<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 3, 1997
FILE NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(Exact Name of the Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
MARYLAND 6513 84-1259577
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
1873 SOUTH BELLAIRE STREET, 17TH FLOOR
DENVER, COLORADO 80222-4348
(303) 759-8101
(Address, including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
LEEANN MOREIN
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
1873 SOUTH BELLAIRE STREET, 17TH FLOOR
DENVER, COLORADO 80222-4348
(303)757-8101
(Name and address, including zip code, of agent for service)
------------------------------
COPY TO:
THOMAS C. JANSON, JR.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
300 SOUTH GRAND AVENUE
LOS ANGELES, CALIFORNIA 90071
(213) 687-5000
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
Upon consummation of the Merger (as defined herein).
------------------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED(2) PER SHARE OFFERING PRICE(3) FEE(4)
<S> <C> <C> <C> <C>
Class A Common Stock ($.01 par value) (1)... 5,142,455 Not Applicable $166,974,968 $50,599
</TABLE>
(1) This Registration Statement relates to Class A Common Stock, par value $.01
per share, of the Registrant ("AIMCO Common Stock") to be issued to holders
of Common Stock, par value $.01 per share, of NHP Incorporated ("NHP Common
Stock") in connection with the Merger.
(2) Represents the number of shares of AIMCO Common Stock issuable upon
consummation of the Merger, based upon the number of shares of NHP Common
Stock and options to purchase NHP Common Stock outstanding on October 30,
1997 and not held by AIMCO or its subsidiaries, and assuming that no NHP
stockholders elect to receive cash in lieu of shares of AIMCO Common Stock.
Does not include 291,240 shares issuable to a subsidiary of AIMCO in
exchange for shares of NHP Common Stock held by such subsidiary.
(3) Pursuant to Rule 457(f)(1) under the Securities Act of 1933, as amended,
this amount represents the market value of the shares of NHP Common Stock to
be converted into shares of AIMCO Common Stock in the Merger, computed by
using (a) the average of the high and low prices for shares of NHP Common
Stock as reported on the Nasdaq Stock Market on October 30, 1997 and (b) the
number of shares of NHP Common Stock outstanding and not owned by AIMCO or
its affiliates as of such date. This amount is estimated solely for the
purpose of calculating the Registration Fee.
(4) Pursuant to Rule 457(b), the registration fee paid has been reduced in an
amount equal to $36,971, the aggregate fee previously paid in connection
with the filing with the Commission of the preliminary proxy materials
relating to the transaction described herein on July 2, 1997 and September
5, 1997.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
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<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NHP INCORPORATED
JOINT PROXY STATEMENT
---------------------
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PROSPECTUS RELATING TO UP TO 5,142,455 SHARES OF
CLASS A COMMON STOCK
---------------------
This Joint Proxy Statement/Prospectus is being furnished to stockholders of
Apartment Investment and Management Company, a Maryland corporation ("AIMCO"),
in connection with the solicitation of proxies by the Board of Directors of
AIMCO (the "AIMCO Board") from holders of shares of Class A Common Stock, par
value $.01 per share, of AIMCO ("AIMCO Common Stock") for use at a special
meeting of AIMCO stockholders (the "AIMCO Special Meeting") to be held to
consider and vote upon a proposal to approve the issuance by AIMCO of up to
5,433,695 shares of AIMCO Common Stock, including 291,240 shares to be issued to
a subsidiary of AIMCO (the "Share Issuance"). The Share Issuance is in
connection with the proposed merger (the "Merger") of AIMCO/NHP Acquisition
Corp., a Delaware corporation and a wholly owned subsidiary of AIMCO ("Merger
Sub"), with and into NHP Incorporated, a Delaware corporation ("NHP"), pursuant
to the Amended and Restated Agreement and Plan of Merger, dated as of April 21,
1997 and amended as of October 14, 1997 (the "Merger Agreement"), by and among
AIMCO, Merger Sub and NHP. Based on the closing price of AIMCO Common Stock on
October 30, 1997, the aggregate value of the AIMCO Common Stock to be issued in
the Merger to non-affiliates of AIMCO is $178,700,311. The Share Issuance is
being submitted for approval by AIMCO stockholders pursuant to the requirements
of the New York Stock Exchange, Inc. (the "NYSE"). Approval of the Share
Issuance is a condition to consummation of the Merger. See "The Merger Agreement
and Terms of the Merger--Conditions Precedent to the Merger." Under the rules of
the NYSE, the approval of the Share Issuance requires the affirmative vote of a
majority of the votes cast at a meeting at which the total votes cast represent
over 50% of all shares of AIMCO Common Stock entitled to vote thereon. Only
holders of record of AIMCO Common Stock at the close of business on October 8,
1997 (the "AIMCO Record Date") are entitled to notice of, and to vote at, the
AIMCO Special Meeting. At the close of business on the AIMCO Record Date,
28,274,739 shares of AIMCO Common Stock, which constitute the only outstanding
voting securities of AIMCO, were outstanding. See "Information Concerning the
AIMCO Special Meeting."
(CONTINUED ON THE FOLLOWING PAGE)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 24 FOR A DISCUSSION OF CERTAIN FACTORS
WHICH SHOULD BE CONSIDERED BY THE STOCKHOLDERS OF AIMCO AND NHP.
---------------------
This Joint Proxy Statement/Prospectus and the accompanying forms of proxy
are first being sent to holders of AIMCO Common Stock and NHP Common Stock on or
about November 5, 1997.
------------------------
THE SECURITIES TO BE ISSUED IN THE MERGER HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Joint Proxy Statement/Prospectus is November 3, 1997.
<PAGE>
This Joint Proxy Statement/Prospectus also is being furnished to the holders
of shares of common stock, par value $.01 per share, of NHP (the "NHP Common
Stock") in connection with the solicitation of proxies by the Board of Directors
of NHP (the "NHP Board"), for use at a special meeting of stockholders of NHP
(the "NHP Special Meeting") to be held to consider and vote upon a proposal to
adopt and authorize the Merger Agreement (the "Merger Agreement Proposal").
Approval of the Merger Agreement Proposal by NHP stockholders is a condition to
consummation of the Merger. See "The Merger Agreement--Conditions Precedent to
the Merger." The Merger Agreement Proposal requires the affirmative vote of (i)
at least a majority of the outstanding shares of NHP Common Stock and (ii) at
least 66 2/3% of the outstanding shares of NHP Common Stock, excluding shares
deemed to be owned by AIMCO or its affiliates. Only holders of record of NHP
Common Stock at the close of business on October 30, 1997 (the "NHP Record
Date"), are entitled to notice of, and to vote at, the NHP Special Meeting. At
the close of business on the NHP Record Date, 13,001,939 shares of NHP Common
Stock were outstanding, of which AIMCO and AIMCO/NHP Holdings, Inc., a Delaware
corporation and an unconsolidated subsidiary of AIMCO ("ANHI"), owned an
aggregate of 6,930,122 shares, or approximately 53.3%. See "Information
Concerning the NHP Special Meeting."
In the Merger, among other things, each outstanding share of NHP Common
Stock, other than NHP Common Stock held by NHP, AIMCO or Merger Sub, will be
converted into the right to receive (i) 0.74766 (the "Exchange Ratio") shares of
AIMCO Common Stock (the "Stock Consideration") or (ii) at the election of the
holder, 0.37383 shares of AIMCO Common Stock and $10.00 in cash (such shares and
cash, the "Mixed Consideration" and, together with the Stock Consideration, the
"Merger Consideration"). AIMCO will issue up to an aggregate of 5,433,695 shares
of AIMCO Common Stock in the Merger, based upon the number of shares of NHP
Common Stock and options to purchase NHP Common Stock ("NHP Stock Options")
outstanding on the NHP Record Date. In addition to the Merger Consideration, NHP
stockholders are also expected to receive at the effective time of the Merger
(or December 1, 1997 if the effective time of the Merger has not yet occurred
and certain conditions are satisfied) a distribution from NHP of one third of a
share of the common stock, par value $.01 per share (the "WMF Common Stock"), of
The WMF Group, Ltd., a Delaware corporation and a wholly-owned subsidiary of NHP
("WMF"), for each share of NHP Common Stock (the "WMF Spin-Off"). See "The
Merger and Related Transactions--The WMF Spin-Off."
Under applicable state law, holders of NHP Common Stock will not be entitled
to any dissenting stockholders' appraisal rights in connection with the Merger
and holders of AIMCO Common Stock will not be entitled to any objecting
stockholders' rights to fair value in connection with the Share Issuance. See
"The Merger and Related Transactions--Appraisal Rights."
This Joint Proxy Statement/Prospectus also constitutes the prospectus of
AIMCO with respect to the shares of AIMCO Common Stock to be issued in
connection with the Merger, as described herein. AIMCO Common Stock is listed
and traded on the NYSE under the symbol "AIV." NHP Common Stock is quoted and
traded on the Nasdaq Stock Market under the symbol "NHPI."
------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR INCORPORATED BY REFERENCE IN
THIS JOINT PROXY STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY AIMCO OR
NHP. THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES, OR THE SOLICITATION OF A
PROXY, IN ANY JURISDICTION IN WHICH, OR TO OR FROM ANY PERSON TO WHOM OR FROM
WHOM, SUCH OFFER, SOLICITATION OF AN OFFER OR SOLICITATION OF A PROXY IS NOT
AUTHORIZED OR IS UNLAWFUL. NEITHER THE DELIVERY OF THIS JOINT PROXY
STATEMENT/PROSPECTUS NOR ANY SALE OR DISTRIBUTION MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN
THE FACTS SET FORTH IN THIS JOINT PROXY STATEMENT/PROSPECTUS OR IN THE AFFAIRS
OF AIMCO OR NHP SINCE THE DATE HEREOF.
INFORMATION IN THIS JOINT PROXY STATEMENT/PROSPECTUS REGARDING AIMCO AND ITS
SUBSIDIARIES HAS BEEN PREPARED AND/OR SUPPLIED BY AIMCO AND INFORMATION
REGARDING NHP AND ITS SUBSIDIARIES HAS BEEN PREPARED AND/OR SUPPLIED BY NHP.
ii
<PAGE>
AVAILABLE INFORMATION
AIMCO and NHP are each subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder, and, in accordance therewith, file
reports, proxy and information statements and other information with the
Securities and Exchange Commission (the "Commission"). These reports, proxy and
information statements and other information concerning AIMCO and NHP can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, at the
Commission's regional offices located at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and at 7 World Trade Center, 13th
Floor, New York, New York 10048, and copies of such material can also be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. The Commission also maintains
a site on the World Wide Web at http://www.sec.gov that contains reports, proxy
and information statements and other information regarding registrants,
including AIMCO and NHP, that file electronically with the Commission. In
addition, information filed by AIMCO with the NYSE may be inspected at the
offices of the NYSE at 20 Broad Street, New York, New York 10005 and information
filed by NHP with the Nasdaq Stock Market may be inspected at the offices of the
Nasdaq Stock Market at 1735 K Street, N.W., Washington, D.C. 20006.
AIMCO has filed with the Commission a Registration Statement on Form S-4
(including all amendments and supplements thereto, the "AIMCO Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
and the rules and regulations of the Commission thereunder, with respect to the
shares of AIMCO Common Stock to be issued pursuant to the Merger Agreement. This
Joint Proxy Statement/Prospectus, which forms a part of the AIMCO Registration
Statement, does not contain all of the information set forth in the AIMCO
Registration Statement and the exhibits thereto, certain parts of which have
been omitted in accordance with the rules and regulations of the Commission.
Such additional information may be obtained from the Commission's offices as
described above. Statements contained herein, or in any document incorporated
herein by reference, concerning the provisions of certain documents are not
necessarily complete and, in each instance, reference is made to the copies of
such documents filed as exhibits to the AIMCO Registration Statement or
otherwise filed with the Commission, each such statement being qualified in its
entirety by such reference.
iii
<PAGE>
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements in certain circumstances. Certain
statements in the Summary, under the captions "Risk Factors," "The
Merger--Reasons of AIMCO for the Merger; Recommendations of the AIMCO Board,"
"The Merger--Reasons of NHP for the Merger; Recommendations of the NHP Board,"
in the Pro Forma Financial Statements and elsewhere in this Joint Proxy
Statement/Prospectus and the documents incorporated by reference herein contain
or may contain information that is forward looking, including, without
limitation: statements regarding the effect of the Merger, other acquisitions,
AIMCO's future financial performance and the effect of government regulations.
Actual results may differ materially from those described in the forward-looking
statements and will be affected by a variety of risks and factors including,
without limitation: national and local economic conditions; the general level of
interest rates; terms of governmental regulations that affect AIMCO and NHP and
interpretations of those regulations; the competitive environment in which AIMCO
and NHP operate; financing risks, including the risk that AIMCO's cash flow from
operations may be insufficient to meet required payments of principal and
interest; real estate risks, including variations of real estate values and the
general economic climate in local markets and competition for tenants in such
markets; acquisition and development risks, including the failure of
acquisitions to perform in accordance with projections; and possible
environmental liabilities, including costs which may be incurred due to
necessary remediation of contamination of properties owned, acquired or
previously owned by AIMCO. In addition, AIMCO's continued qualification as a
real estate investment trust involves the application of highly technical and
complex provisions of the Internal Revenue Code of 1986, as amended (the
"Code"). Readers should carefully review AIMCO's and NHP's financial statements
and the notes thereto, as well as the risk factors described herein and in the
AIMCO Incorporated Documents and the NHP Incorporated Documents.
iv
<PAGE>
INCORPORATION BY REFERENCE
AIMCO incorporates by reference herein the following documents (the "AIMCO
Incorporated Documents") filed by it with the Commission (File No. 001-13232)
pursuant to the Exchange Act:
1. AIMCO's Annual Report on Form 10-K for the year ended December 31, 1996;
2. AIMCO's Amendment No. 2 to Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996, filed March 10, 1997;
3. AIMCO's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997 and June 30, 1997 (and Amendments No. 1 and 2 thereto filed August
19, 1997 and October 6, 1997);
4. AIMCO's Current Reports on Form 8-K dated December 19, 1996, February
19, 1997, April 16, 1997 (and Amendments No. 1, 2 and 3 thereto filed
April 30, 1997, October 6, 1997 and October 22, 1997, respectively), May
5, 1997, June 3, 1997 (and Amendments No. 1, 2, 3, 4 and 5 thereto filed
June 27, 1997, August 14, 1997, September 5, 1997, October 6, 1997 and
October 22, 1997, respectively), August 26, 1997, September 19, 1997 and
October 15, 1997 (and Amendment No. 1 thereto filed October 22, 1997);
and
5. The description of AIMCO's capital stock which is contained in AIMCO's
Registration Statement on Form 8-A filed July 19, 1994, including any
amendment or reports filed for the purpose of updating such description.
NHP incorporates by reference herein the following documents (the "NHP
Incorporated Documents") filed by it with the Commission (File No. 000-26572)
pursuant to the Exchange Act:
1. NHP's Annual Report on Form 10-K for the year ended December 31, 1996
(and Amendments No. 1 and 2 thereto filed October 3, 1997 and October 29,
1997, respectively);
2. NHP's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997 (and Amendment No. 1 thereto filed October 3, 1997), June 30, 1997
(and Amendments No. 1 and 2 thereto filed October 3, 1997 and October 21,
1997, respectively) and September 30, 1997; and
3. NHP's Current Reports on Form 8-K dated February 20, 1997, April 16,
1997 and Exhibit 99.2 to NHP's Current Report on Form 8-K dated April 21,
1997.
All documents and reports filed by AIMCO or NHP pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Joint Proxy
Statement/Prospectus and prior to the Special Meetings shall be deemed to be
incorporated by reference in this Joint Proxy Statement/Prospectus and to be a
part hereof from the date of such filing. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Joint Proxy Statement/Prospectus
to the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Joint Proxy Statement/Prospectus.
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. A COPY OF THESE DOCUMENTS
(OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE IN SUCH DOCUMENTS) WILL BE PROVIDED, WITHOUT CHARGE,
TO EACH PERSON TO WHOM THIS JOINT PROXY STATEMENT/PROSPECTUS IS DELIVERED, UPON
WRITTEN OR ORAL REQUEST, BY FIRST CLASS MAIL OR OTHER EQUALLY PROMPT MEANS
WITHIN ONE BUSINESS DAY OF RECEIPT OF SUCH REQUEST. SUCH REQUEST SHOULD BE
DIRECTED, IN THE CASE OF DOCUMENTS RELATING TO AIMCO, TO LEEANN MOREIN, SENIOR
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER, APARTMENT INVESTMENT AND MANAGEMENT
COMPANY, 1873 SOUTH BELLAIRE STREET, 17TH FLOOR, DENVER, COLORADO 80222-4348,
(303) 691-4376, OR IN THE CASE OF DOCUMENTS RELATING TO NHP, TO JOEL F. BONDER,
SENIOR VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL, NHP INCORPORATED, 8065
LEESBURG PIKE, SUITE 400, VIENNA, VIRGINIA 22182-2738, (703) 394-2400. IN ORDER
TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS PRIOR TO THE SPECIAL MEETINGS, ANY
REQUEST SHOULD BE MADE BY DECEMBER 1, 1997, 1997.
v
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TABLE OF CONTENTS
<TABLE>
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AVAILABLE INFORMATION................................................................. iii
FORWARD-LOOKING STATEMENTS............................................................ iv
INCORPORATION BY REFERENCE............................................................ v
SUMMARY............................................................................... 1
RISK FACTORS.......................................................................... 24
Risks Relating to the NHP Acquisition............................................. 24
Risks Relating to AIMCO's and NHP's Businesses.................................... 27
INFORMATION CONCERNING THE AIMCO SPECIAL MEETING...................................... 40
Purpose, Time and Place........................................................... 40
Record Date; Quorum; Vote Required................................................ 40
Proxies........................................................................... 41
Appraisal Rights.................................................................. 41
INFORMATION CONCERNING THE NHP SPECIAL MEETING........................................ 42
Purpose, Time and Place........................................................... 42
Record Date; Quorom; Vote Required................................................ 42
Proxies........................................................................... 42
Other Matters..................................................................... 43
Appraisal Rights.................................................................. 43
THE MERGER AND RELATED TRANSACTIONS................................................... 43
The NHP Stock Purchase............................................................ 43
The NHP Real Estate Acquisition................................................... 44
General Description of the Merger................................................. 44
The NHP Reorganization............................................................ 45
Background of the Merger.......................................................... 45
Reasons of AIMCO for the Merger; Recommendation of the AIMCO Board................ 51
Reasons of NHP for the Merger; Recommendation of the NHP Board.................... 53
Opinion of Financial Advisor to NHP Independent Committee......................... 55
The WMF Spin-Off.................................................................. 61
NHP Stock Options................................................................. 63
Registration Rights Agreements.................................................... 64
Interests of Directors and Management of NHP and AIMCO in the Merger and the
Related Transactions............................................................. 66
Federal Income Tax Consequences of the Merger and the WMF Spin-Off................ 68
Accounting Treatment.............................................................. 70
Appraisal Rights.................................................................. 70
Conditions to the Merger.......................................................... 70
Regulatory Matters................................................................ 71
Section 203 of the DGCL........................................................... 71
NYSE Listing...................................................................... 71
Deregistration and Delisting of NHP Common Stock.................................. 72
Restrictions on Resales by Affiliates............................................. 72
THE MERGER AGREEMENT AND TERMS OF THE MERGER.......................................... 73
Effective Time of the Merger...................................................... 73
Manner and Basis of Converting Shares............................................. 73
Contribution of Excess Cash Flow.................................................. 74
Indemnification................................................................... 74
</TABLE>
vi
<PAGE>
<TABLE>
<S> <C>
Representations and Warranties.................................................... 74
Conduct of Business Pending the Merger............................................ 75
Response to Other Offers.......................................................... 76
Conditions to the Merger.......................................................... 76
Termination....................................................................... 77
Termination Fees.................................................................. 78
Amendment and Modification........................................................ 78
SELECTED HISTORICAL FINANCIAL INFORMATION OF AIMCO.................................... 79
SELECTED HISTORICAL FINANCIAL INFORMATION OF NHP...................................... 83
PRO FORMA FINANCIAL INFORMATION (MERGER).............................................. 85
PRO FORMA FINANCIAL INFORMATION (PRE-MERGER).......................................... 104
CAPITALIZATION OF AIMCO............................................................... 119
BUSINESS OF AIMCO..................................................................... 120
Operating and Financial Strategies................................................ 120
Growth Strategies................................................................. 121
Property Management Strategies.................................................... 123
Recent Acquisitions............................................................... 125
Recent Investment................................................................. 127
Recent Financings................................................................. 127
Third Quarter Results............................................................. 127
Accounting Policies and Definitions............................................... 128
Policies of AIMCO with Respect to Certain Other Activities........................ 128
BOARD OF DIRECTORS AND OFFICERS OF AIMCO.............................................. 131
PRINCIPAL STOCKHOLDERS OF AIMCO....................................................... 136
BUSINESS OF NHP....................................................................... 138
PRINCIPAL STOCKHOLDERS OF NHP......................................................... 140
DESCRIPTION OF AIMCO'S CAPITAL STOCK.................................................. 142
General........................................................................... 142
Restrictions on Transfer.......................................................... 142
AIMCO Class B Preferred Stock..................................................... 143
AIMCO Class B Common Stock........................................................ 144
Business Combinations............................................................. 145
Control Share Acquisitions........................................................ 146
FEDERAL INCOME TAX CONSIDERATIONS RELATED TO AIMCO.................................... 147
Taxation of AIMCO................................................................. 147
Tax Aspects of AIMCO's Investments in Partnerships................................ 151
Taxation of Management Subsidiaries and Unconsolidated Subsidiaries............... 152
Taxation of Taxable Domestic Stockholders......................................... 153
Taxation of Foreign Stockholders.................................................. 153
Taxation of Tax-Exempt Stockholders............................................... 155
REIT Provisions of the Taxpayer Relief Act of 1997................................ 156
Other Tax Consequences............................................................ 156
COMPARATIVE RIGHTS OF STOCKHOLDERS OF AIMCO AND NHP................................... 157
LEGAL MATTERS......................................................................... 163
EXPERTS............................................................................... 163
STOCKHOLDER PROPOSALS................................................................. 165
APPENDIX I--Amended and Restated Agreement and Plan of Merger, dated as of April 21, 1997 and
amended as of October 14, 1997, by and among Apartment Investment and Management Company,
AIMCO/NHP Acquisition Corp. and NHP Incorporated
APPENDIX II--Opinion of Donaldson, Lufkin & Jenrette Securities Corporation dated November 3,
1997
</TABLE>
vii
<PAGE>
SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS JOINT PROXY STATEMENT/ PROSPECTUS. THIS SUMMARY IS NOT INTENDED TO BE
COMPLETE AND REFERENCE IS MADE TO, AND THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY
BY, THE MORE DETAILED INFORMATION CONTAINED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS, THE APPENDICES HERETO AND THE DOCUMENTS INCORPORATED
HEREIN BY REFERENCE. STOCKHOLDERS OF BOTH AIMCO AND NHP ARE ENCOURAGED TO REVIEW
CAREFULLY THIS JOINT PROXY STATEMENT/PROSPECTUS, THE APPENDICES HERETO AND THE
DOCUMENTS INCORPORATED HEREIN BY REFERENCE, IN THEIR ENTIRETY.
THE COMPANIES
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
AIMCO, including NHP, is the second largest owner and manager of multifamily
apartment properties in the United States, based on apartment unit data compiled
by the National Multi Housing Council as of January 1, 1997. As of September 30,
1997, AIMCO owned or managed 186,993 apartment units, comprised of 28,773 units
in 109 apartment properties owned or controlled by AIMCO (the "Owned
Properties"), 87,182 units in 526 apartment properties in which AIMCO had an
equity interest (the "Equity Properties") and 71,038 units in 394 apartment
properties managed by AIMCO for third parties and affiliates (the "Managed
Properties," and, together with the Owned Properties and the Equity Properties,
the "AIMCO Properties"). In addition to the Managed Properties, AIMCO manages
all of the Owned Properties and a majority of the Equity Properties. The AIMCO
Properties are located in 42 states, the District of Columbia and Puerto Rico.
AIMCO has elected to be taxed as a real estate investment trust (a "REIT") for
Federal income tax purposes. AIMCO conducts substantially all of its operations
through AIMCO Properties, L.P., a Delaware limited partnership (the "Operating
Partnership"), and its subsidiaries. As of October 30, 1997, AIMCO held
approximately an 87% interest in the Operating Partnership. AIMCO's principal
executive offices are located at 1873 South Bellaire Street, 17th Floor, Denver,
Colorado 80222-4348, and its telephone number is (303) 757-8101. See "Business
of AIMCO."
NHP INCORPORATED
NHP provides a broad array of real estate services nationwide, including
property management and asset management, as well as a group of related
services, including equity investments, purchasing, risk management and home
health care. According to the National Multi Housing Council, as of January 1,
1997, NHP was the nation's second largest manager of multifamily properties,
based on the number of units managed. As of September 30, 1997, NHP's management
portfolio (which is included in the AIMCO Properties) included 732 properties
containing 79,208 conventional units and 55,102 "affordable" units (units
benefiting from some form of interest rate or rental subsidy or otherwise
subject to governmental programs aimed at providing low and moderate income
housing) located in 38 states, the District of Columbia and Puerto Rico. NHP
also conducts mortgage banking services through WMF. At the effective time of
the Merger (or, if certain conditions are satisfied, December 1, 1997), all of
the issued and outstanding WMF Common Stock will be distributed to NHP
stockholders. See "The Merger and Related Transactions--The WMF Spin-Off." NHP's
principal executive offices are located at 8065 Leesburg Pike, Suite 400,
Vienna, Virginia 22182-2738, and its telephone number is (703) 394-2400. See
"Business of NHP."
THE MERGER AND RELATED TRANSACTIONS
INTRODUCTION AND OVERVIEW
The Merger is the final step in a series of integrated transactions (the
"NHP Acquisition") pursuant to which AIMCO will acquire both NHP and a group of
companies (the "NHP Real Estate Companies") previously owned by NHP that hold
interests in partnerships owning 534 conventional and affordable multifamily
apartment properties, a captive insurance company and certain related assets. In
May 1997,
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ANHI acquired 6,496,073 shares of NHP Common Stock, representing 51.3% of the
shares issued and outstanding as of May 31, 1997. In June 1997, AIMCO acquired
the NHP Real Estate Companies. In August and September 1997, AIMCO acquired
certain of ANHI's shares of NHP Common Stock, and acquired an additional 434,049
shares of NHP Common Stock. As a result, AIMCO and ANHI owned in the aggregate
6,930,122 shares, or approximately 53.3% of the shares of NHP Common Stock
outstanding as of October 30, 1997. AIMCO is seeking to acquire the remaining
outstanding shares of NHP Common Stock pursuant to the Merger. See "The Merger
and Related Transactions." The diagram set forth below illustrates the ownership
of NHP and WMF immediately prior to the Merger and the WMF Spin-Off.
OWNERSHIP PRIOR TO THE MERGER AND WMF SPIN-OFF
(all ownership interests 100% unless otherwise indicated)
[OWNERSHIP BEFORE THE MERGER DIAGRAM]
[Set forth below is a narrative description of a diagram contained in the
printed Joint Proxy Statement/ Prospectus that has been omitted from this
electronically filed version thereof because such diagram cannot be reproduced
in such version:
The diagram illustrates that prior to the Merger and WMF Spin-Off, (i) AIMCO
owns 100% of each of AIMCO-LP, AIMCO-GP and Merger Sub; (ii) AIMCO-LP, AIMCO-GP
and other limited partners of the Operating Partnership own 86%, 1% and 13% of
the Operating Partnership, respectively, as qualified by notes (1) and (2);
(iii) the Operating Partnership owns 95% and Terry Considine and Peter K.
Kompaniez own, in the aggregate, 5% of ANHI, as qualified by note (3); (iv)
AIMCO, ANHI and other stockholders of NHP own 47%, 6% and 47% of NHP, as
qualified by note (4), respectively; and (v) NHP owns 100% of WMF.]
(1) AIMCO-LP, Inc., a Delaware corporation and a wholly owned subsidiary of
AIMCO ("AIMCO-LP"), is a limited partner in the Operating Partnership, with
an 86% interest as of October 30, 1997.
(2) AIMCO-GP, Inc., a Delaware corporation and a wholly owned subsidiary of
AIMCO ("AIMCO-GP"), is the sole general partner of the Operating
Partnership, with a 1% interest as of October 30, 1997.
(3) The Operating Partnership owns a 95% economic interest in ANHI through its
ownership of shares of non-voting preferred stock of ANHI (the "ANHI
Preferred Stock"). Mr. Considine, Chairman and Chief Executive Officer of
AIMCO, and Mr. Kompaniez, President of AIMCO, own a 5% economic interest in
ANHI through their ownership of all of its outstanding shares of common
stock. As a result of the controlling ownership interest in ANHI held by
Messrs. Considine and Kompaniez, ANHI is an unconsolidated subsidiary of
AIMCO, and AIMCO accounts for its interest in ANHI and NHP on the equity
method.
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(4) As of October 30, 1997, ANHI owned 779,073 shares of NHP Common Stock,
representing 6.0% of such shares issued and outstanding.
The diagram below illustrates the ownership of NHP and WMF immediately
following the Merger and the WMF Spin-Off.
OWNERSHIP FOLLOWING THE MERGER AND WMF SPIN-OFF
(all ownership interests 100% unless otherwise indicated)
[OWNERSHIP AFTER THE MERGER DIAGRAM]
[Set forth below is a narrative description of a diagram contained in the
printed Joint Proxy Statement/Prospectus that has been omitted from this
electronically filed version thereof because such diagram cannot be reproduced
in such version:
The diagram illustrates that following the Merger and WMF Spin-Off (i)
current AIMCO stockholders and former stockholders of NHP will own 89% and 11%
of AIMCO, respectively, as qualified by note (5); (ii) former stockholders of
NHP will own 100% of WMF; (iii) AIMCO will own 100% of each of AIMCO-LP,
AIMCO-GP and NHP, as qualified by note (6); (iv) AIMCO-LP, AIMCO-GP and other
limited partners of the Operating Partnership will own 88%, 1% and 11% of the
Operating Partnership, respectively; (v) the Operating Partnership and certain
directors and officers of AIMCO will own 95-99% and 1-5%, respectively, of the
Unconsolidated Subsidiaries, as qualified by note (6); and (vi) the Operating
Partnership and certain directors and officers of AIMCO will own 95% and 5%,
respectively, of ANHI, as qualified by note (6).]
(5) Excluding shares of AIMCO Common Stock issuable to ANHI in the Merger and
assuming all other NHP stockholders elect to receive Stock Consideration. If
all such other NHP stockholders elect to receive Mixed Consideration, they
would have a 6% ownership interest in AIMCO immediately following the
Merger, and current AIMCO shareholders would have a 94% interest in AIMCO.
(6) Immediately following the Merger, NHP will be a wholly owned subsidiary of
AIMCO. In order for AIMCO to retain its qualification as a REIT, it is
necessary that, as soon as practicable following the Merger and as an
integral step in completing the NHP Acquisition, AIMCO restructure the
assets and operations of NHP, so that NHP's operations are conducted through
ANHI and/or other unconsolidated subsidiaries of AIMCO. Messrs. Considine
and Kompaniez are expected to own a controlling 1% to 5% interest in these
unconsolidated subsidiaries. See "The Merger and Related Transactions-- The
NHP Reorganization."
THE NHP STOCK PURCHASE
On May 5, 1997, ANHI acquired 6,496,073 shares of NHP Common Stock,
representing 51.3% of the shares issued and outstanding as of May 31, 1997, from
Demeter Holdings Corporation, a Massachusetts corporation ("Demeter"), Capricorn
Investors, L.P., a Delaware limited partnership ("Capricorn"), and certain
partners of Capricorn (together with Capricorn, the "Capricorn Sellers"). Such
acquisition (the
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"Initial NHP Stock Purchase") was made pursuant to a Stock Purchase Agreement,
dated as of April 16, 1997 (the "Stock Purchase Agreement"), by and among AIMCO,
Demeter and Capricorn. As consideration for such shares of NHP Common Stock,
Demeter received $72.6 million in cash and 1,224,463 shares of AIMCO Common
Stock, and the Capricorn Sellers received 918,394 shares of AIMCO Common Stock.
AIMCO subsequently purchased 5,717,000 shares of NHP Common Stock from ANHI. On
September 12, 1997, AIMCO acquired 434,049 additional shares of NHP Common Stock
from Demeter and the Capricorn Sellers pursuant to the Stock Purchase Agreement
(the "Subsequent NHP Stock Purchase" and, together with the "Initial NHP Stock
Purchase," the "NHP Stock Purchase"). As consideration for such shares in the
Subsequent NHP Stock Purchase, Demeter received $7.0 million in cash and the
Capricorn Sellers received 61,364 shares of AIMCO Common Stock. See "Business of
AIMCO--Recent Financings." Following the NHP Stock Purchase, AIMCO and ANHI own,
in the aggregate, 6,930,122 shares of NHP Common Stock. Pursuant to the Stock
Purchase Agreement, Demeter and the Capricorn Sellers are entitled to receive
the shares of WMF Common Stock to be distributed in respect of the rights
associated with the shares of NHP Common Stock acquired by AIMCO and ANHI in the
NHP Stock Purchase or, under certain circumstances, in lieu of such shares of
WMF Common Stock, an additional cash payment of $3.05 for each such share of NHP
Common Stock sold to AIMCO or ANHI by Demeter and the Capricorn Sellers. See
"The Merger and Related Transactions--The NHP Stock Purchase."
THE NHP REAL ESTATE ACQUISITION
On June 3, 1997 AIMCO acquired the NHP Real Estate Companies from Demeter,
Capricorn, Phemus Corporation, a Massachusetts corporation and an affiliate of
Demeter ("Phemus"), J. Roderick Heller, III, the President, Chairman and Chief
Executive Officer of NHP, and NHP Partners Two LLC, a Delaware limited liability
company ("NHP Partners Two LLC"). Such acquisition (the "NHP Real Estate
Acquisition") was made pursuant to a Real Estate Acquisition Agreement, dated as
of May 22, 1997 (the "Real Estate Agreement"), by and among AIMCO, the Operating
Partnership, Demeter, Capricorn, Phemus, Mr. Heller and NHP Partners Two LLC. As
consideration, AIMCO paid $54.8 million in cash and issued warrants to purchase
399,999 shares of AIMCO Common Stock at an exercise price of $36.00 per share
(the "Warrants"). Of such consideration, Demeter, Phemus and certain of their
affiliates received $41.65 million in cash and 303,959 Warrants, and Capricorn
and Mr. Heller received $10.4 million in cash and 76,000 Warrants, and $2.75
million in cash and 20,040 Warrants, respectively. The NHP Real Estate
Companies, including NHP Partners, Inc., a Delaware corporation ("NHP Partners,
Inc."), own interests in partnerships that own 534 conventional and affordable
multifamily apartment properties (the "NHP Properties") containing 87,659 units,
a captive insurance subsidiary and certain related assets. Prior to NHP's
initial public offering in August 1995 (the "NHP IPO"), the NHP Real Estate
Companies were owned by NHP. A substantial majority of the NHP Properties are
currently managed by NHP pursuant to a long-term agreement (the "Master Property
Management Agreement"). AIMCO is currently engaged in a reorganization (the "NHP
Real Estate Reorganization") of its interests in the NHP Real Estate Companies,
which will result in the vast majority of the assets of the NHP Real Estate
Companies being owned by a limited partnership (the "Unconsolidated
Partnership") in which AIMCO's Operating Partnership will hold a 99% limited
partner interest and Messrs. Considine and Kompaniez will, directly or
indirectly, hold a 1% general partner interest. See "The Merger and Related
Transactions--The NHP Real Estate Acquisition."
THE MERGER
On April 21, 1997, AIMCO, Merger Sub and NHP entered into the Merger
Agreement, which was amended and restated on October 14, 1997. Pursuant to the
Merger Agreement, Merger Sub will be merged with and into NHP, with NHP being
the surviving corporation (the "Surviving Corporation") after the Merger and
becoming a wholly owned subsidiary of AIMCO. The Merger will become effective at
the time the parties file a certificate of merger with the Secretary of State of
the State of Delaware (the "Effective Time"). Upon consummation of the Merger,
each outstanding share of NHP Common Stock,
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other than NHP Common Stock held by NHP, AIMCO or Merger Sub, will be converted
into the right to receive (i) 0.74766 shares of AIMCO Common Stock, or (ii) at
the election of the holder, 0.37383 shares of AIMCO Common Stock and $10.00 in
cash. Pursuant to AIMCO's Amended and Restated Articles of Incorporation (the
"AIMCO Charter") and subject to certain exceptions specified therein, no person
may own, or be deemed to own, more than 8.7% (the "Ownership Limit") of the
outstanding shares of AIMCO Common Stock and Class B Common Stock, par value
$.01 per share, of AIMCO (the "AIMCO Class B Common Stock"). Any person who
would otherwise be entitled to receive shares of AIMCO Common Stock in the
Merger in excess of the Ownership Limit ("Excess Shares") will receive instead
an amount in cash equal to the product of such Excess Shares and $26.75 (the
closing price of the AIMCO Common Stock on the NYSE on February 13, 1997, the
day that AIMCO entered into a letter agreement (the "Letter Agreement") with
Demeter, Phemus and Capricorn setting forth the understanding among the parties
pursuant to which AIMCO would acquire the NHP Common Stock owned by Demeter and
Capricorn and the NHP Real Estate Companies). In lieu of any fractional shares
of AIMCO Common Stock, each holder of NHP Common Stock who would otherwise be
entitled to receive such fractional shares will be paid cash equal to the
product of such fractional shares and $26.75. The Merger is subject to a number
of conditions, including the approval of the stockholders of both NHP and AIMCO.
See "The Merger Agreement and Terms of the Merger."
As of the NHP Record Date, there were 13,001,939 shares of NHP Common Stock
outstanding, including an aggregate 6,930,122 shares owned by AIMCO and ANHI,
and outstanding NHP Stock Options to purchase 806,250 shares of NHP Common
Stock. In the Merger, ANHI will elect to receive the Mixed Consideration in
exchange for all of its shares of NHP Common Stock. If all NHP stockholders
other than ANHI elect to receive the Stock Consideration and all NHP Stock
Options are exercised (and assuming no person would be required to receive cash
in lieu of Excess Shares), the number of shares of AIMCO Common Stock to be
issued in the Merger would be approximately 5,433,695 shares (including 291,240
shares issued to ANHI), and AIMCO would pay $7.8 million in cash to ANHI. If all
NHP stockholders elect to receive the Mixed Consideration and all NHP Stock
Options are exercised (and assuming no person would be required to receive cash
in lieu of Excess Shares), the number of shares of AIMCO Common Stock to be
issued in the Merger would be approximately 3,163,867 shares (including 291,240
shares issued to ANHI), and AIMCO would pay $7.8 million in cash to ANHI and
$60.7 million in cash to the other NHP stockholders. See "The Merger Agreement
and Terms of the Merger--Manner and Basis of Converting Shares."
NHP STOCKHOLDERS SHOULD NOT SEND STOCK CERTIFICATES TO NHP OR AIMCO AT THIS
TIME. As soon as practicable after the Effective Time, each NHP stockholder will
receive a form (an "Election Form") from a bank or trust company designated by
AIMCO (the "Exchange Agent") to be used to indicate whether such stockholder
elects to receive Stock Consideration or Mixed Consideration with respect to
such stockholder's shares of NHP Common Stock. Election forms must be returned
to the Exchange Agent on or prior to the fifteenth business day after the
Effective Time (the "Election Deadline"). ALL NHP STOCKHOLDERS WHO HAVE NOT
SUBMITTED A PROPERLY COMPLETED AND EXECUTED ELECTION FORM BY THE ELECTION
DEADLINE WILL BE DEEMED TO HAVE ELECTED TO RECEIVE STOCK CONSIDERATION FOR ALL
OF THEIR SHARES OF NHP COMMON STOCK. See "The Merger Agreement and Terms of the
Merger--Manner and Basis of Converting Shares."
As a result of a "change of control" occurring upon the consummation of the
NHP Stock Purchase, each outstanding NHP Stock Option became fully vested and
exercisable. Pursuant to the Merger Agreement, AIMCO will assume all NHP Stock
Options outstanding at the Effective Time that were granted on or before April
16, 1997, each of which will be converted into an option to purchase AIMCO
Common Stock based upon the Exchange Ratio. Based upon the number of NHP Stock
Options outstanding at October 30, 1997, AIMCO will reserve approximately 0.6
million shares of AIMCO
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Common Stock for issuance upon exercise of such options. See "The Merger and
Related Transactions-- NHP Stock Options."
THE NHP REORGANIZATION
Immediately following the Merger, NHP will be a wholly owned subsidiary of
AIMCO. In order for AIMCO to retain its qualification to be taxed as a REIT, it
is necessary that, as soon as practicable following the Merger and as an
integral step to completing the NHP Acquisition, AIMCO reorganize (the "NHP
Reorganization," and together with the NHP Stock Purchase, the NHP Real Estate
Acquisition and the WMF Spin-Off, the "Related Transactions") the assets and
operations of NHP, which will result in the Master Property Management Agreement
being terminated and NHP's operations being conducted through ANHI and/or other
unconsolidated subsidiaries of AIMCO (together with ANHI, the "Unconsolidated
Subsidiaries"). The Unconsolidated Subsidiaries will have an ownership structure
similar to ANHI, in which AIMCO holds a 95% to 99% economic interest through
ownership of shares of non-voting preferred stock, and Messrs. Considine and
Kompaniez hold a 1% to 5% economic interest through ownership of all of the
outstanding shares of common stock. As a result of the controlling ownership
interest in the Unconsolidated Subsidiaries held by such directors and officers,
AIMCO will account for its interest in the Unconsolidated Subsidiaries on the
equity method. See "The Merger and Related Transactions--The NHP
Reorganization."
THE WMF SPIN-OFF
In accordance with the Merger Agreement, on May 9, 1997 (the "Rights
Distribution Date"), NHP distributed to each stockholder of record as of May 2,
1997, one right (a "Right") for each outstanding share of NHP Common Stock (the
"Rights Distribution"). Pursuant to the Rights Agreement, dated as of April 21,
1997 (the "Rights Agreement"), by and among NHP, WMF and The First National Bank
of Boston, a national banking association ("Bank of Boston"), as rights agent,
each Right entitles the holder thereof to receive, on the earlier of the
effective time of the Merger or December 1, 1997 (the "Maturity Time"), one
third of a share of WMF Common Stock (the "Rights Consideration"). The WMF
Spin-Off is subject to certain conditions set forth in the Rights Agreement,
which conditions AIMCO and NHP do not expect will be satisfied until the
Effective Time. In lieu of any fractional shares of WMF Common Stock, each
holder of NHP Common Stock who otherwise would be entitled to receive a
fractional share of WMF Common Stock will be paid cash equal to the product of a
fractional share and $9.15. For additional information about WMF and the WMF
Spin-Off, reference is made to the Information Statement/ Prospectus relating
thereto (the "WMF Information Statement/Prospectus"), which is being delivered
to NHP stockholders with this Joint Proxy Statement/Prospectus.
THE SPECIAL MEETINGS
THE AIMCO SPECIAL MEETING
TIME AND PLACE. The AIMCO Special Meeting will be held on December 8, 1997
at 10:00 a.m., local time, at the offices of AIMCO, 1873 South Bellaire Street,
17th Floor, Denver, Colorado 80222-4348.
PURPOSE. At the AIMCO Special Meeting, the stockholders of AIMCO will be
asked to consider and vote upon the Share Issuance and to transact such other
business as may properly come before the AIMCO Special Meeting or any
adjournment or postponement thereof. See "Information Concerning the AIMCO
Special Meeting--Purpose, Time and Place."
RECORD DATE; QUORUM; REQUIRED VOTE The record date for the AIMCO Special
Meeting is the close of business on October 8, 1997. Only holders of record of
AIMCO Common Stock at the close of business on the AIMCO Record Date are
entitled to notice of, and to vote at, the AIMCO Special Meeting. As of the
AIMCO Record Date, there were 28,274,739 outstanding shares of AIMCO Common
Stock, held by 300 holders of record. Each share of AIMCO Common Stock is
entitled to one vote on the Share Issuance.
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The presence at the AIMCO Special Meeting, either in person or by proxy, of a
majority of the issued and outstanding shares of AIMCO Common Stock entitled to
vote will constitute a quorum at the AIMCO Special Meeting. Under the rules of
the NYSE, the approval of the Share Issuance requires the affirmative vote of a
majority of the votes cast at a meeting at which the total votes cast represents
over 50% of all shares of AIMCO Common Stock entitled to vote thereon.
Abstentions and broker non-votes will not be considered votes cast for purposes
of determining whether the required 50% of all shares entitled to vote at the
Special Meeting have voted on the Share Issuance, but, if over 50% of the shares
are voted on the Share Issuance, abstentions and broker non-votes will not
affect the outcome of the vote to approve the Share Issuance. All directors and
executive officers of AIMCO who own shares of AIMCO Common Stock are expected to
vote their shares for approval of the Share Issuance. On the AIMCO Record Date,
directors and executive officers of AIMCO owned 2,492,983 shares of AIMCO Common
Stock, representing 8.8% of the shares then issued and outstanding. In addition,
Demeter and the Capricorn Sellers, which owned 2,204,221 shares of AIMCO Common
Stock as of the AIMCO Record Date, representing 7.7% of the shares then issued
and outstanding, are expected to vote all shares owned by them for approval of
the Share Issuance. See "Information Concerning the AIMCO Special
Meeting--Record Date; Quorum; Required Vote."
THE NHP SPECIAL MEETING
TIME AND PLACE. The NHP Special Meeting is to be held on December 8, 1997
at 9:00 a.m., local time, at the offices of Wilmer, Cutler & Pickering, 2445 M
Street, N.W., Washington, D.C. 20037-1420.
PURPOSE. At the NHP Special Meeting, the stockholders of NHP will be asked
to consider and approve the Merger Agreement Proposal, and to transact any and
all other business that may properly come before the NHP Special Meeting. See
"Information Concerning the NHP Special Meeting-- Purpose, Time and Place."
RECORD DATE; QUORUM; REQUIRED VOTE. The record date for the NHP Special
Meeting is the close of business on October 30, 1997. Only holders of record of
shares of NHP Common Stock on the NHP Record Date are entitled to notice of and
to vote at the NHP Special Meeting. As of the NHP Record Date, there were
13,001,939 outstanding shares of NHP Common Stock, held by 41 holders of record.
Each share of NHP Common Stock is entitled to one vote on each matter to be
acted upon or which may properly come before the NHP Special Meeting. Under the
Delaware General Corporation Law (the "DGCL"), the approval of the Merger
Agreement Proposal requires (i) the affirmative vote of a majority of the
outstanding shares of NHP Common Stock, and (ii) the affirmative vote of at
least 66 2/3% of the outstanding shares of NHP Common Stock, excluding shares
deemed to be owned by AIMCO or its affiliates. For this purpose, the 779,073
shares owned by ANHI are deemed to be owned by AIMCO. Votes to abstain and
broker non-votes will have the same effect as votes cast against the Merger
Agreement Proposal. All directors and executive officers of NHP who own shares
of NHP Common Stock are expected to vote their shares for approval of the Merger
Agreement Proposal. On the NHP Record Date, directors and executive officers of
NHP who are not affiliated with AIMCO owned 487,139 shares of NHP Common Stock,
representing 3.7% of the shares issued and outstanding. In addition, AIMCO and
ANHI, which owned an aggregate of 6,930,122 shares of NHP Common Stock as of the
NHP Record Date, representing 53.3% of the shares then issued and outstanding,
have agreed to vote all shares owned by them for approval of the Merger
Agreement Proposal. See "Information Concerning the NHP Special Meeting--Record
Date; Quorum; Vote Required."
SUMMARY RISK FACTORS
Stockholders of AIMCO and NHP should consider carefully certain risks
relating to the Merger and the Related Transactions and to the business of AIMCO
and NHP. Factors to be considered include, among other things, the risks that
certain members or former members of the NHP Board and senior management of NHP
potentially have interests in the Merger and the Related Transactions that
conflict
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with those of NHP stockholders, that AIMCO would not be able to enter into
certain "business combinations" transactions with NHP if the Merger Agreement
Proposal is not approved, that AIMCO may not be able to integrate successfully
the businesses of AIMCO and NHP and may not realize the benefits anticipated
from the Merger, that AIMCO and its subsidiaries have significant amounts of
debt outstanding, certain of which debt bears interest at variable rates, and
that AIMCO and NHP are subject to various risks associated with investments in
and management of real estate. STOCKHOLDERS OF AIMCO AND NHP SHOULD CAREFULLY
EVALUATE THE MATTERS SET FORTH UNDER "RISK FACTORS."
RECOMMENDATION OF THE AIMCO BOARD
The AIMCO Board has unanimously determined that the Merger is advisable and
unanimously recommends that AIMCO stockholders vote FOR approval of the Share
Issuance. For a discussion of the factors considered by the AIMCO Board in
making such determination, see "The Merger and Related Transactions--Reasons of
AIMCO for the Merger; Recommendation of the AIMCO Board." The AIMCO Board did
not engage a financial advisor or seek to obtain a fairness opinion in
connection with its determination that the Merger is advisable. As of the AIMCO
Record Date, directors of AIMCO owned 0.2% of the outstanding AIMCO Common
Stock.
RECOMMENDATION OF THE NHP BOARD
The NHP Board, and a committee of directors appointed by the NHP Board who
are not affiliated with Demeter or Capricorn (the "NHP Independent Committee"),
have unanimously (with one director absent, but including all members of the NHP
Independent Committee) approved the Merger Agreement and have determined that
the Merger is fair to, and in the best interests of, NHP and its stockholders.
The NHP Board and the NHP Independent Committee have unanimously (with one
director absent, but including all members of the Independent Committee)
recommended that all of the NHP stockholders vote FOR the adoption and
authorization of the Merger Agreement. For a discussion of the factors
considered by the NHP Board and the NHP Independent Committee in reaching their
decisions to approve, and recommend that NHP stockholders adopt and authorize,
the Merger Agreement, see "The Merger and Related Transactions--Reasons of NHP
for the Merger; Recommendation of the NHP Board." As of the NHP Record Date,
directors of NHP who are not affiliated with AIMCO owned 2.0% of the outstanding
NHP Common Stock.
FINANCIAL ADVISOR TO THE NHP INDEPENDENT COMMITTEE
The NHP Independent Committee retained the investment banking firm of
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") to render an opinion
as to the fairness, from a financial point of view, of the Merger Consideration
and the Rights Consideration, in the aggregate, to be received by NHP
stockholders other than Demeter, Phemus, Mr. Heller and Capricorn (such other
stockholders, the "Unaffiliated NHP Stockholders"). DLJ delivered its opinion,
dated April 21, 1997, to the effect that, as of such date and based upon and
subject to the assumptions, limitations and qualifications therein, the Merger
Consideration and the Rights Consideration were, in the aggregate, fair to the
Unaffiliated NHP Stockholders from a financial point of view. In addition DLJ
has also delivered to the NHP Independent Committee its opinion, dated the date
hereof, to substantially the same effect. A copy of the DLJ opinion dated the
date hereof is attached hereto as Appendix II. NHP stockholders are urged to
read the DLJ opinion attached hereto in its entirety for assumptions made,
procedures followed, other matters considered and limits of the review by DLJ.
See "The Merger and Related Transactions--Opinion of Financial Advisor to NHP
Independent Committee."
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INTERESTS OF DIRECTORS AND MANAGEMENT OF NHP AND AIMCO IN THE MERGER AND THE
RELATED TRANSACTIONS
In considering the recommendations of the NHP Board with respect to the
Merger, stockholders of NHP should be aware that three former directors of NHP
(Michael R. Eisenson, Tim R. Palmer and Herbert S. Winokur, Jr.) had interests
in certain of the Related Transactions that are in addition to or different from
those of the Unaffiliated NHP Stockholders. In particular, Messrs. Eisenson and
Palmer are representatives of Demeter and Mr. Winokur is a representative of
Capricorn, each of whom had an interest in certain of the Related Transactions
as a result of the Stock Purchase Agreement, pursuant to which Demeter and
Capricorn received consideration in exchange for shares of NHP Common Stock that
differs in some respects from the consideration to be received by Unaffiliated
NHP Stockholders. In particular, pursuant to the Stock Purchase Agreement, AIMCO
could elect to pay cash for more than one half of the consideration to be
received by Demeter for its shares of NHP Common Stock. AIMCO and ANHI have paid
Demeter approximately $79.6 million in cash, and AIMCO issued to Demeter and the
Capricorn Sellers 1,224,463 and 979,758 shares, respectively, of AIMCO Common
Stock, for the shares of NHP Common Stock purchased from Demeter and the
Capricorn Sellers. Since Demeter and the Capricorn Sellers received shares of
AIMCO Common Stock on May 5, 1997, they have received, and will continue to
receive, dividends declared and paid by AIMCO on the AIMCO Common Stock as of
record dates after May 5, 1997 and prior to the Effective Time, which dividends
will not be received by other NHP stockholders. Based on the number of shares of
AIMCO Common Stock issued to Demeter and the Capricorn Sellers on or prior to
such record dates, as of the date of this Joint Proxy Statement/Prospectus, such
dividends totaled $2.0 million in the aggregate. In addition, based on the
number of shares of AIMCO Common Stock issued to Demeter and the Capricorn
Sellers in the NHP Stock Purchase on or prior to November 7, 1997, Demeter and
the Capricorn Sellers are expected to receive an aggregate of $1.0 million in
dividends payable to holders of record as of such date. The terms of the
consideration received by Demeter and Capricorn in the NHP Stock Purchase are
set forth under "The Merger and Related Transactions--The NHP Stock Purchase."
In addition, Demeter, Capricorn and Mr. Heller had interests in the Related
Transactions that are in addition to the interests of Unaffiliated NHP
Stockholders, because each received consideration from AIMCO in connection with
the sale of the NHP Real Estate Companies to AIMCO. In the NHP Real Estate
Acquisition, Demeter and certain of its affiliates, Capricorn and Mr. Heller
received $41.65 million in cash and 303,959 Warrants, $10.4 million in cash and
76,000 Warrants, and $2.75 million in cash and 20,040 Warrants, respectively,
from AIMCO. The terms of the sale of the NHP Real Estate Companies are set forth
under "The Merger and Related Transactions--The NHP Real Estate Acquisition."
As a result of the Merger and the Related Transactions, NHP Stock Options
held by Mr. Heller (for 376,250 shares), Ann Torre Grant, the Chief Financial
Officer of NHP (for 80,000 shares), Shekar Narasimhan, an Executive Vice
President of NHP (for 80,000 shares), Eric N. Ross, a Senior Vice President of
NHP (for 40,000 shares), Joel F. Bonder, a Senior Vice President of NHP (for
20,000 shares) and Jeffrey J. Ochs, a Vice President and the Chief Accounting
Officer of NHP (for 20,000 shares) have, pursuant to the terms of such NHP Stock
Options, become immediately exercisable, and each of these persons now has the
opportunity to exercise those options at exercise prices that are less than the
value of the Merger Consideration, and to receive the Merger Consideration or
sell the shares in the market. The executive officers of NHP have also received
severance and bonus payments in connection with the Merger and the Related
Transactions from NHP and NHP Partners, Inc. (Mr. Heller, $187,500 from NHP and
$200,000 from NHP Partners, Inc.; Ms. Grant, $502,500 from NHP; Mr. Ross,
$296,250 from NHP Partners, Inc.; Mr. Bonder, $224,000 from NHP and $37,500 from
NHP Partners, Inc.; and Mr. Ochs, $114,750 from NHP and $20,250 from NHP
Partners, Inc., all through September 30, 1997). Each of the executive officers
will be entitled to receive additional severance through the dates of their
actual termination of employment. See "The Merger and Related
Transactions--Interests of Directors and Management of NHP and AIMCO in the
Merger and the Related Transactions."
9
<PAGE>
In considering the recommendation of the AIMCO Board with respect to the
Share Issuance, stockholders of AIMCO should be aware that Messrs. Considine and
Kompaniez hold a 5% controlling interest in ANHI, which owns 779,073 shares of
NHP Common Stock and will receive Mixed Consideration for such shares. In
addition, AIMCO used $40.0 million in net proceeds from an offering of AIMCO
Common Stock to purchase shares of NHP Common Stock from ANHI. See "Business of
AIMCO-- Recent Financings." As holders of an aggregate 5% interest in ANHI,
Messrs. Considine and Kompaniez received $2.0 million in proceeds from such
purchase as a distribution from ANHI and used such proceeds to repay in part
outstanding promissory notes payable by them to ANHI in an aggregate principal
amount of $3.2 million. The loans were incurred by them to acquire their
interest in ANHI. See "The Merger and Related Transactions--Interests of
Directors and Management of NHP and AIMCO in the Merger and the Related
Transactions."
CONDITIONS TO THE MERGER
The respective obligations of each party to effect the Merger are subject to
the satisfaction or waiver of a number of conditions, including, (i) the receipt
of all authorizations, consents and approvals necessary from any governmental
entity necessary for consummation of the Merger, (ii) the absence of any
statute, rule, order, decree or regulation of a governmental entity, or
injunction or other court order, that would prohibit the consummation of the
Merger, (iii) the effectiveness of the AIMCO Registration Statement and a
registration statement relating to the distribution of shares of WMF Common
Stock pursuant to the Rights, (iv) the approval for listing on the NYSE of the
shares of AIMCO Common Stock to be issued pursuant to the Merger, (v) the
approval of the Merger Agreement Proposal by the NHP stockholders and the
approval of the Share Issuance by the AIMCO stockholders, (vi) that neither the
Real Estate Agreement nor the Stock Purchase Agreement shall have been
terminated, (vii) the continued accuracy of the representations and warranties
made by the other parties in the Merger Agreement, including the absence of
events having a material adverse effect on AIMCO or NHP, other than events
generally affecting the industries in which they operate and (viii) (solely with
respect to NHP's obligations) that DLJ shall not have withdrawn its opinion
dated April 21, 1997. See "The Merger Agreement and Terms of the
Merger--Conditions to the Merger."
Neither AIMCO nor NHP currently anticipates waiving any of the conditions to
the Merger specified in the Merger Agreement.
REGULATORY MATTERS
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), and the rules that have been promulgated thereunder by the
Federal Trade Commission ("FTC"), AIMCO could not acquire a controlling interest
in NHP through the acquisition of stock or through the Merger unless certain
filings had been submitted to the Antitrust Division of the U.S. Department of
Justice (the "Antitrust Division") and the FTC and certain waiting period
requirements had been satisfied. On February 28, 1997, AIMCO submitted the
required filings to the FTC and the Antitrust Division. On March 18, 1997, the
FTC notified AIMCO of the early termination of the waiting period under the HSR
Act. See "The Merger and Related Transactions--Regulatory Matters."
Pursuant to the Previous Participation Review and Clearance procedure of the
U.S. Department of Housing and Urban Development ("HUD") set forth in the Code
of Federal Regulations, Title 24, Subpart H (the "2530 Procedure"), a
corporation seeking to participate in apartment projects assisted or insured by
HUD must receive clearance to do so from HUD in accordance with the 2530
Procedure. AIMCO has submitted the required filings to HUD, and on May 1, 1997,
HUD notified AIMCO of its clearance under the 2530 Procedure to acquire a 10
percent or greater interest in NHP. See "The Merger and Related
Transactions--Regulatory Matters."
PROHIBITION OF CERTAIN ACTIVITIES
The Merger Agreement provides that, prior to the Effective Time, AIMCO and
NHP will conduct their respective business in the ordinary course as discussed
in this Joint Proxy Statement/Prospectus in
10
<PAGE>
"The Merger Agreement and Terms of the Merger--Conduct of Business Pending the
Merger." In addition, NHP has agreed that it will not solicit, encourage or
participate in certain transactions that essentially constitute a sale of NHP or
a substantial portion of its assets except under certain conditions set forth in
the Merger Agreement.
AMENDMENT AND TERMINATION
At any time before or after approval of the Merger Agreement Proposal by the
NHP stockholders, whether before or after approval of the Share Issuance by the
AIMCO stockholders, and prior to the Effective Time, the Merger Agreement may be
amended or supplemented in writing by NHP, AIMCO and the Merger Sub with respect
to any of the terms contained in the Merger Agreement, except that following
approval by the NHP stockholders, no amendment or supplement may be made without
further approval of the NHP stockholders if applicable law would require such
further approval.
The Merger Agreement provides that it may be terminated prior to the
Effective Time, whether before or after the respective approvals by NHP and
AIMCO stockholders, by the mutual written consent of AIMCO and NHP. The Merger
Agreement may also be terminated prior to the Effective Time, whether before or
after the respective approvals by NHP and AIMCO stockholders, by either AIMCO or
NHP upon the occurrence of certain events, including (i) the failure of the
Merger to be consummated by December 22, 1997, other than by reason of a default
by the party attempting to terminate, (ii) the failure to receive any required
governmental consent, (iii) any court of competent jurisdiction issuing an
order, judgment or decree restraining, enjoining or otherwise prohibiting the
Merger, (iv) the failure to obtain the approval of NHP stockholders or AIMCO
stockholders, or (v) the termination of either the Stock Purchase Agreement or
the Real Estate Agreement. Either party may terminate the Merger Agreement if
the other party commits a material breach of any representation, warranty,
covenant or agreement and fails to cure such default within ten business days of
receiving notice from the terminating party; provided, that, at such time, the
terminating party is not in material breach of any representation, warranty,
covenant or agreement under the Merger Agreement. Either party may terminate the
Merger Agreement if any events arise or occur that, individually or in the
aggregate, have or, insofar as reasonably can be foreseen, are likely in the
future to have, a material adverse effect on the other party, other than events
generally affecting the industry in which such party operates. NHP may terminate
the Merger Agreement, under certain circumstances, upon receiving an alternative
acquisition proposal.
If NHP terminates the Merger Agreement after receiving an alternative
acquisition proposal, under certain circumstances, NHP may be required to pay
AIMCO a termination fee of $4 million. See "The Merger Agreement and Terms of
the Merger--Termination Fees."
REGISTRATION RIGHTS AGREEMENT
The Merger Agreement requires that, prior to the Effective Time, AIMCO will
enter into a registration rights agreement (the "Rule 145 Registration
Agreement") with persons who may be deemed affiliates ("Rule 145 Affiliates") of
NHP under Rule 145 of the Securities Act (generally certain NHP directors or
officers owning NHP Common Stock) as of the NHP Record Date. Pursuant to the
Rule 145 Registration Agreement, AIMCO will be obligated to register for resale
the shares of AIMCO Common Stock issued to such Rule 145 Affiliates as Merger
Consideration.
ACCOUNTING TREATMENT
The Merger will be accounted for by AIMCO and its subsidiaries under the
purchase method of accounting in accordance with Accounting Principles Board
Opinion No. 16, "Business Combinations," as amended. Under this method of
accounting, the purchase price will be allocated to assets acquired and
liabilities assumed based on their estimated fair values. See "The Merger and
Related Transactions-- Accounting Treatment."
11
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
MERGER. AIMCO and NHP expect that the Merger will not qualify as a tax free
reorganization for Federal income tax purposes. As a result, for Federal income
tax purposes, assuming that NHP stockholders hold their NHP Common Stock as a
capital asset, NHP stockholders will recognize capital gain or loss measured by
the difference between the fair market value of the Merger Consideration and
such stockholder's basis in the NHP shares converted in the Merger.
RIGHTS DISTRIBUTION. Although the matter is not free from doubt, the Rights
Distribution should be treated for Federal income tax purposes as a taxable
distribution made on the date of distribution of the Rights (the "Rights
Distribution Date") to the NHP stockholders of record on May 2, 1997. Assuming
the Rights Distribution is treated as a taxable event on the Rights Distribution
Date, such distribution will be a dividend to the extent of the current and
accumulated earnings and profits of NHP. The value of the dividend for each NHP
stockholder will be such stockholder's ratable portion of the fair market value
of the WMF Common Stock, as of the Rights Distribution Date, to the extent of
current and accumulated earnings and profits of NHP. The value of the Rights in
excess of the amount treated as a dividend will be treated as a tax free return
of basis to the extent of such NHP stockholder's basis in the NHP Common Stock
(which basis reduction, if it occurs, will increase any gain or reduce any loss
on a subsequent disposition of the NHP Common Stock, including a disposition in
the Merger), and as a capital gain to the extent such portion exceeds the NHP
stockholder's basis in the NHP Common Stock. The portion of the value of the
Rights that will be treated as a dividend cannot be finally determined until
after NHP's results are determined for the taxable year in which the Rights
Distribution occurs. The Surviving Corporation will distribute to NHP
stockholders information regarding the amount that will be treated as a dividend
when the information becomes available. For a more complete discussion of
Federal income tax consequences of the Rights Distribution, see "The Merger and
Related Transactions--Federal Income Tax Consequences of the Merger and the WMF
Spin-Off--Consequences of the Rights Distribution and the Maturity of the
Rights." NHP stockholders are urged to consult their own tax advisors.
NHP will recognize gain as a result of the Rights Distribution combined with
the later maturity of the Rights. The amount of gain recognized by NHP will be
the excess of the fair market value of the WMF Common Stock over NHP's tax basis
in the WMF Common Stock. NHP's tax basis in the WMF Common Stock as of December
31, 1996 was approximately $23.4 million, and is subject to further adjustment
reflecting WMF's 1997 earnings and distributions. NHP expects to have regular
Federal income tax net operating losses available in a sufficient amount to
offset the gain under the regular Federal income tax, but does not expect to
have sufficient alternative minimum tax net operating losses available to offset
the gain under the alternative minimum tax.
APPRAISAL RIGHTS
Under the Maryland General Corporation Law ("MGCL"), the holders of AIMCO
Common Stock will not be entitled to any objecting stockholders' rights to fair
value in connection with the Share Issuance or the Merger. Under the DGCL, the
holders of NHP Common Stock will not be entitled to any dissenting stockholders'
appraisal rights in connection with the Merger. See "The Merger and Related
Transactions-- Appraisal Rights" and "Comparative Rights of Stockholders of
AIMCO and NHP--Appraisal Rights."
COMPARATIVE RIGHTS OF STOCKHOLDERS OF AIMCO AND NHP
As a result of the Merger, shares of NHP Common Stock, which are issued by a
Delaware corporation, will be converted into the right to receive shares of
AIMCO Common Stock, which are issued by a Maryland corporation. As a result of
differences between the MGCL and the DGCL, and differences between the governing
instruments of NHP and AIMCO, the rights of NHP stockholders as holders of NHP
Common Stock before the Merger, and as holders of AIMCO Common Stock after the
Merger, will be different. For a discussion of certain differences between the
rights of NHP stockholders and the rights of AIMCO stockholders, see
"Comparative Rights of Stockholders of AIMCO and NHP."
12
<PAGE>
SUMMARY HISTORICAL FINANCIAL INFORMATION OF AIMCO
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth summary historical financial and operating
information for AIMCO. The summary historical financial information for the
years ended December 31, 1996 and 1995 and for the period January 10, 1994 (the
date of AIMCO's inception) through December 31, 1994, and for the AIMCO
Predecessors (as defined herein) for the period from January 1, 1994 through
July 28, 1994 is based on the audited financial statements of AIMCO and the
AIMCO Predecessors incorporated by reference herein. The summary historical
financial information for the years ended December 31, 1993 and 1992 is based on
the audited financial statements of the AIMCO Predecessors. The summary
historical financial information for AIMCO for the six months ended June 30,
1997 and 1996 has been prepared from unaudited historical financial data
incorporated by reference herein. In the opinion of the management of AIMCO, the
operating data for the six months ended June 30, 1997 and 1996 include all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the information set forth therein. The results for the six months
ended June 30, 1997 are not necessarily indicative of the results to be obtained
for the year ending December 31, 1997. The following information should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the historical financial statements of AIMCO and
notes thereto incorporated by reference in this Joint Proxy
Statement/Prospectus.
<TABLE>
<CAPTION>
AIMCO PREDECESSORS(a)
AIMCO ------------------------------
------------------------------------------------------------------ FOR THE
FOR THE PERIOD
FOR THE FOR THE PERIOD JANUARY 1, FOR THE
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JANUARY 10, 1994 YEAR ENDED
JUNE 30, 1994 THROUGH THROUGH DECEMBER 31,
------------------------- ----------------------- DECEMBER 31, JULY 28, -----------------
1997 1996 1996 1995 1994 1994(b) 1993 1992
---------- ------------- -------- ------------- ------------ ---------- -------- -------
(RESTATED)(C) (RESTATED)(C) (RESTATED)(C)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Income from rental
property
operations........... $ 30,779 $ 17,700 $ 39,814 $ 27,483 $ 9,126 $ 2,391 $ 3,154 $ 2,289
Income from service
company business..... 2,031 641 1,717 1,973 1,006 360 983 506
Income (loss) before
minority interest in
Operating Partnership
and extraordinary
item................. 11,733 7,078 15,673 14,988 7,702 (1,499) 291 (114)
Net income (loss)...... $ 9,848 $ 5,955 $ 12,984 $ 13,375 $ 7,143 $(1,499) $ 291 $ (114)
PER SHARE DATA:
Net income per common
share and common
share equivalents.... $ 0.53 $ 0.49 $ 1.04 $ 0.86 $ 0.42 N/A N/A N/A
Dividends paid per
common share......... $ 0.925 $ 0.85 $ 1.70 $ 1.66 $ 0.29 N/A N/A N/A
Weighted average number
of common shares and
common share
equivalents
outstanding.......... 18,559 12,039 12,427 9,579 9,589 N/A N/A N/A
BALANCE SHEET DATA (END
OF PERIOD):
Real estate, before
accumulated
depreciation......... $1,102,073 $551,826 $865,222 $477,162 $406,067 $47,500 $ 46,819 $30,789
Cash and cash
equivalents.......... 21,521 2,328 13,170 2,379 7,144 1,531 809 844
Total assets........... 1,272,890 540,117 834,813 480,361 416,739 39,042 38,914 23,366
Total mortgages and
notes payable........ 644,457 307,612 522,146 268,692 141,315 40,873 41,893 25,935
Mandatorily redeemable
1994 Cumulative
Convertible Senior
Preferred Stock...... -- -- -- -- 96,600 N/A N/A N/A
Minority interest in
Operating
Partnership.......... 63,366 41,525 58,777 30,376 29,082 N/A N/A N/A
Stockholders'
equity(d)............ 388,477 178,059 222,889 169,032 140,319 (9,345) (7,556) (7,003)
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
AIMCO PREDECESSORS(a)
AIMCO ------------------------------
------------------------------------------------------------------ FOR THE
FOR THE PERIOD
FOR THE FOR THE PERIOD JANUARY 1, FOR THE
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JANUARY 10, 1994 YEAR ENDED
JUNE 30, 1994 THROUGH THROUGH DECEMBER 31,
------------------------- ----------------------- DECEMBER 31, JULY 28, -----------------
1997 1996 1996 1995 1994 1994(b) 1993 1992
---------- ------------- -------- ------------- ------------ ---------- -------- -------
(RESTATED)(C) (RESTATED)(C)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CASH FLOW DATA:
Cash provided by
operating
activities........... $ 25,035 $ 25,209 $ 38,806 $ 25,911 $ 16,825 $ 2,678 $ 2,203 $ 1,892
Cash used in investing
activities........... (108,134) (18,074) (88,144) (60,821) (186,481) (924) (16,352) (1,078)
Cash provided by (used
in) financing
activities........... 91,450 (7,186) 60,129 30,145 176,800 (1,032) 14,114 (1,426)
OTHER DATA:
Funds from
Operations(e)........ $ 28,441 $ 16,368 $ 35,185 $ 25,285 $ 9,391 N/A N/A N/A
Weighted average number
of common shares and
OP Units
outstanding(f)....... 21,590 14,303 14,994 11,461 10,920 N/A N/A N/A
</TABLE>
- ------------------------
(a) On July 29, 1994, AIMCO completed its initial public offering of 9,075,000
shares of AIMCO Common Stock and issued 966,000 shares of convertible
preferred stock and 513,514 unregistered shares of AIMCO Common Stock. On
such date, AIMCO and Property Asset Management, L.L.C., Limited Liability
Company and its affiliated companies and PDI Realty Enterprises, Inc.
(collectively, the "AIMCO Predecessors") engaged in a business combination
and consummated a series of related transactions which enabled AIMCO to
continue and expand the property management and related businesses of the
AIMCO Predecessors. The 966,000 shares of convertible preferred stock and
513,514 shares of AIMCO Common Stock were repurchased by AIMCO in 1995.
(b) Represents the period January 1, 1994 through July 28, 1994, the date of the
completion of the business combination with AIMCO.
(c) In the second quarter of 1996, AIMCO reorganized the ownership of the
service company, whereby the Operating Partnership (i) owns all of the
non-voting preferred stock of the service company, Property Asset Management
Services, Inc. ("PAMS Inc."), representing a 95% economic interest, and (ii)
owns the 1% general partnership interest in Property Asset Management
Services, L.P. ("PAMS LP"). PAMS Inc. owns the 99% limited partnership
interest in PAMS LP. Substantially all the activity of PAMS Inc. is
conducted by PAMS LP. Because the Operating Partnership owns 95% of the
economic value of PAMS Inc. and also controls the general partnership
interest in PAMS LP, thereby controlling the activity of the partnership,
the service company is consolidated. Prior to the reorganization, AIMCO
reported the service company business on the equity method. The restatement
has no impact on net income, but does increase third party and affiliate
management and other income, management and other expenses, amortization of
management company goodwill and depreciation of non-real estate assets.
AIMCO has restated the balance sheet as of December 31, 1995 and 1994, and
the statements of income and statements of cash flows for the year ended
December 31, 1995 and the period from January 10, 1994 through December 31,
1994 to reflect the change.
(d) Subsequent to June 30, 1997, AIMCO issued 750,000 shares of Class B
Cumulative Preferred Stock, par value $.01 per share, and 12,052,418 shares
of AIMCO Common Stock for aggregate net proceeds of approximately $472
million. See "Business of AIMCO--Recent Financings."
(e) AIMCO's management believes that the presentation of funds from operations
("FFO"), when considered with the financial data determined in accordance
with generally accepted accounting principles ("GAAP"), provides a useful
measure of AIMCO's performance. However, FFO does not represent cash flow
and is not necessarily indicative of cash flow or liquidity available to
AIMCO, nor should it be considered as an alternative to net income as an
indicator of operating performance. The Board of Governors of the National
Association of Real Estate Investment Trusts ("NAREIT") defines FFO as net
income (loss), computed in accordance with GAAP, excluding gains and losses
from debt restructuring and sales of property, plus real estate related
depreciation and amortization (excluding amortization of financing costs),
and after adjustments for unconsolidated partnerships and joint ventures. In
addition, AIMCO adjusts FFO for minority interest in the Operating
Partnership, amortization of management company goodwill, the non-cash
deferred portion of the income tax provision for unconsolidated subsidiaries
and the payments of dividends on preferred stock. AIMCO's management
believes that presentation of FFO provides investors with an industry
accepted measurement which helps facilitate an understanding of AIMCO's
ability to meet required dividend payments, capital expenditures and
principal payments on its debt. There can be no assurance that AIMCO's basis
of computing FFO is comparable with that of other REITs.
14
<PAGE>
The following is a reconciliation of Income before minority interest in
Operating Partnership to FFO:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED FOR THE PERIOD
JUNE 30, DECEMBER 31, JANUARY 10, 1994
------------------------- ----------------------- THROUGH DECEMBER
1997 1996 1996 1995 31, 1994
---------- ------------- -------- ------------- -----------------
OPERATING ACTIVITIES
<S> <C> <C> <C> <C> <C>
Income before minority interest in
Operating
Partnership...................... $ 11,464 $ 7,078 $ 15,673 $ 14,988 $ 7,702
Gain on disposition of property.... -- -- (44) -- --
Extraordinary item................. 269 -- -- -- --
Real estate depreciation, net of
minority interest in other
partnerships..................... 13,250 9,060 19,056 15,038 4,727
Amortization of management company
goodwill......................... 474 230 500 428 76
Equity in earnings of
Unconsolidated Subsidiaries:
Real estate depreciation......... 1,263 -- -- -- --
Amortization of recoverable
amount of management
contracts...................... 150 -- -- -- --
Deferred income taxes............ 874 -- -- -- --
Real estate depreciation from
investments in
partnerships..................... 697 -- -- -- --
---------- ------------- -------- ------------- --------
Net funds provided by operating
activities....................... 28,441 16,368 35,185 30,454 12,505
---------- ------------- -------- ------------- --------
FINANCING ACTIVITIES
Payment of dividend on preferred
stock............................ -- -- -- (5,169) (3,114)
---------- ------------- -------- ------------- --------
Net funds used in financing
activities....................... -- -- -- (5,169) (3,114)
---------- ------------- -------- ------------- --------
Funds from Operations.............. $ 28,441 $ 16,368 $ 35,185 $ 25,285 $ 9,391
---------- ------------- -------- ------------- --------
---------- ------------- -------- ------------- --------
</TABLE>
(f) After a one year holding period, Partnership Common Units in the Operating
Partnership ("OP Units") may be tendered for redemption at the option of the
holder and, upon tender, may be acquired by AIMCO for shares of AIMCO Common
Stock at an exchange ratio of one share of AIMCO Common Stock for each OP
Unit (subject to adjustment).
15
<PAGE>
SUMMARY HISTORICAL FINANCIAL INFORMATION OF NHP
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, PROPERTIES AND UNITS)
The historical summary financial information of NHP for each of the years in
the five year period ended December 31, 1996 has been derived from NHP's audited
consolidated financial statements. The historical summary financial information
for the six months ended June 30, 1997 and 1996 has been derived from the NHP's
unaudited financial statements which, in the opinion of management, include all
adjustments (consisting only of normal and recurring adjustments except for
amounts discussed below in note (h) to the table) necessary to present fairly
the information set forth below. This information should be read in conjunction
with such financial statements, including the notes thereto.
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
---------------------------- ------------------------------------------------------------------
1997 1996 1996 (a) 1995 1994 1993 1992
------------ ------------ ------------- ------------ ------------ -------- --------
(RESTATED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Total revenue (b)........... $ 104,603 $ 92,552 $194,979 $ 174,674 $ 147,296 $ 95,900 $ 91,559
Operating income............ 4,559(h) 10,043 20,677 19,307 14,741(c) 12,469 11,964
Income from continuing
operations before income
taxes................... 1,998(h) 8,848 17,442 13,811 9,005(c) 8,528 8,276
Income from continuing
operations.............. 1,199(h) 5,307 10,465 31,613(d) 9,005(c) 8,528 8,276
Income per common and
equivalent share from
continuing operations... $ 0.09(h) $ 0.42 $ 0.82 $ 3.27(d) $ 1.11(c) $ 1.04 $ 1.00
OTHER INFORMATION:
Net Cash provided by (used
in):
Continuing operations
activities.............. $ 7,241 $ 12,339 $ 21,965 $ 9,700 $ 11,892 $ 12,056 $ 12,957
Investing activities...... (11,173) (37,473) (56,815) (16,026) (4,543) (19,695) (503)
Financing activities...... 8,355 19,626 33,797 8,786 (4,276) 23,416 1,963
EBITDA (e).................. $ 10,923(h) $ 12,701 27,745 23,402 17,386 13,848 13,249
Cash dividends per share.... -- -- -- -- -- -- --
Weighted average common and
equivalent shares
outstanding............... 12,959 12,684 12,730 9,645 8,095 8,209 8,291
Properties managed at period
end (f):
Affiliated................ 444 461 452 453 390 373 384
Unaffiliated.............. 283 259 265 258 224 199 21
------------ ------------ ------------- ------------ ------------ -------- --------
Total....................... 727 720 717 711 614 572 405
------------ ------------ ------------- ------------ ------------ -------- --------
------------ ------------ ------------- ------------ ------------ -------- --------
Units managed at period end
(f):
Affiliated................ 78,034 79,812 78,750 77,627 63,064 58,372 61,782
Unaffiliated.............. 56,046 55,606 54,294 56,040 48,442 42,977 3,296
------------ ------------ ------------- ------------ ------------ -------- --------
Total....................... 134,080 135,418 133,044 133,667 111,506 101,349 65,078
------------ ------------ ------------- ------------ ------------ -------- --------
------------ ------------ ------------- ------------ ------------ -------- --------
BALANCE SHEET DATA (END OF
PERIOD):
Total assets................ $ 232,477 $ 190,112 $218,141 $ 84,770 $ 57,668 $ 46,353 $ 15,095
Long-term debt, including
current portion........... 142,150(i) 117,138(i) 134,479(i) 23,690 70,133 72,429 44,523
Shareholders' equity
(deficit) (g)............. 58,952 56,013 56,013 39,154 (47,554) (63,584) (61,709)
</TABLE>
- ------------------------------
(a) Due to the anticipated WMF Spin-Off, NHP's financial statements for the year
ended December 31, 1996 have been restated to reflect WMF as a discontinued
operation since April 1, 1996, the date of its acquisition by NHP.
(b) Includes $127,266, $117,249, $98,158, $60,223 and $58,500 of on-site
personnel, general and administrative cost reimbursement for the years ended
December 31, 1996, 1995, 1994, 1993, and 1992, respectively, and $64,900 and
$61,746 for the six months ended June 30, 1997 and 1996, respectively.
On-site personnel, general and administrative cost reimbursement represents
a pass-through of expenses incurred on behalf of property owners.
(c) Includes a write-off of $1.8 million ($0.22 per share) of certain costs of
transferring operations to a new computer system that was not completed in a
timely manner.
(d) Includes a credit of $23.3 million ($2.42 per share) related to a change in
the valuation allowance on NHP's net deferred tax asset.
(e) EBITDA consists of income from continuing operations before interest
expense, income taxes, depreciation and amortization. EBITDA is included
because it is widely used in the industry as a measure of a company's
operating performance, but should not be construed as an alternative either
(i) to income from continuing operations (determined in accordance with
GAAP) as a measure of profitability or (ii) to cash flows from operating
activities (determined in accordance with GAAP). EBITDA does not take into
account NHP's debt service requirements and other commitments and,
accordingly, is not necessarily indicative of amounts that may be available
for discretionary uses.
16
<PAGE>
The following is a reconciliation of income from continuing operations to
EBITDA:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
---------------- -----------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- ---------- ------- ------- ------- -------
(RESTATED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Income from continuing
operations..................... $ 1,199 $ 5,307 $10,465 $31,613 $ 9,005 $ 8,528 $ 8,276
Interest expense................. 3,670 1,479 3,982 5,788 5,857 3,941 3,688
Income tax provision (credit).... 799 3,541 6,977 (17,802) -- -- --
Amortization of management
contracts...................... 3,037 1,893 4,562 3,076 2,043 875 694
Other depreciation and
amortization................... 2,218 481 1,759 727 481 504 591
------- ------- ---------- ------- ------- ------- -------
EBITDA............................. $10,923 $12,701 $27,745 $23,402 $17,386 $13,848 $13,249
------- ------- ---------- ------- ------- ------- -------
------- ------- ---------- ------- ------- ------- -------
</TABLE>
(f) Affiliated properties and units are properties (and units in properties)
with respect to which entities under common control with NHP have the right,
generally in their capacity as a general partner, to select the management
agent.
(g) The deficit in shareholders' equity prior to 1995 is the result of losses
recorded from NHP's discontinued real estate operations.
(h) Includes non-recurring costs of $5,546 ($3,328 after-tax, or $0.26 per
share) recorded by NHP.
(i) Includes $71.2 million of real estate related debt that is non-recourse to
NHP.
17
<PAGE>
SUMMARY PRO FORMA FINANCIAL AND OPERATING INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth summary pro forma financial and operating
information of AIMCO for the six months ended June 30, 1997 and the year ended
December 31, 1996. The Pre-Merger pro forma financial and operating information
gives effect to the NHP Stock Purchase, the NHP Real Estate Acquisition and a
number of transactions completed by AIMCO prior to the Merger. In addition to
all of the transactions reflected in the Pre-Merger pro forma financial and
operating information, the Merger pro forma financial and operating information
gives effect to the Merger, the WMF Spin-Off and the NHP Reorganization (i)
assuming that ANHI elects to receive Mixed Consideration and all other NHP
stockholders elect to receive Stock Consideration (Stock Consideration), and
(ii) assuming that all NHP stockholders elect to receive Mixed Consideration
(Mixed Consideration). The pro forma financial and operating information set
forth below should be read in conjunction with, and is qualified in its entirety
by, the historical and pro forma financial statements and notes thereto of
AIMCO, NHP, the NHP Real Estate Companies, NHP Southwest Partners, L.P., the NHP
New LP Entities (as defined in Note 1 of such financial statements included in
Amendment No. 1 to AIMCO's Current Report on Form 8-K, dated June 3, 1997 (the
"June 3, 1997 Form 8-K, Amendment No. 1")), the NHP Borrower Entities (as
defined in Note 1 of such financial statements included in the June 3, 1997 Form
8-K, Amendment No. 1), The Bay Club at Aventura, the Morton Towers apartments,
and the Thirty-five Acquisition Properties (as defined in AIMCO's Current Report
on Form 8-K, dated October 15, 1997), which are included in or incorporated by
reference in this Joint Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30, 1997 FOR THE YEAR ENDED DECEMBER 31, 1996
----------------------------------------- -----------------------------------------
MERGER MERGER
------------------------------- -------------------------------
PRE- (STOCK (MIXED PRE- (STOCK (MIXED
MERGER CONSIDERATION) CONSIDERATION) MERGER CONSIDERATION) CONSIDERATION)
-------- -------------- -------------- -------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Income from rental property
operations..................... $ 44,454 $ 44,344 $ 44,344 $ 74,241 $ 72,275 $ 72,275
-------- -------------- -------------- -------- -------------- --------------
Income from service company
business....................... 1,173 535 535 2,134 856 856
-------- -------------- -------------- -------- -------------- --------------
Income (loss) before minority
interest in Operating
Partnership.................... 18,064 20,603 18,399 29,122 31,408 27,104
-------- -------------- -------------- -------- -------------- --------------
Net income allocable to preferred
stockholders................... 2,672 2,672 2,672 5,344 5,344 5,344
-------- -------------- -------------- -------- -------------- --------------
Net income allocable to common
stockholders................... $ 13,142 $ 15,798 $ 13,823 $ 20,237 $ 22,377 $ 18,578
-------- -------------- -------------- -------- -------------- --------------
-------- -------------- -------------- -------- -------------- --------------
PER SHARE DATA:
Net income per common share and
common share equivalent........ $ 0.37 $ 0.39 $ 0.36 $ 0.60 $ 0.58 $ 0.51
Weighted average number of common
shares and common share
equivalents outstanding........ 35,281 40,307 38,069 33,592 38,638 36,400
CASH FLOW DATA:
Cash provided by operating
activities (a)................. $ 46,396 $ 47,771 $ 45,566 $ 77,073 $ 75,715 $ 71,411
Cash used by investing
activities (b)................. (5,423) (5,291) (5,291) (10,847) (10,582) (10,582)
Cash provided by financing
activities (c)................. (39,684) (44,094) (42,024) (73,262) (81,366) (77,562)
OTHER DATA:
Funds from Operations (d)........ $ 47,463 $ 60,044 $ 57,840 $ 88,130 $109,232 $104,928
Weighted average number of common
shares, common share
equivalents and OP units
outstanding (e)................ 42,591 47,616 47,841 41,435 46,480 46,705
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
-------------------------------------------
MERGER
-------------------------------
PRE- (STOCK (MIXED
MERGER CONSIDERATION) CONSIDERATION)
---------- -------------- --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Real estate, before accumulated
depreciation................... $1,460,289 $1,370,933 $1,370,933
Cash and cash equivalents........ 77,698 77,698 77,698
Total assets..................... 1,799,263 1,786,798 1,786,798
Total mortgages and notes
payable........................ 651,217 609,608 669,476
Minority interest in Operating
Partnership.................... 105,396 105,396 105,396
Stockholders' equity(f).......... 859,875 992,319 932,451
</TABLE>
- ------------------------------
(a) Pro forma cash provided by operating activities represents income before
income allocable to minority interests, plus depreciation and amortization
less the non-cash portion of AIMCO's equity in earnings of unconsolidated
subsidiaries. The pro forma amounts do not include adjustments for changes
in working capital resulting from changes in current assets and current
liabilities as there is no historical data available as of both the
beginning and end of each period presented.
(b) On a pro forma basis, cash used in investing activities represents the
minimum annual provision for capital replacements of $300 per owned
apartment unit.
(c) Pro forma cash used in financing activities represents estimated dividends
and distributions to be paid based on AIMCO's historical dividend rate of
$1.70 and $0.925 per share for the year ended December 31, 1996 and the six
months ended June 30, 1997, respectively, on outstanding shares of AIMCO
Common Stock and OP Units, as well as estimated dividends to be paid based
on the rate of $7.125 and $3.5625 per share for the year December 31, 1996
and the six months ended June 30, 1997, respectively, on outstanding shares
of AIMCO Class B Preferred Stock.
(d) AIMCO's management believes that the presentation of FFO, when considered
with the financial data determined in accordance with GAAP, provides useful
measures of AIMCO's performance. However, FFO does not represent cash flow
and is not necessarily indicative of cash flow or liquidity available to
AIMCO, nor should it be considered as an alternative to net income as an
indicator of operating performance. The Board of Governors of NAREIT defines
FFO as net income (loss), computed in accordance with GAAP, excluding gains
and losses from debt restructuring and sales of property, plus real estate
related depreciation and amortization (excluding amortization of financing
costs), and after adjustments for unconsolidated partnerships and joint
ventures. In addition, AIMCO adjusts FFO for minority interest in the
Operating Partnership, amortization of management company goodwill, the
non-cash deferred portion of the income tax provision for unconsolidated
subsidiaries and the payments of dividends on preferred stock. AIMCO's
management believes that presentation of FFO provides investors with an
industry accepted measurement which helps facilitate an understanding of
AIMCO's ability to meet required dividend payments, capital expenditures and
principal payments on its debt. There can be no assurance that AIMCO's basis
of computing FFO is comparable with that of other REITs.
19
<PAGE>
The following is a reconciliation of pro forma Income before minority
interest in Operating Partnership to pro forma FFO:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1997 FOR THE YEAR ENDED DECEMBER 31, 1996
------------------------------------------ ------------------------------------------
STOCK MIXED STOCK MIXED
PRE- MERGER CONSIDERATION CONSIDERATION PRE- MERGER CONSIDERATION CONSIDERATION
---------- ------------- ------------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Income before minority
interest in Operating
Partnership................. $18,064 $20,603 $18,399 $29,122 $ 31,408 $ 27,104
Real estate depreciation, net
of minority interest in
other partnerships.......... 21,385 19,881 19,881 41,621 38,533 38,533
Amortization of management
company goodwill............ 1,164 598 598 3,180 1,256 1,256
Equity of earnings of
Unconsolidated subsidiaries:
Real estate depreciation.... 803 2,307 2,307 1,606 4,694 4,694
Amortization of recoverable
amount of management
contracts................. 83 4,580 4,580 261 9,161 9,161
Deferred income taxes....... 57 600 600 376 3,600 3,600
Real estate depreciation from
investments in
partnerships................ 5,907 11,475 11,475 11,964 20,580 20,580
---------- ------------- ------------- ---------- ------------- -------------
Net funds provided by
operating activities........ 47,463 60,044 57,840 88,130 109,232 104,928
---------- ------------- ------------- ---------- ------------- -------------
Funds from Operations......... $47,463 $60,044 $57,840 $88,130 $109,232 $104,928
---------- ------------- ------------- ---------- ------------- -------------
---------- ------------- ------------- ---------- ------------- -------------
</TABLE>
(e) After a one year holding period, OP Units may be tendered for redemption at
the option of the holder and, upon tender, may be acquired by AIMCO for
shares of AIMCO Common Stock at an exchange ratio of one share of AIMCO
Common Stock for each OP Unit (subject to adjustment).
(f) Subsequent to June 30, 1997, AIMCO issued 750,000 shares of AIMCO Class B
Preferred Stock, par value $.01 per share, and an aggregate 12,052,418
shares of AIMCO Common Stock for aggregate net proceeds of approximately
$472 million. See "Business of AIMCO--Recent Financings."
20
<PAGE>
COMPARATIVE PER SHARE DATA
Set forth below are historical and pro forma earnings per common share, cash
dividends per common share and book value per common share data of AIMCO and
historical and equivalent pro forma earnings per common share, cash dividends
per common share and book value per common share data of NHP. The data set forth
below should be read in conjunction with the AIMCO and NHP audited financial
statements and unaudited interim financial statements, including the notes
thereto, which are incorporated by reference herein. The data should also be
read in conjunction with the unaudited pro forma financial statements, including
the notes thereto, included elsewhere herein. The pro forma data are not
necessarily indicative of the actual financial position that would have
occurred, or future operating results that will occur, upon consummation of the
Merger.
<TABLE>
<CAPTION>
AIMCO NHP
---------------------------------- ----------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996 JUNE 30, 1997 DECEMBER 31, 1996
-------------- ----------------- -------------- -----------------
(RESTATED)
<S> <C> <C> <C> <C>
HISTORICAL:
Earnings per common share........ $0.53 $1.04 $0.14 $0.91
Cash dividends per common share.. $0.925 $1.70 -- --
Book value per common share...... $17.62 $14.40 $4.65 $4.45
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA - MERGER (A) PRO FORMA - MERGER (A)
STOCK CONSIDERATION MIXED CONSIDERATION
---------------------------------- ----------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996 JUNE 30, 1997 DECEMBER 31, 1996
-------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
PRO FORMA (B):
Earnings per common share............. $0.39 $0.58 $0.36 $0.51
Cash dividends per common share....... $0.925 $1.70 $0.925 $1.70
Book value per common share........... $24.79 $25.16 $24.68 $25.06
NHP PRO FORMA EQUIVALENTS (C):
Earnings per common share............. $0.29 $0.43 $0.27 $0.38
Cash dividends per common share....... $0.69 $1.27 $0.69 $1.27
Book value per common share........... $18.53 $18.81 $18.45 $18.74
</TABLE>
- ------------------------------
(a) Upon consummation of the Merger, each outstanding share of NHP Common Stock
will be converted into the right to receive either (i) 0.74766 shares of
AIMCO Common Stock, or (ii) 0.37383 shares of AIMCO Common Stock and $10.00
in cash. The exact amount of cash and/or shares of AIMCO Common Stock to be
received by each stockholder of NHP pursuant to the Merger is dependent on
the stated preferences of the NHP stockholders on the Election Form.
Accordingly, two alternative scenarios of pro forma per share data are
presented, which reflect to the range of possible amounts of AIMCO Common
Stock and/or cash to be received by NHP stockholders upon consummation of
the Merger. The Stock Consideration scenario assumes that ANHI will elect
the Mixed Consideration and all other NHP stockholders will elect to receive
the Stock Consideration for each share of NHP Common Stock. The Mixed
Consideration scenario assumes that all NHP stockholders will elect to
receive the Mixed Consideration for each share of NHP Common Stock.
(b) The pro forma combined per share data for AIMCO for the year ended December
31, 1996 and the six months ended June 30, 1997 have been prepared as if the
Merger, the NHP Reorganization, the WMF Spin-Off, the NHP Stock Purchase,
the NHP Real Estate Acquisition, the NHP Real Estate Reorganization, certain
acquisitions and dispositions, certain completed sales of AIMCO Common Stock
and the sale of the shares of AIMCO Class B Preferred Stock had all occurred
as of January 1, 1996, resulting in weighted average shares outstanding of
38,349,022 and 39,910,482 for the year ended December 31, 1996 and the six
months ended June 30, 1997, respectively.
(c) The equivalent pro forma per share amounts of NHP are calculated by
multiplying pro forma earnings per share, cash dividends per share and book
value per share by the Exchange Ratio of 0.74766 to 1.
21
<PAGE>
COMPARATIVE STOCK PRICES AND DIVIDENDS
AIMCO Common Stock is listed and traded on the NYSE under the symbol "AIV."
NHP Common Stock is quoted on the Nasdaq Stock Market under the symbol "NHPI."
The following table sets forth, for the periods indicated, the high and low
reported sales prices per share of AIMCO Common Stock, as reported on the NYSE
Composite Tape, and NHP Common Stock, as reported by the Nasdaq Stock Market,
and dividends declared on AIMCO Common Stock for the same periods. NHP did not
declare any dividends during the indicated periods on NHP Common Stock, other
than the Rights Distribution.
<TABLE>
<CAPTION>
AIMCO NHP
COMMON STOCK COMMON STOCK
------------------------------ ------------------------
CALENDAR QUARTERS HIGH LOW DIVIDEND HIGH LOW
- ---------------------------------------------- ------- ------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1995
First Quarter............................... $18 3/4 $17 1/8 $ 0.415 $ -- $ --
Second Quarter.............................. 20 1/4 17 7/8 0.415 -- --
Third Quarter............................... 21 1/4 19 1/2 0.415 14 (1) 12 (1)
Fourth Quarter.............................. 20 7/8 18 0.425 18 5/8 13 3/4
1996
First Quarter............................... 21 1/8 19 3/8 0.425 19 5/8 17
Second Quarter.............................. 21 18 3/8 0.425 20 5/8 17 5/8
Third Quarter............................... 22 18 3/8 0.425 20 7/8 16 5/8
Fourth Quarter.............................. 28 3/8 21 1/8 0.4625 19 15 1/4
1997
First Quarter............................... 30 1/2 25 1/2 0.4625 25 1/8 15 1/4
Second Quarter.............................. 29 3/4 26 0.4625 24 1/8 21
Third Quarter............................... 36 3/16 28 1/8 0.4625 28 1/4 22 1/8
Fourth Quarter (through October 30)......... 38 32 -- 30 3/4 26 1/2
</TABLE>
- ------------------------------
(1) NHP Common Stock began trading on August 15, 1995.
Set forth below is a table containing, for each of February 19, 1997 (the
last trading day before the announcement that AIMCO had entered into the Letter
Agreement), April 18, 1997 (the last trading day before the announcement of the
Merger Agreement) and October 30, 1997 (the most recent practicable date prior
to the printing of this Joint Proxy Statement/Prospectus), the last reported
sale price per share of AIMCO Common Stock, as reported on the NYSE Composite
Tape, and NHP Common Stock, as reported on the Nasdaq Stock Market. In addition,
the table sets forth the market value of the amount of AIMCO Common Stock to be
received per share of NHP Common Stock in the Merger, as if the Merger had
occurred on the date indicated, plus, in the case of Mixed Consideration, the
amount of cash to be received per share of NHP Common Stock.
<TABLE>
<CAPTION>
FEBRUARY 19, APRIL 18, OCTOBER 30,
1997 1997 1997
---------------- ------------- ---------------
<S> <C> <C> <C>
AIMCO...................................... $ 26.125 $ 29.25 $ 34.75
NHP........................................ 15.375 24.00 27.50
NHP (AIMCO equivalent)(1)
Stock Consideration...................... 19.53 21.87 25.98
Mixed Consideration...................... 19.77 20.93 22.99
</TABLE>
- ------------------------------
(1) Does not include any value associated with the shares of WMF Common
Stock that will be distributed to NHP stockholders at the Maturity Time
in accordance with the Rights Agreement.
22
<PAGE>
AIMCO, as a REIT, is required to distribute annually to holders of AIMCO
Common Stock at least 95% of its "real estate investment trust taxable income,"
which, as defined by the Code and the Treasury regulations promulgated
thereunder (the "Treasury Regulations"), is generally equivalent to net taxable
ordinary income. AIMCO measures its economic profitability and intends to pay
regular dividends to its stockholders based on its operating results during the
relevant period. The future payment of dividends by AIMCO will be at the
discretion of the AIMCO Board and will depend on numerous factors, including
AIMCO's financial condition, its capital requirements, the annual distribution
requirements under the provisions of the Code applicable to REITs and such other
factors as the AIMCO Board deems relevant. See "Business of AIMCO--Operating and
Financial Strategies--Dividend Policy." The NHP Board currently does not
anticipate paying any cash dividends in the foreseeable future on shares of NHP
Common Stock.
On October 8, 1997, AIMCO announced that its management had recommended to
the AIMCO Board that it increase the annual dividend rate on the AIMCO Common
Stock to $2.15 per share. If adopted by the AIMCO Board, such dividend increase
would be effective commencing with the February 1998 dividend payment and is
subject to the factors described above, including AIMCO's future results of
operations from its recently completed acquisitions.
FLUCTUATIONS IN MARKET PRICE
The value realized by NHP stockholders in the Merger will depend upon the
market price of AIMCO Common Stock, which is subject to fluctuation. See
"--Comparative Stock Prices and Dividends," above. If at any time the market
price of AIMCO Common Stock is below $26.75 per share, at such time the value of
the Mixed Consideration would be greater than the value of the Stock
Consideration. NHP stockholders are urged to obtain current market quotations
for the AIMCO Common Stock. The value of the shares of WMF Common Stock that
will be distributed to NHP stockholders at the Maturity Time will depend on the
market price, if any, of such shares, which is subject to fluctuation.
23
<PAGE>
RISK FACTORS
In considering whether to approve the Share Issuance or the Merger Agreement
Proposal, the AIMCO stockholders and NHP stockholders, respectively, should
consider, in addition to the other information in this Joint Proxy
Statement/Prospectus, the AIMCO Incorporated Documents and the NHP Incorporated
Documents, the following risk factors.
RISKS RELATING TO THE NHP ACQUISITION
The NHP Acquisition constitutes the largest acquisition ever undertaken by
AIMCO and its subsidiaries, involving an aggregate purchase price in excess of
$450 million. In addition to the risks typically associated with acquisitions
generally (see "--Risks Relating to AIMCO's and NHP's Businesses--Risks Related
to Investment in and Management of Real Estate--Risks of Acquisition and
Development Activities"), the NHP Acquisition involves the following risks and
uncertainties:
BENEFITS OF THE MERGER AND THE RELATED TRANSACTIONS TO CERTAIN OFFICERS AND
DIRECTORS OF NHP; POSSIBLE CONFLICTS OF INTEREST IN CONNECTION WITH THE NHP
ACQUISITION
Three former directors of NHP (Messrs. Eisenson, Palmer and Winokur) had
interests in certain of the Related Transactions that are in addition to or
different from those of the Unaffiliated NHP Stockholders. In particular,
Messrs. Eisenson and Palmer are representatives of Demeter and Mr. Winokur is a
representative of Capricorn, each of whom had an interest in certain of the
Related Transactions as a result of the Stock Purchase Agreement, pursuant to
which Demeter and Capricorn have received consideration in exchange for shares
of NHP Common Stock that differs in some respects from the consideration to be
received by Unaffiliated NHP Stockholders.
AIMCO elected to pay cash for more than one half of the consideration
received by Demeter for shares of its NHP Common Stock purchased pursuant to the
Stock Purchase Agreement. AIMCO has paid Demeter approximately $79.6 million in
cash and issued Demeter and Capricorn 1,224,463 and 979,758 shares,
respectively, of AIMCO Common Stock for the shares of NHP Common Stock it has
purchased from Demeter and Capricorn pursuant to the Stock Purchase Agreement.
Since Demeter and the Capricorn Sellers received shares of AIMCO Common Stock on
May 5, 1997, they have received, and will continue to receive, dividends
declared and paid by AIMCO on the AIMCO Common Stock as of record dates after
May 5, 1997 and prior to the Effective Time, which dividends will not be
received by other NHP stockholders. Based on the number of shares of AIMCO
Common Stock issued to Demeter and the Capricorn Sellers in the NHP Stock
Purchase on or prior to such record dates, such dividends have totalled $2.0
million in the aggregate as of the date of this Joint Proxy
Statement/Prospectus. In addition, on October 23, 1997, the AIMCO Board declared
a dividend of $0.4625 per share of AIMCO Common Stock, payable on November 14,
1997 to AIMCO stockholders of record as of November 7, 1997. Based on the number
of shares of AIMCO Common Stock issued to Demeter and the Capricorn Sellers in
the NHP Stock Purchase on or prior to November 7, 1997, Demeter and the
Capricorn Sellers will receive additional dividends totalling $1.0 million in
the aggregate. The terms of the consideration received by Demeter and the
Capricorn Sellers are set forth under "The Merger and Related Transactions--The
NHP Stock Purchase."
In addition, Demeter, Capricorn and Mr. Heller have interests in the Related
Transactions that are in addition to the interests of Unaffiliated NHP
Stockholders, because each received consideration from AIMCO in connection with
the sale of the NHP Real Estate Companies to AIMCO. Pursuant to the NHP Real
Estate Acquisition, Demeter, Phemus and certain of their affiliates received
$41.65 million in cash and 303,959 Warrants, and Capricorn and Mr. Heller
received $10.4 million in cash and 76,000 Warrants, and $2.75 million in cash
and 20,040 Warrants, respectively. The terms of the sale of the NHP Real Estate
are set forth under "The Merger and Related Transactions--The NHP Real Estate
Acquisition."
24
<PAGE>
As a result of the Merger and the Related Transactions, options to acquire
NHP Common Stock held by Mr. Heller (376,250 shares), Ms. Grant (80,000 shares),
Mr. Narasimhan (80,000 shares), Mr. Ross (40,000 shares), Mr. Bonder (20,000
shares) and Mr. Ochs (20,000 shares) have, pursuant to their terms, become
immediately exercisable, and each of these persons now has the opportunity to
exercise those options at exercise prices that are less than the value of the
Merger Consideration (based on the market price of AIMCO Common Stock on the
date of the execution of the Merger Agreement) and to receive the Merger
Consideration or sell the shares in the market. The executive officers of NHP
also received severance and bonus payments in connection with the Merger and the
Related Transactions from NHP and NHP Partners, Inc.: Mr. Heller, $187,500 from
NHP and $200,000 from NHP Partners, Inc.; Ms. Grant, $502,500 from NHP; Mr.
Ross, $296,250 from NHP Partners, Inc.; Mr. Bonder, $224,000 from NHP and
$37,500 from NHP Partners, Inc.; and Mr. Ochs, $114,750 from NHP and $20,250
from NHP Partners, Inc., all as of September 30, 1997. Each of the executive
officers will be entitled to receive additional severance payments through the
dates of their actual termination of employment. Further details regarding the
potential conflicts of interest are set forth under "The Merger and Related
Transactions--Interests of Directors and Management of NHP and AIMCO in the
Merger and the Related Transactions." Each of the benefits identified above will
accrue to the identified stockholders, officers and directors, but not to other
stockholders of NHP. These persons may therefore have had incentives to approve
the Merger that are not shared by other stockholders of NHP. The NHP Board was
aware of these benefits and the potential conflicts of interest they create at
the time of its consideration of the Merger, and the NHP Independent Committee
did not include any director having any such conflict of interest.
RISKS OF AIMCO'S INABILITY TO EFFECT CERTAIN BUSINESS COMBINATIONS AND OTHER
TRANSACTIONS
As a result of the NHP Stock Purchase, AIMCO is an "interested stockholder"
of NHP for the purpose of Section 203 of the DGCL. Accordingly, if the Merger
Agreement is not adopted and authorized at the NHP Special Meeting by the
required vote, AIMCO may not, prior to February 13, 2000, enter into any
"business combination" transaction with NHP, unless the transaction is approved
by holders of at least 66 2/3% of the outstanding shares of NHP Common Stock,
excluding shares deemed to be owned by AIMCO or its affiliates (which includes
shares owned by ANHI). For these purposes, a "business combination" includes any
merger or consolidation of NHP or its subsidiaries with AIMCO or its affiliates;
any sale, lease, exchange, mortgage, pledge, transfer or other disposition of
assets of NHP or its subsidiaries to AIMCO with a value of 10% or more of the
total assets of NHP; transfers or issuances of stock of NHP or its subsidiaries
to AIMCO; and certain other transactions that may provide financial benefits to
AIMCO.
If the Merger is not approved, the prohibition on business combinations
contained in Section 203 may prevent AIMCO from taking a variety of actions that
may be necessary to optimize AIMCO's corporate structure for operating reasons,
tax reasons and for purposes of complying with the REIT rules following the NHP
Stock Purchase and the NHP Real Estate Acquisition. Such actions may include,
for example, certain aspects of the NHP Reorganization, a liquidation of NHP, a
merger of NHP with another AIMCO subsidiary, a transfer of assets from NHP or
its subsidiaries to AIMCO or its subsidiaries or guarantees by NHP or its
subsidiaries of loans made to AIMCO or its subsidiaries. The inability of AIMCO
to engage in such transactions could have a material adverse effect on AIMCO's
results of operations and its ability to realize the potential benefits of the
NHP Acquisition.
RISKS ASSOCIATED WITH INTEGRATING NHP AND OTHER ACQUIRED BUSINESSES
The integration of NHP's business with AIMCO's may place a significant
burden on AIMCO's management. Such integration is subject to risks commonly
encountered in making such acquisitions, including, among others, loss of key
personnel of NHP, the difficulty associated with assimilating the personnel and
operations of NHP, the disruption of AIMCO's ongoing business and acquisition
strategy, the difficulty in maintaining uniform standards, controls, procedures
and policies, and the impairment of
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AIMCO's reputation. No assurance can be given that the anticipated benefits from
the Merger will be realized or that AIMCO will be able to integrate the two
businesses successfully. Failure of AIMCO to integrate the two businesses
successfully could have a material adverse effect on AIMCO's results of
operations. Substantial growth in AIMCO's portfolio as a result of recent and
possible future acquisitions of businesses may involve similar burdens and
risks.
RISK OF TERMINATION OF OXFORD CONTRACTS
Pursuant to contracts among certain entities and individuals associated with
Oxford Realty Financial Group, Inc. and Oxford Holdings Corporation
(collectively "Oxford") and NHP, NHP manages a portfolio of properties (the
"Oxford Properties") controlled by Oxford. The management contracts for
individual properties (the "Oxford Management Contracts") have terms of one year
and provide for management fees ranging from 3.25% to 9% of each property's
rental revenue. Unless 30 days' notice of non-renewal is provided by Oxford to
NHP, the Oxford Management Contracts automatically renew for additional one year
periods. Such contracts are terminable for failure by NHP to meet certain
financial performance standards with respect to the management of individual
properties, and for cause in certain circumstances, including material breaches
of NHP's obligations under the contracts. However, NHP possesses voting rights
with respect to certain Oxford entities that NHP believes prevent Oxford from
terminating or failing to renew the Oxford Management Contracts without NHP's
consent, except in the event of a sale of the managed Oxford Property. In
connection with the NHP Acquisition, Oxford has indicated that it believes it
has the right not to renew the Oxford Management Contracts without NHP's
consent. AIMCO and NHP believe these assertions are without merit. Although
AIMCO and NHP intend to vigorously oppose any attempt by Oxford to terminate or
not to renew the Oxford Management Contracts, there can be no assurance that
Oxford will not prevail in any such attempt.
NHP received $12.9 million of management fees from management of the Oxford
Properties in 1996 and $9.6 million in the first nine months of 1997. The Stock
Purchase Agreement provides that Demeter and Capricorn will indemnify AIMCO
against certain losses in excess of $3 million arising from the termination,
cancellation or non-renewal of any property management contract of NHP,
including losses related to the Oxford Management Contracts. This
indemnification obligation is subject to a number of exceptions and
qualifications. Termination of the Oxford Management Contracts could have a
material adverse effect on NHP's results of operations.
RISKS RELATING TO MAINTENANCE OF AIMCO'S REIT STATUS
In order for AIMCO to qualify for taxation as a REIT, among other things,
the value of securities of any issuer (other than a wholly owned subsidiary)
held by AIMCO generally may not exceed 5% of AIMCO's gross asset value
(determined at the close of each quarter of its taxable year). In order to
comply with such requirements in connection with the NHP Stock Purchase, ANHI
initially acquired the shares of NHP Common Stock and AIMCO acquired the ANHI
Preferred Stock representing a 95% economic interest in ANHI. All of the
outstanding common stock of ANHI, representing a 5% economic interest, is owned
by certain officers and directors of AIMCO. AIMCO believes that the value of its
interest in ANHI was never more than 5% of AIMCO's gross asset value at any
applicable measurement date. ANHI currently holds 779,073 shares of NHP Common
Stock. AIMCO has purchased an aggregate of 5,717,000 shares of NHP Common Stock
from ANHI with a portion of the net proceeds from sales of shares of AIMCO
Common Stock. See "Business of AIMCO--Recent Financings."
RISKS TO NHP STOCKHOLDERS RESULTING FROM FIXED EXCHANGE RATIO
The number of shares of AIMCO Common Stock that will be received by NHP
stockholders in the Merger for each share of NHP Common Stock is equal to a
fixed exchange ratio of 0.74766 shares of AIMCO Common Stock in the case of the
Stock Consideration (or 0.37383 shares in the case of the Mixed Consideration),
irrespective of the market price for AIMCO Common Stock at the Effective Time.
The
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value realized by NHP stockholders in the Merger will, accordingly, depend upon
the market price of AIMCO Common Stock, which is subject to fluctuation. In
particular, there can be no assurance that the value of the Merger Consideration
will be equal to or greater than its value at the time of the execution of the
Merger Agreement or at the time of the mailing of this Joint Proxy
Statement/Prospectus. NHP stockholders are urged to obtain current market
quotations for the AIMCO Common Stock. See "Summary--Comparative Stock Prices
and Dividends" and "Summary--Fluctuations in Market Price."
RISKS TO NHP STOCKHOLDERS RESULTING FROM DIFFERENCES IN STOCKHOLDER RIGHTS
As a result of the Merger, NHP stockholders will no longer own shares of NHP
and will become stockholders of AIMCO. While NHP is a Delaware corporation,
AIMCO is a Maryland corporation, and the different laws governing the two
corporations, together with differences in the provisions of the respective
corporate charters of AIMCO and NHP, result in differences in rights of
stockholders of the two corporations. As a result of these differences, the
rights of AIMCO stockholders may in some cases be considered less favorable than
the rights of NHP stockholders. In particular, the AIMCO Charter restricts the
ownership of shares by any person of AIMCO Common Stock to 8.7% of the issued
and outstanding AIMCO Common Stock, subject to certain exceptions and conditions
described under "Description of AIMCO's Capital Stock--Restrictions on
Transfer." In addition, stockholder action may be taken by written consent of
NHP stockholders having not less than the minimum number of votes that would be
necessary to take such action at a meeting at which all shares were present and
voted, whereas stockholder action may be taken by written consent of AIMCO
stockholders only if holders of all issued and outstanding shares entitled to
vote on the matter consent. See "Comparative Rights of Stockholders of AIMCO and
NHP--Action by Written Consent of Stockholders." Finally, pursuant to the
provisions of applicable Maryland law, the approval by affirmative vote of
two-thirds of all the votes entitled to be cast on the matter is required for
mergers, consolidations, share exchanges, and any transfers of all or
substantially all of the assets of AIMCO, whereas such actions generally require
the approval of the holders of only a majority of the issued and outstanding
shares of NHP. Under Delaware law, certain business combinations with interested
stockholders are prohibited for three years from the date such stockholder
became an interested stockholder, subject to certain exemptions, whereas under
Maryland law, similar business combinations with interested stockholders are
prohibited for five years from the date such stockholder became an interested
stockholder, subject to certain exemptions, and after such five year period,
certain business combinations with interested stockholders are prohibited unless
certain "fair price" provisions are complied with or the proposed business
combination is approved by certain supermajority stockholder votes. See
"Comparative Rights of Stockholders of AIMCO and NHP-- Business Combinations."
These differences in the rights of stockholders may make it more difficult for a
person interested in acquiring or engaging in a business combination with AIMCO
to complete such a transaction and may discourage offers for such a transaction,
and may also adversely affect the ability of AIMCO stockholders to take action
that may be in their interests.
RISKS RELATING TO AIMCO'S AND NHP'S BUSINESSES
An investment in AIMCO Common Stock following the Merger will involve
various risks associated with AIMCO's and NHP's businesses. In addition to
general investment risks and those factors set forth elsewhere in this Joint
Proxy Statement/Prospectus, NHP stockholders and AIMCO stockholders should
consider the following material risk factors related to an investment in AIMCO:
CONFLICTS OF INTEREST; TRANSACTIONS WITH AFFILIATES
AIMCO and certain of its officers and/or directors have entered into, and
may in the future enter into, certain types of transactions that may result in
conflicts of interest between AIMCO and such officers and/ or directors. These
type of transactions include: the acquisition by AIMCO of property or assets
from, or the sale by AIMCO of property or assets to, such officers and/or
directors; making loans to or borrowing
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from such officers and/or directors, including in connection with the purchase
of AIMCO Common Stock or the purchase of interests in the Unconsolidated
Partnership and ANHI and the other Unconsolidated Subsidiaries; investments by
AIMCO in partnerships or other entities (such as the Unconsolidated Partnership
and ANHI and the other Unconsolidated Subsidiaries) in which such officers
and/or directors have a controlling equity interest or other form of ownership
interest; and the purchase or sale of real estate or other assets by such
officers and/or directors, where the acquisition of such real estate or assets
is also a corporate opportunity for AIMCO. AIMCO has adopted certain policies
designed to minimize or eliminate conflicts of interest between AIMCO and its
officers and/or directors. Without the approval of a majority of the
disinterested directors, AIMCO will not acquire from or sell to any director,
officer or employee of AIMCO or any entity in which such director, officer or
employee owns more than a 1% interest, or acquire from or sell to any affiliate
of any of the foregoing persons, any assets or other property of AIMCO, make any
loan to or borrow from any of the foregoing persons, or engage in any material
transaction with the foregoing persons. In addition, AIMCO has entered into
employment agreements with Messrs. Considine, Kompaniez and Ira which include
provisions intended to eliminate or minimize potential conflicts of interest,
and which provide that those persons will be prohibited from engaging directly
or indirectly in the acquisition, development, operation or management of other
multifamily apartment properties outside of AIMCO, except with respect to
certain investments currently held by such persons, as to which investments
those persons have committed to an orderly liquidation. There can be no
assurance, however, that these policies always will be successful in eliminating
the influence of such conflicts, and if they are not successful, decisions could
be made that might fail to reflect fully the interests of AIMCO's stockholders
as a whole. Furthermore, such policies are subject to change without the
approval of stockholders of AIMCO.
AIMCO presently manages the Managed Properties through PAMS Inc. and PAMS
LP. In order to satisfy certain REIT requirements, the ownership of PAMS Inc.
consists of the Operating Partnership holding non-voting preferred stock that
represents a 95% economic interest, and certain officers and/or directors of
AIMCO holding, directly or indirectly, all of the voting common stock,
representing a 5% economic interest. In addition, PAMS LP provides property
management services with respect to certain Managed Properties in which certain
officers and/or directors of AIMCO have separate ownership interests. The fees
for these services have been negotiated on an individual basis and typically
range from 3% to 6% of gross receipts for the particular property. Although
these arrangements were not negotiated on an arm's-length basis, AIMCO believes,
based on comparisons to the fees charged by other real estate companies and by
PAMS LP with respect to unaffiliated Managed Properties in comparable locations,
that the terms of such arrangements are fair to AIMCO.
