Exhibit (a)(5)
SUPPLEMENT
TO
OFFER TO PURCHASE FOR CASH
UP TO 13,120 LIMITED PARTNERSHIP UNITS
OF
MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP
AT
$400 PER UNIT
BY
MADISON LIQUIDITY INVESTORS 114, LLC
(the "Purchaser")
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD HAS BEEN EXTENDED,
AND WILL EXPIRE AT 5:00 P.M., EASTERN DAYLIGHT TIME, ON OCTOBER 12, 2001, UNLESS
FURTHER EXTENDED.
This Supplement provides additional information concerning the
Purchaser's Offer, dated August 31, 2001, to purchase limited partnership Units
in Marriott Residence Inn Limited Partnership, a Delaware limited partnership
(the "Partnership"). The Offer is made pursuant to the Purchaser's Offer to
Purchase of that date, as supplemented hereby, and this Supplement should be
read in conjunction therewith.
Unitholders are urged to read carefully this Supplement and the Offer
to Purchase, including the accompanying Agreement of Assignment and Transfer,
before deciding whether to tender their Units.
Unitholders should be aware of the following:
Consideration for Units. The Purchaser is offering $400 per Unit, in
cash, reduced by any cash distributions made or declared on or after August 31,
2001, with interest at the rate of 7% per annum from the Expiration Date to the
date of payment, upon the terms and subject to the conditions set forth in the
Offer to Purchase and in the related Agreement of Assignment and Transfer and
accompanying documents, as each may be supplemented or amended from time to
time. If, prior to the Expiration Date, the Purchaser increases the
consideration offered to Unitholders pursuant to the Offer, such increased
consideration will be paid with respect to all Units that are purchased pursuant
to the Offer, whether or not such Units were tendered prior to such increase in
consideration.
As explained in the Offer to Purchase, the Purchaser established the
Offer Price based on its analysis of the Partnership's assets and estimates of
when the Partnership may liquidate. This analysis yielded a estimated value of
approximately $144 million for the Partnership's properties and, after assuming
the use of the Partnership's cash and equivalents to fund $47 million of future
capital expenditures as publicly estimated by the Partnership, and subtracting
mortgage debt and the General Partner's one percent share of sales and
refinancing proceeds, an estimated value of approximately $40 million, or $614
per Unit. For the reasons set forth therein, however, the Purchaser does not
believe that this estimated per Unit value is an accurate reflection of what an
investor might receive today or in future periods, in respect of a Unit. In
addition, as explained in the Offer to Purchase, the principals of the Purchaser
own a small percentage of outstanding Units which were acquired between April
1998 and March 1999 in an unregistered tender offer at a price of $400 per Unit
(which took place prior to the distribution resulting from the class action
litigation of $152 per Unit that was paid to Unitholders during the fourth
quarter of 2000, and, adjusted for such distribution, was at a net price of $248
per Unit in comparison to the current Offer), and the Purchaser has contractual
arrangements to purchase an additional 2,522 Units pursuant to tender offers
made in May and July of this year at a price of $300 per Unit. In consideration
of the limited and inefficient nature of the
market for the Units, the Purchaser does not believe that the prices paid for
previously acquired Units should be relied upon as a complete and accurate
representation as to the current fair market value of the Units.
After completion of its prior offers of earlier this year, the
Purchaser reevaluated its assessment of the Partnership and its ability to
persuade Unitholders to consider its offer. It reviewed its previous analysis of
the Partnership's financial condition and prospects, taking into consideration
the Partnership's second quarter results reported in its most recent Form 10-Q
and its announcement of having retained a financial advisor to pursue a possible
sale. The Purchaser confirmed that its previous estimate of net asset value for
the Units remained plausible, and that acquisition of additional Units at a $400
offer price would still be consistent with its investment objectives respecting
the Partnership. Its determination to offer $400 per Unit in this Offer as
opposed to $300 in its offers of earlier this year was based on its judgment of
what minimally adequate price might induce an acceptable number of Unitholders
to tender, based on its general experience in the industry and its experience
with its previous offers for Units of the Partnership, and what minimum return
it requires on such an investment.
The Purchaser has not definitively determined whether or not to make
additional purchases after completion of this Offer. It does not, however,
intend to make additional purchases at a higher price in the absence of a
material change in the Partnership's assets, financial condition or prospects,
whether resulting from a specific event or transaction relating to the
Partnership or from trends in industry or general market or economic conditions.
If such a change occurs, the Purchaser would reevaluate the price at which it
believes Unitholders would tender, taking into consideration its estimate at
that time of the Partnership's ultimate value, the risks associated with
achieving that value, other estimates of Unit value as reflected in secondary
market trading, other third-party tender offers or proposed business
combinations or other strategic transactions, and prevailing investment and
business conditions.
The Partnership, in its Schedule 14D-9 Solicitation/Recommendation
Statement, dated September 14, 2001, in response to the Offer, has disclosed
that as a result of having retained a financial advisor to pursue a possible
sale, "the Partnership has begun exclusive discussions with one potential
acquirer who is currently conducting additional due diligence." The Schedule
14D-9 also discloses that "the proposed per Unit purchase price submitted by
several potential acquirers as a result of the solicitation process (which
proposals were subject to additional due diligence and negotiation by such
potential acquirers), exceeded the $400 per Unit currently offered by the
Purchaser." The Schedule 14D-9 does not, however, disclose the price negotiated
by the exclusive potential acquirer, or whether such price is greater or less
than the $400 per Unit currently offered by the Purchaser. If a transaction were
to be presented to Unitholders for approval, the Purchaser would be able to vote
on the transaction in proportion to its ownership interest in the Partnership at
that time.
The Purchaser continues to believe, although it cannot guarantee, that
the Offer may be an attractive one for many Unitholders, based on (i) the Offer
Price being greater than current and recent historical secondary market prices,
(ii) the Partnership's historical operations and distribution performance, (iii)
the nature and condition of the Partnership's properties and the future capital
expenditure obligations they will require, (iv) the terms of the Partnership's
indebtedness and the long-term management agreement encumbering such properties
and (v) the financial and record-keeping benefits that will accrue to a
Unitholder whose interest is purchased.
Expiration Date. The Expiration Date of the Offer has been extended to
5:00 p.m., New York Time, on October 12, 2001 or such other date to which this
Offer may be extended. The Purchaser is offering to pay interest on the Offer
Price because the Partnership's Limited Partnership Agreement, which provides,
among other things, that assignments become effective on the first day of a
fiscal quarter of the Partnership, will in all likelihood delay payment for
Units accepted for payment until after the first day of the Partnership's 2002
first fiscal quarter (approximately January 1, 2002). The Purchaser believes the
Partnership's practice is to provide confirmation of transfers only after they
have actually taken place, which may be some days or one or more weeks after the
date of transfer. The Purchaser will pay for Units accepted for payment as
soon as possible after receipt of confirmation of transfers.
Withdrawal Rights. You may withdraw tendered Units at any time until
the Offer expires, and, if and to the extent tendered Units have not been
accepted for payment by October 27th (the 60th day from the Offer Date) at any
time thereafter. We will be deemed to have accepted your Units, subject to the
terms and conditions of the Offer, on the Expiration Date unless we terminate
the Offer. If and to the extent we do not accept all or any of your Units, we
will return them promptly to you.
Other Terms. Except as modified as described above, the terms of the
Offer and other information set forth in the Offer to Purchase continue in full
force and effect.
September 27, 2001
MADISON LIQUIDITY INVESTORS 114, LLC