SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
Solicitation/Recommendation Statement Pursuant to
Section 14(d)(4) of the Securities Exchange Act of 1934
(Amendment No. ___)
BRAUVIN REAL ESTATE FUND L.P. 5
(Name of Subject Company)
Brauvin Real Estate Fund L.P. 5
(Name of Person(s) Filing Statement)
Limited Partnership Interests
(Title of Class of Securities)
Not Applicable
(CUSIP Number of Class of Securities)
Thomas E. Murphy,
Treasurer and Chief Financial Officer
Brauvin Real Estate Fund L.P. 5
30 North LaSalle Street, Suite 3100
Chicago, Illinois 60602
(312) 759-7660
(Name, address and telephone number of
person authorized to receive notices
and communications on behalf of the
person(s) filing statement)
With a copy to:
Leslee M. Cohen, Esq.
Much Shelist Freed Denenberg Ament & Rubenstein, P.C.
200 North LaSalle Street, Suite 2100
Chicago, Illinois 60601
(312) 621-1707
[ ] 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 of the subject company is Brauvin Real Estate Fund L.P.
5, a Delaware limited partnership (the "Partnership"). The principal
executive offices of the Partnership are located at 30 North LaSalle
Street, Suite 3100, Chicago, Illinois 60602 and the telephone number
of such offices is (312) 759-7660. The general partners of the
Partnership are Jerome J. Brault and Brauvin Ventures, Inc., an
Illinois corporation (the "General Partners"). The title of the
class of equity securities to which this statement relates is the
units of limited partnership interest of the Partnership
(the "Units"). The number of Units outstanding as of the date hereof
is 9,914.5.
Item 2. Identity and Background of Filing Person.
This statement is being filed by the Partnership.
This Statement relates to a tender offer by MP Falcon Growth
Fund, LLC; Accelerated High Yield Institutional Investors, Ltd.;
MP Value Fund 7, LLC; MP Value Fund 4, LLC; MP Dewaay Fund, LLC;
Moraga Fund 1, L.P.; Moraga Gold, LLC; MP Income Fund 13, LLC,
Steven Gold and Previously Owned Partnerships Income Fund II, L.P.
(collectively, the "Bidder" or the "Purchaser") disclosed in a Tender
Offer Statement on Schedule TO (the "Schedule TO"), dated June 21,
2001 to purchase up to 4,950 Units at a purchase price equal to $100
per Unit, less the amount of any distributions declared or made with
respect to the Units between June 21, 2001 and July 27, 2001 or such
other date to which the Offer (as hereinafter defined) may be
extended, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated June 21, 2001, and the related Letter
of Transmittal (the "Offer to Purchase" or the "Offer"). The number
of Units subject to the Offer will be reduced to the extent necessary
to cause the number of Units purchased in the Offer, when added to
the number of Units transferred within the 12 months preceding the
closing of the Offer, not to equal or exceed 50% of the outstanding
Units.
Based on the information in the Schedule TO, the business
address of the person authorized to receive notices and
communications on behalf of the Purchaser is Christine Simpson,
MacKenzie Patterson, Inc., 1640 School Street, Moraga,
California 94556.
Item 3. Past Contacts, Transactions, Negotiations and Agreements.
There is no material agreement, arrangement or understanding or
any material actual or potential conflict of interest between: (i) the
Partnership and the General Partners; (ii) the Partnership and the
Purchaser; or (iii) the General Partners and the Purchaser. The
General Partners are entitled to receive distributions of the
Partnership's operating cash flow and net sale or refinancing
proceeds, which amounts are subordinated to certain preferential
returns due the limited partners of the Partnership (the "Limited
Partners"), as outlined in the Partnership's Amended and Restated
Limited Partnership Agreement, as amended to date (the "Agreement").
In addition, an affiliate of the General Partners is compensated for
providing property management services to the Partnership. The
Partnership paid this affiliate of the General Partners approximately
$87,995 for the year ended December 31, 2000 and $21,465 for the three
months ended March 31, 2001, for such services, pursuant to the terms
of the Agreement. Further, should the General Partners or their
affiliates provide services to the Partnership in connection with the
sale or refinancing of one of the Partnership's real properties, they
will be entitled to a fee for such services; however, it will be
subordinated to certain preferential distributions due to the Limited
Partners, as set forth in the Agreement. The Partnership is entitled
to engage in various other transactions involving affiliates of the
General Partners, as described in the sections of the Partnership's
Prospectus, dated March 1, 1985, as supplemented, entitled
"Compensation Table" and "Conflicts of Interest" at pages 11 to 16 and
the section of the Agreement entitled "Rights, Duties and Obligations
of the General Partners" at pages A-15 to A-18.
