SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
NATIONAL PROPERTY INVESTORS 7
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 14a-6(i)(1) 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: 60,571
(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): $9,300,000
(4) Proposed maximum aggregate value of transaction: $9,300,000
(5) Total fee paid: $1,178.31
[X] 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:
NATIONAL PROPERTY INVESTORS 7
A CALIFORNIA LIMITED PARTNERSHIP
c/o THE ALTMAN GROUP, INC.
1275 Valley Brook Avenue
Lyndhurst, New Jersey 07071
March 29, 2004
Dear Limited Partner:
We are writing to request your consent to the sale by National Property
Investors 7, a California limited partnership (the "Partnership"), of its
ownership of the apartment complex known as Pines of Roanoke Apartments, located
in Roanoke, Virginia (the "Property"). Taken together with the prior sales by
the Partnership of other properties in the last 12 months, the sale by the
Partnership of the Property constitutes the sale of more than 66 2/3% of the net
book value of all of the Partnership's property in a single sale, or in multiple
sales in the same 12-month period. Therefore, pursuant to the partnership
agreement of the Partnership dated as of October 11, 1983, as amended (the
"Partnership Agreement"), the Partnership is required to obtain the consent of
the limited partners owning more than 50% of the outstanding limited partnership
units of the Partnership in order to sell the Property. The Partnership hereby
requests your consent to the sale of the Property. If the requisite limited
partner consent is not received with regard to the sale, the Partnership will
not sell the Property.
Enclosed for your consideration is a Consent Solicitation Statement, dated March
29, 2004 (the "Solicitation Statement"), and a form of Consent of Limited
Partner (the "Consent Form") for indicating whether or not you wish to grant
your consent to the sale of the Property. The consent of limited partners who
own more than 50% of all outstanding limited partnership units is required to
approve the sale. As described more fully below, affiliates of NPI Equity
Investments, Inc., a Florida corporation, the managing general partner of the
Partnership (the "Managing General Partner" or "we"), have the right to
independently vote 46.27% of the limited partnership units and intend to consent
to the sale of the Property. As a result, and due to the voting restriction
described more fully below, the consent of an additional 2.16% of the limited
partnership units, or 1,309 limited partnership units, is all that is required
to approve the sale.
THE MANAGING GENERAL PARTNER RECOMMENDS THAT YOU CONSENT
TO THE SALE OF THE PROPERTY
The Managing General Partner recommends that you consent to the sale of the
Property by fully completing, dating and signing the enclosed Consent Form and
returning it by hand, mail, overnight courier or fax, pursuant to the
instructions below.
YOUR PARTICIPATION IS VERY IMPORTANT. PLEASE REVIEW THIS LETTER AND THE
INFORMATION IN THE ATTACHED SOLICITATION STATEMENT AND RETURN THE ENCLOSED
CONSENT FORM PER THE INSTRUCTIONS BELOW. PLEASE NOTE THAT THIS SOLICITATION WILL
EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON APRIL 15, 2004.
If you have any questions or require any assistance in completing and returning
the Consent Form, please contact our Solicitation Agent, The Altman Group, Inc.,
by mail at 1275 Valley Brook Avenue, Lyndhurst, New Jersey 07071; by overnight
courier service at 1275 Valley Brook Avenue, Lyndhurst, New Jersey 07071; by fax
at (201) 460-0050; or by telephone at (800) 461-2657.
Very truly yours,
NATIONAL PROPERTY INVESTORS 7,
a California limited partnership
By: NPI EQUITY INVESTMENTS, INC.,
a Florida corporation,
its Managing General Partner
By: /s/ PATRICK F. SLAVIN
-----------------------------------
Name: Patrick F. Slavin
---------------------------------
Title: Authorized Representative
--------------------------------
CONSENT SOLICITATION STATEMENT
FOR
NATIONAL PROPERTY INVESTORS 7
A CALIFORNIA LIMITED PARTNERSHIP
c/o THE ALTMAN GROUP, INC.
1275 Valley Brook Avenue
Lyndhurst, New Jersey 07071
March 29, 2004
Dear Limited Partner:
This Consent Solicitation Statement (the "Solicitation Statement") is being
furnished to the limited partners of record as of the close of business on March
26, 2004 (the "Record Date"), of National Property Investors 7, a California
limited partnership (the "Partnership"), in connection with the solicitation of
consent to approve the sale by the Partnership of its ownership of the apartment
complex known as Pines of Roanoke Apartments, located in Roanoke, Virginia (the
"Property"). Taken together with the prior sales by the Partnership of other
properties in the last 12 months, the sale by the Partnership of the Property
constitutes the sale of more than 66 2/3% of the net book value of all of the
Partnership's property in a single sale, or in multiple sales in the same
12-month period. Therefore, pursuant to the partnership agreement of the
Partnership dated as of October 11, 1983, as amended (the "Partnership
Agreement"), the Partnership is required to obtain the consent of the limited
partners owning more than 50% of the outstanding limited partnership units of
the Partnership in order to sell the Property. The Partnership hereby requests
your consent to the sale of the Property. If the requisite limited partner
consent is not received with regard to the sale, the Partnership will not sell
the Property.
