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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:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
NATIONAL PROPERTY INVESTORS 6
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(Name of Registrant as Specified in Its Charter)
N/A
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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:
109,600
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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):
$18,060,000 is the purchase price for the properties to be sold
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(4) Proposed maximum aggregate value of transaction:
$18,060,000
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(5) Total fee paid:
$3,612
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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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NATIONAL PROPERTY INVESTORS 6
CONSENT SOLICITATION STATEMENT
January 23, 2006
Dear Limited Partner:
We have entered into an agreement (the "Purchase and Sale
Agreement") with the California State Teachers' Retirement System, a public
entity ("Calstrs"), to sell Place du Plantier and Fairway View I (the
"Properties"), two of the three properties currently owned by National Property
Investors 6, a California limited partnership (the "Partnership"), for
$10,500,000 and $7,560,000, respectively (the "Sale"). Upon completion of the
Sale, we will pay, or establish appropriate reserves for, Partnership
liabilities and other obligations related to the Properties, and distribute the
remaining net sale proceeds to partners. Although the actual distribution to
limited partners may vary, we currently estimate that it will be approximately
$14 per limited partnership unit, based on information available as of November
30, 2005.
Under the Purchase and Sale Agreement, the purchaser of the
Properties will be SH Partners, L.P., a Delaware limited partnership ("SH
Partners"), which is a joint venture between Calstrs (which owns 66.7%) and
certain of our affiliates (which own the remaining 33.3% interest and act as
general partner). Although our affiliates own an interest in SH Partners, by
agreement with Calstrs, our affiliates will not be entitled to receive any
distributions or allocations of gain or loss with respect to SH Partners'
investment in the Properties.
We are writing to request your consent to amendments (the
"Amendments") to the Partnership's partnership agreement (the "Partnership
Agreement") to permit the Sale of the Properties to SH Partners.
Under the Partnership Agreement, amendments to the Partnership
Agreement require the approval of limited partners owning more than 50% of the
outstanding limited partnership units (the "Majority Approval"). However,
because an affiliate of ours owns an interest in SH Partners, in order to
authorize the Amendments, we are also seeking consents from limited partners who
hold a majority of the outstanding limited partnership units held by limited
partners other than us and our affiliates (the "Approval of Unaffiliated
Partners"). Under the Purchase and Sale Agreement, if the Amendments are
approved, the Properties will be sold to SH Partners. If the Amendments are not
approved, then the Properties will not be sold to SH Partners, but Calstrs will
have an option to purchase the Properties. Under the Partnership Agreement, the
Sale of the Properties to Calstrs does not require any approval of limited
partners. However, Calstrs would not be obligated to purchase the Properties
and, as a result, the Sale might not occur.
The Sale to SH Partners involves certain risks, including that SH
Partners is an affiliate of ours. As a result, we have a conflict of interest in
connection with the Amendments, and make no recommendation as to whether you
should consent to the Amendments. See "Risk Factors" beginning on page 4 of this
Solicitation Statement for a description of risk factors to consider in
connection with the Sale and the Amendments.
This Consent Solicitation Statement (the "Solicitation Statement")
and the accompanying form of Consent of Limited Partner (the "Consent Form") are
first being mailed on or about January 23, 2006, to limited partners of record
as of the close of business on January 19, 2006 (the "Record Date").
Your participation is very important. Please review this
Solicitation Statement and return the enclosed Consent Form in accordance with
the instructions in this Solicitation Statement. Please note that this
solicitation will expire at 5:00 P.M., New York City Time, on February 13, 2006
(the "Expiration Date"), unless extended.
If you have any questions or require any assistance in completing
and returning the Consent Form, please contact our Solicitation Agent, The
Altman Group, Inc., by mail at 1200 Wall Street, 3rd Floor, Lyndhurst, New
Jersey 07071; by overnight courier service at 1200 Wall Street, 3rd Floor,
Lyndhurst, New Jersey 07071; by fax at (201) 460-0050; or by telephone at (800)
217-9608.
Very truly yours,
NPI EQUITY INVESTMENTS, INC.,
Managing General Partner
1
DESCRIPTION OF THE TRANSACTION
GENERAL
Under the Purchase and Sale Agreement, the Partnership and seven
other partnerships (collectively, the "Sellers") have agreed to sell nine
properties (the "Nine Sale Properties"), including Place du Plantier and Fairway
View I, for an aggregate net purchase price of $86,820,000 (subject to customary
prorations and adjustments), of which $10,500,000 has been allocated to Place du
Plantier, and $7,560,000 has been allocated to Fairway View I. Upon completion
of the Sale, we will pay, or establish appropriate reserves for, Partnership
liabilities and other obligations related to the Properties, and distribute the
remaining net sale proceeds to partners. Although the actual distribution to
limited partners may vary, we currently estimate that it will be approximately
$14 per limited partnership unit, based on information available as of November
30, 2005. If the Amendments are approved, the closing of the Sale to SH Partners
is expected to occur shortly after the expiration of this consent solicitation.
THE PURCHASER
The purchaser is intended to be SH Partners, a joint venture between
Calstrs (which owns 66.7%) and certain of our affiliates (which own the
remaining 33.3% interest and act as general partner). Calstrs is the largest
teachers' retirement fund in the United States. Calstrs had a total membership
of approximately 755,000 and assets of $128.9 billion as of June 2005. Calstrs'
primary responsibility is to provide retirement related benefits and services to
teachers in public schools from kindergarten through community college. Calstrs
and our affiliates (collectively referred to herein as "Aimco") formed SH
Partners in August 2002 in order to invest in student housing. To date, SH
Partners has invested in 12 properties with an aggregate gross property value of
$199 million (including five of the Nine Sale Properties). By agreement between
Calstrs and Aimco, although Aimco owns a 33.3% interest in SH Partners, in order
to fund the purchase of the Nine Sale Properties, Calstrs is responsible for
contributing all of the funds necessary for SH Partners to pay the purchase
price and related expenses, and Aimco will not be entitled to receive any
distributions or allocations of gain or loss with respect to SH Partners'
investment in the Nine Sale Properties. Although there are circumstances in
which Aimco could benefit as a result of SH Partners' investment in the Nine
Sale Properties, the intention of Aimco and Calstrs is that Calstrs receive all
of the benefits, and bear all of the burdens, of SH Partners' investment in the
Nine Sale Properties.
THE PROPERTIES
The Partnership has owned and operated the Place du Plantier
Apartments, a 268-unit apartment complex located in Baton Rouge, Louisiana,
since May 1, 1984, and the Fairway View I Apartments, a 242-unit apartment
complex located in Baton Rouge, Louisiana, since May 31, 1984. In addition to
these Properties, the Partnership has only one remaining property, Colony at
Kenilworth Apartments. There is a first mortgage loan on Place du Plantier with
an unpaid balance of $5,743,763 (as of November 30, 2005), and a first mortgage
loan on Fairway View I with an unpaid balance of approximately $4,649,599 (as of
November 30, 2005). At the closing of the Sale of the Properties, the
Partnership will pay off the loans encumbering the Properties with the proceeds
from the Sale, and all lender fees and other costs of such payment-in-full will
be deducted from the purchase price payable to the Partnership, including
prepayment penalties for the two properties, which we estimate will be
$2,146,268.
