<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 22, 1994
BRE PROPERTIES, INC.
- - -------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 94-1722214
- - -------------------------------- -------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NUMBER)
One Montgomery Street
Telesis Tower, Suite 2500
San Francisco, California 94104-5525
- - -------------------------------- -------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
(415) 445-6530
- - -------------------------------------------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
<PAGE>
ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITION OF TUCSON APARTMENTS
BRE Properties, Inc. ("BRE" or "the company") has entered into an Agreement for
Purchase and Sale of Real Property, Loan Agreement and Joint Escrow Instructions
to acquire 1,301 units in seven apartment communities in Tucson, Arizona
("Tucson Apartments"). The sellers are affiliates of The Schomac Group
("Schomac"), a privately held apartment and self-storage developer headquartered
in Tucson which is not affiliated with BRE. In connection with the purchase,
the company has agreed, subject to satisfaction of certain conditions, to
provide $3,000,000 in loans to entities affiliated with the seller.
The purchase price is $51,637,000, subject to $28,160,000 of first mortgage
financing on six of the properties. Accordingly, BRE's cash portion of the
purchase price is approximately $23,477,000. The following summarizes the seven
apartment communities:
<TABLE>
<CAPTION>
Number Interest
Name of Units Purchase Price Mortgage Payable Rate
- - ------------------- ---------- -------------- ---------------- -----------
<S> <C> <C> <C> <C>
Camino Seco Village 168 $ 6,675,000 $ 4,295,000 8.00%
Casas Lindas 144 7,557,000 -- -
Colonia del Rio 176 8,866,000 5,349,000 8.00
Fountain Plaza 197 4,534,000 3,168,000 8.00
Hacienda del Rio 248 9,295,000 5,684,000 6.85
Oracle Village 144 6,045,000 4,250,000 7.88
Spring Hill 224 8,665,000 5,414,000 8.00
----- ------------ ------------
1,301 $ 51,637,000 $ 28,160,000
----- ------------ ------------
----- ------------ ------------
</TABLE>
MATERIAL FACTORS CONSIDERED BY THE REGISTRANT
Prior to acquiring the Tucson Apartments, BRE considered general regional and
local economic conditions, as well as the Tucson apartment market and the Tucson
Apartments' competitive posture within that market.
Arizona Overview
Between 1980 and 1989, Arizona's population grew 43.4% compared with a national
growth of 9.6%. Averaging increases of 2.2% over the past five years, the
population of Arizona exceeded 4 million for the first time at the end of 1993.
Despite its reputation as a retirement center, Arizona's population is slightly
younger than the national average, or 32.2 years compared with 32.9 years.
-2-
<PAGE>
The reasons cited for Arizona's growth include affordable housing, a strong
university system and high quality of life. Businesses favor Arizona because
of low labor costs, a well educated work force and the low cost of land and
factory space. The state provides a major transportation hub for the southwest
with international air connections, cross country rail lines and inter-city
trucking operations. Employers consider Arizona to have a positive business
climate, an improving economy and a stable political environment. The state has
been somewhat generous in granting tax incentives to companies to encourage the
location of facilities there. Arizona is also a "right to work" state.
The Arizona Department of Economic Security (DES) presents employment growth
rates for Arizona since 1985 as well as projections through 1995. Arizona has
experienced employment gains in all recent years except 1991 when it was
impacted most by the national recession. Even then, it posted a year of growth.
Arizona's economy showed considerable improvement in 1993 over 1991 and 1992.
Non-farm wage and salary employment grew by more than 54,000 or 3.6%. With the
exception of mining, all eight of the state's major industry groups showed
employment gains, with healthy increases reported in construction. In addition,
throughout 1993, the state's seasonally adjusted unemployment rate declined
steadily, dropping from 7.7% in January to 5.7% in December. Unemployment
averaged 6.2% for the year, 1.2% lower than 1992's average. By comparison, the
national economy showed modest improvement over the same period, reporting an
average 6.8% unemployment rate and 1.5% employment growth. In March of this
year, unemployment in Arizona was 5.5% compared with 6.5% nationally.
The DES two-year forecast calls for Arizona's economy to create 63,000 jobs in
1994 and 67,500 in 1995, representing a 4% increase each year. All eight of the
major industry groups are expected by DES to add jobs in these years, with
construction leading the way.
Arizona's construction industry continues to gain momentum. In 1992,
construction employment increased by 3.2% or by 2,500 jobs, after five prior
years of losses. In 1993, construction employment increased by 11.2%, or nearly
9,000 jobs. The DES forecast calls for continued strength, with 11,000 and
11,700 new jobs forecasted in 1994 and 1995, respectively. Single-family
residential construction is expected to provide most of the gains although
increasing demand for apartment, commercial and industrial property should also
boost job growth. DES suggests that rises in interest rates as the Federal
Reserve attempts to head off inflation will, at some point, slow this robust
activity.
While certain of Arizona's manufacturing sectors, such as lumber and wood
products, are improving because of increased construction, other manufacturing
gains are expected on the high technology side. For 1994, DES predicts an
increase of 2.2%, or 3,900 manufacturing jobs.
-3-
<PAGE>
The University of Arizona predicts that population gains will increase in the
short term. As economic opportunities improve locally and as homes become
easier to sell in other parts of the country, migration inflow will improve as
in prior expansions. It predicts that, after adding less than 90,000 persons
last year, the number of new residents will surge to almost 125,000 per year by
1995. This represents nearly 3% population growth in 1995.
TUCSON
The City of Tucson, located in eastern Pima County about 65 miles north of the
Mexican border, is the second largest city in Arizona. Incorporated Tucson
covers a land area of 162 square miles (1993) within an urbanized area of over
400 square miles. Downtown Tucson lies at 2,490 feet above sea level in a
desert valley surrounded by eight mountain ranges. The closest of these are the
Santa Catalina Mountains to the north, rising to 9,200 feet, the Rincon
Mountains to the west and the Santa Rita and Sierrita Mountains to the south.
There is little history of recent seismic activity.
Population and Demographics
Pima County grew in population by 25.8% from 1980 to 1990, well above the
national average of 10% for the period but below the 34.9% growth rate for the
State of Arizona. During that time, Tucson grew by 22.6% while the growth rate
for the unincorporated areas of the county grew by 28.3%. The City of Tucson
grew from the 45th largest U. S. city to the 33rd largest by 1990.
-4-
<PAGE>
The University of Arizona projects the population of Pima County to grow by
24,000 residents in 1994, or by approximately 3.4%.
Examples of major employers that have come to the Tucson area in the 1990s
include American Airlines Reservation Center, American Home Furnishings, AT & T
Directory Assistance Center, Cheetah Systems, ChipSoft, Confed Admin Services,
Lockheed Aeromod, Southwest Airlines, Muscular Dystrophy Association, Quantas
Airways Reservation Center, Quality Rubber Products, Rail Car America, Vanguard
Automation and Weiser Locks.
Multi-family Residential Real Estate Market
The total Tucson multi-family residential inventory consisted of 84,637 units,
or about 28% of the total housing stock, at March 31, 1994. The University of
Arizona's "Metropolitan Tucson Land Use Study" reports 3.85 % vacancy for those
units. RealData, Inc., which tracks properties of 40 units or more, reports an
inventory of 54,196 units with a 3.35% vacancy at March 31, 1994.
Peak construction of multi-family properties was seen in the mid 1980s, as
permit levels ranged from 5,525 to 8,289 units between 1983 and 1986. 37% of
Tucson's entire apartment inventory was permitted during those four years. Not
surprisingly, vacancy rates soared to almost 20% in 1988 as employment growth
declined from its high in 1986 in a severely overbuilt market.
Apartment permit levels declined sharply from 1989 through 1993 due to high
vacancy and the recession. This reduced construction coupled with the improving
economy has resulted in the low marketwide vacancy rates reported today.
Projected absorption in 1994 of over 2,500 units will drive vacancy rates even
lower. The size and income levels of the Tucson market have resulted in the
apartment supply generally being developed as a "B" quality market. Of 204
properties having 100 or more units, only 27 of these would be considered "A"
quality by institutional investors.
The Tucson Apartments Being Acquired
As mentioned, there are seven properties containing 1,301 units. Fountain Plaza
was built in 1975. The other six communities were built between 1983 and 1987.
Spring Hill was built of reinforced concrete and steel. The other six
properties consist of one, two and three story structures built of wood frame
and stucco. They range in quality from "A" to "C" and from 144 to 250 units.
Project amenities include pools, spas, activities clubhouses and free covered
parking. Except for Fountain Plaza and Hacienda del Rio, all units have washers
and dryers.
BRE purchased Casas Lindas for $7,557,000 cash on August 18, 1994. The other
six properties are subject to mortgage loans insured by governmental agencies.
Four of the six (Camino Seco Village, Colonia del Rio, Oracle Village and
Spring Hill) mortgages are insured by the Federal National Mortgage Association
("FNMA").
-5-
<PAGE>
The other two (Fountain Plaza and Hacienda del Rio) are insured by the
Department of Housing and Urban Development ("HUD"). Both FNMA and HUD require
that each property be held in a single-asset entity, so BRE has established six
wholly owned, single asset subsidiaries, all Delaware corporations, as follows:
BRE Camino Seco Village, Inc.
BRE Colonia del Rio, Inc.
BRE Fountain Plaza, Inc.
BRE Hacienda del Rio, Inc.
BRE Oracle Village, Inc.
BRE Spring Hill, Inc.
BRE will purchase each of the six properties as FNMA and HUD approve BRE's
assumption of the related mortgage loans. Through the date of this report, BRE
has completed the purchases of Colonia del Rio, Fountain Plaza, Oracle Village
and Spring Hill.
With a weighted average interest rate of 7.75% on the $28,160,000 of mortgage
loans, BRE expects to achieve positive leverage on this transaction, allowing a
return on the equity portion of the investment of above 10%, an attractive
return in this market for apartments. The per unit price of $39,690 compares
very favorably with comparable sales in Tucson and represents an estimated 91%
of the properties' current replacement value.
ESTIMATED EFFECT ON THE REGISTRANT'S FINANCIAL STATEMENT
The financial effect of the acquisition of the Tucson Apartments is expected to
be positive during the first year of operations, with the Tucson Apartments
increasing BRE's net income before depreciation expense by approximately
$1,643,000 ($.15 per share). This amount is calculated as follows:
<TABLE>
<CAPTION>
Annual Results
--------------
<S> <C> <C>
Purchase price $ 51,637,000 at 9.00% yield = $ 4,647,000
Less: Interest on mortgages payable 28,160,000 at 7.75% rate = (2,182,000)
: Interest on short-term investments 23,477,000 at 3.50% = (822,000)
-----------
Income before depreciation $ 1,643,000
-----------
-----------
Per share $.15
-----------
-----------
</TABLE>
The 3.50% yield on short-term investments represents BRE's actual yield for the
fiscal year ended July 31, 1994, consistent with information included in BRE's
audited financial statements.
After reasonable inquiry, BRE is not aware of any material factors relating to
the Tucson Apartments, other than those set forth above, that would cause the
reported financial information not to be necessarily indicative of future
operating results.
-6-
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO-FORMA FINANCIAL INFORMATION AND
EXHIBITS
(a) FINANCIAL STATEMENTS
(a)(3) Auditors' report and combined financial statements for the
following properties as of December 31, 1993 (audited):
Camino Seco Village Apartments
Casas Lindas Apartments
Colonia del Rio Apartments
Fountain Plaza Apartments
Hacienda del Rio Apartments
Oracle Village Apartments
Spring Hill Apartments
(b) Pro forma financial information for the year ended July 31, 1994
(c) EXHIBITS
(c)(2) Agreement for Purchase and Sale of Real Property, Loan
Agreement and Joint Escrow Instructions between Registrant and the following
limited partnerships:
Property Name Property Owner
- - ------------------------------- -----------------------------------
Camino Seco Village Apartments Camino Seco Associates, L. P.
Casas Lindas Apartments Tucson Casas Lindas, L. P.
Colonia del Rio Apartments Colonia del Rio Investors, L. P.
Fountain Plaza Apartments Fountain Plaza Partners, L. P.
Hacienda del Rio Apartments Hacienda del Rio Associates, L. P.
Oracle Village Apartments Rudasill Associates, L. P.
Spring Hill Apartments Spring Hill Associates, L. P.
23.1 Consent of Kenneth Leventhal & Company
-7-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BRE PROPERTIES, INC.
(Registrant)
Date: November 23, 1994 /s/ Howard E. Mason, Jr.
----------------- ---------------------------------------
Howard E. Mason, Jr.
Senior Vice President, Finance
(Principal Financial and Accounting Officer)
Date: November 23, 1994 /s/ Ellen G. Breslauer
----------------- ---------------------------------------
Ellen G. Breslauer
Secretary and Treasurer
-8-
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. EXHIBIT
(2) Agreement for Purchase and Sale of Real Property, Loan
Agreement and Joint Escrow Instructions between Registrant
and the following partnerships:
Property Name Property Owner
------------------------------ ----------------------------------
Camino Seco Village Apartments Camino Seco Associates, L. P.
Casas Lindas Apartments Tucson Casas Lindas, L. P.
Colonia del Rio Apartments Colonia del Rio Investors, L. P.
Fountain Plaza Apartments Fountain Plaza Partners, L. P.
Hacienda del Rio Apartments Hacienda del Rio Associates, L. P.
Oracle Village Apartments Rudasill Associates, L. P.
Spring Hill Apartments Spring Hill Associates, L. P.
-9-
<PAGE>
PRO FORMA CONDENSED STATEMENTS
BRE has entered into an agreement to purchase 1,301 units in seven apartment
communities in Tucson, Arizona. The purchase price was $51,637,000, consisting
of $23,477,000 in cash and the assumption of $28,160,000 of existing first
mortgage financing on six of the properties, with a weighted average interest
rate of 7.75%.
Set forth below are unaudited pro forma condensed statements of income of BRE
Properties, Inc. for the year ended July 31, 1994, which give effect to the
acquisition of the Tucson Apartments as if the acquisition had occurred on
August 1, 1993. The pro forma adjustments are based upon available information
and certain assumptions that management believes are reasonable. The unaudited
pro forma condensed statements of income are not necessarily indicative of the
results of the company's operations that would have actually occurred had the
acquisition taken place on the dates assumed, nor do such statements purport to
indicate the future results of operations.
-10-
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA CONDENSED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Year ended July 31, 1994
---------------------------------------------------
Pro forma
BRE Historical Adjustments BRE Pro forma
-------------- ----------- -------------
<S> <C> <C> <C>
Revenues
Rental income $ 51,374 $ 7,592 (A) $ 58,966
Other 2,205 (822) (B) 1,383
-------- --------
53,579 60,349
-------- --------
Expenses
Operating expense 16,970 2,884 (A) 20,045
191 (C)
Interest expense 4,547 2,182 (D) 6,729
Provision for depreciation and amortization 6,674 1,033 (E) 7,707
General and administrative 3,631 3,631
-------- --------
31,822 38,112
-------- --------
Income before gain on sales of investments 21,757 22,237
Net gain on sales of investments 548 548
-------- --------
Net income $ 22,305 $ 22,785
-------- --------
-------- --------
Net income per share
Primary:
Income before gain on sales of investments $ 1.99 $ 2.03
Net gain on sales of investments 0.05 0.05
-------- --------
Net income $ 2.04 $ 2.08
-------- --------
-------- --------
Fully diluted $ 2.04 $ 2.08
-------- --------
-------- --------
Weighted average shares outstanding 10,933 10,933
-------- --------
-------- --------
<FN>
(A) Reflects rental income and operating expenses as reported by Shomac
for the period July 1, 1993 to June 30, 1994 (unaudited).
(B) Reflects pro forma adjustments to interest income as if the cash
investment ($23,477) had been made at the beginning of the period,
using an interest rate of 3.5%, which was BRE's actual yield for the
fiscal year ended July 31,1994.
(C) In preparing the properties for sale, Schomac capitalized $762 for
replacements and improvements with estimate useful lives greater than
one year. These costs include, but are not limited to, roof
replacements, floor coverings (carpet, tile and vinyl), interior and
exterior painting, window coverings, appliances, tools, recreational
equipment, refurbishments and the salaries, benefits and related
burden of employees who installed or constructed them. BRE estimates
that, under BRE's accounting policies, BRE would have expensed
approximately 25% ($191) of these costs as part of annual repairs
and maintenance.
(D) Reflects pro forma interest expense as if the first mortgage loans
($28,160) had been outstanding for the entire period at the same terms
as effective July 31, 1994.
(E) Reflects depreciation based upon a cost basis to BRE of $41,310 for
buildings and improvements, depreciated over 40 years.
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA BALANCE SHEET
(DOLLARS IN THOUSANDS) As of July 31, 1994
-----------------------------------------------------
Pro forma BRE Pro
BRE Historical Adjustments forma
-------------- ----------- ----------
<S> <C> <C> <C>
ASSETS
Equity investments in real estate $ 325,519 $ 51,637 (A) $ 377,156
Less: Accumulated depreciation and amortization (41,264) (41,264)
--------- ---------
284,255 335,892
Investments in limited partnerships 1,109 1,109
--------- ---------
Real estate portfolio 285,364 337,001
Mortgage loans 4,516 4,516
Allowance for possible losses (1,000) (1,000)
--------- ---------
288,880 340,517
Cash and short-term investments 28,938 (23,477) (B) 5,461
Other 5,077 5,077
--------- ---------
TOTAL ASSETS $ 322,895 $ 351,055
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and other liabilities $ 3,466 $ 3,466
Mortgage loans payable 73,944 28,160 (C) 102,104
--------- ---------
Total liabilities 77,410 105,570
--------- ---------
Shareholders' equity:
Class A common stock 109 109
Additional paid-in capital 211,340 211,340
Undistributed net realized gain on sales of properties 34,036 34,036
--------- ---------
Total shareholders' equity 245,485 245,485
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 322,895 $ 351,055
--------- ---------
--------- ---------
<FN>
(A) Reflects pro forma adjustments to equity investments in real estate as
if the Tucson apartments ($51,637) had been purchased as of July 31,
1994.
(B) Reflects pro forma cash and short-term investments as if the cash
investment in the Tucson apartments ($23,477) had been made as of July
31, 1994.
(C) Reflects pro forma mortgage loans payable as if the mortgage loans
payable on the Tucson apartments ($28,160) had been assumed as of July
31, 1994.