In order to satisfy certain requirements of the Code with respect to AIMCO's
continued qualification as a REIT, ANHI, which is the holder of 779,073 shares
of NHP Common Stock, representing approximately 6.0% of the shares outstanding
as of October 30, 1997, has an ownership structure that is similar to that of
PAMS Inc. described above, with Messrs. Considine and Kompaniez holding all the
voting common stock that represents a 5% economic interest in ANHI. At the time
ANHI acquired 6,496,073 shares of NHP Common Stock in the NHP Stock Purchase,
Messrs. Considine and Kompaniez acquired their interest in ANHI for promissory
notes in an aggregate amount of $3.2 million payable to ANHI. In August and
September 1997 ANHI sold 5,717,000 shares of NHP Common Stock to AIMCO for
$114.3 million. Such purchases by AIMCO, and ANHI's prior acquisition of NHP
Common Stock from AIMCO, were found by the AIMCO Board to be fair to and in the
best interest of AIMCO and were approved by the AIMCO Board in accordance with
AIMCO's conflict of interest policies. Messrs. Considine and Kompaniez continue
to hold a 5% controlling interest in ANHI, which continues to own 779,073 shares
of NHP Common Stock and will receive Mixed Consideration for such shares. ANHI
distributed $38.0 million of the proceeds from such sale of NHP Common Stock to
AIMCO and $2.0 million of such proceeds to Messrs. Considine and Kompaniez, who
used such proceeds to repay in part their outstanding promissory notes payable
by them to ANHI in an aggregate principal amount of $3.2 million, which they
incurred to acquire their interests in ANHI.
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Upon completion of the NHP Real Estate Reorganization, the vast majority of
the assets of the NHP Real Estate Companies will be owned by the Unconsolidated
Partnership, in which certain officers and/or directors of AIMCO will have a
controlling interest (with a 1% economic interest). Upon consummation of the
Merger and the NHP Reorganization, the operations of NHP will be conducted by
ANHI and/or other Unconsolidated Subsidiaries, in which certain officers and/or
directors of AIMCO will have a controlling ownership interest (with an economic
interest of between 1% and 5%). See "Federal Income Tax Consequences Related to
AIMCO--Taxation of AIMCO." As a result of the ownership interest held by certain
officers and/or directors of AIMCO in PAMS Inc., the Unconsolidated Partnership,
ANHI and the other Unconsolidated Subsidiaries, certain conflicts of interest
may arise with respect to such persons in transactions involving such entities
or the assets held by such entities. For example, in order to acquire an
interest in such entities, such persons are required to contribute assets to
such entities in exchange therefor. Although AIMCO believes that such
contributions, and any additional contributions that have been made to maintain
a particular percentage interest, have been made on terms that were fair to
AIMCO and such entities, such transactions were not made at arms'-length, AIMCO
in some instances did not obtain independent valuations of such entities and
there can be no assurance that contributions by such individuals to such
entities were made in amounts which reflected the market value of the associated
economic interest. In addition, because AIMCO does not have voting control over
PAMS Inc., the Unconsolidated Partnership, ANHI or the other Unconsolidated
Subsidiaries, AIMCO may not be able to cause such entities to take actions that
would be in the interest of AIMCO and its stockholders or prevent other actions
that are not in the interest of AIMCO and its stockholders.
In the event the Merger is not consummated, AIMCO and one or more of its
subsidiaries will continue to own approximately 53% of the issued and
outstanding NHP Common Stock. As a result, AIMCO and such subsidiary or
subsidiaries, as long as they own such shares, will have the ability to
determine the outcome of corporate actions of NHP, including the election of all
the directors of NHP, requiring stockholder approval (other than any
transactions requiring approval pursuant to Section 203 of the DGCL). This
concentration of ownership may have the effect of delaying or preventing a
change of control of NHP and may impair the liquidity of the NHP Common Stock or
otherwise impair the market value of such stock. As a result, there can be no
assurance that the price at which the NHP Common Stock trades will not be less
than the value of the Merger Consideration and the Rights Consideration, and
such trading price may be less than the price at which the NHP Common Stock
traded prior to the public announcement of the NHP Stock Purchase and the
Merger.
In addition, even if the Merger is not consummated, AIMCO or the
Unconsolidated Partnership will continue to own the NHP Real Estate Companies.
NHP is substantially dependent on revenue from the management of the NHP
Properties, which are owned or controlled by the NHP Real Estate Companies. In
1996, NHP derived approximately 67% of its property management revenue from fees
for services provided to the NHP Properties. Although the Master Property
Management Agreement limits the ability of the NHP Real Estate Companies to
terminate the contracts under which NHP provides such management services, the
interests of AIMCO, as owner of the NHP Real Estate Companies, may differ from
the interests of NHP, and there can be no assurance that such contracts will not
be terminated. Termination of such contracts could have a material adverse
effect on NHP's results of operations.
SIGNIFICANT INDEBTEDNESS; REFINANCING RISKS
AIMCO and its subsidiaries, and partnerships in which a subsidiary of AIMCO
is a general partner, have significant amounts of debt outstanding and,
accordingly, are subject to the risks normally associated with debt financing,
including the risk that its cash flow from operations will be insufficient to
make required payments of principal and interest, the risk that existing
indebtedness, including secured indebtedness, may not be refinanced or that the
terms of any refinancing will not be as favorable as the terms of existing
indebtedness. As of September 30, 1997, 94% of AIMCO's Owned Properties, and 80%
of its total assets, were encumbered by debt, and AIMCO had total outstanding
indebtedness of $661.7 million which
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was secured by Owned Properties and other assets of AIMCO, including $74.0
million of outstanding borrowings under AIMCO's credit facility (the "Credit
Facility") with Bank of America National Trust and Savings Association ("Bank of
America"). The Credit Facility restricts AIMCO's ability to effect certain
mergers, business consolidations and asset sales, imposes minimum net worth
requirements, and requires AIMCO to maintain a ratio of debt to gross asset
value of no more than 0.6 to 1, an interest coverage ratio of at least 2.0 to 1
and a debt service coverage ratio of at least 1.8 to 1. Additionally, the Credit
Facility limits AIMCO from distributing more than 80% of FFO to AIMCO
stockholders. Failure by AIMCO to make payments exceeding $2.0 million under any
other debt agreement (except intracompany agreements), failure to perform or
observe covenants or conditions under an intracompany subordination agreement
entered into in connection with the Credit Facility and events of default
resulting in acceleration under AIMCO's other credit agreements, among other
events, are considered defaults under the Credit Facility. General Motors
Acceptance Corporation has made 59 loans (the "GMAC Loans"), with an aggregate
outstanding principal balance of $301.9 million at September 30, 1997, to 29
property owning partnerships of AIMCO, each of which is secured by the
underlying Owned Property of such partnership. Each GMAC Loan is
cross-collateralized with certain other GMAC Loans. Other than the GMAC Loans,
none of AIMCO's debt is subject to cross-collateralization provisions. The AIMCO
Charter does not limit the amount of indebtedness which may be incurred by AIMCO
and its subsidiaries. AIMCO's management generally follows the strategies set
forth under "Business of AIMCO--Operating and Financial Strategies--Debt
Financing," in connection with incurrences of additional indebtedness; however,
such strategies are not binding on management and are subject to change from
time to time. As of September 30, 1997, ANHI had outstanding indebtedness
totaling $134.0 million, consisting of $62.9 million of unsecured indebtedness
(including $57.0 million outstanding under NHP's credit facility) and $71.0
million of indebtedness secured by real estate wholly owned by NHP.
If AIMCO or NHP does not have sufficient funds to repay its indebtedness at
maturity, it may be necessary to refinance such indebtedness through additional
debt financing, private or public offerings of debt securities or additional
equity offerings. If, at the time of any such refinancing, prevailing interest
rates or other factors result in higher interest rates on refinancings,
increases in interest expense could adversely affect cash flow. If AIMCO or NHP
is unable to refinance its indebtedness on acceptable terms, it might be forced
to dispose of properties or other assets on disadvantageous terms, potentially
resulting in losses and adverse effects on cash flow from operating activities.
If AIMCO is unable to make required payments of principal and interest on
indebtedness secured by Owned Properties, such properties could be foreclosed
upon by the lender with a consequent loss of income and asset value to AIMCO. In
addition, if the Merger is not completed, requirements of the Code with respect
to AIMCO's continued qualification as a REIT may limit AIMCO's flexibility in
refinancing certain indebtedness.
RISK OF RISING INTEREST RATES
Certain of AIMCO's, ANHI's and NHP's borrowings, including the Credit
Facility, bear interest at a variable rate. In addition, as of September 30,
1997, AIMCO (excluding NHP) had approximately $112.5 million of other
indebtedness that bears interest at a variable rate. As of September 30, 1997,
approximately 83% of AIMCO's total consolidated indebtedness was subject to
fixed interest rates and 17% was subject to variable interest rates. Although,
as described below, AIMCO has certain hedging arrangements in place, increases
in interest rates could increase AIMCO's interest expense and adversely affect
cash flow. See "--Risks Related to Interest Rate Hedging Arrangements." As of
September 30, 1997, NHP had approximately $57.0 million of variable rate
indebtedness, representing approximately 43% of NHP's outstanding indebtedness.
No hedging arrangements are in place with respect to NHP's variable rate
indebtedness, although NHP has purchased a nominal interest rate cap agreement
protecting it from interest rate fluctuations above 13.25%. Increases in
interest rates would increase NHP's interest expense and adversely affect NHP's
cash flow.
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RISKS RELATED TO INTEREST RATE HEDGING ARRANGEMENTS
AIMCO from time to time enters into agreements to reduce the risks
associated with increases in short term interest rates. Although these
agreements provide AIMCO with some protection against rising interest rates,
these agreements also reduce the benefits to AIMCO when interest rates decline.
In March 1997, AIMCO entered into an interest rate hedging agreement (the
"Hedge") with an investment banking company, in anticipation of refinancing
certain indebtedness. The Hedge, which was extended to mature on December 3,
1997, has a notional principal amount of $100 million and fixes the interest
rate of the anticipated refinancing at 7.019%. In addition, in September 1997,
AIMCO entered into a second interest rate agreement (the "September Hedge"),
with the same investment banking company, having a notional principal amount of
$75 million, in anticipation of refinancing certain indebtedness. The September
Hedge matures on December 4, 1997, and fixes the interest rate of the
anticipated refinancing at 6.179%. Based on the fair value of the Hedge and
September Hedge at September 30, 1997, AIMCO has unrealized losses of
approximately $7.9 million. These losses, when amortized, will result in
effective interest rates of 7.8% and 7.0%, respectively, over the life of the
refinanced debt. There can be no assurance that the above described indebtedness
will be refinanced or that AIMCO will be able to enter into other hedging
arrangements to replace the Hedge or the September Hedge.
Interest rate hedging arrangements, including the Hedge and the September
Hedge, may expose AIMCO to certain risks. Interest rate movements during the
term of interest rate hedging arrangements may result in a gain or loss on
AIMCO's investment in the hedging arrangement. In addition, if a hedging
arrangement is not indexed to the same rate as the indebtedness that is hedged,
AIMCO may be exposed to losses to the extent that the rate governing the
indebtedness and the rate governing the hedging arrangement change independently
of each other. Finally, nonperformance by the other party to the hedging
arrangement may result in credit risks to AIMCO. In order to minimize
counterparty credit risk, AIMCO's policy is to enter into hedging arrangements
only with large financial institutions that maintain an investment grade credit
rating.
RISKS RELATED TO INVESTMENT IN AND MANAGEMENT OF REAL ESTATE
GENERAL. Real property investments are subject to varying degrees of risk.
The yields available from equity investments in real estate depend on the amount
of income generated and expenses incurred. AIMCO's income from its Owned
Properties and Equity Properties may be adversely affected by the general
economic climate, local conditions such as oversupply of apartments or a
reduction in demand for apartments in the area, the attractiveness of the
properties to tenants, competition from other available apartments, the ability
of AIMCO to provide adequate maintenance and insurance, and increases in
operating costs (including real estate taxes). AIMCO's income from its Owned
Properties and Equity Properties would also be adversely affected if a
significant number of tenants were unable to meet their rent payment obligations
when due or if apartments could not be rented on favorable terms. Certain
significant expenditures associated with real property investments (such as debt
service, real estate taxes and maintenance costs) generally are not reduced when
circumstances cause a reduction in income from the investments. In addition,
income from properties and real estate values are also affected by such factors
as applicable laws, including tax laws, interest rate levels and the
availability of financing. If AIMCO's Owned Properties and Equity Properties do
not generate income sufficient to meet operating expenses, including debt
service and capital expenditures, AIMCO's income and its ability to make
distributions to holders of AIMCO Common Stock will be adversely affected. Many
of the factors that could adversely affect AIMCO's income from its Owned
Properties and Equity Properties could also adversely affect AIMCO's income from
its Managed Properties by reducing gross receipts for such properties.
ILLIQUIDITY OF REAL ESTATE. Investments in real estate or partnerships
which own real estate may be illiquid. As a result, AIMCO may be unable to vary
its portfolio promptly in response to changes in
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economic or other conditions. In addition, the Code limits the ability of AIMCO,
as a REIT, to sell properties held for fewer than four years.
RISKS OF ACQUISITION AND DEVELOPMENT ACTIVITIES. AIMCO has engaged in, and
intends to continue to engage in, the selective acquisition, development and
expansion of multifamily apartment properties. In the ordinary course of
business, AIMCO is engaged in discussions and negotiations regarding the
acquisition of apartment properties or interests in apartment properties. AIMCO
frequently enters into contracts and binding or nonbinding letters of intent
with respect to the purchase of properties. These contracts are typically
subject to certain conditions and permit AIMCO to terminate such contracts in
its sole and absolute discretion if it is not satisfied with the results of its
due diligence investigation of the properties. AIMCO believes that such
contracts essentially result in the creation of an option on the subject
properties and give AIMCO greater flexibility in seeking to acquire properties.
As of September 30, 1997, AIMCO had under letter of intent or contract
(exclusive of two acquisitions closed in October 1997) an aggregate of 26
multi-family apartment properties with a maximum aggregate purchase price of
$315 million, which, in some cases, may be paid in the form of assumption of
existing debt. All such contracts are subject to termination by AIMCO as
described above. No assurance can be given that any of these possible
acquisitions will be completed or, if completed, that they will be accretive to
earnings on a per share basis. In addition to general investment risks
associated with any new investment, acquisitions entail risks that such
investments will fail to perform in accordance with expectations, including
projected occupancy and rental rates, management fees and the costs of property
improvements, along with integration-related risks. Risks associated with
redevelopment and expansion of properties include the risks that development
opportunities may be abandoned; that construction costs of a property may exceed
original estimates, possibly making the property uneconomical; that occupancy
rates and rents at a newly completed property may not be sufficient to make the
property profitable; that construction and permanent financing may not be
available on favorable terms; and that construction and lease-up may not be
completed on schedule, resulting in increased debt service expense and
construction costs. Development activities are also subject to risks relating to
any inability to obtain, or delays in obtaining, necessary zoning, land-use,
building, occupancy, and other governmental permits and authorizations. See also
"-- Risks Relating to the NHP Acquisition."
AIMCO also has engaged in, and intends to continue to engage in the
selective acquisition of, or investment in, companies that own or manage
multifamily apartment properties or own general or limited partnership or other
interests therein, including tender offers for limited partnership interests.
Risks associated with AIMCO's past and future acquisitions of general
partnership interests, and tender offers for outstanding limited partnership
interests, include the risks that the general partner will be subject to
allegations (including legal actions) of, or will be otherwise liable for,
breaches of fiduciary duty to the limited partners of such partnership and that
the assets of the general partner may be subject to claims by creditors of the
partnership if the partnership becomes insolvent. See "--Risks Relating to
English Litigation."
OPERATING RISKS. The AIMCO Properties and the properties managed by NHP are
subject to operating risks common to multifamily apartment properties in
general. These risks may adversely affect AIMCO's and NHP's cash flow from
operations. For example, increases in unemployment in the areas in which the
AIMCO Properties or the properties managed by NHP are located may adversely
affect multifamily apartment occupancy or rental rates and it may not be
possible to offset increases in operating costs due to inflation and other
factors by increased rents. Local rental market characteristics also limit the
extent to which rents may be increased without decreasing occupancy rates.
COMPETITION. There are numerous housing alternatives that compete with the
AIMCO Properties, including the properties managed by NHP, in attracting
residents. Such properties compete directly with other multifamily rental
apartments and single family homes that are available for rent in the markets in
which such properties are located. Such properties also compete for residents
with new and existing homes
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and condominiums. The ability of AIMCO and NHP to lease apartment units and the
level of rents charged is determined in large part by the number of competitive
properties in the local market. Numerous real estate companies compete with
AIMCO in each of its market areas in acquiring, developing and managing
multifamily apartment properties and seeking tenants to occupy their properties
and AIMCO's market share is small in each of its market areas. In addition,
numerous property management companies compete with AIMCO and NHP in the markets
where the Managed Properties, including the properties managed by NHP, are
located.
CHANGE IN LAWS. Changes in laws increasing the potential liability for
environmental conditions existing on properties or increasing the restrictions
on discharges or other conditions, as well as changes in laws affecting
development, construction and safety requirements, may result in significant
unanticipated expenditures, which would adversely affect AIMCO's and NHP's cash
flow from operating activities. In addition, future enactment of rent control or
rent stabilization laws or other laws regulating multifamily housing may reduce,
or limit the ability of AIMCO to increase, rental revenue or increase operating
costs in particular markets.
POSSIBLE ENVIRONMENTAL LIABILITIES. Under Federal, state and local
environmental laws and regulations, a current or previous owner or operator of
real property may be required to investigate and clean up
a release of hazardous substances at such property, and may, under such laws and
common law, be held liable for property damage and other costs incurred by third
parties in connection with such releases. The liability under certain of these
laws has been interpreted to be joint and several unless the harm is divisible
or there is a reasonable basis for allocation of responsibility. The failure to
remediate the property properly may also adversely affect the owner's ability to
sell or rent the property or to borrow using the property as collateral. In
connection with its ownership, operation or management of the AIMCO Properties
or the properties managed by NHP, AIMCO or NHP, as the case may be, could be
potentially liable for environmental liabilities or costs associated with its
properties or properties it may in the future acquire or manage.
Certain Federal, state and local laws and regulations govern the removal,
encapsulation or disturbance of asbestos-containing materials ("ACMs") when
those materials are in poor condition or in the event of building remodeling,
renovation or demolition, impose certain worker protection and notification
requirements and govern emissions of and exposure to asbestos fibers in the air.
These laws also impose liability for a release of ACMs and may enable third
parties to seek recovery from owners or operators of real properties for
personal injury associated with ACMs. In connection with the ownership,
operation or management of properties, AIMCO or NHP could be potentially liable
for those costs. There are ACMs at certain of the Owned Properties, and there
may be ACMs at certain of the other AIMCO Properties or the properties managed
by NHP. AIMCO has developed and implemented operations and maintenance programs,
as appropriate, that establish operating procedures with respect to the ACMs at
most of the Owned Properties, and intends to develop and implement, as
appropriate, such programs at AIMCO Properties that do not have such programs.
Certain of the Owned Properties, and some of the other AIMCO Properties, are
located on or near properties that contain or have contained underground storage
tanks or on which activities have occurred which could have released hazardous
substances into the soil or groundwater. There can be no assurances that such
hazardous substances have not been released or have not migrated, or in the
future will not be released or will not migrate onto the AIMCO Properties or the
properties managed by NHP. Such hazardous substances have been released at
certain Owned Properties and, in at least one case, have migrated from an
off-site location onto AIMCO's property. In addition, AIMCO's Montecito property
in Austin, Texas, is located adjacent to, and may be partially on, land that was
used as a landfill. Low levels of methane and other landfill gas have been
detected at Montecito. The City of Austin (the "City"), the former landfill
operator, has assumed responsibility for conducting all investigation and
remedial activities to date associated with the methane and other landfill gas.
The remediation of the landfill gas is now substantially complete, and the Texas
Natural Resources Conservation Commission ("TNRCC") has
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preliminarily approved the methane gas remediation efforts. Final approval of
the site and the remediation process is contingent upon the results of continued
methane gas monitors to confirm the effectiveness of the remediation efforts.
Should further actionable levels of methane gas be detected, a proposed
contingency plan of passive methane gas venting may be implemented by the City.
The City has also conducted testing on AIMCO's Montecito property to determine
whether, and to what extent, groundwater has been impacted. Based on test
reports received to date by AIMCO, the groundwater does not appear to be
contaminated at actionable levels. AIMCO has not incurred and does not expect to
incur liability for the landfill investigation and remediation; however, AIMCO
has relocated some of its tenants and has installed a venting system according
to the TNRCC's specifications under the building slabs, in connection with
AIMCO's present raising of four of its buildings in order to install stabilizing
piers thereunder, at an estimated total cost of approximately $573,000, which is
primarily the cost for the restabilization. AIMCO anticipates that the
restabilization will be completed in January 1998. The City will be responsible
for monitoring the conditions at the Montecito property.
All of the Owned Properties were subject to Phase I or similar environmental
audits by independent environmental consultants prior to acquisition. The audits
did not reveal, nor is AIMCO aware of, any environmental liability relating to
such properties that AIMCO believes would have material adverse effect on
AIMCO's business, assets or results of operations. However, such audits involve
a number of judgments and it is possible that such audits did not reveal all
environmental liabilities or that there are material environmental liabilities
of which AIMCO is unaware. In addition, the Managed Properties may not have
been, and certain of the NHP Properties have not been, subject to Phase I or
similar environmental audits by independent environmental consultants. While
AIMCO is not aware of any environmental liability that it believes would have a
material adverse effect on its business, financial condition or results of
operations relating to either the Managed Properties or the NHP Properties for
which audits are not available, there can be no assurance that material
environmental liabilities of which AIMCO is unaware do not exist at such
properties.
RESTRICTIONS IMPOSED BY LAWS BENEFITING DISABLED PERSONS. Under the
Americans with Disabilities Act of 1990 (the "ADA"), all places of public
accommodation are required to meet certain Federal requirements related to
access and use by disabled persons. These requirements became effective in 1992.
A number of additional Federal, state and local laws exist which also may
require modifications to the Owned Properties, or restrict certain further
renovations thereof, with respect to access thereto by disabled persons. For
example, the Fair Housing Amendments Act of 1988 (the "FHAA") requires apartment
properties first occupied after March 13, 1990 to be accessible to the
handicapped. Noncompliance with the ADA or the FHAA could result in the
imposition of fines or an award of damages to private litigants and also could
result in an order to correct any non-complying feature, which could result in
substantial capital expenditures. Although management of AIMCO believes that the
Owned Properties are substantially in compliance with present requirements, if
the Owned Properties are not in compliance, AIMCO is likely to incur additional
costs to comply with the ADA and FHAA.
RISKS RELATING TO ENGLISH LITIGATION. In November 1996, AIMCO acquired (the
"English Acquisition") certain partnership interests, real estate and related
assets owned by J.W. English, a Houston, Texas-based real estate syndicator and
developer, and certain affiliated entities (collectively, the "J.W. English
Companies"). In the English Acquisition, AIMCO purchased all of the general and
limited partnership interests owned by the J. W. English Companies in 22 limited
partnerships which act as the general partner to 31 limited partnerships (the
"English Partnerships") that own 22 multifamily apartment properties and other
assets and interests related to the J.W. English Companies, and assumed
management of the properties owned by the English Partnerships. AIMCO made
separate tender offers (the "English Tender Offers") to the limited partners of
25 of the English Partnerships (the "Tender Offer English Partnerships").
In November 1996, purported limited partners of certain of the Tender Offer
English Partnerships filed a purported class action lawsuit against AIMCO and
J.W. English in the U.S. District Court for the
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Northern District of California (the "Federal Action"), alleging, among other
things, that AIMCO conspired with J.W. English to breach his fiduciary duty to
the plaintiffs, and that the offering materials used by AIMCO in connection with
the English Tender Offers contained misleading statements or omissions. The
plaintiffs in the Federal Action have filed a motion to voluntarily dismiss the
Federal Action, without prejudice, in favor of another purported class action.
In May 1997, limited partners of certain of the Tender Offer English
Partnerships and six additional English Partnerships filed two complaints in
Superior Court of the State of California (the "California Actions") against
AIMCO and the J.W. English Companies, alleging, among other things, that the
consideration AIMCO offered in the English Tender Offers was inadequate and
designed to benefit the J.W. English Companies at the expense of the limited
partners, that certain misrepresentations and omissions were made in connection
with the English Tender Offers, that AIMCO receives excessive fees in connection
with its management of the properties owned by the English Partnerships, that
AIMCO continues to refuse to liquidate the English Partnerships and that the
English Acquisition violated the partnership agreements governing the English
Partnerships and constituted a breach of fiduciary duty.
In addition to unspecified compensation and exemplary damages, the
complaints in the California Actions seek an accounting, a constructive trust on
the assets and monies acquired by the English defendants in connection with the
English Acquisition, a court order removing AIMCO from management of the English
Partnerships and/or ordering disposition by AIMCO of the properties and
attorneys fees, expert fees and other costs. AIMCO intends to vigorously defend
itself in connection with these actions. AIMCO believes it is entitled to
indemnity from the J.W. English Companies, subject to certain exceptions.
Failure by AIMCO to prevail in the California Actions or to receive
indemnification could have a material adverse effect on AIMCO's financial
condition and results of operations.
On August 4, 1997 AIMCO filed demurrers to both complaints in the California
Actions. Hearing on the demurrers is scheduled for November 7, 1997.
RISK OF LOSS OF REVENUE DUE TO TERMINATION OR OTHER LOSS OF PROPERTY
MANAGEMENT AGREEMENTS. Both AIMCO and NHP are dependent upon revenue received
for services performed under property management agreements relating to
properties owned by third parties. For the year ended December 31, 1996, AIMCO
and NHP derived approximately 7.1% and 26.8%, respectively, of their gross
revenues from management of properties owned by third parties, excluding, in the
case of NHP, reimbursements from property owners for on-site personnel and
general and administrative costs. Risks associated with the management of
properties owned by third parties include risks that management contracts will
be terminated by the property owner or will be lost in connection with a sale of
the property, contracts may not be renewed upon expiration or may not be renewed
on terms consistent with current terms, and rental revenues upon which
management fees are based will decline as a result of general real estate market
conditions or other factors and result in decreases in management fees. If
significant numbers of contracts are terminated or are not renewed, net income
from fee management operations could be adversely affected. Contracts with
unaffiliated third parties are for terms ranging from 30 days to 5 years, with
most contracts being terminable within one year or less. In general, management
contracts may be terminated or otherwise lost as a result a number of factors,
many of which are beyond the control of AIMCO or NHP, including: (i) disposition
of the property by the owner in the ordinary course or as a result of financial
distress of the property owner; (ii) the property owner's determination that
AIMCO's or NHP's management of the property is unsatisfactory; (iii) willful
misconduct, gross negligence or other conduct by the manager that constitutes
grounds for termination under such contracts; or (iv) with respect to certain
affordable properties, termination of such contracts by HUD or state housing
finance agencies, generally at their discretion.
On July 29, 1997, the NHP Real Estate Companies elected to sell their
interests in 32 multifamily properties (collectively, the "Hall Portfolio") to
other unaffiliated joint venture partners. The sale is subject to the approval
of certain third parties and there is no assurance that the sale will occur. NHP
recognized approximately $1.8 million and $1.3 million in property management
revenues associated with
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management of the Hall Portfolio for the year ended December 31, 1996, and the
nine months ended September 30, 1997, respectively. If the sale occurs, NHP will
no longer provide property management services to the 32 properties which
comprise the Hall Portfolio.
RISKS RELATING TO REGULATION OF AFFORDABLE HOUSING. As of September 30,
1997, NHP's management portfolio included 60,171 affordable units in 474
properties. In addition, the NHP Real Estate Companies own interests in 54,310
affordable units (a substantial majority of which are managed by NHP). A
substantial portion of the affordable properties, and some conventional
properties in which the NHP Real Estate Companies own interests, were built or
acquired by the owners with the assistance of programs administered by HUD that
provide mortgage insurance, favorable financing terms, or rental assistance
payments to the owners. As a condition to the receipt of assistance under these
and other HUD programs, the properties must comply with various HUD
requirements, which typically include limits on rents to amounts approved by
HUD. HUD approval is required before NHP or AIMCO may be appointed as manager of
additional HUD-assisted properties. There can be no assurance that HUD approval
will be received with respect to any particular action for which it is required.
In addition to the effects of HUD regulation on NHP or AIMCO as a manager of
affordable properties, the business of NHP or AIMCO may be indirectly affected
by regulations generally applicable to the entities owning affordable
properties. In particular, HUD limits the rents that may be charged on certain
HUD-assisted properties to approved amounts. If permitted rents on a property
are insufficient to cover costs, a sale of the property may become necessary
which would result in a loss of management fee revenue. As of September 30,
1997, and in addition to the 422 HUD-assisted properties, NHP managed 52
properties that receive assistance from agencies other than HUD or are subject
to regulation by agencies other than HUD. NHP estimates that it receives
approximately 50% of its revenues from affordable units; such revenues comprise
less than 9% of AIMCO's revenues on a pro forma basis.
RISKS RELATED TO HUD ENFORCEMENT AND LIMITED DENIALS. Under its
regulations, HUD has the authority to suspend or deny property owners and
managers from participation in HUD programs within a geographic region or
nationwide for various causes, which causes include imposition of a limited
denial of participation by any other HUD office. In March 1997, HUD announced
its intention to step up enforcement against property owners who violate their
agreements with HUD, and, in July 1997, HUD announced the creation of a new
Department-wide enforcement division. HUD has recently issued limited denials of
participation to NHP as a result of physical inspections and mortgage defaults
at four properties owned by the NHP Real Estate Companies (two of which
properties are managed by NHP). The limited denials of participation, unless
lifted, suspend AIMCO's and NHP's ability to manage or acquire additional
HUD-assisted properties in Florida (until April 4, 1998), western Missouri and
Kansas (until June 5, 1998) and eastern Missouri (until June 24, 1998). In 1996,
NHP received approximately $1.4 million in management revenues from affordable
properties in the affected regions. NHP is in the process of requesting that HUD
lift the denials of participation, but HUD has so far refused to do so, and NHP
cannot determine whether HUD will reverse that decision with respect to any of
the affected regions. Because the limited denials of participation are
prospective, existing HUD agreements are not terminated, so the limited denials
of participation are not expected to result in the loss of management service
revenue from or to otherwise affect properties that AIMCO or NHP currently
manages in the subject regions. If HUD were to disapprove AIMCO or NHP as
property manager for one or more affordable properties, AIMCO's or NHP's ability
to obtain property management revenues from new affordable properties may be
impaired.
HUD monitors the performance of properties with HUD-insured mortgage loans.
HUD also monitors compliance with applicable regulations, and takes performance
and compliance into account in approving management of additional HUD-assisted
properties. In this regard, since July 1988, 29 HUD-assisted properties owned or
managed by NHP Real Estate Companies or NHP have defaulted on non-recourse
HUD-insured mortgage loans. Eight of these 29 properties are currently managed
by NHP. An additional six properties owned or managed by the NHP Real Estate
Companies or NHP have received
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unsatisfactory performance ratings. As a result of the defaults and
unsatisfactory ratings, a national HUD office must review any application by
AIMCO or NHP to act as property manager or owner for additional HUD-assisted
properties. The national HUD office has consistently approved NHP's applications
to manage new properties, and AIMCO received HUD clearance to acquire its
interests in NHP and the NHP Real Estate Companies. AIMCO and NHP each believes
that it enjoys a good working relationship with HUD and that the national office
will continue to apply the clearance process to large management portfolios such
as AIMCO's and NHP's with discretion and flexibility. While there can be no
assurance, AIMCO and NHP each believes that the unsatisfactory reviews and the
mortgage defaults will not have a material impact on each of their results of
operations or financial condition.
In October 1997, NHP received a subpoena from the Inspector General of HUD
requesting documents relating to any arrangement whereby NHP or any of its
affiliates provides or has provided compensation to owners of HUD multifamily
projects in exchange for or in connection with property management of a HUD
project. NHP believes that other owners and managers of HUD projects have
received similar subpoenas. Documents relating to certain of NHP's acquisitions
of property management rights for HUD projects, including its acquisition of
property management rights from Oxford, may be responsive to the subpoena. NHP
intends to comply with the subpoena and believes that its operations are in
compliance, in all material respects, with all laws, rules and regulations
relating to HUD-assisted or HUD-insured properties. Although the Inspector
General has not initiated any action against NHP or AIMCO or, to NHP's or
AIMCO's knowledge, any owner of a HUD property managed by NHP or AIMCO, if any
such action is taken in the future, it could ultimately affect existing
arrangements with respect to HUD projects or otherwise have a material adverse
effect on the results of operations of AIMCO.
RISKS RELATING TO UNCERTAINTY REGARDING STATUS OF FEDERAL SUBSIDIES. NHP
manages approximately 43,800 units (including approximately 37,900 units
included in the NHP Properties) that are subsidized under Section 8 of the
United States Housing Act of 1937, as amended ("Section 8"). These subsidies are
generally provided pursuant to project-based contracts with the owners of the
properties or, with respect to a limited number of units managed by NHP,
pursuant to vouchers received by tenants. On October 27, 1997, the President
signed into law the Multifamily Assisted Housing Reform and Affordability Act of
1997 (the "1997 Housing Act"). Under the 1997 Housing Act, certain properties
assisted under Section 8, with rents above market levels and financed with
HUD-insured mortgage loans, will be restructured by reducing subsidized rents to
market levels, thereby reducing rent subsidies, and lowering required debt
service costs as needed to ensure financial viability at the reduced rents and
rent subsidies. The 1997 Housing Act retains project-based subsidies for most
properties (properties in rental markets with limited supply, properties serving
the elderly and certain other properties). The 1997 Housing Act phases out
project-based subsidies on selected properties serving families not located in
rental markets with limited supply, converting such subsidies to a tenant-based
subsidy. Under a tenant-based system, rent vouchers would be issued to qualified
tenants who then could elect to reside at properties of their choice, provided
such tenants have the financial ability to pay the difference between the
selected properties' monthly rent and the value of the vouchers, which would be
established based on HUD's regulated fair market rent for the relevant
geographical areas. The 1997 Housing Act provides that properties will begin the
restructuring process in Federal fiscal year 1999 (beginning October 1, 1998),
and that HUD will issue final regulations implementing the 1997 Housing Act on
or before October 27, 1998. With respect to Housing Assistance Payments
Contracts ("HAP Contracts") expiring before October 1, 1998, Congress has
elected to renew them for one-year terms, generally at existing rents, so long
as the properties remain in compliance with the HAP Contracts. While NHP does
not expect the provisions of the 1997 Housing Act to result in a significant
number of tenants relocating from properties managed by NHP, there can be no
assurance that the provisions will not significantly affect NHP's management
portfolio. Furthermore, there can be no assurance that other changes in Federal
housing subsidy policy will not occur. Any such changes could have a material
adverse effect on NHP's property management revenues and the NHP Properties.
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DEPENDENCE ON CERTAIN EXECUTIVE OFFICERS
Although each of Messrs. Considine and Kompaniez and Steven D. Ira, officers
and/or directors of AIMCO, has entered into an employment agreement with AIMCO,
the loss of any of their services could have an adverse effect on the operations
of AIMCO.
ADVERSE CONSEQUENCES OF FAILURE TO QUALIFY AS A REIT
Qualification as a REIT involves the application of highly technical and
complex provisions of the Code, for which there are only limited judicial or
administrative interpretations, and the determination of various factual matters
and circumstances not entirely within AIMCO's control. For example, in order to
qualify as a REIT, at least 95% of AIMCO's gross income in any year must be
derived from qualifying sources and AIMCO must make distributions to
stockholders aggregating annually at least 95% of its REIT taxable income
(excluding net capital gains). Although AIMCO believes that it has operated
since July 29, 1994, the date of its initial public offering, in a manner so as
to qualify as a REIT, no assurance can be given that AIMCO is or will remain so
qualified. See "Federal Income Tax Considerations Related to AIMCO." Although
AIMCO is not aware of any pending tax legislation that would adversely affect
AIMCO's ability to operate as a REIT, no assurance can be given that new
legislation, regulations, administrative interpretations or court decisions will
not change the tax laws with respect to qualification as a REIT or the Federal
income tax consequences of such qualification.
In connection with the AIMCO Registration Statement, of which this Joint
Proxy Statement/Prospectus is a part, AIMCO received an opinion of Skadden,
Arps, Slate, Meagher & Flom LLP, tax counsel to AIMCO, concerning the
qualification of AIMCO as a REIT. In rendering this opinion, Skadden, Arps,
Slate, Meagher & Flom LLP relied on certain assumptions and representations by
AIMCO (including the value of the Management Subsidiaries, ANHI and the other
Unconsolidated Subsidiaries and of the Operating Partnership's ownership
interests therein and other items regarding AIMCO's ability to meet the various
requirements for qualification as a REIT) and on opinions of local counsel with
respect to matters of local law. The opinion is expressed based upon facts,
representations and assumptions as of its date, and Skadden, Arps, Slate,
Meagher & Flom LLP has no obligation to advise AIMCO or the holders of AIMCO
Common Stock or NHP Common Stock of any subsequent change in the matters stated,
represented or assumed or any subsequent change in applicable law. No assurance
can be given that AIMCO will meet these requirements in the future, and a legal
opinion is not binding on the Internal Revenue Service (the "IRS").
In connection with the AIMCO Registration Statement, AIMCO also received an
opinion of Skadden, Arps, Slate, Meagher & Flom LLP stating that the
partnerships and limited liability companies in which AIMCO has ownership
interests (the "Subsidiary Partnerships") are properly treated as partnerships
for Federal income tax purposes. The opinion is expressed based upon facts,
representations and assumptions as of its date and, with respect to certain
matters of local law, relies on opinions of local counsel. Skadden, Arps, Slate,
Meagher & Flom LLP is under no obligation to advise AIMCO or the holders of
AIMCO Common Stock or NHP Common Stock of any subsequent change in the matters
stated, represented or assumed or any subsequent change in applicable law. If
the IRS were to challenge successfully the tax status of any of the Subsidiary
Partnerships as partnerships for Federal income tax purposes, such Subsidiary
Partnerships would be treated as associations taxable as corporations. As a
consequence, the character of AIMCO's assets and items of gross income would
change and thereby preclude AIMCO from qualifying as a REIT. In addition, the
imposition of a corporate tax on the Subsidiary Partnerships would reduce the
amounts that the Subsidiary Partnerships could distribute to the Operating
Partnership and AIMCO, and that AIMCO could then distribute to the holders of
AIMCO Common Stock. See "Federal Income Tax Considerations Related to AIMCO."
If, in any taxable year, AIMCO fails to qualify as a REIT, AIMCO would not
be allowed a deduction for dividends to stockholders in computing taxable income
and would be subject to Federal income tax on its taxable income at corporate
rates. As a result of the additional tax liability, AIMCO might need to
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borrow funds or liquidate certain investments on terms that may be
disadvantageous to AIMCO in order to pay the applicable tax and AIMCO would not
be compelled to make distributions under the Code. Unless entitled to relief
under certain statutory provisions, AIMCO would also be disqualified from
treatment as a REIT for the four taxable years following the year during which
qualification is lost. Although AIMCO currently intends to operate in a manner
designed to qualify as a REIT, it is possible that future economic, market,
legal, tax or other considerations may cause AIMCO to fail to qualify as a REIT
or may cause the Board of Directors of AIMCO to revoke the REIT election. See
"--Significant Indebtedness; Refinancing Risks," "--Real Estate Risks," and
"Federal Income Tax Considerations Related to AIMCO."
Certain requirements for REIT qualification may in the future limit AIMCO's
ability to conduct or increase the property management and asset management
operations of the Management Subsidiaries, ANHI and NHP following the Merger
without jeopardizing AIMCO's qualification as a REIT. See "Federal Income Tax
Considerations Related to AIMCO."
In addition, if AIMCO fails to qualify as a REIT, the agreement pursuant to
which AIMCO issued its Class B Cumulative Preferred Stock, par value $.01 per
share (the "AIMCO Class B Preferred Stock"), provides that the original
purchaser may require AIMCO to repurchase such investor's AIMCO Class B
Preferred Stock, in whole or in part, at a price of $105 per share, plus accrued
and unpaid dividends to the date of repurchase. Such investor acquired and
currently owns 750,000 shares of AIMCO Class B Preferred Stock.
SHARES AVAILABLE FOR FUTURE SALE
Consummation of the Merger will increase the amount of outstanding shares of
AIMCO Common Stock by between approximately 2.6 million shares and 4.8 million
shares (or approximately 7.2% to 13.6%) depending upon the type of Merger
Consideration elected by NHP stockholders (including 0.3 million shares issuable
to ANHI, which will elect Mixed Consideration), and will increase the number of
shares of AIMCO Common Stock issuable upon exercise of options by approximately
0.6 million shares. As a result of the NHP Stock Purchase, AIMCO issued
approximately 2.2 million shares of AIMCO Common Stock to Demeter and the
Capricorn Sellers, which may be sold pursuant to a registration statement that
AIMCO is required to use its best efforts to cause to become effective within 10
days after the Effective Time. In addition, as of September 30, 1997, there were
outstanding options and warrants to purchase AIMCO Common Stock, and shares of
AIMCO Class B Preferred Stock and AIMCO Class B Common Stock convertible into
AIMCO Common Stock, that, if exercised or converted, would result in the
issuance of approximately 3.7 million shares of AIMCO Common Stock. As of
September 30, 1997, there were approximately 4.9 million OP Units outstanding
which upon tender for redemption by the holders, may be acquired by AIMCO in
exchange for an equal number of shares of AIMCO Common Stock. All of the shares
of AIMCO Common Stock issued to NHP stockholders as Merger Consideration will be
immediately available for sale in the public markets pursuant to the AIMCO
Registration Statement, of which this Joint Proxy Statement/Prospectus is a
part, and the other shares of AIMCO Common Stock described above will be
available for sale in the public markets from time to time pursuant to
exemptions from registration or upon registration. In addition, since receipt of
the Merger Consideration will cause NHP stockholders to recognize capital gain
or loss, NHP stockholders (particularly those stockholders who elect Stock
Consideration) may sell their shares of AIMCO Common Stock to pay any taxes due
upon receipt of the Merger Consideration. Sales of substantial amounts of shares
of AIMCO Common Stock, or the perception that such sales could occur, could
adversely affect the prevailing market price for shares of AIMCO Common Stock.
No prediction can be made, however, as to the effect, if any, of future sales of
such shares, or the availability of such shares for future sale, on the market
price of AIMCO Common Stock prevailing from time to time.
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INFORMATION CONCERNING THE AIMCO SPECIAL MEETING
PURPOSE, TIME AND PLACE
This Joint Proxy Statement/Prospectus is being furnished to AIMCO
stockholders in connection with the solicitation of proxies by the AIMCO Board
from AIMCO stockholders for use at the AIMCO Special Meeting to be held on
December 8, 1997, at 10:00 a.m., local time, at the principal executive offices
of AIMCO at 1873 South Bellaire Street, 17th Floor, Denver, Colorado 80222-4348,
and at any adjournments or postponements thereof. At the AIMCO Special Meeting,
AIMCO stockholders will be asked to consider and vote upon the Share Issuance,
and to transact such other business as may properly come before the AIMCO
Special Meeting or any adjournment or postponement thereof.
RECORD DATE; QUORUM; VOTE REQUIRED
The AIMCO Board has fixed the close of business on October 8, 1997, as the
record date for determining the holders of AIMCO Common Stock entitled to notice
of, and to vote at, the AIMCO Special Meeting or any adjournment or postponement
thereof. Only holders of record of AIMCO Common Stock at the close of business
on the AIMCO Record Date will be entitled to notice of, and to vote at, the
AIMCO Special Meeting. At the close of business on the AIMCO Record Date,
28,274,739 shares of AIMCO Common Stock were issued and outstanding and were
held by approximately 300 holders of record. The AIMCO Common Stock constitutes
the only outstanding class of securities of AIMCO entitled to vote on the Share
Issuance, and each share of AIMCO Common Stock is entitled to one vote on each
matter to be acted upon or which may come before the AIMCO Special Meeting.
Votes may be cast at the AIMCO Special Meeting in person or by proxy. See
"--Proxies."
The presence at the AIMCO Special Meeting, either in person or by proxy, of
the holders of a majority of the issued and outstanding shares of AIMCO Common
Stock entitled to vote is necessary to constitute a quorum to transact business
at the AIMCO Special Meeting. If a quorum is not present at the AIMCO Special
Meeting, the stockholders who are present and entitled to vote at the AIMCO
Special Meeting may, by a majority vote of those present, adjourn the AIMCO
Special Meeting from time to time without notice or other announcement until a
quorum is present.
Under the rules of the NYSE, the approval of the Share Issuance requires the
affirmative vote of a majority of the votes cast at a meeting at which the total
votes cast represents over 50% of all shares of AIMCO Common Stock entitled to
vote thereon. Abstentions and broker non-votes (i.e., shares held by brokers in
street name that are not entitled to vote at the AIMCO Special Meeting due to
the absence of specific instructions from the beneficial owners of such shares)
will not be considered votes cast for purposes of determining whether over 50%
of the all shares entitled to vote have voted on the Share Issuance, but, if
over 50% of the shares are voted on the Share Issuance, abstentions and broker
non-votes will not affect the outcome of the vote to approve the Share Issuance.
All directors and executive officers of AIMCO who own shares of AIMCO Common
Stock are expected to vote their shares for approval of the Share Issuance. On
the AIMCO Record Date, directors and executive officers of AIMCO owned 2,492,983
shares of AIMCO Common Stock (excluding shares underlying stock options),
representing 8.8% of the shares then issued and outstanding. In addition,
Demeter and the Capricorn Sellers, which owned 2,204,221 shares of AIMCO Common
Stock as of the AIMCO Record Date, representing 7.7% of the shares then issued
and outstanding, are expected to vote all shares owned by them for approval of
the Share Issuance.
THE AIMCO BOARD UNANIMOUSLY RECOMMENDS THAT AIMCO STOCKHOLDERS
VOTE FOR APPROVAL OF THE SHARE ISSUANCE.
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PROXIES
Shares of AIMCO Common Stock represented by properly executed proxies
received prior to commencement of voting at the AIMCO Special Meeting will be
voted at the AIMCO Special Meeting in the manner specified in such proxies.
Proxies which are properly executed but which do not contain voting instructions
will be voted FOR approval of the Share Issuance. It is not expected that any
matter other than the Share Issuance will be brought before the AIMCO Special
Meeting; however, if other matters are properly presented, the persons named in
such proxy will have authority to vote in accordance with their judgment on any
other such matter, including without limitation, any proposal to adjourn or
postpone the meeting or otherwise concerning the conduct of the meeting;
provided, however, that such persons may not use proxies voted against the Share
Issuance to vote in favor of such adjournment or postponement.
The grant of a proxy on the enclosed AIMCO proxy card does not preclude a
stockholder from voting in person at the AIMCO Special Meeting. A stockholder
may revoke a proxy at any time prior to its exercise by (i) attending the AIMCO
Special Meeting and voting in person or (ii) delivering, prior to the AIMCO
Special Meeting, a written notice of revocation or another duly executed proxy
bearing a later date or time than the revoked proxy. Any such written revocation
or proxy should be delivered to Leeann Morein, Secretary, Apartment Investment
and Management Company, 1873 South Bellaire Street, 17th Floor, Denver, Colorado
80222-4348. Attendance at the AIMCO Special Meeting will not by itself
constitute revocation of a proxy.
AIMCO will bear the cost of solicitation of proxies from its stockholders,
except that AIMCO and NHP have agreed to share equally the cost of printing this
Joint Proxy Statement/Prospectus and the proxies solicited hereby. In addition
to solicitation by mail, the directors, officers and employees of AIMCO and its
subsidiaries may solicit proxies from stockholders of AIMCO by telephone,
telegram, facsimile or in person. Arrangements will also be made with brokerage
houses and other custodians, nominees and fiduciaries for the forwarding of
solicitation material to the beneficial owners of stock held of record by such
persons, and AIMCO will reimburse such custodians, nominees and fiduciaries for
their reasonable out-of-pocket expenses in connection therewith.
In addition, AIMCO has retained Corporate Investor Communications ("CIC") to
assist AIMCO in the solicitation of proxies from stockholders in connection with
the AIMCO Special Meeting. CIC will receive a fee of $4,500 as compensation for
its services and reimbursement of its out-of-pocket expenses in connection
therewith. AIMCO has agreed to indemnify CIC against certain liabilities arising
out of or in connection with its engagement.
APPRAISAL RIGHTS
Stockholders of AIMCO will have no objecting stockholders' right to fair
value under the MGCL in connection with the Share Issuance or the Merger. See
"The Merger and Related Transactions--Appraisal Rights" and "Comparative Rights
of Stockholders of AIMCO and NHP--Appraisal Rights."
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INFORMATION CONCERNING THE NHP SPECIAL MEETING
PURPOSE, TIME AND PLACE
The NHP Special Meeting will be held on December 8, 1997 at 9:00 a.m., local
time, at the offices of Wilmer, Cutler & Pickering, 2445 M Street, N.W.,
Washington, D.C. 20037-1420. The purpose of the NHP Meeting is to (i) consider
and act upon the Merger Agreement Proposal, and (ii) transact any and all other
business that may properly come before the NHP Special Meeting.
RECORD DATE; QUOROM; VOTE REQUIRED
The NHP Board has selected October 30, 1997 as the record date for the NHP
Special Meeting. Only holders of record of NHP Common Stock at the close of
business on the NHP Record Date are entitled to notice of and to vote at the NHP
Special Meeting.
On the NHP Record Date, there were approximately 41 holders of record of NHP
Common Stock with 13,001,939 shares of NHP Common Stock issued and outstanding.
Each share of NHP Common Stock entitles the holder thereof to one vote on each
matter submitted for NHP stockholder approval.
The presence, in person or by proxy, of at least a majority of the issued
and outstanding shares of capital stock entitled to vote (6,500,970 shares) is
necessary to constitute a quorum at the NHP Special Meeting. Abstentions and
broker non-votes will be treated as shares that are present and entitled to vote
for purposes of determining the presence of a quorum at the NHP Special Meeting.
Under the DGCL, the approval of the Merger Agreement Proposal requires (i) the
affirmative vote of a majority of the outstanding shares of NHP Common Stock,
and (ii) the affirmative vote of at least 66 2/3% of the outstanding shares of
NHP Common Stock, excluding shares deemed to be owned by AIMCO or its
affiliates. For this purpose, the 779,073 shares owned by ANHI are deemed to be
owned by AIMCO. Votes to abstain and broker non-votes will have the same effect
as votes cast against the Merger Agreement Proposal. Accordingly, the Merger
Agreement Proposal must be approved by stockholders voting at least 6,500,970
shares and by stockholders other than AIMCO and ANHI voting at least 4,047,878
shares.
All directors and executive officers of NHP who own shares of NHP Common
Stock are expected to vote their shares for approval of the Merger Agreement
Proposal. On the NHP Record Date, directors and executive officers of NHP that
are not affiliated with AIMCO owned 487,139 shares of NHP Common Stock,
representing 3.7% of the shares issued and outstanding. In addition, AIMCO and
ANHI, which owned an aggregate of 6,930,122 shares of NHP Common Stock as of the
NHP Record Date, representing 53.3% of the shares then issued and outstanding,
have agreed to vote all shares owned by them for approval of the Merger
Agreement Proposal.
THE NHP BOARD HAS UNANIMOUSLY (WITH ONE DIRECTOR ABSENT, BUT INCLUDING ALL
MEMBERS OF THE NHP INDEPENDENT COMMITTEE) RECOMMENDED THAT STOCKHOLDERS VOTE
IN FAVOR OF THE MERGER AGREEMENT PROPOSAL.
PROXIES
All proxies in the enclosed form of proxy that are properly executed and
returned to NHP prior to commencement of voting at the NHP Special Meeting will
be voted at the NHP Special Meeting or any adjournments or postponements thereof
in accordance with the instructions thereon. All executed but unmarked NHP
proxies will be voted FOR adoption and authorization of the Merger Agreement.
Any proxy may be revoked by any NHP stockholder who attends the NHP Special
Meeting and gives notice of his or her intention to vote in person without
compliance with any other formalities. In addition, any NHP stockholder may
revoke a proxy at any time before it is voted by executing and delivering a
subsequent proxy or by delivering a written notice stating that the proxy is
revoked to Joel F. Bonder, the Secretary of NHP, 8065 Leesburg Pike, Suite 400,
Vienna, Virginia 22182-2738. At the NHP Special Meeting, stockholder votes will
be tabulated by persons appointed by the NHP Board to act as inspectors of
election.
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The expense of printing this Joint Proxy Statement/Prospectus and the
proxies solicited hereby will be shared equally by AIMCO and NHP. All other
expenses incurred in connection with the solicitation of proxies will be borne
by AIMCO or NHP as they are incurred by each. In addition to the use of the
mails, proxies may be solicited by officers and directors and regular employees
of NHP, without additional remuneration, by personal interviews, telephone,
telegraph or otherwise. NHP may also request brokerage firms, nominees,
custodians and fiduciaries to forward proxy materials to beneficial owners of
shares of NHP Common Stock and will provide reimbursement for the cost of
forwarding the material in accordance with customary charges. NHP has retained
CIC at an estimated cost of $4,000, plus reimbursement of expenses, to assist in
its solicitation of proxies from brokers, nominees, institutions and
individuals.
OTHER MATTERS
At the date of this Joint Proxy Statement/Prospectus, the NHP Board does not
know of any business to be presented at the NHP Special Meeting other than as
set forth in the notice accompanying this Joint Proxy Statement/Prospectus. If
any other matter should properly come before the NHP Special Meeting, it is
intended that the shares represented by proxies will be voted with respect to
such matters in accordance with the judgment of the persons voting such proxies;
provided, however, that such persons may not use proxies voting against the
Merger Agreement Proposal to vote in favor of adjournment or postponement of the
NHP Special Meeting.
APPRAISAL RIGHTS
Under Delaware law, stockholders of NHP who dissent from the Merger are not
entitled to seek any appraisal or similar rights with respect to such
stockholders' shares of NHP Common Stock. See "The Merger and Related
Transactions--Appraisal Rights" and "Comparative Rights of Stockholders of AIMCO
and NHP--Appraisal Rights."
THE MERGER AND RELATED TRANSACTIONS
The discussion in this Joint Proxy Statement/Prospectus of the Merger and
the description of the principal terms of the Merger Agreement are subject to,
and qualified in their entirety by reference to, the Merger Agreement, a copy of
which is attached to this Joint Proxy Statement/Prospectus as Appendix I and is
incorporated herein by reference.
THE NHP STOCK PURCHASE
Pursuant to the Stock Purchase Agreement, on May 5, 1997, AIMCO's
unconsolidated subsidiary, ANHI, acquired 5,267,720 shares of NHP Common Stock
from Demeter and 1,228,353 shares of NHP Common Stock from the Capricorn
Sellers, representing in the aggregate 51.3% of the shares issued and
outstanding as of May 31, 1997. The Stock Purchase Agreement provided for
Demeter and Capricorn to receive 0.74766 shares of AIMCO Common Stock per share
of NHP Common Stock or, in the case of Demeter, at least $59.5 million in cash
at a price of $20 per share of NHP Common Stock. Demeter received $72.6 million
in cash and 1,224,463 shares of AIMCO Common Stock, and the Capricorn Sellers
received 918,394 shares of AIMCO Common Stock, as consideration for their shares
of NHP Common Stock sold in the NHP Stock Purchase. ANHI financed the cash
portion of the consideration with a short-term loan (the "ANHI Credit
Facility"). AIMCO subsequently purchased 5,717,000 shares of NHP Common Stock
from ANHI with proceeds from offerings of AIMCO Common Stock. On September 12,
1997, AIMCO acquired 434,049 additional shares of NHP Common Stock from Demeter
and the Capricorn Sellers in the Subsequent NHP Stock Purchase. As consideration
for such shares, Demeter received $7.0 million in cash and the Capricorn Sellers
received 61,364 shares of AIMCO Common Stock. Following the NHP Stock Purchase,
AIMCO and ANHI own 6,930,122 shares of NHP Common Stock in the aggregate. In
addition, pursuant to the Stock Purchase Agreement, Demeter and the Capricorn
Sellers are entitled to receive the shares of WMF Common Stock to be distributed
in respect of the Rights associated with the shares of NHP Common Stock acquired
by AIMCO and ANHI in the NHP Stock
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Purchase or, under certain circumstances, in lieu of such shares of WMF Common
Stock, an additional cash payment of $3.05 for each such share of NHP Common
Stock sold by Demeter and the Capricorn Sellers.
On May 5, 1997, pursuant to the terms of the Stock Purchase Agreement,
Messrs. Eisenson and Palmer (who are affiliated with Demeter) and Mr. Winokur
(who is affiliated with Capricorn) resigned their positions as directors of NHP.
On May 23, 1997, Messrs. Considine and Kompaniez and Thomas W. Toomey (an
executive officer of AIMCO) were appointed as directors of NHP by the NHP Board.
THE NHP REAL ESTATE ACQUISITION
On June 3, 1997, AIMCO acquired the NHP Real Estate Companies from Demeter,
Capricorn, Phemus, Mr. Heller, and NHP Partners Two LLC. The NHP Real Estate
Acquisition was made pursuant to the Real Estate Agreement. As consideration,
AIMCO paid $54.8 million in cash and issued 399,999 Warrants. The NHP Real
Estate Companies are comprised of NHP Partners, Inc., NHP Partners Two Limited
Partnership, a Delaware limited partnership ("NHP Partners Two LP"), and their
subsidiaries. NHP Partners, Inc. owns the National Corporation for Housing
Partnerships, a District of Columbia corporation ("NCHP"), and NHP Partners,
Inc. and NHP Partners Two LP own The National Housing Partnership, a District of
Columbia limited partnership (the "NHP Partnership"). NCHP and the NHP
Partnership were organized by Congress in 1970 as private, for-profit entities
pursuant to Title IX of the Housing and Urban Development Act of 1968, as
amended, to promote private investment in the production of affordable housing.
NCHP acts as the general partner of the NHP Partnership. Through NCHP, the NHP
Partnership and other subsidiaries, the NHP Real Estate Companies hold interests
in (i) partnerships owning 11,078 apartment units in 34 conventional "Class A"
and "Class B" apartment communities, (ii) partnerships owning 9,996 apartment
units in 44 "Class C" apartment communities (properties that management
estimates have a remaining useful life of less than 20 years and will have a
residual value equal to the value of the underlying land) and (iii) partnerships
owning 50,309 affordable housing units and 15,004 "Class C" apartment units in
462 affordable and conventional apartment communities. The NHP Real Estate
Companies also owned a captive insurance subsidiary and other assets. Prior to
the NHP IPO in August 1995, the NHP Real Estate Companies were owned by NHP. A
substantial majority of the NHP Properties are currently managed by NHP pursuant
to the Master Property Management Agreement. AIMCO is currently engaged in the
NHP Real Estate Reorganization, which will result in the vast majority of the
assets of the NHP Real Estate Companies being owned by the Unconsolidated
Partnership, in which AIMCO's Operating Partnership will hold a 99% limited
partner interest, and certain directors and officers of AIMCO, directly or
indirectly, will hold a 1% general partner interest.
GENERAL DESCRIPTION OF THE MERGER
On April 21, 1997, AIMCO, Merger Sub and NHP entered into a merger agreement
(the "April 21 Merger Agreement"), which was subsequently amended and restated
as of October 14, 1997. Pursuant to the Merger Agreement, Merger Sub will be
merged with and into NHP, with NHP being the Surviving Corporation after the
Merger and becoming a wholly owned subsidiary of AIMCO. The Merger will become
effective at the Effective Time. Upon consummation of the Merger, each
outstanding share of NHP Common Stock, other than NHP Common Stock held by NHP,
AIMCO or Merger Sub, will be converted into the right to receive (i) 0.74766
shares of AIMCO Common Stock, or (ii) at the election of the holder, 0.37383
shares of AIMCO Common Stock and $10.00 in cash. Subject to certain exceptions
specified in the AIMCO Charter, no person may own, or be deemed to own, more
than 8.7% of the outstanding shares of AIMCO Common Stock and AIMCO Class B
Common Stock. Any person who would otherwise be entitled to receive Excess
Shares will receive instead an amount in cash equal to the product of such
Excess Shares and $26.75. In lieu of any fractional shares of AIMCO Common
Stock, each holder of NHP Common Stock who would otherwise be entitled to
receive such fractional shares will be
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paid cash equal to the product of such fractional shares and $26.75. The Merger
is subject to a number of conditions, including the approval of the stockholders
of both NHP and AIMCO.
As of October 30, 1997, there were 13,001,939 shares of NHP Common Stock
outstanding, including 6,151,049 shares owned by AIMCO and 779,073 shares owned
by ANHI, and 806,250 outstanding NHP Stock Options. In the Merger, ANHI will
elect to receive the Mixed Consideration in exchange for all of its shares of
NHP Common Stock. If all NHP stockholders other than ANHI elect to receive the
Stock Consideration and all NHP Stock Options are exercised (and assuming no
person would be required to receive cash in lieu of Excess Shares), the number
of shares of AIMCO Common Stock to be issued in the Merger would be
approximately 5,433,695 shares (including 291,240 shares issued to ANHI), and
AIMCO would pay $7.8 million in cash to ANHI. If all NHP stockholders elect to
receive the Mixed Consideration and all NHP Stock Options are exercised (and
assuming no person would be required to receive cash in lieu of Excess Shares),
the number of shares of AIMCO Common Stock to be issued in the Merger would be
approximately 3,163,867 shares (including 291,240 shares issued to ANHI), and
AIMCO would pay $7.8 million in cash to ANHI and $60.7 million in cash to the
other NHP stockholders.
NHP STOCKHOLDERS SHOULD NOT SEND STOCK CERTIFICATES TO NHP OR AIMCO AT THIS
TIME. As soon as practicable after the Effective Time, each NHP stockholder will
receive an Election Form from the Exchange Agent to be used to indicate whether
such stockholder elects to receive Stock Consideration or Mixed Consideration
with respect to such stockholder's shares of NHP Common Stock. Election forms
must be returned to the Exchange Agent on or prior to a date to be mutually
agreed upon by AIMCO and NHP, but not later than the Election Deadline. ALL NHP
STOCKHOLDERS WHO HAVE NOT SUBMITTED A PROPERLY COMPLETED AND EXECUTED ELECTION
FORM BY THE ELECTION DEADLINE WILL BE DEEMED TO HAVE ELECTED TO RECEIVE STOCK
CONSIDERATION FOR ALL OF THEIR SHARES OF NHP COMMON STOCK.
At the earlier of the Effective Time and December 1, 1997, each Right will
mature (subject to the terms and conditions of the Rights Agreement) and each
holder of Rights will become entitled to receive one third of a share of WMF
Common Stock per Right. Prior to the earlier of the Effective Time and the
distribution of shares of WMF Common Stock pursuant to the Rights, and pursuant
to the Merger Agreement, NHP will contribute to WMF an amount of cash equal to
the excess of (i) NHP Free Cash Flow (as defined below) from February 1, 1997 to
the earlier of the Effective Time and the Maturity Time over (ii) NHP's expenses
related to the Merger and the WMF Spin-Off pursuant to the Separation Agreement
described under "--The WMF Spin-Off" below. NHP may reduce the amount of such
payment to the extent NHP cancels amounts owed by WMF to NHP.
THE NHP REORGANIZATION
Immediately following the Merger, NHP will be a wholly owned subsidiary of
AIMCO. In order for AIMCO to retain its qualification as a REIT, it is necessary
that, as soon as practicable following the Merger and as an integral step in
completing the NHP Acquisition, AIMCO engage in the NHP Reorganization, which
will result in the Master Property Management Agreement being terminated and
NHP's operations being conducted through ANHI and/or other Unconsolidated
Subsidiaries. It is expected that the Unconsolidated Subsidiaries will have an
ownership structure similar to ANHI, in which AIMCO holds a 95% to 99% economic
interest through ownership of shares of non-voting preferred stock, and Messrs.
Considine and Kompaniez hold a 1% to 5% economic interest through ownership of
all of the outstanding shares of common stock. As a result of the controlling
ownership interest in the Unconsolidated Subsidiaries held by such directors and
officers, AIMCO will account for its interest in the Unconsolidated Subsidiaries
on the equity method.
BACKGROUND OF THE MERGER
PRELIMINARY NEGOTIATIONS. Since the NHP IPO in August 1995, NHP's business
strategy has focused on increasing the number of apartment properties it manages
by acquiring management rights in properties that were owned by unaffiliated
entities and by acquiring management rights in properties
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acquired by NHP Partners or other joint venture partners. As part of this
strategy, NHP regularly contacted large owners of multifamily properties to
explore the possibility of transactions that would include management of
properties by NHP. These transactions included those in which the owner of
properties would acquire a significant equity interest in NHP and NHP would
acquire the right to manage properties owned or controlled by the other party.
The NHP Board did not at this time or at any time prior to receiving the Merger
Proposal (as defined below) consider seeking a transaction as a result of which
it would no longer be independent.
In this context, Mr. Heller, the Chairman, President and Chief Executive
Officer of NHP and the President of NHP Partners, met with Mr. Considine, the
Chairman, President and Chief Executive Officer of AIMCO, in late 1995, and
proposed a transaction in which (i) AIMCO would acquire all of the NHP Real
Estate Companies' interests in conventional properties (but not affordable
properties), (ii) NHP would acquire the right to manage all of the approximately
40,000 units controlled by AIMCO, and (iii) AIMCO would acquire from Demeter
approximately 20% of the issued and outstanding shares of NHP Common Stock at an
arms'-length price to be negotiated. At that time, Demeter and its affiliates
owned a majority of the equity interests in the NHP Real Estate Companies. As a
result of this proposal and after further conversations regarding a potential
transaction between AIMCO and NHP, Mr. Heller and Mr. Eisenson, the President of
Harvard Private Capital Group, Inc., the investment adviser to Demeter ("Harvard
Capital"), met with Mr. Considine in the spring of 1996 to discuss the proposal.
At that meeting, Mr. Considine indicated that AIMCO would only be interested in
a transaction in which it acquired a controlling interest in NHP, because of
AIMCO's long term strategy to remain a self-managed REIT. Mr. Eisenson responded
that Demeter was not at that time interested in such a transaction. Accordingly,
the parties concluded that it would not be fruitful to pursue further
discussions at that time.
During the summer and fall of 1996, Mr. Heller identified other publicly
traded REITs that, based on his experience in and knowledge of the industry, he
believed controlled significant portfolios of multifamily properties and that
would have access to capital to make an investment in NHP, and proposed similar
transactions in which NHP would acquire the right to manage properties and the
property owners would acquire an equity interest in NHP. Although two owners of
apartment properties expressed interest in exploring a potential transaction,
these discussions did not progress to the point at which a proposal was
presented to the NHP Board.
In November 1996, Mr. Considine called Mr. Heller and proposed that he and
Mr. Heller meet. On December 9, 1996, Mr. Heller and Mr. Considine met and
discussed, among other things, a transaction involving the acquisition by AIMCO
of interests in properties controlled by the NHP Real Estate Companies,
management by NHP of properties owned by AIMCO and the acquisition by AIMCO of a
significant equity interest in NHP. Mr. Heller advised Mr. Considine that he
thought Demeter might be willing to sell as much as a 35% interest in NHP, which
would leave both AIMCO and Demeter with significant interests in NHP, but
neither with a controlling interest. Mr. Considine advised Mr. Heller that AIMCO
was still interested in acquiring a controlling interest in NHP in connection
with any transaction. He also expressed AIMCO's view that an important element
of AIMCO's long term strategy was to remain a self-managed REIT and that
transferring management of the properties owned by AIMCO to NHP was not
consistent with this strategy. In telephone conversations during December 1996
and January 1997 among Mr. Considine, Mr. Heller and Mr. Eisenson, Demeter
indicated that it might consider a transaction in which AIMCO acquired a
majority interest in NHP either through the sale of shares owned by Demeter or
through a combination of a sale of shares by Demeter and the issuance of new
shares by NHP, if a favorable price was offered.
As a result of these discussions, NHP and the NHP Real Estate Companies in
January 1997 proposed a transaction in which: (i) NHP would enter into a
long-term management agreement with AIMCO that would give NHP the exclusive
right to manage properties controlled by AIMCO for a period of ten years, (ii)
AIMCO would acquire a majority of the issued and outstanding shares of NHP at an
effective price of $24 per share through a purchase of approximately 5.5 million
shares of NHP Common Stock from Demeter and Capricorn (plus up to an additional
1 million shares from Demeter and Capricorn if not
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purchased from public stockholders) and a tender offer to the public
stockholders of NHP to purchase up to approximately 1 million additional shares
of NHP Common Stock, and (iii) AIMCO and the NHP Real Estates Companies would
form a joint venture to hold interests in the conventional properties controlled
by the NHP Real Estate Companies and certain properties owned by NHP. AIMCO
ultimately decided not to pursue this proposal because it could have resulted in
AIMCO's not qualifying as a REIT. In addition, AIMCO reiterated its view that
the transfer of management of its Owned Properties to NHP was inconsistent with
AIMCO's long term strategy to remain a self-managed REIT. In January 1997,
Messrs. Considine, Eisenson, Heller, Kompaniez and Winokur, president of the
managing general partner of Capricorn, met in New York and further discussed an
acquisition of a majority interest in NHP by AIMCO.
THE FEBRUARY LETTER AGREEMENT. On February 12 and 13, 1997, Messrs.
Considine, Kompaniez, Toomey and Harry Alcock, Vice President--Acquisitions, of
AIMCO, Messrs. Eisenson of Demeter, Mr. Winokur of Capricorn (which together
with Demeter, Phemus and Mr. Heller, owned all of the equity interests in the
NHP Real Estate Companies), along with Mr. Heller and Ann Torre Grant
representing NHP, and counsel for each of the parties, met in Denver, Colorado
for the purpose of determining whether an agreement could be reached relating to
the acquisition by AIMCO of an interest in NHP and in the real estate controlled
by the NHP Real Estate Companies. On February 13, 1997, AIMCO entered into the
Letter Agreement with Demeter, Phemus and Capricorn whereby AIMCO agreed to
purchase all of the 6,930,122 shares of NHP Common Stock held by Demeter and
Capricorn (representing approximately 54.8% of the issued and outstanding NHP
Common Stock) for $20 per share. The consideration was to be payable in shares
of AIMCO Common Stock (valued for such purposes at $26.75 per share, the closing
price of AIMCO Common Stock on the NYSE on February 13, 1997), except that AIMCO
would pay Demeter cash to the extent that payment in AIMCO Common Stock would
cause Demeter to directly or indirectly own Excess Shares. In the Letter
Agreement, AIMCO agreed to propose a merger with NHP pursuant to which AIMCO
would acquire all of the remaining shares of NHP Common Stock for consideration
of at least $20 of AIMCO Common Stock (valued for such purpose at $26.75 per
share) for each share of NHP Common Stock. The Letter Agreement also
contemplated that, prior to the completion of the merger, NHP would distribute
to NHP stockholders all of the shares of WMF Common Stock owned by NHP. The
Letter Agreement also contemplated that, if the record date for distribution of
the shares of WMF Common Stock did not occur prior to September 1, 1997, Demeter
and Capricorn would have the right to elect to receive an additional $3.05 in
cash, and the other stockholders of NHP would receive an additional $3.05 in
AIMCO Common Stock per share of NHP Common Stock, in lieu of the shares of WMF
Common Stock. The Letter Agreement also provided that (subject to certain
existing rights of first refusal of NHP) AIMCO would purchase or have the option
to purchase the NHP Real Estate Companies' interests in conventional properties
and 25% of the NHP Real Estate Companies' interests in affordable properties.
The Letter Agreement anticipated that AIMCO, Demeter, Phemus and Capricorn would
enter into the appropriate agreements to effect such transactions. AIMCO's
obligations under the Letter Agreement were contingent on the approval of the
AIMCO Board, and Demeter and Capricorn's obligations were contingent on the
receipt of advice of counsel to AIMCO that the transactions contemplated by the
Letter Agreement would not result in AIMCO not qualifying as a REIT under the
Code. AIMCO subsequently received such advice of counsel and on February 19,
1997, the AIMCO Board approved the transactions contemplated by the Letter
Agreement.
On February 19, 1997, AIMCO proposed to NHP a merger (the "Merger Proposal")
pursuant to which NHP would merge with AIMCO or one of its subsidiaries and NHP
stockholders would receive $20 of AIMCO Common Stock (valued for such purpose at
$26.75 per share) for each share of NHP Common Stock. The Merger Proposal
contemplated that the Merger would be conditioned on the prior distribution of
shares of WMF Common Stock to NHP stockholders but that AIMCO would have the
option to waive this condition and either increase the consideration payable in
the Merger by $3.05 per share or subsequently distribute shares of WMF Common
Stock to persons who were NHP stockholders immediately prior to the Merger. On
February 20, 1997, NHP issued a press release announcing the Letter Agreement
and the receipt of the Merger Proposal.
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APPOINTMENT OF NHP INDEPENDENT COMMITTEE. In light of the fact that
Demeter, Phemus and Capricorn had entered into the Letter Agreement and
therefore had interests in a transaction with AIMCO that may have differed from
the interests of other shareholders of NHP, the Board of Directors of NHP on
February 24, 1997 formed the NHP Independent Committee, comprised of three
directors-- Richard S. Bodman, John W. Creighton, Jr. and Lloyd N. Cutler--who
had no interests in AIMCO, Demeter, Capricorn or the NHP Real Estate Companies.
At the time of their nomination to the NHP Independent Committee, Mr. Bodman
beneficially owned 5,535 shares of NHP Common Stock, Mr. Creighton beneficially
owned 17,760 shares of NHP Common Stock and Mr. Cutler beneficially owned 3,135
shares of NHP Common Stock and was senior counsel to the firm of Wilmer, Cutler
& Pickering, legal advisor to NHP. The NHP Independent Committee was authorized
to evaluate the Merger Proposal, any other acquisition proposals received by NHP
and any other pertinent strategic options, retain a financial advisor and legal
advisor to assist it in carrying out its responsibilities (with all of the fees
and expenses of the advisors to be paid by NHP), and make recommendations to the
NHP Board. The NHP Board had not previously considered the option of a
transaction in which NHP would not remain independent and did not consider any
such transaction except in the context of determining its response to the Merger
Proposal. The NHP Independent Committee first met on February 24, 1997, at which
time it was given a review of the Letter Agreement and the Merger Proposal, and
Demeter and Capricorn made a presentation as to their reasons for entering into
the Letter Agreement. The NHP Independent Committee next met on February 26,
1997 and preliminarily retained DLJ as its financial advisor with respect to the
proposed transaction, subject to agreement on the terms of the retention, which
agreement was reached on March 14, 1997. On March 3, 1997, the NHP Independent
Committee retained Morris, James, Hitchens & Williams as its legal advisor. The
NHP Independent Committee met a total of 14 times between February 24, 1997 and
its approval of the April 21 Merger Agreement on April 19, 1997, inclusive. At
the NHP Independent Committee's March 20, 1997 meeting, DLJ presented its
preliminary analysis of the Merger Proposal and the members of the NHP
Independent Committee discussed the analysis. In addition to the specific
actions described herein, the NHP Independent Committee received reports from
its legal advisor, DLJ, and representatives of NHP regarding the status of
negotiations, discussed the terms of the Merger Agreement and the Related
Transactions, and directed its advisors and representatives of NHP to negotiate
various terms of the Merger Proposal.
NEGOTIATIONS OF THE MERGER AGREEMENT. On March 7, 1997, AIMCO delivered to
NHP a draft merger agreement substantially incorporating the terms of the Merger
Proposal, along with a letter stating that the Merger Proposal would expire on
March 14, 1997. AIMCO subsequently extended the March 14, 1997 deadline to
permit negotiations to continue. On March 10, 1997, the NHP Independent
Committee directed its advisors to negotiate with AIMCO various provisions of
the draft merger agreement, and instructed its advisors and representatives of
NHP to forward the comments of the NHP Independent Committee in connection with
the draft merger agreement to counsel for AIMCO. Between March 10 and April 19,
1997, the advisors to the NHP Independent Committee and representatives of NHP
(acting at the direction of the NHP Independent Committee) and AIMCO negotiated
the terms of the draft merger agreement through numerous telephone conferences
and one meeting which occurred on March 13, 1997. The meeting on March 13 was
for the purpose of negotiating the terms of the proposed merger agreement and
was attended by Mr. Kompaniez on behalf of AIMCO, Messrs. Heller and Bonder and
Ms. Grant on behalf of NHP, and counsel for each of AIMCO and NHP.
The principal issues involved in the negotiation of the draft merger
agreement were the amount and form of consideration, the circumstances under
which NHP would be permitted to terminate such merger agreement if it received
another acquisition proposal, and the fee that would be paid by NHP in the event
of any such termination. The Merger Proposal proposed merger consideration of
$20 of AIMCO Common Stock (valued for this purpose at $26.75 per share) for each
share of NHP Common Stock. The NHP Independent Committee instructed its advisors
and representatives of NHP to explore with AIMCO the possibility of receiving
consideration of greater value and of receiving some portion of the
consideration in cash rather than shares of AIMCO Common Stock. Although AIMCO
refused to increase the value of the
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consideration, it did agree to provide NHP stockholders the option of receiving
up to 50% of the consideration in the form of cash rather than shares of AIMCO
Common Stock. It also agreed to permit consideration by NHP of certain
unsolicited acquisition proposals, if required in the exercise of the NHP
directors' fiduciary duties, and to permit NHP to terminate the Merger Agreement
under certain circumstances subject to reimbursement of AIMCO's expenses and
payment under certain circumstances of a termination fee as provided in the
Merger Agreement. See "The Merger Agreement and Terms of the Merger--Termination
Fees."
SPIN-OFF OF WMF. In the course of negotiations relating to the NHP Stock
Purchase and the Merger, AIMCO advised NHP that the business of WMF was not
compatible with AIMCO's other businesses and that acquisition of WMF might
jeopardize AIMCO's continuing qualification as a REIT. At the same time, Demeter
and Capricorn advised AIMCO and NHP that they were interested in retaining an
interest in WMF. The Merger Proposal contemplated that the Merger would be
conditioned on the prior distribution of shares of WMF Common Stock, but that
AIMCO would have the option to waive this condition and instead either (i)
increase the Merger Consideration by $3.05 per share or (ii) subsequently
distribute shares in WMF Common Stock to those persons who were NHP stockholders
immediately prior to the Merger. However, AIMCO, Demeter and Capricorn
subsequently advised NHP that they strongly preferred that the WMF Spin-Off
occur prior to the sale of shares of NHP Common Stock by Demeter and Capricorn
in order to insure that the distribution with respect to these shares was
effectively received for tax purposes by Demeter and Capricorn rather than
AIMCO, since AIMCO was not entitled to keep any WMF Common Stock distributed to
it. Regulatory requirements relating to registration of shares of WMF Common
Stock with the Commission effectively prevented immediate completion of the WMF
Spin-Off. In addition, the NHP Independent Committee was concerned that
following the WMF Spin-Off, WMF would have a relatively small market
capitalization, and therefore the shares of WMF Common Stock received by NHP
stockholders would be correspondingly illiquid. The NHP Independent Committee
determined that any concerns about the value of WMF Common Stock were offset by
the value stockholders would receive in the Merger, provided that the
protections described in the following paragraph were obtained for the minority
stockholders in the WMF Spin-Off.
In order to meet regulatory requirements and to address the concerns of the
NHP Independent Committee regarding the stand-alone value of WMF, the parties
agreed to the distribution of the Rights, which defers the distribution of
shares of WMF Common Stock until (subject to the satisfaction of certain
conditions) the earlier of the Effective Time of the Merger and December 1,
1997. The Rights associated with shares of NHP Common Stock acquired by AIMCO
were initially distributed to Demeter and Capricorn prior to the transfer of
shares to AIMCO, and, although the Rights are attached to and were transferred
with the shares of NHP Common Stock, AIMCO agreed to hold the Rights in trust
for Demeter and Capricorn, thus resulting in Demeter and Capricorn, rather than
AIMCO, effectively receiving the distribution of shares when it occurs. In
addition, the advisors to the NHP Independent Committee and representatives of
NHP (at the direction of the NHP Independent Committee) sought and obtained a
commitment set forth in a letter dated April 21, 1997 (the "Capricorn II
Investment Commitment"), from Capricorn Investors II, L.P., a Delaware limited
partnership whose general partner is managed by Mr. Winokur ("Capricorn II"), to
NHP Financial Services, Ltd. (now WMF), pursuant to which Capricorn II will,
following the negotiation and execution of a definitive agreement and subject to
satisfaction of the conditions that will be specified therein, make an
investment of $5 million (the "Capricorn Investment") in WMF Common Stock at a
price of $9.15 per share (equivalent to $3.05 for each one third of a share of
WMF Common Stock to be distributed with respect to each share of NHP Common
Stock). NHP also sought and obtained agreements from Demeter, Capricorn and
Capricorn II that, in certain circumstances, limit their purchases of shares of
WMF at a price of less than $9.15 per share and limit transactions in which
Demeter, Capricorn and Capricorn II may sell their interests in WMF without
affording other WMF stockholders the opportunity to participate in the
transaction. See "--The WMF Spin-Off--Capricorn II Investment" and "--The WMF
Spin-Off--Certain Restrictions on Purchases and Sales," below.
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NEGOTIATION OF RELATED TRANSACTIONS. Concurrent with the negotiation of the
April 21 Merger Agreement, AIMCO continued to negotiate the terms of the Stock
Purchase Agreement with Demeter and Capricorn. The representatives of NHP (at
the direction of the NHP Independent Committee) informed AIMCO, Demeter and
Capricorn that NHP determined that it was inappropriate for NHP to agree to the
terms of the Merger Agreement until the Stock Purchase Agreement was finalized
and reviewed by NHP. Accordingly, the NHP Independent Committee deferred final
consideration and approval of the April 21 Merger Agreement until the Stock
Purchase Agreement was finalized.
Concurrent with the negotiation of the April 21 Merger Agreement, AIMCO also
conducted negotiations with Demeter and Capricorn regarding the purchase of the
NHP Real Estate Companies. The Letter Agreement contemplated the purchase of all
of the NHP Real Estate Companies' interests in conventional properties and 25%
of the NHP Real Estate Companies' interests in affordable properties. Pursuant
to an agreement entered into at the time NHP sold the NHP Real Estate Companies
in August 1995, the NHP Real Estate Companies and its owners had granted NHP a
right of first refusal (the "Right of First Refusal") with respect to certain
transactions in which either the control of the NHP Real Estate Companies or the
ability to appoint the property manager with respect to 25% of the properties
controlled by the NHP Real Estate Companies and managed by NHP was transferred
to a third party. At the direction of the NHP Independent Committee, NHP acted
to preserve the ability to exercise the Right of First Refusal while recognizing
that the purchase of the NHP Real Estate Companies (or their assets)
contemplated by the Letter Agreement could have been structured in such a way
that the Right of First Refusal would not have been triggered. In addition, the
NHP Independent Committee expressed concern that AIMCO might withdraw the Merger
Proposal if NHP sought to exercise the Right of First Refusal.
In the course of negotiations, AIMCO and Demeter, Capricorn and the NHP Real
Estate Companies determined to transfer all of the NHP Real Estate Companies'
interests in affordable properties to AIMCO. As a result, NHP determined that
the transaction could not be structured in such a way as to avoid NHP's Right of
First Refusal. Accordingly, the NHP Independent Committee instructed DLJ to
obtain information regarding the properties subject to the Right of First
Refusal and determine if holders of NHP Common Stock would be likely to receive
a higher price if NHP were to exercise its Right of First Refusal. See
"--Opinion of Financial Advisor to NHP's Independent Committee--Real Estate
Valuation," below. The NHP Independent Committee also directed its advisors and
representatives of NHP to inform AIMCO and the NHP Real Estate Companies that it
was appropriate for NHP to have an opportunity to determine whether to exercise
the Right of First Refusal after announcement of the definitive April 21 Merger
Agreement. Accordingly, NHP proposed, and AIMCO agreed, to include a provision
in the April 21 Merger Agreement waiving the Right of First Refusal, provided
that the Real Estate Agreement was entered into prior to May 31, 1997, and
provided that such waiver was not to become effective until approximately two
weeks after announcement of the completion of the April 21 Merger Agreement,
thus permitting other potential purchasers to approach NHP Partners and NHP.
OTHER OFFERS. On February 20, 1997, NHP received a letter from Insignia
Financial Group, Inc. ("Insignia") stating that Insignia wished to make an offer
to purchase 100% of the NHP Common Stock in a tax-free transaction at a price
higher than the merger proposal from AIMCO. Insignia is subject to certain
contractual restrictions which limit its ability to make an offer to acquire
NHP, and the February 20, 1997 letter stated that it did not constitute an offer
and did not state a price or specify any other terms and conditions.
On February 26, 1997, NHP received a second letter from Insignia stating
that Insignia was prepared to offer $24 per share, 50% payable in cash and 50%
payable in Insignia Class A Common Stock, for all outstanding NHP Common Stock,
including NHP Common Stock held by Demeter and Capricorn. This indication of
interest from Insignia did not contemplate a spin-off of WMF. At a meeting on
March 12, 1997, the NHP Independent Committee determined that Insignia should be
approached directly by advisors and representatives of NHP. After several
unsuccessful attempts by NHP and DLJ to schedule such a meeting, Mr. Heller and
counsel for NHP met with Andrew Farkas, the chairman of Insignia, on March 24,
1997. In connection with NHP's earlier acquisition of the right to manage
certain properties
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controlled by Oxford, Demeter acquired from Insignia certain securities that
otherwise would have given Insignia the right to prevent NHP from acquiring
management rights from Oxford, and Insignia agreed in connection with that
transaction that it would not make any offer to acquire interests in NHP without
NHP's consent. At the March 24, 1997 meeting, NHP advised Insignia among other
things that it was prepared to waive the prohibitions on Insignia making an
offer for NHP, and further advised Insignia that if it sought to make a formal
offer it should do so promptly. Despite NHP's initiation of this meeting, NHP's
agreement to waive the restrictions and NHP's invitation to Insignia to make an
offer if it wished to do so, NHP never received a proposal for a transaction
from Insignia.
COMPLETION OF AGREEMENTS AND SUBSEQUENT EVENTS. On April 16, 1997, AIMCO
entered into a Stock Purchase Agreement with Demeter and Capricorn. After review
of the Stock Purchase Agreement and the proposed merger agreement, the NHP
Independent Committee met on April 19, 1997 to consider the terms of the
proposed merger agreement. After review of the terms of the agreements and
presentations by DLJ and its legal advisors, the NHP Independent Committee
unanimously recommended that the NHP Board should approve the proposed merger
agreement. The NHP Board met immediately following the NHP Independent Committee
meeting and unanimously (with one director absent, but including all members of
the NHP Independent Committee) approved the proposed merger agreement and
recommended that it be presented for a vote of the NHP stockholders. The
proposed merger agreement was executed and publicly announced on April 21, 1997.
No other offers were received with respect to the NHP Real Estate Companies (or
their assets) and the waiver of the Right of First Refusal became effective May
3, 1997, subject to execution of the Real Estate Agreement.
On May 5, 1997, AIMCO and ANHI completed the Initial NHP Stock Purchase.
On May 22, 1997, AIMCO entered into the Real Estate Agreement with Demeter,
Phemus, Capricorn, Mr. Heller and NHP Partners Two LLC, and on June 3, 1997,
AIMCO acquired all of the interests of Demeter, Phemus, Capricorn, Mr. Heller
and NHP Partners Two LLC in the NHP Real Estate Companies, which own interests
in the NHP Properties. AIMCO paid consideration of $54.8 million in cash and
issued 399,999 Warrants.
On September 12, 1997, AIMCO completed the Subsequent NHP Stock Purchase.
On October 14, 1997, AIMCO, NHP and Merger Sub amended the April 21 Merger
Agreement to (i) extend the deadline for the Effective Date to occur from
December 1, 1997 to December 22, 1997, (ii) modify the mechanics of the
distribution of shares of WMF Common Stock in the WMF Spin-Off, and (iii)
postpone, from the Effective Time until after the Election Deadline, the date
from which holders of NHP Stock Options could, in lieu of exercising such
options, elect to receive per NHP Stock Option the difference between the
equivalent of $26.75 in cash for each share of AIMCO Common Stock for which such
options are exercisable and the adjusted per share exercise price of such
options (see "--NHP Stock Options").
REASONS OF AIMCO FOR THE MERGER; RECOMMENDATION OF THE AIMCO BOARD
At meetings of the AIMCO Board held on February 19 and April 23, 1997, the
AIMCO Board received and considered presentations by the senior management of
AIMCO and its legal advisors regarding the NHP Acquisition. The AIMCO Board did
not engage a financial advisor or seek to obtain a fairness opinion in
connection with its determination that the Merger is advisable. At its meeting
held on April 23, 1997, the AIMCO Board unanimously determined that the Merger
was advisable and approved the Merger Agreement, the Stock Purchase Agreement
and the NHP Real Estate Acquisition.
In reaching its determination to approve the Merger Agreement and the Stock
Purchase Agreement, the AIMCO Board considered a number of factors, including
those listed below. In view of the wide variety of factors considered by the
AIMCO Board and the complexity of those matters, the AIMCO Board did not
consider it practical to, and it did not, attempt to quantify or otherwise
assign relative weights to the specific factors it considered in reaching its
determination. After evaluating all such factors, the AIMCO Board reached its
conclusion based on its judgment in light of all such factors.
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OPPORTUNITY TO ACQUIRE LARGE REAL ESTATE PORTFOLIO. The AIMCO Board
considered the views of senior management that the acquisition of all or a
controlling interest in NHP would enhance AIMCO's opportunities to acquire the
NHP Real Estate Companies, which were owned by affiliates of NHP. Following the
NHP Stock Purchase and the NHP Real Estate Acquisition, AIMCO would own or
manage over 170,000 apartment units.
POTENTIAL BENEFITS OF THE COMBINED OPERATIONS. The AIMCO Board reviewed the
potential benefits of a combination of the two companies. Management of AIMCO
discussed with the AIMCO Board the current operation of the companies and the
opportunities that would be created from the increased size of the combined
companies' property management operations. Among the potential benefits outlined
by management were:
- the addition of the NHP Real Estate Companies would increase AIMCO's
operations to a nationwide scale, would significantly enhance the
diversification of AIMCO's property portfolio and should provide a
platform to allow AIMCO to pursue further expansion of its operations
through selective incremental acquisitions;
- the potential for cost savings and efficiencies in the operations of the
combined companies, especially through the elimination of overhead
expenses, provisionally estimated to be $7.8 million annually; and
- the opportunity to provide additional revenue generating services, such as
cable television and telephone services and home health care services, to
apartment residents on a more cost effective basis.
GEOGRAPHIC AND MARKET DIVERSIFICATION. The AIMCO Board also considered the
significantly greater diversification of the combined company, both in terms of
geographic diversification and in terms of the significantly different mix of
conventional and affordable units. The AIMCO Board believed that this
diversification would benefit AIMCO by reducing its exposure to local economic
cycles and by allowing it to attract a larger base of institutional investors.
ENTRY INTO AFFORDABLE MULTIFAMILY HOUSING MARKET. In evaluating the NHP
Acquisition, the AIMCO Board considered that the NHP Acquisition would provide
AIMCO with a significant presence in the affordable multifamily housing market.
It considered the views of senior management of AIMCO that it believed that
there were attractive expansion and acquisition opportunities in the affordable
multifamily market and that the NHP Acquisition would permit AIMCO to enter the
market by acquiring an established operator of such properties. It also
considered the lack of experience of AIMCO in that segment of the market and
noted the belief of senior management of AIMCO that it should be able to retain
sufficient experienced personnel of NHP following the Merger.
EXPANDED CAPITALIZATION OF AIMCO. The AIMCO Board noted that the NHP Stock
Purchase and the Merger would involve the issuance of up to approximately 8
million additional shares of AIMCO Common Stock. The Board considered that the
additional market capitalization of AIMCO following the NHP Acquisition should
increase the liquidity of the market for AIMCO Common Stock and could enhance
the ability of AIMCO to raise additional debt or equity financing.
FINANCIAL CONDITION AND PROSPECTS OF AIMCO AND NHP. In evaluating the NHP
Acquisition, the AIMCO Board considered information with respect to the
financial condition, results of operations and businesses of both AIMCO and NHP,
on both an historical and prospective basis, and for AIMCO, the NHP Real Estate
Companies and NHP on a pro forma combined basis. The AIMCO Board also considered
the dilutive effect of the issuance of shares of AIMCO Common Stock in the NHP
Acquisition, especially in the event that no NHP stockholders elect the Mixed
Consideration, and the likely effect of such issuance on the earnings per share,
cash flow and FFO per share of the combined entity.
In reaching its determination to approve the NHP Acquisition and to
recommend that AIMCO stockholders approve the Share Issuance, the AIMCO Board
also considered a number of potentially negative factors that could be
associated with the NHP Acquisition. These factors included, but were not
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limited to, the significant costs and resources, including the substantial
commitment of senior management's time, required to complete the NHP Acquisition
and integrate the businesses of the NHP Real Estate Companies and NHP into
AIMCO's operations; the risk that the anticipated benefits of the NHP
Acquisition, including the reduction of overhead expenses, will not be realized;
the risk that, as a result of the NHP Acquisition, an owner of properties
managed by NHP might seek to terminate or not renew property management
agreements with NHP; and the potential for changes in Federal or state laws
relating to low income housing subsidies that could adversely affect the
financial performance of the affordable properties proposed to be acquired by
AIMCO. The AIMCO Board also considered the advice of its legal advisors to the
effect that, if the NHP Stock Purchase is effected, Section 203 of the DGCL will
require the affirmative vote of at least 66 2/3% of all of the outstanding
shares of NHP Common Stock, excluding shares deemed to be owned by AIMCO or its
affiliates, in order to consummate the Merger or any other business combination
transaction with NHP within three years of such transaction. The AIMCO Board did
not believe that these factors, either individually or in the aggregate,
outweighed the potential benefits to AIMCO and its stockholders of the NHP
Acquisition.
THE AIMCO BOARD HAS UNANIMOUSLY CONCLUDED THAT THE MERGER IS ADVISABLE AND
UNANIMOUSLY RECOMMENDS THAT AIMCO STOCKHOLDERS VOTE FOR APPROVAL OF THE SHARE
ISSUANCE.
REASONS OF NHP FOR THE MERGER; RECOMMENDATION OF THE NHP BOARD
THE BOARD OF DIRECTORS OF NHP, INCLUDING THE INDEPENDENT COMMITTEE,
UNANIMOUSLY (WITH ONE MEMBER ABSENT BUT INCLUDING ALL MEMBERS OF THE INDEPENDENT
COMMITTEE) HAS APPROVED THE MERGER AGREEMENT AND THE RIGHTS AGREEMENT, HAS
DETERMINED THAT THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, NHP AND ITS
STOCKHOLDERS AND RECOMMENDS THAT ALL OF THE STOCKHOLDERS OF NHP VOTE FOR THE
ADOPTION AND AUTHORIZATION OF THE MERGER AGREEMENT.
In reaching its determination that the Merger is in the best interests of
and fair to NHP and its stockholders, the NHP Board considered a number of
factors, which factors taken together supported such determination, including
without limitation the following:
1. The terms of the Merger Agreement, including (a) that the Merger
permits stockholders to elect to receive either a mixture of shares of AIMCO
Common Stock and cash or only shares of AIMCO Common Stock, and (b) that the
Merger will allow NHP's stockholders to participate in the equity of the
combined companies. The NHP Board recognized that the terms of the Merger
Agreement would result in the Merger constituting a taxable transaction to
stockholders of NHP for Federal income tax purposes and determined that the
other terms of the Merger outweighed this factor.
2. The ability of NHP stockholders to retain an interest in WMF through
the WMF Spin-Off and to obtain the benefit of a portion of NHP's Free Cash
Flow (as defined below), if any, from February 1, 1997 to the Maturity Time.
3. The value of the shares of WMF Common Stock that NHP stockholders
will acquire in the WMF Spin-Off. The NHP Board considered the fact that
there was no prior trading market for WMF and the risk that shares of WMF
would not be fully valued in any trading market that might develop. While
the NHP Board did not assign a specific value to these shares, the NHP Board
considered the following factors with respect to their value: (i) that
Capricorn II committed, under certain conditions, to purchase shares of WMF
Common Stock at a price of $9.15 per share (which is equivalent to $3.05 per
share of NHP Common Stock), in connection with the completion of the WMF
Spin-Off; (ii) that Demeter, Capricorn and Capricorn II agreed to refrain in
certain circumstances and for a limited period of time from selling shares
of WMF Common Stock unless the transaction afforded other stockholders the
opportunity to sell on comparable terms; and (iii) that Demeter and
Capricorn agreed not to purchase shares of WMF Common Stock at a price less
than $9.15 per share for one
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year following the WMF Spin-Off, subject to certain exceptions, and that
Capricorn II agreed, if it completes its proposed acquisition of shares of
WMF Common Stock, not to purchase shares of WMF in open market transactions
for up to 90 days following the WMF Spin-Off unless WMF advises Capricorn II
that WMF does not intend to purchase shares in open market purchases during
that period. The NHP Board concluded that in light of these factors and the
overall value of the Merger Consideration, the risk that shares of WMF might
not be fully valued was outweighed by the benefits of the Merger.
4. The terms of the Stock Purchase Agreement, pursuant to which Demeter
and Capricorn were to sell their shares of NHP Common Stock on terms
substantially similar to those provided in the Merger Agreement. (The NHP
Board considered the fact that Demeter and Capricorn could receive
additional cash consideration in lieu of the WMF Common Stock, the fact that
AIMCO may pay to Demeter more than 50% of the consideration in cash for
Demeter's NHP Common Stock and the fact that Demeter and Capricorn would
receive shares of AIMCO Common Stock, and thus dividends paid on those
shares, prior to completion of the Merger). The NHP Board also considered
the terms the Real Estate Agreement was expected to include based on the
terms of the Letter Agreement, and subsequent advice regarding the expected
terms. In light of the general similarity between the consideration received
by Demeter and Capricorn for their shares of NHP Common Stock and the Merger
Consideration, the terms of the Stock Purchase Agreement and the expected
terms of the Real Estate Agreement, and the opinion of DLJ described in the
next paragraph, the NHP Board concluded that the terms of the Merger
Agreement were fair to and in the best interests of the Unaffiliated NHP
Stockholders.
5. The opinion of DLJ to the effect that, as of April 21, 1997 and
based upon and subject to the assumptions, limitations and qualifications
set forth therein, the Merger Consideration and the Rights Consideration
were, in the aggregate, fair to the Unaffiliated NHP Stockholders from a
financial point of view. See "--Opinion of Financial Advisor to NHP
Independent Committee."
6. The unanimous recommendation of the NHP Independent Committee that
the NHP Board should approve the Merger Agreement.
7. NHP's and AIMCO's financial condition, results of operations, cash
flows, competitive position and the risks of owning shares of AIMCO,
including those set forth in "Risk Factors," above. The NHP Board did not
rely on a quantitative analysis of these factors, but based its conclusions
on its qualitative judgment of the relative prospects of the companies based
on a review of the foregoing factors.
8. Historic market prices of the NHP Common Stock and the AIMCO Common
Stock, particularly that the Merger could enable the stockholders of NHP to
realize a premium over the prices at which shares of NHP Common Stock have
traded in the past (including a premium of 27.0% (based on the Stock
Consideration) and 28.6% (based on the Mixed Consideration, and in each case
without considering any value attributable to shares of WMF to be received
in the WMF Spin-Off) based on the closing price of AIMCO Common Stock and
NHP Common Stock on the last trading day before the announcement that AIMCO
had entered into the Letter Agreement). The NHP Board considered the fact
that the value of the Merger Consideration would depend wholly (in the case
of Stock Consideration) or partly (in the case of Mixed Consideration) on
the value of shares of AIMCO Common Stock at the Effective Time, and
determined that the risk that the fixed exchange ratio would result in a
value of the Merger Consideration that was less than the value of the Merger
Consideration at the time of the signing of the Merger Consideration was
outweighed by the size of the premium over prior market prices of NHP Common
Stock and their assumption that the market price of NHP Common Stock would
likely decline to or below historic levels if the Merger were not completed.
9. That, in the absence of the Merger, AIMCO will continue to control
NHP through its ownership of a majority of the shares of NHP Common Stock
and that AIMCO will continue to own
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the NHP Real Estate Companies, from which NHP received approximately 67% of
its property management revenues in 1996.
10. Possible limitations on NHP's future growth if it is unable to
acquire interests in real estate or form joint ventures with others who will
hold real estate to be managed by NHP.
11. That, notwithstanding the public announcement of the Letter
Agreement and the Merger Proposal, no other firm offers to acquire NHP were
received.
12. The terms of the Merger Agreement, which allow the NHP Board to
provide information and enter into negotiations with respect to certain
alternative acquisition proposals and to terminate the Merger Agreement in
certain circumstances, subject to reimbursement of AIMCO's expenses and
payment under certain circumstances of a termination fee.
The NHP Board considered each of the foregoing factors as a whole and
determined that, based on these factors, the Merger Proposal would provide
greater value to Unaffiliated NHP Stockholders than any practical alternative.
In particular, the NHP Board concluded that, in view of the negotiations with
AIMCO and AIMCO's right to acquire a majority of the issued and outstanding
shares of NHP Common Stock, there were no practical alternatives to the Merger
Proposal other than simply rejecting the proposal and continuing to be a
majority-owned subsidiary of AIMCO. In reaching its conclusion that the Merger
is in the best interests of and fair to NHP and its stockholders, the NHP Board
considered all the factors presented and, in light of the complexity of the
risks and benefits, did not consider it practical to, and did not attempt to,
quantify or otherwise assign relative weights to the factors or determine that
any factor was of particular importance. Rather, the NHP Board viewed its
position and recommendations as being based on its judgment in light of the
totality of the information presented to and considered by it as to the overall
effect of the Merger on Unaffiliated NHP Stockholders compared to the likely
effect of rejecting the Merger Proposal.
OPINION OF FINANCIAL ADVISOR TO NHP INDEPENDENT COMMITTEE
In its role as financial advisor to the NHP Independent Committee, DLJ was
asked by the NHP Independent Committee to render an opinion to the NHP
Independent Committee as to the fairness to the Unaffiliated NHP Stockholders,
from a financial point of view, of the Merger Consideration and Rights
Consideration, in the aggregate, to be received by the Unaffiliated NHP
Stockholders pursuant to the terms of the Merger Agreement and the Rights
Agreement. On April 21, 1997, DLJ delivered its written opinion to the effect
that, as of the date of such opinion, and based upon and subject to the
assumptions, limitations and qualifications set forth in such opinion, the
Merger Consideration and Rights Consideration, in the aggregate, to be received
by the Unaffiliated NHP Stockholders were fair to the Unaffiliated NHP
Stockholders from a financial point of view. DLJ also delivered to the NHP
Independent Committee its opinion as of the date hereof to substantially the
same effect.
A COPY OF THE DLJ OPINION AS OF THE DATE HEREOF IS ATTACHED HERETO AS
APPENDIX II. NHP STOCKHOLDERS ARE URGED TO READ THE DLJ OPINION ATTACHED HERETO
IN ITS ENTIRETY FOR ASSUMPTIONS MADE, PROCEDURES FOLLOWED, OTHER MATTERS
CONSIDERED AND LIMITS OF THE REVIEW BY DLJ.
The DLJ opinions were prepared for the NHP Independent Committee and are
directed only to the fairness of the Merger Consideration and Rights
Consideration, in the aggregate, to be received by the Unaffiliated NHP
Stockholders from a financial point of view and do not constitute
recommendations to any NHP stockholder as to how such stockholder should vote at
the NHP Special Meeting. DLJ was not retained as an advisor or agent to NHP
stockholders or any other person, other than as an advisor to the
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NHP Independent Committee. As part of its investment banking business, DLJ is
regularly engaged in the valuation of businesses and securities in connection
with mergers, acquisitions, underwritings, sales and distributions of listed and
unlisted securities, private placements and valuations for estate, corporate and
other purposes. DLJ was selected to render an opinion in connection with the
Merger based upon DLJ's general expertise and reputation and the fact that DLJ
has substantial experience in transactions similar to the Merger and is familiar
with NHP and its business.
The DLJ opinions do not constitute opinions as to the price at which shares
of AIMCO Common Stock or WMF Common Stock will actually trade at any time. The
Merger Consideration and Rights Consideration were determined in arm's-length
negotiations between representatives of the NHP Independent Committee and NHP
and AIMCO, in which negotiations DLJ advised the NHP Independent Committee. No
restrictions or limitations were imposed by the NHP Independent Committee upon
DLJ with respect to the investigations made or the procedures followed by DLJ in
rendering its opinions. DLJ was not requested to, nor did it, solicit the
interest of any other party in acquiring NHP or WMF (except to the extent it
participated in discussions with Insignia), nor did it solicit the interest of
any other party in acquiring any equity interests in, or assets of, NHP
Partners, Inc. or NHP Partners Two LP.
In arriving at the DLJ opinion attached hereto, DLJ reviewed the Merger
Agreement, the Rights Agreement, the Stock Purchase Agreement, the Real Estate
Agreement, the Right of First Refusal Agreement, the Capricorn II Investment
Commitment, and the letter agreement dated April 21, 1997 from Demeter and
Capricorn to NHP Financial Services, Ltd. (now known as WMF) regarding purchases
and sales of WMF Common Stock (the "WMF Agreement"). DLJ also reviewed financial
and other information that was publicly available or furnished to it by NHP, WMF
and AIMCO, including information provided during discussions with their
respective managements, which consisted of certain financial projections of NHP
(without projected growth and dispositions in properties under management and
excluding WMF) for the period beginning January 1, 1997 and ending December 31,
1997, prepared by the management of NHP, certain financial projections of WMF
for the period beginning January 1, 1997 and ending December 31, 1997, prepared
by the management of WMF, certain financial projections of AIMCO for the period
beginning January 1, 1997 and ending December 31, 1997, prepared by the
management of AIMCO, certain financial projections relating to the NHP
Properties prepared by the management of AIMCO and certain historical data and
financial projections relating to the NHP Properties prepared by the management
of NHP, as provider of administrative services to the NHP Real Estate Companies.
In addition, DLJ compared certain financial and securities data of NHP and
AIMCO, and certain financial data of WMF, with various other companies whose
securities are traded in public markets, reviewed the historical stock prices
and trading volumes of NHP Common Stock and AIMCO Common Stock, reviewed prices
and premiums paid in certain other selected business combinations and conducted
such other financial studies, analyses and investigations as DLJ deemed
appropriate for purposes of rendering its opinions. In addition, DLJ also had
discussions with a representative of Demeter with respect to discussions between
Demeter and a number of third parties who may have had a prior interest in
acquiring NHP.
In rendering its opinions, DLJ relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
it from public sources, that was provided to it by NHP, WMF and AIMCO or their
respective representatives, or that was otherwise reviewed by it. DLJ did not
make any independent evaluation of the assets or liabilities of NHP or WMF nor
did DLJ independently verify the information reviewed by it. DLJ also assumed
that the financial projections supplied to it were reasonably prepared on bases
reflecting the best currently available estimates and judgments of (i) the
respective managements of NHP, WMF and AIMCO as to the future operating and
financial performance of NHP, WMF and AIMCO, respectively and (ii) the
respective managements of NHP and AIMCO as to
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the future operating and financial performance of the NHP Properties. DLJ also
assumed that Capricorn II will make the investment in WMF that is contemplated
by the Capricorn II Investment Commitment and that the transactions contemplated
by the Stock Purchase Agreement, the Real Estate Agreement, the Merger Agreement
and the Rights Agreement will not result in AIMCO not qualifying as a REIT under
Federal tax laws.
The DLJ opinions are necessarily based on economic, market, financial and
other conditions as they existed on, and on the information made available to
DLJ as of, the respective dates thereof. It should be understood that, although
subsequent developments may affect its opinions, DLJ does not have any
obligation to update, revise or reaffirm its opinions.
The following is a summary of the material factors considered and principal
financial analyses performed by DLJ to arrive at its opinion dated April 21,
1997.
NHP VALUATION
STOCK TRADING HISTORY. To provide contextual data and comparative market
data, DLJ examined the history of the trading prices and volumes for the NHP
Common Stock from August 15, 1995, the day after the NHP IPO, through April 18,
1997, and the AIMCO Common Stock for the period beginning March 31, 1996 through
April 18, 1997. DLJ also reviewed the daily closing prices of the NHP Common
Stock and compared them with the Standard & Poor's 400 Index ("S&P 400") and an
index of certain other management companies whose securities are publicly traded
(collectively, the "Management Companies"), consisting of: Cardinal Realty
Services, Inc., CB Commercial Real Estate Services Group, Inc., Central Parking
Corporation, Grubb & Ellis Company, HFS Incorporated, Insignia Financial Group,
Inc., Marriott International, Inc., and ServiceMaster L.P. DLJ also reviewed the
daily closing prices of AIMCO Common Stock and compared them with the S&P 400
and an index of certain other apartment REITs whose securities are publicly
traded (collectively, the "Apartment REITs"), consisting of: Amli Residential
Properties Trust, Avalon Properties, Inc., Bay Apartment Communities, Inc.,
Camden Property Trust, Charles E. Smith Residential Realty, Inc., Equity
Residential Properties Trust, Evans Withycombe Residential, Inc., Gables
Residential Trust, Irvine Apartment Communities, Inc., Merry Land and Investment
Company, Inc., Paragon Group, Inc., Security Capital Atlantic Trust, Security
Capital Pacific Trust and United Dominion Realty Trust, Inc. DLJ also reviewed
the implied exchange ratio since the NHP IPO, calculated by dividing the price
of NHP Common Stock by the price of AIMCO Common Stock, and the relationship
between the price of NHP Common Stock and the price of AIMCO Common Stock from
February 19, 1997, one day prior to announcement of the Merger Proposal (the
"Pre-Announcement Day") through April 18, 1997. This information was reviewed
solely to provide background regarding the stock prices of AIMCO Common Stock
and NHP Common Stock over the periods indicated. DLJ noted the high and low
closing prices for NHP Common Stock since the NHP IPO were $24.75 and $12.00 per
share, respectively, and the high and low closing prices for AIMCO over the
period beginning March 31, 1996 through April 18, 1997 were $29.50 and $18.50
per share, respectively.
ANALYSIS OF CERTAIN PUBLICLY TRADED COMPANIES. To attempt to provide
contextual data and comparative market information with respect to NHP, DLJ
reviewed certain earnings, operating and financial ratios relating to each of
the Management Companies. However, DLJ noted that NHP was not directly
comparable to any of the Management Companies, based on a number of factors
including, but not limited to, NHP's focus on multi-family properties, the fact
that NHP does not own the real estate it manages, NHP's lack of established
brand name and its dependence on real estate acquisitions by NHP Partners, Inc.
or other third parties for future growth. Further, based on DLJ's discussions
with management of NHP and a representative of Demeter with respect to NHP
Partners, Inc.'s unwillingness to fund further real estate acquisitions, DLJ
believed that the values implied from the historical data and ratios of NHP as
of the Pre-Announcement Day represent the upper end of the range of reasonable
values for NHP Common Stock. DLJ noted that, as of the Pre-Announcement Day,
NHP's total Enterprise Value (defined as the product of the per share price of
NHP Common Stock and total shares of such stock outstanding
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plus Net Debt (defined as total debt less cash and cash equivalents, which for
NHP as of the Pre-Announcement Day was assumed to be $60.5 million, the amount
outstanding at September 30, 1996, being the latest then publicly available
information with respect thereto as set out in NHP's Form 10-Q for the quarterly
period ended September 30, 1996)), as a multiple of earnings before interest,
taxes, depreciation and amortization ("EBITDA") for the latest reported twelve
months ("LTM") was 7.5, which included the effect of ownership of WMF. Based on
an assumed range of LTM EBITDA multiples of 6.0 to 8.0, DLJ computed an
Enterprise Value range for NHP (excluding WMF) of $160 million to $215 million
and an equity market valuation range of $8.80 to $12.70 per share on a fully
diluted basis. This compared with an equity value per share of NHP Common Stock
pursuant to the terms of the Merger of $21.87, based upon the Exchange Ratio and
the closing stock price of AIMCO Common Stock on April 18, 1997 of $29.25.
In addition, to provide contextual data and comparative market information
with respect to AIMCO, DLJ compared selected historical share price, earnings
and operating and financial ratios for AIMCO (both prior and subsequent to the
Pre-Announcement Day) to the corresponding data and ratios of the Apartment
REITs. Such data and ratios included common stock price (which for AIMCO Common
Stock on the Pre-Announcement Day was $26.375 and on April 18, 1997 was $29.25)
as a multiple of certain published research estimates of FFO for the fiscal
years 1997 and 1998 ("Estimated 1997 FFO" and "Estimated 1998 FFO,"
respectively). DLJ noted that, as of the Pre-Announcement Day, AIMCO Common
Stock price as a multiple of Estimated 1997 FFO and Estimated 1998 FFO was 10.0
and 9.2, respectively, and on April 18, 1997 was 10.8 and 9.6, respectively.
This compared with the median of the Apartment REITs on April 18, 1997 of 10.8
and 9.9, respectively.
CONTRIBUTION ANALYSIS. DLJ analyzed NHP's and AIMCO's relative
contributions to the combined companies (excluding WMF and the NHP Properties)
with respect to total revenues, EBITDA and FFO. Its analysis was made for the
fiscal year ended December 31, 1996 and the projected results (based on NHP and
AIMCO management projections) for the fiscal year ending December 31, 1997. As a
result of the Merger and assuming no NHP stockholders elect Mixed Consideration,
holders of NHP Common Stock, (prior to completion of the NHP Stock Purchase),
will own approximately 29% of the shares of AIMCO Common Stock, on a fully
diluted basis, after the Effective Time. This compares with NHP's contribution
to the combined companies' pro forma results (excluding WMF and the NHP
Properties) for the fiscal year ended December 31, 1996 of approximately 39% of
revenues, 31% of EBITDA and 33% of FFO and as projected for the fiscal year
ending December 31, 1997 of approximately 31% of revenues, 22% of EBITDA and 22%
of FFO.
DISCOUNTED CASH FLOW ANALYSIS. DLJ also performed a discounted cash flow
analysis with respect to NHP (excluding WMF). In conducting its analysis, DLJ
relied on the financial projections and other information provided by NHP
management and certain additional assumptions and financial projections
developed by DLJ and reviewed by NHP management. Using this information, DLJ
performed standalone discounted cash flow analyses of NHP (excluding WMF). DLJ
calculated the estimated unlevered cash flow based on standalone projected
operating income adjusted for: (i) taxes; (ii) certain projected non-cash items
(i.e., depreciation and amortization); (iii) projected changes in non-cash
working capital; and (iv) projected capital expenditures. DLJ analyzed the NHP
standalone (excluding WMF) projections and discounted the stream of unlevered
cash flows from fiscal 1997 to fiscal 2001 provided in such projections, back to
December 31, 1996 using discount rates ranging from 11% to 13%. To estimate the
residual values of NHP standalone (excluding WMF) at the end of the forecast
period, DLJ applied terminal multiples of 7.0 to 9.0 to the projected fiscal
2001 EBITDA and discounted such value estimates back to December 31, 1996 using
discount rates ranging from 11% to 13%. DLJ then aggregated the present values
of the unlevered cash flows and the present values of the residual values to
derive a range of implied Enterprise Values for NHP standalone (excluding WMF).
The range of implied Enterprise Values for NHP standalone (excluding WMF) were
then adjusted for the Net Debt (including the assumed proceeds from the exercise
of stock options) of NHP standalone (excluding WMF) as at January 31, 1997 to
yield implied
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equity values of NHP standalone (excluding WMF). The range of equity values were
then divided by the number of outstanding shares of NHP Common Stock on a fully
diluted basis to determine a range of equity values per share for NHP standalone
(excluding WMF). The range of implied equity values for NHP Common Stock was
$11.40 to $15.20 per share. This compared with an equity value per share of NHP
Common Stock pursuant to the terms of the Merger of $21.87, based upon the
Exchange Ratio and the closing stock price of AIMCO Common Stock on April 18,
1997 of $29.25.
PREMIUMS PAID ANALYSIS. DLJ determined the percentage premium of the offer
price over the trading prices one day, one week and four weeks prior to the
announcement date of each stock-for-stock merger transaction that ranged in
Enterprise Value from $250 million to $500 million and occurred since January 1,
1993. These transactions involved companies that are not necessarily comparable
to NHP. The median premiums for the selected transactions over the trading
prices, one day, one week, and four weeks prior to the announcement dates were
30%, 36% and 44%, respectively. Additionally, DLJ performed the same analysis
for the 81 merger or acquisition transactions (including the 41 stock-for-stock
merger transactions described above) for the same period and range of Enterprise
Values. The median premiums over the trading prices one day, one week and four
weeks prior to the announcement dates were 29%, 36% and 41%, respectively. DLJ
subtracted a range of values for WMF from $2.00 to $3.05 per share of NHP Common
Stock from the stock price of NHP Common Stock on the Pre-Announcement Day to
derive an unaffected stock price for NHP Common Stock standalone (excluding WMF)
ranging from $12.33 to $13.38 per share. DLJ then applied a range of premiums of
30% to 45% to this unaffected stock price to derive NHP Common Stock standalone
(excluding WMF) stock prices ranging from $16.00 to $19.40 per share. This
compared with an equity value per share of NHP Common Stock pursuant to the
terms of the Merger of $21.87, based upon the Exchange Ratio and the closing
stock price of AIMCO Common Stock on April 18, 1997 of $29.25.
WMF VALUATION
ANALYSIS OF CERTAIN PUBLICLY TRADED COMPANIES. In addition, with respect to
the proposed WMF Spin-Off, DLJ noted that WMF is a pure multi-family and
commercial mortgage company, whereas the primary business of the publicly traded
mortgage companies is residential mortgage origination and servicing.
