SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Consent Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Consent Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
REAL ESTATE ASSOCIATES LIMITED VII
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] Fee not required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<page>
PRELIMINARY COPY - SUBJECT TO COMPLETION
REAL ESTATE ASSOCIATES LIMITED VII
9090 Wilshire Boulevard
Beverly Hills, California 90211
This Consent Revocation Statement and the enclosed BLUE Consent
Revocation Card are first being mailed to limited
partners on or about March __, 2003.
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CONSENT REVOCATION STATEMENT FURNISHED BY
THE GENERAL PARTNERS OF REAL ESTATE ASSOCIATES LIMITED VII
IN OPPOSITION TO THE SOLICITATION OF CONSENTS BY MILLENIUM MANAGEMENT, LLC
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This Consent Revocation Statement and the accompanying BLUE Consent
Revocation Card are being furnished by the General Partners of REAL ESTATE
ASSOCIATES LIMITED VII, a California limited partnership (the "Partnership" or
"REAL VII"), to the Partnership's limited partners in opposition to the
solicitation (the "Millenium Solicitation") of written consents from the
limited partners by Millenium Management, LLC, a California limited liability
company ("Millenium"). Millenium is managed by Everest Properties II, LLC
("Everest"), whose president is W. Robert Kohorst.
Millenium and Mr. Kohorst are attempting to remove, we believe
without cause, National Partnership Investments Corp., a California
corporation ("NAPICO" or the "Managing General Partner") and National
Partnership Investment Associates II, a California limited partnership ("NAPIA
II" and collectively with NAPICO, the "General Partners"), as general partners
of the Partnership and to elect Millenium as the new general partner. You may
have received a solicitation from Millenium trying to obtain your consent to
remove your General Partners and elect Millenium as general partner of the
Partnership (the "Millenium Solicitation Materials" or "Solicitation
Materials").
YOUR VOTE IS IMPORTANT TO THE FUTURE OF YOUR INVESTMENT
The General Partners unanimously oppose the Millenium Solicitation
and urge you NOT TO SIGN OR RETURN any WHITE consent card or any other forms
which may be sent to you by Millenium. Please DISCARD any WHITE consent cards
sent to you by Millenium.
Even if you previously signed and returned Millenium's WHITE consent
card, you have every right to revoke your consent. We urge you to sign, date,
fax and mail the enclosed BLUE consent revocation card in the postage-paid
envelope provided to:
<page>
MACKENZIE PARTNERS, INC.
105 Madison Avenue
New York, New York 10016
(212) 929-5500 (Call Collect)
E-mail: proxy@mackenziepartners.com
or
Call Toll Free (800) 322-2885
Your prompt action is important. Please return the BLUE consent
revocation card today. In order to be sure that you are revoking a prior
consent, you must date, sign and mark the "REVOKE CONSENT" box on the BLUE
consent revocation card, or date and sign the BLUE consent revocation card
without marking any boxes.
If you have any questions about revoking your consent or require
assistance, please call Simon Coope at MacKenzie Partners, Inc., which is
assisting the Partnership, toll free at 1-800-322-2885.
<page>
WHAT IS MILLENIUM TRYING TO DO AND
WHY ARE THEY TRYING TO DO IT?
Millenium and Mr. Kohorst are trying to remove your General Partners
and replace them with Millenium as general partner of your Partnership. We
believe that they are trying to do so because they could be entitled to
receive a significant liquidation fee under the REAL VII partnership agreement
in the event that the Partnership's assets are sold, as Millenium has
proposed. You should also be aware that Millenium and Mr. Kohorst are waging
similar consent solicitations to remove NAPICO as the general partners of two
other limited partnerships, Real Estate Associates Limited III and Real Estate
Associates Limited VI.
REASONS FOR OPPOSING THE MILLENIUM SOLICITATION
The General Partners oppose the Millenium Solicitation and urge you
NOT TO SIGN OR RETURN any WHITE consent card or any other forms which may be
sent to you by Millenium.
In what we believe is merely an attempt to become entitled to receive
a significant liquidation fee in the event that the Partnership's assets are
sold, we believe Mr. Kohorst and Millenium have not given you all of the
relevant information in their Solicitation Materials. In particular, we
believe that you should be aware of the following:
o If the Partnership's remaining assets were to be sold as Millineum
has proposed, the general partners of the Partnership, including
Millenium if elected, could be entitled to receive a significant
liquidation fee pursuant to the Partnership's Restated Certificate
and Agreement of Limited Partnership (the "Partnership Agreement").
o Millenium fails to give you important facts regarding the tax
consequences to the limited partners that may be triggered by
Millenium's proposed sale of the Partnership's assets and they fail
to tell you that Millenium and its affiliates may not be subject to
the same tax consequences.
o Millenium asserts that they intend to investigate purported "claims"
against us, but they fail to provide any details concerning the
nature of these alleged claims.
o Millenium implies that we have been charging the Partnership
excessive management fees, but they fail to tell you that the
management fees have decreased by over 59% since the sale of certain
partnership interests in 1998.
o Millenium claims that we are not actively seeking opportunities to
sell the Partnership's assets. This is simply not true. The fact is
that we have publicly announced our intent to sell the Partnership's
assets and eventually wind down its affairs and we are continuing
efforts to sell the Partnership's remaining assets in cases where it
would be advantageous (including with respect to tax consequences) to
the Partnership or the limited partners to do so.
o Millenium implies that we are remiss in failing to sell the
properties in which the Partnership maintains interests. Mr. Kohorst
and Millenium fail to tell you, however, that in some cases we do not
have the power to force a sale of the properties without the consent
of the local general partners that also own an interest in those
properties. Therefore, if Millenium were elected as general partner
of the Partnership, it would be constrained in its efforts to sell
the properties as well. Furthermore, we believe that our long history
with local general partners affords us a better opportunity to work
with them to sell properties than Mr. Kohorst would have.
o Millenium indicates in its solicitation materials that it will reduce
management fees by 50%. However, they fail to tell you that their
proposed reduction would equate to a meager annual savings of about
$19.20 per unit, or approximately 37 cents per week.
For these reasons and those that follow, we believe that Millenium
does not represent the best interests of the Partnership, and we urge you to
(1) withhold your consent from Millenium or (2) revoke any consent previously
submitted to Millenium. DO NOT SIGN OR RETURN THE WHITE MILLENIUM CONSENT CARD
TO ANYONE - EVEN AS A PROTEST VOTE AGAINST MILLENIUM. Instead, regardless of
whether or not you have already voted, please:
o sign and date your BLUE consent revocation card today;
o fax your signed BLUE consent revocation card today to MacKenzie
Partners, Inc., Attn: Simon Coope (fax number: (212) 929-0308); and
o mail your signed BLUE consent revocation card today in the enclosed
postage-paid envelope.
