SUPPLEMENT #1
TO
OFFER TO PURCHASE FOR CASH
7,500 UNITS
OF
BOSTON FINANCIAL APARTMENT ASSOCIATES LIMITED PARTNERSHIP
AT $25.00 NET PER UNIT BY
EQUITY RESOURCE LEXINGTON FUND LIMITED PARTNERSHIP,
EQUITY RESOURCES GROUP, INC., AND
EGGERT DAGBJARTSSON
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THIS OFFER WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME,
ON APRIL 26, 2001, UNLESS THE OFFER IS EXTENDED.
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On March 7, 2001, Equity Resource Lexington Fund Limited Partnership, a
Massachusetts limited partnership ("Lexington Fund" or the "Purchaser"), filed
with the Securities and Exchange Commission (the "Commission") a Schedule TO
(the "Schedule TO") with respect to its offer (the "Offer") to purchase 7,500
units ("Units") of limited partnership interests in Boston Financial Apartment
Associates Limited Partnership, a Delaware limited partnership (the
"Partnership") for $25.00 for each Unit, net to the seller in cash, without
interest, less the amount of any distributions declared or paid from any source
by the Partnership with respect to the Units after March 5, 2001 (without regard
to the record date). The terms and conditions of the Offer are set forth in an
Offer to Purchase (the "Offer to Purchase") and in an Agreement of Sale, each of
which was delivered to limited partners of the Partnership on or about March 7,
2001.
On April 6, 2001, the Purchaser announced that it was extending the
Offer until April 26, 2001 and filed with the Commission an amendment to the
Schedule TO providing for this extension. On April 11, 2001, the Purchaser filed
a second amendment to the Schedule TO ("Amendment No. 2") with the Commission in
response to comments received by the Purchaser from the Commission with respect
to the Schedule TO. The purpose of this Supplement is to provide a brief
description of the material changes to the Offer to Purchase as set forth in
Amendment No. 2, a copy of which is included with this Supplement. Except for
the changes to the Offer to Purchase set forth in Amendment No. 2, all of the
terms and conditions of the Offer set forth in the Offer to Purchase previously
delivered to limited partners of the Limited Partnership remain unchanged.
EQUITY RESOURCES GROUP, INC.
14 STORY STREET
CAMBRIDGE, MA 02138
(617) 876-4800
INFO@EQUITYRESOURCES.COM
APRIL 11, 2001
SUPPLEMENT # 1 TO OFFER TO PURCHASE
Equity Resource Lexington Fund, a Massachusetts limited partnership
("Lexington Fund" or the "Purchaser") has offered to purchase 7,500 units of
limited partnership interests in Boston Financial Apartment Associates L.P., a
Delaware limited partnership (the "Partnership") for $25.00 per unit, net to the
seller in cash, less the amount of any distributions declared or paid from any
source by the Partnership with respect to the units after March 5, 2001, and
less any transfer fee charged by the general partner of the Partnership. On
April 6, 2001, Lexington announced that it was extending the offer until April
26, 2001 and filed with the Commission an amendment to the Schedule TO providing
for this extension. On April 11, 2001, Lexington filed a second amendment to the
Schedule TO ("Amendment No. 2") with the Commission in response to comments
received by Lexington from the Commission with respect to the Schedule TO. Set
forth below in question and answer format is a description of the material
changes to the Offer to Purchase as set forth in Amendment No. 2. Except for the
changes to the Offer to Purchase described in Amendment No. 2, all of the terms
and conditions of the offer set forth in the Offer to Purchase previously
delivered to limited partners of the limited partnership remain unchanged.
WHO IS OFFERING TO BUY MY UNITS?
In Amendment No. 2, Lexington Fund has clarified that each of Lexington
Fund, Equity Resources Group, Inc. and Eggert Dabjartsson are jointly offering
to purchase 7,500 units of limited partnership interests in the Partnership.
Lexington Fund is a Massachusetts Limited Partnership whose manager is Equity
Resources Group, Inc., a Massachusetts corporation which is engaged in real
estate investment and consulting. Eggert Dabjartsson is the sole general partner
of Lexington Fund. Although Equity Resources Group, Inc. and Eggert Dabjartsson
are considered bidders in the offer, the offer price for units will be paid by
Lexington Fund and all units purchased in the offer will be held by Lexington
Fund.
