UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule Section 240.14a-12
UNITED INVESTORS INCOME PROPERTIES
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
$3,800,000
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(5) Total fee paid:
$481.46
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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PRELIMINARY COPY
UNITED INVESTORS REAL ESTATE, INC.
C/O THE ALTMAN GROUP, INC.
1275 VALLEY BROOK AVENUE
LYNDHURST, NEW JERSEY 07071
[__________], 2004
Dear Limited Partner:
We solicit your consent to an amendment to the agreement of limited
partnership (the "Partnership Agreement") of United Investors Income Properties,
a Missouri limited partnership (the "Partnership") in which you have invested,
to permit sales of the Partnership's property to the general partner of the
Partnership (the "General Partner") or its affiliates (the "Amendment"). If the
Amendment is approved, the Partnership plans to sell Bronson Place Apartments, a
70-unit apartment complex located in Mountlake Terrace, Washington (the
"Property"), to Bronson Place Associates, LLC, a Delaware limited liability
company (the "Purchaser") and an affiliate of the General Partner (the "Sale").
The Partnership entered into an agreement, dated September 27, 2004 (the
"Purchase Agreement"), with the Purchaser, pursuant to which the Purchaser will
purchase the Property for a gross purchase price of $3,800,000.00, which
purchase price is equal to the "as is" value of the Property previously
determined by an independent third party appraiser. The Purchase Agreement is
conditioned upon receipt of consent to the Amendment by a majority in interest
of the limited partners of the Partnership (the "Limited Partners") and upon the
failure to receive objections to the Sale from the Limited Partners who hold a
majority of the units held by all Limited Partners who are not the General
Partner or its affiliates (the "Unaffiliated Limited Partners"). The Amendment
and terms of the Sale are more fully described in the attached Consent
Solicitation Statement.
If Limited Partners approve the Amendment and the Sale is consummated
in accordance with the terms of the Purchase Agreement, the Partnership will
distribute the proceeds of the Sale in accordance with the Partnership Agreement
and applicable law after consummation of the Sale. In connection with the Sale,
we anticipate that the Partnership will distribute $3,809,468, or approximately
$62.39 per unit of limited partnership interest, to the Limited Partners.
The Purchaser is our affiliate, and both of us may be deemed to be
under common control of Apartment Investment and Management Company, a publicly
traded real estate investment trust. Accordingly, we have a substantial conflict
of interest with respect to the proposals. As a result, we do not make any
recommendation as to whether or not Limited Partners should consent to the
Amendment or object to the Sale.
We are of the opinion that Limited Partners should be presented with
the proposed Amendment and Sale of the Property at the current time for the
following reasons, among others:
o Under the terms of the Purchase Agreement, the Sale will be
consummated shortly after the requisite consents are obtained.
o In the Sale, the Partnership will not incur some of the costs
that it would otherwise incur in a sale of the Property to a
third party, such as brokerage fees which the General Partner
expects would total approximately $46,400 and which would
otherwise reduce the net sale proceeds to the Partnership.
o The Sale under the terms of the Purchase Agreement provides
more certainty to a sale of the Property than a sale to a
third party, due to, among other things, the short feasibility
period and limited conditions to closing.
o The Partnership currently owns three properties, including the
Property. After the Sale is completed, the General Partner
plans to actively market the remaining properties for sale and
distribute any available proceeds in accordance with the
Partnership Agreement and applicable law. Upon the sale of the
final property, the Partnership will be dissolved in
accordance with the terms of the Partnership Agreement. There
can be no assurances that any of the remaining properties can
be sold on terms favorable to the Partnership, that the
proceeds from the sales will be sufficient to allow for
distributions to the Limited Partners, that any distributions
of the proceeds from the sales will be sufficient to pay any
resulting tax liability, or that the properties can be sold at
all.
o The General Partner is of the opinion that the Partnership is
incurring significant administrative and accounting expenses
relating to the preparation and filing of periodic reports
with the Securities and Exchange Commission (the "SEC"),
particularly in light of the additional requirements imposed
by the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated by the SEC thereunder, administrative
and accounting expenses relating to the preparation of tax
returns and Form K-1s and general audit, tax and investor
relations expenses. Upon completion of the disposition of all
of the Partnership's properties, the Partnership will no
longer incur these expenses.
o The purchase price for the Property is equal to the appraised
market value of the fee simple interest in the Property as of
April 28, 2004.
o Market conditions are currently favorable for sellers of
properties of the type and character of the Property, largely
because of the current interest rate environment and tax
benefits and favorable financing available to purchasers of
these properties. However, these market conditions are of
uncertain duration and could be adversely affected by, among
other things, future weakness in the economy, increases in
interest rates, federal budgetary and appropriation
constraints and other factors, and there is no assurance that
the Partnership would succeed in selling the Property on equal
or better terms than in the Purchase Agreement.
o If the proposed Sale is not approved and consummated on or
before December 31, 2004, then given changing economic
conditions, among other things, the execution of a similar
sale in the future currently is uncertain.
However, there are disadvantages and risks related to the Sale, which
are more fully described in the "Risk Factors" section of the attached Consent
Solicitation Statement and include:
o The General Partner is affiliated with the Purchaser and
stands in a conflict of interest.
o The Sale did not result from arm's length bargaining.
o It is possible that the Partnership could realize a higher
purchase price if the General Partner marketed the Property to
third parties or held the Property for a longer period of
time.
o Limited Partners will recognize taxable gain in connection
with the Sale.
o After consummation of the Sale, Limited Partners will no
longer receive any distributions from operating cash flow of
the Property or upon a refinancing of the Property, and the
Partnership will continue to incur operating costs without the
benefit of revenue generated by the Property.
If the Limited Partners do not approve the Amendment or they object to
the Sale as described in the attached Consent Solicitation Statement, the
Partnership will continue to operate the Property, and there can be no assurance
that the Property will be operated profitably, the Partnership will make any
future distributions to the Limited Partners, the Limited Partners will receive
distributions equal to any future taxable income generated from operations, the
Property can continue to be operated without substantial improvements, the
Partnership will not default under its mortgages or other obligations, the
Partnership will not lose its entire investment in the Property, or a sale of
the Property on comparable or more favorable terms will be possible in the
future.
As more fully discussed in the attached Consent Solicitation Statement,
Limited Partners are not entitled to appraisal rights under applicable law or
the Partnership Agreement permitting them to seek a judicial determination of
the value of their Partnership interests in connection with the sale of
Partnership assets or an amendment to the Partnership Agreement. However, the
Partnership is providing each Limited Partner with contractual dissenters'
appraisal rights that are based upon the dissenters' appraisal rights that a
Limited Partner would have were it a shareholder in a corporate merger under the
corporation laws of Missouri.
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If you have any questions or require any assistance in completing and
returning the attached Consent Form, please contact the Solicitation Agent at
its address set forth below.
Very truly yours,
UNITED INVESTORS REAL ESTATE, INC.
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
By Facsimile: For Information please call:
(201) 460-0050 TOLL FREE (800) 217-9608
</Table>
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PRELIMINARY COPY
UNITED INVESTORS REAL ESTATE, INC.
C/O THE ALTMAN GROUP, INC.
1275 VALLEY BROOK AVENUE
LYNDHURST, NEW JERSEY 07071
CONSENT SOLICITATION STATEMENT
[__________], 2004
United Investors Real Estate, Inc., a Delaware corporation (the
"General Partner"), the general partner of United Investors Income Properties, a
Missouri limited partnership (the "Partnership"), solicits the consent of the
limited partners (the "Limited Partners") of the Partnership to an amendment to
the agreement of limited partnership of the Partnership (the "Partnership
Agreement") to permit sales of property to the General Partner or its affiliates
(the "Amendment"). If the Amendment is approved, the Partnership plans to sell
Bronson Place Apartments, a 70-unit apartment complex located in Mountlake
Terrace, Washington (the "Property"), to Bronson Place Associates, LLC, a
Delaware limited liability company (the "Purchaser") and an affiliate of the
General Partner of the Partnership, for a gross purchase price of $3,800,000.00
(the "Purchase Price") on the terms and conditions described in this Consent
Solicitation Statement (the "Sale"). The Partnership entered into an agreement,
dated September 27, 2004 (the "Purchase Agreement"), with the Purchaser,
pursuant to which the Purchaser will purchase the Property for a gross purchase
price of $3,800,000.00, which purchase price is equal to the "as is" value of
the Property previously determined by an independent third party appraiser. The
Purchase Agreement is conditioned upon receipt of consent to the Amendment by a
majority in interest of the Limited Partners and upon the failure to receive
objections to the Sale from the Limited Partners who hold a majority of the
units held by all Limited Partners who are not the General Partner or its
affiliates (the "Unaffiliated Limited Partners"). The Amendment, the Sale, and
the terms of the Purchase Agreement are more fully described in this Consent
Solicitation Statement.
If Limited Partners approve the Amendment and the Sale is consummated
in accordance with the terms of the Purchase Agreement, the Partnership will
distribute the proceeds of the Sale in accordance with the Partnership Agreement
and applicable law after the Sale is consummated. In connection with the Sale,
we anticipate that the Partnership will distribute $3,809,468, or approximately
$62.39 per unit, to the Limited Partners.
As more fully discussed in this Consent Solicitation Statement, Limited
Partners are not entitled to appraisal rights under applicable law or the
Partnership Agreement permitting them to seek a judicial determination of the
value of their Partnership interests in connection with the sale of Partnership
assets or an amendment to the Partnership Agreement. However, the Partnership is
providing each Limited Partner with contractual dissenters' appraisal rights
that are based upon the dissenters' appraisal rights that a Limited Partner
would have were it a shareholder in a corporate merger under the corporation
laws of Missouri.
SEE "RISK FACTORS" IN THIS CONSENT SOLICITATION STATEMENT FOR A
DESCRIPTION OF THE RISK FACTORS THAT YOU SHOULD CONSIDER.
This Consent Solicitation Statement and the accompanying Consent Form
are first being mailed to the Limited Partners of record as of September [__],
2004 (the "Record Date"). The Partnership has 61,063 units of limited
partnership interest (referred to in this Consent Solicitation Statement as
"units" or individually as a "unit") outstanding as of the Record Date, and each
unit represents approximately a 0.0016% interest in the Partnership. Other than
the general partnership interest held by the General Partner, the Partnership
does not have any other classes of securities.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the transaction described
herein; passed upon the merits or fairness of the transaction; or
passed upon the adequacy or accuracy of the disclosure contained in
this document. Any representation to the contrary is a criminal
offense.
The Partnership Agreement requires the prior written consent of Limited
Partners owning a majority in interest of the outstanding Units to approve the
Amendment. Affiliates of the General Partner currently own approximately 40% of
the outstanding units and will consent to the Amendment. Limited Partners owning
an additional 6,108.61, or 10.01%, of the outstanding units must approve the
Amendment for it to be approved.
In addition, we will not consummate the Sale if a majority in interest
of Unaffiliated Limited Partners object to the Sale in compliance with the
procedures set forth in this Consent Solicitation Statement. Unaffiliated
Limited Partners own 36,634 units. Therefore, if Unaffiliated Limited Partners
owning more than 18,321 unaffiliated Units, or approximately 30% of the
outstanding units, object to the Sale in compliance with the procedures set
forth in this Consent Solicitation Statement, the Sale will not be consummated.
Abstentions on the enclosed Consent will not be treated as objections, although
they will be treated as a vote against the Amendment for purposes of determining
whether the requisite vote has been achieved.
THIS SOLICITATION OF CONSENTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY
TIME, ON OCTOBER [__], UNLESS SUCH DATE IS EXTENDED BY THE GENERAL PARTNER IN
ITS DISCRETION AS DESCRIBED IN THIS CONSENT SOLICITATION STATEMENT (THIS DATE,
AS SO EXTENDED, IS REFERRED TO IN THIS CONSENT SOLICITATION STATEMENT AS the
"EXPIRATION DATE").
WE URGE YOU TO READ THIS CONSENT SOLICITATION STATEMENT CAREFULLY AND
TO CONTACT YOUR TAX ADVISOR TO THE EXTENT THAT YOU HAVE QUESTIONS RELATED TO
YOUR TAX SITUATION.
The General Partner and the Purchaser are affiliates of, and may be
deemed to be under common control with, Apartment Investment and Management
Company, a publicly traded real estate investment trust ("AIMCO"). Accordingly,
the General Partner has a substantial conflict of interest with respect to the
proposals. As a result, the General Partner does not make any recommendation as
to whether or not Limited Partners should consent to the proposed Amendment or
object to the Sale.
If the Limited Partners do not approve the Amendment or they object to
the Sale as described in this Consent Solicitation Statement, the Partnership
will continue to operate the Property, and there can be no assurance that the
Property will be operated profitably, the Partnership will make any future
distributions to the Limited Partners, the Limited Partners will receive
distributions equal to any future taxable income generated from operations, the
Property can continue to be operated without substantial improvements, the
Partnership will not default under its mortgages, the Partnership will not lose
its entire investment in the Property, or a sale of the Property on comparable
or more favorable terms will be possible in the future.
Questions and requests for assistance may be directed to the
solicitation agent, The Altman Group, Inc. (the "Solicitation Agent"), by mail
at 1275 Valley Brook Avenue, Lyndhurst, New Jersey 07071, by telephone toll free
at (800) 217-9608 or by fax at (201) 460-0050.
SUMMARY
This summary highlights the most material information regarding the
Amendment and the Sale but does not describe all of their details. We urge you
to read this entire Consent Solicitation Statement. We have also included in
this summary references to the section of this Consent Solicitation Statement in
which a more complete discussion may be found.
o THE AMENDMENT. The Partnership Agreement will be amended to
eliminate prohibitions against the sale of the Partnership's
property to the General Partner or its affiliates. In
addition, the provisions relating to the authority granted to
the Partnership will be revised to expressly permit the sale
of the Partnership's property to the General Partner or its
affiliates. See "The Amendment" for additional information.
o THE SALE. The Partnership has entered into the Purchase
Agreement with the Purchaser, pursuant to which the Purchaser
will purchase the Property for a gross purchase price of
$3,800,000.00, which
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purchase price is equal to the "as is" value of the Property
previously determined by an independent third party appraiser.
The Purchase Agreement is conditioned upon receipt of consent
to the Amendment by a majority in interest of the Limited
Partners and upon the failure to receive objections to the
Sale from the Unaffiliated Limited Partners who hold a
majority of the units held by all Unaffiliated Limited
Partners. The proposed terms of the Sale are more fully
described below in "The Sale."
o DISTRIBUTION FROM SALE PROCEEDS. If Limited Partners approve
the Amendment and do not object to the Sale, the Partnership
will distribute the proceeds of the Sale in accordance with
the Partnership Agreement and applicable law after the Sale is
consummated. In connection with the Sale, we anticipate that
the Partnership will distribute $3,809,468, or approximately
$62.39 per unit, to the Limited Partners. See "Sale Proceeds
and Estimated Tax Consequences" for additional information.
o APPROVAL OF THE PROPOSAL. The Partnership Agreement requires
the prior written consent of Limited Partners owning a
majority in interest of the outstanding units to approve the
Amendment. Affiliates of the General Partner currently own
approximately 40% of the outstanding units and will consent to
the Amendment. Unaffiliated Limited Partners owning in the
aggregate 6,108.61, or 10.01%, of the outstanding units must
approve the Amendment for it to be approved.
In addition, we will not consummate the Sale if a majority in
interest of the Unaffiliated Limited Partners withhold consent
to the Sale in compliance with the procedures set forth in
this Consent Solicitation Statement. Unaffiliated Limited
Partners own 36,634 units. Therefore, if Unaffiliated Limited
Partners owning more than 18,321 units, or approximately 30%
of the outstanding units, withhold consent to the Sale in
compliance with the procedures set forth in this Consent
Solicitation Statement, the Sale will not be consummated.
Abstentions on the enclosed Consent will not be treated as
objections. See "Solicitation of Consents and Consents
Required" for additional information.
o REASONS FOR THE PROPOSALS. The General Partner and AIMCO
Properties, L.P., a Delaware limited partnership that conducts
substantially all of the business of AIMCO (the "AIMCO
Operating Partnership"), are of the opinion that increasing
audit, tax, tax return and Form K-1 preparation costs, and
investor relations expenses, and the incremental legal and
accounting fees associated with being a separate public
company particularly in light of the additional requirements
imposed by the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley")
are increasingly burdensome expenses to share among a
decreasing number of Limited Partners. Moreover, due to the
limited number of properties currently owned by the
Partnership, these increased expenses constitute significant
expenditures of the Partnership. The AIMCO Operating
Partnership and the General Partner are of the opinion that
the sale of the Partnership's properties and subsequent
dissolution will result in ownership of the properties either
by privately-held entities, in which case the obligations
would no longer apply, or by existing public entities, in
which case those obligations would be redundant, thereby
presenting opportunities to eliminate or significantly reduce
these costs and expenses.
Additionally, the AIMCO Operating Partnership is of the
opinion that by transferring ownership of the Property to a
wholly owned subsidiary, the AIMCO Operating Partnership will
have greater operating flexibility with respect to the
Property. The AIMCO Operating Partnership has advised the
General Partner that it is more difficult to integrate the
operations of the Partnership into those of the AIMCO
Operating Partnership due to the constraints and additional
costs related to the operation of the Partnership as a public
entity, including the procedural and compliance costs and
requirements associated with the registration of units of the
Partnership under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). After the proposed Sale and the
future sale of the Partnership's remaining property are
consummated, the Partnership will dissolve pursuant to the
terms of the Partnership Agreement and plans to file a notice
with the Securities and Exchange Commission (the "SEC") that
will result in the termination of the Partnership's obligation
to file annual, quarterly and other reports with the SEC.