THE AMENDMENTS
The Partnership Agreement has three provisions that prohibit the
Sale of the Properties to SH Partners. Section 15.3.7 prohibits the sale of real
property to any entity in which a general partner or any affiliate has an
interest. Section 15.3.26 prohibits the Partnership from entering into any
transaction with any other partnership in which a general partner or any
affiliate has an interest. Section 15.3.32 imposes restrictions on the
Partnership entering into any agreement with a general partner or its affiliate.
We are seeking your approval to amend the Partnership Agreement so that the Sale
of the Properties to SH Partners pursuant to the Purchase and Sale Agreement
would not be prohibited by these provisions. The complete text of the proposed
Amendments is attached hereto as Annex A.
As a result of our affiliation with SH Partners, in order to
authorize the Amendments which are necessary to sell the Properties to SH
Partners, we are seeking the Majority Approval and the Approval of Unaffiliated
Partners. Under the Purchase and Sale Agreement, if the Amendments are approved,
the Properties will be sold to SH Partners. If the Amendments are not approved,
then the Properties will not be sold to SH Partners, but Calstrs will have an
option to purchase the Properties. Under the Partnership Agreement, the Sale of
the Properties to Calstrs does not require any approval of limited partners.
However, Calstrs would not be obligated to purchase the Properties and, as a
result, the Sale might not occur.
2
ESTIMATED DISTRIBUTION TO LIMITED PARTNERS
Upon completion of the Sale, we will pay, or establish appropriate
reserves for, Partnership liabilities and other obligations related to the
Properties, and distribute the remaining net sale proceeds to partners. We
estimate that the net proceeds from the Sale that will be available for
distribution to limited partners will be approximately $14 per limited
partnership unit. We expect that this distribution to limited partners will
occur within 90 days after the Sale closes. However, this amount and timing is
estimated based on a number of assumptions. The actual amount and timing of the
distribution may be different. In making our estimate, we used information
available as of November 30, 2005 and made other assumptions based on
information currently known to us. Of course, many factors could cause the
actual proceeds to limited partners to vary from this estimate, including delays
or unforeseen complications with the closing, or contingent liabilities of the
Partnership. Our estimate of the distribution to limited partners was calculated
as follows:
ESTIMATED DISTRIBUTION TO LIMITED PARTNERS
(IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
Purchase Price (less capital spending adjustment of $3,492,000)(a) $ 18,060,000
Plus: Cash and cash equivalents 172,939
Plus: Other Partnership assets 586,671
Less: Mortgage debt, including accrued interest (10,393,361)
Less: Prepayment penalty (2,146,268)
Less: Accounts payable, accrued expenses and other liabilities (b) (377,640)
Less: Loans from general partner and/or affiliates (2,331,821)
Less: Reserve for Contingencies (646,560)
Less: Closing costs/sales of commissions (646,560)
Less: Nonresident withholding taxes (539,728)
Less: Incentive compensation fee payable to Managing General Partner (c) (211,453)
TOTAL $ 1,526,220
Net proceeds available for distribution to all partners $ 1,526,220
Percentage of net proceeds allocable to limited partners 99.00%
Net proceeds available for distribution to limited partners $ 1,510,957
Total number of limited partnership units 109,600
Distribution per limited partnership unit $ 14
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(a) The final purchase price is subject to prorations and adjustments.
(b) Includes approximately $30,000 to pay for costs associated with
pending litigation.
(c) Pursuant to the terms of the Partnership Agreement, the Managing
General Partner is entitled to receive an incentive compensation fee
upon the sale of the Properties.
APPRAISAL RIGHTS
Limited partners of the Partnership are not entitled to dissenters'
appraisal rights under California law or the Partnership Agreement in connection
with the Sale of the Properties.
REGULATORY APPROVALS
Other than the filing and distribution of this Solicitation
Statement, no material governmental filings or approvals are required for the
Sale of the Properties.
3
RISK FACTORS
The following describes risks and disadvantages to you of consenting
to the Amendments. Before deciding whether or not to consent to the Amendments,
you should carefully consider these risks:
LIMITED PARTNERS WILL RECOGNIZE TAXABLE INCOME FROM THE SALE.
Limited partners will recognize taxable gain as a result of the Sale of the
Properties. EACH LIMITED PARTNER SHOULD CONSULT AND RELY ON THE LIMITED
PARTNER'S TAX ADVISOR REGARDING THE TAX CONSEQUENCES TO THE LIMITED PARTNER OF
THE SALE OF THE PROPERTIES. Cash distributions from the Sale may be less than
any tax liability resulting from the taxable gain recognized by each limited
partner. Certain possible tax consequences of the Sale are discussed in more
detail below under "Federal Income Tax Consequences."
WE ARE AFFILIATED WITH SH PARTNERS AND THEREFORE HAVE A CONFLICT OF
INTEREST IN CONNECTION WITH THE PROPOSED SALE TO SH PARTNERS. Our affiliates
(Aimco) own a 33.3% interest in, and act as general partner of, SH Partners. By
agreement between Aimco and Calstrs, Calstrs is responsible for funding all of
the costs for SH Partners to purchase the Properties, and is entitled to receive
all distributions and allocations of gain or loss attributable to SH Partners'
investment in the Properties. However, through its interest in SH Partners,
Aimco could still benefit as a result of SH Partners' acquisition of the
Properties. For example, upon a liquidation of SH Partners, if its assets other
than the Properties were insufficient to satisfy all of SH Partners' creditors,
proceeds from a disposition of the Properties might be used to pay SH Partners'
liabilities, which could inure to the benefit of Aimco.
WE ARE NOT MAKING A RECOMMENDATION REGARDING THE PROPOSED
AMENDMENTS. We make no recommendation as to whether or not you should consent to
the Amendments. Although we believe the Sale is fair, you must make your own
decision whether to consent to the Amendments, based upon a number of factors,
including several factors that may be personal to you, such as your financial
position, your need or desire for liquidity, your tax position and the tax
consequences to you of the Sale. You are encouraged to carefully review this
Solicitation Statement and any other information available to you and to seek
advice from your independent lawyer, tax advisor and/or financial advisor before
deciding whether to consent to the Amendments.
IF THE AMENDMENTS ARE NOT APPROVED, THE PROPERTIES MIGHT NOT BE
SOLD. If the Amendments are not approved, then, under the Purchase and Sale
Agreement, Calstrs will have an option to purchase the Properties. Calstrs would
not be obligated to purchase the Properties and, as a result, the Sale might not
occur.
WE DID NOT MARKET THE PROPERTIES TO OTHER PROSPECTIVE PURCHASERS. We
negotiated the purchase price for the Properties with Calstrs with a view to
maximizing the proceeds to the Partnership. However, we did not solicit offers
from other prospective purchasers, and it is possible that a higher price might
have been obtained if the Properties had been marketed to other parties.
WE HAVE NOT OBTAINED ANY RECENT APPRAISALS OF THE PROPERTIES OR ANY
FAIRNESS OPINIONS WITH RESPECT TO THE SALE. In the absence of an appraisal or a
fairness opinion, we could be mistaken in believing that the purchase price for
the Properties under the Purchase and Sale Agreement are fair prices. The most
recent appraisals of the Properties were done as of May 23, 2003, by American
Appraisal Associates, Inc. ("AAA"), in which AAA determined the "as is" market
values of Place du Plantier and Fairway View I were $9,800,000 and $8,800,000,
respectively. Under the Purchase and Sale Agreement, the purchase price for
Fairway View I is less than this appraised value by $1,240,000, or approximately
16.4% of the purchase price.
