UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
Real Estate Associates Limited III
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[x] No fee 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:
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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):
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4) Proposed maximum aggregate value of transaction:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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REAL ESTATE ASSOCIATES LIMITED III
CONSENT SOLICITATION STATEMENT
Dear Limited Partner:
We are writing to recommend and seek your consent to amendments to
the agreement of limited partnership (the "Partnership Agreement") of Real
Estate Associates Limited III (the "Partnership"). We believe that these
amendments (the "Amendments") will facilitate the sale of the Partnership's
interests (the "Project Interests") in the local limited partnerships that own
the low income housing projects (the "Projects") in which the Partnership has
invested. We are seeking your consent to amend the Partnership Agreement to:
o eliminate the requirement that the cash proceeds from the sale of an
individual Project or Project Interest must be at least as great as
the tax liability to the limited partners resulting from that sale;
and
o modify the provision in the Partnership Agreement that requires
limited partner approval for a sale of all or substantially all
assets so that a sale of a single Project (or a sale of Project
Interests related to a single Project) does not require limited
partner approval, even if all Projects or Project Interests are
ultimately sold.
We believe that the Amendments are fair to the limited partners, and
we recommend that you "CONSENT" to the Amendments. You should note, however,
that our recommendation is subject to the following conflicts of interest and
risks, as described more fully in the enclosed Consent Solicitation Statement
in the section entitled "THE PROPOSED AMENDMENTS--Risks and Disadvantages of
the Amendments":
o The Amendments will permit the general partners to initiate or
consent to a sale of a Project or Project Interests in transactions
that result in tax liabilities to limited partners in excess of the
cash proceeds arising from such disposition.
o NAPICO, a general partner of the Partnership, has a conflict of
interest in determining when, and at what price, to initiate or
consent to the sale of a Project or Project Interest.
o The general partners are entitled to receive disposition fees upon a
sale of a Project, which they would not receive in a foreclosure,
and therefore have a conflict of interest in recommending the
Amendments.
o Expenses, including disposition fees paid to the general partners,
may consume all or substantially all of the net proceeds from a
disposition.
o The Amendments will permit the general partners to initiate or
consent to a sale of all or substantially all of the Partnership's
assets without limited partner approval if the assets are sold in
multiple transactions that do not involve, and are not part of a
series of related transactions involving, the sale of all or
substantially all of the Projects (or Project Interests) or if the
asset to be sold is a single Project (or the Project Interests
related to a single Project).
We urge you to read carefully the Consent Solicitation Statement
before completing your consent card. Your consent is important. Approval
requires the consent of a majority of the outstanding limited partner
interests. Failure to return your consent card by 5:00 p.m. EST on January 10,
2005 will be treated as a consent to the Amendments. Please sign, date and
return the enclosed consent card as promptly as possible.
We urge you to consult your tax advisor regarding the federal, state,
local and other tax consequences to you of a sale or other disposition of a
Project or Project Interests.
If you have any questions about the Consent Solicitation, please do
not hesitate to contact The Altman Group, the Partnership's consent
solicitation agent, at (800) 217-9608.
Very truly yours,
NATIONAL PARTNERSHIP INVESTMENTS CORP.,
General Partner of Real Estate Associates
Limited III
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of this consent solicitation
statement or determined if this consent solicitation statement is truthful or
complete. Any representation to the contrary is a criminal offense.
This Consent Solicitation Statement and the enclosed form of Consent
Card are first being mailed to limited partners on or about December 20, 2004.
BACKGROUND
The Partnership is a limited partnership that was formed under the
laws of the State of California in 1981. As of October 5, 2004, there were
5,716 units (the "Units") of limited partnership interest outstanding. The
general partners of the Partnership are National Partnership Investments
Corp., a California corporation ("NAPICO"), and National Partnership
Investments Associates, a California limited partnership ("NAPIA"). Pursuant
to an agreement between NAPICO and NAPIA, NAPICO has primary responsibility
for the performance of any duties required to be performed by the general
partners, and NAPICO has the sole and final discretion to manage and control
the business of the Partnership and make all decisions relating to it. The
Partnership has no employees of its own.
The principal business of the Partnership is to invest, directly or
indirectly, in other limited partnerships that own or lease and operate
federal, state and local government-assisted housing projects. The
Partnership's original objectives were to own and operate real estate assets
for investment so as to obtain (i) tax benefits for the limited partners, (ii)
reasonable protection for the Partnership's capital investments, (iii)
potential for appreciation, subject to considerations of capital preservation
and (iv) potential for future cash distributions from operations (on a limited
basis), refinancings or sales of assets. We have been successful in
accomplishing the Partnership's original objectives. Through December 31,
1998, the Partnership had provided the limited partners with cumulative tax
benefits (assuming the maximum applicable individual federal income tax rates
and passive loss limitations) and cash distributions of approximately 115.8%
of their original capital contributions. 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 facilitate the sale of a majority of the Partnership's interests
in real property, subject to the consent of general partners of local limited
partnerships where required.