</TABLE>
-12-
<PAGE>
THE SCHOMAC
MULTIFAMILY
HOUSING PROPERTIES
Combined Statement of
Gross Income and Direct
Operating Expenses
FOR THE YEAR ENDED DECEMBER 31, 1993
<PAGE>
THE SCHOMAC
MULTIFAMILY HOUSING PROPERTIES
TABLE OF CONTENTS
Page
----
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . 1
Combined Statement of Gross Income and Direct Operating Expenses . . . . . 2
Notes to Combined Statement of Gross Income and Direct Operating
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Property Information:
Schedule 1 - Camino Seco Village Apartments. . . . . . . . . . . . 5
Schedule 2 - Casas Lindas Apartments . . . . . . . . . . . . . . . 6
Schedule 3 - Colonia Del Rio Apartments. . . . . . . . . . . . . . 7
Schedule 4 - Fountain Plaza Apartments . . . . . . . . . . . . . . 8
Schedule 5 - Hacienda Del Rio Apartments . . . . . . . . . . . . . 9
Schedule 6 - Oracle Village Apartments . . . . . . . . . . . . . . 10
Schedule 7 - Spring Hill Apartments. . . . . . . . . . . . . . . . 11
<PAGE>
[LOGO]
2425 East Camelback Road, Suite 300 Kenneth Leventhal
Phoenix, Arizona 85016 & Company
Telephone 602.957.2000
Tucson 602.882.0022
Facsimile 602.957.8239
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
The Schomac Group, Inc.
We have audited the accompanying Combined Statement of Gross Income and Direct
Operating Expenses of The Schomac Multifamily Properties listed in Note 1 (the
"Properties"), for the year ended December 31, 1993 ("Combined Historical
Summary"). This Combined Historical Summary is the responsibility of the
Properties' management. Our responsibility is to express an opinion on this
Combined Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Combined Historical Summary is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the Combined Historical Summary. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the Combined
Historical Summary. We believe that our audit provides a reasonable basis for
our opinion.
The accompanying Combined Historical Summary was prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission as described in Note 1 and is not intended to be a complete
presentation of the Properties' revenues and expenses.
In our opinion, the Combined Historical Summary of the Properties referred to
above presents fairly, in all material respects, the gross income and direct
operating expenses on the basis described in Note 1, for the year ended December
31, 1993 in conformity with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the Combined
Historical Summary taken as a whole. The individual property information
included on Schedules 1 through 7 is presented for purposes of additional
analysis and is not a required part of the Combined Historical Summary. Such
information has been subjected to the auditing procedures applied in the audit
of the Combined Historical Summary, and, in our opinion, is fairly stated in all
material respects in relation to the Combined Historical Summary taken as a
whole.
Kenneth Leventhal & Company
July 8, 1994
1
<PAGE>
THE SCHOMAC
MULTIFAMILY HOUSING PROPERTIES
Combined Statement of Gross Income and Direct Operating Expenses
For the Year Ended December 31, 1993
<TABLE>
<S> <C>
Gross Income
Rental income $ 7,062,200
Other income 258,859
------------
7,321,059
------------
Direct Operating Expenses:
Salaries, benefits, and related burden 787,572
Utilities 501,014
Real estate taxes 551,406
Maintenance and repairs 301,419
Management fees - Note 2 335,091
Marketing 185,707
Property insurance 49,601
General and administrative 78,294
------------
2,790,104
------------
Excess of Gross Income over Direct
Operating Expenses $ 4,530,955
------------
------------
</TABLE>
See accompanying independent auditors' report and notes. 2
<PAGE>
THE SCHOMAC
MULTIFAMILY HOUSING PROPERTIES
Notes to Combined Statement of Gross Income and Direct Operating Expenses
For the Year Ended December 31, 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Combined Statement of Gross Income and Direct Operating Expenses
("Combined Historical Summary") includes the operations of seven
multifamily properties (the "Properties") controlled by The Schomac
Group, Inc. and is prepared in contemplation of an acquisition by a
publicly held company. Certain expenses which would not be comparable
to the proposed future operations of the Properties have been excluded
from the Combined Historical Summary in accordance with Rule 3-14 of
Regulation S-X of the Securities and Exchange Commission. The primary
expenses which have been excluded are depreciation, amortization, land
leases and mortgage interest.
ORGANIZATION
The Properties which are located in Tucson, Arizona are listed below:
<TABLE>
<CAPTION>
Year Square
Property Name Built Units Footage
--------------------------------------- ------- ------- ---------
<S> <C> <C> <C>
Camino Seco Village Apartments 1985 168 150,920
Casas Lindas Apartments 1987 144 150,080
Colonia del Rio Apartments 1985 176 177,760
Fountain Plaza Apartments 1975 197 106,978
Hacienda del Rio Apartments 1983 248 152,504
Oracle Village Apartments 1983 144 129,336
Spring Hill Apartments 1987 224 175,520
------- ---------
1,301 1,043,098
------- ---------
------- ---------
</TABLE>
INCOME RECOGNITION
Rental income attributable to residential leases is recorded when
earned. Other operating income includes nonrefundable deposits,
forfeited security deposits, late charges, vending and laundry
revenues, damage charges, and miscellaneous reimbursements from
tenants.
CAPITALIZATION POLICY
Replacements and improvements with estimated useful lives greater than
one year were capitalized and have been excluded from the Combined
Historical Summary. These costs include, but are not limited to, floor
coverings (carpet, tile and vinyl), interior and exterior painting,
window coverings, appliances, tools, recreational equipment,
refurbishments and the salaries, benefits and related burden of
employees who installed or constructed the above. Capitalized costs in
the aggregate and per unit during the year ended December 31, 1993 were
$760,587 ($585 per unit).
3
<PAGE>
THE SCHOMAC
MULTIFAMILY HOUSING PROPERTIES
Notes to Combined Statement of Gross Income and Direct Operating Expenses
NOTE 2 - TRANSACTIONS WITH AFFILIATES
Operations of the Properties are managed by Schomac Property
Management, Inc. ("SPM"), an affiliate of the owners of the Properties.
SPM is paid a monthly fee based on a percentage of rental and other
operating revenues collected. Management fees associated with the
Properties aggregated $335,091 for the year ended December 31, 1993.
4
<PAGE>
SCHEDULE 1
CAMINO SECO VILLAGE APARTMENTS
Statement of Gross Income and Direct Operating Expenses
For the Year Ended December 31, 1993
<TABLE>
<S> <C>
Gross Income:
Rental income $ 966,876
Other operating income 32,723
------------
999,599
------------
Direct Operating Expenses:
Salaries, benefits, and related burden 116,405
Utilities 58,247
Real estate taxes 78,720
Maintenance and repairs 47,670
Management fees 45,016
Marketing 32,994
Property insurance 7,483
General and administrative 9,801
------------
396,336
------------
Excess of Gross Income over Direct
Operating Expenses $ 603,263
------------
------------
Capitalized costs $ 144,852
------------
------------
</TABLE>
See accompanying independent auditors' report and notes. 5
<PAGE>
SCHEDULE 2
CASAS LINDAS APARTMENTS
Statement of Gross Income and Direct Operating Expenses
For the Year Ended December 31, 1993
<TABLE>
<S> <C>
Gross Income:
Rental income $ 1,006,169
Other operating income 23,186
------------
1,029,355
------------
Direct Operating Expenses:
Salaries, benefits, and related burden 84,025
Utilities 65,707
Real estate taxes 81,248
Maintenance and repairs 49,563
Management fees 30,649
Marketing 19,819
Property insurance 7,461
General and administrative 13,737
------------
352,209
------------
Excess of Gross Income over Direct
Operating Expenses $ 677,146
------------
------------
Capitalized costs $ 62,493
------------
------------
</TABLE>
See accompanying independent auditors' report and notes. 6
<PAGE>
SCHEDULE 3
COLONIA DEL RIO APARTMENTS
Statement of Gross Income and Direct Operating Expenses
For the Year Ended December 31, 1993
<TABLE>
<S> <C>
Gross Income:
Rental income $ 1,151,085
Other operating income 28,649
------------
1,179,734
------------
Direct Operating Expenses
Salaries, benefits, and related burden 121,323
Utilities 68,533
Real estate taxes 97,611
Maintenance and repairs 33,673
Management fees 53,088
Marketing 23,167
Property insurance 8,748
General and administrative 11,575
------------
417,718
------------
Excess of Gross Income over Direct
Operating Expenses $ 762,016
------------
------------
Capitalized costs $ 98,595
------------
------------
</TABLE>
See accompanying independent auditors' report and notes. 7
<PAGE>
SCHEDULE 4
FOUNTAIN PLAZA APARTMENTS
Statement of Gross Income and Direct Operating Expenses
For the Year Ended December 31, 1993
<TABLE>
<S> <C>
Gross Income:
Rental income $ 794,384
Other operating income 42,991
------------
837,375
------------
Direct Operating Expenses:
Salaries, benefits, and related burden 108,835
Utilities 103,767
Real estate taxes 44,638
Maintenance and repairs 38,821
Management fees 37,682
Marketing 27,240
Property insurance 4,774
General and administrative 12,720
------------
378,477
------------
Excess of Gross Income over Direct
Operating Expenses $ 458,898
------------
------------
Capitalized costs $ 209,541
------------
------------
</TABLE>
See accompanying independent auditors' report and notes. 8
<PAGE>
SCHEDULE 5
HACIENDA DEL RIO APARTMENTS
Statement of Gross Income and Direct Operating Expenses
For the Year Ended December 31, 1993
<TABLE>
<S> <C>
Gross Income:
Rental income $ 1,101,999
Other operating income 65,886
------------
1,167,885
------------
Direct Operating Expenses:
Salaries, benefits, and related burden 146,249
Utilities 75,800
Real estate taxes 86,334
Maintenance and repairs 36,399
Management fees 75,545
Marketing 24,082
Property insurance 7,298
General and administrative 12,061
------------
463,768
------------
Excess of Gross Income over Direct
Operating Expenses $ 704,117
------------
------------
Capitalized costs $ 129,441
------------
------------
</TABLE>
See accompanying independent auditors' report and notes. 9
<PAGE>
SCHEDULE 6
ORACLE VILLAGE APARTMENTS
Statement of Gross Income and Direct Operating Expenses
For the Year Ended December 31, 1993
<TABLE>
<S> <C>
Gross Income:
Rental income $ 865,584
Other operating income 29,992
------------
895,576
------------
Direct Operating Expenses:
Salaries, benefits, and related burden 82,465
Utilities 65,841
Real estate taxes 66,286
Maintenance and repairs 60,763
Management fees 40,418
Marketing 21,395
Property insurance 7,165
General and administrative 7,818
------------
352,151
------------
Excess of Gross Income over Direct
Operating Expenses $ 543,425
------------
------------
Capitalized costs $ 76,894
------------
------------
</TABLE>
See accompanying independent auditors' report and notes. 10
<PAGE>
SCHEDULE 7
SPRINGHILL APARTMENTS
Statement of Gross Income and Direct Operating Expenses
For the Year Ended December 31, 1993
<TABLE>
<S> <C>
Gross Income:
Rental income $ 1,176,103
Other operating income 35,432
------------
1,211,535
------------
Direct Operating Expenses:
Salaries, benefits and related burden 128,270
Utilities 63,119
Real estate taxes 96,569
Maintenance and repairs 34,530
Management fees 52,693
Marketing 37,010
Property insurance 6,672
General and administrative 10,582
------------
429,445
------------
Excess of Gross Income over Direct
Operating Expenses $ 782,090
------------
------------
Capitalized costs $ 39,771
------------
------------
</TABLE>
See accompanying independent auditors' report and notes. 11
<PAGE>
AGREEMENT FOR PURCHASE AND SALE
OF
REAL PROPERTY, LOAN AGREEMENT,
AND JOINT ESCROW INSTRUCTIONS
SELLERS:
THOSE PARTNERSHIPS
IDENTIFIED IN EXHIBIT A HERETO
BUYER:
BRE PROPERTIES
A DELAWARE CORPORATION
August 12, 1994
SEVEN PROPERTIES
COMPRISED OF 1,301 UNITS
LOCATED IN
PIMA COUNTY, ARIZONA
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1 ----
BASIC DEFINITIONS. . . . . . . . . . . . . . . 1
1.1 ASSUMED DEBT . . . . . . . . . . . . . . . . . . . . 1
1.2 BORROWERS. . . . . . . . . . . . . . . . . . . . . . 1
1.3 BUSINESS DAY . . . . . . . . . . . . . . . . . . . . 1
1.4 CLOSE OF ESCROW. . . . . . . . . . . . . . . . . . . 2
1.5 CLOSING DATE . . . . . . . . . . . . . . . . . . . . 2
1.6 CONTRACT PERIOD. . . . . . . . . . . . . . . . . . . 2
1.7 CONTRACTS. . . . . . . . . . . . . . . . . . . . . . 2
1.8 CURE PERIOD. . . . . . . . . . . . . . . . . . . . . 2
1.9 DEPOSIT . . . . . . . . . . . . . . . . . . . . . . 2
1.10 DISAPPROVED ITEMS. . . . . . . . . . . . . . . . . 2
1.11 ESCROW . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 HAZARDOUS SUBSTANCES . . . . . . . . . . . . . . . . 2
1.13 INSPECTION PERIOD. . . . . . . . . . . . . . . . . . 3
1.14 INTANGIBLE PROPERTY. . . . . . . . . . . . . . . . . 3
1.15 LEASE STANDARDS. . . . . . . . . . . . . . . . . . . 3
1.16 LEASES . . . . . . . . . . . . . . . . . . . . . . . 4
1.17 LENDERS' APPROVALS . . . . . . . . . . . . . . . . . 4
1.18 LOAN . . . . . . . . . . . . . . . . . . . . . . . . 4
1.19 LOAN DOCUMENTS . . . . . . . . . . . . . . . . . . . 4
1.20 LOAN FEES. . . . . . . . . . . . . . . . . . . . . . 4
1.21 LOAN PROPERTIES. . . . . . . . . . . . . . . . . . . 4
1.22 NET OPERATING INCOME OR NOI. . . . . . . . . . . . . 4
1.23 NEW REPORTS. . . . . . . . . . . . . . . . . . . . . 4
1.24 PERSONAL PROPERTY. . . . . . . . . . . . . . . . . . 4
1.25 PERMITS. . . . . . . . . . . . . . . . . . . . . . . 4
1.26 PERMITTED EXCEPTIONS . . . . . . . . . . . . . . . . 5
1.27 PROPERTY . . . . . . . . . . . . . . . . . . . . . . 5
1.28 PURCHASE PRICE . . . . . . . . . . . . . . . . . . . 5
1.29 REAL PROPERTY. . . . . . . . . . . . . . . . . . . . 5
1.30 SURVEYS. . . . . . . . . . . . . . . . . . . . . . . 5
1.31 TITLE COMPANY. . . . . . . . . . . . . . . . . . . . 5
1.32 TITLE POLICY . . . . . . . . . . . . . . . . . . . . 5
1.33 TITLE REPORTS. . . . . . . . . . . . . . . . . . . . 5
1.34 WARRANTIES . . . . . . . . . . . . . . . . . . . . . 5
1.35 WRITTEN NOTICE . . . . . . . . . . . . . . . . . . . 5
ARTICLE 2
PURCHASE AND SALE. . . . . . . . . . . . . . . 6
2.1 PURCHASE AND SALE; TITLE TO BE HELD IN SINGLE
ASSET ENTITIES . . . . . . . . . . . . . . . . . . . 6
2.2 PURCHASE PRICE . . . . . . . . . . . . . . . . . . . 6
2.3 DISPOSITION OF DEPOSIT . . . . . . . . . . . . . . . 7
2.4 INDEPENDENT CONSIDERATION. . . . . . . . . . . . . . 7
i.
<PAGE>
ARTICLE 3
INSPECTION OF PROPERTY . . . . . . . . . . . . 7
3.1 SELLERS' DOCUMENTS . . . . . . . . . . . . . . . . . 7
3.2 INSPECTION OF REAL PROPERTY. . . . . . . . . . . . . 8
3.3 BUYER'S RIGHT TO TERMINATE . . . . . . . . . . . . . 9
3.4 DISAPPROVAL NOTICES. . . . . . . . . . . . . . . . . 9
3.5 SELLERS' CURE OF DISAPPROVED ITEMS . . . . . . . . . 10
3.6 FAILURE TO CURE DISAPPROVED ITEMS. . . . . . . . . . 11
3.7 SUPPLEMENTAL TITLE REPORTS AND SURVEYS . . . . . . . 11
3.8 COSTS TO REPAIR. . . . . . . . . . . . . . . . . . . 11
ARTICLE 4
CONDITIONS PRECEDENT . . . . . . . . . . . . . 12
4.1 BUYER'S CONDITIONS . . . . . . . . . . . . . . . . . 12
4.2 SELLERS' CONDITIONS. . . . . . . . . . . . . . . . . 14
4.3 FAILURE OR WAIVER OF CONDITIONS PRECEDENT. . . . . . 14
4.4 SALE OF FOUNTAIN PLAZA AND HACIENDA DEL RIO
CONDITIONAL ON HUD APPROVAL. . . . . . . . . . . . . 15
ARTICLE 5
COVENANTS, WARRANTIES AND REPRESENTATIONS. . . 15
5.1 SELLERS' WARRANTIES AND REPRESENTATIONS. . . . . . . 15
5.2 SELLER'S COVENANTS . . . . . . . . . . . . . . . . . 17
5.3 BUYER'S WARRANTIES AND REPRESENTATIONS . . . . . . . 19
5.4 BUYER'S COVENANTS. . . . . . . . . . . . . . . . . . 20
5.5 SELLER'S DISCLAIMER. . . . . . . . . . . . . . . . . 20
5.6 SURVIVAL . . . . . . . . . . . . . . . . . . . . . . 22
5.7 BORROWER'S COVENANTS . . . . . . . . . . . . . . . . 22
ARTICLE 6
ESCROW AND CLOSING . . . . . . . . . . . . . . 22
6.1 ESCROW . . . . . . . . . . . . . . . . . . . . . . . 22
6.2 DEPOSITS BY BUYER. . . . . . . . . . . . . . . . . . 22
6.3 DEPOSITS BY SELLER . . . . . . . . . . . . . . . . . 23
6.4 TITLE COMPANY'S DUTIES AT CLOSING. . . . . . . . . . 24
6.5 CLOSING COSTS. . . . . . . . . . . . . . . . . . . . 25
6.6 PRORATIONS . . . . . . . . . . . . . . . . . . . . . 26
6.7 INSURANCE. . . . . . . . . . . . . . . . . . . . . . 28
6.8 DELIVERY OF ORIGINAL DOCUMENTS AND KEYS. . . . . . . 28
6.9 FILING OF REPORTS. . . . . . . . . . . . . . . . . . 28
ARTICLE 7
LOAN AGREEMENT . . . . . . . . . . . . . . . . 28
7.1 LOAN . . . . . . . . . . . . . . . . . . . . . . . . 28
7.2 LOAN TERMS . . . . . . . . . . . . . . . . . . . . . 28
7.3 BUYER'S CONDITIONS TO MAKING THE LOAN. . . . . . . . 29
ii.
