SCHEDULE 14C
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[ ] Definitive Information Statement
ANGELES PARTNERS IX
A CALIFORNIA LIMITED PARTNERSHIP
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required
[X] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11
(1) Title of each class of securities to which transaction applies: Limited
Partnership Units
(2) Aggregate number of securities to which transaction applies: 20,000
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined): $9,750,000
(4) Proposed maximum aggregate value of transaction: $9,750,000
(5) Total fee paid: $788.78
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
INFORMATION STATEMENT
FOR
ANGELES PARTNERS IX
A CALIFORNIA LIMITED PARTNERSHIP
c/o THE ALTMAN GROUP, INC.
1275 Valley Brook Avenue
Lyndhurst, New Jersey 07071
Dear Limited Partner:
We are sending you this information statement to inform you that Angeles Realty
Corporation, a California corporation, the general partner (the "General
Partner") of Angeles Partners IX, a California limited partnership (the
"Partnership"), has agreed to sell the Partnership's apartment complex known as
Village Green, in Montgomery, Alabama (the "Property") to Village Green, L.L.C.
(the "Buyer"), an unaffiliated third party, for $9,750,000 cash or the
assumption by the Buyer of the approximately $6,464,700 (estimated balance as of
August 1, 2003) outstanding principal balance of the loan encumbering the
Property plus the payment by the Buyer of an amount of cash equal to a total
purchase price of $9,750,000. As more fully described below, the General Partner
and holders of greater than 50% of the limited partnership units intend to
consent to the sale. After the sale closes, we estimate that there will be
approximately $115 in pre-tax distributions per limited partnership unit to
distribute to the limited partners. This amount is an estimate, and as explained
below, it is based on a number of assumptions. We expect the distribution will
occur one to three months after the sale closes. This information statement
contains information about the sale and the reason that the General Partner has
decided that the sale is in the best interests of the limited partners. The
General Partner has conflicts of interest in the sale as described in greater
detail herein.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY.
The date of this information statement is August 27, 2003.
This information statement is being mailed on or about September 8, 2003 to all
holders at the close of business on September 5, 2003 of the limited partnership
units of the Partnership.
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SUMMARY OF THE TRANSACTION
The following is a summary of the transaction:
The Buyer or an affiliate thereof will acquire the Property for $9,750,000 cash
or the assumption by the Buyer of the approximately $6,464,700 outstanding
principal balance of the loan encumbering the Property plus the payment by the
Buyer of an amount of cash equal to a total purchase price of $9,750,000
pursuant to a purchase and sale agreement dated as of May 15, 2003, as amended
on May 30, 2003 and amended and reinstated on August 6, 2003, between the Buyer
and the Partnership (collectively, the "Agreement"). The completion of the sale
is scheduled to occur approximately September 30, 2003 (subject to extension
pursuant to the Agreement to October 30, 2003).
Upon the completion of the sale, the Partnership will continue to hold and
operate its remaining interest in the apartment complex known as Forest River
Apartments, located in Gadsden, Alabama. The Forest River Apartments are,
however, under contract for sale to a third party.
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REASONS FOR THE SALE
The General Partner has determined that the sale is in the best interest of the
limited partners after considering a number of factors, including the following:
o The tax benefits of continued investment in the Property have
been substantially eliminated for most limited partners due
principally to declining depreciation deductions from the
Property.
o The Property was completed in 1972, and given its age, the
Property probably will require substantial capital
expenditures in the future for which existing reserves will
not be adequate.
o Market conditions are currently favorable for selling
properties of this type because of the availability of
favorable financing terms and the general withdrawal of
capital from the stock markets and into alternative
investments such as real estate.
o The current economic downturn may make it difficult to find a
buyer at a future date or to sell the Property at as favorable
a price.
o The Property's occupancy rate and rental rates have been
declining since 2001 due to the economic downturn or the age
of the Property.
For these reasons, the General Partner has approved the sale and the Agreement,
and, as described more fully below, it is anticipated that limited partners
holding a majority of the limited partnership units also will approve the sale
and the Agreement.
THE SALES PROCESS
In September 2002, we hired The Apartment Group, a national real estate
brokerage firm, to market the Property. They marketed the Property nationally
and regionally to prospective buyers known to be interested in the acquisition
of multifamily housing projects similar to the Property. The broker received
offers from 10 potential purchasers. We evaluated prospective purchasers and
offers in terms of price offered, feasibility of the proposed transaction,
credibility of the prospective purchaser, and ability of the prospective
purchaser to close. We chose to accept the offer described in this letter based
on these criteria.
