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EXHIBIT 99.1
LOGO 9171 Wilshire Boulevard
PROPERTIES - XII, LTD. Beverly Hills, California 90210
National: (800) 321-9638
February 21, 1997 California: (800) 421-2991
Dear Limited Partner:
De Anza Properties - XII, Ltd., a California limited partnership (the
"Partnership") has reviewed the unsolicited tender offer made by MacKenzie
Patterson, Inc. and its affiliates (collectively, the "Bidders") to purchase
units of limited partnership interest of the Partnership ("Units") for $375 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. Limited Partners who sell any Unit to
the Bidders will not receive any distributions to be made by the Partnership
with respect to that Unit once the Unit is sold, including all quarterly
distributions and any distributions to be made when the Partnership's properties
are sold.
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 has
significantly improved. As a result, the Operating General Partner has
determined to list Warner Oaks for sale with a nationally recognized real estate
broker and has entered into discussions for this purpose. The Operating General
Partner anticipates that Warner Oaks could be sold as early as this year.
The Operating General Partner has estimated that a limited partnership Unit
has a current liquidating value of $570 as compared to the Bidders' estimate of
$478 and the Bidders' offer of only $375. 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 9%
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 1996 amounted to $85,138, which represents only
3.6% 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 $570 per Unit value is realized no management fees
would be payable to the Operating General Partner or its affiliates. In
addition, the costs borne by the Partnership for salaries and professional fees
and services paid for the year ended December 31, 1996 increased to $353,544 and
the approximate $5,000 increase in these administrative costs for the year ended
December 31, 1996, compared with the year
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ended December 31, 1995, was due to expenses related to the need to respond to
the previous tender offers of affiliates of the Bidders.
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 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.,
A CALIFORNIA LIMITED PARTNERSHIP
By: DE ANZA CORPORATION,
Operating General Partner
By: /s/ HERBERT M. GELFAND
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Herbert M. Gelfand
Chairman of the Board