After the sale of the Property closes, we estimate that there will be
approximately $55 in pre-tax distributions per limited partnership unit to
distribute to the limited partners as a result of the sale. This amount is an
estimate, and, as explained below, is based on a number of assumptions. We
expect that the distribution for the sale will occur one to three months after
the sale closes. This Solicitation Statement contains information regarding the
sale of the Property and the reasons that NPI Equity Investments, Inc., the
managing general partner of the Partnership (the "Managing General Partner" or
"we"), has decided that the sale is in the best interests of the limited
partners. The Managing General Partner has conflicts of interest in the sale as
described in greater detail below.
This Consent Solicitation Statement is being solicited by the Managing General
Partner on behalf of the Partnership. This Solicitation Statement, and the
accompanying form of Consent of Limited Partner (the "Consent Form"), are first
being mailed to the limited partners on or about March 29, 2004.
THE MANAGING GENERAL PARTNER RECOMMENDS THAT YOU CONSENT
TO THE SALE OF THE PROPERTY
THIS SOLICITATION OF CONSENTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
APRIL 15, 2004 (THE "EXPIRATION DATE").
SEE "RISK FACTORS" BEGINNING ON PAGE 2 OF THIS SOLICITATION STATEMENT FOR A
DESCRIPTION OF RISK FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH THE SALE
OF THE PROPERTY.
Questions and requests for assistance may be directed to the Solicitation Agent,
The Altman Group, Inc., by mail at 1275 Valley Brook Avenue, Lyndhurst, New
Jersey 07071; by overnight courier service at 1275 Valley Brook Avenue,
Lyndhurst, New Jersey 07071; by fax at (201) 460-0050; or by telephone at (800)
461-2657.
RISK FACTORS
Before deciding whether or not to consent to the sale of the Property, you
should consider carefully the following risks:
1
THE VALUE OF THE PROPERTY COULD BE ADVERSELY AFFECTED IF THE SALE DOES NOT
OCCUR. The proposed sale of the Property may not occur for a number of reasons.
The sale is conditioned on customary closing conditions and, as detailed above,
the consent of the limited partners being obtained. Failure of the sale to occur
could cause a perception in the market that the Property is worth less than the
price in the purchase and sale agreement for the proposed transaction.
TIME FRAME REGARDING THE SALE OF THE PROPERTY. We continually consider whether a
property should be sold or otherwise disposed of after consideration of the
relevant factors, including prevailing economic conditions, availability of
favorable financing and tax considerations, with a view to achieving maximum
capital appreciation for the Partnership. At the current time, we believe that
the sale of the Property would be advantageous given market conditions, the
condition of the Property and tax considerations. In particular, we considered
the changes in the local rental market, the potential for appreciation in the
value of the Property and the tax consequences to you and your partners relating
to the sale. However, we cannot predict or guarantee that now is the most
advantageous time to sell the Property.
CONFLICTS OF INTEREST OF MANAGING GENERAL PARTNER. We have conflicts of interest
with respect to the sale of the Property. Based on financial statements dated
December 31, 2003, approximately $63 of partnership indebtedness to us (and our
affiliates) will be repaid from the sale proceeds. In addition, because a
general partner generally also is liable for all recourse debts and other
liabilities of a partnership when the partnership's assets are insufficient, a
sale of property reduces the general partner's liability for existing and future
partnership debt and liabilities. Furthermore, Apartment Investment and
Management Company ("AIMCO") and its affiliates hold an ownership interest in us
and own 68.82% of the outstanding limited partnership units of the Partnership
(at December 31, 2003). As a result of its ownership of 68.82% of the
outstanding limited partnership units, AIMCO is in a position to influence all
voting decisions with respect to the Partnership. (See "Record Date; Consents
Required" for a discussion of AIMCO's effective voting control.) Although we owe
fiduciary duties to the limited partners of the Partnership, we also owe
fiduciary duties to AIMCO, which owns all of the stock of AIMCO/IPT, Inc., our
sole stockholder. As a result, our duties, as managing general partner, to the
Partnership and its limited partners may come into conflict with our duties to
AIMCO.
POSSIBLE ADVERSE TAX CONSEQUENCES TO LIMITED PARTNERS. Limited partners may
recognize gain as a result of the sale of the Property. EACH LIMITED PARTNER
SHOULD CONSULT AND RELY ON ITS, HIS OR HER TAX ADVISOR REGARDING THE TAX
CONSEQUENCES TO IT, HIM OR HER OF THE SALE OF THE PROPERTY. For example, cash
distributions from the sale may be less than the taxable gain recognized by each
limited partner. Certain possible tax consequences of the sale are discussed in
more detail below under "Federal Income Tax Consequences."
RECORD DATE; CONSENTS REQUIRED
The Partnership has fixed March 26, 2004 as the Record Date for determining the
limited partners entitled to notice of and consent to the sale of the Property.
Only limited partners of record on the Record Date may execute and deliver a
Consent Form. Approval of the sale requires the affirmative consent of limited
partners who own more than 50% of the Partnership's outstanding limited
partnership units.