The General Partner is of the opinion that Limited Partners
should be presented with the proposed Amendment and Sale of
the Property at the current time for the following reasons,
among others:
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o Under the terms of the Purchase Agreement, the Sale
will be consummated shortly after the requisite
consents are obtained.
o In the Sale, the Partnership will not incur some of
the costs that it would otherwise incur in a sale of
the Property to a third party, such as brokerage fees
which the General Partner expects would total
approximately $46,400 and which would reduce the net
sale proceeds to the Partnership.
o The Sale under the terms of the Purchase Agreement
provides more certainty to a sale of the Property
than a sale to a third party, due to, among other
things, the short feasibility period and abbreviated
conditions to closing.
o The AIMCO Operating Partnership and the General
Partner are of the opinion that the Partnership is
incurring significant administrative and accounting
expenses relating to the preparation and filing of
periodic reports with the SEC, particularly in light
of the additional requirements imposed by
Sarbanes-Oxley and the rules and regulations
promulgated by the SEC thereunder, administrative and
accounting expenses relating to the preparation of
tax returns and Form K-1s and general audit, tax and
investor relations expenses.
o The Purchase Price for the Property is equal to the
appraised market value of the fee simple interest in
the Property as of April 28, 2004.
o Market conditions are currently favorable for sellers
of properties of the type and character of the
Property, largely because of the current interest
rate environment and tax benefits and favorable
financing available to purchasers of these
properties. However, these market conditions are of
uncertain duration and could be adversely affected
by, among other things, future weakness in the
economy, increases in interest rates, federal
budgetary and appropriation constraints and other
factors, and there is no assurance that the
Partnership would succeed in selling the Property on
equal or better terms than in the Purchase Agreement.
o If the proposed Sale is not approved and consummated
on or before December 31, 2004, then given changing
economic conditions, among other things, the
execution of a similar sale in the future currently
is uncertain.
See "Background" and "Reasons for and Fairness of the Proposals" for
additional information.
o DISADVANTAGES OF THE AMENDMENT. The Amendment will permit the
Partnership to sell its properties to the General Partner and
its affiliates, although the General Partner would have
conflicts of interest with respect to the transaction. See
"Risks Factors - Risks Associated with the Amendment" for
additional information.
o DISADVANTAGES OF THE SALE. Although the General Partner is of
the opinion that the Purchase Price of the Property and the
terms of the Purchase Agreement are fair:
o The General Partner is affiliated with the Purchaser
and stands in a conflict of interest.
o The Sale did not result from arm's length bargaining.
o It is possible that the Partnership could realize a
higher purchase price if the General Partner marketed
the Property to third parties or held the Property
for a longer period of time.
o Limited Partners will recognize taxable gain in
connection with the Sale.
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o Proceeds available for distribution to the Partners
from the Sale of the Property after repayment of the
Property's debts and payment of the Partnership's
expenses may be less than the taxable gain realized
by the Partnership and any tax liability resulting
from the foregoing.
o After consummation of the Sale, Limited Partners will
no longer receive any distributions from operating
cash flow of the Property or upon a refinancing of
the Property, and the Partnership will continue to
incur operating costs without the benefit of revenue
generated by the Property.
See "Risk Factors - Risks Associated with the Sale" for additional
information.
o DETERMINATION OF PURCHASE PRICE. The Purchase Price for the
Property is equal to the "as is" value of the Property
previously determined by an independent third party appraiser.
See "The Partnership and the Property - Appraisal" for
additional information on the appraisal.
o FAIRNESS. Although the General Partner has interests that may
conflict with those of the Limited Partners, the General
Partner is of the opinion that the Amendment and the Sale are
fair to the Unaffiliated Limited Partners in view of the
factors listed below. Each of the following factors was
considered by the General Partner, although the General
Partner did not assign any particular relative weights to the
individual factors listed below. See "Summary - Reasons for
and Fairness of the Proposals" for additional factors
considered by the General Partner.
o The Purchase Price is equal to the appraised market
value of the Property as of April 28, 2004, which was
determined by an independent third party appraiser.
o There have been no other firm offers by third parties
for the Property, a merger or other extraordinary
transaction during the past two years with which to
compare the Purchase Price and resulting distribution
to Limited Partners. No other offer to purchase the
Property is currently outstanding.
o The Sale will not be consummated if Unaffiliated
Limited Partners holding a majority of the units held
by all Unaffiliated Limited Partners object to the
Sale.
See "Fairness of the Sale" for additional information.
o CONDITIONS TO THE PROPOSALS. The consent of Limited Partners
and other third parties, including lenders to the Partnership,
are required in order to effect the Amendment and consummate
the Sale. The Partnership will not proceed with the Amendment
and the Sale if the required consents are not obtained. In
addition, if Unaffiliated Limited Partners, owning more than
18,321 units, or approximately 30% of the outstanding units,
withhold consent to the Sale in compliance with the procedures
set forth in this Consent Solicitation Statement, the Sale
will not be consummated. The Amendment will not be effected
and the Sale will not be consummated, unless and until all of
the required third party consents are obtained. In addition,
none of the parties is required to consummate the Sale if the
Purchaser does not have adequate cash or financing commitments
to pay for the Property in the Sale. The Sale is also subject
to the conditions set forth in the Purchase Agreement prior to
its closing, which include the foregoing. See "The Sale -
Conditions to Closing."
o TERMINATION. Either party to the Purchase Agreement may
terminate the Purchase Agreement at any time prior to closing,
acting in their sole discretion and for any reason or no
reason, upon written notice to the other party. See "The Sale
- Termination" for additional information.
o CONFLICTS OF INTEREST. The General Partner and the Purchaser
are affiliates of, and may be deemed to be under common
control with, AIMCO. In addition, AIMCO and its affiliates
will realize substantial
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benefits from the proposed Sale of the Property to the
Purchaser and the consummation by the Purchaser of the
transactions discussed in this Consent Solicitation Statement,
including, without limitation, Partnership distributions of
sale proceeds, management fees, and a share of the residual
proceeds from the Property. Accordingly, the General Partner
has a substantial conflict of interest with respect to the
proposed Sale. See "Conflicts of Interest" for additional
information.
o NO RECOMMENDATION BY THE GENERAL PARTNER. As a result of the
General Partner's conflict of interest with respect to the
proposed Amendment and Sale, the General Partner does not make
any recommendation as to whether or not Limited Partners
should consent to the Amendment or object to the Sale. See "No
Recommendation by the General Partner" for additional
information.
o TAX CONSEQUENCES OF THE SALE. The Sale will be a taxable
transaction for United States federal income tax purposes and
possibly for state and local income tax purposes as well. See
"United States Federal Income Tax Consequences" for additional
information.
o APPRAISAL RIGHTS. Limited Partners are not entitled to
appraisal rights under applicable law or the Partnership
Agreement permitting them to seek a judicial determination of
the value of their Partnership interests in connection with
the sale of Partnership assets or an amendment to the
Partnership Agreement. However, the Partnership is providing
each Limited Partner with contractual dissenters' appraisal
rights that are based upon the dissenters' appraisal rights
that a Limited Partner would have were it a shareholder in a
corporate merger under the corporation laws of Missouri. See
"No Appraisal Rights" for additional information.
o ADDITIONAL INFORMATION. For additional information about the
Partnership, AIMCO, or the AIMCO Operating Partnership, see
"General Information." If you have any questions regarding the
transaction, please contact the Information Agent, The Altman
Group, Inc., at (800) 217-9608 (toll-free).
FORWARD LOOKING INFORMATION
The discussion set forth in this Consent Solicitation Statement
regarding estimated future capital expenditures, uses of sales proceeds,
estimated distributions to the Limited Partners and other parties, estimates of
fees and reimbursements to be received by the General Partner and its
affiliates, and estimates of the tax liabilities of the Limited Partners under
different scenarios, at the time they were made, are forward-looking information
developed by the General Partner. Any estimate of the future performance of a
business, like the Partnership's business or that of the Property, or the
performance of the Partnership if the Property is not sold, is forward-looking
and based on assumptions, some of which inevitably will prove to be incorrect.
These expectations incorporated various assumptions including, but not limited
to, net sales proceeds, transaction costs, revenue (including occupancy rates),
various operating expenses, general and administrative expenses, depreciation
expenses, capital expenditures, working capital levels, the timing of
transactions, and the actions taken or to be taken by other parties. While the
General Partner deemed these expectations to be reasonable and valid at the date
made, there is no assurance that the assumed facts will be validated, that the
expenses will actually be incurred, the results will actually be realized, or
the estimates will prove to be accurate.
BACKGROUND
Effective February 25, 1998, the General Partner became wholly-owned by
AIMCO/IPT, Inc. ("AIMCO/IPT"), a Delaware corporation and subsidiary of AIMCO,
when the prior owner of the General Partner merged into AIMCO/IPT. On May 1,
2003, Everest Properties, Inc., a California corporation ("Everest"), acquired
all of the capital stock of the General Partner. In connection with this
transaction, the General Partner and the Partnership entered into a Services
Agreement effective May 1, 2003 (the "Services Agreement") with NHP Management
Company ("NHP"), an affiliate of AIMCO, whereby NHP agreed to provide portfolio
and property management services for the Partnership. The portfolio management
services included the services the General Partner of the Partnership generally
performs or procures in connection with the management of the Partnership,
subject to certain limitations provided for in the Services Agreement. As
compensation for providing the portfolio
-6-
management services and the property management services, the General Partner
paid and assigned over to NHP all of the income, distributions, fees,
commissions, reimbursements and other payments payable by the Partnership to the
General Partner or any of its affiliates. On February 27, 2004, AIMCO/IPT
reacquired from Everest all of the capital stock of the General Partner. As of
February 26, 2004, the Services Agreement was terminated. As the sole
stockholder of the General Partner, AIMCO/IPT is in a position to remove the
current directors and elect the directors of the General Partner and
consequently to control the Partnership. As of February 27, 2004, David I.
Lesser and W. Robert Kohorst resigned as directors of the General Partner, and
AIMCO/IPT appointed Martha Long and Peter Kompaniez as directors of the General
Partner.
The General Partner, together with the property manager of the
Property, are both affiliates of the AIMCO Operating Partnership. The General
Partner regularly evaluates the Partnership's interest in the Property by
considering various factors such as the Partnership's financial position, the
physical condition of the Property, and real estate and capital market
conditions.
The AIMCO Operating Partnership and the General Partner are of the
opinion that increasing audit, tax, tax return and Form K-1 preparation costs,
and investor relations expenses, and the incremental legal and accounting fees
associated with being a separate public company are increasingly burdensome
expenses to share among a decreasing number of limited partners. Moreover, due
to the limited number of properties currently owned by the Partnership, these
increased expenses constitute significant expenditures of the Partnership.
Significantly, starting in late 2002, the AIMCO Operating Partnership and the
General Partner became aware that these expenses would likely increase
materially in the future as a result of the recently enacted Sarbanes-Oxley and
the related rules and regulations promulgated by the SEC thereunder. The AIMCO
Operating Partnership and the General Partner are of the opinion that the sale
of the Partnership's properties and dissolution will result in ownership of the
properties by privately-held entities, thereby eliminating or significantly
reducing these costs and expenses.
In addition, the AIMCO Operating Partnership has advised the General
Partner that it is more difficult to integrate the operations of the Partnership
into those of the AIMCO Operating Partnership due to the constraints and
additional costs related to the operation of the Partnership as a public entity,
including the procedural and compliance costs and requirements associated with
the registration of units of the Partnership under the Exchange Act. After the
proposed Sale and the future sale of the Partnership's remaining property are
consummated, the Partnership will dissolve pursuant to the terms of the
Partnership Agreement and plans to file a notice with the SEC that will result
in the termination of the Partnership's obligation to file annual, quarterly and
other reports with the SEC.
The sale of all of the Partnership's properties and dissolution will
also provide you with liquidity in your investment, and beginning in the year
after the year in which the dissolution occurs, you will no longer have to
include K-1 information from the Partnership in your tax returns.
In April 2004, the General Partner retained the services of KTR Newmark
Real Estate Services LLC (the "Appraiser"), an independent third party, to
appraise the fair market value of the Property. On May 10, 2004, the Appraiser
issued its report. The Partnership then entered into the Purchase Agreement with
the Purchaser, pursuant to which the Purchaser will purchase the Property for a
gross purchase price of $3,800,000. The purchase price is equal to the "as is"
value of the Property previously determined by the Appraiser.
SALE PROCEEDS AND ESTIMATED TAX CONSEQUENCES
ESTIMATED ALLOCATION OF SALES PROCEEDS. The following table contains a
summary of the estimated allocation of the proceeds to the Limited Partners from
the Sale, assuming that the Sale was completed on June 30, 2004. These
calculations are estimates based upon information currently available to the
General Partner and are provided as an example only. Based on our experience, it
is likely that the amounts set forth below will vary depending on the reserves
established to satisfy future obligations, if any, actual transaction costs, and
factors beyond the control of the General Partner.
-7-
<Table>
Gross sale price $ 3,800,000
Plus: Cash and cash equivalents 32,105
Plus: Other partnership assets 121,028
Less: Accounts payable, accrued expenses and other liabilities (53,069)
Less: Closing costs (67,600)
TOTAL $ 3,832,464
===========
Net proceeds distributable to all Partners 3,832,464
Percentage of proceeds allocable to Limited Partners 99.40%
Net proceeds distributable to Limited Partners $ 3,809,467
Total number of units 61,063
Distributable net proceeds per unit $ 62.39
===========
</Table>
ESTIMATED TAX CONSEQUENCES OF THE SALE. If the Sale is consummated, the
Partnership and the Limited Partners will recognize taxable gain. The table
below is a summary of the estimated allocation to the Limited Partners of
taxable gain upon the Sale, assuming that the Sale was completed June 30, 2004.
These calculations are estimates based upon information currently available to
the General Partner and are provided as an example only. The amounts to be
allocated to the partners may vary depending the reserves established to satisfy
future obligations, if any, actual transaction costs, and factors beyond the
control of the General Partner. Each Limited Partner should consult his or her
tax advisor regarding the tax consequences to him or her. See "United States
Federal Income Tax Consequences - Tax Consequences If the Property Is Sold."
<Table>
Gain per unit recognized on Sale $ 25
Unrecaptured Section 1250 gain per unit 25
Distribution per unit 62.39
</Table>
The receipt of Sale proceeds will generate taxable gain to the
Partnership, which will be allocated to all of the partners of the Partnership,
including the Limited Partners. Accordingly, partners will recognize gain on the
Sale.
SPECIAL FACTORS
REASONS FOR THE PROPOSALS
The AIMCO Operating Partnership and the General Partner are of the
opinion that increasing audit, tax, tax return and Form K-1 preparation costs,
and investor relations expenses, and the incremental legal and accounting fees
associated with being a separate public company are increasingly burdensome
expenses to share among a decreasing number of limited partners. Significantly,
starting in late 2002, the AIMCO Operating Partnership and the General Partner
became aware that these expenses would likely increase materially in the future
as a result of the recently enacted Sarbanes-Oxley and the related rules and
regulations promulgated by the SEC thereunder.
The AIMCO Operating Partnership is of the opinion that by transferring
ownership of the Property to a wholly owned subsidiary, the AIMCO Operating
Partnership will have greater operating flexibility with respect to the
Property. The AIMCO Operating Partnership has advised the General Partner that
it is more difficult to integrate the operations of the Partnership into those
of the AIMCO Operating Partnership due to the constraints and additional costs
related to the operation of the Partnership as a public entity, including the
procedural and compliance costs and requirements associated with the
registration of units of the Partnership under the Exchange Act. After the
proposed Sale and the future sale of the Partnership's remaining property are
consummated, the Partnership will dissolve pursuant to the terms of the
Partnership Agreement and plans to file a notice with the SEC that will result
in the termination of the Partnership's obligation to file annual, quarterly and
other reports with the SEC.
-8-
The sale of all of the Partnership's properties and dissolution will
also provide you with liquidity in your investment, and beginning in the year
after the year in which the dissolution occurs, you will no longer have to
include K-1 information from the Partnership in your tax returns.
The General Partner is of the opinion that Limited Partners should be
presented with the proposed Amendment and Sale of the Property at the current
time. It came to this conclusion based upon many factors, including the
following:
THE SALE WILL BE CLOSED QUICKLY. Under the terms of the Purchase
Agreement, the Sale will be consummated shortly after the requisite consents are
obtained.
THE SALE WILL AVOID CERTAIN CUSTOMARY TRANSACTION COSTS. In the Sale,
the Partnership will not incur some of the costs that it would otherwise incur
in a sale of the Property to a third party, such as brokerage fees which the
General Partner expects would total approximately $46,400 and which would reduce
the net sale proceeds to the Partnership.
THE PROPOSED SALE PROVIDES MORE CERTAINTY THAN A SALE TO A THIRD PARTY.
The Sale under the terms of the Purchase Agreement provides more certainty to a
sale of the Property than a sale to a third party, due to, among other things,
the short feasibility period and abbreviated conditions to closing.
THE COSTS OF ADMINISTRATIVE, ACCOUNTING, AND OTHER EXPENSES ARE
INCREASINGLY BURDENSOME. The AIMCO Operating Partnership and the General Partner
are of the opinion that the Partnership is incurring significant administrative
and accounting expenses relating to the preparation and filing of periodic
reports with the SEC, particularly in light of the additional requirements
imposed by Sarbanes-Oxley and the rules and regulations promulgated by the SEC
thereunder, administrative and accounting expenses relating to the preparation
of tax returns and Form K-1s and general audit, tax and investor relations
expenses.
THE PURCHASE PRICE IS AT A FAVORABLE LEVEL. The Purchase Price for the
Property is equal to the appraised market value of the fee simple interest in
the Property as of April 28, 2004.
CURRENT CONDITIONS ARE FAVORABLE TO A SALE. Market conditions are
currently favorable for sellers of properties of the type and character of the
Property, largely because of tax benefits and favorable financing available to
purchasers of such properties. However, these market conditions are of uncertain
duration and could be adversely affected by, among other things, continued
weakness in the economy, increases in interest rates, federal budgetary and
appropriation constraints and other factors, and there is no assurance that the
Partnership would succeed in selling the Property on equal or better terms than
in the Purchase Agreement.
THE EXECUTION OF A SIMILAR SALE IN THE FUTURE CURRENTLY IS UNCERTAIN.
If the proposed Sale is not approved and consummated on or before December 31,
2004, then given changing economic conditions, among other things, the execution
of a similar sale in the future currently is uncertain.
FUTURE TAXABLE INCOME MAY EXCEED DISTRIBUTIONS. In the future, the
Property might not generate sufficient cash for distribution to the Limited
Partners to pay resulting tax liabilities, even if it generates taxable income.