The broker has received brokerage fees from the General Partner and its
affiliates from time to time. Neither the General Partner nor its affiliates bid
on the Property.
THE BUYER
Village Green, L.L.C., which is not affiliated with the Partnership, agreed to
acquire the Property through an arms-length negotiation. The General Partner or
its affiliates have conducted business with the Buyer or its affiliates from
time to time. Village Green, L.L.C. has an office located at 6000 Atlanta
Highway, Montgomery, AL 36117, and its phone number is (334) 279-6444.
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THE PROPERTY
The Partnership has owned and operated the Property, a 337-unit apartment
complex located in Montgomery County, Alabama, since December 31, 1980. The
Property constitutes 61% of the Partnership's outstanding assets. There is a
first mortgage loan on the Property with an unpaid balance of approximately
$6,464,700 (please note that this figure is as of August 1, 2003; an outstanding
balance of $6,519,623 was used for purposes of calculating the use of proceeds
below). The Partnership has other indebtedness of approximately $111,233. The
loan encumbering the Property either will be assumed by the Buyer at closing,
with the costs of all fees and costs of such assumption to be paid by the Buyer,
or be paid in full at closing, with the costs of all fees and costs of such
payment-in-full to be paid by Buyer. In the event the loan is assumed, the
amount of the assumed loan will be credited towards the purchase price.
APPROVAL OF THE SALE
The General Partner approved the sale and determined that it is in the best
interests of the Partnership and the limited partners.
Section 8.2(g) of the Partnership's amended and restated certificate and
agreement of limited partnership, dated February 30, 1980, permits the
Partnership to sell all or substantially all of its assets if the sale is
approved by the limited partners holding a majority of the limited partnership
units entitled to vote thereon.
As of August 31, 2003, the Partnership has approximately 662 limited partners
who collectively own 19,975 outstanding limited partnership units. Each limited
partnership unit represents approximately .005% of the outstanding limited
partnership units. Affiliates of the General Partner currently own approximately
13,501 limited partnership units or 67.59% of the outstanding limited
partnership units. It is anticipated that the holders of these 67.59% of the
outstanding limited partnership units will give their written consent approving
and adopting the sale and the Agreement. The following limited partners are
expected to execute such written consent:
<Table>
<Caption>
NAME AND ADDRESS NUMBER OF LIMITED PERCENT OF
OF BENEFICIAL OWNER PARTNERSHIP UNITS CLASS
Insignia Properties L.P. 981 4.91%
55 Beattie Place, Greenville, SC 29602
Broad River Properties, L.L.C. 2,529 12.66%
55 Beattie Place, Greenville, SC 29602
AIMCO Properties, L.P.
Stanford Place 3, 4582 S. Ulster St. Parkway, Suite 1100, 8,631 43.21%
Denver, CO 80237
Cooper River Properties, L.L.C. 1,360 6.81%
55 Beattie Place, Greenville, SC 29602
TOTAL: 13,501 67.59%
</Table>
Upon the execution of such written consent by the above parties, the holders of
a majority of the limited partnership units will have approved the sale and the
Agreement, and, as a result, no vote
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of any other limited partnership unit holder will be necessary to approve the
sale and the Agreement. Accordingly, the Partnership is not soliciting any other
votes. Such written consent shall have an effective date of September 28, 2003,
which is 20 days after the mailing of this information statement.
Subject to the terms and conditions of the Agreement, we contemplate that the
sale will be consummated on approximately September 30, 2003, but no sooner than
20 days after the mailing of this information statement and following
satisfaction or waiver of the conditions contained in the Agreement. See
"Summary of Agreement."
INTEREST OF CERTAIN PERSONS IN THE SALE
The General Partner has conflicts of interest with respect to the sale. A
general partner generally is liable for all recourse debts and other liabilities
of a partnership when the partnership's assets are insufficient. A sale of the
Property reduces the General Partner's liability for existing and future
Partnership debt and liabilities.