We are convinced that Mr. Kohorst and Millenium do not have your best
interests in mind and have not given you important facts necessary to make an
informed decision on whether to consent to remove your General Partners. We
urge you to consider the facts and to protect your investment.
Your current General Partners possess the dedication, experience and
expertise to continue to manage the Partnership on your behalf. We trust that
you will carefully consider our record of success in deciding how to cast your
vote. We remain committed to continuing to act in the best interests of all of
our limited partners.
We urge you to carefully read all of this Consent Revocation
Statement. If you have already returned a WHITE consent card, please fax your
signed and dated BLUE consent revocation card and mail it in the return
envelope provided as soon as practicable.
If you have any questions or need assistance with voting your consent
revocation card, please do not hesitate to contact MacKenzie Partners, Inc.,
the Partnership's proxy solicitor, toll free at 1-800-322-2885.
On behalf of your General Partners, we thank you for your interest
and your continued loyalty and support.
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<table>
<caption>
TABLE OF CONTENTS
Page
<s> <c>
QUESTIONS AND ANSWERS ABOUT THE MILLENIUM SOLICITATION MATERIALS...............................1
REASONS FOR OPPOSING THE MILLENIUM SOLICITATION................................................3
THE PARTNERSHIP................................................................................6
General............................................................................ 6
General Partners....................................................................6
Objectives6
Our Record of Success...............................................................6
Assets ..........................................................................7
Distributions.......................................................................7
MANAGEMENT ....................................................................................8
Interests of the General Partners in the Matters to be Acted Upon...................8
Experience of Our Managing General Partner..........................................8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................................11
LEGAL PROCEEDINGS.............................................................................11
VOTING PROCEDURE..............................................................................12
Limited Partner Approval...........................................................12
Consent Revocation Procedures......................................................12
Tabulation of Consents and Consent Revocations; Independent Inspector..............13
Consent Record Date................................................................14
No Dissenters' Rights of Appraisal.................................................15
PARTICIPANTS IN THE SOLICITATION..............................................................15
SOLICITATION OF CONSENT REVOCATION CARDS......................................................15
PARTNER PROPOSALS.............................................................................16
IMPORTANT NOTE................................................................................16
WHERE YOU CAN FIND MORE INFORMATION...........................................................16
</table>
Certain statements made herein contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. Such
statements are indicated by words such as "believes," "intends," "expects,"
"anticipates" and similar words or phrases. Such statements are based on
current expectations and are subject to risks, uncertainties and assumptions.
Should any of these risks or uncertainties materialize, or should the
underlying assumptions prove incorrect, actual results may vary materially
from those anticipated, estimated or projected. Factors that could cause
actual results to differ materially from those in our forward-looking
statements include the ability of the local general partners to sell the
underlying properties on economically advantageous terms, real estate and
general economic conditions in the markets in which the properties are located
and changes in federal and state tax laws that may create tax disadvantages
for certain distributions, some of which may be beyond our control.
Given these uncertainties, limited partners are cautioned not to
place undue reliance on our forward-looking statements.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT PASSED UPON THE
ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
<page>
REAL ESTATE ASSOCIATES LIMITED VII
9090 Wilshire Boulevard
Beverly Hills, California 90211
March __, 2003
CONSENT REVOCATION STATEMENT
In this Consent Revocation Statement, "we," "our," "ours" and "us"
refer to REAL ESTATE ASSOCIATES LIMITED VII and its General Partners, NAPICO
and NAPIA II, unless the context requires or we state otherwise.
QUESTIONS AND ANSWERS ABOUT THE
MILLENIUM SOLICITATION MATERIALS
Q: What is Millenium Asking Me to Vote Upon?
A: Millenium has sent you solicitation materials in which it seeks your
consent (1) to remove, we believe without cause, NAPICO and NAPIA II as your
General Partners, and (2) to continue the Partnership and to elect itself as
your general partner. As explained in this document, we do not believe that
such actions are in your best interests. Accordingly, we are asking that you
withhold your consent from Millenium and, if you have already given your
consent, revoke your consent.
Q: What Does the Partnership Recommend I Do?
A: We believe that Millenium does not represent the best interests of the
Partnership or its limited partners, and we urge you to withhold your consent
from Millenium and to revoke your consent if you have already voted.
Q: Who is Making This Consent Revocation Statement?
A: This Consent Revocation Statement is sent to you by the Managing General
Partner on behalf of the Partnership.
Q: Can I Change My Vote After I Have Mailed a Consent Card?
A: Yes. You have every legal right to change your vote at any time before the
expiration of the Millenium Solicitation. However, it is critical that you
change your vote as soon as possible so that the required consents are not
obtained by Millenium. Please sign, date and promptly mail the BLUE consent
revocation card in the enclosed envelope. Because time is of the essence, we
also ask that you fax your BLUE consent revocation card to MacKenzie Partners,
Inc. at the number listed below:
MacKenzie Partners, Inc.
Attn: Simon Coope
Fax Number: (212) 929-0308
Q: What Should I Do If I Want to Keep the Current General Partners?
A: If you have already returned a WHITE consent card to Millenium, you can
revoke your consent by completing the BLUE consent revocation card enclosed,
faxing it to MacKenzie Partners, Inc., Attn: Simon Coope, at (212) 929-0308
and mailing it in the pre-addressed postage-paid envelope provided. You do not
need to do anything if you are absolutely certain that you have not already
voted--however, we recommend that you return a BLUE consent revocation card
just to be sure.
Q: What Do I Need to Do Now?
A: After carefully reading and considering the information contained in this
document, we ask that you complete, sign and date the enclosed BLUE consent
revocation card as soon as possible so that your interests are protected. Even
though you do not need to do anything unless you have already voted, we ask
you to promptly fax your signed and dated BLUE consent revocation card to
MacKenzie Partners, Inc., Attn: Simon Coope, at (212) 929-0308 and then mail
your BLUE consent revocation card in the enclosed postage-paid envelope so
that your interests are represented.
WHO CAN HELP ANSWER YOUR QUESTIONS
If you would like additional copies of this document, or if you would
like to ask any questions about these materials or need assistance in voting
your BLUE consent revocation card, you should contact MacKenzie Partners, Inc.
at (800) 322-2885.
<page>
REASONS FOR OPPOSING THE MILLENIUM SOLICITATION
Recently, you may have received a communication from Millenium
Management, LLC, a company managed by W. Robert Kohorst.
We believe that Mr. Kohorst's and Millenium's interests are not
completely aligned with your interests because if Millenium is elected as
general partner of your Partnership and the Partnership's remaining assets
were to be sold, as Millenium has proposed, Millenium could be entitled to
receive a significant liquidation fee.