FAIRNESS OF THE PROPOSALS
FACTORS CONSIDERED BY THE GENERAL PARTNER AND THE AIMCO OPERATING
PARTNERSHIP. The AIMCO Operating Partnership owns the General Partner. As a
result, the AIMCO Operating Partnership's interests may conflict with those of
the Unaffiliated Limited Partners. Notwithstanding this conflict, the General
Partner and the AIMCO Operating Partnership are of the opinion that the
Amendment and the Sale are fair to the Unaffiliated Limited Partners on the
basis of the factors described below.
Positive Factors Considered. In determining that the Amendment and the
Sale are fair to the Unaffiliated Limited Partners, the General Partner and the
AIMCO Operating Partnership considered the following factors, each of which, in
the their opinions, supported the General Partner's and the AIMCO Operating
Partnership's determination:
-9-
o The purchase price is equal to the appraised market value of
the Property as of April 28, 2004, which was determined by an
independent third party appraiser.
o The Sale will be consummated quickly after the requisite
consents are obtained, reducing any costs associated with
delays.
o In the Sale, the Partnership will not incur some of the costs
that it would otherwise incur in a sale of the Property to a
third party, such as brokerage fees which the General Partner
expects would total approximately $46,400 and which would
reduce the net sale proceeds to the Partnership.
o The Sale under the terms of the Purchase Agreement provides
more certainty to a sale of the Property than a sale to a
third party, due to, among other things, the short feasibility
period and abbreviated conditions to closing.
o The AIMCO Operating Partnership and the General Partner are of
the opinion that the Partnership is incurring significant
administrative and accounting expenses relating to the
preparation and filing of periodic reports with the SEC,
particularly in light of the additional requirements imposed
by Sarbanes-Oxley and the rules and regulations promulgated by
the SEC thereunder, administrative and accounting expenses
relating to the preparation of tax returns and Form K-1s and
general audit, tax and investor relations expenses.
o There have been no other firm offers by third parties for the
Property, a merger or other extraordinary transaction during
the past two years with which to compare the Purchase Price
and resulting distribution to Limited Partners. No other offer
to purchase the Property is currently outstanding.
o The method used to determine the Purchase Price is a method
commonly relied upon by investors to value income producing
property.
o The ability of the Purchaser to consummate the Sale on the
terms specified in the Purchase Agreement.
o The fact that the Purchase Price to be received exceeds the
net book value of the Property, which was approximately
$2,118,000 at June 30, 2004.
Negative Factors Considered. In determining that the Amendment and the
Sale are fair to the Unaffiliated Limited Partners, the General Partner also
considered the following negative factors:
o Following the Sale, the Limited Partners will cease to
participate in future earnings or growth, if any, of the
Property or benefit from increases, if any, in the value of
the Property.
o The General Partner has actual or potential conflicts of
interest in connection with the Amendment, the Sale, and
determining that the Sale is fair to the Unaffiliated Limited
Partners. See "Conflicts of Interest."
o Neither applicable law nor the terms of the Partnership
Agreement require consent of a majority in interest of the
Limited Partners unaffiliated with the Purchaser to the
Amendment, or the Sale if the Amendment is approved.
o In structuring the Sale, neither the Partnership nor the
Limited Partners had separate representation. If separate
representation had been provided, the terms of the Sale might
have been different.
In the opinions of the General Partner and the AIMCO Operating
Partnership, these negative factors were not sufficient, either individually or
in the aggregate, to outweigh the benefits of the proposed Amendment and Sale to
the Limited Partners.
-10-
Procedural Fairness of the Proposals. The General Partner and the AIMCO
Operating Partnership are aware that AIMCO and its affiliates have interests in
the transaction or relationships that may present conflicts of interest in
connection with the Amendment and the Sale and considered these conflicts of
interest along with the other factors enumerated above in making its
determination. See "Conflicts of Interest." Further, the General Partner and the
AIMCO Operating Partnership took into account the absence of the following
procedural safeguards: (1) an unaffiliated representative to act solely on
behalf of the Partnership or the Unaffiliated Limited Partners for purposes of
negotiating the terms of the Sale, (2) the approval of the Amendment and the
Sale by a majority of non-employee directors of the General Partner's board of
directors and (3) the approval of the Amendment and the Sale by a majority in
interest of the Unaffiliated Limited Partners. As enumerated above, the General
Partner and the AIMCO Operating Partnership considered these factors to be
negative factors in its determination that the Amendment and the Sale are fair
to the Unaffiliated Limited Partners. However, the General Partner and the AIMCO
Operating Partnership are of the opinion that the Amendment and the Sale are
procedurally fair to the Unaffiliated Limited Partners because, among other
things:
o The Partnership obtained an appraisal of the Property from an
independent third party appraiser. The Purchaser determined to
pay the appraised value as the purchase price of the Property.
o The Sale will not be consummated if Unaffiliated Limited
Partners holding a majority of the units held by all
Unaffiliated Limited Partners object to the Sale.
o By providing the information required by Schedules 13E-3 and
14A of the Securities Exchange Act of 1934, as amended, the
General Partner, the AIMCO Operating Partnership and its
affiliates have provided sufficient information to each
Limited Partner to make its own decision with respect to
consenting to the Amendment and objecting to the Sale.
o The Partnership Agreement requires the prior written consent
of Limited Partners owning a majority in interest of the
outstanding units to approve the Amendment.
o The Partnership is providing each Limited Partner with
contractual dissenters' appraisal rights that are based upon
the dissenters' appraisal rights that a Limited Partner would
have were it a shareholder in a corporate merger under the
corporation laws of Missouri.
The General Partner and the AIMCO Operating Partnership found it
impracticable to assign, and they did not assign, relative weights to the
individual factors (positive, negative and procedural) considered in reaching
its conclusion as to the fairness of the Amendment and the Sale. The foregoing
discussion of the information and factors considered and given weight by the
General Partner and the AIMCO Operating Partnership is not intended to be
exhaustive but is believed to include all material factors considered by the
General Partner and the AIMCO Operating Partnership.
ALTERNATIVES TO THE AMENDMENT AND THE SALE. The assessment of the
fairness of the Amendment and the Sale by the General Partner and the AIMCO
Operating Partnership was also based on a review of other possible alternatives.
The General Partner and the AIMCO Operating Partnership considered as
alternatives to the Amendment and the Sale the continuation of the business of
the Partnership, with the Property continuing to be owned by the Partnership.
CONTINUED OWNERSHIP BY THE PARTNERSHIP. One alternative would be for the
Partnership to continue to own and operate the Property without consummating the
Sale. A number of advantages could result from the continued ownership of the
Property by the Partnership without consummation of the Sale.
Benefits of Continued Ownership. The General Partner considered the
primary benefits of continued ownership to be the following:
o Limited Partners of the Partnership would retain the potential
of receiving distributions of net cash flow arising from
operations and the sale or refinancing of the Property until
the expiration of the term of the Partnership.
-11-
o Continued ownership of the Property by the Partnership affords
the Limited Partners of the Partnership with the opportunity
to participate in any future appreciation in the Property.
o Continued ownership would avoid the disadvantages resulting
from the Sale as described in "Risk Factors - Risks Associated
with the Sale."
o Continued ownership of the Property by the Partnership would
allow Limited Partners to delay the recognition of any taxable
gain that would otherwise be triggered by the sale of the
Property.
Disadvantages of Continued Ownership. The General Partner also
considered the relative disadvantages to the Limited Partners of the Partnership
of continuing the ownership of the Property by the Partnership under its current
business plan relative to the benefits discussed above and relative to the Sale.
o If the ownership by the Partnership is continued, Limited
Partners will not have any assurance of when or if another
sale transaction will occur with respect to the Property. In
addition, continued ownership of the Property by the
Partnership would fail to secure the benefits to the Limited
Partners that are expected to result from the Sale, including
a cash distribution to the Limited Partners of approximately
$62 per unit.
o The Partnership would continue to own the Property and
therefore would continue to be exposed to the risks inherent
in Property ownership, including, but not limited to,
fluctuations in occupancy rates, operating expenses and rental
rates, which in turn may be affected by general and local
economic conditions, the supply and demand for properties of
the type owned by the Partnership and federal and local laws
and regulations affecting the ownership and operation of real
estate. Consequently, the value of the Property could decline
in the future if rental conditions, operating performance or
the real estate market decline.
Based on the factors described above, the General Partner concluded
that the disadvantages of continuing the ownership of the Property by the
Partnership under its current business plan outweighed the benefits of
continuing the ownership of the Property, and that the Amendment and the Sale
would provide greater benefit to the Limited Partners than would a continuation
of the Partnership's ownership of the Property.
OTHER ALTERNATIVES CONSIDERED BY THE GENERAL PARTNER. The General
Partner also considered other alternative transactions, including an offer by
the AIMCO Operating Partnership to exchange your units for partnership common
units or partnership preferred units in the AIMCO Operating Partnership ("OP
Units"). While this would provide an investment option for the Limited Partners
and might permit the Limited Partners to defer taxation upon disposition of
their limited partnership interests, a disadvantage of such an offer is that
those Limited Partners who desire a cash distribution with respect to their
investment would be forced to wait at least one year before they would have the
right to convert their OP Units into cash or AIMCO Class A common stock. In
addition, an exchange offer of OP Units would involve additional administrative
expense and delay, which likely would result in a lower distribution amount per
limited partnership interest than in the Sale. Finally, the AIMCO Operating
Partnership is of the opinion that, based on its historical experience, most
limited partners, when given a choice between OP Units and cash, prefer cash.
APPRAISAL.
Selection and Qualifications of Independent Appraiser. The Partnership
retained the services of KTR Newmark Real Estate Services LLC (the "Appraiser"),
an independent third party, to appraise the fair market value of the Property.
The Appraiser is an independent valuation consulting firm with offices in 9 U.S.
cities and in London. The General Partner selected the Appraiser based on its
qualifications.
Scope of Engagement. The General Partner instructed the Appraiser to
appraise the fair market value of the fee simple estate of the Property. The
General Partner did not place any limitations on the scope of the Appraiser's
investigation. Although the Appraiser appraised the market value of the
Property, the General Partner and the Purchaser determined the sale price of the
Property.
-12-
Appraisal Procedures. The Appraiser represented that its report was
prepared in conformity with the Code of Professional Ethics of the Appraisal
Institute and Uniform Standards of Professional Appraisal Practice. In preparing
its valuation of the Property, the Appraiser, among other things:
o Inspected the Property;
o Conducted neighborhood and area research, including major
employers, demographics (population trends, number of
households, and income trends), transportation, surrounding
uses, and general economic outlook of the area;
o Conducted market research of rental inventory, historical
vacancy rates, historical average rental rates, occupancy
trends, concessions, and marketing strategies in the
submarket, and occupancy rates at competing properties;
o Reviewed leasing policy, concessions and history of recent
occupancy;
o Reviewed the historical operating statements for the Property
and an operating budget forecast for 2004;
o Conducted market inquiries into recent sales of similar
properties to ascertain sales price per unit, effective gross
income multipliers and capitalization rates; and
o Prepared sales comparison and income capitalization approaches
to value.
Summary of Approaches and Methodologies Employed. The following summary
describes the material approaches and analyses employed by the Appraiser in
preparing the appraisal. The Appraiser principally relied on two approaches to
valuation: (i) the sales comparison approach and (ii) the income capitalization
approach.
The sales comparison approach uses analysis techniques and sales of
competitive properties in surrounding or competing areas to derive units of
comparison that are then used to indicate a value for the subject property.
Under this approach, the primary methods of analysis used by the Appraiser were:
(i) net operating income analysis; and (ii) effective gross income analysis.
The purpose of the income capitalization approach is to value an
income-producing property by analyzing likely future income and expenses of the
Property over a reasonable holding period. Under the income capitalization
approach, the Appraiser performed a direct capitalization analysis to derive
property value. The direct capitalization analysis determines the value of a
property by applying a capitalization rate that takes into account various
factors influencing the value of such property to the net operating income of
such property for a single year.
The Appraiser relied principally on the income capitalization approach
to valuation and secondarily on the sales comparison approach. Although the
sales comparison approach is considered a reliable method for valuing property,
the income capitalization approach is the primary approach used for valuing
income producing property, such as the Property.
Valuation Under Sales Comparison Approach. The Appraiser compared five
apartment complexes with the Property that were either listed for sale as of the
date of the appraisal or sold between October 2003 and January 2004 and located
in the Property's real estate market area. The Appraiser considered the
comparable properties as generally similar in terms of style, physical
condition, vintage, and construction componentry. The sales prices of comparable
properties indicated per unit prices ranging from $68,271 to $87,786.
As part of the sales comparison approach, the Appraiser also conducted
a net operating income ("NOI") analysis. NOI effectively takes into account the
various location and unit sizes of the comparable properties. The Appraiser
compared the Property's NOI to the NOI of the five comparable properties and
arrived at a percentage adjustment. Based on this adjustment, the Appraiser
concluded an adjusted value range of $52,074 to $58,817 per
-13-
unit with the mean and median adjusted price of $54,930 and $54,667 per unit.
Thus, the estimated value based on a $54,800 sales price per unit for the 70
units was approximately $3,836,000 using the NOI analysis.
The Appraiser also performed an effective gross income multiplier
("EGIM") analysis. The EGIM measures the relationship between the sales price of
a property and its effective gross income, which is the total annual income that
a property would produce after an allowance for losses. The Appraiser estimated
the operating expense ratio ("OER") of the Property to be 56%, with the expense
ratios of the five comparable properties ranging from 37% to 45%, resulting in
EGIMs ranging from 7.2 to 8.7. In light of the Property's OER relative to those
of the comparable properties, the Appraiser concluded an EGIM of 6.25 for the
Property, which is below the range of the comparable properties.
Consequently, the Appraiser concluded that the value for the Property
under the sales comparison approach was $3,800,000.
Valuation Under Income Capitalization Approach. Under the income
capitalization approach, the Appraiser performed a direct capitalization
analysis to derive a value for the Property.
The Appraiser also employed a direct capitalization analysis on the
Property by dividing a forecast of net operating income ("NOI") by an
appropriate capitalization rate. The Appraiser first performed an economic rent
analysis, in which the Appraiser determined the Property's rent potential by
comparing rents of competing properties and the rent actually commanded by the
Property.
The Appraiser calculated the Property's effective gross income ("EGI")
by adding apartment rental collections to other income and then making an
adjustment for vacancy and collection loss. Under this analysis, the Appraiser
arrived at an EGI of $614,620. Once the EGI was established, operating expenses
and reserves for replacement were deducted from the EGI in order to arrive at an
NOI for the Property of approximately $268,780. The Appraiser derived
appropriate investment criteria, including a capitalization rate based upon
analysis of comparable sales and a survey of real estate investors.
The assumptions employed by the Appraiser to determine the value of the
Property under the income approach included:
(1) stabilized vacancy and collection loss rate of 10%;
(2) rent concession of $6,868;
(3) loss to lease expenses of $44,160;
(4) bad debt expenses of 3.0% of total income;
(5) utility income of $36,400;
(6) other income of 5.0% of the gross rent potential;
(7) capitalization rate of 7.0%; and
(8) total expenses of $4,941 per unit inclusive of reserves.
Using the income capitalization approach, the Appraiser determined that
the direct capitalization method indicated the value for the Property was
$3,800,000.
Reconciliation of Values and Conclusions of Appraisal. The final step
in the appraisal process was to reconcile the sales comparison approach and the
income capitalization approach values to arrive at a final value conclusion. The
reconciliation of the two approaches involved considering the relative
applicability of the approaches, examining the range between the value
indications, and placing emphasis on the approach that appears to produce the
most reliable solution to the specific appraisal problem. The Appraiser
concluded that the estimated market value under the sales comparison approach
was $3,800,000 and the estimated
-14-
market value under the income capitalization approach was $3,800,000. The
Appraiser determined a final market value for the Property of $3,800,000 as of
April 28, 2004.
Assumptions, Limitations and Qualifications of the Appraiser's
Valuation. In preparing the appraisal, the Appraiser relied, without independent
verification, on the accuracy of all information supplied or otherwise made
available to it by or on behalf of the Partnership. In arriving at the
appraisal, the Appraiser assumed:
o information and data obtained from public records and other
reliable sources are satisfactory evidence;
o accuracy and reliability of information furnished to the
Appraiser;
o no undisclosed leases, agreements, liens or other encumbrances
affecting the use of the Property;
o competency and responsibility of ownership and management; and
o unless otherwise stated in the report of the Appraiser, no
substances such as asbestos, urea-formaldehyde foam
insulation, or other potentially hazardous materials in
existence or present on or in the property.
Compensation of Appraiser. The Appraiser was paid a fee of $5,000 for
the appraisal. The Appraiser has conducted and is conducting other appraisals of
property in connection with the other property sales being made with respect to
other partnerships. During the past two years, the AIMCO Operating Partnership
and its affiliates have engaged the services of the Appraiser for the purposes
of appraising certain of its properties. In connection with the performance of
these services, the AIMCO Operating Partnership and its affiliates have paid
aggregate fees to the Appraiser of approximately $220,000. Other than these
services, no material relationship has existed in the past two years or is
mutually contemplated.
Appraisal Report. A copy of the appraisal may be obtained from the
Solicitation Agent upon request at the requesting partner's expense.
RISK FACTORS
The Amendment and the Sale have certain risks and disadvantages. Before
deciding whether or not to consent to the Amendment and object to the Sale, you
should carefully consider the following:
RISKS ASSOCIATED WITH THE AMENDMENT
FUTURE SALES OF THE PARTNERSHIP'S PROPERTY TO THE GENERAL PARTNER OR
ITS AFFILIATES MAY NOT REQUIRE LIMITED PARTNER CONSENT. Under the terms of the
Partnership Agreement, consent of a majority in interest of Limited Partners is
required for a sale of all or substantially all of the Partnership's properties,
and sales of any Partnership property to the General Partner or its affiliate is
prohibited. Consent of the Limited Partners is not required to sell the
Partnership's property so long as the property does not constitute all or
substantially all of the Partnership's assets and the sale is not to the General
Partner or one of its affiliates. If the Amendment is adopted, the General
Partner would be able to sell portions of the Partnership's property to its
affiliates without the consent of Limited Partners. The General Partner,
however, will continue to be subject to fiduciary duties under applicable law
and the Partnership Agreement, which prohibit the General Partner from dealing
unfairly with the Partnership.