USE OF PROCEEDS
We estimate that we will use the gross proceeds from the sale as follows
(subject, however, to such reductions in the purchase price and reallocations in
the proceeds as determined by the General Partner, in its reasonable discretion,
to address objections made by the Buyer to the condition of the Property):
<Table>
Gross purchase price $ 9,750,000
Plus: Cash and cash equivalents 149,497
Plus: Other Partnership assets 48,556
Less: Mortgage debt, including accrued interest (6,519,623)
Less: Accounts payable, accrued expenses and other liabilities (111,233)
Less: Estimated state entity and withholding taxes (405,532)
Less: Reserves for contingencies (292,500)
Less: Closing costs/sales commissions (292,500)
-----------
TOTAL $ 2,326,665
Net proceeds distributable to all partners $ 2,326,665
Percentage of proceeds allocable to limited partners 99%
-----------
Net proceeds distributable to limited partners $ 2,303,398
Total number of limited partnership units 19,975
Distributable net proceeds per limited partnership unit $ 115
</Table>
In addition, the sale of the Property may require the General Partner to escrow
part of the proceeds from the sale for some period of time if the General
Partner agrees with the Buyer to do so.
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This estimate assumes the closing occurs as of July 31, 2003 and is based on
information known to the General Partner at this time. These figures will adjust
based on the fact that closing will occur after July 31, 2003. Of course, many
factors could cause the actual use of proceeds to vary from this estimate,
including delays or unforeseen complications with the closing or contingent
liabilities of the Partnership.
FEDERAL INCOME TAX CONSEQUENCES
The tax consequences to you of a sale of the Property may be significant. The
following discussion briefly summarizes the typical material aspects of the
federal income tax consequences for the limited partners that should be
considered in connection with the sale; however, the tax consequences to you
could be materially different.
EACH LIMITED PARTNER SHOULD CONSULT AND MUST RELY UPON HIS, HER OR ITS OWN TAX
ADVISOR IN ORDER TO UNDERSTAND FULLY THE FEDERAL, STATE, LOCAL AND FOREIGN
INCOME AND ESTATE AND GIFT TAX CONSEQUENCES TO HIM, HER OR IT ARISING FROM THE
SALE.
The discussion is based on current law, which is subject to change (possibly
with retroactive effect), and does not consider state, local and foreign income
tax aspects of the sale. For purposes of this tax discussion, references to
"I.R.C. Section" are to sections of the Internal Revenue Code of 1986, as
amended. THIS DISCUSSION DOES NOT ADDRESS SPECIAL CONSIDERATIONS AND RULES
APPLICABLE TO LIMITED PARTNERS THAT ARE TAX-EXEMPT OR FOREIGN ENTITIES.
No ruling will be requested from the Internal Revenue Service on any of the tax
matters discussed herein. The federal income tax consequences to the limited
partners from the sale cannot be predicted with absolute certainty. We cannot
assure that the Internal Revenue Service will not audit or question the
treatment of any item discussed herein.
The following discussion also assumes that the Partnership is characterized as a
partnership for federal income tax purposes. If the Partnership is treated for
federal income tax purposes as an association, any cash available for
distribution after the sale would be substantially reduced and the tax
consequences would be materially different than as described below.
TAX CONSEQUENCES IF THE PROPERTY IS SOLD. The Partnership will recognize gain
from a sale of the Property to the extent that the amount the Partnership
realizes from that sale exceeds its adjusted basis in the Property. The
Partnership's amount realized from the sale includes the sum of cash it receives
from the Buyer plus the fair market value of any property it receives other than
money. If the Buyer assumes or takes the Property subject to liabilities which
encumber the Property, the face amount of those liabilities also is included in
the Partnership's amount realized as though the Buyer had made a cash payment to
the Partnership in the same amount. Selling expenses of the Partnership, such as
brokerage commissions, legal fees and title costs, reduce the Partnership's
amount realized. Any gain recognized by the Partnership will be allocated to the
partners, including the limited partners, in accordance with the partnership
agreement. We estimate that approximately $309 gain will be allocated per unit
to the limited partners. This
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amount is an estimate based on a number of assumptions with respect to closing
costs discussed under "Use of Proceeds."
