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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
SHELTER PROPERTIES I LIMITED PARTNERSHIP
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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:
15,000
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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):
$14,390,000 is the purchase price for the property to be sold
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(4) Proposed maximum aggregate value of transaction:
$14,390,000
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(5) Total fee paid:
$2,878
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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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SHELTER PROPERTIES I LIMITED PARTNERSHIP
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 Windsor Hills (the "Property"), one of the two currently remaining
properties owned by Shelter Properties I Limited Partnership, a South Carolina
limited partnership (the "Partnership"), for $14,390,000 (the "Sale"). Upon
completion of the Sale, we will pay, or establish appropriate reserves for,
Partnership liabilities and other obligations related to the Property, 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 $257 per limited partnership unit, based on information available
as of November 30, 2005.
Under the Purchase and Sale Agreement, the purchaser of the Property 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 Property.
We are writing to request your consent to amendments (the "Amendments") to
the Partnership's Amended and Restated Certificate and Agreement of Limited
Partnership, as amended (the "Partnership Agreement") and the Agreement of
Limited Partnership (the "Subsidiary Partnership Agreement") of Windsor Hills,
I, L.P., a Delaware limited partnership (the "Subsidiary Partnership"), which is
99.9% owned by the Partnership and holds title to the Property, in order to
permit the Sale of the Property 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
Property will be sold to SH Partners. If the Amendments are not approved, then
the Property will not be sold to SH Partners, but Calstrs will have an option to
purchase the Property. Under the Partnership Agreement and the Subsidiary
Partnership Agreement, the Sale of the Property to Calstrs does not require any
approval of limited partners. However, Calstrs would not be obligated to
purchase the Property 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 Agreements.
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,
SHELTER REALTY CORPORATION,
Corporate General Partner
1
DESCRIPTION OF THE TRANSACTION
GENERAL
Under the Purchase and Sale Agreement, Windsor Hills I, L.P., a Delaware
limited partnership (the "Subsidiary Partnership"), which is 99.9% owned by the
Partnership, and seven other partnerships (collectively, the "Sellers") have
agreed to sell nine properties (the "Nine Sale Properties"), including Windsor
Hills, for an aggregate net purchase price of $86,820,000 (subject to customary
prorations and adjustments), of which $14,390,000 has been allocated to Windsor
Hills. Upon completion of the Sale, we will pay, or establish appropriate
reserves for, Partnership liabilities and other obligations related to the
Property, 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 $257 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 PROPERTY
The Subsidiary Partnership has owned and operated the Windsor Hills
Apartments, a 300-unit apartment complex located in Blacksburg, Virginia, since
September 1980. In addition to this Property, the Partnership has only one
remaining property, Quail Hollow Apartments. There is a first mortgage loan on
the Property with an unpaid balance of approximately $5,991,605 (as of November
30, 2005). At the closing of the Sale of the Property, the Partnership will pay
off the loan encumbering the Property 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 a prepayment penalty which
we estimate will be approximately $1,233,619.
THE AMENDMENTS
Section 8.2(z) of the Partnership Agreement prohibits the general partners
of the Partnership from entering into a contract with a general partner or an
affiliate unless it may be terminated by the Partnership without penalty upon 60
days written notice. Section 8.2(o) of the Subsidiary Partnership Agreement has
the same prohibition with respect to the Subsidiary Partnership. We are seeking
your approval to amend the Partnership Agreement and the Subsidiary Partnership
Agreement so that the Sale of the Property 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 and Annex
B.
As a result of our affiliation with SH Partners, in order to authorize the
Amendments which are necessary to sell the Property to SH Partners, we are
seeking the Approval of Unaffiliated Partners. Under the Purchase and Sale
Agreement, if the Amendments are approved, the Property will be sold to SH
Partners. If the Amendments are not approved, then the Property will not be sold
to SH Partners, but Calstrs will have an option to purchase the Property. Under
the Partnership Agreement and the Subsidiary Partnership Agreement, the Sale of
the Property to Calstrs does not require any approval of limited partners.
However, Calstrs would not be obligated to purchase the Property and, as a
result, the Sale might not occur.
