SCHEDULE 14A Page 1 of 20
SCHEDULE 14A
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SCHEDULE 14A INFORMATION
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Winthrop Growth Investors 1 Limited Partnership
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SCHEDULE 14A Page 2 of 20
PRELIMINARY COPY
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
C/O THE ALTMAN GROUP, INC.
1275 VALLEY BROOK AVENUE
LYNDHURST, NEW JERSEY 07071
(800) 461-2657
October __, 2003
Dear Limited Partner:
Two Winthrop Properties, Inc., the managing general partner of your
partnership (the "General Partner"), is writing to request your consent to an
amendment (the "Amendment") of the Agreement of Limited Partnership of Winthrop
Growth Investors 1 Limited Partnership (the "Partnership") to extend the term of
the Partnership Agreement from December 31, 2003 to December 31, 2021. Enclosed
for your consideration is a Consent Solicitation Statement, dated October __,
2003 (the "Solicitation Statement"), and a form of Consent of Limited Partner
(the "Consent Form").
If the Amendment is approved, the term of your Partnership will be
extended until December 31, 2021 and your Partnership will continue to operate
as it has in the past. If the Amendment is not approved, the term of the
Partnership Agreement will expire on December 31, 2003, and the Partnership will
wind up its affairs in accordance with the terms of the Partnership Agreement
and applicable law. Under the Partnership Agreement, the General Partner must
liquidate the assets of the Partnership on the expiration of its term, but if
the General Partner determines that an immediate sale of any of the
Partnership's assets would cause undue loss to the partners, the General Partner
may defer liquidation of the Partnership's assets for a reasonable time.
Your Partnership owns two properties (each a "Property" and together,
the "Properties") through two limited partnerships in which your Partnership
owns a 99.9% and 99.98% limited partnership interest respectively (each a "local
limited partnership"). The general partner of each local limited partnership is
an affiliate of the General Partner. If the Properties are sold, the Partnership
would recognize gain or loss for Federal income tax purposes in the tax year in
which the sale occurs. Any taxable income would be allocated to the partners,
and, depending on the purchase price and related sales costs, a partner's tax
liability could be greater than the funds, if any, it receives from the
Partnership. To the extent that the Properties are sold prior to the time that
they would be sold if the Partnership is extended, the sales price for the
Properties may be less than if the General Partner had greater control over the
timing of the sales. Your General Partner is of the opinion that the Properties
should not be required to be sold at the present time. If the Partnership sells
the Properties in a "forced sale" due to a near-term dissolution date, the
General Partner is of the opinion that its negotiating leverage will be greatly
reduced and that the net proceeds to the Partnership and the limited partners
would likely be lower than if the Properties were disposed of over time in an
orderly manner.
If the term of the Partnership is not extended and the Properties are
not sold prior to its expiration, the Partnership will dissolve and the General
Partner will be required to immediately seek to liquidate the Partnership's
assets which, we believe, given the nature of the assets and timing of the
sales, will generate minimal value for such assets. Further, it is possible that
the assets could not be sold in a reasonable time period thereby requiring the
Partnership to distribute its remaining assets in kind. Accordingly, if the
Partnership were to be dissolved and liquidated, we believe that limited
partners would (i) receive only a small fraction of the ultimate realizable
value of the Partnership's assets or (ii) either be distributed a limited
partner interest in each of the local limited partnerships in which the
Partnership holds an investment that are not liquidated, thereby resulting in
the limited partner holding a direct limited partner interest in the local
limited partnership or, more likely, receive an interest in a liquidating trust
that would hold the remaining assets of the Partnership and which would not be
subject to the current reporting requirements of the Partnership and in which
transfers would be severely restricted.
The consent of limited partners who own more than 50% of all
outstanding limited partnership interests in your Partnership ("Units") is
required to approve the Amendment. AIMCO Properties, L.P. ("AIMCO Properties")
and its affiliates currently own 10,979.25 Units or approximately 47.45% of the
outstanding Units in the Partnership. AIMCO Properties has indicated that it
will vote its interests FOR the Amendment and the selection of counsel by the
General Partner, as discussed below. Please read the enclosed Consent
Solicitation Statement carefully.
The General Partner cannot predict when the Properties will be sold. In
the past several years, your Partnership has sold the following properties to
unaffiliated third parties: Sunflower Apartments in 2000 for a gross purchase
price of $6,900,000 and Stratford Village Apartments in 2002 for a gross
purchase price of $9,514,000.
SCHEDULE 14A Page 3 of 20
The general partners of the Partnership are the General Partner and
Linnaeus-Lexington Associates Limited Partnership. Your General Partner is an
affiliate of AIMCO Properties, and its affiliates receive fees for managing the
Partnership, as discussed in the accompanying Consent Solicitation Statement,
and therefore has a conflict of interest. Continuation of the Partnership beyond
2003 will result in the General Partner and its affiliates continuing to receive
management fees from the Partnership. These fees would not continue to be
payable beyond 2003 if the Partnership were liquidated in 2003. See "CONFLICTS
OF INTEREST" in the Consent Solicitation Statement.
FOR THE REASONS SET FORTH IN THE ATTACHED CONSENT SOLICITATION
STATEMENT, YOUR GENERAL PARTNER IS OF THE OPINION THAT THE AMENDMENT IS IN THE
BEST INTERESTS OF THE PARTNERSHIP AND THE PARTNERS, AND RECOMMENDS THAT YOU
APPROVE THE AMENDMENT.
In connection with the Amendment, we are also seeking your consent of
the selection of Nixon Peabody LLP as counsel to render an opinion as to the
voting rights of limited partners in connection with the Amendment, as more
fully described in the attached Consent Solicitation Statement. We have selected
this firm as counsel, based on the considerations contained in the attached
Consent Solicitation Statement. Under the terms of your Partnership Agreement,
any counsel selected by us must be approved by a majority in interest of the
limited partners in connection with the Amendment. Limited partners holding 10%
of the outstanding Units may propose counsel for this purpose, but such counsel
must also be approved by the limited partners. If the counsel selected by the
General Partner is not approved, your General Partner may seek to solicit the
approval of another firm, but there can be no assurance that any alternative
will be approved by a majority in interest of the limited partners prior to the
expiration of the Partnership, or that the Amendment could be approved.
The General Partner of the Partnership recommends that you consent to
the Amendment and the selection of counsel by completing, dating and signing the
enclosed Consent Form and returning it in the enclosed pre-addressed,
postage-paid envelope. The General Partner is of the opinion that the Amendment
will not prohibit or unduly restrict the Partnership's ability to sell the
Properties in the future prior to the expiration of the extended term of the
Partnership Agreement.
Your participation is important. Please note that this solicitation
will expire at midnight, New York City time, on November _, 2003, unless
extended. The General Partner may extend the solicitation in its sole
discretion.
SCHEDULE 14A Page 4 of 20
Questions and requests for assistance may be directed to the
Solicitation Agent, The Altman Group, Inc., at its address set forth below.
Very truly yours,
TWO WINTHROP PROPERTIES, INC.
THE SOLICITATION AGENT IS:
THE ALTMAN GROUP, INC.
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By Mail: By Overnight Courier: By Hand:
1275 Valley Brook Avenue 1275 Valley Brook Avenue 1275 Valley Brook Avenue
Lyndhurst, New Jersey 07071 Lyndhurst, New Jersey 07071 Lyndhurst, New Jersey 07071
</Table>
By Facsimile: For Information please call:
(201) 460-0050 TOLL FREE (800) 461-2657
SCHEDULE 14A Page 5 of 20
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
C/O THE ALTMAN GROUP, INC.
