SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Materials Under Rule 14a-12
Prometheus Income Partners, a California limited partnership
(Name of Registrant as Specified in Its Charter)
Everest Investors 12, LLC
Everest Properties II, LLC
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transactions applies:
...........................................................................
(2) Aggregate number of securities to which transactions applies:
...........................................................................
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11.
...........................................................................
(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:
Everest
199 S. Los Robles Ave., Suite 440
Pasadena, CA 91101
Tel: (626) 585-5920
Fax: (626) 585-5929
July 2, 2002
TO THE LIMITED PARTNERS OF
PROMETHEUS INCOME PARTNERS
RE: Solicitation Statement
Dear Fellow Limited Partner:
Everest Investors 12, LLC, and Everest Properties II, LLC, each a
California limited liability company (collectively, "Everest"), are each a
limited partner of Prometheus Income Partners, a California limited partnership
(the "Partnership"). Everest will soon be sending you a proxy statement asking
you to give Everest your proxy to vote your limited partnership units at the
meeting of the limited partners of the Partnership at 10:00 a.m., local time, on
July 24, 2002, at Villa Hotel, 4000 South El Camino Real, San Mateo, California
94403.
EVEREST STRONGLY RECOMMENDS THAT YOU VOTE AGAINST THE PROPOSALS BY THE
GENERAL PARTNER, and will seek your proxy to do so on your behalf, for the
following reasons:
-On June 24, 2002, the Partnership received a superior offer for the
Partnership's assets, from a well-qualified and credible purchaser. Aspen
Square Management, Inc. ("Aspen") has offered $54,500,000 for the
Partnership's properties (the "Superior Offer"), $1,300,000 more than the
deal offered by the general partner's affiliate (the "General Partner's
Offer"). Also, the Superior Offer includes no brokerage commission or
disposition fee for the Partnership, which eliminates $1,600,000 of selling
expenses. The Superior Offer is effectively $2,900,000 higher than the
General Partner's Offer. Please see the enclosed copy of Aspen's offer.
-Limited partners should receive about $152 per Unit more from the Superior
Offer than they would receive from the General Partner's Offer. Everest
estimates that, if the properties were sold pursuant to the Superior Offer,
limited partners would receive approximately $1,888 per unit of limited
partnership interest ("Unit"), which is $152 per unit more than the
expected proceeds of the General Partner's Offer.
-The Superior Offer was made by a party that is not affiliated with the
Partnership, its general partner, or Everest. Limited partners can be more
confident that the Partnership is receiving the full, fair market value for
the Partnership's properties. The general partner would be free to
negotiate and close a sale pursuant to the Superior Offer without the
conflicts of interest it has with the General Partner's Offer, and
therefore should better represent the interests of the Partnership and your
interests as a limited partner. The conditions of the Superior Offer are
minimal and the time-frame for completion of the sale pursuant to the
Superior Offer is comparable to the General Partner's Offer.
-The General Partner's Offer would divert to the general partner equity
that belongs to the limited partners. The General Partner's Offer assumes
that the Partnership's debt does not change after March 31, 2002, while in
reality the Partnership continues to make mortgage payments, including
payments of principal that increase the Partnership's equity in its
properties, and generate cash flow. Pursuant to the General Partner's
Offer, the benefit of such principal payments and net cash flow goes to the
general partner's affiliated purchaser; while under the Superior Offer, the
benefit of such increased equity and net cash flow goes to the limited
partners.
There are other investment considerations which should be weighed
carefully. You will receive from Everest a Proxy Solicitation Statement
containing more information concerning Everest's solicitation, the reasons for
Everest's recommendations, and other considerations. Please see the Appendix for
more information about the parties making this solicitation.
LIMITED PARTNERS ARE ADVISED TO READ EVEREST'S PROXY SOLICITATION STATEMENT
AND THE GENERAL PARTNER'S PROXY STATEMENT CAREFULLY. The Proxy Statement of
Prometheus Development Co., Inc., the general partner of the Partnership, is
available for free from the website of the Securities and Exchange Commission:
www.sec.gov (select "Filings and Forms (EDGAR)" from the home page and follow
instructions to search for "Prometheus Income Partners"). This solicitation,
and, when filed, Everest's Proxy Solicitation Statement and any other additional
soliciting materials will also be available for free at the same website.
