SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule TO
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
(Name of Subject Company)
CAPITAL REALTY INVESTORS IV LTD. PARTNERSHIP
A Maryland limited partnership
at $40 Net Per Unit
by
EQUITY RESOURCE WESTON FUND LIMITED PARTNERSHIP,
a Massachusetts limited partnership
Equity Resources Group, Inc.
Eggert Dagbjartsson
Limited Partnership Units
Eggert Dagbjartsson, Executive Vice President
Equity Resources Group, Inc.
44 Brattle Street
Cambridge, MA 02138
(617) 876-4800
Calculation of Filing Fee
Transaction Valuation* Amount of Filing Fee
$441,000 $88.20
* For purposes of calculating the filing fee only. This calculation assumes
the purchase of 11,025 Units at a purchase price of $40 per Unit in the
Partnership.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: Not Applicable Filing Party: Not Applicable
Form of Registration No.: Not Applicable Date Filed: Not Applicable
TENDER OFFER
This Tender Offer Statement on Schedule TO (the "Schedule TO") relates
to an offer by Equity Resource Weston Fund, Limited Partnership, a Massachusetts
limited partnership, Eggert Dagbjartsson, its general partner and Equity
Resources Group, Inc., its manager (collectively the "Purchaser") to purchase
11,025 units (the "Units") of limited partnership interests in Capital Realty
Investors IV Ltd. Partnership, a Maryland limited partnership (the
"Partnership"), at $40 for each Unit, net to the seller in cash, without
interest, less the amount of any distributions declared or paid from any source
by the Partnership with respect to the Units after June 17, 2003 (without regard
to the record date), upon the terms and subject to the conditions set forth in
the Offer to Purchase (the "Offer to Purchase") and in the related Agreement of
Sale, copies of which are attached hereto as Exhibits (a)(l) and (a)(3) (which
are herein collectively referred to as the "Offer") and less the $100 transfer
fee (per transaction, not per unit) charged by the general partner of the
Partnership. The information in the Offer to Purchase, including all schedules
and annexes thereto, is hereby expressly incorporated herein by reference in
response to all the items of this Statement, except as otherwise set forth
below.
ITEM 12. EXHIBITS
(a)(1) Offer to Purchase, dated June 17, 2003
(a)(2) Transmittal letter, dated June 17, 2003
(a)(3) Agreement of Sale and Assignment
(a)(4) Summary Advertisement
(b) Not applicable
(c) Not applicable
(d) Not applicable
(e) Not applicable
(f) Not applicable
(g) Not applicable
(h) Not applicable
SIGNATURE
After due 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.
Dated: June 17, 2003 Equity Resource Weston Fund Limited Partnership,
a Massachusetts limited partnership
By: /s/ Eggert Dagbjartsson
-------------------------------
Eggert Dagbjartsson
General Partner
Equity Resources Group, Inc.
A Massachusetts Corporation
By: /s/ Eggert Dagbjartsson
-------------------------------
Eggert Dagbjartsson
Executive Vice President
Eggert Dagbjartsson
By: /s/ Eggert Dagbjartsson
-------------------------------
Eggert Dagbjartsson
EXHIBIT INDEX
Sequential
Exhibit No. Description Page Number
- ----------- ---------------------------------------- -----------
(a)(1) - Offer to Purchase, dated June 17, 2003. 4-28
(a)(2) - Transmittal letter, dated June 17, 2003. 29
(a)(3) - Agreement of Sale and Assignment 30-33
(a)(4) Summary Advertisement 34
(b) - Not applicable.
(c) - Not applicable.
(d) - Not applicable.
(e) - Not applicable.
(f) - Not applicable.
(g) Not applicable
(h) Not applicable.
EXHIBIT (A)(1)
OFFER TO PURCHASE FOR CASH
11,025 Units
OF
CAPITAL REALTY INVESTORS IV LTD. PARTNERSHIP
at $40 Per Unit by
EQUITY RESOURCE WESTON FUND LIMITED PARTNERSHIP
THIS OFFER WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON JULY 17, 2003
UNLESS THE OFFER IS EXTENDED.
Equity Resource Weston Fund, Limited Partnership, a Massachusetts limited
partnership, Eggert Dagbjartsson, its general partner and Equity Resources
Group, Inc., its manager (collectively "Weston Fund" or the "Purchaser"), hereby
offers to purchase 11,025 Units ("Units") of limited partnership interests in
Capital Realty Investors IV Ltd. Partnership, a Maryland Limited partnership
(the "Partnership"). Weston Fund is offering to pay a purchase price of $40 for
each Unit, to the seller in cash, without interest, less the amount of any
distributions declared or paid from any source by the Partnership with respect
to the Units after June 17, 2003 (without regard to the record date), upon the
terms and subject to the conditions set forth in this Offer to Purchase (the
"Offer to Purchase") and in the Agreement of Sale, as each may be supplemented
or amended from time to time (which together constitute the "Offer") and less
the $100 transfer fee charged by the general partner of the Partnership. The
transfer fee is $100 per transaction, not per unit. For example, a limited
partner who sells twenty (20) Units will receive $700 ($800 less the $100
transfer fee). Neither Weston Fund, Equity Resources Group, Inc., Weston Fund's
manager nor Eggert Dagbjartsson, Weston Fund's general partner is an affiliate
of the Partnership or CRI, Inc the general partner of the Partnership. The Units
sought to be purchased pursuant to the Offer represent, to the best knowledge of
the Purchaser, approximately 15% of all Units outstanding as of the date of the
Offer.
The Offer is subject to certain conditions described in this Offer to Purchase.
See "THE OFFER--Section 15--Conditions of the Offer." The Offer is not
conditioned upon the valid tender of any minimum number of Units. If more than
11,025 Units are validly tendered and not withdrawn, the Purchaser will accept
for purchase up to 11,025 Units, on a pro rata basis, subject to the terms and
conditions described in the Offer to Purchase, see "THE OFFER--Section
15--Certain Conditions of the Offer." A limited partner of the Partnership (a
"Limited Partner") may tender any or all Units owned by that Limited Partner.
The Offer is subject to certain risks described in this Offer to Purchase. See
"THE OFFER--Introduction--Risk Factors."
IMPORTANT
Any Limited Partner desiring to tender any or all of the Units held by that
Limited Partner should complete and sign the Agreement of Sale accompanying this
Offer to Purchase, in accordance with the instructions set forth in the
Agreement of Sale, and mail or deliver the Agreement of Sale and any other
required documents to Equity Resources Group, Inc., the manager of the
Purchaser, at the address set forth on the back cover of this Offer to Purchase,
or request his or her broker, dealer, commercial bank, credit union, trust
company or other nominee to effect the transaction for him or her.
No person has been authorized to make any recommendation or any
representation on behalf of the Purchaser or to provide any information other
than as contained in this Offer to Purchase or in the Agreement of Sale. No
recommendation, information, or representation may be relied upon as having been
authorized.
Direct questions or requests for assistance or additional copies of this Offer
to Purchase or the Agreement of Sale to:
EQUITY RESOURCES GROUP, INC.
44 BRATTLE STREET
CAMBRIDGE, MA 02138
(617) 876-4800
Info@equityresources.com
[THIS PAGE LEFT INTENTIONALLY BLANK]
Table of Contents
SUMMARY TERM SHEET .........................................................
INTRODUCTION ............................................................... 1
RISK FACTORS ............................................................... 3
TENDER OFFER ............................................................... 5
Section 1. Terms of the Offer ............................................ 5
Section 2. Acceptance for Payment and Payment for Units .................. 5
Section 3. Procedures for Tendering Units................................. 5
Section 4. Withdrawal Rights ............................................. 7
Section 5. Extension of Tender Period; Termination; Amendment ............ 7
Section 6. Certain Tax Consequences ...................................... 7
Section 7. Purpose and Effects of the Offer .............................. 9
Section 8. Future Plans .................................................. 10
Section 9. Past Contacts and Negotiations With General Partner ........... 10
Section 10. Certain Information Concerning the Partnership ................ 11
Section 11. Background and Reasons for the Offer .......................... 16
Section 12. Certain Information Concerning the Purchaser................... 16
Section 13. Source and Amount of Funds .................................... 17
Section 14. Voting Power .................................................. 17
Section 15. Certain Conditions of the Offer ............................... 17
Section 16. Certain Legal Matters and Required Regulatory Approvals........ 17
Section 17. Fees and Expenses ............................................. 18
Section 18. Miscellaneous ................................................. 18
SCHEDULE 1
Information with respect to the Managers of Equity Resources
Group, Inc. the Manager of Purchaser (Equity Resources
Weston Fund) ...................................................... S-1
SCHEDULE 2
Properties Owned by the Partnership ............................... S-2
2
SUMMARY TERM SHEET
Equity Resource Weston Fund, Limited Partnership, a Massachusetts limited
partnership, Eggert Dagbjartsson, its general partner and Equity Resources
Group, Inc., its manager (collectively "Weston Fund") is offering to purchase
11,025 Units ("Units") of limited partnership interests in Capital Realty
Investors IV Ltd. Partnership, a Maryland Limited partnership (the
"Partnership") for $40 per Unit, to the seller in cash, less the amount of any
distributions declared or paid from any source by the Partnership with respect
to the Units after June 17, 2003, unless a limited partner was not entitled to
receive that distribution and less the $100 transfer fee charged by the general
partner of the Partnership. The transfer fee is $100 per transaction, not per
unit. For example, a limited partner who sells twenty (20) Units will receive
$700 ($800 less the $100 transfer fee). The following are some questions you, as
a Limited Partner, may have, and the answers to those questions. We urge you to
read carefully the remainder of this Offer to Purchase and the accompanying
documents because the information in this summary is not complete, and
additional information is contained in the remainder of this Offer to Purchase.
How do I tender my Units?
In order to tender your Units properly, you must properly complete and execute
an Agreement of Sale and deliver it to our address set forth on the enclosed
business reply envelope and on the back cover of the offer to purchase not later
than the time the offer expires. See "THE OFFER--Section 3--Procedures for
Tendering Units."
Who is offering to buy my Units?
Weston Fund is offering to purchase 11,025 Units. Weston Fund is a Massachusetts
limited partnership whose general partner is Eggert Dagbjartsson and whose
manager is Equity Resources Group, Inc., a Massachusetts corporation which is
engaged in real estate investment and consulting. See "THE OFFER--Section
12--Certain Information Concerning the Purchaser."
What are the classes and amounts of securities sought in the offer?
Weston Fund is seeking to purchase 11,025 Units of limited partnership interests
in the Partnership. This represents 15% of the Partnership's outstanding Units.
See "INTRODUCTION."
How much are you offering to pay for my securities and what is the form of
payment? Will I have to pay fees or commissions?
Weston Fund is offering to purchase 11,025 Units ("Units") of limited
partnership interests in Capital Realty Investors IV Ltd. Partnership, a
Maryland Limited partnership (the "Partnership"). Weston Fund is offering to pay
a purchase price of $40 for each Unit, to the seller in cash, without interest,
less the amount of any distributions declared or paid from any source by the
Partnership with respect to the Units after June 17, 2003 (without regard to the
record date), upon the terms and subject to the conditions set forth in this
Offer to Purchase (the "Offer to Purchase") and in the Agreement of Sale, as
each may be supplemented or amended from time to time (which together constitute
the "Offer") and less the $100 transfer fee charged by the general partner of
the Partnership. The transfer fee is $100 per transaction, not per unit. For
example, a limited partner who sells twenty (20) Units will receive $700 ($800
less the $100 transfer fee). If you tender your Units in the Offer and you were
not entitled to receive any distribution declared or paid from any source by the
Partnership with respect to your Units after June 17, 2003, the amount paid to
you in the Offer will not be reduced by the amount of any distribution you were
not entitled to receive. Limited partners who hold their units in a brokerage
account or in trust should consult their advisors concerning brokerage fees,
commissions or similar expenses associated with the tender their Units.