1275 VALLEY BROOK AVENUE
LYNDHURST, NEW JERSEY 07071
(800) 461-2657
CONSENT SOLICITATION STATEMENT
This Consent Solicitation Statement is being furnished to holders of
record of limited partnership units (the "Units") in Winthrop Growth Investors 1
Limited Partnership, a Massachusetts limited partnership (the "Partnership"), in
connection with the solicitation of consents to an amendment (the "Amendment")
of the Partnership's Agreement of Limited Partnership to extend the term of the
Partnership Agreement from December 31, 2003 to December 31, 2021. Two Winthrop
Properties, Inc., the managing general partner (the "General Partner"), is
providing this Consent Solicitation Statement to holders of record as of the
close of business on October __, 2003 (the "Record Date"). This Consent
Solicitation Statement and the accompanying form of Consent of Limited Partners
(the "Consent Form") are first being mailed to Limited Partners on or about
October __, 2003.
If the Amendment is approved, the term of your Partnership will be
extended until December 31, 2021 and your Partnership will continue to operate
as it has in the past. If the Amendment is not approved, the term of the
Partnership Agreement will expire on December 31, 2003, and the Partnership will
wind up its affairs in accordance with the terms of the Partnership Agreement
and applicable law. Under the Partnership Agreement, the General Partner must
liquidate the assets of the Partnership upon the expiration of its term, but if
the General Partner determines that an immediate sale of any of the
Partnership's assets would cause undue loss to the partners, the General Partner
may defer liquidation of the Partnership's assets for a reasonable time.
Alternatively, the Partnership may make distributions in kind of the
Partnership's interests in the local limited partnerships, which distributions
may not be permitted under the terms of the local limited partnerships
partnership agreements or, more likely, receive an interest in a liquidating
trust that would hold the remaining assets of the Partnership and which would
not be subject to the current reporting requirements of the Partnership and in
which transfers would be severely restricted.
Your Partnership owns two properties (each a "Property" and together,
the "Properties") through two limited partnerships in which your Partnership
owns a 99.9% and 99.98% limited partnership interest respectively (each a "local
limited partnership"). The general partner of each local limited partnership is
an affiliate of the General Partner. If the Properties are sold, the Partnership
would recognize gain or loss for Federal income tax purposes in the tax year in
which the sale occurs. Any taxable income would be allocated to the partners,
and, depending on the purchase price and related sales costs, a partner's tax
liability could be greater than the funds, if any, it receives from the
Partnership. To the extent that the Properties are sold prior to the time that
they would be sold if the Partnership is extended, the sales price for the
Properties may be less than if the General Partner had greater control over the
timing of the sales. Your General Partner is of the opinion that the Properties
should not be required to be sold at the present time. If the Partnership sells
the Properties in a "forced sale" due to a near-term dissolution date, the
General Partner is of the opinion that its negotiating leverage will be greatly
reduced and that the net proceeds to the Partnership and the limited partners
would likely be lower than if the Properties were disposed of over time in an
orderly manner.
The consent of limited partners who own more than 50% of all
outstanding limited partnership Units is required to approve the Amendment.
AIMCO Properties, L.P. ("AIMCO Properties") and its affiliates currently own
10,979.25 Units or approximately 47.45% of the outstanding Units in the
Partnership. AIMCO Properties has indicated that it will vote its interests FOR
the Amendment and the selection of counsel by the General Partner, as discussed
below. Please read the enclosed Consent Solicitation Statement carefully.
The general partners of the Partnership are the General Partner and
Linnaeus-Lexington Associates Limited Partnership. Your General Partner is an
affiliate of AIMCO Properties and receives fees for managing the Partnership, as
discussed below, and therefore has a conflict of interest. Continuation of the
Partnership beyond 2003 will result in the General Partner and its affiliates
continuing to receive management fees from the Partnership. These fees would not
continue to be payable beyond 2003 if the Partnership were liquidated in 2003.
See "CONFLICTS OF INTEREST."
The General Partner is of the opinion that it is in the best interests
of the Partnership and the partners to extend the Partnership's term because
dissolution of the Partnership at the end of this year would require a sale of
the Partnership's
SCHEDULE 14A Page 6 of 20
properties which, given current economic and market conditions, probably would
not be on the most advantageous terms. Further, if the General Partner is
required to sell the Properties in a "forced sale" pursuant to the dissolution
and winding up of the Partnership at the end of 2003, the General Partner is of
the opinion that prospective buyers could infer that the General Partner has a
limited amount of time to sell the Properties. In that circumstance, the General
Partner is of the opinion that its negotiating leverage in selling the
Properties may be reduced and that the net proceeds to the Partnership and the
limited partners would likely be lower than if the Properties were disposed of
over time in an orderly manner. See "GENERAL PARTNER'S RECOMMENDATIONS." YOUR
GENERAL PARTNER THEREFORE RECOMMENDS THAT YOU CONSENT TO THE AMENDMENT.
Your Partnership is engaged in the business of operating and holding
real estate properties for investment. Your Partnership invested approximately
$18,177,000 of the original offering proceeds in four apartment complexes.
During 2000, the Partnership sold Sunflower Apartments to an unaffiliated third
party for approximately $6,900,000, and during 2002, the Partnership sold
Stratford Village Apartments to an unaffiliated third party for approximately
$9,514,000. Your Partnership made distributions to the partners of $197.85 per
Unit in 2000, $138.64 per Unit in 2001, and $216.99 per Unit in 2002.
The Partnership through the local limited partnerships continues to
hold two apartment complexes - Ashton Ridge Apartments, a 356-unit apartment
complex located in Jacksonville, Florida, and Stratford Place Apartments, a
350-unit apartment complex located in Gaithersburg, Maryland.
The General Partner continually considers whether the Properties should
be sold or otherwise disposed of after consideration of relevant factors,
including prevailing economic and market conditions, availability of favorable
financing and tax considerations, with a view to achieving maximum capital
appreciation for the Partnership. The General Partner is of the opinion that a
sale of the Properties at the current time would not be advantageous given the
condition of the Properties, current economic and market conditions, and the tax
consequences of such sales to limited partners. The General Partner has
considered, among other things, the potential for future appreciation in the
value of the Properties and the fact that limited partners will be allocated
taxable gain resulting from the sale of the Properties. Further, if the General
Partner is required to sell the Properties pursuant to the dissolution and
winding up of the Partnership at the end of 2003, the General Partner is of the
view that its negotiating leverage in selling the Properties may be reduced. The
General Partner cannot predict when the Properties will be sold or otherwise
disposed of.
The General Partner is also seeking your consent of the selection of
Nixon Peabody LLP as counsel to render an opinion as to the voting rights of
limited partners in connection with the Amendment. Your General Partner has
selected this firm as counsel, based on the considerations described below.
Under the terms of your Partnership Agreement, any counsel selected by us must
be approved by a majority in interest of the limited partners in connection with
the Amendment. Limited partners holding 10% of the outstanding Units may propose
counsel for this purpose, but such counsel must also be approved by the limited
partners. If the counsel selected by the General Partner is not approved, your
General Partner may seek to solicit the approval of another firm, but there can
be no assurance that any alternative will be approved by a majority in interest
of the limited partners prior to the expiration of the Partnership, or that the
Amendment could be approved. YOUR GENERAL PARTNER RECOMMENDS THAT YOU CONSENT TO
THE SELECTION OF COUNSEL.
This Consent Solicitation Statement is being solicited by the General
Partner on behalf of the Partnership. The General Partner of the Partnership
recommends that you consent to the Amendment and the selection of counsel by
completing, dating and signing the enclosed Consent Form and returning it in the
enclosed pre-addressed, postage-paid envelope. The General Partner is of the
opinion that the Amendment will not prohibit or unduly restrict the
Partnership's ability to sell the Properties in the future prior to the
expiration of the extended term of the Partnership Agreement.
