further action, and no
subsequent proxies may be given nor any subsequent written consents executed
(and, if given or executed, will not be deemed effective). The Purchaser and
its designees will, with respect to the Units (and such other Units and
securities) for which such appointment is effective, be empowered to exercise
all voting and other rights of such Limited Partner as it in its sole
discretion may deem proper pursuant to the Partnership's Amended and Restated
Agreement of Limited Partnership, as amended to date (the "Partnership
Agreement") or otherwise. The Purchaser may assign such proxy and/or power of
attorney to any person with or without assigning the related Units with
respect to which such proxy and/or power of attorney was granted. The
Purchaser reserves the right to require that, in order for Units to be deemed
validly tendered, immediately upon the Purchaser's payment for such Units, the
Purchaser must be able to exercise full voting rights with respect to such
Units and other securities.
In addition, pursuant to such appointment as attorneys-in-fact, the
Purchaser and its designees each will have the power, among other things, (i)
to seek to transfer ownership of such Units on the books and records of the
Partnership (and execute and deliver any accompanying evidences of transfer
and authenticity any of them may deem necessary or appropriate in connection
therewith, including, without limitation, any documents or instruments
required to be executed under the Partnership Agreement or a "Transferor's
(Seller's) Application for Transfer" created by the NASD, if required), (ii)
to be allocated all Low-Income Housing Credits and tax losses and to receive
any and all distributions made by the Partnership after the Expiration Date,
and to receive all benefits and otherwise exercise all rights of beneficial
ownership of such Units in accordance with the terms of the Offer, (iii) to
execute and deliver to the Partnership and/or the General Partners (as the
case may be) a change of address form instructing the Partnership to send any
and all future distributions to which the Purchaser is entitled pursuant to
the terms of the Offer in respect of tendered Units to the address specified
in such form, and (iv) to endorse any check payable to or upon the order of
such Limited Partner representing a distribution, if any, to which the
Purchaser is entitled pursuant to the terms of the Offer, in each case on
behalf of the tendering Limited Partner.
Assignment of Entire Interest in the Partnership. By executing and
delivering the Letter of Transmittal, a tendering Limited Partner irrevocably
assigns to the Purchaser and its assigns all of the, direct and indirect,
right, title and interest of such Limited Partner in the Partnership with
respect to the Units tendered and purchased pursuant to the Offer, including,
without limitation, such Limited Partner's right, title and interest in and to
any and all Low-Income Housing Credits and tax losses and any and all
distributions made by the Partnership after the Expiration Date in respect of
the Units tendered by such Limited Partner and accepted for payment by the
Purchaser, regardless of the fact that the Partnership Agreement provides that
transfers are effective on the first day of the fiscal quarter following the
fiscal quarter in which the transfer occurs. The Purchaser reserves the right
to transfer or assign, in whole or from time to time in part, to any third
party, the right to purchase Units tendered pursuant to the Offer, together
with its rights under the Letter of Transmittal, but any such transfer or
assignment will not relieve the assigning party of its obligations under the
Offer or prejudice the rights of tendering Limited Partners to receive payment
for Units validly tendered and accepted for payment pursuant to the Offer.
Determination of Validity. All questions as to the form of documents
and validity, eligibility (including time of receipt) and acceptance for
payment of any tender of Units will be determined by the Purchaser, in its
sole discretion, whose determination shall be final and binding on all
parties. The Purchaser reserves the absolute right to reject any or all
tenders determined by it not to be in proper form, or the acceptance of or
payment for which may, in the opinion of the Purchaser's counsel, be unlawful.
The Purchaser also reserves the absolute right to waive any of the conditions
of the Offer or any defect or irregularity in any tender of Units of any
particular Limited Partner whether or not similar defects or irregularities
are waived in the case of other Limited Partners.
Assignee Status. Assignees must provide documentation to the
Administrative Agent/Depositary which demonstrates, to the satisfaction of the
Purchaser, such person's status as an assignee of a Unit.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be
final and binding. No tender of Units will be deemed to have been validly made
until all defects and irregularities with respect to such tender have been
cured or waived. None of the Purchaser, any of its affiliates or assigns, if
any, the Administrative Agent/Depositary or any other person will be under any
duty to give any notification of any defects or irregularities in tenders or
incur any liability for failure to give any such notification.
The Purchaser's acceptance for payment of Units tendered pursuant to the
procedures described above will constitute a binding agreement between the
tendering Limited Partner and the Purchaser upon the terms and subject to the
conditions of the Offer.
4. Withdrawal Rights.
Tenders of Units made pursuant to the Offer are irrevocable, except that
Units tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment as provided in
this Offer to Purchase, may also be withdrawn at any time after September 21,
1997.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Administrative
Agent/Depositary at the address set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name(s) of the
person(s) who tendered the Units to be withdrawn, the number of Units to be
withdrawn and the name(s) of the registered holder(s) of the Units, if
different from that of the person(s) who tendered such Units. Such notice of
withdrawal must also be signed by the same person(s) who signed the Letter of
Transmittal in the same manner as the Letter of Transmittal was signed. If the
Units are held in the name of two or more persons, all such persons must sign
the notice of withdrawal. Any Units properly withdrawn will be deemed not
validly tendered for purposes of the Offer, but may be re-tendered at any
subsequent time prior to the Expiration Date by following the procedures
described in Section 3 ("Procedures for Tendering Units").
If, for any reason whatsoever, acceptance for payment of any Units
tendered pursuant to the Offer is delayed, or the Purchaser is unable to
accept for payment or pay for Units tendered pursuant to the Offer, then,
without prejudice to the Purchaser's rights set forth herein, the
Administrative Agent/Depositary may, nevertheless, on behalf of the Purchaser,
retain tendered Units and such Units may not be withdrawn except to the extent
that the tendering Limited Partner is entitled to and duly exercises
withdrawal rights as described herein. The reservation by the Purchaser of
the right to delay the acceptance or purchase of or payment for Units is
subject to the provisions of Rule 14e-1(c) under the Exchange Act, which
requires the Purchaser to pay the consideration offered or return Units
tendered by or on behalf of Limited Partners promptly after the termination or
withdrawal of the Offer.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding. None of the
Purchaser, any of its affiliates or assigns, if any, the Administrative
Agent/Depositary or any other person will be under any duty to give any
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
5. Extension of Tender Period; Termination; Amendment.
The Purchaser reserves the right, in its sole discretion and regardless
of whether any of the conditions set forth in Section 14 ("Conditions of the
Offer") shall have been satisfied, at any time and from time to time, (i) to
extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and the payment for, any Units, (ii) to terminate
the Offer and not accept for payment any Units not already accepted for
payment or paid for, and (iii) to amend the Offer in any respect by giving
oral or written notice of such amendment to the Administrative
Agent/Depositary.
If the Purchaser increases or decreases either the number of the Units
being sought or the consideration to be paid for any Units pursuant to the
Offer and the Offer is scheduled to expire at any time before the expiration
of a period of 10 business days from, and including, the date that notice of
such increase or decrease is first published, sent or given in the manner
specified below, the Offer will be extended until, at a minimum, the
expiration of such period of 10 business days. If the Purchaser makes a
material change in the terms of the Offer (other than a change in price or
percentage of securities sought) or in the information concerning the Offer,
or waives a material condition of the Offer, the Purchaser will extend the
Offer, if required by applicable law, for a period sufficient to allow Limited
Partners to consider the amended terms of the Offer.
The Purchaser also reserves the right, in its sole discretion, if any of
the conditions specified under Section 14 ("Conditions of the Offer") shall
not have been satisfied and so long as Units have not theretofore been
accepted for payment, to delay (except as otherwise required by applicable
law) acceptance for payment of or payment for Units or to terminate the Offer
and not accept for payment or pay for Units.
If the Purchaser extends the period of time during which the Offer is
open, delays acceptance for payment of or payment for Units or is unable to
accept for payment or pay for Units pursuant to the Offer for any reason,
then, without prejudice to the Purchaser's rights under the Offer, the
Administrative Agent/Depositary may, on behalf of the Purchaser, retain all
Units tendered, and such Units may not be withdrawn except as otherwise
provided under Section 4 ("Withdrawal Rights"). The reservation by the
Purchaser of the right to delay acceptance for payment of or payment for Units
is subject to applicable law, which requires that the Purchaser pay the
consideration offered or return the Units deposited by or on behalf of Limited
Partners promptly after the termination or withdrawal of the Offer.
Any extension, termination or amendment of the Offer will be followed as
promptly as practicable by a public announcement thereof. Without limiting the
manner in which the Purchaser may choose to make any public announcement, the
Purchaser will have no obligation (except as otherwise required by applicable
law) to publish, advertise or otherwise communicate any such public
announcement other than by making a release to the Dow Jones News Service. In
the case of an extension of the Offer, the Purchaser will make a public
announcement of such extension no later than 9:00 a.m., Eastern time, on the
next business day after the previously scheduled Expiration Date.
6. Certain Federal Income Tax Consequences.
The following summary is a general discussion of certain expected
federal income tax consequences of a sale of Units pursuant to the Offer.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), applicable Treasury Regulations thereunder, administrative rulings,
practice and procedures and judicial authority as of the date of the Offer.
All of the foregoing are subject to change, and any such change could affect
the continuing accuracy of this summary. In particular, legislation is
currently pending in both Houses of Congress which could make significant
changes in the federal tax laws, including tax rates applicable to long-term
capital gain. This summary does not discuss all aspects of federal income
taxation that may be relevant to a particular Limited Partner based on such
Limited Partner's specific circumstances or to certain types of Limited
Partners subject to special treatment under the federal income tax laws (for
example, foreign persons, dealers in securities, banks, insurance companies
and tax-exempt entities), nor does it discuss any aspect of state, local,
foreign or other tax laws. Sales of Units pursuant to the Offer will be
taxable transactions for federal income tax purposes, and may also be taxable
transactions under applicable state, local, foreign and other tax laws. EACH
LIMITED PARTNER SHOULD CONSULT HIS OR ITS TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO SUCH LIMITED PARTNER OF SELLING UNITS PURSUANT TO THE OFFER,
INCLUDING, WITHOUT LIMITATION, FEDERAL, STATE AND LOCAL TAX CONSEQUENCES.
Consequences to Tendering Limited Partner. A Limited Partner will
recognize gain or loss on a sale of Units pursuant to the Offer equal to the
difference between (i) the Limited Partner's "amount realized" on the sale and
(ii) the Limited Partner's adjusted tax basis in the Units sold. The "amount
realized" with respect to a Unit sold pursuant to the Offer will be equal to
the sum of the amount of cash received by the Limited Partner for the Unit
plus the amount of Partnership liabilities allocable to the Unit as determined
under Code Section 752. The amount of a Limited Partner's adjusted tax basis
in Units sold pursuant to the Offer will vary depending upon the Limited
Partner's particular circumstances, and will be adjusted by allocations of
Partnership income, gain or loss to a Limited Partner with respect to such
Units. In this regard, tendering Limited Partners will be allocated a pro rata
share of the Partnership's taxable income or loss with respect to Units sold
pursuant to the Offer through the effective date of the sale.
A Limited Partner who acquired Units pursuant to the original offering
of Units by the Partnership is expected to recognize a long-term capital loss
on a sale of Units pursuant to the Offer. If such Limited Partner is subject
to the passive activity loss limitation discussed below, such loss and any
unused tax losses from prior years will generally not be available to offset
income of such Limited Partner from other sources, unless such Limited Partner
sells all of his Units.
In general, the character (as capital or ordinary) of a Limited
Partner's gain or loss on a sale of a Unit pursuant to the Offer will be
determined by allocating the Limited Partner's amount realized on the sale and
his adjusted tax basis in the Units sold between "Section 751 items," which
are "substantially appreciated inventory" and "unrealized receivables"
(including depreciation recapture) as defined in Code Section 751, and non-
Section 751 items. The Purchaser believes that substantially all of the loss
realized on a sale of Units pursuant to the Offer will be treated as a capital
loss under these rules.
A Limited Partner's capital gain or loss on a sale of Units pursuant to
the Offer will be treated as long-term capital gain or loss if the Limited
Partner's holding period for the Units exceeds one year. Under current law,
long-term capital gains of individuals and other non-corporate taxpayers are
taxed at a maximum marginal federal income tax rate of 28%, whereas the
maximum marginal federal income tax rate for other income of such persons is
39.6%. Capital losses are deductible only to the extent of capital gains,
except that non-corporate taxpayers may deduct up to $3,000 of capital losses
in excess of the amount of their capital gains against ordinary income. Excess
capital losses generally can be carried forward to succeeding years (a
corporation's carry forward period is five years and a non-corporate taxpayer
can carry forward such losses indefinitely). In addition, corporations, but
not non-corporate taxpayers, are allowed to carry back excess capital losses
to the three preceding taxable years.
Under Code Section 469, a non-corporate taxpayer or personal service
corporation can deduct passive activity losses in any year only to the extent
of such person's passive activity income for such year, and closely held
corporations may not offset such losses against so-called "portfolio" income.
If a Limited Partner is subject to these restrictions and has a loss on the
sale of Units and/or unused tax losses attributable to the Partnership from
prior years, such tax losses will generally become available to offset any
taxable income, provided the Limited Partner sells all his Units. If a Limited
Partner is unable to sell all his Units (for example, because the Offer is
oversubscribed and the Purchaser makes the pro rata reduction described under
Section 2. "Proration; Acceptance for Payment and Payment for Units"), the
deductibility of such losses would continue to be subject to the passive
activity loss limitation until the Limited Partner sells his remaining Units,
except that such losses can be used to offset other passive activity income of
the Limited Partner. See Section 7 ("Effects of the Offer").
A Limited Partner who acquired his or her Units pursuant to the original
offering of Units by the Partnership is expected to recognize a long-term
capital loss of approximately $24 per Unit in connection with a sale pursuant
to the Offer. Additionally, if such Limited Partner was unable to utilize his
share of previously allocated tax losses of approximately $236 per Unit as a
result of the passive activity limitations described above and such Limited
Partner sells all of his Units, such losses will no longer be subject to the
passive activity restrictions and will be available to offset income of the
Limited Partner from any source. Under these circumstances, a sale pursuant
to the Offer could generate tax savings for a Limited Partner of approximately
$85-$90 per Unit, assuming a tax rate of 28% for long-term capital gains which
could be offset by the long-term capital loss and assuming a tax rate of 35%
on ordinary income which could be offset by the prior passive losses.
In certain cases, the transfer of an interest in a Partnership which
generated Low-Income Housing Credits can result in a recapture of the Tax
Credits to the seller (i.e., the seller would be required to pay an additional
amount of tax equal to the credit "recaptured"). The transfer of an interest
in an entity that has generated Low-Income Housing Credits generally results
in a recapture of a portion of the Low-Income Housing Credits. However, an
exception to this rule is provided for partnerships with 35 or more partners,
such as the Partnership. The Purchaser anticipates that, as a result of this
rule, the sale of Units will not cause a recapture of Low-Income Housing
Credits.