RISKS ASSOCIATED WITH THE SALE
CONFLICTS OF INTEREST OF GENERAL PARTNER. The General Partner of the
Partnership is an affiliate of the Purchaser and has a substantial conflict of
interest with respect to the proposed Sale. The General Partner and the
Purchaser may be deemed to be under common control of AIMCO, a publicly traded
real estate investment trust.
-15-
IF THE SALE OCCURS, AIMCO AND ITS AFFILIATES WILL RECEIVE FEES
OTHER PARTNERS WILL NOT RECEIVE. AIMCO and its affiliates will realize
substantial benefits from the proposed Sale of the Property to the
Purchaser and the consummation by the Purchaser of the transactions
discussed in this Consent Solicitation Statement. First, the General
Partner and its affiliates will receive an estimated $1,547,020 of
proceeds from the sale of the Property as distributions upon their
interests in the Partnership (not including payment of fees in
connection with the sale). Second, an affiliate of AIMCO will manage
the Property after consummation of the proposed sale for a property
management fee based on a rate of 5% of gross receipts. Third, the
Purchaser will have an additional share of net sales proceeds from a
future sale of the Property.
THE GENERAL PARTNER DOES NOT MAKE ANY RECOMMENDATION AS TO
WHETHER OR NOT LIMITED PARTNERS SHOULD OBJECT TO THE PROPOSED SALE.
Given its substantial conflict of interest with respect to the proposed
Sale, although the General Partner is of the opinion that the Sale is
fair to the Limited Partners for the reasons listed above, the General
Partner nonetheless does not make any recommendation as to whether or
not Limited Partners should object to the proposed Sale. Limited
Partners will have to make their own evaluation as to whether or not
they should object to the proposed Sale of the Property based upon a
number of factors, including without limitation their financial
position, their need or desire for cash distributions, other financial
opportunities available to them, and their tax position and the tax
consequences to them of a sale of the Property.
THE PROPOSED SALE MAY MITIGATE THE GENERAL PARTNER'S LIABILITY
FOR PARTNERSHIP LIABILITIES. The General Partner generally is liable
for all recourse debts and other liabilities of the Partnership. A sale
of the Property reduces the General Partner's liability for Partnership
debt and liabilities that increase over time through the accrual of
interest or otherwise and for liabilities and recourse debt that the
Partnership may incur in the future with respect to the Property.
THE PARTNERSHIP COULD REALIZE A HIGHER SALE PRICE IF IT MARKETED THE
PROPERTY TO THIRD PARTIES OR CONTINUED TO HOLD THE PROPERTY. Although the
General Partner is of the opinion that the Purchase Price of the Property and
the terms of the Purchase Agreement are fair to the Unaffiliated Limited
Partners, it is possible that the Partnership could realize a higher purchase
price if the General Partner marketed the Property to third parties, or held the
Property for a longer period of time. The General Partner continually considers
whether the Property should be sold or otherwise disposed of after consideration
of certain relevant factors, including prevailing economic conditions,
availability of favorable financing and tax considerations, with a view to
achieving maximum capital appreciation for the Partnership. Based on the
foregoing considerations, among others, the General Partner is of the opinion
that the Sale is in the best interests of the Limited Partners. The General
Partner, however, cannot predict or guarantee that the present time is the most
advantageous time to sell the Property.
LIMITED PARTNERS WILL RECOGNIZE GAIN UPON THE SALE. When the Property
is sold, the Partnership will recognize gain as a result of the Sale equal to
the sum of the cash received for the Property plus the amount of liabilities
assumed by the Purchaser, minus the Partnership's adjusted basis in the
Property. This gain recognized with respect to the Property will be allocated by
the Partnership to the General Partner and the Limited Partners, in accordance
with the terms of the Partnership Agreement. If the Property is sold to the
Purchaser as described in this Consent Solicitation Statement, the total amount
of gain on the Sale that will be recognized is estimated to be $25 per unit,
assuming that the Sale was consummated on June 30, 2004. The cash proceeds
distributable are estimated to be approximately $62 per unit. These estimates
are based upon information currently available to the Partnership. There can be
no assurance that these estimates will prove accurate. Each Limited Partner
should consult his or her tax advisor regarding the tax consequences to him or
her. See "United States Federal Income Tax Consequences."
THE CHARACTER OF THE GAIN RECOGNIZED UPON THE SALE LIKELY WILL BE
RECHARACTERIZED. Although gain from a sale of real property such as the Property
is generally taxed as Section 1231 gain at the same rates as capital gain income
(currently taxed at 15% for federal income tax purposes), under special rules
that apply to real property that has been depreciated, it is expected that all
of the gain from the Sale will be taxed as "unrecaptured section 1250 gain." The
maximum rate of tax at which "unrecaptured section 1250 gain" may be taxed is
25% for federal income tax purposes. Generally, the "unrecaptured section 1250
gain" tax rate applies only to individuals, trusts and estates. The amount of
"unrecaptured section 1250 gain" from the Sale is estimated to be approximately
$62 per unit, assuming that the Sale is consummated on June 30, 2004. These
estimates are based upon information currently
-16-
available to the Partnership. There can be no assurance that these estimates
will prove accurate. Each Limited Partner should consult his or her tax advisor
regarding the tax consequences to him or her. See "United States Federal Income
Tax Consequences."
IF THE PROPERTY IS SOLD, YOU WILL LOSE THE POTENTIAL TO RECEIVE FUTURE
DISTRIBUTIONS FROM THE PROPERTY. If the Property is sold, you will no longer
receive any future distributions from operating cash flow of the Property or
upon a refinancing of the Property.
LACK OF ARMS-LENGTH NEGOTIATIONS IN DETERMINING THE TERMS OF THE SALE.
The terms and conditions of the proposed Sale, including the amount of the
consideration to be paid for the Property, were determined without arms-length
negotiations. The terms of the proposed Sale could differ if they were subject
to independent third party negotiations. While the Purchase Price for the
Property is equal to a recent appraisal and the Partnership will not be required
to pay a brokerage commission with respect to the Sale, an arms-length sale of
the Property through a licensed real estate broker might result in greater
pre-tax proceeds to you than are estimated to be distributed in the proposed
Sale.
Moreover, in deciding upon the terms and conditions of the proposed
Sale, no one separately represented the interests of the Limited Partners. The
General Partner did not appoint, or ask the Limited Partners to appoint, an
unaffiliated party to represent only their interests. See "Conflicts of
Interest" below.
THE PARTNERSHIP WILL CONTINUE TO INCUR ACCOUNTING AND OTHER
ADMINISTRATIVE COSTS AND MAY NOT HAVE SUFFICIENT INCOME TO PAY THOSE EXPENSES.
If the Sale is consummated, the Partnership will continue to exist until it is
liquidated and dissolved. During such time, the Partnership will have two
remaining properties and will continue to incur accounting and other
administrative costs. The General Partner anticipates that the operating cash
flow from the remaining properties will be sufficient to pay operating expenses
and loan payments, but there can be no assurance that the remaining properties
will be operated profitably, the Partnership will make any future distributions
to Limited Partners, the Partnership will not default under any remaining
mortgages or other obligations, or the Partnership will not lose its entire
investment in the remaining property.
RISKS ASSOCIATED WITH THE REJECTION OF THE AMENDMENT AND THE SALE
THE VALUE OF THE PROPERTY COULD DECLINE IF THE SALE DOES NOT OCCUR. If
the Property is not sold, the Partnership will continue to bear the investment
risk associated with the Partnership's continued ownership of the Property. The
future success of the Partnership will depend on 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 may cause the value of the Property and the
Partnership to decline.
A SALE TO A THIRD PARTY WILL LIKELY RESULT IN CUSTOMARY TRANSACTION
COSTS. A sale of the Property to an unaffiliated third party would cause the
Partnership to incur the customary transaction costs involved with a sale of the
Property. The Sale would avoid certain of these costs such as brokerage fees
which the General Partner expects would total approximately $46,400.
A SALE TO A THIRD PARTY IS SUBJECT TO MORE UNCERTAINTY. A third party
would likely be less familiar with the Property than an affiliate of the General
Partner. As a result, a sale of the Property would likely be subject to many
more conditions as well as a longer inspection period than the Sale. The Sale
under the terms of the Purchase Agreement provides more certainty to a sale of
the Property than a sale to a third party, due to, among other things, the short
feasibility period and abbreviated conditions to closing.
THE COSTS OF ADMINISTRATIVE, ACCOUNTING, AND OTHER EXPENSES ARE
INCREASINGLY BURDENSOME. The AIMCO Operating Partnership and the General Partner
are of the opinion that the Partnership is incurring significant administrative
and accounting expenses relating to the preparation and filing of periodic
reports with the SEC, particularly in light of the additional requirements
imposed by Sarbanes-Oxley and the rules and regulations promulgated by the SEC
thereunder, administrative and accounting expenses relating to the preparation
of tax returns and Form K-1s and general audit, tax and investor relations
expenses. If the Property is not sold and the
-17-
Partnership continues in existence, these expenses will continue and will
adversely affect the Partnership's financial performance.
FUTURE TAXABLE INCOME MAY EXCEED DISTRIBUTIONS. In the future, the
Partnership might not distribute sufficient cash to the Partnership to enable
the Limited Partners to pay any resulting tax liabilities, even if it generates
taxable income.
NO RECOMMENDATION BY THE GENERAL PARTNER
The General Partner and the Purchaser are affiliates of, and may be
deemed to be under common control with, AIMCO and the AIMCO Operating
Partnership. Accordingly, the General Partner has a substantial conflict of
interest with respect to the proposed Amendment and Sale. As a result, the
General Partner does not make any recommendation as to whether or not Limited
Partners should consent to the proposed Amendment or object to the proposed
Sale.
THE AMENDMENT
The proposed Amendment to the Partnership Agreement would amend and
restate Section 9(c)(xi), which currently states:
(c) Limitations on General Partner's Authority - The General
Partner shall have no authority to do any act prohibited by law, nor
shall the General Partner have any authority to:
(xi) Permit the Partnership to purchase or lease
property in which the General Partner or any of its Affiliates
has an interest or sell any Property to the General Partner or
any of its Affiliates. Nothing in the preceding sentence shall
prohibit the General Partner from purchasing Properties in its
own name, or that of any of its Affiliates, and temporarily
holding title thereto for the purpose of facilitating the
acquisition of such Properties by the Partnership; provided,
however, that such Properties shall be purchased by the
Partnership for a price not greater than the cost of such
Properties to the General Partner or its Affiliate plus the
actual costs (which may include imputed financing costs if the
property is purchased by the General Partner or its Affiliate
on an all-cash basis) incurred by the General Partner or its
Affiliate in holding such Property and provided that there is
no difference in interest rates of the loan, if any, secured
by the Property at the time acquired by the Partnership, nor
any other benefit arising out of such transaction to the
General Partner or its Affiliate apart from the compensation
otherwise permitted by this Agreement.
The amended Section 9(c)(xi) will be the following:
(c) Limitations on General Partner's Authority - The General
Partner shall have no authority to do any act prohibited by law, nor
shall the General Partner have any authority to:
(xi) Permit the Partnership to purchase or lease
property in which the General Partner or any of its Affiliates
has an interest. Nothing in the preceding sentence shall
prohibit the General Partner from purchasing Properties in its
own name, or that of any of its Affiliates, and temporarily
holding title thereto for the purpose of facilitating the
acquisition of such Properties by the Partnership; provided,
however, that such Properties shall be purchased by the
Partnership for a price not greater than the cost of such
Properties to the General Partner or its Affiliate plus the
actual costs (which may include imputed financing costs if the
property is purchased by the General Partner or its Affiliate
on an all-cash basis) incurred by the General Partner or its
Affiliate in holding such Property and provided that there is
no difference in interest rates of the loan, if any, secured
by the Property at the time acquired by the Partnership, nor
any other benefit arising out of such transaction to the
General Partner or its Affiliate apart from the compensation
otherwise permitted by this Agreement.
In addition, the Amendment would insert new Section 9(d)(v) as follows:
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(d) Authority of Partners to Deal with Partnership - Without
limitation upon the other powers set forth herein, the General Partner
is expressly authorized, in the name of and on behalf of the
Partnership, to:
(v) Sell any Property to the General Partner or any
of its Affiliates; provided, however, that such Property shall
be sold by the Partnership for a price not less than the price
established by an independent appraiser.
We propose the Amendment, because the proposed Sale cannot be
consummated unless the Amendment is first adopted. If the Amendment is not
approved or adopted, the Purchaser or another affiliate of the General Partner
may not purchase any of the Partnership's properties. If the Amendment is
approved and adopted, the General Partner or its affiliate will be able to
purchase any of the Partnership's properties without obtaining the consent of
the Limited Partners. However, a majority in interest of the Limited Partners
would still have the right to approve or disapprove a sale of all or
substantially all of the Partnership's assets (except sales made in the ordinary
course of the Partnership's business of acquiring and disposing of properties).
The Amendment therefore will facilitate the sale of a property to the General
Partner or its affiliate.
THE SALE
PROPOSED SALE. Effective as of September 27, 2004, the Partnership
entered into the Purchase Agreement to sell the Property to the Purchaser,
pursuant to which the Purchaser will purchase the Property for $3,800,000.00.
The proposed terms of the Sale are more fully described below.
The following is a summary of the terms and conditions of the Purchase
Agreement, which may be amended or superseded at any time and from time to time
by the parties; provided, however, that if any amendment materially changes the
terms or conditions of the Sale, the General Partner will provide an opportunity
for the Unaffiliated Limited Partners to object.
PURCHASE PRICE. Pursuant to the Purchase Agreement, the purchase price
is $3,800,000. The purchase price is subject to prorations and adjustments at
the Closing (as defined below) as provided in the Purchase Agreement.
TITLE. The Purchaser may cause title to the Property to be examined at
its sole cost and expense. The Purchaser agrees to accept the following
exceptions to the title to the Property: (i) all exceptions to title to the land
shown on any title examination which the Purchaser obtains; (ii) all leases and
any other occupancy, residency, lease, tenancy and similar agreements entered
into in the ordinary course of business; and (iii) all assignments, levies and
ad valorem taxes related to the real and personal property constituting the
Property.
CLOSING. The closing of the Sale is to occur as promptly as possible
after the satisfaction or waiver of all of the conditions to closing contained
in the Purchase Agreement (the "Closing Date"). The Purchaser has the right to
extend the Closing Date in its sole discretion for up to two hundred seventy
(270) days. At any time prior to the Closing, either party may terminate the
Purchase Agreement, in each case acting in their sole discretion and for any
reason or no reason, upon written notice. In such case, the Purchase Agreement
and the transactions contemplated thereby will be terminated without liability
on the part of either party.
COSTS AND FEES. The Purchaser will pay the cost of all transfer, sales,
use and excise taxes and recording costs and all other closing costs and fees
with respect to the Closing.
REPRESENTATIONS AND WARRANTIES. The Partnership made limited
representations and warranties to the Purchaser in the Purchase Agreement,
including representations and warranties as to, among other things, the
Partnership's organization, power and authority to enter into and complete
transactions, title matters, possession of the Property, and commissions. The
Purchaser has made limited representations and warranties to the Partnership
including representations and warranties as to, among other things, its
organization, power and authority, absence of litigation and claims, and
commissions.
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CONDITIONS TO CLOSING. The Purchaser's obligation to close under the
Purchase Agreement is subject to the fulfillment in all material respects of the
following conditions precedent to the Closing: (a) delivery of all documents
required to be delivered by the Partnership pursuant to the terms and conditions
of the Purchase Agreement; (b) the truth of each of the Partnership's
representations and warranties as of the Closing Date in all material respects;
(c) the Partnership's compliance with and performance of the Partnership's
covenants, terms, and conditions under the Purchase Agreement; (d) obtaining of
the consent or approvals of any federal or state authorities having jurisdiction
over the Property, to the extent required; and (e) all other required consents
and approvals to the sale have been obtained, on terms and conditions reasonably
acceptable to the Purchaser.
The Partnership's obligation to close under the Purchase Agreement is
subject to the fulfillment of the following conditions precedent to the Closing:
(i) the truth of each of the Purchaser's representations and warranties as of
the Closing Date and as of the Effective Date in all material respects; (ii) the
Purchaser's compliance with and performance of the Purchaser's covenants, terms,
and conditions under the Purchase Agreement; (iii) receipt by the Partnership of
all consents and approvals to the consummation of the transactions (a) of the
Partnership's partners, including the failure of Limited Partners to object to
the Sale as described in this Consent Solicitation Statement, (b) that are
required by law, or (c) that are required by the partnership agreement, as
amended; and (iv) obtaining of the consent or approvals of any federal or state
authorities having jurisdiction over the Property, to the extent required.
RISK OF LOSS. The risk of loss or damage to the Property by reason of
any insured or uninsured casualty during the period through and including the
Closing Date will be borne by the Partnership. The Partnership must maintain all
of its existing insurance coverage on the Property in full force and effect
until the Closing Date, without material modification. In the event of any
material damage to or destruction of the Property or any portion, the Purchaser
may, at its option, by notice within ten (10) days after the Purchaser is
notified of such material damage or destruction: (i) unilaterally terminate the
Purchase Agreement, or (ii) proceed under the Purchase Agreement with no
reduction in the Purchase Price, receive any insurance proceeds, together with
the amount of any deductible with respect to such insurance proceeds, and assume
responsibility for repair of the Property. If the Property is not materially
damaged, then the Purchaser may not terminate the Purchase Agreement, but all
insurance proceeds, together with the amount of any deductible with respect to
the insurance proceeds, will be paid or assigned to the Purchaser and the
Purchaser will assume responsibility for repair. "Material damage" means damages
reasonably exceeding $500,000 to repair, as determined by an independent
insurance claims adjuster doing business in the county in which the Property is
located, which claims adjuster must be reasonably satisfactory to the
Partnership and the Purchaser.