THE GENERAL PARTNER RECOMMENDS THAT LIMITED PARTNERS CONSENT TO THE AMENDMENT
AND THE SELECTION OF COUNSEL. SEE "GENERAL PARTNER'S RECOMMENDATION" BELOW. YOUR
GENERAL PARTNER HAS CONFLICTS OF INTEREST THAT YOU SHOULD CONSIDER. SEE
"CONFLICTS OF INTEREST" BELOW.
THIS SOLICITATION OF CONSENTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON
NOVEMBER __, 2003 (THE "EXPIRATION DATE"), UNLESS EXTENDED. THE GENERAL PARTNER
RESERVES THE RIGHT TO EXTEND THE OFFER IN ITS SOLE DISCRETION.
SCHEDULE 14A Page 7 of 20
Questions and requests for assistance may be directed to the
Solicitation Agent, The Altman Group, Inc., at its address set forth below.
CONFLICTS OF INTEREST
The General Partner is an affiliate of AIMCO Properties. AIMCO
Properties and its affiliates, including the General Partner may have interests
that conflict with the interests of the limited partners. You should consider
these factors before consenting to the Amendment or the selection of counsel.
Affiliates of the General Partner Will Continue to Receive Fees.
Affiliates of the General Partner manage the Properties and receive management
fees equal to 5% of gross receipts from the Properties. The Partnership paid
affiliates of your General Partner approximately $392,000 and $424,000 during
the years ended December 31, 2002 and December 31, 2001, respectively.
Affiliates of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $203,000 and $268,000 during
the years ended December 31, 2002 and December 31, 2001, respectively.
Beginning in 2001, the Partnership began insuring its Properties up to
certain limits through coverage provided by an affiliate of your General Partner
which is generally self-insured for a portion of losses and liabilities related
to workers compensation, property casualty and vehicle liability. The
Partnership insures its Properties above those limits through insurance policies
obtained by AIMCO Properties from insurers unaffiliated with the General
Partner. During the year ended December 31, 2002 and 2001, the Partnership paid
affiliates of the General Partner approximately $113,000 and $105,000,
respectively, for insurance coverage and fees associated with policy claims
administration.
The extension of the Partnership's term will likely result in such fees
continuing to be paid for a longer period than would be the case if the term of
the Partnership expired in 2003. Therefore, the interests of the General Partner
and its affiliates in continuing the Partnership may be different than those of
the limited partners who desire to have the Partnership dissolved and liquidated
more quickly. See "Security Ownership of Certain Beneficial Owners and
Management."
The General Partner Receives Fees on Disposition of the Properties. The
General Partner will receive fees for the disposition of the Properties that
will be higher if the sale prices of the Properties are higher. The General
Partner has an interest in obtaining the highest price possible for the
Properties.
AIMCO Properties May Buy Units in Future Tender Offers. AIMCO
Properties is affiliated with the General Partner. From time to time, AIMCO
Properties and its affiliates have purchased Units of the Partnership in the
past with a view to making a profit. AIMCO Properties and its affiliates
currently hold 10,979.25 Units or approximately 47.45% of the outstanding Units.
If the Partnership is liquidated and dissolved pursuant to the original term,
AIMCO Properties and its affiliates will not have future opportunities to make a
profit on the purchase of Units.
We Have Not Obtained A Third Party Valuation or Appraisal. You should
note that there has been no recent appraisal of the Properties, and your General
Partner has not hired a broker or otherwise explored the current market for the
Properties. There are no third party offers for any of the Properties. The
General Partner cannot predict when the Properties will be sold or otherwise
disposed of.
GENERAL PARTNER'S RECOMMENDATIONS
The General Partner recommends that the limited partners approve the
Amendment and the selection of counsel. The General Partner is of the opinion
that the Amendment is in the best interest of the Partnership and its limited
partners because a sale of the Properties now, and the liquidation of the
Partnership's assets in 2003, will be taxable events to the Partnership, which
will equal the difference between the proceeds, if any, and the Partnership's
basis in the Properties, and, potentially, due to cancellation of indebtedness.
Any taxable income would be allocated to partners, and, depending on the
purchase price and related sales costs, a partner's tax liability could be
greater than the funds, if any, it receives from the Partnership. The General
Partner continually considers whether the Properties should be sold or otherwise
disposed of after consideration of relevant factors, including prevailing
economic and market conditions, availability of favorable financing and tax
considerations, with a view to achieving maximum capital appreciation for the
Partnership. The General Partner is of
SCHEDULE 14A Page 8 of 20
the opinion that the Properties should not be required to be sold at the present
time. A sale of the Properties at the current time may not be advantageous given
the condition of the Properties, current economic and market conditions, and the
tax consequences of such sales to limited partners. Additionally, if the
Partnership sells the Properties in a "forced sale" due to a near-term
dissolution date, the General Partner is of the opinion that its negotiating
leverage would be greatly reduced because prospective buyers could infer that
the General Partner has a limited amount of time to sell the Properties, and the
net proceeds to the Partnership and the limited partners would likely be lower
than if the Properties were sold over time in an orderly manner. The General
Partner recommends that you consult with your tax and financial advisors as to
the ultimate potential impact a sale of the Properties and a liquidation of the
Partnership's assets will have on you.
Conversely, if the Amendment is approved, the Properties will not be
required to be sold and the Partnership will not expire until December 31, 2021.
As economic conditions improve in the markets where the Partnership properties
are located and rental revenues increase, the value of the Properties are
expected to increase. By approving the Amendment, the General Partner may be in
a better position to maximize the value of the Properties. However, the General
Partner recognizes that the Amendment would not prohibit or unduly restrict the
Partnership's ability to sell the Properties or other assets of the Partnership
in the future prior to the expiration of the extended term of the Partnership.
The General Partner has selected the counsel and is of the opinion that
the counsel can represent the Partnership effectively for the purposes set forth
in your Partnership Agreement. The General Partner based its selection on the
following considerations: Nixon Peabody LP is a national law firm with extensive
experience in real estate partnerships and partnership law.
The General Partner recommends that you consent to the Amendment and
the selection of counsel by completing, dating and signing the enclosed Consent
Form and returning it in the enclosed pre-addressed, postage-paid envelope.
RISK FACTORS
In making its recommendation, the General Partner considered the
following material factors. You should also consider these factors before
consenting to the Amendment or the selection of counsel.
RISK FACTORS IF THE AMENDMENT IS NOT APPROVED
Your General Partner Will Be Obligated to Dissolve the Partnership as
Soon as Reasonably Possible. Failure to approve the Amendment for any reason,
including the failure of the limited partners to approve the selection of
counsel by the General Partner, will require that the Partnership dissolve on
December 31, 2003 and that the General Partner thereafter liquidate the
Partnership's assets. If the General Partner determines that an immediate sale
of any of the Partnership's assets would cause undue loss to the partners, the
General Partner may defer liquidation of the Partnership's assets for a
reasonable time. In certain limited circumstances, any partner may apply to a
Massachusetts court for a decree of dissolution of the Partnership. The
marketing period for the Properties therefore is likely to be shorter if the
Amendment is not approved than it would be if the Amendment were approved. A
longer marketing period in a more favorable market might elicit additional,
higher offers for the Properties that are more favorable to the Partnership.
Further, if the General Partner is required to sell the Properties pursuant to
the dissolution and winding up of the Partnership at the end of 2003, the
General Partner is of the opinion that prospective buyers could infer that the
General Partner has a limited amount of time to sell the Properties. In that
circumstance, the General Partner is of the opinion that its negotiating
leverage in selling the Properties may be reduced and that the net proceeds to
the Partnership and the limited partners would likely be lower than if the
Properties were disposed of over time in an orderly manner.