The General Partners oppose the Millenium Solicitation and urge you,
in what we believe to be your best interests, NOT TO SIGN OR RETURN any WHITE
consent card or any other forms which may be sent to you by Millenium.
In an attempt to obtain the consent of the limited partners, we
believe Millenium and Mr. Kohorst have not told you the whole story. Consider
the following:
o If the Partnership's remaining assets were to be sold as Millenium
has proposed, the general partners of the Partnership, including
Millenium if elected, could be entitled to receive a significant fee.
Our Partnership Agreement provides for the general partners to
receive a liquidation fee equal to the lesser of (a) 10% of our net
proceeds from the sale of a project or project interest or (b) 1% of
the sales price (including the mortgage) plus 3% of the net proceeds
after deducting an amount for federal and state taxes.
o Mr. Kohorst and Millenium failed to tell you that Millenium and its
affiliates may not be subject to the same tax consequences as the
limited partners arising out of the proposed sale of the
Partnership's assets or liquidation of the Partnership. Currently,
the original limited partners have deficit capital accounts with the
Partnership due to the fact that they have taken more net tax
deductions than the amount of money they have invested into the
Partnership. When partnership interests -- or the underlying assets
held by the Partnership -- are sold, many of the limited partners
will recognize taxable income equal to the deficit in their capital
account plus the amount of any net proceeds distributable to them.
Based upon the financial information contained in the Partnership's
2001 tax return and its September 30, 2002 Quarterly Report on Form
10-Q, even the sale of the remaining properties in which the
Partnership owns interests for little or no gain may result in a
taxable gain to the Partnership and the limited partners in excess of
$___ million. This amount may translate into a combined federal and
state income tax liability in excess of $___ million to the limited
partners. You should consult your tax advisor to determine the
precise effect of a sale of the properties upon you.
The tax liability that may be incurred by many of the limited
partners does not apply to Millenium because it does not own any
Partnership interests. In addition, Millenium's affiliate, Everest
Management, LLC, which is a limited partner of the Partnership, will
in all likelihood not have the same tax liability as the other
limited partners. As a result, to the extent that the Partnership's
assets are sold or the Partnership is liquidated, as Millenium has
proposed, Millenium and its affiliate which owns limited partnership
interests will not have the same tax liability that would be incurred
by you and the other limited partners. We urge you not to be misled.
o Mr. Kohorst and Millenium did not provide you with any details
concerning the nature of alleged "claims" against the General
Partners. Millenium told you, in the event Millenium is elected as
your new general partner, Millenium will investigate certain "claims"
against the current General Partners. However, you should note that
Millenium failed to provide you, the General Partners or the
Partnership with any explanation relating to the nature of these
purported claims, the party asserting such claims and the parties
against whom such claims would be made. The fact is, we are not aware
of any such claims and we believe this is nothing but a hollow ploy
to get your vote. Once again, we urge you not to believe everything
Millenium may tell you.
o Mr. Kohorst and Millenium did not tell you that the Partnership
management fees have decreased significantly since the sale of
Partnership interests in 1998. Millenium suggests that the General
Partners may have been charging the Partnership excessive management
fees. Once again, this is not true. Millenium told you that
management fees should be reduced because of the sale of assets in
1998. The fact is that the management fees paid to NAPICO pursuant to
the Partnership Agreement have been reduced substantially following
the sale of many of our assets. The management fees are calculated
based on our total invested assets. Our cash on hand is not included
in the calculation of management fees. Because of this, management
fees dropped by approximately fifty-nine percent (59%) after the sale
of assets in 1998, falling from more than $743,640 in 1998 to
approximately $500,903 in 2001 and $297,539 in 2002.
o Mr. Kohorst and Millenium have suggested that the administrative
expenses charged to the Partnership are excessive. Millenium told you
the Partnership incurred "administrative" expenses of $110,039 for
2001. However, as reflected in our current Annual Report on Form
10-K, filed April 16, 2002, they did not tell you that such expenses
were reduced from $459,567 in 1998 and $134,251 in 1999. Therefore,
as you can see, these costs have declined by over seventy-six percent
(76%) since 1998.
o Mr. Kohorst and Millenium told you that we are not actively seeking
opportunities to sell our remaining assets. This is simply not true.
We have publicly announced our intent to dispose of our assets and
eventually wind down our affairs and have made continuing efforts to
sell the remaining 26 assets. In 1998, eleven local limited
partnership interests were sold. In our 1998 Consent Solicitation
Statement relating to the sale of these limited partnership
interests, we told you of our intent to eventually dispose of our
interests in the local limited partnerships not included in the 1998
sale and to then wind up the Partnership's affairs. We have continued
since 1998 to explore the possibility of selling and/or refinancing
properties held by these local limited partnerships in cases where it
would be advantageous (including with respect to tax consequences) to
the Partnership or the limited partners to do so and we continue our
efforts to negotiate with the local limited partners to obtain their
consent to sell the properties. The Partnership also surrendered its
interest in one limited partnership in July 2001, sold its interest
in two limited partnerships in April and December 2001 and the lender
foreclosed on three limited partnerships in September 2001. Indeed,
NAPICO has a disposition group that specifically examines sales
possibilities and is continuing our efforts on behalf of all limited
partners. One limited partnership interest is expected to be sold in
the first quarter of 2003, and another interest is under contract to
be sold in the second quarter of 2003; a third limited partnership
interest is expected to be sold in the _____ quarter of 2003.
o Mr. Kohorst and Millenium did not tell you that we do not have the
power to sell the properties without the consent of the general
partners of the local limited partnerships. Millenium did not tell
you about the inherent limitations on our ability to sell the
properties held by certain of the local limited partnerships without
the consent and participation of the general partners of those local
limited partnerships. Mr. Kohorst and Millenium implied, however,
that we are remiss in failing to sell the properties in which the
Partnership has an interest. This is simply not true. The fact is
that we do not have the power to force a sale of properties held by
the local limited partnerships to a third party in every case.
Instead, in some cases, the cooperation of a local general partner is
necessary to allow us to sell the properties. We are continuing our
efforts to dispose of the remaining properties in cases where it
would be advantageous (including with respect to tax consequences) to
the Partnership or the limited partners to do so and we are
optimistic about new government programs that will facilitate the
sale of these properties. Yet, Millenium failed to tell you that
where the cooperation of local general partners is necessary, a new
general partner would have no more authority to sell the Partnership
assets than your current General Partners.
o Mr. Kohorst and Millenium suggest that the General Partners have less
of a financial incentive than Millenium to sell the Partnership's
remaining assets. If Millenium was elected as the new general partner
it would be entitled to the same amount of management fees that your
current General Partners are entitled to. Millenium states in its
solicitation materials that it will reduce the annual management fees
by 50%. However, it did not tell you that this plan would result in a
meager annual savings of about $19.20 per unit, or approximately 37
cents per week.