The Partnership currently holds Project Interests in nine Projects.
The mortgage loans of these Projects are payable to or insured by various
governmental agencies. The Partnership, as a limited partner of the local
limited partnerships, does not exercise control over the activities and
operations of the local limited partnerships that own the Projects. The
general partner of each local limited partnership retains responsibility for
maintaining, operating and managing the Projects. In some cases, the
Partnership has the right to initiate (or to cause the general partner of the
local limited partnership to initiate) the sale of a Project. In other cases,
the sale of a Project requires the consent of the general partner of the local
limited partnership that owns that Project. In some cases, the sale of a
Project requires the Partnership's consent. In some cases, the sale of Project
Interests in a local limited partnership requires the consent of the general
partner of that partnership. As a limited partner, the Partnership's risk of
loss related to any local limited partnership is limited to the amount of its
investment in that partnership.
Currently, one of the nine Projects, Charlotte Lake River Apartments
("Charlotte Lake"), a 553-unit Project in Rochester, New York, is at risk of
foreclosure. Charlotte Lake's mortgage loan is in default, with an aggregate
of $13,828,842 due in unpaid principal and accrued interest as of October 31,
2004. There is substantial doubt that the income from operations of the local
limited partnership that owns Charlotte Lake will be sufficient to cure the
default. As a result, Charlotte Lake is at risk of foreclosure. The local
limited partnership that owns Charlotte Lake has requested the Partnership's
consent to sell Charlotte Lake to an entity unaffiliated with NAPICO or the
Partnership for $250,000 plus the assumption of Charlotte Lake's mortgage
principal and accrued interest of $13,828,842. We estimate that the cash
proceeds from the sale would be $43 per Unit, which we expect to be available
for distribution to limited partners. We estimate that the resulting taxable
gain to a limited partner who acquired Units in the original offering would be
$1,046 per Unit. As a result, the tax liability of the limited partners
resulting from the sale could exceed the cash proceeds from the sale. The
Partnership Agreement currently prohibits a sale under these circumstances.
The first Amendment described below would eliminate this prohibition and allow
the Partnership to consent to the proposed sale of Charlotte Lake.
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THE PROPOSED AMENDMENTS
The full text of the Amendments is attached as Annex A hereto. The
opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to the legality of the
proposed Amendments is attached as Annex B hereto. We are seeking your consent
to amend the Partnership Agreement in the following ways:
Permit Sales Where the Cash Proceeds Would Be Less Than the Tax Liability.
The Partnership Agreement currently prohibits the Partnership from
selling any Project or Project Interest if the cash proceeds from such sale
would be less than the taxes at the then maximum state and federal tax rates.
We are seeking your approval to amend the Partnership Agreement to eliminate
this prohibition. This Amendment would allow the Partnership to initiate or
consent to the sale of a Project or Project Interests in situations where the
cash proceeds are less than the limited partners' tax liability associated
with the sale. We urge you to consult your tax advisor regarding the federal,
state, local and other tax consequences to you of a sale or other disposition
of a Project or Project Interests.
Amend the "Sale of All or Substantially All Assets" Provision.
The Partnership Agreement currently prohibits the Partnership from
selling all or substantially all of the Partnership's assets without limited
partner consent. We are seeking your consent to modify this provision so that
a sale of a single Project (or a sale of Project Interests related to a single
Project) that is not part of a series of related transactions involving the
sale of multiple Projects (or Project Interests related to multiple Projects)
that constitute all or substantially all of the Projects does not require
limited partner approval, even if all Projects (or Project Interests) are
ultimately sold.
Benefits of the Amendments
We believe that the Amendments will benefit the Partnership for the
following reasons:
o The Amendments will give the Partnership greater flexibility in
initiating or consenting to sales of Projects or Project Interests. In
some cases, we believe that the Partnership should be permitted to
initiate or consent to a sale of a Project or Project Interests at a
price that results in cash proceeds less than the resulting tax liability
to the limited partners. The first Amendment would allow such sales
without the delay and expense of soliciting the consent of limited
partners each time such a sale is proposed. We believe that the vast
majority of potential benefits from investment in the Partnership have
been realized, and that most limited partners are not realizing material
benefits from continuing to own their limited partnership interests. The
Partnership is not currently realizing sufficient cash flow from
operating activities to generate distributions to the limited partners
and does not anticipate realizing sufficient cash flow from future
operating activities to enable it to make distributions to limited
partners. The Partnership realized net decreases in cash and cash
equivalents of approximately $904,000 and $102,000 for the years ended
December 31, 2003 and 2002, respectively. Although we review potential
dispositions of Projects or Project Interests on a case-by-case basis, in
light of the limited cash flow currently generated by the Projects, we
believe that it is in the best interest of the Partnership and its
limited partners to facilitate the disposition of Projects and Project
Interests. Accordingly, the Partnership's current business strategy is to
facilitate the orderly disposition of the Projects and Project Interests,
subject to the consent of general partners of local limited partnerships
where required. We believe that the proposed Amendments will improve our
ability to divest the Projects and Project Interests more quickly and, as
a result, may enable us to make distributions of net sales proceeds to
the limited partners sooner (and, potentially, in greater amounts) than
if the Amendments were not made. However, we cannot assure you that
approval of the Amendments will result in larger or more rapid
distributions to the limited partners.