<PAGE>
ARTICLE 8
DAMAGE OR DESTRUCTION. . . . . . . . . . . . . 30
8.1 CONTRACT PERIOD DAMAGE . . . . . . . . . . . . . . . 30
8.2 BUYER'S ELECTION TO PROCEED. . . . . . . . . . . . . 30
8.3 SELLERS' REPAIRS . . . . . . . . . . . . . . . . . . 30
8.4 BUSINESS INTERRUPTION AND RENTAL LOSS INSURANCE. . . 30
8.5 CONDEMNATION PROCEEDS. . . . . . . . . . . . . . . . 31
ARTICLE 9
REMEDIES . . . . . . . . . . . . . . . . . . . 31
9.1 REMEDIES . . . . . . . . . . . . . . . . . . . . . . 31
9.2 LIQUIDATED DAMAGES . . . . . . . . . . . . . . . . . 31
9.3 NO PERSONAL LIABILITY. . . . . . . . . . . . . . . . 32
9.4 SEPARATE LIABILITY OF EACH SELLER. . . . . . . . . . 32
ARTICLE 10
MISCELLANEOUS. . . . . . . . . . . . . . . . . 32
10.1 BROKERAGE COMMISSIONS AND FINDER'S FEES. . . . . . . 32
10.2 LEASING COMMISSIONS. . . . . . . . . . . . . . . . . 34
10.3 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . 34
10.4 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . 34
10.5 NOTICES. . . . . . . . . . . . . . . . . . . . . . . 35
10.6 TIME . . . . . . . . . . . . . . . . . . . . . . . . 35
10.7 POSSESSION . . . . . . . . . . . . . . . . . . . . . 36
10.8 INCORPORATION BY REFERENCE . . . . . . . . . . . . . 36
10.9 NO DEDUCTIONS OR OFF-SETS. . . . . . . . . . . . . . 36
10.10 ATTORNEYS' FEES. . . . . . . . . . . . . . . . . . . 36
10.11 CONSTRUCTION . . . . . . . . . . . . . . . . . . . . 36
10.12 NO MERGER. . . . . . . . . . . . . . . . . . . . . . 36
10.13 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . 36
10.14 TERMINATION WITHOUT BREACH . . . . . . . . . . . . . 36
10.15 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . 37
10.16 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . 37
10.17 ACKNOWLEDGEMENT OF CANCELLATION. . . . . . . . . . . 37
10.18 SEVERABILITY . . . . . . . . . . . . . . . . . . . . 37
10.19 ESCROW INSTRUCTIONS. . . . . . . . . . . . . . . . . 37
10.20 TAX-DEFERRED EXCHANGE. . . . . . . . . . . . . . . . 37
10.21 EXECUTION OF AGREEMENT BY SPM, INC., WALTER R.
TAYLOR, AND KWM. . . . . . . . . . . . . . . . . . . 38
EXHIBITS
Exhibit A Properties to be Purchased
Exhibit B Legal Descriptions
Exhibit C Documents to be Delivered by Seller
Exhibit D Form of Deed
Exhibit E Form of General Assignment
iii.
<PAGE>
Exhibit F Form of Bill of Sale
Exhibit G Form of Assignment of Leases
Exhibit H Form of FIRPTA Certificate
Exhibit I Form of Letter to Tenants
Exhibit J Form of Assignment and Assumption of Contracts and
Claims
Exhibit K Form of Affidavit of Property Value
Exhibit L Lease Standards
Exhibit M Punchlist Items
iv.
<PAGE>
AGREEMENT FOR PURCHASE AND SALE
OF
REAL PROPERTY, LOAN AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
SEVEN PROPERTIES COMPRISED OF 1,301 UNITS
PIMA COUNTY, ARIZONA
THIS AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY, LOAN AGREEMENT AND
JOINT ESCROW INSTRUCTIONS (this "Agreement") is made and entered into as of
August 12, 1994, by and between THOSE PARTNERSHIPS IDENTIFIED IN EXHIBIT A
HERETO (collectively, "Sellers" or individually, "Seller" or "Each Seller"); BRE
PROPERTIES, a Delaware corporation ("Buyer"); WMS PARTNERS L.P., an Arizona
limited partnership and MISSION HEIGHTS INVESTORS L.P., an Arizona limited
partnership ("Borrowers"); and FIDELITY NATIONAL TITLE AGENCY, INC. ("Title
Company"). Sellers and certain affiliated partnerships previously entered into
an "Agreement for Purchase and Sale of Real Property and Escrow Instructions"
dated March 25, 1994 (the "Prior Agreement") with KWM Realty Advisors, Inc.
("KWM"), which Prior Agreement provided for the sale of up to eighteen apartment
projects in Pima County, Arizona. With Sellers' consent, KWM has assigned its
rights to certain of said projects to Buyer, and Buyer and Seller have agreed to
certain new terms as provided in this Agreement. As between Buyer and Sellers,
this Agreement replaces and supersedes the Prior Agreement as to the designated
apartment projects, but in the event that Buyer does not close as to any such
project, it shall remain subject to the Prior Agreement.
ARTICLE 1
BASIC DEFINITIONS
1.1 ASSUMED DEBT. The term "Assumed Debt" shall mean those existing loans
against the Properties which Buyer intends to assume at Closing. The loans with
respect to which Sellers intend to seek arrangements with the lender for Buyer
to assume as of the Closing are identified on EXHIBIT A under the heading
"Assumed Debt." The loan on Casas Lindas Apartments will not be assumed, but
will be paid off at Closing.
1.2 BORROWERS. The term "Borrowers" shall mean the two affiliated
entities to whom Buyer will make the Loan at Closing, as described in SECTION
7.1.
1.3 BUSINESS DAY. The term "Business Day" shall mean any day, excluding
Saturdays, Sundays, and any day observed by the Federal Government as a legal
holiday.
1.
<PAGE>
1.4 CLOSE OF ESCROW. The term "Close of Escrow" shall mean the recording
of the Deeds and the occurrence of all other acts required by this Agreement to
transfer title to the Properties from Each Seller to Buyer.
1.5 CLOSING DATE. The term "Closing Date" shall mean the date of the
Close of Escrow. The Closing Date shall be on a date agreed to by Buyer and
Sellers, but no earlier than the later of (i) August 5, 1994 or (ii) 10 days
after both the final approval of this transaction by Buyer's Board of Directors
and the Lenders' Approvals as provided in SECTION 4.1.3; provided that the
Closing Date shall not be later than August 31, 1994 unless agreed to by Buyer
and Seller in writing. Notwithstanding anything to the contrary in this
Agreement, if for any reason the Closing has not occurred on or before August
31, 1994, then the parties may exercise the remedies provided in Article 9
hereof and this Agreement shall survive the termination provided in Article 9 as
as to any default occurring prior to termination.
1.6 CONTRACT PERIOD. The term "Contract Period" shall mean the period
from the date of this Agreement through and including the earlier of the Closing
Date or the date of termination of this Agreement.
1.7 CONTRACTS. The term "Contracts" shall mean all maintenance,
management, service or supply contracts, including all amendments thereto,
relating to the Real Property and/or the Personal Property.
1.8 CURE PERIOD. The term "Cure Period" shall mean the five (5) business
day period following the Inspection Period specified in SECTION 3.5 for the
removal by Seller of matters disapproved by Buyer.
1.9 DEPOSIT. The term "Deposit" shall mean the amount of Two Hundred
Fifty Thousand No/100 Dollars ($250,000.00) in cash or its equivalent to be
deposited into Escrow by Buyer pursuant to SECTION 2.2.1, together with all
interest which accrues thereon following the deposit thereof into Escrow.
1.10 DISAPPROVED ITEMS. The term "Disapproved Items" shall mean all items
disapproved by Buyer in any Disapproval Notice.
1.11 ESCROW. The term "Escrow" shall mean the escrow to be opened with
Title Company in connection with this Agreement and the transactions
contemplated hereunder. The Escrow shall be opened concurrently with the
payment of the Deposit.
1.12 HAZARDOUS SUBSTANCES. The term "Hazardous Substances" shall mean any
chemical, material or substance now or hereafter defined as or included in the
definition of "hazardous
2.
<PAGE>
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
waste," "restricted hazardous waste," "toxic substances" or words of similar
import under any local, state or federal law or under the regulations adopted or
publications promulgated pursuant thereto applicable to the property, including,
without limitation: the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Section 9601, ET SEQ. ("CERCLA"); the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. Section 1801, ET SEQ.; the
Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251, ET
SEQ.; the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section
6901, ET SEQ. ("RCRA"). The term "Hazardous Substances" shall also include any
of the following: any and all toxic or hazardous substances, materials or wastes
listed in the United States Department of Transportation Table (49 CFR 172.101)
or by the Environmental Protection Agency as hazardous substances (40 CFR Part
302) and in any and all amendments thereto in effect as of the Closing Date;
oil, petroleum, petroleum products (including, without limitation, crude oil or
any fraction thereof), natural gas, natural gas liquids, liquefied natural gas
or synthetic gas usable for fuel, not otherwise designated as a hazardous
substance under CERCLA; any substance which is toxic, explosive, corrosive,
reactive, flammable, infectious or radioactive (including any source, special
nuclear or by-product material as defined at 42 U.S.C. Section 2011, ET SEQ.),
carcinogenic, mutagenic, or otherwise hazardous and is or becomes regulated by
any governmental authority; asbestos in any form; urea formaldehyde foam
insulation; transformers or other equipment which contain dielectric fluid
containing levels of polychlorinated byphenyls; radon gas; or any other
chemical, material or substance (i) which poses a hazard to the Property, to
adjacent properties, or to persons on or about the Property, (ii) which causes
the Property to be in violation of any of the aforementioned laws or
regulations, or (iii) the presence of which on or in the Property requires
investigation, reporting or remediation under any such laws or regulations.
1.13 INSPECTION PERIOD. The term "Inspection Period" shall mean the
period following the date of this Agreement and ending at 5:00 p.m. Pacific
Daylight Time on July 25, 1994.
1.14 INTANGIBLE PROPERTY. The term "Intangible Property" shall mean Each
Seller's interest in the Contracts, the Leases, the Permits, the Warranties and
the name of its Property listed on EXHIBIT A hereto and any other claims,
credits or intangible property related to the ownership, occupancy or use of the
Property.
1.15 LEASE STANDARDS. The term "Lease Standards" shall means those
leasing standards attached as EXHIBIT L, which Buyer and Sellers have agreed
will apply to all new Leases during the Contract Period.
3.
<PAGE>
1.16 LEASES. The term "Leases" shall mean all leases, rental agreements
and other agreements for occupancy of any portion of the Real Property, together
with any amendments thereto.
1.17 LENDERS' APPROVALS. The term "Lenders' Approvals" shall mean the
written consent by each of the Assumed Debt lenders to Buyer's purchase of the
Properties and assumption of the existing debt.
1.18 LOAN. The term "Loan" shall mean the loan to be made by Buyer in the
maximum amount of $3,000,000, as provided in Article 7.
1.19 LOAN DOCUMENTS. The term "Loan Documents" shall mean those documents
evidencing the Loan, as provided in Article 7.
1.20 LOAN FEES. The term "Loan Fees" shall mean those fees and costs
payable to Buyer pursuant to Section 7.2 of this Agreement.
1.21 LOAN PROPERTIES. The term "Loan Properties" shall mean the two
apartment projects securing the Loan, as described in Article 7.
1.22 NET OPERATING INCOME OR NOI. The term "Net Operating Income" or
"NOI" shall have the meaning provided for in SECTION 7.3.4 hereof.
1.23 NEW REPORTS. The term "New Reports" shall mean title, survey,
appraisal, engineering, environmental and other studies or reports identified
under the Building Information or Real Estate sections of EXHIBIT C which Buyer
may reasonably require as part of its due diligence review of the Properties,
and which Sellers have not produced to Buyer.
1.24 PERSONAL PROPERTY. The term "Personal Property" shall mean Each
Seller's interest, if any, in all furniture, fixtures, machinery, appliances,
equipment, supplies and other personal property located on Each Seller's Real
Property and utilized in connection with the ownership or operation of Each
Seller's Real Property by Each Seller.
1.25 PERMITS. The term "Permits" shall mean all licenses, permits,
certificates (including, without limitation, certificates of occupancy) and
approvals issued by any federal, state or local government or governmental
agency relating to the ownership, occupancy or use of the Real Property and/or
the Personal Property.
4.
<PAGE>
1.26 PERMITTED EXCEPTIONS. The term "Permitted Exceptions" shall mean all
the items described in SECTION 3.4.1 and enumerated as (1)-(5), together with
all exceptions reflected in either the Title Report or Surveys for which Buyer
does not deliver to Sellers a Disapproval Notice as provided for in SECTION 3.4
prior to expiration of the Inspection Period.
1.27 PROPERTY. The term "Property" shall mean the Real Property, the
Personal Property and the Intangible Property. Collectively, each Property
listed on EXHIBIT A hereto shall be referred to as the "Properties."
1.28 PURCHASE PRICE. The term "Purchase Price" shall mean the sum of
Fifty-One Million Two Hundred Fifty Thousand Dollars ($51,250,000.00), payable
as set forth in SECTION 2.2.
1.29 REAL PROPERTY. The term "Real Property" shall mean individually
certain apartment complexes (including, without limitation, any and all
easements and improvements related thereto) listed on EXHIBIT A hereto, located
in Pima County, Arizona. The land component of Each Seller's Real Property is
more particularly described in EXHIBITS B-1 - B-8 attached to this Agreement.
1.30 SURVEYS. The term "Surveys" shall mean any and all ALTA surveys of
the Properties to be made or updated by Sellers pursuant to SECTION 3.2.
1.31 TITLE COMPANY. The term "Title Company" shall mean Title Insurance
Company, whose address for this transaction is as follows:
Fidelity National Title Agency, Inc.
17 W. Wetmore Road, Suite 100
Tucson, AZ 85705-1644
1.32 TITLE POLICY. The term "Title Policy" is defined in SECTION 4.1.2.
1.33 TITLE REPORTS. The term "Title Reports" shall mean the Preliminary
Title Reports to be prepared by Title Company with respect to each of the
Properties, together with complete and legible copies of all documents shown as
exceptions to title therein.
1.34 WARRANTIES. The term "Warranties" shall mean all existing warranties
held by Each Seller and given by third parties with respect to that Seller's
Property.
1.35 WRITTEN NOTICE. The term "Written Notice" shall mean the notice
which Buyer is required to give Sellers on or before
5.
<PAGE>
the expiration of the Inspection Period pursuant to SECTION 3.3, stating the
election of Buyer to proceed with the transaction and purchase the Properties.
ARTICLE 2
PURCHASE AND SALE
2.1 PURCHASE AND SALE; TITLE TO BE HELD IN SINGLE ASSET ENTITIES. Sellers
agree to sell the Properties to Buyer, and Buyer agrees to purchase the
Properties from Sellers, upon all of the terms, covenants and conditions set
forth in this Agreement. In order to meet the requirements of HUD and FHA
lenders, title to Camino Seco Apartments, Colonia del Rio Apartments, Fountain
Plaza Apartments, Hacienda del Rio Apartments, Oracle Village Apartments, and
Spring Hill Apartments will be vested in single-asset wholly owned corporate
subsidiaries of Buyer.
2.2 PURCHASE PRICE. Subject to the closing adjustments and prorations
described in SECTIONS 6.5 AND 6.6 hereof, Buyer shall pay to Sellers the
Purchase Price for the Properties, which shall be allocated to each Property in
accordance with the allocation schedule attached hereto as a portion of EXHIBIT
A. The Purchase Price shall be paid as follows:
2.2.1 DEPOSIT. Buyer shall deliver the Deposit into Escrow within 5
days after each of the following has occurred: (i) the earlier of final approval
by Buyer's Board of Directors or July 25, 1994, and (ii) the Lenders' Approvals.
Title Company shall invest the Deposit in an interest-bearing cash-management
account reasonably acceptable to Buyer and Sellers. For purposes of reporting
interest income on the Deposit, Buyer's Tax Identification Number shall be
supplied by Buyer to Title Company at or before the time the Deposit is
delivered.
2.2.1.1 In the event that (a) the conditions precedent set
forth in SECTION 4.1 shall have been satisfied or waived by Buyer, (b) Sellers
shall have performed fully or tendered performance of their obligations
hereunder including those set forth in SECTION 4.2 and (c) Buyer shall be unable
or fail to perform its obligations hereunder, then the entire amount of the
Deposit shall be delivered by Title Company to Sellers upon Sellers' election to
terminate this Agreement in accordance with SECTION 4.3.
2.2.1.2 In the event that this transaction is consummated as
contemplated by this Agreement, then the entire amount of the Deposit shall be
credited against the Purchase Price.
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2.2.1.3 The entire amount of the Deposit shall be returned
immediately by Title Company to Buyer upon Buyer's election to terminate this
Agreement in accordance with SECTION 4.3 in the event that (a) the conditions
precedent set forth in SECTION 4.1 shall not have been satisfied or waived by
Buyer as of the Closing Date, (b) Buyer shall have performed fully or tendered
performance of its obligations hereunder, and (c) Sellers shall be unable or
fail to perform their obligations under this Agreement, including those
contained in SECTION 4.2.
2.2.2 ASSUMED DEBT. The amount of the Assumed Debt shall be credited
against the Purchase Price.
2.2.3 BALANCE. The balance of the Purchase Price shall be paid by
wire transfer of immediately available funds through Escrow on the Closing Date
in an amount equal to the Purchase Price less (i) the Deposit and (ii) the
Assumed Debt.
2.3 DISPOSITION OF DEPOSIT. This Agreement shall automatically terminate
if the Deposit is not delivered to the Title Company within the time proscribed
in SECTION 2.2.1, and no party hereto shall have any further obligations under
this Agreement except as otherwise provided herein. Buyer agrees to deliver to
Sellers at the time of such termination, at no cost to Sellers, copies of all
feasibility studies, surveys, engineering and construction reports and all other
information obtained by Buyer from Sellers or from Buyer's consultants, other
than legal counsel, with respect to the Properties.
2.4 INDEPENDENT CONSIDERATION. Upon execution of this Agreement, Buyer
shall deliver ONE HUNDRED AND NO/100 DOLLARS ($100.00) (the "Independent
Consideration") which shall be nonrefundable. The Independent Consideration
shall constitute consideration for the rights given Buyer hereunder either to
proceed with this Agreement or to terminate it after its investigation and
inspection of the Properties as provided for in SECTION 3.3 below. Should Buyer
elect to proceed with this Agreement in accordance with SECTION 3.3, Buyer
shall, as hereinafter provided, deliver the Deposit which shall be the
consideration for Buyer's right to purchase the Properties and Seller's,
execution, delivery and performance of this Agreement. The Independent
Consideration is in addition to and independent of any other consideration or
payment provided for in this Agreement, is nonrefundable and shall be retained
by Sellers notwithstanding any other provision of this Agreement.
ARTICLE 3
INSPECTION OF PROPERTY
3.1 SELLERS' DOCUMENTS.
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3.1.1 By execution of this Agreement, Buyer acknowledges having
received from Sellers those materials identified in EXHIBIT C which were either
in the possession of, or reasonably accessible to, Each Seller, with respect to
Each Sellers' Property. At Buyer's request, Each Seller shall hereafter furnish
Buyer with any materials or information reasonably related to its Property which
are either in its possession, or reasonably accessible to it, and which were not
furnished previously.