HOW MUCH ARE YOU OFFERING TO PAY FOR MY SECURITIES AND WHAT IS THE FORM
OF PAYMENT?
As set forth in the Offer to Purchase, Lexington Fund is offering to
pay $25.00 per unit, net to you less the amount of any distributions declared or
paid from any source by the Partnership with respect to your units after March
5, 2001 and less any transfer fee charged by the general partner of the
Partnership. In Amendment No. 2, Lexington Fund has clarified that if you tender
your units in the offer and you were not entitled to receive any distribution
declared or paid from any source by the Partnership with respect to your units
after March 5, 2001, the amount paid to you in the offer will NOT be reduced by
the amount of any distribution which you were not entitled to receive.
HOW DID YOU DETERMINE THE OFFER PRICE?
In Amendment No. 2, we have clarified our method of determining the
offer price. We established the offer price based on our own review of the
Partnership, taking into account primarily the prices paid by Lexington Fund in
other recent purchases of units. We reviewed the Partnership's original
prospectus, the Agreement of Limited Partnership, the Partnership's Annual
Report on Form 10-KSB for the year ended December 31, 1999 ("1999 10-K") and the
Partnership's Quarterly Report on Form 10-Q for the period ended September 30,
2000 ("September 30, 2000 10-Q"). We also considered the fact that on December
8, 2000, we purchased units for $20.00. Based on the foregoing, we determined to
offer to purchase units at a price which reflected a premium over the price we
had most recently paid for units.
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
Lexington Fund expects that approximately $187,500 (exclusive of fees
and expenses) will be required to purchase 7,500 units, if tendered. In
Amendment No. 2, Lexington Fund has clarified that Lexington Fund will either
use cash on hand to pay for tendered units or will obtain those funds from
capital contributions from its members, each of whom have an aggregate net worth
substantially in excess of the amount required to be contributed to the
Purchaser to purchase the 7,500 units. As of April 6, 2001, Lexington Fund had
over $400,000 in cash on hand and total assets in excess of $2,000,000.
Lexington Fund represents to all tendering limited partners that Lexington Fund
has the financial wherewithal to accept for payment and thereby purchase all
7,500 units which it has offered to purchase in the Offer to Purchase.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
As a result of the extension of the offer by Lexington Fund, you will
have at least until 12:00 midnight, Eastern Time, on April 26, 2001, to decide
whether to tender your units in the offer.
CAN THE OFFER BE EXTENDED OR AMENDED AND UNDER WHAT CIRCUMSTANCES?
As described in the Offer to Purchase, we may elect to extend the
offer:
o to extend the period of time during which the offer is open;
o upon the failure of a limited partner to satisfy any of the
conditions specified in Section 15 of the Offer to Purchase, to
delay the acceptance for payment of, or payment for, any units; and
o to amend the offer in any respect (including, without limitation,
by increasing or decreasing the offer price).
In Amendment No. 2, we have clarified that because Lexington Fund is
offering to purchase less than 100% of the units, there will be NO "subsequent
offering period" as defined in Rule 14d-11 of the Exchange Act. Therefore, if
you do not tender your units during the initial offering period, you will not
have the opportunity to accept the offer.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
In Amendment No. 2, we have clarified that we may not terminate the
offer for ANY reason but only for a failure of any of the conditions to the
offer to be satisfied. We are not obligated to purchase any units in the offer
if we have not confirmed to our reasonable satisfaction that, upon purchase of
the units, we will be entitled to receive all distributions, from any source,
from the Partnership after March 5, 2001, and that the Partnership will change
the address associated with the holder of the units to our address.
In Amendment No. 2, we have also clarified what actions Lexington Fund
may take with respect to these conditions. If any or all of those conditions
have not been satisfied or waived by the expiration date of the offer, we may
(i) decline to purchase any of the units tendered, (ii) terminate the offer and
return all tendered units to tendering limited partners, (iii) waive all the
unsatisfied conditions and, subject to complying with applicable rules and
regulations of the Commission, purchase all units validly
tendered, (iv) extend the offer and, subject to the right of limited partners to
withdraw units until the expiration date, retain the units that have been
tendered during the period or periods for which the offer is extended or (v) to
otherwise amend the offer.
WHAT ARE THE TAX CONSEQUENCES TO LIMITED PARTNERS OF ACCEPTING OUR
OFFER?
