SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 14D-9
(RULE 14d-101)
SOLICITATION/RECOMMENDATION STATEMENT UNDER SECTION 14(d)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
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CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP
(Name of Subject Company)
C.R.I., Inc., Managing General Partner
(Name of Person(s) Filing Statement)
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Units of Limited Partner Interest
(Title of Class of Securities)
Not applicable
(CUSIP Number of Class of Securities)
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Melissa Lackey, General Counsel
C.R.I., Inc.
11200 Rockville Pike
Rockville. MD 20852
(301) 231-0255
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)
___ Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Item 1. Subject Company Information.
The name, address and telephone number of the subject company are as
follows:
Capital Realty Investors-II Limited Partnership
c/o C.R.I., Inc., Managing General Partner
11200 Rockville Pike
Rockville, Maryland 20852
(301) 468-9200
The title and number of the class of equity securities to which this
Statement relates are 49,910 outstanding units of Limited Partner Interest.
Item 2. Identity and Background of Filing Person.
The name, address and telephone number of the filing person are as follows:
C.R.I., Inc., Managing General Partner
11200 Rockville Pike
Rockville, Maryland 20852
(301) 468-9200
The filing person is an affiliate of the subject company. C.R.I., Inc.
holds a 0.01% General Partner Interest in the Partnership and serves as its
Managing General Partner.
The Statement relates to the tender offer initiated on or about January 23,
2004 for up to five thousand (5,000) of the outstanding units of Limited Partner
Interest in the subject company for $175 per unit of Limited Partner Interest
by:
Equity Resource Fund XXII Limited Partnership
c/o Equity Resources Investments LLC
44 Brattle Street
Cambridge, Massachusetts 02138
The tender offeror will hereinafter be referred to as Equity Resources.
Item 3. Past Contacts, Transactions, Negotiations and Agreements.
There are no material agreements, arrangements or understandings, or
any actual or potential conflicts of interest, between the filing person or its
affiliates and (i) the subject company, its executive officers, directors or
affiliates, other than a Partnership Management Agreement originally between
CRICO Management Corporation, an affiliate of the filing person, as assigned to
the subject person as of January 1, 1999, and the subject company (as to which
there is no conflict of interest because the current tender offer applies only
to Limited Partner Interests and does not purport to affect management of the
subject company), or (ii) Equity Resources, its executive officers, directors or
affiliates.
On January 23, 2004, Equity Resources initiated a registered tender offer
to purchase up to 5,000 units at a price of $175 per unit. Equity Resources and
its affiliates have stated that they currently own 9,345 units in the subject
company, or approximately 20% of the outstanding units. Since 1988, various
affiliates of Equity Resources have engaged in conversations and correspondence
with the filing person and various of its affiliates with regard to their
ownership of interests in the subject company and other CRI-sponsored
partnerships.
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Item 4. The Solicitation or Recommendation.
This Statement relates to the recommendation of the filing person, in its
capacity as Managing General Partner of the subject company, with respect to the
Equity Resources tender offer.
The filing person is advising holders of the subject securities to reject
the tender offer because it views the offer price as inadequate, as discussed
below:
On February 4, 2004, the subject company filed a definitive proxy statement
proposing its liquidation. The proxy statement estimates the range in value of
each investment unit of the subject company between $333 and $433. The estimated
value is based upon the filing person's experience and familiarity with the
markets for conventional multifamily housing and government assisted low income
housing. The filing person is of the view that its estimates of values for the
properties reflect a reasonable range of expected sale prices should the
multifamily apartment complexes or interests therein be marketed.
The filing person has estimated the values of the multifamily rental real
estate owned by each of the twelve partnerships in which the subject company
owns an interest, using either the direct capitalization method or an assumed
sale in a Low Income Housing Tax Credit transaction, depending upon certain
federal and/or state restrictions associated with the particular property.
The filing person anticipates that, if the liquidation is approved, it will
take up to 36 months to complete the sales of the twelve properties (or
interests in the partnerships that own them) and liquidate the partnership.