Do you have the financial resources to make payment and is your financial
condition relevant to my decision to tender in the offer?
The Purchaser expects that approximately $441,000 (exclusive of fees and
expenses) will be required to purchase 11,025 Units, if tendered. The Purchaser
will obtain those funds from capital contributions from its members, which have
an aggregate net worth substantially in excess of the amount required to
purchase the 11,025 Units. The Purchaser is not a public company and has not
prepared audited financial statements. We do not think our financial condition
is relevant to your decision whether to tender in the offer because the form of
payment is cash, and we currently have sufficient cash and cash equivalents
relative to the consideration to be paid in the offer. See "THE OFFER--Section
13--Source and Amount of Funds."
How long do I have to decide whether to tender in the offer?
You will have at least until 12:00 midnight, Eastern Time, on July 17, 2003, to
decide whether to tender your Units in the offer. In addition, if we decide to
extend the offering period as described below, you will have an additional
opportunity to tender your Units. See "THE OFFER--Section 3--Procedures for
Tendering Units."
Can the offer be extended or amended and under what circumstances?
Yes, we may elect to extend the offer: to extend the period of time during which
the offer is open; upon the failure of a Limited Partner to satisfy any of the
conditions specified in Section 15, to delay the acceptance for payment of, or
payment for, any Units; and to amend the offer in any respect (including,
without limitation, by increasing or decreasing the offer price). If you do not
tender your Units during the initial offering period, you will not have the
opportunity to accept the offer. See "THE OFFER--Section 5--Extension of Tender
Period; Termination; Amendment."
How will I be notified if the offer is extended?
If we decide to extend the offer, we will send each Limited Partner notification
of the extension, not later than 9:00 a.m., Eastern Time, on the business day
after the day on which the offer was scheduled to expire. See "THE
OFFER--Section 5--Extension of Tender Period; Termination; Amendment."
What are the most significant conditions to the offer?
We are not obligated to purchase any Units in the offer if we have not confirmed
to our reasonable satisfaction that, upon purchase of the Units, we will be
entitled to receive all distributions, from any source, from the Partnership
after June 17, 2003, and that the Partnership will change the address associated
with the holder of the Units to our address. See "THE OFFER--Section 15--Certain
Conditions of the Offer."
How do I withdraw previously tendered Units?
"To withdraw your Units after you have tendered them, you must deliver a
properly executed written notice of withdrawal with the required information to
us while you still have the right to withdraw the Units. See 'THE OFFER--Section
4--Withdrawal Rights.'"
Until what time can I withdraw previously tendered Units?
"Until what time can I withdraw previously tendered Units? You can withdraw
Units at any time until the offer has expired, and you can withdraw them at any
time after the expiration date until we accept Units for payment. See 'THE
OFFER--Section 4--Withdrawal Rights.'"
What does the partnership think of the offer?
CRI, Inc, the general partner of the Partnership, is required to respond to this
offer. The Purchaser does not currently know what the general partner will
recommend to limited partners as to whether or not to tender units pursuant to
the offer.
Will there be any change to the Partnership or my Units if I decide not to
tender my Units?
It is expected that following the offer, the business and operations of the
Partnership will be continued substantially as they are currently being
conducted today. We are acquiring the Units for investment purposes only, not
with a view toward affecting management of the Partnership. You should note,
however, that if we purchase 11,025 Units, the Weston Fund and affiliated funds
controlled by Equity Resources Group will own 27.03% of the outstanding Units.
Although this would not represent a majority interest, this increase in
ownership would give us and our affiliates increased control over any vote of
the limited partners. See "THE OFFER--Section 8--Future Plans" and "--Section
14--Voting Power."
What is the market value of my shares as of a recent date?
Partnership Spectrum, a national reporting service covering limited
partnerships, reported 6 sales for a total of 125 Units in the Partnership at an
average price of $51 per Unit on the informal market "matching service" in the
past 12 months. There was 1 reported sale of 15 Units at a price of $60 per Unit
in the past sixty days. The Purchaser and its affiliates have purchased 407
Units in the Partnership in the past twelve months at the same price at which it
is currently offering to purchase Units. The Purchaser knows of no other sales
of Units in the past twelve months. See "INTRODUCTION--Market Value of the
Units."
2
Who can I talk to if I have questions about the offer?
You can call Equity Resources Group, Inc., who is acting as information agent
for the offer, at 617-876-4800.
3
INTRODUCTION
Equity Resource Weston Fund, Limited Partnership, a Massachusetts
limited partnership, Eggert Dagbjartsson, its general partner and Equity
Resources Group, Inc., its manager (collectively "Weston Fund" or the
"Purchaser"), is offering to purchase 11,025 Units ("Units") of limited
partnership interests in Capital Realty Investors IV Ltd. Partnership, a
Maryland Limited partnership (the "Partnership"). Weston Fund is offering to pay
a purchase price of $40 for each Unit, to the seller in cash, without interest,
less the amount of any distributions declared or paid from any source by the
Partnership with respect to the Units after June 17, 2003 (without regard to the
record date), upon the terms and subject to the conditions set forth in this
Offer to Purchase (the "Offer to Purchase") and in the Agreement of Sale, as
each may be supplemented or amended from time to time (which together constitute
the "Offer") and less the $100 transfer fee charged by the general partner of
the Partnership. The transfer fee is $100 per transaction, not per unit. For
example, a limited partner who sells twenty (20) Units will receive $700 ($800
less the $100 transfer fee). If you tender your Units in the Offer and you were
not entitled to receive any distribution declared or paid from any source by the
Partnership with respect to your Units after June 17, 2003, the amount paid to
you in the Offer will not be reduced by the amount of any distribution you were
not entitled to receive.
The Units sought to be purchased pursuant to the Offer represent, to the
best knowledge of the Purchaser, approximately 15% of the Units outstanding as
of the date of the Offer. Neither Weston Fund, its manager, Equity Resources
Group, Inc., nor its general partner, Eggert Dagbjartsson is an affiliate of the
Partnership. The Offer to Purchase is not conditioned upon the valid tender of
any minimum number of Units. If more than 11,025 Units are validly tendered and
not withdrawn, the Purchaser will accept for purchase up to 11,025 Units, on a
pro rata basis, subject to the terms and conditions described in this Offer to
Purchase, see "OFFER--Section 15--Certain Conditions of the Offer." A limited
partner of the Partnership (a "Limited Partner") may tender any or all Units
owned by that Limited Partner.
PAYMENT OF THE OFFER PRICE
For those Limited Partners who accept the Offer, a cash payment for
Units will be made to those Limited Partners within ten (10) business days
following the expiration date of the Offer, as long as Weston Fund has received
from those Limited Partners a properly completed and duly executed Agreement of
Sale and assurances from the general partner of the Partnership that the address
applicable to the holder of those Units will be changed to the Purchaser's
address. The Purchasers may accept only a portion of the Units tendered by a
Limited Partner in the event a total of more than 11,025 Units are tendereded.
Given the complicated procedure for transferring limited partnership
interests, the potential proration of units, the need to verify correct
ownership information of all tendered units and the need to receive assurances
that the general partner of the Partnership will allow tendered units to be
transferred to the Purchaser, the Purchaser has determined and believes that it
may take up to ten days to issue payment for tendered units
MARKET VALUE OF THE UNITS
Partnership Spectrum, a national reporting service covering limited
partnerships, reported 6 sales for a total of 125 Units in the Partnership at an
average price of $51 per Unit on the informal market "matching service" in the
past 12 months. There was 1 reported sale of 15 Units at a price of $60 per Unit
in the past sixty days. The Purchaser and its affiliates have purchased 407
Units in the Partnership in the past twelve months at the same price at which it
is currently offering to purchase Units.
NO SELLING COMMISSIONS
Units sold in the informal market "matching service" usually require
payment of a selling commission of the greater of $200 or 8.75%. If you accept
the Offer, however, you will not pay any selling commission.
TRANSFER FEES
If you accept the Offer, a $100 transfer fee will be deducted from your
sale proceeds. This transfer fee is charged by the general partner of the
Partnership. The transfer fee is $100 per transaction, not per unit. For
example, a limited partner who sells twenty (20) Units will receive $700 ($800
less the $100 transfer fee).
PURPOSE OF THE OFFER
The purpose of the Offer is to allow the Purchaser to benefit from any one or a
combination of the following:
. any cash distributions, whether these distributions are
classified as a return on, or a return of, capital, from the
operations in the ordinary course of the Partnership;
. any distributions of net proceeds from the sale of assets by the
Partnership;
. any distributions of net proceeds from the liquidation of the
Partnership;
. any cash from any redemption of the Units by the Partnership,
and
. any proceeds that may be received by the Limited Partners or by
the Partnership as a result of any litigation. The Purchaser is
not aware of any current or pending litigation involving the
Partnership.
The Offer is not conditioned upon the valid tender of any minimum number
of the Units. If more than 11,025 Units are tendered and not withdrawn, the
Purchaser will accept up to 11,025 of the tendered Units on a pro rata basis,
subject to the terms and conditions described in this Offer to Purchase. See
"THE OFFER-Section 15--Certain Conditions of the Offer. The Purchaser expressly
reserves the right, in its sole discretion and for any reason, to waive any or
all of the conditions of the Offer, although the Purchaser does not presently
intend to do so.
CERTAIN INFORMATION ABOUT THE PARTNERSHIP
The Partnership is subject to the information and reporting requirements
of the Securities Exchange Act of 1934, as amended ("Exchange Act"), and, in
accordance with that act, is required to file reports and other information with
the Securities and Exchange Commission (the "SEC") relating to its business,
financial condition and other matters. These reports and other information may
be inspected at the public reference facilities maintained by the SEC at room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and is
available for inspection and copying at the regional offices of the SEC located
in Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of these materials can also be obtained from the Public
Reference Room of the SEC in Washington, D.C. at prescribed rates or from the
SEC's Website at http://www.sec.gov.
The Purchaser has filed with the SEC a Tender Offer Statement on
Schedule TO (including exhibits) pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, which provides certain additional
information with respect to the Offer. The Schedule TO and any amendments to the
Schedule TO, including exhibits, may be inspected and copies may be obtained
from the SEC in the manner specified above.
According to publicly available information, there were 73,500 Units
issued and outstanding held by approximately 5,796 limited partners on March 31,
2003.
Information contained in this Offer to Purchase which relates to, or
represents statements made by, the Partnership, has been derived from
information provided in reports and other information filed with the SEC by the
Partnership.
Limited Partners are urged to read this Offer to Purchase and the
accompanying Agreement of Sale carefully before deciding whether to tender their
Units in the Offer.
2
RISK FACTORS
Before making a decision whether or not to accept the Offer, you should consider
the following Risk Factors:
In making the Offer, there has been no third party valuation or appraisal.
No independent party has been retained by Weston Fund or any other person to
evaluate or render any opinion to Limited Partners with respect to the fairness
of the Offer Price, and no representation is made as to any fairness or other
measures of value that may be relevant to Limited Partners. In making the Offer,
Weston Fund has not based its valuation of the properties owned by the
Partnership on any third-party appraisal or valuation and it is uncertain
whether the Offer Price reflects the value that would be realized upon the sale
of Units by a Limited Partner to a third party. We urge Limited Partners to
consult their own financial and tax advisors in connection with the Offer.
The Offer Price may not represent fair market value of Units.
There is no established or regular trading market for Units, nor is there
another reliable standard for determining the fair market value of the Units.