The Partnership May Not Recognize Full Value for the Properties and May
Incur Higher Costs. If the Amendment is not approved, the Partnership Agreement
will terminate on December 31, 2003, and the General Partner will wind up the
affairs of the Partnership in accordance with the terms of the Partnership
Agreement and applicable law and will be required to sell the Properties within
a reasonable period of time. The General Partner continually considers whether a
Property should be sold or otherwise disposed of after consideration of relevant
factors, including prevailing economic and market conditions, availability of
favorable financing and tax considerations, with a view to achieving maximum
capital appreciation for your Partnership. The General Partner is of the opinion
that the Properties should not be required to be sold at the present time. A
sale of the Properties at the current time may not be advantageous given the
condition of the Properties, current economic and market conditions, and the tax
consequences of such sales to limited partners. Because the General Partner
would have less control over the timing of the sale of the Properties, the sales
price for the Properties may be less than if the General Partner had control
over the timing of the sales.
SCHEDULE 14A Page 9 of 20
The Partners Will Recognize Gain on the Sale or Other Disposition of
the Properties. Any sale, exchange or other disposition of any Property by the
Partnership likely would result in the recognition of gain or loss by the
Partnership equal to the difference between (i) the amount realized for the
Property and (ii) the Partnership's tax basis (which has been reduced because of
prior years' depreciation deductions) in the Property. The amount realized for
the Property would be the selling price for the Property, less any expenses of
sale, plus any liabilities assumed by the purchaser of the Property or
liabilities that the purchaser takes the Property subject to. In addition, to
the extent that the Partnership may recognize cancellation of indebtedness
("COD") income to the extent it is unable to satisfy all of other Partnership
indebtedness that is not assumed by the purchaser of the Property. Any taxable
gain or loss and COD income will pass through to the partners of the
Partnership. See "Material U.S. Federal Income Tax Consequences" below.
Distributions from Your Partnership May Not Be Sufficient to Cover
Current Tax Liabilities of the Partners. The proceeds available for distribution
to the partners of the Partnership in the event of a liquidation of the
Partnership's assets and dissolution of the Partnership may be less than any tax
liabilities resulting from the recognition of any gain relating to a transfer of
the Property by the Partnership, any COD income, or any gain that is recognized
upon liquidation of a partner's interest in the Partnership. Accordingly, a
limited partner may need to use funds from other sources to satisfy any such tax
liabilities.
There is No Time Frame Regarding Sale of Property. There may be no way
to liquidate your investment in the Partnership until its Properties are sold
and the Partnership is liquidated. Under the existing mortgage documents, the
Properties may not be sold subject to existing indebtedness. The existing
mortgages terminate in 2006 and 2021.
RISK FACTORS IF THE AMENDMENT IS APPROVED
Continuation of the Partnership; No Time Frame Regarding Sale of
Properties. The General Partner proposes to continue to operate the Partnership
and has no current intention to sell all of the Partnership's property and
liquidate the Partnership. Thus, the Amendment reduces the likelihood that a
limited partner will receive the return of his or her investment in the
Partnership through a sale of the Properties. The prospectus pursuant to which
the Units were sold in 1984 indicated that the Properties might be sold within
five to seven years of their acquisition, depending upon the performance of the
Property and the then current real estate market and economic climate. It is not
currently known when any Property may be sold. There may be no way to liquidate
your investment in the Partnership in the future until all Properties are sold.
Affiliates of Your General Partner Will Continue to Receive Fees.
Affiliates of the General Partner receive substantial fees in connection with
the operation of the Partnership. See "Conflicts of Interest." Since an
affiliate of the General Partner receives fees for managing the Properties and
because your General Partner is entitled to receive fees for transactions
involving your Partnership and its property, a conflict of interest exists
between continuing the Partnership and receiving such fees, and the liquidation
of the Partnership and the termination of such fees. Also, the removal, for any
reason, of the General Partner of your Partnership or the property manager of
any Property owned by your Partnership would result in a decrease or elimination
of the substantial fees to which affiliates of the General Partner are entitled
for services provided to your Partnership.
Beginning in 2001, the Partnership began insuring its Properties up to
certain limits through coverage provided by an affiliate of your General Partner
which is generally self-insured for a portion of losses and liabilities related
to workers compensation, property casualty and vehicle liability. The
Partnership insures its Properties above those limits through insurance policies
obtained by AIMCO Properties from insurers unaffiliated with the General
Partner. During the year ended December 31, 2002 and 2001, the Partnership paid
affiliates of the General Partner approximately $113,000 and $105,000,
respectively, for insurance coverage and fees associated with policy claims
administration.
The extension of the term of the Partnership Agreement will likely
result in such fees continuing to be paid for a longer period than would be the
case if the term of the Partnership Agreement expired December 31, 2003.
There Is No Active Trading Market for Your Units. Although the Units
are registered with the Securities and Exchange Commission (the "SEC"), there is
no active trading market for the Units. There may be a limited number of
prospective buyers for your Units in the future, and you may find it difficult
to liquidate your investment at a price that exceeds the amounts you might
receive on the liquidation and dissolution of the Partnership. The General
Partner cannot predict when any Property will be sold or otherwise disposed of.
If the Amendment is not approved, your Partnership will
SCHEDULE 14A Page 10 of 20
terminate on December 31, 2003; if the Amendment is approved, you may not be
able to exit from the Partnership until December 31, 2021, or if this
termination date is further extended, until such extended date.
You May Be Required to Hold Your Units Indefinitely. The General
Partner is of the opinion that the Properties should not be required to be sold
at the present time. A sale of the Properties at the current time may not be
advantageous given the condition of the Properties, current economic and market
conditions, and the tax consequences of such sales to limited partners. It is
not known whether or when the Properties may ultimately be sold. Therefore,
there may be no way to liquidate your investments in the Partnership in the
future until the Properties are sold and your Partnership is liquidated. You may
be required to continue to hold your Units for an indefinite period of time.
The Value of the Properties May Decline and Your Investment Will
Continue to Be At Risk. The partners will continue to bear the investment risk
associated with the continued ownership of the Properties. The future success of
the Partnership will depend upon many factors beyond the control of the General
Partner, including competitive activity, the need for capital expenditures,
prevailing economic and market conditions and financial, business and other
factors. These factors, and others, may cause the value of the Properties and
the Partnership to decline. Although the Partnership has made distributions to
the partners in the past, the Partnership may not be able to continue to make
distributions.
Holding the Properties for a Longer Period of Time May Result in
Greater or Lesser Future Value. As noted above, your General Partner is of the
opinion that the Partnership may not receive full value for the Properties if
they are required to be sold at the present time given the condition of the
Properties and current economic and market conditions, among other
considerations. However, there has been no recent appraisal of the Properties,
and your General Partner has not hired a broker or otherwise explored the
current market for the Properties. There are no third party offers for any of
the Properties. Because the value of your Partnership may decline, you might
receive more or less for your Units if you continue to hold your Units and
receive proceeds from a later sale of your Units, a liquidation of your
Partnership, a merger of your Partnership, or other transaction involving your
Partnership.
AIMCO Properties and its Affiliates May Increase Control Over Your
Partnership. Decisions with respect to the day-to-day management of your
Partnership are the responsibility of the General Partner. The General Partner
is affiliated with AIMCO Properties, which may control actions of the General
Partner. In addition, AIMCO Properties and its affiliates hold 10,979.25 Units
or 47.45% of the outstanding Units. Under the Partnership Agreement, a majority
in interest of the limited partners must approve certain transactions, including
certain amendments to the Partnership Agreement. If AIMCO Properties and its
affiliates acquire more than 592.75 additional Units, it will control a majority
of the limited partnership interests, and will have the ability to control the
outcome of such votes of the limited partners.
You May Recognize Gain If Partnership Liabilities Are Reduced.
Generally, a decrease in your share of Partnership liabilities is treated, for
Federal income tax purposes, as a deemed cash distribution. Although the General
Partner does not have any current plan or intention to reduce the liabilities of
your Partnership, it is possible that future economic, market, legal, tax or
other considerations may cause the General Partner to reduce the liabilities of
your Partnership and you would be treated as receiving a hypothetical
distribution of cash resulting from a decrease in your share of the liabilities
of the Partnership.
