SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) JANUARY 30, 1998
LEXFORD, INC.
(Exact Name of Registrant as Specified in Charter)
OHIO 0-21670 31-4427382
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
41 SOUTH HIGH STREET, SUITE 2410 COLUMBUS 43215
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (614)242-3850
Page 1 of 20 Pages
Exhibit Index on Page 7.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
This Current Report on Form 8-K is being filed in order to report the
acquisition by Lexford, Inc. (the "Registrant") of all third party partners'
interests in 180 limited partnerships (collectively, the "Consolidating
Partnerships") previously held by partners unrelated to the Registrant
(collectively, the "Outside Partner Interests").
Each of the Consolidating Partnerships owns and operates a multi-family
residential apartment community developed by the Registrant's predecessor,
Cardinal Industries, Inc. A list of the Consolidating Partnerships involved in
the subject transactions and data concerning the apartment communities owned by
each such Consolidating Partnership are set forth in Table 1 appearing
hereinbelow.
The Consolidating Partnerships' real estate assets include 11,868
apartment units which, collectively, generated about $60.5 million in Total
Revenue, and approximately $34 million in net operating income, for the year
ended December 31, 1997, according to unaudited results. The aggregate mortgage
debt of the Consolidating Partnerships is approximately $216 million, of which,
as of February 17, 1998, $75.0 million is prepayable without substantial penalty
or premium. Combined with the Registrant's other wholly-owned real estate
assets, the Registrant now has outstanding approximately $120 million of
prepayable mortgage debt on a consolidated basis. That amount is expected to
increase as the Registrant continues to seek to consolidate ownership of
additional partnerships in which it presently has a minority equity interest.
The Registrant and one or more of its wholly owned subsidiary
corporations serves as the managing general partner of each Consolidating
Partnership. The acquisition of the Outside Partner Interests in the
Consolidating Partnerships was accomplished by a merger of a general or limited
partnership in which the Registrant and its wholly owned subsidiary, Cardinal
Industries Development Corporation, were the sole partners formed solely for the
purpose of effecting the merger (in each case, a "Merger Partnership"). In each
instance, the Merger Partnership was merged with and into the subject
Consolidating Partnership with the subject Consolidating Partnership surviving
the merger.
Pursuant to the terms of the agreement of merger governing each such
merger, the Outside Partner Interest held by each partner of the subject
Consolidating Partnership, other than the Registrant and its wholly owned
affiliates, was canceled and thereafter represented the right solely to receive
a cash payment, if any. The mergers were effected in accordance with the terms
of governing state law, as well as the terms of the agreement of limited
partnership of each subject Consolidating Partnership.
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Table 1 also sets forth the merger consideration paid or payable in
respect of each unit of limited Outside Partner Interest, as well as the general
Outside Partner Interest, if any, held by any third party co-general partner in
each Consolidating Partnership. The Registrant and its affiliates have funded,
or will fund, the merger consideration payable to holders of Outside Partner
Interests from internal working capital and the proceeds of borrowings under the
Registrant's revolving credit facility with The Provident Bank.
Pursuant to the terms of the agreement of limited partnership of each
Consolidating Partnership (and, when applicable, a separate agreement between
the managing general partner and third party co-general partner(s)) the
Registrant or its wholly owned affiliate, as managing general partner, solicited
the consent (in each case, the "Consent Solicitation") of the holders of the
Outside Partner Interests to effect the merger.
In accordance with the terms of the Consent Solicitation, holders of
Outside Partner Interests who executed and delivered their consent by the date
specified in the Consent Solicitation materials became entitled to a voluntary
payment from the Registrant separate and apart from the merger consideration
payable to all holders of Outside Partner Interests. The amount of voluntary
payment per unit of limited Outside Partner Interest to consenting payable
holders of Outside Partner Interests holders of Outside Partner Interests is set
forth in Table 1. The Registrant has funded, or will fund, all such voluntary
payments from internal working capital and the proceeds of borrowings under the
Registrant's revolving credit facility with The Provident Bank.