o The Amendments will help reduce the risk of foreclosure (and the
consequent forfeiture of Projects or Project Interests) by facilitating
alternative dispositions. All of the Projects are subject to mortgage
loans. If a Project were foreclosed, it could be forfeited to the
holder(s) of the mortgage note in satisfaction of the indebtedness
evidenced by such note. Foreclosure of the Projects would eliminate any
potential future returns that the limited partners might receive from
continued ownership or more advantageous dispositions of the Projects or
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Project Interests. Additionally, if a Project were foreclosed, limited
partners could recognize a tax liability without any corresponding cash
distribution. Limited partners would often be better off if the Project
or Project Interests were sold to avoid foreclosure, even if the cash
proceeds are less than the limited partners' tax liability associated
with the sale. Such a sale may generate net cash proceeds that the
Partnership could distribute to the limited partners. Such a distribution
would enable the limited partners to partially offset their tax liability
resulting from the sale. The Partnership Agreement currently prohibits
the Partnership from making such a sale. The Amendments would allow the
Partnership to initiate or consent to such sales.
o We believe that current conditions in the real estate markets make this
an opportune time for the Partnership to initiate or consent to
disposition of the Projects or Project Interests. We believe that the
current interest rate environment and the availability of capital for
real estate investments may facilitate the disposition of the Projects or
Project Interests more quickly and provide the Partnership with an
opportunity to maximize the value of the Projects or Project Interests.
o The second Amendment will enable the Partnership to initiate or consent
to transactions without the delay and expense of soliciting the consent
of limited partners each time a transaction is proposed, even if all the
Projects or Project Interests are ultimately sold, as long as the
disposition of all or substantially all of the Projects or Project
Interests is not made in a series of related transactions. We are not
contemplating a specific transaction pursuant to which all or
substantially all of the Partnership's assets will be sold, nor do we
have any plans for the Partnership to initiate or consent to a
transaction or a series of related transactions that would result in the
sale of all or substantially all of the Partnership's assets. Rather, we
intend to facilitate liquidation of the Partnership's portfolio through
transactions that will be considered on an individual basis, subject to
the consent of general partners of local limited partnerships where
required. A sale of all or substantially all of the assets in a series of
related transactions would still require limited partner approval.
Risks and Disadvantages of the Amendments
The following sets forth the risks and disadvantages of the
Amendments. Before deciding whether to consent to the Amendments, you should
carefully consider these factors.
o The Amendments will permit the general partners to initiate or consent to
a sale of Projects or Project Interests in transactions that result in
tax liabilities to limited partners in excess of the cash proceeds
arising from such disposition. The Partnership Agreement currently
prohibits the Partnership from selling a Project or Project Interest if
the cash proceeds from such sale would be less than the tax liability to
the limited partners associated with such sale. The Amendments would
eliminate this prohibition. Therefore, the general partners could
initiate or consent to a sale of a Project or Project Interest in a
taxable transaction that results in tax liabilities for the limited
partners in excess of any cash proceeds received from the sale or
distributed to the limited partners.
o NAPICO, a general partner of the Partnership, is controlled by AIMCO and
has a conflict of interest in determining when, and at what price, to
initiate or consent to the sale of a Project or Project Interest. NAPICO,
a general partner of the Partnership, has fiduciary duties to the
Partnership and its limited partners. The directors of NAPICO have
fiduciary duties to NAPICO's stockholders. NAPICO is indirectly owned by
Apartment Investment and Management Company ("AIMCO"), an NYSE-listed
real estate investment trust (REIT), and AIMCO Properties, L.P., the
operating partnership through which AIMCO conducts its operations. The
interests of the Partnership's limited partners may conflict with those
of AIMCO. AIMCO regularly reviews its portfolio to identify properties
that do not meet its long-term investment criteria. As a REIT, AIMCO will
not recognize any tax liability in the event of a sale of a Project or
Project Interest. In addition, AIMCO will benefit to the extent that
NAPICO receives a disposition fee upon a sale. As a result, there may be
a conflict between AIMCO's objectives and the interests of the
Partnership's limited partners.
o The general partners are entitled to receive disposition fees upon a sale
of a Project, which they would not receive in a foreclosure, and
therefore NAPICO has a conflict of interest in recommending the
Amendments. The Partnership Agreement currently prohibits the Partnership
from selling a Project or Project Interest if the cash proceeds from such
sale would be less than the resulting tax liability to the limited
partners, even if such a sale would avoid foreclosure. The Amendments
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would permit the general partners to initiate or consent to such a sale
and, therefore, make it easier to achieve a sale for which the general
partners may receive disposition fees. They would not receive these fees
in a foreclosure. As a result, NAPICO has a conflict of interest in
recommending the Amendments.
o Expenses, including disposition fees paid to the general partners, may
consume all or substantially all of the net proceeds from a disposition.