As of the Record Date, there were 60,517 limited partnership units issued and
outstanding. Accordingly, approval of the sale of the Property will require the
affirmative consent of limited partners who own at least 30,259 limited
partnership units. Assuming receipt of the required consents, the consent of the
limited partners to the sale will become effective on the Expiration Date. Our
affiliates currently own 41,649.67 limited partnership units, or 68.82% of the
outstanding limited partnership units. Holders of these outstanding limited
partnership units have indicated to us that they will consent to the sale.
However, 25,399 of these 41,649.67 limited partnership units held by our
affiliates are subject to a voting restriction.
Under a settlement agreement entered into by DeForest Ventures II, L.P., a prior
owner of these units, DeForest Ventures II, L.P. agreed that it would vote the
25,399 limited partnership units in the same proportion as the votes of units
not held or controlled by it on any matter that is submitted to a vote of the
limited partners by the general partner of the Partnership or its affiliates.
These limited partnership units were acquired by one of our affiliates
2
through a merger which means that these units are still subject to this voting
restriction. Our affiliates can vote free of this voting restriction an
aggregate of approximately 46.27% of the limited partnership units, consisting
of the 16,250.67 limited partnership units acquired by our affiliates in
transactions unrelated to the merger and owned by an entity which is not
controlled by the owner of the units subject to the voting restriction plus a
corresponding proportion of the restricted limited partnership units. The
remaining portion of the 25,399 limited partnership units will be voted by us in
the same proportion as the other consents received for the sale of the Property.
As a result, the consent of the owners of an additional 1,309 limited
partnership units, or approximately 2.16% of the limited partnership units, will
be required to approve the sale. Only 2.16% of the limited partnership units
unaffiliated with us are required to consent because once this consent is
achieved the same percentage of the remaining 25,399 limited partnership units
subject to the voting restriction will automatically be voted in favor of the
sale.
In addition, your consent to the sale of the Property will authorize us, in our
discretion, to reduce the purchase price for the Property up to 10% and make any
other amendments to the purchase and sale agreement for the Property which, in
our opinion, are necessary, appropriate or desirable in connection with the sale
and that do not materially and adversely affect the Partnership.
SOLICITATION OF CONSENTS
Consents will be solicited by mail, telephone, e-mail and in person.
Solicitations may be made by representatives of us, none of whom will receive
additional compensation for such solicitations. The cost of preparing,
assembling, printing and mailing this Solicitation Statement and the enclosed
Consent Form will be borne by the Partnership. The Partnership has retained The
Altman Group, Inc. to act as its Solicitation Agent in connection with this
consent solicitation. The fees and expenses of the Solicitation Agent will be
paid by the Partnership.
CONSENT PROCEDURES
LIMITED PARTNERS WHO DESIRE TO CONSENT TO THE SALE OF THE PROPERTY SHOULD DO SO
BY MARKING THE APPROPRIATE BOX ON THE INCLUDED CONSENT FORM AND BY SIGNING,
DATING AND DELIVERING THE CONSENT FORM TO THE SOLICITATION AGENT BY HAND, MAIL,
OVERNIGHT COURIER OR FACSIMILE AT THE ADDRESS OR FACSIMILE NUMBER SET FORTH ON
THE CONSENT FORM, ALL IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN AND
THEREIN.
All Consent Forms that are properly completed, signed and delivered to the
Solicitation Agent 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 NEITHER THE
"CONSENTS," THE "WITHHOLDS CONSENT" NOR THE "ABSTAINS" BOX IS MARKED, BUT THE
CONSENT FORM IS OTHERWISE PROPERLY COMPLETED AND SIGNED, THE LIMITED PARTNER
WILL BE DEEMED TO HAVE CONSENTED TO THE SALE OF THE PROPERTY.
Consent Forms must be executed in exactly the same manner as the name(s) in
which ownership of the limited partnership units is registered. If the limited
partnership 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 limited partnership units. All Consent Forms
received by the Solicitation Agent (and not properly revoked) prior to the
Expiration Date will be effective notwithstanding a record transfer of such
limited partnership units subsequent to the Record Date, unless the limited
partner revokes such Consent Form prior to 5:00 p.m., 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 us in our 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
3
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 we determine. Neither we nor any of our affiliates or any other persons shall
be under any duty to give any notification of any such defects, 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 us shall be
conclusive and binding.
REVOCATION OF INSTRUCTIONS
Any limited partner who has delivered a Consent Form to the Solicitation Agent
may revoke the instructions set forth in such Consent Form by delivering to the
Solicitation Agent a written notice of revocation prior to 5:00 p.m., 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 us 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 5:00 p.m., New York City time, on the
Expiration Date at one of its addresses or facsimile number 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 telephone number 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 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
NO APPRAISAL RIGHTS
Limited partners of the Partnership are not entitled to dissenters' appraisal
rights under California law or the Partnership Agreement in connection with the
sale of the Property.
REGULATORY APPROVALS
Other than the filing and distribution of this Solicitation Statement, no
regulatory approvals are required for the sale of the Property.
