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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
Pursuant to Section 14(d)(4) of the Securities Exchange Act of 1934
MARRIOTT HOTEL PROPERTIES II
LIMITED PARTNERSHIP
(Name of Subject Company)
MacKenzie Patterson Special Fund 2, L.P.
(Name of Person(s) Filing Statement)
Units of Limited Partnership Interest
(Title of Class of Securities)
None
(CUSIP Number of Class of Securities)
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C. E. Patterson Paul J. Derenthal, Esq.
MacKenzie Patterson, Inc. Derenthal & Dannhauser
1640 School Street, Suite 100 455 Market Street, Suite 1600
Moraga, California 94556 San Francisco, California 94105
(510) 631-9100 (415) 243-8070
(Name, Address and Telephone Number of Persons Authorized to Receive
Notices and Communications on Behalf of Persons Filing Statement)
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Item 1. Security and Subject Company
The name of the subject company is Marriott Hotel Properties II Limited
Partnership, a Delaware limited partnership (the "Partnership"). The address of
the Partnership's principal executive offices is 10400 Fernwood Road, Bethesda,
MD 20817. The class of equity securities to which this statement relates is the
units of limited partnership interest of the Partnership (the "Units").
Item 2. Tender Offer of the Bidder
This Solicitation/Recommendation Statement (this "Statement") relates to
the offer by MHP II Acquisition Corp. (the "Purchaser"), a Delaware corporation
and wholly owned indirect subsidiary of Host Marriott Corporation, a Delaware
corporation ("Parent"), to purchase all outstanding Units at a price of $125,000
per Unit, net to the seller in cash without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated April 18,
1996 (the "Offer to Purchase"), and the related Letter of Transmittal including
supplements thereto, copies of which are attached as Exhibits (a)(1) and (a)(2)
to the Schedule 14D-1 (collectively with all other exhibits, the "Schedule
14D-1") filed by the Purchaser and Parent with the Securities and Exchange
Commission on April 18, 1996.
Item 3. Identity and Background
(a) This Statement is filed by MacKenzie Patterson Special Fund 2, L.P.
("MPSF2"), a holder of Units, and its general partner, MacKenzie Patterson, Inc.
("MPI"). MPSF2 and MPI are located at 1640 School Street, Suite 100, Moraga,
California 94556. MPSF2 and MPI are not related in any way with MacKenzie
Partners, Inc., the information agent engaged by the Purchaser for the Offer to
Purchase.
(b) No contract, agreement, arrangement or understanding exists between
MPSF2 and MPI, on the one hand, and the Purchaser or the Partnership. MPSF2
believes that a material conflict exists between the interests of the
Partnership and its limited partners, on the one hand, and Parent and the
Purchaser, on the other. The objective of the Partnership and its limited
partners is to own and operate the assets of the Partnership for a limited
period, anticipated to be through 1998, and thereafter to dispose of such assets
at the most desirable price available. The business of Parent, and its apparent
objective, is to own and operate hotels such as the assets of the Partnership,
and to finance such operation at the lowest practicable costs. The Offer to
Purchase, if consummated, would permit Parent to gain effective control of the
hotel assets owned by Partnership for the indefinite future without buying the
assets on terms negotiated at arm's length with the Partnership. MPSF2 has filed
a class action lawsuit seeking to enjoin the tender offer for the same reasons,
discussed in Exhibit 1 hereto, that it urges its fellow limited partners to
reject the Offer to
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Purchase.
Item 4. The Solicitation or Recommendation
(a) MPSF2 and MPI are recommending that the limited partners of the
Partnership reject the Offer to Purchase.
(b) The reasons for the recommendation are set forth in Exhibit 1 hereto
and are incorporated herein by reference.
Item 5. Persons Retained, Employed or to be Compensated
MPSF2 has not engaged any person on its behalf to make the recommendations
described herein.
Item 6. Recent Transactions and Intent with Respect to the Securities
(a) Since March 1, 1996, MPSF2 and MPI have purchased 16.5 units of limited
partnership interest of the Partnership in individual privately negotiated
transactions with unitholders for prices ranging from $102,500 to $106,500 per
unit.
(b) The person referred to in Item 6(a) does not intend to tender to the
Purchaser the Units which are held of record or beneficially owned by such
person. Nevertheless, MPSF2 may tender up to one full Unit.
Item 7. Certain Negotiations and Transactions by the Subject Company
(a)(1) Not applicable.
(a)(2) Not applicable.
(a)(3) Not applicable.
(a)(4) Not applicable.
(b) Not applicable.
Item 8. Additional Information
None.
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Item 9. Material to be Filed as Exhibits
Exhibit No.
Exhibit 1 Notice to Unitholders of Marriott Hotel Properties II
Limited Partnership from MacKenzie Patterson, Inc.
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SIGNATURE
After reasonable inquiry, and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: May 3, 1996 MACKENZIE PATTERSON SPECIAL FUND 2, L.P.
a California Limited Partnership
By: MACKENZIE PATTERSON, INC., General
Partner
By: _/S/ VICTORIAANN TACHEIRA___________
Victoriaann Tacheira, Vice President
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EXHIBIT 1
Notice to Unitholders
of
MARRIOTT HOTEL PROPERTIES II LIMITED PARTNERSHIP
from
MacKENZIE PATTERSON, INC.
