Exhibit (a)(1)
[MARRIOTT RESIDENCE INN II LIMITED PARTNERSHIP LETTERHEAD]
March 6, 2002
Dear Marriott Residence Inn II Limited Partner:
Please be advised that an unsolicited tender offer to purchase up to
8,341 of the limited partnership Units of the Partnership (approximately 12% of
the outstanding Units) for $300 per Unit in cash, reduced by any cash
distributions made or declared by the Partnership on or after February 15, 2002,
was commenced. The tender offer is being made by Madison Liquidity Investors
117, LLC, a Delaware limited liability company (the "Purchaser"), and MRI
Partners LLC, Madison Capital Management, LLC, Haberhill LLC, Bryan E. Gordon,
Ronald M. Dickerman and Douglas H. S. Greene, as co-bidders. The Schedule TO
with respect to this offer was filed at the Securities and Exchange Commission
on February 19, 2002
The General Partner is required to inform you of its position, if
any, with respect to this offer. In that regard, the General Partner is making
no recommendation whether limited partners should accept or reject the offer and
is remaining neutral with respect to the offer.
Although the General Partner is not making a recommendation, we
believe that limited partners should carefully consider the following in making
their own decision about whether to accept or reject the offer. As previously
disclosed to the limited partners, consistent with the terms of the Partnership
Agreement and the original investment objectives contemplated at the formation
of the Partnership, the General Partner is currently attempting to sell the
Marriott Residence Inns owned by the Partnership ("Inns") or, in the
alternative, find a buyer for the Units. In this regard, the General Partner
engaged Merrill Lynch & Co. as its financial advisor in April 2001 to solicit
bids from interested parties. As part of that process, Merrill Lynch prepared a
list of over 20 parties that Merrill Lynch believed might have an interest in
acquiring either the Partnership's Inns or the Units and contacted those
parties. Several of the parties contacted requested additional information,
conducted preliminary due diligence of the Partnership and submitted acquisition
proposals to the Partnership. As a result of that process, and as previously
disclosed, the Partnership had begun exclusive discussions with one potential
acquirer.
Shortly after the events of September 11, 2001, these discussions
were suspended to allow the parties to determine the effect on the business and
operations of the Partnership of the terrorist attacks of September 11, 2001, as
well as the current economic conditions generally. In this regard, you should be
aware that the Partnership's unaudited financial results for the fourth quarter
of fiscal 2001 indicate a decrease in revenue per available room and operating
profit of 16.0% and 10.3%, respectively, from the fourth quarter of fiscal 2000.
In addition, the Inns experienced significantly weaker than expected operating
results in January 2002. The General Partner understands that the potential
acquirer is continuing to evaluate the possibility of a transaction with the
Partnership, taking into account the current operating results of the Inns and
the general economic environment. Accordingly, there can be no assurance that a
transaction will occur or, if it were to occur, of the timing or ultimate value
of any such transaction. In addition, if a transaction were to occur, it would
require approval of the limited partners as well as the consent of the
Partnership's lenders.
Although the General Partner is not making a recommendation at this
time, the General Partner believes that limited partners should consider the
following in making their own decision about whether to accept or reject the
offer:
. Over the past several years, the General Partner has retained cash in the
Partnership in anticipation of financing required capital improvements to
the Inns. The Partnership's unaudited financial results for the fourth
quarter of fiscal 2001 indicate that the Partnership's cash balance as of
December 28, 2001 was approximately $25.1 million (approximately $359 per
Unit).
. In light of the increased competition in the extended-stay hotel market,
the manager of the Inns has proposed additional improvements to the Inns
totaling approximately $59 million over the next five years that are
intended to enhance their overall value and competitiveness. These
improvements include total suite refurbishments at a majority of the Inns
as part of the Partnership's ongoing routine capital replacement.
. The General Partner has reviewed the manager's proposed Inn renovations and
improvements with respect to fiscal 2002 and has agreed to undertake
certain of these capital improvements. The improvements that the General
Partner has agreed to undertake involve Inns that were built between 1985
and 1989 and that have not been renovated in four to nine years. The
General Partner does not believe that cash flows from the operations of the
Inns will be sufficient to fund these improvements. As a result, the
General Partner expects to fund these improvements with approximately $9.7
million (approximately $138 per Unit) of the Partnership's existing cash
reserves. Actual funding of these improvements is not expected to occur
until the end of this fiscal year. The General Partner will continue to
monitor the capital expenditure program with a view towards maximizing
limited partner value.
. The manager of the Inns also has proposed additional improvements to the
Inns that are intended to be implemented in fiscal years subsequent to
2002. The General Partner will review and assess these additional proposed
improvements annually at the end of each fiscal year.
. The General Partner does not believe that cash from Inn operations and the
Partnership's remaining cash reserves will be sufficient to fund the
Partnership's required debt service payments and all of the proposed
additional capital expenditures requested by the manager of the Inns. As a
result, at the present time, it appears unlikely that cash distributions
will be possible for the next several years.
. You will have to make the determination as to whether to wait for a
possible transaction resulting from Merrill Lynch's solicitation efforts or
to sell your Units now at the tender offer price. If you are 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 will be available now or in the future. In this
regard, you should be aware that, based upon the Partnership's current
results of operations, its debt-service obligations, its capital-
expenditure requirements for the next several years and the purchase price
range discussed with the potential acquirer prior to September 11, 2001,
the General Partner does not believe that, at the current time, the
aggregate consideration, including any potential cash distribution made in
connection with any such transaction, that a unit holder would receive in
any acquisition transaction would significantly exceed the tender offer
price.
. Although the General Partner continues to pursue a sale of the Partnership,
there can be no assurance that a tranasction will occur or, if it were to
occur, of the timing or ultimate value of any such transaction. If the
General Partner is unable to find an acquirer for the Partnership, or finds
the consideration offered by the acquirer to be below an acceptable level,
the General Partner will terminate the sale process and continue to conduct
the business and affairs of the Partnership. If the Partnership continues
to operate, the General Partner will continue to pursue all options at its
disposal to maximize the value of the Partnership to the limited partners.
-2-
Enclosed with this letter is a copy of our
Solicitation/Recommendation Statement on Schedule 14D-9 that has been filed with
the Securities and Exchange Commission. We urge you to read the enclosed
material carefully.
If you have any questions, please call Host Marriott Investor
Relations at 301-380-2070.
Very truly yours,
RIBM Two LLC
General Partner
/s/ Robert E. Parsons, Jr.
---------------------------
Robert E. Parsons, Jr.
President and Manager
Enclosure
-3-