Accordingly, DLJ does not believe that there are any traded companies which are
directly comparable to WMF. However, DLJ reviewed selected historical share
price, earnings and operating and financial ratios of certain mortgage
originating and servicing companies whose securities are publicly traded
(collectively, the "Mortgage Companies"). The Mortgage Companies consisted of:
AMRESCO, Inc., Countrywide Credit Industries, Inc., North American Mortgage
Company and Resource Bancshares Mortgage Group, Inc. Such data and ratios
included Equity Value (defined as the product of the common stock price and
total number of shares outstanding) as a multiple of LTM net income and as a
multiple of stockholders' equity as of the latest reported balance sheet date
("Book Value"). DLJ noted that all of the Mortgage Companies had significantly
greater earnings than WMF, and the Equity Values of the Mortgage Companies
ranged from $265 million to $2,781 million. DLJ also noted that, for the
Mortgage Companies, the average Equity Value multiples of LTM net income and
Book Value were 11.9 and 1.8, respectively. DLJ noted that, given WMF's
relatively small size, the fact that subsequent to the WMF Spin-Off it would be
controlled by Demeter and Capricorn II and the incremental costs of being an
independent public company, these average multiples implied values that
represented the upper end of the range of reasonable values for WMF.
Accordingly, using a range of Equity Value multiples of 1996 net income of 10.0
to 12.0 and a range of Equity Value multiples of Book Value of 1.5 to 2.0 and
after adjusting WMF's 1996 net income by certain assumed costs of being a public
company, DLJ derived a range of equity market values for WMF from $2.44 to $3.25
per fully diluted share of NHP Common Stock on a fully distributed basis.
BREAK-UP VALUE ANALYSIS. DLJ also performed a break-up analysis with
respect to WMF. DLJ analyzed the value of WMF's servicing portfolio as of
December 31, 1996 by calculating servicing cash flow
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as the difference between servicing fees and servicing costs and making certain
adjustments to account for the expected value of cash flows from designated
underwriter servicer loans. DLJ then applied a range of multiples to this
servicing cash flow of 2.0 to 6.0 to derive a range of values for the servicing
portfolio. In addition, DLJ analyzed the value of WMF's origination portfolio by
calculating the origination fee on the originations earned in 1996 and the
origination fee expected to be earned by WMF in 1997. Due to the fact that
origination fees are non-recurring transaction fees, DLJ applied a multiple of
1.0 both to the 1996 origination fee and the expected 1997 origination fee to
derive a range of values for WMF's origination portfolio. DLJ then derived a
break-up equity value for WMF by adding the range of values for the servicing
portfolio and the origination portfolio and subtracting WMF's Net Debt as of
December 31, 1996. This analysis produced a range of equity values of WMF
ranging from $1.49 to $2.99 per fully diluted share of NHP Common Stock. The
purpose of this analysis was to determine if WMF had sufficient assets to
command a break-up value in excess of its value that would be implied from
multiples of LTM net income and Book Value.
DISCOUNTED CASH FLOW ANALYSIS. DLJ also performed a discounted cash flow
analysis with respect to WMF. In conducting its analysis, DLJ relied on the
financial projections and other information provided by WMF management and
certain additional assumptions and financial projections developed by DLJ and
reviewed by WMF management. Using this information, DLJ performed standalone
discounted cash flow analyses of WMF. DLJ calculated the estimated levered cash
flow based on standalone projected net income adjusted for certain projected
non-cash items (i.e., depreciation and amortization). DLJ analyzed the WMF
projections and discounted the stream of levered cash flows from fiscal 1997 to
fiscal 2001 provided in such projections back to December 31, 1996 using
discount rates ranging from 17% to 20%. To estimate the residual values of WMF
at the end of the forecast period, DLJ applied terminal multiples of 8.0 to 12.0
to the projected fiscal 2001 net income and discounted such value estimates back
to December 31, 1996 using discount rates ranging from 17% to 20%. DLJ then
aggregated the present values of the levered cash flows and the present values
of the residual values to derive a range of implied equity values for WMF. The
range of equity values were then divided by the number of outstanding shares of
NHP Common Stock on a fully diluted basis to determine a range of equity values
per share for WMF. The range of implied equity values was $2.44 to $3.04 per
share of NHP Common Stock on a fully diluted basis.
REAL ESTATE VALUATION
DLJ performed a limited analysis of the value of the NHP Properties based on
information provided to DLJ by management of NHP in its capacity as provider of
administrative services to NHP Partners, Inc. DLJ reviewed certain financial and
operating data and other information relating to the NHP Properties, including
asset location, asset quality, asset occupancy rates, asset leverage,
capitalization rates ("Cap. Rates") estimated by NHP management, net operating
income before capital expenditures ("NOI") and allowance for capital
expenditures for fiscal 1996 for certain properties, NOI and capital
expenditures for fiscal 1997 for certain other properties as projected by NHP
management, NHP Partners, Inc.'s ownership of debt instruments relating to the
NHP Properties and NHP Partners, Inc.'s ownership interests as both general
partner and limited partner in certain partnerships owning the NHP Properties.
In performing its limited analysis, DLJ considered the degree to which the NOI
for each property would have to be increased, and what the average Cap. Rate for
the NHP Properties as a whole would have to be, for the combined value of the
Right of First Refusal, NHP standalone (excluding WMF), based on the mid-point
of DLJ's discounted cash flow analysis, and WMF, based on the mid-point of DLJ's
discounted cash flow analysis, to be comparable to the Merger Consideration,
Rights Consideration and consideration for the NHP Properties in the aggregate.
This analysis was conducted to determine if holders of NHP Common Stock would be
likely to receive a higher price if NHP were to exercise its Right of First
Refusal. DLJ's analysis suggested that the concurrently required increase in NOI
and the average Cap. Rate would range from an approximate increase in NOI per
property of 20% together with an approximate average Cap.
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Rate of 8.50%, to an approximate increase in NOI per property of 50% together
with an approximate average Cap. Rate of 10.75%.
* * *
The summary set forth above does not purport to be a complete description of
the analyses performed by DLJ. The preparation of a fairness opinion involves
various determinations as to the most appropriate and relevant methods of
financial analysis and the application of these methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to
summary description. Each of the analyses conducted by DLJ was carried out in
order to provide a different perspective on the transaction and add to the total
mix of information available. DLJ did not form a conclusion as to whether any
individual analysis, considered in isolation, supported or failed to support an
opinion as to fairness from a financial point of view. Rather, in reaching its
conclusion, DLJ considered the results of the analyses in light of each other
and ultimately reached its opinion based on the results of all analyses taken as
a whole. DLJ did not place particular reliance or weight on any individual
analysis, but instead concluded that its analyses, taken as a whole, supported
its determination. Accordingly, notwithstanding the separate factors summarized
above, DLJ believes that its analyses must be considered as a whole and that
selecting portions of its analysis and the factors considered by it, without
considering all analyses and factors, could create an incomplete or misleading
view of the evaluation process underlying its opinions. In performing its
analyses, DLJ made numerous assumptions with respect to industry performance,
business, economic, market and financial conditions and other matters, including
the absence of any material changes in the real estate markets in which NHP and
AIMCO conduct business, U.S. economic conditions generally and the financial
markets and mergers and acquisitions markets in particular. The analyses
performed by DLJ are not necessarily indicative of actual values or future
results, which may be significantly more or less favorable than suggested by
such analyses.
Pursuant to the terms of an engagement letter dated March 14, 1997, NHP has
paid DLJ a fee of $700,000. NHP has also agreed to reimburse DLJ promptly for
all out-of-pocket expenses (including the reasonable fees and out-of-pocket
expenses of counsel) incurred by DLJ in connection with its engagement, and to
indemnify DLJ and certain related persons against certain liabilities in
connection with its engagement, including liabilities under the Federal
securities laws.
Certain affiliates of DLJ own, in the aggregate, limited partnership
interests representing approximately 3% of the outstanding capital of Capricorn
and approximately 5% of the outstanding capital of Capricorn II. DLJ was a
co-manager with respect to the NHP IPO in August 1995 and received usual and
customary compensation with respect thereto. In addition, NHP is the receiver
and property manager with respect to certain multifamily residential properties
the mortgages of which were owned by an affiliate of DLJ and certain other
multifamily residential properties the mortgages of which collaterize securities
which were owned by an affiliate of DLJ.
In the ordinary course of business, DLJ may actively trade the securities of
both NHP and AIMCO for its own account and for the accounts of its customers
and, accordingly, may at any time hold a long or short position in such
securities.
THE WMF SPIN-OFF
IN GENERAL. On April 21, 1997, concurrent with signing the Merger
Agreement, NHP signed the Rights Agreement providing for the Rights
Distribution. The Rights were distributed May 9, 1997 to stockholders of record
of NHP Common Stock on May 2, 1997 on the basis of one Right for each share of
NHP Common Stock. In addition, one Right was issued with and attached to each
share of NHP Common Stock issued after May 2, 1997, and one Right will be issued
with and attached to each share of NHP Common Stock issued prior to the Maturity
Time. The Rights are attached to the shares of NHP Common Stock and may not be
separately traded. The WMF Share Distribution will be made at the Maturity Time
to holders of Rights. The WMF Share Distribution is conditioned on receipt of
all necessary consents, and
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therefore may not be completed until consent to the WMF Share Distribution is
received from the lenders under NHP's bank credit facility. Accordingly, if this
consent is not received prior to the earlier of the Effective Time or December
1, 1997, the Maturity Time will be deferred until the consent is received. NHP
stockholders of record immediately prior to the Maturity Time will receive
certificates evidencing the shares of WMF Common Stock promptly after the
Maturity Time. No certificates or scrip representing fractional shares of WMF
Common Stock will be issued. NHP stockholders will receive cash in lieu of
fractional shares of WMF Common Stock that would otherwise be distributed at a
rate of $9.15 per share of WMF Common Stock.
As of October 30, 1997, 13,001,939 shares of NHP Common Stock were
outstanding and held of record by 41 holders, and 806,250 NHP Stock Options were
outstanding. If the WMF Share Distribution occurred on that date, an aggregate
of approximately 4,333,980 shares of WMF Common Stock would have been
distributed to such holders. If all NHP Stock Options outstanding on that date
were exercised, approximately 268,750 additional shares of WMF Common Stock
would have been issued. NHP is prohibited by the Merger Agreement from issuing
additional shares of NHP Common Stock, except in connection with the exercise of
outstanding stock options, without the prior written approval of AIMCO. NHP
therefore believes the number of shares of WMF Common Stock to be issued in the
WMF Share Distribution will not differ significantly from the amounts set forth
above.
The Merger Agreement provides that the Rights Distribution is a condition to
the Merger. AIMCO and ANHI have agreed to hold in trust for Demeter and the
Capricorn Sellers all Rights distributed with respect to the shares of NHP
Common Stock AIMCO or ANHI acquired in the NHP Stock Purchase and any Remaining
Shares acquired by AIMCO or its subsidiaries, and to deliver to Demeter and the
Capricorn Sellers all the shares of WMF Common Stock they receive in respect of
such Rights.
SEPARATION AGREEMENT. In connection with the WMF Share Distribution, WMF
and NHP will enter into a Separation Agreement (the "Separation Agreement"). The
Separation Agreement will, among other things, provide for (i)
cross-indemnification designed to place with WMF the responsibility for
liabilities of the business carried on by WMF prior to the WMF Share
Distribution and place on NHP the responsibility for liabilities of the business
carried on by NHP (excluding WMF) prior to the WMF Share Distribution, (ii) to
the extent not previously paid by WMF, the payment by WMF to NHP of any tax
liabilities of WMF, computed on a stand-alone basis, for periods when WMF is
affiliated with NHP, (iii) the repayment of amounts owed by WMF to NHP at the
time of the WMF Share Distribution and (iv) the transfer to WMF of the Merger
Consideration payable in respect of certain shares of NHP Common Stock held in
escrow in connection with the purchase by NHP of WMF. Amounts owed to NHP
pursuant to the Separation Agreement will be offset by NHP Free Cash Flow to the
extent it is required to be transfered to WMF pursuant to the Merger Agreement.
"NHP Free Cash Flow" for a given period means the amount of NHP's earnings
before interest, taxes, depreciation and amortization for such period less (i)
the amount of cash payments made or obligated to be made in respect of taxes and
interest during such periods and (ii) $500,000 per month (or ratable portion
thereof) included in such period.
CAPRICORN II INVESTMENT. On April 21, 1997, Capricorn II entered into the
Capricorn II Investment Commitment with WMF pursuant to which Capricorn II
would, following the negotiation and execution of definitive documentation and
subject to the satisfaction of the conditions that will be specified therein,
purchase from WMF 546,448 shares of WMF Common Stock for a price of $9.15 per
share in connection with the WMF Spin-Off. The Capricorn II Investment
Commitment does not purport to constitute a legally binding agreement with
respect to the investment.
WMF ISSUANCE OF SHARES. WMF also will issue, pursuant to the terms and
conditions of an Employee Stock Purchase Plan (the "ESPP"), 25 shares of WMF
Common Stock to each employee of WMF who is not eligible for participation in
WMF's 1997 Key Employee Incentive Plan at a nominal per share purchase price. In
addition, the ESPP will provide that each employee will have an option to
acquire up to 1,000 shares of WMF Common Stock for a price of $9.15 per share,
which option shall be exercisable for 10 business days commencing upon the
Maturity Time.
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CERTAIN RESTRICTIONS ON PURCHASES AND SALES. In connection with the WMF
Share Distribution, each of Demeter and Capricorn have agreed that it will not,
prior to April 1, 1998, purchase any shares of WMF Common Stock at a price of
less than $9.15 per share and that, except in certain situations, for a period
of one year following the Maturity Time, it will not sell, in one or more
related transactions, more than 50% of the shares held by it at the Maturity
Time without requiring the purchaser of the shares to offer to purchase the
shares of all holders of WMF Common Stock or propose a merger, each on terms
comparable to those on which Demeter or Capricorn, as the case may be, sells its
shares of WMF Common Stock. In addition, Capricorn II agreed in the Capricorn II
Investment Commitment that, if the Capricorn Investment is completed, for a
period of 90 days following the Maturity Time, it will not purchase any shares
of WMF Common Stock on the open market unless it has been notified by WMF that
WMF will not be buying any shares of WMF Common Stock in open market
transactions. Capricorn II has also agreed that, if during the period of one
year following the Maturity Time it (together with its affiliates, which does
not include Capricorn for this purpose) is the single largest stockholder of WMF
and holds more than 20% of the shares of WMF Common Stock, it will not sell, in
one or more related transactions, more than 50% of the shares held by it at the
time of the sale without requiring the purchaser of the shares to offer to
purchase the shares of all holders of WMF Common Stock or propose a merger, each
on terms comparable to those on which Capricorn II sells.
NHP STOCK OPTIONS
Each NHP Stock Option outstanding on May 5, 1997 became fully vested and
exercisable on that date as a result of the NHP Stock Purchase. NHP Stock
Options may be exercised prior to the Merger and the shares of NHP Common Stock
received upon exercise shall be converted into the right to receive the Merger
Consideration in the Merger. Pursuant to the Merger Agreement, any NHP Stock
Options outstanding at the Effective Time will immediately vest to the extent
they have not previously vested. AIMCO, at the Effective Time, will assume all
outstanding NHP Stock Options that were granted on or before April 16, 1997,
will reserve approximately 0.6 million shares of AIMCO Common Stock for delivery
upon exercise of the NHP Stock Options and will prepare and file a registration
statement on Form S-8 to become effective as of the Effective Time with respect
to the shares of AIMCO Common Stock subject to the NHP Stock Options. Each such
NHP Stock Option will become exercisable for that number of shares of AIMCO
Common Stock equal to the product of (i) the aggregate number of shares of NHP
Common Stock for which such NHP Stock Option was exercisable and (ii) the
Exchange Ratio, rounded up to the nearest whole number, in the case of any NHP
Stock Options other than an "incentive stock option" (within the meaning of
Section 422 of the Code), and rounded down to the nearest whole number, in the
case of any incentive stock option, if necessary. The exercise price per share
of such NHP Stock Option shall be equal to the quotient of (i) the aggregate
exercise price of such NHP Stock Option at the Effective Time (adjusted as
described in the following paragraph), divided by (ii) the number of shares of
AIMCO Common Stock for which such NHP Stock Option shall be exercisable, as
determined in accordance with the preceding sentence, rounded up to the next
highest cent, if necessary. AIMCO has agreed that, for a period beginning on the
first business day following the Election Deadline and ending 90 days after the
Effective Time, each holder of NHP Stock Options that are not incentive stock
options may, in lieu of exercising any such NHP Stock Options, elect to receive
for each share of AIMCO Common Stock subject to such option a cash amount equal
to the excess of $26.75 over the per share exercise price of such NHP Stock
Option, as determined in accordance with the preceding sentence. AIMCO has
agreed that for a period beginning on the first business day following the
Election Deadline and ending 90 days after the Effective Time, it will
repurchase any shares of AIMCO Common Stock acquired upon exercise of an NHP
Stock Option that is an incentive stock option for $26.75 per share in cash.
Immediately prior to the WMF Share Distribution, each NHP Stock Option will
be divided into two separately exercisable options: (i) an option (the "Add-on
WMF Option"), exercisable for the number of shares of WMF Common Stock that
would have been issued in the WMF Share Distribution in respect of the shares of
NHP Common Stock subject to the applicable NHP Stock Option, if such NHP Stock
Option
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had been exercised in full immediately prior to the WMF Share Distribution, and
containing substantially equivalent terms as the existing NHP Stock Option, and
(ii) a new option to purchase NHP Common Stock, exercisable for the same number
of shares of NHP Common Stock as the original NHP Stock Option. The per share
exercise price of the original NHP Stock Option will be allocated between the
Add-on WMF Option and the new NHP Stock Option based on assumed relative values
of the WMF Common Stock and the NHP Common Stock. All other terms of the new NHP
Stock Option will be the same, in all material respects, as the original NHP
Stock Option.
REGISTRATION RIGHTS AGREEMENTS
AIMCO has entered into registration rights agreements pursuant to the Stock
Purchase Agreement and the Real Estate Acquisition Agreement (respectively the
"Stock Purchase Registration Agreement" and the "Real Estate Acquisition
Registration Agreement"), as well as the Rule 145 Registration Agreement. The
following summaries do not purport to be complete and are qualified in their
entirety by reference to the registration rights agreements actually entered
into by AIMCO in connection with the referenced transactions.
THE STOCK PURCHASE REGISTRATION AGREEMENT
REGISTRATION. Pursuant to the Stock Purchase Registration Agreement, AIMCO
is obligated to file a registration statement with the Commission to register
for resale the 2,204,221 shares (the "Stock Purchase Shares") of AIMCO Common
Stock issued to Demeter, Capricorn and Capricorn's permitted transferees
pursuant to the Stock Purchase Agreement. AIMCO included the Stock Purchase
Shares in a registration statement on Form S-3 filed with the Commission on
September 26, 1997, as amended by Amendment No. 1 thereto filed October 28, 1997
(as so amended, the "September 26, 1997 Registration Statement"). AIMCO is
required to use its best efforts to effect such registration within 10 days
after the effectiveness of the AIMCO Registration Statement but not later than
November 5, 1997, and to keep such registration continuously effective until the
earlier of (i) May 5, 2000, (or a number of days thereafter equal to the number
of days, if any, that AIMCO defers the filing of or suspends such registration
statement as described below), and (ii) the date on which all of the Stock
Purchase Shares have been sold pursuant to such registration statement or Rule
144 ("Rule 144") under the Securities Act.
DEFERRAL OF REGISTRATION; SUSPENSION OF SALES. Notwithstanding the
foregoing, AIMCO has the right to suspend sales of Stock Purchase Shares under
any effective registration statement for a period of not more than 120 days
during any one-year period ending on December 31, if AIMCO determines that it
would be detrimental to AIMCO and its stockholders to permit continued sales of
Stock Purchase Shares under an effective registration statement or if the
managing underwriter in an underwritten offering by AIMCO requests that the
holders of Stock Purchase Shares refrain from any sale or distribution of AIMCO
Common Stock.
EXPENSES. AIMCO is required to bear the expenses of the registration of the
Stock Purchase Shares. AIMCO will also pay the fees and disbursements, not to
exceed $25,000, of counsel selected to represent the holders by holders owning a
majority of Stock Purchase Shares. Selling stockholders are responsible for
paying any other selling expenses, including underwriting discounts and broker's
commissions, and expenses of selling stockholders' counsel, except as described
in the previous sentence.
THE RULE 145 REGISTRATION AGREEMENT
REGISTRATION. The Merger Agreement requires AIMCO to enter into the Rule
145 Registration Agreement prior to the Effective Date. Pursuant to the Rule 145
Registration Agreement, AIMCO would be obligated to file a shelf registration
statement (the "Merger Shelf Registration Statement") with the Commission within
90 days after the delivery of the Rule 145 Registration Agreement to register
for resale the shares of AIMCO Common Stock issued to Rule 145 Affiliates
("Affiliate Shares"). AIMCO would be required to use its best efforts to effect
such registration as soon as possible, and to keep such registration
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continuously effective until the earlier of (i) the later of the first
anniversary of the date of the Rule 145 Registration Agreement and 90 days after
the Commission declares such registration statement effective plus the number of
days, if any, AIMCO defers the filing of or suspends such registration statement
as described below and (ii) the date on which all of the Affiliate Shares have
been sold pursuant to such registration statement.
In addition to the Merger Shelf Registration Statement, AIMCO is obligated
also to file a registration statement (the "Demand Registration Statement," and
together with the Merger Shelf Registration Statement, the "Merger Registration
Statements") with the Commission within 20 days of written notice (a "Demand
Notice") by holders of at least 300,000 Affiliate Shares to register such
Affiliate Shares for resale. Such holders would be entitled to request the
filing of two Demand Registration Statements within three years of the date of
the Rule 145 Registration Agreement. AIMCO would be required to use its best
efforts to effect such registration within 90 days of AIMCO's receipt of a
Demand Notice, and to keep such registration continuously effective until the
earlier of (i) 90 days after the Commission declares such Demand Registration
Statement effective and (ii) the date all shares covered by such Demand
Registration Statement have been sold pursuant to such Demand Registration
Statement.
DEFERRAL OF REGISTRATION; SUSPENSION OF SALES. Notwithstanding the
foregoing, AIMCO has the right to defer the filing of the Merger Registration
Statements (or suspend sales under any effective Merger Registration Statement)
for periods of not more than 60 days and not exceeding 150 days in any 12-month
period, if AIMCO determines that it would be detrimental to AIMCO and its
stockholders to file such registration statement at such time (or to permit
continued sales under an effective Merger Registration Statement).
EXPENSES. AIMCO is required to bear the expenses of the registration of the
Affiliate Shares. AIMCO will also pay the fees and disbursements, not to exceed
$25,000, of counsel selected by holders owning a majority of Affiliate Shares to
represent such holders. Selling stockholders are responsible for paying any
other selling expenses, including underwriting discounts and broker's
commissions, and expenses of selling stockholders' counsel except as described
in the previous sentence.
THE REAL ESTATE ACQUISITION REGISTRATION AGREEMENT
REGISTRATION. Pursuant to the Real Estate Acquisition Registration
Agreement, upon the request of the sellers under the Real Estate Agreement,
AIMCO is obligated to file a registration statement with the Commission to
register the shares (the "Warrant Shares") of AIMCO Common Stock that may be
issued upon exercise of the Warrants. AIMCO included the Warrant Shares in the
September 26, 1997 Registration Statement. AIMCO is required to use its best
efforts to effect registration of the Warrant Shares upon request of the sellers
under the Real Estate Agreement, and to keep such registration continuously
effective until the earlier of (i) the fifth anniversary of the date of
effectiveness of such registration (or a number of days thereafter equal to the
number of days, if any, that AIMCO defers the filing of or suspends such
registration statement as described below), and (ii) the date on which all of
the Warrant Shares have been sold pursuant to such registration statement or
Rule 144.
DEFERRAL OF REGISTRATION; SUSPENSION OF SALES. Notwithstanding the
foregoing, AIMCO has the right to suspend sales of Warrant Shares under any
effective registration statement for a period of not more than 120 days during
any one-year period ending on December 31, if AIMCO determines that it would be
detrimental to AIMCO and its stockholders to permit continued sales of Warrant
Shares under an effective registration statement.
EXPENSES. AIMCO is required to bear the expenses of the registration of the
Warrant Shares. AIMCO will also pay the fees and disbursements, not to exceed
$25,000, of counsel selected by holders owning a majority of Warrant Shares to
represent the holders. Selling stockholders are responsible for paying any other
selling expenses, including underwriting discounts and broker's commissions, and
expenses of selling stockholders' counsels except as described in the previous
sentence.
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INTERESTS OF DIRECTORS AND MANAGEMENT OF NHP AND AIMCO IN THE MERGER AND THE
RELATED TRANSACTIONS
Certain current and former members of the NHP Board, senior management and
current and former affiliates of NHP have interests in the transactions
contemplated under the Merger Agreement that may present them with potential
conflicts of interest. The NHP Board was aware of these potential conflicts at
the time of its consideration of the Merger and the NHP Independent Committee
did not include any director having the interests identified below. A summary of
these potential conflicts of interest is provided below.
STOCK PURCHASE AGREEMENT. Messrs. Eisenson and Palmer, who, until May 5,
1997, were directors of NHP, are President/Chief Executive Officer and Managing
Director, respectively, of Harvard Capital. Harvard Capital, which manages the
real estate and private equities portfolios of the Harvard University endowment
fund, is the investment advisor for Demeter and Phemus. Mr. Winokur, who, until
May 5, 1997, was a director of NHP, is President of Winokur Holdings, Inc.,
which is the managing general partner of Capricorn. In addition, Mr. Winokur is
a member of the board of directors of Harvard Management Company, Inc., an
affiliate of Demeter and Phemus. Pursuant to the Stock Purchase Agreement,
Demeter received $79.6 million in cash for shares of NHP Common Stock held by
Demeter directly. For the remainder of the shares of NHP Common Stock held by
Demeter and Capricorn, AIMCO issued 1,224,463 shares of AIMCO Common Stock to
Demeter and 979,758 shares of AIMCO Common Stock to the Capricorn Sellers.
Phemus, as one of the Capricorn Sellers, received 195,158 shares of AIMCO Common
Stock in the NHP Stock Purchase. Since Demeter and the Capricorn Sellers
received shares of AIMCO Common Stock on May 5, 1997, they have received, and
will continue to receive, dividends declared and paid by AIMCO on such shares of
AIMCO Common Stock as of record dates after May 5, 1997 and prior to the
Effective Time, which dividends will not be received by other NHP stockholders.
As of the date of this Joint Proxy Statement/Prospectus, AIMCO had declared
dividends with record dates after May 5, 1997 aggregating $1.3875 per share of
AIMCO Common Stock. Based on the number of shares of AIMCO Common Stock issued
on or prior to such record dates to Demeter and the Capricorn Sellers, they have
received $2.0 million in dividends in the aggregate. Based on the number of
shares of AIMCO Common Stock issued to Demeter and the Capricorn Sellers in the
NHP Stock Purchase on or prior to November 7, 1997, Demeter and the Capricorn
Sellers will receive additional dividends payable to recordholders as of such
date totalling $1.0 million in the aggregate. Demeter and the Capricorn Sellers
are also entitled to receive the shares of WMF Common Stock issued in respect of
the shares of NHP Common Stock sold pursuant to the Stock Purchase Agreement or,
at their option, in lieu thereof, additional consideration of $3.05 per share of
NHP Common Stock. Although the consideration received by NHP stockholders
pursuant to the Merger Agreement (other than the possible receipt of a cash
payment of $3.05 for each share of NHP Common Stock sold by Demeter and the
Capricorn Sellers in lieu of the distribution of WMF Common Stock and AIMCO's
payment to Demeter of more than 50% of the consideration in cash for Demeter's
NHP Common Stock) is substantially equivalent to the consideration received by
Demeter and Capricorn pursuant to the Stock Purchase Agreement, Demeter and
Capricorn may have had interests in completing the sale of shares of NHP Common
Stock pursuant to the Stock Purchase Agreement and in completing the Merger that
are not shared by other stockholders of NHP.
Messrs. Considine and Kompaniez hold a 5% controlling interest in ANHI,
which acquired 6,496,073 shares of NHP Common Stock from Demeter and the
Capricorn Sellers. In August and September 1997 ANHI sold 5,717,000 shares of
NHP Common Stock to AIMCO for $114.3 million. See "Business of AIMCO--Recent
Financings." ANHI distributed $38.0 million of the proceeds from such sales to
the Operating Partnership and $2.0 million of such proceeds to Messrs. Considine
and Kompaniez, who used such proceeds to repay in part their outstanding
promissory notes payable to ANHI.
THE REAL ESTATE ACQUISITION. Pursuant to the Real Estate Agreement, AIMCO
purchased the NHP Real Estate Companies from Demeter, Phemus, Capricorn, Mr.
Heller, the Chairman and Chief Executive Officer of NHP, and NHP Partners Two
LLC. Phemus, Capricorn and Mr. Heller own all of the interests in
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NHP Partners Two LLC. Execution of the Real Estate Agreement was a condition to
completing the Merger. Pursuant to the Real Estate Agreement, Demeter and Phemus
received $41.65 million in cash and 303,959 Warrants, Capricorn received $10.4
million in cash and 76,000 Warrants, and Mr. Heller received $2.75 million in
cash and 20,040 Warrants, for their respective interests in NHP Partners, Inc.
and NHP Partners Two LP. Mr. Heller also received a bonus of $200,000 from NHP
Partners, Inc. in connection with the sale of the NHP Real Estate Companies. As
parties to the Real Estate Agreement, Demeter, Capricorn and Mr. Heller may have
had interests in completing the Merger that are not shared by other stockholders
of NHP.
THE WMF SHARE DISTRIBUTION. Pursuant to the terms of the Stock Purchase
Agreement, Demeter and the Capricorn Sellers will, at the time of the WMF Share
Distribution, receive all of the shares of WMF Common Stock they would have
received if the WMF Share Distribution had occurred prior to the sale of their
NHP Common Stock, unless Demeter or the Capricorn Sellers elect to receive, in
lieu of the shares of WMF Common Stock, cash in the amount of $3.05 per share of
NHP Common Stock sold under the Stock Purchase Agreement. In addition, Capricorn
II, whose general partner is managed by Mr. Winokur, has entered into a
commitment pursuant to which it would, subject to satisfaction of certain
conditions, acquire additional shares of WMF Common Stock. Assuming Demeter and
the Capricorn Sellers do not receive cash in lieu of WMF Common Stock and
Capricorn II consummates such share purchase, immediately after consummation of
the WMF Share Distribution, Demeter, the Capricorn Sellers and Capricorn II will
own approximately 39.3%, 9.1% and 11.5%, respectively, of the issued and
outstanding shares of WMF Common Stock. Capricorn has informed NHP that it
intends to distribute any shares of WMF Common Stock it receives to its
partners, including Phemus. In addition, AIMCO has agreed, pending completion of
the WMF Share Distribution, to cause NHP to appoint persons designated by
Demeter as directors of WMF to the extent within AIMCO's control and subject to
any fiduciary obligations AIMCO may have. The current board of directors of WMF
includes executive officers and directors of NHP and persons designated by
Demeter, including Messrs. Heller and Palmer, and Shekar Narasimhan. Messrs.
Eisenson and Winokur are expected to become directors of WMF at the time of the
WMF Share Distribution.
NHP STOCK OPTIONS. The following table sets forth, as of October 30, 1997,
with respect to the directors and executive officers of NHP, (i) the number of
shares of AIMCO Common Stock that will be purchasable upon exercise of NHP Stock
Options held by such persons, all of which are vested as a result of the NHP
Stock Purchase (as are all of the options held by employees of NHP), and (ii)
the average exercise price per share of AIMCO Common Stock:
<TABLE>
<CAPTION>
SHARES OF AVERAGE
AIMCO EXERCISE
NAME COMMON STOCK PRICE/SHARE(1)
- ----------------------------------------------------- -------------- -------------
<S> <C> <C>
J. Roderick Heller, III.............................. 281,307 $ 16.36
Ann Torre Grant...................................... 59,812 16.43
Shekar Narasimhan.................................... 59,812 23.29
Eric N. Ross......................................... 29,906 22.52
Joel F. Bonder....................................... 14,953 18.46
Jeffrey J. Ochs...................................... 14,953 21.51
</TABLE>
- ------------------------
(1) Adjusted based upon the Exercise Ratio and to reflect the WMF Spin-Off
(with an assumed allocation of 94.48% of the exercise price to the NHP
Common Stock and 5.52% to the WMF Common Stock). The actual adjustment
will depend on the relative values of NHP Common Stock and WMF Common
Stock at the time of the WMF Spin-Off. See "--Stock Options" above.
Each such person also has the right (as does each other employee of NHP),
during the period beginning the first business day following the Election
Deadline and ending 90 days after the Effective Time, to receive, upon exercise
of NHP Stock Options, cash in an amount equal to the difference between
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$26.75 and the exercise price for such options or, in the case of "incentive
stock options," to require AIMCO to repurchase shares received upon such
exercise at $26.75 per share of AIMCO Common Stock.
SEVERANCE PLAN AND BONUSES. On February 27, 1997, the NHP Board adopted a
resolution providing for certain benefits for employees of NHP in the event of a
change of control of NHP (the "Severance Plan"). Pursuant to the Severance Plan,
Mr. Heller has received a payment of $187,500, and is entitled to receive an
amount equal to the bonus he received in 1996 pro-rated to the Effective Time,
plus accrued vacation through the Effective Time, if he resigns his employment
or declines employment with NHP, the NHP Real Estate Companies or the Surviving
Corporation. The severance payments received by Mr. Heller are the same as the
benefits to be paid other employees of NHP, except that Mr. Heller received a
payment equal to one-half of his annual salary whereas other members of senior
management are entitled to receive a severance payment equal to their annual
salary and some employees at lower grade levels are entitled to receive a
severance payment equal to one quarter to one half of their annual salary, and
Mr. Heller received a payment notwithstanding the fact that he will remain an
officer of WMF, whereas other employees who remain employees of WMF will not
receive a payment. In addition to the severance payment of $187,500 from NHP and
the bonus of $200,000 paid to Mr. Heller in connection with the sale of the NHP
Real Estate Companies, other executive officers of NHP have also received the
following severance payments and bonuses in connection with the Merger and
Related Transactions: Ms. Grant, $502,500 from NHP; Mr. Ross, $296,250 from NHP
Partners Inc.; Mr. Bonder, $224,000 from NHP and $37,500 from NHP Partners,
Inc.; and Mr. Ochs, $114,750 from NHP and $20,250 from NHP Partners, Inc., all
as of September 30, 1997. Each of the executive officers will be entitled to
receive additional severance payments through the dates of their actual
termination of employment. Other persons who were executive officers of NHP at
the time of the execution of the Merger Agreement, but who are no longer
executive officers, also received severance pay and bonuses.
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER AND THE WMF SPIN-OFF
The following summary describes the material United States Federal income
tax consequences to NHP stockholders of the Merger, the Rights Distribution and
the maturity of the Rights. The summary is based on the Code and Treasury
regulations, rulings and judicial decisions as of the date hereof, all of which
may be repealed, revoked, or modified so as to result in Federal income tax
consequences different from those described below. Such changes could be applied
retroactively in a manner that could adversely affect an NHP stockholder. In
addition, the authorities on which this summary is based are subject to various
interpretations. It is therefore possible that the Federal income tax treatment
of the Merger and the distribution, holding, and disposition of WMF Common Stock
may differ from the treatment described below.
This discussion does not address all aspects of Federal income taxation that
may be relevant to particular NHP stockholders and may not be applicable to
stockholders who are not citizens or residents of the United States, or who will
acquire their AIMCO Common Stock pursuant to the exercise or termination of
employee stock options or otherwise as compensation, nor does the discussion
address the effect of any applicable foreign, state, local or other tax laws.
This discussion assumes that NHP stockholders hold their NHP Common Stock as
capital assets within the meaning of Section 1221 of the Code. EACH NHP
STOCKHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE PARTICULAR
TAX CONSEQUENCES TO HIM OR HER OF THE MERGER, THE RIGHTS DISTRIBUTION AND THE
MATURITY OF THE RIGHTS, INCLUDING THE APPLICABILITY AND EFFECT OF FOREIGN,
STATE, LOCAL AND OTHER TAX LAWS.
CONSEQUENCES OF THE MERGER
AIMCO and NHP expect that the Merger will not qualify as a tax free
reorganization. As a result, the Merger will be treated for Federal income tax
purposes as if the NHP stockholders sold their shares of NHP Common Stock for
shares of AIMCO Common Stock or a combination of cash and shares of
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AIMCO Common Stock, as the case may be, in a taxable exchange. At the time of
the Merger, NHP stockholders will recognize capital gain or loss measured by the
difference between the fair market value of all the consideration received in
the Merger and the stockholder's basis in the shares of NHP Common Stock
exchanged in the Merger. Each stockholder's holding period in any share of AIMCO
Common Stock received in the Merger will begin on the later of the date of the
Merger or the date on which the stockholder no longer holds an offsetting
security. The basis of the shares of AIMCO Common Stock received in the Merger
will be the fair market value of such shares on the date of the Merger.
CONSEQUENCES OF THE RIGHTS DISTRIBUTION AND THE MATURITY OF THE RIGHTS
EFFECT OF THE RIGHTS DISTRIBUTION AND MATURITY OF THE RIGHTS ON NHP. NHP
will recognize gain for Federal income tax purposes as a result of the Rights
Distribution combined with the later maturity of the Rights. The amount of gain
recognized by NHP will be the excess of the fair market value of WMF Common
Stock over NHP's tax basis in WMF Common Stock. NHP's tax basis in WMF Common
Stock as of December 31, 1996, was approximately $23,400,000, and is subject to
further adjustment reflecting WMF's 1997 earnings and distributions. As of the
WMF Share Distribution Date, WMF is expected to have issued and outstanding
4,880,428 shares of WMF Common Stock, including the 546,448 shares proposed to
be issued as a result of the Capricorn Investment. All shares of WMF Common
Stock held by NHP at the time of the WMF Share Distribution will be distributed
in the WMF Share Distribution. The gain so recognized will be a capital gain,
and will be added to the regular taxable income and the alternative minimum
taxable income of NHP for the taxable year in which the Rights Distribution
occurred. NHP expects to have regular Federal income tax net operating losses
available in a sufficient amount to offset such gain under the regular Federal
income tax, although the amount of available loss carryovers has not been
finally determined. However, NHP does not expect to have sufficient alternative
minimum tax net operating losses available to offset such gain, so that the 20
percent Federal alternative minimum tax will likely apply to most or all of such
gain. In the event that the fair market value of WMF is less than NHP's tax
basis, NHP will not be permitted to claim any loss in respect of the Rights
Distribution for Federal income tax purposes.
EFFECT OF THE RIGHTS DISTRIBUTION AND MATURITY OF THE RIGHTS ON NHP
STOCKHOLDERS. Although the matter is not free from doubt, the Rights
Distribution should be treated for Federal income tax purposes as a taxable
distribution made on the Rights Distribution Date to the NHP stockholders of
record on May 2, 1997. Assuming the Rights Distribution is treated as a taxable
event on the Rights Distribution Date, such distribution will be a dividend to
the extent of the current and accumulated earnings and profits of NHP. NHP will
make a determination of the fair market value, as of the Rights Distribution
Date, of the WMF Common Stock covered by the Rights Distribution based on all
available facts and circumstances (including the price at which the WMF Common
Stock trades after the maturity of the Rights), and will report such amount to
the NHP stockholders as the amount of the distribution. The IRS will not be
bound by NHP's determination of the value of the distribution and may take a
different view, in which event a NHP stockholder's dividend amount might be
different from the amount reported by NHP.
The portion of the Rights Distribution that will be treated as a dividend
cannot be finally determined until the end of NHP's taxable year in which the
Rights Distribution Date occurred. For each NHP stockholder, the portion of the
Rights Distribution in excess of the amount treated as a dividend will be
treated as a tax-free return of basis to the extent of such stockholder's basis
in his or her NHP Common Stock, and as a capital gain to the extent such portion
exceeds such stockholder's basis in his or her NHP Common Stock. For certain
noncorporate NHP stockholders (including individuals), the rate of taxation of
capital gains will depend upon (i) the NHP stockholder's holding period in the
NHP Common Stock (with a preferential rate available for NHP Common Stock held
more than 18 months) and (ii) the NHP stockholder's marginal tax rate for
ordinary income. NHP stockholders should consult their tax advisors with respect
to applicable rates and holding periods, and netting rules for capital losses.
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An NHP stockholder's basis in NHP Common Stock will be reduced (but not
below zero) by the portion of the Rights Distribution in excess of the amount
treated as a dividend. Any such reduction in basis will generally increase the
amount of gain (or decrease the amount of loss) recognized by the NHP
stockholder upon a subsequent sale or exchange of NHP Common Stock, including an
exchange in the Merger.
Domestic corporations that satisfy the holding period requirements of
Section 246(c) of the Code with respect to NHP Common Stock, and that receive a
Rights Distribution, will generally be entitled to a 70 percent dividends
received deduction for the portion of the distribution that is treated as a
dividend. However, if the corporation's NHP Common Stock is "debt-financed
portfolio stock" for the purposes of Section 246A of the Code, the corporation's
dividends received deduction will be reduced to the extent provided by that
section. In addition, the portion of the distribution that is treated as a
dividend may be an
"extraordinary dividend" for the purpose of Section 1059 of the Code, which
would require a corporation owning NHP Common Stock for less than two years
before the "announcement date" of the Rights Distribution to reduce its basis in
its NHP Common Stock by the nontaxed portion of the dividend. Under a recent
amendment to Section 1059, if the nontaxed portion of the dividend exceeds the
corporation's basis in its NHP Common Stock, the corporation is required to
recognize such excess as taxable gain on the Rights Distribution Date. Domestic
corporations that are NHP stockholders should consult their tax advisors
concerning these issues.
Assuming the Rights Distribution is treated as a taxable event on the Rights
Distribution Date, (i) a NHP stockholder will have basis in his or her Rights
equal to the value of the Rights Distribution to such stockholder, (ii) the
maturity of the rights should not be a taxable event to NHP stockholders, and
(iii) a stockholder of NHP will have basis in the shares of WMF Common Stock
equal to such stockholder's basis in the Rights prior to the maturity of the
Rights.
ACCOUNTING TREATMENT
The Merger will be accounted for by AIMCO and its subsidiaries under the
purchase method of accounting in accordance with Accounting Principles Board
Opinion No. 16, "Business Combinations," as amended. Under this method of
accounting, the purchase price will be allocated to assets acquired and
liabilities assumed based on their estimated fair values at the Effective Time.
APPRAISAL RIGHTS
Under the MGCL, the holders of AIMCO Common Stock will not have objecting
stockholders' rights to fair value in connection with the Share Issuance, the
Merger Agreement or the consummation of the Merger. Under the DGCL, the holders
of NHP Common Stock will not have objecting stockholders' appraisal rights in
connection with the Merger Agreement or the consummation of the Merger. See
"Comparative Rights of Stockholders of AIMCO and NHP--Appraisal Rights."
CONDITIONS TO THE MERGER
The respective obligations of each party to effect the Merger are subject to
the satisfaction or waiver of a number of conditions, including, (i) the receipt
of all authorizations, consents and approvals necessary from any governmental
entity necessary for consummation of the Merger, (ii) the absence of any
statute, rule, order, decree or regulation of a governmental entity, or
injunction or other court order, that would prohibit the consummation of the
Merger, (iii) the effectiveness of the AIMCO Registration Statement and a
registration statement relating to the distribution of shares of WMF Common
Stock pursuant to the Rights, (iv) the approval for listing on the NYSE of the
shares of AIMCO Common Stock to be issued pursuant to the Merger, (v) the
approval of the Merger Agreement Proposal by the NHP stockholders and the
approval of the Share Issuance by the AIMCO stockholders, (vi) that neither the
Real Estate Agreement nor the Stock Purchase Agreement shall have been
terminated, (vii) the continued accuracy of the representations and warranties
made by the other parties in the Merger Agreement, including the absence of
events having a material adverse effect on AIMCO or NHP, other than events
generally
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affecting the industries in which they operate and (viii) (solely with respect
to NHP's obligations) that DLJ shall not have withdrawn its opinion dated April
21, 1997. See "The Merger Agreement and Terms of the Merger--Conditions to the
Merger."
Neither AIMCO nor NHP currently anticipates waiving any of the conditions to
the Merger specified in the Merger Agreement.
REGULATORY MATTERS
Under the HSR Act, and the rules that have been promulgated thereunder by
the FTC, AIMCO could not acquire a controlling interest in NHP through the
acquisition of stock or through the Merger unless certain filings had been
submitted to the Antitrust Division and the FTC and certain waiting period
requirements had been satisfied. On February 28, 1997, AIMCO submitted the
required filings to the FTC and the Antitrust Division. On March 18, 1997, the
FTC notified AIMCO of the early termination as of that date of the waiting
period under the HSR Act.
Pursuant to the 2530 Procedure of HUD, a corporation seeking to become a
"principal" in apartment projects assisted or insured by HUD must receive
clearance to do so from HUD. By obtaining a 10 percent or greater interest in
NHP, which manages HUD projects, AIMCO is deemed to have become a principal for
this purpose. On May 1, 1997, HUD notified AIMCO of its clearance under the 2530
Procedure to become a principal of NHP. AIMCO and certain of its subsidiaries
and officers were also required to be cleared to become principals of the NHP
Real Estate Companies in connection with the Real Estate Acquisition because the
NHP Real Estate Companies hold general and limited partnership interests in
partnerships that own HUD projects. On May 6, 1997, HUD notified AIMCO and such
subsidiaries and officers of their clearance under the 2530 Procedure to become
principals of the NHP Real Estate Companies.
Under the Merger Agreement, AIMCO and NHP have agreed to use all reasonable
efforts to obtain all necessary material permits, licenses, franchises and other
governmental authorizations necessary or advisable to complete or effect the
Merger. It is a condition to the parties' respective obligations to consummate
the Merger that all necessary material consents, approvals, actions of, filings
with and notice to any governmental authority or public or private third parties
be obtained.
SECTION 203 OF THE DGCL
Section 203 of the DGCL prohibits business combination transactions
involving a Delaware corporation (such as NHP) and an "interested stockholder"
(defined generally as any person that directly or indirectly beneficially owns
15% or more of the outstanding voting stock of the subject corporation) for
three years following the date such person became an interested stockholder,
unless special requirements are met or certain exceptions apply. An exception
applies if the business combination is authorized at an annual or special
meeting of stockholders, and not by written consent, by the affirmative vote of
at least 66 2/3% of the outstanding voting stock which is not deemed to be owned
by the interested stockholder. Because AIMCO is considered an interested
stockholder, the Merger must be authorized by the affirmative vote of 66 2/3% of
the outstanding shares of NHP Common Stock, excluding the shares deemed to be
owned by AIMCO or its affiliates. For this purpose, the 779,073 shares owned by
ANHI are deemed to be owned by AIMCO.
NYSE LISTING
The NYSE has approved AIMCO's application to list on the NYSE the shares of
AIMCO Common Stock to be issued in connection with the Merger, subject to
approval by the AIMCO stockholders of the Share Issuance and subject to official
notice of issuance.
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DEREGISTRATION AND DELISTING OF NHP COMMON STOCK
If the Merger is consummated, the registration of NHP Common Stock under the
Exchange Act will be terminated, and NHP will no longer be required to file
reports, proxy and information statements or other information with the
Commission, and the NHP Common Stock will no longer be included for quotation in
the Nasdaq Stock Market.
RESTRICTIONS ON RESALES BY AFFILIATES
The AIMCO Common Stock issuable in the Merger has been registered under the
Securities Act, but this registration does not cover resales by Rule 145
Affiliates. Rule 145 Affiliates of NHP may not sell their shares of AIMCO Common
Stock acquired in the Merger except pursuant to an effective registration
statement under the Securities Act covering such shares, or in compliance with
the resale provisions of Rule 145 of the Securities Act or another applicable
exemption from the registration requirements of the Securities Act. AIMCO is
obligated to deliver the Rule 145 Registration Agreement, providing for the
registration of the Affiliate Shares, prior to the Effective Date. See
"--Registration Rights Agreements."
Pursuant to the Merger Agreement, NHP has delivered to AIMCO a letter
identifying those persons who may be deemed Rule 145 Affiliates as of the date
of the NHP Special Meeting. NHP has agreed to provide AIMCO with such
information and documents as AIMCO shall reasonably request for purposes of
reviewing the list of persons identified in such letter. NHP is obligated under
the Merger Agreement to advise the persons identified in such letter of the
resale restrictions imposed by applicable securities laws and to use
commercially reasonable efforts to obtain from each person identified in such
letter a written agreement, substantially in the form agreed to by NHP and
AIMCO, executed by each of the Rule 145 Affiliates identified in the foregoing
letter.
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THE MERGER AGREEMENT AND TERMS OF THE MERGER
The following is a brief summary of certain provisions of the Merger
Agreement, a copy of which is included as Appendix I and is incorporated herein
by reference. This summary does not purport to be complete and is qualified in
its entirety by reference to the Merger Agreement. All stockholders are urged to
read the Merger Agreement in its entirety. Capitalized terms used herein and not
otherwise defined have the same meaning as in the Merger Agreement.
EFFECTIVE TIME OF THE MERGER
The Merger Agreement provides that, on the terms and subject to the
conditions set forth therein, and in accordance with the DGCL, Merger Sub will
be merged with and into NHP, the separate existence of Merger Sub will cease,
and NHP will continue its existence as the Surviving Corporation. The effective
time of the Merger will be the date and time of the filing of the Certificate of
Merger, and any other documents necessary to effect the Merger, with the
Secretary of State of the State of Delaware or such subsequent date or time as
shall be agreed by AIMCO and NHP and specified in the Certificate of Merger.
MANNER AND BASIS OF CONVERTING SHARES
In the Merger, each outstanding share of NHP Common Stock (other than shares
of NHP Common Stock owned by AIMCO or Merger Sub, which will be cancelled) will
be converted into (i) the right to receive the Stock Consideration or (ii) at
the election of the holder, the right to receive the Mixed Consideration. At the
Effective Time, each outstanding share of common stock, par value $.01 per
share, of Merger Sub (the "Merger Sub Common Stock") will be converted into one
share of common stock, par value $.01 per share, of the Surviving Corporation.
Notwithstanding any other provision of the Merger Agreement to the contrary,
AIMCO will not be obligated to issue shares of AIMCO Common Stock to any person
if such issuance would result in a violation of the Ownership Limit. See
"Description of AIMCO's Capital Stock--Restrictions on Transfer." In lieu of
issuing any Excess Shares, AIMCO will pay cash at the rate of $26.75 per Excess
Share.
The Merger Agreement requires AIMCO to cause the Exchange Agent to mail
promptly after the Effective Time a letter of transmittal including an Election
Form to each holder of record of NHP Common Stock immediately prior to the
Effective Time. NHP stockholders will be required to return the Election Form,
indicating whether they wish to receive the Mixed Consideration or the Stock
Consideration, on or prior to the fifteenth business day after the Effective
Time. NHP stockholders who fail to make an election within the required time
period will be deemed to have elected to receive the Stock Consideration.
At the Maturity Time, subject to the terms and conditions of the Rights
Agreement, each Right will mature and each holder of Rights will become entitled
to receive one third of a share of WMF Common Stock per Right.
No fractional shares of AIMCO Common Stock or WMF Common Stock will be
issued in connection with the Merger or the maturity of the Rights. In lieu of
any fractional shares of AIMCO Common Stock or WMF Common Stock, the holder
thereof will be entitled to receive a cash payment determined by multiplying (i)
the fraction of a share of AIMCO Common Stock or WMF Common Stock to which such
holder would otherwise have been entitled, by (ii) in the case of AIMCO Common
Stock, $26.75, and, in the case of WMF Common Stock, $9.15.
The Merger Agreement provides that the certificate of incorporation and
bylaws of Merger Sub will become the certificate of incorporation and bylaws of
the Surviving Corporation. In addition, under the Merger Agreement, the
directors of Merger Sub immediately prior to the Effective Time will become the
directors of the Surviving Corporation following the Merger, and the officers of
NHP immediately prior to
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the Effective Time will become the officers of the Surviving Corporation
following the Merger, in each case, until their successors are elected and
qualified.
CONTRIBUTION OF EXCESS CASH FLOW
The Merger Agreement provides that NHP will contribute cash to WMF, forgive
indebtedness of WMF to NHP, or any combination of the foregoing, in an aggregate
amount equal to NHP's best estimate (subject to AIMCO's reasonable approval) of
the amount by which (i) NHP's Free Cash Flow (as defined in the Merger
Agreement) for the period from February 1, 1997 to the earlier of the Effective
Time or the Maturity Time, exceeds (ii) the termination, severance and
transaction costs incurred by NHP with respect to the Merger and the WMF
Spin-Off during that period.
INDEMNIFICATION
The Merger Agreement provides that, from and after the Effective Time, the
Surviving Corporation shall, and AIMCO shall cause the Surviving Corporation to,
indemnify, defend and hold harmless the present and former officers and
directors of NHP against all losses, expenses (including attorneys fees),
claims, damages, liabilities or amounts paid in settlement in connection with
any claim, action, suit, proceeding or investigation based upon the fact that
such person is or was a director or officer of NHP and arising out of actions or
omissions occurring at or prior to the Effective Time, in each case, to the full
extent permitted under the DGCL and NHP's certificate of incorporation and
bylaws.
The Merger Agreement also provides that each party to the Merger Agreement
shall indemnify (in such role, an "Indemnifying Party") and hold harmless each
other party and their respective directors, officers and controlling persons (an
"Indemnified Party") against any and all loss, liability, claim, damage and
expense to which an Indemnified Party may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of any untrue statement or
alleged untrue statement of a material fact contained in this Joint Proxy
Statement/Prospectus, the AIMCO Registration Statement of which this Joint Proxy
Statement/Prospectus is a part, or the WMF Registration Statement, or the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading. However,
each Indemnifying Party shall be liable only for information relating to such
Indemnifying Party and no Indemnifying Party shall be liable to the extent that
any such loss, claim, damage, liability or action arises out of any untrue
statement or alleged untrue statement or omission or alleged omission made in
any such documents in reliance upon and in conformity with written information
furnished to the Indemnifying Party by or on behalf of such Indemnified Party.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains certain customary representations and
warranties of the parties. AIMCO and Merger Sub, on one hand, and NHP, on the
other, have made certain representations and warranties to the other(s)
regarding, among other things: (i) their respective organization, subsidiaries
and capitalization; (ii) their respective authority to enter into and perform
their respective obligations under the Merger Agreement; (iii) the compliance of
the transactions contemplated by the Merger Agreement with their respective
articles or certificates of incorporation and bylaws, certain agreements and
applicable laws; (iv) their respective compliance with applicable laws and
certain agreements; (v) the accuracy and completeness of their respective
Exchange Act filings with the Commission, including this Joint Proxy
Statement/Prospectus; (vi) the absence of material adverse changes; (vii)
litigation; (viii) the accuracy of their respective disclosures; (ix) employee
benefit plans; (x) taxes; and (xi) brokers' fees.
Additionally, NHP has represented and warranted to AIMCO and the Merger Sub
that, subject to certain conditions that must be met by AIMCO with respect to
the Oxford Properties, and except for contracts related to certain scheduled
properties, NHP knows of no fact or circumstance that would result
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in the termination, cancellation or nonrenewal of any contract pursuant to which
NHP provides property management services that would have a material adverse
effect on NHP. AIMCO and the Merger Sub have represented and warranted to NHP
that (i) AIMCO has been organized and operated in conformity with the
requirements for qualification as a REIT and that AIMCO will continue to meet
requirements for such qualification; (ii) AIMCO will have the financial capacity
to complete the Merger; and (iii) AIMCO meets certain financial and operating
criteria. The representations and warranties contained in the Merger Agreement
do not survive beyond the Effective Time.
CONDUCT OF BUSINESS PENDING THE MERGER
CONDUCT OF BUSINESS BY NHP. The Merger Agreement provides that, prior to
the Effective Time, except as expressly permitted or contemplated by the Merger
Agreement, unless AIMCO shall otherwise agree in writing, (i) the business of
NHP and its subsidiaries shall be conducted only in the ordinary and usual
course of business and consistent with past practice, and NHP and its
subsidiaries will use reasonable efforts to keep available the services of its
present officers and key employees and preserve the goodwill and business
relationships with all persons having business relationships with NHP and its
subsidiaries; and (ii) neither NHP nor any of its subsidiaries will (A) amend
its certificate of incorporation, its bylaws or the Rights Agreement, (B) issue,
sell, pledge, dispose of, grant or otherwise create, or agree to issue, sell,
pledge or dispose of, grant or otherwise create any capital stock or other
equity securities, any debt or other securities convertible into or exchangeable
for any of its capital stock or other equity securities, (C) purchase, redeem or
otherwise acquire or retire, or offer to purchase, redeem or otherwise acquire
or retire, any of its capital stock or equity securities (including any options
with respect thereto) or any long-term debt, (D) with certain exceptions,
declare, set aside, make or pay any dividend or other distribution, payable in
cash, stock, property or otherwise, with respect to any of its capital stock or
other equity securities, or subdivide, reclassify, recapitalize, split, combine
or exchange any of its capital stock or other equity securities, (E) incur or
become contingently liable with respect to any indebtedness or guarantee any
indebtedness or issue any debt securities in excess of a specified amount, (F)
acquire or agree to acquire by merging or consolidating with, or by purchasing a
substantial equity interest in or a substantial portion of the assets of, any
business or any corporation, partnership, association or other business entity,
(G) mortgage or otherwise encumber or subject to any lien, or sell, transfer or
otherwise dispose of, any assets or properties that are material to NHP and its
subsidiaries, taken as a whole, other then liens incurred in the ordinary course
of business, (H) except as may be required by applicable law or as contemplated
by the Merger Agreement, (1) increase the compensation payable or to become
payable to, or enter into any employment agreement with, its executive officers
or employees, except with respect to non-executive officers in the ordinary
course of business consistent with past practice, (2) grant any severance or
termination pay to any director, executive officer or employee of NHP or any
subsidiary of NHP, except with respect to non-executive officer employees in the
ordinary course of business consistent with past practice, (3) enter into any
severance agreement with any director, executive officer or employee except with
respect to non-executive officer employees in the ordinary course of business
consistent with past practice or pursuant to existing NHP Benefit Plans, or (4)
establish, adopt, enter into, terminate, withdraw from or amend in any material
respect or take action to accelerate any rights or benefits under any collective
bargaining agreement, any stock option plan, or any employee benefit plan or
policy, (I) take any action, other than reasonable actions in the ordinary
course of business and consistent with past practice, with respect to accounting
policies or procedures, except as may be required by GAAP, or settle any
material audit or, except as required by law, amend in any material respect any
material Tax Return; or (J) authorize any of, or commit or agree to take any of,
the foregoing actions.
CONDUCT OF BUSINESS BY AIMCO. The Merger Agreement provides that, prior to
the Effective Time, except as expressly permitted or contemplated by the Merger
Agreement, unless NHP shall otherwise agree in writing, the business of AIMCO
and its subsidiaries shall be conducted only in the ordinary and usual course of
business and consistent with past practice, and AIMCO and its subsidiaries will
use reasonable efforts to keep available the services of its present officers
and key employees and preserve the
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goodwill and business relationships with all persons having business
relationships with AIMCO and its subsidiaries.
NHP BOARD OF DIRECTORS. Pursuant to the Merger Agreement, NHP has agreed to
fill any vacancy on the NHP Board that occurs after the NHP Stock Purchase with
a person designated by AIMCO, and AIMCO has agreed not to remove any director of
NHP who is a member of the NHP Independent Committee and not to enlarge the NHP
Board prior to the earlier of Effective Time or the termination of the Merger
Agreement.
RESPONSE TO OTHER OFFERS
Pursuant to the Merger Agreement, NHP may not, nor may it permit any of its
subsidiaries or representatives, directly or indirectly, to (i) initiate,
solicit or encourage any inquiry, proposal or offer for a merger, consolidation,
business combination, sale of assets representing a substantial portion of the
assets of NHP and its subsidiaries, or sale of shares of capital stock,
including a tender offer or exchange offer for shares of capital stock of NHP,
other than transactions contemplated by the Merger Agreement (any of the
foregoing being referred to as an "Acquisition Proposal"), (ii) engage in
negotiations or discussions concerning, or provide to any person any non-public
information or data relating to NHP or any subsidiary of NHP for the purposes
of, or otherwise cooperate with or assist or participate in, facilitate or
encourage, any inquiries or the making of any Acquisition Proposal; or (iii)
agree to, approve or recommend any Acquisition Proposal.
The Merger Agreement provides that NHP may furnish non-public information
pursuant to appropriate confidentiality agreements, and may enter into
discussions or negotiations with, any person or entity in connection with an
unsolicited bona fide written Acquisition Proposal, but if and only to the
extent that the NHP Board, by action of a majority of the entire NHP Board, or
the NHP Board with the approval of the NHP Independent Committee, determines in
good faith (after consultation with outside legal counsel) that such action is
necessary for the NHP Board to comply with its fiduciary duties to stockholders
under applicable law (a "Fiduciary Determination"). NHP may also, after
consultation with AIMCO, comply with applicable securities laws with regard to
an Acquisition Proposal or make any other public disclosure that, in the opinion
of NHP's counsel, is required by applicable law, rule or regulation. NHP is
obligated to provide AIMCO with notice of all written or oral Acquisition
Proposals or requests for nonpublic information or access to its or its
subsidiaries' properties, books or records by any person that may be considering
making or has made an Acquisition Proposal. NHP is obligated to keep AIMCO
advised of the status and principal financial terms of any Acquisition Proposal
or request.
CONDITIONS TO THE MERGER
Under the Merger Agreement, the respective obligations of AIMCO and NHP to
effect the Merger are subject to the satisfaction of the following conditions:
(i) all consents, approvals and actions of any governmental authority (including
HUD) required for consummation of the Merger and other transactions contemplated
by the Merger Agreement shall have been obtained or made, free of any adverse
condition; (ii) no action shall have been taken and no statute, rule,
regulation, order, judgment, decree or injunction shall have been enacted,
entered, promulgated or enforced by any court or governmental authority which
restrains, enjoins or prohibits the consummation of the transactions
contemplated by the Merger Agreement; (iii) each of the AIMCO Registration
Statement and the WMF Registration Statement shall have been declared effective
and no stop order shall be in effect with respect thereto, and all state
securities permits or other authorizations shall have been received; (iv) the
shares of AIMCO Common Stock to be issued in the Merger shall have been approved
for listing on NYSE; (v) the expiration or early termination of any waiting
period under the HSR Act shall have occurred; (vi) the Effective Time shall have
occurred on or prior to December 22, 1997; (vii) the Merger Agreement shall have
been approved by the stockholders of NHP and the Share Issuance shall have been
approved by the stockholders of AIMCO; (viii) the record date for the
distribution of Rights to NHP stockholders shall have occurred; and (ix) neither
the Stock Purchase Agreement nor the Real Estate Agreement shall have been
terminated.
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The obligation of NHP to effect the Merger is subject to the satisfaction or
waiver of the following additional conditions: (i) the representations and
warranties of AIMCO and Merger Sub contained in the Merger Agreement shall be
true and accurate in all material respects at the Effective Time (except for
representations made as of a certain date), provided that any representation or
warranty that is true and accurate on the date of the Merger Agreement shall be
deemed to be true and accurate at the Effective Time except to the extent that
AIMCO or any of its subsidiaries shall have taken voluntary action completely
within the control of such person that is the principal cause of such
representation or warranty not being true and accurate; (ii) AIMCO and Merger
Sub shall have performed and complied in all material respects with all
obligations and covenants under the Merger Agreement; (iii) NHP shall have
received a certificate from AIMCO certifying as to its compliance with the
conditions set forth in clauses (i) and (ii) above; (iv) NHP shall have received
the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to AIMCO and
Merger Sub, and AIMCO's Maryland legal counsel with respect to certain matters;
(v) DLJ shall not have withdrawn its opinion dated April 21, 1997; (vi) the
Stock Purchase Agreement shall not have been amended so as to increase the
consideration payable to Demeter and Capricorn; and (vii) no events shall have
arisen or occurred that, individually or in the aggregate, have or, insofar as
reasonably can be foreseen, are likely in the future to have, a material adverse
effect on AIMCO, other than events generally affecting the industry in which it
operates.
The obligations of AIMCO and Merger Sub to effect the Merger are subject to
the satisfaction or waiver of the following additional conditions: (i) the
representations and warranties of NHP contained in the Merger Agreement shall be
true and accurate in all material respects at the Effective Time (except for
representations made as of a certain date), provided that any representation or
warranty that is true and accurate on the date of the Merger Agreement shall be
deemed to be true and accurate at the Effective Time except to the extent that
NHP or any of its subsidiaries shall have taken voluntary action completely
within the control of such person that is the principal cause of such
representation or warranty not being true and accurate; (ii) NHP shall have
performed and complied in all material respects with all obligations and
covenants under the Merger Agreement; (iii) AIMCO shall have received a
certificate from NHP certifying as to its compliance with the conditions set
forth in clauses (i) and (ii) above; (iv) AIMCO shall have received an agreement
from each Rule 145 Affiliate of NHP; (v) AIMCO shall have received the opinion
of each of NHP's legal counsel and special counsel with respect to certain
matters, including certain opinions with respect to the Oxford management
contracts; and (vi) no events shall have arisen or occurred that, individually
or in the aggregate, have or, insofar as reasonably can be foreseen, are likely
in the future to have, a material adverse effect on NHP, other than events
generally affecting the industry in which it operates.
TERMINATION
The Merger Agreement provides that it may be terminated and abandoned prior
to the Effective Time, whether before or after stockholder approval, by the
mutual written consent of NHP and AIMCO. The Merger Agreement may also be
terminated and abandoned prior to the Effective Time, whether before or after
stockholder approval, by either NHP or AIMCO (i) if the Effective Time shall not
have occurred on or before December 22, 1997, (ii) if any governmental
authority, the consent of which is a condition to the obligations of NHP and
AIMCO to consummate the transactions contemplated by the Merger Agreement, shall
have determined not to grant its consent and all appeals of such termination
shall have been taken and have been unsuccessful, (iii) if any court of
competent jurisdiction shall have issued an order, judgment or decree
restraining, enjoining or otherwise prohibiting the Merger and such order,
judgment or decree shall have become final and non-appealable, (iv) if, at the
NHP Special Meeting, the stockholders of NHP shall not have approved the
transactions contemplated by the Merger Agreement, or if, at the AIMCO Special
Meeting, the stockholders of AIMCO shall not have approved the Share Issuance,
or (v) if the Stock Purchase Agreement or the Real Estate Agreement is
terminated in accordance with its terms.
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The Merger Agreement may also be terminated prior to the Effective Time,
whether before or after stockholder approval, by either NHP or AIMCO, if there
has been a material breach by AIMCO, or NHP, respectively, of any
representation, warranty, covenant or agreement set forth in the Merger
Agreement, which breach has not been cured.
The Merger Agreement may also be terminated by NHP prior to the Effective
Time, whether before or after stockholder approval, if (i) NHP receives an
alternative Acquisition Proposal and has complied with the provisions of the
Merger Agreement related to such proposals and is not in breach of any other
representation, warranty, covenant or agreement set forth in the Merger
Agreement, (ii) NHP shall have paid the termination fee described below, (iii)
NHP has provided written notice to AIMCO (A) of the material terms of the
Acquisition Proposal and (B) that the NHP Board has made a Fiduciary
Determination, and (iv) on the date of the termination, the NHP Board determines
that such termination continues to be necessary in order for the NHP Board to
comply with its fiduciary duties to stockholders under applicable law, and NHP
concurrently enters into a definitive agreement providing for implementation of
such Acquisition Proposal.
TERMINATION FEES
If NHP receives an alternative Acquisition Proposal and otherwise complies
with the termination provisions of the Merger Agreement relating to alternative
Acquisition Proposals, as described immediately above, then NHP may only
terminate the Merger Agreement as a result of an alternative Aquisition Proposal
if it pays to AIMCO a termination fee of $4 million, provided, however, that NHP
shall not be required to pay AIMCO such termination fee if NHP is otherwise
entitled to terminate the Merger Agreement because (i) the Effective Time has
not occurred on or prior to December 22, 1997, (ii) any Governmental Authority,
the consent of which is a condition to consummate the Transactions, shall have
finally determined not to grant its consent, (iii) any court of competent
jurisdiction shall have issued a final order, judgment or decree prohibiting the
Merger, (iv) AIMCO has materially breached a representation, warranty, covenant
or agreement and such breach has not been cured within ten Business Days
following receipt by AIMCO of notice of such breach, or (v) at the AIMCO Special
Meeting, the Share Issuance is not approved.
NHP will also be required to pay AIMCO a termination fee of $4 million if
the Merger Agreement is terminated because NHP has failed to obtain the approval
of its stockholders and (i)(A) at the time of the NHP Special Meeting, NHP has
received an alternative Acquisition Proposal and (B) prior to the termination of
the Merger Agreement, the NHP Board shall have withdrawn, or modified in a
manner adverse to AIMCO, its approval or recommendation of the Merger, and (ii)
within two years after the termination of the Merger Agreement, NHP enters into
a definitive agreement providing for an alternative Acquisition Proposal or an
alternative Acquisition Proposal is consummated with any person. If the Merger
Agreement is terminated because NHP has failed to obtain the approval of its
stockholders and the condition of clause (i)(B) above is satisfied, but NHP is
not obligated to pay the termination fee, NHP is obligated to pay to AIMCO the
out-of-pocket expenses incurred by AIMCO in connection with the Merger Agreement
and the Merger, up to a maximum of $4 million.
AMENDMENT AND MODIFICATION
The Merger Agreement may be amended or supplemented in writing, whether
before or after any vote of the stockholders of NHP or AIMCO and prior to the
Effective Time. After the approval of the Merger Agreement by the stockholders
of NHP or AIMCO, no amendment or supplement which by law requires further
approval by such stockholders will be permitted without such further approval.
78
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION OF AIMCO
(IN THOUSANDS, EXCEPT OTHER DATA)
The following table sets forth selected historical financial and operating
information for AIMCO. The selected historical financial information for the
years ended December 31, 1996 and 1995 and for the period January 10, 1994 (the
date of AIMCO's inception) through December 31, 1994, and for the AIMCO
Predecessors for the period from January 1, 1994 through July 28, 1994 is based
on the audited financial statements of AIMCO and the AIMCO Predecessors
incorporated by reference herein. The selected historical financial information
for the years ended December 31, 1993 and 1992 is based on the audited financial
statements of the AIMCO Predecessors. The selected historical financial
information for AIMCO for the six months ended June 30, 1997 and 1996 has been
prepared from unaudited historical financial data incorporated by reference
herein. In the opinion of the management of AIMCO, the operating data for the
six months ended June 30, 1997 and 1996 include all adjustments (consisting only
of normal recurring adjustments) necessary to present fairly the information set
forth therein. The results for the six months ended June 30, 1997 are not
necessarily indicative of the results to be obtained for the year ending
December 31, 1997. The following information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the historical financial statements of AIMCO and notes thereto
incorporated by reference in this Joint Proxy Statement/ Prospectus.
<TABLE>
<CAPTION>
AIMCO PREDECESSORS(a)
AIMCO ------------------------------
------------------------------------------------------------------------ FOR THE
FOR THE PERIOD
FOR THE PERIOD JANUARY 1, FOR THE
SIX MONTHS ENDED FOR THE JANUARY 10, 1994 YEAR ENDED
JUNE 30, YEAR ENDED DECEMBER 31, 1994 THROUGH THROUGH DECEMBER 31,
------------------------- ----------------------------- DECEMBER 31, JULY 28, -----------------
1997 1996 1996 1995 1994 1994(b) 1993 1992
---------- ------------- ------------- ------------- ------------ ---------- -------- -------
(RESTATED)(C) (RESTATED)(C) (RESTATED)(C)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
RENTAL PROPERTY
OPERATIONS:
Rental and other
income.......... $ 79,719 $ 46,252 $100,516 $ 74,947 $ 24,894 $ 5,805 $ 8,056 $ 5,769
Property operating
expenses........ (31,160) (18,153) (38,400) (30,150) (10,330) (2,263) (3,200) (2,248)
Owned property
management
expenses........ (2,734) (1,339) (2,746) (2,276) (711) -- -- --
---------- ------------- ------------- ------------- ------------ ---------- -------- -------
45,825 26,760 59,370 42,521 13,853 3,542 4,856 3,521
Depreciation and
amortization.... (15,046) (9,060) (19,556) (15,038) (4,727) (1,151) (1,702) (1,232)
---------- ------------- ------------- ------------- ------------ ---------- -------- -------
30,779 17,700 39,814 27,483 9,126 2,391 3,154 2,289
---------- ------------- ------------- ------------- ------------ ---------- -------- -------
SERVICE COMPANY
BUSINESS:
Management fees
and other
income.......... 5,605 3,725 8,367 8,132 3,217 6,533 8,069 7,231
Management and
other
expenses........ (2,643) (2,464) (5,352) (4,953) (2,047) (5,823) (6,414) (5,853)
Corporate overhead
allocation...... (294) (296) (590) (581) -- -- -- --
Owner and seller
bonuses......... -- -- -- -- -- (204) (468) (522)
Depreciation and
amortization.... (635) (322) (718) (596) (150) (146) (204) (350)
---------- ------------- ------------- ------------- ------------ ---------- -------- -------
Income from
service company
business........ 2,033 643 1,707 2,002 1,020 360 983 506
Minority interests
in service
company
business........ (2) (2) 10 (29) (14) -- -- --
---------- ------------- ------------- ------------- ------------ ---------- -------- -------
Company's shares
of income from
service company
business........ 2,031 641 1,717 1,973 1,006 360 983 506
---------- ------------- ------------- ------------- ------------ ---------- -------- -------
</TABLE>
79
<PAGE>
<TABLE>
<CAPTION>
AIMCO PREDECESSORS(a)
AIMCO ------------------------------
------------------------------------------------------------------------ FOR THE
FOR THE PERIOD
FOR THE PERIOD JANUARY 1, FOR THE
SIX MONTHS ENDED FOR THE JANUARY 10, 1994 YEAR ENDED
JUNE 30, YEAR ENDED DECEMBER 31, 1994 THROUGH THROUGH DECEMBER 31,
------------------------- ----------------------------- DECEMBER 31, JULY 28, -----------------
1997 1996 1996 1995 1994 1994(b) 1993 1992
---------- ------------- ------------- ------------- ------------ ---------- -------- -------
(RESTATED)(C) (RESTATED)(C) (RESTATED)(C)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GENERAL AND
ADMINISTRATIVE
EXPENSES.......... (784) (549) (1,512) (1,804) (977) -- -- --
INTEREST INCOME..... 1,341 211 523 658 123 -- -- --
INTEREST EXPENSE.... (20,604) (10,925) (24,802) (13,322) (1,576) (4,214) (3,510) (2,741)
MINORITY INTEREST IN
OTHER
PARTNERSHIP....... (565) -- (111) -- -- -- -- --
EQUITY IN EARNINGS
OF OTHER
PARTNERSHIPS
(d)............... (379) -- -- -- -- -- -- --
EQUITY IN EARNINGS
OF UNCONSOLIDATED
SUBSIDIARIES
(e)............... (86) -- -- -- -- -- -- --
---------- ------------- ------------- ------------- ------------ ---------- -------- -------
INCOME (LOSS) BEFORE
GAIN ON
DISPOSITION OF
PROPERTY,
EXTRAORDINARY
ITEM, INCOME TAXES
AND MINORITY
INTEREST IN
OPERATING
PARTNERSHIP....... 11,733 7,078 15,629 14,988 7,702 (1,463) 627 54
Gain on
disposition of
property........ -- -- 44 -- -- -- -- --
Extraordinary
(loss) gain--
forgiveness of
debt............ (269) -- -- -- -- -- -- 135
Provision for
income taxes.... -- -- -- -- -- (36) (336) (303)
---------- ------------- ------------- ------------- ------------ ---------- -------- -------
INCOME (LOSS) BEFORE
MINORITY INTEREST
IN OPERATING
PARTNERSHIP....... 11,464 7,078 15,673 14,988 7,702 (1,499) 291 (114)
Minority interest
in Operating
Partnership..... (1,616) (1,123) (2,689) (1,613) (559) -- -- --
---------- ------------- ------------- ------------- ------------ ---------- -------- -------
NET INCOME (LOSS)... $ 9,848 $ 5,955 $ 12,984 $ 13,375 $ 7,143 $ (1,499) $ 291 $ (114)
---------- ------------- ------------- ------------- ------------ ---------- -------- -------
---------- ------------- ------------- ------------- ------------ ---------- -------- -------
BALANCE SHEET DATA
(END OF PERIOD):
Real estate,
before
accumulated
depreciation.... $1,102,073 $551,826 $865,222 $477,162 $406,067 $ 47,500 $ 46,819 $30,789
Total assets...... 1,272,890 540,117 834,813 480,361 416,739 39,042 38,914 23,366
Total mortgages
and notes
payable......... 644,457 307,612 522,146 268,692 141,315 40,873 41,893 25,935
Mandatorily
redeemable 1994
Cumulative
Convertible
Senior Preferred
Stock........... -- -- -- -- 96,600 -- -- --
Stockholders'
equity(f)....... 388,477 178,059 222,889 169,032 140,319 (9,345) (7,556) (7,003)
OTHER DATA:
Total properties
(end of period)... 107 60 94 56 48 4 4 3
Total apartment
units (end of
period)......... 27,056 15,850 23,764 14,453 12,513 1,711 1,711 1,041
Total equity
interest........ 88,690 -- -- -- -- -- -- --
Units under
management (end
of period)...... 70,213 18,702 19,045 19,594 20,758 29,343 28,422 25,636
</TABLE>
80
<PAGE>
<TABLE>
<CAPTION>
AIMCO PREDECESSORS(a)
AIMCO ------------------------------
------------------------------------------------------------------------ FOR THE
FOR THE PERIOD
FOR THE PERIOD JANUARY 1, FOR THE
SIX MONTHS ENDED FOR THE JANUARY 10, 1994 YEAR ENDED
JUNE 30, YEAR ENDED DECEMBER 31, 1994 THROUGH THROUGH DECEMBER 31,
------------------------- ----------------------------- DECEMBER 31, JULY 28, -----------------
1997 1996 1996 1995 1994 1994(b) 1993 1992
---------- ------------- ------------- ------------- ------------ ---------- -------- -------
(RESTATED)(C) (RESTATED)(C) (RESTATED)(C)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net income per
common share and
common share
equivalents....... 0.53 0.49 1.04 0.86 0.42 N/A N/A N/A
Dividends paid per
common share...... 0.925 0.85 1.70 1.66 0.29 N/A N/A N/A
Cash flow data:
Cash provided by
operating
activities...... $ 25,035 $ 25,209 $ 38,806 $ 25,911 $ 16,825 $ 2,678 $ 2,203 $ 1,892
Cash used in
investing
activities...... (108,134) (18,074) (88,144) (60,821) (186,481) (924) (16,352) (1,078)
Cash provided by
(used in)
financing
activities...... 91,450 (7,186) 60,129 30,145 176,800 (1,032) 14,114 (1,426)
Funds from
Operations(g)..... $ 28,441 $ 16,368 $ 35,185 $ 25,285 $ 9,391 N/A N/A N/A
Weighted average
number of common
shares and OP
Units
outstanding(h).... 21,590 14,303 14,994 11,461 10,920 N/A N/A N/A
</TABLE>
- ------------------------
(a) On July 29, 1994, AIMCO completed its initial public offering of 9,075,000
shares of AIMCO Common Stock and issued 966,000 shares of convertible
preferred stock and 513,514 unregistered shares of AIMCO Common Stock. On
such date, AIMCO and the AIMCO Predecessors engaged in a business
combination and consummated a series of related transactions which enabled
AIMCO to continue and expand the property management and related businesses
of the AIMCO Predecessors. The 966,000 shares of convertible preferred stock
and 513,514 shares of AIMCO Common Stock were repurchased by AIMCO in 1995.
(b) Represents the period January 1, 1994 through July 28, 1994, the date of the
completion of the business combination with AIMCO.
(c) In the second quarter of 1996, AIMCO reorganized the ownership of the
service company, whereby the Operating Partnership (i) owns all of the
non-voting preferred stock of the service company, PAMS Inc., representing a
95% economic interest, and (ii) owns the 1% general partnership interest in
PAMS LP. PAMS Inc. owns the 99% limited partnership interest in PAMS
LP. Substantially all of the activity of PAMS Inc. is conducted by PAMS
LP. Due to the Operating Partnership having 95% of the economic value of
PAMS Inc. and also controlling the general partnership interest in PAMS LP,
thereby having control over the activity of the partnership, the service
company is consolidated. Prior to the reorganization, AIMCO reported the
service company business on the equity method. The restatement has no impact
on net income, but does increase third party and affiliate management and
other income, management and other expenses, amortization of management
company goodwill and depreciation of non-real estate assets. AIMCO has
restated the balance sheet as of December 31, 1995 and 1994, and the
statements of income and statements of cash flows for the year ended
December 31, 1995 and the period from January 10, 1994 through December 31,
1994 to reflect the change.
(d) Represents AIMCO's share of earnings from 85,785 units in which AIMCO
purchased an equity interest from the NHP Real Estate Companies.
(e) Represents AIMCO's equity in earnings in ANHI.
(f) Subsequent to June 30, 1997, AIMCO issued 750,000 shares of AIMCO Class B
Preferred Stock and 12,052,418 shares of AIMCO Common Stock for aggregate
net proceeds of approximately $472 million. See "Business of AIMCO--Recent
Financings."
(g) AIMCO's management believes that the presentation of FFO, when considered
with the financial data determined in accordance with generally accepted
accounting principles, provides a useful measure of AIMCO's performance.
However, FFO does not represent cash flow and is not necessarily indicative
of cash flow or liquidity available to AIMCO, nor should it be considered an
alternative to net income as an indicator of operating performance. The
Board of Governors of NAREIT defines FFO as net income (loss), computed in
accordance with generally accepted accounting principles, excluding gains
and losses from debt restructuring and sales of property, plus real estate
related depreciation and amortization (excluding amortization of financing
costs), and after adjustments for unconsolidated partnerships and joint
ventures. In addition, AIMCO adjusts FFO for minority interest in the
Operating Partnership, amortization of management company goodwill, the
non-cash deferred portion of the income tax provision for unconsolidated
subsidiaries and the payment of dividends on preferred stock. AIMCO's
management believes that presentation of FFO provides investors with an
industry accepted measurement which helps facilitate an
81
<PAGE>
understanding of AIMCO's ability to meet required dividend payments, capital
expenditures and principal payments on its debt. There can be no assurance
that AIMCO's basis of computing FFO is comparable with that of other REITs.
The following is a reconciliation of Income before minority interest in
Operating Partnership to FFO:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED FOR THE PERIOD
JUNE 30, DECEMBER 31, JANUARY 10, 1994
---------------- ---------------- THROUGH DECEMBER
1997 1996 1996 1995 31, 1994
------- ------- ------- ------- -----------------
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Income before minority interest in
Operating Partnership................. $11,464 $ 7,078 $15,673 $14,988 $ 7,702
Gain on disposition of property......... -- -- (44) -- --
Extraordinary item...................... 269 -- -- -- --
Real estate depreciation, net of
minority interest in other
partnerships.......................... 13,250 9,060 19,056 15,038 4,727
Amortization of management company
goodwill.............................. 474 230 500 428 76
Equity in earnings of Unconsolidated
Subsidiaries:
Real estate depreciation.............. 1,263 -- -- -- --
Amortization of recoverable amount of
management contracts................ 150 -- -- -- --
Deferred income taxes................. 874 -- -- -- --
Real estate depreciation from
investments in partnerships........... 697 -- -- -- --
------- ------- ------- ------- -------
Net funds provided by operating
activities............................ 28,441 16,368 35,185 30,454 12,505
------- ------- ------- ------- -------
FINANCING ACTIVITIES
Payment of dividend on preferred
stock................................. -- -- -- (5,169) (3,114)
------- ------- ------- ------- -------
Net funds used in financing
activities............................ -- -- -- (5,169) (3,114)
------- ------- ------- ------- -------
Funds from Operations................... $28,441 $16,368 $35,185 $25,285 $ 9,391
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>
(h) After a one year holding period, OP Units may be tendered for redemption at
the option of the holder and, upon tender, may be acquired by AIMCO for
shares of AIMCO Common Stock at an exchange ratio of one share of AIMCO
Common Stock for each OP Unit (subject to adjustment).
82
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION OF NHP
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, PROPERTIES AND UNITS)
The historical summary financial information of NHP for each of the years in
the five year period ended December 31, 1996 has been derived from NHP's audited
consolidated financial statements. The historical summary financial information
for the six months ended June 30, 1997 and 1996 has been derived from NHP's
unaudited financial statements which, in the opinion of management, include all
adjustments (consisting only of normal and recurring adjustments except for
amounts discussed in note (h) to the table) necessary to present fairly the
information set forth below. This information should be read in conjunction with
such financial statements, including the notes thereto.
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------------------------- -----------------------------------------------------------------
1997 1996 1996(a) 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Total revenue(b)............ $104,603 $ 92,552 $194,979 $174,674 $147,296 $ 95,900 $ 91,559
Operating income............ 4,559(h) 10,043 20,677 19,307 14,741(c) 12,469 11,964
Income from continuing
operations before income
taxes................... 1,998(h) 8,848 17,442 13,811 9,005(c) 8,528 8,276
Income from continuing
operations.............. 1,199(h) 5,307 10,465 31,613(d) 9,005(c) 8,528 8,276
Income per common and
equivalent share from
continuing operations... $ 0.09(h) $ 0.42 0.82 3.27(d) 1.11(c) 1.04 1.00
OTHER INFORMATION:
Net Cash provided by (used
in):
Continuing operations
activities.............. $ 7,241 $ 12,339 $ 21,965 $ 9,700 $ 11,892 $ 12,056 $ 12,957
Investing activities...... (11,173) (37,473) (56,815) (16,026) (4,543) (19,695) (503)
Financing activities...... 8,355 19,626 33,797 8,786 (4,276) 23,416 1,963
EBITDA(e)................... $ 10,923(h) $ 12,701 27,745 23,402 17,386 13,848 13,249
Cash dividends per share.... -- -- -- -- -- -- --
Weighted average common and
equivalent shares
outstanding............... 12,959 12,684 12,730 9,645 8,095 8,209 8,291
Properties managed at period
end(f):
Affiliated................ 444 461 452 453 390 373 384
Unaffiliated.............. 283 259 265 258 224 199 21
------------ ------------ ------------ ------------ ------------ --------- ---------
Total....................... 727 720 717 711 614 572 405
------------ ------------ ------------ ------------ ------------ --------- ---------
------------ ------------ ------------ ------------ ------------ --------- ---------
Units managed at period end
(f):
Affiliated................ 78,034 79,812 78,750 77,627 63,064 58,372 61,782
Unaffiliated.............. 56,046 55,606 54,294 56,040 48,442 42,977 3,296
------------ ------------ ------------ ------------ ------------ --------- ---------
Total....................... 134,080 135,418 133,044 133,667 111,506 101,349 65,078
------------ ------------ ------------ ------------ ------------ --------- ---------
------------ ------------ ------------ ------------ ------------ --------- ---------
BALANCE SHEET DATA (END OF
PERIOD):
Total assets................ $232,477 $190,122 $218,141 $ 84,770 $ 57,668 $ 46,353 $ 15,095
Long-term debt, including
current portion........... 142,150(i) 117,138(i) 134,479(i) 23,690 70,133 72,429 44,523
Shareholders' equity
(deficit)(g).............. 58,952 56,013 56,013 39,154 (47,554) (63,584) (61,709)
</TABLE>
- ----------------------------------
(a) Due to the anticipated WMF Spin-Off, NHP's financial statements for the year
ended December 31, 1996 have been restated to reflect WMF as a discontinued
operation since April 1, 1996, the date of its acquisition by NHP.
(b) Includes $127,266, $117,249, $98,158, $60,223 and $58,500 of on-site
personnel, general and administrative cost reimbursement for the years ended
December 31, 1996, 1995, 1994, 1993, and 1992, respectively, and $64,900 and
$61,746 for the six months ended June 30, 1997 and 1996, respectively.
On-site personnel, general and administrative cost reimbursement represents
a pass-through of expenses incurred on behalf of property owners.
(c) Includes a write-off of $1.8 million ($.22 per share) of certain costs of
transferring operations to a new computer system that was not completed in a
timely manner.
(d) Includes a credit of $23.3 million ($2.42 per share) related to a change in
the valuation allowance on NHP's net deferred tax asset.
(e) EBITDA consists of income from continuing operations before interest
expense, income taxes, depreciation and amortization. EBITDA is included
because it is widely used in the industry as a measure of a company's
operating performance, but should not be construed as an alternative either
(i) to income from continuing operations (determined in accordance with
generally accepted accounting principles) as a measure of profitability or
(ii) to cash flows from operating activities (determined in accordance with
generally accepted accounting principles). EBITDA does not take into account
NHP's debt service requirements and other commitments and, accordingly, is
not necessarily indicative of amounts that may be available for
discretionary uses.
83
<PAGE>
The following is a reconciliation of income from continuing operations to
EBITDA:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
---------------- -----------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- ---------- ------- ------- ------- -------
(RESTATED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Income from continuing operations..... $ 1,199 $ 5,307 $10,465 $31,613 $ 9,005 $ 8,528 $ 8,276
Interest expense...................... 3,670 1,479 3,982 5,788 5,857 3,941 3,688
Income tax provision (credit)......... 799 3,541 6,977 (17,802) -- -- --
Amortization of management
contracts........................... 3,037 1,893 4,562 3,076 2,043 875 694
Other depreciation and amortization... 2,218 481 1,759 727 481 504 591
------- ------- ---------- ------- ------- ------- -------
EBITDA.................................. $10,923 $12,701 $27,745 $23,402 $17,386 $13,848 $13,249
------- ------- ---------- ------- ------- ------- -------
------- ------- ---------- ------- ------- ------- -------
</TABLE>
(f) Affiliated properties and units are properties (and units in properties)
with respect to which entities under common control with NHP have the right,
generally in their capacity as general partner, to select the management
agent.
(g) The deficit in shareholders' equity prior to 1995 is the result of losses
recorded from NHP's discontinued real estate operations.
(h) Includes non-recurring costs of $5,546 ($3,328 after-tax, or $0.26 per
share) recorded by NHP.
(i) Includes $71.2 million of real estate related debt that is non-recourse to
the NHP.
84
<PAGE>
PRO FORMA FINANCIAL INFORMATION (MERGER)
The following Pro Forma Condensed Consolidated Balance Sheet (Merger) of
AIMCO as of June 30, 1997 has been prepared as if each of the following
transactions had occurred as of June 30, 1997: (i) the Merger; (ii) the WMF
Spin-Off; (iii) the NHP Reorganization; and (iv) each of the transactions
reflected in the Pro Forma Condensed Consolidated Balance Sheet (Pre-Merger) of
AIMCO as of June 30, 1997, included elsewhere in this Joint Proxy
Statement/Prospectus. The following Pro Forma Condensed Consolidated Statements
of Operations (Merger) of AIMCO for the year ended December 31, 1996 and the six
months ended June 30, 1997 have been prepared as if each of the following
transactions had occurred as of January 1, 1996 (i) the Merger; (ii) the WMF
Spin-Off; (iii) the NHP Reorganization; and (iv) each of the transactions
reflected in the Pro Forma Condensed Consolidated Statements of Operations
(Pre-Merger) of AIMCO for the year ended December 31, 1996 and the six months
ended June 30, 1997.
The following Pro Forma Financial Information (Merger) assumes that ANHI
elects to receive Mixed Consideration, and all other NHP stockholders elect to
receive Stock Consideration. However, the notes to the pro forma financial
statements disclose the effect of all NHP stockholders electing to receive Mixed
Consideration. The Pro Forma Financial Information (Merger) also assumes that no
NHP stockholder will receive cash in lieu of Excess Shares or fractional shares.
The following Pro Forma Financial Information (Merger) is based, in part, on
the Pro Forma Financial Information (Pre-Merger) included elsewhere in this
Joint Proxy Statement/Prospectus. The Pro Forma Financial Information
(Pre-Merger) gives effect to all material transactions of AIMCO prior to the
Merger and as of the date of this Joint Proxy Statement/Prospectus, including
the NHP Stock Purchase, the purchase by AIMCO of 5,717,000 shares of NHP Common
Stock from ANHI in two separate transactions (the "ANHI Stock Transfers"), the
NHP Real Estate Acquisition, the NHP Real Estate Reorganization, certain
acquisitions and dispositions, certain completed sales of shares of AIMCO Common
Stock and the sale of shares of the AIMCO Class B Preferred Stock. See "Pro
Forma Financial Information (Pre-Merger)." The Pro Forma Financial Information
(Merger) is also based, in part, on the following historical financial
statements, which are incorporated by reference in this Joint Proxy
Statement/Prospectus: (i) the Consolidated Financial Statements of AIMCO for the
year ended December 31, 1996 and the six months ended June 30, 1997; (ii) the
restated Consolidated Financial Statements of NHP for the year ended December
31, 1996 (which have been restated to reflect WMF as a discontinued operation as
a result of the Rights Distribution) and for the six months ended June 30, 1997;
(iii) the Combined Financial Statements of the NHP Real Estate Companies for the
year ended December 31, 1996 and the three months ended March 31, 1997; (iv) the
Financial Statements of NHP Southwest Partners, L.P. for the year ended December
31, 1996 and the three months ended March 31, 1997; (v) the Combined Financial
Statements of the NHP New LP Entities for the year ended December 31, 1996 and
the three months ended March 31, 1997; (vi) the Combined Financial Statements of
the NHP Borrower Entities for the year ended December 31, 1996 and the three
months ended March 31, 1997; (vii) the Historical Summaries of Gross Income and
Certain Expenses of The Bay Club at Aventura for the year ended December 31,
1996 and the three months ended March 31, 1997; (viii) the Historical Summaries
of Gross Income and Direct Operating Expenses of Morton Towers for the year
ended December 31, 1996 and the six months ended June 30, 1997; and (ix) the
Combined Statement of Revenues and Certain Expenses of the Thirty-five
Acquisition Properties for the year ended December 31, 1996 and the six months
ended June 30, 1997. The Pro Forma Financial Information (Merger) should be read
in conjunction with such financial statements and the notes thereto.
The unaudited Pro Forma Financial Information (Merger) has been prepared
using the purchase method of accounting whereby the assets and liabilities of
NHP are adjusted to estimated fair market value, based upon preliminary
estimates, which are subject to change as additional information is obtained.
The allocations of purchase costs are subject to final determination based upon
estimates and other evaluations of fair market value. Therefore, the allocations
reflected in the following unaudited Pro Forma Financial Information (Merger)
may differ from the amounts ultimately determined.
The unaudited Pro Forma Financial Information (Merger) is presented for
informational purposes only and is not necessarily indicative of the financial
position or results of operations of AIMCO that would have occurred if such
transactions had been completed on the dates indicated, nor does it purport to
be indicative of future financial positions or results of operations. In the
opinion of AIMCO's management, all material adjustments necessary to reflect the
effects of these transactions have been made. The unaudited Pro Forma
Consolidated Statement of Operations (Merger) for the six months ended June 30,
1997 is not necessarily indicative of the results of operations to be expected
for the year ending December 31, 1997.
85
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (MERGER)
AS OF JUNE 30, 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
ADJUSTMENTS
-----------------------------------------------------------------------
PRE- MERGER AIMCO MERGER
PRO FORMA NHP MERGER BEFORE NHP NHP REOR- PRO FORMA
TOTAL HISTORICAL(B) ADJUSTMENTS(C) REORGANIZATION(D) GANIZATION(E) TOTAL
---------------- ------------ ---------------- --------------- ------------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Real estate...... $ 1,304,185 $ 89,952 $ 14,369(F) $ 1,408,506 $ (88,242)(K) $ 1,214,829
(105,435)(L)
Real estate held
for sale....... 6,873 -- -- 6,873 -- 6,873
Investments in
real estate
partnerships... 175,547 -- -- 175,547 (19,592)(K) 170,824
(22,049)(K)
36,918(L)
Investment in and
notes
receivable from
Unconsolidated
Subsidiaries... 19,456 -- -- 19,456 63,879(K) 157,944(S)
40,000(M)(N)
17,004(K)
17,605(M)(O)
Investment in NHP
Common Stock... 123,021 -- 15,581(G) -- -- --
119,737(H)
(258,339)(F)
Cash and cash
equivalents.... 77,698 2,040 -- 79,738 (1,136)(L) 77,698
(904)(M)
Restricted
cash........... 17,151 2,218 -- 19,369 (1,975)(L) 17,151
(243)(M)
Investment in
management
contracts...... 10,480 46,957 111,533(F) 62,355 (51,131)(M)(P) 11,224
(106,615)(I)
Goodwill......... -- 5,579 134,489(F) 140,068 (74,665)(M)(Q) 65,403
Accounts
receivable..... 19,611 17,292 -- 36,903 (17,292)(M) 19,611
Deferred
financing
costs.......... 9,423 1,201 -- 10,624 (1,201)(L) 9,423
Net deferred tax
asset.......... -- 12,797 (6,000)(J) - -- --
(6,797)(F)
Other assets..... 35,818 54,442 (6,505)(F) 60,776 (774)(L)
(22,979)(J) (24,184)(M) 35,818
---------------- ------------ ---------------- --------------- ---------- ----------------
$ 1,799,263 $ 232,478 $ (11,526) $ 2,020,215 $ (233,417) $ 1,786,798
---------------- ------------ ---------------- --------------- ---------- ----------------
---------------- ------------ ---------------- --------------- ---------- ----------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Secured long-term
notes
payable........ $ 576,418 $ 71,005 $ -- $ 647,423 $ (49,000)(K) $ 527,418
(71,005)(L)
Secured
short-term
financing...... -- -- 7,791(G) 7,791 (400)(L) 7,391(R)
Secured long-term
tax-exempt
financing...... 74,799 -- -- 74,799 -- 74,799
Unsecured
short-term
financing...... -- 71,145 -- 71,145 (71,145)(M) --
Accrued
management
contract
liability...... 106,615 -- (106,615)(I) -- -- --
Accounts payable,
accrued and
other
liabilities.... 48,229 16,809 5,497(F) 70,535 (2,013)(L) 51,729
(16,793)(M)
Resident security
deposits and
prepaid rents.. 8,580 -- -- 8,580 -- 8,580
Other long-term
liabilities.... -- 14,567 -- 14,567 (14,567)(M) --
Deferred tax
liability...... -- -- 8,309(F) 8,309 (8,309)(M) --
---------------- ------------ ---------------- --------------- ---------- ----------------
814,641 173,526 (85,018) 903,149 (233,232) 669,917
Minority interest
in other
partnerships
and
corporations... 19,351 -- -- 19,351 (185)(L) 19,166
Minority interest
in Operating
Partnership.... 105,396 -- -- 105,396 -- 105,396
Class B Preferred
Stock ($.01 par
value)......... 75,000 -- -- 75,000 -- 75,000
Class A Common
Stock ($.01 par
value)......... 353 127 3(G) 401 -- 401
45(H)
(127)(F)
Class B Common
Stock ($.01 par
value)......... 3 -- -- 3 -- 3
Additional
paid-in
capital........ 849,418 134,483 7,787(G) 981,814 -- 981,814
119,692(H)
(134,483)(F)
4,917(F)
Notes due on
common stock
purchases...... (40,603) -- -- (40,603) -- (40,603)
Retained earnings
(distributions
in excess of
earnings)...... (24,296) (75,658) (28,979)(J) (24,296) (24,296)
104,637(F)
---------------- ------------ ---------------- --------------- ---------- ----------------
859,875 58,952 73,492 992,319 -- 992,319(R)
---------------- ------------ ---------------- --------------- ---------- ----------------
$ 1,799,263 $ 232,478 $ (11,526) $ 2,020,215 $ (233,417) $ 1,786,798
---------------- ------------ ---------------- --------------- ---------- ----------------
---------------- ------------ ---------------- --------------- ---------- ----------------
The pro forma statement above is presented assuming all NHP stockholders (other than ANHI) elect to receive
Stock Consideration in the Merger. See note (R) for the effect on the pro forma statement assuming all NHP
stockholders elect to receive Mixed Consideration in the Merger.
</TABLE>
86
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (MERGER)
AS OF JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(A) Represents AIMCO's pro forma consolidated financial position as of June 30,
1997, which gives effect to the NHP Stock Purchase, the ANHI Stock
Transfers, the NHP Real Estate Acquisition, the NHP Real Estate
Reorganization, certain acquisitions and dispositions, certain completed
sales of shares of AIMCO Common Stock and the sale of the shares of AIMCO
Class B Preferred Stock. See "Pro Forma Financial Information (Pre-Merger)."
(B) Represents the unaudited consolidated financial position of NHP as of June
30, 1997.
(C) Represents the following adjustments occurring as a result of the Merger:
(i) the issuance of 4,767,365 shares of AIMCO Common Stock, valued at
approximately $127,527 (based on $26.75 per share, the closing sale price on
the NYSE of the AIMCO Common Stock on the date the Letter Agreement was
executed), as Merger Consideration to holders of NHP Common Stock
outstanding as of August 31, 1997 (including 291,240 shares, valued at
$7,790, issued to ANHI and 4,476,125 shares, valued at $119,737, issued to
NHP stockholders); (ii) the additional purchase price consideration of
$4,917 for the Merger resulting from the NHP Stock Options, which vested
upon the consummation of the Stock Purchase and will be converted to options
to purchase shares of AIMCO Common Stock; (iii) the allocation of the
combined purchase price of NHP and the NHP Real Estate Companies based on
the preliminary estimates of relative fair value of the combined assets and
liabilities of NHP and the NHP Real Estate Companies; and (iv) the
elimination of the net assets of WMF as a result of the WMF Spin-Off.
(D) Represents the effects of AIMCO's purchase of NHP immediately after the
Merger. These amounts do not give effect to the NHP Reorganization, which
includes the transfer of certain assets of NHP to the Unconsolidated
Subsidiaries and to the Unconsolidated Partnership. The NHP Reorganization
must occur immediately after the Merger in order for AIMCO to maintain its
qualification as a REIT. This column is included as an intermediate step to
assist the reader in understanding the entire nature of the Merger
transaction. The assets and liabilities of NHP are adjusted to estimated
fair market value, based upon preliminary estimates, which are subject to
change as additional information is obtained. The allocations of purchase
price are subject to final determination based upon estimates and other
evaluations of fair market value; therefore, the amount of goodwill is
subject to change. AIMCO has amortized goodwill associated with the Merger
using the straight-line method over 20 years, which is also preliminary and
is subject to change and could range from five to 20 years.
(E) Represents adjustments related to the NHP Reorganization, whereby AIMCO will
contribute to the combined Unconsolidated Subsidiaries: (i) certain assets
and liabilities of NHP, primarily related to the management operations and
other businesses owned by NHP; and (ii) sixteen real estate properties
containing 3,625 apartment units and the related liabilities, and interests
in four real estate partnerships owning four real estate properties
containing 2,836 apartment units. In addition, AIMCO will contribute twelve
real estate properties containing 2,905 apartment units to the
Unconsolidated Partnership. The adjustments reflect the transfer of assets
valued at AIMCO's new basis resulting from the allocation of the combined
purchase price of NHP and the NHP Real Estate Companies. AIMCO will receive
notes payable from the Unconsolidated Subsidiaries as consideration for
certain assets sold and will receive equity, in the form of preferred stock
in exchange for certain assets contributed. The businesses of NHP that will
be contributed to and operated by the Unconsolidated Subsidiaries have
goodwill associated with them; therefore, a portion of the goodwill has been
transferred to the Unconsolidated Subsidiaries. The net deferred tax
liability is assumed by the Unconsolidated Subsidiaries as it resulted from
the assets and liabilities transferred to the Unconsolidated Subsidiaries.
(F) On a pro forma basis, AIMCO currently has an investment in NHP Common Stock
of $123,021, comprised of 6,151,049 shares of NHP Common Stock. In
connection with the Merger, (i) AIMCO will issue 291,240 shares of AIMCO
Common Stock valued at $7,790 (based on $26.75 per share, the closing sale
price on the NYSE of the AIMCO Common Stock on the date the Letter Agreement
was executed) and pay cash of $7,791 to acquire 779,073 shares of NHP Common
Stock owned by ANHI; and (ii) AIMCO will issue 4,476,125 shares of AIMCO
Common Stock valued at $119,737 (based on $26.75 per share, the closing sale
price on the NYSE of the AIMCO Common Stock on the date the Letter Agreement
was executed), assuming all NHP stockholders elect to receive Stock
Consideration, to acquire the shares of NHP Common Stock owned by the NHP
stockholders. AIMCO's investment in NHP Common Stock of $258,339, which will
be eliminated upon completion of the Merger, is as follows:
<TABLE>
<S> <C>
Amount of NHP Common Stock at pre-Merger................................................ $ 123,021
Purchase NHP Common Stock from ANHI..................................................... 15,581
Purchase NHP Common Stock from public................................................... 119,737
---------
Total Investment........................................................................ $ 258,339
---------
---------
</TABLE>
87
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (MERGER)
AS OF JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
At June 30, 1997, NHP has a deferred tax asset in the amount of $12,797.
In connection with the WMF Spin-Off, the deferred tax asset will be reduced
by $6,000, which relates to net operating loss carryforwards which will be
utilized to reduce taxable gains related to the WMF Spin-Off. The remaining
deferred tax asset of $6,797 was netted against the deferred tax liability of
$15,106, of which the primary component is the difference between the new
basis of the management contracts, as a result of the combined purchase price
of NHP and the NHP Real Estate Companies, and the historical tax basis.
The total purchase price of NHP is $450,588, as follows:
<TABLE>
<S> <C>
Cash paid in the NHP Stock Purchase..................................................... $ 79,640
Issuance of 2,204,221 shares of AIMCO Common Stock in connection with the NHP Stock
Purchase at $26.75 per share.......................................................... 58,962
Issuance of 4,767,365 shares of AIMCO Common Stock in the Merger, at $26.75 per share... 127,527
Cash paid to ANHI as Mixed Consideration in the Merger.................................. 7,791
Assumption of NHP liabilities........................................................... 173,526
Transaction and severance costs......................................................... 5,497
Generation of deferred tax liability.................................................... 8,309
Consideration for NHP Stock Options outstanding......................................... 4,917
Less: Consideration given to ANHI in Merger............................................. (15,581)
---------
Total................................................................................... $ 450,588
---------
---------
</TABLE>
This amount was allocated to the various assets of NHP to be acquired in the
Merger, as follows:
<TABLE>
<S> <C>
Purchase price.......................................................................... $ 450,588
Historical basis of NHP's assets acquired............................................... (203,499)
---------
Step up to record fair value of NHP's assets purchased.................................. $ 247,089
---------
---------
</TABLE>
The step-up was applied to NHP's assets as follows:
<TABLE>
<S> <C>
Real estate............................................................................. $ 14,369
Investment in management contracts...................................................... 111,533
Reduction in value of other assets...................................................... (6,505)
Reclassification of deferred tax asset.................................................. (6,797)
Goodwill................................................................................ 134,489
---------
Total................................................................................... $ 247,089
---------
---------
</TABLE>
Goodwill of $134,489 represents the consideration paid in excess of
identifiable tangible assets and identifiable intangible assets, based on the
preliminary valuation of the tangible and intangible assets, including
businesses owned by NHP that provide (i) group purchasing services; (ii)
comprehensive risk-management and insurance services; (iii) asset management
services; (iv) the origination and underwriting of investments and long-term
asset management services to institutional investors that finance apartment
developments qualifying for the Federal low-income housing tax credit
program; (v) home health care assistance to residents; and (vi) the placement
of insurance coverage for master insurance programs and loss prevention
services.
As of June 30, 1997, NHP's shareholder's equity was $58,952, which is
detailed as follows:
<TABLE>
<S> <C>
Common stock............................................................................ $ 127
Additional paid-in capital.............................................................. 134,483
Retained earnings, of which $28,979 is attributable to WMF.............................. (75,658)
---------
Total shareholders' equity.............................................................. $ 58,952
---------
---------
</TABLE>
Upon completion of the Merger, the entire amount of common stock and
additional paid-in capital is eliminated, along with $104,637 of retained
deficit, representing the total amount of $(75,658), less the $28,979
allocated to WMF.
88
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (MERGER)
AS OF JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(G) Represents the issuance of 291,240 shares of AIMCO Common Stock, valued at
approximately $7,790, and borrowings incurred to fund the cash portion of
the Mixed Consideration payable to ANHI of $7,791, in exchange for 779,073
shares of NHP Common Stock owned by ANHI prior to the Merger.
(H) Represents the issuance of 4,476,125 shares of AIMCO Common Stock, valued at
approximately $119,737, to NHP stockholders, in exchange for all of the
shares of NHP Common Stock not owned by AIMCO or ANHI prior to the Merger,
assuming that all NHP stockholders elect to receive Stock Consideration. In
the Merger, NHP stockholders may elect to receive Stock Consideration or
Mixed Consideration. If all NHP stockholders elect to receive Mixed
Consideration, 2,238,063 fewer shares of AIMCO Common Stock would be issued
with a resulting decrease in stockholders' equity of $59,868 and an increase
in unsecured financing of approximately $59,868 (assuming the cash portion
of the Mixed Consideration is financed with additional borrowings.)
(I) Represents the elimination of the accrued liability related to management
contracts acquired in connection with the NHP Real Estate Acquisition.
Subsequent to the Merger, AIMCO will control all parties to the Master
Property Management Agreement and will eliminate such agreement.
(J) Represents the elimination of the net assets of WMF which are being
distributed as a result of the WMF Spin-Off.
(K) Represents the contribution from AIMCO to the Unconsolidated Subsidiaries,
at AIMCO's new basis as a result of the allocation of the combined purchase
prices of NHP and the NHP Real Estate Companies, of sixteen real estate
properties containing 3,625 apartment units and the related liabilities, and
the investment in four real estate partnerships owning four real estate
properties containing 2,836 apartment units and the related mortgage notes
payable, which bear interest at 7.98% per annum and mature in four years.
The real estate and the related mortgage notes payable are being contributed
to the Unconsolidated Subsidiaries to reduce future income taxes. In
exchange for such assets, AIMCO will receive notes receivable from the
Unconsolidated Subsidiaries of $63,879 and preferred stock of $17,004.
Certain of the interests in the real estate partnerships contributed to the
Unconsolidated Subsidiaries with a new basis of $22,049 will be controlled
by the Unconsolidated Subsidiaries and, therefore, the assets and
liabilities of such real estate partnerships are consolidated by the
Unconsolidated Subsidiaries. Prior to being contributed to the
Unconsolidated Subsidiaries, such interests in real estate partnerships had
been held by the Unconsolidated Partnership. The remainder of the interests
in real estate partnerships with a new basis of $19,592 will be accounted
for by the Unconsolidated Subsidiaries on the equity method.
(L) Represents the contribution to the Unconsolidated Partnership, at AIMCO's
new basis as a result of the allocation of the combined purchase prices of
NHP and the NHP Real Estate Companies, of the real estate owned by NHP prior
to the Merger, comprised of twelve real estate properties containing 2,905
apartment units.
(M) Represents certain assets and liabilities of NHP, primarily related to the
management operations and other businesses owned by NHP, contributed by
AIMCO to the Unconsolidated Subsidiaries, valued at AIMCO's new basis
resulting from the allocation of the combined purchase price of NHP and the
NHP Real Estate Companies.
(N) Pursuant to the NHP Reorganization, AIMCO is selling certain net assets to
the Unconsolidated Subsidiaries. In exchange for such assets, AIMCO will
receive a note receivable from the Unconsolidated Subsidiaries. The note
will bear interest at 10% per annum and mature in ten years.
(O) Represents the increase in AIMCO's investment in the Unconsolidated
Subsidiaries to reflect the contribution of the equity in certain assets and
liabilities to the Unconsolidated Subsidiaries.
(P) Represents the contribution to the Unconsolidated Subsidiaries of the
management operations and other businesses of NHP at AIMCO's new basis as a
result of the allocation of the combined purchase prices of NHP and the NHP
Real Estate Companies. The average remaining life of the management
contracts contributed is 14.66 years.
(Q) Represents the contribution of the goodwill related to the management
operations and the service provider businesses of NHP that are being
contributed to, and will be operated by the Unconsolidated Subsidiaries.
(R) Pursuant to the Merger, NHP stockholders may elect to receive Stock
Consideration or Mixed Consideration. If all NHP stockholders elect to
receive Mixed Consideration in the Merger, 2,238,063 fewer shares of AIMCO
Common Stock would be issued with a resulting decrease in stockholders'
equity of $59,868 and an increase in unsecured financing of approximately
$59,868 (assuming the cash portion of the Mixed Consideration is financed
with additional borrowings).
89
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (MERGER)
AS OF JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(S) Amount represents notes receivable from the Unconsolidated Subsidiaries of
$103,879, investment in preferred stock of the Unconsolidated Subsidiaries
of $54,155, and retained earnings of $(90). The combined Pro Forma Balance
Sheet (Merger) of the Unconsolidated Subsidiaries as of June 30, 1997 is
presented below, which reflects the effects of the Merger and the NHP
Reorganization as if such transactions had occurred as of June 30, 1997.
<TABLE>
<CAPTION>
ADJUSTMENTS
PRE-MERGER ----------------------------------- MERGER
PRO FORMA NHP REORGANIZA- PRO FORMA
TOTAL(i) MERGER(ii) TION(iii) TOTAL
---------- ---------- ---------------------- ---------
<S> <C> <C> <C> <C>
ASSETS
Real estate............................. $45,893 $ -- $ 88,242(iv) $134,135
Investment in real estate
partnerships.......................... -- -- 19,592(iv) 19,592
Investment in NHP Common Stock.......... 15,491 (15,581) 90(iv) --
Cash and cash equivalents............... 4,980 7,791 904(v) 13,675
Restricted cash......................... 761 -- 243(v) 1,004
Investment in management contracts...... 124 -- 51,131(v) 51,255
Goodwill................................ -- -- 74,665(v) 74,665
Deferred financing costs................ 594 -- -- 594
Investment in parent.................... -- 7,790 -- 7,790
Other assets............................ 353 -- 41,476(v)
(90)(iv) 41,739
---------- ---------- -------- ---------
$68,196 $ -- $276,253 $344,449
---------- ---------- -------- ---------
---------- ---------- -------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage and other notes payable........ $25,476 $ -- $ 49,000(iv)(vi) $ 74,476
Notes payable to AIMCO.................. -- -- 40,000(v)(vii)
63,879(iv)(vii) 103,879
Unsecured short-term financing.......... -- -- 71,145(v)(viii) 71,145
Accounts payable and other
liabilities........................... 990 -- 16,793(v) 17,783
Other long-term liabilities............. -- 14,567(v) 14,567
Deferred tax liability.................. -- -- 8,309(v)(ix) 8,309
---------- ---------- -------- ---------
26,466 -- 263,693 290,159
Minority interest in consolidated
partnerships.......................... 22,274 -- (22,049)(iv)(x) 225
Preferred Stock......................... 19,546 -- 17,605(v)
17,004(iv) 54,155
Common Stock............................ 2,000 -- -- 2,000
Retained earnings....................... (2,090) -- -- (2,090)
---------- ---------- -------- ---------
19,456 -- 34,609 54,065
---------- ---------- -------- ---------
$68,196 $ -- $276,253 $344,449
---------- ---------- -------- ---------
---------- ---------- -------- ---------
</TABLE>
(i) Represents the combined Unconsolidated Subsidiaries' pro forma
consolidated financial position as of June 30, 1997, which gives effect
to the ANHI Stock Transfers, reducing ANHI's ownership of NHP Common
Stock from 51.2% to 6.03%. See "Pro Forma Financial Information
(Pre-Merger)."
(ii) In connection with the Merger, AIMCO will acquire all of the
outstanding shares of NHP Common Stock, including shares owned by ANHI.
ANHI will elect to receive Mixed Consideration of 291,217 shares of AIMCO
Common Stock valued at approximately $7,790 (based on $26.75 per share,
the market price per share of AIMCO Common Stock on the date the Letter
Agreement was executed) and cash of $7,791 in exchange for the 779,073
shares of NHP Common Stock owned by ANHI.
(iii) Represents adjustments related to the NHP Reorganization, whereby
AIMCO will contribute or sell to the combined Unconsolidated
Subsidiaries: (i) certain assets and liabilities of NHP, primarily
related to the management operations and
90
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (MERGER)
AS OF JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
other businesses owned by NHP; and (ii) sixteen real estate properties
containing 3,625 apartment units and the related liabilities, and
interests in four real estate partnerships owning four real estate
properties containing 2,836 apartment units. In addition, AIMCO will
contribute twelve real estate properties containing 2,905 apartment units
to the Unconsolidated Partnership. The adjustments reflect the transfer
of assets valued at AIMCO's new basis resulting from the allocation of
the combined purchase price of NHP and the NHP Real Estate Companies.
AIMCO will receive notes payable from the Unconsolidated Subsidiaries as
consideration for certain assets sold and will receive equity, in the
form of preferred stock in exchange for certain assets contributed. The
businesses of NHP that will be contributed to and operated by the
Unconsolidated Subsidiaries have goodwill associated with them;
therefore, a portion of the goodwill has been transferred to the
Unconsolidated Subsidiaries. The net deferred tax liability is assumed by
the Unconsolidated Subsidiaries as it resulted from the assets and
liabilities transferred to the Unconsolidated Subsidiaries.
(iv) Represents the contribution from AIMCO to the Unconsolidated
Subsidiaries, at AIMCO's new basis as a result of the allocation of the
combined purchase prices of NHP and the NHP Real Estate Companies, of
sixteen real estate properties containing 3,625 apartment units and the
related liabilities, and interests in four real estate partnerships
owning four real estate properties containing 2,836 apartment units and
the related mortgage notes payable, which bear interest at 7.98% per
annum and mature in four years. The real estate and the related mortgage
note payable are being contributed to the Unconsolidated Subsidiaries to
reduce the income tax provision. In exchange for such assets, AIMCO will
receive notes receivable from the Unconsolidated Subsidiaries of $63,879
and preferred stock of $17,004. Certain of the interests in the real
estate partnerships contributed to the Unconsolidated Subsidiaries with a
new basis of $88,242 will be controlled by the Unconsolidated
Subsidiaries and, therefore, the assets and liabilities of such real
estate partnerships are consolidated by the Unconsolidated Subsidiaries.
