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EXHIBIT
[CAPTEC LETTERHEAD]
CAPTEC FRANCHISE CAPITAL PARTNERS L.P. II
PLAN OF LIQUIDATION
November 18, 1996
Dear Limited Partner:
In our Second Quarter Report we advised you that the Managing General Partner
intended to propose a sale of all the Partnership's assets to an affiliate of
the General Partners in order to respond to the default of the tenant of the
Kenny Rogers Roasters property in Tampa, Florida. Subsequently, the Managing
General Partner became aware of a potential problem with the Taco Cabana
property in Las Vegas, Nevada. On September 5, 1996, the Partnership and the
Tenant/Guarantor of the Taco Cabana property entered into an agreement whereby
the Partnership took possession of the Taco Cabana property and the
Tenant/Guarantor paid $325,000 to the Partnership in settlement of all
obligations.
The Managing General Partner believes that eventually the properties can be
re-leased on reasonable terms and is continuing its efforts to find new tenants
for these buildings, but there is no assurance that it will be successful in
the near future, and if new tenants are obtained, there is no assurance that
the economic terms of those leases will compare favorable with the defaulted
leases. If the Managing General Partner is unable to replace the lost
revenues, the next quarterly distribution, payable January 15, 1997, is
estimated at only $4,000 ($1.03 per Unit), as compared with approximately
$60,000 ($15.46 per Unit) which would have been available if the leases were
current.
In order to protect the Limited Partners against this current loss of yield and
the uncertainty of the remarketing process, the Managing General Partner is
proposing the Plan of Liquidation described in this letter.
Under the Plan of Liquidation, the Partnership will sell all of its assets,
including the value of the settlement noted above, to Captec Net Lease Realty,
Inc., an affiliate of the General Partners, for the sum of $2,760,000. The
Partnership will then pay its liabilities and distribute the remaining funds in
accordance with the Partnership Agreement. It is estimated that approximately
$1,975,000 ($508.89 per Unit) will be available for distribution to the Limited
Partners. This is in addition to the distributions received to date of over
$150 per Unit. The original offering price per Unit was $500. The Managing
General Partner believes that the sale to Captec Net Lease Realty, Inc., is
more beneficial to the Limited Partners than a sale on the open market, since
it is unlikely that a sale of all the Partnership's assets can be effected at
an attractive price within the next ninety days.
The purchase price was determined by valuing the two Properties in excess of
recent MAI appraisals. If the Managing General Partner was successful in
releasing those Properties at attractive rentals, it is possible that the
values would be higher; however, although discussions
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with prospective tenants are ongoing, the Managing General Partner is unable to
predict when and upon what terms the buildings might be leased. The equipment
packages were valued by discounting the stream of rental payments and the
residual values provided for in the leases at a discount rate equal to the rate
used in determining the rental under the leases, in order to determine the net
present value of the income stream. The Managing General Partner believes that
the value so determined is not less than would be obtained from an appraisal of
the equipment and the leases. Taking all the foregoing factors into account,
the Managing General Partner believes that the sale price is fair and that the
sale is in the best interest of the limited partners. Enclosed is a schedule
setting forth the calculation of the purchase price and the determination of
the estimated distributable proceeds.
The Partnership's Agreement of Limited Partnership, as currently drafted,
prohibits a sale to an affiliate of the General Partners. In order to permit
the sale it is necessary that a majority in interest of the Limited Partners
vote both to amend the Agreement of Limited Partnership and to approve the
sale. The proposed amendment is enclosed.
Enclosed is a ballot for you to sign and return voting for, or against the Plan
of Liquidation and the proposed amendment to the Agreement of Limited
Partnership. The Managing General Partner recommends a vote in favor of the
Plan of Liquidation and proposed amendment. The Managing General Partner
requires a written response from you by December 23, 1996. Your failure to
return your marked ballot so that it is received by that date, will constitute
a vote in favor of the Plan of Liquidation and the proposed amendment, provided
that at least a majority in interest of the Limited Partners respond. If the
Plan of Liquidation is approved by the Limited Partners, it is anticipated that
the sale will take place in December. Final distributions would be made
approximately 30 days thereafter. However, if we receive a positive majority
vote by December 1, 1996, proceeds will be distributed by the end of the year.
Please mark your ballot as soon as possible and return it in the enclosed
postage paid envelope. To expedite the voting process, you may fax the ballot
to the Partnership at (313) 994-1376 and place the original in the mail.
If you have any questions, please call Maureen Giammara toll-free at (888)
422-7832.
