AIMCO PROPERTIES, L.P.
c/o River Oaks Partnership Services, Inc.
P.O. Box 2065 S. Hackensack, N.J. 07606-2065
(888) 349-2005
October 31, 2002
Dear Limited Partner:
You should have already received the tender offer documents, including
the Offer to Purchase dated September 16, 2002, we recently mailed you offering
to acquire your units of limited partnership interest in REAL ESTATE ASSOCIATES
LIMITED ("REAL"). The offer was originally scheduled to expire on October 11,
2002, but was extended to expire on October 31, 2002. WE HAVE EXTENDED THE
TENDER OFFER UNTIL MIDNIGHT, NEW YORK TIME, ON NOVEMBER 11, 2002. As of October
29, 2002, 2,325 units, or 14.1%, had been tendered to us in response to this
offer.
Bond Purchase, LLC ("BPLLC"), a third party not affiliated with your
partnership or its general partner, has sent a letter to Mr. Charles Boxenbaum,
addressed to the general partner of your partnership, and to certain executive
officers of AIMCO Properties, L.P. The letter noted, among other things, BPLLC's
belief that the tender offer should disclose the cash balances of the "Local
Partnerships" (as we refer to them in our Offer to Purchase). We note that the
cash balances of the Local Partnerships are not available for distribution to
your partnership without the consent of the general partners of the Local
Partnerships. While our affiliates are general partners of three of the Local
Partnerships, we do not have sufficient control to cause the distribution of
cash from all the Local Partnerships. The obligations of the general partner of
any Local Partnership to distribute cash will be governed by the terms of the
partnership agreement of the Local Partnership, and the regulatory requirements
and other agreements, including the mortgages, of that Local Partnership.
BPLLC also recommended that we disclose that the payables of REAL might
be worth less than face value, and that AIMCO Properties, L.P. and the general
partner of your partnership are "chilling" the market for limited partnership
units of your partnership by making outside purchasers accept an assignment of
limited partnership units, rather than admitting them as new limited partners.
We are of the opinion that the disclosure suggested by BPLLC would not be
helpful, and is not warranted.
BPLLC also indicated that it had an interest in making an offer to
acquire units of REAL for $101.00 per unit, if the general partner would agree
to admit new limited partners to the partnership, rather than requiring
purchasers of limited partnership units to accept an assignment of the economic
interest of those units. Since 1998, your partnership has had a policy of not
admitting new limited partners. Your general partner is not willing to waive
this policy for any purchaser of limited partnership units, including AIMCO
Properties, L.P., and we will accept an assignment of your interests in our
tender offer, as discussed in the offer to purchase and the related letter of
transmittal.
BPLLC also indicated that it would "buy all of the partnership
properties for cash to the existing debt" for $800,000, and that the partnership
could then be liquidated "at a much higher valuation." As we stated in our Offer
to Purchase, your general partner has concluded that (i) at the current time, a
sale of the Property owned by the Local Partnerships would not be advantageous
given market conditions, the condition of the Property and tax considerations,
and (ii) it would be neither feasible nor in the limited partners' best interest
to force the liquidation of the partnership. We refer you to our Offer to
Purchase for our discussion of these matters.
BPLLC has written other letters to the general partner with respect to
offers for units of other limited partnerships. There can be no assurance that
BPLLC has the necessary funds to complete any or all of the offers it has
proposed. We call your attention to the following additional facts.