3.1.2 Sellers will provide copies of its most recent Surveys on
each of the Properties. New Title Reports shall be furnished by Title Company
and new Surveys shall be furnished at Seller's expense by a surveyor chosen by
Sellers; provided that Buyer shall reimburse Seller for the cost of updating any
existing surveys which were prepared subsequent to March 1, 1993.
3.1.3 Should Buyer require any New Reports (other than title and
Surveys), Buyer shall independently arrange to obtain the same at Buyer's
expense, subject to credit at Closing as provided below. Buyer shall select the
agents and/or representatives who compile such New Reports (other than those
related to Surveys and title matters) in its sole and absolute discretion.
3.1.4 Conditional upon Closing, Sellers shall credit Buyer at Closing
for one-half of the cost of any New Reports (other than Survey Updates)
reasonably required as part of Buyer's due diligence investigation of the
Properties and relating to either the condition or operation of the Properties;
provided, however, that in no event shall the Sellers be obligated to credit or
reimburse Buyer for such costs relating to any single Property in excess of Four
Thousand Five Hundred Dollars ($4,500). The foregoing notwithstanding, in no
event shall Sellers be responsible for any costs incurred by Buyer for analysis
or review of financial records, reports or documents relating to the Properties,
or for inspection of the condition of the Properties by Buyer's employees or
other personnel on its payroll.
3.2 INSPECTION OF REAL PROPERTY. At reasonable times to be scheduled by
Sellers, Buyer and its agents and representatives may enter each Property and
Each Seller's offices during reasonable business hours during the Inspection
Period for the purposes of conducting (i) physical inspections of the Real
Property (including, without limitation, appraisals and investigations to
ascertain whether any Hazardous Substances are present in, on, under or about
the Real Property), (ii) interviews with tenants of the Real Property, and (iii)
reviews of Seller's books and records pertaining to the Property (other than
those books and
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records previously delivered to Buyer). Concurrent with the execution of this
Agreement, or as soon thereafter as possible, Buyer or its agents shall commence
such inspections, surveys, interviews and reviews and shall diligently prosecute
same to completion. As soon as possible after the completion of each such
inspection, Survey, interview and review, the persons or entities conducting
same shall prepare a written report thereof. The reports may include, without
limitation, the Surveys, a Phase I environmental report for each Property,
engineering reports for each Property, and reports as to the compliance by the
improvements located on each Property with the Americans with Disabilities Act
of 1990 and other local legal disability laws and may constitute New Reports if
within the definition thereof. Sellers shall arrange for Title Company to
prepare and deliver the Title Reports to Buyer. Sellers shall arrange for a
surveyor acceptable to Buyer to prepare and deliver Surveys of the Real Property
to Buyer. Sellers shall cooperate with and assist Buyer in arranging and
conducting such inspections, interviews and reviews. Buyer agrees to keep each
Property free and clear of any liens which may arise as a result of the
activities by or on behalf of Buyer pursuant to this SECTION 3.2. Buyer shall
promptly restore any physical damage to each Property caused by such activities.
Buyer shall indemnify and defend Each Seller against and hold Each Seller
harmless from any and all loss, cost, claims, liability and expenses (including
reasonable attorneys' fees) arising out of Buyer's activities on the Real
Property during the Inspection Period, which indemnification shall survive the
Closing.
3.3 BUYER'S RIGHT TO TERMINATE. Notwithstanding anything in this
Agreement to the contrary and in addition to any other rights and remedies
available to Buyer, the parties hereto agree that Buyer shall have the right to
terminate this Agreement, at its sole discretion, at any time during the
Inspection Period. If on or before the date of the expiration of the Inspection
Period, Buyer elects to proceed with purchase of the Properties, it may do so by
giving the Written Notice to the Sellers of such intent unconditionally or
subject to the condition that Sellers, at Buyer's election, shall (1) cure and
correct any existing defects or reasonable objections to the physical,
environmental, or title condition of the Properties, or any of them, identified
in any Disapproval Notice (as defined in SECTION 3.4) to Sellers, or (2) give
Buyer a credit against the Purchase Price for the actual cost of any such cure
or correction.
3.4 DISAPPROVAL NOTICES. Buyer agrees to review the due diligence
documents provided pursuant to SECTION 3.1 and listed on EXHIBIT C as soon as
they are received by Buyer. Buyer also agrees to review the Title Reports, the
Surveys and the other documents and items which Buyer has a right to review
pursuant to SECTION 3.2. On or before the expiration of the Inspection Period,
Buyer may deliver one or more notices ("Disapproval
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Notices") disapproving of any one or more of the following: (i) a document
delivered to Buyer pursuant to SECTION 3.1 or SECTION 3.2; (ii) any exception to
title or other matter disclosed by any of the Title Reports; (iii) any matter
disclosed by the Surveys or by any supplement thereto; (iv) any matter disclosed
by Buyer's physical inspection of the Properties; (v) any matter disclosed by
Buyer's interviews with the tenants of the Properties; or (vi) any matter which,
in Buyer's sole determination and opinion, is an existing defect or reasonable
objection to the physical, environmental, or title condition of a Property or
Properties. Any matter which is the subject of a Disapproval Notice shall be
identified and explained in detail, including an itemized explanation of the
estimated cost of correction. Any matter not disapproved by Buyer in a timely
delivered Disapproval Notice shall be deemed approved by Buyer.
3.4.1 Notwithstanding the foregoing, (1) the lien for real property
taxes in the year of Closing, (2) zoning ordinances in effect as of the dates of
completion of the Real Properties (3) any and all liens and encumbrances
(including mechanic's and materialman's liens) relating to the Properties and
created (whether or not voluntarily or solely) by, through or under Buyer, its
agents, employees or contractors whether as a result of its actions or
omissions, (4) reservations of oil, coal and mineral rights by the United States
of America pursuant to the terms of Patents from it, and (5) the rights of
tenants under all tenant leases (recorded or unrecorded) existing as of the
Closing and listed on a Rent Roll delivered at Closing shall constitute
Permitted Exceptions. If, prior to expiration of the Inspection Period, Buyer
does not deliver to Sellers a Disapproval Notice as provided for in SECTION 3.4
specifying a particular objection, then such objection and all the items
described above and enumerated as (1)-(5) together with all exceptions reflected
in either the Title Report or Surveys not objected to shall be considered to be
Permitted Exceptions, and Buyer shall be deemed to have waived any right to
object thereto or to terminate this Agreement as a result thereof. Except as
Sellers shall commit in writing to do as provided for in SECTION 3.5 hereof,
Sellers do not agree to undertake, and nothing contained herein shall be
construed to require Sellers to undertake, any action or proceeding or otherwise
to incur expense either to remove any title defect or exception or to render
title to the Properties either acceptable to Buyer or marketable, indefeasible
or insurable.
3.5 SELLERS' CURE OF DISAPPROVED ITEMS. Upon Sellers' receipt of any
Disapproval Notice, Sellers may elect by no later than five (5) business days
after receiving such notice for each such Disapproved Item, to use their good
faith best efforts to remove or otherwise cure to Buyer's satisfaction the
Disapproved Items. Notwithstanding the foregoing, (i) Sellers may elect not to
cure any Disapproved Item and (ii) Sellers shall not be
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obligated to credit the Purchase Price or incur any costs to cure or remove
Disapproved Items.
3.6 FAILURE TO CURE DISAPPROVED ITEMS. If Seller elects pursuant to
SECTION 3.5 not to cure one or more of the Disapproved Items, or if Sellers
otherwise fail to cure one or more of the Disapproved Items by the expiration of
the Cure Period, then Buyer may elect any of the following by written notice to
Sellers:
3.6.1 to waive Buyer's disapprovals with respect to the unremoved and
uncured Disapproved Items or those Disapproved Items which Sellers elect not to
cure as permitted under SECTION 3.5 and proceed with the Close of Escrow; or
3.6.2 to terminate this Agreement and immediately receive the Deposit
from Escrow.
3.7 SUPPLEMENTAL TITLE REPORTS AND SURVEYS. If at any time prior to the
Close of Escrow Buyer receives any supplement to any of the Title Reports, to
the Survey or to any other report regarding the Real Property (collectively, a
"Supplemental Report"), then Buyer and Seller shall have the right to deliver
the notices described in SECTIONS 3.4, 3.5 AND 3.6, for that Property only, and
the Closing Date for the transactions as contemplated herein shall be extended
to the date which is five (5) business days after the Cure Period pertaining to
the Supplemental Report.
3.8 COSTS TO REPAIR. Attached hereto as Exhibit M is a list for each of
the Properties of repairs which Sellers have agreed to make to Buyer's
reasonable satisfaction, together with an agreed estimate of cost for each such
repair. If any of the listed repairs have not been completed prior to Closing,
the amount shown on Exhibit M for such repair (the "holdback") shall be withheld
from the purchase price otherwise payable for that Property and retained in
escrow until the repair has been completed to Buyer's reasonable satisfaction.
Promptly after the completion of each such repair, Buyer will instruct escrow to
release the designated holdback to the applicable Seller. In the event that any
such repairs have not been completed by Sellers within 90 days after Closing,
Buyer shall be paid the amount of withhold for each such repair, and Seller
shall have no further obligation to complete the repair. Any disputes as to the
adequacy of the repair work which cannot be resolved through negotiation shall
be submitted to binding arbitration by a licensed general contractor having at
least 10 years experience in the renovation of commercial buildings, and having
no prior connection with either party. The parties shall first attempt to
select the arbitrator by agreement, failing which the arbitrator shall be
selected by the American Arbitration Association. The arbitration shall be
conducted under the
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construction industry rules of the American Arbitration Association.
ARTICLE 4
CONDITIONS PRECEDENT
4.1 BUYER'S CONDITIONS. Notwithstanding anything in this Agreement to the
contrary, Buyer's obligation to purchase the Properties and make the Loan shall
be subject to and contingent upon the satisfaction (or waiver by Buyer) of the
following conditions precedent with respect to each Property, prior to and as of
the Closing Date:
4.1.1 Seller shall have removed or cured, to Buyer's satisfaction, or
Buyer shall have waived, all Disapproved Items pursuant to SECTIONS 3.5 AND 3.6
hereof.
4.1.2 Title Company shall have irrevocably committed to issue to
Buyer American Land Title Association Owner's Policy 1970 -- Form B Extended
Coverage Title Insurance Policy, unmodified, or such equivalent policy form as
reasonably approved by Buyer, containing such available endorsements as Buyer
may reasonably request and which were previously requested and approved by Buyer
as part of the Title Commitment (the "Title Policy"), insuring Buyer in the
amount of the Purchase Price for the Property as set forth on EXHIBIT A and
insuring that title to the Real Property is vested of record in Buyer as of the
Close of Escrow, subject only to the printed conditions and exceptions of such
policy and the Permitted Exceptions to title shown therein.
4.1.3 On or before the Closing Date, Buyer shall have received copies
of the written consent to the transfer of the Property to Buyer contemplated in
this Agreement from all holders of the Assumed Debt, which written consents
shall be in form and substance reasonably satisfactory to Buyer. Buyer's
failure to approve by written notice to Seller the proposed form of written
consent of the holders of the Assumed Debt within five (5) business days of
receipt thereof shall be deemed approval. Any disapproval of said proposed form
of written consent shall state in reasonable detail the reasons for disapproval,
and Seller shall have five (5) business days to cure same, to the reasonable
satisfaction of Buyer. A requirement that Buyer assume Seller's obligations
under the Assumed Debt shall not be a reasonable basis for disapproval. The
consent form shall identify the loan documents, confirm that there is no
knowledge of existing default, and confirm the outstanding loan balance. The
inability to timely obtain one or more consents from the holders of the assumed
debt shall not constitute a default of either party unless such inability is the
result of a failure to act diligently or to cooperate in good faith in pursuing
lender
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consent. Buyer and Seller each agree to act with reasonable speed, and to
cooperate and act in good faith in seeking lender consent.
4.1.4 All documents necessary to consummate the transactions
contemplated in this Agreement shall have been executed and delivered as
required by this Agreement, including the recertification of warranties as
provided in SECTION 5.1.
4.1.5 There shall not have been any material adverse change in the
title, physical condition, permits and/or operation of the Property (or any
portion thereof), nor shall any default have occurred under the Assumed Debt,
from the date that Buyer completed its inspections of the Real Property pursuant
to Article 3.
4.1.6 Neither Buyer nor Sellers shall have terminated this Agreement
pursuant to the terms of this Agreement.
4.1.7 Each and every representation and warranty of Sellers contained
in this Agreement shall be true and correct in all material respects.
4.1.8 Each and every material statement or representation contained
in the documents prepared by Sellers and/or delivered by Sellers to Buyer
pursuant to this Agreement shall be true and correct in all material respects.
4.1.9 Buyer shall have received final approval of this transaction
from its Board of Directors on or before July 25, 1994.
4.1.10 Physical occupancy of each Property shall not have declined
below 94%.
4.1.11 Buyer shall have received an opinion from Sellers' counsel in
form satisfactory to Buyer, that:
(a) Each Seller is duly organized and is in good standing;
(b) All necessary consents have been obtained by each Seller
to lawfully permit Seller to enter into this Agreement, and Sellers are legally
authorized to convey fee simple title to the Properties; and
(c) Sellers are legally authorized to enter into the
transactions described in this Agreement and that this Agreement and the
documents called for herein will, when executed by the persons signing as
Sellers, be binding upon Sellers
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according to their terms, subject to limitations of applicable laws regarding
bankruptcy and equitable remedies.
4.1.12 Buyer and Seller shall have agreed upon necessary physical
repairs and the estimated cost of repairs pursuant to Section 3.8.
4.1.13 Each of the conditions to making the Loan, as provided in
Article 7, shall have been satisfied or waived by Buyer.
4.2 SELLERS' CONDITIONS. Notwithstanding anything in this Agreement to
the contrary, Sellers' obligation to sell the Properties shall be subject to and
contingent upon the satisfaction (or waiver by Sellers) of the following
conditions precedent prior to and as of the Closing Date:
4.2.1 Payment of the Purchase Price to Sellers at the Closing.
4.2.2 All documents necessary to consummate the transaction as
contemplated in this Agreement shall have been executed and delivered as
required by this Agreement.
4.2.3 Neither Buyer nor Sellers shall have terminated the Agreement
pursuant to the terms of this Agreement.
4.2.4 Each and every representation and warranty of Buyer contained
in this Agreement shall be true and correct as and when made in all material
respects.
4.2.5 Buyer shall have made the Deposit when due.
4.2.6 Buyer shall have delivered the Written Notice on or before the
termination of the Inspection Period.
4.2.7 Buyer shall at Closing make the Loan described in Article 7.
4.3 FAILURE OR WAIVER OF CONDITIONS PRECEDENT. In the event any of the
conditions set forth in SECTIONS 4.1 AND 4.2 do not occur as of the Closing
Date, or such earlier date as set forth above, or have not been waived in
writing by Buyer or Sellers, respectively, the party whose conditions have not
been satisfied or waived may terminate this Agreement by written notice to the
other party, and neither party shall have any further obligation to the other
with respect to the Properties, other than as stated in the Agreement. Buyer
and Sellers may, at their election, at any time or times on or before the
Closing Date, waive in writing the benefit of any of the conditions set forth
in SECTIONS 4.1 AND 4.2. A party's waiver of any condition to the Close of
Escrow shall not constitute a waiver by that party
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of any other unsatisfied conditions, or of such party's right to terminate this
Agreement based on said other unsatisfied conditions, unless such waiver is
specified in writing by such party.
4.4 SALE OF FOUNTAIN PLAZA AND HACIENDA DEL RIO CONDITIONAL ON HUD
APPROVAL. As to Fountain Plaza Apartments and Hacienda del Rio Apartments, this
agreement is expressly conditioned upon preliminary approval by HUD for the
transaction as set forth in HUD's standard form of APPLICATION FOR TRANSFER OF
PHYSICAL ASSETS, and supporting documents submitted by HUD. No transfer of any
interest in said projects under this Agreement shall be effective prior to such
HUD approval. Buyer will not take possession of said projects nor assume the
benefits of said projects prior to such approval by HUD. The Buyer, its heirs,
executors, administrators or assigns, shall have no right upon any breach by
Sellers hereunder to seek damages, directly or indirectly, from said project,
including from any assets, rents, issues or profits therefrom, and the Buyer
shall have no right to effect a lien upon said projects for the assets, rents,
issues or profits thereof. The closing date of this transaction shall not occur
prior to approval of the HUD APPLICATION FOR TRANSFER OF PHYSICAL ASSETS.
ARTICLE 5
COVENANTS, WARRANTIES AND REPRESENTATIONS
5.1 SELLERS' WARRANTIES AND REPRESENTATIONS. Each Seller hereby
represents and warrants, with respect to itself only and its Property only, to
Buyer as follows:
5.1.1 Except for a potential road widening at Colonio del Rio
Apartments, Seller has no actual knowledge, as of the date hereof, that eminent
domain proceedings for the condemnation of its Real Property are pending;
5.1.2 Seller has no actual knowledge, as of the date hereof, that
there is threatened or pending litigation against Seller which would materially
and adversely affect its Real Property;
5.1.3 Seller has no actual knowledge, as of the date hereof, that the
improvements located on the Real Property are presently in violation of any
applicable building codes or other law, ordinance, rule or regulation affecting
those improvements;
5.1.4 Seller has no actual knowledge, as of the date hereof, that
there are any construction defects or other conditions of the Properties which
would materially and adversely affect the value thereof;
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5.1.5 Seller has no actual knowledge, as of the date hereof, that
Seller's use of its Real Property is presently in violation of any applicable
zoning, land use or other law, order, ordinance, rule or regulation affecting
such Real Property;
5.1.6 Except as disclosed to Buyer in writing, Seller has no actual
knowledge, as of the date hereof, that there are any Contracts by which Buyer
would be bound that are not cancelable by the owner of the Real Property within
(30) days after written notice from such owner;
5.1.7 Without due inquiry, to the best of Seller's knowledge, as of
the date hereof, (i) no Hazardous Substances are located on, in, beneath the
surface of or about its Real Property; (ii) no release of Hazardous Substances
has occurred on, in, or beneath the surface of or about its Real Property; and
(iii) Seller has not been required by any governmental agency to undertake any
remediation activity with respect to Hazardous Substances on, in, or beneath the
surface of or about its Real Property, except for matters, if any, disclosed in
the environmental reports delivered to Buyer by Seller pursuant to Section 3.1
of this Agreement.
5.1.8 Without due inquiry, to the best of Seller's knowledge, as of
the date hereof, there are no underground storage tanks located beneath the
surface of its Real Property; except for any such storage tanks, if any,
disclosed on the environmental reports delivered to Buyer by Seller pursuant to
Section 3.1 of the Agreement.