A Limited Partner (other than corporations and certain foreign
individuals) who tenders Units may be subject to 31% backup withholding unless
the Limited Partner provides a taxpayer identification number ("TIN") and
certifies that the TIN is correct or properly certifies that he is awaiting a
TIN. A Limited Partner may avoid backup withholding by properly completing the
Substitute Form W-9 included as part of the Letter of Transmittal. If a
Limited Partner who is subject to backup withholding does not properly
complete the Substitute Form W-9, the Purchaser will withhold 31% from
payments to such Limited Partner and pay it over to the Internal Revenue
Service ("IRS"). See Instruction 4 to the Letter of Transmittal. These
withholding requirements are applicable even if the Limited Partner recognizes
a loss with respect to the sale of his or her Units.
Gain realized by a foreign Limited Partner on a sale of a Unit pursuant
to the Offer will be subject to federal income tax. Under Section 1445 of the
Code, the transferee of a partnership interest held by a foreign person is
generally required to deduct and withhold a tax equal to 10% of the amount
realized on the disposition. The Purchaser will withhold 10% of the amount
realized (which will include the amount of indebtedness attributable to such
sold Units) by a tendering Limited Partner from the Purchase Price payable to
such Limited Partner unless the Limited Partner properly completes the FIRPTA
Affidavit included as part of the Letter of Transmittal, certifying the
Limited Partner's TIN, that such Limited Partner is not a foreign person and
such Limited Partner's address. Any amounts which are withheld would be
creditable against a foreign Limited Partner's federal income tax liability
and a refund of any excess can be obtained from the IRS by filing a U.S.
income tax return.
Consequences to a Non-Tendering Limited Partner. The Purchaser does not
anticipate that a Limited Partner who does not tender his or her Units will
realize any material tax consequences as a result of the election not to
tender. The Purchaser has retained a law firm which will deliver an opinion
letter that consummation of the Offer will not result in the Partnership being
treated as a publicly-traded partnership for federal income tax purposes.
There can be no assurance, however, that the IRS will agree with the
conclusions reached in such opinion. There is no precedent governing whether
the Offer will cause the Partnership to be treated as a publicly-traded
partnership for federal income tax purposes. If the IRS successfully asserted
that the Partnership should be treated as a publicly-traded partnership,
Limited Partners who are subject to the passive activity loss rules would not
be able to use tax losses derived from the Partnership to offset passive
taxable income from sources other than the Partnership prior to the Limited
Partner's disposition of his entire interest in the Partnership. However,
because 90% of the Partnership's gross income is expected to be derived from
rents and other qualifying income, the Partnership should not be taxable as a
corporation even if it becomes publicly traded.
Under recently revised Treasury Regulations, if, as a result of the
Offer, there is a sale or exchange of 50% or more in Partnership capital and
profits within a 12-month period, a termination of the Partnership for federal
income tax purposes would occur, and the taxable year of the Partnership would
close. In the case of such a sale or exchange, the Properties (subject to
related debt) of the Partnership would be treated as contributed by the
Partnership to a new partnership for federal income tax purposes, and
following the deemed contribution, a deemed distribution of interests in the
new partnership would be made to the Partnership and by the Partnership to its
partners. The consequences of a termination of the Partnership could include
changes in the methods and timing of depreciation available to the Partnership
for tax purposes, changes in the tax basis of the Partnership's assets,
possible recognition of taxable gain resulting from any deemed cash
distribution in excess of the non-tendering Limited Partner's tax basis in his
or her Units, and a recapture of Low Income Housing Credits. In addition, a
termination of the Partnership could cause the Partnership or its assets to
become subject to unfavorable statutory or regulatory changes enacted or
issued prior to the termination but previously not applicable to the
Partnership or its assets because of protective "transitional" rules. The
Purchaser will not purchase Units to the extent such purchase would cause a
termination of the Partnership for federal income tax purposes.
7. Effects of the Offer.
Certain Restrictions on Transfer of Interests. The Partnership Agreement
restricts transfers of Units if, among other things, such transfer would cause
a termination of the Partnership for federal income tax purposes (which
termination would occur when Units that represent 50% or more of the total
Partnership capital and profits are transferred within a twelve-month period).
Consequently, sales of Units in the secondary market and in private
transactions during the twelve-month period following completion of the Offer
may be restricted, and requests for transfers of Units during such twelve-
month period may not be recognized. The Purchaser does not intend to purchase
Units to the extent such purchase would violate the transfer restrictions set
forth in the Partnership Agreement. See Section 6 ("Federal Income Tax
Considerations--Consequences to a Non-Tendering Limited Partner"). Based on
information provided by the Partnership, for the period from July 1, 1996 to
July 1, 1997, approximately 1283 Units (representing approximately 2.5% of the
outstanding Units) were transferred. Therefore, the Purchaser does not believe
the number of Units sought in the Offer will violate the Transfer
Restrictions.
Effect on Trading Market; Registration Under Section 12(g) of the
Exchange Act. If a substantial number of Units are purchased pursuant to the
Offer, the result will be a reduction in the number of Limited Partners. In
the case of certain kinds of equity securities like the Units, a reduction in
the number of security holders might be expected to result in a reduction in
the liquidity and volume of activity in the trading market for the security.
The Form 10-K states: "There is no public market for the Units and it is not
expected that a public market will develop." Therefore, the Purchaser does
not believe a reduction in the number of Limited Partners will materially
further restrict the Limited Partners' ability to find purchasers for their
Units through secondary market transactions.
Partnership Profiles, Inc., which publishes the Partnership Spectrum,
tracks recent trades in certain limited partnership interests. The most
recent issue of the Partnership Spectrum (May/June 1997) indicates that 750
Units traded in the period from June 1, 1996 through May 31, 1997.
The Units currently are registered under Section 12(g) of the Exchange
Act, which means, among other things, that the Partnership is required to file
periodic reports with the Commission and to comply with the Commission's proxy
rules. The Purchaser does not expect or intend that consummation of the Offer
will cause the Units to cease to be registered under Section 12(g) of the
Exchange Act. If the Units were to be held by fewer than 300 persons, the
Partnership could apply to de-register the Units under the Exchange Act.
Because the Units are widely held, however, the Purchaser expects that even if
it purchases the maximum number of Units in the Offer, the Units will continue
to be held of record by substantially more than 300 persons.
Influence Over All Limited Partner Voting Decisions By Purchaser.
Pursuant to the Partnership Agreement, the Purchaser will have the right to
vote each Unit purchased by it pursuant to the Offer. If the Purchaser is
successful in acquiring a significant number of Units pursuant to the Offer,
the Purchaser could be in a position to significantly influence all
Partnership decisions on which Limited Partners, may vote. If the maximum
number of Units sought by the Purchaser is tendered and accepted for payment
pursuant to the Offer, the Purchaser will own approximately 25% of the
outstanding Units. The ownership of tendered Units by the Purchaser could
effectively (i) prevent non-tendering Limited Partners from taking actions
they desire but that the Purchaser opposes and (ii) enable the Purchaser to
take actions desired by it but opposed by non-tendering Limited Partners.
Generally, under the Partnership Agreement, holders of more than 50% of the
outstanding Units are entitled to take action with respect to a variety of
matters, including, approving the removal of any General Partner and proposing
and approving a replacement therefor; approving the dissolution of the
Partnership; and most types of amendments to the Partnership Agreement.
However, no such votes have ever been taken and the General Partners have
indicated that none are presently scheduled or expected. Although the
Purchaser does not have any current plans or intentions with regard to any of
these matters, it will vote the Units acquired pursuant to the Offer in its
interest, which may, or may not, be in the best interest of non-tendering
Limited Partners.
It is likely that the Purchaser, which is affiliated with the General
Partners, will vote all of its Units to continue the General Partners as
general partners of the Partnership and in a manner that is otherwise
consistent with the decisions and recommendations of the General Partners,
including as they relate to matters involving transactions between the
Partnership and affiliates of the Purchaser. Therefore, the Purchaser's
acquisition of Units may have the effect of making any future change of the
Partnership's policies and/or current management more difficult.
8. Purpose of the Offer; Future Plans.
Purpose of the Offer. The purpose of the Offer is to enable the
Purchaser to acquire a significant interest in the Partnership for investment
purposes based on its expectation that the Partnership will continue to
generate Low-Income Housing Credits and tax losses attributable to the Units.
The Purchaser intends to sell membership interests in the Purchaser to third
parties (either directly or through an affiliate in which such third parties
invest) with a need for Low-Income Housing Credits and/or tax losses. The
purchase of the Units will allow the Purchaser to benefit from any of the
following: (a) any and all Low-Income Housing Credits and tax losses
attributable to such Units; (b) any cash distributions from Partnership
operations in the ordinary course of business; (c) distributions, if any, of
net proceeds from the sale of any Properties after the Partnership has
satisfied its liabilities; and (d) any distributions of net proceeds from the
dissolution of the Partnership. Since the formation of the Partnership,
corporations have shown increasing interest in investing in programs
benefiting from Low-Income Housing Credits and passive tax losses.
Individuals usually cannot fully use passive tax losses since current tax laws
restrict the use of such losses by individuals (See Section 6. "Certain
Federal Income Tax Consequences"), whereas corporate investors, in addition to
utilizing such Low-Income Housing Credits, are able to fully utilize passive
tax losses. The aggregate sales price of the Purchaser's membership interests
to third parties will be equal to the aggregate Purchase Price for the
tendered Units plus the Purchaser's expenses in conducting and consummating
the Offer and financing the purchase of the tendered Units. Neither the
Purchaser nor its currrent members will derive a profit from the sale of the
Purchaser's membership interests. There can be no assurance, however, that
any membership interests will be sold. Alternatively, the Purchaser may sell
such membership interests at a price equal to its cost. In such a case
affiliates of the Purchaser may earn fees for structuring such a transaction.
Future Plans. The Purchaser does not currently intend to make any
effort to change current management or the operation of the Partnership nor
does it have any current plans or intentions for any extraordinary transaction
involving the Partnership. However, the Purchaser's plans with respect to its
investment in the Units could change at any time in the future. If such plans
with respect to the Partnership change in the future, the ability of the
Purchaser to influence actions on which Limited Partners have a right to vote
will depend on the Limited Partners' response to the Offer (i.e., the number
of Units tendered). If the Purchaser acquires only a small number of Units
pursuant to the Offer, it will not be in a position to influence matters over
which Limited Partners have a right to vote. Conversely, if the maximum number
of Units sought are tendered and accepted for payment pursuant to the Offer,
the Purchaser will own approximately 25% of the issued and outstanding Units
and, as a result, will be in a position to exert significant influence over
matters on which Limited Partners have a right to vote.
Following the completion of the Offer, the Purchaser and its affiliates
may acquire additional Units. Any such acquisition may be made through private
purchases, through one or more future tender offers or by any other means
deemed advisable, and may be at prices higher or lower than the price to be
paid for the Units purchased pursuant to the Offer. Additionally, the
Purchaser intends to sell membership interests in the Purchaser to third
parties (either directly or through an affiliate in which such third parties
invest) with a need for Low-Income Housing Credits and/or tax losses. The
aggregate sales price of the Purchaser's membership interests to third parties
will be equal to the aggregate Purchase Price for the tendered Units plus the
Purchaser's expenses in conducting and consummating the Offer and financing
the purchase of the tendered Units. Neither the Purchaser nor its current
members will derive a profit from the sale of the Purchaser's membership
interests. Affiliates of the Purchaser expect to arrange the sale of
membership interests of the Purchaser to third parties upon conclusion of the
Offer and to earn fees for structuring this transaction and arranging the
sale. These fees will be, in part, dependent on the amount third parties are
willing to pay for membership interests in excess of the Purchase Price per
Unit and the amount of membership interests sold. There can be no assurance,
however, that any membership interests in the Purchaser will be sold or at
what price.
9. Certain Information Concerning the Partnership.
Information included herein concerning the Partnership is derived from
the Partnership and its publicly-filed reports. Additional financial and other
information concerning the Partnership is contained in the Partnership's
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other filings
with the Commission. Such reports and other documents may be examined and
copies may be obtained from the public reference facilities maintained at the
principal offices of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at the regional offices of the Commission located at 7 World Trade
Center, Suite 1300, New York, New York 10048 and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661, and at the Commission's World Wide Web
site at http://www.sec.gov. Copies should be available by mail upon payment of
the Commission's customary charges by writing to the Commission's principal
offices at 450 Fifth Street, N.W., Washington, D.C. 20549. The Purchaser
disclaims any responsibility for the information included in such reports and
extracted in this Offer to Purchase.
The Partnership's Assets and Business.
The Partnership is a limited partnership formed in 1992, under the laws
of the Commonwealth of Massachusetts. Its principal executive offices are
located at 101 Arch Street, Boston, Massachusetts 02110. Its telephone number
is (617) 439-3911. The Partnership's fiscal year ends March 31st.
The Partnership was formed to invest, as a limited partner, in other
limited partnerships (referred to herein as "Local Limited Partnerships") each
of which owns one or more leveraged low-income multifamily residential
complexes ("Apartment Complexes" or "Properties") that are eligible for the
low-income housing tax credit ("Low Income Housing Credit") enacted in the Tax
Reform Act of 1986. Some of the Apartment Complexes benefit from one or more
other forms of federal or state housing assistance. The Partnership's interest
in the profits and losses from normal operations and Low-Income Housing
Credits in each Local Limited Partnership is equal to 99% of such items, with
the exception of one Local Limited Partnership in which the Partnership's
interest in such items is equal to 19.80% of such items. According to the
Form 10-K, as of March 31, 1997, all of the net proceeds from the original
offering of Units was invested in 19 Local Limited Partnerships. The
Partnership does not anticipate making any additional investments.
SLP, Inc. is the special limited partner in all 19 Local Limited
Partnerships and is an affiliate of each General Partner of the Partnership.
SLP, Inc. has certain rights and obligations in its role as special limited
partner which permit SLP, Inc. to execute control over the management and
policies of the Local Limited Partnerships.
According to the Form 10-K, the stated investment objectives of the
Partnership are to:
1. Provide investors with annual tax credits which they may use to
reduce their federal income taxes;
2. Provide limited cash distributions from the operations of
apartment complexes; and
3. Preserve and protect the Partnership's capital with the
possibility of realizing a profit through the sale or refinancing of apartment
complexes.
According to the Form 10-K, as of March 31, 1997, there can be no
assurance that the Partnership will achieve its investment objectives.
