OMB APPROVAL
--------------------------
OMB Number: 3235-0059
Expires: February 28, 2006
Estimated average burden
hours per response...12.75
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
CENTURY PROPERTIES FUND XVIII
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
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):
- --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
- --------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
3) Filing Party:
- --------------------------------------------------------------------------------
4) Date Filed:
- --------------------------------------------------------------------------------
PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
CENTURY PROPERTIES FUND XVIII
C/O THE ALTMAN GROUP, INC.
1275 VALLEY BROOK AVENUE
LYNDHURST, NEW JERSEY 07071
(800) 217-9608
March 14, 2005
Dear Limited Partner:
We write to request your consent to an amendment (the "Amendment") to
the Limited Partnership Agreement (the "Partnership Agreement") of Century
Properties Fund XVIII, a California limited partnership (your "Partnership"), to
extend the term of your Partnership from December 31, 2007 to December 31, 2010.
On October 1, 2004, your Partnership refinanced (with an independent,
third party lender) its mortgage indebtedness scheduled to mature in October
2004 and secured by Oak Run Apartments (the "Property"), a 420-unit apartment
complex located in Dallas, Texas and owned by your Partnership (the
"Refinancing"). The Partnership refinanced the Property because it did not have
sufficient resources to repay the due and payable mortgage indebtedness secured
by the Property and would otherwise have needed to sell the Property to avoid
the loss of the Property through an exercise of remedies by the previous lender.
Fox Partners, the general partner of your Partnership (the "General
Partner"), is of the opinion that a sale of the Property was not advantageous
given the economic conditions, the local and sub-market conditions where the
Property is located, its expectation that these economic conditions and the
Property's operating performance will improve in the long term, and the negative
tax consequences to limited partners of a sale (including the possibility that
proceeds would not be sufficient to enable limited partners to pay their
resulting tax liability). Your General Partner regularly evaluates whether the
Property should be sold by considering various factors, such as the
Partnership's financial position, prevailing conditions in real estate and
capital markets, availability of favorable financing, and tax considerations.
Had the Partnership sold the Property in a "forced sale," the General
Partner is of the opinion that its negotiating leverage would have been greatly
reduced, and the net proceeds to the Partnership and the limited partners could
be lower than if the Property were marketed over time and sold in an orderly
manner.
The new mortgage indebtedness has an initial term of three years, with
two optional one-year extensions, and bears interest at a rate per annum equal
to 4.69% as of October 1, 2004 (as opposed to 7.36% charged on the previous
indebtedness). Since the new mortgage indebtedness may have a term of up to five
years, it could extend beyond the current term of the Partnership, which expires
on December 31, 2007. In order to extend the term of the mortgage indebtedness,
the Partnership must extend the term of the Partnership beyond the extended
maturity date.
If the Amendment is not adopted, the new mortgage indebtedness will
mature on October 1, 2007, the term of the Partnership will terminate on
December 31, 2007, the Partnership will dissolve, and the General Partner will
liquidate all of the Partnership's remaining assets. In this case, the sale
price for the Property could be lower than if the General Partner had greater
control over the timing of the sale, given economic conditions and the local and
sub-market conditions where the Property is located.
The General Partner is an affiliate of AIMCO Properties, L.P. ("AIMCO
Properties"). The General Partner and its affiliates have conflicts of interest
with respect to the Amendment. Continuation of the Partnership beyond 2007 will
result in the General Partner and its affiliates continuing to receive
management, insurance, interest and other fees from the Partnership. These fees
would not continue to be payable beyond 2007 if the Amendment is not adopted.
Pursuant to the Partnership Agreement, the consent of limited partners
who own more than 50% of all outstanding limited partnership units in the
Partnership ("Units") is required to approve the Amendment. As of
March 1, 2005, 75,000 Units were issued and outstanding. AIMCO Properties
and its affiliates own 42,694.50, or 56.93%, of the outstanding Units. As more
fully described in the accompanying Consent Solicitation Statement, AIMCO
Properties and its affiliates must vote 21,513 Units owned by them in proportion
to the votes made with respect to Units not subject to this voting restriction.
AIMCO Properties and its affiliates have indicated that they will vote their
other 21,181.50 Units, or approximately 28.24%, of the outstanding Units, that
are not subject to the voting restriction in favor of the Amendment.
Accordingly, other limited partners owning at least 5,563, or approximately
7.42%, of the outstanding Units, must vote in favor of the Amendment in order
for the Amendment to be approved.
The General Partner recommends that you consent to the Amendment, by
completing, dating and signing the enclosed Consent Form and returning it in the
enclosed pre-addressed, postage-paid envelope.
Please note that this solicitation will expire at midnight, New York
City time, on April 4, 2005. Questions and requests for assistance may be
directed to the Solicitation Agent, The Altman Group, Inc., at its address set
forth below.
Very truly yours,
CENTURY PROPERTIES FUND XVIII
THE SOLICITATION AGENT IS:
THE ALTMAN GROUP, INC.
By Mail, Overnight Courier or Hand: By Facsimile: For Information please call:
1275 Valley Brook Avenue (201) 460-0050 TOLL FREE (800) 217-9608
Lyndhurst, New Jersey 07071
CENTURY PROPERTIES FUND XVIII
C/O THE ALTMAN GROUP, INC.
1275 VALLEY BROOK AVENUE
LYNDHURST, NEW JERSEY 07071
(800) 217-9608
CONSENT SOLICITATION STATEMENT
March 14, 2005
This Consent Solicitation Statement is being furnished to limited
partners (the "Limited Partners") of record as of the close of business on March
1, 2005 (the "Record Date"), of Century Properties Fund XVIII, a California
limited partnership (the "Partnership"), in connection with the solicitation of
consents to an amendment (the "Amendment") to the Partnership's limited
partnership agreement (the "Partnership Agreement") to extend the term of the
Partnership from December 31, 2007 to December 31, 2010. YOUR PARTICIPATION IS
IMPORTANT.
This Consent Solicitation Statement is being solicited by Fox Partners,
the general partner of the Partnership (the "General Partner"), on behalf of the
Partnership. This Consent Solicitation Statement, and the accompanying form of
Consent of Limited Partner (the "Consent Form"), are first being mailed to
Limited Partners on or about March 14, 2005.
On October 1, 2004, your Partnership refinanced (with an independent,
third party lender) its mortgage indebtedness scheduled to mature in October
2004 and secured by Oak Run Apartments (the "Property"), a 420-unit apartment
complex located in Dallas, Texas and owned by your Partnership (the
"Refinancing"). The Partnership refinanced the Property because it did not have
sufficient resources to repay the due and payable mortgage indebtedness secured
by the Property and would otherwise have needed to sell the Property to avoid
the loss of the Property through an exercise of remedies by the previous lender.
The General Partner is of the opinion that a sale of the Property was
not advantageous given the economic conditions, the local and sub-market
conditions where the Property is located, its expectation that these economic
conditions and the Property's operating performance will improve in the long
term, and the negative tax consequences to Limited Partners of a sale (including
the possibility that proceeds would not be sufficient to enable Limited Partners
to pay their resulting tax liability). Your General Partner regularly evaluates
whether the Property should be sold by considering various factors, such as the
Partnership's financial position, prevailing conditions in real estate and
capital markets, availability of favorable financing, and tax considerations.