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ESTIMATED DISTRIBUTION TO LIMITED PARTNERS
Upon completion of the Sale of the Property, after payment of selling
expenses and indebtedness secured by the Property, the Subsidiary Partnership
will distribute the remaining net proceeds from the Sale to its constituent
partners, which will result in 99.99% of such remaining net proceeds being
distributed to the Partnership. The Subsidiary Partnership will then be
dissolved. We will then pay, or establish appropriate reserves for, Partnership
liabilities and other obligations related to the Property, and will 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 $257 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 $2,000,000) (a) $ 14,390,000
Plus: Cash and cash equivalents 213,432
Plus: Other Partnership assets 105,748
Less: Mortgage debt, including accrued interest (5,991,605)
Less: Prepayment penalty (1,233,619)
Less: Accounts payable, accrued expenses and other liabilities (b) (386,217)
Less: Loans from General partner and/or affiliates (813,984)
Less: Distributions to lower tier general partner (613)
Less: Reserve for Contingencies (491,700)
Less: Closing costs (540,870)
Less: Commission payable to Corporate General Partner (c) (143,900)
Less: Nonresident withholding taxes (545,783)
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TOTAL $ 4,560,888
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Net proceeds available for distribution to all partners $ 4,560,888
Percentage of net proceeds allocable to limited partners 85%
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Net proceeds available for distribution to limited partners $ 3,856,502
Total number of limited partnership units 15,000
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Distribution per limited partnership unit $ 257
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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 Corporate General
Partner is entitled to receive a real estate commission upon the sale of
the Property.
APPRAISAL RIGHTS
Limited partners of the Partnership are not entitled to dissenters'
appraisal rights under California law or the Partnership Agreement in connection
with the Sale of the Property.
REGULATORY APPROVALS
Other than the filing and distribution of this Solicitation Statement, no
material governmental filings or approvals are required for the Sale of the
Property.
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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 Property.
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
PROPERTY. 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 Property, and is entitled to receive
all distributions and allocations of gain or loss attributable to SH Partners'
investment in the Property. However, through its interest in SH Partners, Aimco
could still benefit as a result of SH Partners' acquisition of the Property. For
example, upon a liquidation of SH Partners, if its assets other than the
Property were insufficient to satisfy all of SH Partners' creditors, proceeds
from a disposition of the Property 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 PROPERTY 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 Property. Calstrs would not be
obligated to purchase the Property and, as a result, the Sale might not occur.
WE DID NOT MARKET THE PROPERTY TO OTHER PROSPECTIVE PURCHASERS. We
negotiated the purchase price for the Property 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 Property had been marketed to other parties.
WE HAVE NOT OBTAINED ANY RECENT APPRAISALS OF THE PROPERTY 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
Property under the Purchase and Sale Agreement is a fair price. The most recent
appraisal of the Property was done as of May 12, 2003, by American Appraisal
Associates, Inc. ("AAA"), in which AAA determined that the "as is" market value
of Windsor Hills was $12,800,000.
WE AND OUR AFFILIATES WILL RECEIVE CERTAIN BENEFITS FROM THE SALE THAT
OTHER PARTNERS WILL NOT RECEIVE. We and our affiliates hold approximately
$836,522 of Partnership indebtedness, which will be repaid from the Sale
proceeds. Upon completion of the Sale, we will receive a real estate commission
of $143,900. 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 Property. In consideration for managing the Property, 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 PROPERTY MIGHT HAVE BEEN HIGHER IF IT WAS NOT
SOLD AS PART OF A PORTFOLIO SALE. The purchase price for the Property 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
Property if it was sold by itself.
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 Windsor
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Hills, 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 PROPERTY. The Sale of the Property 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 Property 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. As the general partners of the
Partnership, both Shelter Realty Corporation and AIMCO Properties, L.P. 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:
- The net purchase price for the Property is $14,390,000 (subject to
customary prorations and adjustments).
- Upon completion of the Sale, the net proceeds will be used to pay a
distribution to limited partners, which we estimate will be approximately
$257 per unit, based on information available as of November 30, 2005.
- There is no established trading market for the limited partnership units
and the Sale would provide immediate liquidity for limited partners.
- The tax benefits of continued investment in the Property have been
substantially reduced or eliminated for most limited partners due
principally to declining depreciation deductions from the Property.