For these reasons, we believe that Millenium does not represent your
best interests, and we urge you to withhold your consent from Millenium and,
if you have already delivered your consent, we urge you to revoke the consent
you delivered. Regardless of the size of your investment, your revocation of
consent is important. Please act today!
THE PARTNERSHIP
General
The Partnership is a limited partnership formed under the laws of the
State of California on May 24, 1983. On February 22, 1984, we offered 2000
units, consisting of 4000 limited partnership interests and warrants to
purchase a maximum of 8,000 additional limited partnership interests at $5,000
per unit, through an offering managed by E. F. Hutton Inc. Each unit consists
of two limited partnership interests and two warrants which entitled the
purchaser of a unit to acquire up to four additional limited partnership
interests between January 1 and January 25, 1985 (the "Units"). As of January
28, 2003, there were 2,966 registered holders of our Units and 7,737.5 Units
outstanding.
General Partners
Our Managing General Partner is NAPICO. NAPIA II is the non-managing
General Partner of the Partnership. Our business is conducted primarily by
NAPICO. Pursuant to an agreement between NAPICO and NAPIA II, NAPICO has the
primary responsibility for the performance of any duties required to be
performed by the General Partners and, in general, has sole and final
discretion to manage and control our business and make all related decisions.
The Partnership has no employees of its own.
On March 11, 2002, Apartment Investment and Management Company, a
Maryland corporation ("AIMCO"), acquired NAPICO from its former owner, Casden
Properties Inc.
Objectives
Our original objectives were to own and operate real estate assets
for investment so as to obtain:
o tax benefits for the limited partners;
o reasonable protection for the Partnership's capital investments;
o potential for appreciation, subject to considerations of capital
preservation; and
o potential for future cash distributions from operations (on a limited
basis), refinancings or sales of assets.
Our Record of Success
We have been successful in accomplishing our primary purposes. From
inception through 1990, the limited partners obtained tax benefits equal to at
least 70.1% of their investments. In 1986, however, the tax laws changed in
such a way as to substantially reduce the ongoing tax benefits to the limited
partners. As a result, we determined that the best course of action was to
sell a majority of our interests in real property. In December 1998, we sold
our interest in the real estate assets of 11 local limited partnerships. In
1999, we made a cash distribution to the limited partners of $272,250. Since
that time, the Managing General Partner has continued to explore the
possibility of disposing or refinancing our remaining local limited
partnership interests.
Assets
As of February, 2003, we held limited partnership interests in 14
local limited partnerships. We also hold a general partner interest in Real
Estate Associates IV, a California general partnership, which in turn holds
limited partnership interests in 12 additional local limited partnerships,
each of which own a low income housing project that is subsidized and/or has a
mortgage note payable to or insured by an agency of the federal government or
local housing agency. The properties we have an interest in are located in
seven states. The Partnership surrendered its interest in one limited
partnership in July 2001, sold its interest in two limited partnerships in
April and December 2001 and the lender foreclosed on three limited
partnerships in September 2001. One additional limited partnership interest is
expected to be sold in the first quarter of 2003, and another interest is
under contract to be sold in the second quarter of 2003. With respect to a
third limited partnership interest, we have received a summary judgment in a
lawsuit against the general partner of such limited partnership to require the
general partner to sell the property.
The local limited partnerships in which we have invested were, in
general, organized by private developers who acquired the sites, or options
thereon, and applied for applicable mortgage insurance and subsidies. We
became the principal limited partner in these real estate holding limited
partnerships pursuant to arm's-length negotiations with these developers, or
others, who act as general partners. As a limited partner, the Partnership's
liability for obligations of the real estate holding limited partnerships is
limited to its investment. The general partners of such local limited
partnerships retain responsibility for maintaining, operating and managing the
properties and, in certain cases, must consent to the sale of limited
partnership assets.
Distributions
In 1999, we made a cash distribution to the limited partners of
$272,250 after the sale of 11 interests in local limited partnerships. The
Partnership Agreement sets forth a procedure for allocating distributions
among the limited partners and its general partners. The general partners are
entitled to receive 1% of the net cash flow from operations to be distributed,
reduced by any amount paid to the general partners as an annual management
fee. The limited partners as a class are entitled to receive the balance of
the net cash flow from operations to be distributed. There are no regulatory
or legal restrictions on the Partnership's current or future ability to pay
distributions, although, pursuant to certain state housing finance statutes
and regulations, certain of the local limited partnerships are subject to
limitations on the distributions to the Partnership.
MANAGEMENT
Interests of the General Partners in the Matters to be Acted Upon
The General Partners have a substantial interest in the matters you
are being asked to vote upon. If the consent of limited partners holding a
majority of the limited partnership interests is obtained by Millenium, the
current General Partners will no longer be the General Partners of the
Partnership and their interests in the Partnership will be sold. In addition,
the General Partners would no longer be entitled to management fees and fees
payable upon the sale of Partnership assets under the Partnership Agreement.
Experience of Our Managing General Partner
The Partnership does not have any directors or officers. The
management of the Partnership is conducted by NAPICO, our Managing General
Partner. Set forth below is information about NAPICO's directors and executive
officers.
<table>
<caption>
Name Age Position
---- --- --------
<s> <c> <c>
David Robertson.................... 37 President, Chief Executive Officer and Director
Michael J. Hornbrook............... 48 Executive Vice President and Chief Operating Officer
Peter K. Kompaniez................. 58 Director
Jeffrey H. Sussman................. 37 Senior Vice President, General Counsel and Secretary
Brian H. Shuman.................... 40 Senior Vice President and Chief Financial Officer
Charles McKinney................... 52 Senior Vice President, Asset Management
Patricia W. Toy.................... 72 Senior Vice President -Communications and Assistant
Secretary
James M. Wallace................... 51 Senior Vice President, Tax
Peter T. Stoughton................. 36 Vice President and Associate Counsel
</table>
Mr. Robertson is a Director and Chief Executive Officer of NAPICO.
Mr. Robertson is also the Executive Vice President, Head of Affordable
Properties of AIMCO, having joined AIMCO in February 2002. Prior to joining
AIMCO, Mr. Robertson was a member of the investment-banking group at Smith
Barney from 1991 to 1996, during which time he was responsible for real estate
investment banking transactions in the western United States, and was part of
the Smith Barney team that managed AIMCO's initial public offering in 1994. In
addition, he is Chairman and C.E.O. of Robeks Corporation, a privately held
chain of specialty food stores he founded in 1996. Mr. Robertson received a
Bachelor of Arts degree in Economics from the University of California, San
Diego and a master's degree in business administration from Harvard Business
School.