Certain Events May Trigger a Termination of Your Partnership for
Federal Income Tax Purposes. If there is a sale or exchange of 50% or more of
the total interest in capital and profits of your Partnership within any
12-month period, including sales or exchanges resulting from any future
purchases by affiliates of the General Partner, your Partnership will terminate
for Federal income tax purposes. Any such termination may, among other things,
subject the assets of your Partnership to longer depreciable lives than those
currently applicable to the assets of your Partnership. This would generally
decrease the annual average depreciation deductions allocable to you if the
Partnership continues and you do not sell your Units before the deemed
termination of the Partnership (thereby increasing the taxable income allocable
to your Units each year), but would have no effect on the total depreciation
deductions available over the useful lives of the assets of your Partnership.
Any such termination may also change (and possibly shorten) your holding period
with respect to the Units retained by you.
RISK FACTORS IF THE GENERAL PARTNER'S SELECTION OF COUNSEL IS NOT
APPROVED
If the counsel selected by the General Partner is not approved, your
General Partner may seek to solicit the opinion of another firm, but there can
be no assurance that any alternative will be approved by a majority in interest
of the limited partners prior to the termination of the Partnership Agreement,
or that the Amendment could be approved. If counsel is not approved in the
relevant time period, the Amendment can also not be approved, the term of the
Partnership Agreement will expire on December 31, 2003, and the General Partner
will wind up the affairs of the Partnership in accordance with the terms of the
Partnership Agreement and applicable law. See "Risk Factors if the Amendment is
Not Approved."
SCHEDULE 14A Page 11 of 20
RISK FACTORS IF THE GENERAL PARTNER'S SELECTION OF COUNSEL IS APPROVED
The General Partner has selected Nixon Peabody LLP as counsel to
represent the Partnership based on the General Partner's previous experience
with such counsel, and based on the experience of such counsel in real estate
partnerships and in Massachusetts partnership law. Affiliates of the General
Partner have also used such counsel's services in the past in connection with
other real estate partnerships affiliated with the General Partner. In 2001 and
2002, the General Partner and its affiliates paid approximately $_____ and
$_____ to such counsel in connection with other transactions. See "Risk Factors
if the Amendment is Approved."
ALTERNATIVES CONSIDERED
The General Partner also considered a sale of some or all of the
Property but believes that a sale of all of the Property at the current time
would not be advantageous given current economic conditions, the local and
sub-market conditions where the Properties are located, and its expectation that
these economic conditions and each Property's operating performance will improve
in the long term and the tax consequences of these sales to limited partners
(including the likelihood that proceeds will not be sufficient to enable limited
partners to pay their resulting tax liability). In particular, the General
Partner considered the potential for future appreciation in the value of each
Property, the change in the local rental markets, and the tax consequences to
you and your partners of a sale of a Property. See "Investment Objectives and
Policies; Sale or Refinancings of Investments" below. The General Partner
recognized that the Amendment would not prohibit or unduly restrict the
Partnership's ability to sell the Property in the future prior to the expiration
of the extended term of the Partnership.
Further, if the General Partner had elected to sell the Properties
instead of soliciting the consent of the limited partners to extend the
Partnership's term, the General Partner is of the view that prospective buyers
could infer that the General Partner had a limited amount of time to sell the
Properties. In that circumstance, the General Partner is of the opinion that its
negotiating leverage in selling the Properties would have been greatly reduced,
and the proceeds to the Partnership and the limited partners would likely be
lower than if the Properties were disposed of over time in an orderly manner.
INFORMATION ABOUT YOUR PARTNERSHIP
GENERAL. Your Partnership was organized under the Uniform Limited
Partnership Act of the Commonwealth of Massachusetts on June 20, 1983 for the
purpose of owning income-producing residential, commercial and industrial
properties. The General Partner is wholly-owned by First Winthrop Corporation, a
Delaware corporation ("First Winthrop"), the controlling entities of which are
Winthrop Financial Associates, A Limited Partnership, and Apartment Investment
and Management Company ("AIMCO"), a publicly traded real estate investment
trust. The Partnership Agreement provides that the Partnership is to terminate
on December 31, 2003.
The Partnership was initially capitalized with contributions of $1,000
from each of the general partners and $5,000 from the Initial Limited Partner.
The Partnership, through a public offering, sold 23,144 Units aggregating
$23,144,000. An additional five Units were held by WFC Realty Co., Inc., a
subsidiary of First Winthrop. These five Units were subsequently purchased by an
affiliate of First Winthrop.
On October 28, 1997, Insignia Financial Group, Inc. ("Insignia")
acquired 100% of the Class B stock of First Winthrop, as well as a 20.7% limited
partnership interest in the Partnership. Pursuant to this transaction, the
by-laws of the General Partner were amended to provide for the creation of a
Residential Committee. Pursuant to the amended and restated by-laws, Insignia
had the right to elect one director to the General Partner's Board of Directors
and to cause the General Partner to take such actions as it deemed necessary and
advisable in connection with the activities of the Partnership. Pursuant to a
series of transactions which closed on October 1, 1998 and February 26, 1999,
Insignia and Insignia Properties Trust merged into AIMCO, with AIMCO being the
surviving corporation. As a result, AIMCO acquired all of the rights of Insignia
in and to the limited partnership interests and the rights granted to Insignia
pursuant to the First Winthrop Corporation transaction.
Your Partnership is engaged in the business of operating and holding
real estate properties for investment. Your Partnership invested approximately
$18,177,000 of the original offering proceeds in four apartment complexes.
During
SCHEDULE 14A Page 12 of 20
2000, the Partnership sold Sunflower Apartments to an unaffiliated third party
for approximately $6,900,000, and during 2002, the Partnership sold Stratford
Village Apartments to an unaffiliated third party for approximately $9,514,000.
Your Partnership made distributions to the partners of $197.85 per unit of
limited partnership ("Unit") in 2000, $138.64 per Unit in 2001, and $216.99 per
Unit in 2002.
During 2000, the Partnership sold Sunflower Apartments to an
unaffiliated third party for approximately $6,900,000, and during 2002, the
Partnership sold Stratford Village Apartments to an unaffiliated third party for
approximately $9,514,000. Information on distributions from the Partnership
during the past three years is set forth below. The Partnership continues to
hold two apartment complexes - Ashton Ridge Apartments, a 356-unit apartment
complex located in Jacksonville, Florida, and Stratford Place Apartments, a
350-unit apartment complex located in Gaithersburg, Maryland. See "The
Properties."
The Partnership does not have any employees. Management and
administrative services are provided by the General Partner and by agents
retained by the General Partner. An affiliate of the General Partner has been
providing such property management services.
PROPERTY MANAGEMENT. The Properties are currently managed, and have for
some time been managed, by an affiliate of AIMCO Properties. Pursuant to the
management agreement between the property manager and your Partnership, the
property manager operates the Properties, establishes rental policies and rates
and directs marketing activities. The property manager also is responsible for
maintenance, the purchase of equipment and supplies, and the selection and
engagement of all vendors, suppliers and independent contractors.
DISTRIBUTIONS.
The following table sets forth the distributions declared and paid by
the Partnership for the following periods:
<Table>
<Caption>
Aggregate Per Limited Partnership
Unit
01/01/00 - 12/31/00 $4,578,000(1) $ 197.85
01/01/01 - 12/31/01 $3,301,000(2) $ 138.64
01/01/02 - 12/31/02 $5,102,000(3) $ 216.99
01/01/03 - 01/31/03 $ 300,000(4) $ 12.97
</Table>
(1) Distributions consisted of approximately $3,700,000 from
surplus cash due to proceeds from the sale of Sunflower
Apartments and approximately $878,000 from operations.