WE AND OUR AFFILIATES WILL RECEIVE CERTAIN BENEFITS FROM THE SALE
THAT OTHER PARTNERS WILL NOT RECEIVE. We and our affiliates hold approximately
$2,477,239 of Partnership indebtedness, which will be repaid from the Sale
proceeds. Upon completion of the Sale, we will receive an incentive compensation
fee, which we estimate will be approximately $211,000, based on information
available as of November 30, 2005. In addition, upon completion of the Sale
(whether to SH Partners or Calstrs), an affiliate of ours is expected to assume
responsibility for managing the Properties. In consideration for managing the
Properties, this affiliate would receive a management fee equal to 3.65% of
gross revenues, which is less than the property management fee currently paid by
the partnership to an affiliate of ours, which is 5% of gross revenues.
THE PURCHASE PRICE FOR THE PROPERTIES MIGHT HAVE BEEN HIGHER IF THEY
WERE NOT SOLD AS PART OF A PORTFOLIO SALE. The purchase price for the Properties
was determined by allocating a portion of the aggregate purchase price under the
Purchase and Sale Agreement for all Nine Sale Properties. It is possible that
Calstrs or a different purchaser might have been willing to pay more for the
Properties if they were sold separately.
4
WE HAD A CONFLICT OF INTEREST IN ALLOCATING THE AGGREGATE PURCHASE
PRICE AMONG THE NINE SALE PROPERTIES. Our affiliates have varying ownership
interests in each of the Nine Sale Properties being sold pursuant to the
Purchase and Sale Agreement. Five of the Nine Sale Properties are wholly owned
by our affiliates. The other four properties, including Place du Plantier and
Fairway View I, are owned by three partnerships in which our affiliates own
between 68% and 80% of the outstanding limited partnership interests. We and the
other Sellers have allocated the aggregate purchase price among the Nine Sale
Properties based on their relative fair market values. However, our affiliates'
different levels of ownership in the properties created a conflict of interest
in which we have an incentive to ascribe greater value to those properties which
are wholly owned by our affiliates. See "Purchase and Sale Agreement - Purchase
Price."
EVENTS OR CIRCUMSTANCES RELATING TO THE OTHER NINE SALE PROPERTIES
MAY INTERFERE WITH THE SALE OF THE PROPERTIES. The Sale of the Properties may
not occur if there is a default or failure to satisfy a condition relating to
one of the other Nine Sale Properties. Under the Purchase and Sale Agreement,
the purchaser is not obligated to purchase the Properties if certain conditions
relating to any of the other Nine Sale Properties are not satisfied. See
"Purchase and Sale Agreement -- Conditions."
GENERAL PARTNER'S ANALYSIS
We believe that the Sale is fair and in the best interests of the
Partnership and its limited partners, and have approved the Purchase and Sale
Agreement. However, as a result of our affiliation with SH Partners, we make no
recommendation as to whether any individual limited partner should consent to
the Amendments to permit the Sale to SH Partners. In approving the Sale, we
considered the risk factors described above, as well as a number of other
factors, including the following:
o The net purchase prices for Place du Plantier and
Fairway View I are $10,500,000 and $7,560,000,
respectively (subject to customary prorations and
adjustments).
o Upon completion of the Sale, the net proceeds will be
used to pay a distribution to limited partners, which we
estimate will be approximately $14 per unit, based on
information available as of November 30, 2005.
o There is no established trading market for the limited
partnership units and the Sale would provide immediate
liquidity for limited partners.
o The tax benefits of continued investment in the
Properties have been substantially reduced or eliminated
for most limited partners due principally to declining
depreciation deductions from the Properties.
o The Properties were completed in 1974 and, given their
age, probably will require substantial capital
expenditures in the future for which existing reserves
may not be adequate.
o Market conditions are currently favorable for selling
properties of this type.
o It may be difficult to find a buyer at a future date or
to sell the Properties at as favorable a price in the
future.
THE CONSENT SOLICITATION
APPROVAL OF THE SALE AND THE AMENDMENTS; CONSENTS REQUIRED
We are soliciting consents from limited partners to approve
Amendments to the Partnership Agreement to permit the Sale of the Properties to
SH Partners pursuant to the Purchase and Sale Agreement. In our discretion, we
may reduce the purchase price for the Properties by up to 10% and make any other
amendments to the Purchase and Sale Agreement which, in our opinion, are
necessary, appropriate or desirable in connection with the Sale, and that do not
materially and adversely affect the Partnership.
If the Amendments are approved, the Properties will be sold to SH
Partners. If the Amendments are not approved, then the Properties will not be
sold to SH Partners, but Calstrs will have an option to purchase the Properties.
Under the Partnership Agreement, the Sale of the Properties to Calstrs does not
require any approval of limited partners. However, Calstrs would not be
obligated to purchase the Properties and, as a result, the Sale might not occur.
Section 16.2.4 of the Partnership Agreement provides that an
amendment of the Partnership Agreement requires Majority Approval. However,
because an affiliate of ours owns an interest in SH Partners, in order to
authorize the proposed Amendments, we are also seeking the Approval of
Unaffiliated Partners.
5
As of January 19, 2006, the Partnership had approximately 1,930
limited partners who collectively owned 109,600 outstanding limited partnership
units. Each limited partnership unit represents approximately 0.0009% of the
outstanding limited partnership units. As of January 19, 2006, our affiliates
owned 75,540 units (representing 68.92% of the total outstanding limited
partnership units), and other limited partners owned 34,060 units (representing
31.08% of the total outstanding limited partnership units). Our affiliates will
consent to the Amendments. However, 46,289 of the limited partnership units
(approximately 42.23% of the total outstanding) held by our affiliates are
subject to a voting restriction. Under a settlement agreement, DeForest Ventures
II, L.P., a prior owner of these units, agreed that these 46,289 limited
partnership units would be voted in the same proportion as the votes of units
not held or controlled by it on any matter that is submitted to a vote of the
limited partners by the general partner of the Partnership or its affiliates.
These limited partnership units were acquired by one of our affiliates through a
merger, and are still subject to this voting restriction. Our affiliates can
vote free of this voting restriction an aggregate of 29,251 limited partnership
units (approximately 26.69% of the total outstanding), which were acquired by
our affiliates in transactions unrelated to the merger and are owned by an
entity which is not controlled by the owner of the units subject to the voting
restriction. As a result of the foregoing, if we receive consents from owners of
17,033.41 limited partnership units that are not owned by our affiliates
(approximately 15.54% of the units outstanding) we will have obtained both the
Majority Approval and the Approval of the Unaffiliated Partners.
Section 16.2.5 of the Partnership Agreement provides that the
Partnership's sale of all or substantially all of its assets, or 66-2/3% or more
of the net book value of all of the Partnership's property, in a single sale, or
in multiple sales in the same 12-month period, requires the Majority Approval.
Place du Plantier and Fairway View I do not represent substantially all of the
Partnership's assets, so the Sale of the Properties does not require any
approval of limited partners.
RECORD DATE
The Partnership has fixed January 19, 2006, as the Record Date for
determining the limited partners entitled to consent to the Amendments. Only
limited partners of record on the Record Date may execute and deliver a Consent
Form.