Mr. Hornbrook is the Chief Operating Officer and an Executive Vice
President of NAPICO, having joined NAPICO in January 2002. Prior to joining
NAPICO, Mr. Hornbrook was a partner in the law firm of McGuire Woods LLP in
the firm's Chicago office and was chairman of the firm's Affordable Housing
Group. While in private practice, Mr. Hornbrook represented syndicators,
developers, lenders, and brokers in the affordable housing industry. He
received a Bachelor of Arts degree, magna cum laude, from Loyola University
and a Juris Doctorate degree, with honors, from Rutgers University. Mr.
Hornbrook is a member of the Illinois and Connecticut State Bar Associations.
Mr. Kompaniez is the Chairman of the Board of Directors of NAPICO.
Mr. Kompaniez is also President and Vice Chairman of the Board of Directors of
AIMCO, as well as its founder. He has been Vice Chairman and a Director of
AIMCO since July 1994 and was appointed President in July 1997. Mr. Kompaniez
has also served as Chief Operating Officer of The National Housing Partnership
and President of NHP Partners since June 1997, and also served as a member of
the Board of Directors of American Health Properties from 1998 to 1999. From
1986 to 1993, he served as President and Chief Executive Officer of Heron
Financial Corporation ("HFC"), a United States holding company for Heron
International, N.V.'s real estate and related assets. While at HFC, Mr.
Kompaniez administered the acquisition, development and disposition of
approximately 8,150 apartment units (including 6,217 units that have been
acquired by AIMCO) and 3.1 million square feet of commercial real estate.
Prior to joining HFC, Mr. Kompaniez was a senior partner with the law firm of
Loeb and Loeb where he had extensive real estate and REIT experience. Mr.
Kompaniez received a Bachelor of Arts degree from Yale College and a Juris
Doctorate degree from the University of California (Boalt Hall).
Mr. Sussman is Senior Vice President, General Counsel and Secretary
of NAPICO and is responsible for the legal affairs of NAPICO and its
affiliates. He is also the President of National Partnership Equities, Inc.
("NPEI") and a member of the preliminary investment committee. Prior to
joining NAPICO in April 1998, Mr. Sussman was an associate with the law firm
of Rus, Miliband, Williams & Smith in Irvine, California. His practice
emphasized real estate finance and insolvency law and included the
representation of borrowers, lenders, and court-appointed trustees in matters
involving apartment complexes, retail centers and hotels. Mr. Sussman received
a Bachelor of Arts degree from the University of California, Berkeley and
Juris Doctor and Master in Business Administration degrees from the University
of Southern California. He is a member of the State Bar of California, and
holds Series 22, 39 and 63 licenses issued by the National Association of
Securities Dealers, Inc.
Mr. Shuman is a Senior Vice President and the Chief Financial Officer
for NAPICO responsible for the financial affairs of NAPICO, as well as the
limited partnerships sponsored by it. From 1996 until joining NAPICO in August
2000, Mr. Shuman was a Vice President - Finance for Preferred Health
Management Inc., the largest provider of worker compensation diagnostic
imaging services in California formed in 1996, and was responsible for
establishing and managing the accounting, billing, collection, treasury and
financial reporting departments. From 1994 to 1996, he was the Controller for
DVI Business Credit Corporation, which provides asset based lending to a wide
range of health concerns. From 1985 to 1994, Mr. Shuman served in senior
management positions, as a director or manager of finance, a portfolio tax
analyst, and a senior accountant/tax consultant. He holds a Bachelor of Arts
degree in economics and accounting from the University of Maryland. Mr. Shuman
is a Certified Public Accountant and is a member of the American Institute of
Certified Public Accountants and the California Society of Public Accountants.
Mr. McKinney became Senior Vice President in Asset Management for
NAPICO in January 2003, having joined AIMCO as Vice President -Affordable
Transactions in June 2002. Mr. McKinney has overall responsibility for
monitoring construction, lease-up, operations, and compliance issues for all
NAPICO assets as well as all other assets in AIMCO's affordable portfolio. In
addition to his asset management responsibilities, Mr. McKinney is responsible
for value added dispositions of affordable properties in the Western portion
of the Unites States. Prior to joining AIMCO, Mr. McKinney had nearly 30 years
experience in all aspects of the real estate business, including, lending,
asset management, development, and underwriting. Most recently, Mr. McKinney
was Managing Underwriter for Real Estate Recovery, Inc. where he was
responsible for the real estate loan underwriting and loan review for the
company's clients including Wall Street, National Lending Institutions, and
Government clients. Prior to Real Estate Recovery, Mr. McKinney was Senior
Vice President of Grubb and Ellis Company and President of the Grubb and Ellis
Asset Services Subsidiary with responsibility for asset management of a $300
million portfolio, appraisal, consulting, auction, mortgage banking, and
federal government contracting services. Prior to that Mr. McKinney ran 6
receiverships for the Resolution Trust Company. Mr. McKinney received a BBA in
Finance from the University of Mississippi.
Ms. Toy joined NAPICO in 1977 and is responsible for investor
communications with and reporting for the NAPICO prior partnerships. Prior to
joining NAPICO, Ms. Toy was associated with Titan Capital Corporation. From
1952 to 1956, Ms. Toy served as a U. S. Naval Officer in communications and
personnel assignments. She holds a Bachelor of Arts degree from the University
of Nebraska, and received a master's degree in business administration from
the Anderson School of Management at the University of California at Los
Angeles.
Mr. Wallace brings 27 years of diversified corporate tax experience
to NAPICO. He served as Vice President of Tax for AIMCO from October 1997 to
September 2000. Prior to joining AIMCO, Mr. Wallace served from 1995 to
September 1997 as Assistant Corporate Controller for Fleming Companies, Inc.
in Oklahoma City, Oklahoma. From 1980 to 1995, Mr. Wallace served as Director
of Corporate Taxation/Assistant Secretary for that organization. From 1978 to
1980, Mr. Wallace served as Senior Tax Consultant with Deloitte & Touche, LLP,
and from 1973 to 1978 he was Managing Partner at Nelon & Wallace, CPAs. Mr.
Wallace received a B.S. in Business Administration from Oklahoma State
University and has been a Certified Public Accountant since 1975.
Mr. Stoughton is a Vice President and Associate Counsel of NAPICO.
Prior to joining NAPICO in April 2001, Mr. Stoughton was an associate with the
law firm of Perkins Coie LLP in Los Angeles, California. His practice
consisted of a wide variety of real estate transactions, including
acquisitions, dispositions, loan workouts and restructuring, loan sales,
judicial and non-judicial foreclosures, receiverships and leasing. Mr.
Stoughton received a Bachelor of Arts degree from the University of
California, Berkeley, holds a Juris Doctorate degree from the University of
California, Los Angeles, and is a member of the State Bar of California.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The General Partners own all of the outstanding general partnership
interests of the Partnership, which constitute 1% of the total interests in
the Partnership. No person is known to own beneficially in excess of 5% of the
outstanding limited partnership interests.