Any gain in excess of "depreciation recapture gain" (discussed below) and
"unrecaptured I.R.C. Section 1250 gain" (discussed below) generally will be
taxed as gain arising from the sale of property used in the Partnership's trade
or business under I.R.C. Section 1231 ("I.R.C. Section 1231 gain"). Each limited
partner will be allocated its share of the Partnership's I.R.C. Section 1231
gain. In general, if the combination of all I.R.C. Section 1231 gains and losses
of a particular limited partner for a taxable year results in a net gain, all of
such gains and losses will be characterized as long-term capital gains and
losses. If the combination results in a net loss, all of such gains and losses
will be characterized as ordinary gains and losses. However, notwithstanding the
foregoing, net I.R.C. Section 1231 gains will be treated as ordinary gains to
the extent of a limited partner's unrecaptured net I.R.C. Section 1231 losses
for the five most recent prior years. As a result, all or a portion of any
I.R.C. Section 1231 gain from the sale of the Partnership's property allocated
to a limited partner may be treated as ordinary income, rather than long-term
capital gain, if the limited partner has had net I.R.C. Section 1231 losses in
prior years.
Under I.R.C. Section 1245, gain recognized by the Partnership from the sale of
any of its depreciable or amortizable personal property and certain statutorily
designated real property, i.e., "depreciation recapture gain," is
re-characterized as ordinary income and will be allocated to the partners as
such. The amount of the Partnership's depreciation recapture gain equals the
amount by which the lower of the (i) amount realized or (ii) recomputed basis
(i.e., the property's basis plus all amounts allowed for depreciation) of the
transferred property exceeds that property's adjusted basis.
Under I.R.C. Section 1250, no portion of the gain recognized by the Partnership
upon the disposition of its residential rental real property generally is
re-characterized as ordinary income because such property is depreciated using
the straight-line method. However, under I.R.C. Section 291(a)(1), a portion of
a corporation's capital gain from the disposition of residential rental real
property is re-characterized as ordinary income. The portion that is
re-characterized equals 20% of the amount that would have been treated as
ordinary income under I.R.C. Section 1245 if the transferred property were
I.R.C. Section 1245 property (which generally would be all depreciation
deductions previously claimed). Therefore, under I.R.C. Section 291(a)(1),
corporate limited partners of the Partnership may recognize ordinary income upon
a disposition of the Partnership's residential rental real property.
In the case of limited partners of the Partnership that are individuals, estates
or trusts, the application of I.R.C. Section 1250 will not require those
taxpayers to recognize gain taxable as ordinary income; however, those limited
partners may be allocated gain from the Partnership's sale of the Property that
is taxed as "unrecaptured I.R.C. Section 1250 gain." Unrecaptured I.R.C. Section
1250 gain generally is equal to the gain on the sale of real property that is
attributable to straight-line depreciation. The maximum federal tax rate
applicable to unrecaptured I.R.C. Section 1250 gain currently is 25%.
In the case of limited partners that are individuals, trusts or estates, gain
from the sale of the Partnership's property that is not taxed as ordinary income
or as unrecaptured I.R.C. Section
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1250 gain generally is taxed at a capital gains tax rate, the current maximum
rate of which is 15%. Gain from the sale of the Partnership's property that is
allocated to limited partners that are corporations is not subject to
preferential capital gains tax rates.
If a limited partner possesses suspended tax losses, tax credits or other items
of tax benefit, such items may be used to reduce any tax liability that arises
with respect to any gain resulting from the sale of the Partnership's property
and allocated to that limited partner. The determination of whether a limited
partner possesses suspended tax losses, tax credits or other items of tax
benefit that may reduce any gain resulting from the sale will depend upon each
limited partner's individual circumstances. Limited partners are urged to
consult with their tax advisors in this regard.
DISTRIBUTIONS OF CASH. A distribution of cash by the Partnership to a limited
partner will be treated as an amount realized from a sale of the limited
partner's interest in the Partnership and will result in taxable gain only to
the extent that the distribution exceeds the limited partner's adjusted tax
basis in his, her or its Partnership interest. Otherwise, distributions will be
tax free, and the adjusted basis of the limited partner's Partnership interest
will be decreased, but not below zero.
Generally, any gain recognized by a limited partner arising from a cash
distribution by the Partnership will be capital gain. Nevertheless, to the
extent that a portion of that gain is attributable to "unrealized receivables"
of the Partnership, including depreciation recapture, or to certain inventory
items described in I.R.C. Section 751, such gain will be taxed as ordinary
income.