MANAGING GENERAL PARTNER'S RECOMMENDATION
We recommend that the limited partners consent to the sale of the Property. We
believe that the sale is in the best interests of the Partnership and its
limited partners. In making its determination, the General Partner considered 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 1978 and, given its age, probably will
require substantial capital expenditures in the future for which
existing reserves may 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 recent economic downturn may make it difficult to find a buyer at a
future date or to sell the Property at as favorable a price.
4
o Due to the economic downturn and the age of the Property, the occupancy
rates have been declining since 2001 and the rental rates have been
declining since 2001.
In general, we regularly evaluate a sale of the Partnership's properties by
considering various factors, such as the Partnership's financial position and
real estate market conditions. We monitor the properties' specific locale and
sub-market conditions (including stability of the surrounding neighborhood),
evaluating current trends, competition, new construction and economic changes.
We oversee each asset's operating performance and continuously evaluate the
physical improvement requirements. In addition, the financing structure for a
property (including any prepayment penalties), tax implications, availability of
attractive mortgage financing and the investment climate all are considered.
Another significant factor that we consider is the tax consequences of a
particular sale of property. After taking into account the foregoing
considerations, we believe it to be in the best interests of the Partnership and
the limited partners to sell the Property.
For these reasons, we have approved the sale of the Property and the purchase
and sale agreement, the terms and conditions of which are described in greater
detail below.
SUMMARY OF THE TRANSACTION
The following is a summary of the purchase and sale transaction for the
Property:
Jackson Square Properties, LLC, a California limited liability company, or an
affiliate thereof, or an assignee described below, will acquire the Property for
$9,300,000 cash, less lender fees (e.g., any applicable penalties and costs to
prepay the loan encumbering the Property), pursuant to a purchase and sale
agreement dated as of February 12, 2004 (as amended). The completion of the sale
of the Property is scheduled to occur on April 30, 2004.
THE SALES PROCESS
On June 25, 2003, we hired Marcus & Millichap, a national real estate brokerage
firm, to market the Property. They marketed the Property nationally to
prospective buyers known to be interested in the acquisition of multifamily
housing projects similar to the Property. The broker received offers from 12
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 solicitation based on these
criteria. The broker has received brokerage fees from us and our affiliates from
time to time. Neither we nor our affiliates bid on the Property.
THE BUYER
Jackson Square Properties, LLC, the buyer of the Property, which is not
affiliated with the Partnership, agreed to acquire the Property through
arms-length negotiations. We or our affiliates may have conducted business with
the buyers or its affiliates from time to time. Jackson Square Properties, LLC
has an office located at 500 Washington Street, Suite 700, San Francisco, CA
94111, and its telephone number is (415) 445-7800. Jackson Square Properties,
LLC may assign its rights to acquire the Property to (a) its affiliates or (b)
to purchasing entity(ies) that are affiliated with David Gustafson, Eric Wilcox
and/or Ken Meislin if the transaction will be used for the purposes of a "1031
Exchange" under the Code (as defined below).
THE PROPERTY
The Partnership has owned and operated the Property, a 216-unit apartment
complex located in Roanoke, Virginia, since April 1985. The Property constitutes
approximately 61% of the Partnership's outstanding assets. However, the
Property, taken together with three other properties sold by the Partnership
within the past 12 months, represents 86% of the Partnership's outstanding
assets. There is a first mortgage loan on the Property with an unpaid balance of
approximately $3,844,980 (as of January 31, 2004). The loan encumbering the
Property will be paid in full at closing, with the costs of all fees and costs
of such payment-in-full to be paid by the buyer and deducted from the purchase
price payable to the Partnership.
5
APPROVAL OF THE SALE
We have approved the sale of the Property and determined that such sale is in
the best interests of the Partnership and the limited partners.
Section 16.2.5 of the Partnership Agreement provides that the Partnership's sale
of all or substantially all of its assets, or 66 2/3% or more of the net book
value of all of the Partnership's property, in a single sale, or in multiple
sales in the same 12-month period, must be approved by the limited partners
owning a majority of the limited partnership units entitled to vote thereon.
As of December 31, 2003, the Partnership has approximately 1,109 limited
partners who collectively own 60,517 outstanding limited partnership units. Each
limited partnership unit represents approximately 0.0017% of the outstanding
limited partnership units. Our affiliates currently own 41,649.67 limited
partnership units, or 68.82% of the outstanding limited partnership units.
Holders of these outstanding limited partnership units have indicated to us that
they will consent to the sale of the Property. However, 25,399 of these
41,649.67 limited partnership units held by our affiliates are subject to a
voting restriction.
Under a settlement agreement entered into by DeForest Ventures II, L.P., a prior
owner of these units, DeForest Ventures II, L.P. agreed that it would vote the
25,399 limited partnership units in the same proportion as the votes of units
not held or controlled by it on any matter that is submitted to a vote of the
limited partners by the general partner of the Partnership or its affiliates.