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<TABLE>
<CAPTION>
TABLE 1
Total
Limited Merger Voluntary Payments
Transaction Apartment Partner Consideration Payment Co-GP to Outside
Date Partnership Name Units Units per LP Unit per LP Unit Payment Partners
<S> <C> <C> <C> <C> <C> <C> <C>
1/30/98 Acadia Court Apartments of Bloomington, Ltd. 97 35 0 300 0 5,550
1/30/98 Annhurst Apartments of Allegheny County, Ltd. 97 35 0 293 0 6,006
1/30/98 Annhurst Apartments of Indianapolis, Ltd. 83 35 0 894 0 22,350
1/30/98 Ansley Oaks Apartments of O'Fallon, LP 69 35 0 524 0 13,624
1/30/98 Applegate Apartments of Delaware County, Ltd. 53 35 2,614 976 0 113,937
1/30/98 Ashgrove Apartments of Calhoun County, Ltd. 50 35 0 1,152 0 27,648
1/30/98 Ashgrove Apartments of Jefferson County, Ltd. 60 35 0 1,103 0 33,090
1/30/98 Ashgrove Apartments of Sterling Heights, II, Ltd. 89 35 0 300 0 6,600
1/30/98 Barrington Apartments of DeKalb County, Ltd. 48 35 0 857 0 29,995
1/30/98 Beckford Place Apartments of New Castle, Ltd. 41 35 0 725 0 20,662
1/30/98 Beckford Place Apartments of North Canton, II, Ltd. 60 35 0 417 0 7,923
1/30/98 Bel Aire Apartments, Ltd. 67 35 0 898 0 18,409
1/30/98 Berry Pines Apartments, Ltd. 64 35 0 1,204 0 31,304
1/30/98 Brandon Court Apartments of Bloomington, Ltd. 78 35 0 1,572 0 34,584
1/30/98 Cambridge Commons Apartments of Indianapolis, II, LP 75 500 495 50 0 250,600
1/30/98 Camden Way Apartments, II, Ltd. 57 35 0 300 0 7,200
1/30/98 Camellia Court Apartments of Carrollton, Ltd. 55 35 0 1,293 0 34,265
1/30/98 Camellia Court Apartments of Columbus, II, Ltd. 40 35 0 813 0 22,357
1/30/98 Carleton Court Apartments of Erie County, Ltd. 60 35 0 91 0 2,093
1/30/98 Carleton Court Apartments of Kanawha County, LP 73 35 0 506 0 10,879
1/30/98 Cedargate Apartments of Bloomington, II, Ltd. 58 35 0 300 0 6,900
1/30/98 Cedargate Apartments of Bowling Green, Ltd. 59 35 3,613 1,446 0 151,746
1/30/98 Cedargate Apartments of Englewood, Ltd. 61 35 0 860 0 18,490
1/30/98 Cedargate Apartments of Michigan City, Ltd. 51 35 0 1,272 0 29,256
1/30/98 Cedargate Apartments of Shelby County, Ltd. 58 35 0 1,379 0 34,475
1/30/98 Charing Cross Apartments of Bowling Green, Ltd. 67 35 2,729 300 0 102,411
1/30/98 Clearlake Pines Apartments II, Ltd. 52 35 0 516 0 12,642
1/30/98 Clearview Apartments of Greenwood, II, LP 80 35 32,394 300 0 714,194
1/30/98 Clearview Apartments of Greenwood, Ltd. 71 500 1,211 50 0 628,469
1/30/98 Concord Square Apartments of Kokomo, Ltd. 49 35 7,330 1,227 0 281,135
1/30/98 Countryside Manor Apartments of Douglasville, Ltd. 82 35 8,972 1,421 0 307,960
1/30/98 Cypress Apartments, Ltd. 70 35 0 609 0 15,073
1/30/98 Daniel Court Apartments of Clermont County, Ltd. 114 35 0 1,180 0 31,270
1/30/98 Dogwood Glen Apartments of Marion County, II, LP 77 500 294 50 0 162,770
1/30/98 Dover Place Apartments of Eastlake, IV, LP 72 35 13,207 300 0 469,584
1/30/98 Driftwood Apartments, Ltd. 63 35 14,793 300 20,482 547,087
1/30/98 Elmwood Apartments, II, Ltd. 49 35 0 1,907 0 66,745
1/30/98 Forest Ridge Apartments of Richmond County, Ltd. 75 35 0 382 0 8,786
1/30/98 Forest Village Apartments of Bibb County, Ltd. 83 36 781 2,489 0 90,471
1/30/98 Foxton Apartments of Dayton II, Ltd. 81 35 0 1,681 0 32,780
1/30/98 Foxton Apartments of Monroe County, Ltd. 51 35 8,250 816 1,604 294,531
1/30/98 Gentian Oaks Apartments of Columbus, Ltd. 62 35 0 513 0 12,825
1/30/98 Greenglen Apartments of Dayton, Ltd. 74 35 0 1,713 0 42,825
1/30/98 Harbinwood Apartments of Gwinnett County, Ltd. 72 35 0 935 0 24,544
1/30/98 Heathmoore Apartments of Evansville, Ltd. 73 35 0 1,860 0 47,430
1/30/98 Heathmoore Apartments of Indianapolis, LP 55 35 3,729 1,261 0 153,200
1/30/98 Heathmoore Apartments of Wayne County, II, Ltd. 51 500 1,254 50 0 644,512
1/30/98 High8Points Apartments, Ltd. 95 35 0 300 0 6,000
1/30/98 Hillandale Manor Apartments of DeKalb County, Ltd. 48 35 9,430 560 0 346,863
1/30/98 Hillcrest Villa Apartments, Ltd. 65 34 0 982 0 28,478
1/30/98 Hillside Manor Apartments of Americus, Ltd. 60 35 0 429 0 9,685
1/30/98 Holly Park Apartments of Columbus, Ltd. 66 35 0 236 0 5,162
1/30/98 Holly Ridge Apartments, Ltd. 98 35 0 300 0 6,737
1/30/98 Knox Landing Apartments of Knoxville, Ltd. 85 35 0 300 0 5,400
1/30/98 Larkspur Apartments of Moraine II, Ltd. 16 35 0 258 0 8,256
1/30/98 Laurel Court Apartments of Fremont, Ltd. 69 35 0 538 0 11,836
1/30/98 Laurelwood Court Apartments of Bedford, Ltd. 50 35 0 300 0 7,200
1/30/98 Link Terrace Apartments, Ltd. 54 35 0 763 0 16,786
1/30/98 Longwood Apartments of Lexington, Ltd. 60 35 0 350 0 7,350
1/30/98 Marsh Landing Apartments, Ltd. 58 35 0 1,470 0 41,160
1/30/98 Meadowland Apartments of Clark County, Ltd. 60 35 0 1,392 0 29,928
1/30/98 Meadowood Apartments of Columbus, Ltd. 60 35 0 1,061 0 22,281
1/30/98 Meadowood Apartments of Cuyahoga Falls, Ltd. 59 35 0 300 0 6,300
1/30/98 Meadowood Apartments of Franklin, Ltd. 51 35 10,099 979 0 372,733