- The Property was completed in 1970 and, given its age, probably will
require substantial capital expenditures in the future for which existing
reserves may not be adequate.
- Market conditions are currently favorable for selling properties of this
type.
- It may be difficult to find a buyer at a future date or to sell the
Property 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 and the Subsidiary Partnership Agreement to permit the
Sale of the Property to SH Partners pursuant to the Purchase and Sale Agreement.
In our discretion, we may authorize a reduction of the purchase price for the
Property by up to 10% and authorize 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.
Under the Purchase and Sale Agreement, if the Amendments are approved, the
Property will be sold to SH Partners. If the Amendments are not approved, then
the Property will not be sold to SH Partners, but Calstrs will have an option to
purchase the Property. Under the Partnership Agreement and the Subsidiary
Partnership Agreement, the Sale of the Property to Calstrs does not require any
approval of limited partners. However, Calstrs would not be obligated to
purchase the Property and, as a result, the Sale might not occur.
Article 16 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. Article
14 of the Subsidiary Partnership Agreement provides that it may be amended at
the election of its limited partner, the Partnership.
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As of January 19, 2006, the Partnership had approximately 329 limited
partners who collectively owned 15,000 outstanding limited partnership units.
Each limited partnership unit represents approximately 0.0067% of the
outstanding limited partnership units. Our affiliates currently own 12,023.50
limited partnership units, or 80.16% of the outstanding limited partnership
units. These affiliates will consent to the Sale, thus assuring the Majority
Approval. The consent of owners of at least 1488.55 limited partnership units
that are not owned by our affiliates will be required to obtain the Approval of
Unaffiliated Partners.
Section 8.2(h) of the Partnership Agreement provides that the sale of
substantially all of the properties originally acquired by the Partnership
requires the Majority Approval. Windsor Hills does not represent substantially
all of the properties originally acquired by the Partnership, so the Sale to
Calstrs (which is not affiliated with the general partners) does not require the
approval of any 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 Shelter Realty Corporation, the
corporate 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.
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
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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.
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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) 5864.0 39.09%
Stanford Place 3, 4582 S. Ulster St. Parkway, Suite 1100
Denver, CO 80237
AIMCO Properties, L.P. (2) 5014.5 33.44%
Stanford Place 3, 4582 S. Ulster St. Parkway, Suite 1100
Denver, CO 80237
Cooper River Properties LLC (3) 1,145.0 7.63%
Stanford Place 3, 4582 S. Ulster St. Parkway, Suite 1100
Denver, CO 80237
TOTAL 12,023.50 80.16%
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(1) The Units may be deemed beneficially owned by AIMCO/IPT, Inc. (which is
the general partner of AIMCO IPLP, L.P. and owns Shelter Realty
Corporation, the Corporate General Partner of the Partnership) and
Apartment Investment and Management Company (which owns AIMCO/IPT, Inc.).
(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.).
(3) The Units may be deemed beneficially owned by AIMCO IPLP, L.P. (which owns
Cooper River Properties LLC), AIMCO/IPT, Inc. (which is the general
partner of AIMCO IPLP, L.P. and owns Shelter Realty Corporation, the
Corporate General Partner of the Partnership) and Apartment Investment and
Management Company (which owns AIMCO/IPT, Inc.).
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 Windsor Hills. 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 Windsor Hills is $16,390,000, less a credit for capital needs of
$2,000,000, for a net purchase price of $14,390,000. With respect to each
Property, 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 Windsor Hills, 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 Allocated Portion of
Property Owner General Partner Purchase Price
-------- ----- -------------------- --------------------
Windsor Hills Windsor Hills I, L.P. (1) 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 (2) 100% $ 4,810,000
Sunstone Couch-Oxford Associates Limited Partnership (2) 100% $ 14,175,000
Peppermill Village Peppermill Village-Oxford Associates L.P. (2) 100% $ 8,505,000
Williamsburg on the Wabash Williamsburg Investors Limited Partnership (2) 100% $ 17,340,000
Mayfair Village Mayfair Village Limited Partnership (2) 100% $ 1,790,000
- ----------
(1) Windsor Hills I, L.P. is 99.99% owned by Shelter Properties I Limited
Partnership.