5.1.9 Seller is a limited partnership validly existing under the laws
of the State of its formation and qualified to do business in the State of
Arizona, and it has the full right, power and authority to sell its Property to
Buyer and to carry out its obligations hereunder.
5.1.10 This Agreement and the other documents to be executed by
Seller hereunder, upon execution and delivery thereof by Seller, will have been
duly entered into by Seller. Seller has no actual knowledge, as of the date
hereof, that either this Agreement or anything provided to be done under this
Agreement violates or shall violate any contract, document, understanding,
agreement, instrument, order or decree to which Seller is a party or by which it
is bound.
5.1.11 Seller has no actual knowledge, as of the date hereof, of any
Leases, Contracts or other agreements, oral or written, entered into by Seller
with respect to the Property which would be binding on Buyer upon the Close of
Escrow, other than the Leases and Contracts which have been delivered to Buyer
pursuant to the terms of this Agreement.
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5.1.12 Seller has no actual knowledge, as of the date hereof, of any
(i) public plans or proposals for changes in road grade, access or other
municipal improvements which would affect its Real Property or result in any
assessment against its Real Property, (ii) pending ordinance authorizing
improvements, the cost of which might be assessed against Buyer or the Real
Property, or (iii) tax certiorari proceeding pending for the reduction or
increase of the assessed real estate tax valuation to the Property or any
portion thereof. Seller has delivered or made available to Buyer all materials
in its possession relating to the Property as of the date of this Agreement.
5.1.13 To the best of Seller's knowledge, all documents and
information delivered by Seller to Buyer and prepared by Seller in connection
with Buyer's investigation of the Property are true and correct in all material
respects, and should Seller learn otherwise prior to Closing, it shall promptly
advise Buyer in writing.
5.1.14 As of Closing, there will be no employees employed by Seller
specifically in connection with its ownership or operation of its Real Property.
5.1.15 Seller is the sole owner of marketable title to all of the
Property. Except for the Assumed Debt, title to the Property will at Closing be
free and clear of all liens, encumbrances and rights in favor of third parties
created by, through or under Seller. Except as disclosed to Buyer, none of the
Personal Property is held by Seller under a lease or installment sale contract.
5.1.16 Seller has no actual knowledge, as of the date hereof, that
any Permits are required to own, operate, use and maintain the Property which
have not been obtained.
For the purposes of this SECTION 5.1, Seller's actual knowledge shall mean the
current actual knowledge of the general partners or officers of Each Seller
executing this Agreement on its behalf; provided, however, that such general
partners or officers shall be obligated to make inquiries of each of Seller's
property managers (and the employees of said property managers) whom those
general partners or officers suspect, or should reasonably suspect, to have
information pertinent to the subject of the representations and warranties made
herein.
Each Seller shall recertify at Closing that it knows of no changes to the
matters warranted above, except as disclosed in the recertification.
5.2 SELLER'S COVENANTS. Each Seller hereby covenants and agrees, with
respect to its Property only and itself only, that:
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5.2.1 Each Seller, as soon as possible but in no event later than
five (5) business days prior to Closing, shall deliver to Buyer such
documentation as Buyer may reasonably require to evidence the matters set forth
in SECTION 5.1 hereof, including without limitation corporate resolutions or
partnership consent authorizing the transactions contemplated herein.
5.2.2 During the Contract Period, Seller will not enter into any
Contracts binding upon Buyer other than those cancellable with advance notice of
thirty days or less without Buyer's prior written approval. If required,
Buyer's approval shall not be unreasonably withheld and shall be deemed given if
Buyer fails to approve or disapprove any proposed Contract in writing within
five (5) business days following Seller's request for such action.
5.2.3 During the Contract Period, Seller will not modify or terminate
any Leases, except in accordance with Seller's historical business practices in
the operation of the Property, without first notifying Buyer in writing of
Seller's intention to materially depart from such historical business practices.
Seller agrees to enter into new Leases only in conformance with the Lease
Standards attached hereto as EXHIBIT L, and to report such new Leases to Buyer
on a weekly basis. Seller and/or its agents shall use their best efforts during
the Inspection Period to maintain maximum occupancy.
5.2.4 Buyer and each Seller shall use their best efforts to obtain
any required written consents from lenders to the transfer of Seller's Property
to Buyer on or before the Closing Date, in a form reasonably acceptable to
Buyer. KWM shall be responsible for the payment of all required expenses and
fees of the lender to allow the assumption of the debt, in partial consideration
for which KWM will receive certain fees pursuant to Section 10.1.1.
5.2.5 During the Contract Period, the average monthly cost to Seller
of any leasing commissions and/or tenant improvements or other Tenant
Concessions (defined in SECTION 6.6.2) payable in connection with any Lease
shall not exceed the average monthly cost to Seller of Tenant Concessions for
the 1993 calendar year.
5.2.6 During the Contract Period, Seller shall keep its Real Property
insured to one hundred percent (100%) of its full replacement value against fire
and other hazards covered by extended coverage endorsement and to its present
level of comprehensive public liability insurance against claims for bodily
injury, death and property damage occurring in, on or about its Real Property.
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5.2.7 During the Contract Period, Seller and/or its agents shall
operate the Property in a businesslike manner, substantially in accordance with
past practices, and maintain satisfactory relationships with licensors,
suppliers, distributors, clients, tenants and others having business
relationships with Seller and involving the Property.
5.2.8 Each apartment will at Closing be in a ready to rent condition
fully equipped with Sellers' standard fixtures and appliances, all of which will
be in good working order.
5.3 BUYER'S WARRANTIES AND REPRESENTATIONS. Buyer hereby represents and
warrants to Sellers that:
5.3.1 Buyer has, and as of the Closing Date shall have, full power
and lawful authority to enter into and carry out the terms and conditions of
this Agreement and to execute and deliver all documents which are contemplated
by this Agreement. The Agreement constitutes a valid and legally binding
obligation of Buyer, enforceable in accordance with its terms.
5.3.2 All actions necessary to confer such power and authority upon
the persons executing this Agreement and all documents which are contemplated by
this Agreement to be executed on behalf of Buyer or its assignee have been
taken.
5.3.3 Buyer acknowledges that it has entered into this Agreement with
the intention of making and relying upon its own investigation of the physical,
environmental, economic and legal condition of the Property.
5.3.4 Buyer is not relying upon any representations and warranties
made by Sellers or anyone acting or claiming to act on Sellers' behalf
concerning the Properties or their value, other than (i) those specifically set
forth in SECTIONS 5.1 AND 5.2, and (ii) the truth and accuracy of all documents
prepared by Sellers and/or delivered by Sellers to Buyer pursuant to this
Agreement. Furthermore, Buyer has not received from Sellers any accounting,
tax, legal, architectural, engineering, property management or other advice with
respect to this transaction, and Buyer is relying solely upon the advice of its
own accounting, tax, legal, architectural, engineering, property management and
other advisors.
5.3.5 The waiver by Buyer or satisfaction of the conditions set forth
in SECTION 4.1 shall constitute an acknowledgment that: (i) Buyer has concluded
whatever studies, tests, and investigations Buyer desired to conduct relating to
the Properties including, without limitation, economic reviews and analyses,
soils tests, engineering analyses, environmental analyses and analysis of any
applicable records of the planning, building, public works or any other
governmental or quasi-
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governmental entity having or asserting jurisdiction over the Properties; (ii)
Buyer has reviewed and read (or has elected not to do so) and has understood all
instruments affecting the Properties and/or its value which Buyer deems
relevant, including, without limiting the generality of the foregoing, all
documents referred to in the Title Reports and all leases, operating statements,
demographic studies and market analyses; and (iii) Buyer and its consultants
have made all such independent studies, analyses and investigations, as Buyer
has deemed necessary, including, without limitation, those relating to
environmental matters and the leasing, occupancy and income of the Properties.
Notwithstanding the foregoing, such acknowledgement shall not waive any rights
of Buyer with respect to Supplemental Reports as set forth in SECTION 3.7.
5.3.6 Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, is authorized to
do business in the State of California, has duly authorized the execution and
performance of this Agreement, such execution and performance will not violate
any material term of its certificate of incorporation or bylaws, and no other
authorizations or approvals, whether of governmental bodies or otherwise, will
be necessary to enable Buyer to enter into or to comply with the terms of this
Agreement.
5.3.7 There is no legal or administrative proceeding, including
without limitation bankruptcy proceedings, pending or, to the best of Buyer's
knowledge, threatened against or effecting either Buyer or Buyer's consummation
of the transactions contemplated hereby.
5.3.8 Neither the execution nor the delivery of this Agreement, nor,
the consummation of the sale and purchase contemplated hereby, nor, the
fulfillment of or compliance with the terms and conditions hereof, conflict or
will result in the breach of any of the terms, conditions or provisions of any
Agreement or instrument to which Buyer is a party or by which it is bound.
5.4 BUYER'S COVENANTS. Buyer hereby covenants and agrees that:
5.4.1 Buyer, as soon as possible but in no event later than five (5)
business days prior to Closing, shall deliver to Sellers such documentation as
Sellers may reasonably require to evidence the matters set forth in SECTION 5.3
hereof, including without limitation corporate resolutions authorizing the
transactions contemplated herein.
5.5 SELLER'S DISCLAIMER. Except as otherwise expressly provided in
SECTIONS 5.1 AND 5.2, Sellers disclaim the making of any representations or
warranties, express or implied, regarding
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the Properties or their value or matters affecting the Properties, including,
without limitation, the physical condition of the Properties, title to or the
boundaries of each Real Property, pest control matters, soil condition,
hazardous waste, toxic substance or other environmental matters, compliance with
the Americans With Disabilities Act of 1990 or other building, health, safety,
land use and zoning laws, regulations and orders, structural and other
information pertaining to the Properties. With the exception of the
representations and warranties made by Sellers in SECTIONS 5.1 AND 5.2 and the
Disapproved Items, Sellers are selling the Properties to Buyer in its "AS IS"
condition and WITH ALL FAULTS on the Closing Date.
5.5.1 Except as otherwise expressly provided in SECTIONS 5.1 AND 5.2,
Buyer agrees that Sellers shall not be responsible or liable to Buyer for any
construction defects, errors, omissions, or on account of any other conditions
on or affecting the Properties. Except as otherwise expressly provided in
SECTIONS 5.1 and 5.2, Buyer hereby fully releases Sellers, their partners and
any of their partners, agents, representatives and their respective employees,
officers, directors (collectively, including Sellers, the "SELLER AFFILIATES")
from any and all claims that it may have or hereafter acquire against the Seller
Affiliates, for any cost, loss, liability, damage, expense, demand, action or
cause of action arising from or related to any construction defects or other
conditions affecting the Properties. Buyer further acknowledges and agrees that
this release shall be given full force and effect according to each of its
expressed terms and provisions, including, but not limited to, those relating to
unknown and unsuspected claims, damages and causes of action. Sellers hereby
assign without recourse or representation of any nature to Buyer, effective upon
Closing, any and all claims that Sellers may have against third parties for any
such errors, omissions or defects in the Properties. THIS ASSIGNMENT, WAIVER
AND RELEASE OF CLAIMS SHALL SURVIVE THE CLOSING.
5.5.2 THIRD PARTY REPORTS. Sellers hereby advise and notify Buyer
that in connection with Buyer's investigation of the Properties, Buyer may have
obtained existing environmental site assessments, surveys, structural reports
and other similar documents and information from Sellers (the "THIRD PARTY
REPORTS"). Buyer specifically acknowledges that Buyer's ability to rely on such
Third Party Reports shall be limited as set forth in the Third Party Reports
and, except as otherwise expressly provided in SECTIONS 5.1 AND 5.2, that
Sellers make no warranties or representations regarding any of the information
contained therein. Sellers hereby disclaim any liability to Buyer for the
completeness or accuracy of any of the Third Party Reports, and, except as
otherwise expressly provided in SECTIONS 5.1 and 5.2, Buyer hereby releases
Seller Affiliates from any liability
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arising out of any conditions and/or defects existing on the Properties and
described in the Third Party Reports or as to the accuracy and/or completeness
of any of the Third Party Reports.
5.6 SURVIVAL. The parties agree that (i) each party's warranties and
representations contained in SECTIONS 5.1 AND 5.3 of this Agreement and in any
document (including any certificate) executed by Sellers or Buyer pursuant to
this Agreement shall survive Buyer's purchase of the Properties only for a
period of thirty-six (36) months after the Closing Date (the "Limitation
Period"), and (ii) Buyer or Sellers shall provide actual written notice to the
other party of any breach of such warranties or representations and shall allow
the other party thirty (30) days within which to cure such breach, or, if such
breach cannot reasonably be cured within thirty (30) days, an additional
reasonable time period, so long as such cure has been commenced within such
thirty (30) days and diligently pursued. If the breaching party fails to cure
such breach after actual written notice and within such cure period, the party
providing the notice of breach shall have all remedies available to it at law or
in equity. The Limitation Period referred to herein shall apply to known as
well as unknown breaches of such warranties or representations. The foregoing
notwithstanding, in no event shall the provisions of this SECTION 5.6 extend
either the Inspection Period, the deadline for making the Deposit, or the
Closing Date.
5.7 BORROWER'S COVENANTS. Each Borrower represents and warrants, with
respect to its Loan Property only, that the statements contained in Sections
5.1.1 through 5.1.5, 5.1.7, 5.1.8, 5.1.13, and 5.1.16 are true and correct as to
its Loan Property.
ARTICLE 6
ESCROW AND CLOSING
6.1 ESCROW. The Escrow for the purchase and sale and the Loan
contemplated by this Agreement shall be opened by Buyer and Seller with the
Title Company concurrently with or as soon as possible after the sending of the
Written Notice to the Sellers. The closing hereunder (the "Closing") shall take
place at the office of the Title Company on the Closing Date. On or before the
Closing Date, Sellers and Buyer shall deliver to the Title Company such
additional escrow instructions consistent with this Agreement as the parties may
desire, and the parties shall deposit in Escrow the funds and documents
described below.
6.2 DEPOSITS BY BUYER. Buyer shall deposit or cause to be deposited:
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6.2.1 the cash portion of the Purchase Price, plus sufficient cash to
fund the Loan and pay Buyer's share of all escrow costs, prorations and closing
expenses as set forth in SECTIONS 6.5 AND 6.6 below;
6.2.2 a counterpart Assignment of Leases (as defined in SECTION 6.3.4
below), duly executed by Buyer; and
6.2.3 written lender confirmation or other reasonable and reliable
written evidence in form satisfactory to Sellers, that Buyer has, effective at
Closing, assumed, and become obligated to pay the Assumed Debt.
6.3 DEPOSITS BY SELLER. Each Seller, with respect to its Property, shall
deposit:
6.3.1 a duly executed and acknowledged special warranty deed to the
Real Property in compliance with applicable law substantially in the form
attached to this Agreement as EXHIBIT D (the "Deed");
6.3.2 a duly executed assignment of Seller's interest in the
Intangible Property in the form attached to this Agreement as EXHIBIT E (the
"General Assignment");
6.3.3 a duly executed bill of sale of the Personal Property in the
form attached to this Agreement as EXHIBIT F (the "Bill of Sale");
6.3.4 counterpart assignments by Seller and assumption by Buyer of
Seller's interest in the Leases affecting the Property as of the Closing Date in
the form attached hereto as EXHIBIT G (the "Assignments of Leases"), duly
executed by Seller;
6.3.5 a certificate from Seller certifying the information required
by 1445 of the Internal Revenue Code and the regulations issued thereunder to
establish, for the purposes of avoiding Buyer's tax withholding obligations,
that Seller is not a "foreign person" as defined in Internal Revenue Code
1445(f) in the form attached to this Agreement as EXHIBIT H (the "FIRPTA
Certificate");
6.3.6 a current rent roll and a current list of any security deposits
and prepaid rents held by Seller under the Leases certified by the existing
management company operating the Property as being true, correct and complete in
all material respects as of the Closing Date, and further certifying that each
such Lease is in full force and effect, and that there are no unperformed
obligations on the part of Seller;
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6.3.7 a partnership authorization satisfactory to Buyer authorizing
Seller's entry into and performance of this Agreement ("Resolution");
6.3.8 a letter signed by Seller and addressed to each tenant of the
Real Property in the form attached hereto as EXHIBIT I. Buyer shall cause the
tenant notification letter to be hand delivered to or affixed to the door of
each tenant promptly following the Closing or otherwise delivered in accordance
with the applicable Arizona laws, whether state, county, local or otherwise;
6.3.9 an assignment and assumption of Contracts and Claims in the
form attached hereto as EXHIBIT J and made a part hereof;
6.3.10 Affidavit of Property Value in the form attached hereto as
EXHIBIT K and made a part hereof; and
6.3.11 duly executed and acknowledged Loan Documents.
6.4 TITLE COMPANY'S DUTIES AT CLOSING. Sellers and Buyer shall instruct
Title Company to close Escrow on the Closing Date by, for each Property:
6.4.1 Recording all documents as may be necessary to clear title in
accordance with the requirements of this Agreement;
6.4.2 Recording the Deed and the Assignment of Leases, in that order,
and, if permitted by applicable law, instructing the applicable county
recorder's offices not to affix the amount of any documentary or transfer taxes
to the Deed but to attach a separate statement to the Deed after recording;
6.4.3 Paying all closing costs and making all prorations in
accordance with SECTIONS 6.5 AND 6.6 of this Agreement, and preparing a separate
closing statement of adjustments and prorations with respect to each Property
prepared by Title Company and approved by Buyer and Sellers prior to the Closing
Date (the "Closing Statement");
6.4.4 Delivering to Buyer the Title Policy, Title Company's certified
Closing Statement as to the Property, conformed copies of the Deed and the
Assignment of Leases showing available recordation information (collectively,
the "Recorded Documents"), an original of the Bill of Sale, the General
Assignment, the FIRPTA Certificate, the Resolution specified in SECTION 6.3.7,
and copies of all other documents deposited into Escrow; and
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6.4.5 Delivering to Sellers the Purchase Price, plus or minus
closing adjustments and prorations, Title Company's certified Closing Statement,
conformed copies of the Recorded Documents, an original of the Bill of Sale, the
General Assignment and the FIRPTA certificate and copies of all other documents
delivered to Title Company.