Had the Partnership sold the Property in a "forced sale," the General
Partner is of the opinion that its negotiating leverage would have been greatly
reduced, and the net proceeds to the Partnership and the Limited Partners could
be lower than if the Property were marketed over time and sold in an orderly
manner.
The new mortgage indebtedness has an initial term of three years, with
two optional one-year extensions, and bears interest at a rate per annum equal
to 4.69% as of October 1, 2004 (as opposed to 7.36% charged on the previous
indebtedness). Since the new mortgage indebtedness may have a term of up to five
years, it could extend beyond the current term of the Partnership, which expires
on December 31, 2007. In order to extend the term of the mortgage indebtedness,
the Partnership must extend the term of the Partnership beyond the extended
maturity date of the indebtedness.
If the Amendment is not adopted, the new mortgage indebtedness will
mature on October 1, 2007, the term of the Partnership will terminate on
December 31, 2007, the Partnership will dissolve, and the General Partner will
liquidate all of the Partnership's remaining assets. In this case, the sale
price for the Property could be lower than if the General Partner had greater
control over the timing of the sale, given economic conditions and the local and
sub-market conditions where the Property is located.
The General Partner is an affiliate of AIMCO Properties, L.P. ("AIMCO
Properties") as more fully described in this Consent Solicitation Statement. The
General Partner and its affiliates have conflicts of interest with respect to
the Amendment. Continuation of the Partnership beyond 2007 will result in the
General Partner and its affiliates continuing to receive management, insurance,
interest and other fees from the Partnership. These fees would not continue to
be payable beyond 2007 if the Amendment is not adopted. See "Conflicts of
Interest."
Pursuant to the Partnership Agreement, the consent of Limited Partners
who own more than 50% of all outstanding limited partnership units in the
Partnership ("Units") is required to approve the Amendment. AIMCO Properties and
its affiliates own 42,694.50, or 56.93%, of the outstanding Units. As more fully
described in this Consent Solicitation Statement, AIMCO Properties and its
affiliates must vote 21,513 Units owned by them in proportion to the votes made
with respect to Units not subject to this voting restriction. AIMCO Properties
and its affiliates have indicated that they will vote their other 21,181.50
Units, or approximately 28.24%, of the outstanding Units, that are not subject
to the voting restriction in favor of the Amendment. Accordingly, other Limited
Partners owning at least 5,563, or approximately 7.42%, of the outstanding
Units, must vote in favor of the Amendment in order for the Amendment to be
approved.
THE GENERAL PARTNER RECOMMENDS THAT LIMITED PARTNERS CONSENT TO THE
AMENDMENT.
THIS SOLICITATION OF CONSENTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY
TIME, ON APRIL 4, 2005 (THE "EXPIRATION DATE").
Questions and requests for assistance may be directed to the
Solicitation Agent, The Altman Group, Inc., at 1275 Valley Brook Avenue,
Lyndhurst, New Jersey 07071, telephone (800) 217-9608.
RISK FACTORS
There are risks associated with the approval and the rejection of the
Amendment. In addition, the General Partner is an affiliate of AIMCO Properties,
and the General Partner and its affiliates have conflicts of interest with
respect to the Amendment. You should consider the following risks carefully:
RISKS IF THE AMENDMENT IS APPROVED
CONTINUATION OF THE PARTNERSHIP; NO TIME FRAME REGARDING SALE OF
PROPERTY. The General Partner proposes to continue to operate the Partnership
until December 31, 2010 and has no current intention to sell the Property and
liquidate the Partnership. Thus, the Refinancing and the Amendment reduce the
likelihood that a Limited Partner will receive the return of his or her
investment in the Partnership through a sale of the Property. The prospectus
pursuant to which the Units were sold in 1983 indicated that the properties
owned by your Partnership might be sold within five to eight years of their
acquisition, depending upon the performance of the property and the then current
real estate market and economic climate. The General Partner does not know when
the Property may be sold. There may not be any way to liquidate your investment
in the Partnership in the future until the Property is sold.
The General Partner is of the opinion that a sale of the Property was
not advantageous given the economic conditions, the local and sub-market
conditions where the Property is located, its expectation that these economic
conditions and the Property's operating performance will improve in the long
term, and the negative tax consequences to Limited Partners of a sale (including
the possibility that proceeds would not be sufficient to enable Limited Partners
to pay their resulting tax liability). Your General Partner regularly evaluates
whether the Property should be sold by considering various factors, such as the
Partnership's financial position, prevailing conditions in real estate and
capital markets, availability of favorable financing, and tax considerations.
The General Partner cannot predict when the Property will be sold. If
the Amendment is approved, you may not be able to exit from the Partnership
until a termination of the Partnership in December 31, 2010, or if the
termination date is further extended, until that extended date.
-2-
AIMCO PROPERTIES AND ITS AFFILIATES CONTROL YOUR PARTNERSHIP AND THEIR
CONTROL MAY INCREASE. Decisions with respect to the day-to-day management of
your Partnership, including a refinancing of the Partnership's mortgage
indebtedness, are the responsibility of the General Partner. The General Partner
is controlled by AIMCO Properties, which wholly owns the managing partner of the
General Partner. In addition, AIMCO Properties and its affiliates hold
42,694.50, or 56.93%, of the outstanding Units. One of AIMCO Properties'
affiliates, with respect to 21,513, or 28.69%, of the outstanding Units,
previously agreed to vote such Units (i) against any proposal to increase the
fees and other compensation payable by the Partnership to the General Partner
and any of its affiliates and (ii) with respect to any proposal made by the
General Partner or any of its affiliates, in proportion to votes cast by other
unitholders. Under the Partnership Agreement, Limited Partners holding a
majority of the outstanding Units must approve certain transactions, including
certain amendments to the Partnership Agreement and the sale of all or
substantially all of the Partnership's assets. AIMCO Properties and its
affiliates can significantly influence, and may have the ability to control
under certain circumstances, some voting decisions with respect to the
Partnership.
From time to time, AIMCO Properties and its affiliates have purchased
Units of the Partnership in the past with a view to making a profit. The
Amendment provides additional time to AIMCO Properties and its affiliates to
purchase additional Units in the future, thereby increasing the influence AIMCO
Properties and its affiliates have over the voting decisions of the Partnership.
Accordingly, the Amendment may result in increased control of the Partnership by
AIMCO Properties and its affiliates.
AFFILIATES OF THE GENERAL PARTNER WILL CONTINUE TO RECEIVE FEES. The
General Partner is controlled by AIMCO Properties, which wholly owns the
managing partner of the General Partner. In addition, AIMCO Properties employs
the property manager and asset manager of the Property. Accordingly, the General
Partner is an affiliate of the property manager, the asset manager and AIMCO
Properties.
Affiliates of the General Partner receive management fees equal to 5%
of gross receipts from the Property. The Partnership paid approximately $79,000
for the nine months ended September 30, 2004 and $219,000 and $245,000 in
management fees during the years ended December 31, 2003 and 2002,
respectively, to affiliates of the General Partner. Affiliates of the General
Partner charged for reimbursement of accountable administrative expenses of
approximately $84,000 for the nine months ended September 30, 2004 and $177,000
and $172,000 during the years ended December 31, 2003 and 2002,
respectively.