CLOSING DELIVERIES. At the Closing, the Partnership must deliver to the
Purchaser, among other things: (i) a bill of sale executed by the Partnership;
(ii) a general assignment executed by the Partnership; (iii) a release and
assumption agreement relating to the mortgage documents executed by the
Partnership; (iv) a closing statement executed by the Partnership; (v) a
certification of the Partnership's non-foreign status; (vi) any other items
including, without limitation, leases, property contracts, lease files, key, and
books and records (in each case in the Partnership's possession and control);
and (vii) such other documents reasonably necessary to consummate the
transactions contemplated by the Purchase Agreement.
The Purchaser must deliver to the Partnership at the Closing, among
other things: (i) the purchase price; (ii) a closing statement executed by the
Purchaser; (iii) a countersigned counterpart of the bill of sale by the
Purchaser; (iv) a general assignment countersigned by the Purchaser; (v) a
countersigned counterpart by the Purchaser of the release and assumption
agreement; and (vi) such other documents reasonably necessary to consummate the
transactions contemplated by the Purchase Agreement.
ASSIGNMENT. The Purchase Agreement is not assignable by either party
without first obtaining the prior written approval of the non-assigning party;
provided that either party has the right to assign the Purchase Agreement to an
affiliate without the consent of the other party.
TERMINATION. At any time prior to Closing, either party may terminate
the Purchase Agreement, in each case acting in their sole discretion and for any
reason or no reason, upon written notice. In such case, the Purchase Agreement
and the transactions contemplated will be terminated without liability on the
part of either party.
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EFFECTS OF THE SALE. After consummation of the Sale, all right, title,
and interest in the Property will be transferred to the Purchaser. The
Partnership and its partners will no longer have any economic interests in the
Property or any right with respect to the operation of the Property. The AIMCO
Operating Partnership's interest in the net earnings of the Property
(approximately $50,000 for the year ended December 31, 2003) will increase to
100%.
THE PARTNERSHIP AND THE PROPERTY
THE PARTNERSHIP. The Partnership was organized on June 23, 1988 under
the laws of the State of Missouri. Its primary business is to invest in real
estate ownership and related operations. The Partnership was formed for the
purpose of acquiring and operating for investment income-producing commercial
and multi-family residential properties.
The General Partner's and the Partnership's principal executive offices
are located at 4582 South Ulster Street Parkway, Suite 1100, Denver, Colorado
80237, telephone number (303) 757-8101.
THE GENERAL PARTNER. United Investors Real Estate, Inc., a Delaware
corporation, is the general partner of the Partnership. The General Partner owns
a 1% general partnership interest in the Partnership, and its principal business
is the ownership of the interest and the management of the Partnership. The
General Partner is an affiliate of AIMCO and the AIMCO Operating Partnership.
See "Conflicts of Interest" and "AIMCO" in this Consent Solicitation Statement.
During the past five years, the General Partner (i) has not been
convicted in a criminal proceeding (excluding minor misdemeanors), and (ii) was
not a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws, or finding any
violation with respect to such laws.
THE PROPERTY. The Property is a 70-unit housing project located in
Mountlake Terrace, Washington. The Property is managed by OP Property
Management, LLC, an entity that is a wholly-owned subsidiary of the AIMCO
Operating Partnership. Pursuant to the management agreement between the property
manager and the Partnership, the property manager operates the Property and is
responsible for maintenance, the purchase of equipment and supplies, and the
selection and engagement of all vendors, suppliers and independent contractors.
FINANCIAL INFORMATION. Certain financial information relating to the
Partnership is hereby incorporated by reference to the audited financial
statements for the Partnership's 2003 and 2002 fiscal years set forth in Part
II, Item 7 of the Partnership's Annual Report on Form 10-K for the fiscal year
ended December 31, 2003 filed with the SEC on March 29, 2004 (the "2003 10-K")
and the unaudited financial statements for the six months ended June 30, 2004
and 2003 filed with the SEC on August 13, 2004 (the "2004 10-Q"). Such reports
and other information may be inspected at the public reference facilities
maintained by the SEC at Judiciary Plaza, 450 Fifth Street, N.W., 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.
Pro forma financial statements reflecting the effect of the Sale for
the year ended December 31, 2003 are attached to this Consent Solicitation
Statement as Appendix A.
LEGAL PROCEEDINGS. On August 8, 2003 AIMCO Properties L.P., an
affiliate of the General Partner, was served with a Complaint in the United
States District Court, District of Columbia alleging that AIMCO Properties L.P.
willfully violated the Fair Labor Standards Act (FLSA) by failing to pay
maintenance workers overtime for all hours worked in excess of forty per week.
The Complaint is styled as a Collective Action under the FLSA and seeks to
certify state subclasses in California, Maryland, and the District of Columbia.
Specifically, the plaintiffs contend that AIMCO Properties L.P. failed to
compensate
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maintenance workers for time that they were required to be "on-call."
Additionally, the Complaint alleges AIMCO Properties L.P. failed to comply with
the FLSA in compensating maintenance workers for time that they worked in
responding to a call while "on-call." The Complaint also attempts to certify a
subclass for salaried service directors who are challenging their classification
as exempt from the overtime provisions of the FLSA. AIMCO Properties L.P. has
filed an answer to the Complaint denying the substantive allegations. Discovery
is currently underway. The General Partner does not anticipate that any costs to
the Partnership, whether legal or settlement costs, associated with this case
will be material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding
litigation matters involving it or its investments that are not of a routine
nature arising in the ordinary course of business.
SUMMARY FINANCIAL INFORMATION
The summarized financial information of the Partnership set forth below
for the years ended December 31, 2003, 2002, 2001, 2000 and 1999 is based on
audited financial statements that are contained in the Partnership's Annual
Reports on Form 10-KSB. This information should be read in conjunction with such
financial statements, including the notes thereto, and "Management's Discussion
and Analysis or Plan of Operation" in the Partnership's Annual Report on Form
10-KSB for the year ended December 31, 2003.
<Table>
<Caption>
For the Year Ended December 31,
------------------------------------------------------------------
2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ----------
($ in thousands, except per LP interest data)
Operating Data:
Total Revenues $ 1,758 $ 1,849 $ 1,874 $ 1,832 $ 1,814
Equity in income (loss) of
joint venture -- -- -- 10 (190)
Income from discontinued
operations -- -- -- -- 7
Impairment loss on
discontinued operations -- -- -- -- (600)
Loss on sale of discontinued
operations -- -- -- -- (246)
Net Income (Loss) 271 457 465 468 (540)
Net Income (Loss) per LP unit 4.39 7.40 7.53 7.58 (8.76)
Distributions per LP unit 6.57 9.42 12.18 32.29 20.08
Balance Sheet Data:
Cash and cash equivalents 509 344 228 332 1,167
Investment properties, net
of accumulated depreciation 6,518 6,829 7,110 7,248 7,484
Total Assets 7,102 7,251 7,402 7,668 9,252
General Partner's Deficit (61) (60) (59) (56) (41)
Limited Partners' Capital 7,020 7,153 7,276 7,560 9,069
Partners' Capital 6,959 7,093 7,217 7,504 9,028
Book value per LP unit 114.96 117.14 119.16 123.81 148.52
Total Distributions 405 581 752 1,992 1,238
Cash Flows:
Net increase (decrease) in
cash and cash equivalents 165 116 (104) (835) 239
Net cash provided by
operating activities 674 825 905 889 1,053
</Table>
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TRANSACTIONS INVOLVING PARTNERSHIP UNITS
DISTRIBUTIONS. The following table shows, for each of the years
indicated, the distributions paid to all partners for such years.
<Table>
<Caption>
YEAR ENDED DECEMBER 31, AMOUNT
----------------------- ------
2001 $ 752,000
2002 581,000
2003 405,000
2004 (through September 23) 579,000
--------------------------- -------------
TOTAL $ 2,317,000
</Table>
VOTING AND OTHER ARRANGEMENTS. The Partnership is not a party to any
agreement with any other person with respect to the voting or future sale of
partnership interests of the Partnership. We are not aware of any arrangements
that may result in a change in control of the Partnership.
SECONDARY MARKET TRANSACTIONS. Secondary market sales information is
not a reliable measure of value because of the limited amount of any known
trades. Except for offers made by us and unaffiliated third parties, privately
negotiated sales and sales through intermediaries are the only means that may be
available to a limited partner to liquidate an investment in units because the
units are not listed or traded on any exchange or quoted on Nasdaq, on the
Electronic Bulletin Board, or in "pink sheets." Secondary sales activity for the
units, including privately negotiated sales, has been limited and sporadic.
Set forth below are the high and low sale prices of units for the years
ended December 31, 2002 and 2003 and the period ended June 30, 2004, as reported
by The Direct Investments Spectrum (formerly known as The Partnership Spectrum),
which is an independent, third-party source. The gross sales prices reported by
The Direct Investments Spectrum do not necessarily reflect the net sales
proceeds received by sellers of units, which typically are reduced by
commissions and other secondary market transaction costs to amounts less than
the reported price. The Direct Investments Spectrum represents only one source
of secondary sales information, and other services may contain prices for the
units that equal or exceed the sales prices reported in The Direct Investments
Spectrum. Neither AIMCO, the AIMCO Operating Partnership nor the General Partner
can confirm whether or not the information compiled by The Direct Investments
Spectrum is accurate or complete.
SALES PRICES OF PARTNERSHIP UNITS, AS REPORTED BY THE DIRECT INVESTMENTS
SPECTRUM
<Table>
<Caption>
Calendar Quarters High Low
----------------- ---- ---
2002
First Quarter N/A N/A
Second Quarter N/A N/A
Third Quarter N/A N/A
Fourth Quarter N/A N/A
2003
First Quarter $100 $100
Second Quarter N/A N/A
Third Quarter $100 $100
Fourth Quarter N/A N/A
2004
First Quarter N/A N/A
Second Quarter (through June 30) $101 $101
</Table>
-23-
Set forth below are the high and low sale prices of units for the years
ended December 31, 2002 and 2003 and the period ended June 30, 2004, as reported
by the American Partnership Board, which is another independent, third-party
source. The gross sales prices reported by the American Partnership Board do not
necessarily reflect the net sales proceeds received by sellers of units, which
typically are reduced by commissions and other secondary market transaction
costs to amounts less than the reported price. The American Partnership Board
represents only one source of secondary sales information, and other services
may contain prices for the units that equal or exceed the sales prices reported
in the American Partnership Board. Neither AIMCO, the AIMCO Operating
Partnership nor the General Partner can confirm whether or not the information
compiled by the American Partnership Board is accurate or complete.
SALES PRICES OF PARTNERSHIP UNITS, AS REPORTED BY THE AMERICAN PARTNERSHIP BOARD
<Table>
<Caption>
Calendar Quarters High Low
----------------- ---- ---
2002
Third Quarter N/A N/A
Fourth Quarter N/A N/A
2003
First Quarter N/A N/A
Second Quarter N/A N/A
Third Quarter N/A N/A
Fourth Quarter N/A N/A
2004
First Quarter N/A N/A
Second Quarter (through June 30) $102.75 $102.75
</Table>
PRIOR TENDER OFFERS. In May 2003, the AIMCO Operating Partnership
commenced a tender offer to purchase units at the price of $108.00 per unit,
based on a calculated liquidation value of the Partnership, using the direct
capitalization method, which involves applying a capitalization rate to the
Partnership's annual residential property income, then adjusting this value for
liabilities, non-real estate assets, and certain other costs and then
determining the proceeds that would be paid to limited partners in the event of
a liquidation of the Partnership. The AIMCO Operating Partnership acquired 1,556
units, representing approximately 2.55% of the outstanding units of the
Partnership, pursuant to that offer.
In August 2002, the AIMCO Operating Partnership commenced a tender
offer to purchase units at a price of $126.00 per unit, which price was
determined using the same basic methodology as was used in the 2003 tender
offer. The AIMCO Operating Partnership acquired 2,590 units, representing
approximately 4.2% of the outstanding units of the Partnership, pursuant to that
offer.
PRIOR PURCHASES BY AFFILIATES. Excluding purchases made pursuant to the
tender offers described above, the following table shows the prices paid by the
AIMCO Operating Partnership and its affiliates (including any units repurchased
by the Partnership) for units during the past two years:
<Table>
<Caption>
NO. OF UNITS HIGHEST PRICE LOWEST PRICE AVERAGE
2002 PURCHASED PAID PAID PRICE PAID
- ---- --------- ---- ---- ----------
First Quarter N/A N/A N/A N/A
Second Quarter 96 $120.40 $120.40 $120.40
Third Quarter N/A N/A N/A N/A
Fourth Quarter N/A N/A N/A N/A
2003
First Quarter 80 $119.34 $100 $109.67
Second Quarter N/A N/A N/A N/A
Third Quarter N/A N/A N/A N/A
Fourth Quarter 68 $324 $324 $324
2004
First Quarter N/A N/A N/A N/A
Second Quarter N/A N/A N/A N/A
</Table>
-24-
RECENT TRANSACTIONS BY AFFILIATES. During the past 60 days neither the
Partnership, the General Partner, the AIMCO Operating Partnership, nor any of
their affiliates have effected a transaction involving the partnership interests
in the Partnership.
CONFLICTS OF INTEREST
The General Partner owes fiduciary duties of care and loyalty to the
Partnership and the Limited Partners. However, the General Partner is an
affiliate of the AIMCO Operating Partnership and an affiliate of the Purchaser.
The General Partner and the Purchaser may be deemed to be under common control
of AIMCO and the AIMCO Operating Partnership. The AIMCO Operating Partnership
proposed the Sale and determined the timing, structure, price and other terms of
the Sale. The AIMCO Operating Partnership and its affiliates, including the
General Partner, may have interests that conflict with your interest as a
Limited Partner. You should consider these factors before consenting to the
Amendment and the Sale.
If the Amendment is not approved or adopted, the Purchaser or another
affiliate of the General Partner may not purchase any of the Partnership's
properties. If the Amendment is approved and adopted, the General Partner or its
affiliate will be able to purchase any of the Partnership's properties without
obtaining the consent of the Limited Partners. The Amendment therefore will
facilitate the sale of a property to the General Partner or its affiliate.
AIMCO and its affiliates will realize substantial benefits from the
proposed Sale of the Property to the Purchaser and the consummation by the
Purchaser of the transactions discussed in this Consent Solicitation Statement.
First, the General Partner and its affiliates will receive an estimated
$1,547,020 of proceeds from the sale of the Property as distributions upon their
interests in the Partnership (not including payment of fees in connection with
the sale). Second, an affiliate of AIMCO will manage the Property after
consummation of the proposed sale for a property management fee based on a rate
of 5% of gross receipts. Third, the Purchaser will have an additional share of
net sales proceeds from a future sale of the Property.
An affiliate of the General Partner, OP Property Management, LLC, is
the property management agent for the Partnership's property. From May 1, 2003
until February 27, 2004, NHP Management Company, an affiliate of AIMCO ("NHP")
was the property management agent for the Partnership's property. OP Property
Management, LLC and other of its affiliates earned approximately $95,000 and
$88,000 from the Partnership for management fees and other services provided to
the Partnership during 2002 and 2003, respectively, of which approximately
$32,000 was attributable to the Property for both years. During the six months
ended June 30, 2004, affiliates earned approximately $41,000 from the
Partnership for management fees, of which $15,000 was attributable to the
Property.
An affiliate of NHP received reimbursement of accountable
administrative expenses amounting to approximately $84,000 and $94,000 for the
years ended December 31, 2003 and 2002, respectively. During the six months
ended June 30, 2004, affiliates received reimbursement of accountable
administrative expenses amounting to approximately $45,000.
The Partnership insures its property up to certain limits through
coverage provided by an affiliate of the 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 property above those limits through insurance policies obtained by the AIMCO
Operating Partnership from insurers unaffiliated with the General Partner.
During the year ended December 31, 2003 and 2002, the Partnership paid
affiliates of the General Partner approximately $23,000 and $28,000,
respectively, for insurance coverage and fees associated with policy
-25-
claims administration. During the six months ended June 30, 2004, affiliates
were paid approximately $15,000 for insurance coverage and fees.
From time to time, the AIMCO Operating Partnership and its affiliates
have purchased units of the Partnership in the past with a view to making a
profit. The AIMCO Operating Partnership and its affiliates hold 24,429 units, or
approximately 40% of the outstanding units.
The General Partner generally is liable for all recourse debts and
other liabilities of the Partnership. The Sale would reduce the General
Partner's liability for Partnership debt and liabilities that increase over time
through the accrual of interest or otherwise and for liabilities and recourse
debt that the Partnership may incur in the future.
INFORMATION CONCERNING THE PURCHASER AND AIMCO
THE PURCHASER. The Purchaser is Bronson Place Associates, LLC, a
Delaware limited liability company wholly-owned by the AIMCO Operating
Partnership. The Purchaser was formed solely for the purposes of owning and
operating the Property. The Purchaser's principal executive offices are located
at 4582 South Ulster Street Parkway, Suite 1100, Denver, Colorado 80237,
telephone number (303) 757-8101.
AIMCO. AIMCO is a Maryland corporation formed on January 10, 1994.
AIMCO is a self-administered and self-managed real estate investment trust (a
"REIT") engaged in the acquisition, ownership, management and redevelopment of
apartment properties. As of June 30, 2004, AIMCO owned or managed a real estate
portfolio of 1,578 apartment properties containing 278,011 apartment units
located in 47 states, the District of Columbia and Puerto Rico. Based on
apartment unit data compiled by the National Multi Housing Council, as of
December 31, 2003, AIMCO was the largest REIT owner and operator of apartment
properties in the United States. AIMCO's portfolio includes garden style,
mid-rise and high-rise properties and we serve approximately one million
residents per year.
AIMCO owns an equity interest in, and consolidates the majority of, the
properties in its owned real estate portfolio. These properties represent the
consolidated real estate holdings in its financial statements ("consolidated
properties"). In addition, AIMCO has an equity interest in, but does not
consolidate, certain properties that are accounted for under the equity method.
These properties represent the investment in unconsolidated real estate
partnerships in its financial statements ("unconsolidated properties").
