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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 11, 1998
REGISTRATION NO. 333-60355
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 5
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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APARTMENT INVESTMENT AND MANAGEMENT COMPANY
AIMCO PROPERTIES, L.P.
(Exact name of co-registrant as specified in its charter)
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MARYLAND 84-1275621
DELAWARE 84-1259577
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification Number)
organization)
1873 SOUTH BELLAIRE STREET, 17TH FLOOR PETER KOMPANIEZ
DENVER, COLORADO 80222 PRESIDENT
(303) 757-8101 1873 SOUTH BELLAIRE STREET, 17TH FLOOR
DENVER, COLORADO 80222
(303) 757-8101
FAX: (303) 753-9538
(Address, including zip code, and telephone number, (Name, address, including zip code, and telephone
including area code, of co-registrants' principal number,
executive offices) including area code, of agent for service)
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Copy to:
JONATHAN L. FRIEDMAN
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
300 SOUTH GRAND AVENUE
LOS ANGELES, CALIFORNIA 90071
(213) 687-5000
FAX: (213) 687-5600
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Approximate Date of Commencement of Proposed Sale to the Public: From time
to time after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and if there is compliance
with General Instruction G, check the following box. [ ]
If the Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED OFFERING PRICE PER UNIT(1) AGGREGATE OFFERING PRICE REGISTRATION FEE(2)
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Preferred Stock, par value $.01
per share(3)....................
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Class A Common Stock, par value
$.01 per share(3)...............
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Partnership Preferred Units(4).... $200,000,000 $200,000,000
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Partnership Common Units(4)....... $200,000,000 $200,000,000
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Total.................... $1,000,000,000 (1) $1,000,000,000 $295,000
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(1) To be determined, from time to time, by the Registrants in connection with
the issuance of the securities registered hereunder.
(2) Calculated pursuant to Rule 457(o) of the rules and regulations under the
Securities Act of 1933, as amended.
(3) To be issued by Apartment Investment and Management Company ("AIMCO"). The
amount of such securities registered hereby includes (i) shares of Preferred
Stock and Class A Common Stock of AIMCO issuable in exchange for Partnership
Preferred Units or Partnership Common Units of AIMCO Properties, L.P.
tendered for redemption pursuant to the agreement of limited partnership of
AIMCO Properties, L.P., plus such additional number of shares of Preferred
Stock and Class A Common Stock as may be issuable pursuant to the
antidilution adjustment provisions of such agreement and (ii) shares of
Class A Common Stock of AIMCO issuable upon conversion of shares of
Preferred Stock of AIMCO. In no event will the aggregate maximum offering
price of all securities registered under this Registration Statement by
AIMCO exceed $600,000,000.
(4) To be issued by AIMCO Properties, L.P.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER 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 COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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EXPLANATORY NOTE
This filing includes a prospectus supplement relating to an exchange offer
for units of limited partnership in Shelter Properties IV.
In accordance with Rule 472(b) the Registrants have not refiled the base
prospectus and the 90 prospectus supplements for the partnerships listed below
filed with Amendment Numbers 2, 3 and 4 since no changes have yet been made to
such documents. The base prospectus and the 90 prospectus supplements filed with
Amendment Numbers 2, 3 and 4 continue to remain part of this Registration
Statement and will be refiled with future Amendments when changes are made to a
particular document.
Angeles Income Properties, Ltd. II
Angeles Income Properties, Ltd. III
Angeles Income Properties, Ltd. IV
Angeles Income Properties, Ltd. 6
Angeles Opportunity Properties, Ltd.
Angeles Partners VII
Angeles Partners VIII
Angeles Partners IX
Angeles Partners X
Angeles Partners XI
Angeles Partners XII
Angeles Partners XIV
Baywood Partners, Ltd.
Brampton Associates Partnership
Buccaneer Trace Limited Partnership
Burgundy Court Associates, L.P.
Calmark/Fort Collins, Ltd.
Calmark Heritage Park II Ltd.
Casa Del Mar Associates Limited Partnership
Catawba Club Associates, L.P.
Cedar Tree Investors Limited Partnership
Century Properties Fund XVI
Century Properties Fund XVIII
Century Properties Fund XIX
Century Properties Growth Fund XXII
Chapel Hill, Limited
Chestnut Hill Associates Limited Partnership
Coastal Commons Limited Partnership
Consolidated Capital Institutional Properties/2
Consolidated Capital Institutional Properties/3
Consolidated Capital Properties III
Consolidated Capital Properties IV
Consolidated Capital Properties V
Consolidated Capital Properties VI
DFW Apartment Investors Limited Partnership
DFW Residential Investors Limited Partnership
Davidson Diversified Real Estate I, L.P.
Davidson Diversified Real Estate II, L.P.
Davidson Diversified Real Estate III, L.P.
Davidson Growth Plus, L.P.
Davidson Income Real Estate, L.P.
Drexel Burnham Lambert Real Estate Associates II
Four Quarters Habitat Apartment Associates, Ltd.
Fox Strategic Housing Income Partners
Georgetown of Columbus Associates, L.P.
HCW Pension Real Estate Fund Limited
Partnership
Investors First-Staged Equity
Johnstown/Consolidated Income Partners
La Colina Partners, Ltd.
Lake Eden Associates, L.P.
Landmark Associates, L.P.
Minneapolis Associates II Limited Partnership
Multi-Benefit Realty Fund '87-1-Class A
Multi-Benefit Realty Fund '87-1-Class B
National Property Investors 8
Northbrook Apartments, Ltd.
Olde Mill Investors Limited Partnership
Orchard Park Apartments Limited Partnership
Park Town Place Associates Limited Partnership
Quail Run Associates, L.P.
Ravensworth Associates Limited Partnership
Rivercreek Apartments Limited Partnership
Rivercrest Apartments, Limited
Riverside Park Associates L.P.
Salem Arms of Augusta Limited Partnership
Shaker Square, L.P.
Shannon Manor Apartments, a Limited Partnership
Sharon Woods, L.P.
Shelter Properties III
Shelter Properties VI
Shelter Properties VII Limited Partnership
Snowden Village Associates, L.P.
Springhill Lake Investors Limited Partnership
Sturbrook Investors, Ltd.
Sycamore Creek Associates, L.P.
Texas Residential Investors Limited Partnership
Thurber Manor Associates, Limited Partnership
U.S. Realty Partners Limited Partnership
United Investors Growth Properties
United Investors Growth Properties II
United Investors Income Properties
Villa Nova, Limited Partnership
Walker Springs, Limited
Wingfield Investors Limited Partnership
Winrock-Houston Limited Partnership
Winthrop Apartment Investors Limited Partnership
Winthrop Growth Investors 1 Limited Partnership
Winthrop Texas Investors Limited Partnership
Woodmere Associates, L.P.
Yorktown Towers Associates
<PAGE> 3
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS
SUPPLEMENT IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED DECEMBER 11, 1998
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1998)
AIMCO PROPERTIES, L.P.
IS OFFERING TO ACQUIRE UNITS OF LIMITED PARTNERSHIP INTEREST OF
SHELTER PROPERTIES IV
IN EXCHANGE FOR YOUR CHOICE OF:
20.20 OF OUR 8.0% PARTNERSHIP PREFERRED UNITS;
OF OUR PARTNERSHIP COMMON UNITS; OR
$505.00 IN CASH.
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GENERALLY, YOU WILL NOT RECOGNIZE ANY WE WILL ACCEPT ALL OF THE OUTSTANDING UNITS
IMMEDIATE TAXABLE GAIN OR LOSS IF YOU TENDERED IN RESPONSE TO OUR OFFER. OUR OFFER
EXCHANGE YOUR UNITS SOLELY FOR OUR IS NOT SUBJECT TO ANY MINIMUM NUMBER OF
SECURITIES. HOWEVER, YOU WILL RECOGNIZE UNITS BEING TENDERED.
TAXABLE GAIN OR LOSS IF YOU EXCHANGE YOUR
UNITS FOR CASH. YOU WILL NOT PAY ANY FEES OR COMMISSIONS IF
YOU TENDER YOUR UNITS.
WE HAVE RETAINED ROBERT A. STANGER &
CO., INC. TO CONDUCT AN ANALYSIS OF OUR OUR OFFER AND YOUR WITHDRAWAL RIGHTS WILL
OFFER AND TO RENDER AN OPINION AS TO THE EXPIRE AT 5:00 P.M., DENVER, COLORADO TIME,
FAIRNESS TO YOU OF THE OFFER CONSIDERATION ON , 1999, UNLESS WE EXTEND THE
FROM A FINANCIAL POINT OF VIEW. DEADLINE.
OUR OFFER CONSIDERATION WILL BE REDUCED
FOR ANY DISTRIBUTIONS SUBSEQUENTLY MADE BY
YOUR PARTNERSHIP PRIOR TO THE EXPIRATION OF
OUR OFFER.
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SEE "RISK FACTORS" BEGINNING ON PAGE S-25 OF THIS PROSPECTUS SUPPLEMENT AND
ON PAGE 2 OF THE ACCOMPANYING PROSPECTUS FOR A DESCRIPTION OF CERTAIN MATTERS
THAT YOU SHOULD CONSIDER IN CONNECTION WITH OUR OFFER, INCLUDING THE FOLLOWING:
- We determined the offer consideration without any arms-length
negotiations. Accordingly, our offer consideration may not reflect the
fair market value of your units. As of October 31, 1997, your general
partner (which is our affiliate) estimated the net asset value of your
units to be $715.00 per unit and an affiliate estimated the net
liquidation value of your units to be $737.85 per unit. It is possible
that if the offer is not successful, we may revise or terminate the offer
or conduct a subsequent offer at a higher or lower price.
- Your general partner is an affiliate of ours and, therefore, has
substantial conflicts of interest with respect to our offer. We are
making this offer with a view to making a profit, and therefore, there is
a conflict between our desire to purchase your units at a low price and
your desire to sell your units at a high price. Consequently, there are
substantial conflicts of interest between you and us.
- If we acquire additional units in your partnership, we will increase our
ability to influence voting decisions of your partnership and may control
any vote of the limited partners.
- An investment in our securities involves real estate investment,
financing, management, acquisition and development risks.
- We may change our investment, acquisition and financing policies without
a vote of our securityholders.
- If you acquire our securities, the nature of your investment will change
from holding an interest in a few properties to holding an interest in
our large portfolio of properties. In the future, the properties owned by
your partnership may outperform our portfolio of assets.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED
THE MERITS OF THIS OFFER. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
December , 1998
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TABLE OF CONTENTS
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PAGE
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QUESTIONS AND ANSWERS ABOUT THE OFFER.......... S-1
SUMMARY........................................ S-4
The AIMCO Operating Partnership.............. S-4
Affiliation with your General Partner........ S-4
The Offer.................................... S-4
Risk Factors................................. S-4
Background and Reasons for the Offer......... S-10
Terms of the Offer........................... S-12
Certain Federal Income Tax Matters........... S-14
Valuation of Units........................... S-14
Fairness of the Offer........................ S-15
Stanger Analysis............................. S-15
Comparison of Your Partnership and the AIMCO
Operating Partnership...................... S-16
Comparison of Your Units and AIMCO OP
Units...................................... S-16
Conflicts of Interest........................ S-16
Your Partnership............................. S-17
Source and Amount of Funds and Transactional
Expenses................................... S-18
Summary Financial Information of AIMCO
Properties, L.P............................ S-19
Summary Pro Forma Financial and Operating
Information of AIMCO Properties, L.P....... S-21
Summary Financial Information of Shelter
Properties IV.............................. S-23
Comparative Per Unit Data.................... S-23
THE AIMCO OPERATING PARTNERSHIP................ S-24
RISK FACTORS................................... S-24
Risks to Unitholders Who Tender Their Units
in the Offer............................... S-25
Risks to Unitholders Exchanging Units for OP
Units in the Offer......................... S-26
Risks to Unitholders Who Do Not Tender Their
Units in the Offer......................... S-27
BACKGROUND AND REASONS FOR THE OFFER........... S-29
Background of the Offer...................... S-29
Alternatives Considered...................... S-30
Expected Benefits of the Offer............... S-31
THE OFFER...................................... S-32
Terms of the Offer; Expiration Date.......... S-32
Acceptance for Payment and Payment for
Units...................................... S-32
Procedure for Tendering Units................ S-33
Withdrawal Rights............................ S-36
Extension of Tender Period; Termination;
Amendment.................................. S-36
Fractional OP Units.......................... S-37
Future Plans of the AIMCO Operating
Partnership................................ S-37
Voting by the AIMCO Operating Partnership.... S-38
Dissenters' Rights........................... S-38
Conditions of the Offer...................... S-38
Effects of the Offer......................... S-40
Certain Legal Matters........................ S-41
Fees and Expenses............................ S-43
Accounting Treatment......................... S-43
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CERTAIN FEDERAL INCOME TAX MATTERS............. S-44
Tax Consequences of Exchanging Units Solely
for OP Units............................... S-44
Tax Consequences of Exchanging Units for Cash
and OP Units............................... S-44
Tax Consequences of Exchanging Units Solely
for Cash................................... S-45
Adjusted Tax Basis........................... S-45
Character of Gain or Loss Recognized Pursuant
to the Offer............................... S-46
Passive Activity Losses...................... S-46
Foreign Offerees............................. S-47
Certain Tax Consequences to Non-Tendering and
Partially-Tendering Offerees............... S-47
VALUATION OF UNITS............................. S-48
FAIRNESS OF THE OFFER.......................... S-50
Position of the General Partner of Your
Partnership With Respect to the Offer;
Fairness................................... S-50
Fairness to Unitholders who Tender their
Units...................................... S-51
Fairness to Unitholders who do not Tender
their Units................................ S-51
Comparison of Consideration to Alternative
Consideration.............................. S-52
Allocation of Consideration.................. S-55
STANGER ANALYSIS............................... S-55
Experience of Stanger........................ S-55
Summary of Materials Considered.............. S-55
Summary of Reviews........................... S-56
Conclusions.................................. S-57
Assumptions, Limitations and
Qualifications............................. S-57
Compensation and Material Relationships...... S-58
COMPARISON OF YOUR PARTNERSHIP AND THE AIMCO
OPERATING PARTNERSHIP........................ S-59
COMPARISON OF YOUR UNITS AND AIMCO OP UNITS.... S-67
DESCRIPTION OF PREFERRED OP UNITS.............. S-73
General...................................... S-73
Ranking...................................... S-73
Distributions................................ S-73
Allocation................................... S-74
Liquidation Preference....................... S-74
Redemption................................... S-75
Voting Rights................................ S-75
Restrictions on Transfer..................... S-76
DESCRIPTION OF CLASS I PREFERRED STOCK......... S-76
COMPARISON OF PREFERRED OP UNITS AND CLASS I
PREFERRED STOCK.............................. S-78
CONFLICTS OF INTEREST.......................... S-82
Conflicts of Interest with Respect to the
Offer...................................... S-82
Conflicts of Interest that Currently Exist
for Your Partnership....................... S-82
Competition Among Properties................. S-82
Features Discouraging Potential Takeovers.... S-82
Future Exchange Offers....................... S-82
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YOUR PARTNERSHIP............................... S-83
General...................................... S-83
Capital Replacement.......................... S-83
Competition.................................. S-83
Legal Proceedings............................ S-83
Additional Information Concerning Your
Partnership................................ S-83
History of the Partnership................... S-84
General Policy Regarding Sales and
Refinancings of Partnership Properties..... S-84
Property Management.......................... S-85
Fiduciary Responsibility of the General
Partner of Your Partnership................ S-85
Distributions................................ S-85
Beneficial Ownership of Interests in Your
Partnership................................ S-85
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Compensation Paid to the General Partner and
its Affiliates............................. S-86
SOURCE AND AMOUNT OF FUNDS AND TRANSACTIONAL
EXPENSES..................................... S-86
LEGAL MATTERS.................................. S-87
EXPERTS........................................ S-87
OPINION OF ROBERT A. STANGER & CO., INC. ...... A-1
DIRECTORS AND EXECUTIVE OFFICERS OF APARTMENT
INVESTMENT AND MANAGEMENT COMPANY AND
AIMCO-GP, INC. .............................. B-1
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ii
<PAGE> 6
QUESTIONS AND ANSWERS ABOUT THE OFFER
Q: WHAT AM I BEING OFFERED?
A: We are offering to acquire your units of limited partnership interest in
Shelter Properties IV. For each unit that you tender, you may choose to
receive 20.20 of our 8.0% Partnership Preferred Units (also referred to as
"Preferred OP Units"), of our Partnership Common Units (also
referred to as "Common OP Units"), or $505.00 in cash (subject, in each
case to adjustment for any distributions paid to you during the offer
period). If you like, you can choose to keep any or all of your units.
Q: WILL I HAVE TO PAY ANY FEES OR COMMISSIONS IF I SELL MY UNITS?
A: No.
Q: WHO IS AIMCO PROPERTIES, L.P.?
A: AIMCO Properties, L.P. is the operating partnership which conducts
substantially all of the operations of Apartment Investment and Management
Company, a real estate investment trust ("AIMCO"). As of October 31, 1998,
AIMCO was the largest owner and manager of multifamily apartment properties
in the United States, with a total portfolio of 386,430 apartment units in
2,240 properties located in 49 states, the District of Columbia and Puerto
Rico. As of September 30, 1998, AIMCO had total assets of $3,121.9 million,
total debt of $1,275.4 million and stockholders' equity of $1,521.5
million. On a pro forma basis, giving effect to our recently completed
merger with Insignia Financial Group, Inc. and related transactions, as of
September 30, 1998, AIMCO had total assets of $4,389.4 million, total debt
of $1,627.8 million and stockholders' equity of $2,074.3 million.
Q: WHAT IS THE RELATIONSHIP BETWEEN AIMCO AND YOUR PARTNERSHIP?
A: On October 1, 1998, we merged with Insignia Financial Group, Inc. In doing
so, we acquired a majority ownership interest in Shelter Realty IV
Corporation, the managing general partner of your partnership (the "general
partner"), and the company that manages the property owned by your
partnership.
Q: WHAT IS THE HISTORY OF YOUR PARTNERSHIP?
A: Your partnership was formed in August 21, 1981 and sold $40,000,000 of
limited partnership units in 1982 for $1,000.00 per unit. Between November
1, 1992 and July 31, 1998 your partnership made a total of $53.80 of
distributions per unit. At the time of the initial offering it was
contemplated in the offering memorandum that the properties to be purchased
by the partnership would be sold within three to eight years. We do not
know why the partnership did not sell all of its properties within such
holding period. Your partnership currently owns three apartment properties.
Q: WHY IS THE OFFER BEING MADE?
A: We are in the business of acquiring direct and indirect interests in
apartment properties. The offer provides us with an opportunity to increase
our ownership interest in the property owned by your partnership. The offer
also provides you and other investors in your partnership with an
opportunity to liquidate your current investment and to invest in our
securities or receive cash, or to retain your units.
Q: WHAT ARE PREFERRED OP UNITS?
A: Preferred OP Units are a class of our Partnership Preferred Units.
Preferred OP Units are not listed on any national securities exchange nor
quoted on NASDAQ. There is no active trading market for Preferred OP Units
and none is likely to develop because they are subject to restrictions on
transfer. The holders of the Preferred OP Units must hold such units for
one year, subject to certain exceptions. However, after a one-year holding
period, a holder of Preferred OP Units may redeem his or her units for
shares of AIMCO's Class I Preferred Stock, shares of AIMCO's Class A Common
Stock or cash, at our option. AIMCO's Class A Common Stock is, and AIMCO's
Class I Preferred Stock is expected to be, listed and traded on the NYSE.
S-1
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Q: WHAT ARE COMMON OP UNITS?
A: The Common OP Units are our Partnership Common Units. Common OP Units are
not listed on any national securities exchange nor quoted on NASDAQ. There
is no active trading market for Common OP Units and none is likely to
develop because they are subject to restrictions on transfer. The holders
of the Common OP Units must hold such units for one year, subject to
certain exceptions. However, after a one-year holding period, a holder of
Common OP Units may redeem his or her units for shares of AIMCO's Class A
Common Stock (on a one-for-one basis, subject to adjustment in certain
circumstances) or, at our option, an equivalent amount of cash. AIMCO's
Class A Common Stock is listed and traded on the NYSE under the symbol
"AIV."
Q: WHAT ARE MY ALTERNATIVES TO TENDERING UNITS?
A: As alternatives to tendering your units, you may retain your units or,
subject to the terms of your partnership's agreement of limited
partnership, seek a private sale of your units. However, your partnership's
agreement of limited partnership contains certain restrictions on the
resale of your units, and the market for your units may be limited.
Q: WHAT HAPPENS IF I DON'T TENDER MY UNITS?
A: If you choose to retain your units, your investment will remain unchanged.
However, if we acquire additional interests in your partnership, we will
increase our ability to influence voting decisions with respect to your
partnership.
Q: WHAT ARE MY UNITS WORTH?
A: Your general partner (which is our affiliate) has received an opinion of an
independent firm that our offer consideration is fair. However, your units
are not listed on any national securities exchange nor quoted on NASDAQ,
and there is no established trading market for your units. Secondary sales
activity for the units has been limited and sporadic. Your general partner
does not monitor or regularly receive or maintain information regarding the
prices at which secondary sales transactions in the units have been
effectuated. Based on information recorded by the general partner of your
partnership, we believe that sales prices for your units have ranged from
$175.00 per unit to $500.00 per unit from November 1, 1995 through July 31,
1998. As of October 31, 1997, your general partner estimated the net asset
value of your units to be $715.00 per unit and an affiliate of your general
partner estimated the net liquidation value of your units to be $737.85 per
unit. However, we do not believe that these valuations represent the
current fair market value of your units.
Q: HOW WAS THE CASH OFFER CONSIDERATION FOR MY UNITS DETERMINED?
A: We estimated the value of the property owned by your partnership using the
direct capitalization method. This method involves applying a
capitalization rate to your partnership's annual net operating income. We
determined an appropriate capitalization rate using our best judgment, but
our valuation is just an estimate. Although the direct capitalization
method is a widely-accepted way of valuing real estate, there are a number
of other methods available to value real estate, each of which may result
in different valuations of the property. The proceeds that you would
receive if you sold your units to someone else or if your partnership were
actually liquidated might be higher or lower than our offer consideration.
An actual liquidation may also result in your paying taxes.
Q: HOW DID YOU DETERMINE THE NUMBER OF PREFERRED OP UNITS TO BE OFFERED IN
EXCHANGE FOR MY UNITS?
A: We divided the cash offer consideration by the $25 liquidation preference
of the Preferred OP Units.
Q: HOW DID YOU DETERMINE THE NUMBER OF COMMON OP UNITS TO BE OFFERED IN
EXCHANGE FOR MY UNITS?
A: We divided the cash offer consideration by $ , which represents the
average closing price of the AIMCO Class A Common Stock on the NYSE for the
20 trading days prior to , 1998.
S-2
<PAGE> 8
Q: HAS THERE BEEN ANY INDEPENDENT EVALUATION OF THE FAIRNESS OF THE OFFER
CONSIDERATION?
A: We have retained Robert A. Stanger & Co., Inc. ("Stanger") to conduct an
analysis of the offer and to render an opinion as to the fairness to you of
the offer consideration. Stanger is not affiliated with us or your general
partner (which is our affiliate). Stanger is one of the leaders in the
field of analyzing and evaluating complex real estate transactions.
However, we provided much of the information used by Stanger in evaluating
our offer. We believe that the information we provided to Stanger is
accurate.
Q: DOES MY GENERAL PARTNER RECOMMEND THAT I TENDER MY UNITS?
A: Your general partner is affiliated with us and, therefore, has substantial
conflicts of interest with respect to our offer. Accordingly, your general
partner makes no recommendation to you as to whether to tender or refrain
from tendering any of your units in the offer. However, your general
partner believes that you should make your decision based on a number of
factors, including your financial position, your risk profile, your desire
for liquidity, other financial opportunities available to you and your tax
position.
Q: WHAT DO I NEED TO DO NOW?
A: First, you should read this Prospectus Supplement and the accompanying
Prospectus thoroughly and discuss it with your financial and tax advisors.
Second, you should decide if you want to tender any of your units and, if
so, whether you prefer to receive Preferred OP Units, Common OP Units, cash
or a combination. Third, if you do want to tender any of your units, you
should fill out the Letter of Transmittal that accompanies these materials
and send it to the Information Agent listed on the back cover of this
Prospectus Supplement.
Q: ARE THERE ANY RESTRICTIONS ON THE NUMBER OF UNITS I MAY TENDER?
A: No. However, if you tender less than all of your units, you must continue
to hold at least three units (except for units held by IRAs and Keogh
Plans) following our acceptance of tendered units.
Q: WHEN WILL THE OFFER BE COMPLETED AND WHEN WILL I RECEIVE PREFERRED OP
UNITS, COMMON OP UNITS OR CASH?
A: You have until , 1999 to send your Letter of Transmittal
to the Information Agent. As soon as practicable after the
, 1999 deadline, we will deliver to you the Preferred OP Units, Common OP
Units or cash to which you are entitled. However, we reserve the right to
extend, terminate or amend the offer and, under certain circumstances, to
delay payment for your units.
Q: CAN I CHANGE MY MIND AFTER I HAVE SENT MY LETTER OF TRANSMITTAL TO THE
INFORMATION AGENT?
A: Yes. You can withdraw your Letter of Transmittal or submit a new one,
changing the number of units you wish to tender or the form of payment you
choose to receive. However, you must do this before the expiration of the
offer, and you must follow the instructions provided with the Letter of
Transmittal and any instructions of the Information Agent.
Q: WHOM DO I CONTACT FOR ADDITIONAL INFORMATION OR IF I HAVE QUESTIONS?
A: You should feel free to contact the Information Agent listed on the back
cover of this Prospectus Supplement.
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SUMMARY
This summary highlights some of the information in this Prospectus
Supplement and the accompanying Prospectus.
THE AIMCO OPERATING PARTNERSHIP
AIMCO Properties, L.P. is the "AIMCO Operating Partnership." It conducts
substantially all of the operations of Apartment Investment and Management
Company, or "AIMCO". AIMCO is a real estate investment trust that owns and
manages multifamily apartment properties throughout the United States. Through
wholly owned subsidiaries, AIMCO acts as the sole general partner of, and owns
approximately an 83% interest in, the AIMCO Operating Partnership. As of October
31, 1998, our portfolio of owned or managed properties included 386,430
apartment units in 2,240 properties located in 49 states, the District of
Columbia and Puerto Rico. Based on apartment unit data compiled as of January 1,
1998 by the National Multi Housing Council, we believe that this made us the
largest owner and manager of multifamily apartment properties in the United
States. As of October 31, 1998, we:
- owned or controlled 62,955 units in 241 apartment properties;
- held an equity interest in 168,746 units in 897 apartment properties; and
- managed 154,729 units in 1,102 apartment properties for third party
owners and affiliates.
Our principal executive offices are located at 1873 South Bellaire Street,
Denver, Colorado 80222, and our telephone number is (303) 757-8101.
AFFILIATION WITH YOUR GENERAL PARTNER
As a result of our October 1, 1998 merger with Insignia Financial Group,
Inc., we acquired a majority ownership interest in the general partner (which is
our affiliate) of your partnership and the company that manages the property
owned by your partnership.
THE OFFER
In exchange for each of your units, we are offering you a choice of:
- 20.20 of our Preferred OP Units;
- of our Common OP Units; or
- $505.00 in cash;
in each case, subject to reduction for any distribution subsequently made by
your partnership prior to the expiration of our offer.
We will accept all of the outstanding units tendered in response to our
offer. Our offer is not subject to any minimum number of units being tendered.
Our offer will expire at 5:00 p.m., Denver, Colorado time, on
, 1999, unless we extend the deadline.
RISK FACTORS
You should carefully consider the risks set forth under "Risk Factors"
beginning on page S-25 of this Prospectus Supplement and on page 2 of the
accompanying Prospectus. The following highlights some of the risks associated
with our offer and the potential disadvantages of the offer to you and should be
considered when you review "Summary -- Background and Reasons for the
Offer -- Expected Benefits of the Offer":
NO THIRD PARTY VALUATION OR APPRAISAL. We did not use any third-party
appraisal or valuation to determine the value of your partnership's property. We
established the terms of our offer, including the
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exchange ratios and the cash consideration, without any arms-length
negotiations. We have retained Robert A. Stanger & Co., Inc. to conduct an
analysis of our offer and to render an opinion as to the fairness to you of our
offer consideration, from a financial point of view. It is possible that if the
offer is not successful, we may revise or terminate the offer or conduct a
subsequent offer at a higher or lower price. Such a decision will depend, among
other things, on the performance of the partnership, prevailing interest rates,
and our interest in acquiring additional limited partnership interests.
OFFER CONSIDERATION MAY NOT REPRESENT FUTURE LIQUIDATION VALUE. Your
partnership's properties may outperform our larger, more diversified portfolio
of assets. Although we cannot predict the future value of your partnership's
properties, our offer consideration could be less than the net proceeds that you
would realize upon a future liquidation of your partnership. Accordingly, you
might receive more value if you retain your units until your partnership is
liquidated. However, you may prefer to receive the offer consideration now
rather than wait for uncertain future net liquidation proceeds. As of October
31, 1997, your general partner (which is our affiliate) estimated the net asset
value of your units to be $715.00 per unit and an affiliate of your general
partner estimated the net liquidation value of your units to be $737.85 per
unit. However, we do not believe that these valuations represent the current
fair market value of your units.
OFFER CONSIDERATION MAY NOT NECESSARILY REPRESENT FAIR MARKET VALUE. There
is no established or regular trading market for your units, nor is there another
reliable standard for determining the fair market value of the units. If you
need or desire liquidity, you may wish to consider the offer. However, the offer
consideration does not necessarily reflect the price that you would receive in
an open market for your units or upon a liquidation of your partnership's
assets. Such prices could be higher or lower than the offer consideration. Based
on information recorded by your general partner (which is our affiliate), we
believe that sales prices for your units have ranged from $175.00 per unit to
$500.00 per unit from November 1, 1995 to July 31, 1998.
CONFLICTS OF INTEREST WITH RESPECT TO THE OFFER. Your general partner is
affiliated with us and, therefore, has substantial conflicts of interest with
respect to our offer.
LOSS OF FUTURE DISTRIBUTIONS FROM YOUR PARTNERSHIP. You will not receive
any future distributions on units that we acquire from you. If you elect to
receive our Preferred OP Units or Common OP Units ("OP Units") in exchange for
your units, you will be entitled to future distributions from us.
TAX RISKS ASSOCIATED WITH THE OFFER. In general, if you exchange your units
solely for our OP Units, it will not be a taxable transaction. If you sell your
units for cash, you will recognize taxable gain or loss in an amount equal to
the difference between the amount realized on the sale and your adjusted tax
basis in your units. If you exchange your units for both cash and OP Units, it
will be treated, for Federal income tax purposes, as a partial taxable sale of
such units for cash and as a partial tax-free contribution of such units to our
operating partnership. If you tender your units for cash or for both cash and OP
Units, the "amount realized" will be measured by the sum of the cash received
plus the portion of your partnership's liabilities allocated to the units sold
for Federal income tax purposes. To the extent that the amount of cash received
plus the allocable share of your partnership's liabilities exceeds your tax
basis for the units sold, you will recognize gain. Consequently, your tax
liability resulting from such gain could exceed the amount of cash you receive
from us. See "Certain Federal Income Tax Matters."
In addition, if there is a sale or exchange of 50% or more of the total
interest in capital and profits of your partnership within any 12-month period,
including sales or exchanges resulting from the offer, your partnership will
terminate for Federal income tax purposes. Any such termination may, among other
things, subject the assets of your partnership to longer depreciable lives than
those currently applicable to the assets of your partnership. This would
generally decrease the annual average depreciation deductions allocable to you
if you do not tender all of your units (thereby increasing the taxable income
allocable to your units each year), but would have no effect on the total
depreciation deductions available over the useful lives of the assets of your
partnership. Any such termination may also change (and possibly shorten) your
holding period with respect to your units that you choose to retain.
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This summary is a general discussion of certain of the anticipated Federal
income tax consequences of the offer. This summary does not discuss all aspects
of Federal income taxation that may be relevant to you in light of your specific
circumstances or if you are subject to special treatment under the Internal
Revenue Code of 1986, as amended. The particular tax consequences of the offer
to you will depend upon a number of factors related to your individual tax
situation, including your tax basis in your units, whether you dispose of all of
your units in your partnership, and whether the "passive loss" rules apply to
your investments. Because the income tax consequences of an exchange of units
will not be the same for everyone, you should consult your tax advisor before
determining whether to tender your units pursuant to our offer.
CERTAIN TAX RISKS ASSOCIATED WITH AN INVESTMENT IN OP UNITS. There are
certain tax risks associated with the acquisition of, holding and disposing of
OP Units. Although your general partner (which is our affiliate) has no present
intention to liquidate or sell your partnership's property or prepay the current
mortgage on the property within any specified time period, any such action in
the future generally will require you to fully recognize any deferred taxable
gain if you exchange your units for OP Units. See "Federal Income Taxation of
the AIMCO Operating Partnership and Unitholders" in the accompanying Prospectus.
FUNDAMENTAL CHANGE IN NATURE AND TERM OF INVESTMENT. If you tender your
units for our OP Units, you will have changed fundamentally the nature of your
investment from an interest in a partnership that owns and manages a few
properties to an interest in a partnership that invests in and manages a large
portfolio of properties.
UNCERTAINTY OF PUBLIC TRADING MARKET. We cannot predict the price at which
our stock will trade in the future. Recently, there have been fluctuations in
the trading prices for many real estate investment trust ("REIT") equity
securities, including ours.
COMPANY AUTHORITY. If you tender your units for OP Units, you will have
less effective power in influencing our policies than you currently have in
influencing the policies of your partnership.
CERTAIN RISKS RELATED TO OUR SECURITIES. Investors in our partnership must
hold their units for one year, subject to certain exceptions. Thereafter holders
may transfer such partnership units under certain conditions. Holders of the
units in our partnership do not have the right to remove the general partner,
and therefore, they cannot effect a change of control of the AIMCO Operating
Partnership. On and after , 20 , we may reduce, within certain
limits, the rate of distributions required to be paid on the Preferred OP Units,
thus reducing the rate of return and possibly encouraging you to redeem such
units. On and after , 20 , we may redeem each share of Series I
Preferred Stock for $25, plus any accrued but unpaid dividends, possibly forcing
you to sell such shares to AIMCO or to sell in the open market at a possible
lower price per share than would have occurred without the redemption.
UNCERTAIN FUTURE DISTRIBUTIONS. Although our operating partnership makes
quarterly distributions based on its available cash, there can be no assurance
regarding the amounts of available cash that our operating partnership will
generate or the portion that we will choose to distribute.
LIMITATIONS ON CHANGE OF CONTROL. Our charter has restrictions on the
ownership of our equity securities in order to comply with certain REIT tax
requirements. The limited partners of the AIMCO Operating Partnership are unable
to remove the general partner of the AIMCO Operating Partnership or to vote in
the election of AIMCO's directors unless they own shares of AIMCO. As a result,
our limited partners and stockholders are limited in their ability to effect a
change of control of the AIMCO Operating Partnership and AIMCO.
POSSIBLE CONFLICTS OF INTEREST; TRANSACTIONS WITH AFFILIATES. We have been,
and continue to be, involved in various transactions with a number of our
affiliates, including executive officers, directors, and entities in which they
own interests. We have adopted certain policies designed to minimize or
eliminate the conflicts of interest inherent in these transactions, including a
requirement that a majority or our disinterested directors approve certain
transactions with affiliates. However, there can be no assurance that these
policies will be successful in eliminating the influence of such conflicts.
Furthermore, such policies are subject to change without the approval of our
stockholders.
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CONFLICTS OF INTEREST AND FIDUCIARY RESPONSIBILITY. Conflicts of interest
have arisen and could arise in the future as a result of the relationships
between the general partner of the AIMCO Operating Partnership and its
affiliates, on the one hand, and the AIMCO Operating Partnership or any partner
thereof, on the other. The directors and officers of the general partner of the
AIMCO Operating Partnership have fiduciary duties to AIMCO, as its sole
stockholder. At the same time, as general partner of the AIMCO Operating
Partnership, it has fiduciary duties to the AIMCO Operating Partnership's
partners.
LACK OF TRADING MARKET FOR OP UNITS. There is no public market for our OP
Units. In addition, the AIMCO Operating Partnership's agreement of limited
partnership restricts the transferability of OP Units. We have no plans to list
the OP Units on a securities exchange. It is unlikely that any person will make
a market in the OP Units, or that an active market for the OP Units will
develop.
LIMITED VOTING RIGHTS OF HOLDERS OF OP UNITS. The AIMCO Operating
Partnership is managed and operated by its general partner. Unlike the holders
of common stock in a corporation, holders of OP Units have only limited voting
rights on matters affecting the AIMCO Operating Partnership's business. Holders
of OP Units have no right to elect the general partner on an annual or other
continuing basis, and the general partner may not be removed by holders of OP
Units. As a result, holders of OP Units have limited influence on matters
affecting the operation of the AIMCO Operating Partnership and third parties may
find it difficult to attempt to gain control or influence the activities of our
operating partnership.
DILUTION OF INTERESTS OF HOLDERS OF OP UNITS. We may issue an unlimited
number of additional OP Units or other securities for such consideration and on
such terms as we may establish, without the approval of the holders of OP Units.
Such securities could have priority over the OP Units as to cash flow,
distributions and liquidation proceeds. The effect of any such issuance may be
to dilute the interests of holders of OP Units.
POSSIBLE INCREASE IN CONTROL BY AIMCO. As a result of the offer, we may
increase our ability to influence voting decisions with respect to your
partnership and, in fact, may be able to control any vote of the limited
partners. Also, removal of your general partner (which is our affiliate) or the
property manager of your partnership's property may become more difficult or
impossible without our consent or approval.
GENERAL RISKS OF ACQUISITION AND DEVELOPMENT ACTIVITIES. The selective
acquisition, development and expansion of apartment properties is one component
of our growth strategy. However, we can make no assurance as to our ability to
complete future acquisitions. Although we seek acquisitions and development
activities that are accretive on a per share basis, acquisitions and development
activities may fail to perform in accordance with our expectations.
WE MAY HAVE DIFFICULTY MANAGING OUR RAPID GROWTH. We have grown rapidly.
Since our initial public offering in July 1994, we have completed numerous
acquisition transactions, expanding our portfolio of owned and/or managed
properties from 132 properties with 29,343 units to 2,240 properties with
386,430 units. These acquisitions have included purchases of properties,
interests in entities that own or manage properties and corporate mergers. The
recent Insignia merger is our largest acquisition so far. We can provide no
assurance that we will be able to successfully integrate any acquired businesses
or properties.
LITIGATION ASSOCIATED WITH PARTNERSHIP ACQUISITIONS. We often acquire
interests in limited partnerships that own apartment properties. In some cases,
we have acquired the general partner of a partnership and then made an offer to
acquire the limited partners' interests in the partnership. In these
transactions, we are sometimes subject to litigation based on claims that the
general partner has breached its fiduciary duties to its limited partners or
that the transaction violates the relevant partnership agreement.
RISKS ASSOCIATED WITH DEBT FINANCING. Our organizational documents do not
limit the amount of debt that we may incur, and we have significant amounts of
debt outstanding. Payments of principal and interest may leave us with
insufficient cash resources to operate our properties or pay distributions
required to be paid in order to maintain our qualification as a REIT. If we fail
to make required payments of principal and interest on any debt, our lenders
could foreclose on the properties securing such debt with a consequent loss of
income and asset value to us.
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MOODY'S NEGATIVE OUTLOOK FOR AIMCO RATINGS. Recently, Moody's Investors
Service ("Moody's") revised its outlook for our ratings from stable to negative
to reflect its concerns surrounding our ability to successfully implement our
financial strategy while maintaining a prudent capital structure as a result of
more difficult general capital market conditions. Moody's noted that our access
to the public markets may prove challenging in light of the volatility in both
the equity and capital markets for REITs and assigned a "ba3" rating to a class
of Preferred Stock proposed to be issued by us. Moody's indicated that its
rating action reflects our increasing leveraged profile, including high levels
of secured debt and preferred stock, limited financial flexibility and
integration risks resulting from the merger with Insignia. Moody's also noted
our high level of encumbered properties and material investments in loans to
highly leveraged partnerships in which we own a general partnership interest. At
the same time, Moody's, Standard & Poor's and Duff & Phelps confirmed their
existing rating on our preferred stock and senior debt.
INCREASES IN INTEREST RATES MAY INCREASE OUR INTEREST EXPENSE. As of
September 30, 1998, approximately $182 million of our debt was subject to
variable interest rates. An increase in interest rates could increase our
interest expense and adversely affect our cash flow.
RISKS OF INTEREST RATE HEDGING ARRANGEMENTS. From time to time, in
anticipation of refinancing debt, we enter into agreements to reduce the risks
associated with increases in short-term interest rates. Although these
agreements provide us with some protection against rising interest rates, these
agreements also reduce the benefits to us when interest rates decline.
COVENANT RESTRICTIONS MAY LIMIT OUR ABILITY TO MAKE PAYMENTS TO OUR
INVESTORS. Some of our debt and other securities contain covenants that restrict
our ability to make distributions or other payments to our investors unless
certain financial tests or other criteria are satisfied. In some cases, our
subsidiaries are subject to similar provisions, which may restrict their ability
to make distributions to us.
WE DEPEND ON DISTRIBUTIONS AND OTHER PAYMENTS FROM OUR SUBSIDIARIES. Many
of our properties are owned by subsidiaries. As a result, we depend on
distributions and other payments from the subsidiaries in order to satisfy our
financial obligations and make payments to our investors. The ability of the
subsidiaries to make such distributions and other payments is dependent upon
their earnings and may be subject to statutory or contractual limitations.