1/30/98 Meadowood Apartments of Logansport, Ltd. 42 35 0 679 0 18,333
1/30/98 Meadowood Apartments of Monroe County, Ltd. 57 35 0 995 0 26,368
1/30/98 Meadowood Apartments of Nicholasville, Ltd. 67 35 4,803 1,650 0 210,165
1/30/98 Meadowood Apartments of Warrick County, Ltd. 63 35 0 1,780 0 40,940
</TABLE>
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<TABLE>
<CAPTION>
TABLE 1
Total
Limited Merger Voluntary Payments
Transaction Apartment Partner Consideration Payment Co-GP to Outside
Date Partnership Name Units Units per LP Unit per LP Unit Payment Partners
<S> <C> <C> <C> <C> <C> <C> <C>
1/30/98 Meldon Place Apartments of Toledo, Ltd. 126 35 0 681 0 19,068
1/30/98 Millburn Apartments of Stow, Ltd. 52 35 0 947 0 12,311
1/30/98 Montgomery Court Apartments of Columbus, II, Ltd. 56 35 0 300 0 5,700
1/30/98 Montgomery Court Apartments of Columbus, Ltd. 60 35 0 364 0 7,644
1/30/98 Northridge Apartments of Carrollton, Ltd. 77 35 0 592 0 16,280
1/30/98 Northrup Court Apartments of Allegheny County, Ltd. 60 35 4,733 751 0 178,824
1/30/98 Nova Glen Apartments II, Ltd. 81 35 0 787 0 16,527
1/30/98 Oak Ridge Apartments, Ltd. 63 35 0 899 0 26,071
1/30/98 Oak Shade Apartments, Ltd. 82 35 0 779 0 17,528
1/30/98 Oakwood Village Apartments of Richmond County, Ltd. 71 35 0 470 0 9,635
1/30/98 Olivewood Apartments of Indianapolis, II, Ltd. 66 35 3,939 300 0 139,539
1/30/98 Olivewood Apartments of Indianapolis, Ltd. 62 34 0 342 0 5,301
1/30/98 Pickerington Meadows Apartments of Pickerington, Ltd. 60 35 0 390 0 9,555
1/30/98 Pine Knoll Apartments of Clayton County, Ltd. 46 35 9,851 310 0 343,763
1/30/98 Pine Meadows Apartments, Ltd. 60 35 0 1,344 0 47,040
1/30/98 Pine Terrace Apartments II, Ltd. 68 35 0 1,838 0 47,788
1/30/98 Pine Terrace Apartments, Ltd. 80 35 0 2,370 0 59,250
1/30/98 Quail Call Apartments, Ltd. 55 35 0 1,415 0 33,488
1/30/98 Ranchside Apartments, Ltd. 76 35 0 960 0 24,480
1/30/98 Red Deer Apartments of Fairborn, Ltd. 67 35 17,004 300 0 604,751
1/30/98 Redan Village Apartments of DeKalb County, II, Ltd. 76 35 9,652 300 0 346,227
1/30/98 Ridgewood Apartments of Bedford, Ltd. 48 35 0 785 0 19,233
1/30/98 Ridgewood Apartments of Columbus II, Ltd. 58 35 0 592 0 13,320
1/30/98 Ridgewood Apartments of Columbus, Ltd. 59 36 910 1,241 0 72,793
1/30/98 Ridgewood Apartments of DeKalb County, II, Ltd. 52 500 0 50 0 12,800
1/30/98 Ridgewood Apartments of Russellville, Ltd. 52 35 0 1,312 0 34,112
1/30/98 Rivers End Apartments, Ltd. 66 35 0 567 0 13,084
1/30/98 Roanoke Apartments of Oakland County, Ltd. 88 35 19,481 300 0 629,552
1/30/98 Rosewood Apartments of Columbus, Ltd. 91 35 0 1,310 0 24,890
1/30/98 Rosewood Apartments of Jefferson County, Ltd. 77 35 0 1,891 0 41,602
1/30/98 Rosewood Commons Apartments of Indianapolis, Ltd. 96 35 0 300 0 7,500
1/30/98 Shadow Bay Apartments, II, Ltd. 59 35 0 885 0 29,205
1/30/98 Shadow Trace Apartments of DeKalb County, Ltd. 81 35 14,478 1,498 0 546,059
1/30/98 Sherbrook Apartments of Columbus, Ltd. 60 35 0 278 0 6,950
1/30/98 Silver Forest Apartments, Ltd. 51 25 0 874 0 21,850
1/30/98 Slate Run Apartments of Bardstown, Ltd. 54 35 0 1,306 0 28,732
1/30/98 Slate Run Apartments of Hopkinsville, Ltd. 57 35 0 1,395 0 27,551
1/30/98 Slate Run Apartments of Jefferson County, Ltd. 64 35 0 1,629 0 47,241
1/30/98 Slate Run Apartments of Lebanon, LP 61 35 9 989 0 20,105
1/30/98 Slate Run Apartments of Miamisburg, Ltd. 48 35 0 136 0 2,992
1/30/98 Spring Gate Apartments, Ltd. 66 35 0 2,453 0 66,231
1/30/98 Springwood Apartments of New Haven, Ltd. 48 35 0 980 0 31,360
1/30/98 Stonehenge Apartments of Glasgow, Ltd. 54 35 0 1,539 0 39,398
1/30/98 Stonehenge Apartments of Indianapolis, Ltd. 61 35 0 1,330 0 29,260
1/30/98 Stonehenge Apartments of Jasper, Ltd. 40 35 0 106 0 2,120
1/30/98 Stonehenge Apartments of Montgomery County, Ltd. 67 35 0 159 0 3,021
1/30/98 Stonehenge Apartments of Richmond, LP 59 35 4,738 875 4,920 180,510
1/30/98 Stonehenge Apartments of Stark County, Ltd. 60 35 0 1,262 0 35,336
1/30/98 Stonehenge Apartments of Tecumseh, Ltd. 48 35 0 759 0 16,319
1/30/98 Sutton Place Apartments, Ltd. 55 35 0 1,328 0 25,232
1/30/98 Terrace Trace Apartments, Ltd. 87 35 0 1,313 0 27,379
1/30/98 Timbercreek Apartments of Toledo, LP 77 35 7,058 300 0 257,231
1/30/98 Timberwoods Apartments of Perry, Ltd. 59 35 0 560 0 12,320
1/30/98 Valleyfield Apartments of Allegheny County, Ltd. 77 35 0 891 0 22,275
1/30/98 Valleyfield Apartments of DeKalb County II, Ltd. 66 35 14,111 503 0 507,453
1/30/98 Valleyfield Apartments of DeKalb County, Ltd. 66 35 8,259 1,352 0 304,248
1/30/98 Valleyfield Apartments of Lexington, Ltd. 84 35 0 981 0 21,582
1/30/98 Waterbury Apartments of Clarke County, Ltd. 53 35 84 514 0 18,345
1/30/98 Waterbury Apartments of Clarksville, Ltd. 52 35 0 550 0 14,850
1/30/98 Waterbury Apartments of Clermont County, LP 70 35 0 350 0 7,467
1/30/98 Waterbury Apartments of Greenwood, Ltd. 44 35 0 802 0 20,050