SOLICITATION OF CONSENTS
This solicitation is being made by NPI Equity Investments, Inc., the
managing general partner, on behalf of the Partnership. Consents will be
solicited by mail, telephone, e-mail and in person. Solicitations may be made by
our representatives, none of whom will receive additional compensation for such
solicitations. The cost of preparing, assembling, printing and mailing this
Solicitation Statement and the enclosed Consent Form will be borne by the
Partnership. We have retained The Altman Group, Inc. to act as its Solicitation
Agent in connection with this consent solicitation. The fees and expenses of the
Solicitation Agent will be paid by the Partnership.
SOLICITATION PERIOD
The solicitation period will begin upon our mailing of this
Solicitation Statement and end on the Expiration Date, or such later date as we
may indicate by a future written notice of extension of the solicitation period.
CONSENT PROCEDURES
Limited partners who desire to consent to the Amendments should do
so by marking the appropriate box on the included Consent Form and by signing,
dating and delivering the Consent Form to the Solicitation Agent by hand, mail,
overnight courier or facsimile at the address or facsimile number set forth on
the Consent Form, all in accordance with the instructions contained herein and
therein.
All Consent Forms that are properly completed, signed and delivered
to the Solicitation Agent and not properly revoked (See "Revocation of
Instructions" below) prior to the Expiration Date, will be given effect in
accordance with the specifications thereof. IF A CONSENT FORM IS DELIVERED AND
NEITHER THE "CONSENTS," THE "WITHHOLDS CONSENT" NOR THE "ABSTAINS" BOX IS MARKED
WITH RESPECT TO THE PROPOSAL, BUT THE CONSENT FORM IS OTHERWISE PROPERLY
COMPLETED AND SIGNED, THE LIMITED PARTNER WILL BE DEEMED TO HAVE CONSENTED TO
THE PROPOSAL.
Consent Forms must be executed in exactly the same manner as the
name(s) in which ownership of the limited partnership units is registered. If
the limited partnership units to which a Consent Form relates are held by two or
more joint holders, all such holders should sign the Consent Form. If a Consent
Form is signed by a trustee, partner, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a
fiduciary, agency or representative capacity, such person must so indicate when
signing and submit with the Consent Form evidence satisfactory to the
Partnership of authority to execute the Consent Form.
6
The execution and delivery of a Consent Form will not affect a
limited partner's right to sell or transfer the limited partnership units. All
Consent Forms received by the Solicitation Agent prior to the Expiration Date
will be effective notwithstanding a record transfer of such limited partnership
units subsequent to the Record Date, unless the limited partner revokes such
Consent Form prior to 5:00 p.m., New York City time, on the Expiration Date by
following the procedures set forth under "Revocation of Instructions" below.
All questions as to the validity, form and eligibility (including
time of receipt) regarding consent procedures will be determined by us in our
sole discretion, which determination will be conclusive and binding. The
Partnership reserves the right to reject any or all Consent Forms that are not
in proper form. The Partnership also reserves the right to waive any defects,
irregularities or conditions of delivery as to particular Consent Forms. Unless
waived, all such defects or irregularities in connection with the deliveries of
Consent Forms must be cured within such time as we determine. Neither we nor any
of our affiliates or any other persons shall be under any duty to give any
notification of any such defects, irregularities or waivers, nor shall any of
them incur any liability for failure to give such notification. Deliveries of
Consent Forms will not be deemed to have been made until any irregularities or
defects therein have been cured or waived. The interpretations of the terms and
conditions of this solicitation by us shall be conclusive and binding.
REVOCATION OF INSTRUCTIONS
Any limited partner who has delivered a Consent Form to the
Solicitation Agent may revoke the instructions set forth in such Consent Form by
delivering to the Solicitation Agent a written notice of revocation prior to
5:00 p.m., New York City time, on the Expiration Date. In order to be effective,
a notice of revocation of the instructions set forth in a Consent Form must (i)
contain the name of the person who delivered the Consent Form, (ii) be in the
form of a subsequent Consent Form marked either as "Consents," "Withholds
Consent" or "Abstains," as the case may be, for either proposal, or in a writing
delivered to us stating that the prior Consent Form is revoked, (iii) be signed
by the limited partner in the same manner as the original signature on the
Consent Form, and (iv) be received by the Solicitation Agent prior to 5:00 p.m.,
New York City time, on the Expiration Date at one of its addresses or facsimile
number set forth on the Consent Form. A purported notice of revocation that
lacks any of the required information, is dispatched to an improper address or
telephone number or is not received in a timely manner will not be effective to
revoke the instructions set forth in a Consent Form previously given. A
revocation of the instructions set forth in a Consent Form can only be
accomplished in accordance with the foregoing procedures. NO LIMITED PARTNER MAY
REVOKE THE INSTRUCTIONS SET FORTH IN A CONSENT FORM AFTER 5:00 PM, NEW YORK CITY
TIME, ON THE EXPIRATION DATE.
7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
As of the date of this consent solicitation statement, none of our
directors or officers own any limited partnership units. The table below sets
forth certain information regarding limited partnership units of the Partnership
owned by each person or entity who is known by the Partnership to beneficially
own more than 5% of the limited partnership units as of January 19, 2006.
Number of Units Percentage of
Name and Address of Beneficial Owner Beneficially Owned Class
- -------------------------------------------------------- ------------------ -------------
AIMCO IPLP, L.P. (1) 48,033 43.83 %
Stanford Place 3, 4582 S. Ulster St. Parkway, Suite 1100
Denver, CO 80237
AIMCO Properties, L.P. (2) 27,507 25.09 %
Stanford Place 3, 4582 S. Ulster St. Parkway, Suite 1100
Denver, CO 80237
- ---------------------------------------------------------------------------------------------
TOTAL 75,540 68.92 %
(1) The Units may be deemed beneficially owned by AIMCO/IPT, Inc. (which
is the general partner of AIMCO IPLP, L.P.) and Apartment Investment
and Management Company (which owns AIMCO/IPT, Inc.), which is the
ultimate parent corporation of NPI Equity Investments, Inc., the
Managing General Partner of the Partnership.
(2) The Units may be deemed beneficially owned by AIMCO-GP, Inc. (which
is the general partner of AIMCO Properties, L.P.) and Apartment
Investment and Management Company (which owns AIMCO-GP, Inc.), which
is the ultimate parent corporation of NPI Equity Investments, Inc.,
the Managing General Partner of the Partnership.
8
PURCHASE AND SALE AGREEMENT
We entered into the Purchase and Sale Agreement with Calstrs and the
other Sellers on November 14, 2005. Under the terms and subject to the
conditions of the Purchase and Sale Agreement, Calstrs has agreed to purchase
the Nine Sale Properties, including Place du Plantier and Fairway View I. Under
the agreement, Calstrs must assign its purchase rights to SH Partners. The
representations, warranties, obligations, and covenants of each Seller are
individual and several, and not joint and several, and each Seller is
responsible and liable only for its own property and its own representations,
warranties, obligations, and covenants. The purchaser has agreed to look solely
to the applicable Seller for any amount due hereunder or, obligation owed
hereunder. Except for a property for which the requisite limited partner
approval was not obtained, the Sellers' obligations to sell, and the purchaser's
obligations to purchase, the Nine Sale Properties are not severable, and the
Sellers must sell, and the purchaser must purchase, all of the Nine Sale
Properties under the agreement. The following is a summary of the material terms
and provisions of the Purchase and Sale Agreement.