The Offer Price does not necessarily reflect the price that Limited Partners
might receive in an open market sale of Units. Those prices could be higher than
the Offer Price.
The Offer Price does not take into account any future prospects of the
Partnership.
The Offer Price is speculative in nature and does not ascribe any value to
potential future improvements in the operating performance of the Partnership's
properties.
The Offer Price may not represent the value that a Limited Partner might receive
upon a liquidation of the Partnership.
Although a liquidation of the Partnership is not anticipated in the near future,
you might receive more value if you retain Units until the Partnership is
liquidated. The actual proceeds which might be obtained upon liquidation of the
Partnership are highly uncertain and could be more than the Offer Price. Limited
Partners are not required to accept the Offer and tender their Units.
There may be conflicts of interest with respect to the Offer.
Weston Fund is making the Offer with a view toward making a profit. Accordingly,
there is a conflict between Weston Fund's desire to acquire your Units at a low
price and your desire to sell your Units at a high price. Weston Fund's intent
is to acquire the Units at a discount to the value Weston Fund might ultimately
realize from owning the Units. Although Weston Fund cannot predict the future
value of the Partnership assets on a per Unit basis, the Offer Price could
differ significantly from the net proceeds that could be realized from a current
sale of the properties owned by the Partnership or that may be realized upon
future liquidation of the Partnership.
We may conduct future offers at a higher price.
It is possible that we may conduct a future offer at a higher price than the
Offer Price. That decision will depend on, among other things, the performance
of the Partnership, prevailing economic conditions and our interest in acquiring
additional Units.
If you accept the Offer and sell your Units, you may recognize taxable gain on
your sale.
A sale of Units in the Offer will be a taxable sale, with the result that you
will recognize taxable gain or loss measured by the difference between the
amount realized on the sale and your adjusted tax basis in the Units you
transfer to us. The tax consequences of the Offer to a particular Limited
Partner may be different from those of other Limited Partners and we urge you to
consult your own tax advisor in connection with the Offer.
3
If you accept the Offer and sell your Units, you will lose the right to share in
the future profits of the Partnership.
Limited Partners who sell their Units will be giving up the opportunity to
participate in any future potential benefits associated with ownership of Units,
including the right to participate in any future distribution of cash or
property.
The Purchaser has not engaged a depository to hold tendered units until payment.
A depository is an independent agent who holds tendered units until payment. The
Purchaser has not engaged a depository for the Offer and the transfer of units
will not be dependent on a depository's determination that payment has been
made. The primary risk associated with the Purchaser's decision to not engage a
depository is that the Purchaser will have access to tendered units before all
terms of the Offer (including payment for the Units) are complete.
The offer will increase our stake in the Partnership.
Weston Fund and its affiliates currently own 8,843 of the Partnership's
outstanding Units. If Weston Fund purchases 11,025 Units, Weston Fund and its
affiliates will own 27.03% of the Partnership's outstanding Units. Although this
would not represent a majority interest, this increase in ownership would give
Weston Fund and its affiliates increased control over any vote of the Limited
Partners.
4
THE OFFER
SECTION 1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for up to 11,025 Units that are validly tendered
on or prior to the Expiration Date (as defined below). The term "Expiration
Date" means 12:00 midnight, Eastern Time, on July 17, 2003, unless the Purchaser
extends the period of time for which the Offer is open, in which event the term
"Expiration Date" shall mean the latest date on which the Offer, as so extended
by the Purchaser, shall expire.
The Offer is conditioned on satisfaction of certain conditions. See
"Offer--Section 15--Certain Conditions of the Offer," which sets forth in full
the conditions of the Offer. The Purchaser will not be required to accept for
payment or to pay for any Units tendered, and may amend or terminate the Offer
if:
.. the Purchaser shall not have confirmed to its reasonable satisfaction
that, upon purchase of the Units, the Purchaser will be entitled to
receive all distributions, from any source, from the Partnership after
June 17, 2003, and that the Partnership will change the address applicable
to the holder of the Units tendered in the Offer to Purchaser's address;
.. the Agreement of Sale is not properly completed and duly executed.
Purchaser reserves the right (but shall not be obligated) to waive any
or all of these conditions. If any or all of those conditions have not been
satisfied or waived by the Expiration Date, Purchaser reserves the right (but
shall not be obligated) to (i) decline to purchase any of the Units tendered,
(ii) terminate the Offer and return all tendered Units to tendering Limited
Partners, (iii) waive all of the unsatisfied conditions and, subject to
complying with applicable rules and regulations of the SEC, purchase all Units
validly tendered, (iv) extend the Offer and, subject to the right of Limited
Partners to withdraw Units until the Expiration Date, retain the Units that have
been tendered during the period or periods for which the Offer is extended or
(v) otherwise amend the Offer.
SECTION 2. PRORATION; ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS.
If fewer than 11,025 Units are validly tendered and not properly
withdrawn prior to the Expiration Date, the Purchaser, upon the terms and
subject to the conditions of the Offer, will accept for payment all of those
Units so tendered.
If more than 11,025 Units are validly tendered and not properly
withdrawn on or prior to the Expiration Date, the Purchaser, upon the terms and
subject to the conditions of the Offer, will accept for payment 11,025 Units so
tendered, on a pro rata basis, with appropriate adjustments to avoid tenders of
fractional Units.
In the event that proration is required, the Purchaser will determine
the precise number of Units to be accepted and will announce the final results
of proration as soon as practicable, but in no event, later than five (5)
business days following the Expiration Date. A letter announcing the final
results of proration will be mailed to all tendering limited partners and a
press release announcing the final results of proration will be released.
Purchaser will not pay for any Units tendered until after the final results of
proration have been determined.
If, prior to the Expiration Date, the Purchaser increases the Offer
Price, the increased Offer Price will be paid for all Units accepted for payment
pursuant to the Offer, whether or not those Units were tendered prior to such
increase.
SECTION 3. PROCEDURES FOR TENDERING UNITS.
Valid Tender. For Units to be validly tendered pursuant to the Offer, a properly
completed and duly executed Agreement of Sale must be received by Weston Fund at
its address set forth on the back cover of this Offer to Purchase, on or prior
to the Expiration Date and not withdrawn prior to the Expiration Date. A Limited
Partner may
5
tender any or all Units owned by that Limited Partner. At least ten (10)
business days will remain in the offer in the event the offer price is reduced
by any distributions with respect to the Units.
The delivery of the Agreement of Sale will be deemed made only when
actually received by Weston Fund. Sufficient time should be allowed by a Limited
Partner electing to tender Units in the Offer to ensure timely delivery.
Backup Federal Income Tax Withholding. A tendering Limited Partner must verify
that Limited Partner's correct taxpayer identification number or social security
number, as applicable, and make certain warranties and representations that it
is not subject to backup federal income tax withholding as set forth in the
Agreement of Sale. Any Limited Partner wishing to tender Units under the Offer
who is subject to backup withholding, including nonresident aliens and foreign
corporations, should contact the Purchaser's information agent for information
regarding the tender procedure for limited partners subject to backup
withholding.
Tenders by Beneficial Holders. A tender of Units can only be made by the
Registered Owner of those Units, and the party whose name appears as Registered
Owner must tender those Units on behalf of any beneficial holder, as set forth
in the "Instructions" to the Agreement of Sale.
Determination of Validity; Rejection of Units; Waiver of Defects; No Obligation
to Give Notice of Defects. All questions as to the form of documents and
validity, eligibility (including time of receipt), and acceptance for payment of
any tender of Units will be determined by the Purchaser, in its sole discretion,
which determination will be final and binding on all parties.
Other Requirements. By executing and delivering the Agreement of Sale, a
tendering Limited Partner (who does not properly withdraw acceptance of the
Offer prior to the Expiration Date) irrevocably appoints the Purchaser as that
Limited Partner's proxy, with full power of substitution. All proxies are
irrevocable and coupled with an interest in the tendered Units and empower the
Purchaser to exercise all voting and other rights of such Limited Partner as it
in its sole discretion may deem proper at any meeting of Limited Partners. The
complete terms and conditions of the proxy are set forth in the Agreement of
Sale.
By executing and delivering the Agreement of Sale, a tendering Limited
Partner also irrevocably constitutes and appoints the Purchaser and its
designees as the Limited Partner's attorneys-in-fact. This appointment will be
effective upon Purchaser's payment for the Units. The complete terms and
conditions of the Power of Attorney are set forth in the Agreement of Sale.
By executing and delivering the Agreement of Sale, a tendering Limited
Partner will irrevocably assign to the Purchaser and its assignees all right,
title, and interest that the Limited Partner has to the Units, including,
without limitation, any and all distributions made by the Partnership after June
17, 2003, regardless of the fact that the record date for any such distribution
may be a date prior to the Expiration Date and whether those distributions are
classified as a return on, or a return of, capital. The complete terms and
conditions of the assignment of the Units are set forth in the Agreement of
Sale.
By executing the Agreement of Sale, a tendering Limited Partner
represents that either:
. the Limited Partner is not a "plan" subject to Title 1 of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA") or Section 4975 of the Internal Revenue Code of 1986,
as amended (the "Code"), or an entity deemed to hold "plan
assets" within the meaning of 29 C.F.R Section 2510-3-101 of any
"plan"; or
. the tender and acceptance of Units pursuant to the applicable
Offer will not result in a nonexempt prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code.
By executing the Agreement of Sale, a tendering Limited Partner also
agrees that regardless of any provision in the Partnership's Agreement of
Limited Partnership which provides that a transfer is not effective until a date
subsequent to the date of any transfer of Units under the Offer, the Offer Price
will be reduced by any distributions with respect to the Units after June 17,
2003, whether those distributions are classified as a return on, or
6
a return of, capital, unless, with respect to a limited partner, that limited
partner was not entitled to receive that distribution.
Limited Partners will not have any appraisal or dissenters' rights with
respect to or in connection with the Offer.
SECTION 4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Units made
pursuant to the Offer are irrevocable. Units tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date. In the event that the
Offer is extended beyond the Expiration Date, the Units tendered may be
withdrawn at any time prior to the end of the extension period. In addition,
limited partners have a right to withdraw tendered shares at any time after the
expiration of the offer until we accept Units for payment. Tendering limited
partners will additionally have withdrawal rights as provided under Exchange Act
14(d)(5).
In order for a withdrawal to be effective, a signed, written
transmission notice of withdrawal must be timely received by the Purchaser at
its address set forth on the last page of this Offer to Purchase. Any notice of
withdrawal must specify the name of the person who tendered the Units to be
withdrawn, and the number of Units to be withdrawn. Any Units properly withdrawn
will be deemed not validly tendered for purposes of the Offer, but may be
re-tendered at any subsequent time prior to the Expiration Date by following the
procedures described in Section 3.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding.
SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT.
The Purchaser expressly reserves the right, in its sole discretion, at
any time: to extend, for a specific period of time, the Offer's expiration date;
and to amend the Offer in any respect (including, without limitation, by
increasing or decreasing the Offer Price). In previous offers for units in this
and other partnerships, the Purchaser has chosen to extend the offer period for
10 to 20 business days. The Purchaser may chose, in its sole discretion, to
extend the Offer in the same manner, but does not plan to extend the Offer
beyond 20 business days.
Any extension, or amendment will be followed as promptly as practicable
by a mailing notifying each Limited Partner, the mailing in the case of an
extension to be issued no later than 9:00 a.m., Eastern Time, on the next
business day after the previously scheduled Expiration Date, in accordance with
Rule 14e-1(d) under the Exchange Act. Any extension or amendment will be
announced by press release on the date of the amendment or extension in
accordance with Rule 14e-1(d). Any mailing or press release announcing an
amendment or extension will include the approximate number of Units tendered at
the time of the extension or amendment.