Generally, Low-Income Housing Credits are available over a ten year
period from the date the Apartment Complex is placed in service (referred to
herein as the "Credit Period"). Each of the Local Limited Partnerships in
which the Partnership has acquired an interest has been allocated by the
relevant state credit agency the authority to recognize Low Income Housing
Credits to be claimed during the Credit Period provided that the Local Limited
Partnership satisfies the rent restriction, minimum set-aside and other
requirements for eligibility for of the Low Income Housing Credits at all
times during the 15-year period commencing at the beginning of the Credit
Period (the "Compliance Period"). Once a Local Limited Partnership has become
eligible to receive Low Income Housing Credits, it may lose such eligibility
and suffer an event of "recapture" if (i) the Local Limited Partnership ceases
to meet qualification requirements, (ii) there is a decrease in the qualified
basis of the projects, or (iii) there is a reduction in the taxpayer's
interest in the project at any time during the 15-year Compliance Period that
began with the first tax year of the Credit Period. According to the Form 10-
K, none of the Local Limited Partnerships in which the Partnership has
acquired an interest has suffered an event of recapture.
According to the Form 10-K, the Partnership generated Low Income
Housing Credits per Unit of $146.39, $136.39 and $82.16, during the calendar
years 1996, 1995 and 1994, respectively. Low Income Housing Credits are not
available for a property until the property is placed in service and its
apartment units are occupied by qualified tenants. In the first year the Low
Income Housing Credits are claimed, the allowable credit amount is determined
using an averaging convention to reflect the number of months that apartment
units comprising the qualified basis were occupied by qualified tenants during
the year. To the extent that the full amount of the annual credit is not
allocated in the first year, an additional credit equal to the difference is
available in the 11th taxable year.
The Form 10-K states that, as of December 31, 1996, the tax year end of
the Local Limited Partnerships, all of the properties had been placed in
service and all generated Low Income Housing Credits in 1996.
According to the Form 10-K, the annual Low Income Housing Credits per
Limited Partnership Unit have stabilized at approximately $147 per Unit, as
properties have reached completion and have become fully leased. Since the
Low-Income Housing Credits have stabilized, the annual amount of Low-Income
Housing Credits allocated to investors is expected to remain the same for
approximately the next seven years. In years eight through ten, the credits
are expected to decrease as Apartment Complexes reach the end of the ten year
Credit Period.
The 19 Local Limited Partnerships own 19 Apartment Complexes. Attached
to this Offer to Purchase as Schedule II is a schedule of these Local Limited
Partnerships (the "Local Limited Partnership Schedule"), including certain
information concerning their respective Apartment Complexes. Attached to this
Offer to Purchase as Schedule III is additional information concerning these
Local Limited Partnerships and their Apartment Complexes, including
information relating to mortgage encumbrances and accumulated depreciation.
According to the Form 10-K, the duration of the leases for the Properties
owned by the Local Limited Partnerships range from six to twelve months. The
Managing General Partner believes the Properties are adequately covered by
insurance
Selected Financial Data. Set forth below is a summary of certain
financial data for the Partnership which has been excerpted from the Form 10-
K. More comprehensive financial and other information is included in such
report and other documents filed by the Partnership with the Commission, and
the following summary is qualified in its entirety by reference to such report
and other documents and all the financial information and related notes
contained therein.
Statements of Operations
For the Years Ended March 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Revenue:
Investment $223,158 $219,674 $287,872
Other 177,191 37,486 45,651
Total Revenue 400,349 257,160 333,523
Expenses:
General and
administrative expenses
(includes reimbursements
to an affiliate in the
amounts of $115,310,
$123,712 and $123,669 in
1997, 1996 and 1995,
respectively) 240,204 245,641 298,586
Asset management fees,
related party 277,575 270,264 263,289
Amortization 45,831 40,752 32,275
Interest -- -- 14,475
Total Expenses 563,610 556,657 608,625
Loss before equity in
losses of Local
Limited Partnerships (163,261) (299,497) (275,102)
Equity in losses of Local
Limited Partnerships (2,967,826) (2,570,732) (2,190,648)
Net Loss $(3,131,087) $(2,870,229) $(2,465,750)
Net Loss allocated
To General Partners $(31,311) $(28,702) $(24,657)
To Limited Partners (3,099,776) (2,841,527) (2,441,093)
$(3,131,087) $(2,870,229) $(2,465,750)
Net Loss per Limited
Partnership Unit
(50,930 Units) $(60.86) $(55.79) $(47.93)
Summary Selected Financial Data.
March 31, March 31, March 31, March 31, March 31,
1997 1996 1995 1994 1993
Revenue $400,349 $257,16 $333,52 $365,31 $488
Equity in losses
of Local Limited
Partnerships (2,967,826) (2,570,732) (2,190,648) (536,848) ---
Net Loss Per
Limited Partnership
Unit<F1> (3,131,087) (2,870,229) (2,465,750) (735,660) (23,957)
(60.86) (55.79) (47.93) (21.34) (3.69)
Cash, cash equivalents
and marketable securities
3,614,673 4,190,187 7,456,668 19,938,766 4,661,492
Investments in Local Limited
Partnerships, at original
cost 39,572,643 39,572,643 39,527,857 24,572,298 1,000,669
Total assets<F2> 35,694,649 38,795,017 41,924,559 44,145,937 5,716,428
Cash Distribution --- --- --- --- ---
Other data:
Passive loss<F3> (3,697,126) (3,835,484) (3,604,952) (822,547) ---
Per Limited (71.87) (74.56) (70.07) (39.28) ---
Partnership
Unit <F3>
Portfolio income 359,903 477,042 1,026,953 415,206 ---
<F3>
Per Limited 7.00 9.27 19.96 19.83 ---
Partnership Unit<F3>
Net short term --- (610) (510,142) --- ---
capital losses<F3>--- (.01) (9.92) --- ---
Per Limited Partnership
Unit<F3>
Low-Income Housing 7,531,209 7,016,512 4,226,746 750,876
Credit <F3> Per 146.39 136.39 82.16 35.86
Limited Partnership
Unit <F3>
Local Limited 19 19 19 15 2
Partnership interests
owned at end of period
<FN>
<F1> Per Limited Partnership Unit data is based upon 50,930 Units for the
years ended March 31, 1997, 1996 and 1995 and a weighted average number
of units outstanding of 34,127 and 6,424 for the year ended March 31,
1994 and the period December 24, 1992 to March 31, 1993, respectively.
<F2> Total assets include the net investments in Local Limited Partnerships.
<F3> Income tax information is as of December 31, the year end of the
Partnership for income tax purposes. Per Limited Partnership Unit data
is based on the initial investor closing on March 30, 1993. The per
Limited Partnership Unit data for Limited Partners admitted subsequent
to March 30, 1993 varies depending on their admission date.
</FN>
</TABLE>
Cash Distributions.
According to the Form 10-K, the Partnership has made no cash
distributions to the Limited Partners during the years ended March 31, 1997,
1996 and 1995.
Liquidity and Capital Resources.
According to the Form 10-K, at March 31, 1997, the Partnership had cash
and cash equivalents of $373,729 compared with $334,845 at March 31, 1996.
This increase was primarily attributable to proceeds from sales and maturities
of marketable securities in excess of cash distributions received from Local
Limited Partnerships and the purchase of marketable securities.
According to the Form 10-K, as of March 31, 1997, approximately
$2,538,000 of marketable securities has been designated as Reserves by the
Managing General Partner. The Reserves were established to be used for
working capital of the Partnership and contingencies related to the ownership
of Local Limited Partnership interests. Management believes that the interest
income earned on Reserves, along with cash distributions received from Local
Limited Partnerships, to the extent available, will be sufficient to fund the
Partnership's ongoing operations. Reserves may be used to fund operating
deficits, if the Managing General Partner deems funding appropriate.
According to the Form 10-K, as of March 31, 1997, the Partnership has
committed to make future capital contributions and pay future purchase price
installments on its investments in Local Limited Partnerships. These future
payments are contingent upon the achievement of certain criteria as set forth
in the limited partnership agreements of the Local Limited Partnerships and
total approximately $752,000. In addition, the Partnership has set aside
$217,000 in future capital contributions to one Local Limited Partnership.
According to the Form 10-K, since the Partnership invests as a limited
partner, the Partnership has no contractual duty to provide additional funds
to Local Limited Partnerships beyond its specified investment. Thus, as of
March 31, 1997, the Partnership had no contractual or other obligation to any
Local Limited Partnership, which had not been paid or provided for, except as
described above.
The Form 10-K states that, in the event a Local Limited Partnership
encounters operating difficulties requiring additional funds, the Partnership
might deem it in its best interests to provide such funds, voluntarily, in
order to protect its investment. No such event has occurred to date.
Results of Operations.
1997 versus 1996.
The Partnership's results of operations for the year ended March 31,
1997 resulted in a net loss of $3,131,087 as compared to a net loss of
$2,870,229 for the same period in 1996. According to the Form 10-K, the
increase in net loss is primarily attributable to an increase in equity in
losses of Local Limited Partnerships partially offset by an increase in other
revenue. The increase in equity in losses of Local Limited Partnerships is
due to an increase in the number of Local Limited Partnership interests which
had a full year of operations. This resulted in increased depreciation,
interest and operating expenses over total revenue earned. The increase in
other revenue is primarily due to an increase in interest received on funds
held in escrow for Local Limited Partnerships for the year ended March 31,
1997.
1996 versus 1995.
The Partnership's results of operations for the year ended March 31,
1996 resulted in a net loss of $2,870,229 as compared to a net loss of
$2,465,750 for the same period in 1995. According to the Form 10-K, the
increase is primarily attributable to greater equity in losses of Local
Limited Partnerships and a decrease in investment income. Partially
offsetting these amounts was a decrease in general and administrative
expenses. Equity in losses of Local Limited Partnerships increased for the
year ended December 31, 1995 as compared to December 31, 1994, due to an
increase in the number of Local Limited Partnership interests which are now in
the operational phase. The decrease in investment income is due to lower
average cash balances maintained by the Partnership during the year ended
March 31, 1996 as compared to March 31, 1995. The decrease in general and
administrative expenses is due to a decrease in certain Partnership
administrative expenses.
Property Discussions.
According to the Form 10-K, one of the Properties in which the
Partnership has acquired an interest, Los Claveles II, located in Trujillo
Alto, Puerto Rico, is experiencing operating difficulties due to ongoing
capital repair needs and management issues. The Form 10-K indicates that most
of these difficulties stem from widespread water infiltration that caused
subsidy payments to be suspended pending completion of required property
repairs. The suspension of Section 8 payments caused large fluctuations in
monthly revenue and a subsequent mortgage default. The Partnership
temporarily cured the default by advancing $208,000 from the developer's
escrow. Recently, an affiliate of the Managing General Partner negotiated
with the Local General Partners, lender and local housing authority to replace
the management agent for Los Claveles II as well as its neighboring property,
Los Claveles I. By consolidating management, the Managing General Partner
feels that it can achieve greater control over both sites and attain certain
operating efficiencies that will benefit both properties. The new management
agent assumed responsibility for the property in December 1996 and has
successfully obtained Section 8 subsidy increases. In addition, the
management agent will oversee the capital improvements program which is under
development and should be implemented this year. The Local General Partners
have agreed to step down voluntarily and will be replaced by an affiliate of
the Managing General Partner, once the workout plan is approved by the lender.
The lender continues to indicate its willingness to work with the General
Partners and management agent to improve operations and cure defaults. The
Form 10-K states that, although there appears to be sufficient resources to
turn the project around, no agreement has been reached with the lender to
date.
The Partnership Agreement.
The General Partners of the Partnership are Arch Street VII Limited
Partnership (the "Co-General Partner") and Arch Street VII, Inc. (the
"Managing General Partner") (the Co-General Partner and the Managing General
Partner are referred to collectively as the "General Partners"). The General
Partners and their affiliates have received or will receive certain types of
compensation, fees or other distributions in connection with the operations of
the Partnership. The arrangements for payment of compensation and fees set
forth in the Partnership Agreement were not determined in arm's-length
negotiations with the Partnership.
The General Partners and their respective officers and directors, are
each entitled to indemnification under certain circumstances from the
Partnership pursuant to provisions of the Partnership Agreement. Generally,
the General Partners are also entitled to reimbursement of expenditures made
on behalf of the Partnership.
In accordance with the Partnership Agreement, the Partnership is
required to pay certain fees to and reimburse expenses of the Managing General
Partner and others in connection with the organization of the Partnership and
the offering of its Units. Commissions, fees and accountable expenses related
to the sale of the Units totaling $6,304,898 have been charged directly to
Limited Partners' equity. In connection therewith, $4,329,050 of selling
expenses and $1,975,848 of offering expenses incurred on behalf of the
Partnership have been paid to an affiliate of the Managing General Partner.
The Partnership is required to pay a non-accountable expense allowance for
marketing expense equal to a maximum of 1% of gross offering proceeds. The
Form 10-K states that this allowance has not yet been charged to the
Partnership. In addition, the Partnership has paid $50,000 in organization
costs to an affiliate of the Managing General Partner. Total organization and
offering expenses exclusive of selling commissions and underwriting advisory
fees did not exceed 5.5% of the gross offering proceeds and organizational and
offering expenses, inclusive of selling commissions and underwriting advisory
fees, did not exceed 15.0% of the gross offering proceeds. Payments made and
expenses reimbursed during the years ended March 31, 1997, 1996 and 1995 are
as follows:
1997 1996 1995
Organizational fees and $ - $3,583 $7,927
expenses
In accordance with the Partnership Agreement, the Partnership is
required to pay acquisition fees to and reimburse acquisition expenses of the
Managing General Partner or its affiliates for selecting, evaluating,
structuring, negotiating, and closing the Partnership's investments in Local
Limited Partnerships. Acquisition fees total 6% of the gross offering
proceeds. Acquisition expenses which include such expenses as legal fees and
expenses, travel and communications expenses, costs of appraisals, accounting
fees and expenses, totaled 1.5% of the gross offering proceeds. Acquisition
fees totaling $3,055,800 for the closing of the Partnership's investments in
Local Limited Partnership were paid to an affiliate of the Managing General
Partner. Acquisition expenses totaling $763,950 were reimbursed to an
affiliate of the Managing General Partner. Payments made and expenses
reimbursed in the years ended March 31, 1997, 1996 and 1995 are as follows:
1997 1996 1995
Acquisition fees $(3,017) $57,598 $554,269
and expenses
Pursuant to the Partnership Agreement, an affiliate of the Managing
General Partner is entitled to a fee (the "Asset Management Fee") for its
services in connection with the administration of the affairs of the
Partnership. The Asset Management Fee is payable annually and is calculated by
multiplying 0.50% by the consumer price index and then multiplying the product
by the gross proceeds of the offering. According to the Form 10-K, this
formula currently results in the amount of .558% being multiplied by the gross
proceeds of the offering. The Asset Management Fees earned during the years
ended March 31, 1997, 1996 and 1995 are as follows:
1997 1996 1995
Asset Management Fees $277,575 $270,264 $263,289
According to the Partnership Agreement, the Managing General Partner or
an Affiliate thereof is also entitled to receive a subordinated disposition
fee (the "Subordinated Disposition Fee") for services rendered in connection
with the sale of a property or the sale of the Partnership's interest in a
Local Limited Partnership. Payment of such fee shall be subordinated to the
Limited Partners receiving their 6% return as set forth in the Partnership
Agreement and is also subordinated to the Limited Partners receiving their
capital back. Each Disposition Fee is equal to 1% of the sale price in
respect of any such sale (including the principal amount of any mortgage loans
and any related seller financing with respect to a property to which such sale
is subject). For the year ended March 31, 1997, neither the Managing General
Partner nor an Affiliate thereof earned any Subordinated Disposition Fee.