(2) 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 Subsidiary Partnership, National Property Investors 6 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 the Subsidiary Partnership, the approval of
limited partners of the Partnership) 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 Windsor Hills, 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:
- 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;
- 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
- 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;
- 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;
- 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;
- 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
- 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:
- all of the representations and warranties of the purchaser in the
agreement shall be true, correct and complete in all material respects;
- 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;
- 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
- 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.
11
ONGOING OPERATIONS
Until the closing, each Seller has agreed, at its sole cost and
expense, to:
- 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;
- perform all of its obligations under leases and service contracts
applicable to its property and other agreements that may affect its
property;
- 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;
- continue to maintain insurance in accordance with its current business
practices;
- 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;
- not voluntarily grant or transfer or permit the grant or transfer of any
interest in the property owned by it, including any air rights;
- promptly advise the purchaser of any litigation or governmental proceeding
to which it becomes a party directly affecting its property; and
- 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:
- 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, by the purchaser, and (ii) for each other property (including
Windsor Hills), by the applicable Seller;
- 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 Windsor
Hills), half by the applicable Seller and half by the purchaser;
- the cost of a survey and its survey certification shall be paid (i) for
each property located in Louisiana or Virginia (including Windsor Hills),
by the purchaser, and (ii) for each other property, by the applicable
Seller;
12
- 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, North Carolina or Virginia (including Windsor
Hills), by the purchaser, and (ii) for each other property, by the
applicable Seller; and
- 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 Property may be
significant. The following discussion briefly summarizes the typical material
aspects of the federal income tax consequences for the limited partners that
should be considered in connection with the Sale; however, the tax consequences
to you could be materially different. EACH LIMITED PARTNER SHOULD CONSULT AND
MUST RELY UPON HIS, HER OR ITS OWN TAX ADVISOR IN ORDER TO UNDERSTAND FULLY THE
FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND ESTATE AND GIFT TAX CONSEQUENCES TO
HIM, HER OR IT ARISING FROM THE SALE OF THE PROPERTY.
The discussion is based on current law, which is subject to change
(possibly with retroactive effect), and does not consider state, local and
foreign income tax aspects of the Sale of the Property. For purposes of this tax
discussion, references to "I.R.C. Section" are to sections of the Internal
Revenue Code of 1986, as amended ("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 Property cannot be predicted with absolute
certainty. We cannot assure that the Internal Revenue Service will not audit or
question the treatment of any item discussed herein.
The following discussion assumes that the Partnership will recognize
taxable gain on the Sale of the Property. The following discussion also assumes
that the Partnership is characterized as a partnership for federal income tax
purposes. If the Partnership is treated for federal income tax purposes as an
association, any cash available for distribution after the Sale would be
substantially reduced and the tax consequences would be materially different
than as described below.
TAX CONSEQUENCES IF THE PROPERTY IS SOLD. The Partnership will recognize
taxable gain from the Sale of the Property in an amount equal to the difference
between the Partnership's adjusted tax basis in the Property 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 Property
subject to liabilities that encumber the Property, 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 of the Property will result in a total gain of approximately $562 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.
13
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 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 Property 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 PROPERTY 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 PROPERTY IS NOT SOLD. The Partnership's current
tax basis in the Property is approximately 25% of its original tax basis in the
Property. As a result, it is more likely that continued operation of the
Property 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 Property. 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 Property's cash flow will be used to service the
Partnership's liabilities. Accordingly, limited partners may be required to use
funds from sources other than the Partnership in order to pay any tax
liabilities that arise as a result of the Partnership's continued operation of
the Property. The Partnership also will continue to incur management fees
associated with the Property. If a limited partner possesses suspended tax
losses, tax credits or other items of tax benefit, such items may potentially be
used to reduce any tax liability that arises with respect to any taxable net
income as a result of the continued operation of the Property by the
Partnership. Limited partners are urged to consult their tax advisors in this
regard.