In Amendment No. 2, we have expanded the description of the tax
consequences to those limited partners who accept our offer. The following
summary of certain federal income tax consequences of a sale of units pursuant
to the offer assumes that the Partnership is a partnership for federal income
tax purposes and that it is not a "publicly traded partnership" as defined in
Section 7704 of the Internal Revenue Code of 1986, as amended (the "Code"). This
summary is based on the Code, applicable Treasury Regulations thereunder,
administrative rulings, practice and procedures and judicial authorities as of
the date of the offer. All of the foregoing are subject to change, and any
change could affect the continuing accuracy of this summary. This summary does
not address all aspects of federal income taxation that may be relevant to a
particular limited partners in light of that limited partner's specific
circumstances, or that may be relevant to limited partners subject to special
treatment under the federal income tax laws (for example, foreign persons,
dealers in securities, banks, insurance companies and tax-exempt entities), nor
does it address any aspect of state, local, foreign or other tax laws. Sales of
units pursuant to the offer will be taxable transactions for federal income tax
purposes, and may also be taxable transactions under applicable state, local,
foreign and other tax laws. EACH LIMITED PARTNER SHOULD CONSULT HIS OR HER TAX
ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO THAT LIMITED PARTNER OF SELLING
UNITS PURSUANT TO THE OFFER, INCLUDING, WITHOUT LIMITATION, FEDERAL, STATE AND
LOCAL TAX CONSEQUENCES.
CONSEQUENCES TO TENDERING LIMITED PARTNERS. A limited partner will
recognize gain or loss on a sale of units pursuant to the offer equal to the
difference between (i) the limited partner's "amount realized" on the sale and
(ii) that limited partner's adjusted tax basis in the units sold. The "amount
realized" with respect to a unit sold pursuant to the offer will be a sum equal
to the amount of cash received by the limited partner for the unit plus the
amount of Partnership liabilities allocable to the unit (as determined under
Code Section 752). The amount of a limited partner's adjusted tax basis in units
sold pursuant to the offer will vary depending upon that limited partner's
particular circumstances and will be affected by allocations of Partnership
taxable income or loss to a limited partner with respect to those units, and
distributions to a limited partner. In this regard, tendering limited partners
will be allocated a pro rata share of the Partnership's taxable income or loss
with respect to units sold pursuant to the offer through the last day of the
month preceding the effective date of the sale.
Subject to Code Section 751 (discussed below), the gain or loss
recognized by a limited partner on a sale of a unit pursuant to the offer
generally will be treated as a capital gain or loss if the unit was held by the
limited partner as a capital asset. Changes to the federal income tax laws in
recent years modified applicable capital gain rates and holding periods. Gain
with respect to units held for more than one year will be taxed at long-term
capital gain rates not exceeding 20 percent. Gain with respect to units held one
year or less will be taxed at ordinary income rates, up to a maximum rate of
39.6 percent. To the extent of depreciation recapture of previously deducted
straight-line depreciation with respect to real property, a maximum rate of 25
percent is imposed (assuming eligibility for long-term capital gain treatment).
A portion of the gain realized by a limited partner with respect to the
disposition of the units may be subject to this maximum 25 percent rate to the
extent that the gain is attributable to depreciation recapture inherent in the
properties of the Partnership.
Capital losses are deductible only to the extent of capital gains,
except that non-corporate taxpayers may deduct up to $3,000 of capital losses in
excess of the amount of their capital gains against ordinary income. Excess
capital losses generally can be carried forward to succeeding years (a
corporation's carry forward period is five years and non-corporate taxpayer can
carry forward such capital losses indefinitely). In addition, corporations (but
not non-corporate taxpayers) are allowed to carry back excess capital losses to
the three preceding taxable years.
A portion of limited partner's gain or loss on a sale of a unit
pursuant to the offer may be treated as ordinary income or loss. That portion
will be determined by allocating a limited partner's amount realized for a unit
between amounts received in exchange for all or a part of the limited partner's
interest in the Partnership attributable to "Section 751 items" and non-Section
751 items. Section 751 items include "inventory items" and "unrealized
receivables" (including depreciation recapture) as defined in Code Section 751.
The difference between the portion of the limited partners amount realized that
is allocable to Section 751 items and the portion of the limited partner's
adjusted tax basis in the units sold that is so allocable will be treated as
ordinary income or loss. The difference between the limited partner's remaining
amount realized and adjusted tax basis will be treated as capital gain or loss
assuming the units were held by the limited partner as a capital asset.