6.4.6 In connection with the Loan, Title Company shall:
6.4.6.1 Record the Loan Documents in such order as instructed
by Buyer, and deliver conformed copies to Buyer;
6.4.6.2 Issue to Buyer its ALTA lender's title insurance
policies insuring the priority of the Loan subject only to the existing
institutional first deeds of trust and such other exceptions as Buyer may
approve in writing;
6.4.6.3 Deliver the net proceeds of the Loan to the Borrowers;
and
6.4.6.4 Deliver the Loan Fees to Buyer.
6.5 CLOSING COSTS.
6.5.1 CLOSING COSTS FOR PURCHASE AND SALE. Buyer, and each Seller
with respect to its Property, shall each pay (i) one-half of the escrow fee
charged by Title Company, (ii) their respective portions of the New Reports
pursuant to SECTION 3.1 and (iii) the fees and expenses of their respective
legal counsel incurred in connection with this transaction and any other
expenses incurred by them and not otherwise allocated in this Agreement. Each
Seller shall each pay with respect to its Property (i) all transfer taxes,
documentary stamp taxes or fees due on the transfer of the Properties from
Sellers to Buyer, if any, (ii) all premiums for the Title Policies, including
such available endorsements as Buyer may reasonably request at a cost for such
endorsements not to exceed $2,500 for each Property unless approved by the
respective Sellers, and all costs in connection with removal of liens other than
the Permitted Exceptions effecting the Properties, (iii) all Survey expenses,
except as provided in SECTION 3.1, (iv) sales and use taxes related to the
transfer of the Personal Property, and (v) all other customary Seller's expenses
due or incurred in connection with the proposed transaction. Buyer will pay the
cost of certain survey updates as provided in SECTION 3.1 and all other
customary Buyer's expenses due or incurred in connection with the proposed
transaction.
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6.5.2 CLOSING COSTS FOR LOAN. All closing costs for the Loan,
including escrow costs, recording fees and Buyer's ALTA lender's title insurance
policies, shall be borne by Sellers.
6.6 PRORATIONS.
6.6.1 Real property taxes and assessments, personal property taxes
(if any), rent received (whether prepaid or applicable to the current rental
period), income received from tenant services and all other items of income
received with respect to the Properties shall be prorated between Sellers and
Buyer as of the Closing Date on a pro rata basis by allocating to the proper
party a credit or debit as the case may be for an amount which equals the
percentage of the applicable period during which that party held or will hold
title to the Properties multiplied by the amount of the item to be prorated.
Assessments, the payment of which have been elected to be paid in annual
installments, shall be prorated based only on the annual installment payment due
for the year during which the Closing occurs, and all subsequent annual
installments shall be the sole obligation of Buyer. If the actual amount of
such taxes and assessments is not known at the time of Closing, such proration
shall be estimated based on the most recent available information. As soon as
the actual amount of such taxes and assessments for such year is known, Sellers
and Buyer shall readjust such taxes and assessments to be paid by each party
with the result that Sellers shall pay for those taxes and assessments (or
annual installment thereof, if applicable), attributable to the period of time
prior to the Closing, and Buyer shall pay for those attributable to the period
of time commencing with the Closing. If Sellers have engaged a tax consulting
entity to protest or appeal the assessed value of any of the Properties for tax
purposes and an assessed value has not been established as of the Closing Date
based upon such protest or appeal, then Buyer may assume all of the obligations
and benefits of Sellers under and pursuant to the contract with such tax
consulting entity to the extent the contract relates to the Properties and the
result of such protest or appeal shall not be subject to proration hereunder.
6.6.2 All items of expense shall be prorated on an accrual basis as
of the Closing Date. The cost to Sellers of any leasing commissions and/or
tenant improvements or other tenant concessions (the "Tenant Concessions")
payable in connection with any Lease approved by Buyer pursuant to SECTION 5.2.2
the initial term of which commences during the Contract Period shall be prorated
between Buyer and Sellers based on the period from the date of execution of the
Lease to the expiration date of the initial term thereof. Sellers shall be
responsible for all Tenant Concessions for any Leases the initial term of which
commenced prior to the commencement of the Contract Period. Buyer shall be
responsible for all such Tenant Concessions for any Leases the
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initial term of which commences after the expiration of the Contract Period.
Buyer shall receive a credit in Escrow in the amount of any deposits under
Leases in effect on the Closing Date, or any portion thereof, which are in each
Sellers' possession and refundable to the tenant as of the Closing Date plus the
amount of any prepaid rent for periods from and after the Closing Date. Buyer
shall not be entitled to any interest on such deposits which may have accrued
prior to the Closing Date unless such interest, under the terms of the
applicable Lease, accrues for the benefit of the tenant. Sellers shall receive
a credit in Escrow for any refundable deposits and/or bonds held by any utility,
governmental agency or service contractor with respect to the Properties,
provided that such utility, agency or contractor is obligated to refund the
deposit to Buyer, rather than to Sellers, following the Close of Escrow. Sellers
shall cause all utility meters to be read one business day prior to the Closing,
shall cause the transfer of all utility service for the Properties to Buyer's
name as of the Closing Date, and Buyer shall cooperate with Sellers in
connection therewith. Sellers shall pay utility charges incurred or accrued up
to the reading of such utility meters. If any utility services have not been
transferred to Buyer's name as of the Closing Date, then at the Closing, any
such charges with respect to services not transferred shall be provided based on
the per diem charges obtained by using the most recent period (having similar
weather) for which readings of such services are available.
6.6.3 Any rent collected by Buyer after the Closing Date shall be
applied first to pay any rent then due and owing for any period subsequent to
the Closing Date, and then to pay any rent owing for any period prior to the
Closing Date. Buyer shall remit such latter amounts immediately upon receipt to
Sellers. Except as specified above, if either Buyer or Sellers receive any
revenues attributable to the period during which it is not the owner of the
Property, said party shall promptly forward such amounts to the other party (if
such revenues are only partially attributable to the period during which said
party is not the owner of the Property, the amount paid to the other party shall
be based upon proration as of the Closing Date as set forth above). Buyer shall
use reasonable efforts, at no expense to Buyer, to collect and assist Sellers in
collecting any revenue which is owed to Sellers as of the Closing Date or which
comes due thereafter.
6.6.4 Buyer and Sellers shall cooperate to produce on or before the
Closing Date a schedule of prorations for each Property which is as complete and
accurate as reasonably possible. All prorations which can be reasonably
estimated as of the Closing Date shall be made in Escrow on the Closing Date.
All other prorations and any adjustments to initial estimated prorations, shall
be made by Buyer and Sellers within thirty (30) days following the Closing Date
or such later time as may be re-
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quired, in the exercise of due diligence, to obtain the necessary information
for proration. Any net credit due one party from the other as a result of such
post-closing prorations and adjustments shall be paid to the other in cash
immediately upon the parties' written agreement to a final schedule of post-
closing adjustments and prorations.
6.7 INSURANCE. Sellers' existing liability and property insurance
pertaining to the Property shall be canceled as of the Closing Date, and Sellers
shall receive any premium refund due thereon.
6.8 DELIVERY OF ORIGINAL DOCUMENTS AND KEYS. Sellers agree to deliver to
Buyer on or immediately following the Closing Date all original Leases,
Contracts, plans and specifications, plot plans, surveys, soils reports,
Permits, Lease applications, and copies of other documents reasonably required
by Buyer in each Seller's possession pertaining to each Property, as well as all
keys and master keys to all locks on its Property, at a location designated by
Buyer.
6.9 FILING OF REPORTS. Title Company shall be solely responsible for the
timely filing of any reports or returns required pursuant to the provisions of
Section 6045(e) of the Internal Revenue Code of 1986 (and any similar reports or
returns required under any state or local laws) in connection with the closing
of the transaction contemplated in this Agreement.
ARTICLE 7
LOAN AGREEMENT
7.1 LOAN. Subject to the conditions of this Article 7, Buyer has agreed
to make a Loan of up to $3,000,000 in the aggregate to WMS Partners L.P. and
Mission Heights Investors L.P. (collectively "Borrowers"), the owners of New
Spanish Village Apartments and Mission Heights Apartments respectively (the
"Loan Properties").
7.2 LOAN TERMS. The Loan will be secured by a second mortgage on each of
the Loan Properties, and will be cross-collateralized and cross-defaulted. The
Loan will be recourse to each Borrower and to W. Michael Schoff individually,
either as a general partner of the Borrower or by guarantee of the Borrower's
obligation. At Closing, Buyer will receive a loan fee equal to 1.5% of the Loan
plus reimbursement of its out-of-pocket legal and due diligence costs (not to
exceed $17,000 for New Spanish Village and $23,000 for Mission Heights)
(collectively the "Loan Fees"). The initial loan term will be one year,
extendible at Borrower's option without extension fee so long as the Loan is
not in default. Interest will be paid monthly in arrears at an
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annual rate of 10% for the first year, 11% for the second year, and 12% for the
third year.
7.3 BUYER'S CONDITIONS TO MAKING THE LOAN. Buyer shall not be required to
make the Loan unless all of the following conditions are met, but the making of
the Loan is a condition to Sellers' obligation to sell the Properties:
7.3.1 The purchase and sale of the Properties shall have Closed
concurrently with the Closing of the Loan.
7.3.2 At Closing, the total of the first and second mortgages on New
Spanish Village Apartments shall not exceed $5,040,000, and on Mission Heights
Apartments shall not exceed $5,360,000.
7.3.3 Net Operating Income for the Loan Properties on a combined
basis after debt service on the first mortgage and maintenance reserves shall
not be less than 150% of the interest payments due on the Loan.
7.3.4 Loan documents satisfactory to Buyer and Borrowers (the Loan
Documents") shall be prepared by Buyer and agreed on no later than Closing.
7.3.5 Borrowers shall provide Buyer, at Borrowers' cost, with ALTA
lenders title insurance showing Buyer's deeds of trust subject only to the
existing first position loans and such additional exceptions as Buyer may
approve in writing.
7.3.6 Borrowers shall provide Buyer with estoppel statements from the
existing first position lenders, in form satisfactory to Buyer, showing the
terms and existing principal balances of the first position loans, the absence
of any defaults known by the lender under said loans, and said lenders' consents
to the Loan.
7.3.7 Borrowers shall provide Buyer with evidence satisfactory to
Buyer, including opinion of counsel, that the Borrowers have consented to the
Loan.
7.3.8 Seller shall have inspected the Loan Properties in the same
manner as with the Properties, and shall have found the Loan Properties to be
satisfactory collateral for the Loan.
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ARTICLE 8
DAMAGE OR DESTRUCTION
8.1 CONTRACT PERIOD DAMAGE. If, during the Contract Period, there occurs
any damage to or destruction of any Property ("Contract Period Damage"), Sellers
shall immediately notify Buyer in writing of the nature and extent of such
Contract Period Damage. Buyer shall have ten (10) business days from the
receipt of Sellers' written notice in which to inspect and appraise the damaged
portion of the Property and to deliver a Disapproval Notice to Sellers with
respect to the Contract Period Damage demanding that Sellers repair the Contract
Period Damage. Buyer's failure to respond shall be deemed a waiver of its right
to require that Sellers repair the Contract Period Damage. If Sellers refuse
to repair the Contract Period Damage pursuant to Buyer's Disapproval Notice, or
fail to commence repairs within a reasonable period of time, Buyer may elect in
writing to terminate this Agreement.
8.2 BUYER'S ELECTION TO PROCEED. If Buyer elects to proceed with the
Close of Escrow without requiring Seller to repair the Contract Period Damage,
Buyer shall receive a credit in Escrow in the amount of the sum of (i) any
insurance proceeds payable to that Seller prior to the Closing Date as a result
of any Contract Period Damage and not expended by that Seller to repair, replace
or restore the Property pursuant to SECTION 8.3, with respect to Contract Period
Damage for which that Seller was insured, and (ii) with respect to Contract
Period Damage for which that Seller was not insured, the actual cost of
repairing or replacing such uninsured Contract Period Damage, as reasonably
estimated by Buyer.
8.3 SELLERS' REPAIRS. Upon the occurrence of any Contract Period
Damage, Sellers may, but shall not be obligated to, use any insurance proceeds
collected with respect to such Contract Period Damage to repair, replace or
restore the damaged Property to the extent reasonably feasible prior to the
Closing Date. Sellers' election to commence the repair, replacement or
restoration of any Property prior to the Closing Date shall in no way imply that
Sellers have made any representation or warranty with respect to any work
performed in connection with such repair, replacement or restoration ("Sellers'
Repairs"). The plans, materials, choice of contractor and all other material
aspects of the performance of Sellers' Repairs shall be subject to Buyer's
review and approval (which shall not be unreasonably withheld) and to the
general disclaimer set forth in SECTION 5.5.
8.4 BUSINESS INTERRUPTION AND RENTAL LOSS INSURANCE. Notwithstanding
anything in this Agreement to the contrary, the insurance proceeds to be
credited or delivered to Buyer pursuant to SECTION 8.2 shall exclude business
interruption or rental loss
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insurance proceeds, if any, allocable to the period through the Closing Date,
which proceeds shall be retained by Sellers.
8.5 CONDEMNATION PROCEEDS. If this transaction is Closed, Buyer shall be
entitled to all proceeds from the possible Colonia del Rio condemnation.
ARTICLE 9
REMEDIES
9.1 REMEDIES. If Sellers default under this Agreement, and such default
continues for five (5) days after written notice thereof, then Buyer may, at
Buyer's option, terminate this Agreement, at which time the Deposit shall be
returned to Buyer, and Buyer may pursue all of Buyer's rights and remedies that
Buyer may have at law, in equity or otherwise, including, without limitation,
the right to seek specific performance subject to the limited liability of each
Seller for a breach relating to its Property only. If Buyer defaults under this
Agreement, and such default continues for five (5) days after written notice
thereof, Each Seller's sole and exclusive remedy shall be to terminate this
Agreement and to retain its allocable share of the Deposit, if the Deposit has
been made, and if not, to sue to recover liquidated damages in the amount of its
allocable share of the Deposit, in accordance with SECTION 9.2. The foregoing
notwithstanding, no grace period, either as provided for in this SECTION 9.1 or
otherwise, shall apply to extend either the Inspection Period, the deadline for
making the Deposit, or the Closing Date.
9.2 LIQUIDATED DAMAGES. BUYER AND SELLERS ACKNOWLEDGE AND AGREE THAT (1)
IT WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO DETERMINE SELLERS' ACTUAL
DAMAGES IN THE EVENT OF BUYER'S DEFAULT UNDER THIS AGREEMENT, AND (2) TAKING
INTO ACCOUNT ALL OF THE CIRCUMSTANCES EXISTING ON THE DATE OF THIS AGREEMENT,
THE DEPOSIT IS A REASONABLE ESTIMATE OF SELLERS' ACTUAL DAMAGES IN SUCH EVENT.
CONSEQUENTLY, IN THE EVENT OF BUYER'S DEFAULT UNDER THIS AGREEMENT, SELLERS'
SOLE AND EXCLUSIVE REMEDY SHALL BE TO
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TERMINATE THIS AGREEMENT AND TO RETAIN THE DEPOSIT IF THEN MADE, AND IF NOT, TO
RECOVER THE SAME AMOUNT FROM BUYER AS LIQUIDATED DAMAGES.
Initials:
/s/Byron M. Fox Jane E. Maushardt
- - ------------------------------------
Buyer SELLERS:
/s/ Edward M. Sanders /s/ Edward M. Sanders
- - ----------------------------------- ----------------------------------------
CAMINO SECO ASSOCIATES L.P. HACIENDA DEL RIO ASSOCIATES L.P.
Tedco, Inc., General Partner Tedco, Inc., General Partner
Edward M. Sanders, Vice Pres. Edward M. Sanders, Vice Pres.
/s/ Edward M. Sanders /s/ Edward M. Sanders
- - ----------------------------------- ----------------------------------------
TUCSON CASAS LINDAS L.P. COLONIA DEL RIO INVESTORS L.P.
Casas Lindas Development Tedco, Inc., General Partner
Corp., General Partner Edward M. Sanders, Vice President
Edward M. Sanders, V.P.
/s/ Edward M. Sanders /s/ Edward M. Sanders
- - ----------------------------------- ----------------------------------------
RUDASILL ASSOCIATES L.P. SPRINGHILL ASSOCIATES, L.P.
Westside Properties, Inc. Tedco, Inc., General Partner
General Partner Edward M. Sanders, Vice President
Edward M. Sanders, V.P.
9.3 NO PERSONAL LIABILITY. In no event shall any shareholder, director,
officer, or limited partner, as the case may be, of Buyer or Each Seller be
personally liable for any obligations of Buyer or Sellers under this Agreement.
9.4 SEPARATE LIABILITY OF EACH SELLER. Notwithstanding anything herein to
the contrary, all promises, covenants, warranties, representations or other
affirmative statements made or agreed to herein by or on behalf of any one or
more of the Sellers shall only obligate Each Seller individually, and only with
respect to its Property. In no event shall any of the Sellers have any
liability or responsibility for a breach, default, act or omission by any of the
other Sellers in connection with this Agreement.
ARTICLE 10
MISCELLANEOUS
10.1 BROKERAGE COMMISSIONS AND FINDER'S FEES.
10.1.1 COMMISSIONS. Each party warrants to the other that it has
incurred no obligation to pay any broker and/or
32.
<PAGE>
finder in connection with the transactions contemplated by this Agreement other
than those identified in this SECTION 10.1. Provided this Agreement closes in
accordance with the terms hereof and Sellers actually receive the Purchase
Price, Sellers shall pay Walter R. Taylor, as Broker, a commission (the "Taylor
Commission") equal to two percent (2%) of the Purchase Price which commission
shall include any obligation of Sellers to Gary Triano. Provided this Agreement
closes in accordance with the terms hereof and Sellers actually receive the
Purchase Price, Sellers shall pay SPM, Inc., the existing property manager, a
termination fee (the "SPM Termination fee") equal to 2% of the Purchase Price.
Provided this Agreement Closes in accordance with the terms hereof, Buyer agrees
to pay KWM Realty Advisors, Inc. ("KWM") the sum of $387,000 (the "KWM
Commission") in consideration for undertaking the obligation to pay any loan
assumption fees and related documentation costs as provided in Section 5.2.4,
and as reimbursement for due diligence expenses incurred by it prior to this
Agreement. Walter R. Taylor and KWM, by their signatures hereto, each hereby
agrees to indemnify and agree to hold harmless Sellers from any claims,
liabilities, losses, costs or expenses (including, without limitation,
reasonable attorneys' fees and costs) incurred by Sellers, and Buyer understands
and agrees, as follows: (a) that this Agreement is the sole agreement between
Buyer and Sellers regarding the Properties; (b) that although Walter R. Taylor
is being paid a portion of the Purchase Price payable to Sellers, he represents
only KWM Realty Advisors; (c) that Walter R. Taylor, KWM and all of their
employees, agents and attorneys, are not authorized to, and do not, act for
Sellers, nor are Sellers bound by their acts or omissions; and (d) and that
except as identified in this SECTION 10.1, neither Walter R. Taylor nor KWM
knows of any other broker, salesperson or finder engaged in connection with the
sale of these Properties. The parties acknowledge and agree that the liability
of Walter R. Taylor and KWM with respect to those matters set forth in
subparagraphs (a) through (d) above shall be several and shall be limited to
their respective representations and indemnifications. Walter R. Taylor and KWM
agree to indemnify and hold harmless Sellers and Buyer from and against all
claims, demands, causes of action, liabilities, damages, costs, and expenses
(including reasonable attorneys' fees and costs) brought by any broker,
salesperson or finder engaged by either Walter R. Taylor or KWM, or claiming
through Walter R. Taylor or KWM, in connection with the sale of the Properties
or arising out of a breach by Walter R. Taylor or KWM, their employees, agents
and attorneys of the foregoing representations, warranties, and covenants of
either Walter R. Taylor or KWM. Notwithstanding anything to the contrary in
this Section 10.1.1, the total obligation of KWM with respect to the
representations, warranties, covenants and indemnification obligations of KWM
under this Section 10.1.1 shall not exceed an amount equal to the KWM Commission
received by KWM, PLUS any amounts due and payable and received by KWM from the
Taylor
33.