There is no benefit to voting early, so if you have not yet voted, please
wait to make your decision until you receive our proxy solicitation statement.
IF YOU HAVE ALREADY VOTED, YOU CAN CHANGE YOUR VOTE AS SPECIFIED IN THE GENERAL
PARTNER'S PROXY STATEMENT. In addition, you will be able to change your vote by
giving your proxy to Everest when you receive our complete Proxy Solicitation
Statement with a proxy form.
Sincerely,
EVEREST PROPERTIES II, LLC
APPENDIX
INFORMATION CONCERNING EVEREST
This Solicitation is being made by Everest Investors 12, LLC ("Everest
Investors 12"), and Everest Properties II, LLC ("Everest Properties"), each a
California limited liability company. Everest Investors 12 owns 645 Units and
Everest Properties owns 304 Units of the Partnership (collectively, 5% of the
outstanding Units). They intend to vote their Units against the general
partner's proposals.
Everest Investors 12 was formed in 1999 for the purpose of investing in
limited partnerships similar to the Partnership, and is managed by Everest
Properties, which manages all of the business affairs of Everest Investors 12.
Everest Properties was formed in 1996 and manages investments in real estate,
cable and equipment leasing limited partnerships, and conducts other investment
banking activities regarding real estate. The principal office of Everest
Properties is 199 South Los Robles Avenue, Suite 440, Pasadena, CA 91101;
telephone (626) 585-5920.
The management of Everest Properties has significant experience in the real
estate industry and with limited partnerships like the Partnership. Below are
resumes for the members of the executive management of Everest Properties.
W. Robert Kohorst. Mr. Kohorst is the President of Everest Properties and
its affiliates. He is a lawyer by profession. From 1984 through 1990, Mr.
Kohorst was the President of the Private Placement Group for Public Storage,
Inc., a national real estate syndicator. Mr. Kohorst's responsibilities included
all structuring, marketing, investor services and accounting services for
private placement syndications for Public Storage, Inc., and its affiliates.
Upon leaving Public Storage, Inc. in 1990, Mr. Kohorst was the Chief Executive
Officer and principal of two businesses, Tiger Shark Golf, Inc., a golf
equipment manufacturer, and Masquerade International, Inc., a manufacturer of
costumes. In 1991 Mr. Kohorst co-founded KH Financial, Inc., which has been
engaged in the acquisition of general partner interests, real estate companies
and related assets. Mr. Kohorst has been the President of KH Financial, Inc.
from its inception to the present. Mr. Kohorst holds a Juris Doctor from the
University of Michigan and a Bachelor of Science degree in accounting from the
University of Dayton.
David I. Lesser. Mr. Lesser is the Executive Vice President of Everest
Properties. He is a lawyer by profession. From 1979 through 1986, Mr. Lesser
practiced corporate and real estate law with Kadison, Pfaelzer, Woodard, Quinn &
Rossi and Johnsen, Manfredi & Thorpe, two prominent Los Angeles law firms. From
1986 through 1995, Mr. Lesser was a principal and member of Feder, Goodman &
Schwartz and its predecessor firm, co-managing the firm's corporate and real
estate practice. Between 1990 and 1992, Mr. Lesser was counsel to Howard, Rice,
Nemerovski, Robertson, Canady & Falk. Mr. Lesser is also a Vice President of KH
Financial, Inc. Mr. Lesser holds a Juris Doctor from Columbia University and a
Bachelor of Arts degree from the University of Rochester.
Christopher K. Davis. Mr. Davis is a Vice President and the General Counsel
of Everest Properties. He is a lawyer by profession. From 1991 to 1995, he
practiced securities and corporate law with Gibson, Dunn & Crutcher, a prominent
national law firm headquartered in Los Angeles. From 1995 through 1997, he
served as Senior Staff Counsel and then Director of Corporate Legal of
Pinkerton's, Inc., a worldwide provider of security, investigation and related
services. At Pinkerton, Mr. Davis was responsible for directing the corporate
legal section of the legal department. Mr. Davis holds a Juris Doctor from
Harvard Law School and a Bachelor of Science degree in Business Administration
from the University of California, Berkeley.
