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SECURED INVESTMENT RESOURCES FUND, L.P.
(Name of Registrant as Specified in Its Charter)
Everest Properties II, LLC
Millenium Management, LLC
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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VOTE VOTE VOTE VOTE VOTE VOTE
Everest Properties II, LLC
Millenium Management, LLC
155 N. Lake Avenue, Suite 1000
Pasadena, CA 91101
April 28, 2004
To the Limited Partners of
Secured Investment Resources Fund, L.P. ("SIR1") and
Secured Investment Resources Fund, L.P. II ("SIR2") (the "Partnerships")
Re: Electing a New General Partner;
Over $2,500,000 Improperly Taken From SIR2 by Current General Partners
Dear Limited Partner:
We are seeking your approval to remove James R. Hoyt and his company as the
general partners of your Partnerships, and elect Millenium Management, LLC, a
California limited liability company ("Millenium"), as the new general partner.
We have heard from many limited partners and thank you for the interest you
have shown in deciding the future of your Partnerships. Certain questions are
being asked by many of you, so we wanted to respond in this letter.
Q: Why have we not received the Partnerships financial reports and SEC filings
over the past 5 years?
A: We spent over 6 months and more than $50,000 in legal fees to obtain a
court order requiring Mr. Hoyt to turn over the books and records of the
Partnerships. Why did he fight so hard against turning over partnership
records? We think we know the answer. Mr. Hoyt and his affiliated companies
improperly took more than $2,500,000 in cash out of SIR2 as an "advance" of
management fees for many future years. That money appears to have come from
the excess proceeds from refinancing SIR2's Las Vegas apartment property in
2001, which nobody even knew had occurred because Mr. Hoyt has not been
providing any reports. That money should have been distributed to Unit
holders who had not seen a distribution for years, rather than taken by Mr.
Hoyt. The Partnership Agreement clearly prohibits the general partner from
borrowing money from the Partnership. What other fees or monies have been
misappropriated from the Partnerships? As the new general partner, we
intend to find out and take all reasonable steps to recover that money on
behalf of the Partnerships. By itself, this is enough reason to replace the
current general partners.
Q: What will Millenium do with the Partnerships if it becomes the new General
Partner?
A: At this point, it is impossible for us to tell you exactly what we will do
with the Partnerships or their assets. However, we can and do commit to the
following:
o Provide Liquidity: Within six months of taking over, we expect to
complete our review of the Partnerships and their properties and make
a proposal to the limited partners that will offer limited partners a
way out of their Partnership for a fair value. We simply cannot
predict exactly what that proposal will be, because there are too many
unknowns at this time. For example, the missing $2.5 Million was
previously unknown. We will give limited partners a chance to vote to
approve or disapprove of whatever proposal we make, whether or not a
vote is legally required. For those limited partners who do not want
to wait for our proposal, as soon as we have adequate financial
information, we will determine a price at which you can sell your
units to one of our affiliates that invests in limited partnership
units, and offer that possibility.
o Investigate: We will scrutinize the financial records of the
Partnerships to see if any additional improper conduct has occurred,
such as the improper use of Partnership funds, during the many years
that the Partnerships have not issued financial reports to you.
o Make SEC Filings: We will work with the Securities and Exchange
Commission to try to bring the Partnerships into good standing and
comply with SEC reporting requirements.
o Report To Investors: We will provide you with regular reports on the
financial condition and operations of the Partnerships and timely
Schedule K-1 tax documents.
Q: Has Millenium taken over other partnerships? If so, what did you do?
A: Over the past 12 years, Millenium and its affiliates have become substitute
general partners in more than 25 private limited partnerships. Variously,
we have: liquidated the partnerships by selling properties to unaffiliated
third parties, refinanced the property debt and distributed the proceeds to
limited partners, obtained limited partner approval of proposals that
offered the choice to stay in or get cashed out at a set price; or simply
managed the properties better while offering to buy out individual limited
partners that wanted to liquidate their investment in the partnership.
Q: What is in it for Millenium?