PURCHASE PRICE
The aggregate purchase price for the Nine Sale Properties is
$98,010,000, less a credit for capital needs of $11,190,000, for a net purchase
price of $86,820,000. The portion of this aggregate purchase price that has been
allocated to Place du Plantier is $11,572,000, less a credit for capital needs
of $1,072,000, for a net purchase price of $10,500,000. The portion of this
aggregate purchase price that has been allocated to Fairway View I is
$9,980,000, less a credit for capital needs of $2,420,000, for a net purchase
price of $7,560,000. With respect to each of the Nine Sale Properties, all
normal and customarily proratable items, including, without limitation, rents,
operating expenses, personal property taxes, other operating expenses and fees,
will be prorated as of the closing date, with the applicable Seller being
charged or credited, as appropriate, for all of the same attributable to the
period up to the closing date (and credited for any amounts paid by the
applicable Seller attributable to the period on or after the closing date, if
assumed by the purchaser), and the purchaser being responsible for, and credited
or charged, as the case may be, for all of the same attributable to the period
on and after the closing date.
Five of the Nine Sale Properties were wholly owned by our
affiliates. These five properties were sold to SH Partners on December 22, 2005.
The other four properties, including Place du Plantier and Fairway View I, are
owned by three partnerships in which our affiliates own less than 100% of the
outstanding limited partnership interests. We and the other Sellers have
allocated the aggregate purchase price among the Nine Sale Properties based on
their relative fair market values. However, our affiliates' different levels of
ownership in the properties created a conflict of interest in which we have an
incentive to ascribe greater value to those properties which are wholly owned by
our affiliates. Each of the Nine Sale Properties, its owner (prior to being sold
pursuant to the Purchase and Sale Agreement), our affiliates' percentage
ownership in the owner, and its allocated portion of the aggregate purchase
price (net of all credits for capital needs) is summarized in the table below:
Percentage Ownership
of Affiliates of the
Managing General Allocated Portion of
Property Owner Partner Purchase Price
- -------------------------- ----------------------------------------------- -------------------- --------------------
Windsor Hills Windsor Hills I, L.P. 80.36% $14,390,000
Place du Plantier National Property Investors 6 69.23% $10,500,000
Fairway View I National Property Investors 6 69.23% $ 7,560,000
Fairway View II National Property Investors 7 70.46% $ 7,750,000
Treehouse II TAHF II Limited Partnership (1) 100% $ 4,810,000
Sunstone Couch-Oxford Associates Limited Partnership (1) 100% $14,175,000
Peppermill Village Peppermill Village-Oxford Associates L.P. (1) 100% $ 8,505,000
Williamsburg on the Wabash Williamsburg Investors Limited Partnership (1) 100% $17,340,000
Mayfair Village Mayfair Village Limited Partnership (1) 100% $ 1,790,000
(1) The Property was sold to SH Partners on December 22, 2005.
9
THE PURCHASED ASSETS
Each of the Sellers has agreed to sell all of its interest in and to
the Nine Sale Properties, including the land parcel; all buildings and
improvements located thereon; all equipment and appliances affixed to and used
in connection with the property or any of the improvements; rights, privileges
and easements appurtenant to or used in connection with the property; tangible
personal property, equipment and supplies owned by the Seller and located at the
property and used exclusively in connection with the use, operation, maintenance
or repair of all or any portion of the property; and certain intangible property
owned by the Seller and used exclusively in connection with all or any portion
of the property, including, leases, certain service contracts, property-related
files and records, all reports, test results and environmental assessments, if
any, as-built plans, specifications and other similar documents and materials
relating to the use, operation, maintenance, repair, construction or fabrication
of all or any portion of the property, transferable business licenses, certain
architectural, site, landscaping or other permits, applications, approvals,
authorizations and other entitlements affecting any portion of the property.
LOAN OBLIGATIONS
At the closing, each Seller will use a portion of the purchase price
for its property to pay off all loan obligations encumbering its property. Fees
payable in connection with the payoff of such loans will be paid by the
purchaser but will be deducted from the purchase price otherwise payable to the
Seller.
LIMITED PARTNER APPROVALS
The Partnership, Windsor Hills I, L.P. and National Property
Investors 7 have each agreed to use commercially reasonable efforts to obtain,
as soon as practicable, the requisite approvals of their respective limited
partners (or, in the case of Windsor Hills I, L.P., the approval of limited
partners of Shelter Properties I Limited Partnership, which is its sole limited
partner) to permit the sale of the four properties owned by them to SH Partners.
If the limited partners of any of these partnerships fail to approve the
transaction, SH Partners may elect to close on the other Nine Sale Properties,
and Calstrs (rather than SH Partners) may elect to purchase the property for
which limited partner approval was not obtained. If Calstrs does not elect to
purchase any such property, the Seller may either extend the closing date for
that property until such approval is obtained (but not beyond June 30, 2006) or
terminate the agreement with respect to that property.
CLOSING
The closing of the sale of the five properties that were wholly
owned by our affiliates occurred on December 22, 2005. The closing of the sale
of the other four properties, including Place du Plantier and Fairway View I, is
expected to take place as soon as practicable after the requisite limited
partner approvals have been obtained.
REPRESENTATIONS AND WARRANTIES
The agreement contains representations and warranties by the
Sellers, including, without limitation, representations and warranties regarding
due organization; authority and validity of agreements; leases and service
contracts in effect at the properties; violations of law; litigation, zoning;
environmental matters; employees; personal property; and property documents.
Each Seller's aggregate liability for a breach of its representations and
warranties is limited to $500,000, and is limited to claims brought within 12
months after the closing.
The agreement also contains representations and warranties by the
purchaser, including, without limitation, representations and warranties
regarding due organization; authority and validity of agreements; and the
purchaser's status under laws relating to terrorist financing and foreign assets
controls.
CONDITIONS TO CLOSING
The obligation of the purchaser to complete the transactions
contemplated by the agreement is subject to the satisfaction or waiver of the
following conditions:
o the title company shall be prepared and irrevocably
committed to issue an extended coverage owner's policy
of title insurance for the property satisfactory to the
purchaser;
o all of the representations and warranties of the Sellers
in the agreement shall be true, correct and complete in
all material respects as of the closing date;
10
o Sellers shall have complied with and/or performed all of
the obligations, covenants and agreements required on
their part to be complied with or performed pursuant to
the agreement;
o the physical condition of the properties shall be
substantially the same as on the inspection date of July
12, 2005, except for reasonable wear and tear;
o there shall have been no material adverse change in or
addition to the information or items reviewed and
approved by the purchaser prior to the inspection date;
o no action or proceeding shall have been commenced by or
against any Seller under the federal bankruptcy code or
any state law for the relief of debtors or for the
enforcement of the rights of creditors, and no
attachment, execution, lien or levy shall have attached
to or been issued with respect to any Seller's interest
in its property or any portion thereof; and
o the Sellers shall have delivered such documents or
instruments as are required to be delivered by the
Sellers pursuant to the agreement, including deeds,
assignments of leases, bills of sale and assignment,
non-foreign affidavits, a guaranty by Apartment
Investment and Management Company, and an amendment to
the agreement of limited partnership of SH Partners.