As a precondition to the financing with respect to Crown Point
Shopping Center, located in Kingsport, Sullivan County, Tennessee, the
lender required that ownership of the property reside in a single
purpose entity. To accommodate the lender's requirements, ownership
of the property was transferred in 1995 to the single purpose entity,
Brauvin/Crown Point L.P., which is owned 99% by the Partnership and 1%
by an affiliate of the General Partners. Distributions of Brauvin/Crown
Point L.P. are subordinated to the Partnership which effectively
precludes any distributions from the single purpose entity to affiliates
of the General Partners. The creation of Brauvin/Crown Point L.P. did
not affect the Partnership's economic ownership of the Crown Point
Shopping Center property.
Item 4. The Solicitation or Recommendation.
(a) Solicitation or Recommendation. The Partnership is not
expressing an opinion and is remaining neutral towards the Offer to
Purchase.
(b) Reasons. In deciding to remain neutral on the Offer to
Purchase, the General Partners considered the fact that, in 1998, the
Partnership engaged a nationally known, independent appraisal firm (the
"Appraisal Firm") to value the Partnership's assets. The Partnership
owns one rental property, a 42% interest in a joint venture which owns
a second rental property and a 53% interest in a joint venture which
owns a third rental property. The General Partners received the
valuation information in November, 1998. By taking the appraised value
of the assets, and the cash and cash equivalents held by the Partnership,
as of June,1999, and then deducting the mortgage balances, the
anticipated selling costs, the Partnership's other liabilities and the
estimated wind-up costs of the Partnership, the Partnership estimated
that the net liquidation value per Unit as of such date was
approximately $329, which did not include any prior distributions or
returns of capital to the Limited Partners.
The General Partners have determined to pursue the disposition of
the Partnership's assets and the Appraisal Firm is assisting the General
Partners in determining the appropriate method and timing for such
disposition. In 1999, the Partnership solicited the votes of the
Limited Partners to approve a sale of all of the Partnership's real
estate assets and to subsequently liquidate the Partnership. The
Limited Partners approved the proposed sale, authorizing the General
Partners to cause the sale of the its properties for not less than a
minimum price equal to 70% of the aggregate appraised value of such
properties.
To date, over 250 potential purchasers have been contacted
regarding the sale of the properties and, of those contacted,
approximately 120 have registered to receive packages on one or more of
the properties. In addition, the properties are listed on the Internet
at Loopnet.com, the largest commercial real estate website in the nation.
In 2001, the Partnership received an offer to purchase the
Strawberry Fields Shopping Center property, a portion of which the
Partnership owns through a joint venture with an affiliate of the
Partnership, at a purchase price of $5.585 million. In addition,
Syms, a national discount clothing retailer, exercised its right of
first refusal on the sale of the property. Accordingly, the Partnership
executed a purchase and sale agreement with Syms for $5.585 million in the
second quarter of 2001. The contract remains subject to standard
contingencies and is anticipated to close in July, 2001.
During 2001, the Partnership received several offers to purchase the
Crown Point Shopping Center, the most attractive of which is at a purchase
price of $5.25 million. The Partnership is currently conducting further
negotiations with the potential purchaser, but there can be no assurance
that the offer will lead to a successful sale. During this negotiation, the
Partnership is continuing to market the property for sale.
In September 2000, after receiving six purchase offers, negotiations
were completed with respect to a contract for the sale of the Sabal Palm
Square property, a portion of which the Partnership owns through a joint
venture with its affiliate. The proposed purchase price for the property
was $3.36 million. However, the buyer terminated the contract within the
due diligence period set forth in the contract. The Partnership is
continuing the market the property for sale. As a result of two dark
(but rent paying) anchor spaces representing approximately 62% of the
property, Sabal Palm Square has been difficult to sell and the Partnership
is reviewing a number of potential possibilities to sublease either or both
of the dark anchors. However, Winn-Dixie and Walgreens, the lessees of such
anchors which have vacated their spaces prior to their lease termination
dates, have been selective in their review of potential subtenants so as to
restrict potential competition. The prior contract price of $3.36 million
was in excess of the 1998 appraised value of $3.2 million, but was only
slightly above the amount of debt associated with the property.
