March 3, 2005
By Facsimile and U.S. Mail
Joseph A. Coco
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Jonathan L. Friedman
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, California 90071
Re: National Property Investors III
Schedule TO-T/13E-3 filed February 16, 2005
Filed by AIMCO Properties LP, et al.
Fox Strategic Housing Income Properties
Schedule TO-T/13E-3 filed February 16, 2005
Filed by AIMCO Properties LP, et al.
Century Properties Fund XIV, XV, XIX, and XXII
Schedules TO-T/13E-3 filed February 16, 2005
Filed by AIMCO Properties LP, et al.
Davidson Income Real Estate LP
Schedule TO-T/13E-3 filed February 16, 2005
Filed by AIMCO Properties LP, et al.
Davidson Growth Plus LP
Schedule TO-T/13E-3 filed February 16, 2005
Filed by AIMCO Properties LP, et al.
Dear Messrs. Coco and Friedman:
We have the following comments on the above-referenced
filings. Please note that the page numbers indicated below correspond to
the disclosure in the Offer to Purchase units of National Property
Investors III, except as otherwise noted. Please make
corresponding changes, where applicable, to each of the above-referenced
filings in response to these comments.
Schedule TO-T/13E-3
1. We note that two of the offers are for less than all units
outstanding, such as the offer for Fox Strategic Housing Income
Partners. You have indicated that Item 10 of Schedule TO is not
applicable with respect to this offer. As the offer is for less
than all the units outstanding, revise to provide the bidders`
financial information as required by Item 10 (to the extent you have not
done so) or tell us why this information is not material. Note that
when financial information is incorporated by reference, you must
include the information required by Item 1010(c) of Regulation M-A in the
document disseminated to unit holders.
Offer to Purchase Units of National Property Investors III
General
2. Revise to provide the legend required by Rule 13e-3(e)(1)(iii).
3. In any future dissemination of this offer document, and in
future Rule 13e-3 filings, please be certain to provide the "Special
Factors" disclosure required by Rule 13e-3(e)(1)(ii) in the front
of the disclosure document.
Risk Factors, page 4
Our Offer Price May Not Represent Fair Market Value for Your
Units, page 4
4. Revise the heading of this risk factor to clarify the risk
discussed in the corresponding text. As the filing persons have
provided fairness determinations with respect to this offer price,
you should revise this risk factor to avoid the implication that
you are disclaiming liability for the filing persons` fairness
determinations.
Continuation of Partnership; No Time Frame Regarding Sale of
Property, page 5
5. Please revise your disclosure to discuss in greater detail and
quantify, if practicable, the "changes in the local rental
markets, the potential for appreciation in the value of a property and
the tax consequences to [limited partners] on a sale of property" that
the bidders believe weigh against the sale of any properties at this
time.
Terms of the Offer; Expiration Date, page 8
6. Revise to clarify when payment will be made for tendered units
and clarify how this date differs from the effective date of the
transfer of ownership interests. For example, you state that you will pay
for the tendered units promptly upon expiration of the offer. Tell us
how many days after termination of the offer this payment will be
made. We note that the transfer of partnership interests will not
be effective until the first day of the calendar quarter in which the
offer expires. Clarify how the payment date and transfer date
correspond, if at all, or confirm that payment for tendered units
will take place without respect to the date the actual transfer of
ownership occurs in the partnership records. Finally, please
clarify how the transfers will take place on the first date of the
calendar quarter in which the offer expires. It appears that any transfer
of units would be made retroactive to the beginning of the current
quarter.
Acceptance for Payment and Payment for Units, page 8
7. In the last paragraph of this section you reserve the right to
transfer or assign the right to purchase tendered units to one or
more of your affiliates. Please be aware that any persons or
entities to whom you transfer or assign such right must be
included as a bidder in the offer. Each such person or entity added as a
bidder (and possibly as a Schedule 13E-3 filing person) must
independently satisfy the disclosure, dissemination and timing
requirements of the tender offer and going private rules.
Extension of the Tender Period; Termination; Amendment; No
Subsequent Offering Period,
page 13
8. We note the reference to governmental approvals required to
consummate the offer. We are unable to locate disclosure
regarding required governmental approvals on which you have conditioned
the offer. Revise to provide this disclosure or eliminate this
reference.
9. Revise the disclosure on page 13 to clarify that, if the offer
is extended, you will issue a press release or other public
announcement by 9 a.m. on the following business day, as required by
Rule 14e-1(d). The current disclosure states that you may do so.