REAL ESTATE INVESTMENT RISKS. Our ability to make payments to our investors
depends on our ability to generate funds from operations in excess of required
debt payments and capital expenditure requirements. Funds from operations and
the value of our properties may be adversely affected by events or conditions
which are beyond our control, including local conditions that might adversely
affect apartment occupancy or rental rates, increases in operating costs, and
changes in governmental regulations and the related costs of compliance.
POSSIBLE ENVIRONMENTAL LIABILITIES. Various Federal, state and local laws
subject property owners or operators to liability for the costs of removal or
remediation of certain hazardous substances released on a property. The presence
of, or the failure to properly remediate, hazardous substances may adversely
affect occupancy at contaminated apartment communities and our ability to sell
or borrow against contaminated properties.
LAWS BENEFITTING DISABLED PERSONS MAY RESULT IN UNANTICIPATED
EXPENSES. Under the Americans with Disabilities Act of 1990, all places of
public accommodation are required to meet certain Federal requirements related
to access and use by disabled persons. Although we believe that our properties
are substantially in compliance with present requirements, we may incur
unanticipated expenses to comply with them.
RISKS RELATING TO REGULATION OF AFFORDABLE HOUSING. We own interests in or
manage many properties that benefit from governmental programs intended to
provide housing to people with low or moderate incomes. As a condition to the
receipt of assistance under these programs, the properties must comply with
various requirements, which typically limit rents to pre-approved amounts. If
permitted rents on a property are insufficient to cover costs, a sale of the
property may become necessary, which could result in a loss of management fee
revenue.
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THE LOSS OF PROPERTY MANAGEMENT CONTRACTS WOULD REDUCE OUR REVENUES. We
manage some properties owned by third parties. We may suffer a loss of revenue
if we lose our right to manage these properties or if the rental revenues upon
which our management fees are based decline.
DEPENDENCE ON CERTAIN EXECUTIVE OFFICERS. Although we have entered into
employment agreements with our Chairman of the Board and Chief Executive
Officer, our President and one of our Executive Vice Presidents, the loss of any
of their services could have an adverse effect on our operations.
ADVERSE CONSEQUENCES OF FAILURE TO QUALIFY AS A REIT. If we fail to qualify
as a REIT, we would not be allowed a deduction for distributions to stockholders
in computing our taxable income and we would be subject to Federal income tax at
regular corporate rates. In addition, unless we are entitled to relief under the
tax law, we could not elect to be taxed as a REIT for four years following the
year during which we were disqualified. Therefore, if we lose our REIT status,
the funds available for payment to our investors would be reduced substantially
for each of the years involved.
EFFECT OF REIT DISTRIBUTION REQUIREMENTS. As a REIT, we are subject to
annual distribution requirements, which limit the amount of cash we have
available for other business purposes, including amounts to fund our growth.
POSSIBLE LEGISLATIVE OR OTHER ACTIONS AFFECTING REITS. 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. Changes
to the Federal laws and interpretations thereof could adversely affect our
investors.
POSSIBLE ADVERSE CONSEQUENCES OF LIMITS ON OWNERSHIP OF SHARES. Our charter
limits ownership of our common stock by any single shareholder to 8.7% of the
outstanding shares (or 15% in the case of certain pension trusts, registered
investment companies and Mr. Considine). Our charter also prohibits anyone from
buying shares if the purchase would result in us losing our REIT status. If you
or anyone else acquires shares in excess of the ownership limit or in violation
of the ownership requirements of the Internal Revenue Code for REITs, the
transfer will be considered null and void.
OUR CHARTER AND MARYLAND LAW MAY LIMIT THE ABILITY OF A THIRD PARTY TO
ACQUIRE CONTROL OF AIMCO. The 8.7% ownership limit discussed above may have the
effect of precluding acquisition of control of us by a third party without the
consent of our board of directors. Under our charter, our board of directors has
the authority to classify and reclassify any of our unissued shares of capital
stock into shares of preferred stock with such preferences, rights, powers and
restrictions as our board of directors may determine. The authorization and
issuance of preferred stock could have the effect of delaying or preventing
someone from taking control of us, even if a change in control were in our
stockholders' best interests. As a Maryland corporation, we are subject to
various Maryland laws which may have the effect of discouraging offers to
acquire us and of increasing the difficulty of consummating any such offers,
even if our acquisition would be in our stockholders' best interests.
POSSIBLE REDUCTION OF AVAILABLE INFORMATION ABOUT YOUR PARTNERSHIP. If
there are less than 300 unitholders in your partnership upon consummation of the
offer, your partnership could cease filing periodic reports with the SEC, such
as yearly reports, including annual audited financial statements, and quarterly
reports containing unaudited quarterly financial statements, on Form 10-KSB and
Form 10-QSB. Such reports are publicly available and can be obtained on the
SEC's web site. The lack of such filings could affect the already limited
secondary market which currently exists for units in your partnership and may
result in others not tendering for such units. In such a case, you would
regularly have access only to the limited information your partnership's
agreement of limited partnership requires your general partner (which is our
affiliate) to provide each year, which information consists primarily of tax
information.
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BACKGROUND AND REASONS FOR THE OFFER
Background of the Offer
We are in the business of acquiring direct and indirect interests in
apartment properties such as the property owned by your partnership. Our offer
provides us with an opportunity to increase our ownership interest in your
partnership's property while providing you and other investors with an
opportunity to liquidate your current investment and to invest in our OP Units
or receive cash, or to retain your units.
On October 1, 1998, we merged with Insignia Financial Group, Inc. In doing
so, we acquired a majority ownership interest in the general partner of your
partnership and the company that manages the property owned by your partnership.
Through our subsidiaries, we currently own, in the aggregate, approximately a
40.08% interest in your partnership.
One of the consequences of the merger with Insignia is to allow us to make
the exchange offer and, if successful, to increase our ownership in your
partnership.
We contacted Robert A. Stanger & Co., Inc. in August 1998 to discuss the
possibility of Stanger providing an independent fairness opinion for our offer
consideration. We chose Stanger based on Stanger's expertise and strong
reputation in this area of work. On October 20, 1998, we entered into an
agreement with Stanger to provide such a fairness opinion for your partnership
and other partnerships.
Alternatives Considered
The following is a brief discussion of the benefits and disadvantages of
alternatives to our offer that could have been pursued by your general partner
(which is our affiliate):
Liquidation. One alternative to our offer would be for your partnership
to sell its assets, distribute the net liquidation proceeds to its partners
in accordance with your partnership's agreement of limited partnership, and
then dissolve. Partners would be at liberty to use the net liquidation
proceeds after taxes for investment, business, personal or other purposes,
at their option. If your partnership were to sell its assets and liquidate,
you and your partners would not need to rely upon capitalization of income
or other valuation methods to estimate the fair market value of your
partnership's assets. Instead, such assets would be valued through
negotiations with prospective purchasers. However, a liquidating sale of
your partnership's property would be a taxable event for you and your
partners and could result in significant amounts of taxable income to you
and your partners. Another option for liquidation of your investment would
be to sell your units in a private transaction. Any such sale could be at a
very substantial discount from your pro rata share of the fair market value
of your partnership's property and might involve significant expense and
delay.
Continuation of Your Partnership Without the Offer. A second alternative
would be for your partnership to continue its business without our offer. A
number of advantages could result from the continued operation of your
partnership. Given improving rental market conditions, the level of
distributions might increase over time. We believe it is possible that the
private resale market for apartment and retail properties could improve
over time, making a sale of your partnership's property in a private
transaction at some point in the future a more viable option than it is
currently. However, there are several risks and disadvantages that result
from continuing the operations of your partnership without the offer. Your
partnership faces maturity or balloon payment dates on its mortgage loans
and must either obtain refinancing or sell its property. If your
partnership were to continue operating as presently structured, it could be
forced to borrow on terms that could result in net losses from operations.
In addition, continuation of your partnership without the offer would deny
you and your partners the benefits that your general partner (which is our
affiliate) expects to result from the offer. For example, a partner of your
partnership would have no opportunity for liquidity unless he were to sell
his units in a private transaction. Any such sale would likely be at a very
substantial discount from the partner's pro rata share of the fair market
value of your partnership's property.
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Expected Benefits of the Offer
We are in the business of acquiring direct and indirect interests in
apartment properties such as the property owned by your partnership. The offer
provides us with an opportunity to increase our ownership interest in your
partnership's property while providing you and other investors with an
opportunity to retain or liquidate your investment in your partnership for cash
or for units in the AIMCO Operating Partnership.
There are four principal advantages of exchanging your units for Preferred
OP Units:
- Enhanced Liquidity. While holders of the Preferred OP Units must hold
such units for one year, subject to certain exceptions, after a one-year
holding period, you may choose to redeem your Preferred OP Units and
receive, at our option, shares of AIMCO's Class I Preferred Stock, shares
of AIMCO's Class A Common Stock or cash. AIMCO's Class A Common Stock is,
and AIMCO's Class I Preferred Stock is expected to be, listed and traded
on the NYSE.
- Tax Deferral. You will generally not recognize any immediate taxable gain
if you exchange your units solely for Preferred OP Units.
- Preferred Quarterly Distributions. Your partnership paid distributions of
$16.07 for the nine months ended July 31, 1998. We will pay fixed
quarterly distributions of $0.50 per unit (equivalent to $2.00 on an
annualized basis) on the Preferred OP Units before any distributions are
paid to holders of Common OP Units. This is equivalent to a distribution
of $40.40 per year on the number of Preferred OP Units you will receive
in exchange for each of your partnership units. However, one class of
outstanding Partnership Preferred Units has prior distribution rights and
the Preferred OP Units rank equal to seven other outstanding classes of
Partnership Preferred Units.
- Diversification. We have a substantially larger and more diverse
portfolio of apartment properties than your partnership.
There are five principal advantages of exchanging your units for Common OP
Units:
- Enhanced Liquidity. While the holders of the Common Units OP Units must
hold such units for one year, subject to certain exceptions, after a
one-year holding period, you may choose to redeem your Common OP Units
and receive, at our option, shares of AIMCO's Class A Common Stock (on a
one-for-one basis, subject to adjustment in certain circumstances) or an
equivalent amount of cash. AIMCO's Class A Common Stock is listed and
traded on the NYSE.
- Tax Deferral. You will generally not recognize any immediate taxable gain
if you exchange your units solely for Tax-Deferral Common OP Units.
- Quarterly Distributions. Your partnership paid distributions of $16.07
for the nine months ended July 31, 1998. We pay quarterly distributions
on the Common OP Units. For the quarter ended September 30, 1998, we paid
distributions of $0.5625 on each of the Common OP Units (equivalent to
$2.25 on an annual basis). This is equivalent to a distribution of $
per year on the number of Common OP Units you will receive in exchange
for each of your partnership units.
- Growth Potential. Our assets, organizational structure and access to
capital enables us to pursue acquisition and development opportunities
that are not available to your partnership. You would have the
opportunity to participate in the growth of our enterprise and would
benefit from any future increase in the AIMCO stock price and from any
future increase in distributions on the Common OP Units.
- Diversification. We have a substantially larger and more diverse
portfolio of apartment properties than your partnership.
The principal advantage if you tender your units for cash is immediate
liquidity. However, tendering your units for cash may cause you to recognize
taxable gain for Federal income tax purposes.
For a description of certain risks of the offer, see "Risk Factors."
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TERMS OF THE OFFER
General. We are offering to acquire all of the outstanding 49,995 units of
your partnership, which we do not directly or indirectly own, for consideration
per unit of 20.20 Preferred OP Units, Common OP Units, or $505.00 in
cash. If you tender units pursuant to the offer, you may chose to receive any
combination of such forms of consideration for your units. The offer is made
upon the terms and subject to the conditions set forth in this Prospectus
Supplement, the accompanying Prospectus and the accompanying Letter of
Transmittal, including the instructions thereto, as the same may be supplemented
or amended from time to time (the "Letter of Transmittal"). To be eligible to
receive Preferred OP Units, Common OP Units or cash pursuant to the offer, you
must validly tender and not withdraw your units on or prior to the Expiration
Date. For administrative purposes, the transfer of units tendered pursuant to
the offer will be deemed to take effect as of , 1999.
Expiration Date. Our offer will expire at 5:00 P.M., Denver, Colorado time,
on , 1999, unless extended.
Conditions of the Offer. Our offer is not conditioned on the tender of any
minimum number of units. However, our offer is conditioned on a number of other
factors.
Procedures for Tendering. If you desire to accept our offer, you must
complete and sign the Letter of Transmittal in accordance with the instructions
contained therein and forward or hand deliver it, together with any other
required documents, to the Information Agent (as defined below), either with
your units to be tendered or in compliance with the specified procedures for
guaranteed delivery of units. If you have units registered in the name of a
broker, dealer, commercial bank, trust company, custodian or nominee and you
wish to tender any units pursuant to the offer, you are urged to contact such
person promptly.
Withdrawal Rights. You may withdraw your tender of units pursuant to the
offer at any time prior to the expiration date of our offer, and unless already
accepted for payment as provided for herein, you may withdraw your tender of
units, pursuant to the offer on and after , 1999.
Purpose of the Offer. The purpose of our offer is to provide us with an
opportunity to increase our investment in apartment properties, and provide you
and your partners with an opportunity to liquidate your current investment and
to invest in our operating partnership or receive cash, or to retain your units.
Fractional OP Units. We will issue fractional Common OP Units or Preferred
OP Units, if necessary.
Delivery of OP Units and Cash. We will deliver OP Units and cash as soon as
practicable after acceptance of units for purchase.
Information Agent. River Oaks Partnership Services, Inc. is serving as
Information Agent in connection with the offer (the "Information Agent"). Its
telephone number is (888) 349-2005 or (201) 896-1900. Its fax number is (201)
460-2881.
Extension; Termination; Amendment. We expressly reserve the right, in our
sole discretion, at any time and from time to time, to:
- extend the period of time during which the offer is open and thereby
delay acceptance of, and payment for, any tendered units;
- terminate the offer and not accept for payment any units not theretofore
accepted for payment or paid for;
- upon the failure to satisfy any of the conditions to the offer, delay the
acceptance of, or payment for, any units not already accepted for payment
or paid for; and
- amend the offer in any respect (subject to applicable rules regarding
tender offers), including the nature and form of consideration.
Effects of the Offer. As a result of the offer, we, in our capacity as a
limited partner of your partnership, will participate in any subsequent
distributions to limited partners, to the extent of units we purchase pursuant
S-12
<PAGE> 18
to the offer. The offer will not affect the operation of your partnership's
property because your general partner (which is our affiliate) and the property
manager of your partnership's property will remain unchanged.
Voting by the AIMCO Operating Partnership. If we acquire a substantial
amount of units pursuant to the offer, we may be in a position to influence or
control voting decisions with respect to your partnership.
Future Plans for Your Partnership. We currently intend that, upon
consummation of the offer, your partnership will continue its business and
operations substantially as they are currently being conducted. We do not have
any present plans or proposals which relate to or would result in any material
changes in your partnership's structure or business. We have no present
intention to cause your partnership to sell its property or to prepay the
current mortgage within any specified time period.
Certain Legal Matters. Except as set forth in this section, we are not,
based on information provided by your general partner (which is our affiliate),
aware of any licenses or regulatory permits that would be material to the
business of your partnership, and that might be adversely affected by our
acquisition of units as contemplated herein. On the same basis, we are not aware
of any filings, approvals or other actions by or with any domestic or foreign
governmental authority or administrative or regulatory agency that would be
required prior to our acquisition of units pursuant to the offer as contemplated
herein that have not been made or obtained. We are not aware of any jurisdiction
in which the making of the offer is not in compliance with applicable law. If we
become aware of any jurisdiction in which the making of the offer would not be
in compliance with applicable law, we will make a good faith effort to comply
with any such law.
Fees and Expenses. We will not pay any fees or commissions to any broker,
dealer or other person for soliciting tenders of units pursuant to the offer. We
will pay the Information Agent reasonable and customary compensation for its
services in connection with the offer, plus reimbursement for out-of-pocket
expenses. We will indemnify the Information Agent against certain liabilities
and expenses in connection therewith, including liabilities under the Federal
securities laws. We will pay all costs and expenses of printing and mailing this
Prospectus Supplement and the accompanying Prospectus and the legal fees and
expenses in connection therewith. We will also pay the fees of Stanger for
providing the fairness opinions for the offer. We estimate that our total costs
and expenses in making the offer (excluding the purchase price of the units
payable to you and your partners) will be approximately $50,000.
Accounting Treatment. Upon consummation of the offer, we will account for
our investment in any acquired units under the purchase method of accounting.
There will be no effect on the accounting treatment of your partnership as a
result of the offer.
No Dissenters' Rights. You are not entitled to dissenters' (appraisal)
rights in connection with the offer.
Other Offers. The AIMCO Operating Partnership is also making similar
exchange offers to approximately other limited partnerships in which it
owns a majority interest and controls the general partner, substantially all of
which were acquired in the merger on October 1, 1998 with Insignia Financial
Group, Inc. Each of such exchange offers are being made by a separate prospectus
supplement similar to this Prospectus Supplement. The effects of the exchange
offers may be different for limited partners in each partnership. In general, we
do not believe any of the risk factors (except for certain tax-related risk
factors) described herein for the offer will differ substantially from the other
offers.
Previously, affiliates of Insignia Financial Group, Inc. made cash tender
offers to limited partners of certain of the partnerships which are subject to
the exchange offers and which are public partnerships. For such cash tender
offers outstanding on the date Insignia Financial Group, Inc. merged into AIMCO,
we extended such cash offers to inform the limited partners of our acquisition
of control and all such cash tender offers expired on December , 1998. For
information regarding the prior cash tender offers made to you and the other
limited partners of your partnership, see "Background and Reasons for the
Offer -- Previous Tender Offers."
S-13
<PAGE> 19
CERTAIN FEDERAL INCOME TAX MATTERS
You will generally not recognize any immediate taxable gain or loss for
Federal income tax purposes if you exchange your units solely for Preferred OP
Units or Common OP Units. You will recognize a gain or loss for Federal income
tax purposes on units you sell for cash. The exchange of your units for cash and
OP Units will be treated, for Federal income tax purposes, as a partial sale of
such units for cash and as a partial tax-free contribution of such units to our
operating partnership.
THIS SUMMARY IS A GENERAL DISCUSSION OF CERTAIN OF THE ANTICIPATED FEDERAL
INCOME TAX CONSEQUENCES OF TENDERING UNITS IN THE OFFER. THIS SUMMARY DOES NOT
DISCUSS ALL ASPECTS OF FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO YOU IN
LIGHT OF YOUR SPECIFIC CIRCUMSTANCES OR IF YOU ARE SUBJECT TO SPECIAL TREATMENT
UNDER THE FEDERAL INCOME TAX LAWS. THE PARTICULAR TAX CONSEQUENCES OF THE OFFER
TO YOU WILL DEPEND ON A NUMBER OF FACTORS RELATED TO YOUR TAX SITUATION. YOU
SHOULD REVIEW "CERTAIN FEDERAL INCOME TAX MATTERS" IN THIS PROSPECTUS SUPPLEMENT
AND "FEDERAL INCOME TAXATION OF AIMCO AND AIMCO STOCKHOLDERS," "FEDERAL INCOME
TAXATION OF THE AIMCO OPERATING PARTNERSHIP AND OP UNITHOLDERS" AND "OTHER TAX
CONSEQUENCES" IN THE ACCOMPANYING PROSPECTUS AND CONSULT YOUR TAX ADVISORS FOR A
FULL UNDERSTANDING OF THE TAX CONSEQUENCES TO YOU OF THE OFFER.
VALUATION OF UNITS
We determined the offer consideration by estimating the value of each
property owned by your partnership using the direct capitalization method. This
method involves applying a capitalization rate to the property's annual net
operating income. We determined appropriate capitalization rates using our best
judgment, but our valuation is just an estimate. In estimating the
capitalization rate, we considered the property's physical condition, location
and above-market mortgage interest rates. In addition, we considered the recent
decline in the real estate markets, and the decline in the availability of
commercial mortgage financing and the recent bankruptcy of a major provider of
subordinated mortgage financing. Although the direct capitalization method is a
widely-accepted way of valuing real estate, there are a number of other methods
available to value real estate, each of which may result in different valuations
of a property. The proceeds that you would receive if you sold your units to
someone else or if your partnership were actually liquidated might be higher or
lower than our offer consideration. We determined our offer consideration as
follows:
<TABLE>
<S> <C>
Estimated total gross valuation of your partnership's
properties(1)............................................. $51,991,000
Plus: Cash and cash equivalents............................. 1,220,727
Plus: Other partnership assets, net of security deposits.... 2,537,082
Less: Mortgage debt, including accrued interest............. 24,009,642
Less: Notes payable, including accrued interest............. 163,762
Less: Other liabilities..................................... 933,910
Partnership valuation before taxes and certain costs........ 30,641,495
Less: Extraordinary capital expenditures for deferred
maintenance............................................... 4,433,556
Less: Closing costs......................................... 942,737
Estimated net valuation of your partnership................. 25,265,202
Percentage of estimated net valuation allocated to units.... 100%
Estimated net valuation of units............................ 25,265,202
Total number of units............................. 49,995
Estimated valuation per unit................................ 505.00
-----------
Cash consideration per unit................................. 505.00
-----------
</TABLE>
- ---------------
(1) See "Valuation of Units" for a determination of the estimated gross
valuation for each property.
S-14
<PAGE> 20
In order to determine the number of Preferred OP Units we are offering for
each of your units, we divided the cash offer consideration by the $25
liquidation preference of each Preferred OP Unit to get 20.20 per unit.
In order to determine the number of Common OP Units we are offering for
each of your units, we divided the cash offer consideration by $ to get
per unit. This price represents the average closing price of AIMCO's Class
A Common Stock on the NYSE for the 20 trading days prior to ,
1998.
FAIRNESS OF THE OFFER
Fairness to Unitholders. We have a majority ownership interest in your
general partner (which is our affiliate). As a result, your general partner has
a conflict of interest and makes no recommendation to you as to whether you
should tender or refrain from tendering your units. Your general partner did not
participate in the structuring of the offer. We and your general partner believe
that the offer is fair to you and the other limited partners of your
partnership. We have retained Stanger to conduct an analysis of the offer and to
render an opinion as to the fairness to you of our offer consideration. Stanger
is not affiliated with us or your general partner. Stanger is one of the leaders
in the field of analyzing and evaluating complex real estate transactions.
However, we provided much of the information used by Stanger in forming its
fairness opinion. We believe the information provided to Stanger is accurate in
all material respects. You should make your decision whether to tender based
upon a number of factors, including your financial needs, other financial
opportunities available to you and your tax position.
The terms of our offer have been established by us and are not the result
of arms-length negotiations.
If you choose not to tender any units, your interest in your partnership
will remain unchanged, except that we may own a larger share of the limited
partnership interests in your partnership than we did before the offer. If we
acquire a substantial number of units pursuant to the offer, we may be in a
position to influence voting decisions with respect to your partnership. Your
general partner (which is our affiliate) has no present intention to liquidate,
sell, finance or refinance your partnership's property within any specified time
period.
Comparison of Offer Price to Other Values. In evaluating the offer, your
general partner (which is our affiliate) has compared our cash offer
consideration to:
- prices at which the units have been sold in the illiquid secondary
market, where information concerning such transactions is known to the
general partner; and
- your general partner's estimate of the net proceeds that would be
distributed to you and your partners if your partnership was liquidated.
The results of these comparative analyses are summarized as follows:
COMPARISON TABLE
<TABLE>
<S> <C>
Cash offer consideration.................................... $505.00
Alternatives:
Prices on secondary market................................ $175.00 to $500.00
Estimated liquidation proceeds............................ $505.00
</TABLE>
STANGER ANALYSIS
We engaged Stanger to conduct an analysis of our offer and to render its
opinion based on the review, analysis, scope and limitations described therein,
as to the fairness to you of our offer consideration from a financial point of
view. The full text of the opinion, which contains a description of the
assumptions and qualifications made, matters considered and limitations on the
review and analysis, is set forth in Appendix A and should be read in its
entirety. We imposed no conditions or limitations on the scope of Stanger's
investigation or with respect to the methods and procedures to be followed in
arriving at the fairness opinion. We have agreed to indemnify Stanger against
certain liabilities arising out of its engagement to render the fairness
opinion. Based on its analysis, and subject to the assumptions, limitations and
qualifications cited in its
S-15
<PAGE> 21
opinion, Stanger concluded that our offer consideration is fair to you from a
financial point of view. Stanger has rendered similar fairness opinions with
regard to the other tender offers being made by the AIMCO Operating Partnership.
Stanger rendered the opinions only as to the individual fairness of the offer
consideration in each proposed exchange offer.
COMPARISON OF YOUR PARTNERSHIP AND THE AIMCO OPERATING PARTNERSHIP
There are a number of significant differences between your partnership and
the AIMCO Operating Partnership relating to, among other things, form of
organization, permitted investments, policies and restrictions, management
structure, compensation and fees, and investor rights. For example, your general
partner (which is our affiliate) may be removed by the limited partners while
the limited partners of the AIMCO Operating Partnership cannot remove the
general partner. Also, your partnership is limited as to the number of limited
partner interests it may issue while the AIMCO Operating Partnership has no such
limitation.
COMPARISON OF YOUR UNITS AND AIMCO OP UNITS
There are a number of significant differences between your units, Preferred
OP Units and Common OP Units relating to, among other things, the nature of the
investment, voting rights, distributions and liquidity and
transferability/redemption. For example, unlike the AIMCO OP Units, you have no
redemption rights with respect to your units.
As of November 30, 1998, the AIMCO Operating Partnership has approximately
9,648,794 Common OP Units outstanding and no Preferred OP Units outstanding. If
you elect to receive OP Units, you will receive a relatively insignificant
number of OP Units in the AIMCO Operating Partnership. In the offer you could
elect to receive $505.00 in cash, Common OP Units or 20.20 Preferred OP
Units. Both your units and the OP Units are subject to transfer restrictions and
it is unlikely that a real trading market will ever develop for any of such
securities. If and when you may seek to redeem OP Units for AIMCO Class A Common
Stock or Class I Preferred Stock of AIMCO, no assurances can be given that such
shares of AIMCO will be trading at a price equal to or in excess of $ .
CONFLICTS OF INTEREST
Conflicts of Interest with Respect to the Offer. Your general partner is
affiliated with us and, therefore, has substantial conflicts of interest with
respect to the offer, including (i) the fact that replacement of your general
partner could result in a decrease or elimination of the management fees paid to
an affiliate for managing your partnership's property and (ii) our desire to
purchase units at a low price and your desire to sell units at a high price.
Your general partner makes no recommendation as to whether you should tender or
refrain from tendering your units.
Conflicts of Interest that Currently Exist for Your Partnership. We own a
majority of both the general partner of your partnership and the manager of your
partnership's property. The general partner does not receive an annual
management fee but may receive reimbursements for expenses incurred in its
capacity as general partner. The general partner of your partnership received
total fees and reimbursements of $158,000 for the nine months ended July 31,
1998. The property manager received management fees of $430,000 for the nine
months ended July 31, 1998. We have no current intention of changing the fee
structure for your general partner or for your property manager.
Competition Among Properties. Your partnership's properties and other
properties owned or managed by us may compete with one another for tenants.
However, in some cases it may be difficult to determine precisely the confines
of the market area for particular properties and some competition may exist.
Furthermore, you should bear in mind that we anticipate acquiring properties in
general market areas where your partnership's property is located. It is
believed that this concentration of properties in a general market area will
facilitate overall operations through collective advertising efforts, staffing
and other operational efficiencies. In managing our properties, we will attempt
to reduce such conflicts between competing
S-16
<PAGE> 22
properties by referring prospective tenants to the property considered to be
most conveniently located for the tenants' needs.
Features Discouraging Potential Takeovers. Certain provisions of our
governing documents, as well as statutory provisions under certain state laws,
could be used by our management to delay, discourage or thwart efforts of third
parties to acquire control of us, or a significant equity interest in us.
Future Exchange Offers. Although we have no current plans to conduct
further exchange offers for your units, our plans may change based on future
circumstances. Any such future offers that we might make could be for
consideration that is more or less than the consideration we are currently
offering. If the results of operations were to improve for your partnership
under our management, we might be required to pay a higher price for any future
exchange offers we may make for units of your partnership.
YOUR PARTNERSHIP
Shelter Properties IV was organized on August 21, 1981, under the laws of
the State of South Carolina. Its primary business is real estate ownership and
related operations. Your partnership was formed for the purpose of making
investments in various types of real properties which offer potential capital
appreciation and cash distributions to its limited partners. Your partnership's
investment portfolio currently consists of the following three residential
apartment complexes: Baymeadows Apartments, a 904-unit complex in Jacksonville,
Florida; Quail Run Apartments, a 332-unit complex in Columbia, South Carolina;
and Countrywood Village Apartments, a 384-unit complex in Raleigh, North
Carolina. The general partner of your partnership is Shelter Realty IV
Corporation, which is a majority-owned subsidiary of AIMCO. A majority-owned
subsidiary of AIMCO serves as a manager of the properties owned by your
partnership. As of September 15, 1998, there were 49,995 units of limited
partnership interest issued and outstanding, which were held of record by 3,676
limited partners. Your partnership's principal executive offices are located at
1873 South Bellaire Street, 17th Floor, Denver, Colorado 80222, and its
telephone number at that address is (303) 757-8101. For additional information
about your partnership, please refer to the annual and quarterly reports
prepared by your partnership which accompany this Prospectus Supplement.
Your partnership sold $40,000,000 of limited partnership units in 1982 for
$1,000.00 per unit. Between November 1, 1992 and July 31, 1998 your partnership
made a total of $53.80 of distributions per unit. At the time of the initial
offering it was contemplated in the prospectus that the properties to be
purchased by the partnership would be sold within three to eight years. We do
not know why the partnership did not sell all of its properties within such
holding period. Your partnership currently owns three apartment properties.
Property Management. Since December 1990, your partnership's property has
been managed by an affiliate of ours. Pursuant to the management agreement
between the property manager and your partnership, the property manager operates
your partnership's property, establishes rental policies and rates and directs
marketing activities. The property manager also is responsible for maintenance,
the purchase of equipment and supplies, and the selection and engagement of all
vendors, suppliers and independent contractors. The property manager is an
affiliate of your general partner and us.
Investment Objectives and Policies; Sale or Financing of Investments. The
principal investment objectives of your partnership are to preserve invested
capital, to maximize the potential for appreciation in property values and to
provide for partially tax sheltered cash distributions. Under your partnership
agreement, your partnership is permitted to raise new capital and reinvest cash
in new properties. Your partnership will terminate on December 31, 2022, unless
earlier dissolved. Your general partner has no present intention to liquidate,
sell, finance or refinance your partnership property within any specified time
period. An investment in your partnership is a finite life investment in which
partners receive regular cash distributions out of your partnership's
distributable cash flow, if any, and upon liquidation.
S-17
<PAGE> 23
SOURCE AND AMOUNT OF FUNDS AND TRANSACTIONAL EXPENSES
We expect that approximately $15,300,000 will be required to purchase all
of the units sought in our offer, if such units are tendered for cash. We will
obtain all such funds from cash from operations, equity issuances and short term
borrowings.
S-18
<PAGE> 24
SUMMARY FINANCIAL INFORMATION OF AIMCO PROPERTIES, L.P.
The historical summary financial data for AIMCO Properties, L.P. for the
nine months ended September 30, 1998 and 1997 is unaudited. The historical
summary financial data for AIMCO Properties, L.P. for the years ended December
31, 1997, 1996 and 1995 and for the AIMCO Properties, L.P. Predecessors for the
period January 10, 1994 through July 28, 1994, and the year ended December 31,
1993, is based on audited financial statements. This information should be read
in conjunction with such financial statements, including the notes thereto, and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in AIMCO Properties, L.P.'s Registration Statement on Form
10, as amended, which is incorporated by reference herein. All dollar values are
in thousands, except per unit data.
<TABLE>
<CAPTION>
AIMCO PROPERTIES, L.P.
-------------------------------------------------------------------------
FOR THE
PERIOD
JULY 29,
FOR THE NINE MONTHS FOR THE YEAR ENDED 1994
ENDED SEPTEMBER 30, DECEMBER 31, THROUGH
----------------------- -------------------------------- DECEMBER 31,
1998 1997 1997 1996 1995 1994
---------- ---------- ---------- -------- -------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
RENTAL PROPERTY OPERATIONS:
Rental and other income............... $ 265,700 $ 127,083 $ 193,006 $100,516 $ 74,947 $ 24,894
Property operating expenses........... (101,600) (50,737) (76,168) (38,400) (30,150) (10,330)
Owned property management expenses.... (7,746) (4,344) (6,620) (2,746) (2,276) (711)
Depreciation.......................... (59,792) (23,848) (37,741) (19,556) (15,038) (4,727)
---------- ---------- ---------- -------- -------- ---------
96,562 48,154 72,477 39,814 27,483 9,126
---------- ---------- ---------- -------- -------- ---------
SERVICE COMPANY BUSINESS:
Management fees and other income...... 13,968 9,173 13,937 8,367 8,132 3,217
Management and other expenses......... (8,101) (5,029) (9,910) (5,352) (4,953) (2,047)
Corporate overhead allocation......... (196) (441) (588) (590) (581) --
Other assets, depreciation and
amortization........................ (3) (236) (453) (218) (168) (150)
Owner and seller bonuses.............. -- -- -- -- -- --
Amortization of management company
goodwill............................ -- -- (948) (500) (428) --
---------- ---------- ---------- -------- -------- ---------
5,668 3,467 2,038 1,707 2,002 1,020
Minority interests in service company
business............................ -- 48 (10) 10 (29) (14)
---------- ---------- ---------- -------- -------- ---------
Company's shares of income from
service company business............ 5,668 3,515 2,028 1,717 1,973 1,006
---------- ---------- ---------- -------- -------- ---------
General and administrative expenses... (7,444) (1,408) (5,396) (1,512) (1,804) (977)
Interest income....................... 18,244 4,458 8,676 523 658 123
Interest expense...................... (56,756) (33,359) (51,385) (24,802) (13,322) (1,576)
Minority interest in other
partnerships........................ (1,052) (777) 1,008 (111) -- --
Equity in losses of unconsolidated
partnerships(c)..................... (5,078) (463) (1,798) -- -- --
Equity in earnings of unconsolidated
subsidiaries(d)..................... 8,413 456 4,636 -- -- --
Amortization of goodwill.............. (5,071) (711) -- -- -- --
---------- ---------- ---------- -------- -------- ---------
Income from operations................ 53,486 19,865 30,246 15,629 14,988 7,702
Gain on disposition of properties..... 2,783 (169) 2,720 44 -- --
Provision for income taxes............ -- -- -- -- -- --
---------- ---------- ---------- -------- -------- ---------
Income (loss) before extraordinary
item................................ 56,269 19,696 32,966 15,673 14,988 7,702
Extraordinary item -- early
extinguishment of debt.............. -- (269) (269) -- -- --
---------- ---------- ---------- -------- -------- ---------
Net income (loss)..................... $ 56,269 $ 19,427 $ 32,697 $ 15,673 $ 14,988 $ 7,702
========== ========== ========== ======== ======== =========
OTHER INFORMATION:
Total owned properties (end of
period)............................. 241 109 147 94 56 48
Total owned apartment units (end of
period)............................. 62,955 28,773 40,039 23,764 14,453 12,513
Units under management (end of
period)............................. 154,729 71,038 69,587 19,045 19,594 20,758
Basic earnings per Common OP Unit..... $ 0.80 $ 0.53 $ 1.09 $ 1.05 $ 0.86 $ 0.42
Diluted earnings per Common OP Unit... $ 0.79 $ 0.53 $ 1.08 $ 1.04 $ 0.86 $ 0.42
Distributions paid per Common OP
Unit................................ $ 1.6875 $ 1.3875 $ 1.85 $ 1.70 $ 1.66 $ 0.29
Cash flows provided by operating
activities.......................... 50,825 53,435 73,032 38,806 25,911 16,825
Cash flows used in investing
activities............................ (185,453) (314,814) (717,663) (88,144) (60,821) (186,481)
Cash flows provided by (used in)
financing activities.................. 141,221 293,984 668,549 60,129 30,145 176,800
<CAPTION>
AIMCO PROPERTIES, L.P.'S
PREDECESSORS(a)
--------------------------
FOR THE
PERIOD
JANUARY 10,
1994 FOR THE YEAR
THROUGH ENDED
JULY 28, DECEMBER 31,
1994(b) 1993
----------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
<S> <C> <C>
OPERATING DATA:
RENTAL PROPERTY OPERATIONS:
Rental and other income............... $ 5,805 $ 8,056
Property operating expenses........... (2,263) (3,200)
Owned property management expenses.... -- --
Depreciation.......................... (1,151) (1,702)
------- --------
2,391 3,154
------- --------
SERVICE COMPANY BUSINESS:
Management fees and other income...... 6,533 8,069
Management and other expenses......... (5,823) (6,414)
Corporate overhead allocation......... -- --
Other assets, depreciation and
amortization........................ (146) (204)
Owner and seller bonuses.............. (204) (468)
Amortization of management company
goodwill............................ -- --
------- --------
360 983
Minority interests in service company
business............................ -- --
------- --------
Company's shares of income from
service company business............ 360 983
------- --------
General and administrative expenses... -- --
Interest income....................... -- --
Interest expense...................... (4,214) (3,510)
Minority interest in other
partnerships........................ -- --
Equity in losses of unconsolidated
partnerships(c)..................... -- --
Equity in earnings of unconsolidated
subsidiaries(d)..................... -- --
Amortization of goodwill.............. -- --
------- --------
Income from operations................ (1,463) 627
Gain on disposition of properties..... -- --
Provision for income taxes............ (36) (336)
------- --------
Income (loss) before extraordinary
item................................ (1,499) 291
Extraordinary item -- early
extinguishment of debt.............. -- --
------- --------
Net income (loss)..................... $(1,499) $ 291
======= ========
OTHER INFORMATION:
Total owned properties (end of
period)............................. 4 4
Total owned apartment units (end of
period)............................. 1,711 1,711
Units under management (end of
period)............................. 29,343 28,422
Basic earnings per Common OP Unit..... N/A N/A
Diluted earnings per Common OP Unit... N/A N/A
Distributions paid per Common OP
Unit................................ N/A N/A
Cash flows provided by operating
activities.......................... 2,678 2,203
Cash flows used in investing
activities............................ (924) (16,352)
Cash flows provided by (used in)
financing activities.................. (1,032) 14,114
</TABLE>
S-19
<PAGE> 25
<TABLE>
<CAPTION>
AIMCO PROPERTIES, L.P.
-------------------------------------------------------------------------
FOR THE
PERIOD
JULY 29,
FOR THE NINE MONTHS FOR THE YEAR ENDED 1994
ENDED SEPTEMBER 30, DECEMBER 31, THROUGH
----------------------- -------------------------------- DECEMBER 31,
1998 1997 1997 1996 1995 1994
---------- ---------- ---------- -------- -------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
<S> <C> <C> <C> <C> <C> <C>
Funds from operations(e)................ $ 132,881 $ 49,692 $ 81,155 $ 35,185 $ 25,285 $ 9,391
Weighted average number of Common OP
Units outstanding..................... 53,007 24,347 29,119 14,994 11,461 10,920
BALANCE SHEET INFORMATION:
Real estate, before accumulated
depreciation.......................... $2,685,487 $1,250,239 $1,657,207 $865,222 $477,162 $ 406,067
Real estate, net of accumulated
depreciation.......................... 2,355,122 1,107,545 1,503,922 745,145 448,425 392,368
Total assets............................ 3,121,949 1,608,195 2,100,510 827,673 480,361 416,361
Total mortgages and notes payable....... 1,275,401 661,715 808,530 522,146 268,692 141,315
Redeemable Partnership Units............ 232,405 178,321 197,086 96,064 38,463 32,047
Mandatorily redeemable 1994 Cumulative
Senior Preferred Units................ -- -- -- -- -- 107,228
Partners' Capital....................... 1,427,087 560,737 960,176 178,462 160,947 137,354
<CAPTION>
AIMCO PROPERTIES, L.P.'S
PREDECESSORS(a)
--------------------------
FOR THE
PERIOD
JANUARY 10,
1994 FOR THE YEAR
THROUGH ENDED
JULY 28, DECEMBER 31,
1994(b) 1993
----------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
<S> <C> <C>
Funds from operations(e)................ N/A N/A
Weighted average number of Common OP
Units outstanding..................... N/A N/A
BALANCE SHEET INFORMATION:
Real estate, before accumulated
depreciation.......................... $47,500 $ 46,819
Real estate, net of accumulated
depreciation.......................... 33,270 33,701
Total assets............................ 39,042 38,914
Total mortgages and notes payable....... 40,873 41,893
Redeemable Partnership Units............ -- --
Mandatorily redeemable 1994 Cumulative
Senior Preferred Units................ -- --
Partners' Capital....................... (9,345) (7,556)
</TABLE>
- ---------------
(a) On July 29, 1994, AIMCO completed its initial public offering of 9,075,000
shares of AIMCO Class A Common Stock and issued 966,000 shares of
convertible preferred stock and 513,514 unregistered shares of AIMCO Common
Stock. The proceeds from the offering and such other issuances were
contributed by AIMCO to AIMCO Properties, L.P. for 9,075,000 OP Units,
966,000 Preferred Units and 513,514 Common OP Units, respectively. On such
date, AIMCO Properties, L.P. and its predecessors engaged in a business
combination and consummated a series of related transactions which enabled
AIMCO Properties, L.P. to continue and expand the property management and
related businesses of its predecessors. The 966,000 shares of convertible
preferred stock and 513,514 shares of AIMCO Class A Common Stock that were
issued concurrently with the initial public offering were repurchased in
1995.