PROCEEDS AVAILABLE FOR DISTRIBUTION TO THE LIMITED PARTNERS FROM THE PROPERTY'S
SALE AFTER REPAYMENT OF THE PARTNERSHIP'S DEBTS MAY BE LESS THAN THE GAIN
RECOGNIZED BY THE PARTNERSHIP (AS A RESULT OF THE SALE) THAT IS ALLOCABLE TO THE
PARTNERS, GAIN RECOGNIZED BY THE PARTNERS AS A RESULT OF ANY CASH DISTRIBUTIONS
FROM THE PARTNERSHIP, AND ANY TAX LIABILITY RESULTING FROM THE FOREGOING.
ACCORDINGLY, LIMITED PARTNERS MAY BE REQUIRED TO USE FUNDS FROM SOURCES OTHER
THAN THE PARTNERSHIP IN ORDER TO PAY ANY TAX LIABILITIES THAT MAY ARISE AS A
RESULT OF THE RECOGNITION OF GAIN.
TAX CONSEQUENCES IF THE PROPERTY IS NOT SOLD. The Property has depreciated
approximately 76% for United States federal income tax purposes. As a result, it
is likely that continued operation of the Property will generate taxable income
to the limited partners, since it is unlikely that there will be adequate
depreciation and other deductions equal to or greater than the income generated
from the Property. However, it is anticipated that there will not be any cash
available for distribution since it is expected that all or substantially all of
the Property's cash flow will be used to service the Partnership's liabilities.
Accordingly, limited partners may be required to use funds from sources other
than the Partnership in order to pay any tax liabilities that may arise as a
result of the Partnership's continued operation of the Property. The Partnership
also will continue to incur the administrative costs of operating the
Partnership, including the cost of preparing and filing a Partnership tax
return, and it will continue to receive management fees. If a limited partner
possesses suspended tax losses, tax credits or other items of tax benefit, such
items may potentially be used to reduce any tax liability that arises with
respect to any taxable
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net income as a result of the continued operation of the Property by the
Partnership. Limited partners are urged to consult their tax advisors in this
regard.
NO APPRAISAL RIGHTS
Limited partners are not entitled to dissenters' appraisal rights under
applicable law or the partnership agreement in connection with the sale.
REGULATORY APPROVALS
Other than the filing and distribution of this information statement, no
regulatory approvals are required for the sale.
PLANS AFTER THE SALE
Upon completion of the sale, after the payment of the transaction-related costs
and other outstanding obligations, the Partnership will continue to own its
interest in the apartment complex known as Forest River Apartments, located in
Gadsden, Alabama, subject to a first mortgage of $4,810,000, and will hold cash
of approximately $90,489. A purchase and sale contract to sell Forest River
Apartments has been signed, but the sale has not been completed as of the date
of this information statement.
PARTNERSHIP BUSINESS
The Partnership is a publicly held limited partnership organized under the
California Uniform Limited Partnership Act on September 12, 1979. The General
Partner was wholly owned by MAE GP Corporation. Effective February 25, 1998, MAE
GP Corporation was merged into Insignia Properties Trust. Effective February 26,
1999, Insignia Properties Trust was merged into Apartment Investment and
Management Company, a publicly traded real estate investment trust. Thus, the
General Partner is now a wholly owned subsidiary of Apartment Investment and
Management Company. The partnership agreement provides that the Partnership is
to terminate on December 31, 2035, unless terminated before such date.
The Partnership's primary business is to operate and hold real estate properties
for investment. Funds obtained during the public offering were invested in seven
existing apartment properties. The Partnership has now sold five of these
investment properties. See below for a description of the Partnership's
remaining properties.
The Partnership, through its public offering of limited partnership units, sold
20,000 limited partnership units aggregating $20,000,000. The General Partner
contributed capital in the amount of $1,000 for a 1% interest in the
Partnership. In addition, the General Partner purchased 100 limited partnership
units. Since its initial offering, the General Partner has not received, nor are
the limited partners required to make, additional capital contributions. The
General Partner intends to maximize the operating results and, ultimately, the
net realizable value of each of the Partnership's properties in order to achieve
the best possible return for the limited partners. Such results may best be
achieved by holding and operating the properties or through property sales or
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exchanges, refinancings, debt restructurings or relinquishment of the assets.
The Partnership evaluates each of its holdings periodically to determine the
most appropriate strategy for each of the assets.
The Partnership has no employees. Management and administrative services are
performed by the General Partner and by agents retained by the General Partner.