14
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 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
AMENDED AND RESTATED CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP
OF
SHELTER PROPERTIES I LIMITED PARTNERSHIP
This Amendment (the "Amendment") to the Amended and Restated Certificate
and Agreement of Limited Partnership, as amended to date (the "Partnership
Agreement"), of Shelter Properties I Limited Partnership, a South Carolina
limited partnership (the "Partnership"), is made and entered into as of
________________, by Shelter Realty Corporation, a South Carolina corporation,
as corporate general partner of the Partnership (the "Corporate General
Partner"), and as attorney-in-fact for the limited partners, and AIMCO
Properties, L.P., a Delaware limited partnership, as general partner of the
Partnership (the "General Partner"). Capitalized terms used but not otherwise
defined herein shall have the respective meanings ascribed thereto in the
Partnership Agreement.
WHEREAS, the Corporate General Partner and the General Partner have
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 Corporate General Partner or the
General Partner have approved this Amendment.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Section 8.2(z) of the Partnership Agreement is hereby amended to read
in its entirety as follows:
"(z) Permit the Partnership to enter into any contract with a General
Partner or an Affiliate unless the contract provides that it may be terminated
by the Partnership without penalty upon 60 days written notice, other than that
certain Purchase and Sale Agreement and Joint Escrow Instructions, dated as of
November 14, 2005, 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. 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.
SHELTER REALTY CORPORATION, AIMCO PROPERTIES, L.P.,
as Corporate General Partner and as General Partner
as Attorney-in-Fact for the Limited Partners
By: AIMCO GP, Inc.,
its General Partner
By: _____________________
Name:
Title: By: ____________________
Name:
Title:
A-1
ANNEX B
AMENDMENT
TO THE
AGREEMENT OF LIMITED PARTNERSHIP
OF
WINDSOR HILLS I, L.P.
This Amendment (the "Amendment") to the Agreement of Limited Partnership,
as amended to date (the "Partnership Agreement"), of Windsor Hills I, L.P., a
Delaware limited partnership (the "Partnership"), is made and entered into as of
________________, by Shelter I GP Limited Partnership, a Delaware limited
partnership, as general partner of the Partnership (the "General Partner"), and
Shelter Properties I Limited Partnership, a South Carolina limited partnership
(the "Limited Partner"). Capitalized terms used but not otherwise defined herein
shall have the respective meanings ascribed thereto in the Partnership
Agreement.
WHEREAS, the General Partner and the Limited Partner have approved this
Amendment.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Section 8.2(o) of the Partnership Agreement is hereby amended to read
in its entirety as follows:
"(o) Permit the Partnership to enter into any contract with the General
Partner or an Affiliate unless the contract provides that it may be terminated
by the Partnership without penalty upon 60 days written notice, other than that
certain Purchase and Sale Agreement and Joint Escrow Instructions, dated as of
November 14, 2005, 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. 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.
SHELTER I GP LIMITED PARTNERSHIP, SHELTER PROPERTIES I LIMITED PARTNERSHIP,
as General Partner as Limited Partner
By: Shelter Realty Corporation, By: Shelter Realty Corporation,
its General Partner its General Partner
By: _____________________ By: ____________________
Name: Name:
Title: Title:
B-1
SHELTER PROPERTIES I LIMITED PARTNERSHIP
CONSENT OF LIMITED PARTNER
This consent is solicited by Shelter Realty Corporation, a South Carolina
corporation and the corporate general partner (the "Corporate General Partner")
of Shelter Properties I Limited Partnership, a South Carolina limited
partnership (the "Partnership")). AS A RESULT OF ITS AFFILIATION WITH SH
PARTNERS, L.P., THE CORPORATE GENERAL PARTNER MAKES NO RECOMMENDATION WITH
RESPECT TO THE PROPOSAL. IF NO ELECTION IS SPECIFIED WITH RESPECT TO 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 and the
Subsidiary Partnership Agreement to permit the Sale of Windsor Hills
Apartments to SH Partners, L.P., an entity in which an affiliate of
the General Partners owns a 33.33% interest and acts as general
partner.
[ ] Consent [ ] Withhold Consent [ ] Abstain
The undersigned hereby constitutes and appoints the Corporate 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 Corporate General Partner, in its
discretion, may authorize a reduction of the purchase price for the Property by
up to 10% and authorize 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: ________________ __________________________________________
Type or Print Name of Individual or Entity
By:
___________________________________
Signature
__________________________________________
Type or Print Name of Person Signing
__________________________________________
Capacity
__________________________________________
Tax Identification or Social Security Number
__________________________________________
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.