None of the directors and executive officers of NAPICO listed above
under "Management - Experience of Our Managing General Partner" own any of the
limited partnership interests of the Partnership.
LEGAL PROCEEDINGS
On August 27, 1998, two investors holding an aggregate of eight units
of limited partnership interests in Real Estate Associates Limited III (an
affiliated partnership in which NAPICO is the corporate general partner) and
two investors holding an aggregate of five units of limited partnership
interest in Real Estate Associates Limited VI (another affiliated partnership
in which NAPICO is the corporate general partner) commenced an action in the
United States District Court for the Central District of California against
the Partnership, NAPICO and certain other affiliated entities. The complaint
alleges, among other things, that the defendants breached their fiduciary duty
to limited partners in seven limited partnerships, including the Partnership
(the "Defendant Partnerships") and made materially false and misleading
statements in violation of Section 14 of the Securities and Exchange Act of
1934 in the consent solicitation statements sent to the limited partners of
the Defendant Partnerships relating to approval of the transfer of partnership
interests in limited partnerships owning certain of the properties, to
affiliates of Casden Properties Inc., organized by an affiliate of NAPICO. The
plaintiffs seek equitable relief, as well as compensatory damages and
litigation related costs. On August 4, 1999, one investor holding one unit of
limited partnership interest in Housing Programs Limited commenced a virtually
identical action in the United States District Court for the Central District
of California against the Partnership, NAPICO and certain other affiliated
entities. The second action was subsumed in the first action, which has been
certified as a class action on behalf of limited partners in the Defendant
Partnerships. On August 21, 2001, plaintiffs filed a supplemental complaint,
which added new claims, including a rescission of the transfer of partnership
interests and an accounting. In November 2002, the jury returned special
verdicts against NAPICO and certain other defendants in the amount of
approximately $25.2 million for violations of securities laws and
approximately $67.3 million for breach of fiduciary duty. In addition, the
jury awarded the plaintiffs punitive damages against NAPICO of approximately
$92.5 million. However, no judgments have been entered in the case. In accord
with a briefing schedule established by the trial court, NAPICO and the other
defendants have submitted motions seeking to set aside the verdict in its
entirety. The motions were heard on March 10, 2003 and the parties are
awaiting a final decision.
VOTING PROCEDURE
Limited Partner Approval
The Partnership Agreement requires the unrevoked consent of limited
partners holding a majority of the limited partnership interests (a "Majority
Vote"): (1) to remove a general partner, and (2) to elect to continue the
Partnership and to elect a new general partner. Each limited partnership
interest is entitled to one vote. Under the terms of the Partnership
Agreement, you must be a limited partner or a substituted limited partner to
vote. The election of Millenium as a general partner is conditioned upon
Millenium obtaining a Majority Vote to remove the current General Partners.
Accordingly, if Millenium does not obtain a Majority Vote to remove the
General Partners, there will be no change in our general partners and we will
continue to operate in accordance with the terms of the Partnership Agreement.
In accordance with the terms of the Partnership Agreement, the Partnership
shall bear the costs of this Consent Revocation Statement.
Consent Revocation Procedures
The following is an outline of the procedures to be followed if you
do not want to change your general partners. A WHITE consent card may have
already been sent to you by Millenium. We urge you not to sign or return the
WHITE consent card. If you have already returned the consent card, you have
every legal right to change your vote by returning your BLUE consent
revocation card. These procedures must be strictly followed in order for the
instructions of a limited partner as marked on a consent card to be revoked:
o A limited partner may revoke his or her consent at any time during
the solicitation period.
o If you have already returned a WHITE consent card, you can return a
properly completed, signed and dated BLUE consent revocation card in
the return envelope provided and, if possible, please also fax it to
MacKenzie Partners, Inc., Attn: Simon Coope at fax number (212)
929-0308. Unless you are absolutely certain that you have not already
voted, you are encouraged to return a BLUE consent revocation card.
o You can also revoke a previously given consent by signing and dating
a WHITE consent card and voting "AGAINST" or "ABSTAIN" and then
returning it to either Millenium or the Partnership.
It is the Partnership's view that only limited partners of record on
the record date for the Millenium Consent Solicitation (the "Record Date"), as
determined pursuant to the procedures described below under the heading
"Consent Record Date", will be given notice of and allowed to give their
consent regarding the matters addressed in this Consent Revocation Statement.
The Managing General Partner urges you to vote AGAINST the Millenium
proposals by signing, dating and returning the BLUE consent revocation card in
the enclosed postage-paid envelope. You can do this even if you may have voted
on the WHITE consent card solicited by Millenium. It is the latest dated
consent revocation or consent that counts.
A consent may be revoked by signing, dating and delivering a written
BLUE consent revocation card at any time prior to the date, if ever, that the
Independent Inspector (as defined below) receives the number of properly
completed, unrevoked consents which would constitute a Majority Vote. The
delivery of a subsequently dated consent revocation card that is properly
completed and signed will constitute a revocation of an earlier consent card
delivered by a limited partner. The delivery of a subsequently dated and
signed consent card that is properly marked to indicate "AGAINST" or "ABSTAIN"
will also constitute a revocation of an earlier dated consent delivered by
such limited partner; however, limited partners are urged to revoke any prior
consent by delivering the BLUE consent revocation card to the Partnership. The
revocation may be delivered either to the Partnership in care of MacKenzie
Partners, Inc., 105 Madison Avenue, New York, New York 10016, Attn: Simon
Coope, or, alternatively, to Millenium. Although a revocation is effective if
delivered to Millenium, the Managing General Partner requests that all
revocations of consents be mailed or delivered to the Partnership in care of
MacKenzie Partners, Inc. at the address set forth above and faxed to Simon
Coope at (212) 929-0308, so that the Partnership will be aware of all
revocations and the Independent Inspector can more accurately determine if and
when unrevoked consents to the actions described in the Millenium Solicitation
Materials have been received from the holders of record on the Record Date of
a majority of outstanding limited partnership interests.
Tabulation of Consents and Consent Revocations; Independent Inspector
While the California Uniform Limited Partnership Act (under which the
Partnership was formed) does not contain provisions regarding procedures for
the solicitation or tabulation of consents of limited partners, the Managing
General Partner has determined, in accordance with the authority granted to
the General Partners under the Partnership Agreement, that it will designate a
qualified independent inspector (the "Independent Inspector") in connection
with the Millenium Consent Solicitation. The Independent Inspector will be
required, as soon as practicable after receipt of written consents and consent
revocations, to conduct such reasonable investigations as the Independent
Inspector deems necessary or appropriate for the purpose of ascertaining the
validity of the consents and consent revocations, to resolve disputes and to
tabulate consents and consent revocations, including determining whether
limited partners having the requisite voting power to constitute a Majority
Vote have done so. If, after this investigation, the Independent Inspector
determines that actions proposed by the Consent Solicitation have been validly
taken, that fact will be certified on the Partnership's records. The Managing
General Partner plans to present the results of the Consent Solicitation with
respect to the actions proposed as soon as possible.