Prior to being contributed to the Unconsolidated Subsidiaries, such
interests in real estate partnerships had been held by the Unconsolidated
Partnership. The remainder of the interests in the real estate
partnerships with a new basis of $19,592 will be accounted for by the
Unconsolidated Subsidiaries on the equity method.
(v) Represents certain assets and liabilities of NHP, primarily related to
the management operations and other businesses owned by NHP, contributed
by AIMCO to the Unconsolidated Subsidiaries, valued at AIMCO's new basis
resulting from the allocation of the combined purchase price of NHP and
the NHP Real Estate Companies.
(vi) Represents the mortgage note payable related to the real estate
contributed to the Unconsolidated Subsidiaries in conjunction with the
NHP Reorganization. The mortgage note payable bears interest at 7.98% per
annum and has a remaining life of four years.
(vii) Represents notes payable to AIMCO in exchange for certain of the
assets sold to the Unconsolidated Subsidiaries as part of the NHP
Reorganization. The notes bear interest at 10% per annum and have an
average life of ten years.
(viii)Represents the contribution of the NHP unsecured line of credit at
June 30, 1997 to the Unconsolidated Subsidiaries as part of the NHP
Reorganization. The NHP unsecured line of credit bears interest at a
floating rate of LIBOR plus 0.75% per annum (6.7% at June 30, 1997) and
has a remaining life of one year.
(ix) Represents the establishment of the estimated net deferred federal and
state tax liabilities at a combined rate of 40% for the estimated
difference between the book and tax basis of the net assets (other than
goodwill) of the Unconsolidated Subsidiaries. The primary component of
the deferred tax liability is the difference between the new basis of the
management contracts, as a result of the allocation of the combined
purchase price of NHP and the NHP Real Estate Companies, and the
historical tax basis.
(x) Represents adjustment to eliminate the minority interest in one real
estate partnership which owns fourteen real estate properties. Prior to
the Merger, the Unconsolidated Subsidiaries owned the general partnership
interests in the real estate partnership and AIMCO owned virtually all of
the limited partnership interests. Pursuant to the NHP Reorganization,
AIMCO has contributed its limited partnership interests to the
Unconsolidated Subsidiaries, resulting in the Unconsolidated Subsidiaries
owning 99% of the real estate partnership.
91
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
ADJUSTMENTS
PRE-MERGER ----------------------------------------------------
PRO FORMA NHP MERGER NHP REOR- PRO FORMA
TOTAL HISTORICAL(B) ADJUSTMENTS(C) GANIZATION(D) TOTAL
------------ -------------- ---------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property
revenues.................... $ 238,883 $ -- $ 11,002(E) $ (11,458)(L)
(11,002)(M) $ 227,425
Property operating expenses... (110,554) -- (5,937)(E) 5,516(L)
5,937(M) (105,038)
Owned property management
expense..................... (8,269) -- (853)(E) 415(L)
853(M)
473(N) (7,381)
------------ -------------- ---------------- -------- --------------
Income from property
operations before
depreciation................ 120,060 -- 4,212 (9,266) 115,006
Depreciation.................. (45,819) -- (3,650)(E) 3,088(L)
3,650(M) (42,731)
------------ -------------- ---------------- -------- --------------
Income from property
operations.................. 74,241 -- 562 (2,528) 72,275
------------ -------------- ---------------- -------- --------------
SERVICE COMPANY BUSINESS
Management fees and other
income...................... 17,502 194,979 (127,266)(F) (65,429)(O)
(1,851)(N) 17,935
Management and other
expenses.................... (13,562) (153,907) 127,266(F) 15,274(O)
9,654(G) 250(P) (15,025)
Corporate overhead
allocation.................. (590) -- -- -- (590)
Amortization of management
contracts and depreciation
and amortization of other
assets...................... (1,226) (6,321) (5,687)(H) 11,760(O) (1,474)
------------ -------------- ---------------- -------- --------------
2,124 34,751 3,967 (39,996) 846
Minority interest in service
company business............ 10 -- -- -- 10
------------ -------------- ---------------- -------- --------------
Company's share of income from
service company business.... 2,134 34,751 3,967 (39,996) 856
------------ -------------- ---------------- -------- --------------
General and administrative
expense..................... (1,512) (14,074) -- 14,074(O)
756(P) (756)
Interest expense.............. (50,638) (3,982) (4,082)(E) 3,982(O)
(560)(I) 4,011(L)
4,082(M) (47,187)(V)
Interest income............... 4,722 747 -- (747)(O)
319(Q)
200(R) 5,241
------------ -------------- ---------------- -------- --------------
Income (loss) before equity in
earnings of unconsolidated
subsidiaries, and minority
interests................... 28,947 17,442 (113) (15,847) 30,429
Equity in earnings of
unconsolidated
corporations................ 5,339 -- (4,984)(J) 1,928(S)
3,800(T)
6,069(T) 12,152
Equity in losses of
partnerships................ (7,830) -- (6,016)(K) 2,138(L)
(3,508)(M)
1,378(N) (13,838) (X)
------------ -------------- ---------------- -------- --------------
Income (loss) before minority
interests................... 26,456 17,442 (11,113) (4,042) 28,743
Minority interest in other
partnerships................ 2,666 -- 11(E) (12)(L) 2,665
------------ -------------- ---------------- -------- --------------
Income (loss) before minority
interest in Operating
Partnership................. 29,122 17,442 (11,102) (4,054) 31,408
Income tax provision.......... (6,977) -- 6,977(O)
Minority interest in Operating
Partnership................. (3,541) -- 197(U) (343)(U) (3,687)
------------ -------------- ---------------- -------- --------------
Net income (loss)............. $ 25,581 $ 10,465 $ (10,905) $ 2,580 $ 27,721(V)
------------ -------------- ---------------- -------- --------------
------------ -------------- ---------------- -------- --------------
Net income allocable to
preferred stockholder....... $ 5,344 $ 5,344
------------ --------------
------------ --------------
Net income allocable to common
stockholders................ $ 20,237 $ 22,377(V)
------------ --------------
------------ --------------
Net income per common
share(W).................... $ 0.60 $ 0.58(V)
------------ --------------
------------ --------------
Weighted average number of
common shares and common
share equivalents
outstanding................. 33,592 38,638(V)
------------ --------------
------------ --------------
</TABLE>
The pro forma statement above is presented assuming all NHP stockholders (other
than ANHI) elect to receive Stock Consideration. See note (V) for the effect on
the pro forma statement if all NHP stockholders elect to receive Mixed
Consideration.
92
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(A) Represents AIMCO's pro forma results of operations for the year ended
December 31, 1996 which give effect to the NHP Stock Purchase, the ANHI
Stock Transfers, the NHP Real Estate Acquisition, the NHP Real Estate
Reorganization, certain acquisitions and dispositions, certain completed
sales of AIMCO Common Stock and the sale of the shares of AIMCO Class B
Preferred Stock. See "Pro Forma Financial Information (Pre-Merger)."
(B) Represents the audited consolidated results of operations of NHP for the
year ended December 31, 1996, which have been restated to reflect WMF as a
discontinued operation as a result of the Rights Distribution.
(C) Represents the following adjustments occurring as a result of the Merger:
(i) the reclassification of NHP's real estate held for sale to real estate
held for investment; (ii) the offsetting of on-site personnel and general
and administrative cost reimbursement against the related revenue; (iii) the
reduction in personnel costs, primarily severance costs, pursuant to a
restructuring plan; (iv) the incremental amortization of the purchase price
adjustment related to the management contracts, furniture, fixtures and
equipment, and goodwill; (v) the reversal of equity in earnings in NHP
during the pre-merger period when AIMCO held a 47.62% interest in NHP; and
(vi) the amortization of the increased basis in investments in real estate
partnerships based on the purchase price adjustment related to the real
estate and an estimated average life of 17.5 years.
(D) Represents adjustments related to the NHP Reorganization, whereby AIMCO will
contribute to the combined Unconsolidated Subsidiaries: (i) certain assets
and liabilities of NHP, primarily related to the management operations and
other businesses owned by NHP; and (ii) sixteen real estate properties
containing 3,625 apartment units and the related liabilities, and interests
in four real estate partnerships owning four real estate properties
containing 2,836 apartment units. In addition, AIMCO will contribute twelve
real estate properties containing 2,905 apartment units to the
Unconsolidated Partnership. The adjustments represent (i) the related
revenues and expenses primarily related to the management operations and
other businesses owned by NHP; and (ii) the historical results of operations
of such real estate properties and interests in such real estate
partnerships contributed, with additional depreciation and amortization
recorded related to AIMCO's new basis resulting from the allocation of the
combined purchase price of NHP and the NHP Real Estate Companies.
(E) Represents the operating results of real estate held for investment by
AIMCO, which was classified as real estate held for sale by NHP prior to the
Initial NHP Stock Purchase.
(F) Represents the offsetting of on-site personnel and general and
administrative cost reimbursement against the related revenue.
(G) Represents a reduction in personnel costs, primarily severance costs,
pursuant to a restructuring plan, approved by AIMCO senior management,
specifically identifying all significant actions to be taken to complete the
restructuring plan, assuming that the Merger had occurred on January 1, 1996
and that the restructuring plan was completed on January 1, 1996.
(H) Represents incremental depreciation and amortization of the tangible and
intangible assets related to the property management and other business
operated by the Unconsolidated Subsidiaries, based on AIMCO's new basis as
adjusted by the allocation of the combined purchase price of NHP and the NHP
Real Estate Companies, including amortization of management contracts of
$3,702, depreciation of furniture, fixtures and equipment of $1,302 and
amortization of goodwill of $7,004, less NHP's historical depreciation and
amortization of $6,321. Management contracts are amortized using the
straight-line method over the weighted average life of the contracts
estimated to be 14.7 years. Furniture, fixtures and equipment are
depreciated using the straight-line method over the estimated life of 5
years. Goodwill is amortized using the straight-line method over 20 years.
The allocation of the purchase price of NHP is preliminary; therefore, the
amount and life of goodwill are subject to change as additional information
is obtained and the purchase price allocation is finalized. The expected
life of goodwill will depend upon the final valuation of the various
intangible assets, which could range from five years to 20 years. If the
estimated life of goodwill is ultimately determined to be five years,
goodwill amortization would be $28,016, net income applicable to common
shareholders would be $17,150 and net income per common share would be
$0.31.
(I) Represents the interest related to the indebtedness of $7,791 incurred to
finance the cash portion of the Merger Consideration to ANHI. The borrowings
were made under AIMCO's Credit Facility, which bears interest at LIBOR plus
1.70% per annum.
(J) Represents the reversal of equity in earnings in NHP during the period prior
to the Merger when AIMCO held a 47.62% interest in NHP, as a result of AIMCO
owning 100% of the NHP Common Stock pursuant to the Merger.
93
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(K) Represents adjustment for amortization of the increased basis in investments
in real estate partnerships, as a result of the allocation of the combined
purchase price of NHP and the NHP Real Estate Companies, based on an
estimated average life of 17.5 years.
(L) Represents the results of operations of real estate contributed to the
Unconsolidated Subsidiaries, including sixteen real estate properties
containing 3,625 apartment units and interests in four real estate
partnerships owning four real estate properties containing 2,836 apartment
units.
(M) Represents the contribution of NHP's twelve real estate properties
containing 2,905 apartment units to the Unconsolidated Partnership pursuant
to the NHP Reorganization.
(N) Represents the elimination of the income generated by the management
contracts which are related to the interests in real estate partnerships
owned by AIMCO or the Unconsolidated Partnership.
(O) Represents the historical income and expenses associated with certain assets
and liabilities of NHP that will be contributed to the Unconsolidated
Subsidiaries, primarily related to the management operations and other
businesses owned by NHP.
(P) Represents adjustments for management costs that will be incurred by the
Unconsolidated Subsidiaries rather than by AIMCO, primarily related to
personnel costs, for work performed on the businesses contributed to held by
the Unconsolidated Subsidiaries.
(Q) Represents the interest income of $6,388 earned on notes payable of $63,879
to AIMCO issued as consideration for certain real estate assets and
liabilities and interests in certain real estate partnerships sold to the
Unconsolidated Subsidiaries by AIMCO, net of the elimination of AIMCO's
share of the related interest expense of $6,069 reflected in the equity in
earnings of ANHI's operating results.
(R) Represents interest income of $4,000 earned on the notes receivable from the
Unconsolidated Subsidiaries, after elimination of AIMCO's share of $3,800 of
the related interest expense.
(S) Represents adjustment to AIMCO's equity in earnings of the Unconsolidated
Subsidiaries on a post-Merger basis, before elimination of interest expense
on notes receivable from the Unconsolidated Subsidiaries.
(T) Represents elimination of AIMCO's share of the related interest expense
reflected in the equity in earnings of ANHI's operating results.
(U) Represents adjustments to minority interest in the Operating Partnership
assuming the Merger had occurred as of January 1, 1996. On a pro forma
basis, giving effect to the Merger, as of December 31, 1996, the minority
interest percentage is approximately 11.74%, assuming that ANHI elects Mixed
Consideration and all other NHP stockholders elect Stock Consideration.
(V) Pursuant to the Merger, NHP stockholders may elect to receive Stock
Consideration or Mixed Consideration. Set forth below is a summary of the
pro forma net income applicable to holders of AIMCO Common Stock and net
income per common share (i) assuming that ANHI elects Mixed Consideration
and all other NHP stockholders, excluding AIMCO, elect to receive Stock
Consideration (Stock Consideration); and (ii) assuming all NHP stockholders,
excluding AIMCO but including ANHI, elect to receive Mixed Consideration
(Mixed Consideration). The detail below assumes an average interest rate of
7.19% per annum
94
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(representing LIBOR plus 1.70%, the current rate under AIMCO's unsecured
credit facility) on the additional borrowings of $59,868.
<TABLE>
<CAPTION>
STOCK MIXED
CONSIDERATION CONSIDERATION
------------- -------------
<S> <C> <C>
Increase in interest expense........................................ $ -- $ 4,304
------------- -------------
------------- -------------
Income before minority interest in Operating Partnership (after
minority interest in other partnerships).......................... $ 31,408 $ 27,104
Minority interest in Operating Partnership.......................... (3,687) (3,182)
------------- -------------
Net income.......................................................... $ 27,721 $ 23,922
------------- -------------
------------- -------------
Net income attributable to common stockholders...................... $ 22,377 $ 18,578
------------- -------------
------------- -------------
Net income per share................................................ $ 0.58 $ 0.51
------------- -------------
------------- -------------
Minority interest percentage........................................ 11.74% 11.74%
------------- -------------
------------- -------------
Number of common shares and common share equivalents................ 38,638 36,400
------------- -------------
------------- -------------
</TABLE>
Additionally, the following table presents the net impact to pro forma
net income applicable to holders of AIMCO Common Stock and net income per
common share assuming the interest rate increases by 0.25%.
<TABLE>
<CAPTION>
STOCK MIXED
CONSIDERATION CONSIDERATION
------------- -------------
<S> <C> <C>
Increase in interest expense........................................ $ -- $ 4,454
------------- -------------
------------- -------------
Income before minority interest in Operating Partnership (after
minority interest in other partnerships).......................... $ 30,140 $ 25,686
Minority interest in Operating Partnership.......................... (3,538) (3,016)
------------- -------------
Net income.......................................................... $ 26,602 $ 22,670
------------- -------------
------------- -------------
Net income attributable to common stockholders...................... $ 21,258 $ 17,326
------------- -------------
------------- -------------
Net income per share................................................ $ 0.55 $ 0.48
------------- -------------
------------- -------------
Minority interest percentage........................................ 11.74% 11.74%
------------- -------------
------------- -------------
Number of common shares and common share equivalents................ 38,638 36,400
------------- -------------
------------- -------------
</TABLE>
(W) In February 1997, the Financial Accounting Standards Board issued Statement
128 EARNINGS PER SHARE ("Statement 128") which specifies the computation,
presentation and disclosure requirements for basic earnings per share and
diluted earnings per share. AIMCO's management believes that adoption of
Statement 128 will not have a material effect on the earnings per share of
AIMCO.
95
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(X) The combined Pro Forma Statement of Operations (Merger) of the
Unconsolidated Subsidiaries for the year ended December 31, 1996 is
presented below, which reflects the effects of the Merger and the NHP
Reorganization as if these transactions had occurred as of January 1, 1996.
<TABLE>
<CAPTION>
PRE- ADJUSTMENTS
MERGER ----------------------------------- MERGER
PRO FORMA NHP PRO FORMA
TOTAL(i) MERGER(ii) REORGANIZATION(iii) TOTAL
---------- ---------- ---------------------- --------------
<S> <C> <C> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property
revenues.................... $ 12,777 $ -- $ 11,458(iv) $ 24,235
Property operating expenses... (8,665) -- (5,516)(iv) (14,181)
Owned property management
expense..................... (613) -- (415)(iv) (1,028)
---------- ---------- ------- --------------
Income from property
operations before
depreciation................ 3,499 -- 5,527 9,026
Depreciation.................. (1,606) -- (3,088)(iv) (4,694)
---------- ---------- ------- --------------
Income from property
operations.................. 1,893 -- 2,439 4,332
---------- ---------- ------- --------------
Management fees and other
income...................... -- -- 65,429(v) 65,429
Management and other
expenses.................... -- -- (15,524)(v) (15,524)
Amortization of management
contracts and goodwill and
depreciation and
amortization of other
assets...................... (41) -- (11,760)(v) (11,801)(ix)
---------- ---------- ------- --------------
(41) -- 38,145 38,104
---------- ---------- ------- --------------
General and administrative.... -- -- (14,830)(v) (14,830)
Interest expense.............. (2,640) -- (3,982)(v)
(3,910)(iv)
(4,000)(vi)
(6,388)(vi) (20,920)
Interest income............... -- -- 747(v) 747
---------- ---------- ------- --------------
Income before income taxes,
equity in earnings and
minority interests.......... (788) -- 8,221 7,433
Income tax provision.......... (249) -- (3,431)(vii) (3,680)
--
Equity in earnings of NHP..... 631 (631) -- --
Equity in losses of
unconsolidated
partnerships................ -- -- (1,358)(v) (1,358)
Minority interest in NHP...... -- -- -- --
Minority interest in
partnerships................ 780 -- (772)(viii) 8
---------- ---------- ------- --------------
Net income.................... $ 374 $ (631) $ 2,660 $ 2,403
---------- ---------- ------- --------------
---------- ---------- ------- --------------
Income attributable to
preferred stockholder....... $ 355 $ 2,283
---------- --------------
---------- --------------
Income attributable to common
stockholder................. $ 19 $ 120
---------- --------------
---------- --------------
</TABLE>
----------------------------
(i) Represents the combined Unconsolidated Subsidiaries' pro forma
consolidated statement of operations, which gives effect to the ANHI
Stock Transfers, reducing ANHI's ownership of NHP Common Stock from
51.3% to 6.03% of the outstanding shares of NHP Common Stock. See "Pro
Forma Financial Information (Pre-Merger)."
(ii) Represents adjustments for the Merger. Subsequent to the Merger, all of
the outstanding shares of NHP Common Stock will be owned by AIMCO.
(iii) Represents adjustments related to the NHP Reorganization, whereby AIMCO
will contribute to the combined Unconsolidated Subsidiaries: (i)
certain assets and liabilities of NHP, primarily related to the
management operations and other businesses owned by NHP; and (ii)
sixteen real estate properties containing 3,625 apartment units and the
related liabilities,
96
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
and interests in four real estate partnerships owning four real estate
properties containing 2,836 apartment units. Adjustments reflect (a)
income and expenses associated with certain assets and liabilities of
NHP that will be contributed to the Unconsolidated Subsidiaries,
primarily related to the management operations and other businesses
owned by NHP; (b) adjustments for management costs that will be
incurred by the Unconsolidated Subsidiaries rather than by AIMCO,
primarily related to personnel costs, for work performed on the
businesses contributed to the Unconsolidated Subsidiaries; (c)
depreciation and amortization of the tangible and intangible assets
related to the management operations and other business contributed to
the Unconsolidated Subsidiaries; (d) interest expense associated with
NHP's historical notes payable and on the notes payable to AIMCO; (e)
historical interest income of NHP; (f) income tax provision; and (g)
the historical results of operations of real estate properties and
interests in real estate partnerships contributed, with additional
depreciation and amortization recorded related to AIMCO's new basis
resulting from the allocation of the combined purchase price of NHP and
the NHP Real Estate Companies.
(iv) Represents adjustments for the historical results of operations of the
real estate properties and interest in real estate partnerships
contributed, with additional depreciation and amortization recorded
related to AIMCO's new basis resulting from the allocation of the
combined purchase price of NHP and the NHP Real Estate Companies.
(v) Represents adjustments to reflect income and expenses associated with
certain assets and liabilities of NHP contributed.
(vi) Represents the interest expense incurred on notes payable to AIMCO of
$40,000 issued in connection with the sale of certain assets and
liabilities to the Unconsolidated Subsidiaries and $63,879 issued in
connection with the sale of certain real estate assets and related
liabilities and interests in certain real estate partnerships to the
Unconsolidated Subsidiaries.
(vii) Represents the estimated Federal and state tax provisions, which are
calculated on the operating results of the Unconsolidated Subsidiaries,
excluding amortization of goodwill which is not deductible for tax
purposes. The Unconsolidated Subsidiaries current tax provision for the
year ended December 31, 1996 would be approximately $80 which differs
from the book tax provision primarily due to differences in
amortization of tangible and intangible assets and expensing of lease
and severance costs which are included in purchase consideration for
financial reporting.
(viii) Represents the reduction of minority interest in one real estate
partnership owning fourteen real estate properties containing 2,725
apartment units. As part of the NHP Reorganization, AIMCO will
contribute the limited partnership interests in the partnership
currently consolidated by the Unconsolidated Subsidiaries. Therefore,
the Unconsolidated Subsidiaries will own 99% of the interests in such
partnership.
(ix) The allocation of the purchase price of NHP is preliminary; therefore,
the amount and life of goodwill are subject to change as additional
information is obtained and the purchase price allocation is finalized.
In addition, a 20-year life for goodwill is preliminary and is subject
to change. The expected life of goodwill will depend upon the final
valuation of the various intangible assets, which could range from five
years to 20 years. If the estimated life of goodwill is ultimately
determined to be five years, amortization of management contracts and
goodwill and depreciation and amortization of other assets would be
$32,811 and net loss would be $(14,684).
97
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
ADJUSTMENTS
PRE-MERGER --------------------------------------------
PRO FORMA NHP MERGER NHP REOR- PRO FORMA
TOTAL(A) HISTORICAL(B) ADJUSTMENTS(C) GANIZATION(D) TOTAL
----------- ------------ --------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues................... $ 122,774 $ 2,916 $ 6,006(E) $ (6,188)(L)
(2,916)(M) $ 122,592
Property operating expenses.......................... (50,332) (1,863) (3,786)(E) 2,362(L)
1,863(M) (51,756)
Owned property management expense.................... (4,390) -- (427)(E) 182(L)
237(N) (4,398)
----------- ------------ --------------- ------------- -----------
Income from property operations before
depreciation....................................... 68,052 1,053 1,793 (4,460) 66,438
Depreciation......................................... (23,598) (500) (852)(E) 1,504(L)
1,352(M) (22,094)
----------- ------------ --------------- ------------- -----------
Income from property operations...................... 44,454 553 941 (1,604) 44,344
----------- ------------ --------------- ------------- -----------
SERVICE COMPANY BUSINESS
Management fees and other income..................... 7,010 101,687 (64,900)(F) (35,645)(O)
(926)(N) 7,226
Management and other expenses........................ (4,906) (79,633) 64,900(F) 14,003(O) (5,636)
Corporate overhead allocation........................ (294) -- -- -- (294)
Amortization of management contracts and depreciation
and amortization of other assets................... (635) (4,755) (1,249) (G) 5,880(O) (759)
----------- ------------ --------------- ------------- -----------
1,175 17,299 (1,249) 537
Minority Interest in service company business........ (2) -- -- -- (2)
----------- ------------ --------------- ------------- -----------
Company's share of income from service company
business........................................... 1,173 17,299 (1,249) (16,688) 535
----------- ------------ --------------- ------------- -----------
General and administrative expense................... (784) (13,293) 5,546(H) 8,125(O) (406)
Interest expense..................................... (26,202) (3,670) (2,304)(E) 3,670(O)
(277)(I) 2,006(L)
3,440(M) (23,337)(U)
Interest income...................................... 2,980 1,109 -- (1,109)(O)
159(P)
100(Q) 3,239
----------- ------------ --------------- ------------- -----------
Income (loss) before equity in earnings of
unconsolidated subsidiaries, and minority
interests.......................................... 21,621 1,998 2,657 (1,901) 24,375
Equity in earnings of unconsolidated corporations.... 611 -- (571)(J) (1,034)(R)
1,900(S)
3,035(S) 3,941(W)
Equity in losses of partnerships..................... (3,380) -- (3,008)(K) 713(L)
(1,936)(M)
689(N) (6,922)
----------- ------------ --------------- ------------- -----------
Income (loss) before minority interests.............. 18,852 1,998 (922) 1,466 21,394
Minority interest in other partnerships.............. (788) -- 7(E) (10)(M) (791)
----------- ------------ --------------- ------------- -----------
Income (loss) before minority interest in Operating
Partnership........................................ 18,064 1,998 (915) 1,456 20,603
Income tax provision................................. -- (799) -- 799(O) --
Minority interest in Operating Partnership........... (2,250) -- 350(T) (233)(T) (2,133)
----------- ------------ --------------- ------------- -----------
Net income (loss).................................... $ 15,814 $ 1,199 $ (565) $ 2,022 $ 18,470(U)
----------- ------------ --------------- ------------- -----------
----------- ------------ --------------- ------------- -----------
Net income allocable to preferred stockholder........ $ 2,672 $ 2,672
----------- -----------
----------- -----------
Net income allocable to common stockholders.......... $ 13,142 $ 15,798(U)
----------- -----------
----------- -----------
Net income per common share(V)....................... $ 0.37 $ 0.39(U)
----------- -----------
----------- -----------
Weighted average number of common shares and common
share equivalents outstanding...................... 35,281 40,307(U)
----------- -----------
----------- -----------
</TABLE>
The pro forma statement above is presented assuming all NHP stockholders
(other than ANHI) elect to receive Stock Consideration. See note (U) for the
effect on the pro forma statement assuming all NHP stockholders elect to receive
Mixed Consideration.
98
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(A) Represents AIMCO's pro forma results of operations for the six months ended
June 30, 1997, which gives effect to the NHP Stock Purchase, the ANHI Stock
Transfers, the NHP Real Estate Acquisition, the NHP Real Estate
Reorganization, certain acquisitions and dispositions, certain completed
sales of AIMCO Common Stock and the sale of the shares of AIMCO Class B
Preferred Stock. See "Pro Forma Financial Information (Pre-Merger)."
(B) Represents the unaudited consolidated results of operations of NHP for the
six months ended June 30, 1997.
(C) Represents the following adjustments occurring as a result of the Merger:
(i) the reclassification of NHP's real estate held for sale to real estate
held for investment; (ii) the offsetting of on-site personnel and general
and administrative cost reimbursement against the related revenue; (iii) the
reduction in personnel costs, primarily severance costs, pursuant to a
restructuring plan; (iv) the incremental amortization of the purchase price
adjustment related to the management contracts, furniture, fixtures and
equipment, and goodwill; (v) the reversal of equity in earnings in NHP
during the pre-merger period when AIMCO held a 47.62% interest in NHP; and
(vi) the amortization of the increased basis in investments in real estate
partnerships based on the purchase price adjustment related to the real
estate and an estimated average life of 17.5 years.
(D) Represents adjustments related to the NHP Reorganization, whereby AIMCO will
contribute or sell to the combined Unconsolidated Subsidiaries: (i) certain
assets and liabilities of NHP, primarily related to the management
operations and other businesses owned by NHP; and (ii) sixteen real estate
properties containing 3,625 apartment units and the related liabilities, and
interests in four real estate partnerships owning four real estate
properties containing 2,836 apartment units. In addition, AIMCO will
contribute twelve real estate properties containing 2,905 apartment units to
the Unconsolidated Partnership. The adjustments represent (i) the related
revenues and expenses primarily related to the management operations and
other businesses owned by NHP; and (ii) the historical results of operations
of such real estate properties and interests in such real estate
partnerships contributed, with additional depreciation and amortization
recorded related to AIMCO's new basis resulting from the allocation of the
combined purchase price of NHP and the NHP Real Estate Companies.
(E) Represents the operating results of real estate held for investment by
AIMCO, which was classified as real estate held for sale by NHP prior to the
Initial NHP Stock Purchase.
(F) Represents the offsetting of on-site personnel and general and
administrative cost reimbursement against the related revenue.
(G) Represents incremental depreciation and amortization of the tangible and
intangible assets related to the property management and other business
operated by the Unconsolidated Subsidiaries, based on AIMCO's new basis as
adusted by the allocation of the combined purchase price of NHP and the NHP
Real Estate Companies, including amortization of management contracts of
$1,851, depreciation of furniture, fixtures and equipment of $651 and
amortization of goodwill of $3,502, less NHP's historical depreciation and
amortization of $4,755. Management contracts are amortized using the
straight-line method over the weighted average life of the contracts
estimated to be 14.7 years. Furniture, fixtures and equipment are
depreciated using the straight-line method over the estimated life of 5
years. Goodwill is amortized using the straight-line method over 20 years.
The allocation of the purchase price of NHP is preliminary; therefore, the
amount and life of goodwill are subject to change as additional information
is obtained and the purchase price allocation is finalized. The expected
life of goodwill will depend upon the final valuation of the various
intangible assets, which could range from five years to 20 years. If the
estimated life of goodwill is ultimately determined to be five years,
goodwill amortization would be $14,008, net income applicable to common
shareholders would be $13,107 and net income per common share would be
$0.26.
(H) Represents a reduction in personnel costs, primarily severance costs,
pursuant to a restructuring plan, approved by AIMCO senior management,
specifically identifying all significant actions to be taken to complete the
restructuring plan, assuming that the Merger had occurred on January 1, 1996
and that the restructuring plan was completed on January 1, 1996.
(I) Represents the interest related to the indebtedness of $7,791 incurred to
finance the cash portion of the Merger Consideration to ANHI. The borrowings
were made under AIMCO's Credit Facility, which bears interest at LIBOR plus
1.70% per annum.
(J) Represents the reversal of equity in earnings in NHP during the pre-merger
period when AIMCO held a 47.62% interest in NHP, as a result of AIMCO's
acquisition of 100% of the NHP Common Stock.
(K) Represents adjustment for amortization of the increased basis in investments
in real estate partnerships, as a result of the allocation of the combined
purchase price of NHP and the NHP Real Estate Companies, based on an
estimated average life of 17.5 years.
99
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(L) Represents the results of operations of real estate contributed to the
Unconsolidated Subsidiaries, including sixteen real estate properties
containing 3,625 apartment units and interests in four real estate
partnerships owning four real estate properties containing 2,836 apartment
units.
(M) Represents the contribution of NHP's twelve real estate properties
containing 2,905 apartment units to the Unconsolidated Partnership pursuant
to the NHP Reorganization.
(N) Represents the elimination of the income generated by the management
contracts which are related to the interests in real estate partnerships
owned by AIMCO or the Unconsolidated Partnership.
(O) Represents the historical income and expenses associated with certain assets
and liabilities of NHP that will be contributed to the Unconsolidated
Subsidiaries, primarily related to the management operations and other
businesses owned by NHP.
(P) Represents the interest income of $3,194 earned on notes payable of $63,879
to AIMCO issued as consideration for certain real estate assets and
liabilities and interests in certain real estate partnerships sold to the
Unconsolidated Subsidiaries by AIMCO, net of the elimination of AIMCO's
share of the related interest expense of $3,035 reflected in the equity in
earnings of ANHI's operating results.
(Q) Represents interest income of $2,000 earned on the notes receivable from the
Unconsolidated Subsidiaries, after elimination of AIMCO's share of $1,900 of
the related interest expense.
(R) Represents adjustment to AIMCO's equity in income (loss) of the
Unconsolidated Subsidiaries on a post-Merger basis, before elimination of
interest expense on notes receivable from the Unconsolidated Subsidiaries.
(S) Represents elimination of AIMCO's share of the related interest expense
reflected in the equity in earnings of ANHI's operating results.
(T) Represents adjustments to minority interest in the Operating Partnership
assuming the Merger had occurred as of January 1, 1996. On a pro forma
basis, giving effect to the Merger, as of June 30, 1997, the minority
interest percentage is approximately 10.35%, assuming that ANHI elects to
receive Mixed Consideration and all other NHP stockholders elect to receive
Stock Consideration.
(U) Pursuant to the Merger, NHP stockholders may elect to receive Stock
Consideration or Mixed Consideration. Set forth below is a summary of the
pro forma net income applicable to holders of AIMCO Common Stock and net
income per share of AIMCO Common Stock (i) assuming that ANHI elects Mixed
Consideration and all other NHP stockholders, excluding AIMCO, elect to
receive Stock Consideration (Stock Consideration); and assuming all NHP
stockholders, excluding AIMCO but including ANHI, elect to receive Mixed
Consideration (Mixed Consideration). The detail below assumes an average
interest rate of 7.36% per annum (representing LIBOR plus 1.70%, the current
rate under AIMCO's unsecured credit facility) on the additional borrowings
of $59,868.
<TABLE>
<CAPTION>
STOCK MIXED
CONSIDERATION CONSIDERATION
------------- -------------
<S> <C> <C>
Increase in interest expense........................................ $ -- $ 2,204
------------- -------------
------------- -------------
Income before minority interest in Operating Partnership (after
minority interest in other partnerships).......................... $ 20,603 $ 18,399
Minority interest in Operating Partnership.......................... (2,133) (1,904)
------------- -------------
Net income.......................................................... $ 18,470 $ 16,495
------------- -------------
------------- -------------
Net income attributable to common stockholders...................... $ 15,798 $ 13,823
------------- -------------
------------- -------------
Net income per share................................................ $ 0.39 $ 0.36
------------- -------------
------------- -------------
Minority interest percentage in Operating Partnership............... 10.35% 10.35%
------------- -------------
------------- -------------
Number of common shares and common share equivalents................ 40,307 38,069
------------- -------------
------------- -------------
</TABLE>
100
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
Additionally, the following table presents the net impact to pro forma net
income applicable to holders of AIMCO Common Stock and net income per share
of AIMCO Common Stock assuming the interest rate per annum increases by
0.25%.
<TABLE>
<CAPTION>
STOCK MIXED
CONSIDERATION CONSIDERATION
------------- -------------
<S> <C> <C>
Increase in interest expense........................................ $ -- $ 2,279
------------- -------------
------------- -------------
Income before minority interest in Operating Partnership (after
minority interest in other partnerships).......................... $ 19,975 $ 17,696
Minority interest in Operating Partnership.......................... (2,067) (1,832)
------------- -------------
Net income.......................................................... $ 17,908 $ 15,864
------------- -------------
------------- -------------
Net income attributable to common stockholders...................... $ 15,236 $ 13,192
------------- -------------
------------- -------------
Net income per share................................................ $ 0.38 $ 0.35
------------- -------------
------------- -------------
Minority interest percentage in Operating Partnership............... 10.35% 10.35%
------------- -------------
------------- -------------
Number of common shares and common share equivalents................ 40,307 38,069
------------- -------------
------------- -------------
</TABLE>
(V) In February 1997, the Financial Accounting Standards Board issued Statement
128 which specifies the computation, presentation and disclosure
requirements for basic earnings per share and diluted earnings per share.
AIMCO's management believes that adoption of Statement 128 will not have a
material effect on the earnings per share of AIMCO.
101
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(W) The combined Pro Forma Statement of Operations (Merger) of the
Unconsolidated Subsidiaries for the six months ended June 30, 1997 is
presented below, which reflects the effects of the Merger and the NHP
Reorganization as if these transactions had occurred as of January 1, 1996.
<TABLE>
<CAPTION>
ADJUSTMENTS
PRE-MERGER ------------------------------
PRO FORMA
TOTAL(i) MERGER(ii)
---------- -----------
<S> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues................... $ 6,218 $ --
Property operating expenses.......................... (4,120) --
Owned property management expense.................... (308) --
---------- -----
Income from property operations before
depreciation....................................... 1,790 --
Depreciation......................................... (803) --
---------- -----
987 --
---------- -----
SERVICE COMPANY BUSINESS
Management fees and other income..................... -- --
Management and other expenses........................ -- --
Amortization of management contracts and goodwill and
depreciation and amortization of other assets...... (21)
---------- -----
(21) --
---------- -----
General and administrative........................... --
Interest expense..................................... (1,002) --
Interest income...................................... -- --
---------- -----
Income before income taxes, equity in earnings and
minority interests................................. (36) --
Income tax provision................................. (27)
Equity in earnings of NHP............................ 72 (72)
Minority interest in partnerships.................... 33
---------- -----
Net income........................................... $ 42 $ (72)
---------- -----
---------- -----
Income attributable to preferred stockholder......... $ 40
----------
----------
Income attributable to common stockholder............ $ 2
----------
----------
<CAPTION>
MERGER
NHP REOR- PRO FORMA
GANIZATION(iii) TOTAL
--------------- ---------
<S> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues................... $ 6,188(iv) $12,406
Property operating expenses.......................... (2,362)(iv) (6,482)
Owned property management expense.................... (183)(iv) (491)
------- ---------
Income from property operations before
depreciation....................................... 3,643 5,433
Depreciation......................................... (1,504)(iv) (2,307)
------- ---------
2,139 3,126
------- ---------
SERVICE COMPANY BUSINESS
Management fees and other income..................... 35,645(v) 35,645
Management and other expenses........................ (14,003)(v) (14,003)
Amortization of management contracts and goodwill and
depreciation and amortization of other assets...... (5,880)(v) (5,901)(ix)
------- ---------
15,762 15,741
------- ---------
General and administrative........................... (8,125)(v) (8,125)
Interest expense..................................... (3,670)(v)
(2,006)(iv)
(2,000)(vi) (11,872)
(3,194)(vi)
Interest income...................................... 1,109(v) 1,109
------- ---------
Income before income taxes, equity in earnings and
minority interests................................. 15 (21)
Income tax provision................................. (318)(vii) (345)
Equity in earnings of NHP............................ -- --
Minority interest in partnerships.................... (713)(viii) (680)
------- ---------
Net income........................................... $ (1,016) $(1,046)
------- ---------
------- ---------
Income attributable to preferred stockholder......... $ (994)
---------
---------
Income attributable to common stockholder............ $ (52)
---------
---------
</TABLE>
---------------------------
(i) Represents the combined Unconsolidated Subsidiaries' pro forma
consolidated statement of operations as of June 30, 1997, which gives
effect to the ANHI Stock Transfers, reducing ANHI's ownership of NHP
Common Stock from 51.3% to 6.03%. See "Pro Forma Financial Information
(Pre-Merger)."
(ii) Represents adjustments for the Merger. Subsequent to the Merger, all of
the outstanding shares of NHP Common Stock will be owned by AIMCO.
(iii) Represents adjustments related to the NHP Reorganization, whereby AIMCO
will contribute to the combined Unconsolidated Subsidiaries: (i)
certain assets and liabilities of NHP, primarily related to the
management operations and other businesses owned by NHP; and (ii)
sixteen real estate properties containing 3,625 apartment units and the
related liabilities, and interests in four real estate partnerships
owning four real estate properties containing 2,836 apartment units.
Adjustments reflect (i) income and expenses associated with certain
assets and liabilities of NHP that will be contributed to
102
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
the Unconsolidated Subsidiaries, primarily related to the management
operations and other businesses owned by NHP; (ii) adjustments for
management costs that will be incurred by the Unconsolidated
Subsidiaries rather than by AIMCO, primarily related to personnel
costs, for work performed on the businesses contributed to by the
Unconsolidated Subsidiaries; (iii) depreciation and amortization of the
tangible and intangible assets related to the management operations and
other business contributed to the Unconsolidated Subsidiaries; (iv)
interest expense associated with NHP's historical notes payable and on
the notes payable to AIMCO; (v) historical interest income of NHP; (vi)
income tax provision; and (vii) the historical results of operations of
real estate properties and interests in real estate partnerships
contributed, with additional depreciation and amortization recorded
related to AIMCO's new basis resulting from the allocation of the
combined purchase price of NHP and the NHP Real Estate Companies.
(iv) Represents adjustments for the historical results of operations of the
real estate properties and interest in real estate partnerships
contributed, with additional depreciation and amortization recorded
related to AIMCO's new basis resulting from the allocation of the
combined purchase price of NHP and the NHP Real Estate Companies.
(v) Represents adjustments to reflect income and expenses associated with
certain assets and liabilities of NHP contributed.
(vi) Represents the interest expense incurred on notes payable to AIMCO of
$40,000 issued in connection with the sale of certain assets and
liabilities to the Unconsolidated Subsidiaries and $63,879 issued in
connection with the sale of certain real estate assets and related
liabilities and interests in certain real estate partnerships to the
Unconsolidated Subsidiaries.
(vii) Represents the estimated Federal and state tax provisions, which are
calculated on the operating results of the Unconsolidated Subsidiaries,
excluding amortization of goodwill which is not deductible for tax
purposes. The Unconsolidated Subsidiaries current tax benefit for the
six months ended June 30, 1997 would be approximately $255, which
differs from the book tax provision primarily due to differences in
amortization of tangible and intangible assets and expensing of lease
costs which are included in purchase consideration for financial
reporting.
(viii) Represents the reduction of minority interest in one real estate
partnership owning fourteen real estate properties containing 2,725
apartment units. As part of the NHP Reorganization, AIMCO will
contribute the limited partnership interests in the partnership
currently consolidated by the Unconsolidated Subsidiaries. Therefore,
the Unconsolidated Subsidiaries will own 99% of the interests in such
partnership.
(ix) The allocation of the purchase price of NHP is preliminary; therefore,
the amount and life of goodwill are subject to change as additional
information is obtained and the purchase price allocation is finalized.
In addition a 20-year life for goodwill is preliminary and is subject
to change. The expected life of goodwill will depend upon the final
valuation of the various intangible assets, which could range from five
years to 20 years. If the life of goodwill is ultimately determined to
be five years, amortization of management contracts and goodwill and
depreciation and amortization of other assets would be $16,405 and net
loss would be $(9,585).
103
<PAGE>
PRO FORMA FINANCIAL INFORMATION (PRE-MERGER)
The following Pro Forma Consolidated Balance Sheet (Pre-Merger) of AIMCO as
of June 30, 1997 has been prepared as if each of the following transactions had
occurred as of June 30, 1997: (i) the issuance pursuant to AIMCO's 1997 Stock
Award and Incentive Plan (the "AIMCO Stock Plan") of 1,100,000 shares of AIMCO
Common Stock financed with notes receivable of $33,000 (the "July 1997 Stock
Sale"); (ii) the sale in August 1997 of 750,000 shares of AIMCO Class B
Preferred Stock and the application of the net proceeds thereof to repay
indebtedness (the "Preferred Stock Offering"); (iii) the sale in August 1997 of
2,400,000 shares of AIMCO Common Stock and the application of the net proceeds
thereof to purchase 3,717,000 shares of NHP Common Stock from ANHI (the "August
1997 Stock Offering"); (iv) the sale of 2,373,418 and 279,000 shares of AIMCO
Common Stock at $31.60 and $33.125 per share, respectively, and the application
of the net proceeds thereof of (a) $40,000 to purchase 2,000,000 shares of NHP
Common Stock from ANHI, (b) $7,040 and the issuance of 61,364 shares of AIMCO
Common Stock valued at $1,641 to purchase the 434,049 shares of NHP Common Stock
from Demeter and the Capricorn Sellers in the Subsequent NHP Stock Purchase, and
(c) $35,462 to reduce the amount outstanding under AIMCO's Credit Facility
(collectively, the "September 1997 Stock Offerings"); (v) the purchase of
886,600 shares of Common Stock in Ambassador (the "Ambassador Stock
Acquisition"); (vi) the receipt of a dividend from ANHI from proceeds ANHI
received from the ANHI Stock Transfers (the "ANHI Dividend"); (vii) the purchase
of third-party notes payable secured by three properties owned by real estate
partnerships in which AIMCO acquired ownership interests in the NHP Real Estate
Acquisition, and the conversion of such notes payable into loans from the
general partner (the "Loan Acquisitions"); (viii) the purchase of land leased by
two properties owned by real estate partnerships in which AIMCO acquired
ownership interests in the NHP Real Estate Acquisition (the "Land Lease
Acquisitions"); (ix) the payment of third-party notes payable secured by one
property owned by a real estate partnership in which AIMCO acquired ownership
interests in the NHP Real Estate Acquisition (the "Property Loan Payment"); (x)
the purchase of the Sawgrass Apartments (the "Sawgrass Acquisition"); (xi) the
purchase of an interest in a partnership owning the Morton Towers Apartments
(the "Morton Towers Acquisition"); (xii) the acquisition of the Los Arboles
Apartments (the "Los Arboles Acquisition"); (xiii) the sale in October 1997 of
7,000,000 shares of AIMCO Common Stock and the application of net proceeds
thereof (a) to pay a portion of the $261.5 million purchase price for a
portfolio of 35 multifamily properties containing 8,175 units from Winthrop
Financial Associates, and (b) to repay outstanding indebtedness (the "October
1997 Offering and Winthrop Acquisition"); and (xiv) the probable disposition of
five real estate properties (the "1997 Dispositions").
The following Pro Forma Consolidated Statement of Operations (Pre-Merger) of
AIMCO for the year ended December 31, 1996 has been prepared as if each of the
following transactions had occurred as of January 1, 1996: (i) the Initial NHP
Stock Purchase and the ANHI Stock Transfers; (ii) the NHP Real Estate
Acquisition; (iii) the NHP Real Estate Reorganization; (iv) AIMCO's acquisition
of (a) the Tustin East Village and The Californian apartments in June 1997, (b)
the Vinings at the Waterways in June 1997, (c) the Stonebrook Apartments in May
1997, and (d) The Bay Club at Aventura in April 1997 (collectively, the "Recent
Property Acquisitions"); (v) the sale of 1,265,000 shares of AIMCO Common Stock
in November 1996, and the application of the net proceeds thereof to repay
indebtedness (the "November 1996 Stock Offering"); (vi) the sale of 2,015,000
shares of AIMCO Common Stock in February 1997, and the application of the net
proceeds thereof to repay indebtedness (the "February 1997 Stock Offering");
(vii) the sale of an aggregate of 2,300,000 shares of AIMCO Common Stock in May
1997, and the application of the net proceeds thereof to repay indebtedness (the
"May 1997 Stock Offering"); (viii) the Preferred Stock Offering; (ix) the August
1997 Stock Offering; (x) the September 1997 Stock Offerings; (xi) the ANHI
Dividend; (xii) the Ambassador Stock Acquisition; (xiii) the Subsequent NHP
Stock Purchase; (xiv) the Loan Acquisitions; (xv) the Land Lease Acquisitions;
(xvi) the Property Loan Payment; (xvii) the Sawgrass Acquisition; (xviii) the
Morton Towers Acquisition; (xix) the Los Arboles Acquisition; (xx) the
acquisition during 1996 of (a) seven multifamily apartment properties, (b)
general and limited partnership interests in limited partnerships owning 22
multifamily apartment properties, and (c) general partnership interests in and
loans to limited partnerships owning 12 multifamily apartment properties, and
the related issuance of AIMCO Common Stock and OP
104
<PAGE>
Units and the incurrence of indebtedness to finance such acquisitions, and the
refinancing of such indebtedness (the "1996 Acquisitions"); (xxi) the October
1997 Offering and Winthrop Acquisition; (xxii) the disposition of four
multifamily apartment properties in 1996 (the "1996 Dispositions"); (xxiii) the
1997 Dispositions; and (xxiv) the purchase of a management company in the third
quarter of 1996 (the "Management Company Acquisition"). The July 1997 Stock Sale
has no impact on the Pro Forma Statement of Operations.
The following Pro Forma Consolidated Statement of Operations (Pre-Merger) of
AIMCO for the six months ended June 30, 1997 has been prepared as if each of the
following transactions had occurred as of January 1, 1996: (i) the Initial NHP
Stock Purchase and the ANHI Stock Transfers; (ii) the NHP Real Estate
Acquisition; (iii) the Recent Property Acquisitions; (iv) the February 1997
Stock Offering; (v) the May 1997 Stock Offering; (vi) the Preferred Stock
Offering; (vii) the August 1997 Stock Offering; (viii) the September 1997 Stock
Offerings; (ix) the ANHI Dividend; (x) the Ambassador Stock Acquisition; (xi)
the Subsequent NHP Stock Purchase; (xii) the Loan Acquisitions; (xiii) the Land
Lease Acquisitions; (xiv) the Property Loan Payment; (xv) the Sawgrass
Acquisition; (xvi) the Morton Towers Acquisition; (xvii) the Los Arboles
Acquisition; (xviii) October 1997 Offering and Winthrop Acquisition; and (xix)
the 1997 Dispositions. The July 1997 Stock Sale has no impact on the Pro Forma
Statement of Operations.
The following Pro Forma Financial Information (Pre-Merger) is based, in
part, on the following historical financial statements, which are incorporated
by reference in this Joint Proxy Statement/Prospectus: (i) the Consolidated
Financial Statements of AIMCO for the year ended December 31, 1996 and the six
months ended June 30, 1997; (ii) the restated Consolidated Financial Statements
of NHP for the year ended December 31, 1996 (which have been restated to reflect
WMF as a discontinued operation as a result of the Rights Distribution) and for
the six months ended June 30, 1997; (iii) the Combined Financial Statements of
the NHP Real Estate Companies for the year ended December 31, 1996 and the three
months ended March 31, 1997; (iv) the Financial Statements of NHP Southwest
Partners, L.P. for the year ended December 31, 1996 and the three months ended
March 31, 1997; (v) the Combined Financial Statements of the NHP New LP Entities
for the year ended December 31, 1996 and the three months ended March 31, 1997;
(vi) the Combined Financial Statements of the NHP Borrower Entities for the year
ended December 31, 1996 and the three months ended March 31, 1997; (vii) the
Historical Summaries of Gross Income and Certain Expenses of The Bay Club at
Aventura for the year ended December 31, 1996 and the three months ended March
31, 1997; (viii) the Historical Summaries of Gross Income and Direct Operating
Expenses of Morton Towers for the year ended December 31, 1996 and the six
months ended June 30, 1997; and (ix) the Combined Statement of Revenues and
Certain Expenses of the Thirty-five Acquisition Properties for the year ended
December 31, 1996 and the six months ended June 30, 1997. The Pro Forma
Financial Information (Pre-Merger) should be read in conjunction with such
financial statements and the notes thereto. In the opinion of AIMCO's
management, all material adjustments necessary to reflect the effects of these
transactions have been made.
The unaudited Pro Forma Financial Information (Pre-Merger) has been prepared
using the purchase method of accounting whereby the assets and liabilities of
NHP are adjusted to estimated fair market value, based upon preliminary
estimates, which are subject to change as additional information is obtained.
The allocations of purchase costs are subject to final determination based upon
estimates and other evaluations of fair market value. Therefore, the allocations
reflected in the following unaudited Pro Forma Financial Information
(Pre-Merger) may differ from the amounts ultimately determined.
The unaudited Pro Forma Financial Information (Pre-Merger) is presented for
informational purposes only and is not necessarily indicative of the financial
position or results of operations of AIMCO that would have occurred if such
transactions had been completed on the dates indicated, nor does it purport to
be indicative of future financial positions or results of operations. In the
opinion of AIMCO's management, all material adjustments necessary to reflect the
effects of these transactions have been made. The unaudited Pro Forma
Consolidated Statement of Operations (Pre-Merger) for the six months ended June
30, 1997 is not necessarily indicative of the results of operations to be
expected for the year ending December 31, 1997.
105
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (PRE-MERGER)
AS OF JUNE 30, 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
OCTOBER 1997
OFFERING AND
AIMCO STOCK PROPERTY WINTHROP PROPERTY PRO FORMA
HISTORICAL(A) OFFERINGS(B) ACQUISITIONS(C) ACQUISITION(D) DISPOSITIONS(E) TOTAL
------------- ------------ --------------- -------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Real estate................... $ 945,969 $ -- $ 12,460(K) $261,500 $-- $ 1,304,185
9,724(L)
12,462(M)
62,070(N)
Real estate held for sale..... 25,945 -- -- -- (19,072) 6,873
Investments in and notes
receivable from real estate
partnerships................ 151,547 -- 24,000(O) -- -- 175,547
Investment in and notes
receivable from
Unconsolidated
Subsidiaries................ 57,231 (38,000)(F) 225(P) -- -- 19,456(S)
Investment in NHP Common
Stock....................... -- 74,340(G) -- -- -- 123,021
48,681(H)
Cash and cash equivalents..... 21,521 -- -- 56,177 -- 77,698
Restricted cash............... 17,963 -- -- -- (812) 17,151
Investment in management
contracts................... 10,480 -- -- -- -- 10,480
Accounts receivable........... 18,870 -- 767(N) -- (26) 19,611
Deferred financing costs...... 7,184 -- 858(L) 1,381 -- 9,423
Other assets.................. 16,180 -- (225)(P) -- (75) 35,818
57(N)
19,881(Q)
------------- ------------ --------------- -------------- --------------- -----------
$1,272,890 $ 85,021 $142,279 $319,058 $(19,985) $ 1,799,263
------------- ------------ --------------- -------------- --------------- -----------
------------- ------------ --------------- -------------- --------------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Secured long-term notes
payable..................... $ 464,780 $ -- $(28,703)(O) $147,881 $-- $ 576,418
(7,540)(R)
Secured short-term
financing................... 71,878 (71,878)(I) 52,703(O) (37,303) (9,869) --
(35,462)(H) 7,540(R)
(38,000)(F) 12,460(K)
10,582(L)
12,462(M)
5,006(N)
19,881(Q)
Secured long-term tax-exempt
bond financing.............. 74,799 -- -- -- -- 74,799
Unsecured short-term
financing................... 33,000 -- -- (33,000) -- --
Accrued management contract
liability................... 106,615 -- -- -- -- 106,615
Accounts payable, accrued and
other liabilities........... 56,997 (2,222)(I) 877(N) -- (7,423) 48,229
Resident security deposits and
prepaid rents............... 6,353 -- 2,255(N) -- (28) 8,580
------------- ------------ --------------- -------------- --------------- -----------
814,422 (147,562) 87,523 77,578 (17,320) 814,641
------------- ------------ --------------- -------------- --------------- -----------
Minority interest in other
partnerships and
corporations................ 6,625 -- 12,726(N) -- -- 19,351
Minority interest in Operating
Partnership................. 63,366 -- 42,030(N) -- -- 105,396
Class B Preferred Stock ($.01
par value).................. -- 75,000(I) -- -- -- 75,000
Class A Common Stock ($.01 par
value)...................... 221 11(J) -- 70 -- 353
24(G)
27(H)
Class B Common Stock ($.01 par
value)...................... 3 -- -- -- -- 3
Additional paid-in capital.... 417,487 (900)(I) -- 241,410 -- 849,418
32,989(J)
74,316(G)
84,116(H)
Notes due on common stock
purchases................... (7,603) (33,000)(J) -- -- -- (40,603)
Retained earnings
(distributions in excess of
earnings)................... (21,631) -- -- -- (2,665) (24,296)
------------- ------------ --------------- -------------- --------------- -----------
388,477 232,583 -- 241,480 (2,665) 859,875
------------- ------------ --------------- -------------- --------------- -----------
$1,272,890 $ 85,021 $142,279 $319,058 $(19,985) $ 1,799,263
------------- ------------ --------------- -------------- --------------- -----------
------------- ------------ --------------- -------------- --------------- -----------
</TABLE>
106
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (PRE-MERGER)
AS OF JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(A) Represents AIMCO's unaudited condensed consolidated financial position as of
June 30, 1997, which includes the acquisition of the NHP Real Estate
Companies (including the NHP Real Estate Reorganization) and the Initial NHP
Stock Purchase.
(B) Represents adjustments to reflect (i) the July 1997 Stock Sale; (ii) the
Preferred Stock Offering; (iii) the August 1997 Stock Offering (iv) the
September 1997 Stock Offerings; (v) the Subsequent NHP Stock Purchase; and
(vi) the ANHI Dividend.
(C) Represents adjustments to reflect (i) the Loan Acquisitions; (ii) the Land
Lease Acquisitions; (iii) the Property Loan Payment; (iv) the Sawgrass
Acquisition; (v) the Morton Towers Acquisition; (vi) the Los Arboles
Acquisition; and (vii) the Ambassador Stock Acquisition.
(D) Represents adjustments to reflect the issuance of 7,000,000 shares of AIMCO
Common Stock in the October 1997 Offering, resulting in net proceeds of
$241,480 and the application of such net proceeds (i) to pay $115,000
towards the purchase of the Winthrop Acquisition, with a total purchase
price of $261,500 including $8,000 related to closing and transactions
costs; and (ii) to repay $126,480 of secured short-term financing which
bears interest at a variable rate of LIBOR plus 1.45%. The remainder of the
Winthrop Acquisition will be financed by assuming a mortgage loan in the
amount of $8,345, which bears interest at a rate of 10.04% and matures April
1, 2002, and with borrowings on a mortgage loan of $139,536, including
$1,381 in deferred financing costs, which will bear interest at 7.1% and
mature in 2017.
(E) Represents adjustments to reflect the 1997 Dispositions comprised of five
properties containing 916 apartment units.
(F) Represents adjustments for the ANHI Dividend, which was used to reduce
amounts outstanding under secured short-term financing.
(G) Represents the issuance of 2,400,000 shares of AIMCO Common Stock in the
August 1997 Stock Offering, resulting in net proceeds of $74,340, and the
application of such net proceeds to purchase 3,717,000 shares of NHP Common
Stock from ANHI.
(H) Represents the issuance of 2,562,418 shares of AIMCO Common Stock in the
September 1997 Stock Offerings, resulting in net proceeds of $82,502, and
the application of such net proceeds to purchase 2,000,000 shares of NHP
Common Stock from ANHI, to effect the Subsequent NHP Stock Purchase and to
reduce amounts outstanding under secured short-term financing. Also
represents adjustments for the 61,364 shares of AIMCO Common Stock issued in
connection with the Subsequent NHP Stock Purchase with a value of $1,641.
(I) Represents the issuance of 750,000 shares of AIMCO Class B Preferred Stock
at $100 per share; the payment of transaction costs of $900 incurred in the
Preferred Stock Offering and the repayment of $71,878 of secured short-term
financing and the payment of accrued liabilities of $2,222 with the net
proceeds of the Preferred Stock Offering.
(J) Represents the issuance of 1,100,000 shares of AIMCO Common Stock in the
July 1997 Stock Sale and the notes receivable from officers financing such
sale of $33,000, which are reflected as a reduction of shareholders' equity
until actually paid.
(K) Represents adjustments for the Land Lease Acquisitions, which were financed
with secured short-term financing.
(L) Represents adjustments for the Sawgrass Acquisition, which was financed with
new secured short-term financing, for which deferred loan costs of $858 were
incurred.
(M) Represents adjustments for the Los Arboles Acquisition, which was financed
with secured short-term financing.
(N) Represents adjustments for the Morton Towers Acquisition, which was financed
with secured short-term financing and issuance of 1.4 million OP Units
valued at $42,030.
(O) Represents adjustments for the Loan Acquisitions, which were financed with
secured short-term financing. The general partner loans from AIMCO to two of
the real estate partnerships totaling $28,703 are eliminated upon
consolidation of the real estate partnerships into AIMCO's financial
statements.
(P) Represents the reclassification of the investment in one of the
Unconsolidated Subsidiaries from other assets to investment in and notes
receivable from Unconsolidated Subsidiaries.
(Q) Represents adjustments for the Ambassador Stock Acquisition.
(R) Represents adjustments for the Property Loan Payment, which was financed
with secured short-term financing.
107
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (PRE-MERGER)
AS OF JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(S) Amount represents investment in preferred stock of the Unconsolidated
Subsidiaries of $19,546 and retained earnings of $(90). The combined Pro
Forma Balance Sheet (pre-Merger) of the Unconsolidated Subsidiaries as of
June 30, 1997 is presented below. At June 30, 1997, the Unconsolidated
Subsidiaries include (i) ANHI, which owned 51.3% of the outstanding shares
of NHP Common Stock prior to the ANHI Stock Transfers and (ii) an
Unconsolidated Subsidiary which owns the general partnership interest, and
therefore controls, one real estate partnership, owning fourteen real estate
properties with 2,725 apartment units. Interests held by limited partners in
the real estate partnerships controlled by the Unconsolidated Subsidiary are
reflected as minority interest in consolidated partnerships.
<TABLE>
<CAPTION>
ADJUSTMENTS
-----------------------------
ANHI STOCK PRE-MERGER
TRANSFERS UNCONSOLIDATE PRO FORMA
HISTORICAL (i) (ii) NHP (iii) TOTAL (vi)
-------------- ------------- ------------- ----------
<S> <C> <C> <C> <C>
ASSETS
Real estate................................................ $143,638 $ -- $ (97,745) $45,893
Investment in NHP Common Stock............................. -- (74,340)(iv) 129,831 15,491
(40,000)(v)
Cash and cash equivalents.................................. 3,280 1,740(iv) (2,040) 4,980
2,000(v)
Restricted cash............................................ 2,979 -- (2,218) 761
Investment in management contracts......................... 101,661 -- (101,537) 124
Goodwill................................................... 87,388 -- (87,388) --
Deferred financing costs................................... 4,718 -- (4,124) 594
Other assets............................................... 61,480 -- (61,127) 353
-------------- ------------- ------------- ----------
$405,144 $(110,600) $(226,348) $68,196
-------------- ------------- ------------- ----------
-------------- ------------- ------------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage and other notes payable........................... $ 96,481 $ -- $ (71,005) $25,476
Secured short-term financing............................... 72,600 (72,600)(iv) -- --
Unsecured short-term financing............................. 71,145 -- (71,145) --
Accounts payable and other liabilities..................... 37,729 -- (36,739) 990
Deferred tax liability..................................... 10,124 -- (10,124) --
-------------- ------------- ------------- ----------
288,079 (72,600) (189,013) 26,466
Minority interest in consolidated partnerships............. 59,609 -- (37,335) 22,274
Preferred Stock............................................ 57,546 (38,000)(v) -- 19,546
Common Stock............................................... -- 2,000(v) -- 2,000
Retained earnings.......................................... (90) (2,000)(v) -- (2,090)
-------------- ------------- ------------- ----------
57,456 (38,000) -- 19,456
-------------- ------------- ------------- ----------
$405,144 $(110,600) $(226,348) $68,196
-------------- ------------- ------------- ----------
-------------- ------------- ------------- ----------
</TABLE>
-----------------------------------
(i) Represents the combined unaudited Unconsolidated Subsidiaries'
consolidated financial position as of June 30, 1997.
(ii) Represents the sale of 5,717,000 shares of NHP Common Stock to AIMCO
for $114,340 and the use of proceeds from the sales.
(iii) Represents the adjustments to ANHI's balance sheet to reflect the
reduction in ownership of NHP Common Stock from 51.3% to 6.03%
following the ANHI Stock Transfers. As a result of the sales of such
shares of NHP Common Stock to AIMCO, ANHI's investment in NHP Common
Stock is accounted for on the equity method.
(iv) Represents the sale of 3,717,000 shares of NHP Common Stock to AIMCO
for $74,340 and the repayment of the ANHI Credit Facility of $72,600
and the receipt of cash of $1,740 with the proceeds from the sale.
(v) Represents the sale of 2,000,000 shares of NHP Common Stock to AIMCO
for $40,000 and the distribution of such proceeds to the stockholders
of ANHI. The holders of the common stock of ANHI used the distribution
of $2,000 to make a payment on the note receivable to ANHI for such
common stock.
(vi) The pre-Merger pro forma total for the Unconsolidated Subsidiaries
represents the investment in NHP Common Stock of 6.03% and the
consolidated financial position of one real estate partnership owning
fourteen real estate properties containing 2,725 apartment units in
which the Unconsolidated Subsidiaries own the 1% general partnership
interest.
108
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
ADJUSTMENTS
--------------------------------------------------------------------------------
OCTOBER 1997
NHP REAL NHP REAL OFFERING AND
AIMCO ESTATE ESTATE NHP STOCK WINTHROP PRO FORMA
HISTORICAL(A) ADJUSTMENTS(B) COMPANIES(C) ACQUISITION(D) PURCHASE(E) ACQUISITION(F) TOTAL
------------- -------------- ------------ -------------- ------------ ---------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
RENTAL PROPERTY
OPERATIONS
Rental and other
property
revenues....... $100,516 $ 73,744(G) $ 29,243 $(13,391)(O) $-- $ 48,771 $ 238,883
Property
operating
expenses....... (38,400) (41,419)(G) (18,125) 9,286(O) -- (21,896) (110,554)
Owned property
management
expense........ (2,746) (2,552)(G) (1,293) 635(O) -- (2,313) (8,269)
------------- -------------- ------------ -------------- ------ -------- ----------
Income from
property
operations
before
depreciation... 59,370 29,773 9,825 (3,470) -- 24,562 120,060
Depreciation..... (19,556) (14,202)(G) (3,904) 996(O) -- (9,153) (45,819)
------------- -------------- ------------ -------------- ------ -------- ----------
Income from
property
operations..... 39,814 15,571 5,921 (2,474) -- 15,409 74,241
------------- -------------- ------------ -------------- ------ -------- ----------
SERVICE COMPANY
BUSINESS
Management fees
and other
income......... 8,367 1,962(H) 7,173(N) -- -- -- 17,502
Management and
other
expenses....... (5,352) (1,254)(H) (8,210)(N) 1,254(P) -- -- (13,562)
Corporate
overhead
allocation..... (590) -- -- -- -- -- (590)
Amortization of
management
contracts and
depreciation
and
amortization of
other assets... (718) (508)(I) -- -- -- -- (1,226)
------------- -------------- ------------ -------------- ------ -------- ----------
1,707 200 (1,037) 1,254 -- -- 2,124
Minority interest
in service
company
business....... 10 -- -- -- -- -- 10
------------- -------------- ------------ -------------- ------ -------- ----------
Company's share
of income from
service company
business....... 1,717 200 (1,037) 1,254 -- -- 2,134
------------- -------------- ------------ -------------- ------ -------- ----------
General and
administrative
expense........ (1,512) -- -- -- -- -- (1,512)
Interest
expense........ (24,802) (8,169)(J) (10,400) (1,578)(Q) -- (5,689) (50,638)(W)
Interest
income......... 523 2,199(K) 2,000 -- -- -- 4,722
------------- -------------- ------------ -------------- ------ -------- ----------
Income (loss)
before equity
in earnings of
unconsolidated
subsidiaries,
gain on
disposition of
property and
minority
interests...... 15,740 9,801 (3,516) (2,798) -- 9,720 28,947
Equity in
earnings of
unconsolidated
corporations... -- 5,339(S) -- 5,339(Z)
Equity in losses
of
partnerships... -- 442(L) (5,168) (3,104)(R) -- -- (7,830)
Gain on
disposition of
property....... 44 (44)(G) -- -- -- -- --
------------- -------------- ------------ -------------- ------ -------- ----------
Income (loss)
before minority
interests...... 15,784 10,199 (8,684) (5,902) 5,339 9,720 26,456
Minority interest
in other
partnerships... (111) 2,523(M) -- 254(O) -- -- 2,666
------------- -------------- ------------ -------------- ------ -------- ----------
Income (loss)
before minority
interest in
Operating
Partnership.... 15,673 12,722 (8,684) (5,648) 5,339 9,720 29,122
Minority interest
in Operating
Partnership . (2,689) (2,490)(V) -- -- 2,217(V) (579) (3,541)
------------- -------------- ------------ -------------- ------ -------- ----------
Net Income
(loss)......... $ 12,984 $ 10,232 $ (8,684) $ (5,648) $7,556 $ 9,141 $ 25,581
------------- -------------- ------------ -------------- ------ -------- ----------
------------- -------------- ------------ -------------- ------ -------- ----------
Net income
allocable to
preferred
stockholders... $ -- $ 5,344(X)
------------- ----------
------------- ----------
Net income
allocable to
common
stockholders... $ 12,984 $ 20,237
------------- ----------
------------- ----------
Net income per
common
share(Y)....... $ 1.04 $ 0.60
------------- ----------
------------- ----------
Weighted average
number of
common shares
and common
share
equivalents
outstanding.... 12,427 33,592
------------- ----------
------------- ----------
</TABLE>
- ------------------------------
(A) Represents AIMCO's audited consolidated results of operations for the year
ended December 31, 1996.
109
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(B) Represents adjustments to reflect the following as if they had occurred on
January 1, 1996: (i) the Recent Property Acquisitions; (ii) the November
1996 Stock Offering; (iii) the February 1997 Stock Offering; (iv) the May
1997 Stock Offering; (v) the August 1997 Stock Offering; (vi) the Preferred
Stock Offering; (vii) the September 1997 Stock Offerings; (viii) the ANHI
Dividend; (ix) the Ambassador Stock Acquisition; (x) the Subsequent NHP
Stock Purchase; (xi) the Loan Acquisitions; (xii) the Land Lease
Acquisitions; (xiii) the Property Loan Payment; (xiv) the Sawgrass
Acquisition; (xv) the Morton Towers Acquisition; (xvi) the Los Arboles
Acquisition; (xvii) the 1997 Dispositions; (xviii) the 1996 Acquisitions;
(xix) the 1996 Dispositions; and (xx) the Management Company Acquisition.
(C) Represents the audited historical combined results of operations of the NHP
Real Estate Companies for the year ended December 31, 1996, excluding gain
on disposition of real estate investments.
(D) Represents the adjustment to reflect the acquisition of the NHP Real Estate
Companies as if it had occurred on January 1, 1996. The historical financial
statements of the NHP Real Estate Companies consolidate certain real estate
partnerships in which they have an interest that will be presented on the
equity method by AIMCO, as a result of the NHP Real Estate Reorganization.
If AIMCO is not in a position to control the partnership or the real estate
assets owned by any partnership in which it has an interest, such
partnership is not consolidated. Factors which preclude control include, but
are not limited to, not controlling a majority of the general partner
interest, and not owning sufficient interest to control the partnership when
there exists the presence of significant limited partner rights, including
the right to vote on a sale of real estate owned by the partnership or the
refinancing of debt. As a part of the NHP Real Estate Reorganization, AIMCO
transferred its ownership interests in certain partnerships to an
unconsolidated subsidiary or partnership in which AIMCO does not exercise
control; therefore, AIMCO does not consolidate such partnerships. In
addition, represents adjustments to record additional depreciation and
amortization related to the increased basis in the assets of the NHP Real
Estate Companies as a result of the allocation of the purchase price of the
NHP Real Estate Companies and additional interest expense incurred in
connection with borrowings incurred by AIMCO to consummate the NHP Real
Estate Acquisition.
(E) Represents AIMCO's equity in earnings of the Unconsolidated Subsidiaries,
assuming the NHP Stock Purchases occurred on January 1, 1996. AIMCO owns
5,717,000 shares of NHP Common Stock (representing 47.62% of the shares
outstanding as of June 30, 1997), and the Operating Partnership owns a 95%
economic interest in ANHI, which owns 779,073 shares of NHP Common Stock
(representing 6.03% of such outstanding shares as of June 30, 1997).
(F) Represents adjustments to reflect the October 1997 Offering and Winthrop
Acquisition as if they had occurred on January 1, 1996.
(G) Represents the pro forma operating results of the 1996 Acquisitions, the
Recent Property Acquisitions, the Sawgrass Acquisition, the Morton Towers
Acquisition, and the Los Arboles Acquisition less the operating results for
the 1996 Dispositions and the 1997 Dispositions. These pro forma operating
results are based on historical results of the properties, except
depreciation, which is based on AIMCO's investment in the properties.
(H) Represents the pro forma operating results of the management companies
acquired by AIMCO since January 1, 1996. These pro forma operating results
are based on historical results of the management companies; however, they
have been adjusted to eliminate management fee income earned by the
respective management companies from the properties which are consolidated.
(I) Represents amortization of the intangible assets related to management
contracts acquired in the Management Company Acquisition. Management
contracts are amortized using the straight-line method over the terms of the
related management contracts.
110
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(J) Represents adjustments to interest expense for the following:
<TABLE>
<S> <C>
Borrowings on AIMCO's Credit Facility and other loans and mortgages assumed in connection with
the 1996 Acquisitions......................................................................... $ (16,887)
Borrowings on AIMCO's Credit Facility and other loans and mortgages assumed in connection with
the Recent Property Acquisitions.............................................................. (8,192)
Borrowings on AIMCO's new secured short-term financing in connection with the Sawgrass
Acquisition................................................................................... (898)
Borrowings on AIMCO's Credit Facility in connection with the Los Arboles Acquisition............ (897)
Borrowings on AIMCO's Credit Facility in connection with the Morton Towers Acquisition.......... (360)
Borrowings on AIMCO's Credit Facility in connection with the Land Lease Acquisitions............ (1,440)
Borrowings on AIMCO's Credit Facility in connection with the Loan Acquisitions.................. (3,795)
Borrowings on AIMCO's Credit Facility in connection with the Ambassador Stock Acquisition....... (1,431)
Reduction in interest for the payment of loans in connection with the Loan Acquisitions and the
Property Loan Payment......................................................................... 3,327
Repayments on AIMCO's Credit Facility and other indebtedness with proceeds from the 1996
Dispositions, the 1997 Dispositions, the November 1996 Stock Offering, the February 1997 Stock
Offering, the May 1997 Stock Offering, the Preferred Stock Offering, and the September 1997
Stock Offerings............................................................................... 19,669
Repayments on AIMCO's Credit Facility with proceeds from the ANHI Dividend...................... 2,735
---------
$ (8,169)
---------
---------
</TABLE>
(K) Represents adjustment to interest income in connection with the Loan
Acquisitions. Interest income is eliminated upon consolidation for two of
the loans purchased. In addition, interest income of $442, related to a loan
with a real estate partnership accounted for on the equity method in which
AIMCO has a 16.72% ownership interest, has been eliminated against equity in
losses of partnerships.
(L) Represents adjustment to eliminate interest expense on the portion of the
general partner loan owned by AIMCO on one of the real estate partnerships
as a result of the Loan Acquisitions.
(M) Represents the minority interest in consolidated real estate partnerships.
(N) Represents revenues and expenses from ancillary businesses purchased from
the NHP Real Estate Companies.
(O) Represents adjustments to present the net historical operations of certain
real estate partnerships on the equity method that were previously
consolidated by the NHP Real Estate Companies.
(P) Represents a reduction in personnel costs pursuant to a restructuring plan,
approved by AIMCO senior management, assuming that the acquisition of the
NHP Real Estate Companies had occurred on January 1, 1996 and that the
restructuring plan was completed on January 1, 1996. The restructuring plan
specifically identifies all significant actions to be taken to complete the
restructuring plan, including the reduction of personnel, job functions,
location and the date of completion.
(Q) Represents (i) interest of $4,016 related to borrowings on AIMCO's Credit
Facility of $55,807 to finance the NHP Real Estate Acquisition; offset by
(ii) a decrease in interest of $2,438 related to the presentation of certain
real estate partnerships on the equity method.
(R) Represents (i) adjustments of $1,208 related to the presentation of certain
real estate partnerships on the equity method that were previously
consolidated by the NHP Real Estate Companies as a result of the NHP Real
Estate Reorganization; and (ii) adjustments of $1,896 representing
amortization of the increased basis in investments in real estate
partnerships, as a result of the allocation of the combined purchase price
of NHP and the NHP Real Estate Companies, based on an estimated average life
of 17.5 years.
(S) Represents adjustments as if the NHP Stock Purchase and the ANHI Stock
Transfers occurred on January 1, 1996, resulting in (i) AIMCO's equity in
earnings of the Unconsolidated Subsidiaries' operating results of $355,
primarily representing 6.03% of NHP's results of operations; and (ii)
AIMCO's equity in earnings of $4,984 for its 47.62% interest in NHP.
111
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(T) Represents the pro forma operating results of the Winthrop Acquisition as if
it had occurred on January 1, 1996. These pro forma operating results are
based on historical results of the properties, except depreciation, which is
based on AIMCO's investment in the properties.
(U) Represents adjustments to interest expense for the following:
<TABLE>
<CAPTION>
<S> <C>
Mortgage assumed in connection with the Winthrop Acquisition at an interest rate of 10.04%....... $ (842)
Borrowings on new secured short-term financing in connection with the Winthrop Acquisition....... (9,907)
Repayments on AIMCO's Credit Facility and other indebtedness with proceeds from the October 1997
Offering....................................................................................... 5,060
---------
$ (5,689)
---------
---------
</TABLE>
(V) Represents adjustments to minority interest in the Operating Partnership
assuming the Recent Property Acquisitions, the November 1996 Stock Offering,
the February 1997 Stock Offering, the May 1997 Stock Offering, the July 1997
Stock Sale, the Preferred Stock Offering, the August 1997 Stock Offering,
the September 1997 Stock Offerings, the ANHI Dividend, the Ambassador Stock
Acquisition, the Loan Acquisitions, the Land Lease Acquisitions, the
Property Loan Payment, the Sawgrass Acquisition, the Morton Towers
Acquisition, the Los Arboles Acquisition, the 1996 Acquisitions, the 1996
Dispositions, the 1997 Dispositions, the Management Company Acquisition, the
October 1997 Offering and Winthrop Acquisition, the NHP Stock Purchase and
the NHP Real Estate Acquisition had occurred as of January 1, 1996. On a pro
forma basis, without giving effect to the NHP Stock Purchase and the NHP
Real Estate Acquisition, as of December 31, 1996, the minority interest
percentage is approximately 15.01%. On a pro forma basis, giving effect to
the NHP Stock Purchase and the NHP Real Estate Acquisition, as of December
31, 1996, the minority interest percentage is approximately 14.67%.
(W) The pro forma amounts presented assume an average interest rate of 7.77% per
annum (on floating rate debt, representing LIBOR plus 1.45% on AIMCO's
Credit Facility) on outstanding debt obligations with a weighted average
term of 12.3 years. An increase of 0.25% in the interest rate would increase
pro forma interest expense to $51,878, decrease net income applicable to
common shareholders to $19,179 and decrease net income per common share to
$0.57.
(X) Represents net income allocable to holders of the AIMCO Class B Preferred
Stock as if the Preferred Stock Offering had occurred on January 1, 1996.
(Y) In February 1997, the Financial Accounting Standards Board issued Statement
128 which specifies the computation, presentation and disclosure
requirements for basic earnings per share and diluted earnings per share.
AIMCO's management believes that adoption of Statement 128 will not have a
material effect on the earnings per share of AIMCO.
112
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(Z) Amount represents (i) AIMCO's equity in earnings in the Unconsolidated
Subsidiaries' operating results of $355, detailed below; and (ii) AIMCO's
equity in earnings of $4,984 for its 47.62% interest in NHP. The combined
Pro Forma Statement of Operations (pre-Merger) of the Unconsolidated
Subsidiaries for the year ended December 31, 1996 is presented below, which
is based on a series of transactions, including the Initial NHP Stock
Purchase, resulting in ANHI owning 51.3% of NHP, the ANHI Stock Transfers,
resulting in ANHI owning 6.03% of NHP, and the contribution, from AIMCO to
one of the Unconsolidated Subsidiaries, of the general partnership interest,
and therefore controlling interest, in one real estate partnership (the
"Consolidated Real Estate Partnership"), owning fourteen real estate
properties with 2,725 apartment units. Interests held by limited partners in
the real estate partnerships controlled by the Unconsolidated Subsidiary are
reflected as minority interest in consolidated partnerships.
<TABLE>
<CAPTION>
CONTRIBUTE PRE-MERGER
NHP STOCK NHP ANHI STOCK REAL PRO FORMA
PURCHASE(i) HISTORICAL(ii) ADJUSTMENTS(iii) TRANSFERS(iv) ESTATE(v) TOTAL
----------- -------------- ---------------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
RENTAL PROPERTY
OPERATIONS
Rental and other property
revenues............... $-- $ -- $ 11,002(vi) $(11,002) $12,777 $12,777
Property operating
expenses............... -- -- (5,937)(vi) 5,937 (8,665) (8,665)
Owned property management
expense................ -- -- (853)(vi) 853 (613) (613)
----------- -------------- ---------------- ------------- ---------- ----------
Income from property
operations before
depreciation........... -- -- 4,212 (4,212) 3,499 3,499
Depreciation............. -- -- (3,108)(vi) 3,108 (1,606) (1,606)
----------- -------------- ---------------- ------------- ---------- ----------
Income from property
operations............. -- -- 1,104 (1,104) 1,893 1,893
----------- -------------- ---------------- ------------- ---------- ----------
Management fees and other
income................. -- 194,979 (127,266)(vii) (67,713) -- --
Management and other
expenses............... -- (153,907) 127,266(vii) 16,987 -- --
9,654(viii)
Amortization of
management contracts
and goodwill and
depreciation and
amortization of other
assets................. -- (6,321) (3,660)(ix) 9,981 (41) (41)
----------- -------------- ---------------- ------------- ---------- ----------
-- 34,751 5,994 (40,745) (41) (41)
----------- -------------- ---------------- ------------- ---------- ----------
General and
administrative......... -- (14,074) -- 14,074 -- --
Interest expense......... (5,932) (3,982) (4,082)(vi) 13,996 (2,640) (2,640)
Interest income.......... -- 747 -- (747) -- --
----------- -------------- ---------------- ------------- ---------- ----------
Income before income
taxes, equity in
earnings and minority
interests.............. (5,932) 17,442 3,016 (14,526) (788) (788)
Income tax provision..... -- (6,977) (135)(x) 7,112 -- (249)
(249)(xiii)
Equity in earnings of
NHP.................... -- -- (3,086)(xi) 3,717(xiv) -- 631
Minority interest in
NHP.................... -- -- (3,652)(xii) 3,652 -- --
Minority interest in
partnerships........... -- -- 11(vi) (11) 780 780
----------- -------------- ---------------- ------------- ---------- ----------
Net income............... $(5,932) $ 10,465 $ (3,846) $ (305) $ (8) $ 374
----------- -------------- ---------------- ------------- ---------- ----------
----------- -------------- ---------------- ------------- ---------- ----------
Income attributable to
preferred
stockholder............ $ 355
----------
----------
Income attributable to
common stockholder..... $ 19
----------
----------
</TABLE>
-----------------------------------
(i) Represents interest expense related to indebtedness of $72,765
(including deferred financing costs) incurred pursuant to the ANHI
Credit Facility to finance the cash portion of the Initial NHP Stock
Purchase.
113
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(ii) Represents the historical operating results of NHP for the year ended
December 31, 1996, which have been restated to reflect WMF as a
discontinued operation as a result of the Rights Distribution.
(iii) Represents adjustments for the following: (i) operating results of
the real estate held for investment, which was held for sale by NHP;
(ii) an adjustment to offset on-site personnel and general and
administrative cost reimbursement against the related revenue; (iii)
a reduction in personnel costs pursuant to a restructuring plan;
(iv) incremental depreciation and amortization resulting from
stating the tangible and intangible assets related to the property
management and other businesses operated by ANHI at their respective
fair values; (v) adjustment to the estimated Federal and state tax
provisions; and (vi) the allocation of 48.7% of NHP's income owned
by other stockholders to minority interest.
(iv) Represents the sale of 5,717,000 shares of NHP Common Stock to AIMCO
reducing ANHI's ownership of NHP Common Stock from 51.3% to 6.03%;
therefore, ANHI will account for its investment in NHP on the equity
method.
(v) Represents the results of operations of the Consolidated Real Estate
Partnership as if the contribution of the general partnership interest
from AIMCO to the Unconsolidated Subsidiary had occurred on January 1,
1996.
(vi) Represents the operating results of the real estate held for
investment by AIMCO, which was previously held for sale by NHP.
(vii) Represents an adjustment to offset certain property management costs
and related reimbursements against the related revenue.
(viii) Represents a reduction in personnel costs pursuant to a
restructuring plan, approved by AIMCO senior management, assuming
that the acquisition of NHP had occurred on January 1, 1996 and that
the restructuring plan was completed on January 1, 1996. The
restructuring plan specifically identifies all significant actions
to be taken to complete the restructuring plan, including the
reduction of personnel, job functions, location and the date of
completion.
(ix) Represents depreciation and amortization of the tangible and
intangible assets related to the property management and other
businesses operated by ANHI, including amortization of management
contracts of $1,899, depreciation of furniture, fixtures and
equipment of $669, and amortization of goodwill of $4,335, less
ANHI's 51.3% share of NHP's historical depreciation and amortization
of $3,243. Management contracts are amortized using the straight-line
method over the weighted average life of 14.7 years. Furniture,
fixtures and equipment are depreciated using the straight-line method
over the estimated life of 5 years. Goodwill is amortized using the
straight-line method over 20 years.
(x) Represents the adjustment to the estimated Federal and state tax
provisions calculated on the operating results of ANHI, excluding the
amortization of goodwill which is not deductible for tax purposes.
(xi) Represents the equity in earnings of NHP attributable to ANHI's
ownership of 51.3% of the NHP Common Stock outstanding as a result of
the Inital NHP Stock Purchase.
(xii) Represents the share of NHP income attributable to the 48.7% of the
NHP Common Stock owned by other stockholders.
(xiii) Represents the adjustment to the estimated Federal and state tax
provisions calculated on the operating results of ANHI, as adjusted
for the ANHI Stock Transfers.
(xiv) Represents the adjustment for the reduction in equity in earnings of
NHP resulting from the ANHI Stock Transfers, reducing ANHI's
investment in NHP from 51.3% to 6.03% as of January 1, 1996.
114
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
ADJUSTMENTS OCTOBER 1997
------------------------------------------------- OFFERING AND
AIMCO NHP REAL ESTATE NHP STOCK WINTHROP PRO FORMA
HISTORICAL(A) ADJUSTMENTS(B) ACQUISITION(C) PURCHASES(D) ACQUISITION(E) TOTAL
------------- --------------- --------------- --------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property
revenues........................ $ 79,719 $ 11,684(F) $ 6,660(J) $ -- $ 24,711 $ 122,774
Property operating expenses....... (31,160) (5,535)(F) (2,941)(J) -- (10,696) (50,332)
Owned property management
expense......................... (2,734) (181)(F) (282)(J) -- (1,193) (4,390)
------------- ------- ------- ----- ------------- -----------
Income from property operations
before depreciation............. 45,825 5,968 3,437 -- 12,822 68,052
Depreciation...................... (15,046) (2,630)(F) (1,346)(J) -- (4,576) (23,598)
------------- ------- ------- ----- ------------- -----------
Income from property operations... 30,779 3,338 2,091 -- 8,246 44,454
------------- ------- ------- ----- ------------- -----------
SERVICE COMPANY BUSINESS
Management fees and other
income.......................... 5,605 -- 1,405(K) -- -- 7,010
Management and other expenses..... (2,643) -- (4,878)(K) -- -- (4,906)
2,615(L) --
Corporate overhead allocation..... (294) -- -- -- -- (294)
Amortization of management
contracts and depreciation and
amortization of other assets.... (635) -- -- -- -- (635)
------------- ------- ------- ----- ------------- -----------
2,033 -- (858) -- -- 1,175
------------- ------- ------- ----- ------------- -----------
Minority interest in service
company business................ (2) -- -- -- -- (2)
------------- ------- ------- ----- ------------- -----------
Company's share of income from
service company business........ 2,031 -- (858) -- -- 1,173
------------- ------- ------- ----- ------------- -----------
General and administrative
expense......................... (784) -- -- -- -- (784)
Interest expense.................. (20,604) 2,329(G) (3,391)(J) -- (2,905) (26,202)(U)
(1,631)(M)
Interest income................... 1,341 1,099(H) 540(K) -- -- 2,980
------------- ------- ------- ----- ------------- -----------
Income (loss) before equity in
earnings of unconsolidated
subsidiaries and minority
interests....................... 12,763 6,766 (3,249) -- 5,341 21,621
Equity in earnings of
unconsolidated corporations..... (86) -- -- 86(O) -- 611(X)
40(P) --
571(Q) --
Equity in losses of
partnerships.................... (379) 221(I) (2,432)(J) -- --
(790)(N) -- (3,380)
------------- ------- ------- ----- ------------- -----------
Income (loss) before minority
interests....................... 12,298 6,987 (6,471) 697 5,341 18,852
Minority interest in other
partnerships.................... (565) (239) 16(J) -- -- (788)
------------- ------- ------- ----- ------------- -----------
Income (loss) before minority
interest in Operating
Partnership..................... 11,733 6,748 (6,455) 697 5,341 18,064
Minority interest in Operating
Partnership..................... (1,616) (1,319) 899(T) (20)(T) (194) (2,250)
------------- ------- ------- ----- ------------- -----------
Net income (loss)................. $ 10,117 $ 5,429 $ (5,556) $ 677 $ 5,147 $ 15,814
------------- ------- ------- ----- ------------- -----------
------------- ------- ------- ----- ------------- -----------
Net income allocable to preferred
stockholder..................... $ -- $ 2,672(V)
------------- -----------
------------- -----------
Net income allocable to common
stockholders.................... $ 10,117 $ 13,142
------------- -----------
------------- -----------
Net income per common share (W)... $ 0.55 $ 0.37
------------- -----------
------------- -----------
Weighted average number of common
shares and common share
equivalents outstanding......... 18,559 35,281
------------- -----------
------------- -----------
</TABLE>
115
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(A) Represents AIMCO's unaudited consolidated results of operations for the six
months ended June 30, 1997.
(B) Represents adjustments to reflect the following as if they had occurred on
January 1, 1996: (i) the Recent Property Acquisitions; (ii) the February
1997 Stock Offering; (iii) the May 1997 Stock Offering; (iv) the Preferred
Stock Offering (v) the September 1997 Stock Offerings; (vi) the ANHI
Dividend; (vii) the Ambassador Stock Acquisition; (viii) the Subsequent NHP
Stock Purchase; (ix) the Loan Acquisitions; (x) the Land Lease Acquisitions;
(xi) the Property Loan Payment; (xii) the Sawgrass Acquisition; (xiii) the
Morton Towers Acquisition; (xiv) the Los Arboles Acquisition; and (xv) the
1997 Dispositions.
(C) Represents the adjustment to reflect the acquisition of the NHP Real Estate
Companies as if it had occurred on January 1, 1996. The historical financial
statements of the NHP Real Estate Companies consolidate certain real estate
partnerships in which they have an interest that will be presented on the
equity method by AIMCO as a result of the NHP Real Estate Reorganization. If
AIMCO is not in a position to control the partnership or the real estate
assets owned by any partnership in which it has an interest, such
partnership is not consolidated. Factors which preclude control include, but
are not limited to, not controlling a majority of the general partner
interest, and not owning sufficient interest to control the partnership when
there exists the presence of significant limited partner rights, including
the right to vote on a sale of real estate owned by the partnership or the
refinancing of debt. As part of the NHP Real Estate Reorganization, AIMCO
transferred its ownership interests in certain partnerships to an
unconsolidated subsidiary or partnership in which AIMCO does not exercise
control; therefore, AIMCO does not consolidate such partnerships. In
addition, represents adjustments to record additional depreciation and
amortization related to the increased basis in the assets of the NHP Real
Estate Companies as a result of the allocation of the purchase price of the
NHP Real Estate Companies and additional interest expense incurred in
connection with borrowings incurred by AIMCO to consummate the NHP Real
Estate Acquisition.
(D) Represents the adjustment to reflect AIMCO's purchase of the 5,717,000
shares of NHP Common Stock from ANHI with the proceeds from the August 1997
Stock Offering and the September 1997 Stock Offerings as if they had
occurred on January 1, 1996 and the corresponding adjustments to the equity
in earnings of the Unconsolidated Subsidiaries.
(E) Represents adjustments to reflect the October 1997 Offering and Winthrop
Acquisition as if they had occurred on January 1, 1996.
(F) Represents adjustments to reflect the Recent Property Acquisitions the
Sawgrass Acquisition, the Morton Towers Acquisition, and the Los Arboles
Acquisition, less the 1997 Dispositions as if they had occurred on January
1, 1996. These pro forma operating results are based on historical results
of the properties, except for depreciation, which is based on AIMCO's
investment in the properties.
(G) Represents adjustments to interest expense for the following:
<TABLE>
<S> <C>
Borrowings on AIMCO's Credit Facility and other loans and mortgages assumed in connection with
the Recent Property Acquisitions............................................................... $ (2,961)
Borrowings on AIMCO's new secured short-term financing in connection with the Sawgrass
Acquisition.................................................................................... (458)
Borrowings on AIMCO's Credit Facility in connection with the Los Arboles Acquisition............. (443)
Borrowings on AIMCO's Credit Facility in connection with the Morton Towers Acquisition........... (178)
Borrowings on AIMCO's Credit Facility in connection with the Land Lease Acquisitions............. (711)
Borrowings on AIMCO's Credit Facility in connection with the Loan Acquisitions................... (1,873)
Borrowings on AIMCO's Credit Facility in connection with the Ambassador Stock Acquisition........ (707)
Reduction in interest for the payment of loans in connection with the Loan Acquisitions and the
Property Loan Payment.......................................................................... 1,680
Repayments on AIMCO's Credit Facility and other indebtedness with proceeds from the 1997
Dispositions, the February 1997 Stock Offering, the May 1997 Stock Offering, the Preferred
Stock Offering, and the September 1997 Stock Offerings......................................... 6,629
Repayments on AIMCO's Credit Facility with proceeds from the ANHI Dividend....................... 1,351
---------
$ 2,329
---------
---------
</TABLE>
(H) Represents adjustments to interest income in connection with the Loan
Acquisitions. Interest income is eliminated upon consolidation for two of
the loans purchased. In addition, interest income of $221, related to a loan
with a real estate partnership
116
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
accounted for on the equity method in which AIMCO has a 16.72% ownership
interest, has been eliminated against equity in losses of partnerships.
(I) Represents adjustment to eliminate interest expense on the portion of the
general partner loan owned by AIMCO on one of the real estate partnerships
as a result of the Loan Acquisitions.
(J) Represents adjustments to reflect the acquisition of the NHP Real Estate
Companies and the corresponding historical results of operations as if they
had occurred on January 1, 1996, including reflecting the NHP Real Estate
Reorganization.
(K) Represents the adjustment to record the revenues and expenses from ancillary
businesses purchased from the NHP Real Estate Companies as if the
acquisition had occurred on January 1, 1996.
(L) Represents a reduction in personnel costs pursuant to a restructuring plan,
approved by AIMCO senior management, assuming that the acquisition of the
NHP Real Estate Companies had occurred on January 1, 1996 and that the
restructuring plan was completed on January 1, 1996. The restructuring plan
specifically identifies all significant actions to be taken to complete the
restructuring plan, including the reduction of personnel, job functions,
location and the date of completion.
(M) Represents the increase in interest expense related to borrowings on AIMCO's
Credit Facility of $55,807 to finance the NHP Real Estate Acquisition.
(N) Represents amortization of the increased basis in investment in real estate
partnerships, as a result of the allocation of the purchase price of the NHP
Real Estate Companies, based on an estimated average life of 17.5 years.
(O) Represents the reversal of operating results generated by AIMCO's
Unconsolidated Subsidiaries during the historical period of ownership from
May 3, 1977 to June 30, 1997 when one of the Unconsolidated Subsidiaries
held a 51.3% interest in NHP.
(P) Represents AIMCO's equity in earnings of the Unconsolidated Subsidiaries'
operating results, primarily representing 6.03% of NHP's results of
operations, as if the NHP Stock Purchase and the ANHI Stock Transfers
occurred on January 1, 1996.
(Q) Represents AIMCO's equity in earnings for its 47.62% interest in NHP as if
the ANHI Stock Transfers occurred on January 1, 1996.
(R) Represents the pro forma operating results of the Winthrop Acquisition as if
it had occurred on January 1, 1996. These pro forma operating results are
based on historical results of the properties, except depreciation, which is
based on AIMCO's investment in the properties.
(S) Represents adjustments to interest expense for the following:
<TABLE>
<S> <C>
Mortgage assumed in connection with the Winthrop Acquisition at an interest rate of 10.04%....... $ (451)
Borrowings on new secured short-term financing in connection with the Winthrop Acquisition....... (4,954)
Repayments on AIMCO's Credit Facility and other indebtedness with proceeds from the October 1997
Offering....................................................................................... 2,500
---------
$ 2,905
---------
---------
</TABLE>
(T) Represents adjustments to minority interest in the Operating Partnership
assuming the Recent Property Acquisitions, the February 1997 Stock Offering,
the May 1997 Stock Offering, the July 1997 Stock Sale, the Preferred Stock
Offering, the August 1997 Stock Offering, the September 1997 Stock
Offerings, the ANHI Dividend, the Ambassador Stock Acquisition, the Loan
Acquisitions, the Land Lease Acquisitions, the Property Loan Payment, the
Sawgrass Acquisition, the Morton Towers Acquisition, the Los Arboles
Acquisition, the NHP Stock Purchase and the NHP Real Estate Acquisitions,
and the October 1997 Offering and Winthrop Acquisition had occurred as of
January 1, 1996. On a pro forma basis, giving effect to these transactions,
as of June 30, 1997, the minority interest percentage is approximately
12.86%.
(U) The pro forma amounts presented assume an average interest rate of 7.84% per
annum (on floating rate debt, representing LIBOR plus 1.45% on AIMCO's
Credit Facility) on outstanding debt obligations with a weighted average
term of 11.3 years. An increase of 0.25% in the interest rate would increase
pro forma interest expense to $26,822, decrease net income applicable to
common shareholders to $12,604 and decrease net income per common share to
$0.36.
(V) Represents the net income allocated to holders of the AIMCO Class B
Preferred Stock as if the Preferred Stock Offering had occurred as of
January 1, 1996.
(W) In February 1997, the Financial Accounting Standards Board issued Statement
128 which specifies the computation, presentation and disclosure
requirements for basic earnings per share and diluted earnings per share.
AIMCO's management believes that adoption of Statement 128 will not have a
material effect on the earnings per share of AIMCO.
117
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(X) Amount represents (i) AIMCO's equity in earnings in the Unconsolidated
Subsidiaries' operating results of $40, detailed below; and (ii) AIMCO's
equity in earnings of $571 for its 47.62% interest in NHP. The combined Pro
Forma Statement of Operations (pre-Merger) of the Unconsolidated
Subsidiaries for the six months ended June 30, 1997 is presented below,
which is based on a series of transactions, including the Initial NHP Stock
Purchase, resulting in ANHI owning 51.3% of NHP, the ANHI Stock Transfers,
resulting in ANHI owning only 6.03% of NHP, and the contribution, from AIMCO
to one of the Unconsolidated Subsidiaries, of the general partnership
interest, and therefore controlling interest, in one real estate
partnership, owning fourteen real estate properties with 2,725 apartment
units. Interests held by limited partners in the real estate partnerships
controlled by the Unconsolidated Subsidiary are reflected as minority
interest in consolidated partnerships.
<TABLE>
<CAPTION>
CONTRIBUTE
ANHI REAL PRE-MERGER
HISTORICAL STOCK ESTATE PRO FORMA
(i) TRANSFERS (ii) (iii) TOTAL
------------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues................ $ 4,103 $ (3,067) $ 5,182 $ 6,218
Property operating expenses....................... (2,403) 1,716 (3,433) (4,120)
Owned property management expense................. (198) 147 (257) (308)
------------- -------------- ----------- -----------
Income from property operations before
depreciation.................................... 1,502 (1,204) 1,492 1,790
Depreciation...................................... (654) 520 (669) (803)
------------- -------------- ----------- -----------
848 (684) 823 987
------------- -------------- ----------- -----------
SERVICE COMPANY BUSINESS
Management fees and other income.................. 11,800 (11,800) -- --
Management and other expenses..................... (2,899) 2,899 -- --
Amortization of management contracts and goodwill
and depreciation and amortization of other
assets.......................................... (1,819) 1,815 (17) (21)
------------- -------------- ----------- -----------
7,082 (7,086) (17) (21)
------------- -------------- ----------- -----------
General and administrative........................ (2,700) 2,700 -- --
Interest expense.................................. (3,153) 2,986 (835) (1,002)
Interest income................................... 440 (440) -- --
------------- -------------- ----------- -----------
Income before income taxes, equity in earnings and
minority interests.............................. 2,517 (2,524) (29) (36)
Income tax provision.............................. (940) 940
(27)(iv) (27)
Equity in earnings of NHP......................... -- 72(v) 72
Minority interest in NHP.......................... (1,568) 1,568 --
Minority interest in partnerships................. 6 -- 27 33
------------- -------------- ----------- -----------
Net income........................................ $ 15 $ 29 $ (2) $ 42
------------- -------------- ----------- -----------
------------- -------------- ----------- -----------
Income attributable to preferred stockholder...... $ 40
-----------
-----------
Income attributable to common stockholders........ $ 2
-----------
-----------
</TABLE>
- ------------------------------
(i) Represents the unaudited combined results of operations of the
Unconsolidated Subsidiaries for the six months ended June 30, 1997,
excluding the income from discontinued operations of WMF.
(ii) Represents the sale of 5,717,000 shares of NHP Common Stock to AIMCO
reducing ANHI's ownership of NHP Common Stock from 51.3% to 6.03%;
therefore, ANHI will account for its investment in NHP on the equity
method.
(iii) Represents the results of operations of the Consolidated Real Estate
Partnership as if the contribution of the general partnership interest
from AIMCO to the Unconsolidated Subsidiary had occurred on January 1,
1996.
(iv) Represents the adjustment to the estimated Federal and state tax
provisions calculated on the operating results of ANHI, as adjusted for
the ANHI Stock Transfers.
(v) Represents the adjustment for the reduction in equity in earnings of NHP
resulting from the ANHI Stock Transfers, reducing ANHI's investment in NHP
from 51.3% to 6.03% as of January 1, 1996.
118
<PAGE>
CAPITALIZATION OF AIMCO
(IN THOUSANDS, EXCEPT SHARE DATA)
The following table sets forth the capitalization of AIMCO at June 30, 1997:
(i) on a historical basis; (ii) on a pro forma basis (Merger) to reflect the
Merger, the WMF Spin-Off and the NHP Reorganization, (a) assuming that ANHI
elects the Mixed Consideration and all other NHP stockholders elect to receive
Stock Consideration (Stock Consideration), and (b) assuming that all NHP
stockholders elect to receive Mixed Consideration (Mixed Consideration). The
information set forth in the following table should be read in connection with
the financial statements and notes thereto incorporated by reference and the pro
forma financial information and notes thereto included herein. See "Pro Forma
Financial Information (Merger)."
<TABLE>
<CAPTION>
PRO FORMA MERGER PRO FORMA MERGER
PRO FORMA (STOCK (MIXED
HISTORICAL PRE-MERGER(1) CONSIDERATION)(1) CONSIDERATION)(1)
---------- ------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Credit Facility (2)................ $ 70,900 $ -- $ -- $ --
Long-term debt
Secured tax-exempt bond
financing...................... 74,799 74,799 74,799 74,799
Secured notes payable............ 465,758 576,418 534,809 594,677
Unsecured notes payable.......... 33,000 -- -- --
Minority interests in other
partnerships..................... 6,625 19,351 19,166 19,166
Minority interests in Operating
Partnership...................... 63,366 105,396 105,396 105,396
Stockholders' equity:
Class B Cumulative Convertible
Preferred Stock, $.01 par
value, 750,000 authorized, none
issued and outstanding on a
historical basis; 750,000
issued and outstanding on a pro
forma basis (3)................ -- 75,000 75,000 75,000
Class A Common Stock, $.01 par
value, 150,000,000 authorized,
22,042,809 issued and
outstanding on a historical
basis; 35,256,591 issued and
outstanding on a pro forma
pre-merger basis; 40,023,933
issued and outstanding on a pro
forma Merger (Stock
Consideration) basis; and
37,785,870 issued and
outstanding on a pro forma
Merger (Mixed Consideration)
basis (4)...................... 221 353 401 378
Class B Common Stock, $.01 par
value, 425,000 authorized,
325,000 issued and outstanding
(5)............................ 3 3 3 3
Preferred Stock, $.01 par value,
9,250,000 authorized, none
issued or outstanding.......... -- -- -- --
Additional paid-in capital....... 417,487 849,418 981,814 921,969
Notes due on common stock
purchases (6).................. (7,603) (40,603) (40,603) (40,603)
Retained earnings (distributions
in excess of earnings)......... (21,631) (24,296) (24,296) (24,296)
---------- ------------- ----------------- -----------------
Total stockholders' equity......... 388,477 859,875 992,319 932,451
---------- ------------- ----------------- -----------------
Total capitalization............... $1,102,925 $1,635,839 $1,726,489 $1,726,489
---------- ------------- ----------------- -----------------
---------- ------------- ----------------- -----------------
</TABLE>
- ------------------------------
(1) The pro forma capitalization information is presented as if the transactions
detailed above occurred on June 30, 1997.
(2) As of September 30, 1997, the borrowings under the Credit Facility were
$74.0 million.
(3) Convertible into 3.28407 shares of AIMCO Common Stock per share at the
option of the holder on or after August 4, 1998, subject to certain
anti-dilution adjustments.
(4) Excludes (i) 4,937,287 shares of AIMCO Common Stock which may be issued in
exchange for 4,937,287 OP Units which may be tendered for redemption; (ii)
325,000 shares of AIMCO Common Stock issuable upon conversion of AIMCO Class
B Common Stock; (iii) 641,445 shares of AIMCO Common Stock issuable upon
exercise of outstanding options and warrants; and (iv) 2,463,053 shares of
AIMCO Common Stock which may be issued upon conversion of 750,000 shares of
AIMCO Class B Preferred Stock, all as of October 30, 1997.
(5) Convertible into 325,000 shares of AIMCO Common Stock if certain performance
standards are achieved, including 8.5% annual increases in both AIMCO's FFO
per share and the market price of AIMCO Common Stock. See "Description of
AIMCO's Capital Stock--AIMCO Class B Common Stock."
(6) As of September 30, 1997, the amount outstanding on notes due on purchases
of AIMCO Common Stock was $30.5 million.
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<PAGE>
BUSINESS OF AIMCO
AIMCO, including NHP, is the second largest owner and manager of multifamily
apartment properties in the United States, based on apartment unit data compiled
by the National Multi Housing Council as of January 1, 1997, with 186,993
apartment units owned or under management as of September 30, 1997. As of
September 30, 1997, AIMCO owned or controlled a total of 28,773 units in 109
apartment properties, had an equity interest in non-consolidated partnerships
that owned 87,182 units in 526 apartment properties and managed 71,038 units in
394 apartment communities for third parties and affiliates. In addition to the
Managed Properties, the Company manages all of the Owned Properties and a
majority of the Equity Properties. The AIMCO Properties are located in 42
states, the District of Columbia and Puerto Rico. Properties owned or managed by
AIMCO had annual gross rental revenues of approximately $1.3 billion, based on
revenues for the month ended June 30, 1997. AIMCO has elected to be taxed as a
REIT for Federal income tax purposes. AIMCO conducts substantially all of its
operations through the Operating Partnership and its subsidiaries. As of October
30, 1997, AIMCO held approximately an 87% interest in the Operating Partnership.
Certain terms used herein are defined below in "--Accounting Policies and
Definitions."
OPERATING AND FINANCIAL STRATEGIES
AIMCO uses the following operating and financing strategies to attempt to
meet its objective of providing long-term, predictable FFO per share:
- ACQUISITION OF PROPERTIES AT LESS THAN REPLACEMENT COST. AIMCO attempts to
acquire properties at a significant discount to their replacement cost,
which AIMCO believes will provide it with a competitive cost advantage in
comparison to newly constructed properties.
- GEOGRAPHIC DIVERSIFICATION. AIMCO operates in 42 states, the District of
Columbia and Puerto Rico. This geographic diversification insulates AIMCO,
to some degree, from inevitable downturns in any one market. Among Owned
Properties and Equity Properties, Houston, Texas, AIMCO's largest single
regional market, and Dallas, Texas, AIMCO's second largest regional
market, accounted for approximately 13.9% and 8.0%, respectively, of the
properties in which AIMCO has an ownership interest, on a pro rata basis.
- MARKET GROWTH. AIMCO seeks to operate in markets where population and
employment growth are expected to exceed the national average and where it
believes it can become a regionally significant owner or manager of
properties. The average annual population and employment growth rates from
1990 to 1995 in AIMCO's five largest regional markets were 2.3% and 2.6%,
respectively, compared to national averages of 1.1% and 1.7%,
respectively. For the 1996 to 1999 period, annual population and
employment growth rates in AIMCO's five largest regional markets are
forecasted to be 2.2% and 3.6%, respectively, compared with projected
national averages of 0.9% and 2.0%, respectively.
- PRODUCT DIVERSIFICATION. AIMCO's portfolio of apartment properties also
span a range of apartment community types, both within and among markets.
AIMCO's properties are located in both urban and suburban areas and range
from garden apartments to high rises and from luxury townhomes to
affordable properties.
- CAPITAL REPLACEMENT. AIMCO believes that the physical condition and
amenities of its apartment communities are important factors in its
ability to maintain and increase rental rates. AIMCO also believes that a
program of regular maintenance of the quality of its apartments, rather
than episodic renovation, contributes to the reliability of earnings per
share. The Company presently allocates approximately $300 annually per
owned apartment unit for Capital Replacements and reserves unexpended
amounts for future capital replacements. From time to time, AIMCO
reevaluates its Capital Replacement requirements and updates the amount of
its budgeted Capital Replacements
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<PAGE>
per owned apartment unit accordingly. For the six months ended June 30,
1997, AIMCO charged approximately $3.4 million for Capital Replacements to
its reserve, of which approximately $2.9 million was spent, and had
aggregate unexpended Capital Replacement reserves of approximately $0.8
million at June 30, 1997. In addition to the Capital Replacement
expenditures, AIMCO spent $3.3 million for repairs and maintenance, or a
weighted average of approximately $135 per apartment unit, for the six
months ended June 30, 1997. In addition to its Capital Replacement
expenditures, AIMCO spent $4.3 million for repairs and maintenance, or a
weighted average of approximately $286 per apartment unit for the year
ended December 31, 1996.
- DEBT FINANCING. AIMCO's strategy is generally to incur debt to increase
its return on equity while maintaining acceptable interest coverage
ratios. AIMCO seeks to match debt maturities to the character of the
assets financed. Accordingly, AIMCO uses predominantly long-term,
fixed-rate and self-amortizing debt in order to avoid the refunding or
repricing risks of short-term borrowings. AIMCO also uses short-term debt
financing to fund acquisitions and generally expects to refinance such
borrowings with proceeds from equity offerings or long-term debt
financings. As of September 30, 1997, approximately 14% of AIMCO's
outstanding debt was short-term debt and 86% was long-term debt.
- DISPOSITIONS. From time to time, AIMCO sells properties that do not meet
its return on investment criteria or that are located in areas where AIMCO
does not believe that the long-term neighborhood values justify the
continued investment in the properties. Three properties in Houston and
one property in each of Dallas and Phoenix are currently under contract
for sale.
- DIVIDEND POLICY. AIMCO pays dividends to share its profitability with
AIMCO's stockholders. For the years ended December 31, 1996 and 1995 and
the six months ended June 30, 1997, AIMCO distributed 72.3%, 75.1% and
70.1% of FFO to its stockholders. Amounts not distributed are available
for reinvestment, stock repurchases, amortization of debt and provide a
margin to insulate annual dividends from fluctuations in AIMCO's business.
AIMCO's dividend for the first nine months of 1997 was $1.3875 per share,
equivalent to an annualized dividend of $1.85 per share. It is the present
policy of the AIMCO to increase the dividend annually in an amount equal
to one-half the rate of the projected increase in FFO, adjusted for
Capital Replacements. The minimum annual distribution requirement for
REITs, which require the distribution of approximately 95% of "REIT
taxable income" (see "Federal Income Tax Considerations Related to
AIMCO"), may result in dividends increasing at a greater rate in the
future.
GROWTH STRATEGIES
AIMCO seeks growth through two primary sources--acquisition and internal
expansion.
ACQUISITION STRATEGIES. AIMCO believes its acquisition strategies will
increase profitability and predictability of earnings by increasing its
geographic diversification, economies of scale and opportunities to provide
ancillary services to tenants at the AIMCO Properties. Since its initial public
offering in July 1994 (the "AIMCO IPO"), excluding the NHP Real Estate
Acquisition and the NHP Stock Purchase, AIMCO has completed 27 acquisition
transactions involving a total of 104 properties for an aggregate purchase price
of $988 million, including the assumption and incurrence of $544 million of
indebtedness, through October 31, 1997.
AIMCO believes that its demonstrated ability to evaluate and complete
acquisitions, its property management record and its scale economies, to the
extent that AIMCO can operate a property more efficiently than the existing
owner or some competing purchasers, all provide credibility and advantage in
negotiating acquisitions. In addition, the ability to issue OP Units to sellers
of properties may provide tax
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<PAGE>
deferral opportunities to sellers and could give AIMCO an advantage over
competing buyers that cannot offer such tax deferral opportunities. AIMCO
acquires additional properties primarily in three ways:
- DIRECT ACQUISITIONS. AIMCO may directly acquire individual properties or
portfolios and controlling interests in entities that own or control such
properties or portfolios. During the ten months ended October 31, 1997, in
addition to the NHP Real Estate Acquisition and acquisitions through the
NHP Stock Purchase, AIMCO has directly acquired 43 apartment properties
for a total consideration of $459 million, consisting of $183 million in
cash, approximately 1.9 million OP Units valued at $56 million and the
assumption or incurrence of $220 million of indebtedness. See "--Recent
Acquisitions."
- ACQUISITION OF MANAGED PROPERTIES. AIMCO believes that its property
management operations support its acquisition activities. Its
relationships with owners of the Managed Properties may provide it with a
means of learning of acquisition opportunities at an early stage of the
sale process. In addition, its familiarity with the property and its
ability to quickly evaluate the property give it an advantage in pursuing
and completing any such acquisition in a timely fashion. Since the AIMCO
IPO, AIMCO has acquired 12 properties comprising 3,530 units from its
managed portfolio for $129.0 million.
- INCREASING ITS INTEREST IN PARTNERSHIPS. For properties where AIMCO owns a
general partnership interest in the property-owning partnership, AIMCO may
seek to acquire, subject to its fiduciary duties to the partnership, the
outstanding limited partnership interests for cash or, in some cases, in
exchange for OP Units.
- In November 1996, AIMCO acquired the English Partnerships, which owned
22 apartment properties. AIMCO subsequently purchased pursuant to
tender offers to acquire all of the outstanding limited partnership
interests of 25 of the English Partnerships, approximately 43%, in the
aggregate, of the outstanding limited partnership interests in such
partnerships for $15.2 million in cash and approximately 71,500 OP
Units valued at $1.7 million.
- As of September 30, 1997, AIMCO has also commenced tender offers to
acquire all of the outstanding limited partnership interests in 26
partnerships owning 25 NHP Properties for an aggregate amount of
approximately $79.0 million. Through September 30, 1997, pursuant to
such tender offers, AIMCO has purchased approximately 20.2%, in the
aggregate, of the outstanding limited partnership interests for $16.0
million in cash. In addition, as of September 30, 1997, AIMCO has
received tenders representing approximately an additional 18.8%, in the
aggregate, of the outstanding limited partnership interests.
INTERNAL GROWTH STRATEGIES. AIMCO pursues internal growth through the
following strategies:
- REVENUE INCREASES. AIMCO increases rents where feasible and seeks to
improve occupancy rates. AIMCO believes that its policy of capital
improvements, amenities and customer service allows it to maintain demand
and to increase its rents above the rate of inflation in the local market.
AIMCO's "same store" revenues from the Owned Properties (based on
properties owned from period to period) have grown by 3.3% from the fiscal
year ended December 31, 1995 to that ended December 31, 1996, and by 3.5%
from the six months ended June 30, 1996 to that ended June 30, 1997,
compared to an urban consumer price inflation rate of 2.8% and 2.3% over
the same periods.
- REDEVELOPMENT OF PROPERTIES. AIMCO believes redevelopment of selected
properties in superior locations provides advantages over development of
new properties, because, compared with new development, redevelopment
generally can be accomplished with relatively lower financial risk, in
less time and with reduced delays attributable to governmental regulation.
Recently AIMCO acquired and redeveloped Sun Katcher, a 360-unit property
in Jacksonville, Florida, at a cost of $8.9 million, including $4.9
million in redevelopment costs. AIMCO also recently commenced the
renovation and upgrading of Bay West, a 376-unit property in Tampa,
Florida, for a projected cost
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<PAGE>
of $4.8 million, to reposition the property in the marketplace. In
addition, AIMCO expects to undertake a major renovation of the Morton
Towers apartments, a 1,277 unit property located in Miami Beach, Florida,
at an estimated cost of $35 million. AIMCO generally finances
redevelopment initially with borrowings from the Credit Facility, and
subsequently arranges permanent financing.
- EXPANSION OF PROPERTIES. AIMCO believes that expansion within or adjacent
to existing AIMCO Properties also provides growth opportunities at lower
risk than new development. Such expansion can offer cost advantages to the
extent common area amenities and on-site management personnel can service
the expanded property. Recently AIMCO constructed 92 additional units at
Fairways, in Phoenix, Arizona, at a cost of $6.5 million. AIMCO is
planning the construction of 42 additional units at Township, in
Littleton, Colorado, for a projected cost of more than $3.0 million. In
addition, AIMCO owns or controls approximately 115 acres of vacant land,
adjacent to existing Owned Properties or Equity Properties, which AIMCO
believes is suitable for the development of approximately 1,300 apartment
units. AIMCO generally finances expansions initially with borrowings from
the Credit Facility, and subsequently arranges permanent financing.
- CONVERSION OF AFFORDABLE PROPERTIES; IMPROVEMENT OF PERFORMANCE. AIMCO
believes that it may be able to significantly increase its return from its
portfolio of affordable properties by improving operations at some of its
properties or by converting some of its properties to conventional
properties. While management of AIMCO has commenced review of the
affordable properties, it has not yet made any determination as to the
conversion of any affordable property.
- ANCILLARY SERVICES. AIMCO's management believes that its ownership and
management of the AIMCO Properties provides it with unique access to a
customer base for the sale of additional services which generate
incremental revenues. AIMCO currently provides cable television, telephone
services, appliance rental, renters' insurance and carport, garage and
storage space rental at certain AIMCO Properties. For example, as of
September 30, 1997, AIMCO has installed cable television service to 8,000
units and currently has more than 5,000 subscribers.