(b) Represents the period January 1, 1994 through July 28, 1994, the date of
the completion of the business combination with AIMCO Properties, L.P.
(c) Represents AIMCO Properties, L.P.'s share of earnings from partnerships
that own 83,431 apartment units in which partnerships AIMCO Properties,
L.P. purchased an equity interest from the NHP Real Estate Companies.
(d) Represents AIMCO Properties, L.P. equity earnings in unconsolidated
subsidiaries.
(e) AIMCO Properties, L.P.'s management believes that the presentation of funds
from operations or "FFO", when considered with the financial data
determined in accordance with GAAP, provides a useful measure of
performance. However, FFO does not represent cash flow and is not
necessarily indicative of cash flow or liquidity available to AIMCO
Properties, L.P., 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. AIMCO Properties, L.P. calculates FFO
consistent with the NAREIT definition, plus amortization of management
company goodwill, the non-cash deferred portion of the income tax provision
for unconsolidated subsidiaries and less the payments of dividends on
perpetual preferred stock. AIMCO Properties, L.P. management believes that
presentation of FFO provides investors with industry-accepted measurements
which help facilitate an understanding of its ability to make required
dividend payments, capital expenditures and principal payments on its debt.
There can be no assurance that AIMCO Properties, L.P.'s basis of computing
FFO is comparable with that of other REITs.
The following is a reconciliation of net income to funds from operations:
<TABLE>
<CAPTION>
FOR THE
FOR THE NINE PERIOD
MONTHS ENDED FOR THE YEAR ENDED JANUARY 10,
SEPTEMBER 30, DECEMBER 31, 1994
------------------ --------------------------- THROUGH
1998 1997 1997 1996 1995 JULY 28, 1994
-------- ------- ------- ------- ------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Net income.................................................. $ 56,269 $19,427 $32,697 $15,673 $14,988 $ 7,702
(Gain) loss on disposition of property...................... (2,783) 169 (2,720) (44) -- --
Extraordinary item.......................................... -- 269 269 -- -- --
Real estate depreciation, net of minority interests......... 56,900 21,052 33,751 19,056 15,038 4,727
Amortization of goodwill.................................... 7,077 711 948 500 428 76
Equity in earnings of unconsolidated subsidiaries:
Real estate depreciation.................................. -- 2,689 3,584 -- -- --
Amortization of management contracts...................... 4,201 430 1,587 -- -- --
Deferred taxes............................................ 6,134 2,164 4,894 -- -- --
Equity in earnings of other partnerships:
Real estate depreciation.................................. 17,379 2,781 6,280 -- -- --
Preferred stock dividends................................. (12,296) -- (135) -- (5,169) (3,114)
-------- ------- ------- ------- ------- -------
Funds from operations....................................... $132,881 $49,692 $81,155 $35,185 $25,285 $ 9,391
======== ======= ======= ======= ======= =======
</TABLE>
S-20
<PAGE> 26
SUMMARY PRO FORMA FINANCIAL AND OPERATING INFORMATION OF AIMCO PROPERTIES, L.P.
The following table sets forth summary pro forma financial and operating
information of AIMCO Properties, L.P. for the nine months ended September 30,
1998 and for the year ended December 31, 1997. The pro forma financial and
operating information gives effect to AIMCO's merger with Insignia Financial
Group, Inc., the transfer of certain assets and liabilities of Insignia to
unconsolidated subsidiaries, a number of transactions completed before the
Insignia merger, and a number of exchange offers proposed to be made to limited
partnerships formerly controlled or managed by Insignia, including your
partnership.
<TABLE>
<CAPTION>
AIMCO PROPERTIES, L.P.
----------------------------
FOR THE NINE
MONTHS FOR THE
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
(IN THOUSANDS, EXCEPT
PER UNIT DATA)
<S> <C> <C>
OPERATING DATA:
RENTAL PROPERTY OPERATIONS:
Rental and other income................................... $ 344,421 $ 440,660
Property operating expenses............................... (135,347) (188,571)
Owned property management expenses........................ (8,875) (11,760)
Depreciation.............................................. (78,169) (95,842)
--------- ---------
122,030 144,487
--------- ---------
SERVICE COMPANY BUSINESS:
Management fees and other income.......................... 28,912 41,676
Management and other expenses............................. (14,386) (23,683)
Corporate overhead allocation............................. (196) (588)
Depreciation and amortization............................. (18,584) (32,177)
--------- ---------
(4,254) (14,772)
Minority interests in service company business............ -- (10)
--------- ---------
Partnership's shares of income from service company
business............................................... (4,254) (14,782)
--------- ---------
General and administrative expenses....................... (9,207) (21,228)
Interest income........................................... (97,374) (104,858)
Interest expense.......................................... 40,887 21,734
Minority interest......................................... (8,052) (9,481)
Equity in losses of unconsolidated partnerships........... (14,461) (31,479)
Equity in earnings of unconsolidated subsidiaries......... 1,538 6,245
Amortization of Goodwill.................................. (5,071) --
--------- ---------
Net income........................................ $ 26,036 $ (9,362)
========= =========
PER OP UNIT DATA:
Basic earnings (loss) per Common OP Unit.................... $ (0.06) $ (0.76)
Diluted earnings (loss) per Common OP Unit.................. $ (0.06) $ (0.76)
Distributions paid per Common OP Unit....................... $ 1.69 $ 1.85
Book value per Common OP Unit............................... $ 24.52 $ 26.96
CASH FLOW DATA:
Cash provided by operating activities....................... $ 83,789 $ 141,666
Cash used in investing activities........................... (81,259) (959,686)
Cash provided by (used in) financing activities............. (2,799) 775,969
OTHER DATA:
Funds from operations(a).................................... $ 184,393 $ 190,185
Weighted average number of Common OP Units outstanding...... 73,942 73,090
</TABLE>
S-21
<PAGE> 27
<TABLE>
<CAPTION>
AIMCO PROPERTIES, L.P.
----------------------
FOR THE NINE
MONTHS ENDED
SEPTEMBER 30, 1998
----------------------
(IN THOUSANDS, EXCEPT
PER UNIT DATA)
<S> <C>
BALANCE SHEET DATA:
Real estate, net of accumulated depreciation................ $2,595,471
Total assets................................................ 4,504,676
Total mortgages and notes payable........................... 1,710,293
Company-obligated mandatorily redeemable convertible
securities of a subsidiary trust.......................... 149,500
Redeemable partnership units................................ 282,473
Partners' capital........................................... 1,979,869
</TABLE>
- ---------------
(a) AIMCO Properties, L.P.'s management believes that the presentation of funds
from operations or "FFO," when considered with the financial data
determined in accordance with GAAP, provides useful measures of AIMCO
Properties, L.P. performance. However, FFO does not represent cash flow and
is not necessarily indicative of cash flow or liquidity available to AIMCO
Properties, L.P., 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. AIMCO Properties, L.P. calculates FFO in a
manner consistent with the NAREIT definition, plus amortization of
management company goodwill, the non-cash deferred portion of the income
tax provision for unconsolidated subsidiaries and less the payments of
dividends on perpetual preferred stock. AIMCO Properties, L.P. management
believes that presentation of FFO provides investors with an industry
accepted measurement which helps facilitate an understanding of AIMCO
Properties, L.P.'s ability to make required dividend payments, capital
expenditures and principal payments on its debt. There can be no assurance
that AIMCO Properties, L.P.'s basis of computing FFO is comparable with
that of other REITs.
The following is a reconciliation of pro forma net income to pro forma
funds from operations:
<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1998 DECEMBER 31, 1997
------------------ ------------------
(IN THOUSANDS)
<S> <C> <C>
Net income (loss)................................. $ 27,037 $ (9,362)
HUD release fee and legal reserve................. -- 10,202
Real estate depreciation, net of minority
interests....................................... 73,621 89,177
Amortization of management contracts.............. 8,660 11,546
Amortization of management company goodwill....... 15,479 18,528
Equity in earnings of unconsolidated subsidiaries:
Real estate depreciation........................ -- 1,715
Amortization of management company goodwill..... 959 1,918
Amortization of management contracts............ 21,704 28,775
Deferred taxes.................................. 268 (231)
Equity in earnings of other partnerships:
Real estate depreciation........................ 66,368 77,474
Interest on convertible debentures................ (7,537) (10,003)
Preferred unit distributions...................... (22,166) (29,554)
-------- --------
Funds from operations............................. $184,493 $190,185
======== ========
</TABLE>
S-22
<PAGE> 28
SUMMARY FINANCIAL INFORMATION OF SHELTER PROPERTIES IV
The summary financial information of Shelter Properties IV for the nine
months ended July 31, 1998 and 1997 is derived from unaudited financial
statements. The summary financial information for Shelter Properties IV as of
and for the years ended October 31, 1997, 1996, 1995, 1994 and 1993 is derived
from audited financial statements. This information should be read in
conjunction with such financial statements, including the notes thereto, and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" incorporated by reference herein.
SHELTER PROPERTIES IV
<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED
JULY 31, FOR THE YEAR ENDED OCTOBER 31,
------------------- ---------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER UNIT DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Total Revenues........................... $ 8,654 $ 8,341 $11,270 $10,910 $10,439 $ 9,913 $10,300
Net Income/(Loss)........................ 1,194 260 507 246 (574) 62 442
Net Income per limited partnership
unit................................... 23.64 5.14 10.04 4.86 (11.36) 1.22 19.94
Distributions per limited partnership
unit................................... 16.07 10.00 15.84 19.80 -- -- 2.09
Distributions per limited partnership
unit (which represent a return of
capital)............................... -- -- -- -- -- -- 2.09
</TABLE>
<TABLE>
<CAPTION>
JULY 31, OCTOBER 31,
------------------ ---------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER UNIT DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and Cash Equivalents................ $ 2,620 $ 1,901 $ 1,847 $ 2,291 $ 886 $ 1,248 $ 611
Real Estate, Net of Accumulated
Depreciation........................... 26,954 27,930 27,727 28,673 29,518 30,531 31,724
Total Assets............................. 32,884 33,130 33,085 34,350 35,522 38,163 37,130
Notes Payable............................ 23,642 24,202 24,067 24,590 25,069 25,508 25,911
Total Liabilities.......................... 24,723 25,303 25,306 26,278 26,698 26,762 27,793
General Partners Capital (Deficit)......... (3) (6) (7) (4) 4 10 9
Limited Partners Capital (Deficit)......... 8,164 7,833 7,786 8,076 8,820 9,391 9,328
------- ------- ------- ------- ------- ------- -------
Partners' Capital (Deficit)................ $ 8,161 $ 7,827 $ 7,779 $ 8,072 $ 8,824 $ 9,401 $ 9,337
Total Distributions........................ $ 812 $ 505 $ 800 $ 1,000 $ -- $ -- $ 106
Book value per limited partnership unit.... $163.30 $156.68 $155.74 $161.54 $176.42 $187.84 $186.58
Net increase (decrease) in cash and cash
equivalents.............................. $ 773 $ (390) $ (444) $ (468) $ 510 $ 637 $ 1
Net cash provided by operating
activities............................... $ 2,882 $ 1,426 $ 2,165 $ 2,271 $ 1,718 $ 1,640 $ 1,612
Ratio of earnings to fixed charges......... 1.73/1 1.16/1 1.23/1 1.11/1 .75/1 1.03/1 1.58/1
</TABLE>
COMPARATIVE PER UNIT DATA
Set forth below are cash distributions for OP Units and historical cash
distributions per unit of your partnership.
<TABLE>
<CAPTION>
AIMCO OPERATING
PARTNERSHIP SHELTER PROPERTIES IV
---------------------------- -------------------------
NINE MONTHS NINE MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31, JULY 31, OCTOBER 31,
1998 1997 1998 1997
------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Equivalent cash distributions on the number of Common OP
Units tendered in the offer for each unit of your
partnership............................................ $ $ $16.07 $15.84
Equivalent cash distributions on the number of Preferred
OP Units tendered in the offer for each unit of your
partnership............................................ $30.30 $40.40 $16.07 $15.84
</TABLE>
S-23
<PAGE> 29
THE AIMCO OPERATING PARTNERSHIP
AIMCO Properties, L.P. is the "AIMCO Operating Partnership." It conducts
substantially all of the operations of AIMCO. AIMCO is a real estate investment
trust that owns and manages multifamily apartment properties throughout the
United States. As of October 31, 1998, AIMCO, through its wholly owned
subsidiaries, AIMCO-GP, Inc., the sole general partner of the AIMCO Operating
Partnership (the "AIMCO GP"), and AIMCO-LP, Inc., a limited partner in the AIMCO
Operating Partnership (the "Special Limited Partner"), held approximately an 83%
interest in the AIMCO Operating Partnership. Based on apartment unit data
compiled as of January 1, 1998 by the National Multi Housing Council, we believe
that, as of October 31, 1998, AIMCO was the largest owner and manager of
multifamily apartment properties in the United States, with a total portfolio of
386,430 apartment units in 2,240 properties located in 49 states, the District
of Columbia and Puerto Rico. As of October 31, 1998, AIMCO:
- owned or controlled 62,955 units in 241 apartment properties;
- held an equity interest in 168,746 units in 897 apartment properties; and
- managed 154,729 units in 1,102 apartment properties for third party
owners and affiliates.
AIMCO's Class A Common Stock is listed and traded on the NYSE under the
symbol "AIV." On December 4, 1998, the last reported sale price of AIMCO Class A
Common Stock on the NYSE was $35 3/8. The following table shows the high and low
reported sales prices and dividends declared per share of AIMCO's Class A Common
Stock for the periods indicated. The table also shows the distributions per unit
declared on the Common OP Units for the same periods.
<TABLE>
<CAPTION>
CLASS A PARTNERSHIP
COMMON STOCK COMMON
--------------------------- UNITS
CALENDAR QUARTERS HIGH LOW DIVIDEND DISTRIBUTION
----------------- ---- --- -------- ------------
<S> <C> <C> <C> <C>
1998
Fourth Quarter (through December 4,
1998)............................... $37 1/8 $30 $ -- $ --
Third Quarter.......................... 41 30 15/16 0.5625 0.5625
Second Quarter......................... 38 7/8 36 1/2 0.5625 0.5625
First Quarter.......................... 38 5/8 34 1/4 0.5625 0.5625
1997
Fourth Quarter......................... 38 32 0.5625 0.5625
Third Quarter.......................... 36 3/16 28 1/8 0.4625 0.4625
Second Quarter......................... 29 3/4 26 0.4625 0.4625
First Quarter.......................... 30 1/2 25 1/2 0.4625 0.4625
1996
Fourth Quarter......................... 28 3/8 21 1/8 0.4625 0.4625
Third Quarter.......................... 22 18 3/8 0.4250 0.4250
Second Quarter......................... 21 18 3/8 0.4250 0.4250
First Quarter.......................... 21 1/8 19 3/8 0.4250 0.4250
</TABLE>
The principal executive offices of AIMCO, the AIMCO GP, the Special Limited
Partner and the AIMCO Operating Partnership are located at 1873 South Bellaire
Street, Denver, Colorado 80222, and their telephone number is (303) 757-8101.
RISK FACTORS
The following sets forth certain risks and possible disadvantages of the
offer and should be read and considered when reviewing the potential benefits of
the offer set forth in "Background and Reasons for the Offer -- Expected
Benefits of the Offer." In addition, you should review the other risks of
investing in us beginning on page 2 of our accompanying Prospectus.
S-24
<PAGE> 30
RISKS TO UNITHOLDERS WHO TENDER THEIR UNITS IN THE OFFER
NO THIRD PARTY VALUATION OR APPRAISAL; NO ARMS-LENGTH NEGOTIATION AND NO
GENERAL PARTNER RECOMMENDATION. We did not base our valuation of your
partnership's property on any third-party appraisal or valuation. We established
the terms of our offer, including the exchange ratios and the cash
consideration. Such terms are not the result of arms-length negotiations. It is
uncertain whether our offer consideration reflects the value which would be
realized upon a sale of your units or a liquidation of your partnership's
assets. Because of our affiliation with your general partner, your general
partner makes no recommendation to you as to whether you should tender your
units. Based on information recorded by the general partner of your partnership,
we believe that sales prices for your units have ranged from $175.00 per unit to
$500.00 per unit from November 1, 1995 to July 31, 1998. As of October 31, 1997,
your general partner estimated the net asset value of your units to be $715.00
per unit. However, we do not believe that these valuations represent the current
fair market value of your units. We have retained Stanger to conduct an analysis
of our offer and to render an opinion as to the fairness to you of our offer
consideration from a financial point of view. It is possible that if the offer
is not successful, we may revise or terminate the offer or conduct a subsequent
offer at a higher or lower price. Such a decision will depend, among other
things, on the performance of the partnership, prevailing interest rates, and
our interest in acquiring additional limited partnership interests.
OFFER PRICE MAY NOT REPRESENT FUTURE LIQUIDATION VALUE. Your partnership's
properties may outperform our larger, more diversified portfolio of assets.
Although we cannot predict the future value of your partnership's properties,
our offer consideration could be less than the net proceeds that you would
realize upon a future liquidation of your partnership. Accordingly, although
there can be no assurance, you might receive more consideration if you do not
tender your units and, instead, continue to hold your units and ultimately
receive proceeds from a liquidation of your partnership. However, you may prefer
to receive our offer consideration now rather than wait for uncertain future net
liquidation proceeds. As of October 31, 1997, an affiliate of your general
partner (which is our affiliate) estimated the net liquidation value of your
units to be $737.85 per unit. However, we do not believe that this valuation
represents the current fair market value of your units. Furthermore, your
general partner has no present intention to liquidate your partnership, and your
partnership's agreement of limited partnership does not require a sale of your
partnership's properties by any particular date.
ATTRACTIVE INVESTMENT FOR THE AIMCO OPERATING PARTNERSHIP. We are making
our offer with a view to making a profit. Accordingly, there is a conflict
between our desire to purchase your units at a low price and your desire to sell
your units at a high price.
CONFLICTS OF INTEREST WITH RESPECT TO THE OFFER. Your general partner is a
subsidiary of AIMCO and an affiliate of the AIMCO Operating Partnership and,
therefore, has substantial conflicts of interest with respect to our offer.
These conflicts include the fact that a decision of the limited partners of your
partnership to remove, for any reason, your general partner or the manager of
your partnership's property from its current position would result in a decrease
or elimination of the substantial fees paid to your general partner or the
property manager for services provided to your partnership. Your general partner
makes no recommendation to you as to whether you should tender your units. Such
conflicts of interest in connection with our offer and our operation's differ
from those conflicts of interest that currently exist for your partnership.
LOSS OF FUTURE DISTRIBUTIONS FROM YOUR PARTNERSHIP. If you tender your
units in response to our offer, you will transfer all rights title and interest
in and to all of the units that we accept, and all distributions in respect of
such units on or after the date on which we accept such units for purchase.
Accordingly, following the purchase of your units, we would be entitled to
receive any future distributions from the operations of your partnership to the
extent of the units we acquire. Similarly, if you tender your units for OP
Units, you will be entitled to future distributions from the operations of the
AIMCO Operating Partnership.
TAX RISKS ASSOCIATED WITH THE OFFER. In general, your exchange of units for
OP Units will not be a taxable transaction. Your sale of units for cash will be
a taxable sale, with the result that you will recognize gain or loss measured by
the difference between the amount realized on the sale and your adjusted tax
basis in the units you transfer to us. Your exchange of units for cash and OP
Units will be treated, for Federal income tax purposes, as a partial taxable
sale of such units for cash and as a partial tax-free contribution of such units
S-25
<PAGE> 31
to the AIMCO Operating Partnership. If you exchange your units for cash or for
cash and OP Units, the "amount realized" will be measured by the sum of the cash
you receive plus the portion of your partnership's liabilities allocated to the
units sold for Federal income tax purposes. To the extent that the amount of
cash received plus the allocable share of your partnership's liabilities exceeds
your tax basis in the units sold, you will recognize gain. Consequently, the tax
liability resulting from such gain could exceed the amount of cash received upon
such sale. Although we have no present intention to liquidate or sell your
partnership's property or prepay the current mortgage on your partnership's
property within any specified time period, any such action in the future
generally will require you to fully recognize any deferred taxable gain if you
exchange your units for OP Units. In addition, if the AIMCO Operating
Partnership were to be treated as a "publicly traded partnership" for Federal
income tax purposes, passive activity losses generated by other passive activity
investments held by you, including passive activity loss carryovers attributable
to your units, could not be used to offset your allocable share of income
generated by the AIMCO Operating Partnership. See "Certain Federal Income Tax
Matters." If you redeem OP Units for shares of AIMCO Class A Common Stock or
Preferred Stock, you will recognize gain or loss measured by the difference
between the amount realized from our tender offer and your adjusted tax basis in
the OP Units exchanged. In addition, if you acquire shares of AIMCO stock, you
will no longer be able to use income and loss from your investment to offset
"passive" income and losses from other investments, and the distributions from
AIMCO will constitute taxable income to the extent of AIMCO's earnings and
profits. In addition, if there is a sale or exchange of 50% or more of the total
interest in capital and profits of your partnership within any 12-month period,
including sales or exchanges resulting from the offer, your partnership will
terminate for Federal income tax purposes. Any such termination may, among other
things, subject the assets of your partnership to longer depreciable lives than
those currently applicable to the assets of your partnership. This would
generally decrease the annual average depreciation deductions allocable to you
if you do not tender all of your units (thereby increasing the taxable income
allocable to your units each year), but would have no effect on the total
depreciation deductions available over the useful lives of the assets of your
partnership. Any such termination may also change (and possibly shorten) your
holding period with respect to your units that you choose to retain.
This summary is a general discussion of certain of the anticipated Federal
income tax consequences of the offer. This summary does not discuss all aspects
of Federal income taxation that may be relevant to you in light of your specific
circumstances or if you are subject to special treatment under the Internal
Revenue Code of 1986, as amended. The particular tax consequences for you of our
offer will depend upon a number of factors related to your tax situation,
including your tax basis in your units, whether you dispose of all of your units
in your partnership and whether you are no longer subject to the "passive loss"
rules with respect to your partnership. Because the income tax consequences of
tendering units will not be the same for everyone, you should consult your own
tax advisor with specific reference to your own tax situation.
RISKS TO UNITHOLDERS EXCHANGING UNITS FOR OP UNITS IN THE OFFER
FUNDAMENTAL CHANGE IN NATURE AND TERM OF INVESTMENT. If you exchange your
units for OP Units, you will have changed fundamentally the nature of your
investment. Your partnership owns and manages a few properties. In contrast, the
AIMCO Operating Partnership is in the business of acquiring, marketing, managing
and operating a large portfolio of apartment properties. While diversification
of assets may reduce certain risks of investment attributable to a single
property or entity, there can be no assurance as to the value or performance of
our securities or our portfolio of properties as compared to the value of your
units or your partnership. Under the AIMCO Operating Partnership Agreement, the
general partner has the ability, without the concurrence of the limited
partners, to acquire and dispose of properties and to borrow funds. Further,
while it is the intent to distribute net income from operations, sales and
refinancing of your partnership, the general partner may not make such
distributions. The AIMCO Operating Partnership generally makes the same
distribution on the Common OP Units as AIMCO pays dividends on its Class A
Common Stock. Further, AIMCO must distribute a significant percentage of its
consolidated revenues each year in order to retain its status as a REIT. Your
partnership is permitted not to make distributions under certain circumstances
such as reinvesting in your partnership. Proceeds of future asset sales or
refinancings by the AIMCO Operating Partnership generally will be reinvested
rather than distributed.
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UNCERTAINTY OF PUBLIC TRADING MARKET. Recently, there have been
fluctuations in the trading prices for many REIT securities. There may be
subsequent changes in public market valuations of real estate assets relative to
private market valuations of real estate assets. We cannot predict the price at
which the Class I Preferred Stock or the Class A Common Stock will trade
following the time at which Preferred OP Units or Common OP Units may be
redeemed for shares of Class I Preferred Stock or Class A Common Stock.
Furthermore, the liquidity of the Class I Preferred Stock and the Class A Common
Stock at the time at which OP Units may be redeemed is also uncertain.
COMPANY AUTHORITY. Under our organizational documents, we have the ability
to change our investment, acquisition and financing policies without a vote of
the limited partners of the AIMCO Operating Partnership or the stockholders of
AIMCO. If you tender your units for OP Units, you will have less effective power
in influencing our policies than you currently have in influencing the policies
of your partnership.
RISKS ASSOCIATED WITH AN INVESTMENT IN AIMCO. We face real estate
investment, financing, management, acquisition and development risks, many of
which are similar to the risks currently faced by your partnership, as well as
additional risks. See "Risk Factors" in the accompanying Prospectus.
CERTAIN RISKS RELATED TO OUR SECURITIES. Investors in our partnership must
hold their units for one year, subject to certain exceptions. Thereafter holders
may transfer such partnership units under certain conditions, including the
general partner's right of first refusal. Holders of the units in our
partnership do not have the right to remove the general partner, and therefore,
they cannot effect a change of control of the AIMCO Operating Partnership. On
and after , 20 , we may reduce, within certain limits, the rate of
distributions required to be paid on the Preferred OP Units, thus reducing the
rate of return and possibly encouraging you to redeem such units. On and after
, 20 , we may redeem each share of Series I Preferred Stock for
$25, plus any accrued but unpaid dividends, possibly forcing you to sell such
shares to AIMCO or to sell in the open market at a possible lower price per
share than would have occurred without the redemption.
RISKS TO UNITHOLDERS WHO DO NOT TENDER THEIR UNITS IN THE OFFER
LACK OF TRADING MARKET FOR UNITS. There is no established or regular
trading market for your units, nor is there another reliable standard for
determining the fair market value of your units. If you desire or need
liquidity, you may wish to consider our offer. Our offer affords you an
opportunity to dispose of your units for cash, an opportunity which might not be
available to you in the foreseeable future. However, our offer consideration
does not necessarily reflect the price that you would receive in an open market
for your units or upon a liquidation of your partnership's assets. Such prices
may be higher or lower than our offer consideration.
POSSIBLE REDUCTION OF AVAILABLE INFORMATION ABOUT YOUR PARTNERSHIP. If
there are less than 300 unitholders in your partnership upon consummation of the
offer, your partnership could cease filing periodic reports with the SEC, such
as yearly reports, including annual audited financial statements, and quarterly
reports containing unaudited quarterly financial statements, on Form 10-KSB and
Form 10-QSB. Such reports are publicly available and can be obtained on the
SEC's web site. The lack of such filings could affect the already limited
secondary market which currently exists for units in your partnership and may
result in others not tendering for such units. In such a case, you would
regularly have access only to the limited information your partnership's
agreement of limited partnership requires your general partner (which is our
affiliate) to provide each year, which information consists primarily of tax
information.
DIFFERENT DISTRIBUTIONS. Anticipated annualized distributions with respect
to the Preferred OP Units are $2.00 and current annualized distributions with
respect to the Common OP Units are $2.25. This is equivalent to distributions of
$40.40 per year on the number of Preferred OP Units, or distributions of
$ per year on the number of Common OP Units, that you would receive in
exchange for each of your partnership's units. Distributions with respect to
your units for the nine months ended July 31, 1998 were $16.07 per unit. See
"Comparison of Ownership of Your Units and AIMCO OP Units -- Distributions."
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FUTURE CONTROL BY AIMCO. Because your general partner is a subsidiary of
AIMCO, we control the management of your partnership. In addition, if we acquire
more units, we will increase our ability to influence voting decisions with
respect to your partnership and may control such voting decisions. Furthermore,
in the event that we acquire a substantial number of units pursuant to our
offer, removal of your general partner without our consent may become more
difficult or impossible. We also own a majority of the company that manages your
partnership's property. In the event that we acquire a substantial number of
units pursuant to our offer, removal of the property manager without our consent
may become more difficult or impossible.
RECOGNITION OF GAIN RESULTING FROM POSSIBLE FUTURE REDUCTION IN YOUR
PARTNERSHIP LIABILITIES. Generally, a decrease in your share of your
partnership's liabilities is treated, for Federal income tax purposes, as a
deemed cash distribution. Although your general partner (which is our affiliate)
has no current plan or intention to reduce the liabilities of your partnership,
it is possible that future economic, market, legal, tax or other considerations
may cause your general partner to reduce the liabilities of your partnership. If
the liabilities of your partnership were to be reduced, and you do not tender
all of your units pursuant to our offer, you will be treated as receiving a
hypothetical distribution of cash resulting from a decrease in your share of the
liabilities of your partnership. Any such hypothetical distribution of cash
would be treated as a nontaxable return of capital to the extent of your
adjusted tax basis in your units and thereafter as gain.
POSSIBLE TERMINATION OF YOUR PARTNERSHIP FOR FEDERAL INCOME TAX
PURPOSES. If there is a sale or exchange of 50% or more of the total interest in
capital and profits of your partnership within any 12-month period, including
sales or exchanges resulting from the offer, your partnership will terminate for
Federal income tax purposes. Any such termination may, among other things,
subject the assets of your partnership to longer depreciable lives than those
currently applicable to the assets of your partnership. This would generally
decrease the annual average depreciation deductions allocable to you if you do
not tender all of your units (thereby increasing the taxable income allocable to
your units each year), but would have no effect on the total depreciation
deductions available over the useful lives of the assets of your partnership.
Any such termination may also change (and possibly shorten) your holding period
with respect to your units that you choose to retain. In determining the amount
of units to tender for, we took into account the number of units transferred in
the past twelve months so as to allow for other transfers without crossing the
50% threshold. It is possible that beginning twelve months after the closing of
this offer, or possibly earlier, we may make another offer for your units and
such offer may or may not be at a higher price.
GENERAL
MOODY'S NEGATIVE OUTLOOK FOR AIMCO RATINGS. Recently, Moody's revised its
outlook for our ratings from stable to negative to reflect its concerns
surrounding our ability to successfully implement our financial strategy while
maintaining a prudent capital structure as a result of more difficult general
capital market conditions. Moody's noted that our access to the public markets
may prove challenging in light of the volatility in both the equity and capital
markets for REITs and assigned a "ba3" rating to a class of preferred stock
proposed to be issued by us. Moody's indicated that its rating action reflects
our increasing leveraged profile, including high levels of secured debt and
preferred stock, limited financial flexibility and integration risks resulting
from the merger with Insignia. Moody's also noted our high level of encumbered
properties and material investments in loans to highly leveraged partnerships in
which we own a general partnership interest. At the same time, Moody's, Standard
& Poor's and Duff & Phelps confirmed their existing ratings on our existing
preferred stock and senior debt.
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BACKGROUND AND REASONS FOR THE OFFER
BACKGROUND OF THE OFFER
General
We are in the business of acquiring direct and indirect interests in
apartment properties such as the property owned by your partnership. Our offer
provides us with an opportunity to increase our ownership interest in your
partnership's property while providing you and other investors with an
opportunity to retain or liquidate your investment in your partnership by
tendering for OP Units or for cash.
On October 1, 1998, AIMCO merged (the "Insignia Merger") with Insignia
Financial Group, Inc. ("Insignia"). As a result of the Insignia Merger, AIMCO
acquired approximately 51% of the outstanding common shares of beneficial
interest of Insignia Properties Trust ("IPT"). The general partner of your
partnership is a wholly owned subsidiary of IPT. Through the Insignia Merger,
AIMCO also acquired a majority ownership interest in the entity that manages the
properties owned by your partnership. Through subsidiaries, AIMCO currently
owns, in the aggregate, approximately a 40.08% interest in your partnership.
IPT and AIMCO have entered into an agreement and plan of merger, dated as
of October 1, 1998 (the "IPT Merger Agreement"), pursuant to which IPT is to be
merged into AIMCO or a subsidiary of AIMCO (the "IPT Merger"). The IPT Merger
Agreement provides that, upon consummation of the IPT Merger, IPT shareholders
will receive $13.25 per share in cash or $13.28 per share in shares of AIMCO's
Class A Common Stock, at AIMCO's option. The transactions contemplated by the
IPT Merger Agreement are subject to certain conditions. The IPT Merger requires
the approval of the holders of a majority of the outstanding IPT Shares. AIMCO
has agreed to vote all of the IPT Shares owned by it in favor of the IPT Merger
and the related merger agreement and granted an irrevocable proxy to certain
affiliates of IPT to vote such shares. Accordingly, IPT shareholder approval is
assured.
One of the consequences of our acquiring Insignia is that it allowed us to
make the exchange offers to acquire limited partnership interests of some of the
limited partnerships formerly controlled or managed by Insignia (the "Insignia
Partnerships"). If we are successful, we will increase our ownership in the
Insignia Partnerships. Such offers would provide liquidity for the limited
partners of the Insignia Partnerships. Such offers would also allow the AIMCO
Operating Partnership an opportunity to increase its ownership interest in
certain Insignia Partnerships which would provide a larger asset and capital
base and increased diversification. As of December , 1998, the AIMCO Operating
Partnership has made offers to of the Insignia Partnerships, including
your partnership.
Previous Tender Offers
Prior to the Insignia Merger, a number of tender offers had been made to
acquire units of your partnership. On July 21, 1998, Cooper River Properties,
L.L.C., then an affiliate of Insignia and now our affiliate, commenced a tender
offer pursuant to which it acquired 3,685 units (representing approximately 7.4%
of the number outstanding) at a cash purchase price of $500 per unit.
We are aware that tender offers may have been made by unaffiliated third
parties to acquire units in your partnership in exchange for cash. We are
unaware of the amounts offered, terms, tendering parties or number of units
involved in these tender offers.
Engagement of Fairness Opinion Provider
The AIMCO Operating Partnership contacted Stanger in August 1998 to discuss
the possibility of Stanger providing a fairness opinion for our offer. The AIMCO
Operating Partnership chose Stanger based on Stanger's expertise and strong
reputation in this area of work. The parties entered into a definitive agreement
dated October 20, 1998 for Stanger to provide such fairness opinion for your
partnership and other partnerships.
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ALTERNATIVES CONSIDERED
The following is a brief discussion of the benefits and disadvantages of
alternatives to our offer that could have been pursued by your general partner
(which is our affiliate).
Liquidation
Benefits of Liquidation. One alternative would be for your partnership to
sell its assets, distribute the net liquidation proceeds to its partners in
accordance with your partnership's agreement of limited partnership, and
thereafter dissolve. Partners would be at liberty to use the net liquidation
proceeds after taxes for investment, business, personal or other purposes, at
their option. If your partnership were to sell its assets and liquidate, you and
your partners would not need to rely upon capitalization of income or other
valuation methods to estimate the fair market value of your partnership's
assets. Instead, such assets would be valued through negotiations with
prospective purchasers (in many cases unrelated third parties).
Disadvantages of Liquidation. A liquidating sale of part or all of your
partnership's property would be a taxable event for you and your partners and
would generally result in significant amounts of taxable income to you and your
partners. In the opinion of your general partner (which is our affiliate), the
present time may not be the most desirable time to sell the real estate assets
of your partnership in private transactions, and any liquidation sale would be
uncertain. Liquidation of the partnership's assets may trigger a substantial
prepayment penalty under the mortgage for the property. Your general partner
believes it currently is in the best interest of your partnership to continue
holding its real estate assets. Another option for liquidation would be to sell
your units in a private transaction. Any such sale likely would be at a very
substantial discount from your pro rata share of the fair market value of your
partnership's property and might involve significant expense and delay.
Continuation of the Partnership Without the Offer
Benefits of Continuation. A second alternative would be for your
partnership to continue as a separate legal entity, with its own assets and
liabilities and continue to be governed by its existing agreement of limited
partnership, without our offer. A number of advantages could result from the
continued operation of your partnership. Given improving rental market
conditions, the level of distributions might increase over time. It is possible
that the private resale market for properties could improve over time, making a
sale of the partnership's property in a private transaction at some point in the
future a more attractive option than it is currently.
Disadvantages of Continuation. There are several risks and disadvantages
that result from continuing the operations of your partnership without our
offer. Your partnership faces maturity or balloon payment dates on its mortgage
loans and must either obtain refinancing or sell its property. If your
partnership were to continue operating as presently structured, your partnership
could be forced to borrow on terms that could result in net losses from
operations.
In addition, continuation of your partnership as a separate entity without
our offer would deny you and your partners the benefits of our offer. For
example, you would have no opportunity for liquidity unless you were to sell
your units in a private transaction. Any such sale would likely be at a very
substantial discount from your pro rata share of the fair market value of your
partnership's property. Continuation without our offer would deny you and your
partners the benefits of diversification into a company which has a much larger
and more diverse portfolio of apartment properties.
Alternative Structures Considered.
We chose to make this offer as a tender/exchange offer because other forms
of reorganization such as a merger would have meant that holders of a majority
of the units in your partnership would bind all limited partners. With a
tender/exchange offer, each limited partner makes his own decision which does
not bind the other partners. Further, we have not offered to purchase all of the
units in your partnership which would occur in other types of reorganizations or
combinations.
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Sale of Assets
Your partnership could sell the properties it owns and not liquidate. The
general partner of your partnership considers sale of your partnership's
properties from time to time. However, any such sale would likely be a taxable
transaction.
EXPECTED BENEFITS OF THE OFFER
We are in the business of acquiring direct and indirect interests in
apartment properties such as the property owned by your partnership. Our offer
provides us with an opportunity to increase our ownership interest in the
property owned by your partnership while providing you and other investors with
an opportunity to retain or liquidate your investment or to invest in the AIMCO
Operating Partnership.
There are four principal advantages of tendering your units for Preferred
OP Units:
- Enhanced Liquidity. While holders of the Preferred OP Units must hold
such units for one year, subject to certain exceptions, after a one-year
holding period, you may choose to redeem your Preferred OP Units and
receive, at our option, shares of AIMCO's Class I Preferred Stock, shares
of AIMCO's Class A Common Stock or cash. AIMCO's Class A Common Stock is,
and AIMCO's Class I Preferred Stock is expected to be, listed and traded
on the NYSE.
- Tax Deferral. You will generally not recognize any immediate taxable gain
if you exchange your units solely for Preferred OP Units.
- Preferred Quarterly Distributions. We will pay fixed quarterly
distributions of $0.50 per unit on the Preferred OP Units before any
distributions are paid to holders of Common OP Units. However, one class
of outstanding Partnership Preferred Units has prior distribution rights
and the Preferred OP Units rank equal to seven other outstanding classes
of Partnership Preferred Units.
- Diversification. We have a substantially larger and more diverse
portfolio of apartment properties than your partnership.
There are five principal advantages of tendering your units for Common OP
Units:
- Enhanced Liquidity. While the holders of the Common OP Units must hold
such units for one year, subject to certain exceptions, after a one-year
holding period, you may choose to redeem your Common OP Units and
receive, at our option, shares of AIMCO's Class A Common Stock (on a
one-for-one basis, subject to adjustment in certain circumstances) or an
equivalent amount of cash. AIMCO's Class A Common Stock is listed and
traded on the NYSE.
- Tax Deferral. You will generally not recognize any immediate taxable gain
if you exchange your units solely for Common OP Units.
- Quarterly Distributions. We pay quarterly distributions on the Common OP
Units. For the quarter ended September 30, 1998, we paid distributions of
$0.5625 on each of the Common OP Units (equivalent to $2.25 on an annual
basis). Historically, the quarterly distributions paid on the Common OP
Units have been equivalent to the dividends paid on AIMCO's Class A
Common Stock. We expect this to continue in the future.
- Growth Potential. Our organizational structure and access to capital
enables us to pursue acquisition and development opportunities that are
not available to your partnership. You would have the opportunity to
participate in the growth of our enterprise and would benefit from any
future increase in the AIMCO stock price and from any future increase in
distributions on the Common OP Units.
- Diversification. We have a substantially larger and more diverse
portfolio of apartment properties than your partnership.
The principal advantage if you tender your units for cash is immediate
liquidity. However, tendering your units for cash may cause you to recognize
taxable gain for Federal income tax purposes.
For a description of certain risks of our offer, see "Risk Factors."
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THE OFFER
TERMS OF THE OFFER; EXPIRATION DATE
We are offering to acquire all of the outstanding 49,995 units of your
partnership, which we do not directly or indirectly own, for consideration per
unit of (i) 20.20 Preferred OP Units, (ii) Common OP Units, or (iii)
$505.00 in cash. If you tender units pursuant to our offer, you may choose to
receive any of such forms of consideration for your units or any combination of
such forms of consideration.
The purchase price per unit will automatically be reduced by the aggregate
amount of distributions per unit, if any, made by your partnership to you on or
after , 1998 and prior to the date on which we acquire your units
pursuant to our offer.
Upon the terms and subject to the conditions of our offer set forth herein,
the AIMCO Operating Partnership will accept (and thereby purchase) units that
are validly tendered prior to the expiration of the offer and not withdrawn in
accordance with the procedures set forth in "-- Withdrawal Rights." Our offer
will expire at 5:00 p.m., Denver, Colorado time, on , 1999,
unless the AIMCO Operating Partnership in its sole discretion, extends the
offer. See "-- Extension of Tender Period; Termination; Amendment" for a
description of the AIMCO Operating Partnership's right to extend the period of
time during which the offer is open and to amend or terminate the offer.
If, prior to the expiration of the offer, the AIMCO Operating Partnership
increases the offer consideration, everyone whose units are accepted in the
offer will receive the increased consideration, regardless of whether their
units were tendered before or after the increase in the offer consideration.
The AIMCO Operating Partnership will, upon the terms and subject to the
conditions of the offer, accept for payment and pay for all units validly
tendered and not withdrawn prior to the expiration of our offer.