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Notice to Unitholders
of
MARRIOTT HOTEL PROPERTIES II LIMITED PARTNERSHIP
from
MacKENZIE PATTERSON, INC.
On April 18, 1996, MHP II Acquisition Corp. ("the Purchaser"), an affiliate
of Marriott MHP II Corporation (the "General Partner") and of Host Marriott
Corporation ("Host"), commenced a tender offer ("the Offer") to purchase all the
outstanding units of Marriott Hotel Properties II Limited Partnership ("MHP
II"). Investment funds managed by MacKenzie Patterson, Inc. ("MPI") own units of
MHP II. MPI believes the proposed transaction is neither in the best interests
of those partners who might tender nor those who choose not to tender. We think
the transaction should not be completed, and have filed a class action law suit
to enjoin the Offer.
While MPI believes that Host has the right to offer to purchase units of
MHP II, Host and its subsidiary have a fiduciary duty to assure that MHP II is
operated to generate maximum returns to the limited partners. We believe that
the terms of the Offer would permit Host to acquire effective ownership of the
partnership's hotels for a price substantially less than Host would pay to
acquire the Hotels from MHP II on terms negotiated by a fiduciary charged with
protecting the independent interests of the unitholders of MHP II. MPI also
believes that, because of the fiduciary duty owed by Host to the limited
partners of MHP II, the current offer is inadequate or inappropriate in several
other respects.
Coercive Nature of the Offer
MPI believes that the Offer should not coerce, or otherwise pressure,
limited partners into tendering their units. MPI believes the following issues
with respect to the Offer to be relevant to this objection:
1) The purpose of the Offer is for Host to acquire control of the
Partnership, and as a consequence, control of the Hotels.
2) The Offer documents contain a series of statements that MPI believes
have the effect of coercing the limited partners into tendering their units.
These statements include the following (excerpted from the Tender Offer
materials):
The effect of the amendments submitted for limited partner vote with
respect to transactions not involving the General Partner and its affiliates
would be to permit (Host), through the General Partner and the Purchaser, to
control all matters affecting the Partnership (except for Interested
Transactions) that require the consent of limited partners holding a majority of
the Units (emphasis added). These matters include the following (certain items
selected):
(vi) making any election to continue beyond its term, discontinue or
dissolve the Partnership;
(vii) causing the Partnership to incur any debt that would result in
refinancing proceeds, unless such refinancing proceeds are distributed to the
partners in the same taxable year in which the Partnership incurred such
liability;
(viii) causing the Partnership to merge or consolidate with any other
entity;
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(ix) issuing additional Units of the Partnership; or...
In addition, the non-tendering Limited Partners are informed that they will
lose thousands of dollars per year (through 2001) of depreciation deductions
because of the transfer of the Units to the Purchaser. (See page 33, Tender
Offer documents.)
3) Thus, the effect of the Offer and Amendments, if successful, will be to
place non- tendering unitholders at the whim of Host, while simultaneously
reducing substantially the value of the non-tendering unitholders' interests.
Inadequate Information
MPI believes that Host should provide limited partners with all available
information regarding MHP II and the Hotels so that limited partners will have
the same information upon which to make their decision as was available to Host
in formulating the Offer. While Host engaged American Appraisal Associates, Inc.
("AAA") to render its opinion as to the fairness of the Offer, Host has
indicated it did not review the valuation provided by AAA, nor did Host provide
its own valuation of the units. MPI believes that, as an affiliate of the
General Partner of MHP II, which has a fiduciary duty to the limited partners,
Host should provide its own internal valuation of the units and disclose its
method of valuation. In the absence of such valuation, Host should render an
opinion as to the validity of the valuation provided by AAA. Host's failure to
provide such information puts the limited partners at a significant disadvantage
in evaluating the Offer. It seems inconceivable that Host, involved in owning,
financing and operating a vast number of hotels, and proposing to invest in
excess of $93 million in purchasing MHP II units, has not performed an analysis
of the value of the underlying hotels, or has no opinion on such valuation.
MPI has conducted a cursory review of AAA's opinion and finds it to be
logically flawed as well as inadequately disclosed (see page 19, Tender Offer
documents). MPI's most obvious questions concerning AAA's opinion are the
following points:
1) AAA's low range valuation of $65,000 per unit lacks credibility in light
of the Partnership's Net Current Assets (Net Cash Assets), which does not
include any of the hotel properties, of over $67,000 per unit.
2) AAA's "Base Case" (mid-range) valuation of $104,000 per unit implies a
value for the Partnership's hotel interests of approximately $298.8 million.
This value directly conflicts with Host's statement that it believes the hotels
have increased in value from the Partnership's original purchase price of $319.5
million.
For the reasons discussed above, MPI and its affiliates recommend that its
fellow limited partners reject the Offer as extended by the Purchaser. MPI and
its affiliates intends to hold their units and to vote against the proposed
amendments. MPI is hopeful that the limited partners' class-action suit brought
against Host will result in Host providing its own internal valuation of the
assets and its presentation of an alternative liquidation plan for the
partnership or a higher tender offer price. Limited partners that have already
tendered their units to Host may withdraw such tender at any time until May 15.
Limited partners are encouraged to contact MacKenzie Patterson, Inc., at (510)
631-9100. For information on withdrawal of tendered units, Marriott MHP Two
Corporation Investor Relations can be reached at (301) 380-2070.
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MACKENZIE PATTERSON, INC.
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