The Partnership Agreement entitles the general partners to receive
disposition fees. No such fees may be paid until the limited partners
have received distributions that add up to the greater of (i) their
aggregate capital contributions or (ii) an amount sufficient to satisfy
the cumulative tax liability of the limited partners resulting from all
sales. However, unpaid disposition fees accrue and may be paid on a later
disposition. If such accrued fees are ultimately paid on a later
disposition, they could be great enough to consume all of the net
proceeds from such disposition. There is no equivalent limitation on
immediate payment of other Partnership expenses. Therefore, such other
expenses could consume all of the net proceeds from any disposition. The
Amendments would permit sales for proceeds that are less than the tax
liability to limited partners, which may result in sales in which the
expenses consume a greater portion of the proceeds than would have been
the case without the Amendments.
o The Amendments will permit the general partners to initiate or consent to
a sale of all or substantially all of the Partnership's assets without
limited partner approval if the assets are sold in multiple transactions
that do not involve, and are not part of a series of related
transactions. The Partnership Agreement currently requires the approval
of limited partners holding a majority of the limited partner interests
for a sale of all or substantially all of the Partnership's assets. The
Amendments would permit the general partners to initiate or consent to
the sale of a single Project (or Project Interests related to a single
Project) even if it is the last Project owned or represents substantially
all of the Partnership's assets. As a result, the Amendments would permit
the general partners to initiate or consent to transactions that the
limited partners might not have approved.
WE URGE YOU TO CONSULT YOUR TAX ADVISOR REGARDING THE FEDERAL, STATE,
LOCAL AND OTHER TAX CONSEQUENCES TO YOU OF A SALE OR OTHER DISPOSITION OF A
PROJECT OR PROJECT INTERESTS.
RECOMMENDATION OF NAPICO
After taking into account all of the positive and negative factors
discussed above under "THE PROPOSED AMENDMENTS," NAPICO believes that the
proposed Amendments are advisable and in the best interest of the Partnership
and its limited partners and recommends that you "CONSENT" to the Amendments.
NAPICO has notified the Partnership's other general partner, NAPIA,
of the proposed Amendments. However, NAPIA has not provided a recommendation
for or against the proposed Amendments. If the Amendments are approved by the
limited partners, NAPICO intends to seek NAPIA's concurrence and approval.
FIDUCIARY RESPONSIBILITY; INDEMNIFICATION
California law requires a general partner to adhere to fiduciary duty
standards under which it owes its limited partners a duty of loyalty and a
duty of care. This generally prohibits a general partner from competing with a
partnership in the conduct of the partnership's business on behalf of a party
having an interest adverse to the partnership and requires the general partner
to exercise any right consistent with the obligation of good faith and fair
dealing and free of gross negligence, reckless conduct, intentional misconduct
or known violations of law. A partnership agreement (a) may not eliminate the
duty of loyalty, but, if not manifestly unreasonable, it may either identify
specific activities that do not violate the duty of loyalty or allow for all
of the partners (or some percentage identified in the partnership agreement)
to authorize or ratify, after full disclosure of all material facts, a
specific act or transaction that otherwise would violate that duty and (b) may
contain provisions releasing a partner from liability for actions taken in
good faith and in the honest belief that the actions are in the best interest
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of the partnership, while indemnifying the partner against any good faith
belief that he or she has the power to act. Further, a partner does not
violate such duties merely because the partner's conduct furthers the
partner's own interest.
The general partners are accountable to the Partnership and the
limited partners as fiduciaries and consequently are obligated, among other
things, to exercise good faith and fair dealing toward other members of the
Partnership. The Partnership Agreement provides that the general partners and
their officers, directors, employees, agents, affiliates, subsidiaries and
assigns are entitled to be indemnified for any liability, loss or damage
resulting from any act performed or omitted by them in connection with the
business of the Partnership, provided that, if such liability, loss or claim
arises out of any action or inaction of the general partners, the general
partners must have determined, in good faith, that such course of conduct was
in the best interests of the Partnership and did not constitute fraud,
negligence, breach of fiduciary duty or willful misconduct by the general
partners.