According to the Form 10-K, the Partnership does not have any employees,
but an affiliate of the Managing General Partner is reimbursed for the cost of
the Partnership' salaries and benefits expenses. The reimbursements are
based upon the size and complexity of the Partnership's operations.
Reimbursements paid or accrued during the years ended March 31, 1997, 1996 and
1995 are as follows:
1997 1996 1995
Salaries and benefits
expense reimbursements $115,310 $123,712 $123,669
According to the Form 10-K, upon construction completion, in August of
1994, Lansing Management Company, an affiliate of the Managing General
Partner, became the management agent for one of the Local Limited
Partnerships, Twin Oaks Meadows. The management fee charged to the property
is equal to 5% of the property gross revenues. Fees charged for the three
years ended March 31, 1997, 1996 and 1995 are as follows:
1997 1996 1995
Property Management $19,215 $17,388 $7,245
Fees
Under the Partnership Agreement, the General Partners are entitled to
receive 1% of cash distributions to the partners of the Partnership. However,
according to the Form 10-K, the Partnership has not paid any cash
distributions to its partners.
In accordance with the Partnership Agreement, an affiliate of the
General Partners (SLP, Inc.) is entitled to receive up to $10,000 from the
sale or refinancing proceeds of each Local Limited Partnership, if such
affiliate is still a limited partner of that Local Limited Partnership at the
time of such transaction.
In addition, under the terms of the Partnership Agreement, upon the
removal of a General Partner by the Limited Partners or upon the occurrence of
an "Event of Withdrawal", as defined in the Partnership Agreement, the removed
General Partner may be entitled to receive the fair market value of its
interest, which will be payable over a five-year period.
10. Certain Information Concerning the Purchaser.
The Purchaser was organized for the purpose of acquiring the Units
pursuant to the Offer. The principal executive office of the Purchaser is at
101 Arch Street, Boston, Massachusetts 02110. The managing member of the
Purchaser (the "Managing Member") is West Cedar Managing, Inc., a
Massachusetts corporation. The directors of the Managing Member are Michael H.
Gladstone, William E. Haynsworth and Jenny Netzer. The business address for
each of Ms. Netzer and Messrs. Gladstone and Haynsworth is 101 Arch Street,
Boston, Massachusetts 02110.
For certain information concerning the executive officers and directors
of the Managing Member, see Schedule I to this Offer to Purchase. The persons
set forth on Schedule I, who effectively control the Purchaser, are also
officers of Arch Street VII, Inc. the Managing General Partner and the general
partner in control of Arch Street VII Limited Partnership, the Co-General
Partner of the Partnership. Therefore, the Purchaser and Arch Street VII, Inc.
and Arch Street VII Limited Partnership, subject to their fiduciary duties,
may have a conflict of interest with respect to certain matters involving
Limited Partners and/or the Partnership.
Arch Street VII Limited Partnership acquired 5 Units in the Partnership
in 1992 as the initial limited partner of the Partnership in connection with
the original formation of the Partnership. Except as otherwise set forth in
this Offer to Purchase or Schedule I hereto, (1) neither the Purchaser, the
Managing Member and, to the best of the Purchaser's knowledge, the persons
listed on Schedule I, nor any affiliate of the foregoing beneficially owns or
has a right to acquire any Units, (2) neither the Purchaser, the Managing
Member and, to the best of the Purchaser's knowledge, the persons listed on
Schedule I, nor any affiliate thereof or director, executive officer or
subsidiary of the Managing Member has effected any transaction in the Units
within the past 60 days, (3) neither the Purchaser, the Managing Member and,
to the best of the Purchaser's knowledge, any of the persons listed on
Schedule I, nor any director or executive officer of the Managing Member has
any contract, arrangement, understanding or relationship with any other person
with respect to any securities of the Partnership, including, but not limited
to, contracts, arrangements, understandings or relationships concerning the
transfer or voting thereof, joint ventures, loan or option arrangements, puts
or calls, guarantees of loans, guarantees against loss or the giving or
withholding of proxies, (4) there have been no transactions or business
relationships which would be required to be disclosed under the rules and
regulations of the Commission between any of the Purchaser, the Managing
Member, or, to the best of the Purchaser's knowledge, the persons listed on
Schedule I, on the one hand, and the Partnership or its affiliates, on the
other hand, and (5) there have been no contracts, negotiations or transactions
between the Purchaser, the Managing Member or, to the best of the Purchaser's
knowledge, the persons listed on Schedule I, on the one hand, and the
Partnership or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets.
11. Background Of The Offer.
The purpose of the Offer is to allow Limited Partners who have a current
or anticipated need or desire for liquidity to sell their Units.
In early July 1997, representatives of the Purchaser met with
representatives of the Partnership in order to discuss the Offer. The
Partnership expressed concern that consummation of the Offer would cause it to
be classified as a "publicly-traded partnership" (a "PTP") for federal income
tax purposes and, therefor, suffer adverse tax consequences. To address this
concern, the Purchaser agreed to retain a law firm to deliver a legal opinion
to the Partnership that consummation of the Offer will not result in it being
treated as a PTP.
The Purchaser requested the names and addresses of the Limited Partners
from the Partnership in order to be able to have the Administrative
Agent/Depositary mail this Offer to Purchase, the related Letter of
Transmittal and other relevant material. On July 24, 1997, the Purchaser was
notified that such materials were mailed at the Purchaser's expense and the
Offer was commenced.
12. Source Of Funds.
The Purchaser expects that an aggregate of approximately $9,420,200
(exclusive of fees and expenses) will be required to purchase the Units sought
pursuant to the Offer, if tendered. The Purchaser presently contemplates that
it will borrow all of such funds from one of its affiliates, on substantially
the same economic terms and conditions that such affiliate borrows such funds
under an existing credit facility that such affiliate has available to it with
Fleet Bank of Massachusetts, N.A. (the "Lender").
The existing credit agreement is between the Lender and an affiliate of
the Purchaser. The interest rate is the "Prime Rate" (as publicly announced by
the Lender, from time to time) plus .125%, which is presently equal to 8.625%
per annum or the "LIBOR Rate" (the annual rate of interest equal to 2.75%
above LIBOR), as elected by such affiliate.
An alternative, the Purchaser may seek financing from the Lender or
other national banks on other terms.
The Purchaser expects to repay all amounts borrowed from its affiliate
by selling additional membership interests to persons or entities that have a
need for the Low-Income Housing Credits and/or tax losses from the Units. No
plans or arrangements have been made with regard to the payment of periodic
interest required by the terms of the loan. However, it is expected that if
interest payments are due and payable, the Purchaser may borrow those funds
from its affiliate(s).
13. Purchase Price Considerations.
The Purchaser has set the Purchase Price at $740.00 net per Unit. The
Purchaser considered the recent trading prices for the Units in the secondary
market and the estimated present value of the expected remaining Low-Income
Housing Credits in setting the offer price.
The Form 10-K states that: "There is no public market for the Units and
it is not expected that a public market will develop." At present,
privately negotiated sales and sales through intermediaries (e.g., through the
trading system operated by Chicago Partnership Board, Inc., which publishes
sales by Limited Partners) are the only means available to Limited Partners to
liquidate an investment in Units (other than the Offer) because the Units are
not listed or traded on any exchange or quoted on any NASDAQ list or system.
The Partnership maintains an internal database of all the Units traded, both
through privately negotiated sales and through intermediaries. Chicago
Partnership Board, Inc. also maintains a database of all Units which are sold
through their services. Both the Partnership and Chicago Partnership Board,
Inc. have provided the Purchaser with copies of the data relating to the sales
of Units from July 1, 1996 through June 30, 1997. The table below sets forth
the high and low sales prices and the weighted average sales prices derived
from the information provided by the Partnership and Chicago Partnership
Board, Inc. for this period. It should be noted that trades over 20 Units
tend to result in higher prices than smaller sales. The prices in the table
below are the "net" prices received by the sellers of Units after the payment
of any sales commissions and transactions costs:
WEIGHTED AVERAGE AND HIGH AND LOW TRADING PRICES
THROUGH JUNE 30, 1997
PERIOD PARTNERSHIP DATA CHICAGO PARTNERSHIP
BOARD, INC. DATA
High/Low Weighted High/Low Weighted
Average Average
April-June 97 $1,000/$500 $732 $730/702 $708
January-March 97 No sales reported No sales reported
October-December 96 $840/730 $796 $823/$730 $819
July-September 96 $1,000/$768 $835 $730/$730 $730
Sales prices of Units may also be obtained from Partnership Spectrum, an
independent third-party industry publication which reports such information;
however, the gross sales prices reported by Partnership Spectrum do not
necessarily reflect the net sales proceeds received by sellers of Units, which
typically are reduced by commissions and other secondary market transaction
costs to amounts less than the reported prices. Based on information provided
to the Purchaser by the Partnership, for a typical 10 Unit trade, sales
commissions generally range from 5% to 8.75% of the gross sales price of the
Units and the transfer fee is $100. The Partnership Spectrum indicates that ,
for the period from April 1, 1997 through May 31, 1997, a total of 241 Units
traded at per Unit prices between $831 and $769.32 with a weighted average of
$794.83 per Unit. For the period from February 21, 1997 through March 31,
1997, no Units traded. For the period from December 1, 1996 through
January 31, 1997, a total of 453 Units traded at per Unit prices between
$823.25 and $823.25 with a weighted average of $823.25 per Unit. For the
period from October 1, 1996 through November 30, 1996, a total of 20 Units
traded at per Unit prices between $800 and $800 with a weighted average of
$800 per Unit. For the period from August 1, 1996 through September 30, 1996,
a total of 20 Units traded at per Unit prices between $750 and $750 with a
weighted average of $750 per Unit. Finally, for the period from June 1, 1996
through July 31, 1996, a total of 16 Units traded at per Unit prices between
$800 and $765 with a weighted average of $786.88 per Unit.
In view of the foregoing, the Purchaser believes that the Purchase Price
compares favorably with the current weighted average secondary market prices.
In addition, the Purchaser believes that the Purchase Price compares favorably
with the estimated present value of the expected future Low-Income Housing
Credits that a Limited Partner who chooses to remain in the Partnership may
receive. The estimated aggregate present value of the expected Low-Income
Housing Credits over the remaining ten years of the Credit Period is $738.
This present value of the Low-Income Housing Credits was calculated by using a
discount rate of 6.52%, which represents the rate for U.S. Treasury Strips
maturing in November, 2010. According to the Form 10-K, all the properties
invested in by the Partnership will have reached the end of the 15 year Low-
Income Housing Credits Compliance Period in 2010.
Limited Partners who sell Units pursuant to the Offer will receive a
cash payment of $740.00 per Unit sold. In addition, Limited Partners who sell
all their Units who have been unable to use the passive losses from the
Partnership will be able to use those suspended passive losses, estimated to
be up to $236 per Unit from the sale to offset any income of such Limited
Partner, and will generate a long-term capital loss of approximately $24 per
Unit. Alternatively, if Limited Partners keep their Units, it is possible
that they will eventually receive proceeds when the properties are sold or
refinanced. Additionally, they may receive the tax benefit of their allocable
share of passive losses plus a capital loss if they ultimately do not receive
a return of their original capital. See Section 6 ("Certain Federal Income
Tax Consequences").
The Purchase Price represents the price at which the Purchaser is
willing to purchase Units. Other measures of the value of the Units may be
relevant to Limited Partners. Limited Partners are urged to consider carefully
all of the information contained herein and consult with their own advisors,
tax, financial or otherwise, in evaluating the terms of the Offer before
deciding whether to tender Units.
14. Conditions of the Offer.
Notwithstanding any other provisions of the Offer and in addition to
(and not in limitation of) the Purchaser's rights to extend and amend the
Offer at any time in its sole discretion, the Purchaser shall not be required
to accept for payment, subject to Rule 14e-1(c) under the Exchange Act, any
tendered Units and may terminate the Offer as to any Units not then paid for
if, prior to the Expiration Date, (i) the Purchaser shall not have confirmed
to its reasonable satisfaction that, upon purchase of the Units pursuant to
the Offer, the Purchaser will have full rights to ownership as to all such
Units and the Purchaser will become the transferee of the purchased Units for
all purposes under the Partnership Agreement, (ii) the Purchaser shall not
have confirmed to its reasonable satisfaction that, upon the purchase of the
Units pursuant to the Offer, the Transfer Restrictions will have been
satisfied, or (iii) all authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by,
any court, administrative agency or commission or other governmental authority
or instrumentality, domestic or foreign, necessary for the consummation of the
transactions contemplated by the Offer shall not have been filed, occurred or
been obtained. Furthermore, notwithstanding any other term of the Offer, the
Purchaser will not be required to accept for payment and may terminate or
amend the Offer as to such Units if, at any time on or after the date of the
Offer and before the Expiration Date, any of the following conditions exist:
(a) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or the over-the-counter market in the United States, (ii) a
declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States (whether or not mandatory), (iii) the
commencement or escalation of a war, armed hostilities or other national or
international crisis involving the United States, (iv) any limitation (whether
or not mandatory) imposed by any governmental authority on, or any other event
that might have material adverse significance with respect to, the nature or
extension of credit by banks or other lending institutions in the United
States, or (v) in the case of any of the foregoing, a material acceleration or
worsening thereof; or
(b) any material adverse change (or any condition, event or
development involving a prospective material adverse change) shall have
occurred or be likely to occur in the business, prospects, financial
condition, results of operations, properties, assets, liabilities,
capitalization, partners' equity, licenses, franchises or businesses of the
Partnership and its subsidiaries taken as a whole; or
(c) there shall have been threatened, instituted or pending any
action, proceeding, application, audit, claim or counterclaim by any
government or governmental authority or agency, domestic or foreign, or by or
before any court or governmental, regulatory or administrative agency,
authority or tribunal, domestic, foreign or supranational, which (i)
challenges the acquisition by the Purchaser of the Units or seeks to obtain
any material damages as a result thereof, (ii) makes or seeks to make illegal,
the acceptance for payment, purchase or payment for any Units or the
consummation of the Offer, (iii) imposes or seeks to impose limitations on the
ability of the Purchaser or any affiliate of the Purchaser to acquire or hold
or to exercise full rights of ownership of the Units, including, but not
limited to, the right to vote any Units purchased by them on all matters,
(iv) may result in a material diminution in the benefits expected to be
derived by the Purchaser or any of their affiliates as a result of the Offer,
(v) requires divestiture by the Purchaser of any Units, (vi) might materially
adversely affect the business, properties, assets, liabilities, financial
condition, operations, results of operations or prospects of the Partnership
or the Purchaser, or (vii) challenges or adversely affects the Offer; or
(d) there shall be any action taken, or any statute, rule, regulation,
order or injunction shall have been enacted, promulgated, entered, enforced or
deemed applicable to the Offer, or any other action shall have been taken, by
any government, governmental authority or court, domestic or foreign, other
than the routine application to the Offer of waiting periods that has
resulted, or in the reasonable good faith judgment of the Purchaser could be
expected to result, in any of the consequences referred to in clauses (i)
through (vii) of paragraph (c) above; or
(e) the Partnership or any of its subsidiaries shall have authorized,
recommended, proposed or announced an agreement or intention to enter into an
agreement, with respect to any merger, consolidation, liquidation or business
combination, any acquisition or disposition of a material amount of assets or
securities, or any comparable event, not in the ordinary course of business
consistent with past practices; or
(f) the failure to occur of any necessary approval or authorization by
any federal or state authorities necessary to the consummation of the purchase
of all or any part of the Units to be acquired hereby, which in the reasonable
judgment of the Purchaser in any such case, and regardless of the
circumstances (including any action of the Purchaser) giving rise thereto,
makes it inadvisable to proceed with such purchase or payment; or
(g) Purchaser shall become aware that any material right of the
Partnership or any of its subsidiaries under any governmental license, permit
or authorization relating to any environmental law or regulation is reasonably
likely to be impaired or otherwise adversely affected as a result of, or in
connection with, the Offer; or
(h) the Partnership or any of its General Partners shall have amended,
or proposed or authorized any amendment to, the Partnership Agreement or the
Purchaser shall have become aware that the Partnership or any of its General
Partners have proposed any such amendment.