Based on (a) the contract price for Strawberry Fields of $5.585 million,
and (b) the offer prices received for Crown Point at $5.25 million and the
Sabal Palm Square property at $3.36 million, both of which have been assessed
by management as an estimate of the net realizable value of such properties,
the General Partners' current estimate of the amount to be received by the
Limited Partners in the ultimate liquidation of the Partnership is $330 per
Unit. In calculating this estimate, the Partnership added to the above
property values cash and cash equivalents of approximately $85 per Unit
held by the Partnership at March 31, 2001, then deducted mortgage balances,
anticipated selling costs of the properties and the Partnership's other
liabilities at March 31, 2001, and estimated wind-up costs of the
Partnership. The General Partners are unable to determine the ultimate
amount to be actually received by the Limited Partners upon the sale of all
of the Partnership's assets. Such amount will be affected by items
including, but not limited to, the timing of the liquidation of the assets,
changes in market conditions, necessary reserves of the Partnership and the
sale prices that can be negotiated.
In reviewing the Offer to Purchase, the General Partners were unable
to determine how the Bidder will deal with the provision of the Agreement
prohibiting a Limited Partner to transfer less than five Units or make any
transfer of his Units if after such transfer he owns less than five Units
unless the Limited Partner transfers all of his Units, as the Offer to
Purchase is silent on this matter. However, should a Limited Partner desire
liquidity at this time, the Offer to Purchase gives the Limited Partner
such an opportunity.
(c) Intent to Tender. Neither the Partnership nor either of the
General Partners or, to the knowledge of the Partnership, any affiliate of
the Partnership or either of the General Partners intends to tender the Units
that are held of record or beneficially by such person to the Purchaser.
Item 5. Person/Assets, Retained, Employed, Compensated or Used.
None.
Item 6. Interest in Securities of the Subject Company.
During the past sixty days, none of the persons referred to in Item
1008(b) of Regulation M-A effected any transactions in the subject
securities.
Item 7. Purpose of the Transaction and Plans or Proposals.
(a) The Partnership has not undertaken or engaged in any negotiations
in response to the Offer to Purchase which relates to: (i) a tender offer
or other acquisition of the Partnership's Units by the Partnership or any
other person; (ii) any extraordinary transaction, such as a merger,
reorganization or liquidation, involving the Partnership; (iii) a purchase,
sale or transfer of a material amount of assets by the Partnership; or
(iv) any material change in the present dividend rate or policy, or
indebtedness or capitalization of the Partnership.
(b) There are no transactions, resolutions, agreements in principle
or signed contracts in response to the Offer to Purchase that relate to or
would result in one or more of the events referred to in Item 7(a).
Item 8. Additional Information.
None.
Item 9. Exhibits.
(a) (1) Letter to Limited Partners.
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.
July 10, 2001
BRAUVIN REAL ESTATE FUND L.P. 5
By: Brauvin Ventures, Inc.,
Corporate General Partner
By: /s/ Jerome J. Brault
Jerome J. Brault,
President
By: /s/ Jerome J. Brault
Jerome J. Brault,
General Partner
July 10, 2001
Dear Limited Partner, Brauvin Real Estate Fund L.P. 5:
Please be advised that, on June 20, 2001, the General Partners received
an unsolicited tender offer to purchase up to 4,950 of the outstanding
Limited Partnership Units of the Partnership for $100 per Unit. The offer
is being made by a group that currently beneficially owns the economic
interests with respect to approximately 14.5% of the outstanding Units.
You have recently received information regarding this offer.
At this time, the General Partners have not made a decision as to the
particular merits or risks to you, as a Limited Partner, associated with
the tender offer. However, the General Partners would like to provide you
with certain updated information and estimates of the per Unit proceeds
that may become available upon the sale of the Partnership's properties and
the liquidation of the Partnership. As detailed and conditioned below, the
General Partners' current estimate of the amount to be received by the
Limited Partners in the ultimate liquidation of the Partnership is $330 per
Unit.