If any of the purchaser's closing conditions are not fulfilled, the
purchaser may waive the condition and close, without adjustment of the purchase
price, or terminate the agreement.
The obligation of the Sellers to complete the transactions
contemplated by the agreement are subject to the satisfaction or waiver of the
following conditions:
o all of the representations and warranties of the
purchaser in the agreement shall be true, correct and
complete in all material respects;
o the purchaser shall have complied with and/or performed
all of the obligations, covenants and agreements
required on its part to be complied with or performed
pursuant to the agreement;
o no action or proceeding shall have been commenced by or
against the purchaser under the federal bankruptcy code
or any state law for the relief of debtors or for the
enforcement of the rights of creditors; and
o the purchaser shall have delivered such documents or
instruments as are required to be delivered by the
purchaser pursuant to the agreement, including an
amendment to the agreement of limited partnership of SH
Partners, assignments of leases, and bills of sale and
assignment.
If any of the Sellers' closing conditions are not fulfilled, the
Sellers may waive the condition and close, without adjustment of the purchase
price, or terminate the agreement.
CASUALTY AND CONDEMNATION
Prior to the closing, if (i) all or any material portion of any
property is taken by condemnation or eminent domain (or is the subject of a
pending or contemplated taking which has not been consummated), or (ii) any
material damage occurs to any portion of any property as a result of any
earthquake, hurricane, tornado, flood, landslide, fire or other casualty, then
the purchaser will have the option to terminate the agreement within 30 days, in
which case the purchaser and the Sellers will equally share the cancellation
charges of the escrow agent and the title company, if any. The purchaser does
not have a right to terminate the agreement as a result of (i) any taking of any
portion of any property that is not a material portion, or (ii) any damage or
destruction of any portion of any property that does not constitute material
damage. If the purchaser does not elect, or has no right, to terminate the
agreement, the purchaser will be entitled to keep all awards and insurance
proceeds for the condemnation or casualty, and will receive a credit against the
portion of the purchase price applicable to such property for the cost of any
repair and/or restoration not covered by such awards and insurance proceeds. For
this purpose, "material" is defined as having a value in excess of $350,000.
ONGOING OPERATIONS
Until the closing, each Seller has agreed, at its sole cost and
expense, to:
11
o carry on its business and activities relating to its
property, including leasing, maintenance and operations
in the same manner as it did before entering into the
agreement;
o perform all of its obligations under leases and service
contracts applicable to its property and other
agreements that may affect its property;
o not supplement or amend any existing contract or enter
into any new contract that will be an obligation
affecting its property subsequent to the closing, except
leases and other contracts entered into in the ordinary
course of business;
o continue to maintain insurance in accordance with its
current business practices;
o afford the purchaser and its representatives reasonable
access to the property owned by such Seller and to such
Seller's books, records and files relating to such
property;
o not voluntarily grant or transfer or permit the grant or
transfer of any interest in the property owned by it,
including any air rights;
o promptly advise the purchaser of any litigation or
governmental proceeding to which it becomes a party
directly affecting its property; and
o promptly forward to the purchaser any written notice
received by it from any governmental agency in
connection with any actual or alleged violation of any
law or regulation applicable to its property.
REMEDIES
If closing fails to occur as a result of a default by the purchaser,
then the Sellers, collectively, are entitled to receive, as their sole and
exclusive remedy liquidated damages in the amount of $1,100,000. If closing
fails to occur as a result of a default by any Seller, then the purchaser, as
its sole remedy, may elect to either (i) terminate the agreement, in which
event, the Sellers shall reimburse the purchaser for its reasonable
out-of-pocket costs up to a maximum of $100,000 per property, or (ii) seek
specific performance for the conveyance of the property to the purchaser (but
not damages).
PROPERTY MANAGEMENT
At the closing, all existing property management agreements
affecting the Nine Sale Properties will be terminated at Sellers' sole cost and
expense, and the purchaser will enter into a new property management agreement
with an Aimco affiliate as property manager with a management fee of 3.65% of
gross revenues.
EXPENSES AND CLOSING COSTS
Each party will pay its own costs and expenses arising in connection
with the closing (including, without limitation, its own attorneys' and
advisors' fees, charges and disbursements), except the following costs, which
shall be allocated between the parties as follows:
o all documentary transfer, stamp, sales and other taxes
related to the transfer of a property shall be paid (i)
for each property located in Louisiana (including Place
du Plantier and Fairway View I), by the purchaser, and
(ii) for each other property, by the applicable Seller;
o the escrow agent's escrow fees and costs for each
property shall be paid (i) for each property located in
North Carolina or Texas, by the applicable Seller, and
(ii) for each other property (including Place du
Plantier and Fairway View I), half by the applicable
Seller and half by the purchaser;
o the cost of a survey and its survey certification shall
be paid (i) for each property located in Louisiana
(including Place du Plantier and Fairway View I) or
Virginia, by the purchaser, and (ii) for each other
property, by the applicable Seller;
o the cost of the owner's title policy for each property
(and all permitted endorsements and amendments thereto)
shall be paid (i) for each property located in Louisiana
(including Place du Plantier and Fairway View I), North
Carolina or Virginia, by the purchaser, and (ii) for
each other property, by the applicable Seller; and
12
o all recording fees for each property shall be paid by
the purchaser.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The tax consequences to you of the Sale of the Properties may be
significant. The following discussion briefly summarizes the typical material
aspects of the federal income tax consequences for the limited partners that
should be considered in connection with the Sale; however, the tax consequences
to you could be materially different. EACH LIMITED PARTNER SHOULD CONSULT AND
MUST RELY UPON HIS, HER OR ITS OWN TAX ADVISOR IN ORDER TO UNDERSTAND FULLY THE
FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND ESTATE AND GIFT TAX CONSEQUENCES TO
HIM, HER OR IT ARISING FROM THE SALE OF THE PROPERTIES.
The discussion is based on current law, which is subject to change
(possibly with retroactive effect), and does not consider state, local and
foreign income tax aspects of the Sale of the Properties. For purposes of this
tax discussion, references to "I.R.C. Section" are to sections of the Internal
Revenue Code of 1986, as amended ("I.R.C." or the "Code"). THIS DISCUSSION DOES
NOT ADDRESS SPECIAL CONSIDERATIONS AND RULES APPLICABLE TO LIMITED PARTNERS THAT
ARE TAX-EXEMPT OR FOREIGN ENTITIES.
No ruling will be requested from the Internal Revenue Service on any
of the tax matters discussed herein. The federal income tax consequences to the
limited partners from the Sale of the Properties cannot be predicted with
absolute certainty. We cannot assure that the Internal Revenue Service will not
audit or question the treatment of any item discussed herein.
The following discussion assumes that the Partnership will recognize
taxable gain on the Sale of the Properties. The following discussion also
assumes that the Partnership is characterized as a partnership for federal
income tax purposes. If the Partnership is treated for federal income tax
purposes as an association, any cash available for distribution after the Sale
would be substantially reduced and the tax consequences would be materially
different than as described below.