Our offer is conditioned on the satisfaction of certain conditions. Our
offer is not conditioned upon any minimum amount of units being tendered. See
"-- Conditions of the Offer," which sets forth in full the conditions of our
offer. The AIMCO Operating Partnership reserves the right (but is not
obligated), in its sole discretion, to waive any or all of those conditions. If,
on or prior to the expiration of the offer, any or all of the conditions have
not been satisfied or waived, the AIMCO Operating Partnership reserves the right
to (i) decline to purchase any of the units tendered, terminate the offer and
return all tendered units, (ii) waive all the unsatisfied conditions and
purchase all units validly tendered, (iii) extend the offer and, subject to the
right of unitholders to withdraw units until the expiration of the offer, retain
the units that have been tendered during the period or periods for which the
offer is extended, and (iv) amend the offer.
For administrative purposes, the transfer of units tendered pursuant to our
offer will be deemed to take effect as of , 1999.
This offer is being mailed to the persons shown by your partnership's
records to have been limited partners or, in the case of units owned of record
by IRAs and qualified plans, beneficial owners of units, as of ,
1999.
ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS
Upon the terms and subject to the conditions of the offer, the AIMCO
Operating Partnership will purchase by accepting for payment and will pay for
all units which are validly tendered and not withdrawn prior to the expiration
of the offer as promptly as practicable following the expiration of the offer. A
beneficial owner of units whose units are owned of record by an individual
retirement account or other qualified plan will not receive direct payment of
the offer consideration. Instead, payment will be made to the custodian of such
account or plan. In all cases, payment for units purchased pursuant to the offer
will be made only after timely receipt by the Information Agent of a properly
completed and duly executed Letter of Transmittal and any other documents
required by the Letter of Transmittal. The offer consideration shall be reduced
by any interim distributions made by your partnership between ,
1999, and the expiration of the offer.
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See "-- Procedure for Tendering Units." UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE OFFER PRICE BY REASON OF ANY DELAY IN MAKING SUCH PAYMENT.
For purposes of the offer, the AIMCO Operating Partnership will be deemed
to have accepted for payment pursuant to the offer, and thereby purchased,
validly tendered units if, as and when the AIMCO Operating Partnership gives
verbal or written notice to the Information Agent of its acceptance of those
units for payment pursuant to the offer. Payment for units accepted for payment
pursuant to the offer will be made through the Information Agent, which will act
as agent for tendering unitholders for the purpose of receiving cash payments
from the AIMCO Operating Partnership and transmitting cash payments to tendering
unitholders. OP Units will be issued directly by the AIMCO Operating Partnership
to those unitholders who elect to receive OP Units pursuant to the offer.
If any tendered units are not accepted for payment for any reason, the
Letter of Transmittal with respect to such units not purchased may be destroyed
by the AIMCO Operating Partnership or its agent. If for any reason, acceptance
for payment of, or payment for, any units tendered pursuant to the offer is
delayed or the AIMCO Operating Partnership is unable to accept for payment,
purchase or pay for units tendered pursuant to the offer, then, without
prejudice to the AIMCO Operating Partnership's rights under "-- Conditions of
the Offer," the Information Agent may, nevertheless, on behalf of the AIMCO
Operating Partnership retain tendered units, and those units may not be
withdrawn except to the extent that the tendering offerees are entitled to
withdrawal rights as described in "-- Withdrawal Rights;" subject, however, to
the AIMCO Operating Partnership's obligation under Rule 14e-1(c) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to pay the
offer consideration in respect of units tendered or return those units promptly
after termination or withdrawal of the offer.
The AIMCO Operating Partnership reserves the right to transfer or assign,
in whole or in part, to one or more of its affiliates, the right to purchase
units tendered pursuant to the offer, but no such transfer or assignment will
relieve the AIMCO Operating Partnership of its obligations under the offer or
prejudice your right to receive payment for units validly tendered and accepted
for payment pursuant to the offer. Specifically, we may assign our rights to
purchase your units for which you elect to receive cash to IPT or Insignia
Properties, L.P. ("IPLP"). IPLP is a Delaware limited partnership that conducts
substantially all of the operations of IPT.
PROCEDURE FOR TENDERING UNITS
Valid Tender
To validly tender units pursuant to the offer, a properly completed and
duly executed Letter of Transmittal and any other documents required by such
Letter of Transmittal must be received by the Information Agent, at its address
set forth on the back cover of this Prospectus Supplement, on or prior to the
expiration of the offer. You may tender all or any portion of your units.
However, if you tender less than all of your units, you must continue to hold at
least three units (except for units held by IRAs and Keogh Plans) following our
acceptance of tendered units. No alternative, conditional or contingent tenders
will be accepted.
Signature Requirements
IF THE LETTER OF TRANSMITTAL IS SIGNED BY THE REGISTERED HOLDER OF THE
UNITS AND PAYMENT IS TO BE MADE DIRECTLY TO THAT HOLDER, THEN NO SIGNATURE
GUARANTEE IS REQUIRED ON THE LETTER OF TRANSMITTAL. Similarly, if the units are
tendered for the account of a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc. or a
commercial bank, savings bank, credit union, savings and loan association or
trust company having an office, branch or agency in the United States (each an
"Eligible Institution"), no signature guarantee is required on the Letter of
Transmittal. However, in all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution.
In order to participate in the offer, you must validly tender and not
withdraw your units prior to the expiration of the offer.
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THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING HOLDER OF UNITS, AND
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE INFORMATION
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY
DELIVERY.
Appointment as Proxy
By executing the Letter of Transmittal, you will irrevocably appoint the
AIMCO Operating Partnership and its designees as your proxies (in the manner set
forth in the Letter of Transmittal), each with full power of substitution, to
the fullest extent of your rights with respect to your units tendered and
accepted for payment by the AIMCO Operating Partnership. Each such proxy shall
be considered coupled with an interest in the tendered units. Such appointment
will be effective when, and only to the extent that, the AIMCO Operating
Partnership accepts the tendered units for payment. Upon such acceptance for
payment, all prior proxies given by you with respect to such units will, without
further action, be revoked, and no subsequent proxies may be given (and if given
will not be effective). The AIMCO Operating Partnership and the designees of the
AIMCO Operating Partnership will, as to those units, be empowered to exercise
all of your voting and other rights as they, in their sole discretion, may deem
proper at any meeting of unitholders, by written consent or otherwise. The AIMCO
Operating Partnership reserves the right to require that, in order for units to
be deemed validly tendered, immediately upon the AIMCO Operating Partnership's
acceptance for payment for the units, the AIMCO Operating Partnership must be
able to exercise full voting rights with respect to the units, including voting
at any meeting of unitholders then scheduled or acting by written consent
without a meeting. By executing the Letter of Transmittal, you agree to execute
all such documents and take such other actions as shall be reasonably required
to enable the units tendered to be voted in accordance with the directions of
the AIMCO Operating Partnership. The proxy and power of attorney granted to the
AIMCO Operating Partnership upon your execution of the Letter of Transmittal
will remain effective and be irrevocable for a period of ten years following the
termination of the offer.
Power of Attorney
By executing a Letter of Transmittal, you also irrevocably constitute and
appoint the AIMCO Operating Partnership and its managers and designees as your
attorneys-in-fact, each with full power of substitution, to the full extent of
your rights with respect to the units tendered by you and accepted for payment
by the AIMCO Operating Partnership. Such appointment will be effective when, and
only to the extent that, the AIMCO Operating Partnership accepts the tendered
units for payment. You agree not to exercise any rights pertaining to the
tendered units without the prior consent of the AIMCO Operating Partnership.
Upon such acceptance for payment, all prior powers of attorney granted by you
with respect to such units will, without further action, be revoked, and no
subsequent powers of attorney may be granted (and if granted will not be
effective). Pursuant to such appointment as attorneys-in-fact, the AIMCO
Operating Partnership and its managers and designees each will have the power,
among other things, (i) to transfer ownership of such units on the partnership
books maintained by your general partner (which is our affiliate) (and execute
and deliver any accompanying evidences of transfer and authenticity any of them
may deem necessary or appropriate in connection therewith), (ii) upon receipt by
the Information Agent of the offer consideration, to become a substituted
limited partner, to receive any and all distributions made by your partnership
on or after the date on which the AIMCO Operating Partnership acquires such
units, and to receive all benefits and otherwise exercise all rights of
beneficial ownership of such units in accordance with the terms of our offer,
(iii) to execute and deliver to the general partner of your partnership a change
of address form instructing the general partner to send any and all future
distributions to which the AIMCO Operating Partnership is entitled pursuant to
the terms of the offer in respect of tendered units to the address specified in
such form, and (iv) to endorse any check payable to you or upon your order
representing a distribution to which the AIMCO Operating Partnership is entitled
pursuant to the terms of our offer, in each case, in your name and on your
behalf.
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Assignment of Interest in Future Distributions and All Other Rights, Etc.
If you tender units, you will agree to irrevocably sell, assign, transfer,
convey and deliver to, or upon the order of, the AIMCO Operating Partnership,
all of your right, title and interest in and to such units tendered that are
accepted for payment pursuant to the offer, including, without limitation, (i)
all of your interest in the capital of your partnership, and interest in all
profits, losses and distributions of any kind to which you shall at any time be
entitled in respect of the units; (ii) all other payments, if any, due or to
become due to you in respect of the units, under or arising out of your
partnership's agreement of limited partnership, whether as contractual
obligations, damages, insurance proceeds, condemnation awards or otherwise;
(iii) all of your claims, rights, powers, privileges, authority, options,
security interests, liens and remedies, if any, under or arising out of your
partnership's agreement of limited partnership or your ownership of the units,
including, without limitation, all voting rights, rights of first offer, first
refusal or similar rights, and rights to be substituted as a limited partner of
your partnership; and (iv) all of your present and future claims, if any,
against your partnership or your partners under or arising out of your
partnership's agreement of limited partnership for monies loaned or advanced,
for services rendered, for the management of your partnership or otherwise.
Election of Consideration
You may elect to receive Preferred OP Units, Common OP Units or cash
pursuant to our offer, by so indicating in the appropriate space on the Letter
of Transmittal. In the event that you tender units but do not indicate on the
Letter of Transmittal which type of consideration you want, the AIMCO Operating
Partnership will issue Preferred OP Units to you.
Determination of Validity; Rejection of Units; Waiver of Defects; No
Obligation to Give Notice of Defects
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for payment of any tender of units pursuant to the offer
will be determined by the AIMCO Operating Partnership, in its sole discretion,
which determination shall be final and binding on all parties. The AIMCO
Operating Partnership reserves the absolute right to reject any or all tenders
of any particular unit determined by it not to be in proper form or if the
acceptance of or payment for that unit may, in the opinion of the AIMCO
Operating Partnership's counsel, be unlawful. The AIMCO Operating Partnership
also reserves the absolute right to waive or amend any of the conditions of the
offer that it is legally permitted to waive as to the tender of any particular
unit and to waive any defect or irregularity in any tender with respect to any
particular unit. The AIMCO Operating Partnership's interpretation of the terms
and conditions of the offer (including the Letters of Transmittal) will be final
and binding on all parties. No tender of units will be deemed to have been
validly made unless and until all defects and irregularities have been cured or
waived. Neither the AIMCO Operating Partnership, the Information Agent nor any
other person will be under any duty to give notification of any defects or
irregularities in the tender of any units or will incur any liability for
failure to give any such notification.
Backup Federal Income Tax Withholding
To prevent the possible application of back-up Federal income tax
withholding of 31% with respect to payment of the offer consideration, you must
provide the AIMCO Operating Partnership with your correct taxpayer
identification number. See the instructions to the Letter of Transmittal and
"Certain Federal Income Tax Matters."
FIRPTA Withholding
To prevent the withholding of Federal income tax in an amount equal to 10%
of the amount realized pursuant to the offer, you must certify under penalty of
perjury that you are not a foreign person. See the instructions to the Letter of
Transmittal and "Certain Federal Income Tax Matters."
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Transfer Taxes
The amount of any transfer taxes (whether imposed on the registered holder
of units or any person other than the person signing the Letter of Transmittal)
payable on account of the transfer to such person will be deducted from the
purchase price unless satisfactory evidence of the such taxes or exemption
therefrom is submitted.
Binding Agreement
If you tender units pursuant to any of the procedures described above, the
acceptance for payment of such units will constitute a binding agreement between
you and the AIMCO Operating Partnership on the terms set forth in this
Prospectus Supplement.
WITHDRAWAL RIGHTS
Tenders of units pursuant to the offer may be withdrawn at any time prior
to the expiration of our offer, as provided in this Prospectus Supplement, and
unless units have been accepted for payment as described in "-- Acceptance For
Payment and Payment For Units," tenders of units pursuant to this offer may be
made on or after , 1999.
For withdrawal to be effective, a written notice of withdrawal must be
timely received by the Information Agent at its address set forth on the back
cover of this Prospectus Supplement. Any such notice of withdrawal must specify
the name of the person who tendered, the number of units to be withdrawn and the
name of the registered holder of such units, if different from the person who
tendered. In addition, the notice of withdrawal must be signed by the person(s)
who signed the Letter of Transmittal in the same manner as the Letter of
Transmittal was signed.
If purchase of, or payment for, units is delayed for any reason or if the
AIMCO Operating Partnership is unable to purchase or pay for units for any
reason, then, without prejudice to the AIMCO Operating Partnership's rights
under the offer, tendered units may be retained by the Information Agent and may
not be withdrawn, except to the extent that participants are entitled to
withdrawal rights as set forth herein; subject, however, to the AIMCO Operating
Partnership's obligation, pursuant to Rule 14e-1(c) under the Exchange Act, to
pay the offer consideration in respect of units tendered or return those units
promptly after termination or withdrawal of the offer.
Any units properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the offer.
All questions as to the validity and form (including time of receipt) of
notices of withdrawal will be determined by the AIMCO Operating Partnership, in
its sole discretion, which determination shall be final and binding on all
parties. Neither the AIMCO Operating Partnership, the Information Agent nor any
other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT
The AIMCO Operating Partnership expressly reserves the right, in its sole
discretion, at any time and from time to time, (i) to extend the period of time
during which the offer is open and thereby delay acceptance for payment of, and
for, any units, (ii) to terminate the offer and not accept for payment any units
not theretofore accepted for payment or paid for if any of the conditions to the
offer are not satisfied or if any event occurs that might reasonably be expected
to result in a failure to satisfy such conditions, (iii) upon the occurrence of
any of the conditions specified in "-- Conditions of the Offer," to delay the
acceptance for payment of, or for, any units not already accepted for payment or
paid for and (iv) to amend the offer in any respect (including, without
limitation, increasing or decreasing the number of Preferred OP Units or Common
OP Units, or the amount of cash offered, eliminating any of the alternative
types of consideration being offered, or increasing or decreasing the percentage
of outstanding units being sought). Notice of any such extension, termination or
amendment will promptly be disseminated in a manner reasonably designed to
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inform unitholders of such change. In the case of an extension of the offer, the
extension will be followed by a press release or public announcement which will
be issued no later than 7:00 a.m., Denver, Colorado time, on the next business
day after the scheduled expiration date of the offer, in accordance with Rule
14e-1(d) under the Exchange Act.
If the AIMCO Operating Partnership extends the offer, or if the AIMCO
Operating Partnership (whether before or after its acceptance for payment of
units) is delayed in its payment for units or is unable to pay for units
pursuant to the offer for any reason, then, without prejudice to the AIMCO
Operating Partnership's rights under the offer, the Information Agent may retain
tendered units and those units may not be withdrawn except to the extent
participants are entitled to withdrawal rights as described in "-- Withdrawal
Rights;" subject, however, to the AIMCO Operating Partnership's obligation,
pursuant to Rule 14e-1(c), under the Exchange Act, to pay the offer
consideration in respect of units tendered or return those units promptly after
termination or withdrawal of the offer.
If the AIMCO Operating Partnership makes a material change in the terms of
the offer, or if it waives a material condition to the offer, the AIMCO
Operating Partnership will extend the offer and disseminate additional tender
offer materials to the extent required by Rule 14e-1 under the Exchange Act. The
minimum period during which the offer must remain open following any material
change in the terms of the offer, other than a change in price or a change in
percentage of securities sought or a change in any dealer's soliciting fee, will
depend upon the facts and circumstances, including the materiality of the
change. With respect to a change in price or, subject to certain limitations, a
change in the percentage of securities sought or a change in any dealer's
soliciting fee, a minimum of ten business days from the date of such change is
generally required to allow for adequate dissemination to participants.
Accordingly, if prior to the expiration of the offer, the AIMCO Operating
Partnership increases (other than increases of not more than two percent of the
outstanding units) or decreases the number of units being sought, or increases
or decreases the consideration offered pursuant to the offer, and if the offer
is scheduled to expire at any time earlier than the tenth business day from the
date that notice of such increase or decrease is first published, sent or given
to unitholders, the offer will be extended at least until the expiration of such
ten business days. As used herein, "business day" means any day other than a
Saturday, Sunday or a Federal holiday, and consists of the time period from
12:01 a.m. through 12:00 midnight, Eastern time.
FRACTIONAL OP UNITS
We will issue fractional Common OP Units or Preferred OP Units, if
necessary.
FUTURE PLANS OF THE AIMCO OPERATING PARTNERSHIP
As described above under "Background and Reasons for the Offer," the AIMCO
Operating Partnership owns a majority of the general partner of your partnership
and thereby controls the management of your partnership. In addition, AIMCO owns
a majority of the company that manages your partnership's property. The AIMCO
Operating Partnership currently intends that, upon consummation of the offer,
your partnership will continue its business and operations substantially as they
are currently being conducted. The offer is not expected to have any effect on
your partnership's financial condition or results of operations.
After the completion or termination of the offer, the AIMCO Operating
Partnership and its affiliates may acquire additional units or sell units. Any
acquisition may be made through private purchases, market purchases or
transactions effected on a so-called partnership trading board, through one or
more future tender or exchange offers, by merger, consolidation or by any other
means deemed advisable. Any acquisition may be at a price higher or lower than
the price to be paid for the units purchased pursuant to this offer, and may be
for cash, limited partnership interests in the AIMCO Operating Partnership or
other consideration. The AIMCO Operating Partnership also may consider selling
some or all of the units it acquires pursuant to the offer to persons not yet
determined, which may include affiliates of the AIMCO Operating Partnership. The
AIMCO Operating Partnership may also buy your partnership's property, although
it has no present intention to do so. There can be no assurance, however, that
the AIMCO Operating Partnership will initiate or
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complete, or will cause your partnership to initiate or complete, any subsequent
transaction during any specific time period following the expiration of the
offer or at all.
We currently intend that, upon consummation of the offer, your partnership
will continue its business and operations substantially as they are currently
being conducted. We do not have any present plans or proposals which relate to
or would result in any material changes in your partnership's structure or
business such as a merger, reorganization or liquidation. We have no present
intention to cause your partnership to sell any of its properties or to prepay
current mortgages within any specified time period.
VOTING BY THE AIMCO OPERATING PARTNERSHIP
If the AIMCO Operating Partnership acquires a substantial number of units
pursuant to the offer, the AIMCO Operating Partnership may be in a position to
influence or control voting decisions with respect to your partnership. Under
your partnership's agreement of limited partnership, holders of outstanding
units are entitled to take action with respect to a variety of matters,
including dissolution and most types of amendments to your partnership's
agreement of limited partnership. See "Comparison of Your Units and AIMCO OP
Units -- Voting Rights."
DISSENTERS' RIGHTS
Neither your partnership's agreement of limited partnership nor applicable
law provides any right for you to have your units appraised or redeemed in
connection with or as a result of the offer. In addition, we are not extending
appraisal rights in connection with the offer. You have the opportunity to make
your own decision on whether to tender your units in the offer.
No provisions have been made with regard to the offer to allow you or other
limited partners to inspect the books and records of your partnership or to
obtain counsel or appraisal services at our expense or at the expense of your
partnership. However, as described under "Comparison of Your Partnership and the
AIMCO Operating Partnership -- Review of Investor Lists," you have the right
under your partnership's agreement of limited partnership to obtain a list of
the limited partners.
CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the offer, the AIMCO Operating
Partnership shall not be required to accept for payment and pay for any units
tendered pursuant to the offer, may postpone the purchase of, and payment for,
units tendered, and may terminate or amend the offer if at any time from or
after , 1998 and at or before the time of acceptance for payment of
any such units (whether or not any units have theretofore been accepted for
payment and paid for) pursuant to the offer, any of the following shall occur:
(a) any change (or any condition, event or development involving a
prospective change) shall have occurred or been threatened in the business,
properties, assets, liabilities, indebtedness, capitalization, condition
(financial or otherwise), operations, licenses or franchises, management
contract, or results of operations or prospects of your partnership or
local markets in which your partnership owns or operates its property,
including any fire, flood, natural disaster, casualty loss, or act of God
that, in the sole judgment of the AIMCO Operating Partnership, is or may be
materially adverse to your partnership or the value of your units to the
AIMCO Operating Partnership, or the AIMCO Operating Partnership shall have
become aware of any facts relating to your partnership, its indebtedness or
its operations which, in the sole judgment of the AIMCO Operating
Partnership, has or may have material significance with respect to the
value of your partnership or the value of your units to the AIMCO Operating
Partnership; or
(b) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange
or the over-the-counter market in the United States, (ii) a decline in the
closing share price of AIMCO's Class A Common Stock of more than 7.5% per
share, from , 1998 (iii) any extraordinary or material
adverse change in the financial, real
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estate or money markets or major equity security indices in the United
States such that there shall have occurred at least a 7.5% increase in
LIBOR or at least a 7.5% decrease in the S&P 500 Index, the Morgan Stanley
REIT Index, or the price of the 10-year Treasury Bond or the price of the
30-year Treasury Bond, in each case from , 1998 (iv) any
material adverse change in the commercial mortgage financing markets, (v) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (vi) a commencement of a war, armed
hostilities or other national or international calamity directly or
indirectly involving the United States, (vii) any limitation (whether or
not mandatory) by any governmental authority on, or any other event which,
in the sole judgment of the AIMCO Operating Partnership, might affect the
extension of credit by banks or other lending institutions, or (viii) in
the case of any of the foregoing existing at the time of the commencement
of the offer, in the sole judgment of the AIMCO Operating Partnership, a
material acceleration or worsening thereof (any changes to the offer
resulting from the conditions set forth in this paragraph will most likely
involve a change in the amount or terms of the consideration offered or the
termination of the offer); or
(c) there shall have been threatened, instituted or pending any action,
proceeding, application or counterclaim by any Federal, state, local or
foreign government, governmental authority or governmental agency, or by
any other person, before any governmental authority, court or regulatory or
administrative agency, authority or tribunal, which (i) challenges or seeks
to challenge the acquisition by the AIMCO Operating Partnership of the
units, restrains, prohibits or delays the making or consummation of the
offer, prohibits the performance of any of the contracts or other
arrangements entered into by the AIMCO Operating Partnership (or any
affiliates of the AIMCO Operating Partnership) seeks to obtain any material
amount of damages as a result of the transactions contemplated by the
offer, (ii) seeks to make the purchase of, or payment for, some or all of
the units pursuant to the offer illegal or results in a delay in the
ability of the AIMCO Operating Partnership to accept for payment or pay for
some or all of the units, (iii) seeks to prohibit or limit the ownership or
operation by AIMCO or any of its affiliates of the entity serving as your
general partner (which is our affiliate) or to remove such entity as the
general partner of your partnership, or seeks to impose any material
limitation on the ability of the AIMCO Operating Partnership or any of its
affiliates to conduct your partnership's business or own such assets, (iv)
seeks to impose material limitations on the ability of the AIMCO Operating
Partnership or any of its affiliates to acquire or hold or to exercise full
rights of ownership of the units including, but not limited to, the right
to vote the units purchased by it on all matters properly presented to
unitholders or (v) might result, in the sole judgment of the AIMCO
Operating Partnership, in a diminution in the value of your partnership or
a limitation of the benefits expected to be derived by the AIMCO Operating
Partnership as a result of the transactions contemplated by the offer or
the value of units to the AIMCO Operating Partnership; or
(d) there shall be any action taken, or any statute, rule, regulation,
order or injunction shall be sought, proposed, enacted, promulgated,
entered, enforced or deemed applicable to the offer, the AIMCO Operating
Partnership, its general partner or any of its affiliates or any other
action shall have been taken, proposed or threatened, by any government,
governmental authority or court, that, in the sole judgment of the AIMCO
Operating Partnership, might, directly or indirectly, result in any of the
consequences referred to in clauses (i) through (v) of paragraph (c) above;
or
(e) your partnership shall have (i) changed, or authorized a change of,
its units or your partnership's capitalization, (ii) issued, distributed,
sold or pledged, or authorized, proposed or announced the issuance,
distribution, sale or pledge of (A) any equity interests (including,
without limitation, units), or securities convertible into any such equity
interests or any rights, warrants or options to acquire any such equity
interests or convertible securities, or (B) any other securities in respect
of, in lieu of, or in substitution for units outstanding on the date
hereof, (iii) purchased or otherwise acquired, or proposed or offered to
purchase or otherwise acquire, any outstanding units or other securities,
(iv) declared or paid any dividend or distribution on any units or issued,
authorized, recommended or proposed the issuance of any other distribution
in respect of the units, whether payable in cash, securities or other
property, (v) authorized, recommended, proposed or announced an agreement,
or intention to
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enter into an agreement, with respect to any merger, consolidation,
liquidation or business combination, any acquisition or disposition of a
material amount of assets or securities, or any release or relinquishment
of any material contract rights, or any comparable event, not in the
ordinary course of business, (vi) taken any action to implement such a
transaction previously authorized, recommended, proposed or publicly
announced, (vii) issued, or announced its intention to issue, any debt
securities, or securities convertible into, or rights, warrants or options
to acquire, any debt securities, or incurred, or announced its intention to
incur, any debt other than in the ordinary course of business and
consistent with past practice, (viii) authorized, recommended or proposed,
or entered into, any transaction which, in the sole judgment of the AIMCO
Operating Partnership, has or could have an adverse affect on the value of
your partnership or the units, (ix) proposed, adopted or authorized any
amendment of its organizational documents, (x) agreed in writing or
otherwise to take any of the foregoing actions, or (xi) been notified that
any debt of your partnership or any of its subsidiaries secured by any of
its or their assets is in default or has been accelerated (any changes to
the offer resulting from the conditions set forth in this paragraph will
most likely involve a change in the amount or terms of the consideration
offered or the termination of the offer); or
(f) a tender or exchange offer for any units shall have been commenced
or publicly proposed to be made by another person or "group" (as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934), or it shall have
been publicly disclosed or the AIMCO Operating Partnership shall have
otherwise learned that (i) any person or group shall have acquired or
proposed or be attempting to acquire beneficial ownership of more than four
percent of the units, or shall have been granted any option, warrant or
right, conditional or otherwise, to acquire beneficial ownership of more
than four percent of the units, or (ii) any person or group shall have
entered into a definitive agreement or an agreement in principle or made a
proposal with respect to a merger, consolidation, purchase or lease of
assets, debt refinancing or other business combination with or involving
your partnership; or
(g) with respect to the cash portion of the offer consideration only,
the AIMCO Operating Partnership shall not have adequate cash or financing
commitments available to pay the cash portion of the offer consideration.
The foregoing conditions are for the sole benefit of the AIMCO Operating
Partnership and may be asserted by the AIMCO Operating Partnership regardless of
the circumstances giving rise to such conditions or may be waived by the AIMCO
Operating Partnership in whole or in part at any time and from time to time in
its sole discretion. The failure by the AIMCO Operating Partnership at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to any particular facts or
circumstances shall not be deemed a waiver with respect to any other facts or
circumstances and each right shall be deemed a continuing right which may be
asserted at any time and from time to time.
EFFECTS OF THE OFFER
Future Control by AIMCO
Because the general partner of your partnership is a subsidiary of AIMCO,
AIMCO has control over the management of your partnership. If the AIMCO
Operating Partnership acquires units in the offer, AIMCO will increase its
ability to influence voting decisions with respect to your partnership or may
control such voting decisions. Furthermore, in the event that the AIMCO
Operating Partnership acquires a substantial number of units pursuant to the
offer, removal of the general partner of your partnership (which general partner
is controlled by AIMCO) without AIMCO's consent may become more difficult or
impossible. AIMCO also owns a majority of the company that manages your
partnership's property. In the event that the AIMCO Operating Partnership
acquires a substantial number of units pursuant to the offer, removal of the
property manager may become more difficult or impossible.
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Effect on Trading Market; Registration Under Section 12(g) of the Exchange Act
If a substantial number of units are purchased pursuant to the offer, the
result will be a reduction in the number of limited partners in your
partnership. In the case of certain kinds of equity securities, a reduction in
the number of securityholders might be expected to result in a reduction in the
liquidity and volume of activity in the trading market for the security. In this
case, however, there is no established public trading market for the units and,
therefore, the AIMCO Operating Partnership does not believe a reduction in the
number of limited partners will materially further restrict your ability to find
purchasers for your units through secondary market transactions.
The units are registered under Section 12(g) of the Securities Exchange Act
of 1934, which means, among other things, that your partnership is required to
file periodic reports with the SEC and to comply with the SEC's proxy rules. It
is possible that upon consummation of the offer, the units in your partnership
could cease to be registered under Section 12(g) of the Securities Exchange Act
of 1934 (the "Exchange Act") and, your partnership could cease to be required to
file periodic reports under the Exchange Act. If the units were held by fewer
than 300 persons, your partnership could apply to de-register the units under
the Exchange Act. The lack of filing periodic reports could affect the already
limited secondary market which currently exists for units in your partnership
and may result in others not tendering for such units. In such a case, you would
regularly have access only to the limited information your partnership's
agreement of limited partnership requires your general partner (which is our
affiliate) to provide each year, which information consists primarily of tax
information. The AIMCO Operating Partnership will provide to the holders of its
OP Units annual financial statements audited by independent public accountants.
Distributions to the AIMCO Operating Partnership
As a result of the offer, the AIMCO Operating Partnership, in its capacity
as a limited partner of your partnership, will participate in any subsequent
distributions to limited partners to the extent of its interest in your
partnership, including the units purchased pursuant to this offer.
Partnership Business
This offer will not affect the operation of your partnership's property.
The AIMCO Operating Partnership will continue to control the general partner of
your partnership and the property manager will remain the same. See "Your
Partnership -- History of the Partnership."
CERTAIN LEGAL MATTERS
General. Except as set forth in this section, the AIMCO Operating
Partnership is not, based on information provided by your general partner (which
is our affiliate), aware of any licenses or regulatory permits that would be
material to the business of your partnership, taken as a whole, and that might
be adversely affected by the AIMCO Operating Partnership's acquisition of units
as contemplated herein, or any filings, approvals or other actions by or with
any domestic or foreign governmental authority or administrative or regulatory
agency that would be required prior to the acquisition of units by the AIMCO
Operating Partnership pursuant to the offer as contemplated herein, other than
the filing with the SEC of a Tender Offer Statement on Schedule 14D-1, a Going
Private Transaction Statement on Schedule 13E-3 and any amendments required
thereto. While there is no present intent to delay the purchase of units
tendered pursuant to the offer pending receipt of any such additional approval
or the taking of any such action, there can be no assurance that any such
additional approval or action, if needed, would be obtained without substantial
conditions or that adverse consequences might not result to your partnership's
business, or that certain parts of your partnership's business might not have to
be disposed of or other substantial conditions complied with in order to obtain
such approval or action, any of which could cause the AIMCO Operating
Partnership to elect to terminate the offer without purchasing units hereunder.
The AIMCO Operating Partnership's obligation to purchase and pay for units is
subject to certain conditions, including conditions related to the legal matters
discussed in this section.
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Antitrust. The AIMCO Operating Partnership does not believe that the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, is applicable
to the acquisition of units contemplated by this offer.
Margin Requirements. The units are not "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly, those regulations generally are not applicable to this offer.
State Laws. The AIMCO Operating Partnership is not aware of any
jurisdiction in which the making of the offer is not in compliance with
applicable law. If the AIMCO Operating Partnership becomes aware of any
jurisdiction in which the making of the offer would not be in compliance with
applicable law, the AIMCO Operating Partnership will make a good faith effort to
comply with any such law. If, after such good faith effort, the AIMCO Operating
Partnership cannot comply with any such law, the offer will not be made to (nor
will tenders be accepted from or on behalf of) limited partners residing in such
jurisdiction. In those jurisdictions whose securities or blue sky laws require
the offer to be made by a licensed broker or dealer, the offer shall be made on
behalf of the AIMCO Operating Partnership, if at all, only by one or more
registered brokers or dealers licensed under the laws of that jurisdiction.
Certain Litigation
On March 24, 1998, certain persons claiming to own limited partner
interests in certain of the limited partnerships for which subsidiaries of IPT
act as general partner (including your partnership) filed a purported class and
derivative action in California Superior Court in the County of San Mateo
against AIMCO, Insignia, the general partners of the partnerships, certain
persons and entities who purportedly formerly controlled the general partners,
and additional entities affiliated with and individuals who are officers,
directors and/or principals of several of the defendants. The complaint contains
allegations that, among other things, (i) the defendants breached fiduciary
duties owed to the plaintiffs, or aided and abetted in those purported breaches,
by selling or agreeing to sell their "fiduciary positions" as stockholders,
officers and directors of the general partners for a profit and retaining said
profit rather than distributing it to the plaintiffs; (ii) the defendants
breached fiduciary duties, or aided and abetted in those purported breaches, by
mismanaging the partnerships and misappropriating assets of the partnerships by
(a) manipulating the operations of the partnerships to depress the trading price
of limited partnership units of the Partnerships; (b) coercing and fraudulently
inducing unitholders to sell units to certain of the defendants at depressed
prices; and (c) using the voting control obtained by purchasing units at
depressed prices to entrench certain of the defendants' positions of control
over the partnerships; and (iii) the defendants breached their fiduciary duties
to the plaintiffs by (a) selling assets of the partnerships such as mailing
lists of unitholders and (b) causing the general partners to enter into
exclusive arrangements with their affiliates to sell goods and services to the
general partners, the unitholders and tenants of properties owned by the
partnerships. The complaint also alleges that the foregoing allegations
constitute violations of various California securities, corporate and
partnership statutes, as well as conversion and common law fraud. The complaint
seeks unspecified compensatory and punitive damages, an injunction blocking the
sale of control of the general partners and a court order directing the
defendants to discharge their fiduciary duties to the plaintiffs. On June 25,
1998, the defendants filed motions seeking dismissal of the action. In lieu of
responding to the motion, plaintiffs have filed an amended complaint. On October
14, 1998, the AIMCO and Insignia defendants filed demurrers to the amended
complaint. The demurrers are scheduled to be heard on January 8, 1999.
On July 30, 1998, certain entities claiming to own limited partnership
interests in a number of the limited partnerships for which subsidiaries of IPT
act as general partner (including your partnership) filed a complaint in the
Superior Court of the State of California, County of Los Angeles against
Insignia, the partnerships, the general partners (including your general
partner) and additional entities affiliated with several of the defendants.
Plaintiffs allege that they have requested from, but have been denied by each of
the partnerships, lists of their respective limited partners for the purpose of
making tender offers to purchase up to 4.9% of the units of limited partnership
interest in each of the partnerships. The complaint also alleges that certain of
the defendants made tender offers to purchase units of limited partnership
interest in many of the partnerships, with the alleged result that plaintiffs
have been deprived of the benefits they would have realized from ownership of
the additional units. The plaintiffs assert eleven causes of action, including
breach
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of contract, unfair business practices, and violations of the partnership
statutes of the states in which the partnerships are organized. Plaintiffs seeks
compensatory, punitive and treble damages. Plaintiffs estimate compensatory
damages to exceed $15 million. An answer to the complaint was filed by the
defendants on September 15, 1998.
FEES AND EXPENSES
The AIMCO Operating Partnership will not pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of units pursuant to the
offer. The AIMCO Operating Partnership has retained River Oaks Partnership
Services, Inc. to act as Information Agent in connection with the offer. The
Information Agent may contact holders of units by mail, telephone, telex,
telegraph and personal interview and may request brokers, dealers and other
nominees to forward materials relating to the offer to beneficial owners of the
units. The AIMCO Operating Partnership will pay the Information Agent reasonable
and customary compensation for its services in connection with the offer, plus
reimbursement for out-of-pocket expenses, and will indemnify the Information
Agent against certain liabilities and expenses in connection therewith,
including liabilities under the Federal securities laws. The AIMCO Operating
Partnership will also pay all costs and expenses of printing and mailing this
Prospectus Supplement and the Letter of Transmittal and its legal fees and
expenses. The AIMCO Operating Partnership will also pay the fees of Stanger for
providing the fairness opinion for the offer. The AIMCO Operating Partnership
estimates that its total costs and expenses in making the offer (excluding the
purchase price of the units) will be approximately $50,000.
ACCOUNTING TREATMENT
Upon consummation of the offer, the AIMCO Operating Partnership will
account for its investment in the units acquired in the offer under the purchase
method of accounting. There will be no effect on the accounting treatment of
your partnership as a result of the offer.
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CERTAIN FEDERAL INCOME TAX MATTERS
The following summary is a general discussion of certain Federal income tax
consequences of the Offer that may be relevant to (i) persons who tender some or
all of their units in exchange for OP Units pursuant to the offer, (ii) persons
who tender some or all of their units for cash pursuant to the offer and (iii)
persons who do not tender any of their units pursuant to the offer. This
discussion is based upon the Internal Revenue Code of 1986 as amended ("the
Code"), Treasury Regulations, rulings issued by the IRS, and judicial decisions,
all in effect as of the date of this offer and all of which are subject to
change, possibly retroactively. Such summary is based on the assumptions that
the AIMCO Operating Partnership and your partnership will be operated in
accordance with their respective organizational documents and partnership
agreements. This summary is for general information only and does not purport to
discuss all aspects of Federal income taxation which may be important to a
particular person in light of its investment or tax circumstances, or to certain
types of investors subject to special tax rules (including financial
institutions, broker-dealers, insurance companies, and, except to the extent
discussed below, tax-exempt organizations and foreign investors, as determined
for United States Federal income tax purposes). This summary assumes that your
units and any OP Units that you receive in the offer constitute capital assets
(generally, property held for investment). No advance ruling has been or will be
sought from the IRS regarding any matter discussed in this Prospectus
Supplement. Further, no opinion of tax counsel has been obtained with regard to
the offer. However, an opinion of counsel has been obtained with regard to
AIMCO's status as a REIT and that the OP Units will be validly issued, fully
paid and non-assessable. You may obtain a copy of such opinion by sending a
written request to the AIMCO Operating Partnership.
THE FEDERAL INCOME TAX TREATMENT OF AN OFFEREE PARTICIPATING IN THE OFFER
DEPENDS IN SOME INSTANCES ON DETERMINATIONS OF FACT AND INTERPRETATIONS OF
COMPLEX PROVISIONS OF FEDERAL INCOME TAX LAW FOR WHICH NO CLEAR PRECEDENT OR
AUTHORITY MAY BE AVAILABLE. ACCORDINGLY, YOU SHOULD CONSULT YOUR TAX ADVISOR
REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES TO YOU OF
SELLING OR EXCHANGING UNITS PURSUANT TO THE OFFER OR OF A DECISION NOT TO SELL
OR EXCHANGE IN LIGHT OR YOUR SPECIFIC TAX SITUATION.
TAX CONSEQUENCES OF EXCHANGING UNITS SOLELY FOR OP UNITS
Except as described below, you will not recognize gain or loss for Federal
income tax purposes upon an exchange of units solely for OP Units. You may
recognize gain upon such exchange, where, immediately prior to such exchange,
the amount of liabilities of your partnership allocable to the units transferred
by you exceeds the amount of the AIMCO Operating Partnership liabilities
allocated to the OP Units issued to you, as determined immediately after such
exchange. In such event, any such excess would be treated as a deemed
distribution to you of cash from the AIMCO Operating Partnership. Such deemed
cash distribution would be treated as a nontaxable return of capital to the
extent of your adjusted tax basis in the OP Units received, and thereafter as a
taxable gain.
The AIMCO Operating Partnership anticipates that, under most circumstances,
you will be allocated an amount of the AIMCO Operating Partnership liabilities,
as determined immediately after an exchange of units pursuant to the offer, at
least equal to the amount of liabilities of your partnership that were allocable
to such units prior to such exchange. Accordingly, the AIMCO Operating
Partnership anticipates that most people would not recognize gain or loss as a
result of an exchange of units solely for OP Units pursuant to the offer.
If you are considering exchanging units for OP Units pursuant to the offer,
please read the description under the heading "Certain Federal Income Tax
Considerations -- the AIMCO Operating Partnership Tax Considerations -- Tax
Consequences Upon Contribution of Property to the AIMCO Operating Partnership"
in the accompanying Prospectus.
TAX CONSEQUENCES OF EXCHANGING UNITS FOR CASH AND OP UNITS
Generally, if you exchange your units for cash and OP Units, it will be
treated, for Federal income tax purposes, as a partial taxable sale of such
units for cash and as a partial tax-free contribution of such units to the AIMCO
Operating Partnership. The portion of the units that will be treated as sold to
the AIMCO
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Operating Partnership will be equal to a fraction, the numerator of which will
be the sum of the cash received by you pursuant to the offer plus the amount of
your partnership liabilities deemed transferred to you pursuant to the offer,
and the denominator of which is the fair market value of the aggregate
consideration received by you pursuant to the offer (i.e., the sum of the
numerator of such fraction plus the fair market value of the OP Units received
by you pursuant to the offer). The transfer by you of the remaining portion of
such units will generally be treated as a tax-free contribution. At the time of
transfer, the adjusted tax basis of the transferred units is allocated between
the portion of the units deemed sold and the remaining portion of the units
deemed contributed on the basis of each such portion's respective fair market
value.