Sincerely,
Captec Franchise Capital Corporation II
Managing General Partner of
Captec Franchise Capital Partners L.P. II
/s/ Patrick L. Beach
Patrick L. Beach
President
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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. II
SCHEDULE DETAILING PORTFOLIO PURCHASE
CALCULATION OF PURCHASE PRICE
Original Capitalized Cost to Partnership Current Values
--------------------------------------------- ------------------------------
Acquisition 9/30/96 Net APPRAISED
Cost Fee Total Book Value VALUE
------ ------------ ----- ----------- --------
Real Estate Leases
Lease #00001 1,350,000.00 67,500.00 1,417,500.00 1,366,969.00 1,100,000.00
Lease #00002 502,202.00 25,100.10 527,302.10 512,640.00 420,590.00
------------ --------- ------------ ------------- ------------
Subtotal - Real Estate 1,852,202.00 92,600.10 1,944,802.10 1,879,609.00 1,520,590.00
------------ --------- ------------ ------------- ------------
Equipment Leases
Lease #05707 142,037.50 7,101.88 149,139.38 107,793.00 n/a
Lease #05710 103,968.31 5,198.42 109,166.73 83,498.00 n/a
Lease #05780 227,062.86 11,353.14 238,416.00 180,689.00 n/a
------------ --------- ------------ -------------
Subtotal - Equipment 473,068.67 23,653.44 496,722.11 371,980.00
------------ --------- ------------ -------------
Grand Totals 2,325,270.67 116,253.54 2,441,524.21 2,251,589.00
less: TCLV settlement acquired by Purchaser
Net Cost to Purchaser
Sale
------------
Purchase
Price
------------
Real Estate Leases
Lease #00001 1,755,000.00
Lease #00002 580,000.00
------------
Subtotal - Real Estate 2,335,000.00
------------
Equipment Leases
Lease #05707 132,000.00
Lease #05710 88,000.00
Lease #05780 205,000.00
------------
Subtotal - Equipment 425,000.00
------------
Grand Totals 2,760,000.00
less: TCLV settlement acquired by Purchaser 325,000.00
------------
Net Cost to Purchaser 2,435,000.00
ESTIMATED DISTRIBUTABLE PROCEEDS
Gross Sale Proceeds to the Partnership 2,760,000.00
Loan Payoff (assuming December 1, 1996 note principal balance) (742,425.00)
Loan Prepayment Premium (7,424.00)
------------
Net Sale Proceeds to the Partnership 2,010,151.00
Undistributed cash from operations 8,549.00
Reversal of rents receivable on defaulted leases (33,700.00)
Contingency (10,000.00)
------------
Estimated Distributable Proceeds 1,975,000.00
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FIRST AMENDMENT
TO
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
CAPTEC FRANCHISE CAPITAL PARTNERS L.P. II
THIS AMENDMENT is made as of ____________________, by the Limited Partners of
Captec Franchise Capital Partners L.P. II.
PRELIMINARY STATEMENT
Captec Franchise Capital Partners L.P. II (the "Partnership") is a limited
partnership formed and presently existing under Delaware law. The rights and
obligations of the partners of the Partnership are governed by the Captec
Franchise Capital Partners L.P. II Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement").
The Limited Partners, by Majority Vote, have voted (1) to approve the Plan of
Liquidation dated November 18, 1996, submitted to the Limited Partners by the
Managing General Partner (the "Plan of Liquidation"), and (2) to amend the
Partnership Agreement to permit the sale of the assets of the Partnership to an
affiliate of the General Partner as provided in the Plan of Liquidation.
Attached to this Amendment are the Ballots of the Limited Partners indicating
their votes in favor of or against the Plan of Liquidation and the Amendment.
In accordance with the Plan of Liquidation and Section 15.3 of the Partnership
Agreement, those Limited Partners whose Ballots are not attached to this
Amendment are considered to have voted in favor of the Plan of Liquidation, as
provided in Section 15.3 of the Partnership Agreement.
Capitalized terms which are not defined in this Amendment and which are defined
in the Partnership Agreement shall have the same meaning as in the Partnership
Agreement.
AMENDMENT
IN CONSIDERATION OF THE FOREGOING, THE PARTNERSHIP AGREEMENT IS HEREBY AMENDED
AS FOLLOWS:
ANY PROVISION OF THE PARTNERSHIP AGREEMENT TO THE CONTRARY NOTWITHSTANDING, THE
GENERAL PARTNERS MAY CAUSE THE PARTNERSHIP TO PURCHASE OR LEASE PROPERTY FROM
OR SELL OR LEASE PROPERTY TO THE GENERAL PARTNERS OR ANY OF THEIR AFFILIATES,
PROVIDED THAT SUCH TRANSACTION IS APPROVED BY THE LIMITED PARTNERS HERETO, AS
OF THE DATE FIRST WRITTEN ABOVE.
CAPTEC FRANCHISE CAPITAL CORPORATION II,
General Partner
By: ______________________________________
Patrick L. Beach
President and Chief Executive Officer
By: _______________________________________
PATRICK L. BEACH, General Partner
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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. II
Limited Partner Ballot
I am a Limited Partner of Captec Franchise Capital Partners L.P. II, a Delaware
limited partnership (the "Partnership"). I have reviewed the Plan of
Liquidation set forth in the General Partner's letter dated November 18, 1996
(the "Plan of Liquidation"), and the proposed First Amendment to Amended and
Restated Agreement of Limited Partnership of the Partnership which accompanied
the Plan of Liquidation (the "Amendment"). I hereby vote:
____ In favor of the Plan of Liquidation and the Amendment.
____ Against the Plan of Liquidation and the Amendment.
____________________________________
Signature
____________________________________
Name (Please Print)
____________________________________
Address
____________________________________
City, State and Zip Code
PLEASE RETURN AS SOON AS POSSIBLE BUT NO LATER THAN DECEMBER 23, 1996. YOU MAY
FAX THE BALLOT TO MAUREEN GIAMMARA (313) 994-1376 AND SENT THE ORIGINAL IN THE
MAIL.
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