If the Purchaser makes a material change in the terms of the Offer or
the information concerning the Offer or waives a material condition of the
Offer, the Purchaser will extend the Offer to the extent required by the rules
and regulations of the SEC. The minimum period during which an Offer must remain
open following a material change in the terms of the Offer or of information
concerning the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
relative materiality of the change in the terms or information. With respect to
a change in price or a change in percentage of securities sought, however, a
minimum ten-business-day period is generally required to allow for adequate
dissemination to security holders and for investor response. As used in this
Offer, "business day" means any day other than a Saturday, Sunday, or a federal
holiday and consists of the time period from 12:01 a.m. through 12:00 midnight,
Eastern Time.
Because Purchaser is offering to purchase less than 100% of the Units,
there will be no "subsequent offering period" as defined in Rule 14d-11 of the
Exchange Act.
SECTION 6. CERTAIN TAX CONSEQUENCES
7
The following is a summary of certain federal income tax consequences of
a sale of Units pursuant to the Offer assuming that the Partnership is a
partnership for federal income tax purposes and that it is not a "publicly
traded partnership" as defined in Section 7704 of the Internal Revenue Code of
1986, as amended (the "Code"). This summary is based on the Code, applicable
Treasury Regulations thereunder, administrative rulings, practice and procedures
and judicial authorities as of the date of the Offer. All of the foregoing are
subject to change, and any change could affect the continuing accuracy of this
summary. This summary does not address all aspects of federal income taxation
that may be relevant to a particular Limited Partner in light of that Limited
Partner's specific circumstances, or that may be relevant to Limited Partners
subject to special treatment under the federal income tax laws (for example,
foreign persons, dealers in securities, banks, insurance companies and
tax-exempt entities), nor does it address any aspect of state, local, foreign or
other tax laws. Sales of Units pursuant to the Offer will be taxable
transactions for federal income tax purposes, and may also be taxable
transactions under applicable state, local, foreign and other tax laws. EACH
LIMITED PARTNER SHOULD CONSULT HIS OR HER TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO THAT LIMITED PARTNER OF SELLING UNITS PURSUANT TO THE OFFER,
INCLUDING, WITHOUT LIMITATION, FEDERAL, STATE AND LOCAL TAX CONSEQUENCES.
Consequences to tendering Limited Partners. A Limited Partner will
recognize gain or loss on a sale of Units pursuant to the Offer equal to the
difference between (i) the Limited Partner's "amount realized" on the sale and
(ii) that Limited Partner's adjusted tax basis in the Units sold. The "amount
realized" with respect to a Unit sold pursuant to the Offer will be a sum equal
to the amount of cash received by the Limited Partner for the Unit plus the
amount of Partnership liabilities allocable to the Unit (as determined under
Code Section 752). The amount of a Limited Partner's adjusted tax basis in Units
sold pursuant to the Offer will vary depending upon that Limited Partner's
particular circumstances and will be affected by allocations of Partnership
taxable income or loss to a Limited Partner with respect to those Units, and
distributions to a Limited Partner. In this regard, tendering Limited Partners
will be allocated a pro rata share of the Partnership's taxable income or loss
with respect to Units sold pursuant to the Offer through the last day of the
month preceding the effective date of the sale.
Subject to Code Section 751 (discussed below), the gain or loss
recognized by a Limited Partner on a sale of a Unit pursuant to the Offer
generally will be treated as a capital gain or loss if the Unit was held by the
Limited Partner as a capital asset. Changes to the federal income tax laws in
recent years modified applicable capital gain rates and holding periods. Gain
with respect to Units held for more than one year will be taxed at long-term
capital gain rates not exceeding 20 percent. Gain with respect to Units held one
year or less will be taxed at ordinary income rates, up to a maximum rate of
39.6 percent. To the extent of depreciation recapture of previously deducted
straight-line depreciation with respect to real property, a maximum rate of 25
percent is imposed (assuming eligibility for long-term capital gain treatment).
A portion of the gain realized by a Limited Partner with respect to the
disposition of the Units may be subject to this maximum 25 percent rate to the
extent that the gain is attributable to depreciation recapture inherent in the
properties of the Partnership.
Capital losses are deductible only to the extent of capital gains,
except that non-corporate taxpayers may deduct up to $3,000 of capital losses in
excess of the amount of their capital gains against ordinary income. Excess
capital losses generally can be carried forward to succeeding years (a
corporation's carry forward period is five years and non-corporate taxpayer can
carry forward such capital losses indefinitely). In addition, corporations (but
not non-corporate taxpayers) are allowed to carry back excess capital losses to
the three preceding taxable years.
A portion of Limited Partner's gain or loss on a sale of a Unit pursuant
to the Offer may be treated as ordinary income or loss. That portion will be
determined by allocating a Limited Partner's amount realized for a Unit between
amounts received in exchange for all or a part of the Limited Partner's interest
in the Partnership attributable to "Section 751 items" and non-Section 751
items. Section 751 items include "inventory items" and "unrealized receivables"
(including depreciation recapture) as defined in Code Section 751. The
difference between the portion of the Limited Partners amount realized that is
allocable to Section 751 items and the portion of the Limited Partner's adjusted
tax basis in the Units sold that is so allocable will be treated as ordinary
income or loss. The difference between the Limited Partner's remaining amount
realized and adjusted tax basis will be treated as capital gain or loss assuming
the Units were held by the Limited Partner as a capital asset.
8
Under Code Section 469, a non-corporate taxpayer or personal service
corporation can deduct passive activity losses in any taxable year only to the
extent of that person's passive activity income for such year. Closely held
corporations may offset passive activity losses against passive activity income
and active income, but may not offset such losses against portfolio income. If a
Limited Partner is subject to these restrictions and has unused passive losses
from prior years, those losses will generally become available upon a sale of
Units, provided the Limited Partner sells all of his or her Units. If a Limited
Partner does not sell all of his or her Units, the deductibility of those losses
would continue to be subject to the passive activity loss limitation until the
Limited Partner sells his or her remaining Units.
Gain realized by a foreign Limited Partner on a sale of a Unit pursuant
to the Offer will be subject to federal income tax. Under Code Section 1445 of
the Code, the transferee of a partnership interest held by a foreign person is
generally required to deduct and withhold a tax equal to 10% of the amount
realized on the disposition. Purchaser will withhold 10% of the amount realized
by a tendering Limited Partner from the Purchase Price payable to that Limited
Partner unless the Limited Partner properly completes and signs the Agreement of
Sale certifying the accuracy of the Limited Partner's TIN and address, and that
the Limited Partner is not a foreign person. Amounts withheld are creditable
against a foreign Limited Partner's federal income tax liability. If amounts
withheld are in excess of such liability, a refund can be obtained.
A Limited Partner who tenders Units must file an information statement
with his or her federal income tax return for the year of the sale which
provides the information specified in Treasury Regulation Section 1.751-1(a)(3).
The selling Limited Partner must also notify the Partnership of the date of the
transfer and the names, addresses and tax identification numbers of the
transferors and transferees within 30 days of the date of the transfer (or, if
earlier, January 15 of the following calendar year).
Consequences to a non-tendering Limited Partner. Purchaser anticipates
that a Limited Partner who does not tender his or her Units will not realize any
material federal income tax consequences as a result of the decision not to
tender.
SECTION 7. PURPOSE AND EFFECTS OF THE OFFER.
The Purchaser is making the Offer for investment purposes with a view
towards making a profit. The Purchaser's intent is to acquire the Units at a
discount to the value that the Purchaser might ultimately realize from owning
the Units. No independent party has been retained by the Purchaser to evaluate
or render any opinion with respect to the fairness of the Offer Price and no
representation is made as to the fairness of the Offer Price. The Purchaser may
in the future seek to acquire additional Units through private purchases, one or
more future tender offers, or by any other means deemed advisable. However, the
Purchaser has no plans that relate to or would result in:
. any extraordinary transaction, such as a merger, consolidation
or liquidation, involving the Partnership;
. any purchase, sale or transfer of a material amount of assets of
the Partnership;
. any material change in the distribution policy of the
Partnership or in its capitalization or indebtedness;
. any change in the present Board of Directors or management of
the Partnership or the General Partner;
. any material change in the Partnership's structure or business;
. any class of securities of the Partnership to be listed or
delisted; or
. any class of securities of the Partnership to become eligible
for termination of registration under the Exchange Act.
The Purchaser established the Offer Price based on its own review of the
Partnership, taking into account primarily the prices paid by the Purchaser in
its most recent purchases of Units. Based on its belief that there have been no
material changes in the Partnership since the date of its last offer, the
Purchaser determined to offer to
9
purchase Units at the same price it has purchased Units at over the previous
twelve months. The Purchaser was unable to determine a net asset value (NAV) or
liquidation value for the Partnership because of the Partnership's two-tiered
structure. The Partnership currently holds limited partnership interests in
twenty-one limited partnerships (the "Local Partnerships"). The majority of the
Local Partnerships own low-income housing projects that are subject to
government regulations limiting the amount of money that the Local Partnerships
can distribute to the Partnership. Government regulations also limit the
properties' rent levels and may limit the Local Partnerships' ability to
refinance or sell these properties. As a result of the Partnership's two-tiered
structure, government regulated income restrictions and the potential inability
to sell or refinance a portion of the Partnership's assets, the Purchaser's
offer price may be viewed as speculative in nature. The Purchaser reviewed the
Partnership's Annual Report on Form 10-K for the year ended December 31, 2002
("2002 10 K") and its quarterly report on Form 10-Q for the period ended March
31, 2003.
Other measures of value may be relevant to a Limited Partner, and all
Limited Partners are urged to carefully consider all of the information
contained in the Offer to Purchase and Agreement of Sale and to consult with
their own advisors (tax, financial, or otherwise) in evaluating the terms of the
Offer before deciding whether to tender Units. The Offer is being made as a
speculative investment by the Purchaser based on its belief that there is
inherent underlying value in the assets of the Partnership. The purpose of the
Offer is to allow the Purchaser to benefit to the greatest extent possible from
any one or a combination of the following:
. any cash distributions, whether those distributions are
classified as a return on, or a return of, capital, from the operations in the
ordinary course of the Partnership;
. any distributions of net proceeds from the sale of assets by the
Partnership;
. any distributions of net proceeds from the liquidation of the
Partnership;
. any cash from any redemption of the Units by the Partnership,
and
. any proceeds that may be received by the Limited Partners or by
the Partnership as a result of litigation (the Purchaser is not aware of any
current or pending litigation involving the Partnership).
Price Range of Units; Lack of Public Market. At present, privately negotiated
sales and sales through intermediaries (e.g., through the trading system
operated by the American Partnership Board, which publishes sell offers by
holders of Units) are the only means available to a Limited Partner to liquidate
an investment in Units (other than by accepting the Offer) because the Units are
not listed or traded on any national securities exchange or quoted on NASDAQ.
The Purchaser and its affiliates have purchased 407 Units in the Partnership in
the past twelve months.
SECTION 8. FUTURE PLANS.
Future Plans of the Purchaser The Purchaser is acquiring the Units pursuant to
the Offer for investment purposes. The Purchaser and its affiliates may acquire
additional Units through private purchases, one or more future tender offers, or
by any other means deemed advisable. The Purchaser does not currently have any
plan or purpose (either formal of informal) of acquiring limited partnership
units in a series of successive and periodic offers in order to acquire units
over time at the lowest possible price at which unit holders are willing to
sell. The Purchaser is, however, involved in the business of acquiring units in
limited partnerships and may conduct future offers for units in the Partnership.