TAX CONSEQUENCES IF THE PROPERTIES ARE SOLD. The Partnership will
recognize taxable gain from the Sale of the Properties in an amount equal to the
difference between the Partnership's adjusted tax basis in the Properties and
the amount realized. The Partnership's amount realized from the Sale includes
the sum of cash it receives from the Purchaser plus the fair market value of any
property it receives other than money. If the purchaser assumes or takes the
Properties subject to liabilities that encumber the Properties, the face amount
of those liabilities is also included in the Partnership's amount realized as
though the Purchaser had made a cash payment to the Partnership in the same
amount. Selling expenses of the Partnership, such as legal fees and title costs,
reduce the Partnership's amount realized with respect to the Sale. Any gain
recognized by the Partnership will be allocated to the partners, including the
limited partners, in accordance with the Partnership Agreement. We estimate that
the Sale will result in total gain of approximately $79 per limited partnership
unit, based on information available as of November 30, 2005. This amount is an
estimate based on a number of assumptions as discussed under "Use of Proceeds."
Generally, if a partnership is a "dealer" with respect to a
property, any gain that it recognizes on the sale of that property will be taxed
as ordinary income. Under I.R.C. Section 707, certain related party sales result
in gain being taxed as ordinary income; however, the general partner does not
believe this section would be applicable to this transaction. Alternatively, any
gain in excess of "depreciation recapture gain" (discussed below) and
"unrecaptured I.R.C. Section 1250 gain" (discussed below) generally will be
taxed as gain arising from the sale of property used in the Partnership's trade
or business under I.R.C. Section 1231 ("I.R.C. Section 1231 gain"). Each limited
partner will be allocated its share of the Partnership's I.R.C. Section 1231
gain. In general, if the combination of all I.R.C. Section 1231 gains and losses
of a particular limited partner for a taxable year results in a net gain, all of
such gains and losses will be characterized as long-term capital gains and
losses. If the combination results in a net loss, all of such gains and losses
will be characterized as ordinary gains and losses. However, notwithstanding the
foregoing, net I.R.C. Section 1231 gains will be treated as ordinary gains to
the extent of a limited partner's unrecaptured net I.R.C. Section 1231 losses
for the five most recent prior years. As a result, all or a portion of any
I.R.C. Section 1231 gain from the sale of the Partnership's property allocated
to a limited partner may be treated as ordinary income, rather than long-term
capital gain, if the limited partner has had net I.R.C. Section 1231 losses in
prior years.
Under I.R.C. Section 1245, gain recognized by the Partnership from
the sale of any of its depreciable or amortizable personal property and certain
statutorily designated real property (i.e., "depreciation recapture gain") is
re-characterized as ordinary income and will be allocated to the partners as
such. The amount of the Partnership's depreciation recapture gain equals the
amount by which the lower of (i) the amount realized and (ii) the recomputed
basis (i.e., a property's basis plus all amounts allowed for depreciation) of
the transferred property exceeds that property's adjusted basis.
Generally, under I.R.C. Section 1250, no portion of the gain
recognized by the Partnership upon the disposition of its residential rental
real property is re-characterized as ordinary income because such property is
depreciated using the straight-line method. However, under I.R.C. Section
291(a)(1), a portion of a corporation's capital gain from the disposition of
residential rental real property is re-characterized as ordinary income. The
portion that is re-characterized equals 20% of the
13
excess of the amount that would have been treated as ordinary income under
I.R.C. Section 1245 if the transferred property were I.R.C. Section 1245
property (which generally would be all depreciation deductions previously
claimed) over the amount treated as ordinary income under I.R.C. Section 1250
(calculated without regard to I.R.C. Section 291(a)(1)). Therefore, under I.R.C.
Section 291(a)(1), corporate limited partners of the Partnership may recognize
ordinary income upon disposition of the Partnership's residential rental real
property.
In the case of limited partners of the Partnership that are
individuals, estates or trusts, the application of I.R.C. Section 1250 will not
require those taxpayers to recognize gain taxable as ordinary income; however,
those limited partners may be allocated gain from the Partnership's Sale of the
Properties that is taxed as "unrecaptured I.R.C. Section 1250 gain."
Unrecaptured I.R.C. Section 1250 gain is generally equal to the gain on the sale
of real property that is attributable to straight-line depreciation. The maximum
federal tax rate applicable to unrecaptured I.R.C. Section 1250 gain is
currently 25%.
In the case of limited partners that are individuals, trusts or
estates, gain from the sale of the Partnership's property that is not taxed as
ordinary income or as unrecaptured I.R.C. Section 1250 gain is generally taxed
at a capital gains tax rate, the current maximum rate of which is 15%. Gain from
the sale of the Partnership's property that is allocated to limited partners
that are corporations is not eligible for preferential capital gains tax rates.
If a limited partner possesses suspended tax losses, tax credits or
other items of tax benefit, such items may be used to reduce any tax liability
that arises with respect to any gain resulting from the sale of the
Partnership's property and allocated to that limited partner. The determination
of whether a limited partner possesses suspended tax losses, tax credits or
other items of tax benefit that may reduce any gain resulting from the sale will
depend upon such limited partner's individual circumstances. Limited partners
are urged to consult with their tax advisors in this regard.
DISTRIBUTIONS OF CASH. A distribution of cash by the Partnership to
a limited partner will be treated as an amount realized from a sale of the
limited partner's interest in the Partnership and will result in taxable gain
only to the extent that the distribution exceeds the limited partner's adjusted
tax basis in his, her or its Partnership interest. Otherwise, distributions will
be tax free, and the limited partner's adjusted tax basis in his Partnership
interest will be decreased, but not below zero.
Generally, any gain recognized by a limited partner arising from a
cash distribution by the Partnership will be capital gain. Nevertheless, to the
extent that a portion of that gain is attributable to "unrealized receivables"
of the Partnership, including depreciation recapture, or to certain inventory
items described in I.R.C. Section 751, such gain will be taxed as ordinary
income.
PROCEEDS AVAILABLE FOR DISTRIBUTION TO THE LIMITED PARTNERS FROM THE
SALE OF THE PROPERTIES AFTER REPAYMENT OF THE PARTNERSHIP'S DEBT MAY BE LESS
THAN ANY TAX LIABILITY RESULTING FROM THE GAIN RECOGNIZED BY THE PARTNERSHIP (AS
A RESULT OF THE SALE) THAT IS ALLOCABLE TO THE PARTNERS AND LESS THAN THEIR TAX
LIABILITY RESULTING FROM THE GAIN RECOGNIZED BY THE PARTNERS AS A RESULT OF ANY
CASH DISTRIBUTIONS FROM THE PARTNERSHIP. ACCORDINGLY, LIMITED PARTNERS MAY BE
REQUIRED TO USE FUNDS FROM SOURCES OTHER THAN THE PARTNERSHIP IN ORDER TO PAY
ANY TAX LIABILITIES THAT ARISE AS A RESULT OF THE RECOGNITION GAIN.
