SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
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CENTURY PROPERTIES FUND XVII
(Name of Subject Company)
CENTURY PROPERTIES FUND XVII
(Name of Person Filing Statement)
LIMITED PARTNERSHIP UNITS
(Title of Class of Securities)
N/A
(CUSIP Number of Class of Securities)
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WILLIAM H. JARRARD, JR.
President
Fox Capital Management Corporation
One Insignia Financial Plaza
Greenville, South Carolina 29602
(864) 239-2854
(Name, Address, and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of the Person(s) filing Statement)
Copy to:
ARNOLD S. JACOBS, ESQ.
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
(212) 969-3210
ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject partnership is Century Properties
Fund XVII, a California limited partnership (the "Partnership"), and the
address of its principal executive offices is One Insignia Financial Plaza,
Greenville, South Carolina 29602. The title of the class of equity securities
to which this statement relates is the Partnership's Limited Partnership Units
("Units").
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to an offer by IPLP Acquisition I
LLC, a Delaware limited liability company (the "Purchaser"), Insignia
Properties L.P., a Delaware limited partnership ("IPLP"), Insignia Properties
Trust, a Maryland real estate investment trust ("IPT") and Insignia Financial
Group, Inc., a Delaware corporation ("Insignia," and together with IPLP, IPT
and the Purchaser, the "Bidders"), disclosed in a Tender Offer Statement on
Schedule 14D-1 dated August 28, 1997 (the "Schedule 14D-1"), to purchase up to
22,500 outstanding Units at a purchase price of $225 per Unit, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated August 28, 1997, (the "Offer to Purchase") and the
related Assignment of Partnership Interest (which collectively constitute the
"Offer" and are contained within the Schedule 14D-1).
The address of the Purchaser's principal executive offices
is One Insignia Financial Plaza, Greenville, South Carolina 29602.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Partnership, which
is the person filing this statement, are set forth in Item 1 above.
(b)(i) The Partnership's sole general partner is Fox
Partners, a California general partnership (the "General Partner") and an
affiliate of the Bidders.
The three general partners of the General Partner are Fox
Capital Management Corporation, a California corporation ("FCMC"), which is
the managing general partner, Fox Realty Investors, a California general
partnership ("FRI"), which is an affiliated general partner and Fox Partners
82, a California general partnership, which is a general partner unaffiliated
with the Bidders.
In January 1996, IFGP Corporation, a wholly-owned subsidiary
of Insignia, acquired all of the outstanding stock of National Property
Investors, Inc.("NPI"), which was at that time the parent corporation of NPI
Equity Investments II, Inc. ("NPI Equity"), the managing general partner of
FRI. In June 1996, Insignia Properties Corporation ("IPC"), which at that time
was a wholly-owned subsidiary of Insignia, acquired all of the outstanding
stock of FCMC. In December 1996, in connection with the formation of IPT, NPI
contributed all of the outstanding stock of NPI Equity to IPT and Insignia
merged IPC with and into IPT. As a result, FCMC and NPI Equity are
wholly-owned subsidiaries of IPT and IPT has control of the General Partner.
The Purchaser is a newly-formed, wholly-owned subsidiary of
IPLP, which is the operating partnership of IPT. IPT is the sole general
partner of IPLP (owning approximately 68% of the total equity interests in
IPLP), and Insignia is the sole limited partner of IPLP (owning approximately
32% of the total equity interests in IPLP). Insignia and its affiliates also
own approximately 70% of the outstanding common shares of beneficial interest
of IPT. NPI-AP Management, L.P. ("NPI-AP"), which since mid-January 1996
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has been an affiliate of Insignia and is an affiliate of IPT and the
Purchaser, provides property management services to the Partnership, and since
mid-January 1996 Insignia (directly or through its affiliates) has performed
asset management and partnership administration services for the Partnership.
By reason of these relationships, the General Partner has conflicts of
interest in considering the Offer.
In a series of transactions between October 1994 and June
1995, DeForest Ventures I, L.P. ("DeForest"), which at the time was an
affiliate of the General Partner but not an affiliate of any of the Bidders,
acquired approximately 25,710.5 Units (or approximately 34.3% of the total
Units) at a purchase price of $83.38 per Unit pursuant to a series of tender
offers.