- CONTROLLING EXPENSES. Cost reductions are accomplished by exploiting
economies of scale. As a result of the size of its portfolio and its
creation of regional concentrations of properties, AIMCO has the ability
to leverage fixed costs for general and administrative expenditures and
certain operating functions, such as insurance, information technology and
training, over a larger property base. For example, AIMCO's insurance
subsidiary provides workers' compensation and employer liability insurance
company-wide, without incurring material incremental costs as AIMCO's
property assets grow. Consequently, AIMCO estimates that it will achieve
annual recurring savings exceeding $1.2 million by combining the insurance
programs of NHP and AIMCO. Management of AIMCO also expects immediate cost
savings of approximately $13.3 million from staffing reductions associated
with the NHP Acquisition, and additional savings from elimination of
redundant expenses such as public reporting costs. There can be no
assurance, however, that all of such cost reductions will be achieved.
AIMCO also instills cost discipline in its property managers by
benchmarking their operations against the local market and other AIMCO
Properties.
PROPERTY MANAGEMENT STRATEGIES
REGIONAL HUBS. AIMCO's property management strategy is to achieve
improvements in operating results by combining centralized financial control and
uniform operating procedures with localized property management decisionmaking
and market knowledge. AIMCO's management operations are
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organized into 13 regional hubs, each supervised by a Regional Vice President,
who have on average 17 years of experience in apartment management.
<TABLE>
<CAPTION>
APARTMENT UNITS APARTMENT COMMUNITIES
REGIONAL HUBS MANAGED(1) MANAGED(1)
- ------------------------------------------------------------------------ --------------- -------------------------
<S> <C> <C>
Florida................................................................. 17,061 63
East (DE, NJ, PA)....................................................... 18,488 83
Mid-Atlantic (DC, MD, VA)............................................... 14,315 72
Midwest (IN, OH, TN, WV)................................................ 8,245 43
North Midwest (IL, MI, MO, MN, WI)...................................... 8,767 60
North Texas (AR, LA, OK, TX)............................................ 14,900 77
Northeast (CT, MA, NH, NY, RI).......................................... 8,482 60
Rocky Mountain (CO, KS, SD, UT)......................................... 7,574 68
South-Atlantic (KY, NC, SC)............................................. 3,758 27
South Texas (TX)........................................................ 13,911 69
Southeast (AL, GA, MS, PR).............................................. 8,071 52
Southwest (AZ, NM, NV).................................................. 7,766 35
West (AK, CA, HI, OR, WA)............................................... 5,682 55
------- ---
Total................................................................. 137,020 764
</TABLE>
- ------------------------
(1) Includes only units and apartment communities managed by AIMCO. Does not
include (i) 13,307 units in 97 apartment communities in which AIMCO has an
ownership interest but does not manage and (ii) 34,334 units in the Oxford
Properties, including 2,332 senior living units, all of which are managed as
a separate portfolio.
CUSTOMER SERVICE. AIMCO believes that resident satisfaction is directly
related to the experience and training of on-site management personnel, AIMCO
provides on-site management trained to respond promptly to residents' needs. To
improve customer service, AIMCO conducts annual resident satisfaction surveys,
guarantees that material defects will be corrected in 24 hours and refunds
related rent if that commitment is not met.
PERSONNEL POLICIES. AIMCO has attempted to reduce turnover and retain
experienced personnel by establishing an employee mentoring program and
providing managers with incentive-based compensation. In addition, managing
properties for third parties, AIMCO believes, improves performance at Managed
Properties and Owned Properties alike by subjecting property managers to
market-based pricing and service standards.
START. Properties that are behind budget or face other significant
operating difficulties receive direct supervision and intervention from START, a
team of professionals, led by Executive Vice President Steven Ira, a founder of
AIMCO. Members of START focus on not more than 10 to 15 properties at any one
time, which allows them to focus sharply on the subject properties. START also
oversees due diligence on acquisitions and major construction activities.
MANAGEMENT INCENTIVES. AIMCO believes that equity ownership by management
and equity- and incentive-based compensation are important factors in
attracting, retaining and motivating the most qualified and experienced
personnel and directors. AIMCO's goal is to align management's interests with
those of stockholders through the use of equity-based compensation plans to
direct management's efforts towards enhancing shareholder value.
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<PAGE>
The following table reflects the ownership of AIMCO Common Stock and OP
Units by senior management of AIMCO, which, as of September 30, 1997 (assuming
full conversion of OP Units), represented approximately 10.3% of the outstanding
AIMCO Common Stock.
<TABLE>
<CAPTION>
TOTAL SHARES OF AIMCO
COMMON STOCK AND OP UNITS PERCENTAGE
OWNED BY MANAGEMENT OWNED INVESTMENT(1)
--------------------------------- ----------- ---------------
<S> <C> <C> <C>
AIMCO IPO......................... 926,000 8.6% $ 17 million
December 31, 1995................. 1,067,000 7.7% $ 21 million
December 31, 1996................. 2,303,000 12.5% $ 65 million
September 30, 1997................ 3,411,000 10.3% $ 123 million
</TABLE>
----------------------------
(1) Encumbered by outstanding secured partially recourse notes in the amount
of $30.5 million as of September 30, 1997.
- On July 25, 1997, eleven senior managers of AIMCO purchased 1.1 million
shares of AIMCO Common Stock at a price of $30 per share in exchange for
promissory notes secured by such stock, which notes are recourse as to 25%
of the principal owed. See "--Recent Financings."
- AIMCO pays a majority of the compensation to its outside directors in
AIMCO Common Stock.
- AIMCO issues all stock options at the then-current market price, and
requires that employees own AIMCO Common Stock before receiving their
options. As of September 30, 1997, the number of outstanding options was
553,646.
RECENT ACQUISITIONS
AIMCO has during the past two years increased substantially the number of
properties owned or managed by it from 33,271 units in 185 properties at
December 31, 1994, to 186,993 units in 1,029 properties at September 30, 1997.
In addition to the NHP Stock Purchase and NHP Real Estate Acquisition, AIMCO
completed the following acquisitions (among others) during the ten months ended
October 31, 1997:
WINTHROP. In October, AIMCO acquired a portfolio of 35 garden-style
apartment communities (collectively, the "Winthrop Portfolio") from 27 limited
partnerships affiliated with Winthrop Financial Associates. The 35 properties
are located in seven states, have an average age of 17 years and contain a total
of 8,175 apartment units. Fifteen of the apartment communities are located in
Arizona, with 2,602 units in Phoenix and 816 units in Tucson; eleven apartment
communities with 2,075 units are located throughout Texas; two apartment
communities with 1,223 units are located in Florida; two apartment communities
with 494 units are located in Michigan; three apartment communities with 536
units are located in Georgia; one apartment community with 293 units is located
in Illinois; and one apartment community with 136 units is located in North
Carolina.
The aggregate purchase price for the Winthrop Portfolio, including estimated
transaction costs, was approximately $263.5 million. AIMCO paid aggregate
consideration of $116.1 million in cash to the partnerships affiliated with
Winthrop Financial Associates, assumed $8.3 million in mortgage indebtedness and
incurred $139.1 million of new indebtedness secured by the properties, to
complete the purchase. AIMCO has also budgeted an additional $16.0 million in
initial capital expenditures.
WINDWARD AT THE VILLAGES. In October, AIMCO purchased Windward at the
Villages ("Windward"), a 196-unit apartment community built in 1988, located in
West Palm Beach, Florida, for approximately $10.8 million. Windward is adjacent
to the Bear Lakes Country Club and Golf Course in the Villages of Palm Beach
Lakes master planned golf course community.
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<PAGE>
MORTON TOWERS. In September AIMCO, through two subsidiary limited
partnerships in which AIMCO is the sole general partner and has an aggregate
interest of approximately 77%, acquired the Morton Towers apartments, a
1,277-unit, twin tower high rise apartment complex built in 1960, located in
Miami Beach, Florida, for $63 million, including approximately 1.4 million OP
Units valued at $42 million. AIMCO expects to undertake a major renovation of
the complex at an estimated total cost of $35 million.
LOS ARBOLES. In September AIMCO acquired Los Arboles Apartments, a 232-unit
apartment community built in 1985, located in Chandler, Arizona, for
approximately $11.3 million. Los Arboles is adjacent to Vista del Lagos, a
200-unit apartment community in which AIMCO has an equity interest.
SAWGRASS. In July AIMCO purchased Sawgrass Apartments, a 208-unit apartment
community built in 1989, located in Orlando, Florida, for approximately $9.6
million. Sawgrass was formerly a Managed Property.
TUSTIN EAST VILLAGE/THE CALIFORNIAN. In June AIMCO acquired Tustin East
Village and The Californian, two garden-style apartment communities consisting
of 292 units, built in 1970, and Red Hill Plaza, an adjacent shopping plaza
built in 1970, located in Tustin, California, for $21.4 million including
approximately 0.5 million OP Units valued at $13.9 million. These properties are
contiguous to Brookside Apartments, another Owned Property, consisting of 336
units, purchased in April 1996 from the same seller and are operated as one
property.
THE VININGS. In June AIMCO acquired The Vinings at the Waterways, a
180-unit luxury garden-style apartment community built in 1991, located in
Aventura, Florida, for approximately $16.4 million. The Vinings is located by a
yacht basin and marina directly accessing the Intracoastal Waterway and is also
adjacent to a commercial center.
STONEBROOK. In May AIMCO acquired the Stonebrook Apartments, a 244-unit
apartment community in Orlando, Florida, for approximately $11 million.
Stonebrook is less than a mile from the location of a proposed interchange on a
beltway around Orlando and is near a regional airport being expanded for
commercial aviation.
BAY CLUB. In April AIMCO acquired The Bay Club at Aventura, a 702-unit
luxury high rise apartment complex, consisting of two towers built in 1990, in
Aventura, Florida, for approximately $71 million. The property includes
approximately 3.5 acres of land with entitlements to construct a third tower
consisting of 225 units. Aventura is a coastal city located near North Miami
Beach.
PROPERTIES SUBJECT TO LETTER OF INTENT OR CONTRACT
In the ordinary course of AIMCO's business, AIMCO is engaged in discussions
and negotiations with property owners regarding the purchase of apartment
properties or interests in apartment properties. AIMCO frequently enters into
letters of intent, which may be binding or nonbinding, and contracts with
respect to the purchase of real property which are subject to certain conditions
and which permit the Company to terminate the contract in its sole and absolute
discretion if it is not satisfied with the results of its due diligence
investigation of the properties under contract. AIMCO's management believes that
such contracts essentially result in the creation of an option on the property
subject to the contract and give AIMCO greater flexibility in seeking to acquire
properties. As of September 30, 1997, AIMCO had under letter of intent or
contract (exclusive of Windward and the Winthrop Portfolio) an aggregate of 26
multi-family apartment properties with a maximum aggregate purchase price of
$315 million, which, in some cases, may be paid in the form of assumption of
existing debt. All such contracts are subject to termination by AIMCO as
described above. Due diligence with respect to these properties is generally not
completed and there is no assurance that any transaction will occur or that they
will occur on the terms currently contemplated.
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<PAGE>
RECENT INVESTMENT
AMBASSADOR APARTMENTS. In September AIMCO filed a Schedule 13D with the
Commission stating that it acquired 886,600 shares of common stock of Ambassador
Apartments, Inc., a publicly traded REIT ("Ambassador"), for $19.8 million,
representing 8.45% of the shares outstanding as reported in Ambassador's Form
10-Q for the quarter ended June 30, 1997.
RECENT FINANCINGS
In July 1997, AIMCO sold 1.1 million newly issued shares of AIMCO Common
Stock at a price of $30 per share, the closing price of the stock on the date of
purchase, to certain members of senior management of AIMCO. In payment for the
stock, such members of senior management executed notes payable to AIMCO
totalling $33.0 million (of which $9.8 million has been repaid), bearing
interest at 7.25% per annum, payable quarterly, and due in ten years. The stock
purchase notes are secured by the stock purchased and are recourse as to 25% of
the principal owed.
In August 1997, AIMCO sold 750,000 shares of newly issued AIMCO Class B
Preferred Stock for gross proceeds of $75 million in cash to an institutional
investor in a private transaction. Holders of the AIMCO Class B Preferred Stock
are entitled to receive, when, as and if declared by the AIMCO Board, quarterly
cash dividends per share equal to the greater of (i) $1.78125 and (ii) the cash
dividends declared on the number of shares of AIMCO Common Stock into which one
share of AIMCO Class B Preferred Stock is convertible. On or after August 4,
1998, each share of AIMCO Class B Preferred Stock is convertible at the option
of the holder into 3.28407 shares of AIMCO Common Stock, subject to certain
anti-dilution adjustments. The AIMCO Class B Preferred Stock is senior to the
AIMCO Common Stock as to dividends and liquidation. See "Description of AIMCO's
Capital Stock--AIMCO Class B Common Stock." The proceeds from the sale of the
AIMCO Class B Preferred Stock were used to repay borrowings outstanding under
the Credit Facility and to provide working capital.
Since August 1997, AIMCO has issued an aggregate of 5,052,418 shares of
AIMCO Common Stock to institutional investors for aggregate net proceeds of
$156.8 million. AIMCO used $114.3 million of such proceeds to purchase 5,717,000
shares of NHP Common Stock from ANHI, used $7.0 million to purchase 351,795
additional shares of NHP Common Stock from Demeter pursuant to the Stock
Purchase Agreement and contributed the remaining $35.5 million to the Operating
Partnership. ANHI used $74.3 million of proceeds from its sale of NHP Common
Stock to AIMCO to repay in full outstanding borrowings under the ANHI Credit
Facility, including accrued interest, and terminated the ANHI Credit Facility.
Borrowings under the ANHI Credit Facility were incurred to purchase NHP Common
Stock in the NHP Stock Purchase. ANHI also distributed $40.0 million of proceeds
from the sale of shares of NHP Common Stock to the Operating Partnership, which
holds a 95% interest in ANHI, and Messrs. Considine and Kompaniez, who hold in
the aggregate a 5% interest in ANHI. Messrs. Considine and Kompaniez received a
distribution of $2.0 million in connection with such sale and used such proceeds
to repay in part outstanding promissory notes payable by them to ANHI in an
aggregate principal amount of $3.2 million. The loans were incurred by them to
acquire their interest in ANHI.
On October 27, 1997, AIMCO sold 7,000,000 shares of AIMCO Common Stock in an
underwritten public offering for net proceeds of $241.5 million. AIMCO used
approximately $23 million in such net proceeds to repay an intercompany loan
from the Operating Partnership, and contributed all of the remaining
approximately $218.5 million of such net proceeds to the Operating Partnership,
which will use such proceeds for the repayment of outstanding indebtedness and
for general business purposes.
THIRD QUARTER RESULTS
On October 24, 1997, AIMCO announced that FFO for the third quarter of 1997
equaled $21.3 million, or $0.72 per share of AIMCO Common Stock, compared to
$8.8 million, or $0.59 per share, for the quarter ended September 30, 1996,
which represented a 22.0% increase on a per share basis.
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For the third quarter of 1997, revenues from "same store" sales for 112
Class A and Class B apartment communities containing 30,725 units owned by both
AIMCO and the NHP Real Estate Companies during the third quarters of both 1997
and 1996 increased 2.7%, operating expenses increased 4.0% and net operating
income increased 1.6%, each over the third quarter of 1996. For the first nine
months of 1997, "same store" sales showed an increase in revenues of 2.3%, an
increase in operating expenses of 0.7% and an increase in net operating income
of 3.5% over the comparable period of 1996. Weighted average physical occupancy
for the 112 apartment communities was 94.4% for the quarter ended September 30,
1996 and 93.9% for the quarter ended September 30, 1997, which represented a
0.5% decrease. Average monthly rent per occupied unit decreased 1.8% from $608
at September 30, 1996 to $597 at September 30, 1997.
ACCOUNTING POLICIES AND DEFINITIONS
AIMCO has the following accounting policies and definitions:
FFO is defined as net income (loss) before minority interest in the
Operating Partnership, computed in accordance with GAAP, excluding gains and
losses from debt restructuring and sales of property, plus real estate related
depreciation and amortization (excluding amortization of financing costs), and
after adjustments for unconsolidated partnerships and joint ventures. In
addition, AIMCO adjusts FFO for minority interest in the Operating Partnership,
amortization of management company goodwill, the non-cash deferred portion of
the income tax provision for unconsolidated subsidiaries and the payment of
dividends on preferred stock. AIMCO's management believes that presentation of
FFO provides investors with an industry accepted measurement which helps
facilitate understanding of AIMCO's ability to meet required dividend payments,
capital expenditures, and principal payments on its debt. There can be no
assurance that AIMCO's basis of computing FFO is comparable with that of other
REITs.
AIMCO capitalizes spending for items which generally cost more than $250 and
have a useful life of more than one year, such as carpet replacement, new
appliances, new roofs or parking lot repaving. Capitalized spending which
maintains a property is termed a "Capital Replacement." In the experience of
AIMCO's management, this spending is better considered a recurring cost of
preserving an asset rather than as an additional investment.
For financial reporting purposes, AIMCO consolidates entities in which it
owns both a general partnership interest and controls investment decisions with
respect to the underlying assets. AIMCO generally has a 30% to 51% economic
interest in such entities. Entities in which AIMCO has less than a 30% economic
interest or limited control are accounted for on the equity method.
AIMCO policy is generally to hold Class C properties and affordable
properties (substantially all of which are Class C properties) in unconsolidated
partnerships. AIMCO accounts for these properties on the equity method in
accordance with GAAP.
POLICIES OF AIMCO WITH RESPECT TO CERTAIN OTHER ACTIVITIES
The following is a discussion of certain other investment objectives and
policies, financing policies and other policies of AIMCO. These policies are
determined by the officers and directors of AIMCO and may be amended or revised
from time to time at their discretion without a vote of AIMCO's stockholders. As
the sole general partner of the Operating Partnership, AIMCO also determines the
investment policies of the Operating Partnership.
INVESTMENT IN OTHERS. AIMCO may also participate with other entities in
property ownership, through joint ventures or other types of co-ownership. Any
such equity investment may be subject to existing mortgage financing and other
indebtedness which would have priority over the equity of AIMCO in that
property.
SECURITIES OF OR INTERESTS IN PERSONS PRIMARILY ENGAGED IN REAL ESTATE
ACTIVITIES. AIMCO may also acquire securities of or interests in persons
engaged in the acquisition, redevelopment and/or management of multifamily
apartment properties, if it determines that such acquisition would be accretive
to FFO per share.
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INVESTMENTS IN REAL ESTATE MORTGAGES. While AIMCO generally emphasizes
direct real estate investments, it may, in its discretion and subject to the
percentage ownership limitations and gross income tests necessary for REIT
qualification, invest in mortgage and other indirect real estate interests,
including securities of other real estate investment trusts. AIMCO has not
previously invested in mortgages or securities of other real estate investment
trusts and AIMCO does not presently intend to invest to a significant extent in
mortgages or securities of other real estate investment trusts.
OPERATING AND FINANCING POLICIES AIMCO seeks to maintain a ratio of EBITDA
(less a provision of approximately $300 per owned apartment unit) to debt (the
"Debt Coverage Ratio") of at least 2 to 1, and to match debt maturities to the
character of the assets financed. See "--Operating and Financial
Strategies--Debt Financing." AIMCO, however, may from time to time re-evaluate
borrowing policies in light of then current economic conditions, relative costs
of debt and equity capital, market values of properties, growth and acquisition
opportunities and other factors. AIMCO may modify its borrowing policy and may
increase or decrease its Debt Coverage Ratio policy.
To the extent that the AIMCO Board determines to seek additional capital,
AIMCO may raise such capital through additional equity offerings, debt financing
or retention of cash flow (after consideration of provisions of the Code
requiring the distribution by a REIT of a certain percentage of taxable income
and taking into account taxes that would be imposed on undistributed taxable
income), or through a combination of these sources. AIMCO presently anticipates
that any additional borrowings will be made through the Operating Partnership,
although AIMCO might incur borrowings that would be reloaned to the Operating
Partnership. The Operating Partnership cannot incur indebtedness that is
recourse to AIMCO without AIMCO's approval. AIMCO may approve the Operating
Partnership's incurring additional debt that is recourse to the Operating
Partnership. Borrowings may be unsecured or may be secured by any or all assets
of AIMCO, the Operating Partnership, or any existing or new property and may
have full or limited recourse to all or any portion of the assets of AIMCO, the
Operating Partnership, or any existing or new property.
AIMCO has not established any limit on the number or amount of mortgages
that may be placed on any single property or on its portfolio as a whole.
AIMCO may also determine to issue securities senior to the AIMCO Common
Stock, including preferred stock and debt securities (either of which may be
convertible into capital stock or be accompanied by warrants to purchase capital
stock). AIMCO may also determine to finance acquisitions through the exchange of
properties or issuance of additional OP Units, shares of AIMCO Common Stock or
other securities.
If the AIMCO Board determines to raise additional equity capital, the AIMCO
Board has the authority, without stockholder approval, to issue additional
shares of AIMCO Common Stock or other capital stock (including securities senior
to the AIMCO Common Stock) in any manner (and on such terms and for such
consideration) it deems appropriate, including in exchange for property. Such
issuances might cause a dilution of a stockholder's investment in AIMCO. If the
AIMCO Board determines to raise additional equity capital to fund investments by
the Operating Partnership, AIMCO will contribute such funds to the Operating
Partnership as a contribution to capital and purchase of additional general
partnership interests. AIMCO may issue additional shares of AIMCO Common Stock
in connection with the acquisition of OP Units that are tendered to the
Operating Partnership for redemption.
The AIMCO Board also has the authority to cause the Operating Partnership to
issue additional OP Units in any manner (and on such terms and for such
consideration) as it deems appropriate, including in exchange for property. Any
such new OP Units will be redeemable at the option of the holder, which
redemption AIMCO intends to cause to be made in AIMCO Common Stock pursuant to
the redemption rights.
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CONFLICT OF INTEREST POLICIES AIMCO has adopted certain policies designed
to minimize or eliminate conflicts of interests between AIMCO and its executive
officers and directors. Without the approval of a majority of the disinterested
directors, AIMCO will not (i) acquire from or sell to any director, officer or
employee of AIMCO or any entity in which a director, officer or employee of
AIMCO owns more than a 1% interest, or acquire from or sell to any affiliate of
any of the foregoing, any assets or other property of AIMCO, (ii) make any loan
to or borrow from any of the foregoing persons, or (iii) engage in any material
transaction with the foregoing. In addition, AIMCO has entered in to employment
agreements with Messrs. Considine, Kompaniez and Ira which include provisions
intended to eliminate or minimize potential conflicts of interest, and which
provide that those persons will be prohibited from engaging directly or
indirectly in the acquisition, development, operation or management of other
multifamily apartment properties outside of AIMCO, except with respect to
certain investments currently held by such persons, as to which investments
those persons have committed to an orderly liquidation. There can be no
assurance, however, that these policies always will be successful in eliminating
the influence of such conflicts, and if they are not successful, decisions could
be made that might fail to reflect fully the interests of AIMCO's stockholders
as a whole.
POLICIES WITH RESPECT TO OTHER ACTIVITIES AIMCO has authority to offer
shares of its capital stock or other securities and to repurchase or otherwise
reacquire its shares or any other securities, has done so, and may engage in
such activities in the future. From its inception to September 30, 1997, AIMCO
has made loans aggregating $5.1 million to certain entities owning properties
subsequently acquired by AIMCO. No balances remain outstanding on such loans. In
the same period, AIMCO has made loans aggregating $52.2 million to its officers
for the purchase of AIMCO Common Stock and $5.1 million to its officers and
other entities to acquire interests in subsidiaries of AIMCO. The outstanding
balances on such loans as of September 30, 1997 were $30.5 million and $3.2
million, respectively. Messrs. Considine and Kompaniez have repaid in part,
using $2.0 million in proceeds distributed to them from the sale of NHP Common
Stock by ANHI to AIMCO, outstanding promissory notes payable by them to ANHI in
an aggregate amount of $3.2 million, which loan was made to them by ANHI to
acquire their interest in ANHI. See "--Recent Financings." In addition, AIMCO
from time to time advances amounts for relocation and other expenses. AIMCO has
not engaged in underwriting securities of other issuers. AIMCO intends to make
investments in such a way that it will not be treated as an investment company
under the Investment Company Act of 1940, as amended.
AIMCO may invest in the securities of other issuers engaged in the
ownership, acquisition or management of multifamily apartment properties for the
purpose of exercising control.
At all times, AIMCO intends to make investments in such a manner as to be
consistent with the requirements of the Code for AIMCO to qualify as a REIT
unless, because of changing circumstances or changes in the Code (or in Treasury
Regulations), the AIMCO Board determines that it is no longer in the best
interest of AIMCO to qualify as a REIT.
AIMCO, as a REIT, is required to distribute annually to holders of AIMCO
Common Stock at least 95% of its "real estate investment trust taxable income,"
which, as defined by the Code and the Treasury regulations, is generally
equivalent to net taxable ordinary income. AIMCO measures its economic
profitability and intends to pay regular dividends to its stockholders based on
earnings during the relevant period. However, the future payment of dividends by
AIMCO will be at the discretion of the AIMCO Board and will depend on numerous
factors, including AIMCO's financial condition, its capital requirements, the
annual distribution requirements under the provisions of the Code applicable to
REITs and such other factors as the AIMCO Board deems relevant.
EXECUTIVE OFFICES
AIMCO's principal executive offices are located at 1873 South Bellaire
Street, 17th Floor, Denver, Colorado 80222, and its telephone number is (303)
757-8101.
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BOARD OF DIRECTORS AND OFFICERS OF AIMCO
The directors and executive officers of AIMCO, their ages, dates they were
first elected and their positions with AIMCO or on the AIMCO Board are set forth
below.
<TABLE>
<CAPTION>
NAME AGE FIRST ELECTED POSITION
- ------------------------------ --- ------------------ -------------------------------------------------------
<S> <C> <C> <C>
Terry Considine............... 50 July 1994 Chairman of the Board of Directors and Chief Executive
Officer
Peter K. Kompaniez............ 52 July 1994 Vice Chairman, President and Director
Steven D. Ira................. 47 July 1994 Executive Vice President--START
Thomas W. Toomey.............. 37 January 1996 Executive Vice President--Finance and Administration
David L. Williams............. 52 January 1997 Executive Vice President--Property Operations
Harry G. Alcock............... 33 July 1996 Senior Vice President--Acquisitions
Joseph DeTuno................. 52 September 1997 Senior Vice President--Property Redevelopment
Jack W. Marquardt............. 41 September 1997 Senior Vice President--Accounting
Leeann Morein................. 43 July 1994 Senior Vice President, Chief Financial Officer and
Secretary
R. Scott Wesson............... 34 July 1997 Senior Vice President--Chief Information Officer
Dora E. Chi................... 37 July 1997 Vice President--Asset Management
Patti K. Fielding............. 34 February 1997 Vice President--Asset Management
Patricia K. Heath............. 43 July 1994 Vice President and Chief Accounting Officer
Carla Stoner.................. 35 July 1997 Vice President--Finance and Administration
James Wallace................. 45 October 1997 Vice President--Tax
Richard S. Ellwood............ 65 July 1994 Director; Chairman, Audit Committee
J. Landis Martin.............. 51 July 1994 Director
Thomas L. Rhodes.............. 58 July 1994 Director; Chairman, Compensation Committee
John D. Smith................. 69 November 1994 Director
</TABLE>
The following is a biographical summary of the experience of the current
directors and executive officers of AIMCO for the past five years or more.
TERRY CONSIDINE. Mr. Considine has been Chairman of the Board of Directors
and Chief Executive Officer of AIMCO since July 1994, and was President until
July 1997. He is the sole owner of Considine Investment Co. and prior to July
1994 was owner of approximately 75% of Property Asset Management, L.L.C.,
Limited Liability Company, a Colorado limited liability company, and its related
entities (collectively, "PAM"), one of the AIMCO Predecessors. On October 1,
1996, Mr. Considine was appointed Co-Chairman and director of Asset Investors
Corp. and Commercial Asset Investors, Inc., two other public real estate
investment trusts, and appointed as a director of Financial Assets Management,
LLC, a real estate investment trust manager. Mr. Considine has been involved as
a principal in a variety of real estate activities, including the acquisition,
renovation, development and disposition of properties. Mr. Considine has also
controlled entities engaged in other businesses such as television broadcasting,
gasoline distribution and environmental laboratories. Mr. Considine received a
B.A. from Harvard College, a J.D. from Harvard Law School and is admitted as a
member of the Massachusetts Bar. He served as a Colorado State Senator from
1987-1992 and in 1992 was the Republican nominee for election to the United
States Senate from Colorado.
Mr. Considine has had substantial multifamily real estate experience. From
1975 through July 1994, partnerships or other entities in which Mr. Considine
had controlling interests invested in approximately 35 multifamily apartment
properties and commercial real estate properties. Six of these real estate
assets (four of which were multifamily apartment properties and two of which
were office properties) did not generate sufficient cash flow to service their
related indebtedness and were foreclosed upon by their
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lenders, causing pre-tax losses of approximately $11.9 million to investors and
losses of approximately $2.7 million to Mr. Considine.
PETER K. KOMPANIEZ. Mr. Kompaniez has been Vice Chairman and a director of
AIMCO since July 1994 and was appointed President in July 1997. Mr. Kompaniez
has also served as Chief Operating Officer of NHP and President of NHP Partners
since June 1997. Since September 1993, Mr. Kompaniez has owned 75% of PDI Realty
Enterprises, Inc., a Delaware corporation ("PDI"), one of AIMCO's predecessors,
and serves as its President and Chief Executive Officer. From 1986 to 1993, he
served as President and Chief Executive Officer of Heron Financial Corporation
("HFC"), a United States holding company for Heron International, N.V.'s real
estate and related assets. While at HFC, Mr. Kompaniez administered the
acquisition, development and disposition of approximately 8,150 apartment units
(including 6,217 units that have been acquired by AIMCO) and 3.1 million square
feet of commercial real estate. Prior to joining HFC, Mr. Kompaniez was a senior
partner with the law firm of Loeb and Loeb where he had extensive real estate
and REIT experience. Mr. Kompaniez received a B.A. from Yale College and a J.D.
from the University of California (Boalt Hall).
The downturn in the real estate markets in the late 1980s and early 1990s
adversely affected the United States real estate operations of Heron
International N.V. and its subsidiaries and affiliates (the "Heron Group").
During this period from 1986 to 1993, Mr. Kompaniez served as President and
Chief Executive Officer of Heron Financial Corporation ("HFC"), and as a
director or officer of certain other Heron Group entities. In 1993, HFC, its
parent Heron International, and certain other members of the Heron Group
voluntarily entered into restructuring agreements with separate groups of their
United States and international creditors. The restructuring agreement for the
United States members of the Heron Group generally provided for the joint
assumption of certain liabilities and the pledge of unencumbered assets in
support of such liabilities for the benefit of their United States creditors. As
a result of the restructuring, the operations and assets of the United States
members of the Heron Group were generally separated from those of Heron
International and its non-United States subsidiaries. At the conclusion of the
restructuring, Mr. Kompaniez commenced the operations of PDI Realty Enterprises,
Inc., a Delaware corporation ("PDI"), which was engaged to act as asset and
corporate manager of the continuing United States operations of HFC and the
other United States Heron Group members for the benefit of the United States
creditors. In connection with certain transactions effected at the time of the
initial public offering of AIMCO Common Stock, Mr. Kompaniez was appointed Vice
Chairman of AIMCO and substantially all of the property management assets of PDI
were transferred or assigned to AIMCO.
STEVEN D. IRA. Mr. Ira has served as Executive Vice President of AIMCO
since July 1994. From 1987 until July 1994, he served as President of PAM. Prior
to merging his firm with PAM in 1987, Mr. Ira acquired extensive experience in
property management. Between 1977 and 1981 he supervised the property management
of over 3,000 apartment and mobile home units in Colorado, Michigan,
Pennsylvania and Florida, and in 1981 he joined with others to form the property
management firm of McDermott, Stein and Ira. Mr. Ira served for several years on
the National Apartment Manager Accreditation Board and is a former president of
both the National Apartment Association and the Colorado Apartment Association.
Mr. Ira is the sixth individual elected to the Hall of Fame of the National
Apartment Association in its 54-year history. He holds a Certified Apartment
Property Supervisor (CAPS) and a Certified Apartment Manager designation from
the National Apartment Association, a Certified Property Manager (CPM)
designation from the National Institute of Real Estate Management (IREM) and he
is a member of the Boards of Directors of the National Multi-Housing Council,
the National Apartment Association and the Apartment Association of Metro
Denver. Mr. Ira received a B.S. from Metropolitan State College in 1975.
Although Mr. Ira has had substantial multifamily real estate experience, in
the late 1980s and early 1990s, three multifamily apartment properties located
in Colorado that were owned by partnerships in which Mr. Ira had a general
partnership interest could not meet their debt payments, and were foreclosed
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upon by their respective lenders, causing a pre-tax loss of approximately $3.2
million to investors. Mr. Ira was not the managing general partner of two of
these partnerships.
THOMAS W. TOOMEY. Mr. Toomey has served as Senior Vice President--Finance
and Administration of AIMCO since January 1996 and was promoted to Executive
Vice President--Finance and Administration in March 1997. From 1990 until 1995,
Mr. Toomey served in a similar capacity with Lincoln Property Company ("LPC") as
Vice President/Senior Controller and Director of Administrative Services of
Lincoln Property Services where he was responsible for LPC's computer systems,
accounting, tax, treasury services and benefits administration. From 1984 to
1990, he was an audit manager with Arthur Andersen & Co. where he served real
estate and banking clients. From 1981 to 1983, Mr. Toomey was on the audit staff
of Kenneth Leventhal & Company. Mr. Toomey received a B.S. in Business
Administration/Finance from Oregon State University and is a Certified Public
Accountant.
DAVID L. WILLIAMS. Mr. Williams has been Executive Vice
President--Operations of AIMCO since January 1997. Prior to joining AIMCO, Mr.
Williams was Senior Vice President of Operations at Evans Withycombe
Residential, Inc. from January 1996 to January 1997. Previously, he was
Executive Vice President at Equity Residential Properties Trust from October
1989 to December 1995. He has served on National Multi-Housing Council Boards
and NAREIT committees. M. Williams also served as Senior Vice President of
Operations and Acquisitions of US Shelter Corporation from 1983 to 1989. Mr.
Williams has been involved in the property management, development and
acquisition of real estate properties since 1973. Mr. Williams received his B.A.
in education and administration from the University of Washington in 1967.
HARRY G. ALCOCK. Mr. Alcock has served as a Vice President since July 1996,
and was promoted to Senior Vice President--Acquisitions in October 1997, with
responsibility for acquisition and financing activities since July 1994. From
June 1992 until July 1994, Mr. Alcock served as Senior Financial Analyst for PDI
and HFC. From 1988 to 1992, Mr. Alcock worked for Larwin Development Corp., a
Los Angeles based real estate developer, with responsibility for raising debt
and joint venture equity to fund land acquisitions and development. From 1987 to
1988, Mr. Alcock worked for Ford Aerospace Corp. He received his B.S. from San
Jose State University.
JOSEPH DETUNO. Mr. DeTuno has been Senior Vice President--Property
Redevelopment of AIMCO since September 1997. Mr. DeTuno was president and
founder of JD Associates, his own full service real estate consulting, advisory
and project management company which he founded in 1990. JD Associates provided
development management, financial analysis, business plan preparation and
implementation services. Previously, Mr. DeTuno served as President/Partner of
Gulfstream Commercial Properties, President and Co-managing Partner of Criswell
Development Company, Vice President of Crow Hotel and Company and Project
Director with Perkins & Will Architects and Planners. Mr. DeTuno received his
B.A. in architecture and is a registered architect in Illinois and Texas.
JACK W. MARQUARDT. Mr. Marquardt has been Senior Vice President--Accounting
of AIMCO since September 1997. Mr. Marquardt brings over 17 years of real estate
accounting experience to AIMCO. From October 1992 through August 1997, Mr.
Marquardt served as Vice President/Corporate Controller and Manager of Data
Processing for Transwestern Property Company, where he was responsible for
corporate accounting, tax, treasury services and computer systems. From August
1986 through September 1992, Mr. Marquardt worked in the real estate accounting
area of Aetna Realty Investors, Inc. serving as Regional Controller from April
1990 through September 1992. Mr. Marquardt received a B.S. in Business
Administration/Finance from Ohio State University.
LEEANN MOREIN. Ms. Morein has served as Senior Vice President, Chief
Financial Officer and Secretary of AIMCO since July 1994. From September 1990 to
March 1994, Ms. Morein served as Chief Financial Officer of the real estate
subsidiaries of California Federal Bank, including the general partner of CF
Income Partners, L.P., a publicly-traded master limited partnership. Ms. Morein
joined California
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Federal in September 1988 as Director of Real Estate Syndications Accounting and
became Vice President--Financial Administration in January 1990. From 1983 to
1988, Ms. Morein was Controller of Storage Equities, Inc., a real estate
investment trust, and from 1981 to 1983, she was Director of Corporate
Accounting for Angeles Corporation, a real estate syndication firm. Ms. Morein
worked on the audit staff of Price Waterhouse from 1979 to 1981. Ms. Morein
received a B.A. from Pomona College and is a Certified Public Accountant.
R. SCOTT WESSON. Mr. Wesson has been Senior Vice President--Chief
Information Officer of AIMCO since July 1997. From 1994 until 1997, Mr. Wesson
served as Vice President of Information Services at Lincoln Property Company,
where he was responsible for information systems infrastructure, technology
planning and business process re-engineering. From 1992 to 1994, Mr. Wesson
served in the role of Director of Network Services for Lincoln Property Company,
where he was responsible for the design and deployment of the company's Wide
Area Network and Local Area Networks, comprising over 2,500 workstations in over
40 locations nationwide. From 1988 to 1992, he was a systems consultant with
Automatic Data Processing involved in design, planning and deployment of
financial and human resources systems for several major, multi-national
organizations. From 1984 to 1987, he was a Senior Analyst with Federated
Department Stores, Inc. involved in planning and distribution. Mr. Wesson
received his B.S. from the University of Texas in 1984.
DORA E. CHI. Ms. Chi has served as Vice President of Finance of AIMCO since
July 1997, with responsibility for limited partnership activities, including
tender offers and refinancings. From January 1996 to July 1997, Ms. Chi served
as Underwriting Manager for Flatiron Credit Co., LLC. From September 1989 to
December 1995, she was the Administrator/Corporate Secretary-Treasurer at The
Law Firm of JPG, PC., and from April 1986 to July 1989 served as Vice President
at Cairn Housing Investments. She brings over fifteen years of experience in
finance and accounting and attended the University of Arizona.
PATTI K. FIELDING. Ms. Fielding has served as a Vice President--Asset
Management since February 1997, concentrating in the area of limited partnership
acquisitions. From February 1996 until February 1997, Ms. Fielding served as a
Vice President with Hanover Capital Corp., headquartered in New York where she
was responsible for the commercial underwriting and CMBS efforts of the firm.
From February 1994 to November 1996 she was Vice Chairman and Principal of
CapSource Funding Corp., which was purchased by MIG Financial Group in 1996.
From 1987 to February 1994, Ms. Fielding was with Duff & Phelps ("D&P") rating
agency in the Commercial Real Estate Structured Finance Group. Her last position
held at D&P was Group Vice President. Prior to D&P, Ms. Fielding was a
Commercial Real Estate Appraiser with American Appraisal Associates. Ms.
Fielding has a B.S. in Business from Cardinal Stritch College.
PATRICIA K. HEATH. Ms. Heath has served as Vice President and Chief
Accounting Officer of AIMCO since July 1994. From 1992 until July 1994, Ms.
Heath served as Manager of Accounting, then Chief Financial Officer of HFC and,
effective September 1993, as Chief Financial Officer of PDI. She had
responsibility for all internal and external financial reporting, cash
management and budgeting for HFC, its subsidiaries, related joint ventures and
partnerships and for PDI. Ms. Heath brings 15 years of real estate accounting
experience to AIMCO, having served as Controller for the real estate investment,
development and syndication firms of Guilford Glazer & Associates from 1990 to
1992, Ginarra Holdings, Inc. from 1984 to 1990, and Fox & Carskadon Financial
Corporation from 1980 to 1983. Ms. Heath worked from 1978 to 1980 as an auditor
with Deloitte, Haskins and Sells. She received her B.S. in Business from
California State University at Chico and is a Certified Public Accountant.
CARLA STONER. Ms. Stoner has been Vice President--Finance and
Administration of AIMCO since July 1997. Ms. Stoner served as Vice President of
NHP Management Company since January 1992. She has also served as Chief
Information Officer for NHP since June 1996. From January 1992 through June
1996, Ms. Stoner was Vice President of Finance for NHP Management Company,
responsible for general ledger accounting, financial analysis and third party
reporting for all properties owned and managed by NHP.
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Ms. Stoner joined NHP in December 1988 as Director of Finance for Property
Accounting. From July 1984 through December 1988, Ms. Stoner was a Senior
Auditor with the public accounting firm of Touche Ross, serving primarily the
real estate industry. Ms. Stoner received her B.S. in accounting from Virginia
Tech.
JAMES WALLACE. Mr. Wallace has been Vice President of Tax for AIMCO since
October 1997. From 1995 to September 1997, Mr. Wallace served as the Assistant
Corporate Controller/Assistant Secretary for Fleming Companies, Inc. in Oklahoma
City. From 1980 to 1995, Mr. Wallace was the Director of Corporate
Taxation/Assistant Secretary for that organization. From 1978 to 1980, Mr.
Wallace served as a Senior Tax Consultant with Deloitte & Touche, and from 1973
to 1977 he was the Managing Partner at Nelon & Wallace, CPAs. Mr. Wallace
received a B.S. in Business Administration from Oklahoma State University and
has been a Certified Public Accountant since 1975.
RICHARD S. ELLWOOD. Mr. Ellwood was appointed a director of AIMCO in July
1994 and is currently Chairman of the Audit Committee. Mr. Ellwood is the
founder and President of R.S. Ellwood & Co., Incorporated, a real estate
investment banking firm. Prior to forming R.S. Ellwood & Co., Incorporated in
1987, Mr. Ellwood had 31 years experience as an investment banker, serving as:
Managing Director and senior banker at Merrill Lynch Capital Markets from 1984
to 1987; Managing Director at Warburg Paribas Becker from 1978 to 1984; general
partner and then Senior Vice President and a director at White, Weld & Co. from
1968 to 1978; and in various capacities at J.P. Morgan & Co. from 1955 to 1968.
Mr. Ellwood currently serves as a director of Corporate Realty Income Trust and
FelCor Suite Hotels, Inc. He is a registered investment advisor.
J. LANDIS MARTIN. Mr. Martin was appointed a director of AIMCO in July
1994. Mr. Martin has served as President, Chief Executive Officer and a director
of NL Industries, Inc., a manufacturer of specialty chemicals, since 1987. Since
1988, he has served as the President and Chief Executive Officer of Tremont
Corporation, an integrated producer of titanium metals. Mr. Martin has also
served as a director and the Chairman of the Board of Directors of Tremont
Corporation since August 1990. From December 1988 until January 1994, he served
as Chairman of the Board of Directors of Baroid Corporation, an oilfield
services company. In January 1994, Baroid Corporation became a wholly owned
subsidiary of Dresser Industries, Inc. and Mr. Martin currently serves as a
director of Dresser Industries, Inc. Mr. Martin also serves as Chairman of the
Board and Chief Executive Officer of Titanium Metals Corporation, an integrated
producer of titanium.
THOMAS L. RHODES. Mr. Rhodes was appointed a director of AIMCO in July 1994
and is currently Chairman of the Compensation Committee. Mr. Rhodes has served
as the President and a director of NATIONAL REVIEW since 1992. From 1976 to
1992, he held various positions at Goldman, Sachs & Co. and was elected a
General Partner in 1986. He also served as a director of Underwriters
Reinsurance Company from 1987 to 1993 and was a member of the Advisory Board of
TransTerra Co. during 1993. He currently serves as Co-Chairman and director of
Financial Assets Management, LLC and its subsidiaries, and as a director of
Delphi Financial Group, Inc. and The Lynde and Harry Bradley Foundation. Mr.
Rhodes is Chairman of the Empire Foundation for Policy Research, a Trustee of
The Heritage Foundation, a Trustee of The Manhattan Institute and a Member of
the Council on Foreign Relations.
JOHN D. SMITH. Mr. Smith was appointed a director of AIMCO in November
1994. Mr. Smith is Principal and President of John D. Smith Developments. Mr.
Smith has been a shopping center developer, owner and consultant for over 8.6
million square feet of shopping center projects including Lenox Square in
Atlanta, Georgia. Mr. Smith is a Trustee and former President of the
International Council of Shopping Centers and was selected to be a member of the
American Society of Real Estate Counselors. Mr. Smith served as a director for
Pan-American Properties, Inc. (National Coal Board of Great Britain) formerly
known as Continental Illinois Properties. He also serves as a director of
American Fidelity Assurance Companies and is retained as an advisor by Shop
System Study Society, Tokyo, Japan.
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PRINCIPAL STOCKHOLDERS OF AIMCO
The following table sets forth certain information available to AIMCO, as of
October 30, 1997, with respect to shares of AIMCO Common Stock and OP Units held
by (i) each director and the five most highly compensated executive officers who
were serving as of December 31, 1996, (ii) all directors and executive officers
of AIMCO as a group and (iii) those persons known to AIMCO to be the beneficial
owners (as determined under the rules of the Commission) of more than 5% of such
shares. The business address of each of the following is 1873 South Bellaire
Street, Suite 1700, Denver, Colorado 80222-4348, unless otherwise specified.
<TABLE>
<CAPTION>
PRO FORMA
PERCENTAGE PERCENTAGE
NUMBER OF OF COMMON PERCENTAGE OWNERSHIP
SHARES OF STOCK NUMBER OF OWNERSHIP OF OF
NAME AND ADDRESS OF BENEFICIAL OWNER COMMON STOCK OUTSTANDING OP UNITS(1) AIMCO(2) AIMCO(2)(3)
- --------------------------------------------- ------------------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS:
Terry Considine............................ 1,684,016(4)(5) 4.7% 783,803(6) 6.1% 5.4%
Peter K. Kompaniez......................... 556,593(4) 1.6% 23,625 1.4% 1.3%
Steven D. Ira.............................. 227,075(4)(7) * 96,373 *% *
Robert P. Lacy............................. 28,165(4)(8) * -- * *
Thomas W. Toomey........................... 239,632 * -- * *
Richard S. Ellwood......................... 12,200(9) * -- * *
J. Landis Martin........................... 20,700 * -- * *
Thomas L. Rhodes........................... 38,700(10) * -- * *
John D. Smith.............................. 12,700(9) * -- * *
All directors and executive officers as a
group (16 persons)......................... 3,001,964(11) 8.4% 903,801 9.6% 8.6%
5% OR GREATER HOLDERS:
Cohen & Steers Realty Shares, Inc.......... 2,979,000 8.4% -- 7.4% 6.5%
757 Third Avenue
New York, New York 10017
ABKB/La Salle Securities Limited
Partnership................................ 2,373,418 6.7% -- 5.9% 5.2%
100 East Pratt Street
Baltimore, Maryland 21202
Fidelity Management and Research
Corporation................................ 2,097,300 5.9% -- 5.2% 4.6%
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
- ------------------------
* Less than 1%
(1) Through wholly owned subsidiaries, AIMCO acts as general partner and, as of
October 30, 1997, holds 87% of the interests in the Operating Partnership.
After a one-year holding period, OP Units may be tendered for redemption
and, upon tender, may be acquired by AIMCO for shares of AIMCO Common Stock
at an exchange ratio of one share of AIMCO Common Stock for each OP Unit
(subject to adjustment). If all OP Units were acquired by AIMCO for AIMCO
Common Stock (without regard to the Ownership Limit) these shares of AIMCO
Common Stock would constitute approximately 12% of the then outstanding
shares of AIMCO Common Stock. OP Units are subject to certain restrictions
on transfer.
(2) On a fully diluted basis, assuming all 4,937,287 OP Units outstanding as of
October 30, 1997 are acquired by AIMCO for shares of AIMCO Common Stock at
the exchange ratio of one OP Unit for each share of AIMCO Common Stock
without regard to the Ownership Limit.
(3) Assumes that 5,142,455 shares of AIMCO Common Stock are issued in the
Merger, excluding shares issuable to ANHI.
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(4) Excludes 186,857, 82,875, 27,625 and 27,643 shares of AIMCO Class B Common
Stock held by Messrs. Considine, Kompaniez, Lacy and Ira, respectively,
representing 57.5%, 25.5%, 8.5% and 8.5%, respectively of the total number
of shares of AIMCO Class B Common Stock outstanding. AIMCO Class B Common
Stock is convertible into an equal number of shares of AIMCO Common Stock
over a period ending December 31, 1998 if certain performance standards are
achieved.
(5) Includes 1,341,759 shares held by entities in which Mr. Considine holds
sole voting and investment power, 74,743 shares held by Mr. Considine's
spouse, Elizabeth Considine, for which Mr. Considine disclaims beneficial
ownership, and 36,778 shares held by a non-profit corporation in which Mr.
Considine has shared voting and investment power with his spouse. Mr.
Considine disclaims beneficial ownership of 90% of 1,227,078 shares held by
Considine Partnership in which Mr. Considine holds a 10% general partnership
interest with the remaining 90% held by trusts for members of Mr.
Considine's family.
(6) Includes 161,816 OP Units held by entities in which Mr. Considine has sole
voting and investment power, 2,300 OP Units held by the Considine
Partnership for 90% of which Mr. Considine disclaims beneficial ownership,
and 157,698 OP Units held by Mr. Considine's spouse, for which Mr. Considine
disclaims beneficial ownership.
(7) Includes 73,800 shares subject to options that are exercisable within 60
days.
(8) Mr. Lacy is no longer an executive officer of AIMCO.
(9) Includes 9,000 shares subject to options that are exercisable within 60
days.
(10) Includes 9,000 shares of common stock held by the Thomas L. Rhodes and
Gleaves Rhodes Foundation and 9,000 shares subject to options that are
exercisable within 60 days.
(11) Includes 168,616 shares subject to options that are exercisable within 60
days.
137
<PAGE>
BUSINESS OF NHP
NHP provides a broad array of real estate services nationwide, including
property management and asset management, as well as a group of related
services, including equity investments, purchasing, risk management and home
health care. According to the National Multi Housing Council, as of January 1,
1997, NHP was the nation's second largest manager of multifamily properties,
based on the number of units managed. As of September 30, 1997, NHP's management
portfolio included 732 properties containing 79,208 conventional units and
55,102 affordable units located in 38 states, the District of Columbia and
Puerto Rico. NHP also conducts mortgage banking services through WMF. Among the
properties it manages, NHP owns 12 properties containing 2,905 apartment units.
Subject to certain conditions, at the earlier of the effective time of the
Merger and December 1, 1997, all of the issued and outstanding WMF Common Stock
will be distributed to NHP stockholders.
The following table sets forth certain information regarding the portfolio
of properties managed by NHP as of the dates shown.
<TABLE>
<CAPTION>
PROPERTIES MANAGED
---------------------------------------------------------
AS OF DECEMBER 31,
AS OF JUNE ------------------------------------------
30, 1997 1996 1995 1994 1993
------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Affordable Properties
Affiliated Owners*.................................. 337 346 359 346 339
Unaffiliated Owners................................. 133 111 89 88 76
------------- --------- --------- --------- ---------
Total............................................. 470 457 448 434 415
------------- --------- --------- --------- ---------
Conventional Properties
Affiliated Owners*.................................. 107 106 94 44 34
Unaffiliated Owners................................. 150 154 169 136 123
------------- --------- --------- --------- ---------
Total............................................. 257 260 263 180 157
------------- --------- --------- --------- ---------
Total Properties...................................... 727 717 711 614 572
------------- --------- --------- --------- ---------
------------- --------- --------- --------- ---------
Percent Affiliated.................................... 61.1% 63.0% 63.7% 63.5% 65.2%
</TABLE>
<TABLE>
<CAPTION>
UNITS MANAGED
---------------------------------------------------------
AS OF JUNE
30, AS OF DECEMBER 31,
------------- ------------------------------------------
1997 1996 1995 1994 1993
------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Affordable Units
Affiliated Owners*.................................. 43,252 44,460 45,908 43,725 43,346
Unaffiliated Owners................................. 16,537 14,044 11,292 10,804 7,672
------------- --------- --------- --------- ---------
Total............................................. 59,789 58,504 57,200 54,529 51,018
------------- --------- --------- --------- ---------
------------- --------- --------- --------- ---------
Conventional Units
Affiliated Owners*.................................. 34,782 34,290 31,719 19,339 15,026
Unaffiliated Owners................................. 39,509 40,250 44,748 37,638 35,305
------------- --------- --------- --------- ---------
Total............................................. 74,291 74,540 76,467 56,977 50,331
------------- --------- --------- --------- ---------
Total Units........................................... 134,080 133,044 133,667 111,506 101,349
------------- --------- --------- --------- ---------
------------- --------- --------- --------- ---------
Percent Affiliated.................................... 58.2% 59.2% 58.1% 56.6% 57.6%
</TABLE>
- ------------------------
* Affiliated Owners are owners under common control with NHP. As of June 30,
1997, all properties and units owned by Affiliated Owners were owned by
entities controlled by AIMCO, except for properties and units in the Great
Atlantic portfolio (described below), which were owned by entities
controlled by NHP.
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<PAGE>
NHP's day-to-day property management services include marketing, leasing,
rent processing and collection, purchasing, accounts payable, administration
(including mortgages, taxes and insurance), payroll services, financial
reporting, on-site computer systems support and all accounting functions. In
addition, NHP provides longer term management services necessary to maintain the
quality and performance of properties, including major repair and replacement
planning, regulatory compliance and budgeting. In addition to providing
conventional property management services, NHP, as the nation's largest manager
of affordable properties, has developed extensive expertise and familiarity with
the affordable housing regulatory process at all levels of government. One of
the principal property management services provided by NHP to owners of
affordable properties is interacting with HUD and/or state regulatory agencies
and monitoring the properties' day-to-day compliance with federal and state
regulations.
In addition to traditional property management services, NHP provides
additional services to properties it manages, other properties and property
residents. These services include asset management, administrative and reporting
services, group purchasing services, risk management and insurance
administration, management consulting services, real estate investment banking
services and home health care services.
NHP generally does not own interests in real property, except that it owns
12 properties (consisting of 2,905 units) in the Great Atlantic portfolio. Prior
to the Merger Agreement NHP had held these properties for disposition, but AIMCO
intends to retain the properties.
NHP also conducts mortgage banking services through WMF. Such services
include multifamily and other commercial loan origination, secondary marketing
and loan servicing. It is expected that at the Effective Time, all of the shares
of WMF Common Stock will be distributed to NHP stockholders.
NHP's principal executive offices are located at 8065 Leesburg Pike, Suite
400, Vienna, Virginia 22182-2738, and its telephone number is (703) 394-2400.
Additional information concerning NHP is included in the NHP Incorporated
Documents. See "Available Information" and "Incorporation by Reference."
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<PAGE>
PRINCIPAL STOCKHOLDERS OF NHP
The following table sets forth as of October 30, 1997, the number and
percentage of outstanding shares of NHP Common Stock beneficially owned by (i)
each director and the five most highly compensated executive officers of NHP,
(ii) all directors and executive officers of NHP as a group and (iii) all
persons known by NHP to own beneficially more than 5% of NHP's Common Stock. The
business address of each of the following is 8065 Leesburg Pike, Vienna, VA
22182, unless otherwise specified.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
- -------------------------------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS
J. Roderick Heller, III(1)................................................................ 612,500 4.7%
Terry Considine(2)........................................................................ 6,930,122 53.3%
1873 South Bellaire Street, 17th Floor
Denver, CO 80222-4348
Peter K. Kompaniez(2)..................................................................... 6,930,122 53.3%
1873 South Bellaire Street, 17th Floor
Denver, CO 80222-4348
Thomas W. Toomey(2)....................................................................... 6,930,122 53.3%
1873 South Bellaire Street, 17th Floor
Denver, CO 80222-4348
John W. Creighton......................................................................... 17,760 *
CHS 33663 Weyerhaeuser Way South
Federal Way, WA 98003
Richard S. Bodman......................................................................... 5,535 *
Lloyd N. Cutler........................................................................... 3,135 *
Ann Torre Grant(3)........................................................................ 88,123 *
Shekar Narasimhan(4)...................................................................... 290,000 2.2%
Joel F. Bonder(5)......................................................................... 23,930 *
Eric N. Ross(6)........................................................................... 40,906 *
All directors and executive officers as a group (12 persons)(7)........................... 8,033,511 61.8%
5% OR GREATER HOLDERS
Apartment Investment and Management Company............................................... 6,151,049 47.3%
1873 South Bellaire Street, 17th Floor
Denver, CO 80222-4348
AIMCO/NHP Holdings, Inc................................................................... 779,073 6.0%
1873 South Bellaire Street, 17th Floor
Denver, CO 80222-4348
Warburg, Pincus Counsellors, Inc.(8)...................................................... 1,524,500 11.7%
466 Lexington Ave.
New York, NY 10017
Wallace R. Weitz & Company(9)............................................................. 740,000 5.7%
1125 South 103rd Street
Omaha, NE 68124
Mentor Partners, L.P.(10)................................................................. 651,000 5.0%
500 Park Avenue
New York, NY 10022
</TABLE>
- ------------------------
* Less than 1%
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<PAGE>
(1) Includes 376,250 shares subject to options that are exercisable currently,
101,250 shares held in trusts for the benefit of Mr. Heller's children and
35,000 shares held by a foundation with respect to which shares Mr. Heller
has the power to vote or dispose. Mr. Heller disclaims beneficial ownership
of the shares held in the trusts and the foundation. The total includes
shares Mr. Heller has the right to acquire pursuant to a performance
vesting option.
(2) Includes all shares owned by AIMCO and ANHI. Messrs. Considine, Kompaniez
and Toomey are executive officers of AIMCO. Messrs. Considine and Kompaniez
own all the outstanding common stock of ANHI and serve as representatives
on the NHP Board. Mr. Toomey is an executive officer of ANHI and serves as
a representative on the NHP Board.
(3) Includes 80,000 shares subject to options that are exercisable currently.
(4) Includes 80,000 shares subject to options that are exercisable currently.
On September 30, 1996, Mr. Narasimhan acquired 8% of the common stock of
Commonwealth Overseas Trading Company Limited ("Commonwealth"), which owns
210,000 shares of NHP Common Stock. Pursuant to an agreement with the other
owners of Commonwealth shares, Mr. Narasimhan shares the power to vote all
shares of NHP Common Stock held by Commonwealth. Therefore, Mr. Narasimhan
has beneficial ownership of all 210,000 shares which are included in this
total. 105,000 of these shares are in escrow and are currently held subject
to reduction under certain circumstances.
(5) Includes 20,000 shares subject to options that are exercisable currently.
(6) Includes 40,000 shares subject to options that are exercisable currently.
(7) Includes all shares set forth above plus 21,500 shares beneficially owned
by an executive officer, of which 20,000 shares are obtainable upon
exercise of options that are currently exercisable. Excludes 324,990 shares
beneficially owned on December 31, 1996 by persons who were executive
officers of NHP on such date, including 81,000 shares beneficially owned by
Robert M. Greenfield and 86,300 shares beneficially owned by J. Robert
Hiner, who were two of the five most highly compensated officers as of that
date.
(8) Based on Amendment No. 1 to Schedule 13G dated January 9, 1997, filed by
Warburg, Pincus Counsellors, Inc., which has sole voting power with respect
to 1,069,300 such shares, shared voting power with respect to 112,500 such
shares and sole dispositive power with respect to 1,514,900 such shares.
(9) Based on Schedule 13G dated January 20, 1997, filed by Wallace R. Weitz &
Company, which has sole voting and dispositive power with respect to all
such shares.
(10) Based on Schedule 13D dated July 28, 1997, filed by Mentor Partners, L.P.,
which has sole voting and dispositive power with respect to all such
shares.
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<PAGE>
DESCRIPTION OF AIMCO'S CAPITAL STOCK
GENERAL
The AIMCO Charter authorizes the issuance of up to 150,000,000 shares of
AIMCO Common Stock with a par value of $.01 per share. As of October 30, 1997,
there were 35,587,439 shares of AIMCO Common Stock issued and outstanding. In
addition, up to 1,150,000 shares of AIMCO Common Stock have been reserved for
issuance under the 1994 Stock Plan, the 1996 Stock Plan and the Non-Qualified
Employee Stock Option Plan. The 1997 Stock Plan provides for the issuance of 10%
of the shares of AIMCO Common Stock outstanding as of the first day of the
fiscal year during which any award is made, but in no event more than 20,000,000
shares. The AIMCO Common Stock is traded on the NYSE under the symbol "AIV."
ChaseMellon Shareholder Services, L.L.C., serves as transfer agent and registrar
of the AIMCO Common Stock. In addition, the AIMCO Charter originally authorized
750,000 shares of AIMCO Class B Common Stock (together with the AIMCO Common
Stock, the "Authorized Common Stock"), which number of authorized shares is
subject to automatic reduction by the number of shares of AIMCO Class B Common
Stock that have been converted into AIMCO Common Stock. As of August 31, 1997,
425,000 shares of AIMCO Class B Common Stock had been so converted, leaving a
total of 325,000 shares of AIMCO Class B Common Stock authorized and
outstanding. See "--AIMCO Class B Common Stock" below. In addition, the AIMCO
Charter authorizes the issuance of up to 9,250,000 shares of non-voting
preferred stock with a par value of $.01 per share, of which none are issued and
outstanding, and 750,000 shares of AIMCO Class B Preferred Stock, all of which
are issued and outstanding.
Holders of the AIMCO Common Stock are entitled to receive dividends, when
and as declared by the AIMCO Board, out of funds legally available therefor. The
holders of shares of AIMCO Common Stock, upon any liquidation, dissolution or
winding up of AIMCO, are entitled to receive ratably any assets remaining after
payment in full of all liabilities of AIMCO and the liquidation preferences of
preferred stock. The shares of AIMCO Common Stock possess ordinary voting rights
for the election of Directors and in respect of other corporate matters, each
share entitling the holder thereof to one vote. Holders of shares of AIMCO
Common Stock do not have cumulative voting rights in the election of Directors,
which means that holders of more than 50% of the shares of AIMCO Common Stock
voting for the election of Directors can elect all of the Directors if they
choose to do so and the holders of the remaining shares cannot elect any
Directors. Holders of shares of AIMCO Common Stock do not have preemptive
rights, which means they have no right to acquire any additional shares of AIMCO
Common Stock that may be issued by AIMCO at a subsequent date.
RESTRICTIONS ON TRANSFER
For AIMCO to qualify as a REIT under the Code, not more than 50% in value of
its outstanding capital stock may be owned, directly or indirectly, by five or
fewer individuals (as defined in the Code to include certain entities) during
the last half of a taxable year and the shares of common stock must be
beneficially owned by 100 or more persons during at least 335 days of a taxable
year of 12 months or during a proportionate part of a shorter taxable year.
Because the AIMCO Board believes that it is essential for AIMCO to continue to
qualify as a REIT, the AIMCO Board has adopted, and the stockholders have
approved, provisions of the AIMCO Charter restricting the acquisition of shares
of Authorized Common Stock.
Subject to certain exceptions specified in the AIMCO Charter, no holder may
own, or be deemed to own by virtue of various attribution and constructive
ownership provisions of the Code and Rule 13d-3 under the Exchange Act, more
than 8.7% (or 15% in the case of certain pension trusts described in the Code,
investment companies registered under the Investment Company Act of 1940 and Mr.
Considine) of the outstanding shares of Authorized Common Stock. The AIMCO Board
may waive the Ownership Limit if evidence satisfactory to the AIMCO Board and
AIMCO's tax counsel is presented that such ownership will not then or in the
future jeopardize AIMCO's status as a REIT. However, in no event may such
142
<PAGE>
holder's direct or indirect ownership of Authorized Common Stock exceed 9.8% of
the total outstanding shares of Authorized Common Stock. As a condition of such
waiver, the AIMCO Board may require opinions of counsel satisfactory to it
and/or an undertaking from the applicant with respect to preserving the REIT
status of AIMCO. The foregoing restrictions on transferability and ownership
will not apply if the AIMCO Board determines that it is no longer in the best
interests of AIMCO to attempt to qualify, or to continue to qualify as a REIT
and a resolution terminating AIMCO's status as a REIT and amending the AIMCO
Charter to remove the foregoing restrictions is duly adopted by the AIMCO Board
and a majority of AIMCO's stockholders. If shares of Authorized Common Stock in
excess of the Ownership Limit, or shares of Authorized Common Stock which would
cause the REIT to be beneficially owned by fewer than 100 persons, or which
would result in AIMCO being "closely held," within the meaning of Section 856(h)
of the Code, or which would otherwise result in AIMCO failing to qualify as a
REIT, are issued or transferred to any person, such issuance or transfer shall
be null and void to the intended transferee, and the intended transferee would
acquire no rights to the stock. Shares of Authorized Common Stock transferred in
excess of the Ownership Limit or other applicable limitations will automatically
be transferred to a trust for the exclusive benefit of one or more qualifying
charitable organizations to be designated by AIMCO. Shares transferred to such
trust will remain outstanding, and the trustee of the trust will have all voting
and dividend rights pertaining to such shares. The trustee of such trust may
transfer such shares to a person whose ownership of such shares does not violate
the Ownership Limit or other applicable limitation. Upon a sale of such shares
by the trustee, the interest of the charitable beneficiary will terminate, and
the sales proceeds would be paid, first, to the original intended transferee, to
the extent of the lesser of (a) such transferee's original purchase price (or
the original market value of such shares if purportedly acquired by gift or
devise) and (b) the price received by the trustee, and, second, any remainder to
the charitable beneficiary. In addition, shares of stock held in such trust are
purchasable by AIMCO for a 90-day period at a price equal to the lesser of the
price paid for the stock by the original intended transferee (or the original
market value of such shares if purportedly acquired by gift or devise) and the
market price for the stock on the date that AIMCO determines to purchase the
stock. The 90-day period commences on the date of the violative transfer or the
date that the AIMCO Board determines in good faith that a violative transfer has
occurred, whichever is later. All certificates representing shares of Authorized
Common Stock bear a legend referring to the restrictions described above.
All persons who own, directly or by virtue of the attribution provisions of
the Code and Rule 13d-3 under the Exchange Act, more than a specified percentage
of the outstanding shares of Authorized Common Stock must file an affidavit with
AIMCO containing the information specified in the AIMCO Charter within 30 days
after January 1 of each year. In addition, each stockholder shall upon demand be
required to disclose to AIMCO in writing such information with respect to the
direct, indirect and constructive ownership of shares as the AIMCO Board deems
necessary to comply with the provisions of the Code applicable to a REIT or to
comply with the requirements of any taxing authority or governmental agency.
The ownership limitations may have the effect of precluding acquisition of
control of AIMCO by a third party unless the AIMCO Board determines that
maintenance of REIT status is no longer in the best interests of AIMCO.
AIMCO CLASS B PREFERRED STOCK
On August 4, 1997, AIMCO issued 750,000 shares of AIMCO Class B Preferred
Stock to an institutional investor (the "Preferred Share Investor") for $75
million. The AIMCO Class B Preferred Stock ranks prior to AIMCO Common Stock,
with respect to dividends, liquidation, dissolution, and winding-up, and has an
aggregate liquidation value of $75 million. Holders of the AIMCO Class B
Preferred Stock are entitled to receive, when, as and if declared by the AIMCO
Board, quarterly cash dividends per share equal to the greater of (i) $1.78125
(the "Base Rate") and (ii) the cash dividends declared on the number of shares
of AIMCO Common Stock into which one share of AIMCO Class B
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<PAGE>
Preferred Stock is convertible. On or after August 4, 1998, each share of AIMCO
Class B Preferred Stock may be converted at the option of the holder into
3.28407 shares of AIMCO Common Stock, subject to certain anti-dilution
adjustments. AIMCO may redeem any or all of the AIMCO Class B Preferred Stock on
or after August 4, 2002, at a redemption price of $100 per share, plus unpaid
dividends accrued on the shares redeemed.
Holders of AIMCO Class B Preferred Stock, voting as a class with the holders
of all AIMCO capital stock that ranks on a parity with the AIMCO Class B
Preferred Stock with respect to the payment of dividends or upon liquidation,
dissolution, winding up or otherwise ("Parity Stock"), will be entitled to elect
(i) two directors of AIMCO if six quarterly dividends (whether or not
consecutive) on the AIMCO Class B Preferred Stock or any Parity Stock are in
arrears, and (ii) one director of AIMCO if for two consecutive quarterly
dividend periods AIMCO fails to pay at least $0.4625 in dividends on the AIMCO
Common Stock. The affirmative vote of the holders of 66 2/3% of the outstanding
shares of AIMCO Class B Preferred Stock will be required to amend the AIMCO
Charter in any manner that would adversely affect the rights of the holders of
AIMCO Class B Preferred Stock, and to approve the issuance of any capital stock
that ranks senior to the AIMCO Class B Preferred Stock with respect to payment
of dividends or upon liquidation, dissolution, winding up or otherwise. If the
IRS were to make a final determination that AIMCO does not qualify as a real
estate investment trust in accordance with Sections 856 through 860 of the IRS
Code, the Base Rate for quarterly cash dividends on the AIMCO Class B Preferred
Stock would be increased to $3.03125 per share.
The agreement pursuant to which AIMCO issued the AIMCO Class B Preferred
Stock (the "Preferred Share Purchase Agreement") provides that the Preferred
Share Investor may require AIMCO to repurchase such investor's AIMCO Class B
Preferred Stock in whole or in part at a price of $105 per share, plus accrued
and unpaid dividends on the purchased shares, if (i) AIMCO shall fail to
continue to be taxed as a real estate investment trust pursuant to Sections 856
through 860 of the Code, or (ii) upon the occurrence of a change of control (as
defined in the Preferred Share Purchase Agreement). The Preferred Share Purchase
Agreement also provides that, so long as the Preferred Share Investor owns AIMCO
Class B Preferred Stock with an aggregate liquidation preference of at least
$18.75 million, neither AIMCO, the Operating Partnership nor any subsidiary of
AIMCO may issue preferred securities or incur indebtedness for borrowed money if
immediately following such issuance and after giving effect thereto and the
application of the net proceeds therefrom, AIMCO's ratio of aggregate
consolidated earnings before income taxes, depreciation and amortization; to
aggregate consolidated fixed charges (earnings before income taxes depreciation
and amortization) for the four fiscal quarters immediately preceding such
issuance would be less than 1.5 to 1.
AIMCO CLASS B COMMON STOCK
In connection with the initial formation of AIMCO, Messrs. Considine,
Kompaniez and Ira and Robert Lacy, a former officer of AIMCO, acquired an
aggregate of 650,000 shares of AIMCO Class B Common Stock. The AIMCO Class B
Common Stock does not have voting or dividend rights and, unless converted into
AIMCO Common Stock, as described below, is subject to repurchase by AIMCO as
described below. As of December 31 of each of the years 1994 through 1998 (each,
a "Year-End Testing Date"), a number of the shares of AIMCO Class B Common Stock
outstanding as of such date (the "Eligible Class B Shares") become eligible for
automatic conversion (subject to the Ownership Limit) into an equal number of
shares of AIMCO Common Stock (subject to adjustment upon the occurrence of
certain events in respect of the AIMCO Common Stock, including stock dividends,
subdivisions, combinations and reclassifications). Once AIMCO Class B Common
Stock has been converted into AIMCO Common Stock, holders of such shares of
converted AIMCO Common Stock will have voting and dividend rights of AIMCO
Common Stock generally. Once converted or forfeited, the AIMCO Class B Common
Stock may not be reissued by AIMCO.
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The Eligible Class B Shares convert to AIMCO Common Stock if (i) AIMCO's FFO
Per Share (as defined below) reaches certain annual and cumulative growth
targets and (ii) the average market price for a share of AIMCO Common Stock for
a 90-calendar day period beginning on any day on or after the October 1
immediately preceding the relevant Year-End Testing Date equals or exceeds a
specified target price. "FFO Per Share" means, for any period, (i) net income
(loss), computed in accordance with generally accepted accounting principles,
excluding gains (or losses) from debt restructuring and sales of property, plus
depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures, less any preferred stock dividend payments,
divided by (ii) the sum of (a) the number of shares of the AIMCO Common Stock
outstanding on the last day of such period (excluding any shares of the AIMCO
Common Stock into which shares of the AIMCO Class B Common Stock shall have been
converted as a result of the conversion of shares of the AIMCO Class B Common
Stock on the last day of such period) and (b) the number of shares of the AIMCO
Common Stock issuable to acquire units of limited partnership that (x) may be
tendered for redemption in any limited partnership in which AIMCO serves as
general partner and (y) are outstanding on the last day of such period.
Set forth below for each of the remaining Year-End Testing Dates is (i) the
number of shares of AIMCO Class B Common Stock that become Eligible Class B
Shares as of such date, (ii) the annual FFO Per Share growth target (as a
percentage increase in FFO Per Share from the prior year), (iii) the cumulative
FFO Per Share growth target (in FFO Per Share) and (iv) the average market price
target:
<TABLE>
<CAPTION>
ELIGIBLE CLASS CUMULATIVE FFO
B ANNUAL FFO PER PER SHARE AVERAGE MARKET
YEAR-END TESTING DATE SHARES(1) SHARE GROWTH TARGET GROWTH TARGET PRICE TARGET
- ----------------------------------------- --------------- ----------------------- --------------- --------------
<S> <C> <C> <C> <C>
December 31, 1997........................ 162,500 8.5% $ 2.544 $ 24.307
December 31, 1998........................ 162,500 8.5% $ 2.760 $ 26.373
</TABLE>
- ------------------------
(1) Assumes that only the shares of AIMCO Class B Common Stock outstanding as of
December 31, 1996 remain outstanding until converted into shares of AIMCO
Common Stock.
If the annual growth target is not met for a particular Year-End Testing
Date, the Eligible Class B Shares for that date may be converted as of a
subsequent Year-End Testing Date if all of the targets are met for that
subsequent Year-End Testing Date. Any AIMCO Class B Common Stock that has not
been converted into AIMCO Common Stock following December 31, 1998 will be
subject to repurchase by AIMCO at a price of $0.10 per share. AIMCO Class B
Common Stock is also subject to automatic conversion upon the occurrence of
certain events, including a change of control (as defined in AIMCO Charter). The
AIMCO Board may increase the number of shares which are eligible for conversion
as of any Year-End Testing Date and may under certain circumstances, accelerate
the conversion of outstanding AIMCO Class B Common Stock at such time and in
such amount as it may determine appropriate.
All of the 65,000 shares of AIMCO Class B Common Stock eligible for
conversion as of the December 31, 1994 Year-End Testing Date, all of the 130,000
shares of AIMCO Class B Common Stock eligible for conversion as of the December
31, 1995 Year-End Testing Date and all of the 130,000 shares of AIMCO Class B
Common Stock eligible for conversion as of the December 31, 1996 Year-End
Testing Date, have been converted into shares of AIMCO Common Stock. As of
October 30, 1997, the outstanding AIMCO Class B Common Stock was held as
follows: 186,857 shares by Mr. Considine, 82,875 shares by Mr. Kompaniez, 27,643
shares by Mr. Ira and 27,625 shares by Mr. Lacy.
BUSINESS COMBINATIONS
Under the MGCL, certain "business combinations" (including a merger,
consolidation, share exchange or, in certain circumstances, an asset transfer or
issuance or reclassification of equity securities) between a Maryland
corporation and any person who beneficially owns 10% or more of the voting power
of the corporation's shares or an affiliate of the corporation who, at any time
within the two-year period
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prior to the date in question, was the beneficial owner of 10% or more of the
voting power of the then-outstanding voting stock of the corporation (an
"Interested Stockholder") or an affiliate thereof are prohibited for five years
after the most recent date on which the Interested Stockholder became an
Interested Stockholder. Thereafter, any such business combination must be
recommended by the board of directors of the corporation and approved by the
affirmative vote of at least (a) 80% of the votes entitled to be cast by holders
of outstanding voting shares of the corporation, voting together as a single
voting group, and (b) two-thirds of the votes entitled to be cast by holders of
outstanding voting shares of the corporation other than shares held by the
Interested Stockholder with whom the business combination is to be effected,
unless, among other conditions, the corporation's stockholders receive a minimum
price (as defined in the MGCL) for their shares and the consideration is
received in cash or in the same form as previously paid by the Interested
Stockholder for its shares. The business combination statute could have the
effect of discouraging offers to acquire AIMCO and of increasing the difficulty
of consummating any such offer. These provisions of the MGCL do not apply,
however, to business combinations that are approved or exempted by the board of
directors of the corporation prior to the time that the Interested Stockholder
becomes an Interested Stockholder.
CONTROL SHARE ACQUISITIONS
The MGCL provides that "control shares" of a Maryland corporation acquired
in a "control share acquisition" have no voting rights except to the extent
approved by a vote of two-thirds of the votes entitled to be cast on the matter,
excluding shares of stock owned by the acquiror or by officers or directors who
are employees of the corporation. "Control shares" are voting shares of stock
that, if aggregated with all other shares of stock previously acquired by that
person, would entitle the acquiror to exercise voting power in electing
directors within one of the following ranges of voting power: (i) one-fifth or
more but less than one-third, (ii) one-third or more but less than a majority or
(iii) a majority or more of all voting power. Control shares do not include
shares the acquiring person is then entitled to vote as a result of having
previously obtained stockholder approval.
A "control share acquisition" means the acquisition of control shares,
subject to certain exceptions. A person who has made or proposes to make a
control share acquisition, upon satisfaction of certain conditions (including an
undertaking to pay expenses), may compel the corporation's board of directors to
call a special meeting of stockholders, to be held within 50 days of demand, to
consider the voting rights of the shares. If no request for a meeting is made,
the corporation may itself present the question at any stockholders meeting.
If voting rights are not approved at the meeting or if the acquiring person
does not deliver an "acquiring person statement" as required by the statute,
then, subject to certain conditions and limitations, the corporation may redeem
any or all of the control shares (except those for which voting rights have
previously been approved) for fair value determined, without regard to voting
rights, as of the date of the last control share acquisition or of any meeting
of stockholders at which the voting rights of such shares were considered and
not approved. If voting rights for control shares are approved at a stockholders
meeting and the acquiror becomes entitled to vote a majority of the shares
entitled to vote, all other stockholders may exercise appraisal rights. The fair
value of the shares as determined for purposes of the appraisal rights may not
be less than the highest price per share paid in the control share acquisition,
and certain limitations and restrictions otherwise applicable to the exercise of
dissenters' rights do not apply in the context of a control share acquisition.
The control share acquisition statute does not apply to shares acquired in a
merger, consolidation or share exchange if the corporation is a party to the
transaction, or to acquisitions approved or exempted by the corporation's
articles of incorporation or bylaws prior to the control share acquisition. The
control share acquisition statute could have the effect of discouraging offers
to acquire AIMCO and of increasing the difficulty of consummating any such
offer.
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FEDERAL INCOME TAX CONSIDERATIONS RELATED TO AIMCO
The following is a summary of Federal income tax considerations regarding an
investment in AIMCO Common Stock. This discussion is based upon the Code, the
Treasury regulations, rulings issued by the IRS, and judicial decisions, all in
effect as of the date of this Joint Proxy Statement/Prospectus and which are
subject to change, possibly retroactively. This discussion is for general
information only and is not tax advice. This discussion does not purport to
discuss all aspects of Federal income taxation which may be important to a
particular investor in light of his individual investment or tax circumstances,
or to certain types of investors subject to special tax rules (including
insurance companies, financial institutions or broker-dealers, foreign investors
and, except to the extent discussed below, tax-exempt organizations). No advance
ruling has been or will be sought from the IRS regarding any matter discussed
herein.
The Taxpayer Relief Act of 1997 enacted on August 5, 1997 (the "Act") made
various changes to the Code, including to the provisions that govern the Federal
income tax treatment of a REIT. These changes to the REIT provisions are
generally effective for taxable years beginning after the date of the enactment
of the Act. For most REITs, including AIMCO, these changes to the REIT
provisions are therefore not effective until taxable years beginning on January
1, 1998. Accordingly, the discussion of the Federal income tax treatment of a
REIT below does not reflect the changes made by the Act to the REIT provisions
of the Code. For a summary of such changes, see "--REIT Provisions of the
Taxpayer Relief Act of 1997" below. As a result of other changes made by the Act
to the Code, for certain noncorporate taxpayers (including individuals), the
rate of taxation of capital gains will depend upon (i) the taxpayer's holding
period in the capital asset (with a preferential rate available for capital
assets held more than 18 months) and (ii) the taxpayer's marginal tax rate for
ordinary income. Each prospective investor should consult his or her own tax
advisor regarding the tax consequences to him or her of the changes made by the
Act.
THE FOLLOWING DISCUSSION IS INCLUDED FOR GENERAL INFORMATION ONLY. EACH NHP
STOCKHOLDER IS URGED TO CONSULT HIS OWN TAX ADVISORS TO DETERMINE THE SPECIFIC
TAX CONSEQUENCES TO HIM OF THE ACQUISITION OF AIMCO COMMON STOCK, INCLUDING ANY
STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES.
TAXATION OF AIMCO
GENERAL. The REIT provisions of the Code are highly technical and complex.
The following sets forth the material aspects of the provisions of the Code that
govern the Federal income tax treatment of a REIT and its stockholders. This
summary is qualified in its entirety by the applicable Code provisions, rules
and regulations promulgated thereunder, and administrative and judicial
interpretations thereof, all of which are subject to change which may apply
retroactively.
AIMCO has elected to be taxed as a REIT under the Code commencing with its
taxable year ending December 31, 1994, and AIMCO intends to continue to operate
in such a manner. AIMCO believes that it was organized in conformity with the
requirements for qualification as a REIT, and that its method of operation since
formation and proposed method of future operation will enable it to meet the
requirements for qualification and taxation as a REIT under the Code. Such
qualification and taxation as a REIT depends upon AIMCO's ability to meet,
through actual annual operating results, distribution levels and diversity of
stock ownership, the various qualification tests imposed under the Code as
discussed below. Accordingly, no assurance can be given that the actual results
of AIMCO's operations for any one taxable year will satisfy such requirements.
See "--Failure to Qualify." No assurance can be given that the IRS will not
challenge AIMCO's eligibility for taxation as a REIT.
If AIMCO qualifies for taxation as a REIT, it generally will not be subject
to Federal corporate income tax on its net income that is currently distributed
to stockholders. This treatment substantially eliminates the "double taxation"
(at the corporate and stockholder levels) that generally results from investment
in a corporation. However, AIMCO will be subject to Federal income tax as
follows: First,
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AIMCO will be taxed at regular corporate rates on any undistributed REIT taxable
income, including undistributed net capital gains. Second, under certain
circumstances, AIMCO may be subject to the "alternative minimum tax" on its
items of tax preference. Third, if AIMCO has net income from prohibited
transactions (which are, in general, certain sales or other dispositions of
property held primarily for sale to customers in the ordinary course of business
other than foreclosure property), such income will be subject to a 100% tax.
Fourth, if AIMCO should fail to satisfy the 75% gross income test or the 95%
gross income test (as discussed below), but has nonetheless maintained its
qualification as a REIT because certain other requirements have been met, it
will be subject to a 100% tax on an amount equal to (a) the gross income
attributable to the greater of the amount by which AIMCO fails the 75% or 95%
test multiplied by (b) a fraction intended to reflect AIMCO's profitability.
Fifth, if AIMCO should fail to distribute during each calendar year at least the
sum of (i) 85% of its REIT ordinary income for such year, (ii) 95% of its REIT
capital gain net income for such year, and (iii) any undistributed taxable
income from prior periods, AIMCO would be subjected to a 4% excise tax on the
excess of such required distribution over the amounts actually distributed.
Sixth, if during the ten-year period beginning on the day on which an asset
acquired by AIMCO from a subchapter C corporation in a transaction in which the
adjusted tax basis of the asset in the hands of AIMCO is determined by reference
to the adjusted basis of such asset in the hands of the subchapter C
corporation, AIMCO recognizes gain on the disposition of such asset, under
Treasury regulations not yet promulgated, AIMCO will be required to recognize
any net built-in gain that would have been realized if the corporation had
liquidated at the end of its last taxable year before it qualifies as a REIT, or
in the case of a transfer of assets to AIMCO by a subchapter C corporation, on
the last day before the date of the transfer. Pursuant to IRS Notice 88-19,
AIMCO may elect, in lieu of the treatment described above, to be subject to tax
at the highest regular corporate tax rate on the excess, if any, of the fair
market value over the adjusted basis of any such asset as of the beginning of
the ten-year period ("Built-in Gain"). AIMCO intends to make such an election
and, therefore, will be taxed at the highest regular corporate rate on such
Built-in Gain if and to the extent such assets are sold within the specified
ten-year period.
REQUIREMENTS FOR QUALIFICATION. The Code defines a REIT as a corporation,
trust or association (1) that is managed by one or more trustees or directors;
(2) the beneficial ownership of which is evidenced by transferable shares, or by
transferable certificates of beneficial interest; (3) which would be taxable as
a domestic corporation, but for the special Code provisions applicable to REITs;
(4) that is neither a financial institution nor an insurance company subject to
certain provisions of the Code; (5) the beneficial ownership of which is held by
100 or more persons; (6) in which, during the last half of each taxable year,
not more than 50% in value of the outstanding stock is owned, directly or
indirectly, by five or fewer individuals (as defined in the Code to include
certain entities); and (7) which meets certain other tests described below
(including with respect to the nature of its income and assets). The Code
provides that conditions (1) through (4) must be met during the entire taxable
year, and that condition (5) must be met during at least 335 days of a taxable
year of 12 months, or during a proportionate part of a taxable year of less than
12 months. The AIMCO Charter provides certain restrictions regarding transfers
of its shares, which provisions are intended to assist AIMCO in continuing to
satisfy the share ownership requirements described in conditions (5) and (6)
above.
To monitor AIMCO's compliance with the share ownership requirements, AIMCO
is required to maintain records regarding the actual ownership of its shares. To
do so, AIMCO must demand written statements each year from the record holders of
certain percentages of its stock in which the record holders are to disclose the
actual owners of the shares (i.e., the persons required to include in gross
income the REIT dividends). A list of those persons failing or refusing to
comply with this demand must be maintained as part of AIMCO's records. A
stockholder who fails or refuses to comply with the demand must submit a
statement with its tax return disclosing the actual ownership of the shares and
certain other information.
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In addition, a corporation may not elect to become a REIT unless its taxable
year is the calendar year. AIMCO satisfies this requirement.
OWNERSHIP OF PARTNERSHIP INTERESTS. In the case of a REIT that is a partner
in a partnership, regulations provide that the REIT is deemed to own its
proportionate share of the partnership's assets and to earn its proportionate
share of the partnership's income. In addition, the assets and gross income of
the partnership retain the same character in the hands of the REIT for purposes
of the gross income and asset tests applicable to REITs as described below.
Thus, AIMCO's proportionate share of the assets, liabilities and items of income
of the Subsidiary Partnerships will be treated as assets, liabilities and items
of income of AIMCO for purposes of applying the REIT requirements described
herein. A summary of certain rules governing the Federal income taxation of
partnerships and their partners is provided below in "Tax Aspects of AIMCO's
Investments in Partnerships."
INCOME TESTS. In order to maintain qualification as a REIT, AIMCO annually
must satisfy three gross income requirements. First, at least 75% of AIMCO's
gross income (excluding gross income from "prohibited transactions," i.e.,
certain sales of property held primarily for sale to customers in the ordinary
course of business) for each taxable year must be derived directly or indirectly
from investments relating to real property or mortgages on real property
(including "rents from real property" and, in certain circumstances, interest)
or from certain types of temporary investments. Second, at least 95% of AIMCO's
gross income (excluding gross income from prohibited transactions) for each
taxable year must be derived from such real property investments, and from other
dividends, interest and gain from the sale or disposition of stock or securities
(or from any combination of the foregoing). Third, short-term gain from the sale
or other disposition of stock or securities, gain from certain sales of property
held primarily for sale, and gain on the sale or other disposition of real
property held for less than four years (apart from involuntary conversions and
sales of foreclosure property) must, in the aggregate, represent less than 30%
of AIMCO's gross income for each taxable year.
Rents received by AIMCO through the Subsidiary Partnerships will qualify as
"rents from real property" in satisfying the gross income requirements described
above, only if several conditions are met, including the following. If rent
attributable to personal property leased in connection with a lease of real
property is greater than 15% of the total rent received under the lease, then
the portion of rent attributable to such personal property will not qualify as
"rents from real property." Moreover, for rents received to qualify as "rents
from real property," the REIT generally must not operate or manage the property
or furnish or render services to the tenants of such property, other than
through an "independent contractor" from which the REIT derives no revenue.
However, AIMCO (or its affiliates) are permitted to, and do directly perform
services that are "usually or customarily rendered" in connection with the
rental of space for occupancy only and are not otherwise considered rendered to
the occupant of the property.
The Management Subsidiaries, ANHI and the other Unconsolidated Subsidiaries
will receive management fees and other income. A portion of such fees and other
income will accrue to AIMCO through the Operating Partnership's general
partnership interest in PAMS LP. Such fee and other income generally will not
qualify under the 95% gross income test. AIMCO also expects to indirectly
receive distributions from the Management Subsidiaries through PAMS Inc. and
from ANHI and the other Unconsolidated Subsidiaries that will be classified as
dividend income to the extent of the earnings and profits of PAMS Inc., ANHI and
the other Unconsolidated Subsidiaries. Such distributions will qualify under the
95% gross income test but not under the 75% gross income test.
If AIMCO fails to satisfy one or both of the 75% or 95% gross income tests
(though not the 30% gross income test) for any taxable year, it may nevertheless
qualify as a REIT for such year if it is entitled to relief under certain
provisions of the Code. These relief provisions will be generally available if
AIMCO's failure to meet such tests was due to reasonable cause and not due to
willful neglect, AIMCO attaches a schedule of the sources of its income to its
return, and any incorrect information on the schedule was not
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due to fraud with intent to evade tax. It is not possible, however, to state
whether in all circumstances AIMCO would be entitled to the benefit of these
relief provisions. If these relief provisions are inapplicable to a particular
set of circumstances involving AIMCO, AIMCO will not qualify as a REIT. As
discussed above in "--General," even where these relief provisions apply, a tax
is imposed with respect to the excess net income.
ASSET TESTS. AIMCO, at the close of each quarter of its taxable year, must
also satisfy three tests relating to the nature of its assets. First, at least
75% of the value of AIMCO's total assets must be represented by real estate
assets (including its allocable share of real estate assets held by the
Subsidiary Partnerships), stock or debt instruments held for not more than one
year purchased with the proceeds of a stock offering or long-term (at least five
years) debt offering of AIMCO, cash, cash items and U.S. government securities.
Second, not more than 25% of AIMCO's total assets may be represented by
securities other than those in the 75% asset class. Third, of the investments
included in the 25% asset class, the value of any one issuer's securities owned
by AIMCO may not exceed 5% of the value of AIMCO's total assets, and AIMCO may
not own more than 10% of any one issuer's outstanding voting securities.
AIMCO indirectly owns interests in the Management Subsidiaries, ANHI and the
other Unconsolidated Subsidiaries. As set forth above, the ownership of more
than 10% of the voting securities of any one issuer by a REIT is prohibited by
the asset tests. In addition, the value of any one issuer's securities owned by
AIMCO may not exceed 5% of the value of AIMCO's total assets. AIMCO believes
that its indirect ownership interest in PAMS Inc., ANHI and the other
Unconsolidated Subsidiaries qualifies under these rules. However, no independent
appraisals have been obtained to support AIMCO's conclusions as to the value of
the Operating Partnership's total assets and the value of the Operating
Partnership's interest in PAMS Inc., ANHI or the other Unconsolidated
Subsidiaries, and these values are subject to change in the future. Accordingly,
there can be no assurance that the IRS will not contend that the Operating
Partnership's ownership interest in PAMS Inc., ANHI or the other Unconsolidated
Subsidiaries disqualifies AIMCO from treatment as a REIT.
Immediately following completion of the Merger, AIMCO intends to restructure
its ownership of NHP by transferring the stock or assets of NHP to ANHI and/or
other Unconsolidated Subsidiaries. AIMCO intends that its indirect ownership
interest in any Unconsolidated Subsidiary will comply with the REIT rules
described above.
AIMCO's indirect interests in the Operating Partnership and other Subsidiary
Partnerships are held through wholly owned corporate subsidiaries of AIMCO
organized and operated as "qualified REIT subsidiaries" within the meaning of
the Code. Qualified REIT subsidiaries are not treated as separate entities from
their parent REIT for Federal income tax purposes. Instead, all assets,
liabilities and items of income, deduction and credit of each qualified REIT
subsidiary are treated as assets, liabilities and items of AIMCO. Each qualified
REIT subsidiary therefore will not be subject to Federal corporate income
taxation, although it may be subject to state or local taxation. In addition,
AIMCO's ownership of the voting stock of each qualified REIT subsidiary does not
violate the general restriction against ownership of more than 10% of the voting
securities of any issuer.
ANNUAL DISTRIBUTION REQUIREMENTS. AIMCO, in order to qualify as a REIT, is
required to distribute dividends (other than capital gain dividends) to its
stockholders in an amount at least equal to (A) the sum of (i) 95% of AIMCO's
"REIT taxable income" (computed without regard to the dividends paid deduction
and AIMCO's net capital gain) and (ii) 95% of the net income (after tax), if
any, from foreclosure property, minus (B) the sum of certain items of noncash
income. Such distributions must be paid in the taxable year to which they
relate, or in the following taxable year if declared before AIMCO timely files
its tax return for such year and if paid with or before the first regular
dividend payment after such declaration. To the extent that AIMCO does not
distribute all of its net capital gain or distributes at least 95%, but less
than 100%, of its "REIT taxable income," as adjusted, it will be subject to tax
thereon at the capital gains or ordinary corporate tax rates, as the case may
be. Furthermore, if AIMCO should fail to distribute during
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each calendar year at least the sum of (i) 85% of its REIT ordinary income for
such year, (ii) 95% of its REIT capital gain income for such year, and (iii) any
undistributed taxable income from prior periods, AIMCO would be subject to a 4%
excise tax on the excess of such required distribution over the amounts actually
distributed. AIMCO believes that it has made, and intends to make, timely
distributions sufficient to satisfy this annual distribution requirement.
It is possible that AIMCO, from time to time, may not have sufficient cash
or other liquid assets to meet the 95% distribution requirement due to timing
differences between (i) the actual receipt of income (including receipt of
distributions from the Operating Partnership) and actual payment of deductible
expenses and (ii) the inclusion of such income and deduction of such expenses in
arriving at taxable income of AIMCO. In the event that such timing differences
occur, in order to meet the 95% distribution requirement, AIMCO may find it
necessary to arrange for short-term, or possibly long-term, borrowings or to pay
dividends in the form of taxable distributions of property.
Under certain circumstances, AIMCO may be able to rectify a failure to meet
the distribution requirement for a year by paying "deficiency dividends" to
stockholders in a later year, which may be included in AIMCO's deduction for
dividends paid for the earlier year. Thus, AIMCO may be able to avoid being
taxed on amounts distributed as deficiency dividends; however, AIMCO will be
required to pay interest based on the amount of any deduction taken for
deficiency dividends.
FAILURE TO QUALIFY. If AIMCO fails to qualify for taxation as a REIT in any
taxable year, and the relief provisions do not apply, AIMCO will be subject to
tax (including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Distributions to stockholders in any year in which
AIMCO fails to qualify will not be deductible by AIMCO nor will they be required
to be made. In such event, to the extent of current and accumulated earnings and
profits, all distributions to stockholders will be taxable as ordinary income,
and, subject to certain limitations of the Code, corporate distributees may be
eligible for the dividends received deduction. Unless entitled to relief under
specific statutory provisions, AIMCO will also be disqualified from taxation as
a REIT for the four taxable years following the year during which qualification
was lost. It is not possible to state whether in all circumstances AIMCO would
be entitled to such statutory relief.
TAX ASPECTS OF AIMCO'S INVESTMENTS IN PARTNERSHIPS
GENERAL. Most of AIMCO's investments are held indirectly through the
Operating Partnership. In general, partnerships are "pass-through" entities that
are not subject to Federal income tax. Rather, partners are allocated their
proportionate shares of the items of income, gain, loss, deduction and credit of
a partnership, and are potentially subject to tax thereon, without regard to
whether the partners receive a distribution from the partnership. AIMCO will
include in its income its proportionate share of the foregoing partnership items
for purposes of the various REIT income tests and in the computation of its REIT
taxable income. Moreover, for purposes of the REIT asset tests, AIMCO will
include its proportionate share of assets held by the Subsidiary Partnerships.
See "--Taxation of AIMCO--Ownership of Partnership Interests."
ENTITY CLASSIFICATION. AIMCO's direct and indirect investment in
partnerships involves special tax considerations, including the possibility of a
challenge by the IRS of the status of any of the Subsidiary Partnerships as a
partnership (as opposed to an association taxable as a corporation) for Federal
income tax purposes. If any of these entities were treated as an association for
Federal income tax purposes, it would be taxable as a corporation and therefore
subject to an entity-level tax on its income. In such a situation, the character
of AIMCO's assets and items of gross income would change and could preclude
AIMCO from satisfying the asset tests and the income tests (see "--Taxation of
AIMCO--Asset Tests" and "--Taxation of AIMCO--Income Tests"), and in turn could
prevent AIMCO from qualifying as a REIT. See "--Taxation of AIMCO--Failure to
Qualify" above for a discussion of the effect of AIMCO's failure to meet such
tests for a taxable year. In addition, any change in the status of any of the
Subsidiary Partnerships for tax purposes might be treated as a taxable event, in
which case AIMCO might incur a tax liability without any related cash
distributions.
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TAX ALLOCATIONS WITH RESPECT TO THE PROPERTIES. Pursuant to the Code and
the regulations thereunder, income, gain, loss and deduction attributable to
appreciated or depreciated property that is contributed to a partnership in
exchange for an interest in the partnership must be allocated in a manner such
that the contributing partner is charged with, or benefits from, respectively,
the unrealized gain or unrealized loss associated with the property at the time
of the contribution. The amount of such unrealized gain or unrealized loss is
generally equal to the difference between the fair market value of contributed
property at the time of contribution, and the adjusted tax basis of such
property at the time of contribution (a "Book-Tax Difference"). Such allocations
are solely for Federal income tax purposes and do not affect the book capital
accounts or other economic or legal arrangements among the partners. The
Operating Partnership was formed by way of contributions of appreciated property
(including certain of the Owned Properties). Consequently, allocations must be
made in a manner consistent with these requirements. Where a partner contributes
cash to a partnership that holds appreciated property, the Treasury regulations
provide for a similar allocation of such items to the other partners. These
rules apply to the contribution by AIMCO to the Operating Partnership of the
cash proceeds received in any offerings of its stock.
In general, certain holders of OP Units will be allocated lower amounts of
depreciation deductions for tax purposes and increased taxable income and gain
on sale by the Operating Partnership or other Subsidiary Partnerships of the
contributed Owned Properties. This will tend to eliminate the Book-Tax
Difference over the life of these partnerships. However, the special allocations
do not always entirely rectify the Book-Tax Difference on an annual basis or
with respect to a specific taxable transaction such as a sale. Thus, the
carryover basis of the contributed Owned Properties in the hands of the
Subsidiary Partnerships may cause AIMCO to be allocated lower depreciation and
other deductions, and possibly greater amounts of taxable income in the event of
a sale of such contributed assets in excess of the economic or book income
allocated to it as a result of such sale. This may cause AIMCO to recognize
taxable income in excess of cash proceeds, which might adversely affect AIMCO's
ability to comply with the REIT distribution requirements. See "--Taxation of
AIMCO--Annual Distribution Requirements."
With respect to any property purchased or to be purchased by any of the
Subsidiary Partnerships (other than through the issuance of OP Units) subsequent
to the formation of AIMCO, such property will initially have a tax basis equal
to its fair market value and the special allocation provisions described above
will not apply.
SALE OF THE PROPERTIES. AIMCO's share of any gain realized by the Operating
Partnership or another Subsidiary Partnership on the sale of any property held
as inventory or primarily for sale to customers in the ordinary course of
business will be treated as income from a prohibited transaction that is subject
to a 100% penalty tax. See "--Requirements for Qualification--Income Tests."
Under existing law, whether property is held as inventory or primarily for sale
to customers in the ordinary course of a partnership's trade or business is a
question of fact that depends on all the facts and circumstances with respect to
the particular transaction. The Operating Partnership and the other Subsidiary
Partnerships intend to hold the Owned Properties for investment with a view to
long-term appreciation, to engage in the business of acquiring, developing,
owning, and operating the Owned Properties (and other apartment properties) and
to make such occasional sales of the Owned Properties, including peripheral
land, as are consistent with AIMCO's investment objectives.
TAXATION OF MANAGEMENT SUBSIDIARIES AND UNCONSOLIDATED SUBSIDIARIES
A portion of the amounts to be used to fund distributions to stockholders is
expected to come from the Management Subsidiaries, ANHI and other Unconsolidated
Subsidiaries, through dividends paid on the non-voting preferred stock of PAMS
Inc., ANHI and the other Unconsolidated Subsidiaries held by the Operating
Partnership, distributions paid to the Operating Partnership as the general
partner of PAMS LP, and interest paid by PAMS Inc. on certain installment notes
held by the Operating Partnership. Each of PAMS Inc., ANHI and the other
Unconsolidated Subsidiaries will not qualify as a REIT and will pay
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Federal, state and local income taxes on its taxable income at normal corporate
rates. The Management Subsidiaries, ANHI and the other Unconsolidated
Subsidiaries intend to claim annual deductions for interest and amortization. No
assurance can be given that the IRS will not challenge such deductions. Any
Federal, state or local income taxes that PAMS Inc., ANHI and the other
Unconsolidated Subsidiaries is required to pay will reduce AIMCO's cash flow
from operating activities and its ability to make payments to holders of its
securities.
TAXATION OF TAXABLE DOMESTIC STOCKHOLDERS
GENERAL. As long as AIMCO qualifies as a REIT, distributions made to
AIMCO's taxable domestic stockholders out of current or accumulated earnings and
profits (and not designated as capital gain dividends) will be taken into
account by them as ordinary income and will not be eligible for the dividends
received deduction for corporations. Distributions that are designated as
capital gain dividends will be taxed as long-term capital gains (to the extent
that they do not exceed AIMCO's actual net capital gain for the taxable year)
without regard to the period for which the stockholder has held its stock.
However, corporate stockholders may be required to treat up to 20% of certain
capital gain dividends as ordinary income.
Distributions in excess of current and accumulated earnings and profits will
not be taxable to a stockholder to the extent that they do not exceed the
adjusted basis of the stockholder's shares, but rather will reduce the adjusted
basis of such shares. To the extent that such distributions exceed the adjusted
basis of a stockholder's shares, they will be included in income as long-term
capital gain (or short-term capital gain if the shares have been held for one
year or less) provided that the shares are a capital asset in the hands of the
stockholder. In addition, any dividend declared by AIMCO in October, November or
December of any year and payable to a stockholder of record on a specified date
in any such month shall be treated as both paid by AIMCO and received by the
stockholder on December 31 of such year, provided that the dividend is actually
paid by AIMCO during January of the following calendar year. Stockholders may
not include in their individual income tax returns any net operating losses or
capital losses of AIMCO.
In general, any loss upon a sale or exchange of shares by a stockholder who
has held such shares for six months or less (after applying certain holding
period rules) will be treated as a long-term capital loss to the extent of
distributions from AIMCO required to be treated by such stockholder as long-term
capital gain.
TAXATION OF FOREIGN STOCKHOLDERS
The following is a discussion of certain anticipated U.S. Federal income and
estate tax consequences of the ownership and disposition of AIMCO Common Stock
applicable to Non-U.S. Holders of such stock. A "Non-U.S. Holder" is any person
other than (i) a citizen or resident of the United States, (ii) a corporation or
partnership created or organized in the United States or under the laws of the
United States or of any state thereof, or (iii) an estate whose income is
includable in gross income for U.S. Federal income tax purposes regardless of
its source or a trust, the income of which is includable in gross income for
United States Federal income tax purposes, regardless of its source or, for tax
years beginning after December 31, 1996 (and, if a trustee so elects, for tax
years ending after August 20, 1996), a trust if a United States court is able to
exercise primary supervision over the administration of such trust and one or
more United States fiduciaries have the authority to control all substantial
decisions of such trust. The discussion is based on current law and is for
general information only. The discussion addresses only certain and not all
aspects of U.S. Federal income and estate taxation.
ORDINARY DIVIDENDS. The portion of dividends received by Non-U.S. Holders
payable out of AIMCO's earnings and profits which are not attributable to
capital gains of AIMCO and which are not effectively connected with a U.S. trade
or business of the Non-U.S. Holder will be subject to U.S. withholding tax at
the rate of 30% (unless reduced by treaty). In general, Non-U.S. Holders will
not be
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considered engaged in a U.S. trade or business solely as a result of their
ownership of AIMCO Stock. In cases where the dividend income from a Non-U.S.
Holder's investment in AIMCO Stock is (or is treated as) effectively connected
with the Non-U.S. Holder's conduct of a U.S. trade or business, the Non-U.S.
Holder generally will be subject to U.S. tax at graduated rates, in the same
manner as U.S. stockholders are taxed with respect to such dividends (and may
also be subject to the 30% branch profits tax in the case of a Non-U.S. Holder
that is a foreign corporation).
NON-DIVIDEND DISTRIBUTIONS. Unless AIMCO Common Stock constitutes a United
States Real Property Interest (a "USRPI"), distributions by AIMCO which are not
dividends out of the earnings and profits of AIMCO will not be subject to U.S.
income or withholding tax. If it cannot be determined at the time a distribution
is made whether or not such distribution will be in excess of current and
accumulated earnings and profits, the distribution will be subject to
withholding at the rate applicable to dividends. However, the Non-U.S. Holder
may seek a refund of such amounts from the IRS if it is subsequently determined
that such distribution was, in fact, in excess of current and accumulated
earnings and profits of AIMCO. If AIMCO Stock constitutes a USRPI, such
distributions will be subject to 10% withholding and taxed pursuant to the
Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA") at a rate of 35%
to the extent such distributions exceed a stockholder's basis in his or her
AIMCO Common Stock.
CAPITAL GAIN DIVIDENDS. Under FIRPTA, a distribution made by AIMCO to a
Non-U.S. Holder, to the extent attributable to gains from dispositions of USRPIs
such as the properties beneficially owned by AIMCO ("USRPI Capital Gains"), will
be considered effectively connected with a U.S. trade or business of the
Non-U.S. Holder and subject to U.S. income tax at the rate applicable to U.S.
individuals or corporations, without regard to whether such distribution is
designated as a capital gain dividend. In addition, AIMCO will be required to
withhold tax equal to 35% of the amount of dividends to the extent such
dividends constitute USRPI Capital Gains. Distributions subject to FIRPTA may
also be subject to a 30% branch profits tax in the hands of a foreign corporate
stockholder that is not entitled to treaty exemption.
DISPOSITION OF STOCK OF AIMCO. Unless AIMCO Common Stock constitutes a
USRPI, a sale of such stock by a Non-U.S. Holder generally will not be subject
to U.S. taxation under FIRPTA. The stock will not constitute a USRPI if AIMCO is
a "domestically controlled REIT." A domestically controlled REIT is a REIT in
which, at all times during a specified testing period, less than 50% in value of
its shares is held directly or indirectly by Non-U.S. Holders. AIMCO believes
that it is, and it expects to continue to be a domestically controlled REIT, and
therefore that the sale of AIMCO Common Stock will not be subject to taxation
under FIRPTA. Because the AIMCO Stock is publicly traded, however, no assurance
can be given that AIMCO will continue to be a domestically controlled REIT.
If AIMCO does not constitute a domestically controlled REIT, a Non-U.S.
Holder's sale of stock generally will still not be subject to tax under FIRPTA
as a sale of a USRPI provided that (i) the stock is "regularly traded" (as
defined by applicable Treasury regulations) on an established securities market
(e.g., the NYSE, on which the AIMCO Common Stock is listed) and (ii) the selling
Non-U.S. Holder held 5% or less of AIMCO's outstanding stock at all times during
a specified testing period.
If gain on the sale of stock of AIMCO were subject to taxation under FIRPTA,
the Non-U.S. Holder would be subject to the same treatment as a U.S. stockholder
with respect to such gain (subject to applicable alternative minimum tax and a
special alternative minimum tax in the case of nonresident alien individuals)
and the purchaser of the stock could be required to withhold 10% of the purchase
price and remit such amount to the IRS.
Capital gains not subject to FIRPTA will nonetheless be taxable in the
United States to a Non-U.S. Holder in two cases: (i) if the Non-U.S. Holder's
investment in the AIMCO Common Stock is effectively connected with a U.S. trade
or business conducted by such Non-U.S. holder, the Non-U.S. Holder will be
subject to the same treatment as a U.S. stockholder with respect to such gain,
or
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(ii) if the Non-U.S. Holder is a nonresident alien individual who was present in
the United States for 183 days or more during the taxable year and has a "tax
home" in the United States, the nonresident alien individual will be subject to
a 30% tax on the individual's capital gain.
ESTATE TAX. AIMCO Common Stock owned or treated as owned by an individual
who is not a citizen or resident (as specially defined for U.S. Federal estate
tax purposes) of the United States at the time of death will be includable in
the individual's gross estate for U.S. Federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise. Such individual's estate may be
subject to U.S. Federal estate tax on the property includable in the estate for
U.S. Federal estate tax purposes.
INFORMATION REPORTING AND BACKUP WITHHOLDING. AIMCO must report annually to
the IRS and to each Non-U.S. Holder the amount of dividends (including any
capital gain dividends) paid to, and the tax withheld with respect to, each
Non-U.S. Holder. These reporting requirements apply regardless of whether
withholding was reduced or eliminated by an applicable tax treaty. Copies of
these returns may also be made available under the provisions of a specific
treaty or agreement with the tax authorities in the country in which the
Non-U.S. Holder resides.
U.S. backup withholding (which generally is imposed at the rate of 31% on
certain payments to persons that fail to furnish the information required under
the U.S. information reporting requirements) and information reporting will
generally not apply to dividends (including any capital gain dividends) paid on
AIMCO Common Stock to a Non-U.S. Holder at an address outside the United States.
The payment of the proceeds from the disposition of AIMCO Common Stock to or
through a U.S. office of a broker will be subject to information reporting and
backup withholding unless the owner, under penalties of perjury, certifies,
among other things, its status as a Non-U.S. Holder, or otherwise establishes an
exemption. The payment of the proceeds from the disposition of stock to or
through a non-U.S. office of a non-U.S. broker generally will not be subject to
backup withholding and information reporting.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the Non-U.S.
Holder's U.S. Federal income tax liability, provided that the required
information is furnished to the IRS.
Recently finalized Treasury Regulations (the "Final Regulations") could
affect the procedures to be followed by a Non-U.S. Holder in establishing such
Non-U.S. Holder's status as a Non-U.S. Holder for the purposes of the
withholding rules (including the back-up withholding rules). The Final
Regulations are effective for payments made after December 31, 1998. NHP
stockholders should consult their tax advisors concerning the Final Regulations
and their potential effect on the ownership of AIMCO Common Stock.
TAXATION OF TAX-EXEMPT STOCKHOLDERS
Based upon a published ruling by the IRS, distributions by AIMCO to a
stockholder that is a tax-exempt entity will not constitute "unrelated business
taxable income" ("UBTI"), provided that the tax-exempt entity has not financed
the acquisition of its shares with "acquisition indebtedness" within the meaning
of the Code and the shares are not otherwise used in an unrelated trade or
business of the tax-exempt entity.
Notwithstanding the preceding paragraph, however, a portion of the dividends
paid by AIMCO may be treated as UBTI to certain domestic private pension trusts
if AIMCO is treated as a "pension-held REIT." AIMCO believes that it is not, and
does not expect to become, a "pension-held REIT." If AIMCO were to become a
pension-held REIT, these rules generally would only apply to certain pension
trusts that hold more than 10% of AIMCO's stock.
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REIT PROVISIONS OF THE TAXPAYER RELIEF ACT OF 1997
The Act makes a number of changes relating to the qualification and taxation
of REITs including the following. First, a REIT will be able to provide certain
services directly without disqualifying all of the rent from the property where
the services are provided if the payment for such services does not exceed 1% of
the gross income from the property. Second, a REIT's wholly owned subsidiary
will be treated as a "qualified REIT subsidiary" even where the REIT had not
always owned such corporation. Third, the Act repeals the requirement that a
REIT must derive less than 30% of its gross income from the sale of stock or
securities held for less than one year, real property held less than four years,
and property sold or disposed of in a "prohibited transaction." Finally, a REIT
will be able to elect to retain and pay income tax on net long-term capital
gains. REIT shareholders would include in income their share of the long-term
capital gains retained by the REIT and would receive a credit for their share of
the taxes paid by the REIT.
OTHER TAX CONSEQUENCES
POSSIBLE LEGISLATIVE OR OTHER ACTIONS AFFECTING TAX
CONSEQUENCES. Prospective investors in shares of AIMCO Common Stock should
recognize that the present Federal income tax treatment of an investment in
AIMCO may be modified by legislative, judicial or administrative action at any
time, and that any such action may affect investments and commitments previously
made. The rules dealing with Federal income taxation are constantly under review
by persons involved in the legislative process and by the IRS and the U.S.
Treasury Department, resulting in revisions of regulations and revised
interpretations of established concepts as well as statutory changes. Revisions
in Federal tax laws and interpretations thereof could adversely affect the tax
consequences of an investment in the Operating Partnership or AIMCO. For
example, a recent Federal budget proposal contains language which, if enacted in
its present form, would result in the immediate taxation of all gain inherent in
a corporation's assets upon an election by the corporation to become a REIT, and
thus would effectively preclude AIMCO from re-electing REIT status following a
termination of its REIT qualification.
STATE AND LOCAL TAXES. The Operating Partnership and its partners and AIMCO
and its stockholders may be subject to state or local taxation in various state
or local jurisdictions, including those in which they transact business or
reside. The state and local tax treatment of the Operating Partnership and its
partners and AIMCO and its stockholders may not conform to the Federal income
tax consequences discussed above. Consequently, prospective investors should
consult their own tax advisors regarding the application and effect of state and
local tax laws on an investment in the Operating Partnership or AIMCO.
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COMPARATIVE RIGHTS OF STOCKHOLDERS OF AIMCO AND NHP
Upon consummation of the Merger, the stockholders of NHP, a Delaware
corporation, will become stockholders of AIMCO, a Maryland corporation.
Accordingly, the rights of stockholders of NHP following the Merger will be
governed by Maryland law, as well as the AIMCO Charter and AIMCO's Amended and
Restated Bylaws (the "AIMCO Bylaws").
The following is a summary of the material differences between the rights
and privileges of NHP stockholders and those of holders of AIMCO Common Stock.
References to the "DGCL" are to the General Corporation Law of Delaware, while
references to the "MGCL" are to the General Corporation Law of Maryland. This
summary is not meant to be relied upon as an exhaustive description of such
differences and is qualified in its entirety by reference to the AIMCO Charter,
the AIMCO Bylaws, NHP's Articles of Incorporation (the "NHP Charter") and Bylaws
(the "NHP Bylaws"), the DGCL and the MGCL.
RESTRICTIONS ON SHARE TRANSFERS
AIMCO. Subject to certain exceptions and conditions specified in the AIMCO
Charter, no holder may own, or be deemed to own by viture of various attribution
and constructive onwership provisions of the Code and Rule 13d-3 under the
Exchange Act, more the 8.7% (or 15% in the case of certain pension trusts
described in the Code, investment companies registered under the Investment
Company Act of 1940, as amended, and Mr. Considine) of the outstanding shares of
Authorized Common Stock. See "Description of AIMCO's Capital Stock--Restrictions
on Transfer" for additional details regarding these restrictions and the
exceptions and conditions to them.
NHP. The NHP Charter has no limitiations on ownership or transfer of shares
of NHP Common Stock.
ACTION BY WRITTEN CONSENT OF STOCKHOLDERS
AIMCO. Under the MGCL, any action required or permitted to be taken at a
meeting of stockholders may be taken without a meeting if all stockholders
entitled to vote on the matter consent to the action in writing and any
stockholder entitled to notice of the meeting but not entitled to vote at it
provides a written waiver of any right to dissent.
NHP. Consistent with the DGCL, the NHP Bylaws allow stockholders to take
any action without a meeting, without prior notice and without a vote, upon the
written consent of stockholders having not less than the minimum number of votes
that would be necessary to take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
AMENDMENT OF CHARTER DOCUMENTS AND BYLAWS
AIMCO. Under the MGCL, unless otherwise provided in a corporation's
charter, a proposed charter amendment requires an affirmative vote of two-thirds
of the outstanding stock entitled to be cast on the matter. However, the AIMCO
Charter provides that it may be amended upon the affirmative vote of a majority
(or, as applicable, two-thirds) of the stock entitled to be cast generally in
the election of directors ("voting stock"). Under the MGCL, the power to adopt,
alter, and repeal the bylaws is vested in the stockholders, except to the extent
that the charter or the bylaws vest it in the board of directors. The AIMCO
Bylaws provide that they may be amended by vote of a majority of the AIMCO
Board. An amendment to any provision of the AIMCO Bylaws relating to their
repeal or the removal of directors may be effected only by the vote of
two-thirds of the voting stock.
NHP. The DGCL provides that an amendment to a corporation's certificate of
incorporation requires the approval of the corporation's board of directors, the
approval of a majority of all shares
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entitled to vote thereon voting together as a single class, and the approval of
a majority of the outstanding stock of each class entitled to vote thereon as a
class. The NHP Bylaws may be amended by the NHP Board (except with respect to
the amendment provisions thereof) and may also be amended by the NHP
stockholders.
BUSINESS COMBINATIONS
AIMCO. Generally, under the MGCL, the approval by the affirmative vote of
two-thirds of all the votes entitled to be cast on the matter is required for
mergers, consolidations, share exchanges and any transfers of all or
substantially all of the assets of a corporation, unless the charter increases
or reduces the vote to not less than a majority. The AIMCO Charter does not
alter the two-thirds vote requirement.