The foregoing conditions are for the sole benefit of the Purchaser and
its affiliates and may be asserted by the Purchaser regardless of the
circumstances (including, without limitation, any action or inaction by the
Purchaser or any of its affiliates) giving rise to such condition, or may be
waived by the Purchaser, in whole or in part, from time to time in its sole
discretion. The failure by the Purchaser at any time to exercise the foregoing
rights will not be deemed a waiver of such rights, which will be deemed to be
ongoing and may be asserted at any time and from time to time. Any
determination by the Purchaser concerning the events described in this Section
14 will be final and binding upon all parties.
15. Certain Legal Matters.
Except as set forth in this Offer to Purchase, based on its review of
publicly available filings by the Partnership with the Commission and other
publicly available information regarding the Partnership, the Purchaser is not
aware of any licenses or regulatory permits that would be material to the
business of the Partnership, taken as a whole, and that might be adversely
affected by the Purchaser's acquisition of Units as contemplated herein, or
any filings, approvals or other actions by or with any domestic or foreign
governmental authority or administrative or regulatory agency that would be
required prior to the acquisition of Units by the Purchaser pursuant to the
Offer as contemplated herein, other than the filing of a Tender Offer
Statement on Schedule 14D-1 (which has been filed) and any required amendments
thereto. Should any such approval or other action be required, there can be
no assurance that any such additional approval or action, if needed, would be
obtained without substantial conditions or that adverse consequences might not
result to the Partnership's business, or that certain parts of the
Partnership's or the Purchaser's businesses might not have to be disposed of
or held separate or other substantial conditions complied with in order to
obtain such approval or action in the event that such approvals were not
obtained or such actions were not taken.
Appraisal Rights. Limited Partners will not have appraisal rights as a
result of the Offer.
State Anti-takeover Laws. A number of states have adopted anti-takeover
laws which purport, to varying degrees, to be applicable to attempts to
acquire securities of corporations or other entities which are incorporated or
organized in such states or which have substantial assets, securityholders,
principal executive offices or principal places of business therein. Although
the Purchaser has not attempted to comply with any state anti-takeover
statutes in connection with the Offer, the Purchaser reserves the right to
challenge the validity or applicability of any state law allegedly applicable
to the Offer and nothing in this Offer to Purchase nor any action taken in
connection therewith is intended as a waiver of such right. If any state anti-
takeover statute is applicable to the Offer, the Purchaser might be unable to
accept for payment or purchase Units tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer. In such case, the Purchaser
may not be obliged to accept for purchase or pay for any Units tendered.
ERISA. By executing and returning the Letter of Transmittal, a Limited
Partner will be representing that either (a) the Limited Partner is not a plan
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Section 4975 of the Code, or an entity deemed to hold
"plan assets" within the meaning of 29 C.F.R. ss.2510.3-101 of any such plan;
or (b) the tender and acceptance of Units pursuant to the Offer will not
result in a nonexempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code.
Margin Requirements. The Units are not "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly, those regulations generally are not applicable to the Offer.
Antitrust. Under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and the rules and regulations that have been
promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated until certain information and
documentary material has been furnished for review by the Antitrust Division
of the Department of Justice and the FTC and certain waiting period
requirements have been satisfied. The Purchaser does not believe any filing is
required under the HSR Act with respect to its acquisition of Units
contemplated by the Offer.
16. Certain Fees and Expenses.
Except as set forth in this Section 16, the Purchaser will not pay any
fees or commissions to any broker, dealer or other person for soliciting
tenders of Units pursuant to the Offer. The Purchaser has retained The Herman
Group, Inc. of Dallas, Texas to act as Administrative Agent/Depositary in
connection with the Offer. The Purchaser will pay to the Administrative
Agent/Depositary reasonable and customary compensation for its services, plus
reimbursement for certain reasonable out-of-pocket expenses, and has agreed to
indemnify it against certain liabilities and expenses in connection therewith,
including certain liabilities under the federal securities laws. The Purchaser
will also pay all costs and expenses of printing and mailing the Offer and its
legal fees and expenses.
17. Miscellaneous.
The Offer is being made to all Limited Partners to the extent their
names and addresses are reflected on the books and records of the Partnership.
The Purchaser is not aware of any state in which the making of the Offer is
prohibited by administrative or judicial action pursuant to a state statute.
If the Purchaser becomes aware of any state where the making of the Offer is
so prohibited, the Purchaser will make a good faith effort to comply with any
such statute or seek to have such statute declared inapplicable to the Offer.
If, after such good faith effort, the Purchaser cannot comply with any
applicable statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) Limited Partners in such state.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, the Purchaser has filed with the Commission a Tender Offer
Statement on Schedule 14D-1, together with exhibits, furnishing certain
additional information with respect to the Offer. Such statement and any
amendments thereto, including exhibits, may be inspected and copies may be
obtained at the same places and in the same manner as set forth with respect
to information concerning the Partnership in Section 9 ("Certain Information
Concerning the Partnership") (except that they will not be available at the
regional offices of the Commission).
No person has been authorized to give any information or make any
representation on behalf of the Purchaser not contained herein or in the
Letter of Transmittal and, if given or made, such information or
representation must not be relied upon as having been authorized.
Oldham Institutional Tax Credits
LLC
July 24, 1997
APPENDIX A
GLOSSARY OF DEFINED TERMS
"Administrative Agency/Depositary" means The Herman Group, Inc. of
Dallas, Texas.
"Assignee" means a person or entity who has purchased Units but is not
recognized on the books and records of the Partnership as a registered holder
of such Units.
"Beneficial Owner" means a Limited Partner in the case of Units owned by
Individual Retirement Accounts or Keogh plans.
"Business Day" means any day other than a Saturday, Sunday or federal
holiday and consists of the time period from 12:01 a.m. through 12:00
midnight, New York City time, and any time period of business days will be
computed in accordance with Rule 14d-1(c)(6) under the Exchange Act.
"Code" means the Internal Revenue Code of 1986, as amended.
"Co-General Partner" means Arch Street VII, Limited Partnership, a
Massachusetts limited partnership.
"Commission" means the Securities and Exchange Commission.
"Credit Period" has the meaning set forth in Section 9.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Expiration Date" has the meaning set forth in Section 1.
"Form 10-K" means the Partnership's Form 10-K for the fiscal year ended
March 31, 1997.
"FTC" means the Federal Trade Commission.
"General Partners" means the Co-General Partner and the Managing General
Partner.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"IRA" means an individual retirement account.
"Limited Partner" means any person who is a limited partner, whether an
Initial Limited Partner, the Original Limited Partner, an Additional Limited
Partner or any other person or entity who is admitted as a Substituted Limited
Partner, at the time of reference thereto, in such person's or entity's
capacity as a limited partner of the Partnership.
"Limited Partnership Interest" means the ownership interest of a Limited
Partner, including its interest in distributions, including liquidating
distributions, and profits and losses of the Partnership and all of its other
rights, duties and obligations under the Partnership Agreement.
"Low-Income Housing Credits" means the tax credit allowed under Section
42 of the Code for qualified low income housing projects.
"Managing General Partner" means Arch Street VII, Inc., a Massachusetts
corporation.
"Managing Member" means West Cedar Managing, Inc., a Massachusetts
corporation and the managing member of the Purchaser.
"NASD" means the National Association of Securities Dealers, Inc.
"Offer" has the meaning set forth in the Introduction.
"Offer to Purchase" means this Offer to Purchase dated July 24, 1997.
"Partnership" means Boston Financial Tax Credit Fund VII, A Limited
Partnership, a Massachusetts limited partnership.
"Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of the Partnership, dated as of December 24, 1992, as
amended to date, by and among Arch Street VII Limited Partnership, a
Massachusetts limited partnership and Arch Street VII, Inc., as General
Partners, Arch Street VII, Inc., as Original Limited Partner of the
Partnership and those persons or entities admitted to the Partnership from
time to time as Limited Partners.
"Purchase Price" has the meaning set forth in the Introduction.
"Purchaser" means Oldham Institutional Tax Credits LLC, a Massachusetts
limited liability company and an affiliate of the General Partners.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Substituted Limited Partner" means any person or entity admitted to the
Partnership as a Limited Partner pursuant to the provisions of Section 7.3 of
the Partnership Agreement.
"Tax Credits" means Rehabilitation Tax Credits and Low-Income Housing
Tax Credits.
"TIN" means taxpayer identification number.
"Transfer Restrictions" has the meaning set forth in Section 2.
"UBTI" means unrelated business taxable income.
"Unit" means a unit of limited partner interest in the Partnership,
representing a cash contribution of $1,000 to the capital of the Partnership.
Reference to a majority, or specified percentage, in the interest of the
Limited Partners means Limited Partners who, in the aggregate, own greater
than 50%, or such specified percentage, respectively, of the total number of
Units.
SCHEDULE I
EXECUTIVE OFFICERS AND DIRECTORS OF WEST CEDAR MANAGING, INC.
Set forth below is the name, current business address, present principal
occupation, and employment history for at least the past five years of each
executive officer and director of WEST CEDAR MANAGING, INC. (the "Managing
Member"). Each person listed below is a citizen of the United States.
The principal officers and directors of West Cedar Managing, Inc. are:
Jenny Netzer
President and Treasurer
William E. Haynsworth
Managing Director, Chief Operating
Officer
Michael H. Gladstone
Managing Director
Paul F. Coughlan
Vice President
Peter G. Fallon, Jr.
Vice President
Randolph G. Hawthorne
Vice President
The Managing Directors of West Cedar Managing, Inc. comprise its board
of directors and also collectively perform the function of chief executive
officer of West Cedar Managing, Inc. Each Managing Director will serve as a
director of West Cedar Managing, Inc. until his or her successor is elected
and qualified. All the above officers occupy executive positions in The
Boston Financial Group Limited Partnership ("Boston Financial"), an affiliate
of the Purchaser.
Jenny Netzer, age 41, is a graduate of Harvard University (B.A., 1976)
and received a Master's in Public Policy from Harvard's Kennedy School of
Government in 1982. She jointed Boston Financial in 1987 and is a Senior Vice
President leading the Institutional Tax Credit Team, which is responsible for
developing, marketing and managing institutional tax credit products.
Previously, she led the company's new business initiatives, helping guide the
company's efforts in the areas of publicly-traded real estate securities and
senior housing. She is also a member of the Senior Leadership Team of Boston
Financial, which is responsible for the strategic direction of the company.
Previously Ms. Netzer managed the firm's Asset Management division. Before
joining Boston Financial, she was Deputy Budget Director for the Commonwealth
of Massachusetts. Ms. Netzer was also Assistant Controller at Yale University
and has been a member of the Watertown Zoning Board of Appeals.
William E. Haynsworth, age 57, graduated from Dartmouth College and
Harvard Law School. Mr. Haynsworth was Acting Executive Director of the
Massachusetts Housing Finance Agency, where he was also General Counsel, prior
to becoming a Vice President of Boston Financial in 1977 and a Senior Vice
President in 1986. He has also served as Director of Non-Residential
Development of the Boston Redevelopment Authority and as an associate of the
law firm of Goodwin, Procter & Hoar in Boston. Mr. Haynsworth is a member of
the Senior Leadership Team and Board of Directors of Boston Financial, and is
the senior executive responsible for structuring and acquiring real estate
investments.
Michael H. Gladstone, age 41, graduated from Emory University (B.A.
1978) and Cornell University (J.D., MBA 1982). He joined Boston Financial in
1985, and currently serves as a Vice President and the company's General
Counsel. Mr. Gladstone is also a member of the Senior Leadership Team of
Boston Financial. Prior to joining Boston Financial, Mr. Gladstone was
associated with the law firm of Herrick & Smith. Mr. Gladstone is a member of
the National Realty Committee and serves on the advisory board to the Housing
and Development Reporter, a national publication on housing issues.
Paul F. Coughlan, age 53, is a graduate of Brown University (A.B., 1965)
and served in the United States Navy before entering the securities business
in 1969. He was employed as an investment broker by Bache & Company until
1972, and then by Reynolds Securities Inc. He joined Boston Financial in 1975
as a Vice President in the real estate investment marketing area and was named
a Senior Vice President in 1986. Mr. Coughlan is a member of the
Institutional Tax Credit Team with responsibility for the marketing of real
estate investments.
Peter G. Fallon, Jr., age 59, graduated from the College of the Holy
Cross (B.S. 1960) and Babson College (M.B.A., 1965). He joined Boston
Financial in 1970, shortly after its formation, and is currently a Senior Vice
President and a member of the Institutional Tax Credit Team with
responsibility for the marketing of real estate investments.
Randolph G. Hawthorne, age 46, is a graduate of Massachusetts Institute
of Technology and Harvard Graduate School of Business. He has been associated
with Boston Financial since 1973 and has served as the Treasurer of Boston
Financial and manager of the company's Investment Real Estate division.
Currently a Senior Vice President of Boston Financial, Mr. Hawthorne's primary
responsibility is structuring and acquiring real estate investments and
development new business opportunities. He also serves on the Board of
Directors of Boston Financial. Mr. Hawthorne currently serves as Chairman of
the National Multi-Housing Council and is a former President of the National
Housing and Rehabilitation Association. He is also a member of the Urban Land
Institute's Multifamily Residential Council and a member of the Advisory Board
of the University of California, Berkeley Real Estate Center.
