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EXHIBIT 99(a)(1)
MCNEIL PACIFIC INVESTORS FUND 1972
October 4, 1996
Dear Unitholder:
Once again, Carl C. Icahn and his affiliate, High River Limited Partnership,
have made an offer to purchase your units of McNeil Pacific Investors Fund 1972
(the "Partnership").
WHY DOES A SOPHISTICATED INVESTOR LIKE MR. ICAHN STILL WANT TO PURCHASE YOUR
UNITS -- THIS YEAR FOR $224.50? THE ANSWER IS RELATIVELY SIMPLE: HE WANTS TO
PROFIT SIGNIFICANTLY FROM HIS OWNERSHIP OF YOUR UNITS. AS DISCUSSED BELOW, AN
INDEPENDENT ESTIMATE OF THE LIQUIDATION VALUE OF YOUR UNITS IS BETWEEN $233 AND
$236 PER UNIT. FURTHER, AS DISCUSSED BELOW, THE PARTNERSHIP HAS BEGUN
MARKETING FOR SALE ITS SOLE ASSET AND ANTICIPATES COMPLETING SUCH SALE BY
DECEMBER 1997 WHICH WILL BE FOLLOWED BY A LIQUIDATING DISTRIBUTION TO ALL
UNITHOLDERS.
As you may remember, last year Mr. Icahn and his affiliates commenced
unsolicited tender offers for up to 45% of the outstanding units of limited
partnership interests in ten McNeil Real Estate funds, including the
Partnership. In response, after fully considering his offer for your Units in
accordance with our fiduciary duties, we informed you that his offer was not in
the best interests of either the Partnership or Unitholders and we strongly
recommended that it be rejected because the price did not adequately reflect
the inherent values of your Units. YOU AND THE HOLDERS OF 94.9% OF THE
PARTNERSHIP'S UNITS AGREED THAT MR. ICAHN'S OFFER WAS INADEQUATE, REJECTED HIS
OFFER AND DID NOT TENDER YOUR UNITS.
This year, the Partnership considered a variety of factors, including, but not
limited to, the following in evaluating Mr. Icahn's offer:
PLANS TO LIQUIDATE THE PARTNERSHIP. In April 1996, the Partnership announced
that it had determined to evaluate market and other economic conditions to
establish the optimum time to commence an orderly liquidation of the
Partnership's sole asset in accordance with the terms of its partnership
agreement. THE PARTNERSHIP HAS BEGUN MARKETING ITS SOLE ASSET. Although there
can be no assurance as to the timing of any liquidation due to real estate
market conditions, the general difficulty of disposing of real estate, and
other general economic factors, it is anticipated that such liquidation would
result in the dissolution of the Partnership followed by a liquidating
distribution to all Unitholders by December 1997.
INDEPENDENT OPINION OF LIQUIDATION VALUE. The report of Crosson Dannis, Inc.
("Crosson Dannis"), the Partnership's financial advisor, dated October 3, 1996,
which estimates the present value (the "Present Estimated Liquidation Value")
of a Unit based on the assumption that the Partnership commences a theoretical
orderly liquidation in January 1997 and completes that liquidation by December
1997 (the "Assumed Liquidation"). THE PRESENT ESTIMATED LIQUIDATION VALUE FOR
THE PARTNERSHIP AS OF OCTOBER 3, 1996 IS BETWEEN $233 AND $236 PER UNIT. The
Present Estimated Liquidation Value represents Crosson Dannis' estimate of the
present value of the gross cash distributions, approximately $265.00, that a
Unitholder would receive between now and the completion of the Assumed
Liquidation. It should be noted that the Present Estimated Liquidation Value
does not represent an estimate by Crosson Dannis of the fair market value of a
Unit.
LIQUIDATION AND DISSOLUTION OF MCNEIL REAL ESTATE FUND V, LTD. You should be
aware that last August, Mr. Icahn offered $400 per unit for McNeil Real Estate
Fund V, Ltd. which was significantly below our estimate of the pro forma
liquidation value of $667.30 per unit as of June 30, 1995. In response,
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we recommended that unitholders reject his offer because it did not reflect the
inherent value of the units and was not in the best interests of either Fund V
or its unitholders. Holders of approximately 97.5% of Fund V's units agreed in
the fall of 1995 that Mr. Icahn's offer was inadequate, rejected his offer and
did not tender their units. We are pleased to inform you that, since then,
Fund V distributed $83.40 cash to unitholders and, on September 10, 1996,
holders of more than 75% of Fund V's units which voted approved the liquidation
and dissolution of Fund V, pursuant to which it is anticipated that all
unitholders will receive a cash distribution of approximately $643.07 per Unit,
subject to reserves and adjustment, which closely approximates our 1995
estimate of pro forma liquidation value. TAKEN TOGETHER WITH THE CASH
DISTRIBUTIONS TO UNITHOLDERS, SUCH AMOUNT IS APPROXIMATELY $326.47 PER UNIT
(82%) HIGHER THAN MR. ICAHN'S 1995 OFFER PRICE FOR UNITS OF FUND V. Although
there can be no assurance that a similar result will occur with the Partnership
or that any particular distribution per unit will be obtained, THE LIQUIDATION
AND DISSOLUTION OF FUND V AND THE REPORT OF CROSSON DANNIS SHOULD BE CONSIDERED
BY UNITHOLDERS WHEN MAKING A DETERMINATION WHETHER TO REJECT OR ACCEPT THE
OFFER.
IN LIGHT OF ALL RELEVANT CIRCUMSTANCES, THE PARTNERSHIP HAS DETERMINED NOT TO
MAKE A RECOMMENDATION AS TO WHETHER UNITHOLDERS SHOULD REJECT OR ACCEPT MR.
ICAHN'S OFFER. Attached is the Partnership's response to Mr. Icahn's offer
which has been filed with the Securities and Exchange Commission and is being
mailed to all Unitholders. While we suggest you read the attached Schedule
14D-9 (the "Response") in its entirety, you should be aware that Item 4 of the
Response sets forth the recommendation of the Partnership with respect to the
Mr. Icahn's offer and the background and reasons for the position taken by the
Partnership.
We will, of course, continue to keep you informed of significant events
concerning the Partnership. In the event you have any questions concerning
this letter, please contact The Herman Group, Inc. which has been retained by
the Partnership to assist in our response to your inquiries, toll free at (800)
658-2007.
Very truly yours,
Donald K. Reed
McNeil Partners, L.P.
General Partner
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