Subtitle 6 of Title 3 of the MGCL prohibits any business combination
(defined to include a variety of transactions, including mergers,
consolidations, share exchanges, sales or dispositions of assets, issuances of
stock, liquidations, reclassification and benefits from the corporation,
including loans or guarantees) between a Maryland corporation and any interested
stockholder (defined generally as any person who, directly or indirectly,
beneficially owns 10% or more of the voting power of the outstanding voting
stock of the corporation) for a period of five years after the most recent date
such stockholder became an interested stockholder. After such five-year period,
a business combination between a Maryland corporation and such interested
stockholder is prohibited unless either certain "fair-price" provisions are
complied with or the business combination is approved by certain supermajority
stockholder votes. The MGCL restrictions do not apply to a business combination
with an interested stockholder if such business combination is approved or
exempted from the MGCL by a resolution of the board of directors adopted prior
to the date on which the interested stockholder became an interested
stockholder. The AIMCO Board has not adopted any such resolution.
A Maryland corporation also may adopt an amendment to its charter electing
not to be subject to the business combination provisions of the MGCL in whole or
in part. Any such amendment generally must be approved by the affirmative vote
of at least 80 percent of the votes entitled to be cast by all holders of out-
standing shares of voting stock and two-thirds of the votes entitled to be cast
by holders of outstanding shares of voting stock who are not interested
stockholders. No such amendment to the AIMCO Charter has been adopted.
NHP. With certain exceptions, Section 203 of the DGCL prohibits a Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" (as defined below) for three years following the date that such
person becomes an interested stockholder. In general and with certain
exceptions, an interested stockholder is a person who owns 15% or more of the
corporation's outstanding voting stock, or is an affiliate or associate of the
corporation and was the owner of 15% or more of such voting stock at any time
within the three years immediately prior to the date on which it is sought to be
determined whether such person is an interested stockholder.
For purposes of Section 203, the term "business combination" is defined
broadly to include mergers with or caused by the interested stockholder; sales
or other dispositions to the interested stockholder (except proportionately with
the corporation's other stockholders) of assets of the corporation or of a
direct or indirect majority-owned subsidiary of the corporation equal to 10% or
more of the aggregate market value of the corporation's consolidated assets or
the corporation's outstanding stock; the issuance or transfer by the corporation
or such a subsidiary of stock of the corporation or such subsidiary to the
interested stockholder (except for, among other transactions, certain transfers
in a conversion or exchange, certain pro rata distributions or certain other
transactions); and receipt by the interested stockholder (except proportionately
as a stockholder), directly or indirectly, of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the corporation or a
direct or indirect majority-owned subsidiary, subject to certain exceptions.
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The three-year moratorium imposed on business combinations by Section 203
does not apply if: (i) prior to the time at which such stockholder becomes an
interested stockholder the board of directors approves either the business
combination or the transaction which resulted in the person becoming an
interested stockholder; (ii) upon consummation of the transaction which made him
an interested stockholder, the interested stockholder owns at least 85% of the
voting stock of the Corporation outstanding at the time the transaction
commenced (excluding for purposes of determining the number of shares
outstanding those shares owned by, among others, certain employee stock plans);
or (iii) at or subsequent to the time such person becomes an interested
stockholder, the business combination is approved by the board of directors and
is authorized at a meeting of stockholders by 66 2/3% of the outstanding voting
stock of the corporation which is not owned by the interested stockholder.
Section 203 generally applies to Delaware corporations which have a class of
voting stock that is listed on a national securities exchange, authorized for
quotation on Nasdaq or held of record by more than 2,000 stockholders. A
Delaware corporation may elect in its original certificate of incorporation that
it will not be governed by Section 203. NHP is subject to the provisions of
Section 203 and AIMCO has become an "interested stockholder" as a result of the
Stock Purchase.
APPRAISAL RIGHTS
AIMCO. Under the MGCL, except as otherwise provided by the MGCL,
stockholders have the right to demand and receive payment of the "fair value" of
their stock in the event of (i) a merger or consolidation, (ii) a share
exchange, (iii) a transfer of all or substantially all assets not in the
ordinary course of business, (iv) an amendment to the charter which alters the
contract rights, as expressly set forth in the charter, of any outstanding stock
and which substantially adversely affects the stockholder's rights, unless the
right to do so is preserved by the charter (which it is not, in the case of
AIMCO), (v) certain business combinations with interested stockholders or (vi)
unless the charter or bylaws otherwise provide, after an approval by the
stockholders of voting rights for control shares which constitute a majority of
the voting power of the corporation. However, except as otherwise provided by
the provisions of the MGCL regarding business combinations with interested
stockholders, stockholders do not have appraisal rights if, among other things,
the stock is listed on a national securities exchange, with respect to (i) a
merger of a 90% or more owned subsidiary into its parent, on the date notice of
such merger is given or waived, or (ii) any other transaction, on the record
date for determining stockholders entitled to vote on the transaction.
NHP. The DGCL provides for appraisal rights only in the case of certain
statutory mergers or consolidations of the corporation where the petitioning
stockholder has neither voted in favor of nor consented in writing to the
transaction. In addition, no appraisal rights are available for the shares of a
corporation if the corporation is to be the surviving corporation and a vote of
its stockholders is not required under DGCL Section 251(f). In general, unless
otherwise provided for in a corporation's certificate of incorporation, there
are no appraisal rights for shares of stock (i) listed on a national securities
exchange or designated as a national market system security on an interdealer
quotation system by the NASD, or (ii) held of record by more than 2,000 holders,
unless the holders of such shares would be required to accept for such stock
anything other than shares of stock of the surviving corporation, shares of
another corporation so listed, designated, or held by such number of holders of
record, cash in lieu of fractional shares of such stock, or any combination
thereof.
PREEMPTIVE RIGHTS
Neither AIMCO nor NHP stockholders have preemptive rights with respect to
issuances of capital stock.
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INDEMNIFICATION
AIMCO. Under the MGCL, a corporation may indemnify any director or officer
made a party to any proceeding unless it is established that (i) the director's
or officer's act or omission was material to the matter giving rise to the
proceeding and was committed in bad faith or resulted from active and deliberate
dishonesty, (ii) the director or officer actually received an improper benefit
in money, property or services, or (iii) in the case of criminal proceedings,
the director or officer had reasonable cause to believe the act or omission was
unlawful. The AIMCO Charter provides that AIMCO will indemnify its directors and
its officers to the fullest extent permitted by Maryland law.
The MGCL provides that a determination must be made that a director or
officer has met the standard of conduct set forth above before the director or
officer may be indemnified. The determination may be made by a majority vote of
disinterested directors, by special legal counsel (selected by the disinterested
directors) or by the stockholders.
The MGCL also establishes several mandatory rules for indemnification. In a
stockholder derivative suit, a corporation may not indemnify a director or
officer if he or she is adjudged to be liable to the corporation. A corporation
may not indemnify a director or officer in respect of any proceeding charging
improper personal benefit to the director, whether or not involving action in
his or her official capacity, in which the director is adjudged to be liable on
the basis that personal benefit was improperly received. A director or officer
who is successful, on the merits or otherwise, in the defense of any proceeding
for which indemnification is permitted, must be indemnified by the corporation
against reasonable expenses in connection with the proceeding (including
attorneys' fees).
The MGCL permits a corporation to advance reasonable expenses to directors
and officers upon the director's or officer's written affirmation of his or her
good faith belief that he or she has met the required standard of conduct and
after his or her written undertaking to repay the corporation if it is
determined that the standard has not been met. The AIMCO Charter provides
further that AIMCO will indemnify any other persons permitted to be indemnified
by the MGCL, including employees and agents, to the extent such indemnification
is authorized and determined to be appropriate by the AIMCO Board, the majority
of stockholders entitled to vote on the matter or special legal counsel
appointed by the AIMCO Board.
AIMCO has entered into indemnification agreements with each of its directors
and officers. The indemnification agreements require, among other things, that
AIMCO indemnify its directors and officers to the fullest extent permitted by
law, and advance to the directors and officers all related expenses, subject to
reimbursement if it is subsequently determined that indemnification is not
permitted.
NHP. Subject to certain limitations, Section 145 of the DGCL empowers a
Delaware corporation to indemnify any person who was, is, or is threatened to be
made, a party in any, whether civil, criminal, administrative or investigative
threatened, pending or completed action, suit or proceeding (other than an
action by or in the right of the corporation) by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another entity, for expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with any such action, suit or proceeding. With
respect to actions by or in the right of a corporation, the DGCL, subject to
certain limitations, permits indemnification of such person for expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit. To be entitled
to indemnification, a person must have acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe such conduct was unlawful. With respect to actions
by or in the right of the corporation, court approval is required for
indemnification relating to any claim, issue, or matter as to which a person has
been adjudged liable to the corporation.
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The DGCL requires indemnification for expenses actually and reasonably
incurred by any director, officer, employee or agent in defense of a proceeding
against such person for actions in such capacity to the extent that the person
has been successful on the merits or otherwise. Advancement of expenses (i.e.,
payment prior to a determination on the merits) is permitted, but not required,
by the DGCL. A director or officer must undertake to repay such advanced
expenses if it is ultimately determined that he or she is not entitled to
indemnification. Unless ordered by a court, the members of the board who are not
parties to such action, suit, or proceeding, by majority vote, (or independent
legal counsel or stockholders) must determine, in each instance where
indemnification is sought but is not required by the DGCL, whether such person
has met the applicable standard of conduct. The DGCL provides that the statutory
indemnification is not exclusive.
The NHP Bylaws provide for indemnification of officers and directors as
permitted by Section 145 of the DGCL.
LIMITATION OF PERSONAL LIABILITY OF DIRECTORS
AIMCO. The MGCL provides that a corporation's charter may include a
provision eliminating or limiting the personal liability of a director or
officer to the corporation or its stockholders for money damages except (i) to
the extent that it is proved that the person actually received an improper
benefit or profit in money, property or services, for the amount of the benefit
or profit in money, property, or services actually received or (ii) to the
extent that a court finds that the person's action, or failure to act, was the
result of active and deliberate dishonesty and was material to the cause of
action adjudicated in the proceeding. The AIMCO Charter provides that its
directors and officers have no personal liability to NHP or its stockholders for
money damages to the maximum extent permitted by Maryland law.
NHP. Section 102(b)(7) of the DGCL allows a Delaware corporation to limit
or eliminate the personal liability of directors to a corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director
subject to certain limitations. The NHP Charter provides for the limitation of
liability as permitted by Section 102(b)(7).
CLASSIFIED BOARD OF DIRECTORS
AIMCO. The MGCL permits, but does not require, a classified board of
directors. The AIMCO Charter provides for classification of directors, but the
AIMCO Bylaws provide that directors are elected for one-year terms by the
stockholders at their annual meeting. Consequently, AIMCO does not currently
have a classified board of directors. The AIMCO Charter and Bylaws provide that
AIMCO shall have at least three and not more than nine directors, which numbers
may be amended in accordance with the AIMCO Bylaws, but shall not be less than
three. Classification of directors has the effect of making it more difficult
for stockholders to change the composition of a board of directors. More than
one annual meeting of stockholders will generally be required to effect a change
in the majority of a classified board. Such a delay may help ensure that
incumbent directors, if confronted by a holder attempting to force a proxy
contest, a tender or exchange offer or other extraordinary corporate
transaction, would have sufficient time to review the proposal as well as any
available alternatives to the proposal and to act in what they believe to be the
best interests of the stockholders. On the other hand, the classification of
directors may delay, defer or prevent a takeover attempt that a stockholder
might consider in its best interest.
NHP. The DGCL permits, but does not require, a classified board of
directors. The NHP Board is not divided into classes. The NHP Bylaws provide
that the NHP Board shall consist of seven members, each holding office for a
term that expires (i) at the annual meeting of stockholders next following his
or her election provided that his or her successor is duly elected and qualified
or (ii) at his or her earlier death, resignation or removal.
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CUMULATIVE VOTING FOR DIRECTORS
Neither AIMCO nor NHP uses cumulative voting in the election of directors.
REMOVAL OF DIRECTORS
AIMCO. Under the MGCL, except as otherwise provided in a corporation's
charter, the stockholders generally may remove any director, with or without
cause, by the vote of a majority of all the votes entitled to be cast in the
election of the directors. The AIMCO Charter provides that a director may be
removed only for cause, and by the vote of two-thirds of all the votes entitled
to be cast in the election of the directors.
NHP. Under the DGCL and the NHP Bylaws, the affirmative vote of a majority
of the shares entitled to vote at the election of directors is required to
remove directors, with or without cause.
NEWLY CREATED DIRECTORSHIPS AND VACANCIES
AIMCO. Consistent with the MGCL, the AIMCO Charter provides that a majority
of the remaining directors, even if less than a quorum or, if applicable, a sole
remaining director, may appoint a director to fill a vacancy which results from
any cause except an increase in the number of directors, and a majority of the
entire board may fill a vacancy which results from an increase in the number of
directors. Any director elected to fill a vacancy shall serve until the next
annual meeting of stockholders, upon which a successor director shall be elected
to serve the remaining term, if any.
NHP. If the position of any director of NHP is or becomes vacant between
annual meetings, such vacancy may be filled by a majority of the remaining
directors or by the stockholders.
SPECIAL MEETINGS
AIMCO. The MGCL provides that a special meeting of stockholders may be
called by the President or a majority of the AIMCO Board. The AIMCO Bylaws
further provide that the Chairman or Vice Chairman may call a special meeting of
stockholders. In addition, the MGCL provides that the Secretary shall call a
special meeting of stockholders on the written request of stockholders entitled
to cast at least 25% of all the votes entitled to be cast at the meeting.
NHP. A special meeting of stockholders of NHP may be called by the
President and shall be called by the President or Secretary at the request in
writing of the NHP Board.
INSPECTION RIGHTS
AIMCO. Under the MGCL any stockholder has the right to inspect and copy
bylaws, minutes of stockholder proceedings, annual statements of affairs, voting
trust agreements on file at the principal corporate office and statements
showing all stock and securities issued by the corporation during a specified
period of not more than twelve months before the date of the request. In
addition, one or more persons who together are and for the last six months have
been stockholders of record of at least 5% of the outstanding stock of any class
may inspect and copy the corporation's books of account and stock ledger and may
request a statement of the corporation's affairs or a list of the corporation's
stockholders, which must be prepared by the corporation and made available
within 20 days of such request.
NHP. Under the DGCL, any stockholder, following a proper written request,
has the right to inspect the corporation's books and records, including the
stockholder list, during normal business hours for a proper purpose.
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DIVIDENDS AND DISTRIBUTIONS
AIMCO. Under the MGCL, a board of directors may authorize a corporation to
make distributions to its stockholders, subject to any restrictions in the
corporation's charter and except if, after giving effect to the distribution,
the corporation would not be able to pay its indebtedness as the indebtedness
becomes due in the usual course of business or the corporation's total assets
would be less than the sum of its total liabilities plus, unless the charter
permits otherwise, the amount needed, if the corporation were dissolved at the
time of the distribution, to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights on dissolution are superior to those
receiving the distribution.
NHP. The DGCL provides that, subject to any restrictions in a corporation's
certificate of incorporation, dividends may be declared out of a corporation's
surplus or, if there is no surplus, out of its net profits for the fiscal year
in which the dividend is declared and/or the preceding fiscal year. However, if
the corporation's capital (generally defined in the DGCL as the sum of the
aggregate par value of all shares of the corporation's capital stock, where all
such shares have a par value and the board of directors has not established a
higher level of capital) has been diminished to an amount less than the
aggregate amount of the capital represented by the issued and outstanding stock
of all classes having a preference upon the distribution of assets, dividends
may not be declared and paid out of such net profits until the deficiency in
such capital has been repaired.
RIGHTS AGREEMENT
Neither AIMCO nor NHP has adopted a stockholder rights or similar plan.
LEGAL MATTERS
Certain legal matters relating to the Merger will be passed upon for AIMCO
by Skadden, Arps, Slate, Meagher & Flom LLP, Los Angeles, California, and for
NHP by Wilmer, Cutler & Pickering, Washington, D.C. The validity of the AIMCO
Common Stock offered hereby will be passed on for AIMCO by Piper & Marbury
L.L.P., Baltimore, Maryland. Skadden, Arps, Slate, Meagher & Flom LLP will rely
on Piper & Marbury L.L.P. as to certain matters of Maryland law.
EXPERTS
The consolidated financial statements of AIMCO and the combined financial
statements of the AIMCO Predecessors appearing in AIMCO's Annual Report on Form
10-K for the year ended December 31, 1996 have been audited by Ernst & Young
LLP, independent auditors, as set forth in their reports thereon included
therein and incorporated herein by reference. Such consolidated financial
statements and combined financial statements are incorporated herein by
reference in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.
This Historical Summary of Gross Income and Direct Operating Expenses of
Morton Towers for the year ended December 31, 1996 appearing in AIMCO's Current
Report on Form 8-K, dated September 19, 1997, has been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such Historical Summary is incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
The Historical Summary of Gross Income and Certain Expenses of The Bay Club
at Aventura for the year ended December 31, 1996 appearing in Amendment No. 1 to
AIMCO's Current Report on Form 8-K, dated June 3, 1997, has been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such Historical Summary
is incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
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The Historical Summary of Gross Income and Direct Operating Expenses of
Villa Ladera Apartments for the year ended December 31, 1995 appearing in
AIMCO's Current Report on Form 8-K, dated December 19, 1996, has been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such Historical Summary
is incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements of NHP for the years ended December
31, 1996, 1995 and 1994 included in Amendment No. 3 to AIMCO's Current Report on
Form 8-K, dated April 16, 1997, have been audited by Arthur Andersen LLP,
independent public accountants, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.
As noted in their report, Arthur Andersen LLP did not audit the 1994
financial statements of certain real estate partnerships whose operating results
are included in "income (loss) from discontinued real estate operations, net of
income taxes" in the 1994 consolidated financial statements of NHP. The
financial statements of these real estate partnerships were audited by other
auditors, whose reports are incorporated herein by reference to Amendments No. 1
and 2 to AIMCO's Current Report on Form 8-K, dated April 16, 1997, and Arthur
Andersen LLP's opinion, insofar as it relates to the amounts included in the
consolidated financial statements for these real estate partnerships, is based
solely on the reports of those auditors included therein and incorporated herein
by reference. The auditors on whose reports Arthur Andersen LLP relied are:
Anders, Minkler & Diehl LLP; Dauby O'Connor & Zaleski, LLC; Deloitte & Touche
LLP; Edwards Leap & Sauer; George A. Hieronymous & Company, LLC; Goldenberg
Rosenthal Friedlander, LLP; Hansen, Hunter & Kibbee, P.C.; J.H. Cohn LLP; J.A.
Plumer & Co., P.A.; Marks Shron & Company, LLP; Reznick Fedder & Silverman; and
Russell Thompson Butler & Houston. Such financial statements are incorporated
herein by reference in reliance upon the respective reports of such firms given
upon their authority as experts in accounting and auditing. All of the foregoing
firms are independent auditors.
The combined financial statements of NHP Real Estate Companies (as defined
in Note 1 of such financial statements) for the years ended December 31, 1996,
1995 and 1994 included in Amendment No. 5 to AIMCO's Current Report on Form 8-K
dated June 3, 1997, have been audited by Arthur Andersen LLP, independent public
accountants, as set forth in their report thereon included therein and
incorporated herein by reference. Such combined financial statements are
incorporated herein by reference in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
As noted in their report, Arthur Andersen LLP did not audit the 1996, 1995
and 1994 financial statements of certain real estate partnerships accounted for
under the equity method by the NHP Real Estate Companies. The financial
statements of these real estate partnerships were audited by other auditors,
whose reports are filed as exhibits to Amendments No. 1 and 3 to AIMCO's Current
Report on Form 8-K, dated June 3, 1997, and Arthur Andersen LLP's opinion,
insofar as it relates to the amounts included in the combined financial
statements for these real estate partnerships, is based solely on the reports of
those auditors included therein and incorporated herein by reference. The
auditors on whose reports Arthur Andersen LLP relied are: Anders, Minkler &
Diehl LLP; Dauby O'Connor & Zaleski, LLC; Deloitte & Touche LLP; Edwards Leap &
Sauer; Fishbein & Company, P.C.; Freeman and Vessillo; Friduss, Lukee, Schiff &
Co., PC; George A. Heironymous & Company, LLC; Goldenberg Rosenthal Friedlander,
LLP; Hansen, Hunter & Kibbee, P.C.; J.H. Cohn LLP; J.A. Plumer & Co., P.A.;
Prague & Company, P.C.; Robert Ercolini & Company; Marks Shron & Company, LLP;
Reznick Fedder & Silverman; Russell Thompson Butler & Houston; Sciarabba Walker
& Co., LLP; Wallace Sanders & Company; Warady and Davis; Ziner and Company, PC;
and Zinner & Co. Such financial statements are incorporated herein by reference
in reliance upon the respective reports of such firms given upon their authority
as experts in accounting and auditing. All of the foregoing firms are
independent auditors.
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The financial statements of NHP Southwest Partners, LP for the year ended
December 31, 1996 and for the period from January 20, 1995 through December 31,
1995 included in Amendment No. 5 to AIMCO's Current Report on Form 8-K, dated
June 3, 1997, have been audited by Arthur Andersen LLP, independent public
accountants, as set forth in their report thereon included therein and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such reports given upon the authority of
such firm as experts in accounting and auditing.
The combined financial statements of NHP New LP Entities (as defined in Note
1 of such financial statements) for the year ended December 31, 1996 and for the
period from January 20, 1995 through December 31, 1995 included in Amendment No.
1 to AIMCO's Current Report on Form 8-K, dated June 3, 1997, have been audited
by Arthur Andersen LLP, independent public accountants, as set forth in their
report thereon included therein and incorporated herein by reference. Such
combined financial statements are incorporated herein by reference in reliance
upon such reports given upon the authority of such firm as experts in accounting
and auditing.
The combined financial statements of NHP Borrower Entities (as defined in
Note 1 of such financial statements) for the year ended December 31, 1996 and
for the period from January 20, 1995 through December 31, 1995 included in
Amendment No. 1 to AIMCO's Current Report on Form 8-K, dated June 3, 1997, have
been audited by Arthur Andersen LLP, independent public accountants, as set
forth in their report thereon included therein and incorporated herein by
reference. Such combined financial statements are incorporated herein by
reference in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.
The Combined Statement of Revenues and Certain Expenses of the Thirty-five
Acquisition Properties (as defined in Note 1 of such financial statements (which
represents the Winthrop Portfolio)) for the year ended December 31, 1996,
included in AIMCO's Current Report on Form 8-K, dated October 15, 1997, have
been audited by Deloitte & Touche LLP, independent public accountants, as set
forth in their report thereon included therein and incorporated herein by
reference. Such combined financial statements are incorporated herein by
reference in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.
STOCKHOLDER PROPOSALS
AIMCO
Any proposals of AIMCO stockholders intended to be presented at AIMCO's 1998
Annual Meeting must have been received by AIMCO for inclusion in the proxy
statement and form of proxy relating to the meeting not later than December 1,
1997. If the date of such annual meeting is advanced or delayed, AIMCO will
comply with any applicable provision concerning submission of stockholder
proposals under Regulation 14A under the Exchange Act.
NHP
In anticipation of completion of the Merger, NHP has not set a date for its
annual meeting of stockholders for 1997. If the Merger is not completed prior to
December 22, 1997, NHP will set a date for an annual meeting at that time. Any
proposals of NHP stockholders intended to be presented at NHP's 1997 Annual
Meeting must have been received by NHP for inclusion in the proxy statement and
form of proxy relating to the meeting not later than March 14, 1997. If the date
of such annual meeting is advanced or delayed, NHP will comply with any
applicable provision concerning submission of stockholder proposals under
Regulation 14A under the Exchange Act.
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APPENDIX I
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
DATED AS OF APRIL 21, 1997 AND AMENDED AS OF OCTOBER 14, 1997
BY AND AMONG
APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
AIMCO/NHP ACQUISITION CORP.
AND
NHP INCORPORATED
<PAGE>
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions............................................................................. I-1
ARTICLE II
THE MERGER
SECTION 2.1 The Merger.............................................................................. I-6
SECTION 2.2 Effective Time of the Merger............................................................ I-6
SECTION 2.3 Closing................................................................................. I-7
SECTION 2.4 Effects of the Merger................................................................... I-7
SECTION 2.5 Certificate of Incorporation and By-Laws................................................ I-7
SECTION 2.6 Directors............................................................................... I-7
SECTION 2.7 Officers................................................................................ I-7
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1 Conversion of Capital Stock of Merger Sub............................................... I-7
SECTION 3.2 Conversion of Capital Stock of NHP...................................................... I-7
SECTION 3.3 NHP Common Stock Elections; Exchange of Certificates.................................... I-8
SECTION 3.4 AIMCO Ownership Limit................................................................... I-10
SECTION 3.5 Dividends, Fractional Shares, Etc....................................................... I-10
SECTION 3.6 NHP Stock Options....................................................................... I-11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NHP
SECTION 4.1 Organization and Qualifications; Subsidiaries........................................... I-13
SECTION 4.2 Certificate of Incorporation and Bylaws................................................. I-13
SECTION 4.3 Capitalization.......................................................................... I-13
SECTION 4.4 Authority Relative to This Agreement.................................................... I-14
SECTION 4.5 No Conflict; Required Filings and Consents; Certain Contracts........................... I-14
SECTION 4.6 Compliance.............................................................................. I-15
SECTION 4.7 SEC Reports and Financial Statements.................................................... I-15
SECTION 4.8 Absence of Certain Changes or Events.................................................... I-15
SECTION 4.9 Litigation.............................................................................. I-16
SECTION 4.10 Registration Statements and Proxy Statement/Prospectus.................................. I-16
SECTION 4.11 Employee Benefit Plans.................................................................. I-17
SECTION 4.12 Brokers................................................................................. I-17
SECTION 4.13 Taxes................................................................................... I-17
SECTION 4.14 Opinion of Financial Advisor............................................................ I-18
SECTION 4.15 Reliance................................................................................ I-18
SECTION 4.16 Management Arrangements................................................................. I-18
SECTION 4.17 Disclosure.............................................................................. I-18
</TABLE>
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AIMCO
AND MERGER SUB
<S> <C> <C>
SECTION 5.1 Organization and Qualifications; Subsidiaries........................................... I-18
SECTION 5.2 Charter and Bylaws...................................................................... I-19
SECTION 5.3 Capitalization.......................................................................... I-19
SECTION 5.4 Authority Relative to This Agreement.................................................... I-19
SECTION 5.5 No Conflict; Required Filings and Consents.............................................. I-20
SECTION 5.6 Compliance.............................................................................. I-20
SECTION 5.7 SEC Reports and Financial Statements.................................................... I-20
SECTION 5.8 Absence of Certain Changes or Events.................................................... I-21
SECTION 5.9 Litigation.............................................................................. I-21
SECTION 5.10 Registration Statements and Proxy Statement/Prospectus.................................. I-21
SECTION 5.11 Employee Benefit Plans.................................................................. I-22
SECTION 5.12 Brokers................................................................................. I-22
SECTION 5.13 Taxes................................................................................... I-23
SECTION 5.14 REIT Status............................................................................. I-23
SECTION 5.15 Reliance................................................................................ I-23
SECTION 5.16 Stock Purchase Agreement................................................................ I-23
SECTION 5.17 Financial Capability.................................................................... I-23
SECTION 5.18 Qualified Purchaser..................................................................... I-23
SECTION 5.19 Disclosure.............................................................................. I-23
ARTICLE VI
COVENANTS
SECTION 6.1 Notification of Certain Matters......................................................... I-24
SECTION 6.2 Further Action, Reasonable Efforts; Consents and Approvals.............................. I-24
SECTION 6.3 Conduct of Business of NHP Pending the Closing.......................................... I-24
SECTION 6.4 Conduct of Business of AIMCO Pending the Closing........................................ I-25
SECTION 6.5 Access to Information................................................................... I-25
SECTION 6.6 No Solicitation......................................................................... I-25
SECTION 6.7 Stockholder Meetings.................................................................... I-26
SECTION 6.8 Registration Statements and Joint Proxy Statement/Prospectus............................ I-27
SECTION 6.9 Letters of Accountants.................................................................. I-27
SECTION 6.10 Accelerations........................................................................... I-28
SECTION 6.11 Public Announcements.................................................................... I-28
SECTION 6.12 Blue Sky................................................................................ I-28
SECTION 6.13 NYSE Listing............................................................................ I-28
SECTION 6.14 Affiliates.............................................................................. I-28
SECTION 6.15 Indemnification with Respect to the Registration/Statement.............................. I-28
SECTION 6.16 Spin-Off................................................................................ I-30
SECTION 6.17 Consent to Certain Transactions......................................................... I-30
SECTION 6.18 Directors' and Officers' Indemnification and Insurance.................................. I-30
SECTION 6.19 NHP Employees........................................................................... I-31
SECTION 6.20 Directors............................................................................... I-31
SECTION 6.21 Financing............................................................................... I-31
SECTION 6.22 Separation Agreement.................................................................... I-31
</TABLE>
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ARTICLE VII
CONDITIONS TO THE MERGER
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SECTION 7.1 Conditions to Each Party's Obligation to Effect the Merger.............................. I-31
SECTION 7.2 Conditions to Obligations of NHP to Effect the Merger................................... I-32
SECTION 7.3 Conditions to Obligations of AIMCO and Merger Sub to Effect the Merger.................. I-33
ARTICLE VIII
TERMINATION, WAIVER, AMENDMENT AND CLOSING
SECTION 8.1 Termination............................................................................. I-33
SECTION 8.2 Effect of Termination................................................................... I-34
SECTION 8.3 Amendment or Supplement................................................................. I-35
SECTION 8.4 Extension of Time, Waiver, Etc.......................................................... I-35
SECTION 8.5 Termination Fee......................................................................... I-35
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Governing Law........................................................................... I-36
SECTION 9.2 Entire Agreement........................................................................ I-36
SECTION 9.3 Modification; Waiver.................................................................... I-36
SECTION 9.4 Notices................................................................................. I-36
SECTION 9.5 Expenses................................................................................ I-37
SECTION 9.6 Assignment.............................................................................. I-37
SECTION 9.7 Survival................................................................................ I-37
SECTION 9.8 Severability............................................................................ I-37
SECTION 9.9 Successors and Assigns; Third Parties................................................... I-37
SECTION 9.10 Counterparts............................................................................ I-37
SECTION 9.11 Interpretation; References.............................................................. I-37
SECTION 9.12 Jurisdiction............................................................................ I-38
SECTION 9.13 Exhibits and Schedules.................................................................. I-38
SECTION 9.14 Attorneys' Fees......................................................................... I-38
SECTION 9.15 Waiver of Jury Trial.................................................................... I-38
SECTION 9.16 Further Assurances...................................................................... I-38
SECTION 9.17 Negotiation of Agreement................................................................ I-38
</TABLE>
DISCLOSURE SCHEDULE
Schedule 4.5 -- Conflicts
Schedule 4.6 -- Compliance
Schedule 4.8 -- Absence of Certain Changes or Events
Schedule 4.9 -- Litigation
Schedule 4.16 -- Management Arrangements
Schedule 6.3 -- Conduct of Business of NHP Pending the Closing
Schedule 6.18 -- Current Directors and Officers Liability Insurance Policies
EXHIBITS
Exhibit A -- Rule 145 Affiliate Agreement
Exhibit B -- Registration Rights Agreement
Exhibit C-1 -- Form of Legal Opinion of Skadden, Arps, Slate, Meagher & Flom
LLP, Counsel to AIMCO and Merger Sub
Exhibit C-2 -- Form of Legal Opinion of Piper & Marbury L.L.P., Maryland Counsel
to AIMCO
Exhibit D-1 -- Form of Legal Opinion of Wilmer, Cutler & Pickering, Counsel to
NHP
Exhibit D-2 -- Form of Legal Opinion of Arent Fox Kintner Plotkin & Kahn,
Special Counsel to NHP
I-iii
<PAGE>
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of April 21,
1997 and amended as of October 14, 1997 (the "AGREEMENT"), by and among
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation ("AIMCO"),
AIMCO/NHP ACQUISITION CORP., a Delaware corporation and a wholly owned
subsidiary of AIMCO ("MERGER SUB"), and NHP INCORPORATED, a Delaware corporation
("NHP").
WHEREAS AIMCO, Merger Sub and NHP have entered into an Agreement and Plan of
Merger dated as of April 21, 1997 (the "Original Agreement"), providing for the
merger of NHP with and into Merger Sub;
WHEREAS, Section 8.3 of the Original Agreement provides that at any time
before approval of the Original Agreement by the stockholders of NHP or AIMCO
and prior to the Effective Time, the Original Agreement may be amended or
supplemented in writing by NHP, Merger Sub and AIMCO with respect to any of the
terms contained in the Original Agreement;
WHEREAS, AIMCO, Merger Sub and NHP wish to amend Section 7.1(f) of the
Original Agreement to extend the Outside Date to December 22, 1997;
WHEREAS, AIMCO, Merger Sub and NHP wish to amend Sections 3.3 and 3.5 to
revise the means by which shares of Mortgage Sub Stock (as defined herein) are
distributed in the Spin-Off (as defined herein);
WHEREAS, AIMCO, Merger Sub and NHP wish to amend Section 3.6(e) of the
Original Agreement to modify the time periods referred to therein;
WHEREAS, AIMCO, Merger Sub and NHP wish to amend and restate the Original
Agreement in its entirety; and
WHEREAS, the Boards of Directors of AIMCO, Merger Sub and NHP have
determined that the merger of Merger Sub with and into NHP on the terms set
forth herein (the "MERGER"), with NHP surviving as a wholly owned subsidiary of
AIMCO, is advisable and in the best interests of their respective corporations
and stockholders and have approved this Agreement.
NOW, THEREFORE, in consideration of the mutual representations, warranties
and agreements contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. The capitalized terms used in this Agreement and
not otherwise defined shall have the following meanings (unless the context
otherwise requires, such capitalized terms shall include the singular and plural
and the conjunctive and disjunctive forms of the terms defined):
"AIMCO COMMON STOCK" shall mean Class A Common Stock, par value $.01 per
share, of AIMCO.
"AIMCO CONFIDENTIALITY AGREEMENT" shall mean the letter agreement, dated
January 15, 1997, from AIMCO to NHP.
"AIMCO MEETING" shall have the meaning set forth in SECTION 6.7.
"AIMCO OPTION PLANS" shall have the meaning set forth in SECTION 5.3.
"AIMCO REGISTRATION STATEMENT" shall have the meaning set forth in SECTION
6.8.
"AIMCO SEC REPORTS" shall have the meaning set forth in SECTION 5.7.
"AIMCO STOCK ISSUANCE" shall have the meaning set forth in SECTION 5.4.
"AIMCO STOCKHOLDER APPROVAL" shall have the meaning set forth in SECTION
5.4.
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"ACQUISITION PROPOSAL" shall have the meaning set forth in SECTION 6.6.
"BENEFIT PLAN" shall mean, with respect to any Person, any plan, program,
arrangement, practice or contract which provides benefits or compensation to or
on behalf of employees, former employees, consultants, officers or directors of
such Person or any of such Person's subsidiaries, including, without limitation,
any employee pension benefit plan (whether or not insured), as defined in
Section 3(2) of ERISA, any employee welfare benefit plan (whether or not
insured), as defined in Section 3(1) of ERISA, any stock bonus, stock ownership,
stock option, stock purchase, stock appreciation right, phantom stock, or other
stock plan (whether qualified or non-qualified), and any pension, welfare,
termination, employment, severance, retirement, bonus, deferred compensation,
incentive compensation, insurance (whether life, accident and health, or other
and whether key man, group, workers compensation, or other), profit sharing,
disability, thrift, day care, legal services, leave of absence, layoff, or
supplemental or excess benefit plan, and any other benefit contract,
arrangement, or procedure having the effect of a plan, whether formal, informal,
written or oral, that is (or was at any time) sponsored maintained or
contributed to by such Person or by any trade or business (whether or not
incorporated) which, together with such Person, would be deemed a "single
employer" within the meaning of Section 4001 of ERISA, within the last six
years.
"BLUE SKY LAWS" shall have the meaning set forth in SECTION 4.5.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a day
on which banking institutions in New York City are not required to be open.
"CAPRICORN" shall mean Capricorn Investors, L.P., a Delaware limited
partnership.
"CERTIFICATE OF MERGER" shall have the meaning set forth in SECTION 2.2.
"CERTIFICATES" shall have the meaning set forth in SECTION 3.2.
"CLAIM" shall have the meaning set forth in SECTION 6.18.
"CLASS B COMMON STOCK" shall have the meaning set forth in SECTION 5.3.
"CLOSING" shall have the meaning set forth in SECTION 2.3.
"CLOSING DATE" shall have the meaning set forth in SECTION 2.3.
"COBRA" shall have the meaning set forth in SECTION 4.11.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONSENTS" shall have the meaning set forth in SECTION 6.2.
"CONTRACT" shall mean, with respect to any Person, any note, bond,
indenture, lease, license, permit, franchise, deed of trust, mortgage, loan
agreement or other document, instrument, obligation or agreement, oral or
written, to which such Person or any of its subsidiaries is a party or by which
any of them or their assets or properties is bound or affected.
"DEMETER" shall mean Demeter Holdings Corporation, a Massachusetts
corporation.
"DGCL" means the General Corporation Law of the State of Delaware.
"DISSENTING SHARES" shall have the meaning set forth in SECTION 3.2.
"DLJ" shall have the meaning set forth in SECTION 4.12.
"EFFECTIVE TIME" shall have the meaning set forth in SECTION 2.2.
"ELECTION DEADLINE" shall have the meaning set forth in SECTION 3.3.
"ELECTION FORM" shall have the meaning set forth in SECTION 3.3.
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"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended (including without limitation any successor act), and the rules and
regulations promulgated thereunder.
"EXCESS SHARES" shall have the meaning set forth in SECTION 3.4.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"EXCHANGE AGENT" shall have the meaning set forth in SECTION 3.3.
"EXCHANGE RATIO" shall have the meaning set forth in SECTION 3.2.
"FAIRNESS OPINION" shall have the meaning set forth in SECTION 4.14.
"GAAP" shall mean generally accepted accounting principles, consistently
applied throughout the specified period and in the immediately prior comparable
period.
"GOVERNMENTAL AUTHORITY" shall mean any government or any agency, bureau,
board, commission, court, judicial or quasi-judicial body, department,
authority, official, political subdivision, tribunal or other instrumentality of
any government, whether Federal, state or local, domestic or foreign.
"IRS" shall mean the United States Internal Revenue Service or any successor
agency.
"INDEMNIFIED OFFICERS/DIRECTORS" shall have the meaning set forth in SECTION
6.18.
"INDEMNIFIED PARTY" shall have the meaning set forth in SECTION 6.15.
"INDEMNIFYING PARTY" shall have the meaning set forth in SECTION 6.15.
"INDEPENDENT COMMITTEE" shall mean NHP's committee of independent directors,
comprised of Messrs. Bodman, Creighton and Cutler, established by resolutions
adopted by the NHP Board of Directors as of February 24, 1997.
"LAW" shall mean any law, statute, rule, regulation, ordinance, decree or
order of any Governmental Authority.
"LETTER AGREEMENT" shall mean that certain letter agreement, dated February
13, 1997, among AIMCO, Demeter, Phemus and Capricorn.
"LIEN" shall mean any mortgage, pledge, assessment, security interest,
lease, sublease, lien, adverse claim, levy, charge, option, right of others or
restriction (whether on voting, sale, transfer, disposition or otherwise) or
other encumbrance of any kind, whether imposed by agreement, understanding, law
or equity, or any conditional sale contract, title retention contract or other
contract to give or to refrain from giving any of the foregoing.
"LOSSES" shall have the meaning set forth in SECTION 6.18.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any Person, a material
adverse effect on (i) the validity or enforceability of this Agreement, (ii) the
ability of such Person to perform its obligations under this Agreement or (iii)
the business, assets, condition or results of operations of such Person and its
subsidiaries, taken as a whole.
"MATERIAL SUBSIDIARY" shall mean, with respect to any Person, a subsidiary
of such Person that (i) constitutes a "significant subsidiary" of such Person,
within the meaning of Rule 1-02 of Regulation S-X of the SEC, (ii) has a direct
or indirect ownership interest in any other subsidiary of such Person that is a
Material Subsidiary of such Person, or (iii) is otherwise material to the
business or operations of such Person and its subsidiaries, taken as a whole.
"MATURITY TIME" shall have the meaning set forth in the Rights Agreement.
"MAXIMUM PREMIUM" shall have the meaning set forth in SECTION 6.18.
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"MERGER CONSIDERATION" shall mean the Stock Consideration or the Mixed
Consideration.
"MERGER FILING" shall have the meaning set forth in SECTION 2.2.
"MIXED CONSIDERATION" shall have the meaning set forth in SECTION 3.2.
"MIXED ELECTION" shall have the meaning set forth in SECTION 3.2.
"MORTGAGE SUBSIDIARY" shall mean NHP Financial Services, Ltd., a Delaware
corporation.
"MORTGAGE SUB STOCK" shall mean common stock, par value $.01 per share, of
the Mortgage Subsidiary.
"MS REGISTRATION STATEMENT" shall have the meaning set forth in SECTION 6.8.
"NHP COMMON STOCK" shall mean the common stock, par value, $.01 per share,
of NHP.
"NHP CONFIDENTIALITY AGREEMENT" shall mean the letter agreement, dated
January 15, 1997, from NHP to AIMCO.
"NHP MEETING" shall have the meaning set forth in SECTION 6.7.
"NHP OPTION PLANS" shall have the meaning set forth in SECTION 4.3.
"NHP SEC REPORTS" shall have the meaning set forth in SECTION 4.7.
"NHP STOCK OPTIONS" shall have the meaning set forth in SECTION 4.3.
"NHP STOCKHOLDER APPROVAL" shall have the meaning set forth in SECTION 6.7.
"NHP'S FREE CASH FLOW" shall mean, for any period, the amount of NHP's
earnings before interest, taxes, depreciation and amortization for such period,
less (i) the amount of cash payments made or obligated to be made in respect of
taxes and interest during such period, and (ii) $500,000 for each month (or
ratable portion thereof) included in such period.
"NHP'S TRANSACTION COSTS" shall mean, for any period, all of NHP's
termination, severance and transaction costs arising during such period in
respect of the Spin-Off and the Merger.
"NYSE" means the New York Stock Exchange, Inc.
"NOTICES" shall have the meaning set forth in SECTION 9.4.
"OPTION" shall mean, with respect to any Person, any option, warrant, call,
right, subscription, convertible or exchangeable security or other right,
agreement, arrangement or commitment of any kind or character to which such
Person or any of its subsidiaries is a party relating to the issued or unissued
capital stock of such Person or any of its subsidiaries, or obligating such
Person or any of its subsidiaries to issue, transfer, grant or sell any shares
of capital stock of, or other equity interest in, or securities convertible into
or exchangeable for any capital stock or other equity interest in, such Person
or any of its subsidiaries.
"ORGANIZATIONAL DOCUMENTS" shall mean (i) with respect to a corporation, its
certificate or articles of incorporation and bylaws, (ii) with respect to any
limited liability company, its certificate of formation, articles of
organization, regulations, operating agreement and limited liability company
agreement, as applicable, (iii) with respect to any limited partnership, its
certificate of limited partnership and limited partnership agreement, (iv) with
respect to any general partnership, its partnership agreement, and (v) all other
similar organizational documents.
"OUTSIDE DATE" shall have the meaning set forth in SECTION 7.1.
"PERSON" shall mean any natural person, corporation, general partnership,
limited partnership, limited liability company, limited liability partnership,
proprietorship, trust, union, association, court, tribunal, agency, government,
department, commission, self-regulatory organization, arbitrator, board, bureau,
instrumentality or other entity, enterprise, authority or business organization.
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"PHEMUS" shall mean Phemus Corporation, a Massachusetts corporation.
"PREFERRED STOCK" shall have the meaning set forth in SECTION 5.3.
"PROXY STATEMENT/PROSPECTUS" shall have the meaning set forth in SECTION
6.8.
"REGISTRATION RIGHTS AGREEMENT" shall have the meaning set forth in SECTION
6.14.
"REAL ESTATE ACQUISITION AGREEMENT" shall mean the Real Estate Acquisition
Agreement to be entered into by and among AIMCO, AIMCO Properties, L.P.,
Demeter, Phemus, Capricorn and/or certain related entities on terms
substantially in accordance with the Letter Agreement, provided that AIMCO and
its affiliates may acquire, directly or indirectly, all of the real property
interests identified in the Letter Agreement for consideration substantially
equivalent to the values attributed to such interests in the Letter Agreement.
"REIT STATUS" shall mean, with respect to any Person, (a) the qualification
of such Person as a real estate investment trust under Sections 856 through 860
of the Code, (b) the applicability to such Person and its shareholders of the
method of taxation provided for in Sections 857 ET SEQ. of the Code, and (c) the
qualification and taxation of such Person as a real estate investment trust
under analogous provisions of state and local law in each state and jurisdiction
in which such Person owns property, operates or conducts business.
"REPRESENTATIVES" means, with respect to any Person, the officers,
directors, employees, auditors and other agents and representatives of such
Person.
"RIGHT" shall have the meaning set forth in the Rights Agreement.
"RIGHT OF FIRST REFUSAL AGREEMENT" shall mean the Right of First Refusal
Agreement, dated as of August 18, 1995, by and among NHP, NHP Partners, Inc.,
The National Housing Partnership, Demeter Holdings Corporation, NHP Partners
Limited Partnership, NHP Partners Two Limited Partnership, NHP Partners LLC, NHP
Partners Two LLC, Capricorn Investors, L.P., and J. Roderick Heller, III.
"RIGHTS AGENT" shall mean the BankBoston, N.A. (formerly known as the First
National Bank of Boston) as Rights Agent under the Rights Agreement.
"RIGHTS AGREEMENT" shall mean the Rights Agreement, dated as of April 21,
1997, by and between NHP, the Mortgage Subsidiary and The First National Bank of
Boston, as Rights Agent.
"RIGHTS CONSIDERATION" shall have the meaning set forth in SECTION 3.2.
"RULE 145 AFFILIATE AGREEMENT" shall have the meaning set forth in SECTION
6.14.
"RULE 145 AFFILIATES" shall have the meaning set forth in SECTION 6.14.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SENIOR PREFERRED STOCK" shall have the meaning set forth in SECTION 5.3.
"SPIN-OFF" shall mean the distribution of Rights and Mortgage Sub Stock
pursuant to the Rights Agreement.
"STOCK AND ASSET TRANSFER RESTRICTIONS AGREEMENT" shall mean the Stock and
Asset Transfer Restrictions Agreement, dated as of December 10, 1993, by and
among Oxford Holding Corporation, Oxford Management Company, Inc., Oxford
Retirement Services, Inc., Oxford Realty Services Corp., Oxford Development
Corporation, NHP-HG, Inc., NHP, Inc., NHP Property Management, Inc., Oxford
Asset Management Corporation and Leo E. Zickler.
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"STOCK PURCHASE AGREEMENT" shall mean the Stock Purchase Agreement, dated as
of April 16, 1997, by and among AIMCO, Demeter, and Capricorn.
"SUBSIDIARY" shall mean, with respect to any Person, (i) any corporation
with respect to which such Person, directly or indirectly through one or more
subsidiaries, (a) owns more than 50% of the outstanding shares of capital stock
having generally the right to vote in the election of directors or (b) has the
power, under ordinary circumstances, to elect, or to direct the election of, a
majority of the board of directors of such corporation, (ii) any partnership
with respect to which (a) such Person or a subsidiary of such Person is a
general partner, (b) such Person and its subsidiaries together own more than 50%
of the interests therein, or (c) such Person and its subsidiaries have the right
to appoint or elect or direct the appointment or election of a majority of the
directors or other Person or body responsible for the governance or management
thereof, (iii) any limited liability company with respect to which (a) such
Person or a subsidiary of such Person is the manager or managing member, (b)
such Person and its subsidiaries together own more than 50% of the interests
therein, or (c) such Person and its subsidiaries have the right to appoint or
elect or direct the appointment or election of a majority of the directors or
other Person or body responsible for the governance or management thereof, or
(iv) any other entity in which such Person has, and/or one or more of its
subsidiaries have, directly or indirectly, (a) at least a 50% ownership interest
or (b) the power to appoint or elect or direct the appointment or election of a
majority of the directors or other Person or body responsible for the governance
or management thereof.
"SUIT" shall have the meaning set forth in SECTION 9.12.
"SURVIVING CORPORATION" shall have the meaning set forth in SECTION 2.1.
"TAX" or "TAXES" shall mean all Federal, state, local and foreign taxes and
other assessments and governmental charges of a similar nature (whether imposed
directly or through withholdings), including any interest, penalties and
additions to Tax applicable thereto.
"TAX RETURNS" shall mean all Federal, state, local and foreign returns,
declarations, statements, reports, schedules, forms and information returns
relating to Taxes, and all amendments thereto.
"TRANSACTIONS" means the transactions contemplated by this Agreement in
ARTICLE II.
"TRIGGERING EVENT" shall have the meaning set forth in SECTION 6.10.
"WARN ACT" shall have the meaning set forth in SECTION 6.19.
ARTICLE II
THE MERGER
SECTION 2.1 THE MERGER. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time, in accordance with the DGCL, Merger Sub
shall be merged with and into NHP in accordance with this Agreement and the
separate existence of Merger Sub shall cease. NHP shall be the surviving
corporation in the Merger (hereinafter sometimes referred to as the "SURVIVING
CORPORATION").
SECTION 2.2 EFFECTIVE TIME OF THE MERGER. Upon the terms and subject to
the conditions hereof, a certificate of merger (the "CERTIFICATE OF MERGER")
shall be duly prepared, executed and acknowledged by the Surviving Corporation
and thereafter delivered to the Secretary of State of the State of Delaware, for
filing on the Closing Date (as defined in SECTION 2.3). The Merger shall become
effective as of the date and at such time as the Certificate of Merger pursuant
to Section 251 of the DGCL and any other documents necessary to effect the
Merger in accordance with the DGCL are duly filed (the "MERGER FILING") with the
Secretary of State of the State of Delaware or at such subsequent date or time
as shall be agreed by AIMCO and NHP and specified in the Certificate of Merger
(the time the Merger becomes effective pursuant to the DGCL being referred to
herein as the "EFFECTIVE TIME").
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SECTION 2.3 CLOSING. Subject to the satisfaction or waiver of all of the
conditions to closing contained in ARTICLE VII, the closing of the Merger (the
"CLOSING") will take place at 10:00 a.m., New York City time, on a date to be
specified by the parties, which shall be no later than the fifth Business Day
(as defined below) after the satisfaction or waiver of the conditions to Closing
contained in ARTICLE VII, at the offices of Skadden, Arps, Slate, Meagher & Flom
LLP, 919 Third Avenue, New York, New York 10022, unless another date, time or
place is agreed to in writing by the parties hereto. The date and time at which
the Closing occurs is referred to herein as the "CLOSING DATE."
SECTION 2.4 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the properties, rights, privileges, powers
and franchises of NHP and Merger Sub shall vest in the Surviving Corporation,
and all debts, liabilities and duties of NHP and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
SECTION 2.5 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Certificate of
Incorporation of Merger Sub in effect immediately prior to the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation until
amended in accordance with the terms thereof and with applicable law. The
By-Laws of Merger Sub in effect immediately prior to the Effective Time shall be
the By-Laws of the Surviving Corporation until amended in accordance with the
terms thereof and with applicable law.
SECTION 2.6 DIRECTORS. The directors of Merger Sub immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation,
each to hold office from the Effective Time in accordance with the Certificate
of Incorporation and By-Laws of the Surviving Corporation and until his or her
successor is duly elected and qualified.
SECTION 2.7 OFFICERS. The officers of NHP immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation, each
to hold office from the Effective Time in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation and until his or her
successor is duly appointed and qualified.
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1 CONVERSION OF CAPITAL STOCK OF MERGER SUB. At the Effective
Time, each issued and outstanding share of common stock, par value $.01 per
share, of Merger Sub shall be converted into and become one fully paid and
nonassessable share of common stock, par value $.01 per share, of the Surviving
Corporation.
SECTION 3.2 CONVERSION OF CAPITAL STOCK OF NHP.
(a) Except as otherwise provided in SECTION 3.4, and subject to SECTIONS
3.2(C)and (D), at the Effective Time, each issued and outstanding share of NHP
Common Stock shall be converted into one of the following:
(i) for each such share of NHP Common Stock with respect to which an
election to receive a combination of AIMCO Common Stock and cash has been
effectively made and not revoked or lost, pursuant to SECTION 3.3 (the
"MIXED ELECTION"), the right to receive 0.37383 shares of AIMCO Common Stock
and an amount in cash equal to $10.00 (together, the "MIXED CONSIDERATION");
or
(ii) for each such share of NHP Common Stock (other than a share with
respect to which a Mixed Election was effectively made and not revoked or
lost), the right to receive 0.74766 (the "EXCHANGE RATIO") shares of AIMCO
Common Stock (the "STOCK CONSIDERATION").
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As a result of the Merger and without any action on the part of the
holders thereof, at the Effective Time, all shares of NHP Common Stock shall
no longer be outstanding and shall automatically be cancelled and retired
and shall cease to exist, and each holder of shares of NHP Common Stock
shall thereafter cease to have any rights with respect to such shares of NHP
Common Stock, except the right to receive, without interest, the Merger
Consideration and cash for fractional shares of AIMCO Common Stock in
accordance with SECTION 3.5 upon the surrender of a certificate that,
immediately prior to the Effective Time, represented an outstanding share or
shares of NHP Common Stock and a related Right or Rights (a "CERTIFICATE").
(b) At the Effective Time, each issued and outstanding Right shall, in
accordance with its terms, be converted into the right to receive one-third of a
share of Mortgage Sub Stock (the "RIGHTS CONSIDERATION"). As a result of the
Merger and without any action on the part of the holders thereof, at the
Effective Time, all Rights shall, in accordance with their terms, no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of Rights shall thereafter cease to have any rights with
respect thereto, except the right to receive, without interest, the Rights
Consideration and cash for fractional Rights in accordance with SECTION 3.5 upon
the surrender of a Certificate.
(c) Notwithstanding anything contained in this SECTION 3.2 to the contrary,
each share of NHP Common Stock issued and held in NHP's treasury immediately
prior to the Effective Time, and each share of NHP Common Stock owned by AIMCO
or Merger Sub immediately prior to the Effective Time, shall, by virtue of the
Merger, cease to be outstanding and shall be cancelled and retired and shall
cease to exist without payment of any consideration therefor.
(d) Notwithstanding anything in this SECTION 3.2 to the contrary, shares of
NHP Common Stock which are issued and outstanding immediately prior to the
Effective Time and which are held by a Person who has not voted such shares in
favor of the Merger and who has properly exercised his rights of appraisal for
such shares in the manner provided by the DGCL (the "DISSENTING SHARES") shall
not be converted into or be exchangeable for the right to receive the Merger
Consideration, unless and until such holder shall have failed to perfect or
shall have effectively withdrawn or lost his right to appraisal and payment, as
the case may be. If such holder shall have so failed to perfect or shall have
effectively withdrawn or lost such right, his shares shall thereupon be deemed
to have been converted into and to have become exchangeable for, at the
Effective Time, the right to receive the Merger Consideration, without any
interest thereon. NHP shall give AIMCO prompt notice of any Dissenting Shares
(and shall also give AIMCO prompt notice of any withdrawals of such demands for
appraisal rights) and AIMCO shall have the right to direct all negotiations and
proceedings with respect to any such demands. NHP shall not, except with the
prior written consent of AIMCO, voluntarily make any payment with respect to, or
settle or offer to settle, any such demand for appraisal rights.
SECTION 3.3 NHP COMMON STOCK ELECTIONS; EXCHANGE OF CERTIFICATES.
(a) Each Person who, at the Effective Time, is a record holder of shares of
NHP Common Stock (other than holders of shares of NHP Common Stock to be
cancelled as set forth in SECTION 3.2(C) or Dissenting Shares) shall have the
right to submit an Election Form specifying the number of shares of NHP Common
Stock that such Person desires to have converted into the right to receive AIMCO
Common Stock and cash pursuant to the Mixed Election, and the number of shares
of NHP Common Stock that such person desires to have converted into the right to
receive solely AIMCO Common Stock (a "STOCK ELECTION").
(b) Promptly after the Effective Time, AIMCO shall deposit (or cause to be
deposited) with a bank or trust company to be designated by AIMCO and reasonably
acceptable to NHP (the "EXCHANGE AGENT"), for the benefit of the holders of
shares of NHP Common Stock and Rights, for exchange in accordance with this
ARTICLE III, (i) cash in an amount sufficient to pay the aggregate cash portion
of the Merger Consideration and (ii) certificates representing the aggregate
number of shares of AIMCO Common Stock that may be issued in respect of shares
of NHP Common Stock in the Merger. AIMCO Common Stock
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into which NHP Common Stock shall be converted pursuant to the Merger shall be
deemed to have been issued at the Effective Time. Promptly after the Effective
Time, AIMCO shall cause the Surviving Corporation to deliver to the Rights Agent
under the Rights Agreement certificates representing the aggregate number of
shares of Mortgage Sub Stock that may be delivered in respect of Rights and
shall cause the Mortgage Subsidiary to deposit with the Rights Agent, for the
benefit of the holders of Rights, cash in an amount sufficient to pay the
aggregate amount of cash payable in lieu of fractional shares of Mortgage Sub
Stock pursuant to SECTION 3.5.
(c) As soon as reasonably practicable after the Effective Time, AIMCO shall
cause the Exchange Agent to mail to each holder of record of NHP Common Stock
and Rights immediately prior to the Effective Time (excluding Dissenting Shares)
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in such form and
have such other customary provisions as AIMCO may reasonably specify), (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration and Rights Consideration with respect to the shares
of NHP Common Stock and Rights formerly represented thereby, and (iii) a form
(an "ELECTION FORM") pursuant to which a holder of shares of NHP Common Stock
may make a Mixed Election or a Stock Election. As of the Election Deadline, all
holders of NHP Common Stock immediately prior to the Effective Time that have
not submitted to the Exchange Agent, or have properly revoked, a properly
completed Election Form, shall be deemed to have made a Stock Election.
(d) A Mixed Election or a Stock Election (other than a deemed Stock
Election) with respect to any shares of NHP Common Stock shall be effective only
if the Exchange Agent shall have received no later than 5:00 p.m., New York City
time (the "ELECTION DEADLINE"), on a date to be mutually agreed upon by NHP and
AIMCO (which date shall not be later than the twentieth Business Day after the
Effective Time), (i) an Election Form properly completed and executed (with the
signature or signatures thereof guaranteed to the extent required by the
Election Form) by the holder thereof, accompanied by (ii) either (x) the
Certificate or Certificates representing such shares of NHP Common Stock, in
such form and with such endorsements, stock powers and signature guarantees as
may be required by such Election Form, or (y) an appropriate guarantee of
delivery of such Certificate from a member of any registered national securities
exchange or of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company in the United States, as may be required by
such Election Form. Any holder of NHP Common Stock immediately prior to the
Effective Time who has made an election by submitting an Election Form to the
Exchange Agent may, at any time prior to the Election Deadline, change his
election by submitting a revised Election Form, properly completed and signed
that is received by the Exchange Agent prior to the Election Deadline. Any
holder of NHP Common Stock immediately prior to the Effective Time who has made
an election by submitting an Election Form to the Exchange Agent may revoke his
election and withdraw his Certificates deposited with the Exchange Agent by
written notice to the Exchange Agent received before the close of business on
the day prior to the Election Deadline.
(e) Upon surrender of a Certificate for cancellation to the Exchange Agent
or to such other agent or agents as may be appointed by AIMCO, together with the
Letter of Transmittal, duly executed, and such other documents as AIMCO or the
Exchange Agent shall reasonably request, the holder of such Certificate shall be
entitled to receive promptly after the Election Deadline in exchange therefor,
(i) a certified or bank cashier's check in an amount equal to the cash, if any,
which such holder has the right to receive pursuant to the provisions of this
ARTICLE III (including any cash in lieu of fractional shares of AIMCO Common
Stock pursuant to SECTION 3.5) and (ii) a certificate representing the number of
shares of AIMCO Common Stock which such holder has the right to receive pursuant
to the provisions of this ARTICLE III (in each case, less the amount of any
required withholding taxes), and the Certificate so surrendered shall forthwith
be cancelled. Until surrendered as contemplated by this SECTION 3.3(E), each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the
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Merger Consideration with respect to the shares of NHP Common Stock formerly
represented thereby and the Rights Consideration with respect to the Rights
formerly represented thereby.
(f) AIMCO shall have the right to make reasonable rules, not inconsistent
with the terms of this Agreement, governing the issuance and delivery of
certificates for shares of AIMCO Common Stock into which shares of NHP Common
Stock are converted in the Merger, the issuance and delivery of certificates for
shares of Mortgage Sub Stock into which Rights are converted in the Merger, and
the payment of cash for shares of NHP Common Stock converted into the right to
receive cash in the Merger.
SECTION 3.4 AIMCO OWNERSHIP LIMIT. Notwithstanding any other provision of
this Agreement to the contrary, AIMCO shall not be obligated to issue shares of
AIMCO Common Stock to any Person if such issuance would result in a violation of
the ownership limit (the "OWNERSHIP LIMIT") set forth in AIMCO's Organizational
Documents. In lieu of issuing any shares (the "EXCESS SHARES") of AIMCO Common
Stock that would result in any Person receiving a number of shares of AIMCO
Common Stock in excess of the Ownership Limit, AIMCO shall pay to such Person
cash in an amount equal to the number of such Excess Shares multiplied by
$26.75.
SECTION 3.5 DIVIDENDS, FRACTIONAL SHARES, ETC.
(a) Notwithstanding any other provisions of this Agreement, no dividends or
other distributions declared after the Effective Time on AIMCO Common Stock
shall be paid to the holder of any unsurrendered Certificates until such
Certificates are surrendered for exchange as provided in this ARTICLE III.
Subject to the effect of applicable laws, following the surrender of any such
Certificate, there shall be paid, without interest, to the Person in whose name
the certificates representing the shares of AIMCO Common Stock into which the
shares of NHP Common Stock formerly represented by such Certificate were
converted are registered, (i) at the time of such surrender, the amount of all
dividends and other distributions with a record date after the Effective Time
theretofore payable with respect to such whole shares of AIMCO Common Stock and
not paid, less the amount of any withholding taxes which may be required
thereon, and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole shares of AIMCO Common Stock, less the amount of any withholding
taxes which may be required thereon.
(b) No fractional shares of AIMCO Common Stock or Mortgage Sub Stock shall
be issued in the Merger. All fractional shares of AIMCO Common Stock or Mortgage
Sub Stock that a holder of shares of NHP Common Stock or Rights would otherwise
be entitled to receive as a result of the Merger (or in accordance with the
terms of the Rights) shall be aggregated and, if a fractional share results from
such aggregation, such holder shall be entitled to receive, in lieu thereof, an
amount in cash determined by multiplying (i) the fraction of a share of AIMCO
Common Stock or Mortgage Sub Stock to which such holder would otherwise have
been entitled by (ii) in the case of AIMCO Common Stock, $26.75 and, in the case
of Mortgage Sub Stock, $9.15. No interest will be paid or will accrue on any
cash paid or payable in lieu of any fractional shares of AIMCO Common Stock or
Mortgage Sub Stock.
(c) At and after the Effective Time, there shall be no further registration
of transfers of shares of NHP Common Stock or Rights. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they shall be
cancelled and exchanged for the consideration provided for, and in accordance
with the procedures set forth, in this ARTICLE III. Certificates surrendered for
exchange by any Person constituting an "affiliate" of NHP for purposes of Rule
145(c) under the Securities Act shall not be exchanged until AIMCO has received
a written Rule 145 Affiliate Agreement from such Person as provided in SECTION
6.14.
(d) If any portion of the Merger Consideration or Rights Consideration is to
be paid to a Person other than the registered holder of the shares of NHP Common
Stock and Rights represented by the Certificate or Certificates surrendered in
exchange therefor, it shall be a condition to such payment that
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the Certificate or Certificates so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the Person requesting such
payment shall pay to the Exchange Agent or Rights Agent, as appropriate, any
transfer or other taxes required as a result of such payment to a Person other
than the registered holder of such Certificates or establish to the satisfaction
of the Exchange Agent or Rights Agent, as appropriate, that such tax has been
paid or is not payable and, with respect to the Rights, such other conditions as
may be set forth in the Rights Agreement.
(e) Any portion of the Merger Consideration, Rights Consideration or cash
payable in lieu of fractional shares made available to the Exchange Agent or the
Rights Agent pursuant to this ARTICLE III that remains unclaimed by the former
holders of shares of NHP Common Stock or Rights one year after the Effective
Time shall be delivered (i) in the case of the Merger Consideration, to AIMCO,
and (ii) in the case of the Rights Consideration and cash payable in lieu of
fractional shares of Mortgage Sub Stock, to the Mortgage Subsidiary. Any such
holder who has not theretofore exchanged his Certificates for the Merger
Consideration and Rights Consideration in accordance with this ARTICLE III shall
thereafter look only (i) to AIMCO for payment of the applicable Merger
Consideration, cash in lieu of fractional shares and unpaid dividends and
distributions on the AIMCO Common Stock deliverable in respect thereof,
determined pursuant to this Agreement, in each case, without interest, and (ii)
to the Mortgage Subsidiary for payment of the applicable Rights Consideration,
cash in lieu of fractional shares and unpaid dividends and distributions on the
Mortgage Sub Stock deliverable in respect thereof, determined pursuant to this
Agreement and the Rights Agreement, in each case, without interest. None of
AIMCO, NHP or the Surviving Corporation shall be liable to any former holder of
shares of NHP Common Stock for any amount paid to a public official pursuant to
any applicable abandoned property, escheat or similar laws. Any amounts
remaining unclaimed by holders of shares of NHP Common Stock three years after
the Effective Time (or such earlier date immediately prior to such time as such
amounts would otherwise escheat to or become property of any governmental
entity) shall, to the extent permitted by applicable law, become the property of
AIMCO free and clear of any claims or interest of any person previously entitled
thereto.
(f) In the event that any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by AIMCO, the
posting by such Person of a bond in such reasonable amount as AIMCO may direct
as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the applicable Merger Consideration, cash in lieu of
fractional shares, and unpaid dividends and distributions on shares of AIMCO
Common Stock deliverable in respect thereof pursuant to this Agreement.
(g) If at any time during the period between the date of this Agreement and
the Effective Time, any change in the outstanding shares of capital stock of
AIMCO or the Mortgage Subsidiary shall occur, including by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, or any stock dividend thereon with a record date during
such period, the number of shares of AIMCO Common Stock constituting all or part
of the Merger Consideration or the number of shares of Mortgage Sub Stock
constituting all or part of the Rights Consideration, as the case may be, shall
be appropriately adjusted, and, in the case of the Rights Consideration, in
accordance with the terms of the Rights.
SECTION 3.6 NHP STOCK OPTIONS.
(a) Prior to the Effective Time, subject to the prior written approval of
AIMCO, in connection with the Spin-Off, NHP may issue to the holders of NHP
Stock Options then outstanding Options to purchase shares of Mortgage Sub Stock
and, in connection therewith, may reduce the exercise price with respect to the
NHP Stock Options. At the Effective Time, each outstanding NHP Stock Option
granted prior to the date of this Agreement shall immediately become fully
vested and exercisable, if not fully vested and exercisable at such time, and
all NHP Stock Options shall be assumed by AIMCO and adjusted in
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accordance with the terms thereof and this Agreement to be exercisable to
purchase shares of AIMCO Common Stock, as provided below. Following the
Effective Time, each NHP Stock Option shall continue to have, and shall be
subject to, the same terms and conditions set forth in the NHP Option Plan
pursuant to which such NHP Stock Option was issued, or any agreement pursuant to
which such NHP Stock Option was subject immediately prior to the Effective Time,
except as set forth in this SECTION 3.6 and except that (i) each such NHP Stock
Option shall be exercisable for that number of shares of AIMCO Common Stock
equal to the product of (x) the aggregate number of shares of NHP Common Stock
for which such NHP Stock Option was exercisable and (y) the Exchange Ratio,
rounded, in the case of any NHP Stock Options other than an "incentive stock
option" (within the meaning of section 422 of the Code), up, and, in the case of
any incentive stock option, down, to the nearest whole share, if necessary, and
(ii) the exercise price per share of such NHP Stock Option shall be equal to the
aggregate exercise price of such NHP Stock Option at the Effective Time divided
by the number of shares of AIMCO Common Stock for which such NHP Stock Option
shall be exercisable as determined in accordance with the preceding clause (i),
rounded up to the next highest cent, if necessary.
(b) As of the Effective Time, AIMCO will enter into an assumption agreement
with respect to each NHP Stock Option, which shall provide for AIMCO's
assumption of the obligations of NHP under the NHP Option Plan or other
agreement under which such NHP Stock Option was granted. Prior to the Effective
Time, NHP shall make such amendments, if any, to the NHP Option Plans as shall
be necessary to permit the assumption and adjustment referred to in this SECTION
3.6; provided, however, that such amendments shall be subject to approval by
AIMCO (which approval will not be unreasonably withheld).
(c) It is the intention of the parties that, to the extent that any NHP
Stock Option constituted an incentive stock option immediately prior to the
Effective Time, such option continue to qualify as an incentive stock option to
the maximum extent permitted by Section 422 of the Code, and that the assumption
of the NHP Stock Options provided by this SECTION 3.6 satisfy the conditions of
Section 424(a) of the Code. AIMCO shall comply with the terms of the NHP Option
Plans and ensure, to the extent required by, and subject to the provisions of,
such NHP Option Plans, that the NHP Stock Options that qualified as incentive
stock options prior to the Effective Time continue to qualify as incentive stock
options after the Effective Time. As soon as practicable after the Effective
Time, AIMCO shall deliver to the participants in the NHP Option Plans notices
setting forth the number of shares and exercise price for such participant's
options.
(d) At or prior to the Effective Time, AIMCO shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of AIMCO Common
Stock for delivery upon exercise of NHP Stock Options under the NHP Option Plans
assumed in accordance with SECTION 3.6(B). AIMCO shall prepare and file, at its
own expense, a registration statement on Form S-8 to become effective as of the
Effective Time with respect to the shares of AIMCO Common Stock subject to NHP
Stock Options and shall use commercially reasonable efforts to maintain the
effectiveness of such registration statement (and maintain the current status of
the prospectus or prospectuses contained therein) for so long as such options
remain outstanding. With respect to those individuals who subsequent to the
Merger will be subject to the reporting requirements under Section 16(a) of the
Exchange Act, where applicable, AIMCO shall administer the NHP Option Plans
assumed pursuant to SECTION 3.6(B) in a manner that complies with Rule 16b-3
promulgated under the Exchange Act, to the extent the applicable NHP Option Plan
complied with such rule prior to the Merger.
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(e) AIMCO shall provide that, for the period beginning on the first Business
Day after the Election Deadline and ending 90 days after the Effective Time,
each holder of NHP Stock Options that are not "incentive stock options" (within
the meaning of Section 422 of the Code) may, in lieu of exercising any such NHP
Stock Options, elect to receive for each share of AIMCO Common Stock subject to
such option a cash amount equal to the excess of $26.75 over the per share
exercise price of such NHP Stock Option (as determined after giving effect to
Section 3.6(a)(ii). For the period beginning on the first Business Day after the
Election Deadline and ending 90 days after the Effective Time, AIMCO will take
all actions necessary to provide that each holder of NHP Stock Options that are
incentive stock options, at his or her election, may exercise his or her NHP
Stock Option and immediately sell the shares of AIMCO Common Stock received upon
such exercise, back to AIMCO for $26.75 per share in cash, such that the net
effect is that the option holder receives an amount in cash equal to the excess
of $26.75 over the per share exercise price of NHP Stock Options (as determined
after giving effect to Section 3.6(a)(ii).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NHP
NHP hereby represents and warrants to AIMCO and Merger Sub that:
SECTION 4.1 ORGANIZATION AND QUALIFICATIONS; SUBSIDIARIES. NHP and each
Material Subsidiary of NHP is a corporation, partnership or other legal entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has the requisite power
and authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a Material Adverse Effect on NHP. Each of NHP and its
Material Subsidiaries is duly qualified or licensed as a foreign corporation or
partnership to transact business, and is in good standing, in each jurisdiction
where the character of the properties owned, leased or operated by it or the
nature of its business makes such qualification or licensing necessary, except
for such failures to be so qualified or licensed and in good standing that would
not, individually or in the aggregate, have a Material Adverse Effect on NHP.
SECTION 4.2 CERTIFICATE OF INCORPORATION AND BYLAWS. Complete and correct
copies of the certificate of incorporation and bylaws of NHP, as amended to
date, have been delivered to AIMCO under cover of a letter dated April 4, 1997,
from NHP's General Counsel. Such Organizational Documents are in full force and
effect and have not been amended or modified in any respect. NHP is not in
violation of any provision of its Organizational Documents. No Material
Subsidiary of NHP is in violation of any provision of its Organizational
Documents, except for such violations that would not, individually or in the
aggregate, have a Material Adverse Effect on NHP.
SECTION 4.3 CAPITALIZATION. The authorized capital stock of NHP consists
of 25,000,000 shares of NHP Common Stock. As of March 7, 1997, (a) 12,652,439
shares of NHP Common Stock were issued and outstanding, all of which were
validly issued, fully paid and nonassessable; and (b)(i) 1,270,750 shares of NHP
Common Stock were reserved for issuance upon the exercise of outstanding stock
options granted pursuant to the 1990 Stock Option Plan of NHP Incorporated, the
1995 Incentive Stock Option Plan of NHP Incorporated, the stock option
agreement, dated as of May 1, 1996, between NHP and William R. Sullivan, and the
stock option agreement, dated as of August 18, 1995, between NHP and J. Roderick
Heller III (collectively, the "NHP OPTION PLANS"), and (ii) 398,250 shares of
NHP Common Stock were reserved for issuance pursuant to options available for
grant under the NHP Option Plans. Except as set forth above, as of March 7,
1997, no shares of capital stock or other voting securities of NHP were issued,
reserved for issuance or outstanding and, since such date, no shares of capital
stock or other voting securities or options in respect thereof have been issued
except upon the exercise of options (the "NHP STOCK OPTIONS") issued under the
NHP Option Plans outstanding on March 7, 1997. Except for the NHP
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Stock Options, there are not now, and at the Closing there will not be, any NHP
Options. All shares of NHP Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding contractual obligations of NHP or any of
its subsidiaries to repurchase, redeem or otherwise acquire any shares of NHP
Common Stock or any other shares of capital stock of NHP or any of its
subsidiaries, or make any material investment (in the form of a loan, capital
contribution or otherwise) in any subsidiary of NHP or any other Person, other
than a wholly-owned subsidiary of NHP. Each outstanding share of capital stock
of each Material Subsidiary of NHP is duly authorized, validly issued, fully
paid and nonassessable and each such share owned by NHP or any subsidiary of NHP
is owned free and clear of any Liens.
SECTION 4.4 AUTHORITY RELATIVE TO THIS AGREEMENT. NHP has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and, subject to the adoption of this Agreement by the
stockholders of NHP as contemplated herein, to consummate the Transactions. The
execution and delivery of this Agreement by NHP, the performance by NHP of its
obligations hereunder and the consummation by NHP of the Transactions have been
duly and validly authorized by all necessary corporate action and approved by
the affirmative vote of a majority of the entire Board of Directors of NHP and
no other corporate proceedings on the part of NHP are necessary to authorize
this Agreement or to consummate the Transactions (other than the NHP Stockholder
Approval and the Merger Filing). This Agreement has been duly and validly
executed and delivered by NHP and, assuming the due authorization, execution and
delivery thereof by AIMCO and Merger Sub, constitutes the legal, valid and
binding obligation of NHP, enforceable against NHP in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to creditors'
rights generally and by equitable principles to which the remedies of specific
performance and injunctive and similar forms of relief are subject.
SECTION 4.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS; CERTAIN CONTRACTS.
(a) Except as set forth on SCHEDULE 4.5, the execution and delivery of this
Agreement by NHP does not, and the performance of its obligations under this
Agreement and the consummation of the Transactions by NHP will not, (i) conflict
with, result in a breach of, cause a dissolution or require the consent or
approval of any Person under, or violate any provision of, the Organizational
Documents of NHP, (ii) require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Authority, except for
(A) applicable requirements of the Exchange Act, the Securities Act and state
securities or "blue sky" laws ("BLUE SKY LAWS"), and (B) the Merger Filing,
(iii) subject to the making of the filings and obtaining the approvals
identified in clause (ii), conflict with or violate any Law, judgment, order,
writ, injunction or decree applicable to NHP or by which any property or asset
of NHP is bound or affected, or (iv) conflict with or result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, result in the loss by NHP or modification in a
manner adverse to NHP of any right or benefit under, or give to others any right
of termination, amendment, acceleration, repurchase or repayment, increased
payments or cancellation of, or result in the creation of a Lien or other
encumbrance on any NHP Common Stock or any property or asset of NHP or any
subsidiary of NHP pursuant to, any Contract of NHP, except, in each case, such
as would not prevent or delay in any material respect consummation of the
Merger, or otherwise, individually or in the aggregate, prevent NHP from
performing its obligations under this Agreement in any material respect, and
would not, individually or in the aggregate, have a Material Adverse Effect on
NHP.
(b) Except as set forth in the Contracts filed (or incorporated by
reference) as exhibits to NHP's Annual Report on Form 10-K for the year ended
December 31, 1996 or the other NHP SEC Reports filed thereafter, there are no
Contracts to which NHP or any subsidiary of NHP is a party or by which NHP or
any subsidiary of NHP or any asset of NHP or any subsidiary of NHP is bound,
which by its terms materially limits the ability of NHP or any subsidiary of NHP
or, after consummation of the Transactions,
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would by its terms materially limit the ability of AIMCO or any of its
affiliates, to engage in any business in any area or for any period.
SECTION 4.6 COMPLIANCE. Except as set forth on SCHEDULE 4.6, neither NHP
nor any subsidiary of NHP is in conflict with, or in default or violation of,
(a) any Law applicable to such Person or by which any property or asset of such
Person is bound or affected, or (b) any Contract to which NHP or any subsidiary
of NHP is a party or by which such Person or any property or asset of such
Person is bound or affected, except for any such conflicts, defaults or
violations that would not, individually or in the aggregate, have a Material
Adverse Effect on NHP.
SECTION 4.7 SEC REPORTS AND FINANCIAL STATEMENTS. Each form, report,
schedule, registration statement and definitive proxy statement filed by NHP
with the SEC since August 14, 1995 and prior to the date hereof (as such
documents have been amended prior to the date hereof, the "NHP SEC REPORTS"), as
of their respective dates, complied in all material respects with the applicable
requirements of the Securities Act and the Exchange Act and the rules and
regulations thereunder. None of the NHP SEC Reports, as of their respective
dates, contained or contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except for such statements, if any, as have been modified or
superseded by subsequent filings prior to the date hereof. NHP has made
available to AIMCO true, accurate and complete copies of all of the NHP SEC
Reports. The consolidated financial statements of NHP and its subsidiaries
included in such reports comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with GAAP
(except as may be indicated in the notes thereto or, in the case of the
unaudited interim financial statements, as permitted by Form 10-Q of the SEC)
and fairly present (subject, in the case of the unaudited interim financial
statements, to normal, year-end audit adjustments) the consolidated financial
position of NHP and its subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended. Since December 31, 1996, neither NHP nor any of its subsidiaries has
incurred any liabilities or obligations (whether absolute, accrued, fixed,
contingent, liquidated, unliquidated or otherwise and whether due or to become
due) of any nature, except liabilities, obligations or contingencies (a) which
are reflected on the consolidated balance sheet of NHP and its subsidiaries as
at December 31, 1996 (including the notes thereto) or (b) which (i) were
incurred in the ordinary course of business after December 31, 1996 and
consistent with past practices, (ii) are disclosed in the NHP SEC Reports filed
after December 31, 1996, (iii) would not, individually or in the aggregate, have
a Material Adverse Effect on NHP, or (iv) were incurred by the Mortgage
Subsidiary or one of its wholly owned subsidiaries and with respect to which
neither NHP nor any of its other subsidiaries will have any liability or
obligation as of the Effective Time. Since August 14, 1995, NHP has timely filed
with the SEC all forms, reports and other documents required to be filed prior
to the date hereof, and no subsidiary of NHP has filed, or been required to
file, any form, report or other document with the SEC, in each case, pursuant to
the Securities Act, the Exchange Act or the rules and regulations thereunder.
Since December 31, 1996, there has been no change in any of the significant
accounting (including tax accounting) policies, practices or procedures of NHP
or any subsidiary of NHP.
SECTION 4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as contemplated
by this Agreement or as disclosed in any NHP SEC Report or as set forth on
SCHEDULE 4.8, since December 31, 1996, (a) NHP and its subsidiaries have
conducted their respective businesses only in the ordinary course, consistent
with past practice, and have not taken any of the actions set forth in
paragraphs (a) through (j) of SECTION 6.3, and (b) there has not occurred or
arisen any event that, individually or in the aggregate, has had or, insofar as
reasonably can be foreseen, is likely in the future to have, a Material Adverse
Effect on NHP other than events or developments generally affecting the industry
in which NHP operates. The Rights Agreement is in full force and effect and has
not been amended, modified or terminated.
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SECTION 4.9 LITIGATION. Except as disclosed in the NHP SEC Reports or as
set forth on SCHEDULE 4.9, there are no claims, suits, actions or proceedings
pending or, to NHP's knowledge, threatened or contemplated, nor are there any
investigations or reviews by any Governmental Authority pending or, to NHP's
knowledge, threatened or contemplated, against, relating to or affecting NHP or
any of its subsidiaries, which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on NHP, or to
prohibit or materially restrict the consummation of the Transactions, nor is
there any judgment, decree, order, injunction, writ or rule of any Governmental
Authority or any arbitrator outstanding against NHP or any of its subsidiaries
having, or which, insofar as can be reasonably foreseen, in the future is likely
to have, a Material Adverse Effect on NHP. In addition, there have not been any
developments with respect to any of the claims, suits, actions, proceedings,
investigations or reviews disclosed in the NHP SEC Reports which, insofar as can
be reasonably foreseen, in the future are likely to have a Material Adverse
Effect on NHP.
SECTION 4.10 REGISTRATION STATEMENTS AND PROXY STATEMENT/PROSPECTUS. The
information supplied or to be supplied by NHP, any subsidiary of NHP or their
respective Representatives for inclusion in (a) the AIMCO Registration Statement
will not, either at the time the AIMCO Registration Statement is filed with the
SEC, at the time any amendment thereof or supplement thereto is filed with the
SEC, at the time it becomes effective under the Securities Act or at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, (b) the MS Registration Statement will not,
either at the time the MS Registration Statement is filed with the SEC, at the
time any amendment thereof or supplement thereto is filed with the SEC, at the
time it becomes effective or at the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (c) the
Proxy Statement/Prospectus, including any amendments and supplements thereto,
will not, at the date mailed to NHP's stockholders, at the time of the NHP
Meeting, at the date mailed to AIMCO's stockholders or at the time of the AIMCO
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Proxy Statement/Prospectus, as to information supplied by NHP,
any subsidiary of NHP or their respective Representatives, will comply in all
material respects with all applicable provisions of the Securities Act and the
Exchange Act and the rules and regulations promulgated thereunder, and the MS
Registration Statement will comply in all material respects with the provisions
of applicable Federal securities laws, rules and regulations.
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SECTION 4.11 EMPLOYEE BENEFIT PLANS. Each Benefit Plan of NHP has been
administered in compliance, in all material respects, with its terms, and is in
compliance in all material respects with applicable laws, rules and regulations,
(including, without limitation, provisions relating to funding, filing,
termination, reporting, disclosure and continuation coverage obligations
pursuant to Title V of the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA")). No Benefit Plan of NHP has been the subject of a
"reportable event" (as defined in Section 4043 of ERISA) (other than a
reportable event for which the 30 day notice requirement has been waived) and
there have not been any non-exempt "prohibited transactions" (as described in
Section 4975 of the Code or in Part 4 of Subtitle B of Title I of ERISA) with
respect to any Benefit Plan of NHP. There are no proceedings, suits or material
claims (other than routine claims for benefits) pending or, to the knowledge of
NHP, threatened with respect to any Benefit Plan of NHP, the assets of any trust
thereunder, or the Benefit Plan sponsor or the Benefit Plan administrator with
respect to the design or operation of any Benefit Plan of NHP. Each Benefit Plan
of NHP which is intended to be "qualified" within the meaning of Section 401(a)
of the Code is so qualified, and any trust created pursuant to any such Benefit
Plan of NHP is exempt from Federal income tax under Section 501(a) of the Code
and the IRS has issued each such Benefit Plan a favorable determination letter
which is currently applicable. NHP is not aware of any circumstance or event
which would jeopardize the tax-qualified status of any Benefit Plan of NHP or
the tax-exempt status of any related trust, or would cause the imposition of any
material liability, penalty or tax under ERISA or the Code with respect to any
Benefit Plan of NHP. No material liabilities to or on behalf of participants
(other than routine claims for benefits), the IRS, the United States Department
of Labor, the Pension Benefit Guaranty Corporation or to any other Person or
entity have been or are reasonably expected to be incurred as a result of the
termination of any Benefit Plan of NHP or otherwise that have not been satisfied
in full or properly accrued on NHP's balance sheet as at December 31, 1996,
included in the NHP SEC Reports. Except as set forth on SCHEDULE 4.11, neither
NHP nor any of its subsidiaries maintains or is obligated to contribute to, or
has ever maintained or been obligated to contribute to, a "multi-employer plan"
(as such term is defined by Section 4001(a)(3) of ERISA) or a "multiple employer
plan" (within the meaning of Section 413(c) of the Code). Except as set forth in
SCHEDULE 4.11 or in the NHP SEC Reports or as otherwise required by applicable
law, neither NHP nor any of its subsidiaries maintains any retiree life and/or
retiree health insurance plans which provide for continuing benefits or coverage
for any employee or any beneficiary of an employee after such employee's
termination of employment. Except as set forth in SCHEDULE 4.11 or in the NHP
SEC Reports, the consummation of the transactions contemplated by this Agreement
will not (a) entitle any employee of NHP or its subsidiaries to severance pay,
unemployment compensation or any other payment, (b) accelerate the time of
payment or vesting, or increase the amount of compensation due to any such
employee or (c) result in any liability under Title IV of ERISA.
SECTION 4.12 BROKERS. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
Transactions based on any arrangement or agreement made by or on behalf of NHP,
except Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"). NHP has
heretofore furnished to AIMCO a complete and correct copy of all agreements
between NHP and DLJ pursuant to which such firm would be entitled to any payment
relating to the Transactions.
SECTION 4.13 TAXES.
(a) Each of NHP and its subsidiaries has timely filed (or has had timely
filed on its behalf) or will file or cause to be timely filed, all material Tax
Returns required by applicable law to be filed by it prior to or as of the
Effective Time. All such Tax Returns and amendments thereto are, or will be
before the Effective Time, true, complete and correct in all material respects.
(b) Each of NHP and its subsidiaries has paid (or has had paid on its
behalf), or where payment is not yet due, has established (or has had
established on its behalf and for its sole benefit and recourse), or
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will establish or cause to be established on or before the Effective Time, an
adequate accrual for the payment of, all material Taxes due with respect to any
period ending prior to or as of the Effective Time.
(c) No deficiency or adjustment for any material Taxes has been proposed,
asserted or assessed against NHP or any of its subsidiaries that has not been
resolved or paid or for which an adequate accrual has not been established in
accordance with generally accepted accounting principles. There are no Liens for
material Taxes upon the assets of NHP or any of its subsidiaries, except Liens
for current Taxes not yet due.
(d) Neither NHP nor any of its subsidiaries has entered into any Contract
that would result in the disallowance of any tax deductions pursuant to section
280G of the Code. No "consent" within the meaning of section 341(f) of the Code
has been filed with respect to NHP or any of its subsidiaries.
(e) All Tax sharing agreements, Tax indemnity agreements and similar
agreements to which NHP or any of its subsidiaries is a party are disclosed in
the NHP SEC Reports, except for a Tax sharing agreement reasonably acceptable to
AIMCO that may be entered into between NHP and the Mortgage Subsidiary after the
date hereof.
SECTION 4.14 OPINION OF FINANCIAL ADVISOR. The Independent Committee has
received the opinion of DLJ, dated April 21, 1997 (the "FAIRNESS OPINION"), to
the effect that, as of such date, the Merger Consideration and the Rights
Consideration are, in the aggregate, fair to the unaffiliated stockholders of
NHP, from a financial point of view, and a copy of the Fairness Opinion has been
delivered to AIMCO.
SECTION 4.15 RELIANCE. In entering into this Agreement, NHP has relied
solely on representations made in this Agreement, including the Schedules
hereto, and any certificates and documents required to be provided by AIMCO and
the Merger Sub pursuant to this Agreement. NHP has been represented by counsel
and has had unrestricted opportunity to examine and understand the business and
assets of AIMCO.
SECTION 4.16 MANAGEMENT ARRANGEMENTS. Except as set forth on SCHEDULE
4.16, and assuming that AIMCO satisfies the test for a "Qualified Purchaser"
under the Stock and Asset Transfer Restrictions Agreement, and satisfies the net
worth and managed units requirements of SECTION 4 of the Stock and Asset
Transfer Restrictions Agreement, there is currently no fact or circumstance
known to NHP that is likely to result in the loss by NHP, or modification in a
manner adverse to NHP, of any right or benefit under, or give any Person any
right of termination, cancellation or nonrenewal of, any Contract pursuant to
which NHP provides property management services, except such as would not,
individually or in the aggregate, have a Material Adverse Effect on NHP.
SECTION 4.17 DISCLOSURE. No representation or warranty of NHP contained in
this Agreement and no statement contained in any certificate or schedule
furnished or to be furnished by or on behalf of NHP to AIMCO or any of its
Representatives pursuant hereto contains or will contain any untrue statement of
a material fact.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AIMCO
AND MERGER SUB
AIMCO and Merger Sub hereby represent and warrant to NHP that:
SECTION 5.1 ORGANIZATION AND QUALIFICATIONS; SUBSIDIARIES. AIMCO, Merger
Sub and each Material Subsidiary of AIMCO is a corporation, partnership or other
legal entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has the
requisite power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power, authority and governmental approvals would
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not, individually or in the aggregate, have a Material Adverse Effect on AIMCO.
Each of AIMCO, Merger Sub and AIMCO's Material Subsidiaries is duly qualified or
licensed as a foreign corporation, partnership or limited liability company to
transact business, and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that would not,
individually or in the aggregate, have a Material Adverse Effect on AIMCO.
SECTION 5.2 CHARTER AND BYLAWS. Complete and correct copies of the charter
and bylaws of AIMCO, as amended and supplemented to date, have been filed (or
incorporated by reference) as exhibits 3.1 and 3.2, respectively, to AIMCO's
Annual Report on Form 10-K for the year ended December 31, 1996. Such
Organizational Documents are in full force and effect and have not been amended
or modified in any respect. AIMCO is not in violation of any provision of its
Organizational Documents. No Material Subsidiary of AIMCO is in violation of any
provision of its Organizational Documents, except for such violations that would
not, individually or in the aggregate, have a Material Adverse Effect on AIMCO.
SECTION 5.3 CAPITALIZATION. The authorized capital stock of AIMCO consists
of (a) 150,000,000 shares of AIMCO Common Stock; (b) 425,000 shares of Class B
Common Stock, par value $.01 per share ("CLASS B COMMON STOCK"), of AIMCO; (c)
9,034,000 shares of Preferred Stock, par value $.01 per share ("PREFERRED
STOCK"), of AIMCO; and (d) 966,000 shares of Cumulative Convertible Senior
Preferred Stock, par value $.01 per share (the "SENIOR PREFERRED STOCK"), of
AIMCO. As of March 11, 1997, (i) 17,569,970 shares of AIMCO Common Stock were
issued and outstanding, all of which were validly issued, fully paid and
nonassessable; (ii) 325,000 shares of Class B Common Stock were issued and
outstanding, all of which were validly issued, fully paid and nonassessable;
(iii) no shares of Preferred Stock or Senior Preferred Stock were issued and
outstanding; and (iv)(A) 560,659 shares of AIMCO Common Stock were reserved for
issuance upon the exercise of outstanding stock options granted pursuant to The
1994 Stock Option Plan of Apartment Investment and Management Company and
Affiliates, the Apartment Investment and Management Company 1996 Stock Award and
Incentive Plan and the Apartment Investment and Management Company Non-Qualified
Employee Stock Option Plan (collectively, the "AIMCO OPTION PLANS"), (B) 174,792
shares of AIMCO Common Stock were reserved for issuance pursuant to options
available for grant under AIMCO Option Plans. Except as set forth above, as of
March 11, 1997, no shares of capital stock or other voting securities of AIMCO
were issued, reserved for issuance or outstanding. All shares of AIMCO Common
Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. There are
no outstanding contractual obligations of AIMCO or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of AIMCO Common Stock or any
other shares of capital stock of AIMCO or any of its subsidiaries, or make any
material investment (in the form of a loan, capital contribution or otherwise)
in any subsidiary of AIMCO or any other Person, other than a wholly-owned
subsidiary of AIMCO. Each outstanding share of capital stock of each Material
Subsidiary of AIMCO is duly authorized, validly issued, fully paid and
nonassessable and each such share owned by AIMCO or any subsidiary of AIMCO is
owned free and clear of any Liens.
SECTION 5.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of AIMCO and Merger
Sub has all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Transactions, subject to the approval of the issuance of shares of AIMCO Common
Stock pursuant to the Merger (the "AIMCO STOCK ISSUANCE") by a majority of votes
cast by the holders of AIMCO Common Stock (the "AIMCO STOCKHOLDER APPROVAL").
The execution and delivery of this Agreement by AIMCO and Merger Sub, the
performance by AIMCO and Merger Sub of their respective obligations hereunder
and the consummation by AIMCO and Merger Sub of the Transactions have been duly
and validly authorized by all necessary corporate action and no other corporate
proceedings on the part of AIMCO or Merger Sub are necessary to authorize this
Agreement or to consummate the Transactions (other than the AIMCO Stockholder
Approval and the Merger Filing). This Agreement has been duly and validly
executed and delivered by AIMCO and Merger Sub and,
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assuming the due authorization, execution and delivery thereof by NHP,
constitutes the legal, valid and binding obligation of AIMCO and Merger Sub,
enforceable against AIMCO and Merger Sub in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to creditors'
rights generally and by equitable principles to which the remedies of specific
performance and injunctive and similar forms of relief are subject.
SECTION 5.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. The execution and
delivery of this Agreement by AIMCO and Merger Sub do not, and the performance
of their respective obligations under this Agreement and the consummation of the
Transactions by AIMCO and Merger Sub will not, (a) conflict with, result in a
breach of, cause a dissolution or require the consent or approval of any Person
under, or violate any provision of, the Organizational Documents of AIMCO or
Merger Sub, (b) require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, except for (i)
applicable requirements, if any, of the Exchange Act, the Securities Act or the
Blue Sky Laws, and (ii) the Merger Filing, (c) subject to the making of the
filings and obtaining the approvals identified in clause (b), conflict with or
violate any Law, judgment, order, writ, injunction or decree applicable to AIMCO
or Merger Sub or by which any property or asset of AIMCO or Merger Sub is bound
or affected, or (d) conflict with or result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, result in the loss by AIMCO or Merger Sub or modification in a
manner adverse to AIMCO or Merger Sub of any right or benefit under, or give to
others any right of termination, amendment, acceleration, repurchase or
repayment, increased payments or cancellation of, or result in the creation of a
Lien or other encumbrance on any Shares or any property or asset of AIMCO or
Merger Sub or any subsidiary of AIMCO or Merger Sub pursuant to, any Contract of
AIMCO or Merger Sub, except, in each case, such as would not prevent or delay
AIMCO or Merger Sub from performing its obligations under this Agreement in any
material respect, and would not, individually or in the aggregate, have a
Material Adverse Effect on AIMCO or Merger Sub.
SECTION 5.6 COMPLIANCE. Neither AIMCO, Merger Sub nor any Material
Subsidiary of AIMCO is in conflict with, or in default or violation of, (a) any
Law applicable to such Person or by which any property or asset of such Person
is bound or affected, or (b) any Contract to which AIMCO or Merger Sub or any
subsidiary of AIMCO is a party or by which such Person or any property or asset
of such Person is bound or affected, except for any such conflicts, defaults or
violations that would not, individually or in the aggregate, have a Material
Adverse Effect on AIMCO.
SECTION 5.7 SEC REPORTS AND FINANCIAL STATEMENTS. Each form, report,
schedule, registration statement and definitive proxy statement filed by AIMCO
with the SEC since June 30, 1995, and prior to the date hereof (as such
documents have been amended prior to the date hereof, the "AIMCO SEC REPORTS"),
as of their respective dates, complied in all material respects with the
applicable requirements of the Securities Act and the Exchange Act and the rules
and regulations thereunder. None of the AIMCO SEC Reports, as of their
respective dates, contained or contains any untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, except for such statements, if any, as have been modified
or superseded by subsequent filings prior to the date hereof. The consolidated
financial statements of AIMCO and its subsidiaries included in such reports
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of the
unaudited interim financial statements, as permitted by Form 10-Q of the SEC)
and fairly present (subject, in the case of the unaudited interim financial
statements, to normal, year-end audit adjustments) the consolidated financial
position of AIMCO and its subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended. Since December 31, 1996, neither AIMCO nor any of its subsidiaries has
incurred any liabilities or
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obligations (whether absolute, accrued, fixed, contingent, liquidated,
unliquidated or otherwise and whether due or to become due) of any nature,
except liabilities, obligations or contingencies (a) which are reflected on the
consolidated balance sheet of AIMCO and its subsidiaries as at December 31, 1996
(including the notes thereto) or (b) which (i) were incurred in the ordinary
course of business after December 31, 1996 and consistent with past practices,
(ii) are disclosed in the AIMCO SEC Reports filed after December 31, 1996, or
(iii) would not, individually or in the aggregate, have a Material Adverse
Effect on AIMCO. Since August 14, 1995, AIMCO has timely filed with the SEC all
forms, reports and other documents required to be filed prior to the date
hereof, and no subsidiary of AIMCO has filed, or been required to file, any
form, report or other document with the SEC, in each case, pursuant to the
Securities Act, the Exchange Act or the rules and regulations thereunder. Since
December 31, 1996, there has been no change in any of the significant accounting
(including tax accounting) policies, practices or procedures of AIMCO or any
subsidiary of AIMCO.
SECTION 5.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as contemplated
by this Agreement or as disclosed in any AIMCO SEC Report, since December 31,
1996, (a) AIMCO and its subsidiaries have conducted their respective businesses
only in the ordinary course, consistent with past practice, and (b) there has
not occurred or arisen any event that, individually or in the aggregate, has had
or, insofar as reasonably can be foreseen, is likely in the future to have, a
Material Adverse Effect on AIMCO other than events or developments generally
affecting the industry in which AIMCO operates.
SECTION 5.9 LITIGATION. Except as disclosed in the AIMCO SEC Reports,
there are no claims, suits, actions or proceedings pending or, to AIMCO's
knowledge, threatened or contemplated, nor are there any investigations or
reviews by any Governmental Authority pending or, to AIMCO's knowledge,
threatened or contemplated, against, relating to or affecting AIMCO or any of
its subsidiaries, which could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on AIMCO, or to prohibit or materially
restrict the consummation of the Transactions, nor is there any judgment,
decree, order, injunction, writ or rule of any Governmental Authority or any
arbitrator outstanding against AIMCO or any of its subsidiaries having, or
which, insofar as can be reasonably foreseen, in the future is likely to have, a
Material Adverse Effect on AIMCO. In addition, there have not been any
developments with respect to any of the claims, suits, actions, proceedings,
investigations or reviews disclosed in the AIMCO SEC Reports which, insofar as
can be reasonably foreseen, in the future are likely to have a Material Adverse
Effect on AIMCO.
SECTION 5.10 REGISTRATION STATEMENTS AND PROXY STATEMENT/PROSPECTUS. The
information supplied or to be supplied by AIMCO, any subsidiary of AIMCO or
their respective Representatives for inclusion in (a) the AIMCO Registration
Statement will not, either at the time the AIMCO Registration Statement is filed
with the SEC, at the time any amendment thereof or supplement thereto is filed
with the SEC, at the time it becomes effective under the Securities Act or at
the Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, (b) the MS Registration Statement will not,
either at the time the MS Registration Statement is filed with the SEC, at the
time any amendment thereof or supplement thereto is filed with the SEC, at the
time it becomes effective or at the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (c) the
Proxy Statement/Prospectus, including any amendments and supplements thereto,
will not, at the date mailed to AIMCO's stockholders, at the time of the AIMCO
Meeting or at the time of the NHP Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Proxy Statement/Prospectus, as to
information supplied by AIMCO, any subsidiary of AIMCO or their respective
Representatives, will comply as to form in all material respects with all
applicable provisions of the Securities Act and the Exchange Act and the rules
and regulations promulgated thereunder, and the AIMCO Registration
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Statement will comply in all material respects with the provisions of the
Securities Act and the rules and regulations promulgated thereunder.
SECTION 5.11 EMPLOYEE BENEFIT PLANS. Each Benefit Plan of AIMCO has been
administered in compliance, in all material respects, with its terms, and is in
compliance in all material respects with applicable laws, rules and regulations,
(including, without limitation, provisions relating to funding, filing,
termination, reporting, disclosure and continuation coverage obligations
pursuant to Title V of COBRA. No Benefit Plan of AIMCO has been the subject of a
"reportable event" (as defined in Section 4043 of ERISA) (other than a
reportable event for which the 30 day notice requirement has been waived) and
there have not been any non-exempt "prohibited transactions" (as described in
Section 4975 of the Code or in Part 4 of Subtitle B of Title I of ERISA) with
respect to any Benefit Plan of AIMCO. There are no proceedings, suits or
material claims (other than routine claims for benefits) pending or, to the
knowledge of AIMCO, threatened with respect to any Benefit Plan of AIMCO, the
assets of any trust thereunder, or the Benefit Plan sponsor or the Benefit Plan
administrator with respect to the design or operation of any Benefit Plan of
AIMCO. Each Benefit Plan of AIMCO which is intended to be "qualified" within the
meaning of Section 401(a) of the Code is so qualified, and any trust created
pursuant to any such Benefit Plan of AIMCO is exempt from Federal income tax
under Section 501(a) of the Code and the IRS has issued each such Benefit Plan a
favorable determination letter which is currently applicable. AIMCO is not aware
of any circumstance or event which would jeopardize the tax-qualified status of
any Benefit Plan of AIMCO or the tax-exempt status of any related trust, or
would cause the imposition of any material liability, penalty or tax under ERISA
or the Code with respect to any Benefit Plan of AIMCO. No material liabilities
to or on behalf of participants (other than routine claims for benefits), the
IRS, the United States Department of Labor, the Pension Benefit Guaranty
Corporation or to any other Person or entity have been or are reasonably
expected to be incurred as a result of the termination of any Benefit Plan of
AIMCO or otherwise that have not been satisfied in full or properly accrued on
AIMCO's balance sheet as at December 31, 1996, included in the AIMCO SEC
Reports. Neither AIMCO nor any of its subsidiaries maintains or is obligated to
contribute to, or has ever maintained or been obligated to contribute to, a
"multi-employer plan" (as such term is defined by Section 4001(a)(3) of ERISA)
or a "multiple employer plan" (within the meaning of Section 413(c) of the
Code). Except as set forth in the AIMCO SEC Reports or as otherwise required by
applicable law, neither AIMCO nor any of its subsidiaries maintains any retiree
life and/or retiree health insurance plans which provide for continuing benefits
or coverage for any employee or any beneficiary of an employee after such
employee's termination of employment. Except as disclosed in the AIMCO SEC
Reports, the consummation of the transactions contemplated by this Agreement
will not (a) entitle any employee of AIMCO or its subsidiaries to severance pay,
unemployment compensation or any other payment, (b) accelerate the time of
payment or vesting, or increase the amount of compensation due to any such
employee or (c) result in any liability under Title IV of ERISA.
SECTION 5.12 BROKERS. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
Transactions based on any arrangement or agreement made by or on behalf of
AIMCO.
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SECTION 5.13 TAXES.
(a) AIMCO and each of its subsidiaries has timely filed (or has had timely
filed on its behalf) or will file or cause to be timely filed, all material Tax
Returns required by applicable law to be filed by it prior to or as of the
Effective Time. All such Tax Returns and amendments thereto are, or will be
before the Effective Time, true, complete and correct in all material respects.
(b) Each of AIMCO and its subsidiaries has paid (or has had paid on its
behalf), or where payment is not yet due, has established (or has had
established on its behalf and for its sole benefit and recourse), or will
establish or cause to be established on or before the Closing Date, an adequate
accrual for the payment of, all material Taxes due with respect to any period
ending prior to or as of the Closing Date.
(c) No deficiency or adjustment for any material Taxes has been proposed,
asserted or assessed against AIMCO or any of its subsidiaries that has not been
resolved or paid or for which an adequate accrual has not been established in
accordance with generally accepted accounting principles. There are no Liens for
material Taxes upon the assets of AIMCO or any of its subsidiaries, except Liens
for current Taxes not yet due.
(d) Neither AIMCO nor any of its subsidiaries has entered into any Contract
that would result in the disallowance of any tax deductions pursuant to section
280G of the Code. No "consent" within the meaning of section 341(f) of the Code
has been filed with respect to AIMCO or any of its subsidiaries.
(e) All Tax sharing agreements, Tax indemnity agreements and similar
agreements to which AIMCO or any of its subsidiaries is a party are disclosed in
the AIMCO SEC Reports.
SECTION 5.14 REIT STATUS. AIMCO has been organized and operated in
conformity with the requirements for qualification as a real estate investment
trust under the Code for its taxable years ended December 31, 1994, 1995 and
1996, AIMCO's present and proposed method of operation will enable it to
continue to meet the requirements for qualification as a real estate investment
trust under the Code, and the consummation of the transactions contemplated by
this Agreement, the Stock Purchase Agreement and the Real Estate Acquisition
Agreement will not adversely affect AIMCO's ability to continue to meet such
requirements.
SECTION 5.15 RELIANCE. In entering into this Agreement, AIMCO has relied
solely on representations made in this Agreement, including the Schedules
hereto, and any certificates and documents required to be provided by NHP
pursuant to this Agreement. AIMCO has been represented by counsel and has had
unrestricted opportunity to examine and understand the business and assets of
NHP.
SECTION 5.16 STOCK PURCHASE AGREEMENT. AIMCO has delivered to NHP a true
and correct copy of the Stock Purchase Agreement. The Stock Purchase Agreement
is a valid and binding obligation of AIMCO and, to AIMCO's knowledge, Demeter,
and Capricorn.
SECTION 5.17 FINANCIAL CAPABILITY. AIMCO will have on the Closing Date and
immediately prior to and at the Effective Time, funds and authorized and
unissued shares of AIMCO Common Stock sufficient to consummate the Merger and
the transactions contemplated hereby. To the extent that such funds are to be
provided by third party financing, AIMCO will provide NHP with complete and
correct copies of all documents relating to the provision of such financing.
SECTION 5.18 QUALIFIED PURCHASER. AIMCO is, and, after giving effect to
the Transactions and the transactions contemplated by the Stock Purchase
Agreement, will be, a "Qualified Purchaser," as such term is defined in the
Stock and Asset Transfer Restrictions Agreement.
SECTION 5.19 DISCLOSURE. No representation or warranty of AIMCO contained
in this Agreement and no statement contained in any certificate or schedule
furnished or to be furnished by or on behalf of AIMCO to NHP or any of its
Representatives pursuant hereto contains or will contain any untrue statement of
a material fact.
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ARTICLE VI
COVENANTS
SECTION 6.1 NOTIFICATION OF CERTAIN MATTERS. Each of the parties hereto
shall give prompt notice to the other parties hereto of (a) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to cause (i) any representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect, or (ii) any covenant,
condition or agreement contained in this Agreement not to be complied with or
satisfied and (b) any failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder. The delivery of any notice pursuant to this SECTION 6.1 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
SECTION 6.2 FURTHER ACTION, REASONABLE EFFORTS; CONSENTS AND
APPROVALS. Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use commercially reasonable efforts to take, or cause to be
taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated hereby, including,
without limitation, using commercially reasonable efforts to obtain all
licenses, permits, consents, approvals, authorizations, certificates,
qualifications and orders of, and make all filings and required submissions
with, all Governmental Authorities, and all shareholders, lenders and partners
of, and parties to Contracts with, AIMCO, NHP or any other Person, in each case,
as are necessary or desirable for the consummation of the transactions
contemplated hereby (collectively "CONSENTS"). NHP shall, as soon as possible
prior to the Closing, deliver to AIMCO copies of all Consents obtained by NHP.
AIMCO shall, as soon as possible prior to the Closing, deliver to NHP copies of
all Consents obtained by AIMCO. In case at any time after the Closing Date any
further action is necessary or desirable to carry out the purposes of this
Agreement, AIMCO and NHP shall use commercially reasonable efforts to take all
such action. Prior to the Closing, each party shall use its best efforts not to
take any action, or enter into any transaction, that would cause any of its
representations or warranties contained in this Agreement to be untrue.
SECTION 6.3 CONDUCT OF BUSINESS OF NHP PENDING THE CLOSING. From the date
hereof through the Closing, except as expressly permitted or contemplated by
this Agreement or as set forth on SCHEDULE 6.3 hereto, unless AIMCO shall
otherwise agree in writing prior to the taking of any action prohibited by the
terms of this SECTION 6.3, NHP and its subsidiaries shall conduct their
operations and business in the ordinary and usual course of business and
consistent with past practice and use reasonable efforts to keep available the
services of its present officers and key employees and preserve the goodwill and
business relationships with all Persons having business relationships with it.
Without limiting the generality of the foregoing, and except as otherwise
expressly permitted by this Agreement, prior to the Closing, without the prior
written consent of AIMCO, neither NHP nor any of its subsidiaries shall: (a)
amend or modify its Organizational Documents or the Rights Agreement; (b) issue,
sell, pledge or dispose of, grant or otherwise create, or agree to issue, sell,
pledge or dispose of, grant or otherwise create any capital stock or other
equity securities, any debt or other securities convertible into or exchangeable
for any of its capital stock or other equity securities; (c) purchase, redeem or
otherwise acquire or retire, or offer to purchase, redeem or otherwise acquire
or retire, any of its capital stock or other equity securities (including any
options with respect to any of its capital stock or other equity securities and
any securities convertible or exchangeable into any of its capital stock or
other equity securities) or any long-term debt; (d) declare, set aside, make or
pay any dividend or other distribution, payable in cash, stock, property or
otherwise, with respect to any of its capital stock or other equity securities
(except the Spin-Off and dividends declared and paid by a subsidiary of NHP only
to NHP or a wholly-owned subsidiary of NHP), or subdivide, reclassify,
recapitalize, split, combine or exchange any of its capital stock or other
equity securities; (e) incur or become contingently liable with respect to any
indebtedness or guarantee any such indebtedness or issue any debt securities if,
after giving effect thereto, the outstanding indebtedness of NHP and its
subsidiaries exceeds the sum of (i) the amount of long-term indebtedness and the
current portion of long-term
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indebtedness of NHP and its subsidiaries at December 31, 1996, plus (ii) $5
million (excluding any such indebtedness relating to the Mortgage Subsidiary and
permitted by the proviso at the end of this SECTION 6.3); (f) acquire or agree
to acquire by merging or consolidating with, or by purchasing a substantial
equity interest in or a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business entity; (g) mortgage or otherwise encumber or subject to any Lien, or
sell, transfer or otherwise dispose of, any assets or properties that are
material, individually or in the aggregate, to NHP and its subsidiaries, taken
as a whole, other than Liens incurred in the ordinary course of business
consistent with past practice or to secure indebtedness incurred in compliance
with clause (e), and sales and dispositions in the ordinary course of business
consistent with past practice; (h) except as may be required by applicable Law,
or as contemplated by this Agreement, (i) increase the compensation payable or
to become payable to, or enter into any employment agreement with, its executive
officers or employees, except with respect to non-executive officer employees in
the ordinary course of business consistent with past practice; (ii) grant any
severance or termination pay to any director, executive officer or employee of
NHP or any subsidiary of NHP, except with respect to non-executive officer
employees in the ordinary course of business or pursuant to existing NHP Benefit
Plans; or (iii) enter into any severance agreement with any director, executive
officer or employee except with respect to non-executive officer employees in
the ordinary course of business; or (iv) establish, adopt, enter into,
terminate, withdraw from or amend in any material respect or take action to
accelerate any rights or benefits under any collective bargaining agreement, any
stock option plan, or any employee benefit plan or policy; (i) take any action,
other than reasonable actions in the ordinary course of business and consistent
with past practice, with respect to accounting policies or procedures (including
Tax accounting policies, procedures and elections relating to Taxes that would
apply to NHP, AIMCO or the Surviving Corporation after the Merger), except as
may be required by generally accepted accounting principles, or settle any
material Audit or, except as required by Law, amend in any material respect any
material Tax Return; or (j) authorize any of, or commit or agree to take any of,
the foregoing actions; provided, however, that the Mortgage Subsidiary may
acquire any assets, businesses or entities, and NHP may incur indebtedness on
behalf of the Mortgage Subsidiary, if, after giving effect to the Spin-Off, NHP
and its other subsidiaries would not have any liabilities or obligations
relating thereto.
SECTION 6.4 CONDUCT OF BUSINESS OF AIMCO PENDING THE CLOSING. From the
date hereof through the Closing, except as expressly permitted or contemplated
by this Agreement, unless NHP shall otherwise agree in writing prior to the
taking of any action prohibited by the terms of this SECTION 6.4, AIMCO and its
subsidiaries shall conduct their operations and business in the ordinary and
usual course of business and consistent with past practice and use reasonable
efforts to keep available the services of its present officers and key employees
and preserve the goodwill and business relationships with all Persons having
business relationships with it.
SECTION 6.5 ACCESS TO INFORMATION.
(a) From the date hereof to the Effective Time, each of AIMCO and NHP shall
(and shall cause their respective subsidiaries and Representatives to) afford
the Representatives of the other party reasonable access at all reasonable times
to its officers, employees, agents, properties, offices, plants and other
facil-ities, books, records and Tax Returns, and shall furnish such
Representatives with all financial, operating and other data and information as
may be reasonably requested.
(b) All information provided by AIMCO or NHP pursuant to this Agreement
shall be subject to the AIMCO Confidentiality Agreement or the NHP
Confidentiality Agreement, respectively.
SECTION 6.6 NO SOLICITATION.
(a) NHP shall not, nor shall it permit any of its subsidiaries, or any of
their Representatives (including, without limitation, any investment banker,
attorney or accountant retained by NHP or a subsidiary of NHP), directly or
indirectly, to, (i) initiate, solicit or encourage any inquiries or proposals
that constitute, or could reasonably be expected to lead to, a proposal or offer
for a merger, consolidation,
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business combination, sale of assets representing a substantial portion of the
assets of NHP and its subsidiaries, taken as a whole, sale of shares of capital
stock (other than to NHP or a subsidiary of NHP), including, without limitation,
by way of a tender offer or exchange offer by any person (other than NHP or a
subsidiary of NHP) for shares of capital stock of NHP, other than the
Transactions (any of the foregoing inquiries or proposals being referred to in
this Agreement as an "ACQUISITION PROPOSAL"), (ii) engage in negotiations or
discussions concerning, or provide to any person or entity any non-public
information or data relating to NHP or any subsidiary of NHP for the purposes
of, or otherwise cooperate with or assist or participate in, facilitate or
encourage, any inquiries or the making of any Acquisition Proposal, (iii) agree
to, approve or recommend any Acquisition Proposal, or (iv) take any other action
inconsistent with the obligations and commitments assumed by NHP pursuant to
this SECTION 6.6; provided, however, that nothing contained in this Agreement
shall prevent NHP or its Board of Directors from (A) furnishing nonpublic
information to, or entering into discussions or negotiations with, any person or
entity in connection with an unsolicited bona fide written Acquisition Proposal
to NHP or its stockholders, if and only to the extent that (1) the Board of
Directors of NHP, by action of a majority of the entire Board of Directors of
NHP, or by the Board of Directors with the approval of its Independent
Committee, determines in good faith (after consultation with outside legal
counsel) that such action is necessary for such Board of Directors to comply
with its fiduciary duties to stockholders under applicable law, and (2) prior to
furnishing such non-public information to, or entering into discussions or
negotiations with, such person or entity, the Board of Directors of NHP receives
from such person or entity an executed confidentiality agreement with terms no
less favorable to such party than those contained in the NHP Confidentiality
Agreement; or (B) complying with Rule 14e-2 promulgated under the Exchange Act
with regard to an Acquisition Proposal or making any other public disclosure
that, in the opinion of NHP's counsel, is required by applicable law, rule or
regulation; provided, that prior to making any such other public disclosure NHP
shall to the extent reasonably practicable inform AIMCO that it intends to make
such disclosure and consult with AIMCO regarding the necessity for such
disclosure. NHP will immediately cease and cause to be terminated any existing
activities, discussions or negotiations by NHP or its Representatives with any
parties conducted heretofore with respect to any of the foregoing.
(b) NHP shall (i) promptly notify AIMCO in writing after receipt by NHP (or
its Representatives) of any Acquisition Proposal or any inquiries indicating
that any person is considering making or wishes to make an Acquisition Proposal,
(ii) promptly notify AIMCO in writing after receipt of any request for nonpublic
information relating to it or any of its subsidiaries or for access to its or
any of its subsidiaries' properties, books or records by any person that, to
NHP's knowledge, may be considering making, or has made, an Acquisition Proposal
and (iii) keep AIMCO advised of the status and principal financial terms of any
such Acquisition Proposal, indication or request.
SECTION 6.7 STOCKHOLDER MEETINGS.
(a) NHP shall take all action necessary, in accordance with the DGCL and
NHP's Organizational Documents, to call a meeting of its stockholders (the "NHP
MEETING") to be held as promptly as practicable for the purpose of considering
and voting upon this Agreement and the Merger. The vote required for such
approval shall be the affirmative vote of the holders of 66 2/3% of the
outstanding shares of NHP Common Stock that is not owned (within the meaning of
Section 203 of the DGCL) by AIMCO (the "NHP STOCKHOLDER APPROVAL"). The Board of
Directors of NHP shall recommend that the stockholders of NHP approve this
Agreement and the Merger; provided, that the Board of Directors of NHP, by
action of a majority of the entire Board of Directors of NHP, or by the Board of
Directors with the approval of its Independent Committee, may withdraw such
recommendation if such Board of Directors determines in good faith, after
receipt of an Acquisition Proposal and after consultation with outside legal
counsel, that the withdrawal of such recommendation is necessary for such Board
of Directors to comply with its fiduciary duties under applicable law. AIMCO
shall vote or cause to be voted all of the shares of NHP owned by it and its
Affiliates in favor of adoption of this Agreement.