For purposes of the partial sale rules, the amount of your partnership's
liabilities deemed transferred in the exchange will be equal to the lesser of
(i) the excess of your partnership's liabilities allocable to you in respect of
the transferred units immediately prior to the exchange, over the AIMCO
Operating Partnership liabilities allocated to you as determined immediately
after the exchange or (ii) the product of (A) your partnership's liabilities
allocable to you in respect of such transferred units immediately prior to the
exchange and (B) a fraction, (x) the numerator of which is the cash received and
(y) the denominator of which is the excess of the fair market value of the
aggregate consideration received in the exchange over the amount of your
partnership liabilities allocable to you in respect of the transferred units
immediately prior to the exchange.
To the extent that your transfer of units to the AIMCO Operating
Partnership is treated as a taxable sale, you will recognize gain or loss in an
amount equal to the difference between (i) the cash received plus the amount of
your partnership's liabilities deemed transferred in the exchange and (ii) the
adjusted tax basis allocable to the portion of such units deemed sold. Thus,
your tax liability resulting from such sale of units could exceed the amount of
cash received upon such sale. To the extent that your transfer of units in
exchange for OP Units is treated as a tax-free contribution to the AIMCO
Operating Partnership, you will generally not recognize any gain or loss for
Federal income tax purposes. You may recognize gain upon such exchange if the
amount of your partnership's liabilities allocable to you, as determined
immediately prior to the exchange, in respect of the portion of units that are
treated as being transferred in a tax-free contribution exceeds the amount of
the AIMCO Operating Partnership liabilities allocated to you, as determined
immediately after the exchange. In this event, such excess would be treated as a
deemed distribution of cash from the AIMCO Operating Partnership to you. Such
deemed cash distribution would be treated as a nontaxable return of capital to
the extent of your adjusted tax basis in the OP Units received, and thereafter
as a taxable gain. You will have a holding period in the OP Units received
pursuant to the portion of the exchange that is treated as a tax free
contribution that includes the holding period of your units transferred in
exchange therefor.
TAX CONSEQUENCES OF EXCHANGING UNITS SOLELY FOR CASH
In general, you will recognize gain or loss on a sale of a unit pursuant to
the offer equal to the difference between (i) your "amount realized" on the sale
and (ii) your adjusted tax basis in the units sold. The "amount realized" with
respect to a unit will be equal to the sum of the amount of cash received by you
for the unit sold pursuant to the offer (that is, the offer consideration) plus
the amount of the liabilities of your partnership allocable to such unit (as
determined under Section 752 of the Code). Thus, your tax liability resulting
from such sale of units could exceed the amount of cash received upon such sale.
ADJUSTED TAX BASIS
In general, investors in your partnership had an initial tax basis in their
units equal to the cash investment in the partnership increased by their share
of partnership liabilities at the time such units were acquired. Your initial
tax basis generally has been increased by (i) your share of your partnership's
income and gains and (ii) any increases in your share of liabilities of your
partnership, and has been decreased (but not below zero) by (i) your share of
cash distributions from your partnership, (ii) any decreases in your share of
liabilities of your partnership, (iii) your share of losses of your partnership,
and (iv) your share of nondeductible expenditures of your partnership that are
not chargeable to capital. For purposes of determining your adjusted tax basis
in units immediately prior to a disposition of such units, your adjusted tax
basis in such units will include your allocable share of your partnership's
income, gain or loss for the taxable year of
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disposition. If your adjusted tax basis is less than your share of your
partnership's liabilities (e.g., as a result of the effect of net loss
allocations and/or distributions exceeding the cost of your unit), your gain
recognized pursuant to the offer will exceed the cash proceeds realized upon the
sale of such unit. The initial adjusted tax basis of the OP Units received by
you in exchange for your units pursuant to the offer will be equal to (i) the
sum of your adjusted tax basis in such transferred units plus any gain
recognized in the exchange and reduced by (ii) cash received or deemed received
in the exchange.
CHARACTER OF GAIN OR LOSS RECOGNIZED PURSUANT TO THE OFFER
Except as described below, the gain or loss that you recognize on a sale or
exchange of a unit pursuant to the offer generally will be treated as a capital
gain or loss and will be treated as long-term capital gain or loss if your
holding period for the unit exceeds one year. Long-term capital gains recognized
by individuals and certain other noncorporate taxpayers generally will be
subject to a maximum Federal income tax rate of 20%. If the amount realized with
respect to a unit attributable to your share of "unrealized receivables" of your
partnership exceeds the basis attributable to those assets, such excess will be
treated as ordinary income. Among other things, "unrealized receivables" include
depreciation recapture with respect to certain types of property. In addition,
the maximum Federal income tax rate applicable to persons who are noncorporate
taxpayers for net capital gains attributable to the sale of depreciable real
property (which may be determined to include an interest in a partnership such
as your partnership) held for more than one year is currently 25% (rather than
20%) to the extent of previously claimed depreciation deductions that would not
be treated as "unrealized receivables."
If you tender units in the offer, you will be allocated a share of your
partnership's taxable income or loss for the year of tender with respect to any
units sold or exchanged. Thus, you will recognize ordinary income or loss in an
amount equal to your partnership's accreted income or loss allocable to such
unit. You will not receive any future distributions on units that you tender on
or after the date on which such units are accepted for purchase, and
accordingly, you may not receive any distributions with respect to such accreted
income. Such allocation and any cash distributed by your partnership to you for
that year will affect your adjusted tax basis in your unit and, therefore, the
amount of your taxable gain or loss upon a sale of a unit pursuant to the offer.
PASSIVE ACTIVITY LOSSES
The passive activity loss rules of the Code limit the use of losses derived
from passive activities, which generally include investments in limited
partnership interests such as the units. An individual, as well as certain other
types of investors, generally cannot use losses from passive activities to
offset nonpassive activity income received during the taxable year. Passive
activity losses that are disallowed for a particular tax year are "suspended"
and may be carried forward to offset passive activity income earned by the
investor in future taxable years. In addition, such suspended losses may be
claimed as a deduction, subject to other applicable limitations, upon a taxable
disposition of the investor's interest in such activity.
Accordingly, if your investment in your partnership is treated as a passive
activity, you may be able to shelter gain from the sale of your units pursuant
to the offer with such losses in the manner described below. If you sell all or
a portion of your units pursuant to the offer and recognize a gain on such sale,
you will be entitled to use your current and "suspended" passive activity losses
(if any) from your partnership and other passive sources to offset that gain. If
you sell all or a portion of your units pursuant to the offer and recognizes a
loss on such sale, you will be entitled to deduct that loss currently (subject
to other applicable limitations) against the sum of your passive activity income
from your partnership for that year (if any) plus any passive activity income
from other sources for that year. If you sell all of your units pursuant to the
offer, the balance of any "suspended" losses that were not otherwise utilized
against passive activity income as described in the two preceding sentences will
no longer be suspended and will therefore be deductible (subject to any other
applicable limitations) by you against any other income for that year,
regardless of the character of that income. Accordingly, you should consult your
tax advisor concerning whether, and the extent to which, you have available
suspended passive activity losses from your partnership or other investments
that may be used to offset gain from the sale of your units pursuant to the
offer.
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FOREIGN OFFEREES
Gain recognized by a foreign person on a transfer of a unit for cash, OP
Units, or a combination thereof, pursuant to the offer will be subject to
Federal income tax under the Foreign Investment in Real Property Tax Act of 1980
("FIRPTA"). In such event, under the FIRPTA provisions of the Code, the AIMCO
Operating Partnership will be required to deduct and withhold 10% of the amount
realized by a foreign person on the disposition. Amounts would be creditable
against the foreign person's Federal income tax liability and, if in excess
thereof, a refund could be obtained from the Internal Revenue Service by filing
a U.S. income tax return. See the Instructions to the Letter of Transmittal.
CERTAIN TAX CONSEQUENCES TO NON-TENDERING AND PARTIALLY-TENDERING OFFEREES
Section 708 of the Code provides that if there is a sale or exchange of 50%
or more of the total interest in capital and profits of a partnership within any
12-month period, such partnership terminates for Federal income tax purposes (a
"Termination"). It is possible that the AIMCO Operating Partnership's
acquisition of units pursuant to the offer could result in a Termination of your
partnership. If a purchase of units results in a Termination, the following
Federal income tax events will be deemed to occur with respect to such
Termination, the terminated Partnership (the "Old Partnership") will be deemed
to have contributed all of its assets (subject to its liabilities) (the
"Hypothetical Contribution") to a new partnership (the "New Partnership") in
exchange for an interest in the New Partnership and, immediately thereafter, the
Old Partnership will be deemed to have distributed interests in the New
Partnership (the "Hypothetical Distribution") to the AIMCO Operating Partnership
and offerees who do not tender all of their units (a "Remaining Offeree") in
proportion to their respective interests in the Old Partnership in liquidation
of the Old Partnership.
A Remaining Offeree will not recognize any gain or loss upon the
Hypothetical Distribution or upon the Hypothetical Contribution and the capital
accounts of the Remaining Offerees in the Old Partnership will carry over intact
into the New Partnership. Any Termination may change (and possibly shorten) a
Remaining Offeree's holding period with respect to its units in your partnership
for Federal income tax purposes.
The New Partnership's adjusted tax basis in its assets will carry over from
the Old Partnership's basis in such assets immediately before the Termination.
Any Termination may also subject the assets of the New Partnership to
depreciable lives in excess of those currently applicable to the Old
Partnership. This would generally decrease the annual average depreciation
deductions allocable to the Remaining Offerees following consummation of the
Offer (thereby increasing the taxable income allocable to their retained units
each year), but would have no effect on the total depreciation deductions
available over the useful lives of the assets of your partnership.
Section 704(c) of the Code will apply to future allocation of income, gain,
loss and deductions with respect to any New Partnership assets among the AIMCO
Operating Partnership and the Remaining Offerees following the consummation of
the offer only to the extent that such assets were Section 704(c) property in
the hands of the Old Partnership immediately prior to the Hypothetical
Contribution. Moreover, subject to the Code's anti-abuse regulations, the New
Partnership will not be required to apply the same Section 704(c) allocation
method applied by the Old Partnership. The Hypothetical Contribution will not
trigger a new five-year holding period for purposes of measuring
post-contribution appreciation of assets for the offeree who contributed such
assets.
Elections as to certain tax matters previously made by the Old Partnership
prior to Termination will not be applicable to the New Partnership unless the
New Partnership chooses to make the same elections.
Additionally, upon a Termination, the Old Partnership's taxable year will
close for all offerees. In the case of a Remaining Offeree reporting on a tax
year other than a calendar year, the closing of your partnership's taxable year
may result in more than 12 months' taxable income or loss of the Old Partnership
being includible in such Offeree's taxable income for the year of Termination.
YOU SHOULD CONSULT YOUR TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES
APPLICABLE TO YOU AS A RESULT OF A SALE OR EXCHANGE OF UNITS PURSUANT TO THE
OFFER.
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VALUATION OF UNITS
We determined our cash offer consideration by estimating the value of each
property owned by your partnership using the direct capitalization method. This
method involves applying a capitalization rate to the property's annual net
operating income. We determined appropriate capitalization rates, but our
valuation is just an estimate. In estimating the capitalization rates, we
considered the property's physical condition, location and above-market mortgage
interest rates. In addition, we considered the recent decline in the real estate
markets, and the decline in the availability of commercial mortgage financing
and the recent bankruptcy of a major provider of subordinated mortgage
financing. Although the direct capitalization method is a widely accepted way of
valuing real estate, there are a number of other methods available to value real
estate, each of which may result in different valuations of a property. The
proceeds that you would receive if you sold your units to someone else or if
your partnership were actually liquidated might be higher or lower than our cash
offer consideration. We determined our cash offer consideration as follows:
- First, we estimated the value of the property owned by your partnership
using the direct capitalization method. We selected capitalization rates
based on our experience in valuing similar properties. The lower the
capitalization rate applied to a property's income, the higher its value.
We considered local market sales information for comparable properties,
estimated actual capitalization rates (net operating income less capital
reserves divided by sales price) and then evaluated each property in
light of its relative competitive position, taking into account property
location, occupancy rate, overall property condition and other relevant
factors. The AIMCO Operating Partnership believes that arms-length
purchasers would base their purchase offers on capitalization rates
comparable to those used by us, however there is no single correct
capitalization rate and others might use different rates. We divided each
property's fiscal 1997 net operating income by its capitalization rate to
derive an estimated gross property value as described in the following
table:
<TABLE>
<CAPTION>
ESTIMATED
FISCAL 1997 NET CAPITALIZATION GROSS PROPERTY
PROPERTY OPERATING INCOME RATE VALUE
-------- ---------------- -------------- --------------
<S> <C> <C> <C>
Baymeadows Apartments $2,566,000 9.75% $26,322,000
Quail Run Apartments 1,126,000 9.75 11,552,000
Countrywood Village Apartments 1,412,000 10.00 14,117,000
-----------
Estimated Total Gross Property Value $51,991,000
</TABLE>
- Second, we calculated the value of the equity of your partnership by
adding to the aggregate gross property value of all properties owned by
your partnership, the value of the non-real estate assets of your
partnership, and deducting the liabilities of your partnership, including
mortgage debt and debt owed by your partnership to its general partner or
its affiliates after consideration of any applicable subordination
provisions affecting payment of such debt. We deducted from this value
any taxes and certain other costs including required capital expenditures
and deferred maintenance to derive a net equity value for your
partnership of $25,265,202.
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- Third, using this net equity value, we determined the proceeds that would
be paid to holders of units in the event of a liquidation of your
partnership, based on the terms of your partnership's agreement of
limited partnership. Our cash offer consideration represents the per unit
liquidation proceeds determined in this manner.
<TABLE>
<S> <C>
Estimated total gross valuation of your partnership's
properties................................................ $51,991,000
Plus: Cash and cash equivalents............................. 1,220,727
Plus: Other partnership assets, net of security deposits.... 2,537,082
Less: Mortgage debt, including accrued interest............. 24,009,642
Less: Notes payable, including accrued interest............. 163,762
Less: Other liabilities..................................... 933,910
Partnership valuation before taxes and certain costs........ 30,641,495
Less: Extraordinary capital expenditures for deferred
maintenance............................................... 4,433,556
Less: Closing costs......................................... 942,737
Estimated net valuation of your partnership................. 25,265,202
Percentage of estimated net valuation allocated to units.... 100%
Estimated net valuation of units............................ 25,265,202
Total number of units............................. 49,995
Estimated valuation per unit................................ 505.00
-----------
Cash consideration per unit................................. 505.00
-----------
</TABLE>
- In order to determine the number of Preferred OP Units we are offering
you, we divided the cash offer consideration by the liquidation
preference of $25 per Preferred OP Unit to get 20.20 per unit.
- In order to determine the number of Common OP Units we are offering you,
we divided the cash offer consideration by $ ., to get per unit.
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<PAGE> 55
FAIRNESS OF THE OFFER
POSITION OF THE GENERAL PARTNER OF YOUR PARTNERSHIP WITH RESPECT TO THE OFFER;
FAIRNESS
The AIMCO Operating Partnership has a majority ownership interest in the
general partner of your partnership. Therefore, the general partner of your
partnership makes no recommendation whether you should tender or refrain from
tendering your units since it did not participate in the structuring of the
offer and has substantial conflicts of interest with regard to the offer.
However, for all of the reasons discussed herein, we and your general partner
believe that the offer is fair to you and the other holders of units in your
partnership. We also reasonably believe that the similar offers to the limited
partners of the other partnerships are fair to such limited partners. The AIMCO
Operating Partnership has retained Stanger to conduct an analysis of the offer
and to render an opinion as to the fairness to unitholders of the offer
consideration from a financial point of view. Stanger is not affiliated with
AIMCO or your partnership. Stanger is one of the leaders in the field of
analyzing and evaluating complex real estate transactions. However, we provided
much of the information used by Stanger in forming its fairness opinion. We
believe the information provided to Stanger is accurate in all material
respects. See "Stanger Analysis." You should make your decision whether to
tender based upon a number of factors, including your financial needs, other
financial opportunities available to you and your tax position.
The terms of our offer have been established by us and are not the result
of arms-length negotiations. In evaluating the fairness of the offer, your
general partner (which is our affiliate) and the AIMCO Operating Partnership
considered the following factors and information:
1. The opportunity for you to make an individual decision on whether to
tender your units in the offer and that the offer allows each investor to
continue to hold his or her units.
2. The estimated value of your partnership's properties has been
determined based on a method believed to reflect the valuation of such
assets by buyers in the market.
3. An analysis of the possible alternatives including liquidation and
continuation without the option of the offer. See "Background and Reasons
for the Offer -- Alternatives Considered."
4. An evaluation of the financial condition and results of operations of
your partnership and the AIMCO Operating Partnership and their anticipated
level of operating results. The offer is not expected to have an effect on
your partnership's financial condition or results of operations.
5. The method of determining the offer consideration which is intended
to provide you with OP Units or cash that are substantially the financial
equivalent to your interest in your partnership, adjusted to reflect the
expenses of the offer. See "Valuation of Units."
6. The opinion of Stanger, an independent third party, that the offer
consideration is fair to holders of units from a financial point of view.
See "Stanger Analysis"
7. The fact that the units are illiquid and the offer provides holders
of units with liquidity.
8. The fact that the offer generally provides holders of units with the
opportunity to receive both cash and OP Units together.
9. The fact that the offer provides holders of units with the
opportunity to defer taxes by electing to accept Preferred OP Units or
Common OP Units.
10. An evaluation of the market price of the Class A Common Stock and
the limited information on prices at which Common OP Units and units are
transferred. See "Your Partnership -- Distributions and Transfers of
Units." No assurance can be given that the Class A Common Stock will
continue to trade at its current price.
11. The estimated unit value of $505.00, based on a total estimated
value of your partnership's properties of $51,991,000. Your general partner
(which is our affiliate) has no present intention to liquidate your
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<PAGE> 56
partnership or to sell or refinance your partnership's properties. See
"Background and Reasons for the Offer".
12. Anticipated annualized distributions with respect to the Preferred
OP Units are $2.00 and current annualized distributions with respect to the
Common OP Units are $2.25. This is equivalent to distributions of $40.40
per year on the number of Preferred OP Units, or distributions of $
per year on the number of Common OP Units, that you would receive in
exchange for each of your partnership's units. Distributions with respect
to your units for the nine months ended September 30, 1998 were $16.07. See
"Comparison of Ownership of Your Units and AIMCO OP Units --
Distributions."
13. The offer consideration in light of any previous tender offers and
the results of such offers. See "Background and Reasons for the
Offer -- Background of the Offer -- Previous Tender Offers" and "Your
Partnership -- Beneficial Ownership of Interests in Your Partnership."
In evaluating these factors, your general partner (which is our affiliate)
and the AIMCO Operating Partnership did not quantify or otherwise attach
particular weight to any of them.
Your general partner (which is our affiliate) has not retained an
unaffiliated representative to act on behalf of the limited partners in
negotiating the terms of the offer since each individual limited partner can
make his own decision as to whether or not to tender and what consideration to
take. Unlike a merger or other form of partnership reorganization, a majority or
more of the holders of limited partnership interests in your partnership cannot
bind you. If an unaffiliated representative had been obtained, it is possible
that such representative could have negotiated a higher price for your units
than was unilaterally offered by the AIMCO Operating Partnership. We have
retained Stanger to conduct an analysis of our offer and to render an opinion as
to the fairness to you of the offer consideration from a financial point of
view.
FAIRNESS TO UNITHOLDERS WHO TENDER THEIR UNITS
Your general partner (which is our affiliate) makes no recommendation as to
whether you should tender or refrain from tendering your units. The terms of the
offer have been established by the AIMCO Operating Partnership and are not the
result of arms-length negotiations. See "Conflicts of Interest." The general
partner of your partnership and the AIMCO Operating Partnership believe that the
valuation method described in "Valuation of Units" provides a meaningful
indication of value for residential apartment properties and, although there are
other ways to value real estate, is a reasonably fair method to determine the
consideration offered. A liquidation in the future might generate a higher or
lower price for holders of units.
The future value of the OP Units received in the offer will depend on some
of the same factors that will affect the value of the units, primarily the
condition of the real estate markets. However, if you exchange your units for OP
Units, you will be able to liquidate your investment only by tendering your OP
Units for redemption after a one-year holding period or by selling your OP
Units, which may preclude you from realizing the full value of your investment.
FAIRNESS TO UNITHOLDERS WHO DO NOT TENDER THEIR UNITS
Your general partner (which is our affiliate) makes no recommendation as to
whether you should tender or refrain from tendering your units. If you choose
not to tender any units, your interest in your partnership will remain
unchanged. The identity of the other limited partners of your partnership may
change. If the AIMCO Operating Partnership acquires a substantial number of
units pursuant to the offer, AIMCO may be in a position to influence voting
decisions with respect to your partnership. AIMCO has no present intention to
liquidate, sell, finance or refinance your partnership's property within any
specified time period.
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<PAGE> 57
COMPARISON OF CONSIDERATION TO ALTERNATIVE CONSIDERATION
General
To assist holders of units in evaluating the offer, your general partner
(which is our affiliate) has attempted to compare the cash offer consideration
against: (a) the prices at which the units have been sold in the illiquid
secondary market; and (b) estimates of the value of the units on a liquidation
basis. The general partner of your partnership believes that analyzing the
alternatives in terms of estimated value, established based upon currently
available data and, where appropriate, reasonable assumptions made in good
faith, establishes a reasonable framework for comparing alternatives. Since the
value of the consideration for alternatives to the Offer is dependent upon
varying market conditions, no assurance can be given that the estimated values
reflect the range of possible values. See "Valuation of Units."
The results of these comparative analyses are summarized in the following
chart. You should bear in mind that the estimated values assigned to the
alternate forms of consideration are based on a variety of assumptions that have
been made by your general partner (which is our affiliate). These assumptions
relate, among other things to: projections as to the future income, expenses,
cash flow and other significant financial matters of your partnership; and the
capitalization rates that will be used by prospective buyers when your
partnership's assets are liquidated.
In addition, these estimates are based upon certain information available
to your general partner (which is our affiliate) at the time the estimates were
computed, and no assurance can be given that the same conditions analyzed by it
in arriving at the estimates of value would exist at the time of the offer. The
assumptions used have been determined by the general partner of your partnership
in good faith, and, where appropriate, are based upon current and historical
information regarding your partnership and current real estate markets, and have
been highlighted below to the extent critical to the conclusions of the general
partner of your partnership. The estimated values in the following chart are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Actual results may vary from those set forth
below based on numerous factors, including interest rate fluctuations, tax law
changes, supply and demand for similar apartment properties, the manner in which
your partnership's property is sold and changes in availability of capital to
finance acquisitions of apartment properties.
COMPARISON TABLE
<TABLE>
<S> <C>
Cash offer price............................................ $505.00
Alternatives:
Prices on secondary market................................ $175.00 to $500.00
Estimated liquidation proceeds............................ $505.00
</TABLE>
Prices on Secondary Market
Secondary market sales activity for the units, including privately
negotiated sales, has been limited and sporadic. According to information
obtained from your general partner (which is our affiliate) from November 1,
1995 to July 31, 1998 an aggregate of 1,419 units (representing approximately
2.8% of the total outstanding units) was transferred (excluding units
transferred by Insignia to IPLP in February 1998 and in tender offers) in sale
transactions. Set forth in the table below are the high and low sales prices of
units for the quarterly periods from November 1, 1995 to July 31, 1998, as
reported by your general partner and by The Partnership Spectrum, which is an
independent, third-party source. The gross sales prices reported by The
Partnership Spectrum do not necessarily reflect the net sales proceeds received
by sellers of units, which typically are reduced by commissions and other
secondary market transaction costs to amounts less than the reported prices;
thus the AIMCO Operating Partnership does not know whether the information
compiled by The Partnership Spectrum is accurate or complete. The transfer
paperwork submitted to the general partner often does not include the requested
price information or contains conflicting information as to the actual sales
price. Accordingly, you should not rely upon this information as being
completely accurate.
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<PAGE> 58
SHELTER PROPERTIES IV
REPORTED SALES PRICES OF PARTNERSHIP UNITS
<TABLE>
<CAPTION>
AS REPORTED BY
AS REPORTED BY THE PARTNERSHIP
THE GENERAL PARTNER(a) SPECTRUM(b)
---------------------- ----------------------
LOW SALES HIGH SALES LOW SALES HIGH SALES
PRICE PRICE PRICE PRICE
PER UNIT PER UNIT PER UNIT PER UNIT
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Fiscal Year Ended October 31, 1998:
Third Quarter................................... $488.33 $380.00 (c) (c)
Second Quarter.................................. 490.00 351.00 $345.00 $421.00
First Quarter................................... 500.00 320.00 330.00 351.00
Fiscal Year Ended October 31, 1997:
Fourth Quarter.................................. 380.06 315.20 330.00 348.00
Third Quarter................................... 375.00 265.00 320.00 380.00
Second Quarter.................................. 360.00 285.20 320.00 375.00
First Quarter................................... 297.00 250.00 285.00 350.00
Fiscal Year Ended October 31, 1996:
Fourth Quarter.................................. 363.00 217.00 275.00 300.00
Third Quarter................................... 280.00 260.00 -- --
Second Quarter.................................. 250.00 250.00 -- --
First Quarter................................... 363.00 175.00 -- --
</TABLE>
- ---------------
(a) Although the general partner requests and records information on the prices
at which units are sold, it does not regularly receive or maintain
information regarding the bid or asked quotations of secondary market
makers, if any. The general partner processes transfers of units only 12
times per year -- on the first day of each month. The prices in the table
are based solely on information provided to the general partner by sellers
and buyers of units transferred in sale transactions (i.e., excluding
transactions believed to result from the death of a limited partner,
rollover to an IRA account, establishment of a trust, trustee to trustee
transfers, termination of a benefit plan, distributions from a qualified or
non-qualified plan, uniform gifts, abandonment of units or similar non-sale
transactions).
(b) The gross sales prices reported by The Partnership Spectrum do not
necessarily reflect the net sales proceeds received by sellers of units,
which typically are reduced by commissions and other secondary market
transaction costs to amounts less than the reported prices. The AIMCO
Operating Partnership does not know whether the information compiled by The
Partnership Spectrum is accurate or complete.
(c) Information not yet published.
The AIMCO Operating Partnership believes that, although secondary market
sales information probably is not a reliable measure of value because of the
limited and inefficient nature of the market for units, this information may be
relevant to a limited partner's decision as to whether to tender his or her
units pursuant to the offer. At present, privately negotiated sales and sales
through intermediaries (e.g., through the trading system operated by American
Partnership Board, Inc., which publishes sell offers by holders of units) are
the only means available to a limited partner to liquidate an investment in
units (other than the offer) because the units are not listed or traded on any
exchange or quoted on NASDAQ.
Estimated Liquidation Proceeds
Liquidation value is a measure of the price at which the assets of your
partnership would sell if disposed of in an arms-length transaction between a
willing buyer and your partnership, each having access to relevant information
regarding the historical revenues and expenses of the business. Your general
partner (which is our affiliate) estimated the liquidation value of units using
the same direct capitalization method and assumptions as we did in valuing the
units for the cash offer consideration. See "Valuation of Units." The
liquidation analysis also assumed that your partnership's property was sold to
an independent third-party buyer
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<PAGE> 59
at the current property value and that other balance sheet assets (excluding
amortizing assets) and liabilities of your partnership were sold at their book
value, and that the net proceeds of sale were allocated to your partners in
accordance with your partnership's agreement of limited partnership.
The liquidation analysis assumes that the assets of your partnership are
sold in a single transaction. Should the assets be liquidated over time, even at
prices equal to those projected, distributions to limited partners from cash
flow from operations might be reduced because your partnership's relatively
fixed costs, such as general and administrative expenses, are not
proportionately reduced with the liquidation of assets. However, for
simplification purposes, the sales of the assets are assumed to occur
concurrently. The liquidation analysis assumes that the assets would be disposed
of in an orderly manner and not sold in forced or distressed sales where sellers
might be expected to dispose of their interests at substantial discounts to
their actual fair market value.
In estimating the net liquidation proceeds, your general partner (which is
our affiliate) considered, among other things, the following valuations:
Appraisals. Each of your partnership's properties was appraised in 1997 by
an independent third party appraiser, Koeppel Tener Real Estate Services, Inc.
(the "Appraiser"), in connection with a requirement in your partnership's
agreement of limited partnership and not in connection with the offer. According
to the appraisal reports, the scope of the appraisals included an inspection of
each property and an analysis of the surrounding market. The Appraiser relied
principally on the income capitalization approach to valuation and secondarily
on the sales comparison approach, and represented that its report was prepared
in accordance with the Code of Professional Ethics and Standards of Professional
Appraisal Practice of the Appraisal Institute and the Uniform Standards of
Professional Appraisal Practice, and in compliance with the Appraisal Standards
set forth in the Financial Institutions Reform, Recovery and Enforcement Act of
1989 (known as "FIRREA"). The estimated market value of the fee simple estate of
each of the properties specified in those reports was $32,000,000 for Baymeadows
Apartments; $12,700,000 for Quail Run Apartments; and $14,300,000 for
Countrywood Village Apartments. Such appraisals do not reflect the mortgages
encumbering the properties or any costs of sales of the properties. A copy of
the summaries of the appraisals has been filed as an exhibit to the Tender Offer
Statement on Schedule 14D-1 filed with the SEC by Cooper River Properties,
L.L.C. (which is now our affiliate). We also believe that based on the
conditions of the properties, the appraisals substantially overstate their
value. For instance, we have received a report from an independent third party
that there is a total of approximately $4,400,000 of deferred maintenance costs
at all three properties. Such maintenance costs consist primarily of repairs
outside the buildings and new roofing. Therefore, we believe that the appraisals
are less meaningful in determining the offer consideration than the analysis
described above under "Valuation of Units." Such appraisals are not intended to
be updated.
General Partner's Annual Estimates of Net Asset Value. Your general partner
(which is our affiliate) prepared an estimate of your partnership's net asset
value per unit in connection with an offer to purchase up to 4.9% of the
outstanding units commenced by an unaffiliated party in September 1998. That
estimate of your partnership's net asset value per unit as of October 31, 1997
was $715.00. This estimated net asset value is based on a hypothetical sale of
the partnership's properties and the distribution to the limited partners and
the general partner of the gross proceeds of such sales, net of related
indebtedness, together with the cash, proceeds from temporary investments, and
all other assets that are believed to have liquidation value, after provision in
full for all of the other known liabilities of your partnership. This net asset
value does not take into account (i) timing considerations, (ii) costs
associated with winding up the partnership, (iii) the distribution paid by your
partnership of $16.07 per unit for the nine months ended July 31, 1998, or (iv)
the anticipated distribution expected to be paid by your partnership in December
1998 of approximately $48 per unit. Therefore, the AIMCO Operating Partnership
believes that this estimate of net asset value per unit does not necessarily
represent either the fair market value of a unit or the amount a limited partner
reasonably could expect to receive if the partnership's properties were sold and
the partnership was liquidated. For this reason, the AIMCO Operating Partnership
considered this net asset value estimate to be less meaningful in determining
the offer consideration than the analysis described above under "Valuation of
Units."
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<PAGE> 60
ALLOCATION OF CONSIDERATION
We have allocated the estimated liquidation proceeds in accordance with the
liquidation provisions of your partnership agreement of limited partnership.
Accordingly, 100% of the estimated liquidation proceeds are assumed to be
distributed to holders of units. See "Valuation of Units."
STANGER ANALYSIS
We engaged Stanger, an independent investment banking firm, to conduct an
analysis and to render an opinion (the "Fairness Opinion") as to whether the
offer consideration for the units is fair, from a financial point of view, to
the unitholders. We selected Stanger because of its experience in providing
similar services to other parties in connection with real estate merger and sale
transactions and Stanger's experience and reputation in connection with real
estate partnerships and real estate assets. No other investment banking firm was
engaged to provide, or has provided, any report, analysis or opinion relating to
the fairness of our offer.
Stanger has advised us that, subject to the assumptions, limitations and
qualifications contained in its Fairness Opinion, the offer consideration for
the units is fair, from a financial point of view, to the unitholders. We
determined the offer consideration, and Stanger did not, and was not requested
to, make any recommendations as to the form or amount of consideration to be
paid in connection with the offer.
The full text of the Fairness Opinion, which contains a description of the
matters considered and the assumptions, limitations and qualifications made, is
set forth as Appendix A hereto and should be read in its entirety. The summary
set forth herein does not purport to be a complete description of the review
performed by Stanger in rendering the Fairness Opinion. Arriving at a fairness
opinion is a complex process not necessarily susceptible to partial analysis or
amenable to summary description.
We imposed no conditions or limitations on the scope of Stanger's
investigation or with respect to the methods and procedures to be followed in
arriving at the fairness opinion. See "-- Assumptions, Limitations and
Qualifications." We have agreed to indemnify Stanger against certain liabilities
arising out of Stanger's engagement to prepare and deliver the Fairness Opinion.
EXPERIENCE OF STANGER
Since its founding in 1978, Stanger and its affiliates have provided
information, research, investment banking and consulting services to clients
located throughout the United States, including major NYSE member firms,
insurance companies and over seventy companies engaged in the management and
operation of partnerships and real estate investment trusts. The investment
banking activities of Stanger include financial advisory and fairness opinion
services, asset and securities valuations, industry and company research and
analysis, litigation support and expert witness services, and due diligence
investigations in connection with both publicly registered and privately placed
securities transactions.
Stanger, as part of its investment banking business, is regularly engaged
in the valuation of businesses and their securities in connection with mergers,
acquisitions, reorganizations and for estate, tax, corporate and other purposes.
Stanger's valuation practice principally involves partnerships, partnership
securities and the assets typically held through partnerships, such as real
estate, oil and gas reserves, cable television systems and equipment leasing
assets. Stanger was selected because of its experience and reputation in
connection with real estate partnerships, real estate assets and mergers and
acquisitions.
SUMMARY OF MATERIALS CONSIDERED
In the course of Stanger's analysis to render its opinion, Stanger: (i)
reviewed a draft of the Prospectus Supplement related to the offer in
substantially the form which will be distributed; (ii) reviewed your
partnership's annual reports on Form 10-KSB filed with the SEC for the years
ending December 31, 1996 and 1997, and the quarterly report on Form 10-QSB for
the period ending July 31, 1998, which reports your partnership's management has
indicated to be the most current available financial statements; (iii) reviewed
descriptive information concerning your partnership's real estate assets (the
"property") provided by
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<PAGE> 61
management, including location, number of units and unit mix or square footage,
age, and amenities; (iv) reviewed summary historical operating statements for
your partnership's property for 1996 and 1997 and through July 31, 1998; (v)
reviewed operating budgets for your partnership's property for 1998, as prepared
by your partnership; (vi) reviewed information prepared by management relating
to any debt encumbering your partnership's property; (vii) reviewed information
regarding market rental rates and conditions for similar properties in the
general market area of your partnership's property and other information
relating to acquisition criteria for similar properties; (viii) reviewed
internal financial analyses and forecasts prepared by your partnership of the
estimated current net liquidation value of your partnership; (ix) reviewed
information provided by AIMCO concerning the AIMCO Operating Partnership, the
Common OP Units and the Preferred OP Units; (x) reviewed available secondary
market trading information for the units; and (xi) conducted other studies,
analysis and inquiries as Stanger deemed appropriate.
In addition, Stanger discussed with management of your partnership and
AIMCO the market conditions for the property, conditions in the market for
sales/acquisitions of properties similar to that owned by your partnership,
historical, current and projected operations and performance of your
partnership's property and your partnership, the physical condition of your
partnership's property including any deferred maintenance, and other factors
influencing value of your partnership's property and your partnership. Stanger
also performed site inspections of your partnership's property, reviewed local
real estate market conditions, and discussed with property management personnel
conditions in local apartment rental markets and market conditions for sales and
acquisitions of properties similar to your partnership's property.
SUMMARY OF REVIEWS
The following is a summary of the material reviews conducted by Stanger in
connection with and in support of its Fairness Opinion. The summary of the
opinion and reviews of Stanger set forth in this Prospectus Supplement is
qualified in its entirety by reference to the full text of such opinion.
Property Evaluation. In preparing its Fairness Opinion, Stanger performed a
site inspection of your partnership's property during October and November 1998.
In the course of the site visit, the physical facilities of your partnership's
property were observed, current rental and occupancy information was obtained,
current local market conditions were reviewed, similar competing properties were
identified, and local property management personnel were interviewed concerning
your partnership's property and local market conditions. Stanger also reviewed
and relied upon information provided by your partnership and AIMCO, including,
but not limited to, financial schedules of historical and current rental rates,
occupancies, income, expenses, reserve requirements, cash flow and related
financial information; property descriptive information including unit mix or
square footage; and information relating to the condition of the property,
including any deferred maintenance, capital budgets, status of ongoing or newly
planned property additions, reconfigurations, improvements and other factors
affecting the physical condition of the property improvements.
Stanger also reviewed historical operating statements for your
partnership's property for 1996, 1997, and for the nine month period ending July
31, 1998, the operating budget for 1998 as prepared by your partnership and
discussed with management the current and anticipated operating results of your
partnership's property.
In addition, Stanger interviewed management personnel of your partnership
and AIMCO. Such interviews included discussions of conditions in the local
market, economic and development trends affecting your partnership's property,
historical and budgeted operating revenues and expenses and occupancies and the
physical condition of your partnership's property (including any deferred
maintenance and other factors affecting the physical condition of the
improvements), projected capital expenditures and building improvements, the
terms of existing debt, encumbering your partnership's property, and
expectations of management regarding operating results of your partnership's
property.
Stanger also reviewed the acquisition criteria used by owners and investors
in the type of real estate owned by your partnership, utilizing available
published information and information derived from interviews conducted by
Stanger with various real estate owners and investors.
Review of Partnership Liquidation Analysis. Stanger reviewed an analysis
prepared by the management of your partnership of the estimated liquidation
values of units utilizing estimates prepared by your partnership of expenses
associated with such a liquidation. The liquidation analysis assumed that your
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<PAGE> 62
partnership's property was sold to an independent third-party buyer at the
current property value estimated by the management of your partnership and that
normal and customary costs of property sale were incurred, that other balance
sheet assets (excluding amortizing assets) and liabilities of your partnership
were sold at their book value, and that the net proceeds of sale were allocated
between the general and limited partners in accordance with your partnership
agreement of limited partnership.
CONCLUSIONS
Stanger concluded, based upon its analysis of the foregoing and the
assumptions, qualifications and limitations stated below, as of the date of the
Fairness Opinion, that the offer consideration to be paid for the units in
connection with the offer is fair to the unitholders from a financial point of
view. Stanger has rendered similar fairness opinions with regard to certain
other exchange offers being made by the AIMCO Operating Partnership. Stanger
rendered the opinions only as to the individual fairness of the offer
consideration in each proposed exchange offer.
ASSUMPTIONS, LIMITATIONS AND QUALIFICATIONS
In rendering the Fairness Opinion, Stanger relied upon and assumed, without
independent verification, the accuracy and completeness of all financial
information and data, and all other reports and information contained in this
Prospectus Supplement or that were provided, made available, or otherwise
communicated to Stanger by your partnership, AIMCO, or the management of the
partnership's property. Stanger has not performed an independent appraisal,
engineering study or environmental study of the assets and liabilities of your
partnership. Stanger relied upon the representations of your partnership and
AIMCO concerning, among other things, any environmental liabilities, deferred
maintenance and estimated capital expenditure and replacement reserve
requirements, the determination and valuation of non-real estate assets and
liabilities of your partnership, the allocation of your partnership's net values
between your general partner (which is our affiliate), special limited partner
and limited partners of your partnership, the terms and conditions of any debt
encumbering the partnership's property, and the transaction costs and fees
associated with a sale of the property. Stanger also relied upon the assurance
of your partnership, AIMCO, and the management of the partnership's property
that any financial statements, budgets, pro forma statements, projections,
capital expenditure estimates, debt, value estimates and other information
contained in this Prospectus Supplement or provided or communicated to Stanger
were reasonably prepared and adjusted on bases consistent with actual historical
experience, are consistent with the terms of your partnership's agreement of
limited partnership, and reflect the best currently available estimates and good
faith judgments; that no material changes have occurred in the value of the
partnership's property or other balance sheet assets and liabilities or other
information reviewed between the date of such information provided and the date
of the Fairness Opinion; that your partnership, AIMCO, and the management of the
partnership's property are not aware of any information or facts that would
cause the information supplied to Stanger to be incomplete or misleading; that
the highest and best use of the partnership's property is as improved; and that
all calculations were made in accordance with the terms of your partnership's
agreement of limited partnership.
Stanger was not requested to, and therefore did not: (i) select the offer
consideration or the method of determining the offer consideration; (ii) make
any recommendation to your partnership or its partners with respect to whether
to accept or reject the proposed offer or whether to accept the cash, Preferred
OP Units or Common OP Units if the offer is accepted; (iii) solicit any third
party indications of interest in acquiring the assets of your partnership or all
or any part of your partnership; or (iv) express any opinion as to (a) the tax
consequences of the offer to unitholders, (b) the terms of your partnership's
agreement of limited partnership or the terms of any agreements or contracts
between your partnership or AIMCO; (c) AIMCO's or the general partner's business
decision to effect the offer, or alternatives to the offer, (d) the amount or
allocation of expenses relating to the offer between AIMCO and your partnership
or tendering unitholders; (e) the relative value of the cash, Preferred OP Units
or Common OP Units to be issued in connection with the offer; and (f) any
adjustments made to determine the offer consideration and the net amounts
distributable to the unitholders, including but not limited to, balance sheet
adjustments to reflect your partnership's estimate of the value of current net
working capital balances, reserve accounts, and liabilities,
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and adjustments to the offer consideration for distributions made by your
partnership subsequent to the date of the offer.