An affiliate of the General Partner provides such property management services.
For information on certain pending litigation, please refer to the Partnership's
most recent report on Form 10-QSB (for the quarterly period ended June 30, 2003)
filed with the Securities and Exchange Commission. Please note, however, that
with respect to the Nuanes and Heller litigation referred to therein, on August
12, 2003, a notice of appeal was filed from the order approving the settlement
and entering judgment.
PARTNERSHIP PROPERTIES
The following table sets forth the Partnership's current investment in real
property:
<Table>
<Caption>
PROPERTY DATE OF PURCHASE TYPE OF OWNERSHIP USE
-------- ---------------- ----------------- ---
Forest River Apartments, 12/29/80 Fee ownership, subject to Apartment - 248 units
Gadsden, Alabama a first mortgage (1)
Village Green Apartments, 12/31/80 Fee ownership, subject to Apartment - 337 units
Montgomery, Alabama a first mortgage
</Table>
(1) Property is held by a limited partnership in which the General Partner owns
a 99% interest.
SUMMARY OF THE PURCHASE AND SALE AGREEMENT
The following summarizes the material terms and conditions of the Agreement.
THE PURCHASED ASSETS
The Partnership has agreed to sell to the Buyer all of the Partnership's
interest in and to the Property, together with all the buildings and
improvements located thereon and certain associated property.
EXCLUSIONS FROM THE SALE OF THE PROPERTY
The sale transaction expressly excludes cash or other funds; refunds, rebates or
other claims, or any interest thereon, for periods or events occurring prior to
the closing; utility and similar deposits; insurance or other prepaid items; the
Partnership's proprietary books and records; any right, title or interest in or
to certain intellectual property rights; equipment leased by the Partnership and
the interest of the Partnership in any equipment provided to the Property for
use, but not owned or leased by the Partnership; or property owned or leased by
any tenant or guest, employee or other
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person furnishing goods or services to the Property; or property and equipment
owned by the Partnership, which in the ordinary course of business of the
Property is not used exclusively for the business, operation or management of
the Property.
ASSUMED LIABILITIES
The Buyer agreed to assume the Partnership's liabilities and obligations under
the Property contracts and the leases after the closing.
THE EXISTING LOAN
If approved by the lender, the Buyer has agreed to assume all of the
Partnership's obligations with respect to the existing loan from Federal Home
Loan Mortgage Corporation in the original principal amount of $6.8 million. In
the event the loan is assumed, the amount of the assumed loan will be credited
towards the purchase price. If the lender does not agree to the loan assumption
on or prior to the closing, then the Buyer and the Partnership have agreed that
the then-outstanding principal balance of the loan shall be paid out of the
balance of the purchase price due at the closing.
PURCHASE PRICE
The purchase price for the Property is $9,750,000, payable as follows: (i) a
$100,000 deposit upon the execution of the Agreement to be held in escrow until
the closing, (ii) an additional non-refundable $100,000 deposit upon the
expiration of the Buyer's due diligence period for its examination of the
Property to be held in escrow until the closing, and (iii) the balance of the
purchase price at the closing. If the lender approves the loan assumption, then
the amount of the then-outstanding principal balance of the loan shall be
deducted from the balance of the purchase price due at the closing and will
reduce the cash at closing payable to the Partnership. As of the date of this
information statement, the Buyer has deposited a total of $200,000 into escrow
with the title company, which amount is, pursuant to the terms of the Agreement,
non-refundable (subject only to the satisfaction of the Buyer's conditions to
closing thereunder); provided, however, that if the Agreement is terminated due
to a default of or breach by the Partnership of the Agreement and the Buyer
chooses to seek damages in lieu of specific performance, then the full $200,000
deposit shall be returned to the Buyer.
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CLOSING
The sale of the Property will take place on the earlier of (a) September 30,
2003 or (b) if applicable, 15 days after lender's approval of the loan
assumption. The Partnership shall have the option to extend the closing to the
last business day of the month in which the closing otherwise would occur or to
such other date as the Partnership determines is desirable in connection with
the loan assumption or, in the event the lender fails to approve the loan
assumption, the then-outstanding principal balance of the loan shall be paid out
of the balance of the purchase price due at the closing. Further, the
Partnership may extend the closing (i) for up to 30 days to satisfy a condition
to be satisfied by the Partnership, (ii) in order to finalize the drafting with
lender and lender's counsel of all documents necessary or desirable to
accomplish the loan assumption, (iii) for up to 60 days if the Securities and
Exchange Commission issues comments on this information statement that delay the
sending of this information statement to the limited partners, or (iv) such
later date as is mutually acceptable to the Partnership and the Buyer. Provided
that the Buyer is not in default of the Agreement, the Buyer shall be permitted
one 30-day extension of the closing by delivery of written notice of such
extension and delivery into escrow of an additional $100,000 deposit.