All questions as to the validity, form, eligibility (including time
of receipt), acceptance of consents and revocations of consent and the
interpretation of the terms and conditions of the solicitation of consents
will be determined by the Independent Inspector, subject to the provisions of
the Partnership Agreement, as well as state and federal law. The Independent
Inspector will have the absolute right to reject any or all consents and
consent revocations that are not acceptable. The Independent Inspector also
will have the right to waive any conditions as to particular consents or
consent revocations. None of the Independent Inspector, the General Partners,
or any of their respective affiliates shall be under any duty to give any
notification of any such defects, irregularities or waiver, nor shall any of
them incur any liability for failure to give such notification. Deliveries of
consents and consent revocations will not be deemed to have been made until
any irregularities or defects therein have been cured or waived.
Consent Record Date
In the event of a solicitation of written consents of the limited
partners with respect to a proposal to be acted upon by the limited partners
without a meeting, such as the Millenium Consent Solicitation, it is important
that the General Partners have sufficient time to formulate a position on such
proposals, inform the limited partners about such proposals and make a
recommendation of the General Partners with respect to such proposals. As a
result, on February 20, 2003, the General Partners adopted the following
procedures to set a record date for a consent solicitation:
In order that the Partnership may determine the limited
partners entitled to consent to action in writing without a meeting,
the General Partners may fix a record date, which record date shall
not be less than ten (10) days after, nor more than sixty (60) days
after, the date upon which the resolution fixing the record date is
adopted by the General Partners. Any limited partner of record
seeking to have the limited partners authorize or take action by
written consent shall, by written notice delivered to the General
Partners at the principal offices of the Partnership, request the
General Partners to fix a record date. The General Partners shall
promptly, but in all events within ten (10) days after the date on
which such a request is received, adopt a resolution fixing the
record date. If within ten (10) days after the date on which such
request is received the General Partners have not adopted a
resolution fixing the record date, the record date for determining
limited partners entitled to consent to action in writing without a
meeting shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered
to the General Partners at the principal offices of the Partnership.
Delivery shall be by hand or by certified or registered mail, return
receipt requested.
The General Partners have delivered a letter to Everest describing
these procedures. On March __, 2003, the General Partners received a request
from Everest Management, LLC, a limited partner of the Partnership, to set a
Record Date. On ____, 2003, the General Partners set _____, 2003 as the Record
Date in accordance with the procedures set forth above.
No Dissenters' Rights of Appraisal
Under the Partnership Agreement and California law, limited partners
do not have dissenters' rights of appraisal.
PARTICIPANTS IN THE SOLICITATION
Under applicable regulations of the Securities and Exchange
Commission, the Partnership and the General Partners each may be deemed to be
a "participant" in this solicitation of revocations of consent. Additional
information about the participants is set forth on Appendix A. Information
about the present ownership of Partnership interests by participants and
information about all transactions in the Partnership's interests within the
past two years by each of the participants is provided in Appendix A.
SOLICITATION OF CONSENT REVOCATION CARDS
This Consent Revocation Statement is being made by the Partnership
and the General Partners. The Managing General Partner and its officers,
directors and employees may assist in this solicitation of consent revocation
cards and in providing information to limited partners in connection with any
questions they may have with respect to this Consent Revocation Statement and
the consent revocation procedures. We have retained MacKenzie Partners, Inc.
("MacKenzie Partners") to assist with the solicitation of revocation of
consents, as well as to assist us with communicating with our limited partners
with respect to this solicitation. Approximately [ ] persons will be utilized
by MacKenzie Partners in their efforts. We expect that MacKenzie Partners will
solicit consent revocations by mail, in person, by telephone, by facsimile
and/or by e-mail. In addition to the Partnership's solicitation by mail, and
MacKenzie Partners' efforts, the Managing General Partner may have certain of
its officers, directors and employees solicit, without additional
compensation, revocations by mail, in person, by telephone, by facsimile or by
e-mail. Although the Managing General Partner does not currently plan to
conduct active solicitation on the Internet, solicitation materials may be
made available on or through NAPICO's web site or through the Internet.
The cost of the solicitation of revocations of consent will be borne
by the Partnership. We estimate that the total expenditures in connection with
the solicitation (including the fees and expenses of attorneys, public
relations advisers, financial advisors, solicitors, advertising, printing,
mailing, travel and other costs, but excluding salaries and wages of officers
and employees), will be approximately $[ ], of which approximately $[ ] has
been incurred to date. MacKenzie Partners' estimated fee is $[ ], plus
reasonable out-of-pocket expenses.
The Partnership has agreed to indemnify MacKenzie Partners against
certain liabilities and expenses in connection with its engagement, including
certain liabilities under the federal securities laws. The Partnership's plan
to reimburse MacKenzie Partners for any such liabilities or expenses will not
be submitted to the limited partners for a vote.
PARTNER PROPOSALS
In accordance with the terms of our Partnership Agreement, we do not
have annual meetings. Thus, there is no deadline for submitting partner
proposals as set forth in Rule 14a-5 under the Securities Exchange of 1934, as
amended (the "Exchange Act"). The limited partners may call a special meeting
to vote upon matters permitted by our Partnership Agreement with the prior
consent of at least 10% of the limited partnership interests.
IMPORTANT NOTE
Millenium could cease the solicitation of consents once it has
determined that valid and unrevoked consents representing a majority of the
limited partnership interests as of the Record Date have been obtained and
delivered such consents to the Partnership in accordance with the Partnership
Agreement. Accordingly, it is important that limited partners who have
executed a WHITE consent card and desire to revoke such consent sign, date,
fax and mail the accompanying BLUE consent revocation card as soon as
possible.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Exchange Act,
and in accordance with the Exchange Act, file reports, consent solicitation
statements and other information with the Securities and Exchange Commission
(the "SEC"). This document references important business and financial
information about our Partnership from documents we have filed with the SEC
but have not included or delivered with this document. If you call or write
us, we will send you these documents, excluding exhibits, without charge, or
you may view Partnership financial information including the Annual Report on
Form 10-K on the web site http://www.napico.com. The contents of NAPICO's web
site are not deemed to be a part of this Consent Revocation Statement. You can
contact us at:
9090 Wilshire Blvd., Suite 201
Beverly Hills, California 90211
310-278-2191
Please request documents at your earliest convenience. If you request
any documents, we will mail the documents to you by first class mail, or
another equally prompt means, by the next business day after we receive your
request.