(2) Distributions consisted of approximately $1,893,000 from
the refinancing proceeds of Ashton Ridge Apartments in
December 2000, approximately $97,000 from the remaining
sale proceeds of Sunflower Apartments in December 2000 and
approximately $1,311,000 from operations. Approximately
$3,208,000 was distributed to limited partners and the
balance to the Managing General Partner in accordance with
the terms of the Partnership Agreement.
(3) Distributions consisted of approximately $3,730,000 of
proceeds from the sale of Stratford Village Apartments in
November 2002 and approximately $1,372,000 from
operations. Approximately $5,021,000 was distributed to
limited partners and the balance to the General Partner in
accordance with the terms of the Partnership Agreement.
(4) Distributions consisted of approximately $300,000 of
remaining proceeds from the sale of Stratford Village
Apartments in November 2002, all of which was distributed
to the limited partners.
Future cash distributions will depend on the levels of net cash
generated from operations, the availability of cash reserves and the timing of
debt maturities, refinancings, and/or property sales. The Partnership's cash
available for distribution is reviewed on a monthly basis. There can be no
assurance that the Partnership will generate sufficient funds from operations
after required capital expenditures to permit any additional distributions to
its partners in the year 2003 or subsequent periods.
ADDITIONAL INFORMATION. For additional information about your
Partnership, please refer to the Annual Report of the Partnership attached as
Annex I, which contains detailed information regarding the Properties. In
addition, your Partnership, AIMCO and AIMCO Properties are subject to the
information and reporting requirements of the Securities
SCHEDULE 14A Page 13 of 20
Exchange Act of 1934, as amended, and, in accordance therewith, file reports and
other information with the SEC relating to the business, financial condition and
other matters of each of the foregoing entities. Such reports and other
information may be inspected at the public reference facility maintained by the
SEC at Judiciary Plaza, 450 Fifth Street, N.W., Room 1200, Washington, D.C.
20549. Copies of such material can also be obtained from the Public Reference
Room of the SEC in Washington, D.C. at prescribed rates. The SEC also maintains
a site on the World Wide Web at http://www.sec.gov that contains reports, proxy
and information statements and other information regarding registrants that file
electronically with the SEC.
THE PROPERTIES
The remaining Properties controlled by your Partnership are (1) Ashton
Ridge Apartments, a 356-unit apartment complex located in Jacksonville, Florida,
and (2) Stratford Place Apartments, a 350-unit apartment complex located in
Gaithersburg, Maryland. The Properties are held by limited partnerships in which
your Partnership holds a 99.9% and 99.98% interest, respectively.
Set forth below is the gross carrying value, accumulated depreciation,
depreciable life, method of depreciation, and Federal tax basis for each of the
Properties.
<Table>
<Caption>
Gross
Carrying Accumulated
Property Value Depreciation Rate Method Federal Tax Basis
(in thousands) (in thousands)
Ashton Ridge Apartments $14,044 $8,657 5-40 years S/L $3,809
Stratford Place Apartments 16,347 9,765 5-40 years S/L 4,672
</Table>
The following table sets forth certain information relating to the
loans encumbering the Properties:
<Table>
<Caption>
Principal Stated
Balance at Interest Period Principal Balance
Property 12/31/2002 Rate Amortized Maturity Date Due At Maturity
(in thousands) (in thousands)
Ashton Ridge Apartments $5,794 7.31% 240 mos. 01/01/2021 --
1st mortgage
Stratford Place Apartments 8,528 8.23% 120 mos. 07/01/2006 $7,739
1st mortgage
</Table>
The mortgage notes payable are non-recourse and are secured by a pledge
of the mortgaged Property and revenues from the respective Property. The
mortgages the Properties are subject to prepayment penalties if the loans are
paid prior to maturity. Further, the Partnership's investment properties may not
be sold subject to existing indebtedness.
Scheduled principal payments of mortgage notes payable subsequent to
December 31, 2002, are as follows (in thousands):
<Table>
2003 $ 363
2004 393
2005 424
2006 8,065
2007 214
Thereafter $4,863
</Table>
SCHEDULE 14A Page 14 of 20
AVERAGE RENTAL RATES AND OCCUPANCY. The following table sets forth the
average rental rates and occupancy for 2002 and 2001 for the Properties:
<Table>
<Caption>
Average Annual Rental Rates Average Occupancy
Property (per unit) (per unit)
2002 2001 2002 2001
Ashton Ridge Apartments $7,080 $6,946 96% 95%
Stratford Place Apartments 9,701 9,287 96% 97%
</Table>
Real estate taxes were approximately $327,000 in 2002. During the year
ended December 31, 2002, the Partnership spent approximately $705,000 for
capital improvements consisting primarily of structural improvements, floor
covering and appliance replacements, building improvements related to
reconstruction from casualties, air conditioning unit replacements, exterior
painting, and water heater, and major landscaping and plumbing enhancements.
These improvements were funded from operating cash flow, insurance proceeds, and
replacement reserves. The Partnership is currently evaluating the capital
improvement needs of the Properties for the upcoming year and expects to budget
approximately $212,000. Additional improvements for any Property may be
considered and will depend on the physical condition of that Property as well as
anticipated cash flow generated by the Property.
INVESTMENT OBJECTIVES AND POLICIES; SALE OR FINANCING OF INVESTMENTS.
In general, your General Partner, together with the property manager, which is
an affiliate of AIMCO Properties, regularly evaluates your Partnership's
property by considering various factors, such as the Partnership's financial
position and real estate and capital markets conditions. The General Partner
monitors their specific locale and sub-market conditions (including stability of
the surrounding neighborhood), evaluating current trends, competition, new
construction and economic changes. It oversees each asset's operating
performance and continuously evaluates the physical improvement requirements. In
addition, the financing structure for the property (including any prepayment
penalties), tax implications, availability of attractive mortgage financing to a
purchaser, and the investment climate are all considered. Any of these factors,
and possibly others, could potentially contribute to any decision by the General
Partner to sell, refinance, upgrade with capital improvements or hold a
Partnership property. If rental market conditions improve, the level of
distributions might increase over time. It is possible that the private resale
market for properties could improve over time, making a sale of the
Partnership's property in a private transaction at some point in the future a
more viable option than it is currently. After taking into account the foregoing
considerations, your General Partner currently is of the view that a sale of the
Properties would not be on advantageous terms primarily because it expects
operating performance to improve in the long term. In making this assessment,
your general partner noted the occupancy and rental rates at the Properties. The
General Partner is of the opinion that a sale of the Properties at the present
time would not adequately reflect the future prospects of the Properties.
Another significant factor considered by your General Partner is the likely tax
consequences of a sale of one the Properties for cash. Such a transaction would
likely result in tax liabilities for many unitholders. Further, if the General
Partner is required to sell the Properties pursuant to the dissolution and
winding up of the Partnership, the General Partner is of the view that
prospective buyers could infer that the General Partner has a limited amount of
time to sell the Properties. In that circumstance, the General Partner is of the
opinion that its negotiating leverage in selling the Properties may be reduced.
CAPITAL REPLACEMENTS. Your Partnership has an ongoing program of
capital improvements, replacements and renovations, including roof replacements,
kitchen and bath renovations, balcony repairs (where applicable), replacement of
various building systems and other replacements and renovations in the ordinary
course of business. All capital improvements are intended to be paid from
operating cash flows, insurance proceeds, cash reserves, or from short-term or
long-term borrowings.
The General Partner is of the opinion that the Properties are
adequately insured. Each of the Properties is an apartment complex which leases
its units for lease terms of one year or less. No tenant leases 10% or more of
the available rental space. The Properties are in good physical condition,
subject to normal depreciation and deterioration as is typical for assets of
this type and age.