The filing person's recommendation to reject the Equity Resources tender
offer assumes that the Limited Partners wish to hold their interests to achieve
the maximum return on their investment. Limited Partners who hold their
investment units for the estimated three years until the partnership's
liquidation may receive an amount substantially in excess of the Equity
Resources offer. However, there can be no assurance that the sales of the
subject company's assets will generate sufficient cash to achieve the estimated
valuation of between $333 and $433 per unit. The filing person's recommendation
also takes into account that Limited Partners who choose to tender their units
may incur capital gains taxes in excess of the tender amount. In addition, if a
Limited Partner desires to liquidate his or her investment in the short term,
there is no established market for the purchase and sale of Limited Partner
units in the subject company. Although several secondary market services exist,
activity has been limited and sporadic. The most recent transfers of which the
subject company is aware were for prices equal to or lower than the current
tender offer by Equity Resources.
Neither the filing person nor, to its knowledge after making reasonable
inquiry, any executive officer, director or affiliate of the filing person,
currently holds any Limited Partner interest that is subject to the tender
offer. Thus, no such person could intend to tender, sell or hold subject
securities that are held of record or beneficially owned by that person.
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Item 5. Person/Assets, Retained, Employed, Compensated or Used.
No persons or classes of persons have been employed, retained or are to be
compensated to make recommendations in connection with this transaction.
Item 6. Interest in Securities of the Subject Company.
Neither the filing person, nor any person within the scope of the
instructions to Item 1008(b) of Regulation M-A, engaged in any transaction in
the subject securities in the past 60 days.
There is no established market for the purchase and sale of Limited Partner
units in the subject company, although several secondary market services exist.
In 2003, two unregistered tender offers were made for units of Limited Partner
interest in the subject company, for prices of $120 per unit (less the $100
transfer fee per transaction). In addition, Equity Resources made a registered
tender offer of $120 per unit (less the $100 transfer fee per transaction) in
May of 2003.
Item 7. Purposes of the Transaction and Plans or Proposals.
The subject company is not undertaking or engaged in any negotiations in
response to the tender offer that relate to:
1. A tender offer or other acquisition of the subject company's
securities by C.R.I., Inc., any of its affiliates, or any other
person; or
2. A. Any extraordinary transaction, such as a merger, reorganization
or liquidation, involving the subject company (which has no
subsidiaries);
B. Any purchase, sale or transfer of a material amount of assets of
the subject company; or
C. Any material change in the present dividend rate or policy, or
indebtedness or capitalization of the subject company.
Notwithstanding the foregoing, prior to the tender offer and unrelated
to it, the subject company filed a definitive proxy statement on February
4, 2004 proposing the liquidation of the subject company.
Item 8. Additional Information.
None.
Item 9. Exhibits.
Exhibit A attached hereto is an excerpt from the subject company's
definitive proxy statement concerning liquidation, filed on February 4, 2004,
recommending against acceptance of the Equity Resources tender offer.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP
By: C.R.I., Inc.
Its: Managing General Partner
By: /s/William B. Dockser
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Name: William B. Dockser
Title: Director, Chairman of the Board
and Treasurer
(Principal Executive Officer)
Date: February 4, 2004
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Exhibit A
to
Schedule 14D-9
You may also receive (or have already received) offers from parties
unrelated to CRI to purchase your units of partnership interest in CRI-II. We
have been notified that Equity Resource Fund XXII Limited Partnership has made a
registered tender offer for up to 5,000 units for $175 per unit, and that
Peachtree Partners has made an unregistered tender offer for up to 4.9% of the
outstanding units of Limited Partner interest (it already holds approximately
3.1% of the units) for $175 per unit less a transfer fee of $100 per investor.
CRI recommends that holders of units in CRI-II reject the tender offers because
it views the offer price as inadequate. Although there can be no assurance that
liquidation of CRI-II's assets will produce the values discussed in the attached
Consent Solicitation Statement, the low end of the range of values estimated by
CRI is nearly double the per unit tender offer prices received to date. If the
proposed liquidation is approved by a majority in interest of the Limited
Partners, Limited Partners who hold their investment units for the estimated
three years until the Partnership's liquidation may receive an amount
substantially in excess of the amount of the current tender offer prices. CRI's
recommendation is based on the assumption that Limited Partners will wish to
continue to hold their interests to achieve the maximum return on their
investment. CRI would advise investors to reject any tender offers they may
receive prior to the Consent Solicitation Expiration Date of March 22, 2004 if
the tender offer price is considerably less than the lower end of the range of
the estimated per unit liquidation proceeds set forth in the attached Consent
Solicitation Statement.
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