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EXHIBIT 99.1
9171 Wilshire Boulevard
Beverly Hills, California 90210
National: (800) 321-9638
California: (800) 421-2991
[LOGO]
PROPERTIES - XII, LTD.
December 11, 1996
Dear Limited Partner:
De Anza Properties - XII, Ltd. (the "Partnership") has reviewed the
unsolicited tender offer made by Moraga Gold, LLC and its affiliates
(collectively, the "Bidders") to purchase units of limited partnership interest
of the Partnership ("Units") for $320 per Unit. The Operating General Partner
has determined that the offer is inadequate, and not in the best interests of
the Partnership or its limited partners. Accordingly, the Operating General
Partner recommends that the limited partners reject the offer and urges you not
to tender any of your limited partnership Units. None of the Operating General
Partner or any of its officers, directors or affiliates intend to tender any
Units.
In arriving at its determination, the Operating General Partner reviewed
the offer with its advisors and management, and considered many factors
including the business, financial condition and prospects of the Partnership.
The Operating General Partner's conclusions and recommendations concerning
the offer are based, in part, on the Operating General Partner's belief that the
amount being offered by the Bidders does not reflect the value of the
Partnership's underlying assets -- the most important of which is the
Partnership's sole remaining real property, the Warner Oaks apartment project.
The Operating General Partner believes that the market for this property is
improving and now anticipates marketing the property for sale in one to two
years. Earlier this year, the Operating General Partner believed that uncertain
market conditions would not permit such a prediction.
The Operating General Partner has estimated that a limited partnership Unit
has a current liquidating value of $564 as compared to the Bidders' estimate of
$419 and the Bidders' offer of only $320. In addition, the Bidders' offer will
be reduced by the expected $14.70 year end distribution. According to the
Bidders' materials, the Bidders' liquidating value estimate was based primarily
on its assumption that the Partnership's property could be sold at a price based
on a 10% capitalization rate. The Operating General Partner's estimate is based
on a 7.5% capitalization rate, which it believes more closely approximates the
rate prevailing for similar properties in the vicinity of the Partnership's
property.
The Bidders have encouraged a sale of the Property to avoid administrative
costs. Of the administrative costs, reimbursements paid to affiliates of the
Operating General Partner in 1995 amounted to $104,365, which represents only
4.5% of total Partnership operating revenues, and affiliates of the Operating
General Partner received no management fees. Deferred management fees would be
payable to the Operating General Partner only if the limited partners first
receive a full return of their capital and their full priority return. Even if
the Property is sold and a $564 per Unit value is realized no management fees
would be payable to the Operating General Partner or its affiliates.
Accordingly, to the extent that the Bidders imply that the Operating General
Partner is motivated to hold the Property to get fees, there is no basis for
that assertion. In addition, the costs borne by the Partnership for salaries and
professional fees and services paid for the nine months ended September 30, 1996
increased to $272, 289 (not $418,197 as indicated in Bidders' Offer to Purchase)
and the approximate $13,000 increase in these administrative costs for the nine
months ended
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September 30, 1996, compared with the nine months ended September 30, 1995, was
largely due to expenses related to the need to respond to the previous tender
offers of Moraga Gold, LLC.
Before deciding to reject the Bidders' offer, limited partners should
consider the risks of a continued investment in the Partnership:
- The offer from the Bidders provides limited partners with the opportunity
to tender their Units and realize their investment now at a definite
price without having to wait for the Partnership to be terminated or
liquidated at an indeterminate date in the future.
- There is no assurance that the return to limited partners after a sale of
the Property will be greater than the price being offered now by the
Bidders.
- The offer provides an opportunity to limited partners to liquidate their
investment without the usual transaction costs associated with market
sales and without the difficulty of selling Units in an illiquid and
limited trading market.
The attached Schedule 14D-9, which has been filed with the Securities and
Exchange Commission, expands upon the reasons for the Operating General
Partner's determination concerning the Bidders' offer, and contains additional
information relating to the Operating General Partner's recommendation and
certain other actions taken by the Operating General Partner on behalf of the
Partnership. We urge you to read the Schedule 14D-9 carefully.
If you have any questions concerning these matters please call Investor
Relations at (310) 777-2153.
You can be assured that the Operating General Partner will continue to act
in the manner in which the Operating General Partner believes to be in the best
interest of the Partnership and its limited partners.
Very truly yours,
DE ANZA PROPERTIES-XII, LTD.
By: DE ANZA CORPORATION,
Operating General Partner
By: /s/ HERBERT M. GELFAND
Herbert M. Gelfand
Chairman of the Board