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(b) AIMCO shall take all action necessary, in accordance with the Maryland
General Corporation Law and AIMCO's Organizational Documents, to call a meeting
of its stockholders (the "AIMCO MEETING") to be held as promptly as practicable
for the purpose of seeking the AIMCO Stockholder Approval. The Board of
Directors of AIMCO shall recommend that the stockholders of AIMCO vote in favor
of the matters that are the subject of the AIMCO Stockholder Approval.
SECTION 6.8 REGISTRATION STATEMENTS AND JOINT PROXY STATEMENT/PROSPECTUS.
(a) As promptly as practicable after the execution of this Agreement, (i)
AIMCO and NHP shall prepare and file with the SEC a joint proxy statement
relating to the NHP Meeting and the AIMCO Meeting to be held in connection with
the Transac-tions (together with any amendments thereof or supplements thereto,
the "PROXY STATEMENT/PROSPECTUS"), (ii) AIMCO shall prepare and file with the
SEC a registration statement on Form S-4 (together with all amendments thereto,
the "AIMCO REGISTRATION STATEMENT"), in which the Proxy Statement/Prospectus
shall be included as a prospectus, in connection with the registration under the
Securities Act of the shares of AIMCO Common Stock to be issued pursuant to the
Merger, and (iii) NHP shall cause the Mortgage Subsidiary to prepare and file
with the SEC a registration statement on an appropriate form (together with any
amendments thereof or supplements thereto, the "MS REGISTRATION STATEMENT"), in
which the Proxy Statement/Prospectus shall be included, in connection with the
registration under applicable Federal securities laws, rules and regulations of
the shares of Mortgage Sub Stock to be distributed pursuant to the Rights and
the Rights Agreement. Each of AIMCO and NHP (i) shall cause the Proxy
Statement/Prospectus, the AIMCO Registration Statement and the MS Registration
Statement to comply as to form in all material respects with the applicable
provisions of the Securities Act, the Exchange Act and the rules and regulations
thereunder, (ii) shall use commercially reasonable efforts to have or cause the
AIMCO Registration Statement and the MS Registration Statement to become
effective as promptly as practicable, and (iii) shall take any and all action
required under any applicable Federal or state securities laws in connection
with the issuance of shares of AIMCO Common Stock and Mortgage Sub Stock
pursuant to the Merger. AIMCO and NHP shall furnish to the other all information
concerning AIMCO and NHP as the other may reasonably request in connection with
the preparation of the documents referred to herein. As promptly as practicable
after the AIMCO Registration Statement and the MS Registration Statement shall
have become effective, each of AIMCO and NHP shall mail the Proxy
Statement/Prospectus to its respective stockholders.
(b) The information supplied by each of AIMCO and NHP for inclusion in the
AIMCO Registration Statement and the MS Registration Statement and the Proxy
Statement/Prospectus shall not (i) at the time the AIMCO Registration Statement
is declared effective, (ii) at the time the MS Registration Statement is
declared effective, (iii) at the time the Proxy Statement/Prospectus (or any
amendment thereof or supplement thereto) is first mailed to the stockholders of
AIMCO or NHP, (iv) at the time of the NHP Meeting, (v) at the time of the AIMCO
Meeting, or (vi) at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. If, at any
time prior to the Effective Time, any event or circumstance relating to NHP, any
subsidiary of NHP, AIMCO, any subsidiary of AIMCO, or their respective officers
or directors, should be discovered by such party which should be set forth in an
amendment or a supplement to the AIMCO Registration Statement, the MS
Registration Statement or the Proxy Statement/Prospectus, such party shall
promptly inform the other thereof and take appropriate action in respect
thereof.
SECTION 6.9 LETTERS OF ACCOUNTANTS. AIMCO and NHP shall use commercially
reasonable efforts to cause to be delivered to the other "comfort" letters of
Ernst & Young LLP, AIMCO's independent public accountants, and of Arthur
Andersen LLP, NHP's independent public accountants, respectively, in each case,
dated and delivered on the date on which the AIMCO Registration Statement shall
become effective, on the date on which the MS Registration Statement shall
become effective and as of the Effective Time, and addressed to the boards of
directors of AIMCO and NHP, in form and substance reasonably satisfactory to the
other and reasonably customary in scope and substance for letters delivered
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by independent public accountants in connection with transactions such as those
contemplated by this Agreement.
SECTION 6.10 ACCELERATIONS. Except as contemplated by this Agreement, NHP
shall take or forbear from taking such action as may be reasonably necessary and
within its control to insure that the Transactions shall not constitute a change
in ownership or control (or other similar event accelerating or triggering
changes to benefits or the terms of any contract, agreement or arrangement
(other than any NHP Benefit Plan) material to NHP and its subsidiaries, taken as
a whole (a "TRIGGERING EVENT")), for purposes of any such contract, agreement or
arrangement under which any such change in ownership or control (or other
Triggering Event) may be avoided by action or inaction, as the case may be, by
NHP or any of its officers or directors.
SECTION 6.11 PUBLIC ANNOUNCEMENTS. At all times at or before the Closing,
neither NHP nor AIMCO shall issue or make, directly or indirectly, any reports,
statements or releases to the public with respect to this Agreement or the
transactions con-templated hereby without the prior written consent of the
other; provided, however, that NHP and AIMCO may, without the prior written
consent of the other, issue or make, directly or indirectly, any report,
statement or release required by Law, its fiduciary obligations or any listing
agreement or arrangement to which such Person is a party with a national
securities exchange if the other parties to this Agreement are so notified as
soon as possible in advance of such report, statement or release.
SECTION 6.12 BLUE SKY. AIMCO shall use its best efforts to obtain prior to
the Effective Time all approvals or permits required to carry out the
transactions contemplated hereby under applicable Blue Sky Laws in connection
with the issuance of shares of AIMCO Common Stock in the Merger and as
contemplated by this Agreement; provided, however, that with respect to such
qualifications neither AIMCO nor NHP shall be required to register or qualify as
a foreign corporation or to take any action which would subject it to general
service of process or taxation in any jurisdiction where any such entity is not
now so subject.
SECTION 6.13 NYSE LISTING. AIMCO shall promptly prepare and submit to the
NYSE listing applications covering the shares of AIMCO Common Stock to be issued
in the Merger, and shall use its best efforts to cause such shares to be
approved for listing and trading on the NYSE prior to the Effective Time,
subject to official notice of issuance.
SECTION 6.14 AFFILIATES. Within 30 days after the date of this Agreement,
(a) NHP shall deliver to AIMCO a letter identifying all persons who may be
deemed to be affiliates of NHP under Rule 145 of the Securities Act as of the
record date for the NHP Meeting (the "RULE 145 AFFILIATES") and (b) NHP shall
advise the persons identified in such letter of the resale restrictions imposed
by applicable securities laws and shall use commercially reasonable efforts to
obtain from each person identified in such letter a written agreement,
substantially in the form of EXHIBIT A hereto (a "RULE 145 AFFILIATE
AGREEMENT"). Prior to the Effective Time, AIMCO shall execute and deliver a
Registration Rights Agreement in the form of EXHIBIT B hereto (the "REGISTRATION
RIGHTS AGREEMENT").
SECTION 6.15 INDEMNIFICATION WITH RESPECT TO THE REGISTRATION STATEMENT.
(a) Each party hereto shall (i) indemnify (in such role, an "INDEMNIFYING
PARTY") and hold harmless each other party and their respective directors,
officers and controlling persons (an "INDEMNIFIED PARTY") against any and all
loss, liability, claim, damage and expense whatsoever to which an Indemnified
Party may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of any untrue statement or alleged untrue statement
of a material fact contained in the AIMCO Registration Statement, the MS
Registration
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Statement or the Proxy Statement/Prospectus, or any amendment or supplement
thereto, or any preliminary Proxy Statement/Prospectus, or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading; and (ii) will reimburse
the Indemnified Party for any legal or other expenses reasonably incurred by the
Indemnified Party in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that (i) NHP shall be liable under this SECTION 6.15 only for
information relating to NHP included or incorporated by reference in the AIMCO
Registration Statement, the MS Registration Statement or Proxy
Statement/Prospectus, (ii) AIMCO and Merger Sub shall be liable under this
SECTION 6.15 only for information relating to AIMCO and Merger Sub included or
incorporated by reference in the AIMCO Registration Statement, the MS
Registration Statement or Proxy Statement/ Prospectus, and (iii) no Indemnifying
Party will be liable in any such case under this SECTION 6.15 to the extent that
any such loss, claim, damage, liability or action arises out of any untrue
statement or alleged untrue statement or omission or alleged omission made in
any of such documents in reliance upon and in conformity with written
information furnished to the Indemnifying Party by or on behalf of such
Indemnified Party specifically for use therein.
(b) Promptly after receipt by an Indemnified Party under this SECTION 6.15
of notice of any claim or the commencement of any action, the Indemnified Party
shall, if a claim in respect thereof is to be made against the Indemnifying
Party under this SECTION 6.15, promptly notify the Indemnifying Party in writing
of the claim or the commencement of that action; PROVIDED, HOWEVER, that the
failure to notify or a delay in notifying the Indemnifying Party shall not
relieve it from any liability which it may have to an Indemnified Party
otherwise than under this SECTION 6.15 except to the extent that such
Indemnifying Party is prejudiced thereby. If any such claim or action shall be
brought against an Indemnified Party, and it shall notify the Indemnifying Party
thereof, the Indemnifying Party shall be entitled to participate therein, and,
to the extent that it wishes, jointly with any other similarly notified
Indemnifying Party, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party. After notice from the Indemnifying Party
to the Indemnified Party of its election to assume the defense of such claim or
action, the Indemnifying Party shall not be liable to the Indemnified Party
under this SECTION 6.15 for any legal or other expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party
unless (i) the employment thereof has been specifically authorized by the
Indemnifying Party in writing, (ii) such Indemnified Party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
Indemnifying Party and in the reasonable judgment of such counsel it is
advisable for such Indemnified Party to employ separate counsel or (iii) the
Indemnifying Party has failed to assume the defense to such claim or action and
employ counsel reasonably satisfactory to the Indemnified Party, in which case,
if such Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense of such claim
or action on behalf of such Indemnified Party; it being understood, however,
that the Indemnifying Party shall not, in connection with any one such claim or
action or separate but substantially similar or related claims or actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for all such Indemnified Parties, which firm shall be
designated in writing by such Indemnified Parties. Each Indemnified Party, as a
condition of the indemnity agreements contained herein shall use its best
efforts to cooperate with the Indemnifying Party in the defense of any such
claim or action. The Indemnifying Party shall not be liable for any settlement
of any such claim or action effected without its written consent (which consent
shall not be unreasonably withheld), but if settled with its written consent or
if there be a final judgment in favor of the plaintiff in any such claim or
action, the Indemnifying Party agrees to indemnify and hold harmless any
Indemnified Party from and against any loss or liability by reason of such
settlement or judgment.
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SECTION 6.16 SPIN-OFF. Prior to the Closing Date, NHP shall distribute to
all NHP stockholders of record as of a date prior to the Closing Date one Right
for each share of NHP Stock held by each NHP stockholder as of such date. Prior
to the Effective Time, NHP shall contribute cash to the Mortgage Subsidiary,
forgive indebtedness of the Mortgage Subsidiary, or any combination of the
foregoing, in an aggregate amount equal to NHP's best estimate (which shall be
subject to the prior approval of AIMCO, which approval shall not be unreasonably
withheld) of the amount, if any, by which (x) NHP's Free Cash Flow for the
period from February 1, 1997 until the earlier of the Effective Time or the
Maturity Time, exceeds (y) NHP's Transaction Costs for such period. NHP and
AIMCO shall use commercially reasonable efforts to obtain the consent of The
First National Bank of Boston to the Spin-Off.
SECTION 6.17 CONSENT TO CERTAIN TRANSACTIONS. NHP hereby consents to a
Change of Control Transaction (as defined in Section 1.3 of the Right of First
Refusal Agreement) involving AIMCO or any of its subsidiaries or affiliates
pursuant to the Real Estate Acquisition Agreement, provided that (a) the Real
Estate Acquisition Agreement is entered into on or prior to May 31, 1997, (b)
such agreement is delivered to NHP, and (c) such consent shall not become
effective until 5:00 p.m., Eastern Time, on May 3, 1997.
SECTION 6.18 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
(a) From and after the Effective Time, the Surviving Corporation shall, and
AIMCO shall cause the Surviving Corporation to, indemnify, defend and hold
harmless the present and former officers and directors of NHP (the "INDEMNIFIED
OFFICERS/DIRECTORS") against all losses, expenses (including attorneys fees),
claims, damages, liabilities or amounts ("LOSSES") that are paid in settlement
(provided that such settlement has been approved by AIMCO, such approval not to
be unreasonably withheld) of, or otherwise in connection with, any claim,
action, suit, proceeding or investigation (a "CLAIM"), based in whole or in part
on the fact that such person is or was a director or officer of NHP and arising
out of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the Transactions), in each case, to the full
extent permitted under the DGCL and NHP's certificate of incorporation and
bylaws (to the extent permitted by applicable law) as in effect on the date of
this Agreement. The Surviving Corporation shall pay any expenses in advance of
the final disposition of any such Claim to each of the Indemnified
Officers/Directors to the fullest extent permitted under the DGCL upon receipt
from any of the Indemnified Officers/Directors to whom expenses are advanced of
any undertaking to repay such advances required under the DGCL. The Surviving
Corporation shall cooperate in the defense of any such matter.
(b) The Surviving Corporation shall, and AIMCO shall cause the Surviving
Corporation to, keep in effect provisions in its certificate of incorporation
and bylaws providing for exculpation of director liability and its
indemnification of the Indemnified Officers/Directors to the fullest extent
permitted under the DGCL, which provisions shall not be amended except as
required by applicable law or except to make changes permitted by law that would
enlarge the right of indemnification of the Indemnified Officers/ Directors.
(c) For a period of three years after the Effective Time, the Surviving
Corporation shall, and AIMCO shall cause the Surviving Corporation to, maintain
in effect the current policies of directors' and officers' liability insurance
maintained by NHP covering persons who are currently covered by NHP's officers'
and directors' liability insurance policies with respect to actions or omissions
occurring at or prior to the Effective Time, a true and correct summary of which
is set forth on SCHEDULE 6.18, to the extent that such policies are available;
provided, that policies of at least the same coverage containing terms and
condi-tions which are no less advantageous to the insureds may be substituted
therefor.
(d) From and after the Effective Time, AIMCO agrees to indemnify, defend and
hold harmless the Indemnified Officers/Directors against all Losses that are
paid in settlement (provided that such settlement has been approved by AIMCO,
such approval not to be unreasonably withheld) of, or otherwise in connection
with, a Claim based in whole or in part on the fact that such Person is or was a
director or
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officer of NHP and arising out of actions or omissions occurring at or prior to
the Effective Time (including, without limitation, the Transactions), in each
case to the fullest extent permitted by applicable Law and whether or not the
Surviving Corporation is permitted by applicable Law to provide any indemnity
with respect to such Losses. AIMCO shall pay any expenses in advance of the
final disposition of any such Claim to each of the Indemnified
Officers/Directors to the fullest extent permitted by applicable Law. AIMCO
shall cooperate in the defense of any such matter.
(e) The provisions of this SECTION 6.18 shall survive the consummation of
the Merger and expressly are intended to benefit each of the Indemnified
Officers/Directors.
SECTION 6.19 NHP EMPLOYEES.
(a) In the event that any employee of the Surviving Corporation or one of
its subsidiaries is at any time after the Effective Time transferred to AIMCO or
any affiliate of AIMCO or becomes a participant in an employee benefit plan,
program or arrangement maintained by or contributed by AIMCO or any affiliate of
AIMCO, AIMCO shall cause such plan, program or arrangement to treat the prior
service of such employee with NHP and its subsidiaries, to the extent prior
service is generally recognized under the comparable plan, program or
arrangement of NHP, as service rendered to AIMCO or such affiliates for purposes
of eligibility, vesting or entitlement to early retirement benefits, vacation
time or severance benefits under such plans.
(b) At the request and direction of AIMCO, NHP shall give any notices
required by the U.S. Worker Adjustment and Retraining Notification Act of 1988,
as amended ("WARN ACT"), or any similar state law or regulation.
SECTION 6.20 DIRECTORS. In the event of any vacancy in the Board of
Directors of NHP arising after the date of this Agreement and after the Initial
Closing (as defined in the Stock Purchase Agreement), NHP shall cause an
individual designated by AIMCO to fill such vacancy, and if such vacancy
resulted from the death, removal or resignation of any director who served as a
member of any committee of NHP's Board of Directors (other than the Independent
Committee) or any board of directors of a subsidiary of NHP, then NHP shall
cause AIMCO's designee to be appointed to such committee or board of directors,
as the case may be. AIMCO shall not, until the earlier of the Effective Time or
the termination of this Agreement, take any action to remove from office as a
director of NHP any member of the Independent Committee, or increase the number
of NHP directors from that in effect as of the date hereof.
SECTION 6.21 FINANCING. AIMCO agrees that it will obtain all financing
necessary to consummate the Merger and the transactions contemplated hereby in
accordance with the terms and conditions specified in this Agreement.
SECTION 6.22 SEPARATION AGREEMENT. Prior to the Effective Time, NHP shall,
and shall cause the Mortgage Subsidiary to, enter into a separation agreement
providing for the Mortgage Subsidiary to assume all liabilities of NHP relating
to the business and operations of the Mortgage Subsidiary and to indemnify NHP
for, and hold NHP harmless from, such liabilities and all expenses, costs and
losses related thereto, all on terms reasonably acceptable to AIMCO.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to this Agreement to effect
the Merger shall be subject to the following conditions:
(a) All consents, approvals and action of any Governmental Authority
(including, without limitation, the U.S. Department of Housing and Urban
Development) required to permit the
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consummation of the Transactions shall have been obtained or made, free of
any condition that would have a Material Adverse Effect on either AIMCO or
NHP.
(b) No action shall have been taken, and no statute, rule, regulation,
executive order, judgment, decree, or injunction (other than a temporary
restraining order) shall have been enacted, entered, promulgated or enforced
(and not repealed, superseded, lifted or otherwise made inapplicable), by
any court of competent jurisdiction or Governmental Authority which
restrains, enjoins or otherwise prohibits the consummation of the
transactions contemplated by this Agreement (each party agreeing to use its
commercially reasonable efforts to avoid the effect of any such statute,
rule, regulation or order or to have any such order, judgment, decree or
injunction lifted).
(c) Each of the AIMCO Registration Statement and the MS Registration
Statement shall have become effective in accordance with the provisions of
all applicable Federal Securities laws, rules and regulations, and no stop
order suspending such effectiveness shall have been issued and remain in
effect. AIMCO, NHP and/or the Mortgage Subsidiary shall have received all
state securities or "blue sky" permits and other authorizations necessary to
issue and distribute the AIMCO Common Stock, and distribute Mortgage Sub
Stock, pursuant to this Agreement.
(d) The shares of AIMCO Common Stock shall have been approved for
listing on the NYSE, subject only to official notice of issuance.
(e) Any applicable waiting period under the HSR Act shall have expired
or been terminated.
(f) The Effective Time shall have occurred on or prior to December 1,
1997 (the "OUTSIDE DATE").
(g) AIMCO shall have received the AIMCO Stockholder Approval.
(h) NHP shall have received the NHP Stockholder Approval.
(i) The record date for the distribution of the Rights to NHP
stockholders shall have occurred.
(j) The Real Estate Acquisition Agreement shall have been entered into
and neither the Stock Purchase Agreement nor the Real Estate Acquisition
Agreement shall have been terminated.
SECTION 7.2 CONDITIONS TO OBLIGATIONS OF NHP TO EFFECT THE MERGER. The
obligations of NHP to effect the Merger are subject to the satisfaction of the
following conditions, unless waived by NHP:
(a) The representations and warranties of AIMCO and Merger Sub contained
herein that are qualified as to materiality shall be true and accurate, and
those not so qualified shall be true and accurate in all material respects,
in each case, at and as of the Effective Time with the same force and effect
as though made at and as of the Effective Time (except to the extent a
representation or warranty speaks specifically as of an earlier date or
except as contemplated by this Agreement); provided, that any representation
and warranty that is true and accurate as of the date hereof (or such
earlier date as set forth above) shall be deemed to be true and accurate at
and as of the Effective Time except to the extent that AIMCO or any of its
subsidiaries shall have taken any voluntary action completely within the
control of such person that has been the principal cause of such
representation or warranty not being true and accurate; and provided,
further, that the representations and warranties set forth in SECTION 5.9
and clause (ii) of SECTION 5.8 shall be true and accurate only as of the
date hereof.
(b) AIMCO and Merger Sub shall have performed, in all material respects,
all obligations and complied, in all material respects, with all covenants
required by this Agreement to be performed or complied with by them prior to
the Effective Time.
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(c) AIMCO shall have delivered to NHP a certificate, dated the Effective
Time and signed by its Chairman of the Board and Chief Executive Officer or
President, evidencing compliance with SECTIONS 7.2(A) and (B).
(d) NHP shall have received an opinion of Skadden, Arps, Slate, Meagher
& Flom LLP, counsel to AIMCO and Merger Sub, and an opinion of Piper &
Marbury L.L.P., Maryland counsel to AIMCO, in each case, in form and
substance reasonably satisfactory to NHP, addressing the matters set forth
in EXHIBIT C-1 and EXHIBIT C-2, respectively.
(e) DLJ shall not have withdrawn the Fairness Opinion.
(f) The Stock Purchase Agreement shall not have been amended so as to
increase the consideration payable to Demeter and Capricorn thereunder.
SECTION 7.3 CONDITIONS TO OBLIGATIONS OF AIMCO AND MERGER SUB TO EFFECT THE
MERGER. The obligations of AIMCO and Merger Sub to effect the Merger are
subject to the satisfaction of the following conditions, unless waived by AIMCO
and Merger Sub:
(a) The representations and warranties of NHP contained herein that are
qualified as to materiality shall be true and accurate, and those not so
qualified shall be true and accurate in all material respects, in each case
at and as of the Effective Time with the same force and effect as though
made at and as of the Effective Time (except to the extent a representation
or warranty speaks specifically as of an earlier date or except as
contemplated by this Agreement); provided, that any representation and
warranty that is true and accurate as of the date hereof (or such earlier
date as set forth above) shall be deemed to be true and accurate at and as
of the Effective Time except to the extent that NHP and its subsidiaries
shall have taken any voluntary action completely within the control of such
person, that has been the principal cause of such representation or warranty
not being true and accurate; and provided, further, that the representations
and warranties set forth in SECTION 4.9 and clause (ii) of SECTION 4.8 shall
be true and accurate only as of the date hereof.
(b) NHP shall have performed, in all material respects, all obligations
and complied, in all material respects, with all covenants required by this
Agreement to be performed or complied with by it prior to the Effective
Time.
(c) NHP shall have delivered to AIMCO a certificate, dated the Effective
Time and signed by its Chairman of the Board and Chief Executive Officer or
President, evidencing compliance with SECTIONS 7.3(A) and (B).
(d) AIMCO shall have received from each Rule 145 Affiliate of NHP an
executed copy of a Rule 145 Affiliate Agreement from each Rule 145 Affiliate
as contemplated by SECTION 6.14.
(e) AIMCO and Merger Sub shall have received an opinion of Wilmer,
Cutler & Pickering, counsel to NHP, and an opinion of Arent Fox Kintner
Plotkin & Kahn, in each case, in form and substance reasonably satisfactory
to AIMCO and Merger Sub, addressing the matters set forth in EXHIBIT D-1 and
EXHIBIT D-2, respectively.
ARTICLE VIII
TERMINATION, WAIVER, AMENDMENT AND CLOSING
SECTION 8.1 TERMINATION. This Agreement may be terminated and abandoned at
any time prior to the Effective Time, whether before or after approval of this
Agreement, the Merger and the other Transactions by the respective stockholders
of NHP and AIMCO:
(a) by the mutual written consent of NHP and AIMCO;
(b) by NHP or AIMCO, if (i) the Effective Time shall not have occurred
on or before the Outside Date, (ii) any Governmental Authority, the consent
of which is a condition to the obligations
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of NHP and AIMCO to consummate the Transactions, shall have determined not
to grant its consent and all appeals of such determination shall have been
taken and have been unsuccessful or (iii) any court of competent
jurisdiction shall have issued an order, judgment or decree (other than a
temporary restraining order) restraining, enjoining or otherwise prohibiting
the Merger and such order, judgment or decree shall have become final and
nonappealable; provided, however, that the right to terminate this Agreement
pursuant to clause (i) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such
date;
(c) by NHP, if there has been a material breach by AIMCO of any
representation, warranty, covenant or agreement set forth in this Agreement,
which breach has not been cured within ten Business Days following receipt
by AIMCO of notice of such breach from NHP; provided, however, that the
right to terminate this Agreement pursuant to this SECTION 8.1(C) shall not
be available to NHP if NHP, at such time, is in material breach of any
representation, warranty, covenant or agreement set forth in this Agreement;
(d) by AIMCO, if there has been a material breach by NHP of any
representation, warranty, covenant or agreement set forth in this Agreement,
which breach has not been cured within ten Business Days following receipt
by NHP of notice of such breach from AIMCO; provided, however, that the
right to terminate this Agreement pursuant to this SECTION 8.1(D) shall not
be available to AIMCO if AIMCO, at such time, is in material breach of any
representation, warranty, covenant or agreement set forth in this Agreement;
(e) by AIMCO or NHP if, at the NHP Meeting (including any adjournment or
postponement thereof) called pursuant to SECTION 6.7 hereof, the NHP
Stockholder Approval shall not have been obtained;
(f) by AIMCO or NHP if, at the AIMCO Meeting (including any adjournment
or postponement thereof) called pursuant to SECTION 6.7 hereof, the AIMCO
Stockholder Approval shall not have been obtained;
(g) by NHP if (i) NHP receives an alternative Acquisition Proposal, (ii)
NHP is not then in breach of SECTION 6.6 or in breach of any other
representation, warranty, covenant or agreement that would give rise to a
failure of a condition set forth in SECTION 7.3(A) or 7.3(B), (iii) NHP
shall have made the payment required by SECTION 8.5, (iv) at least three
Business Days prior to such termination, NHP shall have provided to AIMCO
written notice (A) as to the material terms of any such Acquisition Proposal
and (B) that the Board of Directors of NHP, in the exercise of its good
faith judgment as to fiduciary duties to stock-holders under applicable law,
after consultation with outside legal counsel, has determined, by action of
a majority of the entire Board of Directors of NHP, or by the Board of
Directors with the approval of its Independent Committee, that such
termination is necessary in order for such Board of Directors to comply with
such duties, and (iv) on the date of such termination, the Board of
Directors of NHP determines, by action of a majority of the entire Board of
Directors of NHP, or by the Board of Directors with the approval of its
Independent Committee, that such termination continues to be necessary in
order for such Board of Directors to comply with its fiduciary duties to
stockholders under applicable law (which determination shall be made in
light of any revised proposal made by AIMCO) and NHP concurrently enters
into a definitive agreement providing for the implementation of such
Acquisition Proposal; and
(h) by AIMCO or NHP if (i) the Real Estate Acquisition Agreement has not
been entered into by May 31, 1997, or (ii) either the Stock Purchase
Agreement or the Real Estate Acquisition Agreement is terminated in
accordance with its terms.
SECTION 8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by NHP or AIMCO as provided in SECTION 8.1 hereof, this Agreement
shall forthwith become void (except SECTIONS
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6.5(B), 6.15, 8.2, 8.5, 9.1, 9.2, 9.5, 9.6, 9.7, 9.8, 9.9, 9.10, 9.14 OR 9.15)
and there shall be no liability on the part of NHP, AIMCO, Merger Sub or their
respective officers or directors, except for any breach of a party's obligations
under SECTIONS 6.5(B), 6.15, 8.2, 8.5, 9.1, 9.2, 9.5, 9.6, 9.7, 9.8, 9.9, 9.10,
9.14 and 9.15. Notwithstanding the foregoing, no party hereto shall be relieved
from liability for any willful, material breach of this Agreement.
SECTION 8.3 AMENDMENT OR SUPPLEMENT. At any time before or after approval
of this Agreement by the stockholders of NHP or AIMCO and prior to the Effective
Time, this Agreement may be amended or supplemented in writing by NHP, Merger
Sub and AIMCO with respect to any of the terms contained in this Agreement,
except that following approval by the stockholders of NHP or AIMCO there shall
be no amendment or supplement which by law requires further approval by such
stockholders without such further approval by the stockholders of NHP or AIMCO,
as the case may be.
SECTION 8.4 EXTENSION OF TIME, WAIVER, ETC. At any time prior to the
Effective Time:
(a) AIMCO may extend the time for the performance of any of the
obligations or acts of NHP, and NHP may extend the time for the performance
of any of the obligations or acts of AIMCO or Merger Sub;
(b) AIMCO may waive any inaccuracies in the representations and
warranties of NHP contained herein or in any document delivered pursuant
hereto, and NHP may waive any inaccuracies in the representations and
warranties of AIMCO contained herein or in any document delivered pursuant
hereto; or
(c) AIMCO may waive compliance with any of the agreements of NHP
contained herein, and NHP may waive compliance with any of the agreements of
AIMCO or Merger Sub contained herein; provided, however, that no failure or
delay by NHP or AIMCO in exercising any right hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right
hereunder.
SECTION 8.5 TERMINATION FEE. If this Agreement is to be terminated
pursuant to SECTION 8.1(E) or 8.1(G), and if NHP is not entitled to terminate
this Agreement by reason of SECTION 8.1(B), 8.1(C) or 8.1(F), then, in addition
to any other rights or remedies that may be available to AIMCO, NHP shall
promptly (and in any event within two days of receipt by NHP of written notice
from AIMCO) pay to AIMCO (by wire transfer of immediately available funds to an
account designated by AIMCO) a termination fee of $4.0 million; provided,
however, that NHP shall not be obligated to pay such fee to AIMCO if this
Agreement is terminated pursuant to SECTION 8.1(E) unless (i) (A) at the time of
the NHP Meeting, NHP has received an alternative Acquisition Proposal, and (B)
prior to the termination of this Agreement, the Board of Directors of NHP shall
have withdrawn, or modified in a manner adverse to AIMCO, its approval or
recommendation of the Merger, and (ii) within two years after the termination of
this Agreement, NHP enters into a definitive agreement providing for an
alternative Acquisition Proposal or an alternative Acquisition Proposal is
consummated with any Person; and, provided, further, that if such termination
fee becomes payable as a result of a termination pursuant to SECTION 8.1(E),
then such termination fee shall be paid promptly following the earlier of the
execution of such definitive agreement providing for an alternative Acquisition
Proposal and the consummation of an alternative Acquisition Proposal, as the
case may be. If this Agreement is terminated pursuant to SECTION 8.1(E) and (i)
prior to the termination of this Agreement, the Board of Directors of NHP shall
have withdrawn, or modified in a manner adverse to AIMCO, its approval or
recommendation of the Merger, and (ii) NHP is not at that time obligated to pay
the termination fee pursuant to the first proviso of the preceding sentence,
then NHP shall pay to AIMCO, on demand, an amount equal to the documented
out-of-pocket expenses incurred by AIMCO in connection with this Agreement and
the Merger, provided, that the maximum amount of such expenses that NHP is
required to reimburse shall not exceed $4.0 million (which expense reimbursement
shall be credited against any termination fee that subsequently becomes payable
pursuant to clause (ii) of the preceding sentence).
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1 GOVERNING LAW. This Agreement and the legal relations among
the parties hereto shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware, without regard to its principles of
conflicts of law.
SECTION 9.2 ENTIRE AGREEMENT. This Agreement, including the exhibits and
schedules attached hereto, constitutes the entire agreement among the parties
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, letters of intent, negotiations and discussions, whether oral or
written, of the parties, and there are no warranties, representations or other
agreements, express or implied, made to any party by any other party in
connection with the subject matter hereof except as specifically set forth
herein or in the documents delivered pursuant hereto or in connection herewith.
SECTION 9.3 MODIFICATION; WAIVER. No supplement, modification, extension,
waiver or termination of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any provision of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
SECTION 9.4 NOTICES. All notices, consents, requests, reports, demands or
other communications hereunder (collectively, "NOTICES") shall be in writing and
may be given personally, by registered mail, fax or by Federal Express (or other
reputable overnight delivery service):
if to AIMCO or Merger Sub, to it at:
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222-4348
Attention: Mr. Terry Considine
Telephone: (303) 757-8600
Fax: (303) 753-9538
and
28200 Highway 189, Building F-240
P.O. Box 1060
Lake Arrowhead, California 92352
Attention: Mr. Peter K. Kompaniez
Telephone: (909) 336-4821
Fax: (909) 336-4826
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Rod A. Guerra, Esq.
Telephone: (213) 687-5000
Fax: (213) 687-5600
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if to NHP, to it at:
8065 Leesburg Pike, Suite 400
Vienna, Virginia 22182
Attention: Mr. J. Roderick Heller III and
Joel Bonder, Esq.
Telephone: (703) 394-2470
Fax: (703) 394-2970
with a copy to:
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attention: Richard W. Cass, Esq.
Telephone: (202) 663-6503
Fax: (202) 663-6363
or to such other address or such other person as the addressee party shall have
last designated by notice to the other party. All Notices shall be deemed to
have been given (i) when delivered personally, (ii) three days after being sent
by registered mail, (iii) upon transmission by fax and receipt of confirmation
of such transmission by the sender's fax machine, or (iv) one day after being
sent by Federal Express (or other reputable overnight delivery service).
SECTION 9.5 EXPENSES. Whether or not the transactions contemplated by this
Agreement shall be consummated, all fees and expenses incurred by any party
hereto in connection with this Agreement shall be borne by such party, except
that the expenses incurred in connection with printing the Proxy Statement/
Prospectus shall be paid in equal shares by NHP and AIMCO.
SECTION 9.6 ASSIGNMENT. No party hereto shall have the right, power or
authority to assign or pledge this Agreement or any portion of this Agreement,
or to delegate any duties or obligations arising under this Agreement,
voluntarily, involuntarily, or by operation of law, without the prior written
consent of the other parties hereto.
SECTION 9.7 SURVIVAL. None of the representations and warranties in this
Agreement or in any document or instrument delivered pursuant to this Agreement
shall survive the Merger or the termination of this Agreement pursuant to
ARTICLE VIII.
SECTION 9.8 SEVERABILITY. Any provision or part of this Agreement which is
invalid or unenforceable in any situation in any jurisdiction shall, as to such
situation and such jurisdiction, be ineffective only to the extent of such
invalidity and shall not affect the enforceability of the remaining provisions
hereof or the validity or enforceability of any such provision in any other
situation or in any other jurisdiction.
SECTION 9.9 SUCCESSORS AND ASSIGNS; THIRD PARTIES. Subject to and without
waiver of the provisions of SECTION 9.6, all of the rights, duties, benefits,
liabilities and obligations of the parties shall inure to the benefit of, and be
binding upon, their respective successors, assigns, heirs and legal
representatives. Except as specifically set forth in SECTION 3.2, 3.3, 3.6,
6.15, 6.18 and 6.19, nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person or entity, other than the parties
hereto and their successors or permitted assigns, any rights or remedies under
or by reason of this Agreement.
SECTION 9.10 COUNTERPARTS. This Agreement may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties hereto on separate counterparts each of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute one and the
same instrument.
SECTION 9.11 INTERPRETATION; REFERENCES. Any use of masculine, feminine or
neuter pronouns herein shall not be limiting, but shall be construed as
referring to persons of any gender, as the context may
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require. Any use of the singular or plural form herein shall not be limiting,
but shall be construed as referring to either the plural or singular, as the
context may require. References to a "Schedule" or an "Exhibit" are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement, and
references to an "Article" or a "Section" are, unless otherwise specified, to an
Article or a Section of this Agreement. The Article and Section headings of this
Agreement are for convenience of reference only and shall not be deemed to
modify, explain, restrict, alter or affect the meaning or interpretation of any
provision hereof.
SECTION 9.12 JURISDICTION. The parties hereto hereby agree that any
disputes arising out of, in connection with or with respect to this Agreement,
the subject matter hereof, the performance or non-performance of any obligation
hereunder, or any of the transactions contemplated hereby shall be adjudicated
in a state or federal court of competent civil jurisdiction sitting in the State
of Delaware and nowhere else. Each of the parties hereto hereby irrevocably
submits to the jurisdiction of any such court of the purposes of any suit, civil
action or other proceeding arising out of, in connection with or with respect to
this Agreement, the subject matter hereof, the performance of non-performance of
any obligation hereunder, or any of the transactions contemplated hereby (each,
a "SUIT"). To the extent permitted by Law, each of the parties hereto hereby
waives and agrees not to assert by way of motion, as a defense or otherwise in
any such Suit, any claim that it is not subject to the jurisdiction of the above
courts, that such Suit is brought in an inconvenient forum, that the venue of
such Suit is improper or that it is entitled to a trial by jury.
SECTION 9.13 EXHIBITS AND SCHEDULES. All exhibits and schedules attached
hereto are hereby incorporated by reference as though set out in full herein.
SECTION 9.14 ATTORNEYS' FEES. In the event that any party hereto brings an
action or proceeding against the other party to enforce or interpret any of the
covenants, conditions, agreements or provisions of this Agreement, the
prevailing party in such action or proceeding shall be entitled to recover all
costs and expenses of such action or proceeding, including, without limitation,
reasonable attorneys' fees, charges, disbursements and the fees and costs of
expert witnesses.
SECTION 9.15 WAIVER OF JURY TRIAL. Each party to this Agreement further
waives its respective right to a jury trial of any claim or cause of action
arising out of this Agreement or any dealings between any of the parties hereto
relating to the subject matter of this Agreement. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this Agreement, including,
without limitation, contract claims, tort claims and all other common law and
statutory claims. This waiver is irrevocable, meaning that it may not be
modified either orally or in writing, and this waiver shall apply to any
subsequent amendments, supplements or other modifications to this Agreement or
to any other document or agreement relating to the Transactions.
SECTION 9.16 FURTHER ASSURANCES. Each of the parties shall, without
further consideration, use reasonable efforts to execute and deliver such
additional documents and take such other action as the other parties, or any of
them, may reasonably request to carry out the intent of this Agreement and the
Transactions.
SECTION 9.17 NEGOTIATION OF AGREEMENT. Each of the parties acknowledges
that it has been represented by independent counsel of its choice throughout all
negotiations that have preceded the execution of this Agreement and that it has
executed the same with consent and upon the advice of said independent counsel.
Each party and its counsel cooperated in the drafting and preparation of this
Agreement and the documents referred to herein, and any and all drafts relating
thereto shall be deemed the work product of the parties and may not be construed
against any party by reason of its preparation. Accordingly, any rule of law or
any legal decision that would require interpretation of any ambiguities in this
Agreement against the party that drafted it is of no application and is hereby
expressly waived. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the intentions of the parties and this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.
NHP Incorporated
By /s/ J. RODERICK HELLER, III
-----------------------------------------
Name: J. Roderick Heller, III
Title: CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
By /s/ LEEANN MOREIN
-----------------------------------------
Name: Leeann Morein
Title: SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
AIMCO/NHP ACQUISITION CORP.
By /s/ LEEANN MOREIN
-----------------------------------------
Name: Leeann Morein
Title: VICE PRESIDENT
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EXHIBIT A TO APPENDIX I
FORM OF AFFILIATE LETTER
Apartment Investment and Management Company
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222-4348
Ladies and Gentlemen:
I have been advised that, as of the date of this letter agreement, I may be
deemed to be an "affiliate" of NHP Incorporated, a Delaware corporation ("NHP"),
as such term is defined for purposes of paragraphs (c) and (d) of Rule 145 of
the rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act").
Pursuant to the terms of the Agreement and Plan of Merger, dated as of April
21, 1997 (the "Merger Agreement"), by and among Apartment Investment and
Management Company, a Maryland corporation ("AIMCO"), NHP and AIMCO/NHP
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of AIMCO
("Merger Sub"), Merger Sub will be merged with and into NHP (the "Merger").
Pursuant to the Merger, all of the shares of Common Stock, par value $0.01 per
share, of NHP owned by the undersigned will be converted into the right to
receive shares of Class A Common Stock, par value $0.01 per share, of AIMCO (the
"AIMCO Common Stock"), or a combination of cash and shares of AIMCO Common
Stock.
I represent, warrant and covenant to AIMCO that, with respect to all shares
of AIMCO Common Stock received as a result of the Merger:
1. I shall not make any sale, transfer or other disposition of the
shares of AIMCO Common Stock in violation of the Act or the Rules and
Regulations.
2. I have carefully read this letter and the Merger Agreement and have
had an opportunity to discuss the requirements of such documents and any
other applicable limitations upon my ability to sell, transfer or otherwise
dispose of shares of AIMCO Common Stock with my counsel or counsel for NHP.
3. I have been advised that the issuance of shares of AIMCO Common
Stock to me pursuant to the Merger has been registered with the Commission
under the Act. However, I have also been advised that, since at the time the
Merger was submitted for a vote of the stockholders of NHP, I may be deemed
to have been an affiliate of NHP and the distribution by me of the AIMCO
Common Stock has not been registered under the Act, I may not sell, transfer
or otherwise dispose of shares of AIMCO Common Stock issued to me in the
Merger unless (i) such sale, transfer or other disposition has been
registered under the Act or is made in conformity with Rule 145 under the
Act, or (ii) in the opinion of counsel reasonably acceptable to AIMCO, or
pursuant to a "no action" letter obtained by the undersigned from the staff
of the Commission, such sale, transfer or other disposition is otherwise
exempt from registration under the Act.
4. I understand that, except as provided in the Registration Rights
Agreement to be entered into by AIMCO and the undersigned as contemplated by
the Merger Agreement, AIMCO is under no obligation to register under the Act
the sale, transfer or other disposition of shares of AIMCO
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Common Stock by me or on my behalf or to take any other action necessary in
order to make compliance with an exemption from such registration available.
5. I understand that AIMCO will give stop transfer instructions to
AIMCO's transfer agents with respect to the AIMCO Common Stock and that the
certificates for the shares of AIMCO Common Stock issued to me, or any
substitutions therefor, will bear a legend substantially to the following
effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY ONLY
BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT, DATED
, BETWEEN THE REGISTERED HOLDER HEREOF AND
, A COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICES OF ."
6. I also understand that unless the transfer by me of my shares of
AIMCO Common Stock has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, AIMCO reserves the right to
place a legend substantially to the following effect on the certificates
issued to any transferee:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM
A PERSON WHO RECEIVED SUCH SECURITIES IN A TRANSACTION TO WHICH
RULE 145 UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SECURITIES
HAVE NOT BEEN ACQUIRED BY THE HOLDER WITH A VIEW TO, OR FOR RESALE
IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF
THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933."
I-A-2
<PAGE>
It is understood and agreed that the legends set forth in paragraphs 5 and 6
above shall be removed by delivery of substitute certificates without such
legend if such legend is not required for purposes of the Act. It is understood
and agreed that such legends and the stop orders referred to above will be
removed if (i) one year shall have elapsed from the date the undersigned
acquired the Securities received in the Merger and the provisions of Rule
145(d)(2) are then available to the undersigned, (ii) two years shall have
elapsed from the date the undersigned acquired the shares of AIMCO Common Stock
received in the Merger and the provisions of Rule 145(d)(3) are then available
to the undersigned, or (iii) AIMCO has received either an opinion of counsel,
which opinion and counsel shall be reasonably satisfactory to AIMCO, or a "no
action" letter obtained by the undersigned from the staff of the Commission, to
the effect that the restrictions imposed by Rule 145 under the Act no longer
apply to the undersigned.
Execution of this letter should not be considered an admission on my part
that I am an "affiliate" of NHP as described in the first paragraph of this
letter.
AIMCO agrees that, for a period of at least two years after the effective
date of Merger, it will make publicly available the information required by, and
in the manner specified by, Rule 144(c) under the Act.
Sincerely,
______________________________________
Name:
Accepted this day of ,
1997:
APARTMENT INVESTMENT AND MANAGEMENT
COMPANY
By:__________________________________________
Name:
Title:
I-A-3
<PAGE>
EXHIBIT B TO APPENDIX I
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is made and entered
into as of , 1997, by and among Apartment Investment and Management
Company, a Maryland corporation ("AIMCO"), and the persons named on the
signature pages hereto (each, an "INVESTOR" and, collectively, the "INVESTORS").
WHEREAS, the Investors own shares of common stock, par value $.01 per share
(the "NHP SHARES"), of NHP Incorporated, a Delaware corporation ("NHP");
WHEREAS, in connection with the Agreement and Plan of Merger, dated as of
April 21, 1997 (the "MERGER AGREEMENT"), by and among AIMCO, NHP, and AIMCO/NHP
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of AIMCO
("MERGER SUB"), Merger Sub will be merged with and into NHP and the NHP Shares
will be converted into shares of AIMCO Common Stock (as defined below) and/or
cash; and
WHEREAS, in order to induce the Investors to execute and deliver to AIMCO
the letters contemplated by Section 6.14 of the Merger Agreement, AIMCO has
agreed to provide the registration rights set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
SECTION 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
"ADVICE" shall have the meaning set forth in SECTION 4.
"AFFILIATE" means, with respect to any specified person, any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For the purposes of this definition,
"control" when used with respect to any specified person means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "CONTROLLING" and "CONTROLLED" have meanings correlative to the
foregoing.
"AIMCO" shall have the meaning set forth in the introductory clauses hereof.
"AIMCO COMMON STOCK" means the Class A Common Stock, par value $0.01 per
share, of AIMCO issued pursuant to the Merger Agreement, or any other shares of
Capital Stock or other securities into which such shares of AIMCO Common Stock
shall be reclassified or changed, including, without limitation, by reason of a
merger, consolidation, exchange, reorganization or recapitalization. If the
AIMCO Common Stock has been so reclassified or changed, or if AIMCO pays a
dividend or makes a distribution on the AIMCO Common Stock in shares of Capital
Stock or other securities, or subdivides (or combines) its outstanding shares of
AIMCO Common Stock into a greater (or smaller) number of shares of AIMCO Common
Stock, a share of AIMCO Common Stock shall be deemed to be such number of shares
of Capital Stock and amount of other securities to which a holder of a share of
AIMCO Common Stock outstanding immediately prior to such change,
reclassification, exchange, dividend, distribution, subdivision or combination
would be entitled.
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or a legal
holiday on which banking institutions in the State of New York are not required
to be open.
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<PAGE>
"CAPITAL STOCK" means, with respect to any person, any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock issued by such person, including each class of common stock and preferred
stock of such person.
"DELAY PERIOD" shall have the meaning set forth in SECTION 2(D).
"DEMAND NOTICE" shall have the meaning set forth in SECTION 2(B).
"DEMAND REGISTRATION" shall have the meaning set forth in SECTION 2(C).
"EFFECTIVENESS PERIOD" shall have the meaning set forth in SECTION 2(D).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"HOLD-BACK PERIOD" shall have the meaning set forth in SECTION 3.
"HOLDER" means a person who owns Registrable Securities and is either (i) an
Investor, (ii) a person that has agreed to be bound by the terms of this
Agreement as if such person were an Investor and is (A) a person to whom an
Investor has transferred Registrable Securities in a transaction not involving a
public offering (e.g. pursuant to Rule "4(1 1/2)" or any similar private
transfer exemption), (B) upon the death of any Investor, the executor of the
estate of such Investor or such Investor's heirs, devisees, legatees or assigns
or (iii) upon the disability of any Investor, any guardian or conservator of
such Investor.
"INITIAL SHELF REGISTRATION" shall have the meaning set forth in SECTION
2(A).
"INTERRUPTION PERIOD" shall have the meaning set forth in SECTION 4.
"INVESTOR(S)" shall have the meaning set forth in the introductory clauses
hereof.
"MERGER AGREEMENT" shall have the meaning set forth in the introductory
clauses hereof.
"MERGER SUB" shall have the meaning set forth in the introductory clauses
hereof.
"NHP" shall have the meaning set forth in the introductory clauses hereof.
"NHP SHARES" shall have the meaning set forth in the introductory clauses
hereof.
"PERSON" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"PROSPECTUS" means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Securities covered by such Registration Statement and all
other amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
"REGISTRABLE SECURITIES" means shares of AIMCO Common Stock of an Investor
unless (i) such securities have previously been disposed of by a Holder pursuant
to an effective Registration Statement under Section 5 of the Securities Act, or
(ii) at any time hereafter, such securities have become freely transferable
without restriction under the Securities Act.
"REGISTRATION" means registration under the Securities Act of the offering
of Registrable Securities pursuant to the Initial Shelf Registration or a Demand
Registration.
"REGISTRATION PERIOD" shall have the meaning set forth in SECTION 2(B).
I-B-2
<PAGE>
"REGISTRATION STATEMENT" means any registration statement of AIMCO under the
Securities Act that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus included therein,
amendments and supplements to such registration statement, including pre-and
post-effective amendments, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
"SHELF REGISTRATION" means the registration under the Securities Act of the
offering of Registrable Securities on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act (or any similar rule that may be adopted by
the SEC).
"SHELF REGISTRATION STATEMENT" means a Registration Statement intended to
effect a Shelf Registration.
"UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING" means a registration
under the Securities Act in which securities of AIMCO are sold to an underwriter
for reoffering to the public.
SECTION 2. INITIAL SHELF REGISTRATION; DEMAND REGISTRATION.
(a) As soon as practicable, but in any event within 90 days after the date
hereof, AIMCO shall prepare and file with the SEC a Shelf Registration Statement
on an appropriate form (the "INITIAL SHELF REGISTRATION"). AIMCO shall include
in the Initial Shelf Registration all Registrable Securities with respect to
which a Holder has, not later than the second day prior to the effectiveness of
such Shelf Registration Statement, given AIMCO written notice of such Holder's
intention to sell thereunder. AIMCO shall use its best efforts to cause such
Shelf Registration Statement to be declared effective by the SEC as soon as
possible. If AIMCO receives written notice from a Holder after the date on which
such Shelf Registration Statement has become effective that such Holder desires
to include additional Registrable Securities in such Shelf Registration
Statement, AIMCO shall use its best efforts to so include such additional
Registrable Securities as promptly as possible, including, if required, filing
an additional registration statement, either pursuant to Rule 462(b) under the
Securities Act or otherwise, which registration statement shall not be counted
towards determining the number of Demand Registrations to which the Holders are
entitled pursuant to SECTION 2(B).
(b) The Holders shall have the right, during the period (the "REGISTRATION
PERIOD") commencing on the date hereof and ending on the third anniversary
hereof, by written notice (the "DEMAND NOTICE") given to AIMCO, to request AIMCO
to register under and in accordance with the provisions of the Securities Act
all or part of the Registrable Securities designated by such Holders; PROVIDED,
that the aggregate number of Registrable Securities requested to be registered
pursuant to any such Demand Notice and pursuant to all Demand Notices received
pursuant to the following sentence shall be at least 300,000 shares of AIMCO
Common Stock. Upon receipt of any such Demand Notice, AIMCO will promptly notify
all other Holders of the receipt of such Demand Notice and allow them the
opportunity to include Registrable Securities held by them in the proposed
registration by submitting their own Demand Notice. The Holders as a group shall
be entitled to two Demand Registrations pursuant to this SECTION 2(B) unless any
such Demand Registration did not become effective or was not maintained
effective for a period (whether or not continuous) of at least 90 days or such
shorter period which shall terminate when all the Registrable Securities covered
by such Demand Registration have been disposed of pursuant thereto, in which
case the Holders, as a group, will be entitled, in each case to one additional
Demand Registration pursuant hereto.
(c) Within 20 days of the date on which AIMCO first receives a Demand
Notice pursuant to SECTION 2(B) hereof, AIMCO shall file with the SEC a
Registration Statement on the appropriate form for the registration and sale of
the total number of Registrable Securities specified in such Demand Notices in
accordance with the intended method or methods of distribution specified by the
Holders in such Demand
I-B-3
<PAGE>
Notices (a "DEMAND REGISTRATION"). AIMCO shall use its best efforts to cause
such Registration Statement to be declared effective by the SEC within 90 days
of the date of AIMCO's earliest receipt of a Demand Notice.
(d) AIMCO agrees to use commercially reasonable efforts to keep any
Registration Statement filed pursuant to this SECTION 2 continuously effective
and usable for the sale of Registrable Securities (i)(A) in the case of a Shelf
Registration, until one year from the date hereof or, if later, 90 days from the
date on which the SEC declares such Registration Statement effective, and (B) in
the case of a Registration that is not a Shelf Registration, until 90 days from
the date on which the SEC declares such Registration Statement effective, or
(ii) until all the Registrable Securities covered by such Registration Statement
have been sold pursuant to such Registration Statement, if earlier, in either
case as such period may be extended pursuant to this SECTION 2. Notwithstanding
the foregoing, AIMCO shall have the right to delay the filing of any
Registration Statement otherwise required to be prepared and filed by AIMCO
pursuant to this SECTION 2, or to suspend the use of any Registration Statement,
for a period not in excess of 60 days (a "DELAY PERIOD") if any executive
officer of AIMCO determines that in such executive officer's reasonable judgment
and good faith the registration and distribution of the Registrable Securities
covered or to be covered by such Registration Statement would materially
interfere with any pending financing, acquisition or corporate reorganization or
other material transaction involving AIMCO or any of its subsidiaries or would
require disclosure of any other material corporate development that AIMCO is not
otherwise required to disclose. AIMCO will promptly give the Holders written
notice of such determination and an approximation of the period of the
anticipated delay; PROVIDED, HOWEVER, that the aggregate number of days included
in all Delay Periods during any consecutive 12 months shall not exceed the
aggregate of (x) 150 days minus (y) the number of days occurring during the
Hold-Back Periods and Interruption Periods during such consecutive 12 months.
Each Holder agrees to cease all disposition efforts under such Registration
Statement with respect to Registrable Securities held by such Holder immediately
upon receipt of notice of the beginning of any Delay Period. AIMCO shall provide
written notice to the Holders of the end of each Delay Period. AIMCO shall not
be entitled to initiate a Delay Period unless it shall (i) to the extent
permitted by agreements with other security holders of AIMCO, concurrently
prohibit sales by such other security holders under registration statements
covering securities held by such other security holders and (ii) have in place a
policy that prohibits sales of securities of AIMCO by senior executive officers
during such period. The time period for which AIMCO is required to maintain the
effectiveness of a Registration Statement referred to above shall be extended by
the aggregate number of days of all Delay Periods, Hold-Back Periods and
Interruption Periods affecting such Registration, and such period and any
extension thereof is hereinafter referred to as the "EFFECTIVENESS PERIOD."
(e) AIMCO shall not include any securities that are not Registrable
Securities in any Registration Statement filed pursuant to this SECTION 2
without the prior written consent of the Holders of a majority in number of the
Registrable Securities covered by such Registration Statement. AIMCO shall not
enter into any agreement granting any person (an "OTHER SECURITY HOLDER")
piggyback registration rights that would permit AIMCO securities of such Other
Security Holder (or such Other Security Holder's successors or assigns) to be
included on a Registration Statement filed pursuant to this SECTION 2 or
granting any Other Security Holder piggyback rights to include such Other
Security Holder's securities in any registration in which the Holders have the
right to include Registrable Securities on a priority basis more favorable to
such Other Security Holder than is provided to the Holders pursuant to SECTION
3(B). To AIMCO's knowledge, there are no agreements granting any person the
right to include securities in any registration pursuant to SECTION 2.
(f) Holders of a majority in number of the Registrable Securities to be
included in a Demand Registration pursuant to this SECTION 2 may, at any time
prior to the effective date of the Registration Statement in respect thereof,
revoke such request by providing a written notice to AIMCO to such effect. The
Holders of Registrable Securities who revoke such request shall reimburse AIMCO
for all of its out-of-pocket expenses incurred in the preparation, filing and
processing of the Registration Statement;
I-B-4
<PAGE>
PROVIDED, HOWEVER, that, if such revocation was based on AIMCO's failure to
comply in any material respect with its obligations hereunder, such
reimbursement shall not be required.
SECTION 3. HOLD-BACK AGREEMENTS.
During any Effectiveness Period, each Holder having Registrable Securities
covered by the Registration Statement to which such Effectiveness Period relates
shall, if requested by the managing underwriter or underwriters in an
underwritten offering by AIMCO for the account of AIMCO, agree not to effect any
public sale or distribution of any securities of the same type (including any
underlying securities) as the securities being offered by AIMCO (except as part
of such underwritten offering or pursuant to Rule 144 or 145 under the
Securities Act), during a period of up to 90 days, beginning on the effective
date of each such underwritten offering (each such period, a "HOLD-BACK
PERIOD").
SECTION 4. REGISTRATION PROCEDURES.
In connection with the registration obligations of AIMCO pursuant to and in
accordance with SECTION 2 hereof (and subject to AIMCO's rights under SECTION
2), AIMCO will use commercially reasonable efforts to effect such registration
to permit the sale of such Registrable Securities in accordance with the
Holders' intended method or methods of disposition thereof, and pursuant thereto
AIMCO shall as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement for the sale of
the Registrable Securities on any form for which AIMCO then qualifies or which
counsel for AIMCO shall deem appropriate in accordance with such Holders'
intended method or methods of distribution thereof and, subject to SECTION 2(D),
use commercially reasonable efforts to cause such Registration Statement to
become effective and remain effective as provided herein;
(b) prepare and file with the SEC such amendments (including post-effective
amendments) to the Registration Statement, and such supplements to the
Prospectus, as may be required by the rules, regulations or instructions
applicable to the Securities Act during the applicable period in accordance with
the intended methods of disposition specified by the Holders owning any
Registrable Securities covered by such Registration Statement, make generally
available earnings statements satisfying the provisions of Section 11(a) of the
Securities Act (provided that AIMCO shall be deemed to have complied with this
clause if it has complied with Rule 158 under the Securities Act), and cause the
Prospectus as so supplemented to be filed pursuant to Rule 424 under the
Securities Act;
(c) notify the Holders owning any Registrable Securities covered by such
Registration Statement promptly and (if requested) confirm such notice in
writing, (i) when a Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the SEC for amendments or supplements to a Registration Statement or
related Prospectus or for additional information regarding such Holders, (iii)
of the issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose,
(iv) of the receipt by AIMCO of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, and (v) of the happening of any event that requires
the making of any changes in such Registration Statement, Prospectus or
documents incorporated or deemed to be incorporated therein by reference so that
they will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading;
(d) use commercially reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement, or the lifting
of any suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction in the United States;
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<PAGE>
(e) furnish to the Holders disposing of Registrable Securities covered by
such Registration Statement, counsel for such Holders and each managing
underwriter, if any, without charge, one conformed copy of the Registration
Statement, as declared effective by the SEC, and of each post-effective
amendment thereto, in each case, including financial statements and schedules
and all exhibits and reports incorporated or deemed to be incorporated therein
by reference; and deliver, without charge, such number of copies of the
preliminary prospectus, any amended preliminary prospectus, each final
Prospectus and any post-effective amendment or supplement thereto, as such
Holder may reasonably request in order to facilitate the disposition of the
Registrable Securities covered by the Registration Statement in conformity with
the requirements of the Securities Act;
(f) prior to any public offering of Registrable Securities, use
commercially reasonable efforts to register or qualify such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions in the United States as the Holders disposing of Registrable
Securities covered by the Registration Statement shall reasonably request in
writing; PROVIDED, HOWEVER,that AIMCO shall in no event be required to qualify
generally to do business as a foreign corporation or as a dealer in any
jurisdiction where it is not at the time so qualified or to execute or file a
general consent to service of process in any such jurisdiction where it has not
theretofore done so or to take any action that would subject it to general
service of process or taxation in any such jurisdiction where it is not then
subject;
(g) except during any Delay Period, upon the occurrence of any event
contemplated by SECTION 4(C)(V) above, promptly file a supplement or
post-effective amendment to the Registration Statement or related Prospectus or
any document incorporated or deemed to be incorporated therein by reference or
any other required document so that, as thereafter delivered to the purchasers
of the Registrable Securities being sold thereunder, such Prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
(h) use commercially reasonable efforts to cause all Registrable Securities
covered by the Registration Statement to be listed on each securities exchange
or automated interdealer quotation system, if any, on which similar securities
issued by AIMCO are then listed or quoted;
(i) on or before the effective date of the Registration Statement, provide
the transfer agent of AIMCO for the Registrable Securities with printed
certificates for the Registrable Securities in a form eligible for deposit with
The Depositary Trust Company;
(j) if such offering is an underwritten offering, make available for
inspection by any Holder disposing of Registrable Securities included in such
Registration Statement, any underwriter of such offering, and any attorney,
accountant or other agent retained by any such Holder or underwriter
(collectively, the "INSPECTORS"), all financial and other records and other
information, pertinent corporate documents and properties of any of AIMCO and
its subsidiaries (collectively, the "RECORDS"), as shall be reasonably necessary
to enable them to exercise their due diligence responsibility; PROVIDED,
HOWEVER, that the Records that AIMCO determines, in good faith, to be
confidential shall not be disclosed to any Inspector unless (i) such Inspector
signs a confidentiality agreement reasonably satisfactory to AIMCO (which shall
permit the disclosure of such Records in such Registration Statement or the
related Prospectus if necessary to avoid or correct a material misstatement in
or material omission from such Registration Statement or Prospectus), (ii) after
consultation with counsel for the applicable Inspectors, the Holders and AIMCO,
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such Registration Statement or (iii) the release of such Records
is ordered pursuant to a subpoena or other order from a court of competent
jurisdiction, PROVIDED that each Holder shall, promptly after learning that
disclosure of such Records is sought in a court having jurisdiction, give notice
to AIMCO and allow AIMCO, at AIMCO's expense, to undertake appropriate action to
prevent disclosure of such Records; and
(k) if such offering is an underwritten offering, enter into such
agreements (including an underwriting agreement in form, scope and substance as
is customary in underwritten offerings) and take all such
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<PAGE>
other appropriate and reasonable actions requested by the Holders owning a
majority of the Registrable Securities being sold in connection therewith
(including those reasonably requested by the managing underwriters) in order to
expedite or facilitate the disposition of such Registrable Securities and, in
such connection, (i) use its commercially reasonable efforts to obtain opinions
of counsel to AIMCO and updates thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the managing
underwriters and counsel to the Holders disposing of Registrable Securities),
addressed to each Holder selling Registrable Securities covered by such
Registration Statement and each of the underwriters as to the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such counsel and underwriters,
(ii) use commercially reasonable efforts to obtain "cold comfort" letters and
updates thereof from the independent certified public accountants of AIMCO (and,
if necessary, any other independent certified public accountants of any
subsidiary of AIMCO or of any business acquired by AIMCO for which financial
statements and financial data are, or are required to be, included in the
Registration Statement), addressed to each Holder selling Registrable Securities
covered by the Registration Statement (unless such accountants shall be
prohibited from so addressing such letters by applicable standards of the
accounting profession) and each of the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings, and (iii) if
requested and if an underwriting agreement is entered into, provide
indemnification provisions and procedures substantially to the effect set forth
in SECTION 7 hereof with respect to all parties to be indemnified pursuant to
said Section. The above shall be done at each closing under such underwriting or
similar agreement, or as and to the extent required thereunder.
With respect to any Registration under SECTION 2 hereof, AIMCO may require
each Holder disposing of Registrable Securities covered by such Registration to
furnish such information regarding the Holder and such Holder's intended
disposition of Registrable Securities as AIMCO may from time to time reasonably
request in writing. If any such information with respect to the Holder is not
furnished within a reasonable period of time after receipt of such request,
AIMCO may exclude such Holder's Registrable Securities from such Registration.
Upon receipt of any notice from AIMCO of the happening of any event of the
kind described in SECTION 4(C)(II), 4(C)(III), 4(C)(IV) or 4(C)(V) hereof, each
Holder shall (i) forthwith discontinue disposition of any Registrable Securities
covered by such Registration Statement or Prospectus until receipt of the copies
of the supplemented or amended Prospectus contemplated by SECTION 4(G) hereof,
or until such Holder is advised in writing (the "ADVICE") by AIMCO that the use
of the applicable Prospectus may be resumed, and has received copies of any
amended or supplemented Prospectus or any additional or supplemental filings
which are incorporated, or deemed to be incorporated, by reference in such
Prospectus (such period during which disposition is discontinued being an
"INTERRUPTION PERIOD") and (ii) if requested by AIMCO, deliver to AIMCO (at the
expense of AIMCO) all copies then in its possession, other than permanent file
copies then in its possession, of the Prospectus covering such Registrable
Securities at the time of receipt of such request. No Holder shall utilize any
material other than the applicable current preliminary prospectus or Prospectus
in connection with the offering of Registrable Securities pursuant to SECTION 2
hereunder.
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<PAGE>
SECTION 5. REGISTRATION EXPENSES.
Whether or not any Registration Statement is filed or becomes effective,
AIMCO shall pay all costs, fees and expenses incident to AIMCO's performance of
or compliance with this Agreement including, without limitation, (i) all
registration and filing fees, including NASD filing fees, (ii) fees and expenses
of compliance with securities or Blue Sky laws, including reasonable fees and
disbursements of counsel in connection therewith, (iii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses (including preliminary
prospectuses) if the printing of prospectuses is requested by the Holders or the
managing underwriter, if any), (iv) messenger, telephone and delivery expenses,
(v) fees and disbursements of counsel for AIMCO, (vi) fees and disbursements of
all independent certified public accountants of AIMCO (including, without
limitation, expenses of any "cold comfort" letters required in connection with
this Agreement) and all other persons retained by AIMCO in connection with the
Registration Statement, (vii) fees and disbursements (not in excess of $25,000
per Registration) of one counsel, other than AIMCO's counsel, selected to
represent all such Holders by Holders owning a majority in number of the
Registrable Securities being registered, (viii) fees and expenses customarily
reimbursed or paid by issuers or selling securityholders on behalf of
underwriters in underwritten offerings (other than any marketing or distribution
expenses) and (ix) all other costs, fees and expenses incident to AIMCO's
performance or compliance with this Agreement. Notwithstanding the foregoing,
the fees and expenses of any persons (other than fees and disbursements not in
excess of $25,000 per Registration of the counsel selected by Holders owning a
majority in number of the Registrable Securities being registered) retained by a
Holder, and any discounts, commissions or brokers' fees or fees of similar
securities industry professionals and any transfer taxes relating to the
disposition of the Registrable Securities by a Holder, will be payable by such
Holder, and AIMCO will have no obligation to pay any such amounts.
SECTION 6. UNDERWRITING REQUIREMENTS.
(a) Subject to SECTION 6(B) hereof, any Holder shall have the right, by
written notice, to specify that it intends to dispose of Registrable Securities
covered by a Registration Statement pursuant to an underwritten offering.
(b) In the case of any underwritten offering pursuant to a Shelf
Registration Statement, the Holders selling securities in such underwritten
offering shall select the institution or institutions that shall manage or lead
the offering or placement, subject to the reasonable satisfaction of AIMCO. In
the case of a Demand Registration in which an underwritten offering is
specified, the Holders selling securities in such offering shall select the lead
manager of such offering or placement, subject to the reasonable satisfaction of
AIMCO, and AIMCO shall select the second manager of such offering or placement,
subject to the reasonable satisfaction of such Holders. Any selection or other
decision by Holders pursuant to this paragraph (b) shall be made by the Holders
of a majority in number of the Registrable Securities to be sold pursuant to the
applicable underwritten offering. No Holder shall be entitled to participate in
an underwritten offering unless and until such Holder has entered into an
underwriting or other agreement with such institution or institutions for such
offering in such form as AIMCO and such institution or institutions shall
determine.
SECTION 7. INDEMNIFICATION.
(a) INDEMNIFICATION BY AIMCO. AIMCO shall, without limitation as to time,
indemnify and hold harmless, to the full extent permitted by law, each Holder
whose Registrable Securities are covered by a Registration Statement or
Prospec-tus, the officers, directors and agents and employees of each of them,
each Person who controls each such Holder (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling person, to the fullest
extent lawful, from and against any and all losses, claims, damages,
liabilities, judgment, costs (including, without limitation, costs of
preparation and reasonable attorneys' fees) and expenses (collectively,
"LOSSES"), as incurred, arising out of or based upon any untrue or alleged
untrue
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<PAGE>
statement of a material fact contained in such Registration Statement or
Prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or based upon any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are based upon
information furnished in writing to AIMCO by or on behalf of such Holder
expressly for use therein; PROVIDED, HOWEVER, that AIMCO shall not be liable to
any Holder to the extent that any such Losses arise out of or are based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any preliminary prospectus if (i) having previously been furnished by or
on behalf of AIMCO with copies of the Prospectus, such Holder failed to send or
deliver a copy of the Prospectus with or prior to the delivery of written
confirmation of the sale of Registrable Securities by such Holder to the person
asserting the claim from which such Losses arise and (ii) the Prospectus would
have corrected in all material respects such untrue statement or alleged untrue
statement or such omission or alleged omission; and PROVIDED, FURTHER, that
AIMCO shall not be liable in any such case to the extent that any such Losses
arise out of or are based upon an untrue statement or alleged untrue statement
or omission or alleged omission in the Prospectus, if (x) such untrue statement
or alleged untrue statement, omission or alleged omission is corrected in all
material respects in an amendment or supplement to the Prospectus and (y) having
previously been furnished by or on behalf of AIMCO with copies of the Prospectus
as so amended or supplemented, such Holder failed to deliver such Prospectus as
so amended or supplemented, prior to or concurrently with the delivery of
written confirmation of the sale of Registrable Securities to the person
asserting the claim from which such Losses arise.
(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. In connection with
any Registration Statement in which a Holder is participating, and as a
condition to such participation, such Holder shall (i) furnish to AIMCO in
writing such information as AIMCO reasonably requests for use in connection with
any Registration Statement or Prospectus and (ii) be deemed to have agreed to
indemnify, to the full extent permitted by law, AIMCO, its directors, officers,
agents and employees, each Person who controls AIMCO (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling Persons, from and
against all Losses arising out of or based upon any untrue or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus or any amendment or supplement thereto, or any preliminary
prospectus, or arising out of or based upon any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, to the extent, but only to the extent, that
such untrue or alleged untrue statement or omission or alleged omission is based
upon any information so furnished in writing by or on behalf of such Holder to
AIMCO expressly for use in such Registration Statement or Prospectus.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Person shall be entitled
to indemnity hereunder (an "INDEMNIFIED PARTY"), such indemnified party shall
give prompt notice to the party from which such indemnity is sought (the
"INDEMNIFYING PARTY") of any claim or of the commencement of any proceeding with
respect to which such indemnified party seeks indemnification or contribution
pursuant hereto; PROVIDED, HOWEVER, that the delay or failure to so notify the
indemnifying party shall not relieve the indemnifying party from any obligation
or liability except to the extent that the indemnifying party has been
materially prejudiced by such delay or failure. The indemnifying party shall
have the right, exercisable by giving written notice to an indemnified party
promptly after the receipt of written notice from such indemnified party of such
claim or proceeding, to assume, at the indemnifying party's expense, the defense
of any such claim or proceeding, with counsel reasonably satisfactory to such
indemnified party; PROVIDED, HOWEVER, that an indemnified party shall have the
right to employ separate counsel in any such claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless: (l) the indemnifying
party agrees to pay such fees and expenses; (2) the indemnifying party fails
promptly to assume the defense of such claim or proceeding or fails to employ
counsel reasonably satisfactory to such indemnified party; or (3) the named
parties to any proceeding (including impleaded parties) include both such
indemnified party and the indemnifying party,
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<PAGE>
and such indemnified party shall have been advised by counsel that there may be
one or more legal defenses available to it which are different from or
additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party); in which case the indemni-fied party shall
have the right to employ counsel and to assume the defense of such claim or
proceeding; PROVIDED, HOWEVER, that subject to clause (3) above, the
indemnifying party shall not, in connection with any one such claim or
proceeding or separate but substantially similar or related claims or
proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one firm of attorneys (together with appropriate local counsel) at any time for
all of the indemnified parties, or for fees and expenses that are not
reasonable. Whether or not such defense is assumed by the indemnifying party,
such indemnified party will not be subject to any liability for any settlement
made without its consent. The indemnifying party shall not consent to entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release, in form and substance reasonably satisfactory to
the indemnified party, from all liability in respect of such claim or litigation
for which such indemnified party would be entitled to indemnification hereunder.
(d) CONTRIBUTION. If the indemnification provided for in this SECTION 7 is
unavailable to an indemnified party in respect of any Losses (other than in
accordance with its terms), then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the indemnifying party, on
the one hand, and such indemnified party, on the other hand, in connection with
the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such indemnifying
party, on the one hand, and indemnified party, on the other hand, shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been taken by, or relates to
information supplied by, such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent any such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include any
legal or other fees or expenses incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this SECTION 7(D) were determined by PRO RATA
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provision of this SECTION 7(D), an indemnifying party that
is a Holder shall not be required to contribute any amount which is in excess of
the amount by which the total proceeds received by such Holder from the sale of
Registrable Securities (net of all underwriting discounts and commissions)
exceeds the amount of any damages that such indemnifying party has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
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<PAGE>
SECTION 8. MISCELLANEOUS.
(a) NOTICES. All notices or communications hereunder shall be in writing
(including facsimile or similar writing), addressed as follows:
To AIMCO:
Apartment Investment and Management Company
1873 South Bellaire Street, 17th Floor
Denver, CO 80222
Attention: Terry Considine
With a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom, LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Rod A. Guerra
To the Holders at their respective addresses set forth on the signature
pages hereto.
Any such notice or communication shall be deemed given (i) when made, if
made by hand delivery, (ii) one business day after being deposited with a
next-day courier, postage prepaid, or (iii) three business days after being sent
certified or registered mail, return receipt requested, postage prepaid, in each
case addressed as above (or to such other address as such party may designate in
writing from time to time).
(b) SEPARABILITY. If any provision of this Agreement shall be declared to
be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
(c) ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, devisees, legatees,
legal representatives, successors and assigns. Except as set forth herein,
neither AIMCO nor any Holder shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of AIMCO and the other
Holders, with respect to an assignment by any Holder, or the Holders, with
respect to an assignment by AIMCO; PROVIDED, that no consent of AIMCO or the
other Holders shall be required for the assignment by any Holder of this
Agreement or any of the rights and obligations of such Holder hereunder to any
person described in clause (ii) of the definition of "Holder" to whom
Registrable Securities are transferred by such Holder.
(d) ENTIRE AGREEMENT. This Agreement represents the entire agreement of the
parties and shall supersede any and all previous contracts, arrangements or
understandings between the parties hereto with respect to the subject matter
hereof.
(e) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless AIMCO has obtained the written consent of Holders of at least a majority
in number of the Registrable Securities then outstanding.
(f) PUBLICITY. The Holders and AIMCO agree that no public release or
announcement concerning the transactions contemplated hereby shall be issued by
either party without the prior consent of the other party, except to the extent
that the Holders or AIMCO is advised by counsel that such release or
announcement is necessary or advisable under applicable law or the rules or
regulations of any securities exchange, in which case the party required to make
the release or announcement shall to the extent practicable provide the other
party with an opportunity to review and comment on such release or announcement
in advance of its issuance.
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<PAGE>
(g) EXPENSES. Whether or not the transactions contemplated hereby are
consummated, except as otherwise provided herein, all costs and expenses
incurred in connection with the execution of this Agreement shall be paid by the
party incurring such costs or expenses, except as otherwise set forth herein.
(h) INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(i) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when two or more such counterparts have been signed by
each of the parties and delivered to the other party.
(j) GOVERNING LAW. This Agreement shall be construed, interpreted, and
governed in accordance with the laws of the State of Maryland, without reference
to rules relating to conflicts of law.
(k) CALCULATION OF TIME PERIODS. Except as otherwise indicated, all periods
of time referred to herein shall include all Saturdays, Sundays and holidays;
PROVIDED, that if the date to perform the act or give any notice with respect to
this Agreement shall fall on a day other than a Business Day, such act or notice
may be timely performed or given if performed or given on the next succeeding
Business Day.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
AIMCO:
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By:___________________________________
Name:
Title:
INVESTOR:
____________________________________
Name:
Address:____________________________
____________________________________
____________________________________
____________________________________
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<PAGE>
EXHIBIT C-1 TO APPENDIX I
FORM OF LEGAL OPINION OF
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP,
COUNSEL TO AIMCO AND MERGER SUB
1. Merger Sub has been duly incorporated and each of Merger Sub and AIMCO
Properties, L.P. is validly existing and in good standing under the laws of the
State of Delaware.
2. Merger Sub has the corporate power and corporate authority to enter into
the Agreement and to consummate the transactions contemplated thereby. The
execution and delivery of the Agreement by Merger Sub and the consummation of
the transactions contemplated thereby have been duly authorized by all requisite
corporate action on the part of Merger Sub.
3. The Agreement has been executed and delivered by Merger Sub and
(assuming it has been duly authorized, executed and delivered by AIMCO and NHP)
is a valid and binding obligation of AIMCO and Merger Sub, enforceable against
AIMCO and Merger Sub in accordance with its terms, except (a) to the extent that
enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
(regardless of whether enforcement is considered in a proceeding at law or in
equity) and (b) that rights to indemnification thereunder may be limited by
Federal or state securities laws or the policies underlying such laws.
4. Neither the execution and delivery of the Agreement by AIMCO, nor the
consummation by AIMCO of the transactions contemplated thereby, will (a) violate
the Certificate of Incorporation or By-laws of Merger Sub, or (b) to the best of
our knowledge, without having made any independent investigation, constitute a
violation of or a default under any material contract, agreement or instrument
to which AIMCO, Merger Sub or any of their Material Subsidiaries is subject and
which has been specifically identified to us as material by AIMCO and Merger Sub
in connection with rendering such opinion. We express no opinion, however, as to
whether the execution, delivery or performance by AIMCO or Merger Sub of the
Agreement will constitute a violation of or a default under any covenant,
restriction or provision with respect to financial ratios or tests or any aspect
of the financial condition or results of operations of AIMCO or Merger Sub.
5. Neither the execution or delivery by AIMCO or Merger Sub of the
Agreement nor the consummation by AIMCO or Merger Sub of the Merger in
accordance with the terms and provisions thereof will violate any Applicable Law
(as hereinafter defined). "Applicable Laws" shall mean those laws, rules and
regulations of the State of California, the general corporate law of the State
of Delaware and of the United States of America which, in our experience, are
normally applicable to transactions of the type contemplated by the Agreement.
6. No Governmental Approval (as hereinafter defined), which has not been
obtained or taken and is not in full force and effect, is required to authorize
or is required in connection with the execution, delivery or performance of the
Agreement by AIMCO or Merger Sub, except that we express no opinion with regard
to the securities or Blue Sky laws of the various states. "Governmental
Approval" means any consent, approval, license, authorization or validation of,
or filing, recording or registration with, any Governmental Authority pursuant
to Applicable Laws.
7. The AIMCO Registration Statement has been declared effective under the
Securities Act and, to the best of our knowledge, no stop order suspending the
effectiveness of the AIMCO Registration Statement or preventing the use of the
Proxy Statement/Prospectus has been issued.
8. [Unless a similar opinion is included as an exhibit in the AIMCO
Registration Statement:] [Commencing with AIMCO's initial taxable year ended
December 31, 1994, AIMCO was organized in
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<PAGE>
conformity with the requirements for qualification as a real estate investment
trust ("REIT") under the Code, and AIMCO's proposed method of operation, and its
actual method of operation since its formation, will enable it to meet the
requirements for qualification and taxation as a REIT. The qualification and
taxation as a REIT depends upon AIMCO's ability to meet, through actual annual
operating results, certain requirements, including requirements relating to
distribution levels and diversity of stock ownership, and the various
qualification tests imposed under the Code, the results of which will not be
reviewed by us. Accordingly, no assurance can be given that the actual results
of AIMCO's operation for any one taxable year will satisfy such requirements.]
9. The Proxy Statement/Prospectus, as of the date it was mailed to
stockholders of AIMCO and as of the date hereof, and the AIMCO Registration
Statement, as of the date of its effectiveness and as of the date hereof,
appeared on its face to be appropriately responsive in all material respects to
the applicable requirements of the Securities Act and the Exchange Act and the
rules and regulations thereunder, except that, in each case, we express no
opinion or belief as to the financial statements, schedules and other financial
data included or incorporated, or deemed to be incorporated, by reference
therein or excluded therefrom or any information to the extent it was furnished
by or relates to NHP, and we do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Proxy
Statement/Prospectus or the AIMCO Registration Statement.
In addition, we have participated in conferences with officers and other
representatives of AIMCO, representatives of the independent public accountants
of AIMCO, officers and other representatives of NHP, counsel for NHP and
representatives of the independent public accountants of NHP, at which the
con-tents of the Proxy Statement/Prospectus, the AIMCO Registration Statement
and related matters were discussed and, although we are not passing upon, and do
not assume any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Proxy Statement/Prospectus or the AIMCO Registration
Statement and have made no independent check or verification thereof, on the
basis of the foregoing, no facts have come to our attention that have led us to
believe that, insofar as it relates to AIMCO, the Proxy Statement/Prospectus,
the AIMCO Registration Statement, in each case, as of its date and the date of
the NHP Meeting, contained or contains an untrue statement of a material fact or
omitted or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except that we express no opinion or
belief with respect to the financial statements, schedules and other financial
data included or incorporated, or deemed to be incorporated, by reference in the
Proxy Statement/Prospectus or the AIMCO Registration Statement or the
information included or incorporated, or deemed to be incorporated, by reference
in the Proxy Statement/Prospectus or the AIMCO Registration Statement to the
extent such information was furnished by or relates to NHP.
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<PAGE>
EXHIBIT C-2 TO APPENDIX I
FORM OF LEGAL OPINION OF
PIPER & MARBURY L.L.P.,
MARYLAND COUNSEL TO AIMCO
1. AIMCO has been duly incorporated and is validly existing and in good
standing under the laws of its jurisdiction of incorporation.
2. AIMCO has the corporate power and corporate authority to enter into the
Agreement and to consummate the transactions contemplated thereby. The execution
and delivery of the Agreement by AIMCO and the consummation of the transactions
contemplated thereby have been duly authorized by all requisite corporate action
on the part of AIMCO.
3. Assuming the Agreement has been executed and delivered by an authorized
officer of AIMCO, the Agreement has been executed and delivered by AIMCO.
4. Neither the execution and delivery of the Agreement by AIMCO, nor the
consummation by AIMCO of the transactions contemplated thereby, will violate the
Charter or By-laws of AIMCO.
5. Neither the execution or delivery by AIMCO of the Agreement nor the
consummation by AIMCO of the Merger in accordance with the terms and provisions
thereof will violate any Applicable Law (as hereinafter defined). "Applicable
Laws" shall mean those laws, rules and regulations of the State of Maryland
which, in our experience, are normally applicable to transactions of the type
contemplated by the Agreement.
6. No Governmental Approval (as hereinafter defined), which has not been
obtained or taken and is not in full force and effect, is required to authorize
or is required in connection with the execution, delivery or performance of the
Agreement by AIMCO, except that we express no opinion with regard to the
securities or Blue Sky laws of the various states. "Governmental Approval" means
any consent, approval, license, authorization or validation of, or filing,
recording or registration with, any Maryland Governmental Authority pursuant to
Applicable Laws.
7. The AIMCO Common Stock to be issued in the Merger has been duly
authorized and, upon issuance in accordance with the Agreement, will be validly
issued, fully paid and nonassessable.
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<PAGE>
EXHIBIT D-1 TO APPENDIX I
FORM OF LEGAL OPINION OF
WILMER, CUTLER & PICKERING,
COUNSEL TO NHP
1. NHP and each subsidiary of NHP listed on Schedule A attached hereto has
been duly incorporated and is validly existing and in good standing under the
laws of its respective jurisdiction of incorporation.
2. NHP has the corporate power and corporate authority to enter into the
Agree-ment and to consummate the transactions contemplated thereby. The
execution and delivery of the Agreement by NHP and the consummation of the
transactions contemplated thereby have been duly authorized by all requisite
corporate action on the part of NHP.
3. The Agreement has been executed and delivered by NHP and (assuming it
has been duly authorized, executed and delivered by AIMCO and Merger Sub) is a
valid and binding obligation of NHP, enforceable against NHP in accordance with
its terms, except (a) to the extent that enforcement thereof may be limited by
(i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity (regardless of whether enforcement is considered in a
pro-ceeding at law or in equity) and (b) that rights to indemnification
thereunder may be limited by Federal or state securities laws or the policies
underlying such laws.
4. Neither the execution and delivery of the Agreement by NHP, nor the
consummation by NHP of the transactions contemplated thereby, will (a) violate
the Certificate of Incorporation or By-laws of NHP, or (b) to the best of our
knowledge, without having made any independent investigation, constitute a
violation of or a default under any material contract, agreement or instrument
to which NHP or any of its Material Subsidiaries is subject and which has been
specifically identified to us as material by NHP in connection with rendering
such opinion. We express no opinion, however, as to whether the execution,
delivery or performance by NHP of the Agreement will constitute a violation of
or a default under any covenant, restriction or provision with respect to
financial ratios or tests or any aspect of the financial condition or results of
operations of NHP.
5. Neither the execution or delivery by NHP of the Agreement nor the
consummation by NHP of the Merger in accordance with the terms and provisions
thereof will violate any Applicable Law (as hereinafter defined). "Applicable
Laws" shall mean those laws, rules and regulations of the District of Columbia,
the general corporate law of the State of Delaware and of the United States of
America which, in our experience, are normally applicable to transactions of the
type contemplated by the Agreement.
6. No Governmental Approval (as hereinafter defined), which has not been
obtained or taken and is not in full force and effect, is required to authorize
or is required in connection with the execution, delivery or performance of the
Agreement by NHP, except that we express no opinion with regard to the
securities or Blue Sky laws of the various states. "Governmental Approval" means
any consent, approval, license, authorization or validation of, or filing,
recording or registration with, any Governmental Authority pursuant to
Applicable Laws.
7. The MS Registration Statement has been declared effective under the
Exchange Act and, to the best of our knowledge, no stop order suspending the
effectiveness of the MS Registration Statement or preventing the use of the
Proxy Statement/Prospectus has been issued.
8. Each of the Proxy Statement/Prospectus, as of the date it was mailed to
stockholders of NHP and as of the date hereof, and the MS Registration
Statement, as of the date of its effectiveness and as of the date hereof,
appeared on its face to be appropriately responsive in all material respects to
the applicable requirements of the Securities Act and the Exchange Act and the
rules and regulations thereunder, except
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<PAGE>
that, in each case, we express no opinion or belief as to the financial
statements, schedules and other financial data included or incorporated, or
deemed to be incorporated, by reference therein or excluded therefrom or any
information to the extent it was furnished by or relates to AIMCO or Merger Sub,
and we do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Proxy Statement/Prospectus or the MS
Registration Statement.
In addition, we have participated in conferences with officers and other
representatives of NHP, representatives of the independent public accoun-tants
of NHP, officers and other representatives of AIMCO, counsel for AIMCO and
representatives of the independent public accountants of AIMCO, at which the
contents of the Proxy Statement/Prospectus, the MS Registration Statement and
related matters were discussed and, although we are not passing upon, and do not
assume any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Proxy Statement/Prospectus or the MS Registration
Statement and have made no independent check or verification thereof, on the
basis of the foregoing, no facts have come to our attention that have led us to
believe that, insofar as it relates to NHP, the Proxy Statement/Prospectus or
the MS Registration Statement, in each case, as of its date and the date of the
NHP Meeting, contained or contains an untrue statement of a material fact or
omitted or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except that we express no opinion or
belief with respect to the financial statements, schedules and other financial
data included or incorporated, or deemed to be incorporated, by reference in the
Proxy Statement/Prospectus or the MS Registration Statement or the information
included or incorporated, or deemed to be incorporated, by reference in the
Proxy Statement/Prospectus or the MS Registration Statement to the extent such
information was furnished by or relates to AIMCO or Merger Sub.
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<PAGE>
SCHEDULE A
NHP Management Company
NHP-HG II, Inc.
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<PAGE>
EXHIBIT D-2 TO APPENDIX I
FORM OF LEGAL OPINION OF
ARENT FOX KINTNER PLOTKIN & KAHN,
SPECIAL COUNSEL TO NHP
1. Neither the execution and delivery of the Agreement by NHP, nor the
consummation by NHP of the Merger, will give to any member of the Oxford Group
(as defined in the Stock Purchase Agreement) any right to terminate, not renew
or amend any of the Oxford Management Contracts (as defined in the Stock
Purchase Agreement) without the consent of NHP or one of its wholly owned
subsidiaries.
2. Neither the execution and delivery of the Agreement by NHP, nor the
consummation by NHP of the Merger, will constitute a violation of or a default
under, any of the Oxford Management Contracts or any other Contract, agreement
or instrument to which (a) NHP or any of its subsidiaries is a party, and (b)
any member of the Oxford Group is party, including, without limitation, the
Stock and Asset Transfer Restrictions Agreement.
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<PAGE>
APPENDIX II
[LETTERHEAD OF DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION]
November 3, 1997
Committee of Independent Directors of the
Board of Directors
NHP Incorporated
8065 Leesburg Pike
Vienna, VA 22182
Dear Sirs:
You have requested our opinion as to the fairness, in the aggregate, from a
financial point of view to the stockholders of NHP Incorporated (the "Company")
other than Apartment Investment and Management Company ("AIMCO"), AIMCO/NHP
Holdings, Inc., Demeter Holdings Corporation ("Demeter"), Phemus Corporation
("Phemus" and, together with Demeter, "Harvard Capital"), J. Roderick Heller,
III ("Heller"), and Capricorn Investors, L.P. ("Capricorn") (such other
stockholders, the "Unaffiliated Stockholders") of the consideration to be
received by the Unaffiliated Stockholders pursuant to the terms of (i) the
Amended and Restated Agreement and Plan of Merger, dated as of April 21, 1997
and amended and restated as of October 14, 1997 (the "Agreement"), by and among
AIMCO, AIMCO/NHP Acquisition Corp. ("Merger Sub"), a wholly-owned subsidiary of
AIMCO, and the Company, pursuant to which Merger Sub will be merged (the
"Merger") with and into the Company and (ii) the Rights Agreement dated as of
April 21, 1997 (the "Rights Agreement"), by and between the Company, NHP
Financial Services, Ltd. ("Mortgage Sub"), and The First National Bank of
Boston, as Rights Agent.
Pursuant to the Agreement, each share of common stock, par value $.01 per
share ("Company Common Stock"), of the Company will be converted, subject to
certain exceptions, into one of the following at the election of the holder of
such share of Company Common Stock: (i) if an election is made to receive a
combination of Class A common stock, par value $.01 per share ("AIMCO Class A
Common Stock"), of AIMCO and cash (a "Mixed Election"), the right to receive
0.37383 shares of AIMCO Class A Common Stock and an amount in cash equal to
$10.00; or (ii) if a Mixed Election has not been made, the right to receive
0.74766 shares of AIMCO Class A Common Stock (such amount as determined pursuant
to clauses (i) and (ii), the "Merger Consideration").
Pursuant to the Rights Agreement, each Unaffiliated Stockholder received a
right ("Right") to acquire from the Company, at (subject to certain conditions)
the earlier of the consummation of the Merger and the close of business on
December 1, 1997, one-third of a share of common stock, par value $.01 per
share, of Mortgage Sub ("Mortgage Sub Stock") without the payment of any
consideration therefor, plus cash for fractional shares at a rate of $9.15 per
share (the Right, subject to such terms, the "Rights Consideration").
In arriving at our opinion, we have reviewed the Agreement, the Stock
Purchase Agreement dated April 16, 1997 by and among AIMCO, Demeter and
Capricorn (the "Stock Purchase Agreement"), the Right of First Refusal
Agreement, dated as of August 18, 1995, by and among the Company, NHP Partners,
Inc. ("NHP Partners"), The National Housing Partnership, Demeter, NHP Partners
Limited Partnership, NHP Partners Two Limited Partnership ("Partners Two"), NHP
Partners LLC, NHP Partners Two LLC ("Partners Two LLC"), Capricorn and Heller,
the letter agreement dated April 21, 1997 between Capricorn Investors II, L.P.
("Capricorn II") and Mortgage Sub (the "Investment Agreement"), the Rights
Agreement, the letter agreement dated April 21, 1997 by and among Mortgage Sub,
Demeter and Capricorn and the Real Estate Acquisition Agreement (and the
Exhibits and Schedules thereto) dated as of May 22, 1997, Amendment No. 1
thereto dated as of June 13, 1997 and Amendment No. 2 thereto dated
<PAGE>
as of July 14, 1997, by and among AIMCO, AIMCO Properties, L.P., Demeter,
Phemus, Capricorn, Heller and Partners Two LLC (the "Real Estate Acquisition
Agreement"). We also have reviewed financial and other information that was
publicly available or furnished to us by the Company, Mortgage Sub and AIMCO
including information provided during discussions with their respective
managements. Included in the information provided during discussions with the
respective managements were certain financial projections of the Company
(without projected growth and dispositions in properties under management) for
the period beginning January 1, 1997 and ending December 31, 1997 prepared by
the management of the Company, certain financial projections of Mortgage Sub for
the period beginning January 1, 1997 and ending December 31, 1997 prepared by
the management of Mortgage Sub, certain financial projections of AIMCO and of
the real property (the "Real Estate") subject to the Real Estate Acquisition
Agreement for the period beginning January 1, 1997 and ending December 31, 1997
prepared by the management of AIMCO and certain historical and projected
financial information relating to the Real Estate prepared by the Company. In
addition, we have compared certain financial and securities data of the Company
and AIMCO, and certain financial data of Mortgage Sub, with various other
companies whose securities are traded in public markets, reviewed the historical
stock prices and trading volumes of the Company Common Stock and AIMCO Class A
Common Stock, reviewed prices and premiums paid in certain other business
combinations and conducted such other financial studies, analyses and
investigations as we deemed appropriate for purposes of this opinion. We have
also had discussions with a representative of Harvard Capital with respect to
discussions between Harvard Capital and a number of third parties who may have
had an interest in acquiring the Company. We were not requested to, nor did we,
solicit the interest of any other party in acquiring the Company or Mortgage Sub
other than Insignia Financial Group, Inc., nor did we solicit the interest of
any other party in acquiring any equity interests in, or assets of, NHP Partners
or Partners Two.
In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
us from public sources, that was provided to us by the Company, Mortgage Sub and
AIMCO or their respective representatives, or that was otherwise reviewed by us.
With respect to the financial projections supplied to us, we have assumed that
they have been reasonably prepared on the basis reflecting the best currently
available estimates and judgments of (a) the respective managements of the
Company, Mortgage Sub and AIMCO as to the future operating and financial
performance of the Company, Mortgage Sub and AIMCO, respectively and (b) the
respective managements of the Company and AIMCO as to the future operating and
financial performance of the Real Estate. We have not assumed any responsibility
for making an independent evaluation of the Company's or Mortgage Sub's assets
or liabilities or for making any independent verification of any of the
information reviewed by us. We have assumed that Capricorn II will make the
investment in Mortgage Sub that is contemplated by the Investment Agreement, on
the terms set forth therein. In addition, we have assumed that the transactions
contemplated by the Stock Purchase Agreement, the Real Estate Acquisition
Agreement, the Agreement and the Rights Agreement will not result in AIMCO being
disqualified as a real estate investment trust under Federal tax laws. We have
relied as to certain legal matters on advice of counsel to the Company.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. We are expressing no opinion herein as to the
prices at which AIMCO Class A Common Stock, the Rights or Mortgage Sub Stock
will actually trade at anytime. Our opinion does not constitute a recommendation
to any stockholder of the Company as to how such stockholder should vote on the
proposed transaction.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of businesses
and securities in connection with mergers, acquisitions, underwritings, sales
and distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. Certain affiliates of DLJ
own, in the aggregate, limited partnership interests representing approximately
3% of the outstanding capital of Capricorn and approximately 5% of the
outstanding capital of Capricorn II. DLJ was a co-manager with respect to the
<PAGE>
Company's initial public offering in August 1995 and received usual and
customary compensation with respect thereto. In addition, the Company is the
receiver and property manager with respect to certain multi-family residential
properties the mortgages of which were owned by an affiliate of DLJ and certain
other multi-family residential properties the mortgages of which collateralize
securities which were owned by an affiliate of DLJ.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the Merger Consideration and the Rights Consideration are,
in the aggregate, fair to the Unaffiliated Stockholders from a financial point
of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ GEOFFREY A. STERN
--------------------------------------
Geoffrey A. Stern
Managing Director
<PAGE>
PART II
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The AIMCO Charter limits the liability of AIMCO's directors and officers to
AIMCO and its stockholders to the fullest extent permitted from time to time by
Maryland law. Maryland law presently permits the liability of directors and
officers to a corporation or its stockholders for money damages to be limited,
except (i) to the extent that it is proved that the director or officer actually
received an improper benefit or profit in money, property or services for the
amount of the benefit or profit in money, property or services actually
received, or (ii) if a judgment or other final adjudication is entered in a
proceeding based on a finding that the director's or officer's action, or
failure to act, was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in the proceeding. This provision
does not limit the ability of or its stockholders to obtain other relief, such
as an injunction or rescission.
The AIMCO Charter and AIMCO Bylaws require AIMCO to indemnify its directors,
officers and certain other parties to the fullest extent permitted from time to
time by Maryland law. The MGCL permits a corporation to indemnify its directors,
officers and certain other parties against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection with
any proceeding to which they may be made a party by reason of their service to
or at the request of the corporation, unless it is established that (i) the act
or omission of the indemnified party was material to the matter giving rise to
the proceeding and (x) was committed in bad faith or (y) was the result of
active and deliberate dishonesty, (ii) the indemnified party actually received
an improper personal benefit in money, property or services or (iii) in the case
of any criminal proceeding, the indemnified party had reasonable cause to
believe that the act or omission was unlawful. Indemnification may be made
against judgments, penalties, fines, settlements and reasonable expenses
actually incurred by the director or officer in connection with the proceeding;
PROVIDED, HOWEVER, that if the proceeding is one by or in the right of the
corporation, indemnification may not be made with respect to any proceeding in
which the director or officer has been adjudged to be liable to the corporation.
In addition, a director or officer may not be indemnified with respect to any
proceeding charging improper personal benefit to the director or officer in
which the director or officer was adjudged to be liable on the basis that
personal benefit was improperly received. The termination of any proceeding by
conviction, or upon a plea of nolo contendere or its equivalent, or an entry of
any order of probation prior to judgment, creates a rebuttable presumption that
the director or officer did not meet the requisite standard of conduct required
for indemnification to be permitted. It is the position of the Securities and
Exchange Commission that indemnification of directors and officers for
liabilities arising under the Securities Act is against public policy and is
unenforceable pursuant to Section 14 of the Securities Act.
AIMCO has entered into agreements with certain of its officers, pursuant to
which AIMCO has agreed to indemnify such officers to the fullest extent
permitted by applicable law.
The Agreement of Limited Partnership (the "Operating Partnership Agreement")
of the Operating Partnership, also provides for indemnification of AIMCO, or any
director or officer of AIMCO, in its capacity as the previous general partner of
the Operating Partnership, from and against all losses, claims, damages,
liabilities, joint or several, expenses (including legal fees), fines,
settlements and other amounts incurred in connection with any actions relating
to the operations of the Operating Partnership, as set forth in the Operating
Partnership Agreement.
Section 11.6 of the 1997 Stock Award and Incentive Plan (the "1997 Plan"),
Section 2.8 of the Non-Qualified Employee Stock Option Plan (the "Non-Qualified
Plan"), Section 2.8 of the 1996 Stock Award and Incentive Plan (the "1996
Plan"), and Section 6.7 of the 1994 Stock Option Plan (the "1994 Plan"),
specifically provide that, to the fullest extent permitted by law, each of the
members of the Board of Directors of AIMCO, the Compensation Committee of the
Board and each of the directors, officers and employees of AIMCO, any AIMCO
subsidiary, the Operating Partnership and any subsidiary of the Operating
Partnership shall be held harmless and indemnified by AIMCO for any liability,
loss (including
II-1
<PAGE>
amounts paid in settlement), damages or expenses (including reasonable
attorneys' fees) suffered by virtue of any determinations, acts or failures to
act, or alleged acts or failures to act, in connection with the administration
of the 1997 Plan, Non-Qualified Plan, the 1996 Plan or the 1994 Plan, as the
case may be, so long as such person is not determined by a final adjudication to
be guilty of willful misconduct with respect to such determination, action or
failure to act.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
The exhibits to this Registration Statement are listed in the Exhibit Index,
which is incorporated herein by reference.
(b) Financial Statement Schedules
Schedule III, Real Estate and Accumulated Depreciation, is incorporated by
reference from AIMCO's Annual Report on Form 10-K for the Fiscal Year Ended
December 31, 1996. All other schedules are omitted because they are not
applicable or the required information is shown in the financial statements of
AIMCO or the notes thereto incorporated by reference herein.
(c) Reports, Opinions or Appraisals
The opinion of Donaldson, Lufkin & Jenrette Securities Corporation is
included as Appendix II of the Joint Proxy Statement/Prospectus constituting
Part I of this Registration Statement.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) (Section230.424(b) of this chapter)
if, in the aggregate, the changes in volume and price represent no more
than 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
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<PAGE>
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(c) (1) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party which is deemed to be an underwriter within the meaning of Rule 145(c),
the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(2) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(e) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(f) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not subject of and included in
the registration statement when it became effective.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Denver, State of
Colorado, on the 31st day of October, 1997.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By: /s/ TERRY CONSIDINE
------------------------------------
TERRY CONSIDINE,
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Terry
Considine and Peter Kompaniez his or her true and lawful attorneys-in-fact and
agents, each acting alone, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, each acting alone,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, each acting alone, or
his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- ------------------
<C> <S> <C>
Chairman of the Board and
/s/ TERRY CONSIDINE Chief Executive Officer
- ------------------------------ (Principal Executive October 31, 1997
Terry Considine Officer)
Senior Vice President,
/s/ LEEANN MOREIN Chief Financial Officer
- ------------------------------ and Secretary (Principal October 31, 1997
Leeann Morein Financial Officer)
Vice President and Chief
/s/ PATRICIA K. HEATH Accounting Officer
- ------------------------------ (Principal Accounting October 31, 1997
Patricia K. Heath Officer)
/s/ PETER K. KOMPANIEZ
- ------------------------------ Vice Chairman, President October 31, 1997
Peter K. Kompaniez and Director
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- ------------------
<C> <S> <C>
- ------------------------------ Director
Richard S. Ellwood
/s/ J. LANDIS MARTIN
- ------------------------------ Director October 31, 1997
J. Landis Martin
/s/ THOMAS L. RHODES
- ------------------------------ Director October 31, 1997
Thomas L. Rhodes
/s/ JOHN D. SMITH
- ------------------------------ Director October 28, 1997
John D. Smith
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
2.1 Amended and Restated Agreement and Plan of Merger, dated as of April 21, 1997 and
amended as of October 14, 1997, by and among Apartment Investment and Management
Company, AIMCO/NHP Acquisition Corp. and NHP Incorporated (incorporated by
reference to Appendix I to the Joint Proxy Statement/Prospectus of Apartment
Investment and Management Company and NHP Incorporated included in this
Registration Statement).
4.6 Specimen certificate for AIMCO Common Stock (incorporated by reference to AIMCO's
Registration Statement on Form 8-A filed on July 19, 1994).
5.1 Opinion of Piper & Marbury L.L.P. regarding the validity of the AIMCO Common Stock
offered hereby.
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding tax matters.
23.1 Consent of Ernst & Young LLP dated October 29, 1997.
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in their opinion
filed as Exhibit 8.1).
23.3 Consent of Piper & Marbury L.L.P. (included in their opinion filed as Exhibit 5.1).
23.4 Consent of Arthur Andersen LLP dated October 30, 1997.
23.5 Consent of Deloitte & Touche LLP dated October 30, 1997.
23.6 Consent of Anders, Minkler & Diehl LLP dated October 30, 1997.
23.7 Consent of Dauby O'Connor & Zaleski, LLC dated October 30, 1997.
23.8 Consent of Edwards Leap & Sauer dated October 30, 1997.
23.9 Consent of Fishbein & Company, P.C. dated October 30, 1997.
23.10 Consent of Freeman and Vessillo dated October 30, 1997.
23.11 Consent of Friduss, Lukee, Schiff & Co. dated October 30, 1997.
23.12 Consent of George A. Hieronymous & Company, LLC dated October 30, 1997.
23.13 Consent of Goldenberg Rosenthal Friedlander, LLP dated October 30, 1997.
23.14 Consent of Hansen, Hunter & Kibbee, P.C. dated October 30, 1997.
23.15 Consent of J.H. Cohn LLP dated October 30, 1997.
23.16 Consent of J.A. Plumer & Co., P.A. dated October 30, 1997.
23.17 Consent of Marks Shron & Company, LLP dated October 30, 1997.
23.18 Consent of Prague & Company, P.C. dated October 30, 1997.
23.19 Consent of Reznick Fedder & Silverman dated October 30, 1997.
23.20 Consent of Robert Ercoloni & Company dated October 30, 1997.
23.21 Consent of Russell Thompson Butler & Houston dated October 30, 1997.
23.22 Consent of Sciarabba Walker & Co., LLP dated October 30, 1997.
23.23 Consent of Wallace Sanders & Company dated October 30, 1997.
23.24 Consent of Warady and Davis dated October 30, 1997.
23.25 Consent of Ziner and Company, PC dated October 30, 1997.
23.26 Consent of Zinner & Co. dated October 30, 1997.
23.27 Consent of Deloitte & Touche LLP dated October 29, 1997.
24 Power of Attorney (included on pages II-4 and II-5).
99.1 Letter to stockholders of Apartment Investment and Management Company, by Terry
Considine, Chairman of the Board and Chief Executive Officer, dated November 3,
1997.
99.2 Notice of special meeting to stockholders of Apartment Investment and Management
Company, dated November 3, 1997.
99.3 Letter to stockholders of NHP Incorporated, by J. Roderick Heller, III, Chairman,
President and Chief Executive Officer, dated November 3, 1997.
99.4 Notice of special meeting to stockholders of NHP Incorporated, dated November 3,
1997.
</TABLE>
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<PAGE>
EXHIBIT 5.1
PIPER & MARBURY WASHINGTON
L.L.P. NEW YORK
CHARLES CENTER SOUTH PHILADELPHIA
36 SOUTH CHARLES STREET EASTON
BALTIMORE, MARYLAND 21201-3018
410-539-2530
FAX: 410-539-0489
November 3, 1997
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
1873 South Bellaire Street, Suite 1700
Denver, Colorado 80222
Gentlemen:
We have acted as Maryland counsel to Apartment Investment and Management
Company, a Maryland corporation (the "Company"), pursuant to a Registration
Statement (the "Registration Statement") on Form S-4 filed with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), relating to the Company's issuance and sale of up to
5,142,455 shares of its Class A Common Stock, par value $.01 per share (the
"Shares"), pursuant to the Amended and Restated Agreement and Plan of Merger
(the "Agreement"), dated as of April 21, 1997 and amended as of October 14,
1997, by and among the Company, AIMCO/NHP Acquisition Corp., a wholly owned
subsidiary of the Company, and NHP Incorporated, a Delaware corporation.
In our capacity as Maryland counsel to the Company, we have examined the
Agreement, the Registration Statement, the Charter and By-Laws of the Company,
as amended and restated in effect on the date hereof, minutes of the proceedings
of the Company's Board of Directors authorizing the issuance of the Shares, an
Officer's Certificate of the Company dated the date hereof (the "Certificate"),
and such other documents as we have considered necessary. In such examination,
we have assumed, without independent investigation, the genuineness of all
signatures, the legal capacity of all individuals who have executed any of the
aforesaid documents, the authenticity of all documents submitted to us as
originals, the conformity with originals of all documents submitted to us as
copies (and the authenticity of the originals of such copies), and that all
public records reviewed are accurate and complete. As to factual matters we have
relied on the Certificate and have not independently verified the matters stated
therein.
Based upon the foregoing and having regard for such legal considerations as
we deem relevant, we are of the opinion and so advise you that upon the issuance
and delivery of the Shares in accordance with the terms set forth in the
Agreement, the Shares will have been duly and validly authorized and validly
issued, fully paid, and nonassessable.
The opinion expressed herein is for the use of the Company and its
stockholders in connection with the Registration Statement. This opinion may not
be relied on by any other person or in any other connection without our prior
written approval. This opinion is limited to the matters set forth herein, and
no other opinion should be inferred beyond the matters expressly stated.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Legal
Matters" in the Proxy Statement/Prospectus included in the Registration
Statement. We further consent to the reliance on this opinion by Skadden, Arps,
Slate,
<PAGE>
Piper & Marbury
L.L.P.
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NOVEMBER 3, 1997
PAGE 2
Meagher & Flom LLP, in rendering their opinion to the Company in connection with
the filing of the Registration Statement. In giving our consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Act or the rules and regulations of the Commission
thereunder.
Very truly yours,
/s/ PIPER & MARBURY L.L.P.
<PAGE>
EXHIBIT 8.1
[LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP (NEW YORK)]
November 3, 1997
Apartment Investment and
Management Company
1873 South Bellaire Street
Suite 1700
Denver, Colorado 80222
Re: Federal Income Tax Considerations
Ladies and Gentlemen:
You have requested our opinion concerning certain Federal income tax
considerations in connection with an offering (the "Issuance") of an aggregate
of up to 5,142,455 shares of Class A Common Stock, par value $.01 per share
("AIMCO Common Stock"), of Apartment Investment and Management Company, a
Maryland corporation ("AIMCO"), in connection with the proposed merger of
AIMCO/NHP Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of AIMCO ("Merger Sub"), with and into NHP Incorporated, a Delaware
corporation ("NHP"), pursuant to the terms of the Amended and Restated Agreement
and Plan of Merger, dated as of April 21, 1997 and amended as of October 14,
1997 (the "Merger Agreement"), by and among AIMCO, Merger Sub, and NHP. The
Issuance will be by AIMCO pursuant to the Registration Statement on Form S-4
filed with the Securities and Exchange Commission (the "Registration
Statement"). Unless otherwise specifically defined herein, all capitalized terms
have the meanings assigned to them in the Registration Statement, as amended to
date.
In connection with the Issuance and with certain previous offerings of AIMCO
Common Stock by AIMCO we have acted as counsel to AIMCO, and we have assisted in
the preparation of the Registration Statement and certain other documents. In
formulating our opinion, we have reviewed the Registration Statement and such
other documentation and information provided by you as is relevant to the
Issuance and necessary to prepare the Registration Statement. In addition, you
have provided us with certain representations of officers of AIMCO relating to,
among other things, the actual and proposed operation of AIMCO. For purposes of
our opinion, we have not made an independent investigation of the facts set
<PAGE>
forth in such representations, the partnership agreements and organizational
documents for each of the partnerships and limited liability companies in which
AIMCO holds a direct or indirect interest (the "Partnerships"), the Registration
Statement or any other document. We have, consequently, relied on your
representations that the information presented in such documents or otherwise
furnished to us accurately and completely describes all material facts relevant
to our opinion. No facts have come to our attention, however, that would cause
us to question the accuracy and completeness of such facts or documents in a
material way. We have also relied upon the opinion of Piper & Marbury L.L.P.
dated November 3, 1997 with respect to certain matters of Maryland law, and the
opinion of Shumaker, Loop & Kendrick dated October 18, 1995 with respect to
certain matters of Florida law.
In rendering our opinion, we have assumed that the transactions contemplated
by the foregoing documents have been consummated in accordance with the
operative documents, and that such documents accurately reflect the material
facts of such transactions. In addition, our opinion is based on the correctness
of the following specific assumptions: (i) each of AIMCO, the Partnerships,
Property Asset Management Services, Inc., AIMCO/NHP Holdings, Inc., AIMCO/NHP
Properties, Inc. and any "qualified REIT subsidiary" of AIMCO (within the
meaning of section 856(i)(2) of the Internal Revenue Code of 1986, as amended
(the "Code")), has been and will continue to be operated in accordance with the
laws of the jurisdiction in which it was formed and in the manner described in
the relevant partnership agreement or other organizational documents and in the
Registration Statement; and (ii) there have been no changes in the applicable
laws of the State of Maryland or any other state under the laws of which any of
the Partnerships have been formed. In rendering our opinion, we have also
considered and relied upon the Code, the regulations promulgated thereunder (the
"Regulations"), administrative rulings and the other interpretations of the Code
and the Regulations by the courts and the Internal Revenue Service, all as they
exist at the date of this letter. With respect to the latter assumption, it
should be noted that statutes, regulations, judicial decisions, and
administrative interpretations are subject to change at any time and, in some
circumstances, with retroactive effect. Of course, a material change which is
made after the date hereof in any of the foregoing bases for our opinion could
affect our conclusions.
We express no opinion as to the laws of any jurisdiction other than the
Federal laws of the United States of America to the extent specifically referred
to herein.
Based on the foregoing, we are of the opinion that:
1. Commencing with AIMCO's initial taxable year ended December 31, 1994,
AIMCO was organized in conformity with the requirements for qualification as a
real estate investment trust ("REIT") under the Code, and AIMCO's proposed
method of operation, and its actual method of operation since its formation,
will enable it to meet the requirements for qualification and taxation as a
REIT. As noted in the Registration Statement, qualification and taxation as a
REIT depend upon AIMCO's ability to meet, through actual annual operating
results, certain requirements, including requirements relating to distribution
levels and diversity of stock ownership, and the various qualification tests
imposed under the Code, the results of which will not be reviewed by us.
Accordingly, no assurance can be given that the actual results of AIMCO's
operation for any one taxable year will satisfy such requirements.
2. The discussion in the Registration Statement under the heading "FEDERAL
INCOME TAX CONSIDERATIONS RELATED TO AIMCO" is, in all material respects, a fair
and accurate summary of the Federal income tax consequences of the purchase,
ownership, and disposition of the AIMCO Common Stock, subject to the
qualifications set forth therein.
Other than as expressly stated above, we express no opinion on any issue
relating to AIMCO, the Partnerships, or any investment therein.
This opinion is intended for the use of the person to whom it is addressed,
except as set forth herein, and it may not be used, circulated, quoted or relied
upon for any other purpose without our prior written consent. We consent to the
filing of this opinion with the Commission as an exhibit to the Registration
Statement. We also consent to the reference to our firm under the caption "Legal
Matters" in the Registration Statement. In giving this consent, we do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the
<PAGE>
rules or regulations of the Securities and Exchange Commission thereunder. This
opinion is expressed as of the date hereof, and we disclaim any undertaking to
advise you of any subsequent changes of the matters stated, represented, or
assumed herein or any subsequent changes in applicable law.
Very truly yours,
/s/ SKADDEN, ARPS, SLATE, MEAGHER &
FLOM LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Joint Proxy Statement/
Prospectus of Apartment Investment and Management Company and NHP
Incorporated for the registration of 5,142,455 shares of Class A Common Stock
and to the incorporation by reference therein of (i) our report dated January
24, 1997, except for Note 4 and Note 20, as to which the date is March 25,
1997, with respect to the consolidated financial statements and schedule of
Apartment Investment and Management Company included in its Annual Report
(Form 10-K) for the year ended December 31, 1996, filed with the Securities
and Exchange Commission (the "Annual Report"); (ii) our report dated January
20, 1995, with respect to the combined financial statements and schedule of
the AIMCO Predecessors (as defined in the notes thereto) included in the
Annual Report; (iii) our report dated January 8, 1997 with respect to the
Historical Summary of Gross Income and Direct Operating Expenses of Villa
Ladera Apartments for the year ended December 31, 1995 included in Apartment
Investment and Management Company's Current Report on Form 8-K dated December
19, 1996, filed with the Securities and Exchange Commission; (iv) our report
dated May 27, 1997 with respect to the Historical Summary of Gross Income and
Certain Expenses of The Bay Club at Aventura for the year ended
December 31, 1996 included in Amendment No. 1 to Apartment Investment and
Management Company's Current Report on Form 8-K dated June 3, 1997; and (v)
our report dated August 29, 1997 with respect to the Historical Summary of
Gross Income and Direct Operating Expenses of Morton Towers for the year
ended December 31, 1996 included in Apartment Investment and Management
Company's Current Report on Form 8-K dated September 19, 1997, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Dallas, Texas
October 29, 1997
<PAGE>
Exhibit 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-4 and related Joint Proxy
Statement/Prospectus, filed with the Securities and Exchange Commission by
Apartment Investment and Management Company ("AIMCO"), of our report on NHP
Incorporated dated April 23, 1997 (except with respect to the matters
discussed in Note 5 and "Discontinued Real Estate Operations" in Note 2, as
to which the dates are October 3, 1997 and October 21, 1997, respectively),
included in Amendment No. 3 to AIMCO's Current Report on Form 8-K/A dated
April 16, 1997 and included in Amendment No. 2 to NHP's Annual Report on Form
10-K/A, and to all references to our Firm included in this Registration
Statement.
We further consent to the incorporation by reference in this Registration
Statement on Form S-4 and related Joint Proxy Statement/Prospectus of our
report on the NHP Real Estate Companies (as defined in Note 1) dated May 5,
1997 (except with respect to the matters discussed in Note 17 and "Investment
in Real Estate Partnerships" in Note 1, as to which the dates are June 3,
1997 and October 21, 1997, respectively), included in Amendment No. 5 to
AIMCO's Current Report on Form 8-K/A dated June 3, 1997, and to all
references to our Firm included in this Registration Statement.
We further consent to the incorporation by reference in this Registration
Statement on Form S-4 and related Joint Proxy Statement/Prospectus of our
report on NHP Southwest Partners, LP dated April 11, 1997 (except with
respect to the matters discussed in Note 7 and Note 3, as to which the dates
are June 3, 1997 and October 21, 1997, respectively) included in Amendment
No. 5 to AIMCO's Current Report on Form 8-K/A dated June 3, 1997, and to all
references to our Firm included in this Registration Statement.
We further consent to the incorporation by reference in this Registration
Statement on Form S-4 and related Joint Proxy Statement/Prospectus of our
reports with respect to the entities detailed below, all included in
Amendment No. 1 to AIMCO's Current Report on Form 8-K/A dated June 3, 1997,
and to all references to our Firm included in this Registration Statement.