COMPETITION. The real estate industry is highly competitive. There are
other residential properties within the market area of the Properties. The
number and quality of competitive properties in such an area could have a
material effect on the rental market for the apartments at the Properties and
the rents that may be charged for such apartments. While AIMCO is a significant
factor in the United States in the apartment industry, competition for
apartments is local.
SCHEDULE 14A Page 15 of 20
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following summary of the material U.S. Federal income tax
consequences is based upon current U.S. Federal tax law which is subject to
change, possibly with retroactive effect. This summary is for general
information only and does not address all aspects of U.S. Federal income
taxation that may be relevant in the particular circumstances of each limited
partner or to limited partners subject to special treatment under the Code. In
addition, this summary does not address any state, local or foreign tax
consequences. No ruling from the Internal Revenue Service ("IRS") will be
requested with respect to the U.S. Federal income tax consequences of the
liquidation and dissolution of the Partnership, and, as such, there can be no
assurance that the IRS will agree with the summary set forth herein.
There will no Federal or state income tax consequences resulting solely
from the approval of the Amendment extending the term of the Partnership
Agreement. However, failure to approve the Amendment for any reason, including
the failure of the limited partners to approve the selection of counsel by the
General Partner, will require that the General Partner take steps to liquidate
the Partnership's assets and dissolve after December 31, 2003 in accordance with
the terms of the Partnership Agreement and applicable law.
Tax Consequences of Sale, Exchange, or Other Disposition of Partnership
Property in Liquidation and Dissolution of the Partnership. While the
description set forth below is a general description of the tax consequences
that a partner of the Partnership may incur as a result of steps taken in
liquidation and dissolution of the Partnership in the 2003 tax year, each
partner should consult with his or her own tax advisor to determine his or her
particular tax consequences.
A sale, exchange or other disposition of any Property by Partnership
likely would result in the recognition of gain or loss by the Partnership equal
to the difference between (i) the amount realized for the Property and (ii) the
Partnership's tax basis (which has been reduced because of prior years'
depreciation deductions) in the Property. The amount realized for the Property
would be the selling price for the Property, less any expenses of sale, plus any
liabilities assumed by the purchaser of the Property or liabilities that the
purchaser takes the Property subject to. In addition, to the extent that the
Partnership may recognize COD income to the extent it is unable to satisfy all
of other Partnership indebtedness that is not assumed by the purchaser of the
Property. Any taxable gain or loss and COD income will pass through to the
partners of the Partnership.
Any gain or loss recognized as a result of the transfer of any Property
may be characterized for taxation purposes as ordinary or capital, or a
combination of both. To the extent that any part of a Property being sold
consists of depreciable personal property under Internal Revenue Code (the
"Code") Section 1245 or depreciable real property under Code Section 1250, gain
on a sale of such Property may be treated as ordinary income. Some portion of
any gain recognized on the Property may be considered "unrecaptured section 1250
gain" that is taxable at a maximum Federal individual rate of 25%. Generally,
the unrecaptured Code Section 1250 gain tax rate applies only to individuals and
certain other noncorporate taxpayers. Gain in excess of Code Section 1245 and
Code Section 1250 gain and unrecaptured Code Section 1250 gain generally will be
taxed as Code Section 1231 gain, which may be taxed at capital gain rates
(currently, the maximum capital gains tax rate applicable to individuals and
certain other noncorporate taxpayers is 20%) depending upon your individual tax
circumstances. Any loss from a disposition of the Property may be characterized
as ordinary loss, subject to certain rules that may require a partner to
re-characterize the loss as capital loss depending upon such partner's
particular circumstances. Any COD income recognized in connection with a
liquidation of the Partnership's assets and dissolution of the Partnership would
be taxable as ordinary income at a maximum Federal individual rate of 38.6%. The
rates set forth above are the Federal tax rates that currently are in effect for
2003.
A partner also would recognize gain or loss on any liquidation of his
or her interest in the Partnership to the extent of the difference between the
sum of the amount of cash (including a deemed distribution of cash as a result
of a reduction in a limited partner's share of Partnership liabilities) and
other property distributed to the partner and the partner's adjusted basis in
his or her Partnership interest after adjustment for any gain or loss from
operation of the Property, including any gain or loss from a transfer of the
Property by the Partnership, and COD income, if any, recognized by the
Partnership, through the date of the Partnership's dissolution. If a 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 gain recognized as a result of a transfer of the Property by the
Partnership, COD income, or any gain that is recognized upon liquidation of a
partner's interest in the Partnership.
The proceeds available for distribution to the partners of the
Partnership in the event of such a liquidation of the Partnership's assets and
dissolution of the Partnership may be less than any tax liabilities resulting
from the recognition of any gain relating to a transfer of the Property by the
Partnership, any COD income, or any gain that is recognized upon liquidation of
a partner's interest in the Partnership. Accordingly, a limited partner may need
to use funds from other sources to satisfy any such tax liabilities.
SCHEDULE 14A Page 16 of 20
If a partner possesses suspended tax losses, tax credits, or other
items of tax benefit, a partner may be able to use such items to reduce any tax
liability that arises with respect to any gain recognized as a result of the
deemed sale of the Property or upon liquidation of a partner's interest in the
Partnership.
SINCE THE TAX CONSEQUENCES TO A PARTICULAR PARTNER OF LIQUIDATION OF
THE PARTNERSHIP'S ASSETS AND A DISSOLUTION OF THE PARTNERSHIP ARE DEPENDENT IN
PART ON FACTS THAT ARE UNIQUE TO EACH SUCH PARTNER, EACH PARTNER OF THE
PARTNERSHIP IS URGED TO CONSULT HIS OR HER TAX ADVISORS AS TO THE EXACT
CONSEQUENCES TO HIM OR HER OF SUCH ACTIONS.
RECORD DATE; CONSENTS REQUIRED
The Partnership has fixed October [__], 2003 as the Record Date for
determining limited partners entitled to notice of and to consent to the
Amendment and the selection of counsel. Only limited partners of record on the
Record Date may execute and deliver a Consent Form. Approval of each of the
Amendment and the selection of counsel requires the affirmative consent of
limited partners who own more than 50% of the Partnership's outstanding Units.
As of the Record Date, there were 23,139 Units issued and outstanding.
Accordingly, approval of the Amendment will require the affirmative consent of
limited partners who own at least 11,572 Units. The Amendment will become
effective on the Expiration Date, provided consents from limited partners owning
at least 592.75 Units have been received.
SOLICITATION OF CONSENTS
Consents will be solicited by mail, telephone, e-mail and in person.
Solicitations may be made by the Solicitation Agent, or by representatives of
the General Partner, none of whom will receive additional compensation for such
solicitations. The cost of preparing, assembling, printing and mailing this
Consent Solicitation Statement and the enclosed Consent Form will be borne by
the Partnership. The fees and expenses of the Solicitation Agent are expected to
be $600.00 and will be borne by the Partnership.
CONSENT PROCEDURES
LIMITED PARTNERS WHO DESIRE TO CONSENT TO THE AMENDMENT AND/OR THE
SELECTION OF COUNSEL SHOULD DO SO BY MARKING THE APPROPRIATE BOX ON THE CONSENT
FORM INCLUDED HEREWITH, AND SIGNING, DATING AND DELIVERING THE CONSENT FORM TO
THE SOLICITATION AGENT BY MAIL IN THE SELF-ADDRESSED, POSTAGE-PAID ENVELOPE
ENCLOSED FOR THAT PURPOSE, BY OVERNIGHT COURIER OR BY FACSIMILE AT THE ADDRESS
OR FACSIMILE NUMBER SET FORTH BELOW AND ON THE CONSENT FORM, ALL IN ACCORDANCE
WITH THE INSTRUCTIONS CONTAINED HEREIN AND THEREIN.