Though the Purchaser does not currently have a time frame or plan in place for
future offers, it believes the best time to conduct offers are generally at the
end of the year and shortly after tax season. This belief is based on the fact
that one of the primary factors in a limited partners decision concerning the
offer is the elimination of ongoing tax consequences and filing requirements. If
the Purchaser does conduct future offers, it will determine pricing for those
offers based on its valuation of the Partnership at the time of offer.
Future Plans of the Partnership. Except as otherwise set forth in this Offer to
Purchase, it is expected that following the Offer, the business and operations
will be continued substantially as they are currently being
10
conducted. For a description of the Partnership's business, Limited Partners are
urged to review the Partnership's 2002 10-K and its 10-Q for the period ended
March 31, 2003.
SECTION 9. PAST CONTACT AND NEGOTIATIONS WITH GENERAL PARTNER.
Since 1983, and continuing until the date of this Offer, various
affiliates of the Purchaser have engaged in ongoing conversations and exchanges
of correspondence with various affiliates of the Partnership and affiliates of
the general partner of the Partnership with regard to these affiliates'
ownership of Units and other partnership interests in which the general partner
of the Partnership is affiliated. These conversations have principally involved
requests to obtain the list of Limited Partners and other information concerning
the Partnership. No discussions have taken place between the Purchaser and its
affiliates and the Partnership and its affiliates with regard to this Offer.
SECTION 10. CERTAIN INFORMATION CONCERNING THE PARTNERSHIP.
Except as otherwise indicated, information contained in this Section 10
is based on filings made by the Partnership with the SEC. The Purchaser has no
information that any statements contained in this Section 10 are untrue and
cannot verify the accuracy or completeness of any information derived from those
filings. The Purchaser cannot verify any failure by the Partnership to disclose
events unknown to the Purchaser that may have occurred and/or may affect the
significance or accuracy of any information contained in this Section 10.
The Partnership is a limited partnership formed under the Maryland
Revised Uniform Limited Partnership Act on December 7, 1983. On June 13, 1984,
the Partnership commenced offering 75,000 units of limited partner interest
through a public offering. The Partnership closed the offering on August 31,
1984, when 73,500 units of limited partnership interest became fully subscribed.
The General Partners of the Partnership are C.R.I., Inc. (CRI), which is
the Managing General Partner, and current and former shareholders of CRI.
Services for the Partnership are performed by CRI, as the Partnership has no
employees of its own.
The Partnership was formed to invest in real estate, which is the
Partnership's principal business activity, by acquiring and holding a limited
partner interest in limited partnerships (Local Partnerships). The Partnership
originally made investments in 47 Local Partnerships. As of December 31, 2002,
the Partnership retained investments in 25 Local Partnerships. Each of these
Local Partnerships owns and operates a federal or state government-assisted
apartment complex, which provides housing principally to the elderly and/or to
individuals and families of low or moderate income, or a conventionally financed
apartment complex. The original objectives of these investments, not necessarily
in order of importance, were to:
(i) preserve and protect the Partnership's capital;
(ii) provide, during the early years of the Partnership's operations,
current tax benefits to the partners in the form of tax losses
which the partners could use to offset income from other
sources;
(iii) provide capital appreciation through increases in the value of
the Partnership's investments and increased equity through
periodic payments on the indebtedness on the apartment
complexes; and
(iv) provide cash distributions from sale or refinancing of the
Partnership's investments and, on a limited basis, from rental
operations.
The Local Partnerships in which the Partnership invested were organized
by private developers who acquired the sites, or options thereon, applied for
mortgage financing and applicable mortgage insurance and/or subsidies, and, who
generally remain as the local general partners in the Local Partnerships. In
most cases, the local general partners of the Local Partnerships retain
responsibility for maintaining, operating and managing the projects. However, in
the event of non-compliance with the Local Partnerships' partnership agreements,
the local general partner may be removed and replaced with another local general
partner or with an affiliate of the Partnership's Managing General Partner. As
of December 31, 2002, the Partnership's investment portfolio currently consisted
of the following limited partnerships:
11
PARTNERSHIP LOCATION
----------- --------
Asbury Tower Asbury Park, NJ
Campbell Terrace Chicago, IL
Canonsburg House Canonsburg, PA
Cedar Point Springfield, IL
Char House Charleroi, PA
Chippewa County Chippewa Falls, WI
Clearfield Hills II Clearfield, UT
Crescent Gardens Wilson, NC
Fairway Park Apts. Naperville, I
Glenridge Gardens Augusta, ME
Hale Ohana Koloa, Kauai, HI
Harborview Apartments St. Croix, U.S. Virgin Islands
Jewish Federation Cherry Hill, NJ
Liberty Tower California, PA
Madison Grand Rapids, MI
Mary Allen West Tower Galesburg, IL
Northridge Park Salinas, CA
Pilgrim Tower East Pasadena, CA
Pilgrim Tower North Pasadena, CA
Riverview Manor Fort Atkinson, WI
Thornwood House University Park, IL
Tradewinds Terrace Traverse City, MI
Valley View Rockford, IL
Wellington Woods Clarkson, NY
Westport Village Freeport, IL
In January 2003, the Partnership's interests in Wellington Woods,
Canonsburg, Char House and Liberty Towers were transferred to the entities
holding purchase money notes on those properties. As of May 15, 2003, the local
managing general partner of Campbell Terrace Associates is negotiating a
contract to sell the property owned by that local partnership. The Purchaser has
no further information regarding those negotiations and there are no assurances
that a sale of the property will occur. For more information on these
transactions and on the Partnership's remaining limited partnerships, please see
the Partnership's 2002 10-K and its 10-Q for the period ended March 31, 2003.
Originally Anticipated Term of Partnership; Alternatives. The Partnership was
formed to invest in real estate by acquiring and holding a limited partnership
interest in limited partnerships that own and operate federal or state
government-assisted or conventionally financed apartment properties located
throughout the United States. The Partnership shall continue until December 31,
2038 unless sooner dissolved in accordance with the Partnership Agreement.
Selected Financial and Property-Related Data. Set forth on the following pages
is a summary of certain financial and statistical information with respect to
the Partnership, all of which has been excerpted or derived from the
Partnership's most recent Form 10K for the year ended December 31, 2002. More
comprehensive financial and other information is included in those reports and
other documents filed by the Partnership with the SEC, and the following summary
is qualified in its entirety by reference to those reports and other documents
and all the financial information and related notes contained in those reports.
12
CAPITAL REALTY INVESTORS IV LTD. PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2002
For the years ended
December 31,
2002 2001
-------------- --------------
ASSETS
Investments in and advances to partnerships $ 12,763,288 $ 13,097,636
Investment in partnerships held for sale or transfer 3,037,231 10,760,494
Investment in partnerships held in escrow 3,006,602 3,084,883
Cash and cash equivalents 4,862,869 4,816,347
Acquisition fees, principally paid to related parties,
net of accumulated amortization of
$217,097 and $249,448, respectively 259,342 332,410
Property purchase costs, net of accumulated
amortization of $164,138 and $212,838, respectively 188,018 275,379
Other assets 113 163
-------------- --------------
Total assets $ 24,117,463 $ 32,367,312
============== ==============
LIABILITIES AND PARTNERS' DEFICIT
Due on investments in partnerships $ 22,955,081 $ 27,732,019
Accrued interest payable 94,373,145 94,666,676
Accounts payable and accrued expenses 161,982 126,219
-------------- --------------
Total liabilities 117,490,208 122,524,914
-------------- --------------
Commitments and contingencies
Partners' deficit:
Capital paid in:
General Partners 2,000 2,000
Limited Partners 73,501,500 73,501,500
-------------- --------------
Less:
Accumulated distributions to partners (9,746,963) (9,122,210)
Offering costs (7,562,894) (7,562,894)
Accumulated losses (149,566,388) (146,975,998)
-------------- --------------
Total partners' deficit (93,372,745) (90,157,602)
-------------- --------------
Total liabilities and partners' deficit $ 24,117,463 $ 32,367,312
============== ==============
13
CAPITAL REALTY INVESTORS IV LTD. PARTNERSHIP
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
For the years ended
December 31,
2002 2001
-------------- --------------
Share of income from partnerships $ 1,887,657 $ 1,192,973
-------------- --------------
Other revenue and expenses:
Revenue:
Gain from extinguishment of debt 6,062,288 16,778,654
Interest 62,631 231,154
-------------- --------------
6,124,919 17,009,808
Expenses:
Interest 9,642,079 10,280,813
Management fee 375,000 375,000
General and administrative 306,285 300,569
Professional fees 256,692 197,141
Amortization of deferred costs 22,910 37,874
-------------- --------------
10,602,966 11,191,397
Total other revenue and expenses (4,478,047) 5,818,411
-------------- --------------
(Loss) income before gain on disposition of investments in
partnerships (2,590,390) 7,011,384
Gain on disposition of investments in partnerships -- 719,413
-------------- --------------
Net (loss) income $ (2,590,390) $ 7,730,797
============== ==============
Net (loss) income allocated to General Partners (1.51%) $ (39,115) $ 116,735
============== ==============
Net (loss) income allocated to Initial and Special Limited
Partners (1.49%) $ (38,597) $ 115,189
============== ==============
Net (loss) income allocated to Additional Limited
Partners (97%) $ (2,512,678) $ 7,498,873
============== ==============
Net (loss) income per unit of Additional Limited Partner
Interest, based on 73,500 units outstanding $ (34.19) $ 102.03
============== ==============
14
CAPITAL REALTY INVESTORS IV LTD. PARTNERSHIP
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2002
For the years ended
December 31,
2002 2001
-------------- --------------
Cash flows from operating activities:
Net (loss) income $ (2,590,390) $ 7,730,797
Adjustments to reconcile net (loss) income to net cash
used in operating activities:
Share of income from partnerships (1,887,657) (1,192,973)
Amortization of deferred costs 22,910 37,874
Gain on disposition of investments in partnerships -- (719,413)
Gain from extinguishment of debt (6,062,288) (16,778,654)
Changes in assets and liabilities:
Decrease (increase) in advances to partnerships 54,500 (9,257)
Decrease (increase) in other assets 50 (163)
Increase in accrued interest payable 9,642,079 10,280,813
Payment of purchase money note interest (276,506) (408,320)
Increase (decrease) in accounts payable and accrued
expenses 35,763 (348,109)
-------------- --------------
Net cash used in operating activities (1,061,539) (1,407,405)
-------------- --------------
Cash flows from investing activities:
Receipt of distributions from partnerships 1,849,933 842,573
Proceeds from disposition of investments in partnerships 5,476,101 1,135,324
Decrease in sales proceeds receivable -- 1,545,628
-------------- --------------
Net cash provided by investing activities 7,326,034 3,523,525
-------------- --------------
Cash flows from financing activities:
Payment of purchase money note principal (1,925,000) (25,000)
Payoff of purchase money notes and related interest (3,668,220) (4,590,324)
Distribution to General Partners and Initial and
Special Limited Partners (37,857) --
Distributions to Additional Limited Partners (586,896) (733,670)
-------------- --------------
Net cash used in financing activities (6,217,973) (5,348,994)
-------------- --------------
Net increase (decrease) in cash and cash equivalents 46,522 (3,232,874)
Cash and cash equivalents, beginning of year 4,816,347 8,049,221
-------------- --------------
Cash and cash equivalents, end of year $ 4,862,869 $ 4,816,347
============== ==============
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 1,992,788 $ 1,365,582
============== ==============
15
Other Information. The Partnership is subject to the reporting requirements of
the Exchange Act and accordingly is required to file reports and other
information with the SEC relating to its business, financial results and other
matters. These reports and other documents may be inspected at the SEC's Public
Reference Section, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
where copies may be obtained at prescribed rates, and at the regional offices of
the SEC located in the Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies should be available by mail upon payment of the
SEC's customary charges by writing to the SEC's principal offices at 450 Fifth
Street, N.W., Washington, D.C. 20549. The SEC also maintains a web site that
contains reports, proxy and other information filed electronically with the SEC,
the address of which is http://www.sec.gov.