Peter J. Wilkinson. Mr. Wilkinson is a Vice President and the Chief
Financial Officer of Everest Properties. He is an accountant by profession. From
1981 through 1987, he worked for Deloitte Haskins and Sells and Coopers and
Lybrand in London and Sydney in their audit divisions, gaining significant
experience in a variety of industry segments. From 1987 to 1990, he was the
company secretary and controller of Gresham Partners, an Australian investment
bank where, in addition to being responsible for all financial, tax and
administrative matters, he was involved with analyzing leveraged buyout,
property finance and business acquisitions. Mr. Wilkinson joined BankAmerica in
the United States and from 1991 to 1996 held a number of positions, culminating
in being the Division Finance Officer for the Corporate Trust and Mortgage and
Asset Backed divisions. In this capacity, he was responsible for presentation of
all financial information and financial due diligence during their divestiture.
Mr. Wilkinson holds a Bachelor of Science degree from Nottingham University and
is an English chartered accountant.
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.
EVEREST PROPERTIES II, LLC
199 South Los Robles Avenue, Suite 440
Pasadena, California 91101
(626) 585-5920
Aspen Square Management, Inc.
380 Union Street, Suite 300
West Springfield, Massachusetts, 01089
Phone: 413-781-0712
Fax: 413-789-9207
June 24, 2002
Sanford Diller
Prometheus Income Partners
350 Bridge Parkway
Redwood City, CA 94065
Dear Sanford:
Our company, Aspen Square Management, owns and operates over 20,000 rental units
nationwide, including 3,500 apartments in California. We are interested in
acquiring your Timberleaf and Alderwood apartment properties in Santa Clara. We
are aware that you have submitted a preliminary proxy bid, whereby you intend to
merge the Prometheus Income Partners Partnership into another entity. Our
enclosed offer, which is a principal-to-principal offer, allows the limited
partners of the partnership to realize higher net sale proceeds than they would
under your proposed merger.
Our enclosed offer, for $54,500,000, is $1,300,000 higher than the gross price
provided under the proposed merger. Additionally, our enclosed offer is a
brokerage commission free, principal-to-principal offer, and does not include
any GP disposition fees. These adjustments provide for a 1.6 million reduction
in the expenses associated with the sale of the properties, compared to your
proposal. This savings flows directly to the partners of the limited
partnership. The combined effect of our higher gross, lower sales expense offer
results in net proceeds to the selling partners that are close to three million
dollars higher than that which would be netted under your existing merger
proposal.
This offer is structured as an all cash transaction, where we will take a credit
for any mortgage prepayment/payoff costs. We anticipate these costs to be in
line with the 3.3 million dollar figure used in your merger calculations. We
reserve the right, however, to assume the existing financing. Either way, our
firm maintains the liquid funds to purchase these properties with no financing
contingencies other than the possible loan assumption. Earlier this year, we
acquired the California and Arizona multi-family assets of a REIT for 107
million dollars. This transaction required over $35 million of our own cash,
along with the assumption of over 70 million dollars of existing debt. In the
past 18 months, we have expended over $250 million for apartment acquisitions.
We are familiar with the operating history of Timberleaf and Alderwood, and our
enclosed offer recognizes the recently reduced rents and net operating income at
the properties. We have personally visited the properties in 2002, and we are
extremely familiar with the Santa Clara apartment market.
We ask only for a reasonable due diligence period to perform a final inspection
of the properties and review your latest operating statements. As a private,
vertically integrated company, we anticipate that we could complete our due
diligence review within fifteen business days. Our offer recognizes the fact
that the properties have serious exterior siding issues, and we are content to
accept the money escrowed for repair of the siding and perform or oversee any
necessary repairs ourselves. With respect to the siding issues, we are willing
to match the terms of your proposed merger.