As a result of litigation instituted in connection with the
tender offers conducted by DeForest in March 1995 the General Partner (and
certain of its affiliates at the time) entered into an Amended Stipulation of
Settlement (the "Stipulation") which, among other things, (i) requires the
General Partner to prohibit the Partnership from entering into a "roll-up"
transaction involving the General Partner or any of its affiliates prior to
January 1, 2000 unless such "roll-up" transaction is approved by Limited
Partners holding at least a majority of the outstanding Units owned by persons
who are unaffiliated with the General Partner and (ii) prohibits DeForest and
its affiliates from initiating or participating in any tender offer for Units
for a period of 24 months following the completion of the tender offers
conducted by DeForest (which period has now expired).
In January 1996, Insignia NPI, L.L.C. ("Insignia NPI"),
which at that time was a wholly-owned subsidiary of Insignia, purchased from
DeForest all of the Units held by DeForest In December 1996, Insignia NPI
merged with and into IPLP and IPLP acquired ownership of all of the foregoing
Units.
The Partnership, the General Partner and NPI-AP (which is
the property manager for the Partnership) were not affiliates of Insignia
prior to mid-January 1996. Accordingly, the following section only discusses
transactions between the Partnership, on the one hand, and Insignia and its
affiliates (including the General Partner and NPI-AP), on the other hand,
which have occurred since mid-January 1996.
Under the Limited Partnership Agreement, the General Partner
holds an interest in the partnership and is entitled to participate in certain
cash distributions made by the Partnership to its partners. The General
Partner received from the Partnership in respect of its in interest in the
Partnership cash distributions of $18,000 to date in 1997 and $23,000 in 1996.
The Partnership paid NPI-AP property management fees for property management
services in the aggregate amounts of $617,000 for the year ended December 31,
1996 and $317,000 for the six-month period ended June 30, 1997. Insignia and
its affiliates do not receive any fees from the Partnership for the asset
management or partnership administration services they provide, although,
pursuant to the Limited Partnership Agreement, the General Partner and its
affiliates are entitled to be reimbursed by the Partnership for the expenses
they incur in connection with providing those services. The Partnership
reimbursed the General Partner and its affiliates for expenses incurred in
connection with asset management and partnership administration services
performed by them for the Partnership in the amounts of $166,000 for the year
ended December 31, 1996 and $78,000 during the first six months of 1997. The
Limited Partnership Agreement provides for a partnership management incentive
fee to be paid to the General Partner for executive and administrative
management services, not to exceed 10% (determined on a cumulative,
non-compound basis) of "cash available for distribution" (as defined in the
Limited Partnership Agreement distributed to partners). In 1996 the General
Partner received $128,000 as a partnership management incentive fee. On
January 19, 1996, the Partnership began insuring its properties under a master
policy through an agency and insurer unaffiliated with the General Partner. An
affiliate of the General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later
acquired by the agent who placed the current year's master policy. The
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current agent assumed the financial obligations to the affiliate of the
General Partner who receives payments on these obligations from the agent.
Insignia and the General Partner believe that the aggregate financial benefit
derived by Insignia and its affiliates from the arrangement described in the
three preceding sentences has been immaterial.
The Purchaser and the General Partner are affiliates of and
controlled by IPT, which is controlled by Insignia. The General Partner has
conflicts of interest in considering the Offer, including (i) as a result of
the fact that a sale or liquidation of the Partnership's assets would result
in a decrease or elimination of the fees paid to the General Partner and/or
its affiliates and (ii) the fact that as a consequence of the Purchaser's
ownership of Units, the Purchaser (which is an affiliate of the General
Partner) may have incentives to seek to maximize the value of its ownership of
Units, which in turn may result in a conflict for the General Partner in
attempting to reconcile the interests of the Purchaser (which is an affiliate
of the General Partner) with the interests of the other Limited Partners.
The Purchaser (which is an affiliate of the General Partner)
expects to pay for the Units it purchases pursuant to the Offer with funds
provided by IPLP as capital contributions. IPLP in turn intends to use its
cash on hand to make such contributions. It is possible, however, that in
connection with its future financing activities, IPT or IPLP may cause or
request the Purchaser (which is an affiliate of the General Partner) to pledge
the Units as collateral for loans, or otherwise agree to terms which provide
IPT, IPLP and the Purchaser with incentives to generate substantial near-term
cash flow from the Purchaser's investment in the Units. This could be the
case, for example, if a loan has a "bullet" maturity after a relatively short
time or bears a high or increasing interest rate. In such a situation, the
General Partner may experience a conflict of interest in seeking to reconcile
the best interests of the Partnership with the need of its affiliates for cash
flow from the Partnership's activities.