If a claim is made against either or both of the general partners in
connection with their respective actions on behalf of the Partnership with
respect to the Amendments, it is expected that they will seek to be
indemnified by the Partnership with respect to such claims. Any expenses
(including legal fees) incurred by the general partners in defending such
claim shall be advanced by the Partnership prior to the final disposition of
such claims, subject to the receipt by the Partnership of an undertaking by
the relevant general partner to repay any amounts advanced if it is determined
that the relevant general partner's actions constituted fraud, bad faith,
gross negligence or failure to comply with any representation, condition or
agreement contained in the Partnership Agreement. A successful claim for
indemnification, including the expenses of defending a claim made, would
reduce the Partnership's assets by the amount paid.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The general partners own all of the outstanding general partnership
interests of the Partnership, which collectively constitute 1% of the total
interests in the Partnership. The Partnership has no directors or executive
officers of its own. NAPICO is a California corporation owned by AIMCO. None
of the directors or executive officers of NAPICO owns any of the limited
partnership interests of the Partnership. NAPIA is a California limited
partnership, the general partner of which is Nicholas G. Ciriello. Mr.
Ciriello owns 0.45% of the limited partner interests of the Partnership. The
following table sets forth certain information as of October 5, 2004 with
respect to the ownership by any person (including any "group," as that term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934) known to us
to be the beneficial owner of more than 5% of the limited partnership
interests of the Partnership.
Name and Address Number of Units Percent of Class
- ---------------- --------------- ----------------
AIMCO Properties, L.P. (1)....................... 492 8.61%
4582 South Ulster Street Parkway
Suite 1100
Denver, CO 80237
___________________
(1) AIMCO Properties, L.P. is an affiliate of NAPICO.
CONSENT PROCEDURE
Limited Partner Consent
The Partnership Agreement requires the consent of limited partners
holding a majority of the limited partnership interests (a "Majority Consent")
to amend the Partnership Agreement. Under the terms of the Partnership
Agreement, you must be a limited partner or a substituted limited partner to
consent. NAPICO will treat a failure to respond as the equivalent of
concurrence with its recommendation. Therefore, if you do not respond by 5:00
p.m. EST on January 10, 2005, you will be deemed to have consented to the
Amendments. If only one of the Amendments is approved, the Partnership
Agreement will be amended to reflect the Amendment that is approved. Each
Amendment is conditioned upon our obtaining a Majority Consent to such
Amendment. Accordingly, if we do not obtain a Majority Consent to any
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Amendment, there will be no change in the Partnership Agreement and we will
continue to operate in accordance with the terms of the Partnership Agreement
as it is currently written. In accordance with the terms of the Partnership
Agreement, the Partnership will bear the costs of this consent solicitation.
Consent Procedures
The following is an outline of the procedures to be followed if you
want to consent, or withhold your consent, to the proposed Amendments. A form
of Consent Card is included with this Consent Solicitation Statement. You
should complete this Consent Card in accordance with the instructions
contained in this Consent Solicitation Statement in order to give or withhold
your consent to the proposed Amendments. A failure to respond will be treated
as the equivalent of a consent to the Amendments. These procedures must be
strictly followed in order for the instructions of a limited partner as marked
on such limited partner's consent to be effective:
1. A limited partner may give or withhold his or her consent by
delivering the Consent Card only during the period commencing upon the date of
delivery of this Consent Solicitation Statement and continuing until 5:00 p.m.
EST on January 10, 2005 or such later date as may be determined by NAPICO (the
"Solicitation Period").
2. You must return a properly completed, signed and dated Consent
Card in the enclosed postage-paid envelope. If possible, please also fax it to
The Altman Group at fax number (201) 460-0050.
3. You can revoke a previously given consent by signing a
subsequently dated Consent Card that is properly marked to indicate "WITHHOLD
CONSENT" and delivering it to The Altman Group at any time prior to the end of
the Solicitation Period.
4. A limited partner that fails to return a Consent Card, submits a
signed but unmarked Consent Card, or submits a properly completed, signed and
dated Consent Card marked to indicate "CONSENT" will be deemed to have
consented to the Amendments.
If you have any questions about this consent solicitation, please do
not hesitate to contact The Altman Group, the Partnership's consent
solicitation agent, at (800) 217-9608.
No Dissenters' Rights of Appraisal
Under the Partnership Agreement and California law, limited partners
do not have dissenters' rights of appraisal.
SOLICITATION OF CONSENTS
This consent solicitation is being made by NAPICO, a general partner
of the Partnership. NAPICO and its officers, directors and employees may
assist in this consent solicitation and in providing information to limited
partners in connection with any questions they may have with respect to this
Consent Solicitation Statement and the consent procedures. We have retained
The Altman Group to assist with the solicitation of consents, as well as to
assist us with communicating with our limited partners with respect to this
solicitation. Approximately five persons will be utilized by The Altman Group
in their efforts. We expect that The Altman Group will solicit consents by
mail, in person, by telephone, by facsimile and/or by e-mail. In addition to
the Partnership's solicitation by mail, and The Altman Group's efforts, NAPICO
may have certain of its officers, directors and employees solicit, without
additional compensation, consents by mail, in person, by telephone, by
facsimile or by e-mail. Although NAPICO does not currently plan to conduct
active solicitation on the Internet, solicitation materials may be made
available on or through NAPICO's website or through the Internet.