Our firm has a fifty-year history as apartment owners, and we have never
defaulted on a loan nor even missed a single mortgage payment during this time.
This outstanding credit history contributed to a swift and satisfactory loan
assumption on our recent $107 million REIT asset acquisition. We are willing to
provide references to this recent transaction, as well as a more comprehensive
list of references of companies with whom we have transacted business over the
years.
Also enclosed please find a summary financial statement for Harold Grinspoon,
founder and owner of Aspen Square Management As you will see, Harold has not
only an extensive net worth of several hundred million dollars, but maintains
substantial cash reserves from which we can immediately draw and purchase
Timberleaf and Alderwood. We have also enclosed a list of financial references
that we urge you to contact to confirm our financial credibility, history, and
ability to perform on this transaction.
In summary, our offer represents a bona-fide offer from a well-capitalized firm
with a tremendous track record of similar apartment acquisitions nationwide,
including recent acquisitions in California. This offer essentially mirrors most
of the terms of your proposal. However, by increasing the gross purchase price
and reducing certain costs associated with your merger proposal, our enclosed
offer yields a significantly higher net return to the limited partners whom you
represent.
We will contact your office by telephone to confirm your receipt of this offer,
and to clarify any aspects of this offer that you feel need further
illumination.
Yours truly,
/s/ John R. Mnich
John R. Mnich
Director of Acquisitions
Aspen Square Management
Cc: Dave Johnson
Bob Kohorst
Aspen Square Management, Inc.
380 Union Street, Suite 300
West Springfield, Massachusetts, 01089
Phone: 413-781-0712
Fax: 413-789-9207
June 24, 2002
Sanford Diller
Prometheus Income Partners
3500 Bridge Parkway
Redwood City, CA 94065
Dear Sanford:
Reference is made to the real estate located at 2147 Newhall Street, Santa
Clara, California, and the real estate located at 900 Pepper Tree Lane, Santa
Clara, California, which respectively consist of 124 units commonly known as
Timberleaf Apartments, and 234 units commonly known as Alderwood Apartments. For
all parcels of real estate, 358 apartments, personal property and other
improvements we are willing to pay Fifty-Four Million Five Hundred Thousand
Dollars ($54,500,000). We are willing to structure this transaction as either an
all-cash transaction, which we would pay from our existing cash reserves, or as
a cash to the mortgage transaction, whereby we would assume the existing loan of
approximately $25,500,000 and contribute the required equity amount of
$29,000,000 from our existing cash reserves. Buyer shall be credited $3.389
million dollars for any potential mortgage prepayment/payoff costs associated
with this transaction.
This offer is made on a principal-to-principal basis, there are no real estate
brokers who have acted as a procuring cause of this sale on our behalf, and thus
this offer would be net of any real estate brokerage commissions.
Our offer is subject to the negotiation of a mutually agreeable Purchase and
Sale Agreement. Buyer shall have fifteen (15) business days to complete its due
diligence, and closing will occur within thirty (30) days from the end of the
due diligence period, or within fifteen (15) days from final notice of loan
assumption approval from the lender, whichever is later. Upon expiration of the
due diligence period, we are willing to submit an earnest money deposit of three
million dollars. This deposit shall be non-refundable, except that in the event
we attempt to assume the loan and are denied, we will have the option of
proceeding immediately with the purchase on an all-cash basis or receiving a
refund of our deposit.
Until such time as said agreement has been executed, this letter shall create no
legal liabilities for either party. This offer will become null and void and
expire on Monday, July 1,2002.
Please sign the enclosed copy of this letter indicating your agreement to the
provisions contained herein and return the signed copy to the attention of Fred
Anthony or myself, John Mnich, here at Aspen Square Management. We look forward
to working with you to complete this transaction.
Sincerely,
/s/ John Mnich
- ------------------------------- -----------------------------------
Buyer: Aspen Square Management, Inc. Seller: Prometheus Income Partners
By: John Mnich By: Sanford Diller
Its: Vice President Its: General Partner
& Acquisitions Director