REPRESENTATIONS AND WARRANTIES
The Agreement contains the customary seller representations and warranties by
the Partnership, including, without limitation, representations and warranties
regarding corporate existence and qualification; corporate authority;
non-contravention of existing contracts; validity and enforceability of the
Agreement; possessory interest in the property; litigation; governmental
violations; material defaults under property contracts; and hazardous or toxic
materials. The Partnership's aggregate liability for a breach of its
representations and warranties is capped at $100,000 and is limited to claims
brought within 12 months after the closing.
The Agreement also contains customary purchaser representations and warranties
by the Buyer, including, without limitation, representations and warranties
regarding existence and qualification; corporate authority; non-contravention of
existing contracts; validity and enforceability of the Agreement; litigation;
and non-reliance upon the Partnership's representations and warranties other
than those in the Agreement.
COVENANTS
The Partnership has agreed that from the expiration of the Buyer's due diligence
period through the closing, it will continue to operate the Property in the
ordinary course of business and subject to the following covenants:
o except as necessary in the Partnership's sole discretion to
address (a) any life or safety issue at the Property or (b)
any other matter which in the Partnership's reasonable
discretion materially adversely affecting the use, operation
or value of the Property, the Partnership will not make any
material alterations to the Property or remove any material
fixtures and tangible personal property without the prior
written consent of the Buyer; and
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o other than utility easements and temporary construction
easements granted by the Partnership in the ordinary course of
business, the Partnership will not voluntarily create or cause
any lien or encumbrance to attach to the Property unless the
Buyer approves such lien or encumbrance.
CONDITIONS
The Partnership's obligation to complete the sale of the Property is subject to
satisfaction of the following conditions on or before the closing unless waived
in whole or in part by the Partnership:
o All of the documents and funds required to be delivered by the
Buyer to the Partnership at the closing shall have been
delivered;
o Each of the representations, warranties and covenants of the
Buyer shall be true in all material respects as of the
closing;
o The Buyer shall have complied with, fulfilled and performed in
all material respects each of the covenants, terms and
conditions to be complied with, fulfilled or performed by the
Buyer; and
o The loan assumption shall have occurred, or, if permitted or
required hereunder, the then-outstanding principal balance of
the loan shall be paid out of the balance of the purchase
price due at the closing.
The Buyer's obligation to complete the sale of the Property is subject to
satisfaction of the following conditions on or before the closing unless waived
in whole or in part by the Buyer:
o All of the documents required to be delivered by the
Partnership to the Buyer at the closing shall have been
delivered;
o Each of the representations, warranties and covenants of the
Partnership shall be true in all material respects as of the
closing;
o The Partnership shall have complied with, fulfilled and
performed in all material respects each of the covenants,
terms and conditions to be complied with, fulfilled or
performed by the Partnership; and
o Neither the Partnership nor the Partnership's General Partner
shall be a debtor in any bankruptcy proceeding nor shall have
been in the last six months a debtor in any bankruptcy
proceeding.
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TERMINATION AND DEFAULT
The Agreement may be terminated at any time after the expiration of the Buyer's
due diligence period through the closing:
o By the Partnership, if the Buyer defaults in its obligations
hereunder to (a) deliver any of the deposits, (b) deliver to
the Partnership the required closing deliveries specified
under the Agreement, or (c) deliver the purchase price at the
time required by the Agreement and close on the purchase of
the Property on the closing date. The Partnership may also
terminate the Agreement if the Buyer defaults in any of its
representations, warranties or obligations, and such default
continues for more than 10 days after written notice from the
Partnership; and
o By the Buyer, if the Partnership defaults in its
representations, warranties, covenants or obligations under
the Agreement, including selling the Property and such default
continues for more than 10 days after written notice from the
Buyer.