As you know, in 1998, the Partnership engaged a nationally known appraisal
firm that was unaffiliated with the Partnership and the General Partners to
appraise the Partnership's properties. Further, in 1999, the Partnership
solicited the votes of the Limited Partners to approve a sale of all of the
Partnership's real estate assets and to subsequently liquidate the
Partnership. The Limited Partners approved the proposed sale, authorizing
the General Partners to cause the sale of the Partnership's properties for
not less than a minimum price equal to 70% of the aggregate appraised value
of such properties.
To date, over 250 potential purchasers have been contacted regarding the
sale of the properties and, of those contacted, approximately 120 have
registered to receive packages on one or more of the properties. In
addition, the properties are listed on the Internet at Loopnet.com, the
largest commercial real estate website in the nation.
In 2001, the Partnership received an offer to purchase the Strawberry Fields
Shopping Center property, a portion of which the Partnership owns through a
joint venture with an affiliate of the Partnership, at a purchase price of
$5.585 million. In addition, Syms, a national discount clothing retailer,
exercised its right of first refusal on the sale of the property.
Accordingly, the Partnership executed a purchase and sale agreement with
Syms for $5.585 million in the second quarter of 2001. The contract remains
subject to standard contingencies and is anticipated to close in July, 2001.
During 2001, the Partnership received several offers to purchase the Crown
Point Shopping Center, the most attractive of which is at a purchase price
of $5.25 million. The Partnership is currently conducting further
negotiations with the potential purchaser, but there can be no assurance
that the offer will lead to a successful sale. During this negotiation, the
Partnership is continuing to market the property for sale.
During 2000, Sabal Palm was placed under contract twice. However, both
contracts were terminated by the potential purchasers during due diligence.
We continue to actively market this property.
Based on (a) the contract price for Strawberry Fields of $5.585 million, and
(b) the offer prices received for Crown Point at $5.25 million and the Sabal
Palm Square property at $3.36 million, both of which have been assessed by
management as an estimate of the net realizable value of such properties,
the General Partners' current estimate of the amount to be received by the
Limited Partners in the ultimate liquidation of the Partnership is $330 per
Unit. In calculating this estimate, the Partnership added to the above
property values cash and cash equivalents of approximately $85 per Unit held
by the Partnership at March 31, 2001, then deducted mortgage balances,
anticipated selling costs of the properties and the Partnership's other
liabilities at March 31, 2001, and estimated wind-up costs of the
Partnership. The General Partners are unable to determine the ultimate
amount to be actually received by the Limited Partners upon the sale of all
of the Partnership's assets. Such amount will be affected by items
including, but not limited to, the timing of the liquidation of the
assets, changes in market conditions, necessary reserves of the Partnership
and the sale prices that can be negotiated.
You will have to make the determination as to whether to wait for the
liquidation of the Partnership's assets or to sell your interest now at
the tender offer price. We do recommend, however, that if you choose to
sell your interest prior to liquidation, you consider other options for sale,
including the informal secondary market for the Units. If you would like
further details regarding the informal secondary market, please consult with
your broker or registered representative.
In addition, please consider that in establishing their offer price of $100
per Unit, the bidders, by their own admission, were motivated to establish
the lowest price that might be acceptable to you and have estimated that
each Unit could have a value of $119, although they have not made an
independent appraisal of the units or the Partnership's properties and are
not qualified to appraise real estate. Furthermore, the bidders review of
independent secondary market reporting publications found no reported sales
of Units during the months of November 2000 through April 2001.
Nonetheless, if you are primarily interested in liquidating your Units
immediately, the tender offer gives you this opportunity. Additionally,
there can be no assurance that a better offer for the purchase of your Units
may be available now or in the future. Please be advised that by accepting
this or any other potential tender offer, you will no longer have an economic
interest in the Partnership's assets; thus, you will not share in any
potential change in their value. If you choose to pursue the tender offer,
payment will come directly from the outside group of investors.
As always, if you have any questions regarding your investment, please do
not hesitate to contact us.
Sincerely,
Jerome J. Brault
Managing General Partner
Some of the statements made herein are forward-looking and concern the value
of the Partnership and the salability of its properties. While the General
Partners have made its best efforts to be accurate in making these
forward-looking statements, any such statements are subject to risks and
uncertainties that could cause the actual values and results to vary
materially. These risks include, without limitation, fluctuations in the
economy and the real estate market and the availability of financing.
Readers are cautioned not to place undue reliance on such forward-looking
statements.