1/30/98 Waterbury Apartments of Westland, Ltd. 100 35 0 300 0 5,550
1/30/98 Wentworth Apartments of Roseville, Ltd. 75 35 0 413 0 9,499
1/30/98 Westcreek Apartments, Ltd. 86 35 0 646 0 12,920
1/30/98 Westway Apartments, Ltd. 70 35 0 1,084 0 29,268
1/30/98 Westwood Apartments of Rochester, Ltd. 42 35 0 728 0 17,472
</TABLE>
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<TABLE>
<CAPTION>
6
Total
Limited Merger Voluntary Payments
Transaction Apartment Partner Consideration Payment Co-GP to Outside
Date Partnership Name Units Units per LP Unit per LP Unit Payment Partners
<S> <C> <C> <C> <C> <C> <C> <C>
1/30/98 Whisperwood Apartments of Cordele, Ltd. 49 35 0 425 0 8,288
1/30/98 Willow Creek Apartments of Griffin, Ltd. 52 35 0 487 0 10,227
1/30/98 Willow Run Apartments of Madisonville, Ltd. 72 35 0 380 0 8,360
1/30/98 Willowood Apartments of Frankfort, II, Ltd. 53 35 0 300 0 6,450
1/30/98 Willowood Apartments of Frankfort, Ltd. 57 35 0 1,219 0 30,475
1/30/98 Willowood Apartments of Grove City, II, Ltd. 26 35 0 80 0 1,600
1/30/98 Willowood Apartments of Grove City, Ltd. 46 35 0 993 0 20,357
1/30/98 Willowood Apartments of Owensboro, Ltd. 55 35 0 1,427 0 45,664
1/30/98 Willowood East Apartments of Indianapolis II, Ltd. 60 35 0 300 0 7,200
1/30/98 Winter Woods Apartments, Ltd. 57 35 0 484 0 9,196
1/30/98 Wood Trail Apartments of Newnan, Ltd. 61 35 10,685 1,376 0 412,502
1/30/98 Woodcliff Apartments of Lilburn, II, Ltd. 72 35 0 559 0 13,835
1/30/98 Woodcliff Apartments of Lilburn, Ltd. 71 35 3,660 1,540 0 160,446
1/30/98 Woodcrest Apartments of Warner Robins, Ltd. 65 35 0 926 0 22,687
1/30/98 Woodland Apartments, II, Ltd. 77 35 0 1,002 0 24,048
1/30/98 Woodland Apartments, Ltd. 92 35 8,895 1,740 0 330,940
1/30/98 Woodlands Apartments of Columbus, II, Ltd. 70 35 0 1,466 0 38,849
1/30/98 Woodlands Apartments of Columbus, III, LP 93 35 5,060 300 0 178,940
1/30/98 Woodlands Apartments of Franklin, Ltd. 56 35 0 1,700 0 44,200
1/30/98 Woodlands Apartments of Streetsboro, II, Ltd. 60 35 0 300 0 5,550
1/30/98 Woodlands Apartments of Streetsboro, Ltd. 60 35 6,005 300 8,314 227,785
1/30/98 Wycliffe Court Apartments of Murfreesboro, Ltd. 64 35 0 716 0 15,036
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1/30/98 156 Partnerships 10,109 Total Investment: 13,768,816
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1/31/98 Amberidge Apartments of Roseville, Ltd. 45 35 0 300 0 4,050
1/31/98 Ashgrove Apartments of Sterling Heights, Ltd. 114 35 0 678 0 12,882
1/31/98 Brunswick Apartments of Monongalia County, LP 101 159 0 66 0 8,547
1/31/98 Cambridge Commons Apartments of Indianapolis, Ltd. 86 152 701 69 0 107,790
1/31/98 Camden Way Apartments, Ltd. 61 91 0 312 0 23,712
1/31/98 Candlelight Apartments II, Ltd. 60 35 0 770 0 22,191
1/31/98 Carriage Hills Apartments of Dublin, Ltd. 60 83 0 127 0 5,937
1/31/98 Elmwoods Apartments of Marietta, Ltd. 48 107 902 386 0 125,299
1/31/98 Forsythia Court Apartments of Harford County, Ltd. 75 51 0 206 0 5,253
1/31/98 Forsythia Court Apartments of Jefferson County, Ltd. 98 35 0 659 0 13,510
1/31/98 Holly Sands Apartments, Ltd. 72 189 0 122 0 22,204
1/31/98 Iris Glen Apartments of Rockdale County, Ltd. 79 135 0 476 0 50,932
1/31/98 Meadowood Apartments of Columbus, II, Ltd. 23 123 0 85 0 5,780
1/31/98 Montgomery Court Apartments of Ingham County, Ltd. 59 123 0 220 0 17,270
1/31/98 Morgan Trace Apartments of Union City, Ltd. 80 35 0 300 0 6,300
1/31/98 Newberry Apartments of Eaton County, Ltd. 62 120 208 345 0 44,212
1/31/98 Oakley Woods Apartments of Union City, Ltd. 60 115 1,756 254 0 224,209
1/31/98 Olivewood 150 60,678 30 0 0 1,219,365
1/31/98 Redan Village Apartments of DeKalb County, Ltd. 78 177 631 356 0 143,373
1/31/98 Sky Pines Apartments, Ltd. 88 33 0 497 0 9,582
1/31/98 Slate Run Apartments of Jefferson County, II, Ltd. 63 35 0 854 0 26,474
1/31/98 Stratford Lane Apartments of Columbus, Ltd. 67 107 0 585 0 55,282
1/31/98 Willowood Apartments of Wooster II, Ltd. 53 26 0 300 0 2,400
1/31/98 Winthrop Court Apartments of Frankfort, Ltd. 77 115 0 224 0 22,176
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1/31/98 24 Partnerships 1,759 Total Investment: 2,178,730
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</TABLE>
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The acquisitions recorded in this Form 8-K are a part of the
Registrant's plan to acquire third party limited partner or other equity
interests in substantially all of its Consolidating Partnerships, which plan the
Registrant previously announced in its press release dated November 12, 1997,
and in its joint proxy statement/prospectus for its special shareholders meeting
to be held on March 3, 1998. The Registrant intends to continue the ownership
and operation of the apartment communities owned by each of the Consolidating
Partnerships in substantially the same manner as previously conducted.