Cash Distributions History. On April 27, 2001, the Partnership made a cash
distribution of $733,670 ($10.00 per Unit) to Additional Limited Partners who
were holders of record as of April 1, 2001. The distribution was a result of the
sale of Wollaston Manor. On June 28, 2002, the Partnership made a cash
distribution of $586,896 ($8.00 per Unit) to Additional Limited Partners who
were holders of record as of June 1, 2002. The distribution was a result of the
sales of DeAngelis Manor and Matthew XXV. On September 11, 2002, the Partnership
made a cash distribution of $37,857 to the General Partners and Initial and
Special Limited Partners. The distribution was a result of cash resources
accumulated from operations and distributions from Local Partnerships. A review
of the Partnership Agreement indicated that these amounts should have been
distributed in prior years when distributions had been made only to the
Additional Limited Partners.
SECTION 11. BACKGROUND AND REASONS FOR THE OFFER.
The Purchaser is in the business of acquiring fractional investment
interests for long-term retention and seeks to purchase the Units in furtherance
of that strategy. The Purchaser and its affiliates have been in this business
since 1981. The Units acquired as a result of the Offer will be held as
long-term investments and not with a view to a resale. The Purchaser does not
acquire general partner interests nor is it engaged in property management. The
Purchaser does not currently intend to establish control of the Partnership in
the future through subsequent tender offers or other purchasers of Units.
SECTION 12. CERTAIN INFORMATION CONCERNING THE PURCHASER.
The Purchaser is a Massachusetts limited partnership which holds limited
partnership interests in real estate with other limited partnerships. The
Manager of the Purchaser is Equity Resources Group, Inc., a Massachusetts
corporation ("Manager"), which is controlled by Eggert Dagbjartsson ("ED"), who
is also the general partner of the Purchaser. ERG is engaged in real estate
investment and consulting. The Purchaser's, ERG's and Mr. Dagbjartsson's offices
are located at 44 Brattle Street Cambridge, MA 02138. For certain information
concerning the members of the Manager, see Schedule 1 to this Offer to Purchase.
Except as otherwise set forth in this Offer to Purchase,
. neither the Purchaser, Manager, or ED, or, to the best knowledge
of the Purchaser, any of the persons listed on Schedule 1, or
any affiliate of the Purchaser beneficially owns or has a right
to acquire any Units;
. neither the Purchaser, Manager, or ED, or, to the best knowledge
of the Purchaser, any of the persons listed on Schedule 1, or
any affiliate of the Purchaser or any member, director,
executive officer, or subsidiary of any of the foregoing has
effected any transaction in the Units;
. neither the Purchaser, Manager, or ED, or, to the best knowledge
of the Purchaser, any of the persons listed on Schedule 1 or any
affiliate of the Purchaser has any contract, arrangement,
understanding, or relationship with any other person with
respect to any securities of the Partnership, including but not
limited to, contracts, arrangements, understandings, or
relationships concerning the transfer or voting thereof, joint
ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss, or the giving or withholding
of proxies, consents, or authorizations;
. there have been no transactions or business relationships which
would be required to be disclosed under the rules and
regulations of the SEC between the Purchaser, Manager, or ED,
or, to the best
16
knowledge of the Purchaser, any of the persons listed on
Schedule 1 or any affiliate of the Purchaser, on the one hand,
and the Partnership or affiliates, on the other hand; and
. there have been no contracts, negotiations, or transactions
between the Purchaser, Manager, or ED, or to the best knowledge
of the Purchaser, any of the persons listed on Schedule 1 or any
affiliate of the Purchaser, on the one hand, and the Partnership
or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer (other than as
described in Section 8 of this Offer) or other acquisition of
securities, an election or removal of the General Partner, or a
sale or other transfer of a material amount of assets.
SECTION 13. SOURCE AND AMOUNT OF FUNDS.
The Purchaser expects that approximately $441,000 (exclusive of fees and
expenses) will be required to purchase 11,025 Units, if tendered. The Purchaser
will either use cash on hand or will obtain those funds from capital
contributions from its members, each of whom have an aggregate net worth
substantially in excess of the amount required to be contributed to the
Purchaser to purchase the 11,025 Units. The Purchaser is not a public company
and has not prepared audited financial statements. The Purchaser and its members
have adequate cash and cash equivalents to fund payment to selling limited
partners. As of June 13, 2003, the Purchaser had $500,000 in cash on hand. The
members of the Partnership have informed the Partnership that they will
contribute any amount required to purchase the 11,025 Units. No third party
financing is required in connection with the Offer. The Purchaser represents to
all tendering Limited Partners that the Purchaser has the financial wherewithal
to accept for payment and thereby purchase all 11,025 Units that the Purchaser
has offered to purchase in this Offer to Purchase. No alternative-financing plan
exists.
SECTION 14. VOTING POWER.
The Purchaser and funds controlled by Equity Resources Group currently
own 8,843 of the Partnership's outstanding Units. If the Purchaser purchases an
additional 11,025 Units, the Purchaser and the funds controlled by Equity
Resources Group will own 27.03% of the Partnership's outstanding Units. Although
this would not represent a majority interest, this increase in ownership would
give the Purchaser and its affiliates increased control over any vote of the
Limited Partners.
SECTION 15. CERTAIN CONDITIONS OF THE OFFER
Purchaser will not be required to accept for payment or to pay for any
Units tendered, and may amend or terminate the Offer if: the general partner of
the Partnership or its transfer agent are unable to confirm after being
contacted by the Purchaser that, upon the purchase of the Units, the Purchaser
will be entitled to receive all distributions, from any source, from the
Partnership after June 17, 2003, and that the Partnership will change the
address associated with the holder of the Units to Purchaser's address; or the
Agreement of Sale is not properly completed and duly executed.
Limited partners may independently confirm the satisfaction of the first
condition of this Section 15 by contacting the general partner of the
Partnership at the telephone number located in Section 10 of the Offer. The
conditions set forth in this Section 15 are for the sole benefit of the
Purchaser and its affiliates and may be asserted by the Purchaser regardless of
the circumstances giving rise to that condition. The conditions set forth in
this Section 15 may be waived by the Purchaser, in whole or in part, from time
to time in its sole discretion on or prior to the expiration of the offer. The
failure by the Purchaser at any time on or prior to the expiration of the offer
to exercise these rights will not be deemed a waiver of those rights, which
rights will be deemed to be ongoing and may be asserted at any time and from
time to time on or prior to the expiration of the offer. Any determination by
the Purchaser concerning the events described in this Section 15 will be final
and binding upon all parties. The Purchaser confirms that it has disclosed all
conditions of the Offer and that all conditions of the Offer must be satisfied
prior to the expiration of the Offer.
SECTION 16. CERTAIN LEGAL MATTERS AND REQUIRED REGULATORY APPROVALS.
17
Except as set forth in this Offer to Purchase, based on its review of
filings made by the Partnership with the SEC and other publicly available
information regarding the Partnership, the Purchaser is not aware of any
licenses or regulatory permits that would be material to the business of the
Partnership, taken as a whole, and that might be adversely affected by the
Purchaser's acquisition of Units in the Offer. In addition, the Purchaser is not
aware of any filings, approvals, or other actions by or with any domestic,
foreign, or governmental authority or administrative or regulatory agency that
would be required prior to the acquisition of Units by the Purchaser pursuant to
the Offer. Should any approval or other action be required, there can be no
assurance that any additional approval or action, if needed, would be obtained
without substantial conditions or that adverse consequences might not result to
the Partnership's business, or that certain parts of the Partnership's or the
Purchaser's business might not have to be disposed of or held separate or other
substantial conditions complied with in order to obtain that approval. The
Purchaser's obligation to purchase and pay for Units is subject to certain
conditions. See "THE OFFER--Section 15--Certain Conditions of the Offer."
Antitrust. Under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and the rules and regulations that have been
promulgated under the HSR Act by the Federal Trade Commission (the "FTC"),
certain acquisition transactions may not be consummated until information and
documentary material has been furnished for review by the Antitrust Division of
the Department of Justice (the "Antitrust Division") and the FTC and certain
waiting period requirements have been satisfied. The Purchaser does not
currently believe that any filing is required under the HSR Act with respect to
its acquisition of Units contemplated by the Offer.
State Takeover Laws. The Purchaser has not attempted to comply with any
state takeover statutes in connection with the Offer. The Purchaser reserves the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer, and nothing in the Offer, nor any action taken in
connection with the Offer, is intended as a waiver of that right. In the event
that any state takeover statute is found applicable to the Offer, the Purchaser
might be unable to accept for payment or purchase Units tendered pursuant to the
Offer or be delayed in continuing or consummating the Offer. In that case, the
Purchaser may not be obligated to accept for purchase, or pay for, any Units
tendered.
SECTION 17. FEES AND EXPENSES
Equity Resources Group, Inc. has been retained by the Purchaser to act
as the Information Agent in connection with the Offer. The Information Agent
will receive reasonable and customary compensation for its services in an amount
not in excess of $5,000 in connection with the Offer and will be indemnified
against certain liabilities and expenses in connection with its service as the
Information Agent.
Except as set forth in this Section 17, the Purchaser will not pay any
fees or commissions to any broker, dealer or other person for soliciting tenders
of Units pursuant to the Offer. Brokers, dealers, commercial banks, trust
companies, and other nominees, if any, will, upon request, be reimbursed by the
Purchaser for customary clerical and mailing expenses incurred by them in
forwarding materials to their customers.
SECTION 18. MISCELLANEOUS.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) Limited Partners in any jurisdiction in which the making of the Offer
or the acceptance of Units tendered in the Offer would not be in compliance with
the laws of that jurisdiction. The Purchaser is not aware of any jurisdiction
within the United States in which the making of the Offer of the acceptance of
Units tendered in the Offer would be illegal.
In any jurisdiction where the securities, blue sky, or other laws
require the Offer to be made by a licensed broker or dealer, the Purchaser will
withdraw the Offer. The Purchaser has filed with the SEC, the Schedule TO,
together with exhibits, pursuant to Rule 14d-1 of the General Rules and
Regulations under the Exchange Act, furnishing information with respect to the
Offer, and may file amendments to that Schedule TO. The Schedule TO and any
amendments to that Schedule TO, including exhibits, may be examined and copies
may be obtained from the SEC as set forth above in "Introduction."
18
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser not contained in this Offer to
Purchase or in the Agreement of Sale and, if given or made, any information or
representation must not be relied upon as having been authorized. Neither the
delivery of the Offer to Purchase nor any purchase pursuant to the Offer shall,
under any circumstances, create any implication that there has been no change in
the affairs of the Purchaser or the Partnership since the date as of which
information is furnished or the date of this Offer to Purchase.
19
SCHEDULE 1
INFORMATION REGARDING THE MANAGERS
OF EQUITY RESOURCES GROUP, INC.
Set forth below are the names of the members of Equity Resources Group,
Inc., the Manager of the Purchaser and their present principal occupations and
five (5) year employment histories. Each individual is a citizen of the United
States and the business address of each person and entity below is 44 Brattle
Street, Cambridge, MA 02138.