All Consent Forms that are properly completed, signed and delivered and
not properly revoked (See "Revocation of Instructions" below) prior to the
Expiration Date, will be given effect in accordance with the specifications
thereof. IF A CONSENT FORM IS DELIVERED AND NONE OF THE "CONSENTS," THE
"WITHHOLDS CONSENT" NOR THE "ABSTAIN" BOX IS MARKED, BUT THE CONSENT FORM IS
OTHERWISE PROPERLY COMPLETED AND SIGNED, THE LIMITED PARTNER WILL BE DEEMED TO
HAVE CONSENTED TO THE AMENDMENT AND THE SELECTION OF COUNSEL.
Consent Forms must be executed in exactly the same manner as the
name(s) in which ownership of the Units is registered. If the Units to which a
Consent Form relates are held by two or more joint holders, all such holders
should sign the Consent Form. If a Consent Form is signed by a trustee, partner,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary, agency or representative capacity, such
person must so indicate when signing and submit with the Consent Form evidence
satisfactory to the Partnership of authority to execute the Consent Form.
The execution and delivery of a Consent Form will not affect a limited
partner's right to sell or transfer the Units. All Consent Forms received by the
Partnership or the Solicitation Agent (and not properly revoked) prior to the
Expiration Date will be effective notwithstanding a record transfer of such
Units subsequent to the Record Date, unless the limited
SCHEDULE 14A Page 17 of 20
partner revokes such Consent Form prior to midnight, New York City time, on the
Expiration Date by following the procedures set forth under "Revocation of
Instructions" below.
All questions as to the validity, form and eligibility (including time
of receipt) regarding consent procedures will be determined by the General
Partner in its sole discretion, which determination will be conclusive and
binding. The Partnership reserves the right to reject any or all Consent Forms
that are not in proper form. The Partnership also reserves the right to waive
any defects, irregularities or conditions of delivery as to particular Consent
Forms. Unless waived, all such defects or irregularities in connection with the
deliveries of Consent Forms must be cured within such time as the General
Partner determines. Neither the General Partner nor any of its affiliates or any
other persons shall be under any duty to give any notification of any such
defects of irregularities or waivers, nor shall any of them incur any liability
for failure to give such notification. Deliveries of Consent Forms will not be
deemed to have been made until any irregularities or defects therein have been
cured or waived. The interpretations of the terms and conditions of this
solicitation by the General Partner shall be conclusive and binding.
REVOCATION OF INSTRUCTIONS
Any limited partner who has delivered a Consent Form may revoke the
instructions set forth in such Consent Form by delivering to the Solicitation
Agent a written notice of revocation prior to midnight, New York City time, on
the Expiration Date. In order to be effective, a notice of revocation of the
instructions set forth in a Consent Form must (i) contain the name of the person
who delivered the Consent Form, (ii) be in the form of a subsequent Consent Form
marked either as "CONSENTS," "WITHHOLDS CONSENT" or "ABSTAINS," as the case may
be, or in a writing delivered to the Solicitation Agent stating that the prior
Consent Form is revoked, (iii) be signed by the limited partner in the same
manner as the original signature on the Consent Form, and (iv) be received by
the Solicitation Agent prior to midnight, New York City time, on the Expiration
Date at its address set forth on the Consent Form. A purported notice of
revocation that lacks any of the required information, is dispatched to an
improper address or is not received in a timely manner will not be effective to
revoke the instructions set forth in a Consent Form previously given. A
revocation of the instructions set forth in a Consent Form can only be
accomplished in accordance with the foregoing procedures. NO LIMITED PARTNER MAY
REVOKE THE INSTRUCTIONS SET FORTH IN A CONSENT FORM AFTER MIDNIGHT, NEW YORK
CITY TIME, ON THE EXPIRATION DATE.
NO APPRAISAL RIGHTS
Limited partners are not entitled to dissenters' appraisal rights under
Massachusetts law or the Partnership Agreement in connection with the Amendment.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
To the best knowledge of the General Partner, except as noted below, no
unitholder is currently the beneficial owner of more than five percent (5%) of
the interests of Partnership. Neither the General Partner nor any director or
officer of the General Partner owns any Units.
<Table>
<Caption>
ENTITY NUMBER OF UNITS PERCENT OF TOTAL
Apartment Investment and Management Company 4,872.34 21%
AIMCO Properties, LP (an affiliate of AIMCO) 6,106.91 26%
</Table>
SCHEDULE 14A Page 18 of 20
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
THE SOLICITATION AGENT IS:
THE ALTMAN GROUP, INC.
<Table>
By Mail: By Overnight Courier: By Hand:
1275 Valley Brook Avenue 1275 Valley Brook Avenue 1275 Valley Brook Avenue
Lyndhurst, New Jersey 07071 Lyndhurst, New Jersey 07071 Lyndhurst, New Jersey 07071
</Table>
By Facsimile: For Information please call:
(201) 460-0050 TOLL FREE (800) 461-2657
SCHEDULE 14A Page 19 of 20
PRELIMINARY COPY
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
CONSENT OF LIMITED PARTNER
The undersigned, a limited partner of Winthrop Growth Investors 1
Limited Partnership (the "Partnership"), and the holder of units ("Units") of
limited partnership interest in the Partnership, acting with respect to all of
the Units owned by the undersigned, hereby:
1. [ ] Consents [ ] Withholds Consent [ ] Abstains
to the appointment of Nixon Peabody LLP as counsel to the Partnership
for the Amendment referred to in the attached Consent Solicitation Statement, as
provided in Section 10.3 of the Partnership Agreement,
AND
2. [ ] Consents [ ] Withholds Consent [ ] Abstains
with respect to an amendment (the "Amendment") of Section 2.4 of the
Partnership's Agreement of Limited Partnership to read in its entirety as
follows:
"Term.
The Partnership commenced upon the filing with the Secretary of State
of the Commonwealth of Massachusetts, on June 20, 1983, of an Agreement
and Certificate of Limited Partnership pursuant to the Uniform Limited
Partnership Act of the Commonwealth of Massachusetts and shall continue
in full force and effect until December 31, 2021, or until dissolution
prior thereto pursuant to the provisions hereof."
IF NO ELECTION IS SPECIFIED, ANY OTHERWISE PROPERLY COMPLETED AND
SIGNED CONSENT FORM WILL BE DEEMED TO BE A CONSENT.
The undersigned hereby acknowledges receipt of the Consent Solicitation
Statement, dated __________, 2003. THIS CONSENT IS SOLICITED ON BEHALF OF
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP, BY TWO WINTHROP PROPERTIES,
INC., THE MANAGING GENERAL PARTNER. A fully completed, signed and dated copy of
this Consent Form should be sent to the Solicitation Agent by mail or overnight
courier to the address specified below, or by fax to the fax number specified
below, prior to midnight, New York City time on ______ __, 2003.
Dated: , 2003
------------
By:
--------------------------------
- -----------------------------------
Please Print Name
If held jointly:
By:
--------------------------------
- -----------------------------------
Please Print Name
Please sign exactly as you hold your Partnership Units. When signing as
an attorney-in-fact, executors, administrator, trustee or guardian, please give
your full title. If an interest is jointly held, each holder should sign. If a
corporation, please sign in full corporate name by a duly authorized officer. If
a partnership, please sign in partnership name by a duly authorized person.
SCHEDULE 14A Page 20 of 20
THE SOLICITATION AGENT IS:
THE ALTMAN GROUP, INC.
<Table>
By Mail: By Overnight Courier: By Hand:
1275 Valley Brook Avenue 1275 Valley Brook Avenue 1275 Valley Brook Avenue
Lyndhurst, New Jersey 07071 Lyndhurst, New Jersey 07071 Lyndhurst, New Jersey 07071
</Table>
By Facsimile: For Information please call:
(201) 460-0050 TOLL FREE (800) 461-2657