SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) Securities
Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
DSI Realty Income Fund VII
(Name of Registrant as Specified in Its Charter)
Millenium Investors 2, LLC
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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:
(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 (Set forth the amount on which
the filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
Millenium Investors 2, LLC
155 N. Lake Avenue, Suite 1000
Pasadena, CA 91101
May 2, 2003
TO THE LIMITED PARTNERS OF
DSI REALTY INCOME FUND VII
Re: PROTECT YOUR INVESTMENT AND
VOTE AGAINST THE GENERAL PARTNER'S PROPOSALS
Dear Limited Partner:
You should have already received our letter dated May 1, 2003 which
described why you should vote AGAINST the proposals (the "Proposals") made by
the general partner (the "general partner") of DSI Realty Income Fund VII (the
"Partnership"). We have decided to file our own consent solicitation statement
to ask you to vote AGAINST the Proposals or if you have already voted for the
Proposals, to revoke your vote by completing, signing and returning the enclosed
consent form to us. To start, we would like to reiterate some of the points made
in our letter as to why you should vote against the Proposals:
o The general partner's consent solicitation statement fails to explain
the significance of the Proposals it is asking you to approve; and
fails to disclose the general partner's conflicts of interest in
making the Proposals.
o If Proposal No. 1 is approved, it is highly likely that the
Partnership will continue for an unspecified and potentially long
number of years, perhaps beyond most of our lives, and substantially
put off the day our investment is cashed out by a sale of the
Partnership's properties and a distribution of the net proceeds to the
limited partners.
o If Proposal No.1 is approved, the limited partners (you and us) will
lose significant voting rights and protections regarding whether or
not the Partnership should be dissolved or continued upon the
occurrence of certain dissolution events.
o If Proposal No. 2 is approved, the value of our Partnership units will
decrease because they will become harder, or impossible, to sell to
anyone but the general partner.
o If Proposal No. 2 is approved, we believe you will no longer be able
to sell your Partnership units on secondary market services like the
American Partnership Board. One such service has advised us it will
cease to effect transfers if Proposal No. 2 passes.
o If Proposal No. 2 is approved, you will be giving the general partner
an effective monopoly on buying your units if you try to sell them. No
one is likely to bother making an offer to purchase your units if the
general partner has a right of first refusal.
o The combined effect of the Proposals is to leave you stuck in this
Partnership for a much longer time, while at the same time effectively
removing all ways for you to get out of this investment other than
selling out to the general partner, probably at low prices.
You may have the following questions:
Q: What is Millenium Asking Me to Vote Upon?
A: Millenium is asking you to vote AGAINST Proposals NO. 1 and 2 in the consent
solicitation statement sent to you by the general partner. By voting AGAINST to
these Proposals, you retain your right to vote to dissolve the Partnership and
liquidate the assets of the Partnership when the open market will provide the
best opportunity to sell these assets. You also retain your right to sell your
Partnership units to whomever you like instead of being limited to selling them
only to the general partner.
Q: Who is Millenium?
A: Millenium and its affiliates are limited partners in the Partnership.
Everest's management has substantial experience in investing in and managing
limited partnerships.
Q: Why Should I Vote Against the Proposals?
A: The current general partner is not marketing the assets of the Partnership
for sale. Meanwhile, they are collecting management fees which we believe are
above what they should collect. Therefore, in our opinion, the current general
partner is not selling the assets of the partnership so that it can continue to
collect high management fees at your expense. Now, they are asking you to secure
their management fees for the what could potentially be a very long time while
prohibiting you from voting to sell Partnership's assets at a time when the
limited partners decide such a sale would result in the highest price for these
assets. They are also asking you to essentially eliminate the market for your
partnership units by giving them a first right of refusal to buy these units. No
one is going to make even an offer to buy our units if they know that their
offer will likely be used by the general partner to buy the units first. Not
only these Proposals are self-serving and are not in your best interest, in our
opinion, they are in violation of the general partner's fiduciary duty to all of
us as limited partners.
Q: What Do I Need to Do Now?
A: After carefully reading and considering the general partner's consent
solicitation statement and this Consent Statement, we are asking that you please
complete, sign and date the enclosed GREEN consent form by voting AGAINST for
each Proposal herein and mailing it to us in the self-addressed envelope
provided. Hopefully by your vote you can send a clear message to the general
partners that it can not place its financial interest before its fiduciary duty
to you.
We urge you to carefully read the enclosed Consent Solicitation Statement
in order to vote your interests. YOUR VOTE IS IMPORTANT. FAILURE TO VOTE,
ABSTENTIONS AND BROKER NON-VOTES WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE
PROPOSALS. Again, to be sure your vote is represented, please sign, date and
return the enclosed GREEN Consent of Limited Partner form as promptly as
possible in the enclosed, prepaid envelope. If you have any questions, please do
not hesitate to contact Mr. Vahan Saroians at 626-585-5920.