The cost of the consent solicitation will be borne by the
Partnership. The Altman Group's estimated fee is $2,500, plus reasonable
out-of-pocket expenses.
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The Partnership has agreed to indemnify The Altman Group against
certain liabilities and expenses in connection with its engagement, including
certain liabilities under the federal securities laws. The Partnership's plan
to reimburse The Altman Group 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.
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.
OTHER MATTERS
Disclosure Regarding Forward-Looking Statements
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.
Where You Can Find More Information
The Partnership files annual, quarterly and current reports, proxy
statements and other information with the Securities and Exchange Commission
(the "SEC"). You may read and copy any reports, statements or other
information that the Partnership files at the SEC's public reference room at
450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public
reference rooms. The Partnership's public filings are also available to the
public from commercial document retrieval services and at the website
maintained by the SEC at www.sec.gov. Reports, proxy statements and other
information concerning the Partnership also may be inspected at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
The SEC allows the Partnership to incorporate by reference
information into this Consent Solicitation Statement, which means that the
Partnership can disclose important information to you by referring you to
another document filed separately with the SEC. The information incorporated
by reference is deemed to be part of this Consent Solicitation Statement,
except for any information modified or superseded by information contained
directly in the Consent Solicitation Statement or in later filed documents
incorporated by reference into this document. Except as otherwise indicated,
this document incorporates by reference the documents set forth below that the
Partnership has previously filed with the SEC. These documents contain
important information about the Partnership and its financial condition:
o Annual Report of the Partnership on Form 10-KSB for the fiscal year ended
December 31, 2003; and
o Quarterly Reports of the Partnership on Form 10-QSB for the fiscal
quarters ended March 31, 2004, June 30, 2004 and September 30, 2004.
o Current Report of the Partnership on Form 8-K dated November 4, 2004.
The Partnership hereby incorporates by reference into this Consent
Solicitation Statement additional documents that the Partnership may file with
the SEC between the date of this Consent Solicitation Statement and the end of
8
the Solicitation Period. These include periodic reports, such as Annual
Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB and Current Reports
on Form 8-K, as well as proxy statements.
The Partnership may have sent you some of the documents incorporated
by reference, but you can obtain any of them through the Partnership or the
SEC's website described above. Documents incorporated by reference are
available from the Partnership without charge, excluding all exhibits unless
specifically incorporated by reference as exhibits into this Consent
Solicitation Statement.
You may obtain some of the documents about the Partnership at
NAPICO's website, located at www.napico.com, by selecting "Partnership
Financial Information."
The Partnership is not incorporating the contents of the website of
the SEC, the Partnership or any other person into this Consent Solicitation
Statement.
You may obtain documents incorporated by reference into this Consent
Solicitation Statement by requesting them in writing from NAPICO at the
following address:
National Partnership Investments Corp.
6100 Center Drive, Suite 800
Los Angeles, CA 90045
Attention: Investor Services
Telephone (800) 666-6274
You should rely only on the information contained in, or incorporated
by reference into, this Consent Solicitation Statement. The Partnership has
not authorized anyone to provide you with information that is different from
what is contained in this Consent Solicitation Statement. This Consent
Solicitation Statement is dated December 20, 2004. You should not assume that
the information contained in the Consent Solicitation Statement is accurate as
of any date other than that date.
NATIONAL PARTNERSHIP INVESTMENTS CORP.,
General Partner of Real Estate Associates
Limited III
December 20, 2004
9
ANNEX A
AMENDMENT TO THE RESTATED CERTIFICATE AND AGREEMENT
OF LIMITED PARTNERSHIP OF REAL ESTATE ASSOCIATES LIMITED III
This Amendment to the Restated Certificate and Agreement of Limited
Partnership, as amended to date (the "Partnership Agreement"), of Real Estate
Associates Limited III, a California limited partnership (the "Partnership"),
is made and entered into as of __________ ___, 2005, by and among National
Partnership Investments Corp., a California corporation ("NAPICO"), as general
partner of the Partnership, National Partnership Investments Associates, a
California limited partnership ("NAPIA"), as general partner of the
Partnership, and NAPICO, as attorney-in-fact for the limited partners of the
Partnership.