Stanger is not expressing any opinions as to the fairness of any terms of
the offer other than the offer consideration for the units. Stanger's opinion is
based on business, economic, real estate and capital market, and other
conditions as of the date of its analysis and addresses the offer in the context
of information available as of the date of its analysis. Events occurring after
such date and before the closing of the proposed offer could affect the
partnership's property or the assumptions used in preparing the Fairness
Opinion. Stanger has no obligation to update the Fairness Opinion on the basis
of subsequent events.
In connection with preparing the Fairness Opinion, Stanger was not engaged
to, and consequently did not, prepare any written report or compendium of its
analysis for internal or external use beyond the report set forth in Appendix A.
COMPENSATION AND MATERIAL RELATIONSHIPS
Stanger has been retained by AIMCO to provide fairness opinions with
respect to your partnership and other partnerships which are or will be the
subject of similar offers. Stanger will be paid a fee by AIMCO of $17,000 with
respect to your partnership. In addition, Stanger is entitled to reimbursement
for reasonable legal, travel and out-of-pocket expenses incurred in making the
site visits and preparing the Fairness Opinion, and is entitled to
indemnification against certain liabilities, including certain liabilities under
Federal securities laws. No portion of Stanger's fee is contingent upon
consummation of the offer or the content of Stanger's opinion. Stanger has
performed other services for AIMCO in the past, including: general financial
advisory services relating to a potential acquisition by AIMCO. However, such
acquisition was never completed and no fee was paid to Stanger.
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<PAGE> 64
COMPARISON OF YOUR PARTNERSHIP AND THE
AIMCO OPERATING PARTNERSHIP
The information below highlights a number of the significant differences
between your partnership and the AIMCO Operating Partnership relating to, among
other things, form of organization, permitted investments, policies and
restrictions, management structure, compensation and fees, and investor rights.
The section immediately following this section compares certain of the
respective legal rights associated with the ownership of units with Common OP
Units and Preferred OP Units. These comparisons are intended to assist you in
understanding how your investment will be changed if, as a result of the offer,
your units are exchanged for Common OP Units or Preferred OP Units. FOR A
DISCUSSION OF CERTAIN OF THE SIGNIFICANT DIFFERENCES BETWEEN THE AIMCO OPERATING
PARTNERSHIP AND AIMCO, SEE "COMPARISON OF THE AIMCO OPERATING PARTNERSHIP AND
AIMCO" IN THE ACCOMPANYING PROSPECTUS. For a comparison of certain legal rights
associated with an investment in the Common OP Units and the Class A Common
Stock, and a similar comparison in respect of the Preferred OP Units and the
Class I Preferred Stock, see "Comparison of Common OP Units and Class A Common
Stock" in the accompanying Prospectus and "Comparison of Preferred OP Units and
Class I Preferred Stock" herein, respectively.
YOUR PARTNERSHIP AIMCO OPERATING PARTNERSHIP
Form of Organization and Assets Owned
<TABLE>
<S> <C>
Your partnership is a limited partnership The AIMCO Operating Partnership is organized
organized under South Carolina law. as a Delaware limited partnership. The AIMCO
Operating Partnership owns interests (either
directly or through subsidiaries) in
numerous multifamily apartment properties.
The AIMCO Operating Partnership conducts
substantially all of the operations of
AIMCO, a corporation organized under
Maryland and as a REIT.
</TABLE>
Duration of Existence
<TABLE>
<S> <C>
Your partnership was presented to limited The term of the AIMCO Operating Partnership
partners as a finite life investment, with continues until December 31, 2093, unless
limited partners to receive regular cash the AIMCO Operating Partnership is dissolved
distributions out of your partnership's Net sooner pursuant to the terms of the AIMCO
Cash from Operations (as defined in your Operating Partnership's agreement of limited
partnership's agreement of limited partner- partnership (the "AIMCO Operating
ship). The termination date of your Partnership Agreement") or as provided by
partnership is December 31, 2022. law. See "Description of OP Units --
General" and "Description of OP
Units -- Dissolution and Winding Up" in the
accompanying Prospectus.
</TABLE>
Purpose and Permitted Activities
<TABLE>
<S> <C>
Your partnership has been formed for the The purpose of the AIMCO Operating
purpose of acquiring existing apartment Partnership is to conduct any business that
properties which offer the potential for may be lawfully conducted by a limited
appreciation in value and cash distributions partnership organized pursuant to the
to the partners from operations. Subject to Delaware Revised Uniform Limited Part-
restrictions contained in your partnership's nership Act (as amended from time to time,
agreement of limited partnership, your or any successor to such statute) (the
partnership may perform all acts necessary, "Delaware Limited Partnership Act"),
advisable or convenient to the business of provided that such business is to be
your partnership including borrowing money conducted in a manner that permits AIMCO to
and creating liens. be qualified as a REIT, unless AIMCO ceases
to qualify as a REIT. The AIMCO Operating
Partner-
</TABLE>
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<PAGE> 65
YOUR PARTNERSHIP AIMCO OPERATING PARTNERSHIP
<TABLE>
<S> <C>
ship is authorized to perform any and all
acts for the furtherance of the purposes and
business of the AIMCO Operating Partnership,
provided that the AIMCO Operating
Partnership may not take, or refrain from
taking, any action which, in the judgment of
its general partner could (i) adversely
affect the ability of AIMCO to continue to
qualify as a REIT, (ii) subject AIMCO to
certain income and excise taxes, or (iii)
violate any law or regulation of any
governmental body or agency (unless such ac-
tion, or inaction, is specifically consented
to by AIMCO). Subject to the foregoing, the
AIMCO Operating Partnership may invest in or
enter into partnerships, joint ventures, or
similar arrangements. The AIMCO Operating
partnership currently invests, and intends
to continue to invest, in a real estate
portfolio primarily consisting of
multifamily rental apartment properties.
</TABLE>
Additional Equity
<TABLE>
<S> <C>
The general partner of your partnership is The general partner is authorized to issue
authorized to issue additional limited additional partnership interests in the
partnership interests in your partnership AIMCO Operating Partnership for any
and may admit additional limited partners by partnership purpose from time to time to the
selling no more than 40,000 units for cash limited partners and to other persons, and
to selected persons who fulfill the to admit such other persons as additional
requirements set forth in your partnership's limited partners, on terms and conditions
agreement of limited partnership. The and for such capital contributions as may be
capital contribution need not be equal for established by the general partner in its
all limited partners and no action or con- sole discretion. The net capital
sent is required in connection with the contribution need not be equal for all OP
admission of any additional limited Unitholders. No action or consent by the OP
partners. Unitholders is required in connection with
the admission of any additional OP
Unitholder. See "Description of OP
Units -- Management by the AIMCO GP" in the
accompanying Prospectus. Subject to Delaware
law, any additional partnership interests
may be issued in one or more classes, or one
or more series of any of such classes, with
such designations, preferences and relative,
participating, optional or other special
rights, powers and duties as shall be
determined by the general partner, in its
sole and absolute discretion without the
approval of any OP Unitholder, and set forth
in a written document thereafter attached to
and made an exhibit to the AIMCO Operating
Partnership Agreement.
</TABLE>
Restrictions Upon Related Party Transactions
<TABLE>
<S> <C>
Under your partnership's agreement of The AIMCO Operating Partnership may lend or
limited partnership, the general partner contribute funds or other assets to its
will not purchase or lease any real property subsidiaries or other persons in which it
from your partnership, borrow has an equity investment,
</TABLE>
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YOUR PARTNERSHIP AIMCO OPERATING PARTNERSHIP
<TABLE>
<S> <C>
any funds from your partnership, or sell or and such persons may borrow funds from the
lease any property to your partnership, AIMCO Operating Partnership, on terms and
either directly or indirectly through an conditions established in the sole and
affiliate or any other partnership in which absolute discretion of the general partner.
a general partner has an interest, provided, To the extent consistent with the business
however, that a general partner or an purpose of the AIMCO Operating Partnership
affiliate may purchase property in their own and the permitted activities of the general
name and temporarily hold title thereto for partner, the AIMCO Operating Partnership may
your partnership or any other purpose transfer assets to joint ventures, limited
related to the business of your partner- liability companies, partnerships,
ship, provided further that (1) the property corporations, business trusts or other
is purchased by your partnership for a price business entities in which it is or thereby
no greater than the cost of the property to becomes a participant upon such terms and
a general partner or affiliate, (2) there is subject to such conditions consistent with
no difference in the interest rates of the the AIMCO Operating Partnership Agreement
loans secured by the property at the time and applicable law as the general partner,
acquired by a general partner or affiliate in its sole and absolute discretion,
and at the time acquired by your believes to be advisable. Except as
partnership, and (3) neither the general expressly permitted by the AIMCO Operating
partner nor any affiliate receives any other Partnership Agreement, neither the general
economic advantage by reason of holding or partner nor any of its affiliates may sell,
having held title to the property. The transfer or convey any property to the AIMCO
general partner may not receive interest and Operating Partnership, directly or
other financing charges on loans to your indirectly, except pursuant to transactions
partnership in excess of the lesser of the that are determined by the general partner
rates currently being paid by a general in good faith to be fair and reasonable.
partner or an affiliate for borrowed funds
or two points over the South Carolina
National Bank prime interest rate, or
subject any asset of your partnership to a
mortgage, deed of trust or security interest
as security for repayment of a loan to your
partnership by a general partner or any
affiliate or provide permanent financing for
any assets of your partnership. In addition,
your partnership will not grant to a general
partner or an affiliate an exclusive right
or an exclusive employment to sell your
partnership's properties. Your partnership
may not enter into any contract with a
general partner or an affiliate unless the
contract provides that it may be terminated
by your partnership without penalty upon 60
days written notice.
</TABLE>
Borrowing Policies
<TABLE>
<S> <C>
The general partner of your partnership is The AIMCO Operating Partnership Agreement
authorized to borrow money on behalf of your contains no restrictions on borrowings, and
partnership. The general partner cannot, in the general partner has full power and
connection with the acquisition of authority to borrow money on behalf of the
properties, subject any property of your AIMCO Operating Partnership. The AIMCO
partnership to one or more mortgages, deeds Operating Partnership has credit agreements
of trust and other security interests, so that restrict, among other things, its
that the aggregate amount of indebtedness ability to incur indebtedness. See "Risk
secured by mortgages, deeds of trust and Factors -- Risks of Significant
other security interests to which all other Indebtedness" in the accompanying
assets of your partnership are subject, Prospectus.
immediately after such action, is greater
than 80% of the aggregate amount of the
purchase prices of such properties or, in
connection with the refinancing of a
property, subject a property to secured
indebtedness
</TABLE>
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YOUR PARTNERSHIP AIMCO OPERATING PARTNERSHIP
<TABLE>
<S> <C>
exceeding 80% of the value of such property.
Except in connection with the acquisition or
improvement of properties or the refinancing
of previous obligations, the general partner
may not mortgage or subject to the
encumbrance of a mortgage, deed of trust or
other security interest substantially all of
the assets of your partnership at one time
or from time to time without the approval of
limited partners holding a majority of the
outstanding units. The general partner also
may not cause your partnership to incur, at
any time, in connection with the financing
of a property, long-term secured
indebtedness exceeding 80% of the value of
such property or new financing, including
any "wrap-around" or "all-inclusive" obli-
gation, containing a balloon payment due in
less than the later of (1) ten years or (2)
three years beyond the anticipated holding
period of the property. The general partner
may not allow any creditor who makes a
non-recourse loan to your partnership to
have, or to acquire at any time as a result
of making such loan, any direct or indirect
interest in the profit, gain, capital or
other property of your partnership, other
than as a secured creditor.
</TABLE>
Review of Investor Lists
<TABLE>
<S> <C>
Under your partnership's agreement of Each OP Unitholder has the right, upon
limited partnership, each partner has the written demand with a statement of the
right to receive by mail, upon written purpose of such demand and at such OP
request to your partnership and at his cost, Unitholder's own expense, to obtain a
a list of the names and addresses of the current list of the name and last known
limited partners and the number of units business, residence or mailing address of
held by each of them, provided such request the general partner and each other OP
is for a purpose reasonably related to such Unitholder.
limited partner's interest in your
partnership.
</TABLE>
Management Control
<TABLE>
<S> <C>
Under your partnership's agreement of All management powers over the business and
limited partnership, the general partner has affairs of the AIMCO Operating Partnership
complete and exclusive control over the are vested in AIMCO-GP, Inc., which is the
management of your partnership's business general partner. No OP Unitholder has any
and affairs, and the limited partners have right to participate in or exercise control
no right to participate in the management or or management power over the business and
conduct of your partnership's business or affairs of the AIMCO Operating Partner-
affairs nor any power or authority to act on ship. The OP Unitholders have the right to
behalf of your partnership in any respect vote on certain matters described under
whatsoever. Subject to certain restrictions "Comparison of Ownership of Your Units and
in your partnership's agreement of limited AIMCO OP Units -- Voting Rights" below. The
partnership, the general partner has the general partner may not be removed by the OP
right, power and authority, on behalf of Unitholders with or without cause.
your partnership, and in its name, to
exercise all rights, powers and authority of In addition to the powers granted a general
a partner of a partnership without limited partner
partners under South Carolina part-
</TABLE>
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YOUR PARTNERSHIP AIMCO OPERATING PARTNERSHIP
<TABLE>
<S> <C>
nership law. No limited partner (except one of a limited partnership under applicable
who may also be a general partner, and then law or that are granted to the general
only in his capacity as general partner) may partner under any other provision of the
participate in or has any control over your AIMCO Operating Partnership Agreement, the
partnership's business or ha any authority general partner, subject to the other
to act for or bind your partnership. provisions of the AIMCO Operating
Partnership Agreement, has full power and
authority to do all things deemed necessary
or desirable by it to conduct the business
of the AIMCO Operating Partnership, to
exercise all powers of the AIMCO Operating
Partnership and to effectuate the purposes
of the AIMCO Operating Partnership. The
AIMCO Operating Partnership may incur debt
or enter into other similar credit,
guarantee, financing or refinancing
arrangements for any purpose upon such terms
as the general partner determines to be
appropriate, and may perform such other acts
and duties for and on behalf of the AIMCO
Operating Partnership as are provided in the
AIMCO Operating Partnership Agreement. The
general partner is authorized to execute,
deliver and perform certain agreements and
transactions on behalf of the AIMCO
Operating Partnership without any further
act, approval or vote of the OP Unitholders.
</TABLE>
Management Liability and Indemnification
<TABLE>
<S> <C>
Under your partnership's agreement of Notwithstanding anything to the contrary set
limited partnership, the general partner is forth in the AIMCO Operating Partnership
not liable to your partnership or the Agreement, the general partner is not liable
limited partners for any act or failure to to the AIMCO Operating Partnership for
act if such act or failure to act was losses sustained, liabilities incurred or
performed in a manner determined by him or benefits not derived as a result of errors
it in good faith to be within the scope of in judgment or mistakes of fact or law of
his or its authority and to be in the best any act or omission if the general partner
interest of your partnership, and if he or acted in good faith. The AIMCO Operating
it was not guilty of negligence, misconduct Partnership Agreement provides for
or a breach of fiduciary obligations in such indemnification of AIMCO, or any director or
act or failure to act. In addition, your officer of AIMCO (in its capacity as the
partnership will indemnify the general previous general partner of the AIMCO
partner or its affiliates for any act or Operating Partnership), the general partner,
failure to act as described above. Your any officer or director of general partner
partnership will not furnish any indem- or the AIMCO Operating Partnership and such
nification as to liabilities arising under other persons as the general partner may
federal securities laws. The indemnification designate from and against all losses,
includes payment of reasonable attorney's claims, damages, liabilities, joint or
fees or other expenses incurred in settling several, expenses (including legal fees),
any claim or liability or incurred in any fines, settlements and other amounts
finally adjudicated judicial proceedings, incurred in connection with any actions
and expenses incurred by the removal of any relating to the operations of the AIMCO
liens affecting any property of the person Operating Partnership, as set forth in the
to be indemnified. Indemnification will be AIMCO Operating Partnership Agreement. The
made from assets of your partnership and no Delaware Limited Partnership Act provides
limited partner will be personally liable to that subject to the standards and
any person to be indemnified. restrictions, if any, set forth in its
partnership agreement, a limited partnership
may, and shall have the power to, indemnify
and hold harmless any partner or other
person from and against any and all
</TABLE>
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YOUR PARTNERSHIP AIMCO OPERATING PARTNERSHIP
<TABLE>
<S> <C>
claims and demands whatsoever. 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 of 1933.
</TABLE>
Anti-Takeover Provisions
<TABLE>
<S> <C>
Under your partnership's agreement of Except in limited circumstances, the general
limited partnership, the limited partners partner has exclusive management power over
may remove a general partner and appoint a the business and affairs of the AIMCO
successor general partner upon a vote of the Operating Partnership. The general partner
limited partners owning more than 50% of the may not be removed as general partner of the
outstanding units. A general partner may AIMCO Operating Partnership by the OP
resign, with the consent of a majority of Unitholders with or without cause. Under the
the limited partners, if the general partner AIMCO Operating Partnership Agreement, the
nominates a substitute general partner whose general partner may, in its sole discretion,
admission will not terminate the status of prevent a transferee of an OP Unit from
your partnership for federal income tax becoming a substituted limited partner
purposes. No person may be admitted as a pursuant to the AIMCO Operating Partnership
substitute general partner unless: (1) such Agreement. The general partner may exercise
person agrees to become a substitute general this right of approval to deter, delay or
partner; (2) the limited partners holding hamper attempts by persons to acquire a
more than 50% of the outstanding units controlling interest in the AIMCO Operating
consent to the admission of such person; and Partnership. Additionally, the AIMCO
(3) such person executes and acknowledges Operating Partnership Agreement contains
such instruments as the general partner restrictions on the ability of OP
deems necessary or advisable, including a Unitholders to transfer their OP Units. See
written acceptance and adoption of your "Description of OP Units -- Transfers and
partnership's agreement of limited Withdrawals" in the accompanying Prospectus.
partnership.
</TABLE>
Amendment of Your Partnership Agreement
<TABLE>
<S> <C>
Your partnership's agreement of limited With the exception of certain circumstances
partnership may be amended by the general set forth in the AIMCO Operating Partnership
partner without the consent of the limited Agreement, whereby the general partner may,
partners if such amendment: (1) adds to the without the consent of the OP Unitholders,
representations, duties or obligations of amend the AIMCO Operating Partnership
the general partner or surrenders any right Agreement, amendments to the AIMCO Operating
or power granted to the general partner, for Partnership Agreement require the consent of
the benefit of the limited partners; (2) the holders of a majority of the outstanding
cures any ambiguity, corrects or supplements Common OP Units, excluding AIMCO and certain
any provision which may be inconsistent with other limited exclusions (a "Majority in
any other provision, or makes any other Interest"). Amendments to the AIMCO
provisions with respect to matters or Operating Partnership Agreement may be
questions arising under your partnership's proposed by the general partner or by
agreement of limited partnership which will holders of a Majority in Interest. Following
not be inconsistent with the provisions of such proposal, the general partner will
your partnership's agreement of limited submit any proposed amendment to the OP
partnership; or (3) deletes or adds any Unitholders. The general partner will seek
provision required by applicable law. Other the written consent of the OP Unitholders on
amendments to your partnership's agreement the proposed amendment or will call a
of limited partnership must be approved by meeting to vote thereon. See "Description of
the limited partners owning more than 50% of OP Units -- Amendment of the AIMCO Operating
the outstanding units. No amendment may Partnership Agreement" in the accompanying
change your partnership to a general Prospectus.
partnership, extend your partnership's
termination date beyond December 31, 2022,
or change the
</TABLE>
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YOUR PARTNERSHIP AIMCO OPERATING PARTNERSHIP
<TABLE>
<S> <C>
liability of the general partner or the
limited liability of the limited partners.
In addition, any amendment that alters the
rights, powers or duties of the general
partner under your partnership's agreement
of limited partnership may not be made
without the consent of the general partner
affected.
</TABLE>
Compensation and Fees
<TABLE>
<S> <C>
The general partner of your partnership does The general partner does not receive
not receive an annual management fee as compensation for its services as general
compensation but may receive reimbursements partner of the AIMCO Operating Partnership.
for expenses incurred in its capacity as However, the general partner is entitled to
general partner. payments, allocations and distributions in
its capacity as general partner of the AIMCO
Operating Partnership. In addition, the
AIMCO Operating Partnership is responsible
for all expenses incurred relating to the
AIMCO Operating Partnership's ownership of
its assets and the operation of the AIMCO
Operating Partnership and reimburses the
general partner for such expenses paid by
the general partner. The employees of the
AIMCO Operating Partnership receive
compensation for their services.
</TABLE>
Liability of Investors
<TABLE>
<S> <C>
Under your partnership's agreement of Except for fraud, willful misconduct or
limited partnership, no limited partner is gross negligence, no OP Unitholder has
liable for the debts, liabilities, contracts personal liability for the AIMCO Operating
or any other obligations of your Partnership's debts and obligations, and
partnership. A limited partner will be liability of the OP Unitholders for the
liable only to make his capital contribution AIMCO Operating Partnership's debts and
and will not be required to lend any funds obligations is generally limited to the
to your partnership or, after his capital amount of their investment in the AIMCO
contribution is paid, to make any further Operating Partnership. However, the
capital contributions to your partnership. limitations on the liability of limited
partners for the obligations of a limited
partnership have not been clearly
established in some states. If it were
determined that the AIMCO Operating Part-
nership had been conducting business in any
state without compliance with the applicable
limited partnership statute, or that the
right or the exercise of the right by the
holders of OP Units as a group to make
certain amendments to the AIMCO Operating
Partnership Agreement or to take other
action pursuant to the AIMCO Operating
Partnership Agreement constituted
participation in the "control" of the AIMCO
Operating Partnership's business, then a
holder of OP Units could be held liable
under certain circumstances for the AIMCO
Operating Partnership's obligations to the
same extent as the general partner.
</TABLE>
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YOUR PARTNERSHIP AIMCO OPERATING PARTNERSHIP
Fiduciary Duties
<TABLE>
<S> <C>
Under your partnership's agreement of Unless otherwise provided for in the
limited partnership, the general partner relevant partnership agreement, Delaware law
must diligently and faithfully devote such generally requires a general partner of a
of its time to the business of your Delaware limited partnership to adhere to
partnership as may be necessary to properly fiduciary duty standards under which it owes
conduct the affairs of your partnership. The its limited partners the highest duties of
general partner has a fiduciary good faith, fairness and loyalty and which
responsibility for the safekeeping and use generally prohibit such general partner from
of all funds and assets of your partnership, taking any action or engaging in any
whether or not in its immediate possession transaction as to which it has a conflict of
or control and may not employ or permit an- interest. The AIMCO Operating Partnership
other to employ such funds or assets in any Agreement expressly authorizes the general
manner except for the benefit of your partner to enter into, on behalf of the
partnership. The general partner also may AIMCO Operating Partnership, a right of
not commingle the funds of your partnership first opportunity arrangement and other
with the funds of any other person. The conflict avoidance agreements with various
general partner and any of its affiliates affiliates of the AIMCO Operating
and any of the limited partners may acquire Partnership and the general partner, on such
real properties for their own account, or terms as the general partner, in its sole
engage in the acquisition, development, and absolute discretion, believes are
operation or management of real estate on advisable. The AIMCO Operating Partnership
behalf of other partnerships, joint Agreement expressly limits the liability of
ventures, corporations or other business the general partner by providing that the
ventures formed by them or in which they may general partner, and its officers and
have an interest, including business directors will not be liable or accountable
ventures similar to, related to or in direct in damages to the AIMCO Operating
or indirect competition with any business of Partnership, the limited partners or as-
your partnership. Neither your partnership signees for errors in judgment or mistakes
nor any other partner has any right in or to of fact or law or of any act or omission if
such other business venture or income or the general partner or such director or
profits derived therefrom. See "Your officer acted in good faith. See
Partnership -- Fiduciary Responsibility of "Description of OP Units -- Fiduciary
the General Partner of Your Partnership." Responsibilities" in the accompanying
Prospectus.
In general, your partnership's agreement of
limited partnership and the AIMCO Operating
Partnership Agreement have limitations on
the liability of the general partner but
such limitations differ in terms and provide
more protection for the general partner of
the AIMCO Operating Partnership.
</TABLE>
Federal Income Taxation
<TABLE>
<S> <C>
In general, there are no material The AIMCO Operating Partnership is not
differences between the taxation of your subject to Federal income taxes. Instead,
partnership and the AIMCO Operating each holder of OP Units includes in income
Partnership. its allocable share of the AIMCO Operating
Partnership's taxable income or loss when it
determines its individual Federal income tax
liability.
Income and loss from the AIMCO Operating
Partnership may be subject to the passive
activity limitations. If an investment in an
OP Unit is treated as a passive activity,
income and loss from the AIMCO Operating
Partnership generally can be offset against
income and loss from other investments that
constitute "passive activities" (unless the
AIMCO Oper-
</TABLE>
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YOUR PARTNERSHIP AIMCO OPERATING PARTNERSHIP
<TABLE>
<S> <C>
ating Partnership is considered a "publicity
traded partnership", in which case income
and loss from the AIMCO Operating
Partnership can only be offset against other
income and loss from the AIMCO Operating
Partnership). Income of the AIMCO Op-
erating Partnership, however, attributable
to dividends from the Management
Subsidiaries (as defined below) or interest
paid by the Management Subsidiaries does not
qualify as passive activity income and
cannot be offset against losses from "pas-
sive activities."
Cash distributions by the AIMCO Operating
Partnership are not taxable to a holder of
OP Units except to the extent they exceed
such Partner's basis in its interest in the
AIMCO Operating Partnership (which will
include such OP Unitholder's allocable share
of the AIMCO Operating Partnership's nonre-
course debt).
Each year, OP Unitholders receive a Schedule
K-1 tax form containing tax information for
inclusion in preparing their Federal income
tax returns.
OP Unitholders are required, in some cases,
to file state income tax returns and/or pay
state income taxes in the states in which
the AIMCO Operating Partnership owns
property or transacts business, even if they
are not residents of those states. The AIMCO
Operating Partnership may be required to pay
state income taxes in certain states.
</TABLE>
COMPARISON OF YOUR UNITS AND AIMCO OP UNITS
YOUR UNITS PREFERRED OP UNITS COMMON OP UNITS
Nature of Investment
<TABLE>
<CAPTION>
<S> <C> <C>
The partnership interests in your The Preferred OP Units constitute The Common OP Units constitute
partnership constitute equity in- equity interests entitling each equity interests entitling each OP
terests entitling each partner to holder of Preferred OP Units, when Unitholder to such partner's pro
its pro rata share of and as declared by the board of rata share of cash distributions
distributions to be made to the directors of the general partner made from Available Cash (as such
partners of your partnership. of the AIMCO Operating Part- term is defined in the AIMCO
nership, quarterly cash distribu- Operating Partnership Agreement)
tion at a rate of $0.50 per to the partners of the AIMCO
Preferred OP Unit, subject to ad- Operating Partnership. To the
justments from time to time on or extent the AIMCO Operating
after the fifth anniversary of the Partnership sells or refinances
issue date of the Preferred OP its assets, the net proceeds
Units. therefrom generally will be re-
tained by the AIMCO Operating
</TABLE>
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<PAGE> 73
YOUR UNITS PREFERRED OP UNITS COMMON OP UNITS
<TABLE>
<S> <C> <C>
Partnership for working capital
and new investments rather than
being distributed to the OP
Unitholders (including AIMCO).
</TABLE>
Voting Rights
<TABLE>
<S> <C> <C>
Under your partnership's Except as otherwise required Under the AIMCO Operating
agreement of limited by applicable law or in the Partnership Agreement, the
partnership, upon the vote AIMCO Operating Partnership OP Unitholders have voting
of the limited partners Agreement, the holders of rights only with respect to
owning more than 50% of the the Preferred OP Units will certain limited matters such
outstanding units, the have the same voting rights as certain amendments and
limited partners may: (1) as holders of the Common OP termination of the AIMCO
dissolve your partnership; Units. See "Description of Operating Partnership
(2) remove the general OP Units" in the accompany- Agreement and certain
partner; (3) amend your ing Prospectus. So long as transactions such as the
partnership's agreement of any Preferred OP Units are institution of bankruptcy
limited partnership, subject outstanding, in addition to proceedings, an assignment
to certain exceptions; (4) any other vote or consent of for the benefit of creditors
appoint a substitute general partners required by law or and certain transfers by the
partner; and (5) approve or by the AIMCO Operating general partner of its
disapprove the sale of all Partnership Agreement, the interest in the AIMCO
or substantially all of the affirmative vote or consent Operating Partnership or the
assets of your partnership. of holders of at least 50% admission of a successor
of the outstanding Preferred general partner.
A general partner may cause OP Units will be necessary
the dissolution of your for effecting any amendment Under the AIMCO Operating
partnership by being removed of any of the provisions of Partnership Agreement, the
from office, retiring or the Partnership Unit general partner has the
becoming insolvent. Your Designation of the Preferred power to effect the
partnership will not OP Units that materially and acquisition, sale, transfer,
dissolve but will be adversely affects the rights exchange or other
continued by the limited or preferences of the disposition of any assets of
partners if: (1) all of the holders of the Preferred OP the AIMCO Operating
partners elect to continue Units. The creation or Partnership (including, but
the business of your issuance of any class or not limited to, the exercise
partnership, or (2) the re- series of partnership units, or grant of any conversion,
maining general partner including, without option, privilege or
elects to continue the limitation, any partner- subscription right or any
business within 90 days ship units that may have other right available in
following one of the above rights senior or superior to connection with any assets
events and nominates a the Preferred OP Units, at any time held by the
substitute general partner shall not be deemed to AIMCO Operating Partnership)
whose admission will not materially adversely affect or the merger,
terminate the status of your the rights or preferences of consolidation,
partnership for federal the holders of Preferred OP reorganization or other
income tax purposes. Units. With respect to the combination of the AIMCO
exercise of the above Operating Partnership with
In general, you have greater described voting rights, or into another entity, all
voting rights in your each Preferred OP Units without the consent of the
partnership than you will shall have one (1) vote per OP Unitholders.
have as an OP Unitholder. OP Preferred OP Unit.
Unitholders cannot remove The general partner may
the general partner of the cause the dissolution of the
AIMCO Operating Partnership. AIMCO Operating Partnership
by an "event of withdrawal,"
as defined in the Delaware
Limited Partnership Act
(including, without limi-
</TABLE>
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<PAGE> 74
YOUR UNITS PREFERRED OP UNITS COMMON OP UNITS
<TABLE>
<S> <C> <C>
tation, bankruptcy), unless,
within 90 days after the
withdrawal, holders of a
"majority in interest," as
defined in the Delaware
Limited Partnership Act,
agree in writing, in their
sole and absolute
discretion, to continue the
business of the AIMCO Op-
erating Partnership and to
the appointment of a
successor general partner.
The general partner may
elect to dissolve the AIMCO
Operating Partnership in its
sole and absolute
discretion, with or with-
out the consent of the OP
Unitholders. See
"Description of OP
Units -- Dissolution and
Winding Up" in the
accompanying Prospectus.
OP Unitholders cannot remove
the general partner of the
AIMCO Operating Partnership
with or without cause.
</TABLE>
Distributions
<TABLE>
<S> <C> <C>
Your partnership's agreement Holders of Preferred OP Subject to the rights of
of limited partnership Units will be entitled to holders of any outstanding
specifies how the cash receive, when and as Preferred OP Units, the
available for distribution, declared by the board of AIMCO Operating Partnership
whether arising from directors of the general Agreement requires the
operations or sales or partner of the AIMCO general partner to cause the
refinancing, is to be shared Operating Partnership, AIMCO Operating Partnership
among the partners. Dis- quarterly cash distributions to distribute quarterly all,
tributions of Net Cash from at the rate of $0.50 per or such portion as the
Operations will be made Preferred OP Unit; provided, general partner may in its
within 60 days following the however, that at any time sole and absolute discretion
end of each fiscal quarter. and from time to time on or determine, of Available Cash
The distributions payable to after the fifth anniversary (as defined in the AIMCO
the partners are not fixed of the issue date of the Operating Partnership
in amount and depend upon Preferred OP Units, the Agreement) generated by the
the operating results and AIMCO Operating Partnership AIMCO Operating Partnership
net sales or refinancing may adjust the annual during such quarter to the
proceeds available from the distribution rate on the general partner, the special
disposition of your part- Preferred OP Units to the limited partner and the
nership's assets. lower of (i) % plus the holders of Common OP Units
annual interest rate then on the record date es-
applicable to U.S. Treasury tablished by the general
notes with a maturity of partner with respect to such
five years, and (ii) the quarter, in accordance with
annual dividend rate on the their respective interests
most recently issued AIMCO in the AIMCO Operating
non-convertible preferred Partnership on such record
stock which ranks on a date. Holders of any other
parity with its Class H Preferred OP Units issued in
Cumulative Preferred Stock. the
Such distributions will be
cumu-
</TABLE>
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<PAGE> 75
YOUR UNITS PREFERRED OP UNITS COMMON OP UNITS
<TABLE>
<S> <C> <C>
lative from the date of future may have priority
original issue. Holders of over the general partner,
Preferred OP Units will not the special limited partner
be entitled to receive any and holders of Common OP
distributions in excess of Units with respect to
cumulative distributions on distributions of Available
the Preferred OP Units. No Cash, distributions upon
interest, or sum of money in liquidation or other
lieu of interest, shall be distributions. See "Per
payable in respect of any Share and Per Unit Data" in
distribution payment or pay- the accompanying Prospectus.
ments on the Preferred OP
Units that may be in The general partner in its
arrears. sole and absolute discretion
may distribute to the OP
When distributions are not Unitholders Available Cash
paid in full upon the on a more frequent basis and
Preferred OP Units or any provide for an appropriate
Parity Units, all record date.
distributions declared upon
the Preferred OP Units and The AIMCO Operating Partner-
any Parity Units shall be ship Agreement requires the
declared ratably in general partner to take such
proportion to the respective reasonable efforts, as
amounts of distributions determined by it in its sole
accumulated, accrued and and absolute discretion and
unpaid on the Preferred OP consistent with AIMCO's
Units and such Parity Units. qualification as a REIT, to
Unless full cumulative cause the AIMCO Operating
distributions on the Partnership to distribute
Preferred OP Units have been sufficient amounts to enable
declared and paid, except in the general partner to
limited circumstances, no transfer funds to AIMCO and
distributions may be enable AIMCO to pay
declared or paid or set stockholder dividends that
apart for payment by the will (i) satisfy the
AIMCO Operating Partnership requirements for qualifying
and no other distribution of as a REIT under the Code and
cash or other property may the Treasury Regulations and
be declared or made, (ii) avoid any Federal
directly or indirectly, by income or excise tax
the AIMCO Operating liability of AIMCO. See
Partnership with respect to "Description of OP
any Junior Units, nor shall Units -- Distributions" in
any Junior Units be the accompanying Prospectus.
redeemed, purchased or
otherwise acquired for
consideration, nor shall any
other cash or other property
be paid or distributed to or
for the benefit of holders
of Junior Units. See
"Description of Preferred OP
Units -- Distributions."
</TABLE>
Liquidity and Transferability/Redemption Rights
<TABLE>
<CAPTION>
<S> <C> <C>
A limited partner may assign There is no public market There is no public market
all or part of his units to for the Preferred OP Units for the OP Units. The AIMCO
any person if: (1) such and the Preferred OP Units Operating Partnership
assignment, in the case of are not listed on any Agreement restricts the
an individual assignor, is securities exchange. The transferability of the OP
not a fractional unit and, Preferred OP Units are Units. Until the expiration
if as- subject to of
</TABLE>
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<PAGE> 76
YOUR UNITS PREFERRED OP UNITS COMMON OP UNITS
<TABLE>
<S> <C> <C>
signor does not transfer all restrictions on transfer as one year from the date on
his interests, such assignor set forth in the AIMCO which an OP Unitholder
and the assignee would not Operating Partnership acquired OP Units, subject
hold less than three units, Agreement. to certain exceptions, such
except in limited cir- OP Unitholder may not
cumstances; and (2) there Pursuant to the AIMCO transfer all or any por-
has been filed with your Operating Partnership tion of its OP Units to any
partnership an instrument Agreement, until the transferee without the
evidencing such assignment expiration of one year from consent of the general
and signed by both the the date on which a holder partner, which consent may
assignor and assignee and of Preferred OP Units be withheld in its sole and
such instrument evidences acquired Preferred OP Units, absolute discretion. After
the written acceptance and subject to certain the expiration of one year,
adoption of your exceptions, such holder of such OP Unitholder has the
partnership's agreement of Preferred OP Units may not right to transfer all or any
limited partnership. No as- transfer all or any portion portion of its OP Units to
signee may become a of its Preferred OP Units to any person, subject to the
substitute limited partner any transferee without the satisfaction of certain con-
unless such assignee consent of the general ditions specified in the
executes a written accept- partner, which consent may AIMCO Operating Partnership
ance and adoption of your be withheld in its sole and Agreement, including the
partnership's agreement of absolute discretion. After general partner's right of
limited partnership. the expiration of one year, first refusal. See
such holders of Preferred OP "Description of OP Units --
Units has the right to Transfers and Withdrawals"
transfer all or any portion in the accompanying
of its Preferred OP Units to Prospectus.
any person, subject to the
satisfaction of certain After the first anniversary
conditions specified in the of becoming a holder of
AIMCO Operating Partner- Common OP Units, an OP
ship Agreement, including Unitholder has the right,
the general partner's right subject to the terms and
of first refusal. conditions of the AIMCO
Operating Partnership
After a one-year holding Agreement, to require the
period, a holder may redeem AIMCO Operating Partnership
Preferred OP Units and to redeem all or a portion
receive in exchange of the Common OP Units held
therefor, at the AIMCO by such party in exchange
Operating Partnership's for a cash amount based on
option, (i) subject to the the value of shares of Class
terms of any Senior Units, A Common Stock. See
cash in an amount equal to "Description of OP
the Liquidation Preference Units -- Redemption Rights"
of the Preferred OP Units in the accompanying
tendered for redemption, Prospectus. Upon receipt of
(ii) a number of shares of a notice of redemption, the
Class I Cumulative Preferred AIMCO Operating Partnership
Stock of AIMCO that pay an may, in its sole and
aggregate amount of absolute discretion but
dividends yield equivalent subject to the restrictions
to the distributions on the on the ownership of Class A
Preferred OP Units tendered Common Stock imposed under
for redemption and are part AIMCO's charter and the
of a class or series of transfer restrictions and
preferred stock that is then other limitations thereof,
listed on the New York Stock elect to cause AIMCO to
Exchange or another national acquire some or all of the
securities exchange, or tendered Common OP Units in
(iii) a number of shares of exchange for Class A Common
Class A Common Stock of
</TABLE>
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<PAGE> 77
YOUR UNITS PREFERRED OP UNITS COMMON OP UNITS
<TABLE>
<S> <C> <C>
AIMCO that is equal in Value Stock, based on an exchange
to the Liquidation ratio of one share of Class
Preference of the Preferred A Common Stock for each
OP Units tendered for Common OP Unit, subject to
redemption. The Preferred OP adjustment as provided in
Units may not be redeemed at the AIMCO Operating
the option of the AIMCO Op- Partnership Agreement.
erating Partnership. See
"Description of Preferred OP
Units -- Redemption."
</TABLE>
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<PAGE> 78
DESCRIPTION OF PREFERRED OP UNITS
GENERAL
The Preferred OP Units are the Class I Partnership Preferred Units of the
AIMCO Operating Partnership.
RANKING
The Preferred OP Units will, with respect to distribution rights and rights
upon liquidation, dissolution or winding up of the AIMCO Operating Partnership,
effectively rank:(i) prior or senior to the Class E Partnership Preferred Units,
the Class I High Performance Units, the Common OP Units and any other interest
in the AIMCO Operating Partnership if the holders of Preferred OP Units shall be
entitled to the receipt of distributions and amounts distributable upon
liquidation, dissolution or winding up in preference or priority to the holders
of such interest (the Common OP Units and such other interests are collectively
referred to herein as "Junior Units"); (ii) on a parity with the Class B
Partnership Preferred Units, the Class C Partnership Preferred Units, the Class
D Partnership Preferred Units, the Class G Partnership Preferred Units, the
Class H Partnership Preferred Units, the Class J Partnership Preferred Units,
and with any other interest in the AIMCO Operating Partnership if the holders of
such interest and the Preferred OP Units shall be entitled to the receipt of
distributions and amounts distributable upon liquidation, dissolution or winding
up in proportion to their respective amounts of accumulated, accrued and unpaid
distributions or stated preferences, without preference or priority of one over
the other ("Parity Units"); and (iii) junior to the Class F Partnership
Preferred Units and any other interest in the AIMCO Operating Partnership if the
holders of such interest shall be entitled to the receipt of distributions or
amounts distributable upon liquidation, dissolution or winding up in preference
or priority to the holders of the Preferred OP Units ("Senior Units"). Junior
Units, Parity Units and Senior Units may be issued from time to time by the
AIMCO Operating Partnership without any approval or consent by holders of the
Preferred OP Units.
Although proceeds upon liquidation, dissolution or winding up of the AIMCO
Operating Partnership will be made in accordance with the positive balance of
all partners capital accounts, the AIMCO Operating Partnership creates, to the
extent possible, the preference upon such events by specially allocating income,
if necessary, to the Preferred OP Units in an amount equal to their liquidation
preference.