The foregoing information set forth in this Item 2 includes certain
forward looking statements regarding the Registrant's plans to acquire equity
interests in additional limited partnerships in which it currently owns only a
minority equity interest, as well as a resulting increase in amounts of
consolidated, prepayable mortgage indebtedness associated with such limited
partnerships. All such forward looking statements are subject to uncertainty.
There can be no assurance that the Registrant will be successful in
consolidating the equity ownership of any such limited partnerships. Actual
results may differ from the forward looking statements due to, among other
things, unavailability or unattractive terms of potential financing necessary to
consolidate the ownership of the additional limited partnerships, as well as the
Registrant's potential inability to obtain the requisite consent of the current
holders of equity interests in, or current mortgage lenders to, such additional
limited partnerships.
ITEM 7. FINANCIAL STATEMENTS, PRO-FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Pursuant to Item 7(a)(4) of Form 8-K the Registrant will file the
financial statements and pro-forma financial information required by this Item 7
not later than April 20, 1998 (sixty days from the filing of this initial report
on Form 8-K).
(c)
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION SEQUENTIAL PAGE
2.1 Representative form of consent
solicitation materials furnished to
holders of Outside Partner Interests 9
2.2 Representative form of agreement
and plan of merger 18
27.1 Financial data schedule*
99.1 Financial statements and pro-forma
financial information*
*To be filed by amendment.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Lexford, Inc.
By: /s/ Mark D. Thompson
---------------------------
Mark D. Thompson
Executive Vice President and Chief Financial Officer
Date: February 17, 1998
8
9
[LEXFORD, INC. LETTERHEAD]
6954 AMERICANA PARKWAY
REYNOLDSBURG, OHIO 43068
PHONE: 614/575-5202 FAX: 614/575-5217
[Date]
ACTION REQUIRED TO RECEIVE POTENTIAL CASH DISTRIBUTION OF UP TO
$[X,XXX] PER UNIT.
Re: [Partnership Name] (the "Partnership")
Dear Limited Partner:
Lexford, Inc. (formerly Cardinal Realty Services, Inc.) 1, Managing
General Partner of the Partnership, recently announced plans to consolidate
ownership of real estate presently owned by syndicated limited partnerships in
which Lexford, Inc. serves as the general partner. Lexford, Inc. seeks your
consent to dispose of the Partnership's property in early 1998. If completed,
the proposed transaction will result in a CASH DISTRIBUTION TO YOU IN THE AMOUNT
OF [$X,XXX]PER UNIT of limited partner interest, which Lexford, Inc. believes is
at least equal to any cash distribution you could receive as a result of any
alternatives available to the Partnership. The proposed transaction must receive
the consent of a majority of the Partnership's outstanding limited partner
Units. Additionally, you may be able to utilize any previously suspended tax
benefits depending upon your individual tax situation. Please consult your tax
advisor with regard to actual tax benefits available to you. THE CASH
DISTRIBUTION WILL ONLY BE PAID IF THE TRANSACTION RECEIVES THE CONSENT OF A
MAJORITY OF OUTSTANDING LIMITED PARTNER UNITS AND IS CONSUMMATED. If we receive
your consent by [DATE] and the transaction is consummated you will be entitled
to an additional cash payment of [$X,XXX] per Unit to assist you in paying any
taxes relating to the transaction.
CURRENT FINANCIAL CONDITION OF THE PARTNERSHIP
After many difficult years, our property has finally appreciated to the
point where there is equity for the limited partners as set forth in Section A.7
of the attached Appendix A. Due to the current strong real estate market for
multifamily properties, we believe it is an opportune time to dispose of the
Partnership's property, which transaction would result in a cash distribution in
the amount of $X,XXX per Unit of limited partner interest if the transaction
receives the consent of a majority of the Partnership's outstanding limited
partner Units and is consummated.
- --------
1 Cardinal Realty Services, Inc. changed its name to Lexford, Inc. effective
October 7, 1997 in order to better reflect its mission under new management.
There was no change of ownership of the company.
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TRANSACTION SUMMARY AND BENEFITS
We have determined that it is in the best interests of both the limited
partners and Lexford, Inc. for a Lexford affiliate to acquire 100% ownership of
the Partnership's property. We have further determined that the most efficient
and economic way to achieve 100% ownership is to seek your consent to a merger
of the Partnership with a wholly-owned affiliate of Lexford, Inc. The consent of
the limited partners holding a majority of the Partnership's outstanding limited
partner Units is required to authorize the disposition of the Partnership's
property. Accordingly, we request your consent to amend the Partnership's
Agreement of Limited Partnership to authorize us to effect a merger of the
Partnership with another entity or to sell the Partnership's property, each of
which would result in the cancellation of your Unit(s). Additionally, if we
receive your consent to the transaction by [DATE], the transaction receives the
consent of a majority of the Partnership's outstanding limited partner Units and
is consummated, you will receive a voluntary payment in addition to the expected
cash distribution, as shown in Section C of the attached Appendix A. The form of
the Amendment to the Agreement of Limited Partnership as well as the form of
Consent we ask you to sign and return to us are included with this letter.
Provided that the limited partners consent, it is our present intention to
transfer the Partnership's property during the second quarter of 1998, with the
cash distributions to occur promptly thereafter. However we reserve the right to
change our plans to transfer the Partnership's property based upon facts and
circumstances which may develop prior to that time.
Benefits to Limited Partners
This transaction will allow limited partners to (i) receive a cash
distribution in the amount of up to [$X,XXX] per Unit of limited partner
interest, (ii) eliminate the omnipresent specter of future "recapture taxes" (if
applicable) at marginal rates lower than ever before and (iii) rid themselves of
their own tax and investment recordkeeping requirements. Additionally, Section B
of Appendix A may indicate that you will have a tax loss relating to the
transaction. (For further explanation, please see the first paragraph under the
heading "Federal Income Tax Considerations" below.) However, you should consult
your tax advisor with respect to the availability of these tax attributes. If
such a transfer is accomplished, you would receive a final (1998) K-1 in 1999.