Additionally, AIMCO manages (both property and asset) but does not own an equity
interest in other properties, although in certain cases AIMCO may indirectly own
generally less than one percent of the operations of such properties through a
partnership syndication or other fund. The equity holdings and managed
properties are as follows as of June 30, 2004:
<Table>
<Caption>
TOTAL PORTFOLIO
---------------------------------
PROPERTIES UNITS
--------------- -------------
Consolidated properties 698 174,760
Unconsolidated properties 382 54,245
Property managed for third parties 82 9,534
Asset managed for third parties 416 39,472
-------------- -------------
Total 1,578 278,011
-------------- -------------
</Table>
AIMCO owns a majority of the ownership interests in the AIMCO Operating
Partnership. Through AIMCO's wholly owned subsidiaries, AIMCO-GP, Inc.
("AIMCO-GP") and AIMCO-LP, Inc., AIMCO held approximately an 89% interest in the
common partnership units and equivalents of the AIMCO Operating Partnership as
of December 31, 2003. AIMCO conducts substantially all of its business and owns
substantially all of its assets through the AIMCO Operating Partnership.
-26-
The principal executive offices of each of AIMCO, AIMCO-GP, the AIMCO
Operating Partnership, and the Purchaser are located at 4582 South Ulster Street
Parkway, Suite 1100, Denver, Colorado 80237, and their telephone number is (303)
757-8101.
The names, positions and business addresses of the directors and
executive officers of AIMCO, as well as a biographical summary of the experience
of such persons for the past five years or more, are set forth on Annex I
attached hereto and are incorporated in this Consent Solicitation Statement by
reference.
During the past five years, none of AIMCO, AIMCO-GP or the AIMCO
Operating Partnership, nor, to the best of their knowledge, any of the persons
listed in Annex I (i) has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors), or (ii) was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting activities subject to,
federal or state securities laws, or finding any violation with respect to such
laws.
PLANS AFTER THE AMENDMENT AND THE SALE
After the Sale of the Property, the Purchaser will own and operate the
Property. The Purchaser, as the sole owner of the Property, may enter into
transactions involving the Property, including, without limitation, an increase
of the indebtedness relating to the Property, a sale of the Property to a third
party, or redevelopment of the Property. Currently, there is no mortgage on the
Property. The Purchaser is evaluating a potential transaction where the
Purchaser would incur indebtedness to be secured by a mortgage on the Property.
The proceeds of the new mortgage indebtedness would be distributed to the
partners of the Purchaser in accordance with its partnership agreement. The
Purchaser anticipates that the transaction will occur (if at all) in the fourth
quarter of 2004 and that the amount of this indebtedness would be approximately
$2,700,000.
Due in part to the additional costs associated with complying with the
Exchange Act and in particular the applicable provisions of Sarbanes-Oxley, the
General Partner intends to offer for sale the remaining properties of the
Partnership after the Sale of the Property is consummated. Under the terms of
the Partnership Agreement, as amended by the Amendment, no consent of Limited
Partners will be required to sell the Partnership's remaining properties. If the
Partnership sells its remaining properties, the Partnership will dissolve in
accordance with the terms of the Partnership Agreement.
The units of limited partnership interest of the Partnership are
registered under Section 12(g) of the Exchange Act. Registration of the units
under the Exchange Act may be terminated upon application of the Partnership to
the SEC if the units are neither listed on a national securities exchange nor
held by 300 or more holders of record. After the sale of all or substantially
all of the Partnership's properties, pursuant to the terms of the Partnership
Agreement, the Partnership will dissolve. After a dissolution of the
Partnership, the Partnership will apply to deregister the units under the
Exchange Act.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material United States federal
income tax consequences of the Sale and is based upon current United States
federal tax law, which is subject to change, possibly with retroactive effect.
This discussion does not address all aspects of United States federal income
taxation that may be relevant in the particular circumstances of each Limited
Partner or to Limited Partners subject to special treatment (including, but not
limited to, corporations, foreign persons, limited partners subject to the
alternative minimum tax, and tax exempt organizations) under the Code. In
addition, this discussion does not address any state, local, or other tax
consequences, however, it should be noted that a Limited Partner could be
subject to income taxation by state, local, or other taxing authorities where
the Property is located or where the Limited Partner resides. The Partnership
also may be obligated to withhold state or local income taxes from any proceeds
ultimately distributed to a Limited Partner, which generally may be creditable
against any state or local tax liability of a Limited Partner. Limited Partners
are urged to consult their tax advisors as to the specific tax consequences to
them of the Sale.
-27-
TAX CONSEQUENCES IF THE AMENDMENT IS EFFECTED. There will be no Federal
or state income tax consequences resulting solely from the Amendment.
TAX CONSEQUENCES IF THE PROPERTY IS SOLD. If the Property is sold, the
Partnership will recognize gain as a result of the Sale. The amount of gain
recognized by the Partnership will be equal to the excess of the sum of the cash
and other property received in exchange for the Property plus the amount of
liabilities assumed by the Purchaser, over the Partnership's adjusted basis in
the Property. The gain recognized with respect to the Property will be allocated
to the partners, including Limited Partners, in accordance with the Partnership
Agreement. The total amount of gain that will be recognized by Limited Partners
in the event the Property is sold is estimated to be $25 per unit, assuming that
the Sale was consummated on June 30, 2004.
Although generally gain from a sale of real property such as the
Property is taxed as Section 1231 gain that is taxed at the same rates as
capital gain income (currently 15% for federal income tax purposes), under
special rules that apply to real property that has been depreciated, it is
expected that all of the gain from the Sale will be taxed as "unrecaptured
section 1250 gain." The maximum rate of tax that "unrecaptured section 1250
gain" may be taxed at is 25% for federal income tax purposes. Generally, the
"unrecaptured section 1250 gain" tax rate applies only to individuals, trusts,
and estates. The amount of "unrecaptured section 1250 gain" from the Sale is
estimated to be $25 per unit, assuming that the Sale was consummated on June 30,
2004. These estimates are based upon information currently available to the
Partnership. There can be no assurance that these estimates will prove accurate.
Each Limited Partner should consult his or her tax advisor regarding the tax
consequences to him or her.
Gain in excess of depreciation recapture gain and unrecaptured section
1250 gain generally will be taxed as section 1231 gain, which may be taxed at
capital gain rates depending upon a Limited Partner's individual tax
circumstances. Generally, this special capital gains tax rate applies only to
individuals, trusts, and estates, however, none of the gain is expected to be
taxed as section 1231 gain.
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 the gain recognized as a result of the
Sale. The determination of whether a Limited Partner possesses suspended tax
losses, tax credits, or other items of tax benefit that may be used to 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.
Cash distributed to a Limited Partner from the proceeds of the Sale,
after repayment of the Partnership's debts and any deemed distribution of cash
to a Limited Partner resulting from any assumption of Partnership indebtedness
in connection with the sale of the Property or the repayment of Partnership
indebtedness will be treated as a nontaxable return of capital to the extent of
such Limited Partner's basis in his interest in the Partnership and then as gain
from the sale or exchange of such Partnership interest to the extent in excess
of such basis. A Limited Partner may include in his basis in his Partnership
interest any gain recognized as a result of the sale of the Property. Generally,
any gain recognized as a result of distributions, including deemed
distributions, by the Partnership will be capital gain except to the extent the
gain is considered to be attributable to unrealized receivables of the
Partnership or depreciation claimed with respect to the Property. In addition,
proceeds available for distribution to the Limited Partners from the Sale after
repayment of the Partnership's debts may be less than the gain recognized by the
Partnership that is allocable to the Partners, any gain that is recognized by a
Limited Partner as a result of the distributions made by the Partnership, and
any tax liability resulting therefrom. Accordingly, the Limited Partners may be
required to use funds from sources other than distributions from the Partnership
in order to pay any tax liabilities that may arise as a result of the foregoing.
The Property has been substantially or fully depreciated for United
States federal income tax purposes. As a result, it is likely that continued
operation of the Property will generate income that will be taxable to the
Limited Partners because 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 to the Limited Partners because it is expected that all or
substantially all of the Property's cash flow will be used to service the
Partnership's liabilities. The Partnership also will continue to incur the
administrative costs of operation, including the cost of preparing and filing a
partnership tax return. 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
-28-
liability that arises with respect to any net income taxable to the Limited
Partner 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.
EACH LIMITED PARTNER IS URGED TO CONSULT HIS OR HER TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES OF THE SALE, INCLUDING THE APPLICATION
OF FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
SECURITY OWNERSHIP
The following table sets forth certain information regarding the units
owned by each person or entity known to own beneficially or exercise voting or
dispositive control over more than 5% of the units as of May 31, 2004.
<Table>
<Caption>
Name of Beneficial Owner Number of Units Percent of Class
------------------------ --------------- ----------------
AIMCO Properties, L.P. 24,341 39.86%
(an affiliate of AIMCO)
4582 South Ulster St. Parkway,
Suite 1100,
Denver, Colorado 80237
AIMCO IPLP, L.P. 88 0.14%
(an affiliate of AIMCO)
55 Beattie Place
Greenville, South Carolina 29602
</Table>
APPRAISAL RIGHTS
Limited Partners are not entitled to dissenters' appraisal rights under
applicable law or the Partnership Agreement in connection with the sale of
Partnership assets or an amendment to the Partnership Agreement. However, the
Partnership is providing each Limited Partner with contractual dissenters'
appraisal rights that are based upon the dissenters' appraisal rights that a
Limited Partner would have were the Limited Partner a shareholder in a corporate
merger under the corporation laws of the state of Missouri. This appraisal
proceeding will be decided by arbitration conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association by a panel
of three arbitrators who will follow the statutory provisions otherwise
governing such dissenters' appraisal rights and who will conduct the proceedings
in Denver, Colorado. Any arbitration award can be appealed in the Federal
District Court located in Denver, Colorado. These appraisal rights enable a
Limited Partner to obtain an arbitrated appraisal of the value of the Limited
Partner's interest in the Partnership, and entitle a Limited Partner to receive
the arbitrated appraised value of the Limited Partner's interest in the
Partnership in connection with the Amendment and the Sale. A copy of these
corporation laws, as they relate to these rights, is attached to this Consent
Solicitation Statement as Appendix B along with a summary of the appraisal
rights. Prosecution of these contractual appraisal rights will involve an
arbitration proceeding, and consideration paid to a Limited Partner after the
prosecution of such contractual appraisal rights, which will take a period of
time that cannot be predicted with accuracy, will be a cash payment, resulting
in a taxable event to such Limited Partner.
SOLICITATION OF CONSENTS AND CONSENTS REQUIRED
The General Partner has set the close of business on September [__],
2004 as the Record Date for the determination of Limited Partners entitled to
notice of and to vote on the proposals. Only Limited Partners of record as of
the Record Date will be entitled to vote on or object to the proposals.
APPROVAL OF THE AMENDMENT ON THE TERMS DESCRIBED IN THIS CONSENT
SOLICITATION STATEMENT IS ONLY POSSIBLE WITH THE WRITTEN APPROVAL OF THE LIMITED
PARTNERS WHO OWN MORE THAN 50% OF THE TOTAL OUTSTANDING UNITS. As of the Record
Date, there were 61,063 units issued and outstanding, and each unit represents a
0.0016% interest in the Partnership. Affiliates of the General Partner currently
own approximately 40% of the outstanding
-29-
units and will consent to the Amendment on the terms described in this Consent
Solicitation Statement. Unaffiliated Limited Partners owning in the aggregate
6,108.61, or 10.1%, of the outstanding units must approve the Amendment for it
to be approved.
We will not consummate the Sale if a majority in interest of
Unaffiliated Limited Partners withhold consent to the Sale in compliance with
the procedures set forth in this Consent Solicitation Statement. Unaffiliated
Limited Partners own 36,634 units. Therefore, if Unaffiliated Limited Partners
owning more than 18,321 unaffiliated Units, or approximately 30% of the
outstanding units, object to the Sale in compliance with the procedures set
forth in this Consent Solicitation Statement, the Sale will not be consummated.
Abstentions on the enclosed Consent will not be treated as objections to the
Sale, although they will be treated as a vote against the Amendment for purposes
of determining whether the requisite vote has been achieved.
A Consent Form has been included with this Consent Solicitation for
your use. Please mark, sign, date and deliver your Consent Form promptly to the
Solicitation Agent, The Altman Group, Inc., by mail at 1275 Valley Brook Avenue,
Lyndhurst, New Jersey 07071, or by fax at (201) 460-0050. Limited Partners must
deliver the enclosed Consent Form to the Solicitation Agent no later than
midnight, New York City time on October [__], 2004, unless this Consent
Solicitation is extended by the General Partner.
Consents will be solicited by mail, telephone, e-mail and in person.
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
$4,000 and will be borne by the Purchaser.
LIMITED PARTNERS WHO DESIRE TO CONSENT TO THE AMENDMENT OR OBJECT TO
THE SALE SHOULD DO SO BY MARKING THE APPROPRIATE BOX ON THE CONSENT FORM
INCLUDED HEREWITH, AND SIGN, DATE AND DELIVER 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 ABOVE AND ON THE CONSENT FORM, ALL IN ACCORDANCE WITH
THE INSTRUCTIONS CONTAINED IN THIS CONSENT SOLICITATION STATEMENT AND THEREIN.
All Consent Forms that are properly completed, signed and delivered to
the Solicitation Agent prior to the Expiration Date and not properly revoked (as
described below) will be given effect in accordance with the specifications
thereof. IF A CONSENT FORM IS PROPERLY COMPLETED, SIGNED, AND DELIVERED TO THE
SOLICITATION AGENT, THE LIMITED PARTNER WILL BE DEEMED TO HAVE CONSENTED TO THE
AMENDMENT, IF NONE OF THE BOXES MARKED "CONSENTS," "WITHHOLDS CONSENT" OR
"ABSTAINS" ARE MARKED WITH RESPECT TO THAT PROPOSAL, AND WILL NOT BE DEEMED TO
HAVE OBJECTED TO THE SALE, IF NONE OF THE BOXES MARKED "CONSENTS," "OBJECTS," OR
"ABSTAINS" ARE MARKED.
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 relate 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 General Partner 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
Solicitation Agent (and not properly revoked as described below) prior to the
Expiration Date will be effective notwithstanding a record transfer of such
units subsequent to the Record Date. A person who acquires units after the
Record Date may not vote or object.
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 General Partner reserves the right to reject any or all Consent
Forms that are not in proper form. The General Partner 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 delivery of Consent Forms must be cured within such time as the General
Partner determines. Neither the General Partner nor
-30-
any of its 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 the General Partner shall be conclusive and
binding.
The General Partner expressly reserves the right, in its discretion, at
any time and from time to time, to extend the period of time during which
consents are solicited hereunder. Notice of any such extension will be
disseminated promptly to Limited Partners in a manner reasonably designed to
inform Limited Partners of such extension.
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
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," "Objects," 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 or the fax 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 facsimile 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. A LIMITED
PARTNER MAY NOT REVOKE THE INSTRUCTIONS SET FORTH IN THE CONSENT FORM AFTER
MIDNIGHT, NEW YORK CITY TIME, ON THE EXPIRATION DATE.
SOURCE OF FUNDS
The AIMCO Operating Partnership expects that approximately $3,800,000
will be required to effect the Amendment and the Sale (exclusive of fees and
expenses) and will provide the requisite funds to the Purchaser. The General
Partner expects that its fees and expenses will be $67,600.
The AIMCO Operating Partnership has a $445 million revolving credit
facility with Bank of America, Fleet National Bank and First Union National Bank
with a syndicate comprised of a total of ten lender participants. The AIMCO
Operating Partnership is the borrower, and all obligations thereunder are
guaranteed by certain of AIMCO's subsidiaries. The obligations under the credit
facility are secured, among other things, by the AIMCO Operating Partnership's
pledge of its stock ownership in certain subsidiaries of AIMCO, and a first
priority pledge of certain of the AIMCO Operating Partnership's non-real estate
assets. The annual interest rate under the credit facility is based on either
LIBOR or a base rate which is the higher of Bank of America's reference rate or
0.5% over the federal funds rate, plus, in either case, an applicable margin.
The margin ranges between 2.15% and 2.85% in the case of LIBOR-based loans and
between 0.65% and 1.35% in the case of base rate loans, based upon a fixed
charge coverage ratio. The credit facility expires on July 31, 2005 and can be
extended at AIMCO's option for a one-year term on a one-time basis. The loan
agreement and its material amendments relating to this credit facility have been
filed with the SEC as Exhibit 10.35.2 to AIMCO's annual report on Form 10-K for
the fiscal year ended December 31, 2002 and Exhibits 10.1 and 10.2 to AIMCO's
quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2003
and are incorporated in this Information Statement by reference.
As of June 30, 2004, the AIMCO Operating Partnership had approximately
$90.6 million of cash on hand and approximately $136.7 million available for
borrowing under existing lines of credit. The AIMCO Operating Partnership
intends to repay any amounts borrowed to finance the offer out of future working
capital.
-31-
FEES AND EXPENSES
Except as set forth in this Consent Solicitation Statement, the General
Partner and the Purchaser will not pay any fees or commissions to any broker,
dealer or other person in connection with the Amendment or the Sale. The General
Partner has retained The Altman Group, Inc. to act as the Solicitation Agent in
connection with the Sale. The Solicitation Agent may contact holders of units by
mail, e-mail, telephone, telex, telegraph and in person and may request brokers,
dealers and other nominee limited partners to forward materials relating to the
Sale to beneficial owners of the limited partnership interests. The Purchaser
will pay the Solicitation Agent reasonable and customary compensation for its
services in connection with the Amendment and the Sale, plus reimbursement for
out-of-pocket expenses, and will indemnify it against certain liabilities and
expenses in connection therewith, including liabilities under the federal
securities laws. The Purchaser will also pay all costs and expenses of filing,
printing and mailing the Consent Solicitation Statement and any related legal
fees and expenses. The Partnership will not be responsible for paying any of the
fees or expenses incurred by the Purchaser or the General Partner in connection
with Sale.