<TABLE>
<CAPTION>
Local Limited Total Paid Mtge. Loans
Partnership Number Committed Through payable at
Property Name of at March 31, March 31, December 31,
Property Location Apt. Units 1997 1997 1996
<S> <C> <C> <C> <C>
Oak Ridge Apartments,
a Limited Partnership
Oak Ridge
Macon, GA 152 $2,870,245 $2,870,245 $4,150,456
Santa Fe Oaks Phase II,
a Limited Partnership
Santa Fe Oaks II
Gainesville, FL 129 2,698,586 2,698,586 3,754,237
Andrew's Pointe Limited
Partnership
Andrew's Pointe
Burnsville, MN 57 1,333,800 1,333,800 2,370,604
Palo Verde II, a Nevada
Limited Partnership
Palo Verde II
Henderson, NV 60 1,324,801 1,324,801 1,106,082
Woods Lane, a Limited
Partnership
Woods Lane
Rogers, AR 156 2,574,180 2,574,180 3,384,986
Crafton Place, a
Limited
Partnership
Crafton Place
Fayetteville, AR 84 1,365,120 1,365,120 1,692,493
Guardian Place
Limited Partnership
Guardian Place
Richmond, VA 120 2,174,390 2,174,390 2,988,767
Twin Oaks Meadows Limited
Dividend Housing
Association
Limited Partnership
Twin Oaks Meadows
Lansing, MI 63 1,436,401 1,436,401 1,927,258
Madera Sunrise Terrace
Limited Partnership
Sunrise Terrace
Madera, CA 52 1,523,196 1,523,196 1,223,697
Eden Park Limited
Partnership
Wynmor
Brooklyn Park, MN 324 5,527,758 5,527,758 5,916,767
Affordable Citrus Glen
Limited Partnership
Citrus Glen
Orlando, FL 176 4,581,360 4,581,360 5,470,969
St. Andrews Pointe
Apartments,
A Limited Partnership
St. Andrews Pointe
Columbia, SC 150 3,414,528 3,414,528 4,703,499
Des Moines Street
Associates
Limited Partnership
Des Moines St. Village
Des Moines, IA 42 1,083,996 1,083,996 1,737,049
Fountain Lakes, A Limited
Partnership
Fountain Lakes
Benton, AR 180 2,854,593 2,854,593 4,255,148
Fairhaven Manor Limited
Partnership
Fairhaven Manor
Burlington, WA 40 1,232,020 1,232,020 956,585
Grand Boulevard
Renaissance I
Limited Partnership
Grand Boulevard
Renaissance
Chicago, IL 30 1,085,000 868,000 1,913,294
Los Claveles, S.E.
Limited
Partnership
Los Claveles II
Trujilio, PR 180 1,272,000 698,373 6,553,050
BHP/Harford Commons
Limited Partnership
Harford Commons
Baltimore, MD 30 1,187,000 1,009,000 1,745,080
Springwood Apartments,
A Limited
Partnership
Springwood (1)
Tallahassee, FL 113 619,614 619,614 3,966,075
Totals: 2,138 $40,158,588 $39,189,961 $59,816,096
</TABLE>
<TABLE>
<CAPTION>
Local Limited
Partnership Occupancy
Property Name at
Property Location Type of Subsidy* March 31, 1997
<S> <C> <C>
Oak Ridge Apartments,
a Limited Partnership
Oak Ridge
Macon, GA None 80%
Santa Fe Oaks Phase II,
a Limited Partnership
Santa Fe Oaks II
Gainesville, FL None 89%
Andrew's Pointe Limited
Partnership
Andrew's Pointe
Burnsville, MN None 100%
Palo Verde II, a Nevada
Limited Partnership
Palo Verde II
Henderson,NV None 100%
Woods Lane, a Limited
Partnership
Woods Lane
Rogers, AR None 88%
Crafton Place, a
Limited
Partnership
Crafton Place
Fayetteville, AR None 75%
Guardian Place
Limited Partnership
Guardian Place
Richmond, VA None 98%
Twin Oaks Meadows Limited
Dividend Housing
Association
Limited Partnership
Twin Oaks Meadows
Lansing, MI None 98%
Madera Sunrise Terrace
Limited Partnership
Sunrise Terrace
Madera, CA None 96%
Eden Park Limited
Partnership
Wynmor
Brooklyn Park, MN None 95%
Affordable Citrus Glen
Limited Partnership
Citrus Glen
Orlando, FL None 96%
St. Andrews Pointe
Apartments,
A Limited Partnership
St. Andrews Pointe
Columbia, SC None 97%
Des Moines Street
Associates
Limited Partnership
Des Moines St. Village
Des Moines, IA None 98%
Fountain Lakes, A Limited
Partnership
Fountain Lakes
Benton, AR Section 8 100%
Fairhaven Manor Limited
Partnership
Fairhaven Manor
Burlington, WA None 100%
Grand Boulevard
Renaissance I
Limited Partnership
Grand Boulevard
Renaissance
Chicago, IL Section 8 97%
Los Claveles, S.E.
Limited
Partnership
Los Claveles II
Trujilio, PR Section 8 95%
BHP/Harford Commons
Limited Partnership
Harford Commons
Baltimore, MD None 100%
Springwood Apartments,
A Limited
Partnership
Springwood (1) None 97%
<FN>
<F1>
(1) Boston Financial Tax Credit Fund VII has a 19.8% interest in Springwood Apartments, A Limited
Partnership. The mortgage payable represents 100% of the outstanding balance.
Section 8 This subsidy, which is authorized under Section 8 of Title II of the Housing and Community
Development Act of 1974, allows qualified low-income tenants to pay 30% of their monthly income
as rent with the balance paid by the federal, government.
</FN>
</TABLE>
Schedule III - Certain Information
Concerning Each Property Owned
by the Local Limited Partnerships
in which the Partnership has Invested
As of March 31, 1997
<TABLE>
<CAPTION>
COST OF INTEREST AT ACQU'N DATE GROSS AMOUNT AT WHICH CARRIED
AT DECEMBER 31, 1996
BUILDINGS/
TOTAL IMPROVEMENTS
DESCRIPTION NUMBER ENCUM- &
OF UNITS BRANCES*<F1> LAND EQUIPMENT
Low and Moderate
Income Apartment
Complexes
<S>
Oak Ridge
Apartments <C> <C> <C> <C>
Macon, GA 152 $4,150,456 $727,440 $583,725
Santa Fe Oaks
Phase II
Gainesville, FL 129 3,754,237 382,394 642,179
Andrew's
Pointe
Bumsville, MN 57 2,370,604 95,000 3,430,523
Palo Verde II
Henderson, NY 60 1,106,082 148,858 2,537,261
Woods Lane
Rogers, AR 156 3,384,986 312,000 5,817,580
Crafton Place
Fayetteville, AR 84 1,692,493 126,001 3,083,929
Guardian Place
Richmond, VA 120 2,988,767 677,786 1,838,034
Twin Oaks
Meadows
Lansing, MI 63 1,927,258 0 720,394
Sunrise
Terrace
Madera, CA 52 1,223,697 149,959 2,719,607
Wynmor
Brooklyn
Park, MN 324 5,916,767 324,000 6,553,123
Citrus Glen
Orlando, FL 176 5,470,969 500,000 759,632
St. Andrews
Pointe
Columbia, SC 150 4,703,499 491,634 7,349,439
Des Moines
Street Village
Des Moines, IA 42 1,737,049 300,000 2,223,447
Fountain Lakes
Benton, AR 180 4,255,148 357,800 4,057,935
Fairhaven
Manor
Burlington, WA 40 956,585 176,182 2,043,351
Grand
Boulevard
Chicago, IL 30 1,913,294 25,580 1,570,044
Los Claveles
II
Trujillo Alto, PR 180 6,553,050 335,000 6,842,254
Harford
Commons
Baltimore, MD 30 1,745,080 28,000 2,680,017
Springwood<F2>
Tallahassee, FL 113 3,966,075 296,280 2,937,028
Total 2,138 $59,816,096 $5,453,914 $58,389,502
<FN>
<F1>
(1) Total aggregate cost for Federal Income Tax purposes is $ 110,230,661.
<F2>
(2) Boston Financial Tax Credit Fund VII has a 20% ownership interest
in Springwood Apartments, A Limited Partnership
<F3>
* Mortgage notes payable generally represent non-recourse financing
of low-income housing projects payable with terms of up to 40 years with
interest payable at rates ranging from 9.75% to 12%. The Partnership has not
guaranteed any of these
</FN>
</TABLE>
<TABLE>
<CAPTION>
NET
IMPROVEMENTS BUILDINGS
CAPITALIZED AND
SUBSEQUENT IMPROVE-
TO ACQUISITION LAND MENTS TOTAL
<S> <C> <C> <C> <C>
Low and
Moderate
Income
Apartment
Complexes
Oak Ridge
Apartments
Macon, GA $5,703,137 $727,440 $6,286,862 $7,014,302
Santa Fe Oaks
Phase II
Gainesville, FL 5,979,956 382,394 6,622,135 7,004,529
Andrew's
Pointe
Bumsville, MN 48,537 95,000 3,479,060 3,574,060
Palo Verde II
Henderson, NY 10,313 148,858 2,547,574 2,696,432
Woods Lane
Rogers, AR 32,148 312,000 5,849,728 6,161,728
Crafton Place
Fayetteville, AR 0 126,001 3,083,929 3,209,930
Guardian Place
Richmond, VA 2,972,628 677,786 4,810,662 5,488,448
Twin Oaks
Meadows
Lansing, MI 2,529,371 307,264 2,942,501 3,249,765
Sunrise
Terrace
Madera, CA 0 149,959 2,719,607 2,869,566
Wynmor
Brooklyn
Park, MN 9,067,995 1,224,989 14,720,129 15,945,118
Citrus Glen
Orlando, FL 9,220,251 10 10,479,873 10,479,883
St. Andrews
Pointe
Columbia, SC 790,326 491,634 8,139,765 8,631,399
Des Moines
Street Village
Des Moines, IA 498,317 303,451 2,718,313 3,021,764
Fountain Lakes
Benton, AR 2,898,341 357,800 6,956,276 7,314,076
Fairhaven
Manor
Burlington, WA 1,168 176,182 2,044,519 2,220,701
Grand
Boulevard
Chicago, IL 1,346,267 31,580 2,910,311 2,941,891
Los Claveles
II
Trujillo Alto, PR 21,516 335,000 6,863,770 7,198,770
Harford
Commons
Baltimore, MD 31,387 28,000 2,711,404 2,739,404
Springwood<F2>
Tallahassee, FL 4,248,155 296,280 7,185,183 7,481,463
Totals $45,399,813 $6,171,628 $103,071,601 $109,243,229(1)<F1>
<FN>
<F1>
(1) Total aggregate cost for Federal Income Tax purposes is $ 110,230,661.
<F2>
(2) Boston Financial Tax Credit Fund VII has a 20% ownership interest in
Springwood Apartments, A Limited Partnership
<F3>
* Mortgage notes payable generally represent non-recourse financing of
low-income housing projects payable with terms of up to 40 years with
interest payable at rates ranging from 9.75% to 12%. The Partnership has
not guaranteed any of these
</FN>
</TABLE>
<TABLE>
<CAPTION>
LIFE ON
WHICH
DEPRECIATION
ACCUMULATED DATE IS COMPUTED DATE
DEPRECIATION BUILT (YEARS) ACQUIRED
<S> <C> <C> <C> <C>
Low and
Moderate
Income
Apartment
Complexes
Oak Ridge
Apartments
Macon, GA $916,166 8/93 10 & 30 12/31/92
Santa Fe Oaks
Phase II
Gainesville, FL 926,405 5/93 10 & 30 12/31/92
Andrew's
Pointe
Bumsville, MN 418,237 12/93 7 & 27.5 4/13/92
Palo Verde II
henderson, NY 292,919 10/93 5 - 27.5 5/19/93
Woods Lane
Rogers, AR 762,856 7/93 7 & 27.5 7/30/93
Crafton Place
Fayetteville, AR 412,534 7/93 7 & 27.5 7/30/93
Guardian Place
Richmond, VA 401,667 8/94 5 - 40 10/07/93
Twin Oaks
Meadows
Lansing, MI 396,315 8/94 useful lives 10/29/93
Sunrise
Terrace
Madera, CA 313,725 11/93 useful lives 11/24/93
Wynmor
Brooklyn Park, MN 1,521,932 9/94 7, 15, & 30 12/22/93
Citrus Glen
Orlando, FL 1,012,279 9/94 5 - 27.5 12/30/93
St. Andrews
Pointe
Columbia, SC 733,603 8/94 10 & 30 01/05/94
Des Moines
Street Village
Des Moines, IA 143,516 4/95 useful lives 01/31/94
Fountain Lakes
Benton, AR 801,082 1/94 7 - 27.5 02/02/94
Fairhaven
Manor
Burlington, WA 180,664 2/94 5 - 7 & 40 03/08/94
Grand
Boulevard
Chicago, IL 156,479 7/95 useful lives 08/03/94
Los Claveles
II
Trujillo Alto, PR 491,978 8/94 8 & 40 08/31/94
Harford
Commons
Baltimore, MD 94,492 12/95 useful lives 2/28/95
Springwood<F2>
Tallahassee, FL 747,191 8/95 useful lives 12/31/94
Totals $10,724,040
<FN>
<F1>
(1) Total aggregate cost for Federal Income Tax purposes is $ 110,230,661.
<F2>
(2) Boston Financial Tax Credit Fund VII has a 20% ownership interest
in Springwood Apartments, A Limited Partnership
<F3>
* Mortgage notes payable generally represent non-recourse financing of
low-income housing projects payable with terms of up to 40 years with
interest payable at rates ranging from 9.75% to 12%. The Partnership has
not guaranteed any of these mortgage notes payable.
</FN>
</TABLE>
Schedule III - Certain Information Concerning
Each Property owned by Local Limited
Partnerships in Which the Partnership
has Invested at March 31, 1997
(continued)
Summary of property owned and accumulated depreciation
Property Owned December 31, 1996 Accumulated Depreciation
December 31, 1996
Balance at beginning of Balance at beginning of
period $110,075,465 period: $6,540,475
Additions during period: Additions during period:
Acquisitions 0 Depreciation 4,183,565
Improvements etc.__155,579 Balance at close of
of period: $10,724,040
Deductions during period: 155,579
Reduction of building
basis due to developer fee
write off (987,430)
Disposition of real
estate (835)
(987,815)
Balance at close of period $109,243,229
Property Owned December 31, 1995 Accumulated Depreciation December 31,
1995
Balance at beginning
Balance at beginning of of period: $2,742,246
period $100,659,642 Additions during period:
Additions during period: Depreciation $3,798,229
Acquisitions 8,778,830
Improvements etc. 1,937,926 Balance at close of period:$6,540,475
Deductions during period: 10,716,756
Disposition of real
estate (1,300,933)
(1,300,933)
Balance at close of period: $110,075,465
Property Owned December 31, 1994 Accumulated Depreciation December 31,
1994
Balance at beginning of
period $43,998,728 Balance at beginning of period $462,061
Additions during period: Additions during period:
Acquisitions 55,723,485 Depreciation 2,280,185
Improvements etc. 937,429 Balance at close of period $2,742,246
Deductions during period: 56,660,914
Disposition of real
estate ______0
__________0
Balance at close of period $100,659,642
Facsimile copies of the Letter of Transmittal, properly completed and duly
execued, will be accepted. Questions on, and requests for assistance in,
completing the documentation or requests for additional copies of this Offer
to Purchase, the Letter of Transmittal and other tender offer materials may
be obtained from The Herman Group, Inc. (the "Administrative Agent/
Depositary") by calling the toll free number below. The Letter of Transmittal
and any other required documents should be sent or delivered by each
Limited Partner to the Administrative Agent/Depositary at its address set
forth below. To be effective, a duly completed and signed Letter of
Transmittal must be received by the Administrative Agent/Depositary at the
address set
forth below before 12:00 midnight, Eastern Time, on Thursday, August 21,
1997.