These limited partnership units were acquired by one of our affiliates through a
merger which means that these units are still subject to this voting
restriction. Our affiliates can vote free of this voting restriction an
aggregate of approximately 46.27% of the limited partnership units, consisting
of the 16,250.67 limited partnership units acquired by our affiliates in
transactions unrelated to the merger and owned by an entity which is not
controlled by the owner of the units subject to the voting restriction plus a
corresponding proportion of the restricted limited partnership units. The
remaining portion of the 25,399 limited partnership units will be voted by us in
the same proportion as the other consents received for the sale of the Property.
As a result, the consent of the owners of an additional 1,309 limited
partnership units, or approximately 2.16% of the limited partnership units, will
be required to approve the sale. Only 2.16% of the limited partnership units
unaffiliated with us are required to consent because once this consent is
achieved the same percentage of the remaining 25,399 limited partnership units
subject to the voting restriction will automatically be voted in favor of the
sale.
In addition, your consent to the sale of the Property will authorize us, in our
discretion, to reduce the purchase price for the Property up to 10% and make any
other amendments to the purchase and sale agreement for the Property which, in
our opinion, are necessary, appropriate or desirable in connection with the sale
and that do not materially and adversely affect the Partnership.
CONFLICTS OF INTEREST
We have conflicts of interest with respect to the sale of the Property. A
general partner generally is liable for all recourse debts and other liabilities
of a partnership when the partnership's assets are insufficient. The sale
reduces our liability for existing and future Partnership debt and liabilities.
Furthermore, AIMCO and its affiliates hold an ownership interest in us and own
68.82% of the outstanding limited partnership units (at December 31, 2003). As a
result of such ownership, AIMCO is in a position to influence all voting
decisions with respect to the Partnership. (See "Record Date; Consents Required"
for a discussion of AIMCO's effective voting control) Although we owe fiduciary
duties to the limited partners of the Partnership, we also owe fiduciary duties
to AIMCO, which owns all of the stock of AIMCO/IPT, Inc., our sole stockholder.
As a result, our duties, as managing general partner, to the Partnership and its
limited partners may come into conflict with our duties to AIMCO.
USE OF PROCEEDS
We estimate that we will use the gross proceeds from the sale of the Property as
follows (subject, however, to such reductions in the purchase price and
reallocations in the proceeds as determined by us, in our reasonable discretion,
to address objections made by the buyer to the condition of the Property):
6
<Table>
Gross purchase price $ 9,300,000
Plus: Cash and cash equivalents 55,668
Plus: Other Partnership assets 48,149
Less: Mortgage debt, including accrued interest (3,844,980)
Less: Accounts payable, accrued expenses and other liabilities (67,442)
Less: Reserves for contingencies (279,000)
Less: Closing costs/sales commissions (279,000)
Less: Lender fees (1,173,838)
Less: Incentive compensation fee payable to managing general partner* (84,960)
Less: Consultant fee payable to buyer's consultant (300,000)
-----------
TOTAL 3,374,597
Net proceeds distributable to all partners 3,374,597
Percentage of proceeds allocable to limited partners 99%
Net proceeds distributable to limited partners 3,340,851
Total number of units 60,517
Distributable net proceeds per unit $ 55
</Table>
- ----------
* Pursuant to the terms of the Partnership Agreement, the Managing General
Partner is entitled to receive an incentive compensation fee upon the sale of
the Property.
These estimates assume that the closing occurs as of January 31, 2004 and are
based on information known to us at this time. These figures will adjust based
on the fact that closing will occur after January 31, 2004. 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 the 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 OF THE PROPERTY.
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 of the Property. For purposes of this tax discussion,
references to "I.R.C. Section" are to sections of the Internal Revenue Code of
1986, as amended (the "Code"). 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 of the Property 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 assumes that the Partnership will recognize gain on the
sale of the Property. 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 the sale of the Property to the extent that the amount the Partnership
realizes from the sale exceeds its adjusted basis in the Property. The
7
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 with respect to the sale. 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 a $98 gain will
be allocated per unit to the limited partners for the sale. This amount is an
estimate based on a number of assumptions as discussed under "Use of Proceeds."
Generally, if a partnership is a "dealer" with respect to a property, any gain
that it recognizes on the sale of that property will be taxed as ordinary
income. Alternatively, to the extent that a partnership is not a "dealer" with
respect to a property, 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., a 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
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 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
8
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 SALE OF THE
PROPERTY 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, THE 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 96.79% 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 partnership tax returns,
and it will continue to incur 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 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.
PLANS AFTER THE SALE
Upon the completion of the transactions in this Solicitation Statement, the
Partnership will continue to hold and operate its remaining interest in the
apartment complex known as Fairway View II Apartments, located in Baton Rouge,
Louisiana. As of the date of this Solicitation Statement, the Partnership is in
the bidding process regarding the potential sale of Fairway View II Apartments
and the estimated sale price is $8,400,000, less lender fees. Assuming the sale
of the Property occurs, and given that the Partnership has recently sold other
properties owned by it in the last 12 months, Fairway View II Apartments will
require separate consent of the limited partners if the sale occurs within 12
months after the closing on the sale of the Property.