Pursuant to the Partnership Agreement, the General Partner is also
entitled to receive a partnership management fee equal to 9% of the
Partnership's adjusted cash from operations as distributed for managing the
affairs of the Partnership. During the nine months ended September 30, 2004 and
the years ended December 31, 2003 and 2002, the Partnership paid no partnership
management fees to the General Partner as the Partnership made no distributions
in 2004 and in 2003 and 2002 the Partnership made distributions from only
cumulative undistributed sales and refinancing proceeds.
An affiliate of the General Partner made a credit line of up to
$150,000 per property owned by the Partnership available to the Partnership.
During the year ended December 31, 2004, an affiliate of the General Partner
agreed to advance funds in excess of the $150,000 credit line for operating
expenses of the Property and costs associated with obtaining a new mortgage on
the Property. During the nine months ended September 30, 2004, approximately
$372,000 was advanced for these purposes. At September 30, 2004, the outstanding
balance was approximately $374,000 including accrued interest. Interest accrues
at the prime rate plus 2% (6.75% at September 30, 2004). Interest expense was
approximately $2,000 for the nine months ended September 30, 2004. On October 1,
2004, an affiliate of the General Partner loaned the Partnership approximately
$1,855,000, which was used to help repay the existing mortgage.
Further, the Partnership insures its properties 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 properties above those limits through insurance policies obtained by
Apartment Investment and Management Company ("AIMCO"), which controls AIMCO
Properties, from insurers unaffiliated with the General Partner. During the nine
months ended September 30, 2004 and the years ended December 31, 2003 and 2002,
the Partnership was charged by affiliates of
-3-
the General Partner approximately $40,000, $66,000 and $79,000, respectively,
for insurance coverage and fees associated with policy claims administration.
The adoption of the Amendment and the extension of the Partnership's
term will result in these fees continuing to be paid for a longer period than
would be the case if the term of the Partnership expired in 2007. Therefore, the
interests of the General Partner and its affiliates in continuing the
Partnership may be different than those of any Limited Partners who desire to
have the Partnership earlier dissolved and liquidated. See "Security Ownership
of Certain Beneficial Owners and Management."
THERE IS NO ACTIVE TRADING MARKET FOR YOUR UNITS. Although the Units
are registered with the Securities and Exchange Commission (the "SEC"), there is
no active trading market for the Units. There may be a limited number of
prospective buyers for your Units in the future, and you may find it difficult
or impossible to liquidate your investment at a price that exceeds the amounts
you might receive on the liquidation and dissolution of the Partnership. The
General Partner cannot predict when the sale or other disposition of the
Property will occur. If the Amendment is not approved, your Partnership will
terminate on December 31, 2007; if the Amendment is approved, you may not be
able to exit from the Partnership until December 31, 2010, or if this
termination date is further extended, until the extended date.
YOU MAY BE REQUIRED TO HOLD YOUR UNITS INDEFINITELY. The General
Partner is of the opinion that a sale of the Property was not advantageous given
the economic conditions, the local and sub-market conditions where the Property
is located, its expectation that these economic conditions and the Property's
operating performance will improve in the long term, and the negative tax
consequences to Limited Partners of a sale (including the possibility that
proceeds would not be sufficient to enable Limited Partners to pay their
resulting tax liability). The General Partner does not know whether or when the
Property may ultimately be sold, and there can be no assurance as to when the
Partnership will sell the Property, the terms under which the Partnership will
sell the Property, or if the Property will be sold at all. There may not be any
way to liquidate your investments in the Partnership in the future until the
Property is sold and your Partnership is liquidated.
THE VALUE OF THE PROPERTY MAY DECLINE, AND YOUR INVESTMENT WILL
CONTINUE TO BE AT RISK. The Partnership will continue to bear the investment
risk associated with the continued ownership of the Property. The Partnership's
future success will depend upon many factors beyond the General Partner's
control, including competitive activity, the need for capital expenditures,
prevailing economic and market conditions and financial, business and other
factors. These factors, and others, may cause the value of the Property and the
Partnership to decline.
YOUR CUMULATIVE RETURNS ACCRUE AT A SIMPLE INTEREST RATE. Pursuant to
the Partnership Agreement, each Limited Partner is entitled to certain
cumulative returns with respect to distributions resulting from sales,
refinancings, and other dispositions of properties and working capital reserves
to the extent cash is available for this purpose. Those cumulative returns are
not compounded and are computed on a simple interest basis. After the Limited
Partners receive their cumulative returns, the General Partner is entitled to
special distributions if available. If the Partnership does not adopt the
Amendment and liquidates in 2007, Limited Partners may be able to invest the
liquidating distributions, if any, in other investments that provide a
compounded return on their investment as opposed to the simple interest returns
to which they are entitled pursuant to the Partnership Agreement. Although your
General Partner regularly evaluates whether your Partnership's property should
be sold and has recently sold one property, if the term of the Partnership is
extended, the General Partner may not be required to sell the Property until the
end of the extended term, depending on, among other things, the Partnership's
financial condition, prevailing conditions in the real estate and capital
markets, availability of favorable financing, and tax considerations.
CONTINGENT LIABILITIES OF AN AFFILIATE OF THE GENERAL PARTNER MAY
DECREASE. As a condition of making the new mortgage, the lender required an
affiliate of the Partnership, AIMCO Properties, to guarantee certain obligations
and liabilities of the Partnership with respect to the new mortgage to the
extent that the lender has recourse to the Partnership under the terms of the
loan with respect to such obligations and liabilities. The Amendment provides
additional time to the Partnership to make payments on the new loan and to
conduct any sale of the Property in an orderly manner, reducing AIMCO
Properties' potential liability under this guarantee. Accordingly, the Amendment
may decrease or eliminate AIMCO Properties' potential liability under its
guarantee of the Partnership's mortgage indebtedness.
RISKS IF THE AMENDMENT IS NOT APPROVED
THE PARTNERSHIP WILL TERMINATE ON DECEMBER 31, 2007. If the Amendment
is not adopted, the new mortgage indebtedness will mature on October 1, 2007,
the term of the Partnership will terminate on December 31, 2007, the Partnership
will dissolve, and the General Partner will liquidate all of the Partnership's
remaining assets. In this case, the sale price for the Property could be lower
than if the General Partner had greater control over the timing of the sale,
given economic conditions and the local and sub-market conditions where the
Property is located.
-4-
THE NEW MORTGAGE INDEBTEDNESS WILL MATURE ON OCTOBER 1, 2007. If the
Amendment is not approved and adopted, the Partnership may not extend the
maturity date of the new mortgage indebtedness under the terms of the loan. At
that time, the Partnership will need to sell the Property or refinance the
indebtedness or otherwise lose the Property through the exercise of remedies by
the lender. The proceeds distributable to the Limited Partners resulting from a
sale at that time may be less than the proceeds resulting from a sale during the
extension periods of the new mortgage indebtedness. During the mortgage debt's
original term, the Partnership is required to make payments comprised of
interest only. During the extension periods, payments of principal and interest
are required. As a result, the balloon payment at the end of the mortgage debt's
original term is larger than at the end of the extension periods. In addition, a
refinancing at that time would likely require an amendment to the Partnership's
Limited Partnership Agreement extending the term of the Partnership beyond the
term in the proposed Amendment.