The following is an itemized statement of the aggregate estimated
expenses incurred and to be incurred in this offer by the Partnership:
<Table>
Legal Fees $15,000
Title Insurance $25,000
Recording Fees $26,600
Survey $1,000
Total $67,600
=======
</Table>
GENERAL LEGAL MATTERS
We are not aware of any licenses or regulatory permits that would be
material to the business of your Partnership, taken as a whole, and that might
be adversely affected by the Amendment or Sale, or any filings, approvals or
other actions by or with any domestic or foreign governmental authority or
administrative or regulatory agency that would be required prior to the
consummation of the Amendment or Sale. While there is no present intent to delay
the consummation of the Amendment or Sale pending receipt of any such additional
approval or the taking of any action, there can be no assurance that any such
additional approval or action, if needed, would be obtained without substantial
conditions or that adverse consequences might not result to your Partnership or
its business, or that certain parts of its business might not have to be
disposed of or other substantial conditions complied with in order to obtain
such approval or action, any of which could cause us to elect to terminate the
Purchase Agreement without consummating the transactions contemplated thereby.
No provision has been made by the General Partner, the Partnership, the
Purchaser, AIMCO, the AIMCO Operating Partnership, or any of its affiliates at
such party's expense for the provision of counsel or appraisal services, other
than the appraisal of the fair market value of the Property as described in this
Consent Solicitation Statement.
-32-
GENERAL INFORMATION
The AIMCO Operating Partnership is an affiliate of AIMCO. AIMCO, the
AIMCO Operating Partnership and the Partnership are subject to the informational
requirements of the Exchange Act and are therefore 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 any of the foregoing
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
statements regarding issuers that file electronically with the SEC.
The information contained in this Consent Solicitation Statement is
accurate only as of the date hereof. We have not authorized anyone else to
provide you with information. You should not assume that the information in this
Consent Solicitation Statement or any supplement is accurate as of any date
other than the date on the front page of this Consent Solicitation Statement.
You are requested to review the material contained in this Consent
Solicitation Statement; complete, sign and date the accompanying Consent Form;
and return it to the Solicitation Agent in the enclosed self-addressed,
postage-paid envelope as soon as possible.
THE SIGNED CONSENT FORMS SHOULD BE SENT OR DELIVERED BY EACH LIMITED PARTNER TO
THE SOLICITATION AGENT AT THE ADDRESS OR FACSIMILE NUMBER SET FORTH BELOW:
THE ALTMAN GROUP, INC.
By Mail, Overnight Courier and Hand Delivery:
1275 Valley Brook Avenue
Lyndhurst, New Jersey 07071
By Facsimile: For Information please call:
(201) 460-0050 TOLL FREE (800) 217-9608
-33-
ANNEX I
OFFICERS AND DIRECTORS
The names and positions of the executive officers of Apartment
Investment and Management Company ("AIMCO"); AIMCO-GP, Inc. ("AIMCO-GP"), AIMCO
Properties, L.P. ("AIMCO Properties") and United Investors Real Estate, Inc.
(the "General Partner") are set forth below. The directors of AIMCO are also set
forth below. The two directors of AIMCO-GP are Terry Considine and Peter
Kompaniez. Unless otherwise indicated, the business address of each executive
officer and director is 4582 South Ulster Street Parkway, Suite 1100, Denver,
Colorado 80237. Each executive officer and director is a citizen of the United
States of America. All titles refer to titles with AIMCO and AIMCO-GP, except as
otherwise stated.
<Table>
<Caption>
NAME POSITION
---- --------
Terry Considine...................... Chairman of the Board, Chief Executive Officer and President
Peter K. Kompaniez................... Vice Chairman of the Board; Director of General Partner
Jeffrey W. Adler..................... Executive Vice President--Conventional Property Operations
Harry G. Alcock...................... Executive Vice President and Chief Investment Officer; Executive Vice
President of General Partner
Miles Cortez......................... Executive Vice President, General Counsel and Secretary; Executive Vice
President, General Counsel and Secretary of General Partner
Joseph DeTuno........................ Executive Vice President--Redevelopment
Randall J. Fein...................... Executive Vice President--University Housing
Patti K. Fielding.................... Executive Vice President--Securities and Debt; Executive Vice President of
General Partner
Thomas M. Herzog..................... Senior Vice President and Chief Accounting Officer; Senior Vice President
and Chief Accounting Officer of General Partner
Lance J. Graber...................... Executive Vice President--AIMCO Capital
Martha L. Long....................... Director and Senior Vice President of General Partner
Paul J. McAuliffe.................... Executive Vice President and Chief Financial Officer; Executive Vice
President and Chief Financial Officer of General Partner
Ronald D. Monson..................... Executive Vice President
James G. Purvis...................... Executive Vice President--Human Resources
David Robertson...................... Executive Vice President; President and Chief Executive Officer
-- AIMCO Capital
James N. Bailey...................... Director
Richard S. Ellwood................... Director
J. Landis Martin..................... Director
Thomas L. Rhodes..................... Director
</Table>
<Table>
<Caption>
NAME PRINCIPAL OCCUPATION FOR THE LAST FIVE YEARS
---- --------------------------------------------
Terry Considine...................... Mr. Considine has been Chairman of the Board and Chief Executive Officer
since July 1994. Mr. Considine serves as Chairman and Chief Executive
Officer of American Land Lease, Inc., another publicly held real estate
investment trust and successor to Asset Investors Corporation and
Commercial Assets, Inc. Mr. Considine devotes his time to his
responsibilities at AIMCO on a full time basis, and the balance to American
Land Lease, Inc. Upon the effectiveness of Mr. Kompaniez's resignation as
President and pending the appointment of a chief operating officer, Mr.
Considine will serve as President.
Peter K. Kompaniez................... Mr. Kompaniez has been Vice Chairman of the Board since July 1994 and was
appointed President in July 1997. Mr. Kompaniez has also served as Chief
Operating Officer of NHP Incorporated after it was acquired by AIMCO in
December 1997. Effective April 1, 2004, Mr. Kompaniez resigned as
President. Mr. Kompaniez will continue in the role of Vice Chairman and
will serve AIMCO on a variety of special and ongoing projects in an
operating role.
Jeffrey W. Adler..................... Mr. Adler was appointed Executive Vice President, Conventional Property
Operations in February 2004. Previously he served as Senior Vice President
of Risk Management of AIMCO from January 2002 until November 2002, when he
added the responsibility of Senior Vice President, Marketing. Prior to
joining AIMCO from 2000 to 2002, Mr. Adler was Vice President,
Property/Casualty for Channelpoint, a software company. From 1990 to 2000
Mr. Adler held several positions at Progressive Insurance including
Colorado General Manager from 1996 to 2000, Product Manager for Progressive
Insurance Mountain Division from 1992 to 1996, and Director of Corporate
Marketing from 1990 to 1992.
Harry G. Alcock...................... Mr. Alcock served as a Vice President from July 1996 to October 1997, when
he was promoted to Senior Vice President-Acquisitions. Mr. Alcock served as
Senior Vice President-Acquisitions until October 1999, when he was promoted
to Executive Vice President and Chief Investment Officer. Mr. Alcock has
had responsibility for acquisition and financing activities of AIMCO since
July 1994.
Miles Cortez......................... Mr. Cortez was appointed Executive Vice President, General Counsel and
Secretary in August 2001. Prior to joining the Company, Mr. Cortez was the
senior partner of Cortez Macaulay Bernhardt & Schuetze LLC, a Denver law
firm, from December 1997 through September 2001. From August 1993 through
November 1997, Mr. Cortez was a partner at McKenna & Cuneo LLP in Denver.
He served as president of the Colorado Bar Association from 1996 to 1997
and the Denver Bar Association from 1982 to 1983.
Joseph DeTuno........................ Mr. DeTuno was appointed Executive Vice President--Redevelopment in
February 2001 and previously served as Senior Vice President--Property
Redevelopment from August 1997 to February 2001. Prior to joining AIMCO,
Mr. DeTuno was President and founder of JD Associates, a full service real
estate consulting, advisory and project management company that he founded
in 1990.
Randall J. Fein...................... Mr. Fein was appointed Executive Vice President--University Housing in
October 2003 and is responsible for the operation of AIMCO's student
housing related portfolio, including its joint venture activities. From
1989 through 2003, Mr. Fein served as general partner of Income Apartment
Investors L.P., and Texas First Properties L.P., which operated student and
non-student housing. Prior to entering the apartment industry, Mr. Fein was
engaged in the securities industry as a Director of Jefferies and as a Vice
President of Salomon Brothers Inc. Mr. Fein is a member of the State Bar of
Texas.
</Table>
Annex I-2
<Table>
<Caption>
NAME PRINCIPAL OCCUPATION FOR THE LAST FIVE YEARS
---- --------------------------------------------
Patti K. Fielding.................... Ms. Fielding was appointed Executive Vice President--Securities and Debt in
February 2003. She is responsible for securities and debt financing and the
treasury department. From January 2000 to February 2003, Ms. Fielding
served as Senior Vice President--Securities and Debt. Ms. Fielding joined
AIMCO in February 1997 and served as Vice President-Tenders, Securities and
Debt until January 2000. Prior to joining the Company, Ms. Fielding was a
Vice President with Hanover Capital Partners from 1996 to 1997, Vice
Chairman, Senior Vice President and Principal of CapSource Funding Corp
from 1993 to 1995, and Group Vice President with Duff & Phelps Rating Co.
from 1987 to 1993.
Lance J. Graber...................... Mr. Graber has been Executive Vice President since October 1999. His
principal business function is overseeing dispositions, refinancings,
redevelopments and other transactions within AIMCO Capital's portfolio of
affordable properties. Prior to joining the Company, Mr. Graber was a
Director at Credit Suisse First Boston from 1994 to May 1999, during which
time he supervised a staff of seven in the making of principal investments
in hotel, multi-family and assisted living properties.
Thomas M. Herzog..................... Mr. Herzog was appointed Senior Vice President and Chief Accounting Officer
in January 2004. Prior to joining AIMCO, Mr. Herzog was at GE Real Estate,
serving as Chief Accounting Officer & Global Controller from April 2002 to
January 2004 and as Chief Technical Advisor from March 2000 to April 2002.
Prior to joining GE Real Estate, Mr. Herzog was at Deloitte & Touche LLP
from 1990 until 2000, including a two-year assignment in the real estate
national office.
Martha L. Long....................... Ms. Long has been a Director and Senior Vice President of the General
Partner since February 2004. Ms. Long has been with AIMCO since October
1998 and has served in various capacities. From 1998 to 2001, Ms. Long
served as Senior Vice President and Controller of AIMCO and the General
Partner. During 2002 and 2003, Ms. Long served as Senior Vice President of
Continuous Improvement for AIMCO.
Paul J. McAuliffe.................... Mr. McAuliffe has been Executive Vice President since February 1999 and was
appointed Chief Financial Officer in October 1999. From May 1996 until he
joined AIMCO, Mr. McAuliffe was Senior Managing Director of Secured Capital
Corp.
Ronald D. Monson..................... Mr. Monson was appointed Executive Vice President in February 2001.
Beginning in February 2004, Mr. Monson assumed oversight of four of AIMCO's
regional operating centers. From February 2001 to February 2004, Mr. Monson
served as the head of AIMCO's conventional property operations. Previously,
he served as Regional Vice President from March 1997 to May 1998, when he
was promoted to Senior Vice President of the Midwest Division. Mr. Monson
served as Senior Vice President of the Midwest Division until January 1999,
when he was appointed Senior Vice President of the Far West Division, which
role he filled until February 2001. From April 1994 to February 1997, Mr.
Monson was a Regional Vice President for Great Atlantic Property Management.
</Table>
Annex I-3
<Table>
<Caption>
NAME PRINCIPAL OCCUPATION FOR THE LAST FIVE YEARS
---- --------------------------------------------
James G. Purvis...................... Mr. Purvis was appointed Executive Vice President--Human Resources in
February 2003. Prior to joining AIMCO, from October 2000 to February 2003,
Mr. Purvis served as the Vice President of Human Resources at SomaLogic,
Inc. a privately held biotechnology company in Boulder, Colorado. From July
1997 to October 2000, Mr. Purvis was the principal consultant for O3C
Global Organization Solutions, a global human resources strategy and
technology consulting company based in Colorado and London. From March 1996
to July 1997 Mr. Purvis served as the Senior Vice President of Employee
Relations at TCI, Inc. From August 1990 to March 1996 Mr. Purvis served as
the Senior Vice President of Human Resources of Westin Hotels and Resorts.
David Robertson...................... Mr. Robertson has been Executive Vice President since February 2002, and
was appointed President and Chief Executive Officer of AIMCO Capital in
October 2002. He is responsible for property operations, asset management
and transaction activities within AIMCO Capital's portfolio of affordable
properties, and for redevelopment and construction activities for both the
conventional and affordable property portfolios. Prior to joining the
Company, Mr. Robertson was a member of the investment-banking group at
Smith Barney from 1991 to 1996, where he was responsible for real estate
investment banking transactions in the western United States, and was part
of the Smith Barney team that managed AIMCO's initial public offering in
1994. Since February 1996, Mr. Robertson has been Chairman and Chief
Executive Officer of Robeks Corporation, a privately held chain of
specialty food stores.
James N. Bailey...................... Mr. Bailey was appointed a Director of AIMCO in June 2000 and is currently
Cambridge Associates, Inc. Chairman of the Nominating and Corporate Governance Committee and a member
1 Winthrop Square, of the Audit and Compensation and Human Resources Committee. Mr. Bailey is
Suite 500 co-founder and Senior Managing Director of Cambridge Associates, LLC,
Boston, MA 02110 founded in 1973, and co-founder, Treasurer and Director of: The Plymouth
Rock Company, founded in 1984; Direct Response Corporation, founded in 1996; and
Homeowners' Direct Corporation, founded in 1996; all U.S. personal lines
insurance companies. In addition, he is a director of Getty Image, Inc., a
publicly held company. He has also been a member of a number of Harvard
University alumni affairs committees, including, the Overseers Nominating
Committee and The Harvard Endowment Committee. Mr. Bailey is a member of the
Massachusetts Bar and the American Bar Association.
Richard S. Ellwood................... Mr. Ellwood was appointed a Director of the Company in July 1994. Mr.
12 Auldwood Lane Ellwood is currently Chairman of the Audit Committee and a member of the
Rumson, NJ 07660 Compensation and Human Resources and Nominating and Corporate Governance
Committees. Mr. Ellwood is the founder and President of R.S. Ellwood &
Co., Incorporated, a real estate investment banking firm. Prior to forming
R.S. Ellwood & Co., Incorporated in 1987, Mr. Ellwood had 31 years
experience on Wall Street as an investment banker, serving as: Managing
Director and senior banker at Merrill Lynch Capital Markets from 1984 to
1987; Managing Director at Warburg Paribas Becker from 1978 to 1984;
general partner and then Senior Vice President and a director at White,
Weld & Co. from 1968 to 1978; and in various capacities at J.P. Morgan &
Co. from 1955 to 1968. Mr. Ellwood currently serves as a director of
Felcor Lodging Trust, Incorporated and Florida East Coast Industries, Inc.
</Table>
Annex I-4
<Table>
<Caption>
NAME PRINCIPAL OCCUPATION FOR THE LAST FIVE YEARS
---- --------------------------------------------
J. Landis Martin..................... Mr. Martin was appointed a Director of AIMCO in July 1994 and is currently
199 Broadway Chairman of the Compensation and Human Resources Committee. Mr. Martin
Suite 4300 is a member of the Audit and Nominating and Corporate Governance
Denver, CO 80202 Committees. Mr. Martin is also the Lead Independent Director of AIMCO's
Board. Since 1994, Mr. Martin has been Chairman of the Board and Chief
Executive Officer of Titanium Metals Corporation, a publicly held
integrated producer of titanium metals. From 1987 to 2003, Mr. Martin
served as President and Chief Executive Officer of NL Industries, Inc.
("NL"), a publicly held manufacturer of titanium dioxide chemicals, and
served as a director of NL from 1986 to 2003. From 1990 until its
acquisition by Dresser Industries, Inc. in 1994, Mr. Martin served as
Chairman of the Board and Chief Executive Officer of Baroid Corporation, a
publicly held petroleum services company. Mr. Martin is also a director of
Halliburton Company, Crown Castle International Corporation, a wireless
communications company, and Trico Marine Services, Inc., which provides
marine support services to the oil and gas industry. Until February 2003,
Mr. Martin was a director of Tremont Corporation, a holding company, and
until December 2003 Mr. Martin was a director of Special Metals Corporation.
Thomas L. Rhodes..................... Mr. Rhodes was appointed a Director of the Company in July 1994 and is
215 Lexington Avenue currently a member of the Audit, Compensation and Human Resources, and
4th Floor Nominating and Corporate Governance Committees. Mr. Rhodes has served as
New York, NY 10016 the President and Director of National Review Magazine since November 1992,
where he has also served as a Director since 1988. From 1976 to 1992, he
held various positions at Goldman Sachs & Co., was elected a General
Partner in 1986 and served as a General Partner from 1987 until November
1992. Mr. Rhodes is Chairman of the Board of Directors of The Lynde and
Harry Bradley Foundation, Vice Chairman of American Land Lease, Inc.,
another publicly held real estate investment trust and successor to Asset
Investors Corporation and Commercial Assets, Inc.
</Table>
Annex I-5
APPENDIX A
PRO FORMA FINANCIAL STATEMENTS
The following pro forma financial information has been derived
from the balance sheet and income statement of your partnership
for the twelve months ended December 31, 2003
UNITED INVESTORS INCOME PROPERTIES
PRO FORMA DECEMBER 31, 2003 BALANCE SHEET
ASSETS
Investment Properties:
Land $ 1,021
Buildings and related personal property 6,556
Accumulated depreciation (3,208)
Cash and cash equivalents 430
Receivables and deposits 12
Other assets 37
------------
TOTAL ASSETS $ 4,848
============
LIABILITIES AND PARTNERS' CAPITAL:
Accounts payable $ 9
Tenant security deposit liabilities 32
Accrued property taxes 6
Other liabilities 29
Due to affiliates 44
Partners' Capital 4,728
------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 4,848
============
PRO FORMA DECEMBER 31, 2003 INCOME STATEMENT
REVENUES
Rental income $ 1,018
Other income 119
------------
Total Revenues 1,137
------------
Expenses:
Operating 471
General & Administrative 141
Depreciation 277
Property Taxes 101
------------
TOTAL EXPENSES 990
------------
NET INCOME $ 147
============
NET INCOME PER LIMITED PARTNERSHIP UNIT $ 2.38
============
APPENDIX B
APPRAISAL RIGHTS
The Partnership is providing each Limited Partner with contractual
dissenters' rights with regard to Partnership interests held by a Limited
Partner in connection with the Amendment and the Sale. The dissenters' rights
are based upon the dissenters' appraisal rights that a Limited Partner would
have were the Limited Partner a shareholder in a corporate merger under the
General and Business Corporation Law of Missouri (the "GBCLM"), except that (i)
the appraisal proceeding will be decided by arbitration conducted in accordance
with the Commercial Arbitration Rules of the American Arbitration Association by
a panel of three arbitrators who will follow the statutory provisions otherwise
governing such dissenters' appraisal rights and who will conduct the proceedings
in Denver, Colorado, and (ii) any arbitration award can be appealed in the
Federal District Court located in Denver, Colorado. Since the GBCLM deals with
corporations, the procedures under the GBCLM dissenters' rights statute are
applicable to the extent practicable.