<PAGE>
Commission, MINUS any fees actually paid by KWM pursuant to Section 5.2.4. In
the event of termination of this Agreement, or if for any reason this Agreement
does not close in accordance with its terms, and regardless of whether the
Deposit is released to Sellers or liquidated damages in the amount of the
deposit is paid to Sellers, there will be no obligation to pay all or any part
of the Taylor Commission, the KWM Commission, or the SPM Termination Fee.
10.1.2 INDEMNIFICATION. Buyer and Sellers agree to indemnify and hold
each other harmless from and against any and all real estate commissions,
finders' fees or brokers' fees not otherwise provided for in SECTION 10.1.1 due
or claimed to be due by reason of the act of the indemnifying party in
connection with this transaction, such indemnity to include attorneys' fees and
costs incurred by each such party in connection with any such claim.
10.1.3 SURVIVAL. All representatives, warranties, covenants and
indemnities contained in this SECTION 10.1 shall survive the Closing and not be
merged therein, and shall also survive any termination of this Agreement.
10.2 LEASING COMMISSIONS. Sellers shall indemnify, protect, defend and
hold Buyer harmless from and against any leasing commissions payable in
connection with the current terms of the Leases (specifically including any
commission for option periods, renewal periods, extension periods or waivers of
termination rights which become due with respect to any Leases prior to or
during the Contract Period but excluding any such commissions approved by Buyer
pursuant to SECTION 5.2.3). Buyer shall indemnify and hold Sellers harmless from
and against any leasing commissions relating to Leases entered into following
the Close of Escrow.
10.3 INDEMNIFICATION. Each Seller hereby agrees to indemnify, defend and
hold Buyer harmless from and against any and all claims, liability, loss,
damage, cost or expense, including attorneys' fees, accruing with respect to any
of the Leases, Contracts or operation or use of said Seller's Property prior to
Closing; provided, however, that said Seller shall have no such obligation with
respect to any such claims which relate to Leases entered into by Seller prior
to Closing but which have arisen out of Buyer's operation of the Property after
Closing.
Buyer hereby agrees to indemnify, defend and hold said Seller harmless from
and against any and all claims, liability, loss, damage, cost or expense,
including attorneys' fees, accruing with respect to any of the Leases, Contracts
or operation or use of the Property after Closing.
34.
<PAGE>
10.4 SUCCESSORS AND ASSIGNS. Buyer may assign any of Buyer's rights or
duties hereunder to any affiliate, nominee or assignee with the prior written
consent of Sellers, which consent may not be unreasonably withheld. Buyer
agrees to furnish Sellers such information with respect to a proposed assignee
as Sellers shall reasonably request. Subject to the foregoing, this Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
successors and assigns. Notwithstanding the foregoing, Buyer may assign its
rights and obligations under
35.
<PAGE>
this Agreement to any entity which controls, is controlled by, or is under
common control with Buyer without the prior written consent of Sellers.
10.5 NOTICES. All written notices required to be given pursuant to the
terms hereof shall be either personally delivered or deposited in the United
States express mail or first class mail, registered or certified return receipt
requested, postage prepaid, or sent by an overnight delivery service or by
facsimile transmission, and addressed as follows:
To Sellers: 17 West Wetmore Road, Suite 300
Tucson, Arizona 85705
with copies to: Law Offices of George J. Feulner, P.C.
The Davis House
262 N. Main
Tucson, Arizona 85701
Fax No. (602) 624-7034
Telephone No. (602) 622-4866
To Buyer: BRE Properties, Inc.
One Montgomery Street, Suite 2500
Telesis Tower
San Francisco, California 94104
Attn: Byron Fox
with copies to: Farella, Braun & Martel
Russ Building, 30th Floor
235 Montgomery Street
San Francisco, California 94104
Attn: Jon F. Hartung, Esq.
Fax No. (415) 954-4480
Telephone No. (415) 954-4417
The foregoing addresses may be changed from time to time by written notice.
Notices shall be deemed received upon the earlier of actual receipt or three (3)
business days following mailing.
10.6 TIME. Time is of the essence of every provision contained in this
Agreement; however, if the final date of each period which is set out in any
provision of this Agreement falls on a Saturday, Sunday or legal holiday under
the laws of the United States then, in such event, the time of such period shall
be extended to the next day which is not a Saturday, Sunday or legal holiday.
36.
<PAGE>
10.7 POSSESSION. Possession of the Property shall be delivered to Buyer
on the Closing Date, subject only to then existing tenancies.
10.8 INCORPORATION BY REFERENCE. All of the exhibits attached to this
Agreement or referred to herein and all documents in the nature of such
exhibits, when executed, are by this reference incorporated in and made a part
of this Agreement.
10.9 NO DEDUCTIONS OR OFF-SETS. Buyer acknowledges that the Purchase
Price to be paid for the Property pursuant to this Agreement is a net amount and
shall not be subject to any off-sets or deductions except for credits, costs and
proration amounts specified herein. Any rental rebates, rollbacks or the like
mandated with respect to the period of Sellers' ownership of the Property and
approved by Buyer shall be paid when due by Buyer.
10.10 ATTORNEYS' FEES. In the event any dispute between Buyer and Sellers
should result in litigation, the prevailing party shall be reimbursed for all
reasonable costs incurred in connection with such litigation, including, without
limitation, reasonable attorneys' fees.
10.11 CONSTRUCTION. The parties acknowledge that each party and its
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments or exhibits hereto.
10.12 NO MERGER. The provisions of this Agreement shall not merge with
the delivery of the Deeds but shall, except as otherwise provided in this
Agreement, survive the Close of Escrow.
10.13 GOVERNING LAW. This Agreement shall be construed and interpreted in
accordance with and shall be governed and enforced in all respects according to
the internal laws, but not the laws of conflicts, of the State of Arizona.
Should suit be instituted arising out of or related to this Agreement, it shall
be brought in a court of jurisdiction located in Tucson, Arizona.
10.14 TERMINATION WITHOUT BREACH. In the event either party desires to
exercise any right expressly provided in this Agreement to terminate this
Agreement, such party shall give written notice of such termination and the
reason therefor to the other party. Thereafter, except in the event of a
termination based upon a default by either party in the performance of its
obligations under this Agreement, and effective as of the effective date of
such notice, each party shall be released from
37.
<PAGE>
its obligations hereunder and all monies and documents deposited into Escrow
shall be returned to the party which deposited them, all documents delivered by
Sellers to Buyer relating to the Property shall be returned, and all reports,
studies, analyses and tests prepared by or for Buyer relating to the Properties
shall immediately be delivered to Sellers; provided, however, that nothing
herein shall limit Buyer's indemnity set forth in SECTIONS 3.2 AND 10.1.2 and
Seller's indemnity set forth in SECTION 10.1.2.
10.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts. All counterparts so executed shall constitute one contract,
binding on all parties, even though all parties are not signatory to the same
counterpart.
10.16 ENTIRE AGREEMENT. This Agreement and the attached exhibits, which
are by this reference incorporated herein, and all documents in the nature of
such exhibits, when executed, contain the entire understanding of the parties
and supersede any and all other written or oral understandings, including
without limitation the letter agreement dated June 14, 1994 between Sellers and
Buyer.
10.17 ACKNOWLEDGEMENT OF CANCELLATION. Upon a termination or cancellation
of this Agreement, both parties covenant and agree to execute such documents as
either party may reasonably request to evidence such termination.
10.18 SEVERABILITY. In case any one or more of the provisions contained
in this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not effect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
10.19 ESCROW INSTRUCTIONS. In the event the Title Company requires
separate written escrow instructions, the Title Company agrees that if there is
a conflict between such escrow instructions and this Agreement, this Agreement
shall control and the parties hereto shall not be obligated to indemnify the
Title Company for the Title Company's negligence, wilfulness, conduct, breach of
contract, or breach of the applicable standard of care and Title Company will
not have any lien rights whatsoever against the Properties.
10.20 TAX-DEFERRED EXCHANGE. Buyer and Sellers shall each reasonably
cooperate in the event the other wishes to Close this transaction as part of an
exchange under Section 1031 of the Internal Revenue Code; providing that the
cooperating party shall (i) be reimbursed for reasonable costs in connection
with said exchange; (ii) not be required to take title to exchange
38.
<PAGE>
property; and (iii) be fully indemnified for all claims and consequences arising
out of such exchange.
10.21 EXECUTION OF AGREEMENT BY SPM, INC., WALTER R. TAYLOR, AND KWM. By
their signatures below, SPM, Inc., Walter R. Taylor, and KWM each agree to the
obligations of this Agreement as described above their signatures.
IN WITNESS WHEREOF, Sellers and Buyer have executed this Agreement as of
the day and year first written above.
SELLERS:
CAMINO SECO ASSOCIATES L.P., an
Arizona Limited Partnership
By: Tedco, Inc., General Partner
By: /s/ Edward M. Sanders
----------------------------------
Its: Vice-President
TUCSON CASAS LINDAS L.P., a
California Limited Partnership
By: Casas Lindas Development
Corp., General Partner
By: Edward M. Sanders
----------------------------------
Its: V. President
COLONIA DEL RIO INVESTORS L.P.,
an Arizona Limited Partnership
Tedco, Inc., General Partner
By: Edward M. Sanders
----------------------------------
Edward M. Sanders, Vice President
By:
----------------------------------
Its:
----------------------------------
FOUNTAIN PLAZA APARTMENTS L.P.,
an Arizona Limited Partnership
By: Westside Properties, Inc.
General Partner
By: Edward M. Sanders
----------------------------------
Its: V. President
39.
<PAGE>
HACIENDA DEL RIO ASSOCIATES
L.P., an Arizona Limited Partnership
By: Tedco, Inc., General Partner
By: /s/ Edward M. Sanders
----------------------------------
Its: Vice-President
RUDASILL ASSOCIATES L.P., an
Arizona Limited Partnership
By: Westside Properties, Inc.,
General Partner
By: /s/ Edward M. Sanders
----------------------------------
Edward M. Sanders
Its: Vice President
----------------------------------
SPRINGHILL ASSOCIATES L.P., a
Delaware Limited Partnership
By: Tedco, Inc., General Partner
By: /s/ Edward M. Sanders
----------------------------------
Edward M. Sanders
Its: Vice President
BORROWERS:
WMS PARTNERS L.P., an Arizona
Limited Partnership
By: /s/ W. Michael Schoff
----------------------------------
W. Michael Schoff
Its General Partner
MISSION HEIGHTS INVESTORS L.P.,
an Arizona Limited Partnership
By: Mission Heights
Investors, Inc.
Its General Partner
By: /s/ Edward M. Sanders
----------------------------------
Edward M. Sanders, Vice President
40.
<PAGE>
Its:
----------------------------------
BUYER:
BRE PROPERTIES, INC.
a Delaware Corporation
By: /s/ Byron M. Fox
----------------------------------
Its: Executive Vice President
----------------------------------
By: /s/ Jane E. Maushardt
----------------------------------
Its: Vice President
----------------------------------
41.
<PAGE>
ADDITIONAL SIGNATORIES
By their signatures below, SPM, Inc., Walter R. Taylor and KWM, in
consideration for payments to be received, each agree to the terms of Section
10.1 and (as to KWM only) 5.2.4 of this Agreement, but otherwise are not parties
to this Agreement.
SPM, INC.
By: /s/ Nancy J. Nicolosi
----------------------------------
Nancy J. Nicolosi
Its: President
----------------------------------
/s/ Walter R. Taylor by Robert M.
Taylor his attorney in fact
----------------------------------
Walter R. Taylor
KWM REALTY ADVISORS, INC.
By: /s/ Kenneth W. Mariash
----------------------------------
Kenneth W. Mariash
Its: /s/
----------------------------------
42.
<PAGE>
This Agreement, together with Buyer's Independent Consideration in the
amount of $100.00, has been received by the Seller this 11th day of August,
1994. Title Company joins in the execution hereof to evidence its
acknowledgement hereof and agreement to perform its obligations hereunder. Upon
receipt of the balance of the Deposit required pursuant to SECTION 2.2.1
hereinabove, Title Company shall give written notice thereof to Seller and
Buyer.
TITLE COMPANY:
FIDELITY NATIONAL TITLE AGENCY, INC.
By: /s/ Sandra L. Michael
----------------------------------
Name: /s/ Sandra L. Michael
---------------------------------
Title: Assistant Vice President
--------------------------------
43.
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
Property Number Approximate Purchase
Name Property Owner of Units Assumed Debt Price
- - -------- -------------- -------- ------------ --------
<S> <C> <C> <C> <C>
Camino Seco Camino Seco 168 4,295,000 6,625,000
Village Associates, L.P.
Apartment
Casas Tucson Casas 144 0 7,500,000
Lindas Lindas L.P.
Apartments
Colonia del Colonia del Rio 176 5,349,000 8,800,000
Rio Investors L.P.
Apartments
Fountain Fountain Plaza 197 3,168,000 4,500,000
Plaza Partners L.P.
Apartments
Hacienda Hacienda del Rio 248 6,154,000 9,225,000
del Rio Associates L.P.
Apartments
Oracle Rudasill 144 4,250,000 6,000,000
Village Associates L.P.
Apartments
Spring Hill Spring Hill 224 5,414,000 8,600,000
Apartments Associates L.P.
</TABLE>
<PAGE>
Camino Seco Village Apartments
Legal Description
Exhibit B-1
<PAGE>
Casas Lindas Apartments
Legal Description
Exhibit B-2
<PAGE>
Colonia Del Rio Apartments
Legal Description
Exhibit B-3
<PAGE>
Fountain Plaza Apartments
Legal Description
Exhibit B-4
<PAGE>
Hacienda Del Rio Apartments
Legal Description
Exhibit B-5
<PAGE>
Oracle Village
Legal Description
Exhibit B-6
<PAGE>
Spring Hill Apartments
Legal Description
Exhibit B-7
<PAGE>
EXHIBIT C
DOCUMENTS TO BE DELIVERED BY SELLER
TENANT INFORMATION (FOR EACH PROPERTY)
1. Rent Roll completed to Buyer's reasonable requirements.
2. ALL leases and amendments thereto, including subleases.
3. List certified by Seller of all concessions made to tenants, including free
or reduced rent, above standard tenant improvements, cash payments, moving
allowances, etc.
4. Rent Delinquency Report.
5. Most recent leasing status report.
6. Standard form lease.
OPERATING INFORMATION (FOR EACH PROPERTY)
1. All historical audited financial statements for 1990, 1991, 1992.
2. Year-to-date financials, certified by Seller.
3. Current operating and capital budgets, including comparison of actual to
budgeted results and an explanation of significant variances.
4. Listing of capital expenditures by category for the prior five (5) years.
5. Copies of all service, maintenance, leasing management or other contracts
including all amendments thereto, indicating those that may survive after
the closing.
6. Copies of real estate tax bills (including special assessments) for fiscal
years 1989 through 1993, including evidence of payment.
7. Copies of all construction bids for each Property not currently in optimum
operating condition, showing the cost of improving such Property to an
acceptable standard.
BUILDING INFORMATION (FOR EACH PROPERTY)
1. Engineering reports, including foundation, walls, roofs, floor and
supports, if any.
2. Mechanical reports, including HVAC, if any.
<PAGE>
3. Roof reports, if any.
4. Copies of all property inspection reports and invoices and construction
contracts for major repairs or renovations (in excess of $5,000), performed
during the preceding three years on the Property.
5. Plans and specifications showing "as-built" condition, to extent available.
6. Certificates of occupancy.
REAL ESTATE (FOR EACH PROPERTY)
1. Copies of any existing and proposed plats and/or land use plans for the
Property and of any adjacent developments.
2. Copy of the most recent surveys of the Property.
3. Copy of the Preliminary title report and all exceptions, conditions,
covenants and restrictions referenced therein, as well as copies of any
existing title insurance policies covering the Property.
4. Copies of all appraisals done on the Property in the last three years.
5. Copies of all studies and reports performed on the Property which Seller
has access to, including but not limited to, soil reports, environmental
and hazardous substance reports, audits assessments, and tests conducted
with regard to the Properties, together with maps indicating the location,
if any, of any hazardous waste sites located in the area surrounding the
Property, including copies of all registrations of underground storage
tanks.
6. Any current termite or Property inspection reports.
7. Seismographic reports, if any (when applicable).
8. Documentation, acceptable to Buyer, certifying that the Property is free
from asbestos or any other toxic or hazardous waste, both the burial of it
on the Property or the contamination of the soil by any means including
migration.
9. A copy of the present zoning map and ordinance for the Property including
parking requirements.
Exhibit C-2
<PAGE>
10. All agreements between the Seller and the legal owner of the Property
pursuant to which Seller has acquired the right to sell the Property.
11. A copy of all ground lease documents, if any.
MISCELLANEOUS (FOR EACH PROVERTY)
1. All licenses, permits and approvals.
2. Any market data (including rent and sale comparables) in Seller's
possession.
3. All existing insurance policies.
4. Copies of all loan documents, Notes and Deeds of Trust and Lender's
approval requirements of the Buyer, if any.
S. Lender's approval of assumption by Buyer of Notes and Deeds of Trust
secured by the Property (as required).
6. All agreements relating directly or indirectly to the Property.
A. TENANT INFORMATION
1. Rent Roll completed to Buyer's requirements.
2. All leases and amendments thereto, including subleases.
3. List certified by Seller of all concessions made to tenants, including
free or reduced rent, above standard tenant improvements, cash
payments, moving allowances, etc.
4. Rent Delinquency Report.
5. Most recent leasing status report.
6. Standard form lease.
B. OPERATING INFORMATION
1. Year-to-date financials.
2. Current operating and capital budgets, including comparison of actual
to budgeted results and an explanation of significant variances.
Exhibit C-3
<PAGE>
3. Copies of all service, maintenance, leasing management or other
contracts including those that survive a closing.
4. Copies of real estate tax bills (including special assessments) for
prior five (5) years, including evidence of payment.
5. 1992 and First Quarter 1993 Profit and Loss Statements for each
Property certified as true and correct by an authorized officer of
Seller.
C. BUILDING INFORMATION
1. Recent (within the last 24 months) engineering reports, including
foundation, walls, roofs, floor and supports, if any.
2. Recent (within the last 24 months) mechanical reports, including HVAC,
if any.