A SALE OF THE PROPERTY IN THE NEAR FUTURE MAY NOT BE ADVANTAGEOUS TO
THE LIMITED PARTNERS. The General Partner is of the opinion that a sale of the
Property was not advantageous given the economic conditions, the local and
sub-market conditions where the Property is located, its expectation that these
economic conditions and the Property's operating performance will improve in the
long term, and the negative tax consequences to Limited Partners of a sale
(including the possibility that proceeds would not be sufficient to enable
Limited Partners to pay their resulting tax liability). Given the
unpredictability of various market and economic conditions, the General Partner
cannot determine whether a sale of the Property by October 2007 would be any
more favorable to the Limited Partners. Your General Partner regularly evaluates
whether the Property should be sold by considering various factors, such as the
Partnership's financial position, prevailing conditions in real estate and
capital markets, availability of favorable financing, and tax considerations.
The Amendment would provide the Partnership more flexibility in determining when
to sell the Property. If the Partnership sells the Property in a "forced sale,"
the General Partner is of the opinion that its negotiating leverage will be
greatly reduced, and the net proceeds to the Partnership and the Limited
Partners could be lower than if the Property were disposed of over time in an
orderly manner.
THE REFINANCING
REASONS FOR THE REFINANCING
On October 1, 2004, your Partnership refinanced (with an independent,
third party lender) its mortgage indebtedness scheduled to mature in October
2004 and secured by the Property. The Partnership refinanced the Property
because it did not have sufficient resources to repay the due and payable
mortgage indebtedness secured by the Property and would otherwise have needed to
sell the Property to avoid the loss of the Property through an exercise of
remedies by the previous lender. The General Partner is of the opinion that a
sale of the Property was not advantageous given the economic conditions, the
local and sub-market conditions where the Property is located, its expectation
that these economic conditions and the Property's operating performance will
improve in the long term, and the negative tax consequences to Limited Partners
of a sale (including the possibility that proceeds would not be sufficient to
enable Limited Partners to pay their resulting tax liability). Your General
Partner regularly evaluates whether the Property should be sold by considering
various factors, such as the Partnership's financial position, prevailing
conditions in real estate and capital markets, availability of favorable
financing, and tax considerations. Had the Partnership sold the Property in a
"forced sale," the General Partner is of the opinion that its negotiating
leverage would have been greatly reduced, and the net proceeds to the
Partnership and the Limited Partners could be lower than if the Property were
marketed over time and sold in an orderly manner.
TERMS OF THE REFINANCING
The new loan has an original principal amount of $8,500,000 and will
mature on October 1, 2007, subject to two optional one-year extensions. The new
loan has an interest rate equal to the London Interbank Offered Rates (LIBOR)
plus 2.85% (with a minimum rate of 4.69%), which equaled 4.69% as of October 1,
2004 (as opposed to 7.36% on the previous indebtedness). The new loan is
non-recourse (with customary exceptions for fraud and misappropriation of funds)
and has a balloon payment due at maturity of approximately $8,500,000, or
$8,284,000 if the maturity date is extended to October 2009. In addition, a fee
of $85,000 is due at maturity or the time of prepayment, as applicable. The
Partnership must make monthly payments of interest only, except during any
-5-
extension periods. During the extension periods, the Partnership must also
make payments of principal based on a 30-year amortization schedule. The
new loan can be prepaid in full upon payment of a prepayment penalty equal to 2%
of the principal amount outstanding if the prepayment occurs within the first
year, 1% after the first year but within the first year and a half, and 0.5%
thereafter. In addition the new mortgage requires monthly escrow deposits for
taxes, insurance and replacement reserves. As a condition of making the new
mortgage, the lender required an affiliate of the Partnership to guarantee the
obligations and liabilities of the Partnership with respect to the new mortgage.
The guarantee is limited to the extent that the lender under the new loan has
recourse to the Partnership, which may occur in the event of or with respect to
the commencement of certain bankruptcy or insolvency proceedings, fraud or
material misrepresentations, certain violations of the loan agreement,
misapplication or misappropriation of certain funds, fees paid to affiliates of
the Partnership during an event of default in violation of the loan agreement,
certain damage to or loss of any part of the Property, criminal acts resulting
in loss of any part of the Property, removal of personal property from the
Property in violation of the loan agreement, certain costs in connection with
the exercise of remedies on the new loan, and certain insurance deductibles.
In accordance with the terms of the loan agreement for the new
mortgage, repayment of the mortgage indebtedness may be accelerated at the
option of the lender if an Event of Default, as defined in the loan agreement,
occurs. Events of Default include, but are not limited to: nonpayment of monthly
interest and escrows within 5 days after the due date; any representations or
warranties made in connection with obtaining the loan that are considered by the
lender to be misleading in any material respect at the time such representations
or warranties were made; any judgment or lien placed on the Partnership, which
in the lender's sole judgment has a material adverse effect on the Partnership
or is not covered by collectible insurance proceeds.
The proceeds from the new loans were used to, among other things, repay
the existing mortgage indebtedness secured by the Property, to pay other
transaction fees and expenses associated with the Refinancing, to pay for
certain repairs at the Property, to fund replacement reserves for the Property,
and to fund certain escrow accounts. The General Partner is evaluating the cash
needs of the Partnership, but does not anticipate a distribution in the near
future.
AFFILIATE LOAN
The prior mortgage loan of approximately $9,728,000 matured on October
1, 2004 and was repaid with proceeds from the new mortgage and an additional
loan of approximately $1,855,000, which was funded by an affiliate of the
General Partner (the "Affiliate Loan") to cover closing costs and the deficiency
between the existing mortgage payoff amount and the new mortgage. The Affiliate
Loan is a demand note that bears interest at the prime rate plus 2%.
INTEREST RATE CAP
In conjunction with the mortgage note, the Partnership paid
approximately $30,000 to enter into an interest rate cap agreement, which
limited the Partnership's exposure to interest rate increases. Under this
interest rate cap agreement, the interest rate on the amounts owed to GMAC
Commercial Mortgage by the Partnership will be no higher than 6.00%.
ALTERNATIVES CONSIDERED
The General Partner considered a sale of the Partnership's Property but
is of the opinion that a sale of the Property was not advantageous given the
economic conditions, the local and sub-market conditions where the Property is
located, its expectation that these economic conditions and the Property's
operating performance will improve in the long term, and the negative tax
consequences to Limited Partners of a sale (including the possibility that
proceeds would not be sufficient to enable Limited Partners to pay their
resulting tax liability). In particular, the General Partner considered the
potential for future appreciation in the value of the Property, the change in
the local rental markets, and the tax consequences to you and your partners of a
sale of the Property. See "Investment Objectives and Policies; Sale or
Refinancing of Investments" below.
Another alternative to refinancing the Property was to allow the
Partnership to default on the existing mortgage and to allow the holder of such
debt to foreclose on the Property. However, such disposition of the Property by
the Partnership would likely result in the recognition of gain or loss by the
Partnership equal to the difference between (i) the amount realized for the
Property and (ii) the Partnership's tax basis (which has been reduced because of
prior years' depreciation deductions) in the Property. The amount realized for
the Property would be the amount of the outstanding indebtedness secured by the
Property, less any expenses of sale, plus any liabilities assumed by the
purchaser of the Property or liabilities that the purchaser takes the Property
subject to.
-6-
Any taxable gain or loss will pass through to the partners of the Partnership.
See "Material U.S. Federal Income Tax Consequences" below.
THE AMENDMENT
The Amendment amends and restates Section 4.3 of the Limited
Partnership Agreement in its entirety as follows:
"The Partnership will commence on the date of filing of the certificate
of limited partnership for the Partnership and will continue until
December 31, 2010, unless previously terminated in accordance with the
provisions of this Partnership Agreement."