Mr. David L. Johnson is a member of BPLLC. In June 2001, a complaint
was filed alleging that Mr. Johnson and other entities with which he is
affiliated, in concert with BPLLC, were improperly withholding certain funds
owed to affiliates of your general partner (which was formerly known as
"NAPICO"), who were limited
partners of certain limited partnerships affiliated with Mr. Johnson and his
related entities. On March 22, 2002, a jury for the United States District Court
for the Central District of California returned a unanimous verdict against
BPLLC, Mr. Johnson and certain affiliated entities, finding:
o That BPLLC Conspired to Commit Fraud. The jury found that
BPLLC and two of its co-defendants agreed "to defraud the
NAPICO limited partners."
o That the BPLLC Entities Breached Fiduciary Duties and
Committed Fraud. The jury also unanimously found against two
entities controlled by Mr. Johnson (the "Johnson Entities"),
each of which serves as the general partner of a limited
partnership in which an affiliate of NAPICO is a limited
partner.
o That each of the Johnson Entities Breached Its Fiduciary
Duties and Acted with Oppression, Malice or Fraud. The jury
also found that the Johnson Entities each:
o materially "breach[ed] its fiduciary duty to the
NAPICO limited partners" and "acted with oppression,
malice or fraud in breaching its fiduciary duty to
the NAPICO limited partners;"
o "breach[ed] the . . . Limited Partnership Agreement"
of the limited partnerships that the Johnson Entities
served as general partner;
o breached a related contract;
o "commit[ted] fraud as to the NAPICO limited partners"
and "acted with oppression, malice or fraud in
committing fraud as to the NAPICO limited partners;"
and
o "agree[d] amongst themselves to defraud the NAPICO
limited partners."
o That Mr. Johnson Breached Fiduciary Duties and Committed
Fraud. The jury also unanimously found that Mr. Johnson:
o "breach[ed] his fiduciary duty to the NAPICO limited
partners" and "acted with oppression, malice or fraud
in breaching his fiduciary duty to the NAPICO limited
partners;" and
o "commit[ted] fraud as to the NAPICO limited partners"
and "acted with oppression, malice or fraud in
committing fraud."
As a result of these unanimous findings, the Court ordered BPLLC, Mr.
Johnson and the affiliated entities to pay the affiliates of NAPICO
approximately $770,000 in compensatory damages and approximately $2,855,000 in
punitive damages. In addition, BPLLC was ordered to repay approximately $38,528
to the limited partnerships.
We have extended the offer period to provide you with an opportunity to
tender your shares, or to consider our offer further. Despite Mr. Johnson's
letter, there can be no assurance that if BPLLC does make an offer that it will
be at a price higher than what we are offering, that it will be for more than
4.9% of the outstanding units, that all tenders will be accepted on a pro rata
basis, or that BPLLC has the financial resources to complete the offer.
Limited partners who have previously tendered their units in response
to our offer are free to withdraw their units at any time in accordance with the
procedures set out in our Offer to Purchase. But we would like to remind you
that our offer provides you with a near-term opportunity to gain liquidity for
your investment and to eliminate the cost and record keeping associated with
limited partnership tax reporting. If we purchase your tendered units, you will
receive cash, but you may recognize a gain or loss for federal income tax
purposes. However, you will not receive a K-1 in respect of your partnership
income or loss after the tax year in which your units are purchased. If you
retain your units, you will continue to be a limited partner. However, you may
not be able to liquidate your investment until the partnership terminates.
If you have not already done so, please remember that to accept our
offer the enclosed Acknowledgement and Agreement must be received before
midnight, New York time, on November 11, 2002.
If you have any questions or need assistance in completing the enclosed
Acknowledgement and Agreement, or if you want additional copies of any of the
tender offer documents, please contact our information agent, River Oaks
Partnership Services, Inc., toll free, at (888) 349-2005.
AIMCO PROPERTIES, L.P.
THE INFORMATION AGENT FOR THE OFFER IS:
RIVER OAKS PARTNERSHIP SERVICES, INC.
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By Mail: By Overnight Courier: By Hand:
P.O. Box 2065 111 Commerce Road 111 Commerce Road
S. Hackensack, NJ 07606-2065 Carlstadt, NJ 07072 Carlstadt, NJ 07072
Attn: Reorganization Dept. Attn: Reorganization Dept.
By Facsimile: For information please call:
(201) 460-2889 TOLL FREE (888) 349-2005
Or
(201) 896-1900
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