Eggert Dagbjartsson Executive Vice President and Principal, Equity Resources
Group Inc., 1992-Present General Partner, Equity
Resource Weston Fund Limited Partnership, 2002-Present
Mr. Dagbjartsson began working at Equity Resources
Group, Inc. (ERG) in 1985. In 1989, Mr. Dagbjartsson
became ERG's Chief Investment Officer, with primary
responsibility for the valuation and negotiation of
investment acquisitions for various Equity Resource
Funds. In 1992, Mr. Dagbjartsson became Executive Vice
President and Principal of ERG. In addition to being the
General Partner of Equity Resource Weston Fund, Mr.
Dagbjartsson is a Co-General Partner of the following
Equity Resources Funds:
Equity Resource Fund XVII
Equity Resource Fund XIX
Equity Resource General Fund
Equity Resource Cambridge Fund
Equity Resource Brattle Fund
Equity Resource Bay Fund
Equity Resource Pilgrim Fund
Equity Resource Bridge Fund
Equity Resource Boston Fund
Equity Resource Lexington Fund
Equity Resource Arlington Fund
During the past five years, Mr. Dagbjartsson has not
been convicted in a criminal proceeding or been a party
to any procedural or administrative proceeding that
resulted in a judgment, decree or final order enjoining
Mr. Dagbjartsson from future violations of, or
prohibiting activities subject to, federal or state
securities law, or a finding of any violation of federal
or state securities law.
Equity Resources Weston Fund Limited Partnership was formed under Massachusetts
law in June 2002 for the purpose of providing a secondary market for real estate
limited partnership interests. Its predecessor entity, Equity Resource Group,
Inc., was formed under Massachusetts law in March 1981 for the purpose of
providing financial consulting services in the field of real estate limited
partnerships syndicated through private placement offerings. The corporation's
functions include advising real estate developers, investors and syndicators in
the areas of financial analysis, negotiation and the structuring of investment
entities.
20
SCHEDULE 2
PROPERTIES OWNED BY THE PARTNERSHIP
For a summary of the Properties owned by the Partnership, see Section 10
of the Offer.
21
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22
EQUITY RESOURCES GROUP, INC.
44 BRATTLE STREET
CAMBRIDGE, MA 02138
(617) 876-4800
Info@equityresources.com
23
EXHIBIT (A)(2)
EQUITY RESOURCE WESTON FUND
44 Brattle Street
Cambridge, MA 02138
June 17, 2003
Offer To Purchase Units in
Capital Realty Investors IV Ltd. Partnership
for $40 Per Unit
Dear Limited Partner:
Equity Resource Weston Fund (the "Purchaser") is offering to purchase limited
partnership units in Capital Realty Investors IV Ltd. Partnership (the
"Partnership") for $40 per unit less the transfer fee charged by the general
partner of the Partnership. If you are interested in selling your units, please
read the enclosed offer carefully. It contains important information concerning
the Purchaser, the Partnership and the terms of the offer. The Purchaser's offer
will expire on July 17, 2003.
FACTORS TO CONSIDER IN EVALUATING THIS OFFER
.. Highest Offer Price
To the best of the Purchaser's knowledge, its offer price of $40 per unit
is currently the highest offer price for units in the Partnership. Limited
Partners should note that the Purchaser will deduct the general partner's
transfer fee from its offer price. This transfer fee is $100 per
transaction, not per unit. For example, a limited partner who tenders
twenty units will receive $700 for those units ($800 less the $100 transfer
fee).
.. Recent Partnership Activity
Over the past two years, the Partnership's distributions have come
primarily from the sales of properties in which the Partnership was
invested. Though the Purchaser was unable to calculate the Partnership's
net asset value, it believes that these sales have reduced the
Partnership's residual value. Given this reduced residual value, the
Purchaser believes it is offering an attractive price when compared to the
current portfolio of properties held by the Partnership.
.. Eliminate Future Taxable Income
Purchase money notes currently encumber eleven of the twenty-one properties
in which the Partnership is invested. These notes are accruing interest.
The total outstanding principal and interest on the notes was $93,716,105
as of March 31, 2003. In several cases, the purchase money notes are in
excess of the value of the properties they encumber. When appropriate, the
Partnership has satisfied purchase money notes by either transferring
properties to the note holders or by negotiating a reduced payoff of the
notes. With either type of transaction, the Partnership must recognize
forgiveness of debt income. Forgiveness of debt income is taxable and
limited partners are required to pay taxes on their share of that income.
The Partnership has negotiated the transfer of four properties to their
note holders in 2003. These properties are in addition to the eleven
properties that still have outstanding notes. As a result of the transfers,
the Partnership has generated $254 of taxable income per unit for the first
quarter of 2003. Though the Purchaser has no information regarding the
Partnership's plans for the remaining purchase money notes, it believes
that a significant portion of those notes will be satisfied by either
transferring properties to the note holders or by negotiating reduced
payoffs. The Purchaser's offer gives limited partners the opportunity to
liquidate their units and eliminate future taxable income for this
investment. Since each limited partners particular tax situation, we urge
you to contact your tax advisor before tendering units under the offer.
[See "THE OFFER-Section 6-Certain Tax Consequences"]
.. The Partnership Owns Government-Subsidized Housing Subject to Long-Term
Restrictions
The Partnership currently holds limited partnership interests in twenty-one
local limited partnerships. The majority of these local partnerships own
low-income housing projects that are subject to government regulations
limiting the amount of money that the local partnerships can distribute to
the Partnership. The restrictions also limit the properties' rent levels
and may impact the Partnership's ability to sell or refinance some of its
properties. These restrictions will not fully expire until 2024. For a
complete description of the Partnership's holdings and its plans regarding
these holdings, please review the Partnership's most recent 10-K and 10-Q.
.. Eliminate Future K-1's/Opportunity for Liquidity
The Purchaser's offer provides liquidity to limited partners by giving them
an opportunity to terminate their investment. The Partnership has been in
existence for 20 years. The Purchaser anticipates that the Partnership will
continue to operate for the foreseeable future. By selling your units, you
give yourself the opportunity to place the proceeds from a sale into other,
more liquid investments. You may also simplify your tax returns by
eliminating future K-1 reporting for this Partnership.
.. Effects of a Sale of Your Units
Limited partners who sell their units will be giving up the opportunity to
participate in any future potential benefits associated with ownership of
units, including the right to participate in any future distribution of
cash or property. The partnership is currently negotiating the sale of
Campbell Terrace, one of the properties in which it is invested. If the
sale is finalized, limited partners may receive a distribution. The
Purchaser does not know when a sale, if it occurs, will be finalized and
does not know if a distribution will be made as a result of the
sale. See "The Offer-Section 10-Certain Information Concerning the
Partnership."
.. Offer Price May Not Represent the Full Value of Your Units
No independent party has been retained by the Purchaser or by any other
person to evaluate or render any opinion to limited partners with respect
to the fairness of the offer price, and no representation is being made as
to fairness or to other measures of value that may be relevant to limited
partners. Because of the two-tiered structure of the Partnership, the
government-regulated income restrictions and the potential inability to
sell or refinance a portion of the Partnership's assets, the Purchaser was
unable to calculate a net asset value for units and the Purchaser's offer
price may be viewed as speculative in nature. The offer price could differ
significantly from the proceeds that could be realized from a current sale
of the properties owned by the Partnership or that may be realized upon a
future liquidation of the Partnership. [See "THE OFFER-Introduction-Market
Value of Units" and "THE OFFER-Section 7-Purpose and Effects of the Offer"]
.. The Purchaser is Seeking to Acquire Units for Long-Term Investment Purposes
The Purchaser is in the business of acquiring fractional investment
interests for long-term retention and seeks to purchase units in the
Partnership in advancement of that strategy. The units acquired as a result
of this offer will be held as long-term investments and not with a view to
a resale. The Purchaser does not acquire general partner positions and is
not engaged in property management.
If you wish to sell your units, complete the enclosed Agreement of Sale and
Assignment according to the directions on the agreement, sign where indicated
and return it in the pre-addressed return envelope. If you have any questions
regarding this offer, please call Equity Resources Group at (617) 876-4800 or
email them at info@equityresources.com.
Sincerely,
Equity Resource Weston Fund
EXHIBIT (A)(3)
CRI 4
AGREEMENT OF SALE AND ASSIGNMENT
The undersigned Limited Partner (the "Seller") does hereby sell, assign,
transfer, convey and deliver to Equity Resource Weston Fund LP, a Massachusetts
limited partnership, or its designee ("Weston Fund" or the "Purchaser"), all of
the Seller's right, title and interest in the units (the "Units") of limited
partnership interests in Capital Realty Investors IV Ltd. Partnership, (the
"Partnership") being sold pursuant to this Agreement of Sale and Assignment
("Agreement") and indicated on the signature pages to this Agreement, for a
purchase price of $40 per Unit less the transfer fee charged by the general
partner of the Partnership and less the amount of any distributions declared or
paid from any source by the Partnership with respect to the Units after June 17,
2003 without regard to the record date or whether such distributions are
classified as a return on, or a return of, capital.
PAYMENT FOR UNITS BEING SOLD PURSUANT TO THIS AGREEMENT WILL BE MADE WITHIN
FIFTEEN (15) BUSINESS DAYS FOLLOWING THE "EXPIRATION DATE" SET FORTH IN THE
OFFER TO PURCHASE ACCOMPANYING THIS AGREEMENT, PROVIDED WESTON FUND HAS RECEIVED
AND ACCEPTED THIS AGREEMENT, PROPERLY COMPLETED AND DULY EXECUTED AND HAS
RECEIVED ASSURANCES FROM THE PARTNERSHIP THAT THE SELLER'S ADDRESS WILL BE
CHANGED TO THE PURCHASER'S ADDRESS PURSUANT TO THE TERMS AND CONDITIONS OF THE
OFFER.
The Seller hereby represents and warrants to the Purchaser that the Seller owns
all of the Units being sold hereunder and has full power and authority to
validly sell, assign, transfer, convey, and deliver to the Purchaser such Units,
and that when any such Units are accepted for payment by the Purchaser, the
Purchaser will acquire good, marketable and unencumbered title thereto, free and
clear of all options, liens, restrictions, charges, encumbrances, conditional
sales agreements, or other obligations relating to the sale or transfer thereof,
and such Units will not be subject to any adverse claim. The Seller represents
and warrants that the Seller is a "United States person" as defined in Section
7701(a)(30) of the Internal Revenue Code of 1986, as amended, or if the Seller
is not a United States person, the Seller does not own beneficially or of record
more than 5 percent of the outstanding Units. The Seller also represents and
warrants that in deciding to sell the Units to the Purchaser, the Seller has not
relied upon any representation or warranty made by the Purchaser or any agent of
the Purchaser with respect to the value of the Units or the income tax
consequences of the sale of the Units.
The sale of Units pursuant to this Agreement shall include, without limitation,
all rights in, and claims to, any Partnership profits and losses, cash
distributions, voting rights and other benefits of any nature whatsoever,
distributable or allocable to such Units under the Partnership's Agreement of
Limited Partnership. Upon the execution of this Agreement by the Seller,
Purchaser shall have the right to receive all benefits and cash distributions
and otherwise exercise all rights of beneficial ownership of such Units. By
executing this Agreement, Seller assigns to Purchaser (i) the Seller's right to
pursue any legal or other action of recovery against any person or entity which
might be liable in any way to the Seller as a result of his purchase or
ownership of the Units (or any interest therein) being sold hereby and (ii) any
existing or future rights arising from the refusal of the Partnership or its
General Partner to recognize the substitution of Purchaser as a limited partner,
the assignment of Seller's beneficial ownership of the Units to Purchaser, or
the assignment of claims effected by clause (i) of this sentence. Any damages or
recoveries resulting from such actions, whether initiated by the Purchaser or by
other parties will be due and payable to the Purchaser.