DISTRIBUTIONS
Holders of Preferred OP Units are entitled to receive, when and as declared
by the board of directors of the general partner of the AIMCO Operating
Partnership, quarterly cash distributions at the rate of $0.50 per Preferred OP
Unit (equivalent to 8.0% per annum of the $25 stated liquidation preference);
provided, however, that at any time and from time to time on or after the fifth
anniversary of the issue date of the Preferred OP Units, the AIMCO Operating
Partnership may adjust the annual distribution rate on the Preferred OP Units to
the lower of (i) % plus the annual interest rate then applicable to U.S.
Treasury notes with a maturity of five years, and (ii) the annual dividend rate
on the most recently issued AIMCO non-convertible preferred stock which ranks on
a parity with its Class H Cumulative Preferred Stock. A reduction in the
distribution rate will reduce your rate of return on the Preferred OP Units and
possibly encourage you to redeem such Units. Such adjustment shall become
effective upon the date the AIMCO Operating Partnership issues a notice to such
effect to the holders of the Preferred OP Units. Such distributions are
cumulative from the date of original issue, whether or not in any distribution
period or periods such distributions have been declared, and shall be payable
quarterly on February 15, May 15, August 15 and November 15 of each year (or, if
not a business day, the next succeeding business day) (each a "Distribution
Payment Date"), commencing on the first such date occurring after the date of
original issue. If the Preferred OP Units are issued on any day other than a
Distribution Payment Date, the first distribution payable on such Preferred OP
Units will be prorated for the portion of the quarterly period that such
Preferred OP Units are outstanding on the basis of twelve 30-day months and a
360-day year. Distributions are payable in arrears to holders of record as they
appear on the records of the AIMCO Operating Partnership at the close of
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<PAGE> 79
business on the February 1, May 1, August 1 or November 1, as the case may be,
immediately preceding each Distribution Payment Date. Holders of Preferred OP
Units will not be entitled to receive any distributions in excess of cumulative
distributions on the Preferred OP Units. No interest, or sum of money in lieu of
interest, shall be payable in respect of any distribution payment or payments on
the Preferred OP Units that may be in arrears. Holders of any Preferred OP Units
that are issued after the date of original issuance are entitled to receive the
same distributions as holders of any Preferred OP Units issued on the date of
original issuance.
When distributions are not paid in full upon the Preferred OP Units or any
Parity Units, or a sum sufficient for such payment is not set apart, all
distributions declared upon the Preferred OP Units and any Parity Units shall be
declared ratably in proportion to the respective amounts of distributions
accumulated, accrued and unpaid on the Preferred OP Units and accumulated,
accrued and unpaid on such Parity Units. Except as set forth in the preceding
sentence, unless distributions on the Preferred OP Units equal to the full
amount of accumulated, accrued and unpaid distributions have been or
contemporaneously are declared and paid, or declared and a sum sufficient for
the payment thereof has been or contemporaneously is set apart for such payment,
for all past distribution periods, no distributions shall be declared or paid or
set apart for payment by the AIMCO Operating Partnership with respect to any
Parity Units. Unless full cumulative distributions (including all accumulated,
accrued and unpaid distributions) on the Preferred OP Units have been declared
and paid, or declared and set apart for payment, for all past distribution
periods, no distributions (other than distributions or distributions paid in
Junior Units or options, warrants or rights to subscribe for or purchase Junior
Units) may be declared or paid or set apart for payment by the AIMCO Operating
Partnership and no other distribution of cash or other property may be declared
or made, directly or indirectly, by the AIMCO Operating Partnership with respect
to any Junior Units, nor shall any Junior Units be redeemed, purchased or
otherwise acquired (except for a redemption, purchase or other acquisition of
Common OP Units made for purposes of an employee incentive or benefit plan of
AIMCO, the AIMCO Operating Partnership or any subsidiary) for any consideration
(or any monies be paid to or made available for a sinking fund for the
redemption of any such Junior Units), directly or indirectly, by the AIMCO
Operating Partnership (except by conversion into or exchange for Junior Units,
or options, warrants or rights to subscribe for or purchase Junior Units), nor
shall any other cash or other property be paid or distributed to or for the
benefit of holders of Junior Units. Notwithstanding the foregoing provisions of
this paragraph, the AIMCO Operating Partnership shall not be prohibited from (i)
declaring or paying or setting apart for payment any distribution on any Parity
Units or (ii) redeeming, purchasing or otherwise acquiring any Parity Units, in
each case, if such declaration, payment, redemption, purchase or other
acquisition is necessary to maintain AIMCO's qualification as a REIT.
ALLOCATION
Holders of Preferred OP Units will be allocated net income of the AIMCO
Operating Partnership in an amount equal to the distributions made on such
holder's Preferred OP Units during the taxable year. Holders of Preferred OP
Units also will generally be allocated any net loss of the AIMCO Operating
Partnership that is not allocated to holders of Common OP Units or other
interests of the AIMCO Operating Partnership.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the AIMCO Operating Partnership, before any allocation of income or gain by the
AIMCO Operating Partnership shall be made to or set apart for the holders of any
Junior Units, to the extent possible, the holders of Preferred OP Units shall be
entitled to be allocated income and gain to effectively enable them to receive a
liquidation preference (the "Liquidation Preference") of $25 per Preferred OP
Unit (the "Stated Preference"), plus accumulated, accrued and unpaid
distributions (whether or not earned or declared) to the date of final
distribution to such holders; but such holders shall not be entitled to any
further allocation of income or gain. Until the holders of the Preferred OP
Units have been paid the Liquidation Preference in full, no allocation of income
or gain will be made to any holder of Junior Units upon the liquidation,
dissolution or winding up of the AIMCO Operating Partnership. If, upon any
liquidation, dissolution or winding up of the AIMCO Operating Partnership, the
assets of the AIMCO Operating Partnership, or proceeds thereof, distributable
among the
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<PAGE> 80
holders of Preferred OP Units shall be insufficient to pay in full the above
described preferential amount and liquidating payments on any Parity Units, then
following certain allocations made by the AIMCO Operating Partnership, such
assets, or the proceeds thereof, shall be distributed among the holders of
Preferred OP Units and any such Parity Units ratably in the same proportion as
the respective amounts that would be payable on such Preferred OP Units and any
such Parity Units if all amounts payable thereon were paid in full. A voluntary
or involuntary liquidation, dissolution or winding up of the AIMCO Operating
Partnership will not include a consolidation or merger of the AIMCO Operating
Partnership with one or more partnerships, corporations or other entities, or a
sale or transfer of all or substantially all of the AIMCO Operating
Partnership's assets. Upon any liquidation, dissolution or winding up of the
AIMCO Operating Partnership, after all allocations shall have been made in full
to the holders of Preferred OP Units and any Parity Units to enable them to
receive their Liquidation Preference, any Junior Units shall be entitled to
receive any and all assets remaining to be paid or distributed, and the holders
of the Preferred OP Units and any Parity Units shall not be entitled to share
therein.
REDEMPTION
The Preferred OP Units may not be redeemed at the option of the AIMCO
Operating Partnership, and will not be required to be redeemed or repurchased by
the AIMCO Operating Partnership or AIMCO except if a holder of a Preferred OP
Unit effects a redemption, as described below. The AIMCO Operating Partnership
or AIMCO may purchase Preferred OP Units from time to time in the open market,
by tender or exchange offer, in privately negotiated purchases or otherwise.
After a one-year holding period, a holder may redeem Preferred OP Units and
receive in exchange therefor, at the AIMCO Operating Partnership's option, (i)
subject to the terms of any Senior Units, cash in an amount equal to the
Liquidation Preference of the Preferred OP Units tendered for redemption, (ii) a
number of shares of Class I Preferred Stock of AIMCO that pay an aggregate
amount of dividends equivalent to the distributions on the Preferred OP Units
tendered for redemption; provided that such shares are part of a class or series
of preferred stock that is then listed on the NYSE or another national
securities exchange, or (iii) a number of shares of Class A Common Stock of
AIMCO that is equal in Value to the Liquidation Preference of the Preferred OP
Units tendered for redemption. The "Value" of shares of Class A Common Stock
will be determined based on a 10-day average trading price of the shares, as set
forth in the AIMCO Operating Partnership's agreement of limited partnership. If
shares of Class I Preferred Stock or Class A Common Stock of AIMCO are issued in
exchange for any Preferred OP Units tendered for redemption, the Preferred OP
Units that are acquired by AIMCO will be converted to a class of AIMCO Operating
Partnership units that corresponds to the class of stock so issued.
VOTING RIGHTS
Except as otherwise required by applicable law or in the AIMCO Operating
Partnership's agreement of limited partnership, the holders of the Preferred OP
Units will have the same voting rights as holders of the Common OP Units. See
"Description of OP Units" in the accompanying Prospectus. So long as any
Preferred OP Units are outstanding, in addition to any other vote or consent of
partners required by law or by the AIMCO Operating Partnership's agreement of
limited partnership, the affirmative vote or consent of holders of at least 50%
of the outstanding Preferred OP Units will be necessary for effecting any
amendment of any of the provisions of the Partnership Unit Designation of the
Preferred OP Units that materially and adversely affects the rights or
preferences of the holders of the Preferred OP Units. The creation or issuance
of any class or series of AIMCO Operating Partnership units, including, without
limitation, any AIMCO Operating Partnership units that may have rights senior or
superior to the Preferred OP Units, will not be deemed to materially adversely
affect the rights or preferences of the holders of Preferred OP Units. With
respect to the exercise of the above described voting rights, each Preferred OP
Unit will have one (1) vote per Preferred OP Unit.
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<PAGE> 81
RESTRICTIONS ON TRANSFER
Preferred OP Units will be subject to the same restrictions on transfer
applicable to Common OP Units, as set forth in the AIMCO Operating Partnership's
agreement of limited partnership.
DESCRIPTION OF CLASS I PREFERRED STOCK
The Class I Preferred Stock (a) ranks prior to the Class A Common Stock and
the Class E Preferred Stock, and any other class or series of capital stock of
AIMCO if the holders of the Class I Preferred Stock are to be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution,
and winding-up in preference or priority to the holders of shares of such class
or series ("Class I Junior Stock"), (b) ranks on a parity with the Class B
Preferred Stock, the Class C Preferred Stock, the Class D Preferred Stock, the
Class G Preferred Stock, the Class H Preferred Stock, the Class J Preferred
Stock and with any other class or series of capital stock of AIMCO, if the
holders of such class of stock or series and the Class I Preferred Stock are
entitled to the receipt of dividends and of amounts distributable upon
liquidation, dissolution or winding-up in proportion to their respective amounts
of accrued and unpaid dividends per share or liquidation preferences, without
preference or priority one over the other ("Class I Parity Stock") and (c) ranks
junior to any class or series of capital stock of AIMCO if the holders of such
class or series are entitled to the receipt of dividends or amounts
distributable upon liquidation, dissolution or winding-up in preference or
priority to the holders of the Class I Preferred Stock ("Class I Senior Stock").
Holders of Class I Preferred Stock are entitled to receive cash dividends
at the rate of 8.0% per annum of the $25 liquidation preference (equivalent to
$2.00 per annum per share). Such dividends are cumulative from the date of
original issue, and are payable quarterly on or before January 15, April 15,
July 15 and October 15 of each year, commencing January 15, 1999. Upon any
liquidation, dissolution or winding up of AIMCO, before payment or distribution
by AIMCO may be made to or set apart for the holders of any shares of Class I
Junior Stock, the holders of Class I Preferred Stock are entitled to receive a
liquidation preference of $25 per share (the "Class I Liquidation Preference"),
plus an amount equal to all accumulated, accrued and unpaid dividends to the
date of final distribution to such holders; but such holders shall not be
entitled to any further payment. If proceeds available for distribution are
insufficient to pay the preference described above and any liquidating payments
on any other shares of any class or series of Class I Parity Stock, then such
proceeds will be distributed among the holders of Class I Preferred Stock and
any such other Class I Parity Stock ratably in the same proportion as the
respective amount that would be payable on such Class I Preferred Stock and any
such other Class I Parity Stock if all amounts payable thereon were paid in
full.
On and after , , AIMCO may redeem shares of
Class I Preferred Stock, in whole or in part, at a cash redemption price equal
to 100% of the Class I Liquidation Preference plus all accrued and unpaid
dividends to the date fixed for redemption. The Class I Preferred Stock has no
stated maturity and is not subject to any sinking fund or mandatory redemption
provisions.
Holders of shares of Class I Preferred Stock have no voting rights, except
that if distributions on Class I Preferred Stock or any series or class of Class
I Parity Stock are in arrears for six or more quarterly periods, the number of
directors constituting the AIMCO board of directors will be increased by two and
the holders of Class I Preferred Stock (voting together as a single class with
all other shares of Class I Parity Stock, which are entitled to similar voting
rights) will be entitled to vote for the election of the two additional
directors of AIMCO at any annual meeting of stockholders or at a special meeting
of the holders of the Class I Preferred Stock called for the purpose. The
affirmative vote of the holders of two-thirds of the outstanding shares of Class
I Preferred Stock will be required to amend the AIMCO charter in any manner that
would adversely affect the rights of the holders of Class I Preferred Stock, and
to approve the issuance of any capital stock that ranks senior to the Class I
Preferred Stock with respect to payment of dividends or upon liquidation,
dissolution, winding up or otherwise.
Ownership of shares of Class I Preferred Stock by any person will be
limited such that the sum of the aggregate value of all capital stock of AIMCO
(including all shares of Class I Preferred Stock) owned
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<PAGE> 82
directly or constructively by such person may not exceed 8.7% (or 15% in the
case of certain pension trusts, registered investment companies and Mr.
Considine) of the aggregate value of all shares of capital stock of AIMCO over
(ii) the aggregate value of all shares of capital stock of AIMCO (the "Class I
Preferred Ownership Limit"). The AIMCO board of directors may waive such
ownership limit if evidence satisfactory to the AIMCO board of directors and
AIMCO's tax counsel is presented that such ownership will not then or in the
future jeopardize AIMCO's status as a REIT. As a condition of such waiver, the
AIMCO board of directors may require opinions of counsel satisfactory to it
and/or an undertaking from the applicant with respect to preserving the REIT
status of AIMCO. If shares of Class I Preferred Stock in excess of the Class I
Preferred Ownership Limit, or shares of Class I Preferred Stock 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 will be null
and void to the intended transferee, and the intended transferee would acquire
no rights to the Class I Preferred Stock. Shares of Class I Preferred Stock
transferred in excess of the Class I Preferred 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 Class I Preferred 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 Class I Preferred 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 Class I Preferred 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 Class I Preferred Stock
on the date that AIMCO determines to purchase the Class I Preferred Stock. The
90-day period commences on the date of the violative transfer or the date that
the AIMCO board of directors determines in good faith that a violative transfer
has occurred, whichever is later. All certificates representing shares of Class
I Preferred Stock bear a legend referring to the restrictions described above.
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<PAGE> 83
COMPARISON OF PREFERRED OP UNITS AND
CLASS I PREFERRED STOCK
PREFERRED OP UNITS CLASS I PREFERRED STOCK
Nature of Investment
<TABLE>
<S> <C>
The Preferred OP Units constitute equity The Class I Preferred Stock constitutes an
interests entitling each holder of Preferred equity interest entitling each holder of
OP Units to receive, when and as declared by Class I Preferred Stock to receive, when and
the board of directors of the general as declared by the AIMCO board of directors,
partner of the AIMCO Operating Partnership, cash distribution at a rate of $2.00 per
quarterly cash distribution at a rate of annum per share.
$0.50 per Preferred OP Unit, subject to
adjustments from time to time on or after
the fifth anniversary of the issue date of
the Preferred OP Units.
</TABLE>
Voting Rights
<TABLE>
<S> <C>
Except as otherwise required by applicable Holders of Class I Preferred Stock do not
law or in the AIMCO Operating Partnership's have any voting rights, except as set forth
agreement of limited partnership, the below and except as otherwise required by
holders of the Preferred OP Units will have applicable law.
the same voting rights as holders of the
Common OP Units. See "Description of OP If and whenever dividends on any shares of
Units" in the accompanying Prospectus. So Class I Preferred Stock or any series or
long as any Preferred OP Units are class of Class I Parity Stock are in arrears
outstanding, in addition to any other vote for six or more quarterly periods (whether
or consent of partners required by law or by or not consecutive), the number of directors
the AIMCO Operating Partnership's agreement then constituting the AIMCO board of
of limited partnership, the affirmative vote directors shall be increased by two (if not
or consent of holders of at least 50% of the already increased by reason of similar types
outstanding Preferred OP Units will be of provisions with respect to shares of
necessary for effecting any amendment of any voting preferred stock), and the holders of
of the provisions of the Partnership Unit shares of Class I Preferred Stock, together
Designation of the Preferred OP Units that with the holders of shares of all other
materially and adversely affects the rights voting preferred stock then entitled to
or preferences of the holders of the exercise similar voting rights, voting as a
Preferred OP Units. The creation or issuance single class regardless of series, will be
of any class or series of AIMCO Operating entitled to vote for the election of two
Partnership units, including, without additional directors of AIMCO. Whenever
limitation, any AIMCO Operating Partnership dividends in arrears and dividends for the
units that may have rights senior or current quarterly dividend period have been
superior to the Preferred OP Units, will not paid or declared and set aside in respect of
be deemed to materially adversely affect the the outstanding shares of the Class I
rights or preferences of the holders of Preferred Stock and the voting preferred
Preferred OP Units. With respect to the stock, then the right of the holders of
exercise of the above described voting Class I Preferred Stock and the voting
rights, each Preferred OP Units will have preferred stock to elect such additional two
one (1) vote per Preferred OP Unit. directors will cease and the terms of office
of such directors will terminate.
The affirmative vote or consent of at least
66 2/3% of the votes entitled to be cast by
the holders of Class I Preferred Stock and
Class I Parity Stock entitled to vote on
such matters, voting as a single class, will
be required to (i) authorize, create,
increase the authorized amount of, or issue
any shares of any class of Class I Senior
Stock or any security convertible into
shares of any class of Class I Senior Stock,
or (ii) amend, alter or repeal any provision
of, or add any provision to, the AIMCO
charter or by-laws, if such action would
materially adversely affect the
</TABLE>
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<PAGE> 84
PREFERRED OP UNITS CLASS I PREFERRED STOCK
<TABLE>
<S> <C>
voting powers, rights or preferences of the
holders of the Class I Preferred Stock;
provided, however, that no such vote of the
Class I Preferred Stockholders shall be
required if, at or prior to the time such
proposed change, provisions are made for the
redemption of all outstanding shares of
Class I Preferred Stock. The amendment of
the AIMCO charter to authorize, create,
increase or decrease the authorized amount
of or to issue Class I Junior Stock, Class I
Preferred Stock or any shares of any class
of Class I Parity Stock shall not be deemed
to materially adversely affect the voting
powers, rights or preferences of the holders
of Class I Preferred Stock.
With respect to the exercise of the above
described voting rights, each share of Class
I Preferred Stock will have one vote per
share, except that when any other class or
series of preferred stock has the right to
vote with the Class I Preferred Stock as a
single class, then the Class I Preferred
Stock and such other class or series shall
have one quarter of one vote per $25 of
stated liquidation preference.
</TABLE>
Distributions
<TABLE>
<S> <C>
Holders of Preferred OP Units are entitled Holders of Class I Preferred Stock are
to receive, when and as declared by the entitled to receive, when and as declared by
board of directors of the general partner of the AIMCO board of directors, out of funds
the AIMCO Operating Partnership, quarterly legally available for payment, cash
cash distributions at the rate of $0.50 per dividends at the rate of $2.00 per annum per
Preferred OP Unit; provided, however, that share. Such dividends are cumulative from
at any time and from time to time on or the date of original issue. Holders of Class
after the fifth anniversary of the issue I Preferred Stock are not be entitled to
date of the Preferred OP Units, the AIMCO receive any dividends in excess of
Operating Partnership may adjust the annual cumulative dividends on the Class I Pre-
distribution rate on the Preferred OP Units ferred Stock. No interest, or sum of money
to the lower of (i) % plus the annual in lieu of interest, shall be payable in
interest rate then applicable to U.S. respect of any dividend payment or payments
Treasury notes with a maturity of five on the Class I Preferred Stock that may be
years, and (ii) the annual dividend rate on in arrears.
the most recently issued AIMCO
non-convertible preferred stock which ranks When dividends are not paid in full upon the
on a parity with its Class H Cumulative Class I Preferred Stock or any other class
Preferred Stock. Such distributions will be or series of Class I Parity Stock, all
cumulative from the date of original issue. dividends declared upon the Class I
Holders of Preferred OP Units will not be Preferred Stock and any shares of Class I
entitled to receive any distributions in Parity Stock will be declared ratably in
excess of cumulative distributions on the proportion to the respective amounts of
Preferred OP Units. No interest, or sum of dividends accumulated, accrued and unpaid on
money in lieu of interest, shall be payable the Class I Preferred Stock and such Class I
in respect of any distribution payment or Parity Stock. Unless dividends equal to the
payments on the Preferred OP Units that may full amount of all accumulated, accrued and
be in arrears. unpaid dividends on the Class I Preferred
Stock have been paid, or declared and set
When distributions are not paid in full upon apart for payment, except in limited
the Preferred OP Units or any Parity Units, circumstances, no dividends may be declared
all distributions declared upon the or paid or set apart for payment by AIMCO
Preferred OP Units and any and no other distribution of cash or other
</TABLE>
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PREFERRED OP UNITS CLASS I PREFERRED STOCK
<TABLE>
<S> <C>
Parity Units will be declared ratably in property may be declared or made, directly
proportion to the respective amounts of or indirectly, by AIMCO with respect to any
distributions accumulated, accrued and shares of Class I Junior Stock, nor shall
unpaid on the Preferred OP Units and such any shares of Class I Junior Stock be
Parity Units. Unless full cumulative redeemed, purchased or otherwise acquired
distributions on the Preferred OP Units have for any consideration, nor shall any other
been declared and paid, except in limited cash or other property be paid or
circumstances, no distributions may be distributed to or for the benefit of holders
declared or paid or set apart for payment by of shares of Class I Junior Stock. See
the AIMCO Operating Partnership and no other "Description of Class I Preferred
distribution of cash or other property may Stock -- Dividends."
be declared or made, directly or indirectly,
by the AIMCO Operating Partnership with
respect to any Junior Units, nor shall any
Junior Units be redeemed, purchased or
otherwise acquired for consideration, nor
shall any other cash or other property be
paid or distributed to or for the benefit of
holders of Junior Units. See "Description of
Preferred OP Units -- Distributions."
</TABLE>
Liquidity and Transferability/Redemption
<TABLE>
<S> <C>
There is no public market for the Preferred Ownership of shares of Class I Preferred
OP Units and the Preferred OP Units are not Stock by any person will be limited such
listed on any securities exchange. The that the sum of the aggregate value of all
Preferred OP Units are subject to certain equity stock (including all shares of Class
restrictions on transferability set forth in I Preferred Stock) owned directly or
the AIMCO Operating Partnership Agreement. constructively by such person may not exceed
8.7% (or 15% in the case of certain parties)
Pursuant to the AIMCO Operating of the aggregate value of all outstanding
Partnership's agreement of limited shares of equity stock. Further, certain
partnership, until the expiration of one transfers which may have the effect of
year from the date on which a holder of causing AIMCO to lose its status as a REIT
Preferred OP Units acquired Preferred OP are void ab initio.
Units, subject to certain exceptions, such
holder of Preferred OP Units may not If any transfer of Class I Preferred Stock
transfer all or any portion of its Preferred occurs which, if effective, would result in
OP Units to any transferee without the any person beneficially or constructively
consent of the general partner, which owning Class I Preferred Stock in excess or
consent may be withheld in its sole and in violation of the Class I Preferred
absolute discretion. After the expiration of Ownership Limit, such shares of Class I
one year, such holders of Preferred OP Units Preferred Stock in excess of the Class I
has the right to transfer all or any portion Preferred Ownership Limit will be
of its Preferred OP Units to any person, automatically transferred to a trustee in
subject to the satisfaction of certain his capacity as trustee of a trust for the
conditions specified in the AIMCO Operating exclusive benefit of one or more charitable
Partnership's agreement of limited beneficiaries designated by AIMCO, and the
partnership, including the general partner's prohibited transferee will generally have no
right of first refusal. rights in such shares, except upon sale of
the shares by the trustee. The trustee will
After a one-year holding period, a holder have all voting rights and rights to
may redeem Preferred OP Units and receive in dividends with respect to shares of Class I
exchange therefor, at the AIMCO Operating Preferred Stock held in the trust, which
Partnership's option, (i) subject to the rights will be exercised for the benefit of
terms of any Senior Units, cash in an amount the charitable beneficiaries.
equal to the Liquidation Preference of the
Preferred OP Units tendered for redemp- The trustee may sell the Class I Preferred
tion, (ii) a number of shares of preferred Stock held in the trust to AIMCO or a
stock of AIMCO that have an aggregate person, designated by the trustee, whose
dividend yield ownership of the Class I Preferred Stock
will not violate the Class I Preferred
Owner-
</TABLE>
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PREFERRED OP UNITS CLASS I PREFERRED STOCK
<TABLE>
<S> <C>
equivalent to the distribution yield of the ship Limit. Upon such sale, the interest of
Preferred OP Units tendered for redemption the charitable beneficiaries in the shares
and are part of a class or series of sold will terminate and the trustee will
preferred stock that is then listed on the distribute to the prohibited transferee, the
New York Stock Exchange or another national lesser of (i) the price paid by the
securities exchange, or (iii) a number of prohibited transferee for the shares or if
shares of Class A Common Stock of AIMCO that the prohibited transferee did not give value
is equal in value to the Liquidation for the shares in connection with the event
Preference of the Preferred OP Units causing the shares to be held in the trust,
tendered for redemption. The Preferred OP the market price of such shares on the day
Units may not be redeemed at the option of of the event causing the shares to be held
the AIMCO Operating Partnership. See in the trust and (ii) the price per share
"Description of Preferred OP received by the trustee from the sale or
Units -- Redemption." other disposition of the shares held in the
trust. Any proceeds in excess of the amount
payable to the prohibited transferee will be
payable to the charitable beneficiaries.
On and after , AIMCO
may, at its option, redeem shares of Class I
Preferred Stock, in whole or from time to
time in part, at a cash redemption price
equal to 100% of the Class I Liquidation
Preference plus all accumulated, accrued and
unpaid dividends to the date fixed for
redemption. If full cumulative dividends on
all outstanding shares of Class I Preferred
Stock have not been paid or declared and set
apart for payment, no shares of Class I
Preferred Stock may be redeemed unless all
outstanding shares of Class I Preferred
Stock are simultaneously redeemed and
neither AIMCO nor any of its affiliates may
purchase or acquire shares of Class I
Preferred Stock otherwise than pursuant to a
purchase or exchange offer made on the same
terms to all holders of Class I Preferred
Stock. The redemption price for the Class I
Preferred Stock (other than any portion
thereof consisting of accumulated, accrued
and unpaid dividends) will be payable solely
with the proceeds from the sale by AIMCO of
capital stock of AIMCO or the sale by the
AIMCO Operating Partnership of partnership
interests in the AIMCO Operating Partnership
(whether or not such sale occurs
concurrently with such redemption).
</TABLE>
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CONFLICTS OF INTEREST
CONFLICTS OF INTEREST WITH RESPECT TO THE OFFER
The general partner of your partnership became a majority-owned subsidiary
of AIMCO on October 1, 1998, when AIMCO merged with Insignia. Accordingly, the
general partner of your partnership is an affiliate of the AIMCO Operating
Partnership and, therefore, has substantial conflicts of interest with respect
to the offer. The general partner of your partnership has a fiduciary obligation
to obtain a fair offer price for you, even as a subsidiary of AIMCO. It also has
a duty to remove the property manager for your partnership's property, under
certain circumstances, even though the property manager is also an affiliate of
AIMCO. The conflicts of interest include the fact that a decision to remove, for
any reason, the general partner of your partnership from its current position as
a general partner of your partnership would result in a decrease or elimination
of the substantial management fees paid to an affiliate of the general partner
of your partnership for managing your partnership property. Additionally, we
desire to purchase units at a low price and you desire to sell units at a high
price. The general partner of your partnership makes no recommendation as to
whether you should tender or refrain from tendering your units. Such conflicts
of interest in connection with the offer and the operation of AIMCO differ from
those conflicts of interest that currently exist for your partnership. See "Risk
Factors -- Risks to Offerees Who Tender Their Units in the Offer -- Conflicts of
Interest with Respect to the Offer."
CONFLICTS OF INTEREST THAT CURRENTLY EXIST FOR YOUR PARTNERSHIP
We have a majority ownership interest in both the general partner of your
partnership and the manager of your partnership's property. The general partner
does not receive an annual management fee but may receive reimbursements for
expenses incurred in its capacity as general partner. The general partner of
your partnership received total fees and reimbursements of $196,000 in 1996,
$223,000 in 1997 and $158,000 for the nine months ended July 31, 1998. The
property manager received management fees of $540,000 in 1996, $558,000 in 1997
and $430,000 for the nine months ended July 31, 1998. The AIMCO Operating
Partnership has no current intention of changing the fee structure for the
general partner or for the manager of your partnership's property.
COMPETITION AMONG PROPERTIES
Because AIMCO and your partnership both invest in apartment properties,
these properties may compete with one another for tenants. AIMCO's policy is to
limit its management to properties which do not compete with one another.
Furthermore, you should bear in mind that AIMCO anticipates acquiring properties
in general market areas where your partnership property is located. It is
believed that this concentration of properties in a general market area will
facilitate overall operations through collective advertising efforts and other
operational efficiencies. In managing AIMCO's properties, the AIMCO Operating
Partnership will attempt to reduce such conflicts between competing properties
by referring prospective customers to the property considered to be most
conveniently located for the customer's needs.
FEATURES DISCOURAGING POTENTIAL TAKEOVERS
Certain provisions of AIMCO's governing documents, as well as statutory
provisions under certain state laws, could be used by AIMCO's management to
delay, discourage or thwart efforts of third parties to acquire control of, or a
significant equity interest in, AIMCO and the AIMCO Operating Partnership. See
"Comparison of Your Partnership and the AIMCO Operating Partnership."
FUTURE EXCHANGE OFFERS
If the results of operations were to improve for your partnership under
AIMCO's management, AIMCO might be required to pay a higher price for any future
exchange offers it may make for units of your partnership. Although we have no
current plans to conduct future exchange offers for your units, our plans may
change based on future circumstances. Any such future offers that we might make
could be for consideration that is more or less than the consideration we are
currently offering.
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YOUR PARTNERSHIP
GENERAL
Shelter Properties IV was organized on August 21, 1981, under the laws of
the State of South Carolina. Its primary business is real estate ownership and
related operations. Your partnership was formed for the purpose of making
investments in various types of real properties which offer potential capital
appreciation and cash distributions to its limited partners. Your partnership's
investment portfolio currently consists of the following three residential
apartment complexes: Baymeadows Apartments, a 904-unit complex in Jacksonville,
Florida; Quail Run Apartments, a 332-unit complex in Columbia, South Carolina;
and Countrywood Village Apartments, a 384-unit complex in Raleigh, North
Carolina. The general partner of your partnership is Shelter Realty IV
Corporation, which is a majority-owned subsidiary of AIMCO. A majority-owned
subsidiary of AIMCO serves as manager of the properties owned by your
partnership. As of September 15, 1998, there were 49,995 units of limited
partnership interest issued and outstanding, which were held of record by 3,676
limited partners. Your partnership's principal executive offices are located at
1873 South Bellaire Street, 17th Floor, Denver, Colorado 80222, and its
telephone number at that address is (303) 757-8101. For additional information
about your partnership, please refer to the annual and quarterly reports
prepared by your partnership which accompany this Prospectus Supplement.
CAPITAL REPLACEMENT
Your partnership maintains an ongoing program of capital improvements,
replacements and renovations, including roof replacements, kitchen and bath
renovations, balcony repairs (where applicable), replacement of various building
systems and other replacements and renovations in the ordinary course of
business. All capital improvement and renovation costs are expected to be paid
from operating cash flows, cash reserves, or from short-term or long-term
borrowings. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations of Your Partnership."
COMPETITION
There are other residential properties within the market area of your
partnership's property. The number of competitive properties in such an area
could have a material effect on the rental market for the apartments at your
partnership's property and the rents that may be charged for such apartments.
LEGAL PROCEEDINGS
Your partnership is party to a variety of legal proceedings related to its
ownership of the partnership's property and management and leasing business,
respectively, arising in the ordinary course of the business, which are not
expected to have a material adverse effect on your partnership.
ADDITIONAL INFORMATION CONCERNING YOUR PARTNERSHIP
Your partnership files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
document your partnership files at the SEC's public reference rooms in
Washington, D.C., New York, New York, and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. Your
partnership's SEC filings are also available to the public at the SEC's web site
at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information your
partnership files with them, which means that we can disclose important
information to you about your partnership by referring you to those documents.
The following reports prepared by your partnership are incorporated by reference
and considered to be part of this Prospectus Supplement:
- Annual Report on Form 10-KSB, for the year ended October 31, 1997;
- Quarterly Reports on Form 10-QSB, for the quarters ended January 31,
1998, April 30, 1998 and July 31, 1998; and
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- Current Report on Form 8-K, dated October 16, 1998.
In order to assist you in making your decision with respect to our offer,
this Prospectus Supplement is accompanied by a copy of the annual and quarterly
reports described above.
HISTORY OF THE PARTNERSHIP
Your partnership sold $40,000,000 of limited partnership units in 1982 for
$1,000.00 per unit. Between November 1, 1992 and July 31, 1998 your partnership
made a total of $53.80 of distributions per unit.
Your partnership raised proceeds to purchase certain properties and it has
expended the funds so raised many years ago. Your partnership currently owns the
properties described herein, each of which is subject to a substantial mortgage.
Your general partner (which is our affiliate) has not experienced any material
adverse financial developments from January 1, 1997 through the present.
According to the prospectus dated June 8, 1982, by which units in your
partnership were originally offered, the general partner of your partnership
(which at the time was not affiliated with AIMCO) indicated that prior
partnerships sponsored by affiliates of the general partner had, on average,
begun selling their properties during the third year after the investments were
made and had sold all of their properties after eight years of ownership. The
prospectus further stated, however, that the general partner was unable to
predict how long the partnership would remain invested in the properties and
that the partnership acquired such properties for investment rather than resale.
In any event, according to the prospectus, the general partner anticipated that
a disposition of the properties would depend on, among other things, the current
real estate and money markets, economic climate and income tax consequences to
the limited partners. We do not know why your partnership did not sell all of
its properties within such holding period. Under your partnership's agreement of
limited partnership, the term of the partnership will continue until December
31, 2022, unless sooner terminated as provided in the agreement or by law.
Limited partners could, as an alternative to tendering their units, take a
variety of possible actions, including voting to liquidate the partnership or
amending the agreement of limited partnership to authorize limited partners to
cause the partnership to merge with another entity or engage in a "roll-up" or
similar transaction.
Consummation of the offer will not affect your partnership's agreement of
limited partnership, the financial condition or results of operations of your
partnership, the business and properties owned, the distributions and
compensation payable to your general partner (which is our affiliate) or its
affiliates or any other matter relating to your partnership, except it would
result in the AIMCO Operating Partnership substantially increasing its ownership
of units of your partnership. It is possible that after the consummation of the
offer, the AIMCO Operating Partnership could, as a practical matter, control any
vote of the limited partners. Further, we will be able to receive any future
distributions from your partnership for any units we purchase.
GENERAL POLICY REGARDING SALES AND REFINANCINGS OF PARTNERSHIP PROPERTIES
In general, your general partner (which is our affiliate) regularly
evaluates the partnership's properties by considering various factors, such as
the partnership's financial position and real estate and capital markets
conditions. The general partner monitors each property's specific locale and
sub-market conditions evaluating current trends, competition, new construction
and economic changes. The general partner oversees each asset's operating
performance and continuously evaluates the physical improvement requirements. In
addition, the financing structure for each property, tax implications and the
investment climate are all considered. Any of these factors, and possibly
others, could potentially contribute to any decision by the general partner to
sell, refinance, upgrade with capital improvements or hold a particular
partnership property. Based on the above considerations, the general partner has
determined that it is not in the best interests of limited partners to sell or
refinance any property at the present time. For a description of mortgages, see
the reports described under "Your Partnership -- Additional Information
Concerning Your Partnership," which are incorporated by reference and are
considered part of this Prospectus Supplement.
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PROPERTY MANAGEMENT
Your partnership's property is managed by an entity which is a
majority-owned subsidiary of AIMCO. Pursuant to the management agreement between
the property manager and your partnership, the property manager operates your
partnership's property, establishes rental policies and rates and directs
marketing activities. The property manager also is responsible for maintenance,
the purchase of equipment and supplies, and the selection and engagement of all
vendors, suppliers and independent contractors.
FIDUCIARY RESPONSIBILITY OF THE GENERAL PARTNER OF YOUR PARTNERSHIP
Under applicable law, your general partner (which is our affiliate) is
accountable to your partnership as a fiduciary. Under your partnership's
agreement of limited partnership, the general partner is not liable to your
partnership or the limited partners for any act or failure to act if such act or
failure to act was performed in a manner determined by him or it in good faith
to be within the scope of his or its authority and to be in the best interest of
your partnership, and if he or it was not guilty of negligence, misconduct or a
breach of fiduciary obligations in such act or failure to act. As a result,
unitholders might have a more limited right of action in certain circumstances
than they would have in the absence of such a provision in your partnership's
agreement of limited partnership. The general partner of your partnership is
majority-owned by AIMCO. See "Conflicts of Interest".
Under your partnership's agreement of limited partnership, your partnership
will indemnify the general partner and any of its affiliates or your
partnership's employees, against any claim or liability by or to any person
other than your partnership, for any act or failure to act if such act or
failure to act was performed in a manner determined by him or it in good faith
to be within the scope of his or its authority and to be in the best interest of
your partnership, and if he or it was not guilty of negligence, misconduct or a
breach of fiduciary obligations in such act or failure to act, provided however,
that your partnership will not furnish any indemnification as to liabilities
arising under federal securities laws. The indemnification includes payment of
reasonable attorney's fees or other expenses incurred in settling any claim or
liability or incurred in any finally adjudicated judicial proceedings, and
expenses incurred by the removal of any liens affecting any property of the
person to be indemnified. Indemnification will be made from assets of your
partnership and no limited partner will be personally liable to any person to be
indemnified.
Your partnership's agreement of limited partnership does not limit the
amount or type of insurance your partnership may purchase to cover the liability
of the general partner of your partnership.
DISTRIBUTIONS
The following table sets forth the distributions paid per unit in the
periods indicated below. The original cost per unit was $1,000.00.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 AMOUNT
--------------------- ------
<S> <C>
1993........................................................ $ 2.09
1994........................................................ 0.00
1995........................................................ 0.00
1996........................................................ 19.80
1997........................................................ 15.84
1998 (through July 31)...................................... 16.07
Total............................................. $53.80
</TABLE>
BENEFICIAL OWNERSHIP OF INTERESTS IN YOUR PARTNERSHIP
Through subsidiaries, AIMCO currently owns, in the aggregate, approximately
a 40.08% interest in your partnership, including 19,737 units held by us and the
interest held by us, as general partner of your partnership. Except as set forth
above, neither the AIMCO Operating Partnership, nor, to the best of its
knowledge, any of its affiliates, (i) beneficially own or have a right to
acquire any units, (ii) have effected any transactions in the units in the past
two years, or (iii) have any contract, arrangement, understanding or
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relationship with any other person with respect to any securities of your
partnership, including, but not limited to, contracts, arrangements,
understandings or relationships concerning transfer or voting thereof, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies.
COMPENSATION PAID TO THE GENERAL PARTNER AND ITS AFFILIATES
Your general partner (which is our affiliate) received total compensation
(which includes all monies paid to the general partner by your partnership
including reimbursement for expenses) in respect of its capacity as general
partner of your partnership as described in the following table:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 COMPENSATION
- --------------------- ------------
<S> <C>
1994........................................................ $153,187
1995........................................................ 173,135
1996........................................................ 196,000
1997........................................................ 223,000
1998 (through July 31)...................................... 158,000
</TABLE>
In addition, a majority-owned subsidiary of AIMCO manages the property of
your partnership. Your partnership has historically paid the property management
fees as described in the following table:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 FEES
--------------------- ----
<S> <C>
1994........................................................ $486,071
1995........................................................ 514,000
1996........................................................ 540,000
1997........................................................ 558,000
1998 (through July 31)...................................... 430,000
</TABLE>
If the offer had been made in such prior periods, there would not have been
any material difference in the compensation that would have been paid to your
general partner (which is our affiliate), or the compensation paid to the
property manager or AIMCO and its affiliates.
SOURCE AND AMOUNT OF FUNDS AND TRANSACTIONAL EXPENSES
The AIMCO Operating Partnership expects that approximately $15,300,000 will
be required to purchase all of the units sought in the offer, if such units are
tendered for cash. The AIMCO Operating Partnership will obtain all such funds
from cash from operations, equity issuances and short term borrowings. The AIMCO
Operating Partnership will pay all of the costs of the offer and not your
partnership.