Once and for all, the Partnership can be REMOVED FROM YOUR TAX AND ESTATE
PLANNING, along with concerns about possible future phantom (non-cash) income
such as debt discharge income, depreciation recapture, imputed gain on sale
(negative capital account recapture), etc.
Benefits to Lexford
We believe that Lexford, Inc. may derive more favorable economic
benefits from ownership of the Partnership property than a third party because
of the size and uniformity of Lexford, Inc.'s overall portfolio of apartment
complexes. If the proposed transaction occurs, Lexford, Inc. can then seek to
recover its second mortgage or other interests in the Partnership's property
without the cost and administrative burden of limited partner financial and tax
reporting and communications.
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FEDERAL INCOME TAX CONSIDERATIONS
While each limited partner's tax situation is unique, we estimate that,
upon disposition of the Partnership's property, a limited partner holding one
Unit of limited partner interest will have an adjusted capital account balance
as set forth under Section B of Appendix A. If a deduction for suspended passive
activity losses is shown on Appendix A, this analysis assumes that passive
activity losses have been disallowed in prior years and carried forward, as
required by law, and have not been utilized in other income offsetting
transactions, in which case, a tax benefit may be available to you upon
disposition. If the adjusted capital account is shown as a deficit, a limited
partner will incur federal "recapture taxes" on amounts claimed (as of December
31, 1996) as losses in previous tax years to the extent such claimed losses
exceed the limited partner's investment in the Partnership, a substantial
portion of which would represent "depreciation recapture" taxes at a "special
rate" of not more than 25% (compared to a rate of up to 39.6% at the current tax
rate on ordinary income). Any remaining taxable income or gain should be taxed
as capital gain (assuming, among other things, you will have been a limited
partner of the Partnership for at least 18 months) at a federal rate of not more
than 20% (compared to a rate of up to 28% under prior law). THERE CAN BE NO
ASSURANCE THAT THESE REDUCED RATES WILL REMAIN IN EFFECT IN FUTURE YEARS.
If you have received debt discharge income in prior years, you may have
elected to defer this income, and instead reduce the basis in your share of the
Partnership's property. In such situations, you may recognize a gain that is
greater than the analysis shows. Please consult your tax advisor on this matter,
both with regard to whether an election has been made in prior years, and with
regard to the tax consequences of the current proposed transaction in light of
any such prior election. Of course, these are only estimates and your personal
income tax situation may vary. Accordingly, we urge you to consult your own tax
advisor for advice specific to your personal tax situation.
If your capital account is shown as a deficit, failure to consummate
this transaction could place you in the position of recognizing non-cash
ordinary income from continuing operations, taxable at rates of up to 39.6%.
Generally, to the extent your tax capital account is negative, federal tax law
will seek ways to impute "recapture" income to you. For example, this income can
arise from any refinancing of the property's debt, especially when debt is
reduced or forgiven. Taxable income will also increase to all partners as
federal tax depreciation is exhausted on the property. Finally, basis for
allocating losses to you may have previously been available to you, by operation
of federal tax law, through your allocation of the basis in the second mortgage.
Regulations developed by the U.S. Department of Treasury will ultimately require
you to recapture any losses previously allowed for your portion of this
obligation.
THE CASH DISTRIBUTIONS WILL ONLY BE PAID TO LIMITED PARTNERS IF THE
TRANSACTION RECEIVES THE CONSENT OF A MAJORITY OF THE PARTNERSHIP'S OUTSTANDING
LIMITED PARTNER UNITS AND IS CONSUMMATED. PLEASE SIGN AND RETURN THE ENCLOSED
CONSENT OF LIMITED PARTNER IN THE POSTAGE PAID ENVELOPE PROVIDED OR BY FACSIMILE
(614/575-5217) BY [DATE].
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If you have any questions regarding the contents of this letter, feel
free to call Corporate Investor Communications, Inc. at 800/248-5108 or our
limited partner inquiry line at 614/575-5202 and Jeff Meyer, Assistant Vice
President, Lee Blackburn, Portfolio Manager, or Dana Lochard, Investor Services
Representative, will return your call.
Very truly yours,
LEXFORD, INC.
(formerly known as
Cardinal Realty Services, Inc.)
/s/ Paul R. Selid
By: Paul R. Selid
Senior Vice President
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INSTRUCTIONS FOR DELIVERY OF CONSENT AND RECEIPT OF CASH DISTRIBUTION
* Sign the enclosed Consent of Limited Partner.
* Return the signed Consent of Limited Partner in the enclosed
postage paid envelope OR fax the signed Consent of Limited
Partner to 614/575-5217. Facsimile transmissions will be
recognized if the transmission is received by Lexford by [DATE]
and an original copy of the signed Consent of Limited Partner as
transmitted is received within 7 days following [DATE].
* If the proposed transaction receives the consent of a majority of
the Partnership's outstanding limited partner Units and the
proposed transaction occurs, no further action is required by you
to receive the cash distribution - you will receive your cash
distribution within 10 days of the consummation of the
transaction, which is expected to occur in the second quarter of
1998 (no later than June 30, 1998).
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CONSENT OF LIMITED PARTNER
--------------------------
The undersigned limited partner(s) in [Partnership Name](the
"Partnership"), hereby consents to (i) the amendment of the Partnership's
[Agreement] to authorize [General Partner Name], general partner of the
Partnership (the "General Partner"), to negotiate, execute and deliver any and
all documents and to take any and all actions necessary to merge the Partnership
with or into another entity or sell the Partnership's property in accordance
with the terms and conditions of the Amendment to Agreement of Limited
Partnership attached to this Consent as Exhibit A or (ii) a sale of the
Partnership's property to a wholly-owned affiliate of the General Partner.