If the Purchaser is successful in acquiring more than
11,532.5 Units pursuant to the Offer (or otherwise), IPT (which controls the
General Partner, IPLP and the Purchaser) will own in excess of 50% of the
total Units outstanding and, accordingly, will be able to control the outcome
of almost all voting decisions with respect to the Partnership, including
decisions concerning liquidation, amendments to the Limited Partnership
Agreement, removal and replacement of the General Partner and mergers,
consolidations and other extraordinary transactions not involving a "roll-up."
Even if the Purchaser acquires a lesser number of Units pursuant to the Offer,
however, because IPT already owns (through IPLP) approximately 34.6% of the
outstanding Units will be able to significantly influence the outcome of
almost all voting decisions with respect to the Partnership. This means that,
other than with respect to "roll-up" transactions, (i) non-tendering Limited
Partners could be prevented from taking action they desire but that IPT (which
is an affiliate of the General Partner) opposes and (ii) IPT (which is an
affiliate of the General Partner) may be able to take action desired by IPT
but opposed by the non-tendering Limited Partners.
Under the Limited Partnership Agreement, Limited Partners
holding a majority of the Units are entitled to take action with respect to a
variety of matters, including: removal of a general partner and in certain
circumstances election of new or successor general partners; dissolution of
the Partnership; the sale of all or substantially all of the assets of the
Partnership; and most types of amendments to the Limited Partnership
Agreement. However, under the Stipulation (as defined above), the General
Partner may not initiate or support a "roll-up" transaction involving the
Partnership prior to January 1, 2000 unless such "rollup" transaction is
approved by Limited Partners holding at least a majority of the outstanding
Units not held by person affiliated with the General Partner. When voting on
those and other matters, IPLP and the Purchaser (which are affiliates of the
General Partner) will vote the Units owned by them in whatever manner they
deem to be in the best interests of IPT which, because of their relationship
with the General Partner, also may be in the interest of the General Partner,
but may not be in the interest of other Limited Partners.
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The Offer will not result in any change in the compensation
payable to the General Partner or its affiliates. However, as a result of the
Offer, the Purchaser (which is an affiliate of the General Partner) will
participate, in its capacity as a Limited Partner, in any subsequent
distributions to Limited Partners to the extent of the Units purchased
pursuant to the Offer.
(b)(ii) To the best knowledge of the General Partner, except
as described in this Schedule 14D-9, there are no other material agreements,
arrangements, understandings or any actual or potential conflicts of interest
between the Partnership, the General Partner and their affiliates and the
Bidders, their executive officers, directors or affiliates.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Because of the existing and potential future conflicts of
interest described in Item 3 above, the Partnership and the General Partner
are remaining neutral and making no recommendation as to whether Unit holders
should tender their Units in response to the Offer.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Neither the Partnership nor any person acting on its behalf
has employed, retained or compensated, or intends to employ, retain or
compensate, any person or class of persons to make solicitations or
recommendations to Unit holders on its behalf concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except as set forth on Schedule I attached hereto, no
transactions in the Units have been effected during the past 60 days by the
Partnership or the General Partner or, to the knowledge of the General
Partner, by any of its current or former executive officers, directors or
affiliates.
(b) To the knowledge of the Partnership, neither the General
Partner nor any of its current or former executive officers, directors or
affiliates intends to tender pursuant to the Offer any Units beneficially
owned by them.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
None.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
None.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a) Form of cover letter to Unit holders from the
Partnership dated August 28, 1997.
(b) None.
(c) None.
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SCHEDULE I
TRANSACTIONS IN THE UNITS
EFFECTED BY IPLP WITHIN THE PAST 60 DAYS
Number of Price
Date Units Purchased Per Unit
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7/22/97 1 $221.00
7/23/97 4 $197.50
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: August 28, 1997
CENTURY PROPERTIES FUND XVII
By: FOX PARTNERS
Its General Partner
By: FOX CAPITAL MANAGEMENT CORPORATION
Its General Partner
By: /s/ William H. Jarrard, Jr.
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William H. Jarrard, Jr.
President and Director
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EXHIBIT INDEX
Exhibit Description
(a) Form of cover letter to Unit holders from the
Partnership dated August 28, 1997.
(b) None.
(c) None.