In addition, the SEC maintains a Website that contains reports, proxy
and information statements and other information regarding registrants that
file electronically with the SEC. The address of the site is
http://www.sec.gov.
<page>
APPENDIX A
INFORMATION CONCERNING THE PARTICIPANTS
Information Regarding Ownership of Partnership Interests by Participants
NAPICO is a leading syndicator of Low Income Housing Tax Credit and
Historic Tax Credit properties. Its principal business address is National
Partnership Investments Corp., 9090 Wilshire Boulevard, Beverly Hills,
California 90211. NAPIA II is a limited partnership organized to manage
property-owning local partnerships. Its principal business address is National
Partnership Investment Associates, 9090 Wilshire Boulevard, Beverly Hills,
California 90211.
NAPICO and NAPIA II each own a general partnership interest in the
Partnership. The aggregate general partnership interest is 1% of the total
interests in the Partnership. The participants do not own any Partnership
interests of record. The number of Partnership interests beneficially owned by
the participants is set forth below.
Name of Beneficial Owner Title of Class Amount
- ------------------------ -------------- ------
NAPICO........................... General Partnership Interest .55%
NAPIA II......................... General Partnership Interest .45%
None of the participants referred to herein have purchased or sold
any of its Partnership interests during the last two years.
The amount of Partnership interests owned beneficially, directly or
indirectly by each of NAPICO's associates is set forth under "Security
Ownership of Certain Beneficial Owners and Management" in the attached Consent
Revocation Statement. The address of each of NAPICO's associates is National
Partnership Investments Corp. 9090 Wilshire Boulevard, Beverly Hills,
California 90211. The address of each of NAPIA II's associates is National
Partnership Investment Associates, 9090 Wilshire Boulevard, Beverly Hills,
California 90211. None of NAPICO's associates beneficially own any of the
Partnership interests, directly or indirectly.
The number of each class of securities of the Parent(1) or the
Subsidiary(2) of the Partnership beneficially owned by the participants,
directly or indirectly, is set forth below.
<table>
<caption>
Name of Beneficial Owner Parent or Subsidiary Company Title of Class Amount
- ------------------------ ---------------------------- -------------- ------
<s> <c> <c> <c>
REAL VII......................... Real Estate Associates IV Partnership Interests 99.9%
(partner)
NAPICO........................... Real Estate Associates IV Partnership Interests 0.1%
(managing general partner)
(1) NAPICO (the "Parent"), as Managing General Partner, may be deemed the parent entity of the Partnership.
(2) Real Estate Associates IV (the "Subsidiary"), an entity in which the Partnership holds a majority
interest, may be deemed a subsidiary entity of the Partnership.
</table>
Information Concerning Agreements With Participants
Except as described in this Appendix A or in the Consent Revocation
Statement, none of the participants nor any of their respective affiliates or
associates (together, the "Participant Affiliates"), have entered into any
agreement or understanding with any person respecting any Partnership Units,
including joint ventures, loan or option arrangements, puts or calls,
guarantees against loss or guarantees of profit, division of losses or
profits, or the giving or withholding of proxies.
Except as described in this Appendix A or in the Consent Revocation
Statement, no Participant Affiliate directly or indirectly beneficially owns
any interests in the Partnership. Except as described in this Appendix A or in
the Consent Revocation Statement, none of the participants own any securities
of the Parent or the Subsidiary of the Partnership. Furthermore, except as
described in this Appendix A or in the Consent Revocation Statement, no
Participant Affiliate is either a party to any transaction or series of
transactions since January 1, 2002, or has knowledge of any currently proposed
transaction or series of transactions, (i) to which the Partnership or the
Parent was or is to be a party, (ii) in which the amount involved exceeds
$60,000, and (iii) in which any Participant Affiliate had, or will have, a
direct or indirect material interest.
Messrs. David Robertson, Michael J. Hornbrook, Jeffrey H. Sussman,
Brian H. Shuman, Peter T. Stoughton, Charles McKinney and James M. Wallace and
Ms. Patricia W. Toy have entered into employment agreements with AIMCO. The
agreements provide for, among other things, a set salary and bonus structure.
The agreements provide for an indefinite term of employment. No other
Participant Affiliate has entered into any agreement or understanding with any
person respecting future employment by the Partnership or its affiliates or
any future transactions to which the Partnership or any of its affiliates will
or may be a party.
Except as described in this Appendix A or in the Consent Revocation
Statement, there are no contracts, arrangement or understandings by any
Participant Affiliate within the past year with any person with respect to
ownership interests in the Partnership.
<page>
PRELIMINARY COPY - SUBJECT TO COMPLETION
FORM OF CONSENT REVOCATION CARD
REAL ESTATE ASSOCIATES LIMITED VII
THIS REVOCATION OF CONSENT IS SOLICITED BY REAL ESTATE ASSOCIATES
LIMITED VII IN OPPOSITION TO THE SOLICITATION BY MILLENIUM MANAGEMENT, LLC.
The undersigned, a limited partner of REAL ESTATE ASSOCIATES LIMITED
VII (the "Partnership"), acting with respect to all of the limited partnership
interests held by the undersigned, hereby revokes any and all consents that
the undersigned may have given with respect to each of the following
proposals:
THE GENERAL PARTNERS OF THE PARTNERSHIP UNANIMOUSLY RECOMMEND THAT
YOU "REVOKE CONSENT" FOR ITEMS 1 AND 2.
1. Removal of General Partners
[ ] REVOKE CONSENT [ ] DO NOT REVOKE CONSENT
2. Continuation of the Partnership and election of new general partner,
Millenium Management LLC
[ ] REVOKE CONSENT [ ] DO NOT REVOKE CONSENT
IF NO DIRECTION IS MADE, THIS CONSENT REVOCATION CARD WILL BE DEEMED
TO REVOKE ALL PREVIOUSLY EXECUTED CONSENTS WITH RESPECT TO ANY OR ALL OF THE
PROPOSALS SET FORTH HEREIN.
PLEASE SIGN, DATE, FAX TO MACKENZIE PARTNERS, INC., ATTN: SIMON COOPE
AT (212) 929-0308 AND MAIL THIS CONSENT REVOCATION CARD TODAY IN THE ENCLOSED
RETURN ENVELOPE.
Please sign your name below. If your partnership interests are held jointly,
each limited partner should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or authorized
officer. If a partnership, please sign in partnership name by general partner.
Dated: ______, 2003
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Name (if held jointly):
Title:
--------------------------------
Telephone Number:
PLEASE SIGN, DATE AND RETURN THIS
CONSENT REVOCATION PROMPTLY. IF
YOU HAVE ANY QUESTIONS OR NEED
ASSISTANCE,
PLEASE CALL MACKENZIE PARTNERS, INC.
TOLL-FREE AT 1-800-322-2885.