The undersigned limited partner(s) hereby irrevocably constitutes and
appoints the General Partner the true and lawful attorney-in-fact in such
Limited Partner's name, stead and place to make, execute, sign, acknowledge and
file, if necessary, the Amendment to Agreement of Limited Partnership
substantially in the form attached to this Consent as Exhibit A. The foregoing
grant of power of attorney is coupled with an interest.
THE GENERAL PARTNER RECOMMENDS THAT ALL
LIMITED PARTNERS CONSENT TO THE PROPOSED AMENDMENT.
__________________________________ ___________________________ _____________
Signature of Custodian or Trustee* Signature Date
(Required for all Custodial
Accounts)
___________________________
Print Name
___________________________ _____________
Signature, if held jointly* Date
___________________________
Print Name
* When limited partnership interest(s) are held by joint tenants, both joint
tenants should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. When the limited
partnership interest(s) are held of record by a tax-exempt Limited Partner
(such as an IRA account), the signature of the custodian or trustee is also
required. If a corporation, please have signed in full corporate name by
the President or other authorized officer. If a partnership, please have
signed in partnership name by an authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS CONSENT FORM BY [DATE] USING THE
ENCLOSED ENVELOPE OR FACSIMILE (614/575-5217).
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EXHIBIT A
AMENDMENT
TO
[Partnership Agreement]
OF
[Partnership Name]
This Amendment ("Amendment") to the ("Partnership Agreement") of
[Partnership Name] (the "Partnership") is made effective this day of , 199 , by
and among [General Partner Name][Co- General Partner Name] (the "General
Partner(s)") and those individuals listed on Schedule A to this Amendment as
limited partners (the "Limited Partners"), and hereby amends the Partnership
Agreement.
RECITALS
A. Terms which are used but not otherwise defined in this Amendment
have the meanings given them in the Partnership Agreement.
B. Section 20.01 of the Partnership Agreement provides that no
amendment of the Partnership Agreement shall be effective or
binding upon the General or Limited Partners unless the same shall
have been agreed to by the General Partner(s) and the Limited
Partners holding at least fifty-one percent (51%) of the
outstanding units of the Partnership.
C. The General Partner(s) and the Limited Partners holding at least
fifty-one percent (51%) of the outstanding units of the
Partnership desire to amend the Partnership Agreement as set forth
below.
AMENDMENT
Effective upon the execution of this Amendment, the Partnership
Agreement is amended as follows:
1. Section 15.01 shall be amended by adding the following paragraph as the final
paragraph of Section 15.01:
The Managing General Partner shall have the authority, in its sole discretion,
to negotiate, execute and deliver any and all documents and to take any and all
actions necessary to merge the Partnership with or into another entity, which
entity may be affiliated with the Partnership, the General Partner of the
Partnership or any shareholder, member, partner, or any other person holding an
equity interest in the Partnership or the General Partner of the Partnership.
Any such merger may be effected upon such terms and conditions (including,
without limitation, terms providing for the cancellation of any units of the
Partnership outstanding prior to the merger transaction for such consideration,
if any, deemed reasonable by the Managing General Partner) as the Managing
General Partner may determine in its sole discretion.
2. Should this Amendment contradict with any of the other terms and conditions
of the Partnership Agreement, the terms of this Amendment shall control.
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3. All other terms and conditions of the Partnership Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
GENERAL PARTNER(S):
___________________________________ ___________________________________
By: _______________________________ By: _______________________________
By: ______________________ By: _______________________
Its:______________________ Its: _______________________
LIMITED PARTNERS
By: _____________________________,
as Attorney-in-fact
By: ______________________
Its:______________________
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<TABLE>
<CAPTION>
APPENDIX A
NAME OF LIMITED PARTNERSHIP
CURRENT FINANCIAL INFORMATION
Name of Partnership: Name of Limited Partnership ("Partnership")
Name of General Partner: Lexford, Inc. ("General Partner")
SECTION A: VALUATION OF PROPERTY AND LIMITED PARTNER EQUITY
<S> <C> <C> <C>
1. Fair Market Value Estimate of Partnership Property:1 X,XXX,XXX
2. 1st and 2nd Mortgage Indebtedness (owed to non-affiliate of General Partner): X,XXX,XXX
3. 2nd Mortgage and Other Advances (owed to General Partner or its affiliate): XXX,XXX
4. Other Net Liabilities/(Assets): XX,XXX
------------
5. Total Partnership Obligations: X,XXX,XXX
------------
6. Net Partnership Equity in Property:2 XXX,XXX
============
7. Average Value of One Limited Partner Investment Unit in Partnership: X,XXX
============
SECTION B: SUMMARY OF SALIENT LIMITED PARTNER TAX INFORMATION
(BASED ON OWNERSHIP OF ONE LIMITED PARTNER INVESTMENT UNIT, ON AVERAGE)3
1. Limited Partner Capital Account Surplus/(Deficit) - Tax Basis: (XX,XXX)
2. Total Potential Distributions to Limited Partners (as set for in Section C.3 below): (X,XXX)
------------
3. Total Projected (Income)/Loss to Limited Partners (XX,XXX)
4. Estimated Suspended Passive Activity Losses:4 XX,XXX
------------
5. Net Taxable Loss/(Gain): (XX,XXX)
Assumed Tax Rate: 31%
------------
6. Estimated Average Limited Partner Tax Benefit/(Liability) per unit (based on
tax rate of 31%): 5 (X,XXX)
============
SECTION C: PROPOSED PAYMENT/DISTRIBUTIONS TO LIMITED PARTNERS
(ALL AMOUNTS PER ONE LIMITED PARTNER INVESTMENT UNIT)
1. Distribution of Limited Partner Equity in Partnership Property: X,XXX
2. Voluntary Payment: X,XXX
------------
3. Total Potential Distributions to Limited Partners: X,XXX
============
</TABLE>
THIS ANALYSIS WAS PREPARED BY THE GENERAL PARTNER. LIMITED PARTNERS ARE URGED TO
CONSULT THEIR OWN REAL ESTATE AND TAX ADVISORS, ATTORNEYS AND ACCOUNTANTS WITH
SPECIFIC REFERENCE TO THE ABOVE ANALYSIS, THEIR OWN TAX SITUATION AND POTENTIAL
CHANGES IN APPLICABLE LAW.