REASONS FOR THE AMENDMENT
The new mortgage indebtedness has an initial term of three years, with
two optional one-year extensions, and bears interest at a rate per annum equal
to 4.69% as of October 1, 2004 (as opposed to 7.36% on the previous
indebtedness) with a balloon payment due at maturity. Since the new mortgage
indebtedness may have a term of up to five years, it could extend beyond the
term of the Partnership, which expires on December 31, 2007. In order to extend
the term of the mortgage indebtedness, the Partnership must extend the term of
the Partnership to the maturity of the new indebtedness. In addition, because
the new mortgage indebtedness is not amortized at all at the original maturity
date, your Partnership will have to refinance such debt, sell assets or
otherwise obtain additional funds prior to the maturity date of the new mortgage
indebtedness, or it will be in default and could lose the property to
foreclosure.
CONFLICTS OF INTEREST
The General Partner is an affiliate of AIMCO Properties. AIMCO
Properties and its affiliates, including the General Partner, may have interests
that conflict with the interests of the Limited Partners. You should consider
these factors before consenting to the Amendment.
Affiliates of the General Partner Will Continue to Receive Fees. The
General Partner is controlled by AIMCO Properties, which wholly owns the
managing partner of the General Partner. In addition, AIMCO Properties employs
the property manager and asset manager of the Property. Accordingly, the General
Partner is an affiliate of the property manager, the asset manager and AIMCO
Properties.
Affiliates of the General Partner receive management fees equal to 5%
of gross receipts from the Property. The Partnership paid approximately $79,000
for the nine months ended September 30, 2004 and $219,000 and $245,000 in
management fees during the years ended December 31, 2003 and 2002, respectively,
to affiliates of the General Partner. Affiliates of the General Partner charged
for reimbursement of accountable administrative expenses of approximately
$84,000 for the nine months ended September 30, 2004 and $177,000 and $172,000
during the years ended December 31, 2003 and 2002, respectively.
Pursuant to the Partnership Agreement, the General Partner is also
entitled to receive a partnership management fee equal to 9% of the
Partnership's adjusted cash from operations as distributed for managing the
affairs of the Partnership. During the nine months ended September 30, 2004 and
the years ended December 31, 2003 and 2002, the Partnership paid no partnership
management fees to the General Partner as the Partnership made no distributions
in 2004 and in 2003 and 2002 the Partnership made distributions from only
cumulative undistributed sales and refinancing proceeds.
An affiliate of the General Partner made a credit line of up to
$150,000 per property owned by the Partnership available to the Partnership.
During the year ended December 31, 2004, an affiliate of the General Partner
agreed to advance funds in excess of the $150,000 credit line for operating
expenses of the Property and costs associated with obtaining a new mortgage on
the Property. During the nine months ended September 30, 2004, approximately
$372,000 was advanced for these purposes. At September 30, 2004, the outstanding
balance was approximately $374,000 including accrued interest. Interest accrues
at the prime rate plus 2% (6.75% at September 30, 2004). Interest expense was
approximately $2,000 for the nine months ended September 30, 2004. On October
-7-
1, 2004, an affiliate of the General Partner loaned the Partnership
approximately $1,855,000, which was used to help repay the existing mortgage.
Further, the Partnership insures its properties 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 properties above those limits through insurance policies obtained by
Apartment Investment and Management Company ("AIMCO"), which controls AIMCO
Properties, from insurers unaffiliated with the General Partner. During the nine
months ended September 30, 2004 and the years ended December 31, 2003 and 2002,
the Partnership was charged by affiliates of the General Partner approximately
$40,000, $66,000 and $79,000, respectively, for insurance coverage and fees
associated with policy claims administration.
The adoption of the Amendment and the extension of the Partnership's
term will result in these fees continuing to be paid for a longer period than
would be the case if the term of the Partnership expired in 2007. Therefore, the
interests of the General Partner and its affiliates in continuing the
Partnership may be different than those of any Limited Partners who desire to
have the Partnership earlier dissolved and liquidated. See "Security Ownership
of Certain Beneficial Owners and Management."
AIMCO Properties May Buy Units in Future Tender Offers. AIMCO
Properties is affiliated with the General Partner. From time to time, AIMCO
Properties and its affiliates have purchased Units of the Partnership in the
past with a view to making a profit. AIMCO Properties and its affiliates hold
42,694.50, or approximately 56.93%, of the outstanding Units. The Amendment
provides additional time to AIMCO Properties and its affiliates to purchase
additional Units in the future, thereby increasing the influence AIMCO
Properties and its affiliates have over the voting decisions of the Partnership.
Accordingly, the Amendment may result in increased control of the Partnership by
AIMCO Properties and its affiliates.
AIMCO Properties Provided a Limited Guarantee of the New Loan. As a
condition of making the new mortgage, the lender required an affiliate of the
Partnership, AIMCO Properties, to guarantee certain obligations and liabilities
of the Partnership with respect to the new mortgage to the extent that the
lender has recourse to the Partnership under the terms of the loan with respect
to such obligations and liabilities. The Amendment provides additional time to
the Partnership to make payments on the new loan and to conduct any sale of the
Property in an orderly manner, reducing AIMCO Properties' potential liability
under this guarantee. Accordingly, the Amendment may decrease or eliminate AIMCO
Properties' potential liability under its guarantee of the Partnership's
mortgage indebtedness.
NO APPRAISAL RIGHTS
Limited Partners are not entitled to dissenters' appraisal rights under
California law or the Partnership Agreement in connection with the Amendment.
RECOMMENDATION OF THE GENERAL PARTNER
The General Partner recommends that Limited Partners consent to the
Amendment. The General Partner is of the opinion that the Amendment is in the
best interests of the Partnership and its Limited Partners. In making its
determination, the General Partner considered the terms of the proposed
Refinancing (see "The Refinancing") and alternatives to such Refinancing (see
"Alternatives Considered").
In addition, the General Partner believes that the Amendment is in the
best interest of the Limited Partners because a sale of the Property and the
liquidation of the Partnership's assets in 2007 will be taxable events to the
Partnership. Any taxable income would be allocated to partners, and, depending
on the purchase price and related sales costs, a partner's tax liability could
be greater than the funds, if any, it receives from the Partnership. If the
Partnership sells the Property in a "forced sale," the General Partner is of the
opinion that its negotiating leverage would be greatly reduced, and the net
proceeds to the Partnership and the Limited Partners could be lower than if the
Property is marketed over time and sold in an orderly manner. The General
Partner recommends that you consult with your tax and financial advisors as to
the ultimate potential impact a sale of the Property and a liquidation of the
Partnership's assets will have on you.
Conversely, if the Amendment is approved, the Property will not be
required to be sold, and the Partnership will not expire, until December 31,
2010. As economic conditions improve in the markets where the Property is
located and rental revenues increase, the value of the Property is expected to
increase. If the Limited Partners approve the Amendment, the General Partner may
be in a better position to maximize the value of the Property.