PARTNERSHIP BUSINESS
The Partnership is a publicly held limited partnership organized in October
1983, under the California Uniform Limited Partnership Act, to acquire and
operate residential apartment complexes. We were a wholly-owned subsidiary of
Insignia Properties Trust. Effective February 26, 1999, Insignia Properties
Trust was merged into AIMCO, a publicly traded real estate investment trust. We
are now a wholly-owned subsidiary of AIMCO. Our directors and officers also
serve as executive officers of AIMCO. The Partnership Agreement provides that
the Partnership is to terminate on December 31, 2008, 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
apartment properties. The Partnership has sold five of these
9
investment properties and, as of the date of this Solicitation Statement,
continues to operate the remaining two residential apartment complexes located
throughout the southeastern United States. See below for a description of the
Partnership's remaining properties.
The Partnership, through its public offering of limited partnership units,
offered up to 100,000 limited partnership units aggregating $30,259,000. Since
the Partnership's initial offering, we have not received, nor are the limited
partners required to make, additional capital contributions. We intend 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 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 us and by agents retained by us. An affiliate of ours provides
property management services for the Property.
For information on certain pending litigation, please refer to the Partnership's
most recent report on Form 10-KSB (for the year ended December 31, 2003) filed
with the Securities and Exchange Commission.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
None of our directors or officers own any limited partnership units. The
following table sets forth certain information regarding limited partnership
units of the Partnership owned by each person or entity who is known by the
Partnership to own beneficially more than 5% of the limited partnership units as
of December 31, 2003:
<Table>
<Caption>
NAME AND ADDRESS NUMBER OF LIMITED PARTNERSHIP
OF BENEFICIAL OWNER UNITS PERCENT OF CLASS
AIMCO IPLP, L.P.
Stanford Place 3, 4582 S. Ulster St. Parkway, Suite 1100, 25,399.00(1) 41.97%
Denver, CO 80237
AIMCO Properties, L.P.
Stanford Place 3, 4582 S. Ulster St. Parkway, Suite 1100, 16,250.67(2) 26.85%
Denver, CO 80237
TOTAL: 41,649.67 68.82%
</Table>
- ----------
(1) The Units may be deemed beneficially owned by AIMCO-GP, Inc. (which is the
general partner of AIMCO Properties, L.P.) and AIMCO (which owns AIMCO-GP,
Inc.).
(2) The Units may be deemed beneficially owned by AIMCO/IPT, Inc. (which is the
general partner of Insignia Properties, L.P.) and AIMCO (which owns AIMCO/IPT,
Inc.).
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
Fairway View II Apartments, 11/84 Fee ownership, subject to Apartment - 204 units
Baton Rouge, Louisiana a first mortgage
Pines of Roanoke Apartments, 4/85 Fee ownership, subject to Apartment - 216 units
Roanoke, Virginia a first mortgage
Northwoods I and II Apartments, 7/85 Fee ownership, subject to Apartment - 320 units
Pensacola, Florida a first mortgage
</Table>
10
SUMMARY OF THE PURCHASE AND SALE AGREEMENT
The following summarizes the material terms and conditions of the purchase and
sale agreement for the Property.
THE PURCHASED ASSETS
The Partnership has agreed to sell 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
The sale transaction expressly excludes receivables; 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 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 of the Property agreed to assume after the closing the Partnership's
liabilities and obligations under (i) the leases and (ii) those property
contracts which the buyer does not desire to terminate at the closing which, by
their terms, are assignable to the buyer. Additionally, the buyer agreed to
either (a) assume the Partnership's liabilities and obligations under any
contracts affecting the Property for the purchase of gas, electricity or other
utility services after the closing, or (b) pay to the Partnership at the closing
the reasonably calculated costs for the period after the closing for any such
utility contracts (with the Partnership to remain responsible for payment of
such utility contracts after the closing).
THE EXISTING LOAN
The buyer of the Property and the Partnership have agreed that, at the closing,
the then-outstanding principal balance of the outstanding first mortgage loan on
the Property shall be paid out of the proceeds of the purchase price due at the
closing.
PURCHASE PRICE
The purchase price for the property is $9,300,000, less lender fees, payable as
follows: (i) a $100,000 deposit upon the execution of the agreement to be held
in escrow until the closing, (ii) a $400,000 deposit upon the expiration of the
buyer's feasibility period, and (iii) the balance of the purchase price at the
closing. The initial $100,000 deposit is refundable through the expiration of
the buyer's feasibility period. If the buyer does not terminate the agreement
prior to the expiration of the feasibility period, such deposit, along with the
second $400,000 deposit, becomes non-refundable, except that, if the agreement
is terminated by the buyer due to (i) a default of or breach by the Partnership
of the agreement or (ii) the failure of the Partnership to satisfy certain
conditions in the agreement, then the full $500,000 deposit shall be returned to
the buyer.
CLOSING
The sale of the Property is scheduled to take place on April 30, 2004.