Below is an itemized statement of the estimated expenses incurred and to be
incurred in the offer by the AIMCO Operating Partnership:
<TABLE>
<S> <C>
Information Agent Fees...................................... $
Accountant's Fees........................................... $
Legal Fees.................................................. $
Printing Fees............................................... $
Stanger's Fees.............................................. $
Other....................................................... $
</TABLE>
If funds are borrowed to consummate the offer, we intend to use our amended
and restated credit agreement with Bank of America National Trust and Savings
Association ("Bank of America") and BankBoston, N.A. The credit agreement
provides a revolving credit facility of up to $100 million, including a swing
line of up to $30 million. The AIMCO Operating Partnership is the borrower under
the credit facility, and all obligations thereunder are guaranteed by AIMCO and
certain of its subsidiaries. The annual interest
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rate under the credit facility is based on either LIBOR or a base rate which is
the higher of Bank of America's reference rate or 0.5% over the federal funds
rate, plus, in either case, an applicable margin. The AIMCO Operating
Partnership elects which interest rate will be applicable to particular
borrowings under the credit facility. The margin ranges between 1.25% and 2.0%
in the case of LIBOR-based loans and between negative 0.25% and positive 0.5% in
the case of base rate loans, depending upon a ratio of the AIMCO Operating
Partnership's consolidated unsecured indebtedness to the value of certain
unencumbered assets. The credit facility matures on September 30, 1999 unless
extended, at the discretion of the lenders. The credit facility provides for the
conversion of the revolving facility into a three year term loan. The
availability of funds to the AIMCO Operating Partnership under the credit
facility is subject to certain borrowing base restrictions and other customary
restrictions, including compliance with financial and other covenants
thereunder. The financial covenants require the AIMCO Operating Partnership to
maintain a ratio of debt to gross asset value of no more than 0.55 to 1.0, an
interest coverage ratio of 2.25 to 1.0 and a fixed charge coverage ratio of at
least 1.6 to 1.0 through December 31, 1998, 1.7 to 1.0 from January 1, 1999
through June 30, 1999, and 1.8 to 1.0 thereafter. In addition, the credit
facility limits the AIMCO Operating Partnership from distributing more than 80%
of its Funds From Operations (as defined) to holders of OP Units, imposes
minimum net worth requirements and provides other financial covenants related to
certain unencumbered assets.
Following the IPT merger, we may obtain funds pursuant to a credit
agreement entered into by Insignia Properties, L.P. ("IPLP"), the operating
partnership for IPT, with Lehman Commercial Paper, Inc., as syndication agent,
First Union National Bank, as administrative agent and the lenders from time to
time parties thereto. Pursuant to the credit agreement, which is guaranteed by
IPT, the lenders have made available to IPLP a revolving credit facility of up
to $50,000,000 at any one time outstanding which matures in a single installment
on December 30, 2000. Loans may be borrowed by IPLP at a rate based upon the
adjusted LIBOR Rate (as defined in the credit agreement) or the Base Rate (as
defined in the credit agreement). IPT is obligated to pay a commitment fee at a
rate of 0.25% per annum on the undrawn portion of the line of credit. The credit
agreement includes customary covenants and restrictions on IPLP's ability to,
among other things, incur debt or contingent obligations, grant liens, sell
assets, make distributions or make investments. In addition, the credit
agreement contains certain financial covenants. The AIMCO Operating Partnership
intends to repay any funds borrowed out of working capital in the ordinary
course of business.
LEGAL MATTERS
Skadden, Arps, Slate, Meagher & Flom LLP will deliver an opinion to the
effect that the Common OP Units and the Preferred OP Units offered by this
Prospectus Supplement will be validly issued, fully paid and nonassessable.
Skadden, Arps, Slate, Meagher & Flom LLP will deliver an opinion as to the
status of AIMCO as a REIT. Skadden, Arps, Slate, Meagher & Flom LLP has
previously performed certain legal services on behalf of AIMCO and the AIMCO
Operating Partnership and their affiliates.
The opinion of Skadden, Arps, Slate, Meagher & Flom LLP is not attached to
this Prospectus Supplement. However, upon receipt of a written request by a
unitholder or representative so designated in writing, a copy of such opinion
will be sent by the Information Agent.
EXPERTS
Ernst & Young LLP, independent auditors, have audited Shelter Properties
IV's consolidated financial statements included in Shelter Properties IV's
Annual Report on Form 10-KSB for the year ended October 31, 1997, as set forth
in their report, which is incorporated in this Prospectus Supplement by
reference. Shelter Properties IV's consolidated financial statements are
incorporated by reference in reliance on their report, given on their authority
as experts in accounting and auditing.
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APPENDIX A
OPINION OF ROBERT A. STANGER & CO., INC.
PRELIMINARY FORM OF OPINION
AIMCO Properties, L.P.
1873 South Bellaire -- Suite 1700
Denver, Colorado 80222
Re: Shelter Properties IV
Gentlemen:
You have advised us that AIMCO Properties, L.P. (the "Purchaser"), a
subsidiary of Apartment Investment and Management Company ("AIMCO"), which
directly or indirectly owns the general partner (the "General Partner") of
Shelter Properties IV (the "Partnership") (the Purchaser, AIMCO, the General
Partner and other affiliates and subsidiaries of AIMCO are referred to herein
collectively as the "Company"), is contemplating a transaction (the "Offer") in
which a minority of the outstanding limited partnership interests in the
Partnership (the "Units") will be acquired by the Purchaser in exchange for an
offer price per Unit of $ in cash, or Common OP Units of the
Purchaser, or Preferred OP Units of the Purchaser, or a combination of
any of such forms of consideration. The limited partners of the Partnership (the
"Limited Partners") will have the choice to maintain their current interest in
the Partnership or exchange their Units for any or a combination of such forms
of consideration. The amount of cash, Common OP Units or Preferred OP Units
offered per Unit is referred to herein as the "Offer Price."
You have requested that Robert A. Stanger & Co., Inc. ("Stanger") provide
its opinion as to whether the Offer Price is fair to the Limited Partners of the
Partnership from a financial point of view.
Since its founding in 1978, Stanger and its affiliates have provided
information, research, investment banking and consulting services to clients
located throughout the United States, including major New York Stock Exchange
member firms, insurance companies and over seventy companies engaged in the
management and operation of partnerships and real estate investment trusts. The
investment banking activities of Stanger include financial advisory and fairness
opinion services, asset and securities valuations, industry and company research
and analysis, litigation support and expert witness services, and due diligence
investigations in connection with both publicly registered and privately placed
securities transactions.
Stanger, as part of its investment banking business, is regularly engaged
in the valuation of businesses and their securities in connection with mergers,
acquisitions, reorganizations and for estate, tax, corporate and other purposes.
Stanger's valuation practice principally involves partnerships, partnership
securities and the assets typically held through partnerships, such as real
estate, oil and gas reserves, cable television systems and equipment leasing
assets.
In the course of our analysis for rendering this opinion, we have, among
other things:
1. Reviewed a draft of the Prospectus Supplement related to the Offer
in a form management has represented to be substantially the same as will
be distributed to the Limited Partners;
2. Reviewed the Partnership's financial statements for the years ended
October 31, 1995, 1996 and 1997, and annual reports on Form 10-KSB filed
with the Securities and Exchange Commission for the years ended October 31,
1996 and 1997, and quarterly report on Form 10-QSB for the period ending
July 31, 1998, which the Partnership's management has indicated to be the
most current available financial statements;
3. Reviewed descriptive information concerning the real property owned
by the Partnership (the "Property"), including location, number of units
and unit mix, age, amenities and land acreage;
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<PAGE> 94
4. Reviewed summary historical operating statements for the Property,
for the years ended October 31, 1996 and 1997, and the nine months ending
July 31, 1998;
5. Reviewed the 1998 operating budget for the Property prepared by the
Partnership's management;
6. [Reviewed multi-year operating projections for the Property and the
Partnership prepared by the Partnership's management, including revenues
and expenses, net operating income, occupancy, capital improvements, debt
service, residual value, and, in the case of the Partnership, general and
administrative expenses and cash distributions to the General Partners and
the Limited Partners;]
7. [Reviewed internal analysis prepared by the Partnership of the
estimated current net liquidation value of the Partnership per Unit of
limited partnership interest;]
8. Discussed with management market conditions for the Property;
conditions in the market for sales/acquisitions of properties similar to
that owned by the Partnership; historical, current and expected operations
and performance of the Property and the Partnership; the physical condition
of the Property including any deferred maintenance; and other factors
influencing value of the Property and the Partnership;
9. Performed a site inspection of the Property;
10. Reviewed data and discussed with local sources real estate rental
market conditions in the market of the Property, and reviewed available
information relating to acquisition criteria for income-producing
properties similar to the Property;
11. Reviewed information provided by the Company relating to debt
encumbering the Property;
12. [Reviewed any bids received for the Property or publicly disclosed
tender offers for the Units during the past two years;] and
13. Conducted such other studies, analyses, inquiries and
investigations as we deemed appropriate.
In rendering this opinion, we have relied upon and assumed, without
independent verification, the accuracy and completeness of all financial
information and management reports and data, and all other reports and
information contained in the Prospectus Supplement or that were provided, made
available or otherwise communicated to us by the Partnership and the Company. We
have not performed an independent appraisal, engineering study or environmental
study of the assets and liabilities of the Partnership. We have relied upon the
representations of the Partnership and the Company concerning, among other
things, any environmental liabilities, deferred maintenance and estimated
capital expenditures and replacement reserve requirements, the determination and
valuation of non-real estate assets and liabilities of the Partnership, the
terms and conditions of any debt encumbering the Property, the allocation of net
Partnership values between the General Partner, Special Limited Partner and
Limited Partners, and the transaction costs and fees associated with a sale of
the Property. We have also relied upon the assurance of the Partnership and the
Company that any financial statements, projections, capital expenditure
estimates, debt summaries, value estimates and other information contained in
the Prospectus Supplement or otherwise provided or communicated to us were
reasonably prepared and adjusted on bases consistent with actual historical
experience, are consistent with the terms of the Partnership Agreement, and
reflect the best currently available estimates and good faith judgments; that no
material changes have occurred in the value of the Property or other information
reviewed between the date such information was provided and date of this letter;
that the Partnership and the Company are not aware of any information or facts
that would cause the information supplied to us to be incomplete or misleading;
that the highest and best use of the Property is as improved; and that all
calculations were made in accordance with the terms of the Partnership
Agreement.
In addition, you have advised us that upon consummation of the Offer, the
Partnership will continue its business and operations substantially as they are
currently being conducted and that the Partnership and the Company do not have
any present plans, proposals or intentions which relate to or would result in an
extraordinary transaction, such as a merger, reorganization or liquidation
involving the Partnership; a sale of the Partnership's Properties or the sale or
transfer of a material amount of the Partnership's other assets; any
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<PAGE> 95
changes to the Partnership's senior management or personnel or their
compensation; any changes in the Partnership's present capitalization or
distribution policy; or any other material changes in the Partnership's
structure or business.
We have not been requested to, and therefore did not: (i) select the Offer
Price or the method of determining the Offer Price in connection with the Offer;
(ii) make any recommendation to the Partnership or its partners with respect to
whether to accept or reject the Offer or whether to accept the cash, Preferred
OP Units or Common OP Units if the Offer is accepted; (iii) solicit any third
party indications of interest in acquiring the assets of the Partnership or all
or any part of the Partnership; or (iv) express any opinion as to (a) the tax
consequences of the proposed Offer to the Limited Partners, (b) the terms of the
Partnership Agreement or of any agreements or contracts between the Partnership
and the Company, (c) the Company's business decision to effect the Offer or
alternatives to the Offer, (d) the amount of expenses relating to the Offer or
their allocation between the Company and the Partnership or tendering Limited
Partners; (e) the relative value of the cash, Preferred OP Units or Common OP
Units to be issued in connection with the Offer; and (f) any adjustments made to
determine the Offer price and the net amounts distributable to the Limited
Partners, including but not limited to, balance sheet adjustments to reflect the
Partnership's estimate of the value of current net working capital balances,
reserve accounts, and liabilities, and adjustments to the Offer Price for
distributions made by the Partnership subsequent to the date of the initial
Offer. We are not expressing any opinion as to the fairness of any terms of the
Offer other than the Offer Price for the Units.
Our opinion is based on business, economic, real estate and capital market,
and other conditions as they existed and could be evaluated as of the date of
our analysis and addresses the Offer in the context of information available as
of the date of our analysis. Events occurring after that date could affect the
assumptions used in preparing the opinion.
The summary of the opinion set forth in the Prospectus Supplement does not
purport to be a complete description of the analyses performed, or the matters
considered, in rendering our opinion. The analyses and the summary set forth
must be considered as a whole, and selecting portions of such summary or
analyses, without considering all factors and analyses, would create an
incomplete view of the processes underlying this opinion. In rendering this
opinion, judgment was applied to a variety of complex analyses and assumptions.
The assumptions made, and the judgments applied, in rendering the opinion are
not readily susceptible to partial analysis or summary description. The fact
that any specific analysis is referred to in the Prospectus Supplement is not
meant to indicate that such analysis was given greater weight than any other
analysis.
Based upon and subject to the foregoing, it is our opinion that as of the
date of this letter the Offer Price is fair to the Limited Partners of the
Partnership from a financial point of view.
Yours truly,
Robert A. Stanger & Co., Inc.
Shrewsbury, New Jersey
December , 1998
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<PAGE> 96
APPENDIX B
DIRECTORS AND EXECUTIVE OFFICERS OF
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
AND
AIMCO-GP, INC.
The names and positions of the executive officers of Apartment Investment
and Management Company ("AIMCO"), AIMCO-GP, Inc. ("AIMCO-GP"), the general
partner of your partnership and the directors of AIMCO are set forth below. The
two directors of AIMCO-GP and the general partner of your partnership are Terry
Considine and Peter Kompaniez. Unless otherwise indicated, the business address
of each executive officer and director is 1873 South Bellaire Street, 17th
Floor, Denver, Colorado 80222. Each executive officer and director is a citizen
of the United States of America.
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
Terry Considine.............................. Chairman of the Board of Directors and Chief Executive
Officer
Peter K. Kompaniez........................... Vice Chairman, President and Director
Thomas W. Toomey............................. Executive Vice President -- Finance and Administration
Joel F. Bonder............................... Executive Vice President, General Counsel and
Secretary
Patrick J. Foye.............................. Executive Vice President
Robert Ty Howard............................. Executive Vice President -- Ancillary Services
Steven D. Ira................................ Executive Vice President and Co-Founder
David L. Williams............................ Executive Vice President -- Property Operations
Harry G. Alcock.............................. Senior Vice President -- Acquisitions
Troy D. Butts................................ Senior Vice President and Chief Financial Officer
Richard S. Ellwood........................... Director
J. Landis Martin............................. Director
Thomas L. Rhodes............................. Director
John D. Smith................................ Director
</TABLE>
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
Terry Considine...................... Mr. Considine has been Chairman of the Board of Directors
and Chief Executive Officer of AIMCO and AIMCO-GP since July
1994. 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 AIMCO's
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.
</TABLE>
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<PAGE> 97
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
Peter K. Kompaniez................... Mr. Kompaniez has been Vice Chairman and a director of AIMCO
since July 1994 and was appointed President of AIMCO in July
1997. Mr. Kompaniez has served as Vice President of AIMCO-GP
from July 1994 through July 1998 and was appointed President
in July 1998. Mr. Kompaniez has been a director of AIMCO-GP
since July 1994. 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 the 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).
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. Mr. Toomey has been Executive
Vice President -- Finance and Administration of AIMCO-GP
since July 1998. From 1990 until 1995, Mr. Toomey served in
a similar capacity with Lincoln Property Company ("LPC") as
well 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.
Joel F. Bonder....................... Mr. Bonder was appointed Executive Vice President and
General Counsel of AIMCO since December 8, 1997. Mr. Bonder
has been Executive Vice President and General Counsel of
AIMCO-GP since July 1998. Prior to joining AIMCO, Mr. Bonder
served as Senior Vice President and General Counsel of NHP
from April 1994 until December 1997. Mr. Bonder served as
Vice President and Deputy General Counsel of NHP from June
1991 to March 1994 and as Associate General Counsel of NHP
from 1986 to 1991. From 1983 to 1985, Mr. Bonder was with
the Washington, D.C. law firm of Lane & Edson, P.C. From
1979 to 1983, Mr. Bonder practiced with the Chicago law firm
of Ross and Hardies. Mr. Bonder received an A.B. from the
University of Rochester and a J.D. from Washington
University School of Law.
</TABLE>
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<PAGE> 98
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
Patrick J. Foye...................... Mr. Foye has served as Executive Vice President of AIMCO and
AIMCO-GP since May 1998. Prior to joining AIMCO, Mr. Foye
was a partner in the law firm of Skadden, Arps, Slate,
Meagher & Flom LLP from 1989 to 1998 and was Managing
Partner of the firm's Brussels, Budapest and Moscow offices
from 1992 through 1994. Mr. Foye is also Deputy Chairman of
the Long Island Power Authority and serves as a member of
the New York State Privatization Council. He received a B.A.
from Fordham College and a J.D. from Fordham University Law
School.
Robert Ty Howard..................... Mr. Howard has served as Executive Vice
President -- Ancillary Services since February 1998. Mr.
Howard was appointed Executive Vice President -- Ancillary
Services of AIMCO-GP in July 1998. Prior to joining AIMCO,
Mr. Howard served as an officer and/or director of four
affiliated companies, Hecco Ventures, Craig Corporation,
Reading Company and Decurion Corporation. Mr. Howard was
responsible for financing, mergers and acquisitions
activities, investments in commercial real estate, both
nationally and internationally, cinema development and
interest rate risk management. From 1983 to 1988, he was
employed by Spieker Properties. Mr. Howard received a B.A.
from Amherst College, a J.D. from Harvard Law School and an
M.B.A. from Stanford University Graduate School of Business.
Steven D. Ira........................ Mr. Ira is a Co-Founder of AIMCO and has served as Executive
Vice President of AIMCO since July 1994. Mr. Ira has been
Executive Vice President of AIMCO-GP since July 1998. 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 Board 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.
</TABLE>
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<PAGE> 99
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
David L. Williams.................... Mr. Williams has been Executive Vice President -- Operations
of AIMCO since January 1997. Mr. Williams has been Executive
Vice President -- Operations of AIMCO-GP since July 1998.
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.
Mr. 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 Vice President of AIMCO and
AIMCO-GP 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.
Troy D. Butts........................ Mr. Butts has served as Senior Vice President and Chief
Financial Officer of AIMCO since November 1997. Mr. Butts
has been Senior Vice President and Chief Financial Officer
of AIMCO-GP since July 1998. Prior to joining AIMCO, Mr.
Butts served as a Senior Manager in the audit practice of
the Real Estate Services Group for Arthur Andersen LLP in
Dallas, Texas. Mr. Butts was employed by Arthur Andersen LLP
for ten years and his clients were primarily publicly-held
real estate companies, including office and multi-family
real estate investment trusts. Mr. Butts holds a Bachelor of
Business Administration degree in Accounting from Angelo
State University and is a Certified Public Accountant.
Richard S. Ellwood................... Mr. Ellwood was appointed a Director of AIMCO in July 1994
12 Auldwood Lane and is currently Chairman of the Audit Committee. Mr.
Rumson, NJ 07660 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 on Wall Street 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 FelCor Suite
Hotels, Inc. and Florida East Coast Industries, Inc.
</TABLE>
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<PAGE> 100
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
J. Landis Martin..................... Mr. Martin was appointed a Director of AIMCO in July 1994
199 Broadway and became Chairman of the Compensation Committee in March
Suite 4300 1998. Mr. Martin has served as President and Chief Executive
Denver, CO 80202 Officer and a Director of NL Industries, Inc., a
manufacturer of titanium dioxide, since 1987. Mr. Martin has
served as Chairman of Tremont Corporation, a holding company
operating through its affiliates Titanium Metals Corporation
("TIMET") and NL Industries, Inc., since 1990 and as Chief
Executive Officer and a director of Tremont since 1998. Mr.
Martin has served as Chairman of Timet, an integrated
producer of titanium, since 1987 and Chief Executive Officer
since January 1995. From 1990 until its acquisition by
Dresser Industries, Inc. ("Dresser") in 1994, Mr. Martin
served as Chairman of the Board and Chief Executive Officer
of Baroid Corporation, an oilfield services company. In
addition to Tremont, NL and TIMET, Mr. Martin is a director
of Dresser, which is engaged in the petroleum services,
hydrocarbon and engineering industries.
Thomas L. Rhodes..................... Mr. Rhodes was appointed a Director of AIMCO in July 1994.
215 Lexingon Avenue Mr. Rhodes has served as the President and a Director of
4th Floor National Review magazine since November 30, 1992, where he
New York, NY 10016 has also served as a Director since 1998. From 1976 to 1992
, he held various positions at Goldman, Sachs & Co. and was
elected a General Partner in 1986 and served as a General
Partner from 1987 until November 27, 1992. He is currently
Co-Chairman of the Board , Co-Chief Executive Officer and a
Director of Commercial Assets Inc. and Asset Investors
Corporation. He also serves as a Director of Delphi
Financial Group, Inc. and its subsidiaries, Delphi
International Ltd., Oracle Reinsurance Company, and the
Lynde and Harry Bradley Foundation. Mr. Rhodes is Chairman
of the Empire Foundation for Policy Research, a Founder and
Trustee of Change NY, a Trustee of The Heritage Foundation,
and a Trustee of the Manhattan Institute.
John D. Smith........................ Mr. Smith was appointed a Director of AIMCO in November
3400 Peachtree Road 1994. Mr. Smith is Principal and President of John D. Smith
Suite 831 Developments. Mr. Smith has been a shopping center
Atlanta, GA 30326 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 Shop ping 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.
</TABLE>
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<PAGE> 101
Questions and requests for assistance or for additional copies of this
Prospectus Supplement and the Letter of Transmittal may be directed to the
Information Agent at its telephone number and address listed below. You may also
contact your broker, dealer, bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the offer is:
RIVER OAKS PARTNERSHIP SERVICES, INC.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
P.O. Box 2065 111 Commerce Road 111 Commerce Road
S. Hackensack, N.J. 07606-2065 Carlstadt, N.J. 07072 Carlstadt, N.J. 07072
Attn.: Reorganization Dept. Attn.: Reorganization Dept.
</TABLE>
By Telephone:
TOLL FREE (888) 349-2005
or
(201) 896-1900
By Fax:
(201) 460-2881
On the Internet:
www.clc-online.com
<PAGE> 102
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
AIMCO
AIMCO's 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 AIMCO or its stockholders to obtain other relief,
such as an injunction or rescission.
AIMCO's Charter and 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 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 AIMCO OPERATING PARTNERSHIP
The AIMCO Operating Partnership Agreement requires the AIMCO Operating
Partnership to indemnify its directors and officers (each an "Indemnitee") to
the fullest extent authorized by applicable law against any and all losses,
claims, damages, liabilities, joint or several, expenses (including, without
limitation, attorney's fees and other legal fees and expenses), judgments,
fines, settlements and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the operations of the AIMCO Operating Partnership. Such
indemnification continues after the Indemnitee ceases to be a director or
officer. The right to indemnification includes the right to be paid by the AIMCO
Operating Partnership the expenses incurred in defending any proceeding in
advance of its final disposition upon the delivery of an undertaking by or on
behalf of the Indemnitee to repay all amounts
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<PAGE> 103
advanced if a final judicial decision is rendered that such Indemnitee did not
meet the standard of conduct permitting indemnification under the AIMCO
Operating Partnership Agreement or applicable law.
The Partnership maintains insurance, at its expense, to protect against any
liability or loss, regardless of whether any director or officer is entitled to
indemnification under the AIMCO Operating Partnership Agreement or applicable
law.
ITEM 21. EXHIBITS.
(a)
<TABLE>
<C> <S>
*4.1 Specimen certificate for Class A Common Stock.
*4.2 Specimen certificate for Common OP Unit.
**5.1 Opinion of Piper & Marbury L.L.P. regarding the validity of
the Class A Common Stock and Preferred Stock offered
hereby.
**5.2 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding the validity of the Common OP Units and the
Preferred OP Units offered hereby.
**8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding tax matters.
*****12.1 Calculation of ratio of earnings to fixed charges.
*****12.2 Calculation of ratio of earnings to combined fixed charges
and preferred stock dividends.
*****23.1 Consent of Ernst & Young LLP, Dallas, Texas.
*****23.2 Consent of Ernst & Young LLP, Chicago, Illinois.
*****23.3 Consent of Ernst & Young LLP, Greenville, South Carolina.
*****23.4 Consent of Ernst & Young LLP, Indianapolis, Indiana.
*****23.5 Consent of Arthur Andersen LLP.
**23.6 Consent of Piper & Marbury L.L.P. (included in opinion filed
as Exhibit 5.1).
**23.7 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in opinion filed as Exhibit 5.2).
23.8 Consents of KPMG Peat Marwick LLP with respect to financial
statements of the following entities:
*****23.8.1 -- Baywood Partners, Ltd.
*****23.8.2 -- Burgundy Court Associates, L.P.
*****23.8.3 -- Catawba Club Associates, L.P.
*****23.8.4 -- Georgetown of Columbus Associates, L.P.
*****23.8.5 -- La Colina Partners, Ltd.
*****23.8.6 -- Lake Eden Associates, L.P.
*****23.8.7 -- Landmark Associates, Ltd.
*****23.8.8 -- Northbrook Apartments, Ltd.
*****23.8.9 -- Shaker Square, L.P.
*****23.8.10 -- Thurber Manor Associates, Limited Partnership.
*****23.8.11 -- Quail Run Associates, L.P.
*****23.8.12 -- Sycamore Creek Associates, L.P.
*****23.9 Consent of Portock, Bye & Co. (Brampton Associates
Partnership).
23.10 Consents of Ernst & Young LLP, Greenville, South Carolina
with respect to financial statements of the following
entities:
*****23.10.1 -- Rivercreek Apartments Limited Partnership.
*****23.10.2 -- Calmark Heritage Park II Ltd.
*****23.10.3 -- Yorktown Towers Associates.
*****23.10.4 -- Shannon Manor Apartments, a Limited Partnership.
*****23.10.5 -- Woodmere Associates, L.P.
*****23.10.6 -- Salem Arms of Augusta Limited Partnership.
</TABLE>
II-2
<PAGE> 104
<TABLE>
<C> <S>
*****23.10.7 -- Coastal Commons Limited Partnership.
*****23.10.8 -- Snowden Village Associates, L.P.
*****23.10.9 -- Sharon Woods, L.P.
*****23.10.10 -- Rivercrest Apartments, Limited.
*****23.10.11 -- Angeles Income Properties, Ltd. II.
*****23.10.12 -- Angeles Income Properties, Ltd. III.
*****23.10.13 -- Angeles Income Properties, Ltd. IV.
*****23.10.14 -- Angeles Income Properties, Ltd. 6.
*****23.10.15 -- Angeles Opportunity Properties, Ltd.
*****23.10.16 -- Angeles Partners VII.
*****23.10.17 -- Angeles Partners VIII.
*****23.10.18 -- Angeles Partners IX.
*****23.10.19 -- Angeles Partners X.
*****23.10.20 -- Angeles Partners XI.
*****23.10.21 -- Angeles Partners XII.
*****23.10.22 -- Angeles Partners XIV.
*****23.10.23 -- Consolidated Capital Institutional Properties/2.
*****23.10.24 -- Consolidated Capital Institutional Properties/3.
*****23.10.25 -- Consolidated Capital Properties III.
*****23.10.26 -- Consolidated Capital Properties IV.
*****23.10.27 -- Consolidated Capital Properties V.
*****23.10.28 -- Consolidated Capital Properties VI.
*****23.10.29 -- Davidson Diversified Real Estate I, L.P.
*****23.10.30 -- Davidson Diversified Real Estate II, L.P.
*****23.10.31 -- Davidson Diversified Real Estate III, L.P.
*****23.10.32 -- Davidson Growth Plus, L.P.
*****23.10.33 -- Davidson Income Real Estate, L.P.
*****23.10.34 -- Investors First-Staged Equity.
*****23.10.35 -- Johnstown/Consolidated Income Partners.
*****23.10.36 -- Multi-Benefit Realty Fund '87-1.
*****23.10.37 -- Shelter Properties III.
*****23.10.38 -- Shelter Properties VI.
*****23.10.39 -- Shelter Properties VII Limited Partnership.
*****23.10.40 -- U.S. Realty Partners Limited Partnership.
****23.10.41 -- Shelter Properties IV
*****23.11 Consents of Deloitte & Touche (Cedar-Tree Investors Limited
Partnership and Wingfield Investors Limited Partnership).
*****23.11.1 -- HCW Pension Real Estate Fund Limited Partnership.
*****23.11.2 -- United Investors Growth Properties.
*****23.11.3 -- United Investors Growth Properties II.
*****23.11.4 -- United Investors Income Properties.
*****23.12 Consents of Reznick Fedder & Silverman (Burnsville
Apartments, LP (Minneapolis Associates II Limited
Partnership), Chestnut Hill Associates Limited
Partnership, DFW Apartment Investors Limited Partnership,
DFW Residential Investors Limited Partnership, Olde Mill
Investors Limited Partnership, Park Towne Place
Associates Limited Partnership and Texas Residential
Investors Limited Partnership, Winthrop Apartment
Investors Limited Partnership).
*****23.12.1 -- Riverside Park Associates L.P.
*****23.12.2 -- Springhill Lake Investors Limited Partnership.
</TABLE>
II-3
<PAGE> 105
<TABLE>
<C> <S>
*****23.13 Consent of Barry S. Fishman & Associates (Ravensworth
Associates Limited Partnership).
23.14 Consents of Imowitz Koenig LLP with respect to financial
statements of the following entities:
*****23.14.1 -- Winthrop Apartment Investors Limited Partnership.
*****23.14.2 -- Winrock -- Houston Limited Partnership.
*****23.14.3 -- Century Properties Fund XVI.
*****23.14.4 -- Century Properties Fund XVIII.
*****23.14.5 -- Century Properties Fund XIX.
*****23.14.6 -- Century Properties Growth Fund XXII.
23.14.7 -- [Reserved].
*****23.14.8 -- Fox Strategic Housing Income Partners.
*****23.14.9 -- National Property Investors 8.
*****23.14.10 -- Winthrop Growth Investors 1 Limited Partnership.
*****23.15.1 Consent of Pannell Kerr Forster PC (Drexel Burnham Lambert
Real Estate Associates II).
*****23.16 Consent of Beers & Cutler PLLC
*****24.1 Power of Attorney for Apartment Investment and Management
Company.
*****24.2 Power of Attorney for AIMCO Properties, L.P.
</TABLE>
- ---------------
* Incorporated by reference from AIMCO's Registration Statement on Form 8-A
filed on July 19, 1994.
** To be filed by amendment.
*** Incorporated by reference from AIMCO's Form 8-K filed on July 2, 1998.
**** Filed herewith.
***** Previously filed.
(b)Financial Statement Schedules
Not Applicable.
(c)Report, opinion or appraisal
To be included in Prospectus Supplement, as applicable.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrants hereby undertake:
(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, as amended;
(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) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
II-4
<PAGE> 106
(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, as amended, 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.
(b) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of the registrants' annual reports 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) Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers and controlling
persons of the registrants pursuant to the foregoing provisions, or otherwise,
the registrants have been advised that in the opinion of the 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 registrants of expenses incurred
or paid by a director, officer or controlling person of the registrants 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 registrants 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.
(d) The undersigned registrants hereby undertake 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.
(e) The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(f) The undersigned registrants hereby undertake to not issue securities
under this registration statement in order to effect any "roll-up transaction"
(as such term in defined in paragraph (c) of Item 901 of Regulation S-K).
Furthermore, the undersigned registrants hereby undertake to supply by means of
a post-effective amendment all information concerning an offer to purchase
partnership interests in exchange for securities issued under this registration
statement, prior to commencing such an offer, if pursuant to the provisions of
subparagraph (iv), (vii) or (viii) of paragraph (c)(2) of Item 901 of Regulation
S-K, such offer fails to constitute a roll-up transaction.
II-5
<PAGE> 107
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Apartment
Investment and Management Company has duly caused this Amendment No. 5 to the
Registration Statement on Form S-4 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Denver, State of
Colorado, on the 7th day of December, 1998.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By: /s/ TERRY CONSIDINE
----------------------------------
Terry Considine,
Chairman and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 5 to the Registration Statement on Form S-4 has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ TERRY CONSIDINE Chairman and Chief Executive December 7, 1998
- ----------------------------------------------------- Officer
Terry Considine
/s/ PETER K. KOMPANIEZ* Vice Chairman and President December 7, 1998
- -----------------------------------------------------
Peter K. Kompaniez
/s/ TROY D. BUTTS* Senior Vice President and December 7, 1998
- ----------------------------------------------------- Chief Financial Officer
Troy D. Butts
/s/ RICHARD S. ELLWOOD* Director December 7, 1998
- -----------------------------------------------------
Richard S. Ellwood
/s/ J. LANDIS MARTIN* Director December 7, 1998
- -----------------------------------------------------
J. Landis Martin
/s/ THOMAS L. RHODES* Director December 7, 1998
- -----------------------------------------------------
Thomas L. Rhodes
/s/ JOHN D. SMITH* Director December 7, 1998
- -----------------------------------------------------
John D. Smith
*By: /s/ TERRY CONSIDINE
------------------------------------------------
Terry Considine, as Attorney-in-Fact
for each of the persons indicated
</TABLE>
<PAGE> 108
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, AIMCO
Properties, L.P. has duly caused this Amendment No. 5 to the Registration
Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Denver, State of Colorado, on the 7th day of
December, 1998.
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, INC.
its General Partner
By: /s/ TERRY CONSIDINE
----------------------------------
Terry Considine,
Chairman and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 5 to the Registration Statement on Form S-4 has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ TERRY CONSIDINE Chairman and Chief Executive December 7, 1998
- ----------------------------------------------------- Officer
Terry Considine
/s/ PETER K. KOMPANIEZ* Vice Chairman and President December 7, 1998
- -----------------------------------------------------
Peter K. Kompaniez
/s/ TROY D. BUTTS* Senior Vice President and December 7, 1998
- ----------------------------------------------------- Chief Financial Officer
Troy D. Butts
*By: /s/ TERRY CONSIDINE
------------------------------------------------
Terry Considine, as Attorney-in-Fact for
each of the persons indicated
</TABLE>
<PAGE> 109
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
*4.1 Specimen certificate for Class A Common Stock.
*4.2 Specimen certificate for Common OP Unit.
**5.1 Opinion of Piper & Marbury L.L.P. regarding the validity of
the Class A Common Stock and Preferred Stock offered
hereby.
**5.2 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding the validity of the Common OP Units and the
Preferred OP Units offered hereby.
**8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding tax matters.
*****12.1 Calculation of ratio of earnings to fixed charges.
*****12.2 Calculation of ratio of earnings to combined fixed charges
and preferred stock dividends.
*****23.1 Consent of Ernst & Young LLP, Dallas, Texas.
*****23.2 Consent of Ernst & Young LLP, Chicago, Illinois.
*****23.3 Consent of Ernst & Young LLP, Greenville, South Carolina.
*****23.4 Consent of Ernst & Young LLP, Indianapolis, Indiana.
*****23.5 Consent of Arthur Andersen LLP.
**23.6 Consent of Piper & Marbury L.L.P. (included in opinion filed
as Exhibit 5.1).
**23.7 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in opinion filed as Exhibit 5.2).
23.8 Consents of KPMG Peat Marwick LLP with respect to financial
statements of the following entities:
*****23.8.1 -- Baywood Partners, Ltd.
*****23.8.2 -- Burgundy Court Associates, L.P.
*****23.8.3 -- Catawba Club Associates, L.P.
*****23.8.4 -- Georgetown of Columbus Associates, L.P.
*****23.8.5 -- La Colina Partners, Ltd.
*****23.8.6 -- Lake Eden Associates, L.P.
*****23.8.7 -- Landmark Associates, Ltd.
*****23.8.8 -- Northbrook Apartments, Ltd.
*****23.8.9 -- Shaker Square, L.P.
*****23.8.10 -- Thurber Manor Associates, Limited Partnership.
*****23.8.11 -- Quail Run Associates, L.P.
*****23.8.12 -- Sycamore Creek Associates, L.P.
*****23.9 Consent of Portock, Bye & Co. (Brampton Associates
Partnership).
23.10 Consents of Ernst & Young LLP, Greenville, South Carolina
with respect to financial statements of the following
entities:
*****23.10.1 -- Rivercreek Apartments Limited Partnership.
*****23.10.2 -- Calmark Heritage Park II Ltd.
*****23.10.3 -- Yorktown Towers Associates.
*****23.10.4 -- Shannon Manor Apartments, a Limited Partnership.
*****23.10.5 -- Woodmere Associates, L.P.
*****23.10.6 -- Salem Arms of Augusta Limited Partnership.
*****23.10.7 -- Coastal Commons Limited Partnership.
*****23.10.8 -- Snowden Village Associates, L.P.
*****23.10.9 -- Sharon Woods, L.P.
*****23.10.10 -- Rivercrest Apartments, Limited.
</TABLE>
<PAGE> 110
<TABLE>
<C> <S>
*****23.10.11 -- Angeles Income Properties, Ltd. II.
*****23.10.12 -- Angeles Income Properties, Ltd. III.
*****23.10.13 -- Angeles Income Properties, Ltd. IV.
*****23.10.14 -- Angeles Income Properties, Ltd. 6.
*****23.10.15 -- Angeles Opportunity Properties, Ltd.
*****23.10.16 -- Angeles Partners VII.
*****23.10.17 -- Angeles Partners VIII.
*****23.10.18 -- Angeles Partners IX.
*****23.10.19 -- Angeles Partners X.
*****23.10.20 -- Angeles Partners XI.
*****23.10.21 -- Angeles Partners XII.
*****23.10.22 -- Angeles Partners XIV.
*****23.10.23 -- Consolidated Capital Institutional Properties/2.
*****23.10.24 -- Consolidated Capital Institutional Properties/3.
*****23.10.25 -- Consolidated Capital Properties III.
*****23.10.26 -- Consolidated Capital Properties IV.
*****23.10.27 -- Consolidated Capital Properties V.
*****23.10.28 -- Consolidated Capital Properties VI.
*****23.10.29 -- Davidson Diversified Real Estate I, L.P.
*****23.10.30 -- Davidson Diversified Real Estate II, L.P.
*****23.10.31 -- Davidson Diversified Real Estate III, L.P.
*****23.10.32 -- Davidson Growth Plus, L.P.
*****23.10.33 -- Davidson Income Real Estate, L.P.
*****23.10.34 -- Investors First-Staged Equity.
*****23.10.35 -- Johnstown/Consolidated Income Partners.
*****23.10.36 -- Multi-Benefit Realty Fund '87-1.
*****23.10.37 -- Shelter Properties III.
*****23.10.38 -- Shelter Properties VI.
*****23.10.39 -- Shelter Properties VII Limited Partnership.
*****23.10.40 -- U.S. Realty Partners Limited Partnership.
****23.10.41 -- Shelter Properties IV
*****23.11 Consents of Deloitte & Touche (Cedar-Tree Investors Limited
Partnership and Wingfield Investors Limited Partnership).
*****23.11.1 -- HCW Pension Real Estate Fund Limited Partnership.
*****23.11.2 -- United Investors Growth Properties.
*****23.11.3 -- United Investors Growth Properties II.
*****23.11.4 -- United Investors Income Properties.
*****23.12 Consents of Reznick Fedder & Silverman (Burnsville
Apartments, LP (Minneapolis Associates II Limited
Partnership), Chestnut Hill Associates Limited
Partnership, DFW Apartment Investors Limited Partnership,
DFW Residential Investors Limited Partnership, Olde Mill
Investors Limited Partnership, Park Towne Place
Associates Limited Partnership and Texas Residential
Investors Limited Partnership, Winthrop Apartment
Investors Limited Partnership).
*****23.12.1 -- Riverside Park Associates L.P.
*****23.12.2 -- Springhill Lake Investors Limited Partnership.
*****23.13 Consent of Barry S. Fishman & Associates (Ravensworth
Associates Limited Partnership).
23.14 Consents of Imowitz Koenig LLP with respect to financial
statements of the following entities:
</TABLE>
<PAGE> 111
<TABLE>
<C> <S>
*****23.14.1 -- Winthrop Apartment Investors Limited Partnership.
*****23.14.2 -- Winrock -- Houston Limited Partnership.
*****23.14.3 -- Century Properties Fund XVI.
*****23.14.4 -- Century Properties Fund XVIII.
*****23.14.5 -- Century Properties Fund XIX.
*****23.14.6 -- Century Properties Growth Fund XXII.
23.14.7 -- [Reserved].
*****23.14.8 -- Fox Strategic Housing Income Partners.
*****23.14.9 -- National Property Investors 8.
*****23.14.10 -- Winthrop Growth Investors 1 Limited Partnership.
*****23.15.1 Consent of Pannell Kerr Forster PC (Drexel Burnham Lambert
Real Estate Associates II).
*****23.16 Consent of Beers & Cutler PLLC.
*****24.1 Power of Attorney for Apartment Investment and Management
Company.
*****24.2 Power of Attorney for AIMCO Properties, L.P.
</TABLE>
- ---------------
* Incorporated by reference from AIMCO's Registration Statement on Form 8-A
filed on July 19, 1994.
** To be filed by amendment.
*** Incorporated by reference from AIMCO's Form 8-K filed on July 2, 1998.
**** Filed herewith.
***** Previously filed.
(b)Financial Statement Schedules
Not Applicable.
(c)Report, opinion or appraisal
To be included in Prospectus Supplement, as applicable.
<PAGE> 1
EXHIBIT 23.10.41
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Prospectus Supplement of AIMCO Properties L.P. related to the offer to acquire
units of limited partnership interest of Shelter Properties IV Limited
Partnership dated December 10, 1998, and to the incorporation by reference
therein of our report dated December 2, 1997, with respect to the consolidated
financial statements of Shelter Properties IV Limited Partnership included in
its Annual Report (Form 10-KSB) for the year ended October 31, 1997, filed with
the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Greenville, South Carolina
December 7, 1998