Valuation of Units, page 18
10. On page 18 you disclose that the court appointed appraiser
determined the value of the partnership properties "in 2003." We
note that the appraisal indicates the fair value of each of the
properties as of May 28, 2003 and May 14, 2003. Revise to
disclose the date of the appraiser`s report. We note that you filed these
reports, as well as an appraisal of a third unit held by the
partnership as exhibits to your Schedule TO/13E-3. Revise to
provide the reports as exhibits and revise page 27 to clarify that the
reports are available on EDGAR as well. Also, it appears that you
should discuss when the third property was sold, to whom (an
affiliate or unrelated party?), how it compared to the prior
valuation, and how this impacts the valuation amount or otherwise
affects the partnership asset valuation. We note from page 48
that the property was sold on January 15, 2004 for a gross sale price
of $14,825,000. We note from the appraisal filed as an exhibit to
your November 7, 2003 Schedule TO/13E-3, as amended, that the property
was appraised at $12,600,000.
11. In addition, tell us when the general partner, who is controlled
by you, first determined to sell this property and the circumstances
surrounding that decision and transaction. In doing so, tell us
when the contract of sale was entered into and when it was executed.
We note that your prior offer expired on December 30, 2003, and this
property was sold on January 14, 2004. We also note that a Form
8-K was filed with respect to this transaction on January 30, 2004.
Finally, we note from page 48 that you recognized gain from the
sale in the quarter ended September 30, 2003. It appears that you were
aware of this pending sale at the time of that offer and had a
duty to disclose this fact and/or amend the tender offer and related
documents to address the fact as a material change, as required by
Rule 14d-3(b)(1), Rule 13e-3(d)(2) and Rule 14d-9(c)(1). Please
provide us your detailed analysis regarding your compliance with
the disclosure requirements in this regard. In addition, tell us how
the proceeds from that sale were used and/or distributed and revise
the current offer to disclose this information. For example, we
assume from the distributions disclosed on page 49 that at least some
portion of the proceeds were distributed to unit holders. Was the
entire $12 million gain distributed to unit holders? When did the
distributions take place? Did those who tendered in the tender
offer (and whose units were accepted by you in the offer) have a right
to receive the distribution?
As noted in our introductory comment, revise the remaining offers
In accord with our comment, where applicable. For example, we note
From page 46 of the Fox Strategic Housing Income offer that one of the
two properties held by that partnership was sold on December 16, 2003
for gross proceeds of $10,100,000. We note that this property had
been appraised at $9.4 million by AAA in connection with the
litigation.
We note that the general partner filed a Form 8-K reporting the
transaction on December 16, 2003, that you amended the Schedule
TO/13E-3 on December 17, 2003 and that the offer expired December
30, 2003; however, we are unable to locate any disclosure related to
the sale or proposed sale in the initial offer document or any
subsequent amendment.
12. Revise to clarify the nature of the "prepayment penalties"
that you subtracted from the appraised value in determining the
consideration for this offer and the liquidation value of the
units (page 28) and explain why it is appropriate to subtract these
penalties.
13. We note footnote (1) to the table on page 19. Revise the
chart and disclosure on page 19 to clarify whether you have disclosed
the highest tender offer price anyone has offered to date, or you have
disclosed the highest price you have offered to pay in a tender
offer to date.
14. What consideration have you given to disclosing the prices you
have offered for partnership units in tender offers prior to the most
recent two year period? It appears that this information could be
material to investors.
15. Clarify why you selected these two third-party sources (Direct
Investment Spectrum and American Partnership Board). For example,
do you consider these to be the most comprehensive sources of this
information? Where other offers refer only to one third party
source of trade price information, such as the offer for units of Fox
Strategic Housing Income Partners, clarify why only one source is
disclosed.
Background and Reasons for the Offer, page 38
16. Here you state that you purchased 659 units in the offer you
commenced in November 2003. In your final amendment to the
Schedule TO, which was filed January 12, 2004 in connection with that
offer, you indicated that 573 units were validly tendered in the offer.
Please clarify.
Position of the General Partner of Your Partnership with Respect
to the Offer, page 39
17. Each filing person must provide a fairness determination with
respect to each group of unaffiliated security holders-those
unaffiliated unit holders who tender into the offer and those who
do not. Revise to clarify that the each filing person has done so,
or revise to provide this information. The current disclosure on
pages 39 and 41 appear to address one fairness determination with
respect to all unaffiliated security holders.
18. Generally, the factors outlined in Instruction 2 to Item 1014
are considered relevant in assessing the fairness of the consideration
to be received in a going private transaction. To the extent any of
the listed factors was not deemed relevant in the context of this
transaction, or was given little weight, this in itself may be an
important part of the decision-making process that should be
explained for unit holders. In this regard, please revise the
general partner`s fairness determination to clarify the general
partner`s consideration of each factor listed in Instruction 2 to
Item 1014. For example, it is unclear from the discussion on
Pages 57-58 whether the general partner considered current and
historical market prices, purchase prices paid in recent purchases or other
Firm offers. It is also unclear what consideration the general partner
gave to the appraisal or the valuation performed by the bidders.
If a factor was not considered because the factor did not exist (such
as where there are a lack of firm offers), then revise to clarify.
See Q&A No. 20 in Exchange Act Release No. 17719 (April 13, 1981).
Where an Item 1014 factor indicates a higher value than the offer price,
such as liquidation value, then revise to clarify how the fairness
determination was made despite this factor.