11
REPRESENTATIONS AND WARRANTIES
The agreement contains the customary seller representations and warranties by
the Partnership, including, without limitation, representations and warranties
regarding partnership existence and qualification; partnership authority;
non-contravention of existing contracts; validity and enforceability of the
agreement; possessory interest in the Property; non-foreign person status under
Section 1445 of the Internal Revenue Code; governmental violations; litigation;
and material defaults under property contracts. The Partnership's aggregate
liability for a breach of its representations and warranties is capped at
$360,000 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 effective date of the agreement
through the closing, it will continue to operate the Property in the ordinary
course of business and subject to the following covenants:
o The Partnership may enter into new contracts or leases involving the
Property, renew existing leases or modify, terminate or accept the
surrender or forfeiture of any of the leases involving the Property,
modify any contracts involving the Property, or institute and prosecute
any available remedies for default under any such leases or contracts
without first obtaining the written consent of the buyer, as long as
any such new contracts or any new or renewed leases do not have a term
in excess of one year (or such longer period of time for which such
contracts or leases are entered into by the Partnership in the ordinary
course of its operation of the Property);
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
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 Partnership shall have received all consents and approvals to the
consummation of the transactions contemplated by the agreement (a) of
the Partnership's partners, members, managers, shareholders or
directors to the extent required by the Partnership's (of the
Partnership's affiliates') organizational documents, or (b) that are
required by law.
12
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;
o Neither the Partnership nor us shall be a debtor in any bankruptcy
proceeding nor shall have been in the last six months a debtor in any
bankruptcy proceeding; and
o The Partnership has, on or before April 16, 2004, notified the buyer
that the Partnership has received the requisite consent of its
partners, including its limited partners, to sell the Property.
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 under the
agreement to (a) deliver the deposit, (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 ten days after written notice from the
Partnership;
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 ten days
after written notice from the buyer; and
o By the buyer if the Partnership fails, on or before April 16, 2004, to
notify the buyer that it has received the requisite consent of its
partners, including its limited partners, to sell the Property.
If the Partnership terminates the agreement due to a default of or breach by the
buyer, then the Partnership is entitled to keep the buyer's deposit 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
deposit would be returned to the buyer), or (ii) seek specific performance for
the conveyance of the Property to the buyer (but not damages). If the buyer
terminates the agreement because the Partnership has not notified the buyer on
or before April 16, 2004 that it has received the requisite consent of its
partners, including its limited partners, to sell the Property, then the buyer
may recover its full deposit and its out-of-pocket expenses up to an aggregate
of $20,000.
EXPENSES AND CLOSING COSTS
The buyer shall pay any grantee's (but not grantor's), sales, use, recordation,
gross receipts or similar taxes, any premiums or fees required to be paid by the
buyer with respect to the title policy pursuant to the agreement, and one-half
of the customary closing costs of the escrow agent; however, the buyer shall be
responsible for any such taxes otherwise imposed on the Partnership that are
attributable to the amount in excess of $9,000,000 of the purchase price. The
Partnership shall pay the grantor's tax payable in the Commonwealth of Virginia
(up to $9,000,000 of the purchase price), the cost of recording any instrument
required to discharge any liens or encumbrances against the Property, the base
premium for the title policy to the extent required by the agreement, and
one-half of the customary closing costs of the escrow agent.
13
Additionally, the Partnership shall pay (i) the broker commission of Marcus &
Millichap, which has served as the Partnership's broker, in accordance with the
terms of a separate written contract between Marcus & Millichap and the
Partnership. The Partnership also shall pay a consulting fee of $300,000 to
Arroyo and Coates, which has served as a consultant to the buyer. The
Partnership intends to pay the broker commission and consulting fee out of the
balance of the purchase price payable on the closing, which will reduce the cash
at closing to the Partnership.
WHERE YOU CAN FIND MORE INFORMATION
The Partnership is subject to the informational requirements of the Exchange Act
and is 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 and 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 Solicitation Statement or any supplement. We have not authorized anyone
else to provide you with information. You should not assume that the information
in this Solicitation Statement or any supplement is accurate as of any date
other than the date on the front of this Solicitation Statement or the
supplement.
We are "incorporating by reference" into this Solicitation Statement certain
information we have filed with the SEC on behalf of the Partnership, which means
that we are disclosing important information to you by referring you to these
documents. The information incorporated by reference is deemed to be part of
this Solicitation Statement, except for any information superseded by
information contained directly in this Solicitation Statement. These documents
contain important information about us and our finances. This Solicitation
Statement incorporates by reference our annual report on Form 10-KSB for the
year ended December 31, 2003.
All documents we file with the SEC on behalf of the Partnership pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act from the date
of this Solicitation Statement also shall be deemed to be incorporated herein by
reference and will automatically update information in this Solicitation
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) 461-2657.
DELIVERY OF DOCUMENTS TO SECURITY HOLDERS
This Solicitation Statement is being delivered to all holders of record of the
outstanding limited partnership units as of the Record Date. The Partnership
will undertake to deliver promptly upon written or oral request additional
copies of this Solicitation Statement to any limited partner that requests
additional copies. In order to obtain such additional copies, the limited
partner may contact the Partnership by mail at c/o THE ALTMAN GROUP, INC., 1275
Valley Brook Avenue, Lyndhurst, New Jersey 07071; by telephone at (800)
461-2657; or by facsimile at (201) 460-0050.