We recommend strongly that you VOTE AGAINST THE PROPOSALS made by the
general partner. We would be pleased to answer any questions you may have about
our recommendation; please call and ask for Stacey McClain or David Lesser, at
(626) 585-5920.
Very truly yours,
MILLENIUM INVESTORS 2, LLC
P.S. Vote against both of theses unfair Proposals. You can change your vote
until May 15, 2003. Do not be tricked by the general partner into voting
against your own interests!
SOLICITATION OF CONSENTS
of
LIMITED PARTNERS
of
DSI Realty Income Fund VII
by
Millenium Investors 2, LLC
May 2, 2003
CONSENT SOLICITATION STATEMENT
Millenium Investors 2, LLC, a California limited liability company
("Millenium") is seeking the written consent (the "Consents") of the limited
partners (the "Limited Partners") of DSI Realty Income Fund VII, a California
limited partnership (the "Partnership"), to vote against the proposals (the
"Proposals") made by the Partnership's general partner (the "general partner")
to amend the dissolution provisions of the Partnership and give the general
partner the first right of refusal to purchase your Partnership units ("Units").
This Consent Solicitation Statement (the "Consent Statement") and the
accompanying GREEN Consent of Limited Partners form are first being mailed to
Limited Partners on or about May 2, 2003. Limited Partners who are record owners
of Limited Partnership Interests as of March 31, 2003 (the "Record Date") shall
be sent this Consent Statement.
In reviewing this Consent Statement please consider the following:
Considerations other than those identified, such as investment and tax
considerations, exist which should be weighed in replacing the current general
partners with Millenium. Limited Partners are advised to read this entire
Consent Statement carefully and to consult with their investment and tax
advisors before making a decision whether or not to consent. You should also
send the Consent Solicitation Statement previously sent to you by the general
partner of the Partnership, dated April 15, 2003.
The Consents are solicited upon the terms and subject to the conditions of
this Consent Statement, the general partners consent solicitation statement
mailed to you on April 15, 2003 and the accompanying form of consent. Record
holders of a majority of the outstanding Units is required to approve or
disapprove the Proposals.
Under the Partnership Agreement and California law, Limited Partners do not
have dissenters' rights of appraisal in connection with these Proposals.
THIS SOLICITATION IS BEING MADE BY MILLENIUM AND NOT ON BEHALF OF THE
PARTNERSHIP. CONSENTS SHOULD BE DELIVERED TO MILLENIUM.
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.
THIS SOLICITATION OF CONSENTS EXPIRES NO LATER THAN 11:59 P.M. PACIFIC TIME
ON MAY 15, 2003, UNLESS EXTENDED.
AVAILABLE INFORMATION
The Partnership is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, consent solicitation statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, consent solicitation statements and other information filed with the
Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices, 233 Broadway, New York,
New York 10279 and 175 W. Jackson Boulevard, Suite 900, Chicago, Illinois 60604.
In addition, the Commission maintains a site on the World Wide Web portion of
the Internet that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The address of such site is http://www.sec.gov.
INFORMATION CONCERNING MILLENIUM AND EVEREST
Millenium is a California limited liability company that was formed in 1998
for the purpose of investing real estate limited partnerships. The sole Manager
of Millenium is Everest Properties II, LLC ("Everest"), who manages all of the
business affairs of Millenium. Everest and Millenium are affiliates of Everest
investors 12, LLC, Everest Investors 3, LLC, KM Investments, LLC, limited
partners in the Partnership (collectively "Everest Entities"). Everest Entities
own approximately 3.2% limited partnership interests in the Partners. Everest
Entities have substantial experience in investing in and managing limited
partnerships.
Everest is a California limited liability company that was formed in 1996
as a diversified real estate-oriented investment firm that specializes in
investing in and managing limited partnerships. The principal office of
Millenium and Everest is 155 N. Lake Avenue, Suite 1000, Pasadena, CA 91101;
telephone (626) 585-5920.
The following are the resumes of Everest officers. The business address of
each of the officers is 155 N. Lake Avenue, Suite 1000, Pasadena, CA 91101.
W. Robert Kohorst. Mr. Kohorst has been the President of Everest and its
predecessor since 1995. 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 U.S. 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 has been the Executive Vice President of
Everest and its predecessor since 1995. 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, which he joined in 1998. 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
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, which he joined in 1996. 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.