Seller, upon execution of this Agreement, hereby irrevocably constitutes and
appoints Purchaser as its true and lawful agent and attorney-in-fact with
respect to the Units being sold hereby with full power of substitution. This
power of attorney is an irrevocable power, coupled with an interest of the
Seller to Purchaser, to (i) execute, swear to, acknowledge, and file any
document relating to the assignment of the Units being sold hereby on the books
of the Partnership that are maintained with respect to the Units and on the
Partnership's books maintained by the General Partner of the Partnership, or
amend the books and records of the Partnership as necessary or appropriate for
the assignment of the Units, (ii) vote or act in such manner as any such
attorney-in-fact shall, in its sole discretion, deem proper with respect to the
Units being sold hereby, (iii) deliver the Units being sold hereby and transfer
ownership of such Units on the books of the Partnership that are maintained with
respect to the Units and on the Partnership's books, maintained by the
Partnership's General Partner, (iv) endorse on the Seller's behalf any and all
payments received by Purchaser from the Partnership for any period on or after
June 17, 2003 which are made payable to the Seller, in favor of Purchaser, (v)
execute on the Seller's behalf, any applications for transfer and any
distribution agreements required by the National Association of Securities
Dealers, Inc.'s Notice to Members 96-14 to give effect to the transaction
contemplated by this Agreement, (vi) receive all distributions and inspect and
amend the books and records of the Partnership, including Seller's address and
records, to direct all distributions to Purchaser as of the effective date of
this Agreement, (vii) request an accounting of the affairs of the Partnership.
Purchaser shall not be required to post bond of any nature in connection with
this power of attorney, and (viii) in the event that the General Partner of the
Partnership refuses to either transfer the Seller's Units to the Purchaser or to
admit the Purchaser as a substitute limited partner, take legal action, as the
Seller's true and lawful agent and attorney-in-fact, on behalf of the Seller, to
enforce this Agreement of Sale.
Seller does hereby direct and instruct the Partnership and the General Partner
immediately upon their receipt of this Agreement of Sale, which includes a
power of attorney appointing the Purchaser as the Seller's true and lawful agent
and attorney-in-fact, (i) to amend the books and records of the Partnership to
change the Seller's address of record for purposes of mailing distributions with
respect to the Units being sold hereby to Equity Resource Weston Fund, LP c/o
Equity Resources Group, Inc., 44 Brattle Street Cambridge, MA 02138 and (ii) to
forward all distributions and all other information relating therein to be
received by Seller to Equity Resource Weston Fund, LP to the address set forth
in (i) above.
Seller does hereby release and discharge the General Partner and their officers,
shareholders, employees and agents from all actions, causes of actions, claims
or demands Seller has, or may have, against the General Partner that result from
the General Partner's reliance on this Agreement or any of the terms and
conditions contained herein. Seller agrees to indemnify and hold the Purchaser
and the Partnership harmless from and against, and to reimburse the Purchaser
and/or the Partnership on demand, for any damage, loss, cost or expense
(including attorneys' fees and costs of investigation incurred in defending
against and/or settling such damage, loss, cost or expense)
CRI 4
reasonably incurred by the Purchaser and/or the Partnership arising out of or in
connection with any misrepresentation, breach of warranty, or failure to perform
or violation of any agreement or covenant on the part of the Seller under this
Agreement.
All authority herein conferred or agreed to be conferred shall survive the death
or incapacity of the Seller and any obligations of the Seller shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned. This agreement is irrevocable and may not be withdrawn following
execution and delivery by the Seller. Upon request, the Seller will execute and
deliver any additional documents deemed by the Purchaser or the Partnership to
be necessary or desirable to complete the assignment, transfer and purchase of
such Units.
If the Seller is more than one person, then and in such event, the obligations
of the Seller under this Agreement shall be joint and several and the
representations, warranties and covenants herein contained shall be deemed to be
made by and binding upon each such person and his heirs, executors,
administrators, successors and assigns. The representations, warranties,
covenants and agreements contained in this Agreement shall survive the transfer
of the Units made by this Agreement and the payment of the consideration
therefor.
The Seller hereby certifies, under penalties of perjury, that (i) the tax
identification number shown on this form is the Seller's correct Taxpayer
Identification Number; and (ii) Seller is not subject to backup withholding
either because Seller has not been notified by the Internal Revenue Service (the
"IRS") that Seller is subject to backup withholding as a result of failure to
report all interest or dividends, or the IRS has notified Seller that Seller is
no longer subject to backup withholding.
The Seller hereby also certifies, under penalties of perjury, that the Seller,
if an individual, is not a nonresident alien for purposes of U.S. income
taxation, and if not an individual, is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations). The Seller understands that
this certification may be disclosed to the IRS by the Purchaser and that any
false statements contained herein could be punished by fine, imprisonment, or
both.
The undersigned recognizes that, if proration is required pursuant to the terms
of the Offer, the Purchaser will accept for payment from among those Units
validly tendered on or prior to the Expiration Date and not properly withdrawn,
the maximum number of Units permitted pursuant to the Offer on a pro rata basis.
The undersigned understands that a tender of Units to the Purchaser will
constitute a binding agreement between the undersigned and the Purchaser upon
the terms and subject to the conditions of the Offer. The undersigned recognizes
that under certain circumstances set forth in the Offer to Purchase, the
Purchaser may not be required to accept for payment any of the Units tendered
hereby. In such event, the undersigned understands that any Agreement for Units
not accepted for payment will be destroyed by the Purchaser.
This Agreement shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts. Seller waives any claim that any court in
Massachusetts is an inconvenient forum, and waives any right to trial by jury.
The undersigned Seller (including any joint owner(s)) owns and wishes to assign
the number of Units set forth below. By its own or its Authorized Signatory's
signature below, the Seller hereby assigns its entire right, title and interest
in the Units set forth below to the Purchaser.
By executing this Agreement, the Seller hereby acknowledges to the General
Partner that the Seller desires to assign the Units referenced herein and hereby
directs the General Partner to take all such actions as are necessary to
accomplish such assignment, and appoints the General Partner the agent and
attorney-in-fact of the Limited Partner, to execute, swear to, acknowledge and
file any document or amend the books and records of the Partnership as necessary
or appropriate for the assignment of the withdrawal of the Limited Partner.
Each of the Parties hereto agrees to promptly execute and deliver any and all
further agreements, documents or instruments necessary to effectuate this
Agreement and the transaction referred to herein or reasonably requested by the
other party to perfect or evidence its or his rights hereunder.
Should either party hereto commence any proceeding to enforce the provisions of
this Agreement, then and in such event, the prevailing party in any such
proceeding or action shall be entitled to reimbursement of its or his costs,
including attorney's fees, incurred in the investigation and prosecution of such
proceeding or action. The parties agree that the proper venue for any such
action shall be in the County of Middlesex, Commonwealth of Massachusetts, and
the Seller hereby consents to the jurisdiction over the Seller by the state and
Federal courts of or in the Commonwealth of Massachusetts, County of Middlesex
in connection with any proceeding or action brought under this Assignment.
Any provision of this Agreement that is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining provisions of this Agreement or affecting the validity or
enforceability of any provisions of this Agreement in any other jurisdiction.
CRI 4
SIGNATURE PAGE
IN WITNESS WHEREOF, ERG and the Limited Partners have executed this
Assignment as of June 17, 2003.
(A) NUMBER OF UNITS OWNED: _________________ NUMBER OF UNITS TO BE
TRANSFERRED -ALL-
(B) _______________________________________________________________________
Limited Partner (s)/Assignor(s) (Full Registered Name of Limited
Partner(s)/Assignor(s))
(C) Mailing Address :
____________________________________ (F) _____________________________________
Street Social Security/Taxpayer No. of Limited
Partner
____________________________________ _________________________________________
City State Zip Security/Taxpayer No. of Joint Limited
Partner
(D) ________________________________
Telephone Number (And Fax Number if
Available)
(E) ________________________________ _________________________________________
Signature of Limited Partner Signature of Joint Limited Partner or
Custodian /Trustee
Date ____________________, 200______ Date _________________________, 200______
Limited Partner's Signature Jnt Limited Partner's or
Guarantee Custodian /Trustee Signature Guarantee
(G) Custodian(s) or Trustee(s)
Information
____________________________________
Name of Custodian(s) or Trustee(s)
____________________________________
Address
____________________________________
City, State, Zip
____________________________________ _________________________________________
Account Number for EQUITY RESOURCE WESTON FUND
INSTRUCTIONS TO COMPLETE AGREEMENT OF SALE
LINE HOW TO FILL IN
- ---- --------------
(A) number of Units you wish to sell
(B) print full registered name of Limited Partner (for example: "Mary
Smith" or "Anne & Bob Smith, JTWROS"). If Units are held in
partnerships, trusts, retirement accounts or other entities, please
indicate (for example: "ABC Corp. Pension Plan, Jane Smith, Custodian"
or "John Smith, Trustee UGMA FBO Sarah Smith Trust")
(C) Limited Partner's current mailing address
(D) telephone number
(E) signature of person listed on Line B or authorized representative
(F) social security or tax ID number of person/entity listed on Line B
(G) name and address of custodian (for example, IRA custodian)
signature guarantee: necessary only if selling more than 100 units. May be
obtained by the officer of a national bank or trust company, or a member firm of
a stock exchange.
EQUITY RESOURCES GROUP, INC.
44 BRATTLE STREET
CAMBRIDGE, MA 02138
EXHIBIT (A)(4)
SCHEDULE TO
Equity Resource Weston Fund LP, Eggert Dagbjartsson, its general partner
and Equity Resources Group, Inc., its manager (collectively the "Purchaser") is
offering (the "Offer") to purchase 11,025 units ("Units") of limited partnership
interests in Capital Realty Investors IV Ltd. partnership (the "Subject
Company") for a purchase price of $40 per Unit in cash less the $100 per
transaction transfer fee. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE ON JULY
17, 2003 ("Expiration Date").
Offer materials will be mailed to record holders, beneficial holders,
brokers, banks and similar persons whose name appears on the list of limited
partners of the Subject Company ("Limited Partners"). You may obtain a copy of
the tender offer materials with respect to the Offer by calling Equity Resources
Group, Inc., the manager of the Offer, at (617) 876-4800. The Purchaser does not
currently intend to establish control of the Subject Company. The general
partner of the Subject Company has not approved or disapproved of the Offer.
If more than 11,025 Units are validly tendered and not withdrawn, Purchaser
will accept up to 11,025 Units, on a pro rata basis. If Purchaser decides to
extend the Offer, Purchaser will promptly send each Limited Partner notification
of that fact. For Units to be validly tendered pursuant to the Offer, a properly
completed and duly executed Agreement of Sale must be received by Purchaser. A
cash payment for Units will be made within 10 business days following the
expiration date of the Offer, as long as the Purchaser has received a properly
completed and duly executed Agreement of Sale and assurances from the general
partner of the Subject Company that the address applicable to the holder of
those Units will be changed to Purchaser's address. Units tendered pursuant to
the Offer may be withdrawn at any time prior to the Expiration Date. In the
event that the Offer is extended beyond the Expiration Date, the Units tendered
may be withdrawn at any time up to the date that the Offer, as extended,
expires. For a withdrawal to be effective, a signed, written or facsimile
transmission notice of withdrawal must be timely received by Purchaser.
The information required by Exchange Act Rule 14d-6(d)(1) is contained in
the Offer to Purchase with respect to the Offer and is incorporated by reference
into this summary advertisement. The complete terms and conditions of this Offer
are set forth in the Offer to Purchase and related agreement of sale, which are
being filed today with the Securities and Exchange Commission and mailed to
Limited Partners.