A: We want to find out what has happened with the investments that our
affiliates have made in the Partnerships, and to take control of that
investment away from a general partner who we believe has violated
partnership agreements and federal law and done a terrible job. Also, when
we propose a transaction to the limited partners, it will probably include
some type of compensation to Millenium, perhaps a disposition fee or
brokerage commission upon the sale of a property, or some other
compensation that would make sense for the transaction being proposed. But
you will have a vote on whatever we propose.
Equally important is what is NOT in this for Millenium. We are NOT GOING TO
COLLECT PROPERTY MANAGEMENT FEES. Mr. Hoyt owns a property management
company that he uses to manage the Partnerships' properties and collect
management fees. It gives Mr. Hoyt, like any general partner who does this,
a conflict of interest: if the Partnership is liquidated, those fees
disappear. WE DO NOT OWN AN APARTMENT PROPERTY MANAGEMENT COMPANY. We hire
independent property managers to manage more than 3,500 apartment units we
already control and we will do the same with your Partnerships. We
supervise our property managers closely to control costs and increase
revenues and profits; and if they are not doing an adequate job, we replace
them with another company that will.
Q: How do we know that Millenium will not be as bad or worse than Mr. Hoyt?
A: We know we will do a much better job of managing the Partnerships and their
properties and keeping you informed, but ultimately, the only way you will
know if that is true will be to give us the chance to prove it. Millenium
has already created benefits for you - at our own cost we have discovered
and disclosed to you a $2.5 Million misappropriation by Mr. Hoyt. Do you
want Mr. Hoyt to be responsible for deciding if or when the Partnership
gets that money back? We will continue to uncover and report the truth
about the Partnerships and, as the new general partner, pursue the
Partnership's rights against Mr. Hoyt and any other parties.
We have already invested significant time, money and initiative to
communicate with you and try to make a positive change to this
disappointing investment, on the speculation that enough limited partners
are sick and tired enough of the current general partners' failure to
communicate, failure to make distributions, failure to liquidate, or just
plain failure to do anything!
Q: Why not just make the current general partners sell the Partnerships'
properties and liquidate the Partnerships?
A: We have heard from several limited partners that Mr. Hoyt's representatives
said they will liquidate the Partnerships soon. Given his past conduct, can
you possibly trust Mr. Hoyt? Do you want a general partner who
misappropriated money from at least one of the Partnerships to be in
control of the liquidation proceeds if properties are actually sold? How
can we possibly believe that he will not do it again? Do you want the
properties sold before someone else gets a chance to analyze what has
actually happened in these Partnerships during the last five years, while
you received no financial reports?
Limited partnership agreements and limited partnership laws provide for the
ability to remove and replace the general partners for a reason; and it is time
that you, as a limited partner, exercise that right to salvage what you can of
your investment in the Partnerships.
It is unlikely that anyone other than Millenium, much less other
professional property investors, will come along and offer to take over the
Partnerships and improve their situation.
Please review the entire Consent Solicitation Statement dated April 5, 2004
we previously sent to you and VOTE TO PROTECT WHATEVER VALUE IS LEFT IN YOUR
PARTNERSHIP - VOTE TO REPLACE THE CURRENT GENERAL PARTNERS WITH MILLENIUM. YOUR
VOTE IS IMPORTANT. FAILURE TO VOTE WILL HAVE THE SAME EFFECT AS A VOTE AGAINST
THE PROPOSALS.
To be sure your vote is represented, please sign, date and return the
enclosed Consent of Limited Partner form as promptly as possible in the
enclosed, prepaid envelope. If you have previously voted and do not wish to
change your vote, there is no need to return an additional Consent. If you wish
to change your vote, a subsequently signed and dated Consent will supersede any
previously dated Consent from you.
We are extending the Expiration Date for the solicitation. 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 26, 2004 or
such later date to which Millenium determines to extend the solicitation, and
(ii) the date the Required Consents are received (as described in the Consent
Solicitation Statement).
If you have any questions, please do not hesitate to contact us toll free
at (800) 611-4613, or at (626) 585-5920.
Millenium Management, LLC
/S/ W. Robert Kohorst
----------------------
W. Robert Kohorst
President