-8-
INFORMATION ABOUT YOUR PARTNERSHIP
GENERAL. Your Partnership was organized under the Uniform Limited
Partnership Act of the State of California in July 1982 for the purpose of
investing in, acquiring, managing and ultimately selling income-producing real
properties. The general partner of your Partnership is Fox Partners, a
California general partnership. The general partners of the General Partner are
Fox Capital Management Corporation, a California corporation, Fox Realty
Investors, a California general partnership, and Fox Partners 82, a California
general partnership. Fox Capital Management Corporation is the managing general
partner of the General Partner and is a subsidiary of AIMCO, a publicly traded
real estate investment trust. NPI Equity Investments II, Inc., a Florida
corporation, is the managing general partner of Fox Realty Investors and is also
a subsidiary of AIMCO. Fox Partners 82 is not affiliated with AIMCO. The
Partnership's principal executive offices are located at 4582 South Ulster
Street Parkway, Suite 1100, Denver, Colorado 80327, and its telephone number is
(303) 757-8101.
On October 1, 1998, AIMCO merged (the "Insignia Merger") with Insignia
Financial Group, Inc. ("Insignia"). As a result of the Insignia Merger, AIMCO
acquired approximately 51% of the outstanding common shares of beneficial
interest of Insignia Property Trust ("IPT"). Through the Insignia Merger, AIMCO
also acquired a majority ownership interest in the entity that manages the
residential properties owned by your Partnership. On October 31, 1998, IPT and
AIMCO entered into an agreement and plan of merger, dated as of October 1, 1998,
pursuant to which IPT merged with AIMCO on February 26, 1999. AIMCO then
contributed IPT's interest in Insignia Properties, L.P., IPT's operating
partnership, to AIMCO's wholly owned subsidiary, AIMCO/IPT, Inc. AIMCO also
replaced IPT as the sole general partner of Insignia Properties, L.P., which is
now known as AIMCO IPLP, L.P. As a result, Fox Capital Management Corporation is
an indirect, wholly owned subsidiary of AIMCO/IPT and the property manager of
your Partnership's properties is our indirect, wholly owned subsidiary.
The Partnership does not have any employees. Management and
administrative services are provided by the General Partner and by agents
retained by the General Partner. An affiliate of the General Partner has been
providing such property management services.
THE PROPERTY
The sole remaining property owned by your Partnership is Oak Run
Apartments, a 420-unit apartment complex located in Dallas, Texas. Oak Run
Apartments is held by a limited partnership in which your Partnership directly
owns a 99% limited partnership interest and indirectly owns a 1% general
partnership interest through a wholly-owned subsidiary.
Set forth below is the gross carrying value, accumulated depreciation,
depreciable life, method of depreciation, and Federal tax basis for the Property
as of December 31, 2003.
GROSS
CARRYING ACCUMULATED FEDERAL TAX
PROPERTY VALUE DEPRECIATION RATE METHOD BASIS
-------- ----- ------------ ---- ------ -----
(in thousands) (in thousands)
Oak Run Apartments $17,937 $8,001 5 -- 30 years S/L $5,928
APPRAISAL. The market value of the Property was appraised as of
September 10, 2004 by CBRE -- Valuation & Advisory Services, an independent
third party appraiser (the "Appraiser"), in an appraisal report dated September
16, 2004 (the "Appraisal"). A copy of the Appraisal is available from the
General Partner upon written request. The Appraisal stated that its purpose was
to estimate the market value of the Property.
The Appraisal defined "market value" as the most probable price which a
property should bring in a competitive and open market under all conditions
requisite to a fair sale, the buyer and seller, each acting prudently,
knowledgably, and assuming that the price is not affected by undue stimulus. The
Appraisal stated that implicit in this definition is the consummation of a sale
as of a specified date and the passing of title from seller to buyer under
conditions whereby buyer and seller are typically motivated, both parties are
well informed or well advised and are each acting in what he considers to be his
own best interests, a reasonable time is allowed for exposure in the open
-9-
market, payment is made in U.S. dollars or comparable financial arrangements,
and the price represents the normal consideration for the property sold
unaffected by special or creative financing or sales concessions granted by
anyone associated with the sale. The Appraisal stated that it was based on the
following additional assumptions, among others: clear and marketable title to
the Property; the structural soundness and code conforming nature of the
Property; the absence of hazardous materials; the absence of any mineral deposit
or subsurface rights on the Property; the absence of any contemplated public
initiatives, governmental development controls, or rent controls; the absence of
liens or other encumbrances; responsible ownership and competent property
management; and the accuracy and the reliability of information received.
The Appraiser stated in the Appraisal that he did not utilize the cost
approach to valuation, which is based on the proposition that a purchaser would
pay no more for a property than the cost to produce a substitute property with
equivalent utility, because of the significant amount of depreciation on the
Property. The Appraisal noted the Appraiser's estimate of the Property's
insurable value of $4,600,000, although the Appraisal noted that the Appraiser
is not an expert in determining insurable value. The Appraisal stated that the
Appraiser considered the sales comparison approach to valuation, which involves
comparison of the Property to comparable properties and adjusting for
differences, and gave primary emphasis to the income capitalization approach to
valuation, which estimates the amount an investor would be willing to pay to
receive an income stream plus reversion value from a property over a period of
time. On this basis, the Appraisal stated that the "as is" market value of the
fee simple estate of the Property was $12,000,000 as of September 10, 2004 and
the "as stabilized" value of the fee simple estate of the Property is
$12,200,000 as of September 10, 2004.
AVERAGE RENTAL RATES AND OCCUPANCY. The following table sets forth the
average rental rates and occupancy for 2004, 2003 and 2002 for the Property:
AVERAGE ANNUAL
RENTAL RATES AVERAGE OCCUPANCY
(PER UNIT)
PROPERTY 2004 2003 2002 2004* 2003 2002
-------- ---- ---- ---- ----- ---- ----
Oak Run Apartments $5,987 $6,375 $7,026 79% 90% 87%
- ---------------------
* This information is as of September 30, 2004. The occupancy at the Property
decreased as a result of changes in the criteria used to accept new tenants. The
changes were instituted in an effort to attract and maintain more desirable
tenants which will then help to control operating expenses.
REAL ESTATE TAXES AND RATES. The following table sets forth the real
estate taxes and rates in 2004 for the Property:
2004 2004
PROPERTY BILLING RATE
-------- ------- ----
(in thousands)
Oak Run Apartments $314 2.88%
INVESTMENT OBJECTIVES AND POLICIES; SALE OR FINANCING OF INVESTMENTS.
In general, your General Partner, together with the property manager, which is
an affiliate of AIMCO Properties, regularly evaluates your Partnership's
property by considering various factors, such as the Partnership's financial
position and real estate and capital markets conditions. The General Partner
monitors specific locale and sub-market conditions (including stability of the
surrounding neighborhood), evaluating current trends, competition, new
construction and economic changes. It oversees each asset's operating
performance and continuously evaluates the physical improvement requirements. In
addition, the financing structure for the property (including any prepayment
penalties), tax implications, availability of attractive mortgage financing to a
purchaser, and the investment climate are all considered. Any of these factors,
and possibly others, could potentially contribute to any decision by the General
Partner to sell, refinance, upgrade with capital improvements or hold a
Partnership property. If rental market conditions improve, the level of
distributions might increase over time. It is possible that the private resale
market
-10-
for properties could improve over time, making a sale of the Partnership's
property in a private transaction at some point in the future a more viable
option than it is currently. The General Partner is of the opinion that a sale
of the Property was not advantageous given the economic conditions, the local
and sub-market conditions where the Property is located, its expectation that
these economic conditions and the Property's operating performance will improve
in the long term, and the negative tax consequences to Limited Partners of a
sale (including the possibility that proceeds would not be sufficient to enable
Limited Partners to pay their resulting tax liability).
