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Exhibit 99.1
DE ANZA PROPERTIES-XII, LTD.
9171 Wilshire Boulevard
Beverly Hills, California 90210
National: (800) 321-9638, ext. 153
California: (800) 421-2991, ext. 153
[DE ANZA LOGO]
PROPERTIES - XII, LTD.
December 12, 1997
Dear Limited Partner:
De Anza Properties-XII, Ltd., a California limited partnership (the
"Partnership") has reviewed the unsolicited tender offer made by affiliates of
MacKenzie Patterson, Inc. and affiliates of Citadel Financial Group, Inc.
(collectively, the "Bidders") to purchase units of limited partnership interests
of the Partnership ("Units") for $550 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 as is anticipated to occur in
January 1998, after which the Partnership will be liquidated. As described
below, the Operating General Partner estimates total liquidating distributions
to be approximately $714 per Unit. In addition, the Partnership anticipates
making a regular quarterly distribution December 31, 1997. It is anticipated
that the distribution will be $8.25 per Unit, as it has been for each of the
prior three quarters of 1997. In accordance with the Bidders' Offer, the
quarterly distribution will reduce the Bidders' $550 per Unit offer by $8.25 per
Unit, resulting in a net offer of $541.75 per Unit.
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 large 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, Warner Oaks Apartments. As described
in the Partnership's October 31, 1997 letter to limited partners, the
Partnership has entered into a contingent agreement with Bay Apartment
Communities, Inc., an unaffiliated entity (the "Purchaser") for the sale of the
project for $20 million. Under the terms of the purchase agreement, the
Purchaser had a right to conduct a thorough investigation of the project and to
determine whether or not to proceed with the purchase of the property. The
Partnership received notice on December 8, 1997 that the Purchaser has completed
its investigation of the project, approved all matters subject to its
inspection, and has determined to proceed with the purchase as contemplated. The
scheduled closing date is in January, 1998, subject to satisfaction of certain
customary closing conditions.
If the project is sold as currently contemplated, the Partnership will be
liquidated, and the net proceeds will be distributed, along with any other
Partnership proceeds, subject to retaining reasonable reserves until final
liquidation. The reserves are not expected to be substantial and are intended to
be fully distributed in 1998. If the closing were to occur at the sales price of
$20 million, total liquidating distributions, including the net sales proceeds,
are estimated to be $714 per Unit of limited partnership interest. The sale of
the project at $20 million would result in a gain, which would be taxable. Based
upon the new federal laws regarding capital gains taxes, it is estimated that
the federal tax would be $110 per Unit. This does not take into account any
state or local taxes, and does not take into account any individual
circumstances which might affect taxation of
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a partner. The general partners are not expected to receive any portion of the
sales proceeds. However, the general partners will realize a taxable gain.
In the event of the sale of the project and the resulting liquidation of
the Partnership, only those partners who still own their partnership interests
will receive proceeds.
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 a sale of Warner Oaks will be consummated at
the current contract price or that a future sale will result in distributions
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