WHEREAS, NAPICO, NAPIA and limited partners owning a majority of the
outstanding limited partnership interests of the Partnership have approved
this Amendment.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Section 9.3(d) of the Partnership Agreement is hereby amended to
read in its entirety as follows:
"(d) upon any sale or refinancing, the Partnership
shall not reinvest any proceeds thereof;"
2. Except as specifically amended hereby, the terms, covenants,
provisions and conditions of the Partnership Agreement shall remain unmodified
and continue in full force and effect and, except as amended hereby, all of
the terms, covenants, provisions and conditions of the Agreement are hereby
ratified and confirmed in all respects.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as
of the date first above written.
NATIONAL PARTNERSHIP INVESTMENTS CORP.,
as General Partner
By: ________________________________________
Jeffrey H. Sussman,
Senior Vice President, General Counsel and
Secretary
NATIONAL PARTNERSHIP INVESTMENTS ASSOCIATES,
as General Partner
By: ________________________________________
Nicholas G. Ciriello,
General Partner
NATIONAL PARTNERSHIP INVESTMENTS CORP.,
as Attorney-in-Fact for the Limited Partners
By: ________________________________________
Jeffrey H. Sussman,
Senior Vice President, General Counsel
and Secretary
A-1
AMENDMENT TO THE RESTATED CERTIFICATE AND AGREEMENT
OF LIMITED PARTNERSHIP OF REAL ESTATE ASSOCIATES LIMITED III
This Amendment to the Restated Certificate and Agreement of Limited
Partnership, as amended to date (the "Partnership Agreement"), of Real Estate
Associates Limited III, a California limited partnership (the "Partnership"),
is made and entered into as of __________ ___, 2005, by and among National
Partnership Investments Corp., a California corporation ("NAPICO"), as general
partner of the Partnership, National Partnership Investments Associates, a
California limited partnership ("NAPIA"), as general partner of the
Partnership, and NAPICO, as attorney-in-fact for the limited partners of the
Partnership.
WHEREAS, NAPICO, NAPIA and limited partners owning a majority of the
outstanding limited partnership interests of the Partnership have approved
this Amendment.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Section 9.3(t) of the Partnership Agreement is hereby amended to
read in its entirety as follows:
"(t) the Partnership shall not sell all or
substantially all of the Partnership's assets in a single
transaction or a series of related transactions without
obtaining the consent of Limited Partners owning a majority
of the outstanding Limited Partnership Interests; provided,
however, that the foregoing will not apply to a sale of a
single Project (or a sale of Project Interests related to a
single Project) that is not part of a series of related
transactions involving the sale of multiple Projects (or
Project Interests related to multiple Projects) that
constitute all or substantially all of the Projects."
2. Except as specifically amended hereby, the terms, covenants,
provisions and conditions of the Partnership Agreement shall remain unmodified
and continue in full force and effect and, except as amended hereby, all of
the terms, covenants, provisions and conditions of the Agreement are hereby
ratified and confirmed in all respects.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as
of the date first above written.
NATIONAL PARTNERSHIP INVESTMENTS CORP.,
as General Partner
By: ________________________________________
Jeffrey H. Sussman,
Senior Vice President, General Counsel
and Secretary
NATIONAL PARTNERSHIP INVESTMENTS ASSOCIATES,
as General Partner
By: ________________________________________
Nicholas G. Ciriello,
General Partner
NATIONAL PARTNERSHIP INVESTMENTS CORP.,
as Attorney-in-Fact for the Limited Partners
By: ________________________________________
Jeffrey H. Sussman,
Senior Vice President, General Counsel
and Secretary
A-2
ANNEX B
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, California 90071-3144
December 20, 2004
Real Estate Associates Limited III
c/o National Partnership Investments Corp.
6100 Center Drive, Suite 800
Los Angeles, CA 90045
Re: Proposed Amendments to Agreement of Limited Partnership
Ladies and Gentlemen:
We have acted as special counsel to Real Estate Associates Limited
III, a California limited partnership (the "Partnership"), in connection with
proposed amendments (the "Proposed Amendments") to the Restated Certificate
and Agreement of Limited Partnership, as amended to date (the "Partnership
Agreement"), of the Partnership. The Proposed Amendments are attached as
Exhibit I hereto. This opinion is being delivered pursuant to Section 14.1 of
the Partnership Agreement.
In our examination we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as facsimile, electronic, certified or photostatic
copies, and the authenticity of the originals of such copies. As to any facts
material to this opinion that we did not independently establish or verify, we
have relied upon statements and representations of the Partnership and its
general partners, officers of such general partners and other representatives
and of public officials, including the facts and conclusions set forth
therein.