TAX CONSEQUENCES IF THE PROPERTIES ARE NOT SOLD. The Partnership's
current tax basis in the Properties is approximately 18% of its original tax
basis in the Properties. As a result, it is more likely that continued operation
of the Properties will generate taxable income to the limited partners, and it
is less likely that there will be depreciation and other deductions equal to or
greater than the income generated from the Properties. In addition, it is
anticipated that there may not be any cash available for distribution since it
is expected that all or substantially all of the Properties' cash flow will be
used to service the Partnership's liabilities. Accordingly, limited partners may
be required to use funds from sources other than the Partnership in order to pay
any tax liabilities that arise as a result of the Partnership's continued
operation of the Properties. The Partnership also will continue to incur
management fees associated with the Properties. If a limited partner possesses
suspended tax losses, tax credits or other items of tax benefit, such items may
potentially be used to reduce any tax liability that arises with respect to any
taxable net income as a result of the continued operation of the Properties by
the Partnership. Limited partners are urged to consult their tax advisors in
this regard.
WHERE YOU CAN FIND MORE INFORMATION
The Partnership is subject to the informational requirements of the
Exchange Act and is required to file annual and quarterly reports, proxy
statements and other information with the SEC. You can inspect and copy reports
and other information filed by us with the SEC at the SEC's public reference
facilities maintained by the SEC at One Station Place, 100 F Street, N.E.,
Washington, D.C. 20002. 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
14
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC.
You should only rely on the information provided in this
Solicitation Statement or any supplement. We have not authorized anyone else to
provide you with information. You should not assume that the information in this
Solicitation Statement or any supplement is accurate as of any date other than
the date on the front of this Solicitation Statement or the supplement.
The Partnership's principal executive offices are located at 55
Beattie Place, P.O. Box 1089, Greenville, South Carolina 29602. However,
questions and requests for assistance regarding this Solicitation Statement and
the matters set forth herein may be directed to the Solicitation Agent, The
Altman Group, Inc. by mail at 1200 Wall Street, 3rd Floor, Lyndhurst, New Jersey
07071; by overnight courier service at 1200 Wall Street, 3rd Floor, Lyndhurst,
New Jersey 07071; by fax at (201) 460-0050; or by telephone at (800) 217-9608.
15
ANNEX A
AMENDMENT
TO THE
PARTNERSHIP AGREEMENT
OF
NATIONAL PROPERTY INVESTORS 6
This Amendment (the "Amendment") to the Partnership Agreement, as
amended to date (the Partnership Agreement"), of National Property Investors 6,
a California limited partnership (the "Partnership"), is made and entered into
as of ________________, by NPI Equity Investments, Inc., a Florida corporation,
as managing general partner of the Partnership (the "Managing General Partner"),
and as attorney-in-fact for the limited partners. Capitalized terms used but not
otherwise defined herein shall have the respective meanings ascribed thereto in
the Partnership Agreement.
WHEREAS, the Managing General Partner has approved this Amendment;
WHEREAS, the Limited Partners have approved this Amendment by a
Majority Vote; and
WHEREAS, limited partners that own a majority of the Units owned by
Limited Partners that are not Affiliates of the Managing General Partner have
approved this Amendment.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Section 15.3.7 of the Partnership Agreement is hereby amended to
read in its entirety as follows:
"15.3.7 Sell or lease real property to any entity in which a General
Partner or any Affiliate has an interest, other than (i) a joint venture or
similar program which complies with the conditions set forth in Paragraph
15.3.8, or (ii) a sale of real property to SH Partners, L.P. pursuant to that
certain Purchase and Sale Agreement and Joint Escrow Instructions, dated as of
November 14, 2005 (the "Calstrs Agreement"), by and among California State
Teachers' Retirement System, Windsor Hills I, L.P., National Property Investors
6, National Property Investors 7, TAHF II Limited Partnership, Couch-Oxford
Associates Limited Partnership, Peppermill Village-Oxford Associates, L.P.,
Williamsburg Investors Limited Partnership and Mayfair Village Limited
Partnership."
2. Section 15.3.26 of the Partnership Agreement is hereby amended to
read in its entirety as follows:
"15.3.26 Cause the Partnership to enter into any transactions with
any other partnership in which a General Partner or any Affiliates have an
interest, including, but not limited to, any transaction involving the sale,
lease or purchase of any property to or from the Partnership, the rendering of
services to or from the Partnership, or the lending of any monies or other
property to or from the Partnership, other than transactions pursuant to the
Calstrs Agreement."
3. Section 15.3.32 of the Partnership Agreement is hereby amended to
read in its entirety as follows:
"15.3.32 Cause the Partnership to enter into any agreements with a
General Partner or its Affiliates which shall not be subject to termination
without penalty by either party upon not more than sixty (60) days' written
notice, other than the Calstrs Agreement."
4. Except as specifically amended hereby, the terms, covenants,
provisions and conditions of the Partnership Agreement shall remain unmodified
and continue in full force and effect and, except as amended hereby, all of the
terms, covenants, provisions and conditions of the Agreement are hereby ratified
and confirmed in all respects.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as
of the date first above written.
NPI EQUITY INVESTMENTS, INC.,
as Managing General Partner and
as Attorney-in-Fact for the Limited Partners
By:
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Name:
Title:
A-1
NATIONAL PROPERTY INVESTORS 6
CONSENT OF LIMITED PARTNER
This consent is solicited by NPI Equity Investments, Inc., a Florida
corporation and the managing general partner (the "Managing General Partner" of
National Property Investors 6, a California limited partnership (the
"Partnership")). AS A RESULT OF ITS AFFILIATION WITH SH PARTNERS, L.P., THE
MANAGING GENERAL PARTNER MAKES NO RECOMMENDATION WITH RESPECT TO THE PROPOSAL.
IF NO ELECTION IS SPECIFIED WITH RESPECT TO THE PROPOSAL, ANY OTHERWISE PROPERLY
COMPLETED AND SIGNED CONSENT FORM WILL BE DEEMED TO BE A CONSENT TO THE
PROPOSAL.
The undersigned limited partner of the Partnership, acting with
respect to all limited partnership units held of record by the undersigned on
January 19, 2006, hereby consents, withholds consent or abstains, with respect
to the proposal specified below and more fully described in the Consent
Solicitation Statement, dated January 23, 2006 (the "Solicitation Statement").
All capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed thereto in the Solicitation Statement.
PROPOSAL: Approval of Amendments to the Partnership Agreement to permit the
Sale of the Place du Plantier Apartments and the Fairway View I
Apartments to SH Partners, L.P., an entity in which an affiliate of
the managing general partner owns a 33.33% interest and acts as
general partner.
[ ] Consent [ ] Withhold Consent [ ] Abstain
The undersigned hereby constitutes and appoints the Managing General
Partner of the Partnership as his or her attorney-in-fact for the purposes of
executing any and all documents and taking any and all actions necessary to
implement the actions set forth above. The Managing General Partner, in its
discretion, may reduce the purchase price for the Properties by up to 10% and
make any other amendments to the Purchase and Sale Agreement which, in its
opinion, are necessary, appropriate or desirable in connection with the Sale,
and that do not materially and adversely affect the Partnership.
Date:
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Type or Print Name of Individual or Entity
By:
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Signature
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Type or Print Name of Person Signing
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Capacity
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Tax Identification or Social Security Number
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Telephone Number
Please sign exactly as you hold your interest in the Partnership. 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.
A fully completed, signed and dated consent form should be sent by hand, by mail
or by overnight courier to The Altman Group, Inc., 1200 Wall Street, 3rd Floor,
Lyndhurst, New Jersey 07071, or by fax at (201) 460-0050. The consent
solicitation will expire, and all consent forms must be received by 5:00 p.m.,
New York City time, on February 13, 2006, unless extended.