Questions and requests for assistance regarding this Solicitation Statement and
the matters set forth herein may be directed to the Solicitation Agent, The
Altman Group, Inc. by mail at 1275 Valley Brook Avenue, Lyndhurst, New Jersey
07071; by overnight courier service at 1275 Valley Brook Avenue, Lyndhurst, New
Jersey 07071; by fax at (201) 460-0050; or by telephone at (800) 461-2657.
14
CONSENT OF LIMITED PARTNER
OF
NATIONAL PROPERTY INVESTORS 7
A CALIFORNIA LIMITED PARTNERSHIP
The undersigned, a limited partner of National Property Investors 7, a
California limited partnership (the "Partnership"), and the holder of units (the
"Units") of limited partnership interest in the Partnership, acting with respect
to all of the Units owned by the undersigned, hereby:
[ ] CONSENTS [ ] WITHHOLDS CONSENT [ ] ABSTAINS
with respect to the following actions of the Partnership:
1. The sale by the Partnership of its interest in the apartment complex
known as Pines of Roanoke Apartments, located in Roanoke, Virginia (the
"Property").
In addition, your consent to the sale of the Property will authorize the
Managing General Partner, in its discretion, to reduce the purchase price for
the Property up to 10% and make any other amendments to the purchase and sale
agreement for the Property which, in its opinion, are necessary, appropriate or
desirable in connection with the sale and that do not materially and adversely
affect the Partnership.
THE MANAGING GENERAL PARTNER OF THE PARTNERSHIP RECOMMENDS THAT YOU CONSENT TO
THE SALE OF THE PROPERTY.
IF NO ELECTION IS SPECIFIED, ANY OTHERWISE PROPERLY COMPLETED AND SIGNED CONSENT
FORM WILL BE DEEMED TO BE A CONSENT TO THE SALE OF THE PROPERTY.
The undersigned hereby acknowledges receipt of the Consent Solicitation
Statement, dated March 29, 2004. THIS CONSENT IS SOLICITED ON BEHALF OF NATIONAL
PROPERTY INVESTORS 7, BY NPI EQUITY INVESTMENTS, INC., THE MANAGING GENERAL
PARTNER.
The undersigned hereby constitutes and appoints the managing general partner of
the Partnership as his or her attorney-in-fact for the purposes of executing any
and all documents and taking any and all actions required under the partnership
agreement in connection with this consent solicitation or in order to implement
the actions set forth above.
A FULLY COMPLETED, SIGNED AND DATED COPY OF THIS CONSENT FORM SHOULD BE SENT TO
THE SOLICITATION AGENT BY HAND, MAIL, OVERNIGHT COURIER OR BY FAX TO THE ADDRESS
OR FAX NUMBER SPECIFIED ON THE LAST PAGE BELOW.
Please sign exactly as you hold your limited partnership units. When signing as
an attorney-in-fact, executor, 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.
ALL RESPONSES MUST BE RECEIVED ON OR BEFORE 5:00 P.M., NEW YORK CITY TIME, ON
APRIL 15, 2004.
[Signature Page Follows]
DATE: , 2004 INDIVIDUAL
-------------- -----
--------------------------------------------
Signature (Individual)
--------------------------------------------
Signature (All record holders should sign)
--------------------------------------------
Type or Print Name(s)
--------------------------------------------
Tax Identification or Social Security Number
--------------------------
Telephone Number
CORPORATION, PARTNERSHIP, TRUST OR OTHER
DATE: , 2004 ENTITY
-------------- -----
--------------------------------------------
--------------------------------------------
Type or Print Name of Entity
By:
-----------------------------------------
Its:
----------------------------------------
-----------------------------------------
Type or Print Name
--------------------------------------------
Tax Identification or Social Security Number
--------------------------
Telephone Number
*If interests are held by an entity, the Certificate of Signatory must also be
completed.
CERTIFICATE OF SIGNATORY
To be completed if consent is signed for by an entity.
I, ____________________________, am the __________________ of
_________________________ (the "Entity").
I certify that I am empowered and duly authorized by the Entity to
execute this consent form, and certify that the consent form has been duly and
validly executed on behalf of the Entity and constitutes the legal and binding
obligations of the Entity.
Dated: , 2004
------------- ---- ---------------------------------
Signature
---------------------------------
Please Print Name
THE SIGNED CONSENT FORM SHOULD BE DELIVERED BY ANY ONE OF THESE METHODS:
<Table>
By Facsimile: By Overnight Courier:
(201) 460-0050 The Altman Group, Inc.
1275 Valley Brook Avenue
Lyndhurst, New Jersey 07071
Attn: Paul Schulman
By Mail: By Hand:
The Altman Group, Inc. The Altman Group, Inc.
1275 Valley Brook Avenue 1275 Valley Brook Avenue
Lyndhurst, New Jersey 07071 Lyndhurst, New Jersey 07071
Attn: Paul Schulman Attn: Paul Schulman
For Information, Please
Call Paul Schulman at:
(800) 461-2657
</Table>