<TABLE>
Entities Periods Report Date
- -------------------------- ------------------------------ --------------------------
<S> <C> <C>
NHP New LP Entities Period from January 20, 1995 to February 20, 1997 (except
(as defined in Note 1) December 31, 1995, and the Year with respect to the
ended December 31, 1996 matters discussed in
Note 8, as to which the
date is June 3, 1997)
NHP Borrower Entities Period from January 20, 1995 to February 20, 1997 (except
(as defined in Note 1) December 31, 1995, and the Year with respect to the matters
ended December 31, 1996 discussed in Note 8, as to
which the date is June 3,
1997)
</TABLE>
/s/ Arthur Andersen LLP
Washington, D.C.,
October 30, 1997
<PAGE>
Exhibit 23.5
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Apartment Investment and Management Company (AIMCO) on Form S-4 of our
reports on the financial statements of certain Partnerships for the year
ended December 31, 1994, incorporated by reference in Amendment No. 1 and
Amendment No. 3 to AIMCO's Current Report on Form 8-K dated June 3, 1997, in
Amendment No. 1 and Amendment No. 2 to AIMCO's Current Report on Form 8-K
dated April 16, 1997, and in Amendment No. 1 and Amendment No. 2 to NHP
Incorporated's Annual Report on Form 10-K for the year ended December 31,
1996, which reports are dated as shown in the following Appendices (Items 1
through 5), and as indicated below (Items 6 through 16):
1) Appendix A-94
2) Appendix B-94 (each of which expresses an unqualified opinion and
includes an explanatory paragraph relating to the Partnership's ability
to continue as a going concern)
3) Appendix C-94 (each of which expresses a qualified opinion as a result of
cumulative unpaid distributions recorded according to HUD guidelines
which is not in accordance with generally accepted accounting principles)
4) Appendix D-94 (each of which expresses an unqualified opinion and
includes an explanatory paragraph relating to the change in 1993 of the
Partnership's method of computing depreciation)
5) Appendix E-94 (each of which expresses an unqualified opinion and
includes an explanatory paragraph relating to the expiration of a Housing
Assistance Payment Contract)
6) Franklin Northwoods Associates, A Limited Partnership, dated March 3,
1995 (which expresses an unqualified opinion and includes an explanatory
paragraph noting that the mortgage lender has the option to require full
payment of all amounts outstanding after December 1, 1994)
7) Franklin Woods Associates, A Limited Partnership, dated March 14, 1995
(which expresses an unqualified opinion and includes an explanatory
paragraph noting that the mortgage note payable and related accrued
interest are due June 30, 1997)
8) Green Mountain Manor Limited Partnership, dated February 17, 1995 (which
expresses an unqualified opinion and includes explanatory paragraphs
relating to the expiration of a Housing Assistance Payment Contract and a
deferred acquisition note and related accrued interest which is due on
February 17, 1996)
Page 1 of 3
<PAGE>
9) Hilltop Apartment Associates, A Limited Partnership, dated February 13,
1995 (which expresses an unqualified opinion and includes explanatory
paragraphs relating to the change in 1993 of the Partnership's method of
computing depreciation and the Partnership's revised estimate in 1993 of
interest due on loans from one of its partners)
10) Leyden Limited Partnership, dated February 8, 1995 (which expresses an
unqualified opinion and includes explanatory paragraphs relating to the
Partnership's ability to continue as a going concern and the correction
of the Partnership's method of computing accrued interest on a deferred
acquisition note)
11) Madison Hill Limited Partnership, dated March 1, 1995 (which expresses an
unqualified opinion and includes an explanatory paragraph relating to the
transfer of substantially all of its assets, liabilities and its deed in
lieu of foreclosure, during February 1995, in return for $50,000)
12) Montblanc Garden Apartments Associates, A Limited Partnership, dated
March 17, 1995 (which expresses an unqualified opinion and includes an
explanatory paragraph relating to a disputed outstanding mortgage
principal balance)
13) Pavilion Associates, A Limited Partnership, dated January 19, 1995 (which
expresses an unqualified opinion and includes an explanatory paragraph
relating to a deferred acquisition note and related accrued interest, and
real estate notes payable which are due February 16, 1996)
14) Spring Meadow Limited Partnership, dated February 13, 1995 (which
expresses an unqualified opinion and includes explanatory paragraphs
relating to the Partnership's ability to continue as a going concern and
the correction of the Partnership's method of computing accrued interest
on a deferred acquisition note and the correction of an error relating to
Partnership cash reflected in the financial statements)
15) Spruce Limited Partnership, dated February 6, 1995 (which expresses an
unqualified opinion and includes an explanatory paragraph relating to the
correction of the Partnership's method of computing accrued interest on a
deferred acquisition note for the years 1992 and prior and the correction
of an error relating to Partnership cash reflected in the financial
statements)
16) Waterman Limited Partnership, dated January 13, 1995 (which expresses a
qualified opinion as a result of cumulative unpaid distributions recorded
according to HUD guidelines which is not in accordance with generally
accepted accounting principles, and includes an explanatory paragraph
regarding a deferred acquisition note and related accrued interest which
is due on April 18, 1996)
Page 2 of 3
<PAGE>
We also consent to the reference to us under the heading "Experts" in the
Joint Proxy Statement/Prospectus of AIMCO and NHP Incorporated, which is part
of this Registration Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
McLean, Virginia
October 30, 1997
Page 3 of 3
<PAGE>
<TABLE>
<CAPTION>
Appendix A-94
PARTNERSHIP REPORT DATE
- ----------- -----------
<S> <C>
107-145 West 135th Street Associates February 9, 1995
Algonquin Tower Limited Partnership February 9, 1995
All Hallows Associates January 26, 1995
Allentown Towne House Limited Partnership January 26, 1995
Anglers Manor Associates February 2, 1995
Antioch Apartments, Ltd. January 11, 1995
Arvada House Associates February 2, 1995
Audobon Park Associates January 12, 1995
Baldwin Oaks Elderly, Ltd. February 6, 1995
Baldwin Towers Associates February 10, 1995
Basswood Manor Limited Partnership January 25, 1995
Bayview Hunters Point Apartments January 26, 1995
Bensalem Gardens Associates February 3, 1995
Berkley Limited Partnership February 14, 1995
Bloomsburg Elderly Associates February 1, 1995
Briarwood Apartments January 19, 1995
Brinton Manor No. 1 Associates January 21, 1995
Brinton Towers Associates January 24, 1995
Brookside Apartments Associates February 1, 1995
Buena Vista Apartments, Ltd. January 16, 1995
Cabell Associates of Lakeview January 21, 1995
California Square Limited Partnership January 30, 1995
California Square II Limited Partnership January 30, 1995
Campbell Heights Associates February 2, 1995
Canterbury Gardens Associates February 1, 1995
Capital Park Limited Partnership January 19, 1995
Center Square Associates January 25, 1995
Chapel NDP January 30, 1995
Cheyenne Village Apartments, Ltd. February 3, 1995
College Heights January 19, 1995
College Park Apartments February 8, 1995
College Park Associates January 27, 1995
Community Developers of High Point January 30, 1995
Congress Park Associates II February 9, 1995
Copperwood Limited January 31, 1995
Copperwood II Limited January 25, 1995
Cypress Gardens, Limited January 20, 1995
Darby Townhouses Associates January 18, 1995
Darbytown Development Associates January 11, 1995
Delcar-S, Ltd. January 9, 1995
Delcar-T, Ltd. January 20, 1995
DIP Limited Partnership January 20, 1995
DIP Limited Partnership-II February 3, 1995
DIP Limited Partnership III February 15, 1995
</TABLE>
Page 1
<PAGE>
<TABLE>
<CAPTION>
Appendix A-94
PARTNERSHIP REPORT DATE
- ----------- -----------
<S> <C>
Discovery Limited Partnership February 7, 1995
Doral Gardens Associates February 1, 1995
Duquesne Associates No. 1 January 16, 1995
Edmond Estates Limited Partnership January 21, 1995
Elden Limited Partnership January 30, 1995
Esbro Limited Partnership January 12, 1995
Fairmont #1 Limited Partnership February 3, 1995
Fairmont #2 Limited Partnership February 6, 1995
Fairwood Associates February 6, 1995
Federal Square Village January 18, 1995
Field Associates January 21, 1995
Forest Green Limited Partnership January 16, 1995
Forest Park Elderly Associates January 13, 1995
Forrester Gardens, Ltd. January 12, 1995
Fort Carson Associates January 12, 1995
Foxwood Manor Associates January 11, 1995
Franklin Chapel Hill Associates February 23, 1995
Franklin Park Limited Partnership February 9, 1995
Friendset Housing Company January 17, 1995
Frio Housing, Ltd. February 2, 1995
G.W. Carver Limited January 26, 1995
Galion Limited Partnership January 30, 1995
Garfield Hill Associates January 17, 1995
Gateway Village Associates January 18, 1995
Gladys Hampton Houses Associates February 6, 1995
Golden Apartments I February 6, 1995
Golden Apartments II March 1, 1995
Grandview Apartments January 11, 1995
Greater Mount Calvary Terrace, Ltd. January 18, 1995
Greater Richmond Community Development February 14, 1995
Corp. I and Associates
Greater Richmond Community Development February 13, 1995
Corp. II and Associates
Griffith Limited Partnership January 11, 1995
Gulfway Limited Partnership January 13, 1995
H.R.H. Properties, Ltd. February 3, 1995
Hamilton Heights Associates January 26, 1995
Harold House Limited Partnership January 14, 1995
Hatillo Housing Associates March 17, 1995
Hickory Ridge Associates, Ltd. January 19, 1995
Hillcrest Green Apartments, Ltd. January 10, 1995
Hillside Village Associates February 9, 1995
Hilltop Limited Partnership January 17, 1995
Hopkins Renaissance Associates February 1, 1995
</TABLE>
Page 2
<PAGE>
<TABLE>
<CAPTION>
Appendix A-94
PARTNERSHIP REPORT DATE
- ----------- -----------
<S> <C>
Hudson Terrace Associates January 26, 1995
Hurbell II Limited Partnership January 13, 1995
Indian Valley I Limited Partnership January 30, 1995
Indian Valley II Limited Partnership January 30, 1995
Indian Valley III Limited Partnership January 30, 1995
Ingram Square Apartments, Ltd. January 26, 1995
Jamestown Village Associates January 12, 1995
Jersey Park Associates January 20, 1995
JFK Associates January 26, 1995
Johnston Square Associates January 17, 1995
JVL 16 Associates January 16, 1995
Kennedy Homes Limited Partnership January 17, 1995
Key Parkway West Associates January 30, 1995
Kimberly Associates Limited Partnership January 10, 1995
La Salle Apartments January 17, 1995
La Vista Associates February 9, 1995
Lafayette Manor Associates February 15, 1995
Lafayette Towne Elderly, Ltd. February 3, 1995
Lafayette Towne Family, Ltd. February 3, 1995
Lake Forest Apartments January 20, 1995
Las Americas Housing Associates March 17, 1995
Lassen Associates January 31, 1995
Laurel Gardens February 1, 1995
Lewisburg Associates January 26, 1995
Lewisburg Elderly Associates January 19, 1995
Lincmar Associates January 31, 1995
Lincoln Park Associates February 3, 1995
Lock Haven Elderly Associates February 7, 1995
Lock Haven Gardens Associates January 30, 1995
Loring Towers Apartments Limited Partnership January 12, 1995
M & P Development Company January 13, 1995
Maple Park East Limited Partnership January 17, 1995
Maple Park West Limited Partnership January 10, 1995
Mayfair Manor Limited Partnership January 16, 1995
Meadowood Apartments-Phase I (Meadowood January 17, 1995
Associates, Ltd.)
Meadowood Apartments-Phase II (Meadowood January 12, 1995
Associates, Ltd.)
Meadows Apartments Limited Partnership January 23, 1995
Meadows East Apartments Limited Partnership January 17, 1995
Menlo Limited Partnership January 13, 1995
Merced Commons II February 7, 1995
Mill Street Associates February 3, 1995
Miramar Housing Associates March 17, 1995
</TABLE>
Page 3
<PAGE>
<TABLE>
<CAPTION>
Appendix A-94
PARTNERSHIP REPORT DATE
- ----------- -----------
<S> <C>
Montblanc Housing Associates March 17, 1995
Morrisania Towers Housing Company January 25, 1995
Moss Gardens Ltd. February 1, 1995
Murphy Blair Associates III February 1, 1995
New Lake Village Apartments January 20, 1995
New West 111th Street Housing Company February 3, 1995
Newton Hill Limited Partnership January 30, 1995
Northgate Village Limited Partnership January 16, 1995
Northlake Terrace Associates February 8, 1995
Northwest Terrace Associates February 8, 1995
Oakland Village Townhouse Associates February 8, 1995
Ocala Place, Ltd. February 7, 1995
One Lytle Place February 2, 1995
One West Conway Associates February 22, 1995
Orange Village Associates February 8, 1995
Palm House Limited Partnership January 30, 1995
Park Avenue West I Limited Partnership January 30, 1995
Park Avenue West II Limited Partnership January 30, 1995
Park Creek Limited Partnership January 11, 1995
Place One Limited Partnership February 11, 1995
Portland Plaza Partnership February 7, 1995
Portner Place Associates February 15, 1995
Post Street Associates January 25, 1995
Pride Gardens Limited Partnership January 20, 1995
Pueblo Apartments Associates, Ltd. January 20, 1995
RI-15 Limited Partnership February 3, 1995
River Front Apartments Limited Partnership January 11, 1995
River Woods Associates February 13, 1995
Riverview II Associates January 27, 1995
Rockwell Limited Partnership January 13, 1995
Rolling Meadows Of Ada, Ltd. January 10, 1995
Ruffin Road Associates February 6, 1995
Rutherford Park Townhouses Associates February 8, 1995
San Jose Limited Partnership January 12, 1995
San Juan Del Centro Limited Partnership January 17, 1995
Sencit Towne House Limited Partnership January 25, 1995
Shoreview Apartments February 8, 1995
Site 10 Community Alliance Associates February 7, 1995
Sleepy Hollow Apartments January 26, 1995
SNI Development Company January 24, 1995
Southmont Apartments January 31, 1995
Southward Limited Partnership January 13, 1995
Stafford Apartments January 27, 1995
Stock Island Limited Partnership January 18, 1995
</TABLE>
Page 4
<PAGE>
<TABLE>
<CAPTION>
Appendix A-94
PARTNERSHIP REPORT DATE
- ----------- -----------
<S> <C>
Storey Manor Associates February 3, 1995
Strawbridge Square Associates Limited Partnership February 6, 1995
Summersong Townhouses Limited Partnership January 26, 1995
Sunrise Associates February 10, 1995
Sunset Plaza Apartments January 20, 1995
Susquehanna View Limited Partnership January 16, 1995
Timberlake Apartments Limited Partnership January 19, 1995
Timuquana Park Associates January 18, 1995
Tinker Creek Limited Partnership January 10, 1995
Town North January 18, 1995
Treeslope Apartments Associates January 26, 1995
Trinity Towers-14th Street Associates, Ltd. March 7, 1995
United Handicap Federation Apartment Associates February 13, 1995
United House Associates February 9, 1995
United Housing Partners-Carbondale, Ltd. February 8, 1995
United Redevelopment Associates January 26, 1995
University Plaza Associates February 9, 1995
Vantage 78 March 7, 1995
Villa De Guadalupe Associates January 16, 1995
Village Circle Apartments, Ltd. January 31, 1995
Village Green Limited Partnership January 20, 1995
Vistas De San Juan Associates February 13, 1995
Waico Apartments Associates January 17, 1995
Waico Phase II Associates February 1, 1995
Walden Oaks Associates January 31, 1995
Walmsley Terrace Associates January 18, 1995
Walnut Hills Associates, Ltd. January 13, 1995
Wash-West Properties January 31, 1995
Waters Towers Associates January 12, 1995
West Oak Village Limited Partnership January 27, 1995
Whitefield Place, Ltd. January 26, 1995
Woodmark Limited Partnership January 30, 1995
Yadkin Associates January 13, 1995
</TABLE>
Page 5
<PAGE>
Appendix B-94
<TABLE>
<CAPTION>
PARTNERSHIP REPORT DATE
- ----------- -----------
<S> <C>
Boynton Beach Limited Partnership March 17, 1995
Central Village Associates February 10, 1995
Cheek Road Limited Partnership February 7, 1995
Clay Courts Associates January 12, 1995
Eastman Associates January 24, 1995
Elm Creek Limited Partnership February 7, 1995
Fairmeadows Limited Partnership January 12, 1995
Fairview Homes Associates January 27, 1995
Franklin Eagle Rock Associates February 28, 1995
Franklin Pheasant Ridge Associates March 1, 1995
Franklin Ridgewood Associates February 24, 1995
Hamilton Gardens, Ltd. February 13, 1995
JVL Limited January 14, 1995
JVL 18 Associates February 3, 1995
JVL 19 Associates January 27, 1995
Langenheim Associates February 1, 1995
Meadowood Associates III, Ltd. January 15, 1995
New West 111th Street Two Associates January 25, 1995
Olde Rivertown Venture February 2, 1995
Retirement Manor Associates February 17, 1995
Royal Towers Limited Partnership January 12, 1995
Southridge Apartments Limited Partnership January 10, 1995
Springfield Limited Partnership January 13, 1995
Trinity Apartments January 13, 1995
Village Park II February 3, 1995
</TABLE>
<PAGE>
Appendix C-94
<TABLE>
<CAPTION>
PARTNERSHIP REPORT DATE
- ----------- -----------
<S> <C>
Cottonwood Apartments January 11, 1995
Kenneth Arms Apartments January 9, 1995
Knollcrest Apartments January 21, 1995
Manzanita Arms Apartments January 11, 1995
Overbrook Park, Ltd. January 23, 1995
Rancho Arms Apartments January 17, 1995
San Juan Apartments January 24, 1995
Trinity Hills Village Apartments January 13, 1995
Tumast Associates February 8, 1995
Verdes Del Oriente February 1, 1995
</TABLE>
<PAGE>
Appendix D-94
<TABLE>
<CAPTION>
PARTNERSHIP REPORT DATE
- ----------- -----------
<S> <C>
Cumberland Court Associates February 9, 1995
Maple Hill Associates February 15, 1995
Merced Commons I February 1, 1995
</TABLE>
<PAGE>
Appendix E-94
<TABLE>
<CAPTION>
PARTNERSHIP REPORT DATE
- ----------- -----------
<S> <C>
Brightwood Manor Associates January 26, 1995
Caroline Arms Limited Partnership January 18, 1995
Richlieu Associates February 11, 1995
Sherman Terrace Associates January 13, 1995
Washington Manor Limited Partnership January 26, 1995
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Apartment Investment and Management Company (AIMCO) on Form S-4 of our
reports on the financial statements of certain Partnerships for the year
ended December 31, 1995 (except for Item 4 below which is for the period
January 1, 1995 to August 7, 1995), included in Amendment No. 1 and
incorporated by reference in Amendment No. 3 to AIMCO's Current Report on
Form 8-K dated June 3, 1997, which reports are dated as shown in the
following Appendices (Items 1 through 3), and as indicated below (Items 4
through 6):
1) Appendix A-95
2) Appendix B-95 (each of which expresses an unqualified opinion and includes
an explanatory paragraph relating to the Partnership's ability to continue
as a going concern)
3) Appendix C-95 (each of which expresses an unqualified opinion and refers to
the reports of other auditors)
4) Hamilton Gardens, Ltd., A Limited Partnership, dated September 7, 1995
(which expresses an unqualified opinion and includes an explanatory
paragraph relating to the sale, by court order, of the property owned by
the Partnership, pursuant to foreclosure proceedings and that title passed
to the new owners on August 8, 1995)
5) Spring Bright Limited Partnership, A Limited Partnership, dated March 11,
1996 (which expresses an unqualified opinion, refers to the report of
other auditors and includes an explanatory paragraph relating to the
Partnership's ability to continue as a going concern)
6) Wash-West Properties, A Limited Partnership, dated February 6, 1996 (which
expresses an unqualified opinion and includes an explanatory paragraph
relating to the correction of the Partnership's method of computing accrued
interest on the Redevelopment Authority promissory note)
We also consent to the reference to us under the heading "Experts" in the
Joint Proxy Statement/Prospectus of AIMCO and NHP Incorporated, which is part
of this Registration Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
McLean, Virginia
October 30, 1997
<PAGE>
Appendix A-95
<TABLE>
<CAPTION>
PARTNERSHIP REPORT DATE
- ----------- -----------
<S> <C>
107-145 West 135th Street Associates February 7, 1996
Algonquin Tower Limited Partnership February 5, 1996
All Hallows Associates January 31, 1996
Allentown Towne House Limited Partnership January 25, 1996
Anglers Manor Associates February 8, 1996
Antioch Apartments, Ltd. February 5, 1996
Arvada House Associates January 30, 1996
Audobon Park Associates January 24, 1996
Baldwin Oaks Elderly, Ltd. February 12, 1996
Baldwin Towers Associates January 31, 1996
Basswood Manor Limited Partnership January 25, 1996
Bayview Hunters Point Apartments January 30, 1996
Bensalem Gardens Associates February 11, 1996
Berkley Limited Partnership February 7, 1996
Bloomsburg Elderly Associates February 3, 1996
Briarwood Apartments January 31, 1996
Brightwood Manor Associates January 31, 1996
Brinton Manor No. 1 Associates January 16, 1996
Brinton Towers Associates February 6, 1996
Brookside Apartments Associates January 31, 1996
Buena Vista Apartments, Ltd. January 20, 1996
Cabell Associates of Lakeview January 25, 1996
California Square Limited Partnership January 22, 1996
California Square II Limited Partnership January 23, 1996
Campbell Heights Associates February 5, 1996
Canterbury Gardens Associates February 6, 1996
Capital Park Limited Partnership January 18, 1996
Caroline Arms Limited Partnership January 31, 1996
Center Square Associates January 25, 1996
Chapel NDP February 6, 1996
Clay Courts Associates January 10, 1996
College Heights January 22, 1996
College Park Apartments February 15, 1996
College Park Associates February 13, 1996
Community Developers of High Point January 27, 1996
Congress Park Associates II January 15, 1996
Copperwood Limited February 2, 1996
Copperwood II Limited February 7, 1996
Cumberland Court Associates January 31, 1996
Cypress Gardens, Limited January 22, 1996
Darby Townhouses Associates January 22, 1996
Darbytown Development Associates January 22, 1996
Delcar-S, Ltd. January 16, 1996
Delcar-T, Ltd. January 25, 1996
DIP Limited Partnership January 19, 1996
DIP Limited Partnership-II January 30, 1996
DIP Limited Partnership III January 31, 1996
Discovery Limited Partnership February 1, 1996
Doral Gardens Associates February 9, 1996
</TABLE>
Page 1
<PAGE>
Appendix A-95
<TABLE>
<CAPTION>
PARTNERSHIP REPORT DATE
- ----------- -----------
<S> <C>
Duquesne Associates No. 1 January 12, 1996
Edmond Estates Limited Partnership January 17, 1996
Elden Limited Partnership January 30, 1996
Esbro Limited Partnership January 14, 1996
Fairmont #1 Limited Partnership January 26, 1996
Fairmont #2 Limited Partnership February 8, 1996
Fairview Homes Associates January 23, 1996
Fairwood Associates February 7, 1996
Federal Square Village January 31, 1996
Field Associates February 3, 1996
Forest Green Limited Partnership January 24, 1996
Forest Park Elderly Associates February 7, 1996
Forrester Gardens, Ltd. January 10, 1996
Fort Carson Associates January 15, 1996
Foxwood Manor Associates February 15, 1996
Franklin Chapel Hill Associates February 5, 1996
Franklin Eagle Rock Associates February 15, 1996
Franklin Park Limited Partnership January 30, 1996
Franklin Pheasant Ridge Associates February 14, 1996
Franklin Woods Associates February 23, 1996
Friendset Housing Company February 21, 1996
Frio Housing, Ltd. February 2, 1996
G.W. Carver Limited January 24, 1996
Galion Limited Partnership January 25, 1996
Garfield Hill Associates February 6, 1996
Gateway Village Associates January 18, 1996
Gladys Hampton Houses Associates February 6, 1996
Golden Apartments I January 31, 1996
Golden Apartments II February 8, 1996
Grandview Apartments January 16, 1996
Greater Mount Calvary Terrace, Ltd. January 15, 1996
Greater Richmond Community Development Corp. I and Associates February 5, 1996
Greater Richmond Community Development Corp. II and Associates January 26, 1996
Griffith Limited Partnership January 17, 1996
Gulfway Limited Partnership January 18, 1996
H.R.H. Properties, Ltd. February 5, 1996
Hamilton Heights Associates February 14, 1996
Harold House Limited Partnership January 30, 1996
Hickory Ridge Associates, Ltd. February 2, 1996
Hillcrest Green Apartments, Ltd. January 11, 1996
Hillside Village Associates February 8, 1996
Hilltop Apartments Associates January 23, 1996
Hilltop Limited Partnership January 19, 1996
Hopkins Renaissance Associates February 14, 1996
Hudson Terrace Associates January 31, 1996
Hurbell II Limited Partnership January 20, 1996
Hurbell III Limited Partnership January 20, 1996
</TABLE>
Page 2
<PAGE>
Appendix A-95
<TABLE>
<CAPTION>
PARTNERSHIP REPORT DATE
- ----------- -----------
<S> <C>
Indian Valley I Limited Partnership January 24, 1996
Indian Valley II Limited Partnership January 26, 1996
Indian Valley III Limited Partnership January 25, 1996
Ingram Square Apartments, Ltd. January 25, 1996
Jamestown Village Associates January 25, 1996
Jersey Park Associates January 17, 1996
JFK Associates February 15, 1996
Johnston Square Associates January 15, 1996
JVL 16 Associates January 18, 1996
Kennedy Homes Limited Partnership January 17, 1996
Key Parkway West Associates January 24, 1996
Kimberly Associates Limited Partnership January 15, 1996
La Salle Apartments February 5, 1996
La Vista Associates February 8, 1996
Lafayette Manor Associates February 9, 1996
Lafayette Towne Elderly, Ltd. January 17, 1996
Lafayette Towne Family, Ltd. January 25, 1996
Lake Forest Apartments January 19, 1996
Las Americas Housing Associates January 30, 1996
Lassen Associates February 2, 1996
Laurel Gardens January 31, 1996
Lewisburg Associates January 29, 1996
Lewisburg Elderly Associates February 6, 1996
Lincmar Associates January 26, 1996
Lincoln Park Associates February 7, 1996
Lock Haven Elderly Associates February 12, 1996
Lock Haven Gardens Associates January 29, 1996
Loring Towers Apartments Limited Partnership January 18, 1996
M & P Development Company January 31, 1996
Maple Hill Associates February 3, 1996
Mayfair Manor Limited Partnership January 16, 1996
Meadowood Associates III, Ltd. January 18, 1996
Meadows Apartments Limited Partnership February 5, 1996
Meadows East Apartments Limited Partnership January 29, 1996
Menlo Limited Partnership January 11, 1996
Merced Commons I January 30, 1996
Merced Commons II January 23, 1996
Mill Street Associates February 1, 1996
Miramar Housing Associates January 29, 1996
Montblanc Garden Apartments Associates February 9, 1996
Montblanc Housing Associates January 31, 1996
Morrisania Towers Housing Company January 31, 1996
Moss Gardens Ltd. February 1, 1996
Murphy Blair Associates III February 7, 1996
National Housing Partnership Realty Fund IV March 19, 1996
National Housing Partnership RESI Associates I March 18, 1996
New Lake Village Apartments January 26, 1996
New West 111th Street Housing Company February 12, 1996
Newton Hill Limited Partnership January 24, 1996
</TABLE>
Page 3
<PAGE>
Appendix A-95
<TABLE>
<CAPTION>
PARTNERSHIP REPORT DATE
- ----------- -----------
<S> <C>
Northgate Village Limited Partnership January 19, 1996
Northlake Terrace Associates January 26, 1996
Northwest Terrace Associates February 19, 1996
Oakland Village Townhouse Associates February 12, 1996
Ocala Place, Ltd. January 31, 1996
One Lytle Place February 20, 1996
One West Conway Associates February 7, 1996
Orange Village Associates January 31, 1996
Palm House Limited Partnership January 30, 1996
Park Avenue West I Limited Partnership January 31, 1996
Park Avenue West II Limited Partnership January 26, 1996
Place One Limited Partnership February 13, 1996
Point West Limited Partnership January 31, 1996
Portfolio Properties Five Associates March 4, 1996
Portfolio Properties Six Associates March 6, 1996
Portfolio Properties Twelve Associates March 22, 1996
Portfolio Properties Two Associates March 2, 1996
Portland Plaza Partnership January 24, 1996
Portner Place Associates January 25, 1996
Post Street Associates February 6, 1996
Pueblo Apartments Associates, Ltd. January 22, 1996
RI-15 Limited Partnership February 9, 1996
Richlieu Associates February 20, 1996
River Front Apartments Limited Partnership January 31, 1996
River Woods Associates January 30, 1996
Riverview II Associates January 17, 1996
Rockwell Limited Partnership January 17, 1996
Rolling Meadows Of Ada, Ltd. January 15, 1996
Ruffin Road Associates February 7, 1996
Rutherford Park Townhouses Associates February 1, 1996
San Jose Limited Partnership January 13, 1996
San Juan Del Centro Limited Partnership January 24, 1996
Sencit Towne House Limited Partnership January 25, 1996
Sherman Terrace Associates January 31, 1996
Shoreview Apartments February 1, 1996
Site 10 Community Alliance Associates January 26, 1996
SNI Development Company February 5, 1996
Southmont Apartments February 5, 1996
Southward Limited Partnership January 19, 1996
Spruce Limited Partnership February 10, 1996
Spruce Palm Limited Partnership March 11, 1996
Stafford Apartments January 26, 1996
Stock Island Limited Partnership February 16, 1996
Storey Manor Associates January 30, 1996
Strawbridge Square Associates Limited Partnership February 7, 1996
Summersong Townhouses Limited Partnership January 25, 1996
Sunrise Associates January 27, 1996
Sunset Plaza Apartments January 18, 1996
Susquehanna View Limited Partnership January 17, 1996
</TABLE>
Page 4
<PAGE>
Appendix A-95
<TABLE>
<CAPTION>
PARTNERSHIP REPORT DATE
- ----------- -----------
<S> <C>
Timuquana Park Associates January 18, 1996
Tinker Creek Limited Partnership January 15, 1996
Town North January 17, 1996
Townview Towers I Partnership, Ltd. February 11, 1996
Treeslope Apartments Associates January 26, 1996
Trinity Towers-14th Street Associates, Ltd. February 18, 1996
United Handicap Federation Apartment Associates February 8, 1996
United House Associates February 9, 1996
United Housing Partners-Carbondale, Ltd. February 10, 1996
United Redevelopment Associates January 27, 1996
University Plaza Associates February 14, 1996
Vantage 78 February 16, 1996
Villa De Guadalupe Associates January 11, 1996
Village Circle Apartments, Ltd. February 1, 1996
Village Green Limited Partnership January 19, 1996
Vistas De San Juan Associates January 25, 1996
Waico Apartments Associates January 17, 1996
Waico Phase II Associates January 30, 1996
Walden Oaks Associates February 10, 1996
Walmsley Terrace Associates January 20, 1996
Walnut Hills Associates, Ltd. January 26, 1996
Washington Manor Limited Partnership February 5, 1996
Waters Towers Associates January 15, 1996
Whitefield Place, Ltd. January 26, 1996
Woodmark Limited Partnership January 24, 1996
Yadkin Associates January 15, 1996
</TABLE>
Page 5
<PAGE>
Appendix B-95
PARTNERSHIP REPORT DATE
- ----------- -----------
Central Village Associates January 17, 1996
Cheek Road Limited Partnership February 15, 1996
Darby Townhouses Limited Partnership March 6, 1996
Doral Limited Partnership March 12, 1996
Eastman Associates January 29, 1996
Fairmeadows Limited Partnership January 20, 1996
Franklin Ridgewood Associates February 15, 1996
Green Mountain Manor Limited Partnership February 19, 1996
Hatillo Housing Associates February 28, 1996
JVL Limited January 15, 1996
JVL 18 Associates January 20, 1996
JVL 19 Associates January 23, 1996
Langenheim Associates January 31, 1996
Leyden Limited Partnership February 14, 1996
Maple Park East Limited Partnership February 1, 1996
Maple Park West Limited Partnership February 1, 1996
Meadowood Apartments-Phase I (Meadowood Associates, Ltd.) January 16, 1996
Meadowood Apartments-Phase II (Meadowood Associates, Ltd.) January 14, 1996
Meadowood Townhouses I Limited Partnership February 27, 1996
Meadowood Townhouses III Limited Partnership February 29, 1996
New West 111th Street Two Associates January 22, 1996
Olde Rivertown Venture January 19, 1996
Park Creek Limited Partnership January 15, 1996
Pavilion Associates January 18, 1996
Portfolio Properties Three Associates March 4, 1996
Retirement Manor Associates February 2, 1996
Royal Towers Limited Partnership January 23, 1996
Southridge Apartments Limited Partnership January 15, 1996
Spring Meadow Limited Partnership February 15, 1996
Timberlake Apartments Limited Partnership January 23, 1996
Trinity Apartments March 18, 1996
Village Park II February 19, 1996
West Oak Village Limited Partnership January 31, 1996
<PAGE>
Appendix C-95
PARTNERSHIP REPORT DATE
- ----------- -----------
National Housing Partnership Realty Fund I March 11, 1996
National Housing Partnership Realty Fund Two March 13, 1996
National Housing Partnership Realty Fund III March 15, 1996
Portfolio Properties Seven Associates March 6, 1996
Portfolio Properties Eight Associates March 12, 1996
Portfolio Properties Nine Associates March 13, 1996
Portfolio Properties Ten Associates March 7, 1996
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Apartment Investment and Management Company (AIMCO) on Form S-4 of our
reports on the financial statements of certain Partnerships for the year
ended December 31, 1996 (except for Item 4 below which is for the period
January 1, 1996 to July 15, 1996), included in Amendment No. 1 and
incorporated by reference in Amendment No. 3 to AIMCO's Current Report on
Form 8-K dated June 3, 1997, which reports are dated as shown in the
following Appendices (Items 1 through 3), and as indicated below (Items 4
through 9):
1) Appendix A-96
2) Appendix B-96 (each of which expresses an unqualified opinion and includes
an explanatory paragraph relating to the Partnership's ability to continue
as a going concern)
3) Appendix C-96 (each of which expresses an unqualified opinion and refers to
the reports of other auditors)
4) Foxwood Manor Associates, A Limited Partnership, dated September 30, 1996
(December 31, 1996 as to Note 8) (which expresses an unqualified opinion
and includes an explanatory paragraph relating to the Partnership's sale of
the land, rental property and substantially all of its assets and
liabilities on July 16, 1996)
5) Hickory Ridge Associates, Ltd., A Limited Partnership, dated February 13,
1997 (which expresses an unqualified opinion and includes an explanatory
paragraph relating to the Partnership's financial loss due to the alleged
misappropriation of funds by former employees and falsifications of
documents to the Department of Housing and Urban Development)
6) Ocala Place, Ltd., A Limited Partnership, dated January 23, 1997 (which
expresses an unqualified opinion and includes an explanatory paragraph
relating to the Partnership's financial loss due to the alleged
misappropriation of funds by former employees and falsification of
documents to the Department of Housing and Urban Development)
7) Portfolio Properties Seven Associates, A Limited Partnership, dated
February 24, 1997 (which expresses an unqualified opinion, refers to the
report of other auditors and includes an explanatory paragraph relating to
the Partnership's ability to continue as a going concern)
Page 1 of 2
<PAGE>
8) Spring Bright Limited Partnership, A Limited Partnership, dated February
22, 1997 (which expresses an unqualified opinion, refers to the report of
other auditors and includes an explanatory paragraph relating to the
Partnership's ability to continue as a going concern)
9) Village Park II, A Limited Partnership, dated March 21, 1997 (which
expresses an unqualified opinion and includes explanatory paragraphs
relating to the Partnership's filing for reorganization under Chapter 11 of
the United States Bankruptcy Code and the Partnership's deeding its land,
rental property and substantially all of its assets to the mortgagee in
lieu of foreclosure on March 21, 1997)
We also consent to the reference to us under the heading "Experts" in the
Joint Proxy Statement/Prospectus of AIMCO and NHP Incorporated, which is part
of this Registration Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
McLean, Virginia
October 30, 1997
Page 2 of 2
<PAGE>
Appendix A-96
<TABLE>
<CAPTION>
PARTNERSHIP REPORT DATE
- ----------- -----------
<S> <C>
107-145 West 135th Street Associates February 14, 1997
Algonquin Tower Limited Partnership February 12, 1997
All Hallows Associates February 6, 1997
Allentown Towne House Limited Partnership January 19, 1997
Anglers Manor Associates January 31, 1997
Antioch Apartments, Ltd. February 4, 1997
Arvada House Associates February 7, 1997
Audobon Park Associates January 28, 1997
Baldwin Oaks Elderly, Ltd. January 17, 1997
Baldwin Towers Associates January 23, 1997
Basswood Manor Limited Partnership January 31, 1997
Bayview Hunters Point Apartments January 17, 1997
Bensalem Gardens Associates February 3, 1997
Berkley Limited Partnership February 8, 1997
Bloomsburg Elderly Associates January 13, 1997
Briarwood Apartments January 20, 1997
Brightwood Manor Associates January 24, 1997
Brinton Manor No. 1 Associates January 20, 1997
Brinton Towers Associates January 31, 1997
Brookside Apartments Associates January 15, 1997
Buena Vista Apartments, Ltd. January 16, 1997
Cabell Associates of Lakeview January 28, 1997
California Square Limited Partnership January 11, 1997
California Square II Limited Partnership January 28, 1997
Campbell Heights Associates January 29, 1997
Canterbury Gardens Associates February 5, 1997
Capital Park Limited Partnership January 17, 1997
Caroline Arms Limited Partnership January 17, 1997
Center Square Associates February 5, 1997
Chapel NDP February 4, 1997
Clay Courts Associates January 17, 1997
College Heights February 1, 1997
College Park Apartments February 6, 1997
College Park Associates February 7, 1997
Community Developers of High Point January 23, 1997
Congress Park Associates II February 11, 1997
Copperwood Limited January 20, 1997
Copperwood II Limited January 21, 1997
Cumberland Court Associates February 1, 1997
Darby Townhouses Associates February 5, 1997
Darbytown Development Associates January 24, 1997
Delcar-S, Ltd. January 16, 1997
Delcar-T, Ltd. January 16, 1997
DIP Limited Partnership January 10, 1997
DIP Limited Partnership-II February 13, 1997
DIP Limited Partnership III January 29, 1997
Discovery Limited Partnership January 16, 1997
Doral Gardens Associates February 3, 1997
</TABLE>
Page 1
<PAGE>
Appendix A-96
<TABLE>
<CAPTION>
PARTNERSHIP REPORT DATE
- ----------- -----------
<S> <C>
Duquesne Associates No. 1 January 15, 1997
Edmond Estates Limited Partnership January 11, 1997
Elden Limited Partnership January 20, 1997
Fairmeadows Limited Partnership January 20, 1997
Fairmont #1 Limited Partnership January 30, 1997
Fairmont #2 Limited Partnership January 30, 1997
Fairview Homes Associates February 3, 1997
Fairwood Associates February 6, 1997
Federal Square Village January 20, 1997
Field Associates January 23, 1997
Forest Green Limited Partnership January 10, 1997
Forest Park Elderly Associates February 12, 1997
Forrester Gardens, Ltd. January 23, 1997
Fort Carson Associates January 21, 1997
Franklin Chapel Hill Associates February 12, 1997
Franklin Eagle Rock Associates February 1, 1997
Franklin Park Limited Partnership February 10, 1997
Franklin Ridgewood Associates Limited Partnership and
NHP Ridgewood Partners Limited Partnership February 15, 1997
Friendset Housing Company February 14, 1997
Frio Housing, Ltd. January 21, 1997
G.W. Carver Limited February 13, 1997
Galion Limited Partnership January 30, 1997
Garfield Hill Associates February 7, 1997
Gateway Village Associates January 17, 1997
Gladys Hampton Houses Associates February 8, 1997
Golden Apartments I February 12, 1997
Golden Apartments II February 14, 1997
Grandview Apartments January 15, 1997
Greater Mount Calvary Terrace, Ltd. January 21, 1997
Greater Richmond Community Development Corp. I and
Associates January 31, 1997
Greater Richmond Community Development Corp. II and
Associates January 30, 1997
H.R.H. Properties, Ltd. January 17, 1997
Hamilton Heights Associates January 28, 1997
Harold House Limited Partnership January 13, 1997
Hatillo Housing Associates February 4, 1997
Hillcrest Green Apartments, Ltd. January 25, 1997
Hillside Village Associates January 25, 1997
Hilltop Apartments Associates February 12, 1997
Hilltop Limited Partnership January 13, 1997
Hudson Terrace Associates January 31, 1997
Hurbell II Limited Partnership January 13, 1997
Hurbell III Limited Partnership January 15, 1997
Indian Valley I Limited Partnership January 30, 1997
Indian Valley II Limited Partnership January 30, 1997
Indian Valley III Limited Partnership January 29, 1997
Ingram Square Apartments, Ltd. February 6, 1997
Jamestown Village Associates January 22, 1997
</TABLE>
Page 2
<PAGE>
Appendix A-96
<TABLE>
<CAPTION>
PARTNERSHIP REPORT DATE
- ----------- -----------
<S> <C>
Jersey Park Associates February 1, 1997
JFK Associates February 3, 1997
Johnston Square Associates January 20, 1997
Kennedy Homes Limited Partnership February 1, 1997
Key Parkway West Associates February 4, 1997
Kimberly Associates Limited Partnership January 11, 1997
La Salle Apartments February 10, 1997
La Vista Associates February 10, 1997
Lafayette Manor Associates February 13, 1997
Lafayette Towne Elderly, Ltd. January 24, 1997
Lafayette Towne Family, Ltd. January 25, 1997
Lake Forest Apartments January 17, 1997
Las Americas Housing Associates February 8, 1997
Lassen Associates January 31, 1997
Laurel Gardens January 27, 1997
Lewisburg Associates January 25, 1997
Lewisburg Elderly Associates January 24, 1997
Lincmar Associates January 29, 1997
Lincoln Park Associates February 5, 1997
Lock Haven Elderly Associates February 11, 1997
Lock Haven Gardens Associates February 11, 1997
Loring Towers Apartments Limited Partnership January 22, 1997
M & P Development Company January 29, 1997
Maple Hill Associates February 9, 1997
Merced Commons I January 10, 1997
Merced Commons II January 27, 1997
Mill Street Associates February 3, 1997
Miramar Housing Associates February 13, 1997
Montblanc Garden Apartments Associates January 30, 1997
Montblanc Housing Associates January 27, 1997
Morrisania Towers Housing Company January 24, 1997
Moss Gardens Ltd. February 5, 1997
Murphy Blair Associates III February 10, 1997
National Housing Partnership RESI Associates I February 26, 1997
New Lake Village Apartments January 18, 1997
New West 111th Street Housing Company January 27, 1997
Newton Hill Limited Partnership January 30, 1997
Northgate Village Limited Partnership January 16, 1997
Northlake Terrace Associates January 27, 1997
Northwest Terrace Associates January 31, 1997
Oakland Village Townhouse Associates February 10, 1997
One Lytle Place January 29, 1997
One West Conway Associates February 4, 1997
Orange Village Associates January 16, 1997
Palm House Limited Partnership January 29, 1997
Park Avenue West I Limited Partnership January 30, 1997
Park Avenue West II Limited Partnership January 30, 1997
Place One Limited Partnership February 7, 1997
Point West Limited Partnership January 28, 1997
Portfolio Properties Five Associates February 21, 1997
Portfolio Properties Twelve Associates February 25, 1997
</TABLE>
Page 3
<PAGE>
Appendix A-96
<TABLE>
<CAPTION>
PARTNERSHIP REPORT DATE
- ----------- -----------
<S> <C>
Portland Plaza Partnership January 31, 1997
Portner Place Associates January 17, 1997
Post Street Associates January 31, 1997
Pueblo Apartments Associates, Ltd. January 23, 1997
PW III Associates February 12, 1997
PW IV Associates February 7, 1997
RI-15 Limited Partnership February 5, 1997
Richlieu Associates February 14, 1997
River Front Apartments Limited Partnership January 22, 1997
River Woods Associates January 30, 1997
Riverview II Associates January 14, 1997
Rolling Meadows Of Ada, Ltd. January 28, 1997
Ruffin Road Associates January 29, 1997
Rutherford Park Townhouses Associates January 10, 1997
San Jose Limited Partnership January 10, 1997
San Juan Del Centro Limited Partnership January 17, 1997
Sencit Towne House Limited Partnership January 27, 1997
Sherman Terrace Associates February 10, 1997
Shoreview Apartments February 10, 1997
Site 10 Community Alliance Associates February 3, 1997
SNI Development Company January 23, 1997
Southmont Apartments February 4, 1997
Southridge Apartments Limited Partnership January 10, 1997
Southward Limited Partnership January 20, 1997
Spruce Limited Partnership January 31, 1997
Spruce Palm Limited Partnership February 26, 1997
Stafford Apartments January 27, 1997
Stock Island Limited Partnership February 18, 1997
Storey Manor Associates February 5, 1997
Strawbridge Square Associates Limited Partnership February 14, 1997
Summersong Townhouses Limited Partnership February 5, 1997
Sunrise Associates February 10, 1997
Sunset Plaza Apartments February 5, 1997
Susquehanna View Limited Partnership January 16, 1997
Timberlake Apartments Limited Partnership February 7, 1997
Timuquana Park Associates January 29, 1997
Town North January 30, 1997
Townview Towers I Partnership, Ltd. February 10, 1997
Treeslope Apartments Associates January 27, 1997
Trinity Towers-14th Street Associates, Ltd. February 7, 1997
United Handicap Federation Apartment Associates February 3, 1997
United House Associates February 11, 1997
United Housing Partners-Carbondale, Ltd. February 7, 1997
United Redevelopment Associates January 27, 1997
University Plaza Associates February 14, 1997
Vantage 78 February 10, 1997
Villa De Guadalupe Associates February 6, 1997
Village Circle Apartments, Ltd. February 5, 1997
Village Green Limited Partnership January 17, 1997
</TABLE>
Page 4
<PAGE>
Appendix A-96
<TABLE>
<CAPTION>
PARTNERSHIP REPORT DATE
- ----------- -----------
<S> <C>
Vistas De San Juan Associates January 31, 1997
Waico Apartments Associates February 3, 1997
Waico Phase II Associates January 16, 1997
Walden Oaks Associates January 16, 1997
Walmsley Terrace Associates January 20, 1997
Walnut Hills Associates, Ltd. February 12, 1997
Wash-West Properties February 7, 1997
Washington Manor Limited Partnership January 14, 1997
Waters Towers Associates January 14, 1997
Whitefield Place, Ltd. February 4, 1997
Wigar, Ltd. January 20, 1997
Woodmark Limited Partnership January 18, 1997
Yadkin Associates February 10, 1997
</TABLE>
Page 5
<PAGE>
Appendix B-96
PARTNERSHIP REPORT DATE
- ----------- -----------
Central Village Associates January 30, 1997
Cheek Road Limited Partnership January 27, 1997
Darby Townhouses Limited Partnership February 20, 1997
Doral Limited Partnership February 27, 1997
Esbro Limited Partnership January 22, 1997
Franklin Pheasant Ridge Associates January 23, 1997
Franklin Woods Associates Limited Partnership
and Woods Mortgage Associates Limited
Partnership February 21, 1997
Green Mountain Manor Limited Partnership February 8, 1997
Griffith Limited Partnership January 20, 1997
Gulfway Limited Partnership January 17, 1997
JVL Limited January 20, 1997
JVL 16 Associates January 14, 1997
JVL 18 Associates January 15, 1997
JVL 19 Associates January 28, 1997
Maple Park East Limited Partnership January 30, 1997
Maple Park West Limited Partnership February 11, 1997
Mayfair Manor Limited Partnership January 21, 1997
Meadowood Apartments-Phase I (Meadowood
Associates, Ltd.) January 11, 1997
Meadowood Apartments-Phase II (Meadowood
Associates, Ltd.) January 10, 1997
Meadowood Associates III, Ltd. January 10, 1997
Meadowood Townhouses I Limited Partnership February 20, 1997
Meadowood Townhouses III Limited
Partnership February 19, 1997
Meadows Apartments Limited Partnership January 10, 1997
Meadows East Apartments Limited
Partnership January 16, 1997
Menlo Limited Partnership January 27, 1997
National Housing Partnership Realty Fund IV March 10, 1997
New West 111th Street Two Associates February 3, 1997
Olde Rivertown Venture February 19, 1997
Park Creek Limited Partnership February 13, 1997
Pavilion Associates February 6, 1997
Pershing Waterman Phase I January 30, 1997
Portfolio Properties Two Associates February 21, 1997
Portfolio Properties Three Associates February 22, 1997
Portfolio Properties Six Associates February 24, 1997
Rockwell Limited Partnership January 17, 1997
Royal Towers Limited Partnership February 13, 1997
Spring Meadow Limited Partnership January 28, 1997
Tinker Creek Limited Partnership January 16, 1997
Trinity Apartments January 11, 1997
West Oak Village Limited Partnership January 21, 1997
<PAGE>
Appendix C-96
<TABLE>
<CAPTION>
PARTNERSHIP REPORT DATE
- ----------- -----------
<S> <C>
National Housing Partnership Realty Fund I February 27, 1997
National Housing Partnership Realty Fund Two March 3, 1997
National Housing Partnership Realty Fund III March 6, 1997
Portfolio Properties Eight Associates March 14, 1997
Portfolio Properties Nine Associates February 27, 1997
Portfolio Properties Ten Associates February 26, 1997
</TABLE>
<PAGE>
Exhibit 23.6
Consent of Anders, Minkler, & Diehl LLP
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 of Apartment Investment and Management
Company ("AIMCO") and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated ("NHP") included therein, and to the incorporation by reference
therein of our reports dated February 3, 6, 9, 11, 14, 15 and 20, 1995 and
our reports dated February 9, 13 and 20, 1996 with respect to the audits of:
Pershing Waterman Phase I (DB I) Caroline Associates I
PW III Associates (DB II) Columbus Square Associates I
PW IV Associates (DB III) Columbus Square Associates II
PW V Associates (DB IV) Savoy Court Associates
PW VI Associates (DB V) Wigar, Ltd. (Winter Garden)
(i) for the years ended December 31, 1994 and 1995, included (for 1995) and
incorporated by reference (for 1994) in AIMCO's Current Report on Form 8-K
dated June 3, 1997, as amended; (ii) for the year ended December 31, 1994,
incorporated by reference in AIMCO's Current Report of Form 8-K dated April 16,
1997, as amended; and (iii) for the year ended December 31, 1994,
incorporated by reference in NHP's Annual Report on Form 10-K for the year
ended December 31, 1996, as amended, all filed with the Securities and
Exchange Commission.
/s/ Anders, Minkler, & Diehl LLP
St. Louis, Missouri
October 30, 1997
<PAGE>
Exhibit 23.7
Dauby O'Connor & Zaleski
A Limited Liability Company
Certified Public Accountants
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement on Form S-4 of Apartment Investment and Management
Company ("AIMCO") and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated ("NHP") included therein, and to the incorporation by reference
therein of our reports dated as referred to in Schedule I and Schedule II
with respect to the audits referred to in Schedule I and Schedule II (i) for
the years ended December 31, 1994 and 1995, included (for 1995) and
incorporated by reference (for 1994) in AIMCO's Current Report on Form 8-K
dated June 3, 1997, as amended; (ii) for the year ended December 31, 1994,
incorporated by reference in AIMCO's Current Report of Form 8-K dated April
16, 1997, as amended; and (iii) for the year ended December 31, 1994,
incorporated by reference in NHP's Annual Report on Form 10-K for the year
ended December 31, 1996, as amended, all filed with the Securities and
Exchange Commission.
/S/ Dauby O'Connor & Zaleski, LLC
October 30, 1997 Dauby O'Connor & Zaleski, LLC
Indianapolis, Indiana Certified Public Accountants
<PAGE>
SCHEDULE I
AUDITS FOR THE YEAR ENDED DECEMBER 31, 1994
Report Date Partnership Name
January 7, 1995 Brookview Apartments Company Limited
March 13, 1995 Clover Ridge East Limited Partnership
January 7, 1995 Colony Apartments Company Limited
January 25, 1995 East Hampton Limited Partnership
January 25, 1995 Edgewood II Associates
January 20, 1995 Fairburn & Gordon Associates, Phase I
January 20, 1995 Fairburn & Gordon Associates, Phase II
January 30, 1995 Laing Village
January 25, 1995 Oakland City/West End Associates, Ltd.
January 30, 1995 Orangeburg Manor
February 6, 1995 except for Note 8
which is dated June 9, 1995 Parkways Associates
January 25, 1995 Pleasant Valley Apartments, Ltd.
January 25, 1995 Sandy Springs Associates, Ltd.
February 8, 1995 The Oak Park Partnership
February 6, 1995, except for Note 8
which is dated June 9, 1995 The Rogers Park Partnership
February 8, 1995 Tiffany Rehab Associates
January 20, 1995 Village Green Apartments Company Limited
January 25, 1995 Vineville Towers Associates, Ltd.
January 20, 1995 Westgate Apartments
<PAGE>
SCHEDULE II
AUDITS FOR THE YEAR ENDED DECEMBER 31, 1995
Report Date Partnership Name
January 19, 1996 Brookview Apartments Company Limited
February 22, 1996 Clover Ridge East Limited Partnership
January 19, 1996 Colony Apartments Company Limited
January 19, 1996 East Hampton Limited Partnership
January 19, 1996 Edgewood II Associates
January 19, 1996 Fairburn & Gordon Associates, Phase I
January 19, 1996 Fairburn & Gordon Associates, Phase II
January 19, 1996 Laing Village
January 19, 1996 Oakland City/West End Associates, Ltd.
January 19, 1996 Orangeburg Manor
January 19, 1996 Pleasant Valley Apartments, Ltd.
January 25, 1996 Sandy Springs Associates, Ltd.
February 22, 1996 Tiffany Rehab Associates
January 19, 1996 Village Green Apartments Company Limited
January 19, 1996 Vineville Towers Associates, Ltd.
January 19, 1996 Westgate Apartments
<PAGE>
Exhibit 23.8
Consent of Edwards Leap & Sauer
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 of Apartment Investment and Management
Company ("AIMCO") and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated ("NHP") included therein, and to the incorporation by reference
therein of our reports dated February 3, February 15, and March 15, 1995 with
respect to the audits of IDA Tower, Genesee Gardens Associates, and Buffalo
Village Associates, respectively, for the year ended December 31, 1994, and
to the incorporation by reference therein of our reports dated February 14,
February 20, and February 23, 1996, with respect to the audits of IDA Tower,
Genesee Gardens Associates, and Buffalo Village Associates, respectively, for
the year ended December 31, 1995, and to the incorporation by reference
therein of our reports dated February 6, February 8, and February 10, 1997,
with respect to the audits of IDA Tower, Genesee Gardens Associates, and
Buffalo Village Associates, respectively, for the year ended December 31,
1996, (i) for the years ended December 31, 1994, 1995 and 1996, included (for
1995 and 1996) and incorporated by reference (for 1994) in AIMCO's Current
Report on Form 8-K dated June 3, 1997, as amended; (ii) for the year ended
December 31, 1994, incorporated by reference in AIMCO's Current Report of
Form 8-K dated April 16, 1997, as amended; and (iii) for the year ended
December 31, 1994, incorporated by reference in NHP's Annual Report on
Form 10-K for the year ended December 31, 1996, as amended, all filed with
the Securities and Exchange Commission.
/s/ Edwards Leap & Sauer
Edwards Leap & Sauer
Hollidaysburg, Pennsylvania
October 30, 1997
<PAGE>
Exhibit 23.9
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 of Apartment Investment and Management
Company (AIMCO) and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated (NHP) included therein, and to the incorporation by reference
therein of our reports dated March 22, 1996 and March 8, 1997 with respect to
the audits of Franklin Housing Associates and our reports dated March 13,
1996 and February 26, 1997 with respect to the audits of Franklin New York
Avenue Associates for the years ended December 31, 1995, and 1996,
respectively, in AIMCO's Current Report on Form 8-K dated June 3, 1997, as
amended, filed with the Securities and Exchange Commission.
/s/FISHBEIN & COMPANY, P.C.
---------------------------
FISHBEIN & COMPANY, P.C.
Elkins Park, Pennsylvania
October 30, 1997
<PAGE>
Exhibit 23.10
(LETTERHEAD OF FREEMAN & VESSILLO, C.P.A., P.C.)
NHP Incorporated
8065 Leesburg Pike
Suite 400
Vienna, VA 22182-2738
Re: Consent of Freeman & Vessillo C.P.A., P.C.
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 of Apartment Investment and Management
Company ("AIMCO") and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated ("NHP") included therein, and to the incorporation by reference
therein of our reports dated as indicated in the attached list with respect
to the audit of the corresponding Partnerships as named in the attached list
for the year ended December 31, 1996, included in AIMCO's Current Report on
Form 8-K dated June 3, 1997, as amended, filed with the Securities and
Exchange Commission.
FREEMAN & VESSILLO, C.P.A., P.C.
/s/ Freeman & Vessillo, C.P.A., P.C.
New York, NY
October 30, 1997
<PAGE>
FREEMAN & VESSILLO, C.P.A., P.C.
<TABLE>
<CAPTION>
PARTNERSHIP NAME REPORT DATE
- ---------------- -----------
<S> <C>
Chateau Gardens February 7, 1997
Club Apartment Associates February 5, 1997
Country Villa Associates, L.P. February 9, 1997
Countrybrook Associates February 1, 1997
Cross Creek Limited Partnership February 1, 1997
Grandland Realty Associates, Ltd. February 4, 1997
Kemar Townhouse Associates, L.P. February 3, 1997
Lakeland East Limited Partnership February 3, 1997
Marten Manor Realty Associates L.P. February 3, 1997
</TABLE>
<PAGE>
Exhibit 23.11
[LETTERHEAD]
NHP Incorporated
8065 Leesburg Pike
Suite 400
Vienna, Virginia 22182-2738
Re: 62nd Street Limited Partnership
We consent to the reference to our firm under the caption "Experts" in this
Registration Statement on Form S-4 of Apartment Investment and Management
Company ("AIMCO") and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated ("NHP") included therein, and to the incorporation by reference
therein of our reports dated February 9, 1997 with respect to the audits of
62nd Street Limited Partnership for the years ended December 31, 1995, and
1996, in AIMCO's Current Report on Form 8-K dated June 3, 1997, as amended,
filed with the Securities and Exchange Commission.
/s/ Friduss, Lukee, Schiff & Co., P.C.
FRIDUSS, LUKEE, SCHIFF & CO., P.C.
Certified Public Accountants
Chicago, Illinois
October 30, 1997
<PAGE>
[LETTERHEAD]
NHP INCORPORATED
8065 Leesburg Pike
Suite 400
Vienna, Virginia 22182-2738
Re: Central Woodlawn Limited Partnership
We consent to the reference to our firm under the caption "Experts" in this
Registration Statement on Form S-4 of Apartment Investment and Management
Company ("AIMCO") and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated ("NHP") included therein, and to the incorporation by reference
therein of our reports dated March 6, 1997 with respect to the audits of
Central Woodlawn Limited Partnership for the years ended December 31, 1995,
and 1996, in AIMCO's Current Report on Form 8-K dated June 3, 1997, as
amended, filed with the Securities and Exchange Commission.
/s/ Friduss, Lukee, Schiff & Co., P.C.
FRIDUSS, LUKEE, SCHIFF & CO., P.C.
Certified Public Accountants
Chicago, Illinois
October 30, 1997
<PAGE>
Exhibit 23.12
[LETTERHEAD]
CONSENT OF GEORGE A. HIERONYMUS AND COMPANY, L.L.C.
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 of Apartment Investment and Management
Company ("AIMCO") and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated ("NHP") included therein, and to the incorporation by reference
therein of our reports dated as shown in Exhibit A with respect to the audits
of those entities as shown in Exhibit A (i) for the years ended December 31,
1994 and 1995, included (for 1995) and incorporated by reference (for 1994)
in AIMCO's Current Report on Form 8-K dated June 3, 1997, as amended; (ii)
for the year ended December 31, 1994, incorporated by reference in AIMCO's
Current Report of Form 8-K dated April 16, 1997, as amended; and (iii) for
the year ended December 31, 1994, incorporated by reference in NHP's Annual
Report on Form 10-K for the year ended December 31, 1996, as amended, all
filed with the Securities and Exchange Commission.
/s/ G. A. HIERONYMUS AND COMPANY, LLC
- ----------------------------------------
George A. Hieronymus and Company, L.L.C.
Mobile, Alabama
October 30, 1997
<PAGE>
E X H I B I T A
For the year ended December 31, 1994
REAL ESTATE PARTNERSHIP REPORT DATE
- ----------------------- -----------
Athens Arms Associates January 27, 1995
Colonial Terrace I Associates January 27, 1995
Colonial Terrace II Associates January 27, 1995
For the year ended December 31, 1995
REAL ESTATE PARTNERSHIP REPORT DATE
- ----------------------- -----------
Athens Arms Associates January 26, 1996
Colonial Terrace I Associates January 26, 1996
Colonial Terrace II Associates January 26, 1996
<PAGE>
EXHIBIT 23.13
CONSENT OF GOLDENBERG ROSENTHAL FRIEDLANDER, LLP
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement on Form S-4 of Apartment Investment and Management
Company (AIMCO) and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated (NHP) included therein, and to the incorporation by reference
therein of our reports with respect to the audits of the Partnerships listed
below (i) for the years ended December 31, 1994, 1995, and 1996, included (for
1995 and 1996) and incorporated by reference (for 1994) in AIMCO's Current
Report on Form 8-K dated June 3, 1997, as amended; (ii) for the year ended
December 31, 1994, incorporated by reference in AIMCO's Current Report of
Form 8-K dated April 16, 1997, as amended; and (iii) for the year ended
December 31, 1994, incorporated by reference in NHP's Annual Report on Form
10-K for the year ended December 31, 1996, as amended, all filed with the
Securities and Exchange Commission.
NAME OF PARTNERSHIP - 1994 DATE OF REPORT
- -------------------------- --------------
Baisley Park Associates (A Limited Partnership) February 3, 1995
Brunswick Village Limited Partnership January 23, 1995
Churchview Gardens Limited Partnership January 23, 1995
Harris Gardens Limited Partnership January 23, 1995
Hawksworth Limited Partnership January 21, 1995
Hollows Associates (A Limited Partnership) February 3, 1995
Kimberton Apartments Associates (A Limited Partnership) January 18, 1995
Washington Northgate Limited Partnership February 3, 1995
Washington Westgate Limited Partnership January 28, 1995
Windsor Apartments Associates (A Limited Partnership) January 18, 1995
NAME OF PARTNERSHIP - 1995 DATE OF REPORT
- -------------------------- --------------
Academy Gardens Associates (A Limited Partnership) March 7, 1996
Brunswick Village Limited Partnership January 25, 1996
Buckingham Hall Associates (A Limited Partnership) March 7, 1996
Churchview Gardens Associates (A Limited Partnership) February 15, 1996
Churchview Gardens Limited Partnership January 31, 1996
Harris Gardens Associates (A Limited Partnership) February 15, 1996
Harris Gardens Limited Partnership February 1, 1996
Hawksworth Gardens Associates (A Limited Partnership) February 15, 1996
Hawksworth Limited Partnership January 31, 1996
Washington Northgate Associates (A Limited Partnership) February 15, 1996
Washington Northgate Limited Partnership January 30, 1996
Washington Westgate Associates (A Limited Partnership) February 15, 1996
Washington Westgate Limited Partnership January 30, 1996
<PAGE>
NAME OF PARTNERSHIP - 1996 DATE OF REPORT
- -------------------------- --------------
Academy Gardens Associates (A Limited Partnership) January 24, 1997
Brunswick Village Limited Partnership January 29, 1997
Churchview Garden Associates (A Limited Partnership) January 5, 1997
Churchview Gardens Limited Partnership January 15, 1997
Buckingham Hall Associates (A Limited Partnership) January 24, 1997
/s/ Goldenberg Rosenthal Friedlander, LLP
Jenkintown, PA
October 30, 1997
<PAGE>
Exhibit 23.14
[LETTERHEAD]
CONSENT OF HANSEN, HUNTER & KIBBEE, P.C.
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 of Apartment Investment and Management
Company ("AIMCO") and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated ("NHP") included therein, and to the incorporation by reference
therein of our report dated, with respect to the audits of the following
partnerships:
<TABLE>
<CAPTION>
DATED WITH RESPECT TO THE AUDITS OF
----- -----------------------------
(i) FOR THE YEARS ENDED DECEMBER 31:
- ------------------------------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
January 24, 1996 January 24, 1997 Franklin Chandler Associates
January 19, 1995 January 19, 1996 January 24, 1997 Haines Associates Limited Partnership
January 13, 1995 January 12, 1996 January 16, 1997 King-Bell Associates
January 19, 1995 January 17, 1996 January 24, 1997 Monmouth Associates Limited Partnership
January 13, 1995 January 12, 1996 January 17, 1997 Pendleton Riverside Apartments Oreg., Ltd.
January 19, 1995 January 19, 1996 January 24, 1997 Penn Hall Associates
January 11, 1995 January 12, 1996 January 15, 1997 Rodeo Drive Limited Partnership
January 14, 1995 January 10, 1996 January 22, 1997 South Mountain Terrace, Ltd.
January 13, 1995 January 12, 1996 Woodland Apartments, Oreg., Ltd.
</TABLE>
included (for 1995 and 1996) and incorporated by reference (for 1994) in
AIMCO's Current Report on Form 8-K dated June 3, 1997, as amended; (ii) for
the year ended December 31, 1994, incorporated by reference in AIMCO's
Current Report on Form 8-K dated April 16, 1997, as amended; and (iii) for
the year ended December 31, 1994, incorporated by reference in NHP's Annual
Report on Form 10-K for the year ended December 31, 1996 as amended, all
filed with the Securities and Exchange Commission.
/s/ Hansen, Hunter & Kibbee, P.C.
Portland, Oregon
October 30, 1997
<PAGE>
Exhibit 23.15
CONSENT OF J. H. COHN LLP
-------------------------
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 of Apartment Investment and Management
Company ("AIMCO") and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated ("NHP") included therein, and to the incorporation by reference
therein of our reports dated April 26, 1995 with respect to the audit of
Marlboro Greens Limited Partnership (i) for the year ended December 31, 1994
incorporated by reference in AIMCO's Current Report on Form 8-K dated June 3,
1997, as amended; (ii) for the year ended December 31, 1994, incorporated by
reference in AIMCO's Current Report of Form 8-K dated April 16, 1997, as
amended; and (iii) for the year ended December 31, 1994, incorporated by
reference in NHP's Annual Report on Form 10-K for the year ended December 31,
1996, as amended, all filed with the Securities and Exchange Commission.
/s/ J. H. Cohn LLP
-----------------------------
J. H. COHN LLP
Roseland, New Jersey
October 30, 1997
<PAGE>
Exhibit 23.16
INDEPENDENT AUDITOR'S CONSENT
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 of Apartment Investment and Management
Company ("AIMCO") and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated ("NHP") included therein, and to the incorporation by reference
therein of our reports with respect to the audits of the partnerships listed
in Attachment A, Attachment B and Attachment C (i) for the years ended
December 31, 1994, 1995, and 1996, included (for 1995 and 1996) and
incorporated by reference (for 1994) in AIMCO's Current Report on Form 8-K
dated June 3, 1997, as amended; (ii) for the year ended December 31, 1994,
incorporated by reference in AIMCO's Current Report of Form 8-K dated April
16, 1997, as amended; and (iii) for the year ended December 31, 1994,
incorporated by reference in NHP's Annual Report on Form 10-K for the year
ended December 31, 1996, as amended, all filed with the Securities and
Exchange Commission.
/s/ J.A. Plumer & Co., P.A.
J. A. PLUMER & CO., P.A.
Bethesda, Maryland
October 30, 1997
<PAGE>
Attachment A
Audit Reports for the Year Ended December 31, 1994
DATE OF
PARTNERSHIP AUDITOR'S REPORT
- ------------------------------------------------- ---------------------
630 East Lincoln Avenue Associates January 24, 1995
Aspen Stratford Apartments Company B January 31, 1995
Aspen Stratford Apartments Company C February 1, 1995
Benjamin Banneker Plaza Associates January 31, 1995
Brightwood Limited Partnership January 10, 1995
Cambridge Heights Apartments, Ltd. February 15, 1995
Carter Associates Limited Partnership March 4, 1995
Cherry Estates January 18, 1995
Christopher Court Housing Company January 27, 1995
Concord Houses Associates March 7, 1995
Duke Manor Associates February 14, 1995
Elderly Housing Associates Ltd. Partnership January 25, 1995
Forest Apartments Associates February 16, 1995
Gate Manor Apartments, Ltd. January 30, 1995
Greenfield Apartments Limited Partnership January 27, 1995
Greenfield North Apartments Limited Partnership January 23, 1995
Haili Associates February 6, 1995
Houston Aristocrat Apartments, Ltd. January 24, 1995
Kapuna Associates February 6, 1995
Kinloch Urban East Housing February 10, 1995
Koolau Housing Associates February 6, 1995
Lakeview Arms Associates February 2, 1995
Lee-Hy Manor Associates Limited Partnership February 8, 1995
Locust Park Associates February 1, 1995
Loring Towers Associates March 3, 1995
Mahoning Associates January 31, 1995
Milliken Apartments Company February 1, 1995
Monument Street Limited Partnership February 8, 1995
Neighborhoods of the Universities Lock Street
Apartments Company February 3, 1995
Oak Hollow South Associates February 21, 1995
Orchard Mews Associates February 15, 1995
Oxford Place Associates February 8, 1995
Pittsfield Neighborhood Associates March 9, 1995
Prince Street Towers Limited Partnership February 6, 1995
Sencit-Lebanon Company January 20, 1995
St. Nicholas Associates February 20, 1995
Tamarac Pines, Ltd. February 18, 1995
Tamarac Pines II, Ltd. February 9, 1995
Taunton Green Associates March 1, 1995
Taunton II Associates February 24, 1995
Tompkins Terrace Associates February 23, 1995
Waipahu Associates February 6, 1995
Washington Chinatown Associates February 15, 1995
Woodcrest Apartments, Ltd. January 16, 1995
Worcester Episcopal Housing Company February 23, 1995
<PAGE>
Attachment B
Audit Reports for the Year Ended December 31, 1995
DATE OF
PARTNERSHIP AUDITOR'S REPORT
- ------------------------------------------------- ---------------------
630 East Lincoln Avenue Associates January 16, 1996
Aspen Stratford Apartments Company B February 2, 1996
Aspen Stratford Apartments Company C January 29, 1996
Baisley Park Associates March 29, 1996
Benjamin Banneker Plaza Associates January 24, 1996
Benton Square, Ltd February 18, 1996
Brightwood Limited Partnership January 16, 1996
Carter Associates Limited Partnership March 7, 1996
Cherry Estates February 8, 1996
Christopher Court Housing Company January 30, 1996
Concord Houses Associates March 7, 1996
Duke Manor Associates February 12, 1996
Echelon Towers, Ltd. December 18, 1995
Elderly Housing Associates Ltd. Partnership February 7, 1996
Ferncliff Limited Partnership March 12, 1996
Forest Apartments Associates February 7, 1996
Gate Manor Apartments, Ltd. January 23, 1996
Greenfield Limited Partnership March 11, 1996
Greenfield Apartments Limited Partnership January 22, 1996
Greenfield North Apartments Limited Partnership January 25, 1996
Greenfield North Limited Partnership March 9, 1996
Haili Associates February 6, 1996
Hollows Associates February 22, 1996
Houston Aristocrat Apartments, Ltd. January 25, 1996
Kapuna Associates February 6, 1996
Kimberton Apartments Associates February 22, 1996
Kinloch Urban East Housing September 13, 1995
Koolau Housing Associates February 6, 1996
Lakeview Arms Associates February 14, 1996
Lee-Hy Manor Associates Limited Partnership February 16, 1996
Locust Park Associates February 5, 1996
Loring Towers Associates March 15, 1996
Mahoning Associates February 5, 1996
Milliken Apartments Company January 18, 1996
Monument Street Limited Partnership February 1, 1996
Neighborhoods of the Universities Lock Street
Apartments Company January 26, 1996
Oak Hollow South Associates February 19, 1996
Oak Park Limited Partnership March 12, 1996
Orchard Mews Associates February 14, 1996
Oxford Place Associates February 13, 1996
Pittsfield Neighborhood Associates March 16, 1996
Portfolio Properties Fifteen Associates March 12, 1996
Portfolio Properties Four Associates March 11, 1996
Prince Street Towers Limited Partnership February 12, 1996
Registry Square, Ltd. February 16, 1996
Sencit-Atlantic City Company February 26, 1996
Sencit-Lebanon Company January 2, 1996
St. Nicholas Associates February 12, 1996
Tamarac Pines, Ltd. February 13, 1996
Tamarac Pines II, Ltd. February 13, 1996
Taunton Green Associates February 28, 1996
Taunton II Associates February 16, 1996
The National Housing Partnership-II March 14, 1996
Tompkins Terrace Associates February 19, 1996
Waipahu Associates February 6, 1996
Washington Chinatown Associates January 21, 1996
Windsor Apartments Associates February 16, 1996
Woodcrest Apartments, Ltd. January 19, 1996
Worcester Episcopal Housing Company February 15, 1996
<PAGE>
Attachment C
Audit Reports for the Year Ended December 31, 1996
DATE OF
PARTNERSHIP AUDITOR'S REPORT
- ------------------------------------------------- ---------------------
630 East Lincoln Avenue Associates January 24, 1997
Aspen Stratford Apartments Company B February 24, 1997
Aspen Stratford Apartments Company C February 6, 1997
Athens Arms Associates February 12, 1997
Benjamin Banneker Plaza Associates January 24, 1997
Benton Square, Ltd February 21, 1997
Brightwood Limited Partnership January 31, 1997
Carter Associates Limited Partnership February 12, 1997
Christopher Court Housing Company February 18. 1997
Colonial Terrace I Associates February 12, 1997
Colonial Terrace II Associates February 12, 1997
Concord Houses Associates March 1, 1997
Duke Manor Associates February 12, 1997
Elderly Housing Associates Ltd. Partnership January 24, 1997
Ferncliff Limited Partnership March 11, 1997
Forest Apartments Associates February 17, 1997
Gate Manor Apartments, Ltd. January 31, 1997
Greenfield Limited Partnership March 11, 1997
Greenfield Apartments Limited Partnership January 17, 1997
Greenfield North Apartments Limited Partnership January 27, 1997
Greenfield North Limited Partnership March 11, 1997
Haili Associates January 30, 1997
Hollows Associates February 19, 1997
Houston Aristocrat Apartments, Ltd. January 27, 1997
Kapuna Associates January 30, 1997
Kimberton Apartments Associates February 12, 1997
Koolau Housing Associates January 30, 1997
Lakeview Arms Associates February 24, 1997
Lee-Hy Manor Associates Limited Partnership February 16, 1997
Locust Park Associates February 22, 1997
Loring Towers Associates February 13, 1997
Milliken Apartments Company January 13, 1997
Monument Street Limited Partnership February 7, 1997
Neighborhoods of the Universities Lock Street
Apartments Company February 4, 1997
Oak Hollow South Associates February 14, 1997
Oak Park Limited Partnership March 12, 1997
Orchard Mews Associates January 14, 1997
Oxford Place Associates February 13, 1997
Pittsfield Neighborhood Associates March 7, 1997
Portfolio Four Associates March 11, 1997
Prince Street Towers Limited Partnership February 10, 1997
Registry Square, Ltd. February 21, 1997
Sencit-Lebanon Company January 30, 1997
St. Nicholas Associates January 29, 1997
Tamarac Pines, Ltd. February 20, 1997
Tamarac Pines II, Ltd. February 20, 1997
Taunton Green Associates February 15, 1997
Taunton II Associates February 3, 1997
The National Housing Partnership-II March 22, 1997
Tompkins Terrace Associates February 25, 1997
Waipahu Associates January 30, 1997
Washington Chinatown Associates January 23, 1997
Windsor Apartments Associates February 12, 1997
Woodcrest Apartments, Ltd. January 15, 1997
Worcester Episcopal Housing Company February 5, 1997
<PAGE>
Exhibit 23.17
CONSENT OF MARKS SHRON & COMPANY, L.L.P.
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 of Apartment Investment and Management
Company ("AIMCO") and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated ("NHP") included therein, and to the incorporation by reference
therein of our reports dated January 19, 1995 and January 25, 1996 with
respect to the audits of Two Bridges Associates (i) for the years ended
December 31, 1994 and 1995, included (for 1995) and incorporated by reference
(for 1994) in AIMCO's Current Report on Form 8-K dated June 3, 1997, as
amended; (ii) for the year ended December 31, 1994, incorporated by reference
in AIMCO's Current Report of Form 8-K dated April 16, 1997, as amended; and
(iii) for the year ended December 31, 1994, incorporated by reference in
NHP's Annual Report on Form 10-K for the year ended December 31, 1996, as
amended, all filed with the Securities and Exchange Commission.
/s/ Marks Shron & Company, L.L.P.
Marks Shron & Company, L.L.P.
Great Neck, New York
October 30, 1997
<PAGE>
Exhibit 23.18
[LETTERHEAD OF PRAGUE & COMPANY, P.C.]
CONSENT OF PRAGUE & COMPANY, P.C.
[FORMERLY KNOWN AS PRAGUE & RICHMOND, P.C.]
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 of Apartment Investment and Management
Company ("AIMCO") and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated ("NHP") included therein, and to the incorporation by reference
therein of our reports dated February 8, 1996 and January 16, 1997 with
respect to the audits of Crosland Housing Associates, L.P. for the years
ended December 31, 1995 and 1996, in AIMCO's Current Report on Form 8-K dated
June 3, 1997, as amended, filed with the Securities and Exchange Commission.
Very truly yours,
/s/ PRAGUE & COMPANY, P.C.
- -------------------------------------------
PRAGUE & COMPANY, P.C.
[FORMERLY KNOWN AS PRAGUE & RICHMOND, P.C.]
CERTIFIED PUBLIC ACCOUNTANTS
WELLESLEY, MASSACHUSETTS
OCTOBER 30, 1997
<PAGE>
Exhibit 23.19
[LETTERHEAD]
CONSENT OF REZNICK FEDDER & SILVERMAN
-----------------------------
-----------------------------
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 of Apartment Investment and Management
Company ("AIMCO") and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated ("NHP") included therein, and to the incorporation by reference
therein of our reports dated as per the attached schedules, with respect to
the audits per the attached schedules for the years ended December 31, 1994,
1995, and 1996, included (for 1995 and 1996) and incorporated by reference
(for 1994) in AIMCO's Current Report on Form 8-K dated June 3, 1997, as
amended; for the year ended December 31, 1994, incorporated by reference in
AIMCO's Current Report of Form 8-K dated April 16, 1997, as amended; and for
the year ended December 31, 1994, incorporated by reference in NHP's Annual
Report on Form 10-K for the year ended December 31, 1996, as amended, all
filed with the Securities and Exchange Commission.
/s/ Reznick Fedder & Silverman
REZNICK FEDDER & SILVERMAN
Bethesda, Maryland
October 30, 1997
<PAGE>
ATTACHMENT
SCHEDULE OF PARTNERSHIPS
PARTNERSHIP NAME DATED
- ---------------- -----
Beautiful Village Associates Redevelopment Company February 8, 1995
Branchwood Towers Limited Partnership February 7, 1995
Citrus Park Associates, Ltd. January 31, 1995
Community Circle II Limited January 26, 1995
Copperstone Limited Partnership January 19, 1995
Diakonia Associates Limited Partnership January 31, 1995
Easton Terrace I Associates January 24, 1995
Easton Terrace II Associates February 9, 1995
Eastridge Apartments January 13, 1995
Emory Grove Associates Limited Partnership February 6, 1995
First Alexandria Associates January 20, 1995
Flatbush NSA Associates January 30, 1995
Franklin Square School Associates January 12, 1995
Gates Mill I Limited Partnership February 1, 1995
Grosvenor House Associates Limited Partnership February 10, 1995
Harris Park Limited Partnership February 8, 1995
Hollybush Gardens I January 27, 1995
Hollybush Gardens II January 27, 1995
Intown West Associates Limited Partnership January 27, 1995
Lake Avenue Associates February 6, 1995
Lake Crossing Limited Partnership January 11, 1995
Lakehaven Associates One January 25, 1995
Lakehaven Associates Two January 20, 1995
Linden Court Associates January 30, 1995
Loudoun House Limited Partnership February 13, 1995
Monaco Arms Associates I January 30, 1995
Monaco Arms Associates II January 25, 1995
Muske Limited Partnership February 3, 1995
Natick Associates January 31, 1995
Oakcrest Terrace Apartments February 8, 1995
Oakwood Limited Partnership February 3, 1995
Parkview Associates January 20, 1995
Queenstown Apartments Limited Partnership February 9, 1995
Rancho Townhouse Associates February 3, 1995
Ruscombe Gardens Limited Partnership January 30, 1995
Sencit - Jacksonville Company LTD January 14, 1995
Sheffield Associates February 8, 1995
Snap IV Limited Partnership January 31, 1995
Tara Bridge Limited Partnership January 20, 1995
Twin Towers Associates February 10, 1995
Tyee Associates Limited Partnership January 13, 1995
Urbanization Maria Lopez Housing Company February 3, 1995
Westminster Associates January 31, 1995
Wollaston Manor Associates January 25, 1995
Woodside Village Limited Partnership January 13, 1995
<PAGE>
ATTACHMENT
SCHEDULE OF PARTNERSHIPS
PARTNERSHIP NAME DATED
- ---------------- -----
Beautiful Village Associates Redevelopment Company April 3, 1996
Branchwood Towers Limited Partnership January 24, 1996
Citrus Park Associates, Ltd. January 24, 1996
Community Circle II Limited January 25, 1996
Copperstone Limited Partnership January 31, 1996
Country Lakes Associates Two February 9, 1996
Diakonia Associates Limited Partnership August 15, 1995
Easton Terrace I Associates January 27, 1996
Eastridge Apartments January 17, 1996
Emory Grove Associates Limited Partnership February 12, 1996
First Alexandria Associates January 17, 1996
Flatbush NSA Associates January 17, 1996
Franklin Square School Associates January 22, 1996
Gates Mill I Limited Partnership January 30, 1996
Grosvenor House Associates Limited Partnership February 9, 1996
Hollybush Gardens I January 24, 1996
Hollybush Gardens II January 24, 1996
Hollywood Gardens January 22, 1996
Intown West Associates Limited Partnership February 8, 1996
Lake Avenue Associates February 9, 1996
Lake Crossing Limited Partnership January 24, 1996
Lakehaven Associates One January 24, 1996
Lakehaven Associates Two January 27, 1996
Linden Court Associates February 12, 1996
Loudoun House Limited Partnership January 31, 1996
Monaco Arms Associates I January 22, 1996
Monaco Arms Associates II January 22, 1996
Muske Limited Partnership February 20, 1996
Natick Associates January 23, 1996
Oakcrest Terrace Apartments February 16, 1996
Oakwood Limited Partnership February 22, 1996
Parkview Associates January 19, 1996
Queenstown Apartments Limited Partnership February 12, 1996
Rancho Townhouse Associates February 7, 1996
Ruscombe Gardens Limited Partnership January 24, 1996
Sencit - Jacksonville Company LTD January 17, 1996
Sencit F/G Metropolitan Associates February 21, 1996
Sheffield Associates February 7, 1996
Snap IV Limited Partnership February 21, 1996
Twin Towers Associates January 16, 1996
Tyee Associates Limited Partnership January 19, 1996
Urbanization Maria Lopez Housing Company January 27, 1996
Westminster Associates January 31, 1996
Wollaston Manor Associates January 17, 1996
Woodside Village Limited Partnership January 10, 1996
2nd Tier - Copperstone Circle Limited Partnership February 8, 1996
2nd Tier - Eastridge Limited Partnership February 8, 1996
2nd Tier - Emory Grove Associates February 22, 1996
2nd Tier - Oakwood-Muskegon Limited Partnership February 22, 1996
<PAGE>
ATTACHMENT
SCHEDULE OF PARTNERSHIPS
PARTNERSHIP NAME DATED
- ---------------- -----
Beautiful Village Associates Redevelopment Company January 29, 1997
Branchwood Towers Limited Partnership January 23, 1997
Brookview Apartments Company Limited January 30, 1997
Citrus Park Associates, Ltd. January 30, 1997
Clover Ridge East Limited Partnership January 21, 1997
Colony Apartments Company Limited January 20, 1997
Community Circle II Limited January 30, 1997
Copperstone Limited Partnership January 27, 1997
Country Lakes Associates Two February 6, 1997
Diakonia Associates Limited Partnership August 13, 1996
East Hampton Limited Partnership February 7, 1997
Easton Terrace I Associates January 15, 1997
Eastridge Apartments January 17, 1997
Edgewood II Associates January 23, 1997
Emory Grove Associates Limited Partnership February 7, 1997
Fairburn and Gordon Associates, Phase I January 23, 1997
Fairburn and Gordon Associates, Phase II January 23, 1997
First Alexandria Associates January 15, 1997
Flatbush NSA Associates January 24, 1997
Franklin Square School Associates January 23, 1997
Gates Mill I Limited Partnership January 23, 1997
Grosvenor House Associates Limited Partnership January 22, 1997
Hollywood Gardens January 28, 1997
Intown West Associates Limited Partnership February 1, 1997
Laing Village A Limited Partnership January 31, 1997
Lake Avenue Associates February 12, 1997
Lake Crossing Limited Partnership February 5, 1997
Lakehaven Associates One January 25, 1997
Lakehaven Associates Two January 30, 1997
Linden Court Associates February 6, 1997
Loudoun House Limited Partnership January 17, 1997
Monaco Arms Associates I January 28, 1997
Monaco Arms Associates II January 28, 1997
Muske Limited Partnership February 7, 1997
Natick Associates January 10, 1997
Oakcrest Terrace Apartments February 10, 1997
Oakland City/West End Associates, Ltd. January 31, 1997
Oakwood Limited Partnership February 8, 1997
Orangeburg Manor January 20, 1997
Parkview Associates January 29, 1997
Pleasant Valley Apartments, Ltd. January 17, 1997
Queenstown Apartments Limited Partnership February 7, 1997
Ruscombe Gardens Limited Partnership January 31, 1997
Sandy Springs Associates, Ltd. January 23, 1997
Sencit-Jacksonville Company LTD January 20, 1997
Sencit F/G Metropolitan Associates February 5, 1997
<PAGE>
Tiffany Rehab Associates January 17, 1997
Twin Towers Associates February 5, 1997
Tyee Associates Limited Partnership January 17, 1997
Urbanization Maria Lopez Housing Company January 22, 1997
Village Green Apartments Company Limited January 18, 1997
Vineville Towers Associates, Ltd. January 24, 1997
Westgate Apartments February 3, 1997
Westminster Associates January 24, 1997
Wollaston Manor Associates January 31, 1997
Woodside Village Limited Partnership January 16, 1997
2nd Tier-Copperston Circle Limited Partnership March 6, 1997
2nd Tier-Eastridge Limited Partnership March 3, 1997
2nd Tier-Emory Grove Associates March 4, 1997
2nd Tier-Oakwood-Muskegon Limited Partnership March 3, 1997
<PAGE>
Exhibit 23.20
[LETTERHEAD]
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 of Apartment Investment and Management
Company (AIMCO) and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated (NHP) included therein, and to the incorporation by reference
therein of our reports dated, as listed in Appendix 1, with respect to the
audits of the Partnerships listed in Appendix 1 for the years ended December
31, 1995 and 1996, in AIMCO's Current Report on Form 8-K dated June 3, 1997,
as amended, filed with the Securities and Exchange Commission.
/s/ ROBERT ERCOLINI & COMPANY LLP
Boston, Massachusetts
October 30, 1997
<PAGE>
APPENDIX 1
Year Ended December 31, 1995
PARTNERSHIP REPORT DATE
- ----------- ------------------
2900 Van Ness Associates March 1, 1996
7400 Roosevelt Investors February 20, 1996
Ivanhoe Associates Limited Partnership and Monroeville February 23, 1996
Development Corporation
Ridge Carlton Associates Limited Partnership and February 27, 1996
Norco Associates
Norco Associates February 27, 1996
Scotch Associates Limited Partnership and February 27, 1996
Scotch Lane Associates
Scotch Lane Associates February 27, 1996
Standart Woods Associates Limited Partnership February 17, 1996
Year Ended December 31, 1996
PARTNERSHIP REPORT DATE
- ----------- ------------------
2900 Van Ness Associates February 12, 1997
7400 Roosevelt Investors February 7, 1997
Fairfax Associates Limited Partnership March 3, 1997
Ivanhoe Associates Limited Partnership and Monroeville February 3, 1997
Development Corporation (except as to Note 5,
which is as of
March 17, 1997)
Ridge Carlton Associates Limited Partnership and January 28, 1997
Norco Associates
Norco Associates January 28, 1997
River Loft Associates Limited Partnership and February 4, 1997
River Loft Apartments Limited Partnership
River Loft Apartments Limited Partnership February 4, 1997
Scotch Associates Limited Partnership and January 31, 1997
Scotch Lane Associates
Scotch Lane Associates January 31, 1997
Standart Woods Associates Limited Partnership February 18, 1997
Wyntre Brooke Associates February 10, 1997
<PAGE>
[LETTERHEAD]
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 of Apartment Investment and Management
Company (AIMCO) and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated (NHP) included therein, and to the incorporation by reference
therein of our reports (each of which expresses an unqualified opinion and
includes an explanatory paragraph relating to the Partnership's ability to
continue as a going concern) dated, as listed in Appendix 2, with respect to
the audits of the Partnerships listed in Appendix 2 for the years ended
December 31, 1995 and 1996, in AIMCO's Current Report on Form 8-K dated
June 3, 1997, as amended, filed with the Securities and Exchange Commission.
/s/ ROBERT ERCOLINI & COMPANY LLP
Boston, Massachusetts
October 30, 1997
<PAGE>
APPENDIX 2
Year Ended December 31, 1995
- ----------------------------
PARTNERSHIP REPORT DATE
- ----------- ------------------
Fairfax Associates Limited Partnership February 27, 1996
River Loft Associates Limited Partnership and February 25, 1996
River Loft Apartments Limited Partnership
River Loft Apartments Limited Partnership February 25, 1996
West lake Arms Limited Partnership February 17, 1996
Wyntre Brook Associates February 17, 1996
(except as to Note 11,
which is as of
February 22, 1996)
Year Ended December 31, 1996
- ----------------------------
PARTNERSHIP REPORT DATE
- ----------- -------------------
West Lake Arms Limited Partnership February 28, 1997
Greater Hartford Associates Limited February 22, 1997
Partnership and Connecticut Colony Associates
Limited Partnership
Connecticut Colony Associates Limited Partnership February 22, 1997
<PAGE>
[LETTERHEAD]
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 of Apartment Investment and Management
Company (AIMCO) and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated (NHP) included therein, and to the incorporation by reference
therein of our reports (each of which expresses an unqualified opinion and
includes an explanatory paragraph noting that the next remarketing date for
the Bonds which finance the Project is to occur on April 1, 1997 at which
date a deferred fee of $925,000 is payable to the issuer of the Letter of
Credit that secures payments on the Bonds) dated, as listed in Appendix 3,
with respect to the audits of the Partnerships listed in Appendix 3 for the
years ended December 31, 1995, in AIMCO's Current Report on Form 8-K dated
June 3, 1997, as amended, filed with the Securities and Exchange Commission.
/s/ ROBERT ERCOLINI & COMPANY LLP
Boston, Massachusetts
October 30, 1997
<PAGE>
APPENDIX 3
Year Ended December 31, 1995
- ----------------------------
PARTNERSHIP REPORT DATE
- ----------- ------------------
Greater Hartford Associates Limited Partnership and February 27, 1996
Connecticut Colony Associates Limited Partnership (except as to Note 6,
which is as of
April 12, 1996)
Connecticut Colony Associates Limited Partnershp February 27, 1996
(except as to Note 6,
which is as of
April 12, 1996)
<PAGE>
Exhibit 23.21
[LETTERHEAD]
CONSENT OF RUSSELL, THOMPSON, BUTLER & HOUSTON
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 of Apartment Investment and Management
Company ("AIMCO") and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated ("NHP") included therein, and to the incorporation by reference
therein of our reports dated as shown in Exhibits A, B and C with respect to
the audits of those entities as shown in Exhibits A, B and C (i) for the
years ended December 31, 1994, 1995, and 1996, included (for 1995 and 1996)
and incorporated by reference (for 1994) in AIMCO's Current Report on Form
8-K dated June 3, 1997, as amended; (ii) for the year ended December 31,
1994, incorporated by reference in AIMCO's Current Report of Form 8-K dated
April 16, 1997, as amended; and (iii) for the year ended December 31, 1994,
incorporated by reference in NHP's Annual Report on Form 10-K for the year
ended December 31, 1996, as amended, all filed with the Securities and
Exchange Commission.
/s/ Russell, Thompson, Butler & Houston
Mobile, Alabama
October 30, 1997
<PAGE>
E X H I B I T A
REAL ESTATE PARTNERSHIP REPORT DATE
- ----------------------- -----------
Housing Assistance of Mt. Dora, Ltd. January 7, 1995
Housing Assistance of Orange City, Ltd. January 7, 1995
Housing Assistance of Sebring, Ltd. January 7, 1995
Housing Assistance of Vero Beach, Ltd. January 7, 1995
Lakeview Villas, Ltd. January 7, 1995
Orange City Villas II, Ltd. January 7, 1995
Woodside Villas of Arcadia, Ltd. January 7, 1995
Grove Park Villas, Ltd. January 7, 1995
Highlands Village II January 7, 1995
Eustis Apartments, Ltd. January 7, 1995
South Hiawassee Village, Ltd. January 7, 1995
Parkview Arms Associates I January 13, 1995
Parkview Arms Associates II January 13, 1995
Twin Gables Associates January 13, 1995
Miami Elderly Associates January 13, 1995
Crosland Housing Associates January 19, 1995
Parkview Apartments, Ltd. January 19, 1995
Chesterfield Housing Associates January 19, 1995
Hemingway Housing Associates January 19, 1995
McColl Housing Associates January 19, 1995
The Meadows Apartments January 19, 1995
St. George Villas January 19, 1995
Hurbell I Limited Partnership (Holly Oak) January 21, 1995
Hurbell IV Limited Partnership (Talladega Downs) January 21, 1995
Eastcourt Village Partners January 25, 1995
United Housing Partners Cuthbert, Ltd. January 27, 1995
United Housing Partners Elmwood, Ltd. January 27, 1995
United Housing Partners Morristown, Ltd. January 27, 1995
United Housing Partners Welch, Ltd. January 27, 1995
Townview Towers I Partnership, Ltd. January 27, 1995
VOA-Nicollet Towers Associates January 28, 1995
Community Developers of Princeville January 30, 1995
Registry Square, Ltd. February 23, 1995
<PAGE>
E X H I B I T B
REAL ESTATE PARTNERSHIP REPORT DATE
- ----------------------- -----------
United Housing Partners Cuthbert, Ltd. January 13, 1996
United Housing Partners Elmwood, Ltd. January 13, 1996
United Housing Partners Morristown, Ltd. January 13, 1996
United Housing Partners Welch, Ltd. January 13, 1996
Parkview Apartments, Ltd. January 18, 1996
Chesterfield Housing Associates January 18, 1996
Hemingway Housing Associates January 18, 1996
McColl Housing Associates January 18, 1996
The Meadows Apartments January 18, 1996
St. George Villas January 18, 1996
Parkview Arms Associates I January 18, 1996
Parkview Arms Associates II January 18, 1996
Twin Gables Associates January 18, 1996
Miami Elderly Associates January 18, 1996
Hurbell I Limited Partnership (Holly Oak) January 20, 1996
Hurbell IV Limited Partnership (Talladega Downs) January 20, 1996
Community Developers of Princeville January 22, 1996
Eastcourt Village Partners January 23, 1996
VOA-Nicollet Towers Associates January 26, 1996
Lake Wales Villas, Ltd. February 3, 1996
Peppertree Village of Avon Park, Ltd. February 3, 1996
Housing Assistance of Mt. Dora, Ltd. February 3, 1996
Housing Assistance of Orange City, Ltd. February 3, 1996
Housing Assistance of Sebring, Ltd. February 3, 1996
Housing Assistance of Vero Beach, Ltd. February 3, 1996
Lakeview Villas, Ltd. February 3, 1996
Orange City Villas II, Ltd. February 3, 1996
Woodside Villas of Arcadia, Ltd. February 3, 1996
Grove Park Villas, Ltd. February 3, 1996
Highlands Village II February 3, 1996
Eustis Apartments, Ltd. February 3, 1996
South Hiawassee Village, Ltd. February 3, 1996
<PAGE>
E X H I B I T C
REAL ESTATE PARTNERSHIP REPORT DATE
- ----------------------- -----------
United Housing Partners Cuthbert, Ltd. January 10, 1997
United Housing Partners Elmwood, Ltd. January 10, 1997
United Housing Partners Morristown, Ltd. January 10, 1997
United Housing Partners Welch, Ltd. January 10, 1997
Community Developers of Princeville January 13, 1997
Eastcourt Village Partners January 22, 1997
Parkview Apartments, Ltd. January 23, 1997
Chesterfield Housing Associates January 23, 1997
Hemingway Housing Associates January 23, 1997
McColl Housing Associates January 23, 1997
The Meadows Apartments January 23, 1997
St. George Villas January 23, 1997
Hurbell I Limited Partnership (Holly Oak) January 25, 1997
Hurbell IV Limited Partnership (Talladega Downs) January 25, 1997
Lake Wales Villas, Ltd. January 31, 1997
Peppertree Village of Avon Park, Ltd. January 31, 1997
Housing Assistance of Mt. Dora, Ltd. January 31, 1997
Housing Assistance of Orange City, Ltd. January 31, 1997
Housing Assistance of Sebring, Ltd. January 31, 1997
Housing Assistance of Vero Beach, Ltd. January 31, 1997
Lakeview Villas, Ltd. January 31, 1997
Orange City Villas II, Ltd. January 31, 1997
Woodside Villas of Arcadia, Ltd. January 31, 1997
Grove Park Villas, Ltd. January 31, 1997
Highlands Village II January 31, 1997
Eustis Apartments, Ltd. January 31, 1997
South Hiawassee Village, Ltd. January 31, 1997
<PAGE>
Exhibit 23.22
[LETERHEAD]
CONSENT OF SCIARABBA WALKER & CO., LLP
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement on Form S-4 of Apartment Investment and Management
Company ("AIMCO") and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated ("NHP") included therein, and to the incorporation by reference
therein of our report dated February 6, 1997, with respect to the audit of
Abbot Associates for the years ended December 31, 1995, and 1996, in AIMCO's
Current Report on Form 8-K dated June 3, 1997, as amended, filed with the
Securities and Exchange Commission.
/s/Sciarabba Walker & Co., LLP
------------------------------
Sciarabba Walker & Co., LLP
Ithaca, New York
October 30, 1997
<PAGE>
Exhibit 23.23
CONSENT OF WALLACE SANDERS & COMPANY
------------------------------------
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 of Apartment Investment and Management
Company ("AIMCO") and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated ("NHP") included therein, and to the incorporation by reference
therein of our reports dated February 14, 1997 with respect to the audits of
the following entities for the period from January 2, 1996 (date of
formation) to December 31, 1996, included in AIMCO's Current Report on Form
8-K dated June 3, 1997, as amended, filed with the Securities and Exchange
Commission:
NHP Chaparral Associates, L.P.
NHP Country Club Woods Associates, L.P.
NHP Country Club Woods, L.P.
NHP Greenbriar Associates, L.P.
NHP Greenbriar, L.P.
NHP Hessian Hills, L.P.
NHP High River, L.P.
NHP Spring Lake Manor Associates, L.P.
NHP Spring Lake Manor, L.P.
NHP Three Chopt West Associates, L.P.
NHP Town & Country/Country Place Associates, L.P.
NHP Town & Country/Country Place, L.P.
NHP Townhouse Associates, L.P.
NHP Townhouse, L.P.
NHP Twin Gates East, L.P.
NHP Will-O-Wisp Arms, L.P.
/s/ Wallace Sanders & Company
WALLACE SANDERS & COMPANY
Dallas, Texas
October 30, 1997
<PAGE>
EXHIBIT 23.24
[LETTERHEAD]
October 30, 1997
We consent to the reference to our firm under the caption "Experts" in this
Registration Statement on Form S-4 of Apartment Investment and Management
Company ("AIMCO") and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated ("NHP") included therein, and to the incorporation by reference
therein of our reports with respect to the audits of the listed partnerships,
as included in the attached schedule, for the years ended December 31, 1995
and 1996, included in AIMCO's Current Report on Form 8-K dated June 3, 1997,
as amended, filed with the Securities and Exchange Commission.
/s/ Warady & Davis LLP
-----------------------
<PAGE>
SCHEDULE OF AUDIT REPORTS ISSUED
BY WARADY & DAVIS LLP FOR NHP
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996
<TABLE>
<CAPTION>
Date of Year Ended Date of Year Ended
December 31, 1995 December 31, 1996
Name of Partnership Audit Report Audit Report
- ------------------- ------------------ ------------------
<S> <C> <C>
Church Street Associates January 30, 1996 February 4, 1997
New Vistas Apartments Associates January 22, 1996 January 24, 1997
New Vistas Apartments
Associates--Phase II January 19, 1996 February 3, 1997
North Washington Park Partnership January 26, 1996 January 21, 1997
Palmer Square Apartments Associates January 23, 1996 February 3, 1997
Parkways Associates January 16, 1996 January 28, 1997
Oak Park Partnership February 6, 1996 January 14, 1997
Rogers Park Partnership February 14, 1996 January 27, 1997
MRR L.P. January 20, 1997
Central Woodlawn Rehabiliatation
Joint Venture March 6, 1997
</TABLE>
<PAGE>
Exhibit 23.25
[GRAPHIC]
CONSENT OF ZINER & COMPANY, P.C.
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement on Form S-4 of Apartment Investment and Management
Company ("AIMCO") and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated ("NHP") included therein, and to the incorporation by reference
therein of our reports dated February 27, 1996 and March 11, 1997 with
respect to the audits of United Front Homes for the years ended December 31,
1995 and 1996, included in AIMCO's Current Report on Form 8-K dated June 3,
1997, as amended, filed with the Securities and Exchange Commission.
/s/ Ziner & Company, P.C.
--------------------------
Ziner & Company, P.C.
Boston, Massachusetts
October 30, 1997
<PAGE>
Exhibit 23.26
[LETTERHEAD]
CONSENT OF ZINNER & CO.
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 of Apartment Investment and Management
Company ("AIMCO") and the Joint Proxy Statement/Prospectus of AIMCO and NHP
Incorporated ("NHP") included therein, and to the incorporation by reference
therein of our reports dated January 16, 1996 and January 13, 1997 with
respect to the audits of Vistula Heritage Village for the years ended
December 31, 1995, and 1996, in AIMCO's Current Report on Form 8-K dated
June 3, 1997, as amended, filed with the Securities and Exchange Commission.
/s/ Zinner & Co.
- ------------------
Zinner & Co.
Pepper Pike, Ohio
October 30, 1997
<PAGE>
Exhibit 23.27
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
on Form S-4 of Apartment Investment and Management Company ("AIMCO") of our
report dated October 20, 1997 with respect to the Combined Statement of
Revenues and Certain Expenses of the Thirty-five Acquisition Properties
(consisting of Brant Rock Village Apartments, Freedom Place Apartments,
Surrey Oaks Apartments, Sand Castles Apartments, Shadow Lake Apartments, Tall
Timbers Apartments, Woodhollow Apartments, Windsor Landing Apartments, Olmos
Club Apartments, Timbertree Apartments, Beacon Hill Apartments, Blossomtree
Apartments, Ferntree (Colonnade) Apartments, Foothills Apartments, Fox Bay
Apartments, Foxtree Apartments, Grovetree (The Arbors) Apartments, Hazeltree
Apartments, Hiddentree Apartments, Islandtree Apartments, Orchidtree
Apartments, Pine Creek Apartments, Polo Park Apartments, Quailtree
Apartments, Rivercrest Apartments, Sand pebble Apartments, Shadetree
Apartments, Silktree Apartments, Twinbridge Apartments, Village Park
Apartments, Wickertree Apartments, Wildflower Apartments, Wydewood
Apartments, Yorktree Apartments, and The Hills Apartments) for the year ended
December 31, 1996, appearing in this Current Report on Form 8-K dated October
15, 1997 of AIMCO.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 29, 1997
<PAGE>
EXHIBIT 99.1
[LOGO]
November 3, 1997
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders (the
"AIMCO Special Meeting") of Apartment Investment and Management Company
("AIMCO") to be held at 10:00 a.m., local time, on December 8, 1997, at the
principal executive offices of AIMCO at 1873 South Bellaire Street, 17th Floor,
Denver, Colorado 80222-4348.
At the AIMCO Special Meeting, you will be asked to consider and vote upon a
proposal to approve the issuance (the "Share Issuance") by AIMCO of up to
5,433,695 shares of AIMCO Class A Common Stock, par value $.01 per share ("AIMCO
Common Stock"), in connection with the proposed merger (the "Merger") of
AIMCO/NHP Acquisition Corp., a wholly owned subsidiary of AIMCO ("Merger Sub"),
with and into NHP Incorporated ("NHP"), pursuant to an Amended and Restated
Agreement and Plan of Merger, dated as of April 21, 1997 and amended as of
October 14, 1997 (the "Merger Agreement"), by and among AIMCO, Merger Sub and
NHP.
AIMCO and AIMCO/NHP Holdings, Inc. ("ANHI"), an unconsolidated subsidiary of
AIMCO, own an aggregate of 6,930,122 shares of common stock of NHP, par value
$.01 per share ("NHP Common Stock"), representing 53.3% of the issued and
outstanding NHP Common Stock as of October 30, 1997.
In the Merger, each outstanding share of NHP Common Stock, other than NHP
Common Stock held by NHP, AIMCO or Merger Sub, will be converted into (i)
0.74766 shares of AIMCO Common Stock or (ii) at the election of the holder,
0.37383 shares of AIMCO Common Stock and $10 in cash, in each case, subject to
certain ownership limits contained in AIMCO's organizational documents. A
maximum of 5,433,695 shares of AIMCO Common Stock will be issued in the Merger,
of which 291,240 shares will be issued to ANHI. NHP stockholders who would
otherwise receive shares of AIMCO Common Stock in excess of such ownership limit
will instead receive cash equal to the number of excess shares multiplied by
$26.75. Approval of the Share Issuance by AIMCO stockholders is a condition to
consummation of the Merger.
The attached Joint Proxy Statement/Prospectus provides you with detailed
information regarding the Merger and related transactions. I urge you to read it
carefully.
YOUR BOARD OF DIRECTORS HAS APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE SHARE ISSUANCE, AND RECOMMENDS
THAT AIMCO STOCKHOLDERS VOTE FOR APPROVAL OF THE SHARE ISSUANCE.
Whether or not you plan to attend the AIMCO Special Meeting in person, it is
important that your shares be represented at the AIMCO Special Meeting. Please
complete, date and sign your proxy card and return it in the enclosed envelope
as soon as possible. This will not prevent you from attending the AIMCO Special
Meeting and voting in person.
Very truly yours,
[SIGNATURE]
Terry Considine
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
[LETTERHEAD ADDRESS]
<PAGE>
EXHIBIT 99.2
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF APARTMENT INVESTMENT AND MANAGEMENT COMPANY:
A Special Meeting of Stockholders (the "AIMCO Special Meeting") of Apartment
Investment and Management Company, a Maryland corporation ("AIMCO"), will be
held at 10:00 a.m., local time, on December 8, 1997, at the principal executive
offices of AIMCO at 1873 South Bellaire Street, 17th Floor, Denver, Colorado
80222-4348, for the following purposes:
(1) To consider and vote upon a proposal to approve the issuance (the "Share
Issuance") of up to 5,433,695 shares of AIMCO Class A Common Stock, par
value $.01 per share ("AIMCO Common Stock"), in connection with the
proposed merger (the "Merger") of AIMCO/NHP Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of AIMCO ("Merger Sub"), with
and into NHP Incorporated, a Delaware corporation ("NHP"), pursuant to
the Amended and Restated Agreement and Plan of Merger, dated as of April
21, 1997 and amended as of October 14, 1997 (the "Merger Agreement"), by
and among AIMCO, Merger Sub and NHP. Approval of the Share Issuance by
AIMCO stockholders is a condition to consummation of the Merger.
(2) To transact such other business as may properly come before the AIMCO
Special Meeting or any adjournment or postponement thereof.
Only stockholders of record at the close of business on October 8, 1997, the
record date for the AIMCO Special Meeting, are entitled to notice of, and to
vote at, the AIMCO Special Meeting or any adjournment or postponement thereof.
Approval of the Share Issuance requires the affirmative vote of a majority of
the votes cast at a meeting at which the total votes cast represent over 50% of
all shares of AIMCO Common Stock entitled to vote thereon. AIMCO stockholders
will not be entitled to objecting stockholders' right to fair value in
connection with the Share Issuance.
The Merger is of great importance to AIMCO and its stockholders. The
accompanying Joint Proxy Statement/Prospectus describes the Merger and related
transactions in detail. Please read the Joint Proxy Statement/Prospectus
carefully and then complete, sign and date the enclosed proxy card and return it
in the enclosed envelope.
Your prompt response will be appreciated. If you plan to attend the AIMCO
Special Meeting and your shares are held in the name of a broker or other
nominee, please bring a proxy or letter from the broker or nominee confirming
your ownership of shares. If you attend the AIMCO Special Meeting, you may vote
in person if you wish, even though you have previously returned your proxy.
By Order of the Board of Directors,
[SIGNATURE]
Leeann Morein
SECRETARY
Denver, Colorado
November 3, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE
ACCOMPANYING ENVELOPE AS SOON AS POSSIBLE. YOU MAY REVOKE YOUR PROXY IN THE
MANNER DESCRIBED IN THE ACCOMPANYING JOINT PROXY STATEMENT/PROSPECTUS AT ANY
TIME BEFORE THE PROXY HAS BEEN VOTED AT THE AIMCO SPECIAL MEETING.
<PAGE>
EXHIBIT 99.3
[LOGO]
November 3, 1997
Dear Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders (the
"NHP Special Meeting") of NHP Incorporated ("NHP") to be held on December 8,
1997 at 9:00 a.m., local time, at the offices of Wilmer, Cutler & Pickering,
2445 M Street, N.W., Washington, D.C. 20037-1420. As described in the enclosed
Joint Proxy Statement/Prospectus, at the NHP Special Meeting, the stockholders
of NHP will be asked to consider and vote upon the adoption and authorization of
an Amended and Restated Agreement and Plan of Merger, dated as of April 21, 1997
and amended as of October 14, 1997 (the "Merger Agreement"), among Apartment
Investment and Management Company ("AIMCO"), AIMCO/NHP Acquisition Corp., a
wholly-owned subsidiary of AIMCO ("Merger Sub"), and NHP. Pursuant to, and
subject to the terms and conditions of, the Merger Agreement, Merger Sub will be
merged with and into NHP (the "Merger") and NHP will become a wholly-owned
subsidiary of AIMCO. In the Merger, each holder of the common stock, par value
$.01 per share, of NHP (the "NHP Common Stock") will receive for each share of
NHP Common Stock, (i) 0.74766 shares (the "Stock Consideration") of AIMCO Class
A Common Stock, par value $.01 per share ("AIMCO Common Stock"), or (ii) at the
election of the stockholder, 0.37383 shares of AIMCO Common Stock and $10.00 in
cash (the "Mixed Consideration" and, together with the Stock Consideration, the
"Merger Consideration"), in each case, subject to certain ownership limits
contained in AIMCO's organizational documents. NHP stockholders who would
otherwise receive shares of AIMCO Common Stock in excess of the applicable
ownership limit will receive instead an amount in cash equal to the number of
such excess shares multiplied by $26.75. Based on the closing price of the AIMCO
Common Stock on October 30, 1997, the values of the Stock Consideration and the
Mixed Consideration per share of NHP Common Stock were $25.98 and $22.99,
respectively. NHP stockholders are urged to obtain current market quotations for
the AIMCO Common Stock. AIMCO and an unconsolidated subsidiary of AIMCO have
acquired an aggregate of 6,930,122 shares of NHP Common Stock previously held by
Demeter Holdings Corporation ("Demeter"), Capricorn Investors, L.P.
("Capricorn") and certain partners of Capricorn. Such shares represent
approximately 53.3% of the issued and outstanding shares of NHP Common Stock as
of October 30, 1997.
The accompanying Joint Proxy Statement/Prospectus provides a detailed
description of the Merger Agreement and other information regarding matters to
be considered at the NHP Special Meeting. A copy of the Merger Agreement is
attached to the Joint Proxy Statement/Prospectus as Appendix I.
On May 9, 1997, NHP distributed to stockholders of record on May 2, 1997,
rights ("Rights") issued pursuant to a Rights Agreement dated as of April 21,
1997. Pursuant to the Rights Agreement, NHP expects to distribute at the
effective time of the Merger all of the shares of WMF Group Ltd. ("WMF") owned
by NHP at such time (the "Rights Consideration"). WMF is NHP's subsidiary
engaged in the mortgage banking business. Information regarding WMF, the
distribution of Rights and the distribution of shares of WMF pursuant to the
Rights is set forth in an Information Statement/Prospectus which accompanies the
enclosed Joint Proxy Statement/Prospectus.
The NHP Board of Directors has carefully reviewed and considered the terms
and conditions of the proposed Merger and the Rights Agreement. THE BOARD OF
DIRECTORS, INCLUDING A COMMITTEE OF DIRECTORS UNAFFILIATED WITH DEMETER AND
CAPRICORN (THE "INDEPENDENT COMMITTEE"), BELIEVES THAT THE TRANSACTIONS ARE FAIR
TO NHP STOCKHOLDERS, HAS UNANIMOUSLY (WITH ONE MEMBER ABSENT, BUT INCLUDING ALL
MEMBERS OF THE INDEPENDENT COMMITTEE) APPROVED THE MERGER AGREEMENT, THE MERGER
AND THE RIGHTS AGREEMENT, AND HAS RECOMMENDED THAT STOCKHOLDERS VOTE FOR
ADOPTION AND AUTHORIZATION OF THE MERGER AGREEMENT.
The Independent Committee retained the investment banking firm of Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ") to render an opinion to the
Independent Committee as to the fairness,
<PAGE>
from a financial point of view, of the Merger Consideration and the Rights
Consideration in the aggregate to be received by stockholders of NHP other than
certain identified stockholders (the "Unaffiliated NHP Stockholders"). DLJ has
delivered opinions, dated April 21, 1997 and the date of the Joint Proxy
Statement/Prospectus, to the effect that, as of such dates and based upon and
subject to the assumptions, limitations and qualifications set forth therein,
the Merger Consideration and the Rights Consideration were, in the aggregate,
fair to the Unaffiliated NHP Stockholders from a financial point of view. A copy
of DLJ's opinion dated the date of the Joint Proxy Statement/Prospectus is
attached to the Joint Proxy Statement/Prospectus as Appendix II.
Your vote on these matters is very important. The Merger must be approved
and authorized by (i) a majority of the outstanding shares of NHP Common Stock
and (ii) 66 2/3% of the outstanding shares of NHP Common Stock, excluding shares
deemed to be owned by AIMCO and its affiliates, so a failure to vote is
equivalent to a vote against the Merger. We urge you to review carefully the
enclosed materials and to return your proxy promptly. Stockholders with
questions regarding the Merger or other transactions or matters described herein
may contact Joel F. Bonder, Senior Vice President, Secretary and General Counsel
of NHP at (703) 394-2400.
Whether or not you plan to attend the NHP Special Meeting, please sign and
promptly return your proxy card in the enclosed postage paid envelope. If you
attend the meeting, you may vote in person if you wish, even though you have
previously returned your proxy.
Sincerely,
[SIGNATURE]
J. Roderick Heller, III
CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
<PAGE>
EXHIBIT 99.4
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 8, 1997
TO THE STOCKHOLDERS OF NHP INCORPORATED:
Notice is hereby given that the Special Meeting of the Stockholders of NHP
Incorporated, a Delaware corporation ("NHP"), will be held at 9:00 a.m., local
time, at the offices of Wilmer, Cutler & Pickering, 2445 M Street, N.W.,
Washington, D.C. 20037-1420 on December 8, 1997, for the following purposes:
1. To consider and act upon a proposal to adopt and authorize an Amended
and Restated Agreement and Plan of Merger dated as of April 21, 1997 and
amended as of October 14, 1997 (the "Merger Agreement"), a copy of which
is included as Appendix I to the Joint Proxy Statement/Prospectus
accompanying this Notice, pursuant to which each holder of NHP common
stock (the "NHP Common Stock") will receive for each share of NHP Common
Stock (i) 0.74766 shares of Apartment Investment and Management Company
("AIMCO") common stock or (ii) at the election of the stockholder,
0.37383 shares of AIMCO common stock and $10.00 in cash. AIMCO's Amended
and Restated Articles of Incorporation prohibit direct or constructive
ownership of AIMCO Common Stock representing more than 8.7% (or 15% in
the case of certain pension trusts, registered investment companies and
certain other persons) of the combined total of outstanding shares of
AIMCO's Common Stock and AIMCO's Class B Common Stock by any person (the
"Ownership Limit"). Any person who would receive shares of AIMCO Common
Stock in excess of the Ownership Limit ("Excess Shares") will receive
instead an amount in cash equal to the number of such Excess Shares
multiplied by $26.75.
2. To transact any and all other business that may properly come before the
Special Meeting.
All NHP stockholders of record at the close of business on October 30, 1997
are entitled to notice of and to vote at this Special Meeting.
NHP stockholders are requested to sign and date the enclosed proxy and
return it in the enclosed envelope. The envelope requires no postage if mailed
in the United States.
By Order of the Board of Directors
[SIGNATURE]
Joel F. Bonder
SENIOR VICE PRESIDENT, SECRETARY AND
GENERAL COUNSEL
Vienna, Virginia
November 3, 1997
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU
PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED POSTAGE PAID ENVELOPE. YOU MAY, IF YOU WISH,
REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE TIME IT IS VOTED.
PLEASE DO NOT SEND YOUR STOCK CERTIFICATES AT THIS TIME.