3. Recent (within the last 24 months) roof reports, if any.
4. Copies of all property inspection reports and invoices and
construction contracts for major repairs or renovations (in excess of
$5,000), performed during the preceding three (3) years on the
Properties.
D. REAL ESTATE
1. Copies of any existing and proposed plats and/or land use plans for
the Properties.
2. Copy of the most recent surveys of the Properties.
3. Copies of any existing title insurance policies covering the
Properties.
4. Copies of all appraisals done on the Properties in the last three (3)
years.
5. Copies of all soil reports, environmental and hazardous substance
reports, audits assessments, and tests conducted with regard to the
Properties.
6. Recent (within the last 24 months) termite or property inspection
reports.
Exhibit C-4
<PAGE>
7. Seismographic reports, if any (when applicable).
E. MISCELLANEOUS
1. All licenses, permits and approvals.
Exhibit C-5
<PAGE>
EXHIBIT D
FORM OF DEED
Recording Requested By
and
When Recorded Mail To:
KWM Realty Advisors, Inc.
- - ------------------------------
--------------------
--------------------
Attention:
- - --------------------------------------------------------------------------------
Space Above This Line For Recorder's Use
SPECIAL WARRANTY DEED
State of _____________________ )
) KNOW ALL MEN BY THESE PRESENTS:
County of_____________________ )
That ______________________________________, a ______________________________,
whose address is 17 W. Wetmore, No. 300, Tucson, Arizona 85705 (hereinafter
called "GRANTOR"), for and in consideration of the sum of Ten Dollars ($10.00)
and other valuable consideration paid to Grantor by BRE Properties, Inc., a
Delaware corporation (hereinafter called "GRANTEE"), whose address is Suite
2500, Pacific Telesis Tower, San Francisco, CA 94104, the receipt and
sufficiency of which are hereby acknowledged, does hereby GRANT, SELL, CONVEY,
ASSIGN and DELIVER to Grantee the real property situated in Pima County,
Arizona, described in EXHIBIT "A," attached hereto and made a part hereof,
together with all improvements thereon, fixtures affixed thereto, and
appurtenances (the "PROPERTY"), subject to all matters of record and subject to
all taxes and assessments, reservations in patents and all easements, zoning
laws, regulations and ordinances of municipal and other governmental
authorities, rights-of-way, encumbrances, liens, covenants, conditions,
restrictions, obligations and liabilities as may appear or record, all leases,
all matters which an accurate survey of the Property or physical inspection of
the Property would disclose, and subject to all exceptions, exclusions and
limitations contained in the Title Policy issued to Grantee in connection with
this Deed.
TO HAVE AND TO HOLD the Property, together with all and singular the
rights, and appurtenances thereto in anywise belonging, unto Grantee, its
successors and assigns forever, and
<PAGE>
Grantor does hereby bind itself and its successors and assigns to warrant and
forever defend the title of the Property as against all acts of Grantor and none
other, subject, however, to the Permitted Exceptions.
IN WITNESS WHEREOF, this Special Warranty Deed is executed by Grantor to be
effective as of the _____ day of _________________________, 19___.
GRANTOR:
Executed by Grantor the ---------------------------------------
_____ day of ________________, 1994 ---------------------------------------
By:
-----------------------------------
Its:
-----------------------------------
State of ______________________)
)
County of _____________________)
On this _____ day of ________________________, 19____, before me, _____________,
this undersigned officer, personally appeared ___________________, known to me
to be the person whose name is subscribed to the foregoing instrument, and
acknowledged to me that he, being authorized to do so, executed the same on
behalf of such corporation and partnership for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
---------------------------------------
Notary Public in and for the State
of
-------------------------------------
---------------------------------------
Printed/Typed Name of Notary
Commission Expires:
- - -----------------------------
(All signatures must be acknowledged)
Exhibit D-2
<PAGE>
SCHEDULE 1
LEGAL DESCRIPTION
(to be attached)
<PAGE>
EXHIBIT E
FORM OF GENERAL ASSIGNMENT
ASSIGNMENT OF INTANGIBLE PROPERTY
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby
expressly acknowledged, _______________________ ("Assignor"), hereby assign,
transfer and convey to BRE Properties, Inc., a Delaware corporation
("Assignee"), all of Assignor's right, title and interest in and to the
Intangible Property, as that term is defined in that certain Agreement for
Purchase and Sale of Real Property and Joint Escrow Instructions (the
"Agreement") dated as of ________________ ____, 1994, entered into by and
between Assignor, as Seller, and Assignee, as Buyer.
Assignee hereby assumes and agrees to keep, perform and fulfill all of
Assignor's obligations as obligor under any contracts included in Intangible
Property under the Agreement (the "Assigned Contracts"). Assignee also agrees
to indemnify, protect, defend and hold Assignor harmless from and against any
and all claims, damages, losses, costs and expenses (including attorneys' fees)
arising in connection with the Assigned Contracts and relating to the period
after the Close of Escrow (as defined in the Agreement).
Assignor hereby covenants and warrants that it has performed all of the
obligations to be performed by Assignor pursuant to and in accordance with, or
with respect to, the Assigned Contracts and agrees to indemnify, protect, defend
and hold Assignee harmless from and against any and all claims, damages, losses,
costs and expenses (including attorneys' fees) arising in connection with the
Assigned Contracts and relating to the period prior to the Close of Escrow.
This Assignment of Intangible Property is given pursuant to the Agreement.
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment of
Intangible Property as of ________________ ____, 1994.
ASSIGNOR:
---------------------------------------
---------------------------------------
By:
-----------------------------------
Its:
------------------------------
ASSIGNEE:
BRE Properties, Inc., a Delaware
corporation
By:
-----------------------------------
Its:
------------------------------
Exhibit E-2
<PAGE>
EXHIBIT F
FORM OF BILL OF SALE
BILL OF SALE
For valuable consideration, receipt of which is acknowledged,
______________________________ ("Seller"), grant, sell, transfer and assign to
BRE Properties, Inc., a Delaware corporation ("Buyer"), all of the personal
property described in SCHEDULE 1 attached hereto and by this reference
incorporated herein.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale this _____ day of
______________ 1994.
SELLER:
---------------------------------------
---------------------------------------
By:
-----------------------------------
Its:
------------------------------
<PAGE>
SCHEDULE 1
Schedule of Personal Property
[TO BE ATTACHED]
<PAGE>
EXHIBIT G
FORM OF ASSIGNMENT OF LEASES
Recording Requested By
and
When Recorded Mail To:
KWM Realty Advisors, Inc.
- - -------------------------
- - -------------------------
- - -------------------------
- - --------------------------------------------------------------------------------
Space Above This Line For Recorder's Use
ASSIGNMENT OF LEASES
This ASSIGNMENT is entered into this ___ day of ____________________ 1993,
by and between ______________________ ("Assignor"), and BRE Properties, Inc., a
Delaware corporation ("Assignee").
RECITALS
A. Assignor is the landlord under those certain leases described on
SCHEDULE 1 attached hereto (the "Leases") relating to that certain real property
described in SCHEDULE 2 attached hereto and commonly known as the ______________
Apartments, City of ___________________, State of Arizona (the "Property").
B. Assignor and Assignee are parties to that certain Agreement for
Purchase and Sale of Real Property and Joint Escrow Instructions dated as of
______________________ ____, 1994, pursuant to which Assignor has agreed to sell
and Assignee has agreed to purchase the Property and Assignor has agreed to
assign and Assignee has agreed to assume the Leases.
For valuable consideration, receipt of which is acknowledged, Assignor and
Assignee agree as follows:
1. Assignor assigns to Assignee all of the right, title and interest of
Assignor in the Leases.
2. Assignor agrees to indemnify and hold Assignee harmless from and
against any and all losses, costs, liabilities, damages and expenses, including,
without limitation, reasonable
<PAGE>
attorneys' fees, accruing prior to the date hereof and arising out of the
Leases.
3. Assignee assumes as of and from the date hereof all of Assignor's
obligations under the Leases.
4. Assignee agrees to indemnify and hold Assignor harmless from and
against any and all losses, costs, liabilities, damages and expenses including,
without limitation, reasonable attorneys' fees, accruing on or after the date
hereof and arising out of the Leases.
5. If Assignor or Assignee is required to employ counsel to enforce any
of the terms of this Agreement or for damages by reason of any alleged breach of
this Agreement or for a declaration of rights hereunder, the prevailing party
shall be entitled to recover its reasonable attorneys' fees and court costs
incurred.
6. This Assignment shall be binding on, and inure to the benefit of, the
parties hereto, their successors in interest, and assigns.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment as
of the day and year first hereinabove written.
ASSIGNOR:
---------------------------------------
---------------------------------------
By:
-----------------------------------
Its:
------------------------------
ASSIGNEE:
BRE Properties, Inc., a Delaware
corporation
By:
-----------------------------------
Its:
------------------------------
Exhibit G-2
<PAGE>
SCHEDULE 1
Schedule of Leases
TENANT DATE OF LEASE
- - ------ -------------
<PAGE>
SCHEDULE 2
Legal Description
[TO BE ATTACHED]
<PAGE>
EXHIBIT H
FORM OF FIRPTA CERTIFICATE
To inform BRE Properties, Inc., a Delaware corporation ("Transferee"), that
withholding of tax under Section 1445 of the Internal Revenue Code of 1986, as
amended, and any other applicable state or local laws or ordinances
(collectively the "Codes"), will not be required upon transfer of certain real
property to Transferee by _____________________________ ("Transferror"), the
undersigned hereby certify the following on behalf of Transferror:
1. Transferror is not a foreign person, foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined in the
Codes and the Income Tax Regulations promulgated thereunder);
2. Transferor's U.S. employer identification number is as follows: _____
3. Transferor's office address is: ______________________,
______________________, ______________________, ______________________,
______________________.
Transferror understands that this Certification may be disclosed to the
Internal Revenue Service and/or applicable state tax authorities by Transferee
and that any false statement contained herein could be punished by fine,
imprisonment, or both.
Transferror understands that Transferee is relying on this Certification in
determining whether withholding is required upon said transfer.
Transferror hereby agrees to indemnify, protect, defend and hold Transferee
harmless from and against any and all obligations, liabilities, claims, losses,
actions, causes of action, rights, demands, damages, costs and expenses of every
kind, nature or character whatsoever (including, without limitation, attorneys'
and paralegals' fees and costs and court costs) incurred by Transferee as a
result of: (i) Transferror's failure to pay U.S. Federal income tax or _________
State tax which the Transferror is required to pay under applicable U.S. or
_______________ law arising in connection with the subject transaction; or (ii)
any false or misleading statement contained herein.
<PAGE>
Under penalty of perjury each of the undersigned declares that he has
examined this Certification and to the best of his knowledge and belief it is
true, correct and complete, and each of the undersigned further declares that he
has authority to sign this document on behalf of Transferror.
Date: ___________________, 1994
TRANSFEROR:
---------------------------------------
By:
------------------------------------
Its:
--------------------------------
Exhibit H-2
<PAGE>
EXHIBIT I
FORM OF LETTER TO TENANTS
[Seller's Letterhead]
[Date]
[Name and address of tenant]
Re: CHANGE OF OWNERSHIP OF LEASED PREMISES
Dear Tenant:
Please be advised that on ___________________________, 1994, the project in
which your leased premises are located was purchased by BRE Properties, Inc., a
Delaware corporation. Please make all subsequent rent payments, and direct all
future questions or comments concerning your lease or the leased premises, to
BRE Properties, Inc. (or the party or parties which may later be designated by
BRE Properties, Inc.) at the following address:
BRE Properties, Inc.
------------------------------
------------------------------
Very truly yours,
---------------------------------------
<PAGE>
EXHIBIT J
Recording Requested By
and
When Recorded Mail To:
KWM Realty Advisors, Inc.
- - -------------------------
- - -------------------------
- - -------------------------
- - --------------------------------------------------------------------------------
Space Above This Line For Recorder's Use
ASSIGNMENT AND ASSUMPTION OF CONTRACTS AND CLAIMS
STATE OF ARIZONA )
) KNOW ALL PERSONS BY THESE PRESENTS:
COUNTY OF PIMA )
That ____________________________ ("Assignor"), for and in
consideration of the sum of Ten and No/100 Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, has sold, assigned and transferred, and by these
presents does sell, assign and transfer, unto BRE Properties, Inc.
("Assignee"), all of Assignor's right, title and interest in and to any and
all: (a) contracts assumed or made by Assignor relating to the operation,
service or maintenance of the improvements located on that certain real property
in Pima County, Arizona (the "Property"), being further described on EXHIBIT A
attached hereto and made a part hereof, and (b) without recourse or warranty,
any and all claims that Assignor may have for errors, omissions or defects in
the Property. Assignee hereby releases Assignor and all of its officials of all
rights, express or implied, that Assignee may have against them arising out of
errors, omissions or defects on the Property. By its acceptance hereof,
Assignee assumes the obligations under such contracts and agreements from and
after the date hereof and agrees to indemnify and hold harmless with regard to
any and all payments or claims due or arising with respect to such contracts or
agreements from and after the date hereof.
This Assignment and Assumption of Contracts and Claims may be executed in
counterparts, and any counterpart containing original signatures of all parties
hereto shall constitute an original Assignment and Assumption of Contracts and
Claims for all purposes.
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment of
Contracts and Claims as of this _______ day of ________________________, 19____.
ASSIGNOR:
---------------------------------------
---------------------------------------
By:
------------------------------
Its:
------------------------------
ASSIGNEE:
BRE Properties, Inc.,
a Delaware corporation
By:
------------------------------
Its:
------------------------------
Exhibit J-2
<PAGE>
EXHIBIT K
AFFIDAVIT OF PROPERTY VALUE
<PAGE>
EXHIBIT L
LEASE STANDARDS
Buyer and Sellers agree that Sellers shall continue to use their existing
leasing standards.
<PAGE>
PUNCHLIST ITEMS
Exhibit M-1
<PAGE>
Exhibit M-2
<PAGE>
Exhibit M-3
<PAGE>
Exhibit M-4
<PAGE>
MEMORANDUM
BRE Properties, Inc.
One Montgomery Street
Telesis Tower, Suite 2500
San Francisco, California 94104
July 25, 1994
To: Byron M. Fox
Jane E. Maushardt
From: Thomas R. Fall
Jeffrey J. Jelniker
Subject: Deferred Maintenance Punch List
Schomac Portfolio
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAMINO SECO
- - -----------
<S> <C> <C>
1 Asphalt Seal Coat/Restripe $7,614
2 Asphalt Repairs $3,000
3 Roof Replacement $62,000
4 Roof Repairs (broken tiles) $4,000
5 Exterior Painting $800
6 Soffit/Fscia Repairs $2,500
7 HVAC Replacement/Repair $1,680
8 Irrigation Repairs $900
9 Deck Coating $3,000
10 ADA Compliance $300
---------
TOTAL: $85,794
<CAPTION>
CASAS LINDAS
- - ------------
<S> <C> <C>
1 Asphalt Seal Coat/Restripe $5,568
2 Asphalt Repairs $2,000
3 Repair/Replace Cracked & Raised Concrete Sidewalks $1,500
4 Roof Repairs $14,300
5 Exterior Painting (balcony & stair railings) $10,000
6 HVAC Replacement/Repairs $2,240
7 Irrigation Repairs $875
<PAGE>
SCHOMAC PORTFOLIO
PAGE 2
8 Deck Coating $1,500
9 ADA Compliance $1,750
10 Fireplace Flue Cleaning $4,250
---------
TOTAL: $43,983
<CAPTION>
COLONIA DEL RIO
- - ---------------
<S> <C> <C>
1 Asphalt Repairs $11,550
2 Repair/Replace Cracked & Raised Concrete Sidewalks $500
3 Roof Repairs $2,200
4 Irrigation Repairs $1,000
5 Tree Trimming $800
6 Site Lighting Repairs $1,500
7 Tennis Court Repairs $1,200
8 ADA Compliance $150
9 Carport Damage $500
---------
TOTAL: $19,400
<CAPTION>
FOUNTAIN PLAZA
- - --------------
<S> <C> <C>
1 Asphalt Seal Coat/Restripe $18,729
2 Asphalt Repairs $21,384
3 Repair/Replace Cracked & Raised Concrete Sidewalks $400
4 Roof Replacement (Inc. 10% Deck replacement) $117,788
5 Dry Rot/Termite Damage $4,300
6 HVAC Replacement/Repairs $2,000
7 Plumbing Repairs/Fountains $1,000
8 Pool/Spa Replaster/Repairs $12,025
9 Irrigation Repairs $1,250
10 Tree Trimming $1,500
12 Stucco/Masonry Repairs $1,000
13 Deck Coating $8,500
14 Asbestos O&M Manual $3,500
15 ADA Compliance $4,400
---------
TOTAL: $197,776
<PAGE>
SCHOMAC PORTFOLIO
PAGE 3
<CAPTION>
HACIENDA DEL RIO
- - ----------------
<S> <C> <C>
1 Asphalt Seal Coat/Restripe $12,383
2 Asphalt Repairs $5,000
3 Roof Replacement $67,000
4 Exterior Painting $7,550
5 Wood Repairs $2,900
6 Dry Rot/Termite Damage $4,800
7 Plumbing Repairs $200
8 Irrigation Repairs $2,650
9 Tree Trimming $1,000
10 Deck Coating $6,000
11 Tennis Court Repairs $900
12 ADA Compliance $840
13 Carport Repairs $4,700
14 Install Weatherstrip at Exterior Doors $3,100
---------
TOTAL: $119,023
<CAPTION>
ORACLE VILLAGE
- - --------------
<S> <C> <C>
1 Asphalt Seal Coat/Restripe $5,000
2 Asphalt Repairs $3,000
3 Repair/Replace Cracked & Raised Concrete Sidewalks $3,000
4 Roof Repairs $6,600
5 HVAC Replacement/Repairs $2,190
6 Irrigation Repairs $1,900
7 Stucco/Masonry Repairs $7,200
8 Tennis Court Repairs $6,000
9 ADA Compliance $460
---------
TOTAL: $35,350
<CAPTION>
SPRINGHILL
- - ----------
<S> <C> <C>
1 Asphalt Seal Coat/Restripe $7,681
2 Asphalt Repairs $5,000
3 Repair/Replace Cracked & Raised Concrete Sidewalks $1,500
4 Roof Recoating $83,000
<PAGE>
SCHOMAC PORTFOLIO
PAGE 4
5 HVAC Replacement/Repairs $3,360
6 Irrigation Repairs $250
7 Deck Coating $5,000
8 ADA Compliance $1,700
9 Clean & Seal Entry Bomanite $1,000
---------
TOTAL: $108,491
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement
Number 83-60082 on Form S-8 of our report dated July 8, 1994 relating to the
combined statement of gross income and direct operating expenses of seven
multifamily housing properties located in Tucson, Arizona, included in BRE
Properties, Inc.'s Form 8-K.
KENNETH LEVENTHAL & COMPANY
Phoenix, Arizona
November 21, 1994