Under the GBCLM, each holder of a limited partnership interest may be
entitled to demand and receive payment of the fair value of his limited
partnership interests in cash, exclusive of any appreciation or depreciation in
anticipation of the transaction objected to, unless exclusion would be
inequitable. Any limited partner who fails to comply with the requirements
described below and as more fully stated in Sections 351.890, 351.900, and
351.925 of the Missouri Revised Statutes will be bound by the Amendment and the
Sale.
To be entitled to demand and receive payment of the fair value of his
limited partnership interests in cash, such limited partner must (i) not vote in
favor of the Amendment and the Sale, (ii) prior to the Expiration Date, deliver
to the Solicitation Agent written notice of the Limited Partner's intent to
demand payment for its interests in the Partnership, (iii) demand payment in
accordance with the instructions below, (iv) certify whether the Limited Partner
acquired beneficial ownership of the limited partnership interests before the
date that payment demands are required to be delivered as will be set forth in a
notice of the approval of the Amendment by the Limited Partners, and (v) if
applicable, deposit the Limited Partner's certificates representing his limited
partnership interests in accordance with the instructions below. Failure to vote
against the Amendment or the Sale will not constitute a waiver of these
appraisal rights, and a vote against a proposal will not be deemed to satisfy
the notice requirements of a Limited Partner's intent to demand payment. A
Limited Partner who demands payment and, if applicable, properly deposits the
certificates with the Partnership retains all other rights of a Limited Partner
until these rights are cancelled or modified by the consummation of the
Amendment and the Sale. A Limited Partner who does not take such actions, each
by the date set forth in this Appendix, is not entitled to payment for the
limited partnership interests under these appraisal rights provisions.
A written notice of intent to demand payment, a written demand for
payment, and if applicable, certificates representing limited partnership
interests should be sent to the Solicitation Agent at 1275 Valley Brook Avenue,
Lyndhurst, New Jersey 07071. The limited partnership interests relating to a
payment for demand may not be transferred, unless such payment demand is
properly withdrawn. Demand must be made and, if applicable, certificates
representing limited partnership interests must be deposited with the
Partnership at the address set forth above within thirty (30) days after the
date the Partnership delivers a written notice of the approval of the Amendment
by Limited Partners.
Immediately after the Amendment and the Sale are consummated, the fair
value, as estimated by the Partnership, will be paid for the dissenter's limited
partnership interests. The payment must be accompanied by certain financial
statements of the Partnership, a statement of the Partnership's estimate of the
fair value of the limited partnership interests, and a statement of the
dissenter's right to demand payment under Section 351.925 of the Missouri
Revised Statutes. Any such payment shall be deemed to incorporate by reference
all information provided with this Consent Solicitation Statement.
A dissenter may notify the Partnership in writing of the dissenter's
own estimate of the fair value of the dissenter's limited partnership interests
and demand payment of the dissenter's estimate if (i) the dissenter believes the
amount paid to the Unaffiliated Limited Partners is less than the fair value of
the limited partnership interests; (ii) the Partnership fails to make payment
within sixty (60) days after the date set for demanding payment; or (iii) the
Partnership, having failed to consummate the Amendment and the Sale, does not
return the deposited
certificates, if applicable, or release the transfer restrictions imposed on the
uncertificated interests within sixty (60) days after the date set for demanding
payment. A dissenter waives the right to demand payment of the dissenter's
estimate, unless the dissenter notifies the Partnership of the dissenter's
demand in writing within thirty (30) days after the Partnership made or offered
payment for its interests.
If a demand for payment of the dissenter's estimate remains unsettled,
the Partnership will commence a proceeding within sixty (60) days after
receiving the payment demand and petition the arbitration panel to determine the
fair value of the shares. If the Partnership fails to commence the proceeding
within this time, the dissenter whose demand remains unsettled will be paid the
amount demanded. The Partnership will make all dissenters whose demands remain
unsettled parties to the proceeding, and all parties must be served a copy of
the petition. The arbitration panel may appoint one or more persons as
appraisers to receive evidence and recommend a decision on the question of fair
value, with the powers described in the order appointing them. The dissenters
will be entitled to the same discovery rights as in other civil proceedings.
Each dissenter who is made a party to the proceeding will be entitled to
judgment for the amount, if any, by which the arbitration panel finds the fair
value of the dissenter's interests exceeds the amount paid, plus interest.
The foregoing summary of the rights of objecting limited partners does
not purport to be a complete statement of the procedures to be followed by
limited partners desiring to exercise their dissenters' rights. The preservation
and exercise of dissenters' rights are conditioned on strict adherence to the
applicable provisions of the GBCLM. Each limited partner desiring to exercise
dissenters' rights should refer to Section 351.870 through Section 351.930 of
the GBCLM, a copy of which is attached hereto, for a complete statement of the
limited partner's rights and the steps which must be followed in connection with
the exercise of those rights.
MISSOURI REVISED STATUTES
DEFINITIONS.
351.870. In sections 351.870 to 351.930:
(1) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder;
(2) "Corporation" means a statutory close corporation at the time the corporate
action is taken and which is the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring corporation by merger or
consolidation of that issuer;
(3) "Dissenter" means a shareholder who is entitled to dissent from corporate
action under section 351.875 and who exercises that right when and in the manner
required by sections 351.885 to 351.925;
(4) "Fair value", with respect to a dissenter's shares, means the value of the
shares immediately before the effectuation of the corporate action to which the
dissenter objects, excluding any appreciation or depreciation in anticipation of
the corporate action unless exclusion would be inequitable;
(5) "Record shareholder" means the person in whose name shares are registered in
the records of a corporation or the beneficial owner of shares to the extent of
the rights granted by a nominee certificate on file with a corporation;
(6) "Shareholder" means the record shareholder or the beneficial shareholder.
GROUNDS FOR SHAREHOLDER DISSENT.
351.875. 1. A shareholder is entitled to dissent from, and obtain payment of the
fair value of his shares in the event of, any of the following corporate
actions:
(1) Consummation of a plan of merger to which the corporation is a party if
shareholder approval is required for the merger by law or the articles of
incorporation and the shareholder is entitled to vote on the merger; or if the
corporation is a subsidiary that is merged with its parent under the provisions
of section 351.447;
(2) Consummation of a sale or exchange of all, or substantially all, of the
property of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all of
the net proceeds of the sale will be distributed to the shareholders within one
year after the date of sale;
(3) An amendment of the articles of incorporation that materially and adversely
affects rights in respect of a dissenter's share because it:
(a) Alters or abolishes a preferential right of the shares;
(b) Creates, alters or abolishes a right in respect of redemption, including a
provision respecting a sinking fund for the redemption or repurchase, of the
shares;
(c) Alters or abolishes a preemptive right of the holder of the shares to
acquire shares or other securities; or
(d) Excludes or limits the right of the shares to vote on any matter, or to
cumulate votes, other than a limitation by dilution through issuance of shares
or other securities with similar voting rights; or
(4) Any corporate action taken pursuant to a shareholder vote to the extent the
articles of incorporation, bylaws, or a resolution of the board of directors
provides that voting or nonvoting shareholders are entitled to dissent and
obtain payment for their shares.
2. A shareholder entitled to dissent and obtain payment for his shares under
sections 351.870 to 351.930 may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
RIGHTS OF PARTIAL DISSENTER.
351.880.
1. A record shareholder may assert dissenters' rights as to fewer than all the
shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in writing of
the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered in
the names of different shareholders.
2. A beneficial shareholder may assert dissenters' rights as to shares held on
his behalf only if:
(1) He submits to the corporation the record shareholder's written consent to
the dissent not later than the time the beneficial shareholder asserts
dissenters' rights; and
(2) He does so with respect to all shares of which he is the beneficial
shareholder or over which he has power to direct the vote.
MEETING NOTICE TO STATE SHAREHOLDER MAY BE ENTITLED TO ASSERT DISSENTERS'
RIGHTS.
351.885.
1. If proposed corporate action creating dissenters' rights under section
351.875 is submitted to a vote at a shareholders' meeting, the meeting notice
shall state that shareholders are or may be entitled to assert dissenters'
rights under sections 351.870 to 351.930 and be accompanied by a copy of
sections 351.870 to 351.930.
2. If corporate action creating dissenters' rights under section 351.875 is
taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was taken
and send them the dissenters' notice described in section 351.895.
WRITTEN NOTICE OF INTENT TO DEMAND PAYMENT FOR SHARES.
351.890.
1. If proposed corporate action creating dissenters' rights under section
351.875 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights shall deliver to the corporation before the
vote is taken written notice of his intent to demand payment for his shares if
the proposed action is effectuated, and shall not vote his shares in favor of
the proposed action.
2. A shareholder who does not satisfy the requirements of subsection 1 of this
section is not entitled to payment for his shares under sections 351.870 to
351.930.
WRITTEN DISSENTERS' NOTICE--CONTENTS.
351.895.1. If proposed corporation action creating dissenters' rights under
section 351.875 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of section 351.890.
2. The dissenters' notice shall be sent no later than ten days after approval by
the shareholders, or if the corporate action was taken without approval of the
shareholders, then ten days after the corporate action was taken. The
dissenters' notice shall:
(1) State where the payment demand shall be sent and where and when certificates
for certificated shares shall be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of the
shares shall be restricted after the payment demand is received;
(3) Supply a form for demanding payment that includes the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action and requires that the person asserting dissenters' rights
certify whether or not he acquired beneficial ownership of the shares before
that date;
(4) Set a date by which the corporation shall receive the payment demand and
when certificates for uncertificated shares shall be deposited, neither of which
dates may be fewer than thirty nor more than sixty days after the date the
notice provided for in subsection 1 of this section is delivered; and
(5) Be accompanied by a copy of sections 351.870 to 351.930.
SHAREHOLDER TO DEMAND PAYMENT AND DEPOSIT CERTIFICATES.
351.900.
1. A shareholder sent a dissenters' notice described in section 351.895 shall
demand payment, certify whether he acquired beneficial ownership of the shares
before the date required to be set forth in the dissenters' notice pursuant to
section 351.895, and deposit his certificates in accordance with the terms of
the notice.
2. The shareholder who demands payment and deposits his share certificates under
this section retains all other rights of a shareholder until these rights are
canceled or modified by the taking of the proposed corporate action.
3. A shareholder who does not demand payment or deposit his share certificates
where required, each by the date set in the dissenters' notice, is not entitled
to payment for his shares under sections 351.870 to 351.930
RESTRICTED TRANSFER OF UNCERTIFICATED SHARES.
351.905.
1. The corporation may restrict the transfer of uncertificated shares from the
date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under section 351.915.
2. The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are canceled
or modified by the taking of the proposed corporate action.
PAYMENT FOR FAIR VALUE OF SHARES.
351.910.
1.Except as provided in section 351.920, immediately following the later of the
effective date of the corporate action creating the dissenters' rights, or
receipt of a payment demand, the corporation shall pay each dissenter who
complied with section 351.900 the amount the corporation estimates to be the
fair value of his shares.
2. The payment shall be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year ending not
more than sixteen months before the effective date of the corporate action
creating the dissenters' rights, an income statement for that year, a statement
of changes in shareholders' equity for that year, and the latest available
interim financial statements, if any;
(2) A statement of the corporations' estimate of the fair value of the shares;
(3) A statement of the dissenters' right to demand payment under section
351.925; and
(4) A copy of sections 351.870 to 351.930.
TIME PERIOD--RELEASE OF TRANSFER RESTRICTIONS.
351.915.
1. If the corporation does not take the proposed action within sixty days after
the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
2. If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it shall send a new
dissenters' notice under section 351.895 and repeat the payment demand
procedure.
WITHHOLDING OF PAYMENT FROM DISSENTER--GROUNDS.
351.920.
1. A corporation may elect to withhold payment required by section 351.910 from
a dissenter unless he was the beneficial owner of the shares before the date set
forth in the dissenters' notice as the date of the first announcement to news
media or to the shareholders of the terms of the proposed corporate action.
2. To the extent the corporation elects to withhold payment under subsection 1
of this section, after taking the proposed corporate action, it shall estimate
the fair value of the shares and shall pay this amount to each dissenter who
agrees to accept it in full satisfaction of his demand. The corporation shall
send with its offer a statement of its estimate of the fair value of the shares
and a statement of the dissenters' right to demand payment under section
351.925.
RIGHT TO DEMAND PAYMENT--NOTIFICATION OF FAIR VALUE.
351.925.
1. A dissenter may notify the corporation in writing of his own estimate of the
fair value of his shares and demand payment of his estimate, less any payment
under section 351.910, or reject the corporation's offer under section 351.920
and demand payment of the fair value of his shares due, if:
(1) The dissenter believes that the amount paid under section 351.910 or offered
under section 351.920 is less than the fair value of his shares;
(2) The corporation fails to make payment under section 351.910 within sixty
days after the date set for demanding payment; or
(3) The corporation, having failed to take the proposed action, does not return
the deposited certificates or release the transfer restrictions imposed on
uncertificated shares within sixty days after the date set for demanding
payment.
2. A dissenter waives his right to demand payment under this section unless he
notifies the corporation of his demand in writing under subsection 1 of this
section within thirty days after the corporation made or offered payment for his
shares.
PROCEEDING TO DETERMINE FAIR VALUE OF SHARES.
351.930.
1. If a demand for payment under section 351.925 remains unsettled, the
corporation shall commence a proceeding within sixty days after receiving the
payment demand and petition the court to determine the fair value of the shares.
If the corporation does not commence the proceeding within the sixty-day period,
it shall pay each dissenter whose demand remains unsettled the amount demanded.
2. The corporation shall commence the proceeding in a court of competent
jurisdiction located in the county where the corporation's principal office, or,
if none in this state, its registered office, is located. If the corporation is
a foreign corporation without a registered office in this state, it shall
commence the proceeding in the county in the state where the registered office
of the domestic corporation merged with, or whose shares were acquired by the
foreign corporation, was located.
3. The corporation shall make all dissenters, whether or not residents of this
state, whose demands remain unsettled, parties to the proceeding as in an action
against their shares and all parties must be served with a copy of the petition.
Nonresidents may be served by registered or certified mail or by publication as
provided by law.
4. The jurisdiction of the court in which the proceeding is commenced under
subsection 2 of this section is plenary and exclusive. The court may appoint one
or more persons as appraisers to receive evidence and recommend a decision on
the question of fair value. The appraisers have the powers described in the
order appointing them or in any amendment to it. The dissenters are entitled to
the same discovery rights as parties in other civil proceedings.
5. Each dissenter made a party to the proceeding is entitled to judgment for the
amount, if any, by which the court finds the fair value of his shares exceeds
the amount paid by the corporation, or for the fair value of his after-acquired
shares for which the corporation elected to withhold payment under section
351.920.
PRELIMINARY COPY
UNITED INVESTORS INCOME PROPERTIES
C/O THE ALTMAN GROUP, INC.
1275 VALLEY BROOK AVENUE
LYNDHURST, NEW JERSEY 07071
CONSENT FORM
CONSENT OF LIMITED PARTNER TO THE AMENDMENT TO THE LIMITED PARTNERSHIP
AGREEMENT AND THE SALE OF BRONSON PLACE APARTMENTS
The undersigned, a limited partner of United Investors Income
Properties (the "Partnership"), and the holder of units, acting with respect to
all of the units owned by the undersigned, hereby:
[__] Consents [__] Withholds Consent [__] Abstains
with respect to the Amendment of the Partnership's agreement of limited
partnership to permit sales of the Partnership's property to the General Partner
of the Partnership and its affiliates, and
[__] Consents [__] OBJECTS [__] Abstains
with respect to the Sale by the Partnership of one of its apartment complexes
known as Bronson Place Apartments, located in Mountlake Terrace, Washington on
the terms and conditions described in the Consent Solicitation Statement dated
[________], 2004.
THIS CONSENT IS SOLICITED BY UNITED INVESTORS REAL ESTATE, INC., THE
GENERAL PARTNER OF THE PARTNERSHIP.
IF NO ELECTION IS SPECIFIED WITH RESPECT TO THE AMENDMENT PROPOSAL, AN
OTHERWISE PROPERLY COMPLETED AND SIGNED CONSENT FORM WILL BE DEEMED TO BE A
CONSENT TO THE AMENDMENT PROPOSAL. IF NO ELECTION IS SPECIFIED WITH RESPECT TO
THE SALE PROPOSAL, AN OTHERWISE PROPERTY COMPLETED AND SIGNED CONSENT FORM WILL
NOT BE DEEMED AN OBJECTION TO THE SALE PROPOSAL.
The undersigned hereby acknowledges receipt of the Consent Solicitation
Statement. Capitalized terms used in this Consent and not defined herein have
the meanings set forth in the Consent Solicitation Statement.
A fully completed, signed and dated copy of this Consent Form should be
sent to The Altman Group, Inc., by mail at 1275 Valley Brook Avenue, Lyndhurst,
New Jersey 07071, or by fax at (201) 460-0050, no later than midnight, New York
City time, on [______________], 2004, unless this Consent Solicitation is
extended by the General Partner.
Dated: By:
---------------------------- ---------------------------------
------------------------------------
Please Print Name
Please sign exactly as you hold your 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.