1 The valuation methodology for the estimated fair market value is an accepted
industry valuation model for income-producing real estate, which involves (i)
deriving net operating income over the prior 12 months ended September 30,
1997, (ii) subtracting $300 per unit for a replacement reserve from net
operating income, (iii) applying a capitalization rate of 10.25% to the
result and (iv) subtracting a sales cost of 4%. Capitalization rate is
defined as the present value rate of return of income-producing property
expressed as a percentage. For example, a capitalization rate of 10% applied
to a property producing $10,000 in annual net income results in a present
market value of $100,000.
2 The Partnership's equity in the property is computed by subtracting the
Partnership's liabilities (including mortgage debt and advances from the
General Partner or its affiliate) from the estimated fair market value of the
property.
3 Your actual investment history may differ. Please consult your tax advisor.
4 This amount assumes each Limited Partner has not utilized Passive
Activity Losses on prior tax returns.
5 Assumes federal tax rate of 25% (based on capital gains tax rate applicable
to depreciation recapture) and 6% for state and local taxes. Actual effective
tax rate may be lower for portion of gain in excess of depreciation
recapture. And may be higher for any voluntary payment.
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AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER ("Agreement") is made and entered as of the
____ day of ___________, 1998, by and between LEXMERGE L.P. [XXXXX], a limited
partnership existing under the laws of the State of Ohio (the "Merged Entity"),
and [PARTNERSHIP NAME], a limited partnership existing under the laws of the
State of [STATE NAME] (the "Surviving Entity") (the Merged Entity and the
Surviving Entity are referred to collectively as the "Constituent Entities").
WHEREAS, the general partner and the limited partner of the Merged
Entity have approved the merger of the Constituent Entities in accordance with
the laws of the State of [STATE NAME]; and
WHEREAS, the general partners of the Surviving Entity have approved the
merger of the Constituent Entities in accordance with the Surviving Entity's
Agreement of Limited Partnership and in accordance with the laws of the State of
[STATE NAME].
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Constituent Entities have agreed, and do hereby
agree, to merge upon the terms and conditions stated below:
1. Merger. The Merged Entity shall be merged with and into the
Surviving Entity (the "Merger").
2. Effective Time. The Merger shall become effective upon the filing
of a Certificate of Merger with the office of the Secretary of State of
[STATE NAME](the "Effective Time").
3. Manner and Basis of Effecting the Merger. The manner and basis of
carrying the Merger into effect shall be as follows:
(a) At the Effective Time of the Merger, the general partner's
interest and the limited partner's interest in the Merged Entity will
be converted into general partners' interests and limited partners'
interests in the Surviving Entity, which (pursuant to Section 4 of this
Agreement) shall be subject to the terms of the Agreement of Limited
Partnership of the Surviving Entity in effect immediately following the
Effective Time of the Merger.
(b) At the Effective Time of the Merger, the Merged Entity
shall be deemed to have transferred its assets to the Surviving Entity
in exchange for the assumption of the Merged Entity's liabilities and
each partner of the Merged Entity shall be deemed to have contributed
their respective general and limited partners' interests in the Merged
Entity to the Surviving Entity in exchange for ownership interests in
the Surviving Entity. In addition, at the Effective Time of the Merger:
(i) Except for Lexford, Inc. or any of its
affiliates which may hold limited partner
interests in the Surviving Entity, the
present limited partners of the Surviving
Entity shall receive for the cancellation of
such limited partnership interests in the
Surviving Entity the
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19
following consideration: $X for each unit of
a limited partner's interest in the
Surviving Entity owned by each limited
partner prior to the Effective Date;
(ii) Lexford, Inc.'s general partner's interest
in the Merged Entity shall be consolidated
with Lexford, Inc.'s general partner's
interest in the Surviving Entity, and
Lexford, Inc. shall become the general
partner of the Surviving Entity; and
(iii) Cardinal Industries Development Corporation
shall become the sole limited partner of the
Surviving Entity.
4. Agreement of Limited Partnership. The Agreement of Limited
Partnership of the Surviving Entity as it exists at the Effective Time of the
Merger shall be and remain the Agreement of Limited Partnership of the Surviving
Entity until it is altered or amended as therein provided.
5. Certificate of Limited Partnership. Except for such amendments as
may be necessary to reflect the terms of this Agreement, the Certificate of
Limited Partnership of the Surviving Entity as it exists at the Effective Time
of the Merger shall be and remain the Certificate of Limited Partnership of the
Surviving Entity until it is amended or canceled.
6. Principal Office. The location of the principal office of the
Surviving Entity shall be 6954 Americana Parkway, Reynoldsburg, Ohio 43068.
7. Authority of General Partner of Merged Entity. The general partner
of the Merged Entity has the authority to effectuate the Merger on behalf of the
Merged Entity and is authorized to execute the Certificate of Merger or any and
all other documents necessary to effectuate the Merger on behalf of the Merged
Entity as general partner of the Merged Entity.
8. Termination and Amendment. The general partner of the Merged Entity
and of the Surviving Entity shall have the right in their sole discretion to
abandon the Merger prior to the filing of a Certificate of Merger with the
office of the Secretary of State of Ohio. The general partner of the Merged
Entity and the Surviving Entity shall have the right to amend this Agreement at
any time before the filing of a Certificate of Merger with the office of the
Secretary of State of Ohio, to the extent permitted under applicable law,
provided that any such amendment is in writing and signed by all parties hereto.
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IN WITNESS WHEREOF, the Constituent Entities have caused this Agreement
to be executed, in multiple counterparts, by their respective representative,
each being thereunto duly authorized, as of the date first above written.
MERGED ENTITY:
LEXMERGE L.P. [XXXXX], an Ohio limited
partnership
By: Lexford, Inc., General Partner
By:
Its:
By: Cardinal Industries Development Corporation,
Limited Partner
By:
Its:
SURVIVING ENTITY:
[PARTNERSHIP NAME]
an Ohio limited partnership
By: Lexford, Inc., General Partner
By:
Its:
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