For additional information with regard to the Offer to Purchase, call the
Purchaser at the toll-free number set forth below.
For Additional Information with regard to the Offer to Purchase Call:
Oldham Institutional Tax Credits LLC
(800) 829-9213, extension 12
101 Arch Street
Boston, Massachusetts 02110
For Assistance in Completing the Letter of Transmittal and Related Documentation
or Additional Copies of the Offer to Purchase, Letter of Transmittal and
Related Documents contact:
The Herman Group, Inc.
2121 San Jacinto Street
26th Floor
Dallas, Texas 75201
Telephone: (800) 243-8440
Facsimile: (214) 999-9323 or (214) 999-9348
Return Letter of Transmittal and other Related Documents
By Mail/Hand or Overnight Delivery:
Administrative Agent/Depositary
The Herman Group, Inc.
2121 San Jacinto Street
26th Floor
Dallas, Texas 75201
Telephone: (800) 243-8440
Facsimile: (214) 999-9323 or (214) 999-9348
Exhibit (a)(2)
LETTER OF TRANSMITTAL
TO
TENDER UNITS
IN
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
PURSUANT TO THE OFFER TO PURCHASE DATED JULY 24, 1997
BY
OLDHAM INSTITUTIONAL TAX CREDITS LLC
Tax I.D. No.:__________________
Number of Number of (1)
Purchase Price
Units Owned Units Tendered
Per Unit _____
(1) If no indication is marked in the Number
of Units Tendered Column, all Units issued to you will
(Please indicate changes or corrections to the address and Tax I.D. number
above, if necessary.) be deemed to have been tendered
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT,
EASTERN TIME, ON THURSDAY, AUGUST 21, 1997 (THE "EXPIRATION DATE") UNLESS SUCH
OFFER IS EXTENDED.
The undersigned hereby tender(s) to Oldham Institutional Tax Credits LLC, a
Massachusetts limited liability company (the "Purchaser"), the number of Units
("Units") representing limited partnership interests in Boston Financial
Tax Credit Fund VII, A Limited Partnership, a Massachusetts limited
partnership (the "Partnership"), specified above, pursuant to the Purchaser's
offer to purchase up to 12,730 of the issued and outstanding Units at a
purchase price of $740.00 per Unit, net to the seller in cash (the "Purchase
Price"), without interest thereon, upon the terms and subject to the conditions
set forth in the Offer to Purchase dated July 24, 1997 (the "Offer to
Purchase") and this Letter of Transmittal (the "Letter of Transmittal", which,
together with the Offer to Purchase and any supplements, modifications or
amendments thereto, constitute the "Offer"), all as more fully described in
the Offer to Purchase. LIMITED PARTNERS WHO TENDER THEIR UNITS WILL NOT BE
OBLIGATED TO PAY ANY COMMISSIONS OR PARTNERSHIP TRANSFER FEES. Receipt of
the Offer to Purchase is hereby acknowledged. Capitalized terms used but
not defined herein have the respective meanings ascribed to them in the
Offer to Purchase.
By executing and delivering this Letter of Transmittal, a tendering Limited
Partner irrevocably appoints the Purchaser and the designees of the Purchaser
and each of them as such Limited Partner's proxies, each with full power of
substitution, to the full extent of such Limited Partner's rights with
respect to the Units tendered by such Limited Partner and accepted for payment
by the Purchaser (and with respect to any and all other Units or other
securities issued or issuable in respect of such Units on or after the date
hereof). All such proxies shall be considered irrevocable and coupled with an
interest in the tendered Units. Such appointment will be effective when,
and only to the extent that, the Purchaser accepts such Units for payment.
Upon such acceptance for payment, all prior proxies given by such Limited
Partner with respect to such Units (and such other Units and securities)
will be revoked without further action, and no subsequent proxies may be
given nor any subsequent written consents executed (and, if given or
executed, will not be deemed effective). The Purchaser and its designees
will, with respect to the Units (and such other Units and securities) for
which such appointment is effective, be empowered to exercise all voting
and other rights of such Limited Partner as it in its sole discretion may
deem proper pursuant to the Amended and Restated Agreement of Limited
Partnership of the Partnership, dated as of December 24, 1992, as amended to
date (the "Partnership Agreement") or otherwise. The Purchaser may assign such
proxy to any person with or without assigning the related Units with respect
to which such proxy and/or power of attorney was granted. The Purchaser
reserves the right to require that, in order for Units to be deemed validly
tendered, immediately upon the Purchaser's payment for such Units,
the Purchaser must be able to exercise full voting rights with respect to such
Units and other securities, including voting at any meeting of Limited Partners.
By executing and delivering this Letter of Transmittal, a tendering Limited
Partner also irrevocably constitutes and appoints the Purchaser and its
designees as the Limited Partner's attorneys-in-fact, each with full power of
substitution to the extent of the Limited Partner's rights with respect to
the Units tendered by the Limited Partner and accepted for payment by the
Purchaser. Such appointment will be effective when, and only to the extent
that, the Purchaser accepts the tendered Units for payment. Upon such
acceptance for payment, all prior powers of attorney granted by the Limited
Partner with respect to such Unit will, without further action, be revoked,
and no subsequent powers of attorney may be granted (and if granted will not be
effective). Pursuant to such appointment as attorneys-in-fact, the Purchaser
and its designees each will have the power, among other things, (i) to seek
to transfer ownership of such Units on the books and records of the
Partnership maintained by the General Partners (and execute and deliver
any accompanying evidences of transfer and authenticity any of them may
deem necessary or appropriate in connection therewith, including, without
limitation, any documents or instruments required to be executed under the
Partnership Agreement or a "Transferor's (Seller's) Application for Transfer"
created by the NASD, if required), (ii) to be allocated all Low-Income
Housing Credits and tax losses and to receive any and all distributions made
by the Partnership after the Expiration Date, and to receive all benefits
and otherwise exercise all rights of beneficial ownership of such Units in
accordance with the terms of the Offer, (iii) to execute and deliver to the
Partnership and/or the General Partners (as the case may be) a change of
address form instructing the Partnership to send any and all future
distributions to which the Purchaser is entitled pursuant to the terms of
the Offer in respect of tendered Units to the address specified
in such form, and (iv) to endorse any check payable to or upon the order of
such Limited Partner representing a distribution, if any, to which the
Purchaser is entitled pursuant to the terms of the Offer, in each case on
behalf of the tendering Limited Partner. If legal title to the Units is
held through an IRA or KEOGH or similar account, the Limited Partner
understands that this Letter of Transmittal must be signed by the custodian of
such IRA or KEOGH account and the Limited Partner hereby authorizes and
directs the custodian of such IRA or KEOGH to confirm this Letter of
Transmittal. This power of attorney shall not be affected by the subsequent
mental disability of the Limited Partner, and the Purchaser shall not be
required to post bond in any nature in connection with this power of
attorney. The Purchaser may assign such power of attorney to any person with
or without assigning the related Units with respect to which such power of
attorney was granted.
By executing and delivering this Letter of Transmittal, a tendering Limited
Partner irrevocably assigns to the Purchaser and its assigns all of the direct
and indirect, right, title and interest of such Limited Partner in the
Partnership with respect to the Units tendered and purchased pursuant to the
Offer, including, without limitation, such Limited Partner's right, title
and interest in and to any and all Low Income Housing Credits and tax
losses and any and all distributions made by the Partnership after the
Expiration Date in respect of the Units tendered by such Limited Partner
and accepted for payment by the Purchaser, regardless of the fact that the
record date for any such distribution may be a date prior to the Expiration
Date. The Purchaser reserves the right to transfer or assign, in whole or
from time to time in part, to any third party, the right to purchase Units
tendered pursuant to the Offer, together with its rights under the Letter
of Transmittal, but any such transfer or assignment will not relieve the
assigning party of its obligations under the Offer or prejudice the rights
of tendering Limited Partners to receive payment for Units validly tendered
and accepted for payment pursuant to the Offer.
By executing this Letter of Transmittal, the undersigned represents that
either (a) the undersigned is not a plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or Section 4975
of the Internal Revenue Code of 1986, as amended (the "Code"), or an entity
deemed to hold "plan assets" within the meaning of 29 C.F.R. {sec}2510.3-101 of
any such plan or (b) the tender and acceptance of
Units pursuant to the Offer will not result in a nonexempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code.
By executing this Letter of Transmittal, the undersigned represents that this
transfer has not been effected through an established securities market or
through a broker-dealer or matching agent which makes a market in Units or
which provides a widely available, regular and ongoing opportunity to the
holders of Units to sell or exchange their Units through a public means of
obtaining or providing information of offers to buy, sell or exchange Units.
The undersigned recognizes that, if proration is required pursuant to the
terms of the Offer, the Purchaser will accept for payment from among those
Units validly tendered on or prior to the Expiration Date and not properly
withdrawn, the maximum number of Units permitted pursuant to the Offer on a
pro rata basis, with adjustments to avoid purchases
which would violate the terms of the Offer, based upon the number of Units
validly tendered prior to the Expiration Date and not properly withdrawn.
The undersigned understands that a tender of Units to the Purchaser will
constitute a binding agreement between the undersigned and the Purchaser upon
the terms and subject to the conditions of the Offer. The undersigned recognizes
that under certain circumstances set forth in Section 2 ("Proration;
Acceptance for Payment and Payment for Units") and Section 14 ("Conditions
of the Offer") of the Offer to Purchase, the Purchaser may not be required
to accept for payment any of the Units tendered hereby. In such event, the
undersigned understands that any Letter of Transmittal for Units not
accepted for payment will be destroyed by the Purchaser. Except as stated in
Section 4 ("Withdrawal Rights") of the Offer to Purchase, this tender is
irrevocable, provided Units tendered pursuant to the Offer may be withdrawn
at any time prior to the Expiration Date. The undersigned acknowledges that
(i) upon acceptance of, and payment for, tendered Units, the undersigned
shall no longer be entitled to any benefits as a Limited Partner.
BOX A
SUBSTITUTE FORM W-9
(See Instruction 4)
The person signing this Letter of Transmittal hereby certifies the following
to the Purchaser under penalties of perjury:
(i) The Taxpayer Identification Number ("TIN") as printed (or corrected) on
the front furnished in the space provided for that purpose in the Signature Box
of this Letter of Transmittal is the correct TIN of the Limited Partner; or
if no TIN is provided above and this box o is checked, the Limited Partner has
applied for a TIN. If the Limited Partner has applied for a TIN, a TIN has
not been issued to the Limited Partner, and either: (a) the Limited Partner
has mailed or delivered an application to receive a TIN to the appropriate
Internal Revenue Service ("IRS") Center or Social Security Administration
Office, or (b) the Limited Partner intends to mail or deliver an application in
the near future, it is hereby understood that if the Limited Partner does not
provide a TIN to the Purchaser within sixty (60) days, 31% of all reportable
payments made to the Limited Partner thereafter will be withheld until a TIN
is provided to the Purchaser; and (ii) Unless this box o is checked, the
Limited Partner is not subject to backup withholding either because the
Limited Partner (a) is exempt from backup withholding, (b) has not been
notified by the IRS that the Limited Partner is subject to backup withholding
as a result of a failure to report all interest or dividends, or (c) has
been notified by the IRS that such Limited Partner is no longer subject to
backup withholding Note: Place an "X" in the box in (ii) above, if you are
unable to certify that the Limited Partner is not subject to backup withholding.
BOX B
FIRPTA AFFIDAVIT
(See Instruction 4)
Under Section 1445(c)(5) of the Code and Treas. Reg. 1.1445-11T(d), a
transferee must withhold tax equal to 10% of the amount realized with respect
to certain transfers of an interest in a partnership if 50% or more of the value
of its gross assets consists of U.S. real property interests and 90% or more
of the value of its gross assets consists of U.S. real property interests plus
cash or cash equivalents, and the holder of the partnership interest is a
foreign person. To inform the Purchaser that no withholding is required with
respect to the Limited Partner's interest in the Partnership, the person signing
this Letter of Transmittal hereby certifies the following under penalties of
perjury:
(i) Unless this box o is checked, the Limited Partner, if an individual, is
a U.S. citizen or a resident alien for purposes of U.S. income taxation, and if
other than an individual, is not a foreign corporation, foreign partnership,
foreign trust or foreign estate (as those terms are defined in the Code and
Income Tax Regulations);
(ii) the Limited Partner's U.S. social security number (for individuals) or
employer identification number (for non-individuals) is correct as furnished in
the blank provided for that purpose on the front of this Letter of Transmittal;
and
(iii) the Limited Partner's home address (for individuals), or office address
(for non-individuals), is correctly printed (or corrected) on the front of this
Letter of Transmittal. If a corporation, the jurisdiction of incorporation is
______________________________ .
The person signing this Letter of Transmittal understands that this
certification may be disclosed to the IRS by the Purchaser and that any false
statements contained herein could be punished by fine, imprisonment, or both.
BOX C
SUBSTITUTE FORM W-8
(See Instruction 5)
By checking this box o, the person signing this Letter of Transmittal hereby
certifies under penalties of perjury that the Limited Partner is an "exempt
foreign person" for purposes of the backup withholding rules under U.S.
federal income tax laws, because the Limited Partner:
(i) Is a nonresident alien or a foreign corporation, partnership, estate or
trust;
(ii) If an individual, has not been and plans not to be present in the U.S.
for a total of 183 days or more during the calendar year; and
(iii) Neither engages, nor plans to engage, in a U.S. trade or business that
has effectively connected gains from transactions with a broker or barter
exchange.