INFORMATION CONCERNING THE PROPOSALS AND PARTNERSHIP
Information concerning the Partnership and the General Partner's Proposals
is available in the general partner's consent solicitation statement, which you
should have received and which 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 "DSI Realty
Income Fund VII"). Everest's Proxy Solicitation Statement and any other
additional soliciting materials are also available for free at the same website.
VOTING PROCEDURE FOR LIMITED PARTNER
Distribution and Expiration Date of Solicitation
This Consent Solicitation Statement and the related Consent are first being
mailed to Limited Partners on or about May 2, 2003. Limited Partners who are
record owners of Limited Partnership Interests as of the Record Date may execute
and deliver a Consent. A beneficial owner of Limited Partnership Interests who
is not the record owner of such Limited Partnership Interests must arrange for
the record owner of such Limited Partnership Interests to execute and deliver to
Millenium a Consent form that reflects the vote of the beneficial owner.
This solicitation of Consents will expire at 11:59 p.m. Pacific Time on the
earlier to occur of the following dates (the "Expiration Date"): (i) May 15,
2003 or such later date to which Millenium determines to extend the
solicitation, and (ii) the date the Required Consents are received. Millenium
reserves the right to extend this solicitation of Consents for such period or
periods as it may determine in its sole discretion from time to time; provided,
however that it will not extend this solicitation past the expiration, as
extended, of the general partner's consent solicitation statement. Any such
extension will be followed as promptly as practicable by notice thereof by
written notice to the Limited Partners, as well as filing with the SEC. All
Consents delivered to Millenium will be sent to the Partnership and will remain
effective until the Expiration Date, including during any extension thereof,
unless validly revoked and not rescinded by a later dated consent delivered to
Millenium prior to the Expiration Date. No Consent will be considered effective
longer than eleven months from the date it is given. Millenium reserves the
right for any reason to terminate the solicitation of Consents at any time prior
to the Expiration Date by filing an amendment to this Consent Solicitation
Statement with the SEC.
Voting Procedures and Required Consents
The consent form included with this Consent Statement can be used by
Limited Partners to cast their votes. For each Proposal, Limited Partners should
mark a box adjacent to the Proposal indicating that the Limited Partner votes
"For" or "Against" the Proposal, or wishes to "Abstain." All Consents that are
properly completed, signed and delivered to Millenium, and not validly revoked
prior to the Expiration Date, will be given effect in accordance with the
specifications thereof. If none of the boxes on the Consent is marked, but the
Consent is otherwise properly completed and signed, the Limited Partner
delivering such Consent will be deemed to have voted "For" the Proposals.
Each Proposal requires the consent of the record holders of a majority of
the Limited Partnership Interests of the Limited Partners (the "Required
Consents"). Accordingly, adoption of each Proposal requires the receipt without
revocation of the Required Consents indicating a vote "For" the Proposal.
Millenium is seeking the disapproval of each of the Proposals. No Proposal is
conditioned on the approval of another Proposal. The failure of a Limited
Partner to deliver a Consent or a vote to "Abstain" will have the same effect as
if such Limited Partner had voted "Against" the Proposals. Limited Partnership
Interests not voted on Consents returned by brokers, banks or nominees will have
the same effect as Limited Partnership Interests voted against the Proposals.
Completion Instructions
Limited Partners are requested to complete, sign and date the GREEN Consent
of Limited Partner form included with this Consent Solicitation Statement and
mail, fax, hand deliver, send by overnight courier the original signed Consent
to Millenium Investors 2, LLC, 155 N. Lake Avenue, Suite 1000, Pasadena, CA
91101, Fax No.: 626-585-5929.
Consents should be sent or delivered to Millenium at the address set forth
on the back cover of this Consent Solicitation Statement. A prepaid, return
envelope is included for your convenience.
Revocation of Consents
Consents may be revoked at any time prior to the Expiration Date, or a
Limited Partner may change his vote on one or both Proposals, in accordance with
the following procedures. For a revocation or change of vote to be effective,
Millenium must receive prior to the Expiration Date a written notice of
revocation or change of vote (which may be in the form of a subsequent, properly
executed Consent) at the address set forth on the Consent. The notice must
specify the name of the record holder of the Limited Partnership Interests and
the name of the person having executed the Consent to be revoked or changed (if
different), and must be executed in the same manner as the Consent to which the
revocation or change relates or by a duly authorized person that so indicates
and that submits with the notice appropriate evidence of such authority as
determined by Millenium. A revocation or change of a Consent shall be effective
only as to the Limited Partnership Interests listed on such notice and only if
such notice complies with the provisions of this Consent Solicitation Statement
Millenium reserves the right to contest the validity of any revocation or
change of vote and all questions as to validity (including time of receipt) will
be determined by Millenium, subject to the provisions of the Partnership
Agreement, as well as state and federal law.