19. On page 40 you disclose a countervailing factor that the offer
price "does not take into account any increases in property income
that [the partnership] may realize in the near future." Clarify
"near future" and whether the partnership has a current
expectation of increased revenue in that time frame.
20. Please revise to provide additional information about the
operation of this business so that it is clear why going concern
value is not relevant here. In addition, you state that "going
concern value typically reflects independent value for the
goodwill of a business as a going concern, over and above its asset value,
however, those facts are not present here." This disclosure is
unclear and appears to inaccurately describe going concern value.
21. Revise to clarify how the general partner found the offer to
be procedurally fair despite the absence of the procedural safeguards
discussed in Item 1014 of Regulation M-A. See Q&A No. 21 in
Exchange Act Release No. 17719 (April 13, 1981).
22. Revise to further clarify why the general partner is not able
to make a recommendation with respect to whether unit holders should
tender into the offer. The factors cited here are typically
present with respect to any tender offer or investment decision.
Source of Funds, page 49
23. We note the disclosure here that you "intend to make
concurrent offers to acquire interest in approximately 7 other limited
partnerships. If all such offers were fully subscribed for cash,
we would be required to pay approximately $33.4 million for all such
units." Please revise this section to address the fact that you
have made 8 additional tender offers (and to reflect any additional
current tender offers not included in the reference line in this
letter). In doing so, disclose the total cash consideration to be
paid if all were fully subscribed.
Letter of Transmittal
24. In the second full paragraph on page 5 you state that the
party signing the letter of transmittal appoints purchaser as its proxy
with respect to "Units tendered by him or her and accepted for
payment by the Purchaser." In the third sentence of this
paragraph, you state, "Such appointment will be effective upon receipt
of the Letter of Transmittal." The sentences following this statement
imply this fact also. As you know, the proxy cannot be effective until
payment has been made. Please clarify this paragraph.
Offers to Purchase Units of Fox Strategic Housing Income Partners
and Davidson Income Real Estate, L.P.
25. Please revise your offers to specifically indicate the number
of limited partnership units sought in each offer, as required by
Item 1004(a)(1)(i) of Regulation M-A. We note that your current
disclosure indicates that you are "offering to purchase limited
partnership units" but does not specify the number of units
sought. We also note the discussion on the cover page that the limited
partnership "prohibits any transfer of an interest if such
transfer, together with all other transfers during the preceding 12 months,
would cause 50% or more of the total interest in capital and
profits of your partnership to be transferred within such 12-month
period," and, in light of this, you may prorate the tendered units so that
you will accept the maximum number without violating this agreement.
In addition to clarifying the number of units sought in each offer,
revise to clarify how you will be able to determine the number of
units that you may purchase while the offer is open, in light of
the fact that others may transfer partnership interests within this 12
month period that are unrelated to this offer. We note that you
control the general partner of the partnership.
26. In light of the above, tell us how many days after the
expiration of the offer you intend to pay for or return tendered units. We
note the disclosure on page 10 regarding possible delays due to
proration.
Schedule TO-T/13E-3 filed with respect to Century Properties
Growth Fund XXII and XIX
27. Please clarify (i) in what capacity Fox Capital Management
Corporation is filing the Schedules TO-T/13E-3 and 14D-9 and (ii)
the relationship between Fox Capital Management and Fox Partners IV
and II. It is our understanding that, with respect to all of the
above-referenced offers, the general partner has been included as a
filing person on the Schedule TO-T/13E-3. In these two offers, Fox
Capital Management Corporation is a filing person on the Schedule TO-
T/13E-3; however, the Schedule 14D-9 indicates that Fox Partners IV and
Fox Partners II are the general partners, respectively. We note that
in each of these two offers, each Fox entity has signed the Schedule
14D-9. In your response, please provide your analysis regarding
whether Fox Partners IV and II should be a filing person on the
Schedule TO-T/13E-3 and provide the disclosure required by that
form, such as the fairness opinion.
Closing Comments
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be certain that they have provided all information investors require.
Since the filing persons are in possession of all facts relating
to the disclosure, they are responsible for the accuracy and adequacy
of the disclosures they have made.
In connection with responding to our comments, please
provide, in writing, a statement from the filing persons acknowledging
that
* the filing persons are responsible for the adequacy and accuracy
of the disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filing; and
* the filing persons may not assert staff comments as a defense in
any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
Please respond to these comments by promptly amending the
filing and submitting a response letter filed via EDGAR under the
label "CORRESP." If the information you provide in response to
our comments materially changes the information that you have already
provided to security holders, disseminate the revised materials in
a manner reasonably calculated to inform them of the new
information.
If you do not agree with a comment, please tell us why in your
response. Direct any questions to me at (202) 942-1881. You may
also contact me by facsimile at (202) 942-9638.
Sincerely,
Abby Adams
Special Counsel
Office of Mergers and Acquisitions