SIGNATURE BOX (ALL OWNERS)
(See Instruction 2)
Please sign exactly as your name(s) is printed (or as corrected) on the Letter
of Transmittal. For joint owners, each joint owner must sign. The signatory
hereto hereby certifies under penalties of perjury the Taxpayer Identification
Number (i.e., the signatory's social security number) printed (or as corrected)
on the Letter of Transmittal and the statements in Box A, Box B and, if
applicable, Box C. The undersigned hereby represents and warrants for the
benefit of the Partnership and the Purchaser that the undersigned owns (or
beneficially owns) the Units tendered hereby and has full power and authority
to validly tender, sell, assign, transfer, convey and deliver the Units
tendered hereby and that when the same are accepted for payment by the
Purchaser, the Purchaser will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges, encumbrances,
conditional sales agreements or other obligations relating to the sale
or transfer thereof, such Units will not be subject to any adverse claims and,
the transfer and assignment contemplated herein are in compliance with all
applicable laws and regulations. All authority herein conferred or agreed to be
conferred shall survive the death or incapacity of the undersigned and any
obligations of the undersigned shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned.
X ____________________________________________________________________
X_____________________________________________________________________
(Signature of Owner) (Date) (Signature of Joint-Owner)
Name and Capacity (if other than individual) __________________________________
Area Code and Telephone No. (Eve) ________________________________________
Title: ________________________________________________
Area Code and Telephone No. (Day) ________________________________________
For Units to be accepted for purchase, a Limited Partner should complete and
sign this Letter of Transmittal in the Signature Box and return it in the self-
addressed, postage-paid envelope enclosed, or by hand or overnight courier to:
The Herman Group, Inc. 2121 San Jacinto Street, 26th Floor, Dallas, TX 75201
or by facsimile to: (214) 999-9323 or (214) 999-9348. Delivery of this Letter
of Transmittal or any other required documents to an address other than the
one set forth above or transmission via facsimile other than as set forth above
does not constitute valid delivery.
INSTRUCTIONS FOR COMPLETING LETTER OF TRANSMITTAL
Forming Part of the Terms and Conditions of the Offer
FOR ASSISTANCE IN COMPLETING THE LETTER OF TRANSMITTAL OR ADDITIONAL
INFORMATION OR MATERIALS, CALL: (800) 243-8440
1. Valid Tender and Delivery of Letter of Transmittal. For convenience in
responding to the Offer, a self-addressed, postage-paid envelope has been
enclosed with the Offer to Purchase. However, to ensure receipt of the Letter
of Transmittal, it is suggested that you use an overnight courier or, if the
Letter of Transmittal is to be delivered by United States mail, that you use
certified or registered mail, return receipt requested.
To be effective, a duly completed and original of the signed Letter of
Transmittal must be received by the Administrative Agent/Depositary at the
address (or facsimile number) set forth below before the Expiration Date,
12:00 Midnight, Eastern Time on Thursday, August 21, 1997, unless extended.
Letters of Transmittal which have been duly executed, but where no indication
is marked in the "Number of Units Tendered" column, shall be deemed to have
tendered all Units pursuant to the Offer.
By Mail/Hand or Overnight Delivery: THE HERMAN GROUP, INC.
2121 San Jacinto
26th Floor
Dallas, Texas 75201
By Facsimile : (214) 999-9323
or
(214) 999-9348 (If faxing the Letter of
Transmittal, the original should also be
mailed
to the Administrative
Agent/Depositary.)
For Additional Information
Regarding the Offer Call: (800) 829-9213, ext. 12
All questions as to the validity, form, eligibility (including time of receipt)
and acceptance of a Letter of Transmittal will be determined by the Purchaser
and such determination will be final and binding. The Purchaser's
interpretation of the terms and conditions of the offer officer (including these
instructions for the Letter of Transmittal) also will be final and binding.
The Purchaser will have the right to waive any irregularities or conditions as
to the manner of tendering. Any irregularities in connection with tenders must
be cured within such time as the Purchaser shall determine unless waived by it.
The Letter of Transmittal will not be valid unless and until any
irregularities have been cured or waived. Neither the Purchaser nor the
Administrative Agent/Depositary is under any duty to give notification of
defects in a Letter of Transmittal and will incur no liability for failure to
give such notification.
THE METHOD OF DELIVERY OF THE LETTER OF THE TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING LIMITED
PARTNER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE ADMINISTRATIVE AGENT/DEPOSITARY. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY.
2 Signatures. All Limited Partners must sign in the Signature Box of
the Letter of Transmittal. If the Units are held in the names of two or more
persons, all such persons must sign the Letter of Transmittal. When signing as a
general partner, corporate officer, attorney-in-fact, executor, custodian,
administrator or guardian, please give full title and send proper evidence of
authority satisfactory to the Purchaser with this Letter of Transmittal. With
respect to most trusts, the Partnership will generally require only the named
trustee to sign the Letter of Transmittal. For Units held in a custodial
account for minors, only the signature of the custodian will be required.
Please sign exactly as your name(s) is printed (or corrected) on the Letter of
Transmittal.
If tendered Units are registered in more than one account, it will be
necessary to complete, sign and submit as many separate Letters of Transmittal
as there are different registrations. Each account has been mailed a separate
Letter of Transmittal.
3. Documentation Requirements. In addition to information required to be
completed on the Letter of Transmittal, additional documentation may be required
by the Purchaser under certain circumstances including, but not limited to
those listed below. Questions on documentation should be directed to
(800) 243-8440.
Deceased Owner (Joint Tenant) - Certified Copy of Death Certificate.
Deceased Owner (Others) - Certified Copy of Death Certificate
(See also Executor/Administrator/
Guardian below).
Executor/Administrator/Guardian - (i) Certified Copies of court
Appointment Documents for Executor
or Administrator dated
within 60 days of the date of
execution of the Letter of
Transmittal; OR (ii) a copy of
applicable provisions of the Will
(Title Page, Executor(s)' powers,
asset distribution); OR (iii)
Certified copy of Estate
distribution documents.
Attorney-in-Fact - Current Power of Attorney.
Corporations/Partnerships - Certified copy of Corporate
Resolution(s) (with raised corporate
seal), or other evidence of authority
to act. Partnerships should furnish
copy of Partnership Agreement.
Trust/Pension Plans - Copy of cover page of the Trust or Pension
Plan, along with copy of the section(s)
setting forth names and powers of Trustee(s)
and any amendments to such sections or
appointment of Successor Trustee(s).
(Continued on Back)
4. Tax Certification-U.S. Persons. A Limited Partner who or which is a
United States citizen OR a resident alien individual, a domestic corporation,
a domestic partnership, a domestic trust or a domestic estate (collectively,
"United States Persons") as those terms are defined in the Code and Income Tax
Regulations, should follow the instructions below with respect to certifying
Boxes A and B (on the reverse side of the Letter of Transmittal).
Taxpayer Identification Number. To avoid 31% federal income tax backup
withholding, the Limited Partner must furnish his, her or its TIN as printed
(or corrected) on the front of the Letter of Transmittal and certify under
penalties of perjury, Box A, B and, if applicable, Box C.
WHEN DETERMINING THE TIN TO BE FURNISHED, PLEASE REFER TO THE FOLLOWING NOTE
AS A GUIDELINE:
NOTE: Individual Accounts should reflect their own TIN. Joint Accounts should
reflect the TIN of the person whose name appears first. Trust Accounts should
reflect the TIN assigned to the Trust. Custodial accounts for the benefit of
minors should reflect the TIN of the minor. Corporations or other business
entities should reflect the TIN assigned to that entity.
Box A-Substitute Form W-9.
(i) In order to avoid 31% federal income tax backup withholding, the Limited
Partner must certify that the TIN as printed (or corrected) on the Letter of
Transmittal to the Purchaser and certify, under penalties or perjury, that
such Limited Partner is not subject to such backup withholding. The TIN being
provided on the Substitute Form W-9 is that of the registered Limited Partner
as indicated on the front of the Letter of Transmittal. If a correct TIN is
not provided, penalties may be imposed by the IRS, in addition to the Limited
Partner being subject to backup withholding. Certain Limited Partners
(including, among others, all corporations) are not subject to backup
withholding. Backup withholding is not an additional tax. If withholding
results in an overpayment of taxes, a refund may be obtained from the IRS.
(ii) DO NOT CHECK THE BOX IN BOX A, PART (ii), UNLESS YOU HAVE BEEN NOTIFIED
BY THE IRS THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING.
Box B - FIRPTA Affidavit. To avoid withholding of tax pursuant to Section
1445 of the Code, each Limited Partner who or which is a United States Person
(as defined in Instruction 4 above) must certify, under penalties of perjury,
the Limited Partner's TIN and address, and that the Limited Partner is not a
foreign person. Tax withheld under Section 1445 of the Internal Revenue Code is
not an additional tax. If withholding results in an overpayment of tax, a
refund may be obtained from the IRS. CHECK THE BOX IN BOX B, PART (i) ONLY IF
YOU ARE NOT A U.S. PERSON, AS DESCRIBED THEREIN. CORPORATIONS SHOULD INSERT
THE STATE OF INCORPORATION IN THE BLANK PROVIDED FOR THAT PURPOSE IN BOX B.
5. Box C - Foreign Persons. In order for a Limited Partner who is a
foreign person (i.e., not a United States Person as defined in Instruction 4
above) to qualify as exempt from 31% backup withholding, such foreign Limited
Partner must certify, under penalties of perjury, the statement in Box C of
this Letter of Transmittal attesting to that foreign person's status by checking
the box in such statement. UNLESS SUCH BOX IS CHECKED, SUCH FOREIGN PERSON WILL
BE SUBJECT TO 31% WITHHOLDING OF TAX UNDER SECTION 1445 OF THE CODE.
6. Conditional Tenders. No alternative, conditional or contingent tenders
will be accepted.
7. Assignee Status. Assignees must provide documentation to the
Administrative Agent/Depositary which demonstrates, to the satisfaction of the
Purchaser, such person's status as an assignee.
8. Inadequate Space. If the space provided herein is inadequate, the
numbers of Units and any other information should be listed on a separate
schedule attached hereto and separately signed on each page thereof in the
same manner as this Letter of Transmittal is signed.
For Information Regarding the Offer,
contact the Purchaser at:
(800) 829-9213, ext. 12
For assistance in completing the Letter of Transmittal
OR
For additional copies of the Offer to Purchase, call
(800) 243-8440
The Letter of Transmittal should be sent to the Administrative Agent/
Depositary at:
THE HERMAN GROUP
2121 San Jacinto Street, 26th Floor
Dallas Texas 75201
Telephone: (800) 243-8440
Facsimile: (214) 999-9323
or
(214) 999-9348
Exhibit (a)(3)
Oldham Institutional Tax Credits LLC
101 Arch Street
Boston, MA 02110
July 24, 1997
OFFER TO PURCHASE UNITS OF BOSTON FINANCIAL TAX CREDIT FUND VII,
A Limited Partnership
Dear Limited Partners of Boston Financial Tax Credit Fund VII:
The enclosed information is very important to all Limited Partners owning
Units in Boston Financial Tax Credit Fund VII, A Limited Partnership (the
"Partnership"). Limited Partners are being provided a convenient opportunity
to sell their Units in the Partnership.
The Offer
Oldham Institutional Tax Credits, LLC, a Massachusetts limited liability
company (the "Purchaser"), an affiliate of the General Partners, is offering
to purchase up to 12,730 Units of the Partnership for a cash purchase price of
$740 per Unit, net to seller subject to the terms and conditions in the
attached Offer to Purchase, dated July 24, 1997 (the "Offer"). The selling
Limited Partners will not be charged any commissions or transfer fees.
Subject to the proration discussion in Section 2 of the attached Offer, the
Purchaser will accept any number of units tendered by a Limited Partner. The
offering period is scheduled to expire at midnight, Eastern time, August 21,
1997 and payment to selling Limited Partners will be made promptly after the
expiration date.
Reasons for the Purchase Offer
The Partnership generates both tax credits and passive tax losses. Since the
formation of the Partnership, corporations have shown increasing interest in
investing in programs benefiting from tax credits and passive tax losses.
Individuals usually cannot fully use passive tax losses since current tax laws
restrict the use of such losses by individuals, whereas corporate investors,
in addition to utilizing such tax credits, are able to fully utilize passive
tax losses. The Purchaser intends to buy these Units and then expects to sell
interests in the Purchaser to corporate investors.
Sales Opportunity
The Purchaser believes that the cash purchase price of the Offer compares
favorably with current average secondary market prices and the present value
of the remaining tax credits. For additional discussion of the benefits of
selling these Units as compared to continuing ownership, please review
Section 13 in the enclosed Offer to Purchase.
Benefits to selling Limited Partners include the opportunity to liquidate a
long-term investment without incurring transfer costs and commissions,
simplification and potential cost reduction of tax return preparation,
convenient access to the secondary market at a competitive price and exiting
an investment which investors may feel no longer meets their investment
objectives. In addition, for some Limited Partners, selling these Units may
permit the use of suspended passive losses against other forms of taxable
income, providing additional tax benefits in the year of sale.
A Limited Partner's decision to sell his/her Unit should be based on many
factors including investment objectives, ability to use the Partnership's
current benefits and the willingness to wait for potential property sale
proceeds for an additional eleven years or more. It is possible that the
overall benefits of continuing ownership of the Units could exceed the
benefits of selling now. However, it is also possible that if a Limited
Partner does not sell his/her Units now he/she will not realize benefits equal
to those obtainable by accepting the Offer.
Partnership Status
Partnership operations appear to have stabilized in 1996 and are generating
approximately $147 per Unit (a 14.7% return) in tax credits per year. The
General Partners expect that the Partnership will continue to generate annual
tax credits of approximately $147 per Unit through 2002, the end of the tax
credit period for a majority of the properties. To satisfy tax credit
requirements, the Partnership will generally not be able to begin selling its
properties and liquidating Limited Partners' interests until 2008.
Summary
A Limited Partner's decision to sell or not to sell his/her units in the
Partnership should be based on many factors including investment objectives,
ability to use the Partnership's current benefits and the willingness to wait
for property sale proceeds for an additional eleven years or more. In today's
secondary market, the Offer presents a competitive price. However, if a
Limited Partner wishes to remain in the Partnership, it is possible that the
overall benefits of continuing ownership could exceed the benefits of selling
now. It is also possible that current estimates will not be achieved and a
remaining Limited Partner will not realize benefits equal to this Offer. THE
ATTACHED INFORMATION SHOULD BE READ VERY CAREFULLY. IT PROVIDES SPECIFIC
DETAILS ABOUT THE TERMS OF THE SALE AND ITS CONSEQUENCES TO YOU AND CONTAINS
INSTRUCTIONS FOR COMPLETING THE SALE DOCUMENTS. YOU SHOULD CONSULT WITH YOUR
ADVISORS ABOUT THE FINANCIAL, TAX, LEGAL AND INVESTMENT IMPLICATIONS TO YOU OF
ACCEPTING THE OFFER. To accept the Offer, complete and sign the enclosed
Letter of Transmittal and return it in the enclosed envelope. The Purchaser
has engaged The Herman Group, Inc. to assist in the administration of this
Offer. You may be contacted by them to discuss the enclosed documentation.
In addition, please feel free to call Oldham Institutional Tax Credits LLC at
1-800-829-9213 ext. 12 if you have any questions.
Sincerely,
Oldham Institutional Tax Credits LLC
BOS2: 74832_1