ADDITIONAL INFORMATION. Your Partnership, AIMCO and AIMCO Properties
are subject to the information and reporting requirements of the Securities
Exchange Act of 1934, as amended, and, in accordance therewith, file reports and
other information with the SEC relating to the business, financial condition and
other matters of each of the foregoing entities. Such reports and other
information may be inspected at the public reference facility maintained by the
SEC at Judiciary Plaza, 450 Fifth Street, N.W., Room 1200, Washington, D.C.
20549. Copies of such material can also be obtained from the Public Reference
Room of the SEC in Washington, D.C. at prescribed rates. The SEC also maintains
a site on the world wide web at http://www.sec.gov that contains reports, proxy
and information statements and other information regarding registrants that file
electronically with the SEC.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following summary of the material U.S. Federal income tax
consequences is based upon current U.S. Federal tax law which is subject to
change, possibly with retroactive effect. This summary is for general
information only and does not address all aspects of U.S. Federal income
taxation that may be relevant in the particular circumstances of each Limited
Partner or to Limited Partners subject to special treatment under the Code. In
addition, this summary does not address any state, local or foreign tax
consequences.
There will be no Federal or state income tax consequences resulting
solely from the approval of the Amendment. If the Partnership is required to
sell the Property, or the lender forecloses on the Property, the Partnership
likely would recognize gain or loss, which would pass through to the partners of
the Partnership.
TAX CONSEQUENCES OF SALE OF PARTNERSHIP PROPERTY OR FORECLOSURE. The
description set forth below is a general description of the tax consequences
that a partner of the Partnership may incur as a result of a sale of the
Property or a foreclosure by the lender, assuming that the applicable tax rates
and tax laws remain unchanged from those in existence for the 2005 tax year.
Each partner should consult with his or her own tax advisor to determine his or
her particular tax consequences.
A sale, exchange or other disposition of the Property by the
Partnership would result in the recognition of gain or loss by the Partnership
equal to the difference between (i) the amount realized for the Property and
(ii) the Partnership's tax basis (which has been reduced because of prior years'
depreciation deductions) in the Property. The amount realized for the Property
would be the selling price for the Property, less any expenses of sale, plus any
liabilities assumed by the purchaser of the Property or liabilities that the
purchaser takes the Property subject to. Any taxable gain or loss will pass
through to the partners of the Partnership.
Any gain or loss recognized as a result of the transfer of the Property
may be characterized for taxation purposes as ordinary or capital, or a
combination of both. To the extent that any part of a Property being sold
consists of depreciable personal property under Internal Revenue Code (the
"Code") Section 1245 or depreciable real property under Code Section 1250, gain
on a sale of such Property may be treated as ordinary income. Some portion of
any gain recognized on the Property may be considered "unrecaptured section 1250
gain" that is taxable at a maximum Federal individual rate of 25%. Generally,
the unrecaptured Code Section 1250 gain tax rate applies only to individuals and
certain other noncorporate taxpayers. Gain in excess of Code Section 1245 and
Code Section 1250 gain and unrecaptured Code Section 1250 gain generally will be
taxed as Code Section 1231 gain, which may be taxed at capital gain rates
(currently, the maximum capital gains tax rate applicable to individuals and
certain other noncorporate taxpayers is 15%) depending upon your individual tax
circumstances. Any loss from a disposition of the Property may be characterized
as ordinary loss, subject to certain rules that may require a partner to
re-characterize the loss as capital loss depending upon such partner's
particular circumstances. The rates set forth above are the Federal tax rates
that currently are in effect for 2005.
-11-
The proceeds available for distribution to the partners of the
Partnership in the event of a sale of the Property or a foreclosure by the
lender may be less than any tax liabilities resulting from such sale or
foreclosure. Accordingly, a Limited Partner may need to use funds from other
sources to satisfy any such tax liabilities.
If a partner possesses suspended tax losses, tax credits, or other
items of tax benefit, a partner may be able to use such items to reduce any tax
liability that arises with respect to any gain recognized as a result of the
sale of the Property or a foreclosure by the lenders.
SINCE THE TAX CONSEQUENCES TO A PARTICULAR PARTNER OF THE REFINANCING, A SALE OF
THE PARTNERSHIP'S ASSETS, OR A FORECLOSURE ARE DEPENDENT IN PART ON FACTS THAT
ARE UNIQUE TO EACH PARTNER, EACH PARTNER IS URGED TO CONSULT HIS OR HER TAX
ADVISORS AS TO THE EXACT CONSEQUENCES TO HIM OR HER OF SUCH ACTIONS, INCLUDING
THE APPLICATION OF FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Except as noted below, the General Partner does not know of any person
or entity who is the beneficial owner of more than 5% of the Units of the
Partnership as of September 30, 2004. Neither the General Partner nor any
director or officer of the General Partner owns any Units.
ENTITY NUMBER OF UNITS PERCENT OF TOTAL
AIMCO IPLP, L.P. (an affiliate of AIMCO) 21,717.0 28.96%
Fox Capital Management Company (an affiliate 100.0 0.13%
of AIMCO)
Madison River Properties, LLC (an affiliate of 5,259.5 7.01%
AIMCO)
AIMCO Properties, L.P. (an affiliate of AIMCO) 15,618.0 20.83%
AIMCO IPLP, L.P., Fox Capital Management Company and Madison River
Properties, LLC are indirectly owned by AIMCO. Their business address is 55
Beattie Place, Greenville, South Carolina 29602. AIMCO Properties, L.P. is
indirectly controlled by AIMCO. Its principal executive offices are located at
4582 South Ulster Street Parkway, Suite 1100, Denver, Colorado 80237, and their
telephone number is (303) 757-8101.
RECORD DATE; CONSENTS REQUIRED
The Partnership has fixed March 1, 2005 as the Record Date for
determining Limited Partners entitled to notice of and to consent to the
Amendment. Only Limited Partners of record on the Record Date may execute and
deliver a Consent Form.
Pursuant to the Partnership Agreement, approval of the Amendment
requires the consent of Limited Partners who own more than 50% of the
Partnership's outstanding Units. As of the Record Date, there were 75,000 Units
issued and outstanding. AIMCO Properties and its affiliates currently own
42,694.50, or approximately 56.93%, of the outstanding Units. With respect to
21,513, or approximately 28.69%, of the outstanding Units, one of AIMCO
Properties' affiliates previously agreed to vote such Units (i) against any
proposal to increase the fees and other compensation payable by the Partnership
to the General Partner and any of its affiliates, and (ii) with respect to any
proposal made by the General Partner or any of its affiliates, in proportion to
votes cast by other Limited Partners, and such affiliate will vote those Units
accordingly. AIMCO Properties and its affiliates have indicated that they will
vote their other 21,181.50 Units, or approximately 28.24%, of the outstanding
Units, that are not subject to the voting restriction in favor of the Amendment.
Accordingly, other Limited Partners owning at least 5,563, or approximately
7.42%, of the outstanding Units, must vote in favor of the Amendment in order
for the Amendment to be approved.
-12-
The Amendment will become effective on the Expiration Date, provided
the requisite consents from Limited Partners have been received. Abstentions
will not be counted as consents in favor of the Amendment.
SOLICITATION OF CONSENTS
Consents will be solicited by mail, telephone, e-mail and in person.