In rendering the opinions set forth herein, we have examined and
relied on originals or copies of the following:
(a) the Proposed Amendments;
(b) the Partnership Agreement, certified by Jeffrey H. Sussman, the
Secretary of National Partnership Investments Corp., a California corporation
("NAPICO"), general partner of the Partnership;
(c) the Agreement of the General Partners, dated as of June 1, 1984,
between NAPICO and National Partnership Investments Associates, a California
limited partnership ("NAPIA"), certified by Jeffrey H. Sussman, the Secretary
of NAPICO;
(d) the certificate of Jeffrey H. Sussman, the Secretary of NAPICO,
dated the date hereof;
(e) resolutions of the Board of Directors of NAPICO, adopted on
December 20, 2004, relating to the Proposed Amendments;
(f) the Certificate of Limited Partnership of the Partnership, as
amended to date and certified by the Secretary of State of the State of
California;
B-1
(g) a certificate, dated October 12, 2004, of the Secretary of State
of the State of California, as to the Partnership's existence and good
standing in the State of California; and
(h) such other documents as we have deemed necessary or appropriate
as a basis for the opinions set forth below.
We express no opinion as to the laws of any jurisdiction other than
the Uniform Limited Partnership Act, as in effect in the State of California,
and the California Revised Limited Partnership Act.
Based upon the foregoing and subject to the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that the Proposed Amendments, if duly authorized and approved by NAPIA
and the limited partners of the Partnership in accordance with the terms of
the Partnership Agreement, will not contravene any provision of the Uniform
Limited Partnership Act, as in effect in the State of California, or the
California Revised Limited Partnership Act.
In rendering the foregoing opinion, we have assumed, with your
consent, that the Partnership is validly existing and in good standing as a
limited partnership under the laws of the State of California.
This opinion is being furnished only to you in connection with the
Proposed Amendments and is solely for your benefit and is not to be used,
circulated, quoted or otherwise referred to for any other purpose or relied
upon by, or assigned to, any other person or entity for any purpose without
our prior written consent. Notwithstanding the foregoing, you (and each of
your employees, representatives or other agents) may disclose this opinion (i)
to limited partners of the Partnership and (ii) to any and all persons,
without limitation of any kind, to the extent such disclosure may be relevant
to understanding the tax treatment or tax structure of the Proposed
Amendments; provided that any and all such persons to whom you make such
disclosure may not rely upon this opinion unless otherwise permitted hereby.
Very truly yours,
Skadden, Arps, Slate, Meagher & Flom LLP
B-2
CONSENT SOLICITED BY
NATIONAL PARTNERSHIP INVESTMENTS CORP.,
A GENERAL PARTNER OF
REAL ESTATE ASSOCIATES LIMITED III
NATIONAL PARTNERSHIP INVESTMENTS CORP., A GENERAL PARTNER OF THE
PARTNERSHIP, RECOMMENDS THAT YOU CONSENT TO EACH OF THE PROPOSALS BELOW.
The undersigned, a limited partner of REAL ESTATE ASSOCIATES LIMITED
III (the "Partnership"), acting with respect to all of the limited partnership
interests held by the undersigned on the date hereof, hereby consents,
withholds consent or abstains, with respect to the proposals specified below
and more fully described in the Real Estate Associates Limited III Consent
Solicitation Statement dated December 20, 2004 (the "Consent Solicitation
Statement"). All terms used but not defined herein shall have the meanings
ascribed to such terms in the Consent Solicitation Statement. A failure to
execute and return this consent card by 5:00 p.m. EST on January 10, 2005 will
be deemed a consent to each of the proposals set forth below. A signed but
unmarked consent card will be deemed a consent to each of the proposals set
forth below.
_______________________________________________________________________________
PROPOSAL 1. Amend Section 9.3(d) of the Partnership Agreement, as described in
the Consent Solicitation Statement, to allow the sale of Projects or Project
Interests for less than the amount necessary to cover the resulting tax
liability.
|_| CONSENT |_| WITHHOLD CONSENT |_| ABSTAIN
_______________________________________________________________________________
PROPOSAL 2. Amend Section 9.3(t) of the Partnership Agreement, as described in
the Consent Solicitation Statement, so that a sale of a single Project (or a
sale of Project Interests related to a single Project) that is not part of a
series of related transactions involving the sale of multiple Projects (or
Project Interests related to multiple Projects) that constitute all or
substantially all of the Projects, does not require limited partner approval,
even if all Projects or Project Interests are ultimately sold.
|_| CONSENT |_| WITHHOLD CONSENT |_| ABSTAIN
_______________________________________________________________________________
PLEASE SIGN, DATE AND FAX THIS CONSENT CARD TO (201) 460-0050, ATTN: JASON
VINICK, AND MAIL THIS CONSENT CARD TODAY IN THE ENCLOSED POSTAGE PAID
ENVELOPE. IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE, PLEASE CALL THE ALTMAN
GROUP AT (800) 217-9608.
Please sign your name below. If your partnership interests are held jointly,
each limited partner should sign a Consent Card. 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
authorized person.
Dated: _________________________
Signature:______________________ Signature:___________________________
Name:___________________________ Name:________________________________
Title:__________________________ Title:_______________________________
Telephone Number:_______________