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Exhibit 9(a)
INCOME GROWTH MANAGEMENT, INC.
1300 SORRENTO VALLEY ROAD, SUITE 10B
SAN DIEGO, CA 92121
March 9, 1999
Dear Limited Partner:
You may have received materials describing the offer (the "Offer") by Everest
Investors 10, LLC, Everest Properties II, LLC and Blackacre Everest, LLC
(collectively, the "Purchasers") to purchase up to 3,240 class A units ("Class A
Units") and 7,530 original units of limited partnership interest ("Original
Units") of Income Growth Partners, Ltd. X (the "Partnership") at a price of $500
per Class A Unit and $5 per Original Unit.
AFTER CAREFULLY REVIEWING THE OFFER, THE GENERAL PARTNERS BELIEVE THAT THE PRICE
PER UNIT OFFERED TO YOU BY THE PURCHASERS IN THE OFFER MAY NOT FAIRLY COMPENSATE
YOU FOR YOUR INTEREST IN THE PARTNERSHIP AND, THEREFORE, RECOMMEND THAT YOU DO
NOT TENDER YOUR UNITS PURSUANT TO THE OFFER.
We believe that the Purchasers' underlying objective is to purchase your units
at a substantial discount. In determining to recommend that Limited Partners do
not tender their units in the Offer, the General Partners considered a number of
factors, including, without limitation, the following:
(1) The $5 per Original Unit price offered by the Purchasers is
approximately 1.5% of the General Partner's estimate of net asset value of
$328 per Original Unit. This estimated net asset value was calculated based
on a recent restricted appraisal, which valued the Mission Park Apartments
("Mission Park") at $18,500,000 and the Shadowridge Meadows Apartments
("Shadowridge") at $14,600,000, excluding closing costs and liquidation and
related expenses. The restricted appraisal updated the appraisal of
Shadowridge made in August, 1997 and updated the appraisal of Mission Park
made in March, 1994. The restricted appraisal dated March 1, 1999 was
completed at the request of the General Partner in response to the tender
offer and to help establish Class A Unit and Original Unit asset values for
various trustees. The actual realizable value per Class A Unit and Original
Unit upon a sale of the Partnership properties and liquidation of the
Partnership would depend on many other factors, including the actual selling
price of the property and Partnership selling and liquidation expenses, and
there can be no assurance these estimated net asset values per unit will be
realized.
(2) The $500 per Class A Unit Offered by the Purchasers is approximately 63%
of General Partner's estimate of the net asset value of $796 per Class A
Unit based on the restricted appraisal discussed above. At liquidation, the
Amended and Restated Agreement of Limited Partnership provides that the
Class A Unitholders will be entitled to, after the payment of creditors and
providing for reasonable reserves, any part of the accrued but unpaid
preferred annual return of 12%, return of the original $250 per Class A Unit
including any prior distributions, and an additional $500 per Class A Unit
bonus. The Partnership in 1998 distributed approximately $311,950 to all
Class A Unitholder which represents a 15.4% cash on cash return. The General
Partner believes these distributions should continue to increase as long as
Partnership revenues continue to increase as they had for the year ended
December 31, 1998, and expenses do not increase. There can, however, be no
assurance future distributions will increase or that they will not decrease
or be eliminated.
(3) The General Partner believes that the tender offer does not adequately
reflect the substantial increase in operating income which the Partnership
properties have achieved since successfully emerging from Chapter 11
Reorganization in 1995. In the 12 months ending December 31, 1998, operating
income for the Partnership increased from approximately $432,146 to
approximately $823,116, based on the unaudited financial
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statements of the Partnership. Though there can be no assurances that
Partnership revenues will continue to increase, the General Partner
currently believes the current lack of construction of new apartment
communities in Northern San Diego County, where the properties are located,
and the continuing inflow of new residents into San Diego County indicates
that the recent trend of increase in rental revenues should continue for a
while.
(4) Recent sales of Partnership Original Units between existing Limited
Partners have been at $20 per unit.
(5) The General Partner's general business plan for the next 36 months is to
continue to increase rental revenues so that the Partnership can be in a
position to refinance the Mission Park Apartments in approximately December
of 2001 and retire the Class A Units. Assuming a successful refinancing and
retirement of the Class A Units, on or about December 2001, the General
Partner intends to have the Partnership begin distributing the Partnership's
available cash flow to the Original Unitholders while the Partnership is
preparing the properties for sale. There, however, can be no assurances as
to the Partnership's ability to increase revenue, to obtain financing for
the Partnership's properties at rates and terms which will allow the
retirement of the Class A Unitholders and/or which would provide for
distribution of cash flow, if any, to the Original Unitholders.
(6) While the Partnership's Amended and Restated Limited Partnership
Agreement allows for a $200 transfer fee, the General Partner has imposed a
$40 fee in the past two fiscal years, and a $40 per transaction fee will
apply to any transfers of Units. Therefore, net proceeds to each Limited
Partner will be reduced by at least $40.
(7) The tender of Units pursuant to the Offer may constitute a taxable event
to the participating Limited Partner. See Item 8--Certain Federal Income Tax
Considerations.
IN SUMMARY, WE DO NOT BELIEVE THAT THE OFFER IS IN YOUR BEST INTEREST. WE
RECOMMEND THAT YOU DO NOT TENDER ANY UNITS AND DO NOT SIGN THE FORMS SENT TO
YOU BY THE PURCHASERS.
In arriving at their recommendation, the General Partners of the Partnership
gave careful consideration to the factors described in the attached Schedule
14D-9, which is being filed today with the Securities and Exchange Commission.
This document contains important information relating to the Offer, and we urge
you to read it carefully.
We will, of course, keep you informed of significant events concerning the
Partnership. If you have any questions, please call Income Growth Management,
Inc. at (619) 457-2750.
Very truly yours,
Income Growth Management, Inc.
General Partner
David Maurer
President
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