Under Code Section 469, a non-corporate taxpayer or personal service
corporation can deduct passive activity losses in any taxable year only to the
extent of that person's passive activity income for such year. Closely held
corporations may offset passive activity losses against passive activity income
and active income, but may not offset such losses against portfolio income. If a
limited partner is subject to these restrictions and has unused passive losses
from prior years, those losses will generally become available upon a sale of
units, provided the limited partner sells all of his or her units. If a limited
partner does not sell all of his or her units, the deductibility of those losses
would continue to be subject to the passive activity loss limitation until the
limited partner sells his or her remaining units.
Gain realized by a foreign limited partner on a sale of a unit pursuant
to the offer will be subject to federal income tax. Under Code Section 1445 of
the Code, the transferee of a partnership interest held by a foreign person is
generally required to deduct and withhold a tax equal to 10% of the amount
realized on the disposition. Purchaser will withhold 10% of the amount realized
by a tendering limited partner from the Purchase Price payable to that limited
partner unless the limited partner properly completes and signs the Agreement of
Sale certifying the accuracy of the limited partner's TIN and address, and that
the limited partner is not a foreign person. Amounts withheld are creditable
against a foreign limited partner's federal income tax liability. If amounts
withheld are in excess of such liability, a refund can be obtained.
A limited partner who tenders units must file an information statement
with his or her federal income tax return for the year of the sale which
provides the information specified in Treasury Regulation Section 1.751-1(a)(3).
The selling limited partner must also notify the Partnership of the date of the
transfer and the names, addresses and tax identification numbers of the
transferors and transferees within 30 days of the date of the transfer (or, if
earlier, January 15 of the following calendar year).
CONSEQUENCES TO A NON-TENDERING LIMITED PARTNER. Purchaser anticipates
that a limited partner who does not tender his or her units will not realize any
material federal income tax consequences as a result of the decision not to
tender.
IS THERE ANY NEW MATERIAL INFORMATION ABOUT THE PARTNERSHIP?
Since the date of the Offer to Purchase, the Partnership has filed with
the Commission its Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2000. In Amendment No. 2, we have included selected financial data
of the Partnership from the Purchaser's Annual Report.
The foregoing description of the material provisions of Amendment No. 2
is qualified by reference to the actual text of Amendment No. 2, which limited
partners are urged to read carefully. Limited partners may contact the manager
of the offer, Equity Resources Group, Inc. at (617) 876-4800 for additional
information.
EQUITY RESOURCE LEXINGTON FUND
14 Story Street
Cambridge, MA 02138
April 11, 2001
OFFER TO PURCHASE UNITS IN
BOSTON FINANCIAL APARTMENT ASSOCIATES LP
FOR $25 PER UNIT
Dear Limited Partner:
On April 6, 2001, Equity Resource Lexington Fund (the "Purchaser") extended its
offer to purchase limited partnership units in Boston Financial Apartment
Associates LP (the "Partnership") until April 26, 2001. Enclosed with this
letter is a supplement to the Purchaser's original offer. This supplement
describes in question and answer format changes made to the Purchaser's original
offer dated March 5, 2001 (the "Offer").
Please read the enclosed supplement carefully. It contains important information
concerning the Offer, the Partnership and the Purchaser. If you have already
tendered your units, you do not need to respond. Payment will be made to you
within ten business days following the expiration of the Offer, as stated in the
Agreement of Sale. If you have not tendered your units but wish to tender them
now, complete the enclosed Agreement of Sale according to the directions on the
back of the agreement, sign where indicated and return it in the pre-addressed
return envelope.
The Purchaser believes that the $25 per unit offer price is speculative in
nature and that it is not, in itself, a motivation to sell your units. The
Purchaser believes that the primary benefit to selling limited partners is the
opportunity to terminate their investment. The Partnership was formed nearly 20
years ago and the Purchaser believes that the Partnership will operate as it has
for the foreseeable future. By selling your units, you may simplify your tax
returns by eliminating future K-1 reporting for the Partnership.
If you have any questions regarding this supplement, please call Equity
Resources Group, Inc., the information agent for this offer, at (617) 876-4800
or e-mail them at Info@equityresources.com.
Sincerely,
Equity Resource Lexington Fund LP