If the Partnership terminates the Agreement due to a default of or breach by the
Buyer, then the Partnership is entitled to keep all the Buyer's deposits as
liquidated damages. If the Buyer terminates the Agreement due to a default or
breach of the Partnership, then the Buyer may choose to either (i) recover its
out-of-pocket costs up to an aggregate $20,000 (in which event, the Buyer's
deposits would be returned to the Buyer), or (ii) seek specific performance for
the conveyance of the Property to the Buyer.
EXPENSES AND CLOSING COSTS
The Buyer shall pay any transfer, mortgage assumption, sales, use, gross
receipts or similar taxes, the cost of recording the deed to the Property, any
premiums or fees required to be paid by the Buyer with respect to its title
policy for the Property, and one-half of the customary closing costs of the
escrow agent for the sale of the Property. The Partnership shall pay the base
premium for the title policy, the cost of recording the release of the mortgage
securing repayment of the loan (in the event that lender fails to approve the
loan assumption and the then-outstanding principal balance of the loan shall be
paid out of the balance of the purchase price due at the closing), and one-half
of the customary closing costs of the escrow agent. The Buyer shall also pay all
costs associated with either the loan assumption or the then-outstanding
principal balance of the loan shall be paid out of the balance of the purchase
price due at the closing, whichever may be applicable as of the closing.
Additionally, the Partnership shall pay for the broker commission of (i) The
Apartment Group, which has served as the Partnership's broker, in accordance
with a separate written contract between The Apartment Group and the
Partnership, and (ii) Colonial Commercial Realty, Inc., which has served as an
outside referral broker for the sale of the Property. The commission payable to
Colonial Commercial Realty, Inc., shall be an amount equal to 1/3 of the
commission that the Partnership is obligated to pay The Apartment Group. The
Partnership intends to pay both commissions out of the balance of the purchase
price payable on the closing and shall reduce the cash at closing to the
Partnership.
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WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Exchange Act and are
required to file annual and quarterly reports, proxy statements and other
information with the SEC. You can inspect and copy reports and other information
filed by us with the SEC at the SEC's Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549. You may also obtain information on the operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0300. The SEC also
maintains an Internet site at http:\\www.sec.gov that contains reports, proxy
and information statements regarding issuers, including us, that file
electronically with the SEC.
You should only rely on the information incorporated by reference or provided in
this information statement or any supplement. We have not authorized anyone else
to provide you with information. You should not assume that the information in
this information statement or any supplement is accurate as of any date other
than the date on the front of this information statement or the supplement.
We are "incorporating by reference" into this information statement certain
information we have filed with the SEC, which means that we are disclosing
important information to you by referring you to those documents. The
information incorporated by reference is deemed to be part of this information
statement, except for any information superseded by information contained
directly in this information statement. These documents contain important
information about us and our finances. This information statement incorporates
by reference:
o Our annual report on Form 10-KSB for the year ended December 31, 2002.
o Our quarterly report on Form 10-QSB for the period ended March 31, 2003.
o Our quarterly report on Form 10-QSB for the period ended June 30, 2003.
All documents we file with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act from the date of this information statement shall
also be deemed to be incorporated herein by reference and will automatically
update information in this information statement.
You may request a copy of these filings, at no cost, by writing or calling
us at the following address or telephone number:
c/o THE ALTMAN GROUP, INC.
1275 Valley Brook Avenue
Lyndhurst, New Jersey 07071
Telephone: (800) 217-9608
DELIVERY OF DOCUMENTS TO SECURITY HOLDERS SHARING AN ADDRESS
Only one information statement is being delivered to multiple limited partners
sharing an address unless the Partnership has received contrary instructions
from one or more of the limited partners.
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The Partnership will undertake to deliver promptly upon written or oral request
a separate copy of this information statement to a limited partner at a shared
address to which the Partnership delivered a single copy of the information
statement. If a limited partner wishes to notify the Partnership that he or she
wishes to receive a separate copy of this information statement, the limited
partner may contact the Partnership as follows:
By mail: c/o THE ALTMAN GROUP, INC.
1275 Valley Brook Avenue
Lyndhurst, New Jersey 07071
By telephone: (800) 217-9608
By facsimile: (201) 460-0050
A limited partner may also use the above telephone number, facsimile number or
mailing address to notify the Partnership that limited partners sharing an
address request delivery of a single copy of this information statement if they
are receiving multiple copies of information statements.
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