Solicitations may be made by the Solicitation Agent, or by representatives of
the General Partner, none of whom will receive additional compensation for such
solicitations. The cost of preparing, assembling, printing and mailing this
Consent Solicitation Statement and the enclosed Consent Form will be borne by
the Partnership. The fees and expenses of the Solicitation Agent are expected to
be approximately $6,000 and will be borne by the Partnership.
CONSENT PROCEDURES
LIMITED PARTNERS WHO DESIRE TO CONSENT TO THE AMENDMENT SHOULD DO SO BY
MARKING THE APPROPRIATE BOX ON THE CONSENT FORM INCLUDED HEREWITH, AND SIGNING,
DATING AND DELIVERING THE CONSENT FORM TO THE SOLICITATION AGENT BY MAIL IN THE
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE ENCLOSED FOR THAT PURPOSE, BY OVERNIGHT
COURIER OR BY FACSIMILE AT THE ADDRESS OR FACSIMILE NUMBER SET FORTH BELOW AND
ON THE CONSENT FORM, ALL IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN
AND THEREIN.
All Consent Forms that are properly completed, signed and delivered and
not properly revoked (See "Revocation of Instructions" below) prior to the
Expiration Date, will be given effect in accordance with the specifications
thereof. Abstentions on the enclosed Consent Form will be treated as a vote
against the Amendment for purposes of determining whether the requisite vote has
been obtained. IF A CONSENT FORM IS DELIVERED AND NONE OF THE "CONSENTS," THE
"WITHHOLDS CONSENT" NOR THE "ABSTAIN" BOX IS MARKED, BUT THE CONSENT FORM IS
OTHERWISE PROPERLY COMPLETED AND SIGNED, THE LIMITED PARTNER WILL BE DEEMED TO
HAVE CONSENTED TO THE AMENDMENT.
Consent Forms must be executed in exactly the same manner as the
name(s) in which ownership of the Units is registered. If the Units to which a
Consent Form relates are held by two or more joint holders, all such holders
should sign the Consent Form. If a Consent Form is signed by a trustee, partner,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary, agency or representative capacity, such
person must so indicate when signing and submit with the Consent Form evidence
satisfactory to the Partnership of authority to execute the Consent Form.
The execution and delivery of a Consent Form will not affect a Limited
Partner's right to sell or transfer the Units. All Consent Forms received by the
Partnership or the Solicitation Agent (and not properly revoked) prior to the
Expiration Date will be effective notwithstanding a record transfer of such
Units subsequent to the Record Date, unless the Limited Partner revokes such
Consent Form prior to midnight, New York City time, on the Expiration Date by
following the procedures set forth under "Revocation of Instructions" below.
All questions as to the validity, form and eligibility (including time
of receipt) regarding consent procedures will be determined by the General
Partner in its sole discretion, which determination will be conclusive and
binding. The Partnership reserves the right to reject any or all Consent Forms
that are not in proper form. The Partnership also reserves the right to waive
any defects, irregularities or conditions of delivery as to particular Consent
Forms. Unless waived, all such defects or irregularities in connection with the
deliveries of Consent Forms must be cured within such time as the General
Partner determines. Neither the General Partner nor any of its affiliates or any
other persons shall be under any duty to give any notification of any such
defects of irregularities or waivers, nor shall any of them incur any liability
for failure to give such notification. Deliveries of Consent Forms will not be
deemed to have been made until any irregularities or defects therein have been
cured or waived. The interpretations of the terms and conditions of this
solicitation by the General Partner shall be conclusive and binding.
REVOCATION OF INSTRUCTIONS
-13-
Any Limited Partner who has delivered a Consent Form may revoke the
instructions set forth in such Consent Form by delivering to the Solicitation
Agent a written notice of revocation prior to midnight, New York City time, on
the Expiration Date. In order to be effective, a notice of revocation of the
instructions set forth in a Consent Form must (i) contain the name of the person
who delivered the Consent Form, (ii) be in the form of a subsequent Consent Form
marked either as "CONSENTS," "WITHHOLDS CONSENT" or "ABSTAINS," as the case may
be, or in a writing delivered to the Solicitation Agent stating that the prior
Consent Form is revoked, (iii) be signed by the Limited Partner in the same
manner as the original signature on the Consent Form, and (iv) be received by
the Solicitation Agent prior to midnight, New York City time, on the Expiration
Date at its address set forth on the Consent Form. A purported notice of
revocation that lacks any of the required information, is dispatched to an
improper address or is not received in a timely manner will not be effective to
revoke the instructions set forth in a Consent Form previously given. A
revocation of the instructions set forth in a Consent Form can only be
accomplished in accordance with the foregoing procedures. NO LIMITED PARTNER MAY
REVOKE THE INSTRUCTIONS SET FORTH IN A CONSENT FORM AFTER MIDNIGHT, NEW YORK
CITY TIME, ON THE EXPIRATION DATE.
CENTURY PROPERTIES FUND XVIII
THE SOLICITATION AGENT IS:
THE ALTMAN GROUP, INC.
By Facsimile: For Information please call:
By Mail, Overnight Courier or Hand:
1275 Valley Brook Avenue (201) 460-0050 TOLL FREE (800) 217-9608
Lyndhurst, New Jersey 07071
-14-
CENTURY PROPERTIES FUND XVIII
CONSENT OF LIMITED PARTNER
The undersigned, a limited partner of CENTURY PROPERTIES FUND XVIII
(the "Partnership"), and the holder of units ("Units") of limited partnership
interest in the Partnership, acting with respect to all of the Units owned by
the undersigned, hereby:
[__] Consents [__] Withholds Consent [__] Abstains
with respect to an amendment (the "Amendment") that amends and restates Section
4.3 of the Partnership's Agreement of Limited Partnership in its entirety as
follows:
"The Partnership will commence on the date of filing of the certificate
of limited partnership for the Partnership and will continue until
December 31, 2010, unless previously terminated in accordance with the
provisions of this Partnership Agreement."
IF NO ELECTION IS SPECIFIED, ANY OTHERWISE PROPERLY COMPLETED AND SIGNED CONSENT
FORM WILL BE DEEMED TO BE A CONSENT.
The undersigned hereby acknowledges receipt of the Consent Solicitation
Statement, dated March 14, 2005. THIS CONSENT IS SOLICITED ON BEHALF OF CENTURY
PROPERTIES FUND XVIII, BY FOX PARTNERS, THE GENERAL PARTNER. A fully completed,
signed and dated copy of this Consent Form should be sent to the Solicitation
Agent by mail or overnight courier to the address specified below, or by fax to
the fax number specified below, prior to midnight, New York City time on
April 4, 2005.
Dated: ____________, 2005
By:______________________________________
_________________________________________
Please Print Name
If held jointly:
By:______________________________________
_________________________________________
Please Print Name
Please sign exactly as you hold your Partnership Units. When signing as an
attorney-in-fact, executors, administrator, trustee or guardian, please give
your full title. If an interest is jointly held, each holder should sign. If a
corporation, please sign in full corporate name by a duly authorized officer. If
a partnership, please sign in partnership name by a duly authorized person.
THE SOLICITATION AGENT IS:
THE ALTMAN GROUP, INC.
By Facsimile: For Information please call:
By Mail, Overnight Courier or Hand:
1275 Valley Brook Avenue (201) 460-0050 TOLL FREE (800) 217-9608
Lyndhurst, New Jersey 07071