No Dissenters' Rights of Appraisal
Under the Partnership Agreement and California law, Limited Partners do not
have dissenters' rights of appraisal in connection with these Proposals.
Solicitation of Consents
Neither the Partnership nor the current general partners are participants
in this solicitation of Consents. Millenium and Everest are the only
participants in the solicitation. Millenium will initially bear all costs of
this solicitation of Consents, including fees for attorneys and the cost of
preparing, printing and mailing this Consent Solicitation Statement, which are
currently estimated to be $4,000. To date, Everest has incurred fees and
expenses for this solicitation of approximately $10,000. Millenium shall seek
reimbursement for such costs from the Partnership to the extent allowed under
the Partnership Agreement and applicable law. In addition to the use of mails,
certain officers or regular employees of Millenium and Everest may solicit
Consents via telephone, for which no additional compensation will be paid.
Limited Partners are encouraged to contact Mr. Vahan Saroians of Millenium
at the telephone number set forth on the back cover of this Consent Solicitation
Statement with any questions regarding this solicitation of Consents and with
requests for additional copies of this Consent Solicitation Statement and form
of Consent.
SOLICITATION OF CONSENTS
of
LIMITED PARTNERS
of
Real Estate Associates Limited III
a California Limited Partnership
Deliveries of Consents, properly completed and duly executed, should be
made to Millenium Investors 2, LLC at:
155 N. Lake Avenue, Suite 1000
Pasadena, CA 91101
Fax No.: 626-585-5929
Questions and requests for assistance about procedures for consenting or
other matters relating to this solicitation may be directed to Mr. Vahan
Saroians at the address and telephone number listed below. Additional copies of
this Consent Solicitation Statement and form of Consent may be obtained from
Millenium as set forth below.
No person is authorized to give any information or to make any
representation not contained in this Consent Solicitation Statement regarding
the solicitation of Consents made hereby, and, if given or made, any such
information or representation should not be relied upon as having been
authorized by Millenium or any other person. The delivery of this Consent
Solicitation Statement shall not, under any circumstances, create any
implication that there has been no change in the information set forth herein or
in the affairs of Millenium or the Partnership since the date hereof.
Millenium Investors 2, LLC
155 N. Lake Avenue, Suite 1000
Pasadena, CA 91101
(626) 585-5920
YOUR CONSENT IS IMPORTANT, SINCE APPROVAL OF THE AMENDMENTS REQUIRES THE WRITTEN
CONSENT OF THE HOLDERS OF A MAJORITY OF THE OUTSTANDING INTERESTS HELD BY
LIMITED PARTNERS. ACCORDINGLY, YOU ARE URGED TO READ AND TO CONSIDER CAREFULLY
THE INFORMATION CONTAINED IN THIS CONSENT STATEMENT.
The date of this Consent Statement is May 2, 2003.
DSI Realty Income Fund VII
A California Limited Partnership
CONSENT
The following Proposal is made by, and this consent is solicited by, DSI REALTY
INCOME FUND VII, a California limited partnership (the "Partnership") for the
purpose of obtaining the consent of limited partners of record holding a
majority of the limited partnership interests in the Partnership in accordance
with Section 21 of the Partnership's Limited Partnership Agreement.
The undersigned, a limited partner of the Partnership, does hereby vote or
abstain and grant or withhold consent as follows:
(a) That paragraphs 5 and 17 of the Partnership's CERTIFICATE AND AGREEMENT OF
LIMITED PARTNERSHIP (the "Limited Partnership Agreement") be amended to permit
the Limited Partnership to continue through the end of the term of the
Partnership even in the event of a dissolution of one of the General Partners of
the Partnership.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(b) That paragraph 19(b) of the Partnership's CERTIFICATE AND AGREEMENT OF
LIMITED PARTNERSHIP (the "Limited Partnership Agreement") be amended to require
Limited Partners to offer a right of first refusal to the General Partners to
proposed transfers of Limited Partnership Units, except for transfers by gift,
inheritance, intrafamily transfers, family dissolutions, transfers to affiliates
and transfers from one individual Retirement Account to another.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Please sign exactly as your name appears above. 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 other
authorized officer. If a partnership, please sign in partnership name by
authorized person. If shares are held jointly, each holder should sign.
Signature:
Additional Signature (if any):
Print Name:
Print Additional Name (if any):
Date of Execution: _______________
RIF A/C #:
Number of Units Owned: When completed, please DETACH & RETURN this Consent in
the enclosed envelope to: Millenium Investors 2, LLC 155 N. Lake Avenue, Suite
1000, Pasadena, CA 91101