SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
Amendment No. 1
to
SCHEDULE TO
Tender Offer Statement Pursuant to Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934
-------------------
U.S. REALTY PARTNERS LIMITED PARTNERSHIP
(Name of Subject Company)
MPF DEWAAY PREMIER FUND, LLC; MP VALUE FUND 7, LLC; MPF SPECIAL FUND 8, LLC;
MACKENZIE PATTERSON SPECIAL FUND 7, LLC; MORAGA GOLD, LLC; STEVEN GOLD;
MPF-NY 2005, LLC; MACKENZIE PATTERSON FULLER, INC.; and C.E. PATTERSON
(Bidders)
DEPOSITARY UNITS CERTIFICATES
(Title of Class of Securities)
None or unknown
(CUSIP Number of Class of Securities)
-----------------------
Copy to:
Christine Simpson Chip Patterson, Esq.
MacKenzie Patterson Fuller, Inc. MacKenzie Patterson Fuller, Inc.
1640 School Street 1640 School Street
Moraga, California 94556 Moraga, California 94556
(925) 631-9100 ext.224 (925) 631-9100 ext. 206
(Name, Address, and Telephone Number of
Person Authorized to Receive Notices and
Communications on Behalf of Bidder)
Calculation of Filing Fee
Transaction Amount of
Valuation* Filing Fee
$1,298,375 $152.82
* For purposes of calculating the filing fee only. Assumes the purchase
of 305,500 of the Depositary Units Certificates ("Units") at a purchase
price equal to $4.25 per Unit in cash.
[X] 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: $152.82
Form or Registration Number: SC TO-T
Filing Party: MacKenzie Patterson Fuller, Inc.
Date Filed: March 22, 2005
[ ] Check the box if the filing relates solely to preliminary
communications made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[X] third party tender offer subject to Rule 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[ ] going private transaction subject to Rule 13e-3
[ ] amendment to Schedule 13D under Rule 13d-2
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [ ]
The Schedule TO filed as of March 22, 2005 by the above-named bidders is hereby
amended as set forth below. Items not amended remain unchanged, and capitalized
terms are used as defined in the original Schedule.
TENDER OFFER
This Tender Offer Statement on Schedule TO relates to the offer (the "Offer") by
MPF DEWAAY PREMIER FUND, LLC; MP VALUE FUND 7, LLC; MPF SPECIAL FUND 8, LLC;
MACKENZIE PATTERSON SPECIAL FUND 7, LLC; MORAGA GOLD, LLC, STEVEN GOLD; and
MPF-NY 2005, LLC (collectively the "Purchasers") to purchase up to 305,500 of
the Depositary Units Certificates ("Units") in U.S. REALTY PARTNERS LIMITED
PARTNERSHIP (the "Partnership"), the subject company, at a purchase price equal
to $4.25 per Unit, less the amount of any distributions declared or made with
respect to the Units between March 22, 2005 (the "Offer Date") and May 6, 2005
or such other date to which this Offer may be extended (the "Expiration Date"),
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated March 22, 2005 (the "Offer to Purchase") and the related Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively. As noted above, the Offer price would be subject to reduction for
distributions made or declared prior to the Expiration Date. Any distributions
made or declared after the Expiration Date, by the terms of the Offer and as set
forth in the Letter of Transmittal, would be assigned by tendering Unit holders
to the Purchasers. MacKenzie Patterson Fuller, Inc. and C.E. Patterson are named
as "bidders" herein because each is deemed to control the Purchasers, but
neither party is otherwise participating in the offer described in this
schedule. As of the date hereof, a total of 2,765 Units have been tendered by
securities holders and not withdrawn. No other Units have been tendered to date.
Item 12. Exhibits.
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(a)(1) Revised Offer to Purchase dated April 19, 2005
(a)(2) Letter of Transmittal*
(a)(3) Form of Letter to Unit holders dated March 22, 2005*
(a)(4) Form of advertisement in Investor's Business Daily*
(b)- (h) Not applicable.
* Previously filed and incorporated by reference from the Schedule TO filed with
the SEC by the Purchasers on March 22, 2005.
Item 13. Information Required by Schedule 13E-3.
--------------------------------------
Not applicable.
SIGNATURES
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: April 19, 2005
MPF DEWAAY PREMIER FUND, LLC
MP VALUE FUND 7, LLC
MPF SPECIAL FUND 8, LLC
MACKENZIE PATTERSON SPECIAL FUND 7, LLC
MORAGA GOLD, LLC
MPF-NY 2005, LLC
By: /s/ CHRISTINE SIMPSON
-------------------------
Christine Simpson, Vice President of Manager of each filing person
MACKENZIE PATTERSON FULLER, INC.
By: /s/ CHRISTINE SIMPSON
-------------------------
Christine Simpson, Vice President
C.E. PATTERSON
/s/ C.E. PATTERSON
- ------------------
STEVEN GOLD
/s/ STEVEN GOLD
- ---------------
EXHIBIT INDEX
Exhibit Description
(a)(1) Revised Offer to Purchase dated April 19, 2005
EXHIBIT (A)(1)
OFFER TO PURCHASE FOR CASH 305,500
DEPOSITARY UNITS CERTIFICATES
OF
U.S. REALTY PARTNERS LIMITED PARTNERSHIP
AT
$4.25 PER UNIT
MPF DEWAAY PREMIER FUND, LLC; MP VALUE FUND 7, LLC; MPF SPECIAL FUND 8, LLC;
MACKENZIE PATTERSON SPECIAL FUND 7, LLC; MORAGA GOLD, LLC; STEVEN GOLD; and
MPF-NY 2005, LLC; (collectively the "Purchasers")
THE OFFER, WITHDRAWAL RIGHTS, AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, PACIFIC TIME, ON MAY 6, 2005, UNLESS THE OFFER IS EXTENDED.
The Purchasers hereby seek to acquire 305,500 Depositary Units Certificates (the
"Units") in U.S. REALTY PARTNERS LIMITED PARTNERSHIP (the "Partnership"). The
Purchasers are not affiliated with the Partnership or with U.S. Realty I
Corporation and AIMCO Properties, L.P., the general partners of the Partnership
(the "General Partners"). The Purchasers hereby offer to purchase 305,500 Units
at a purchase price equal to $4.25 PER UNIT, less the amount of any
distributions declared or made with respect to the Units between March 22, 2005
and May 6, 2005, or such other date to which this offer may be extended (the
"Expiration Date"), in cash, without interest, upon the terms and subject to the
conditions set forth in this offer to purchase (the "Offer to Purchase") and in
the related Letter of Transmittal, as each may be supplemented or amended from
time to time (which together constitute the "Offer"). As noted above, the Offer
price would be subject to reduction for distributions made or declared prior to
the Expiration Date. Any distributions made or declared after the Expiration
Date would, by the terms of the Offer and as set forth in the Letter of
Transmittal, be assigned by tendering Unit holders to the Purchasers.
Tender of Units will include the tender of any and all securities into which the
Units may be converted and any securities distributed with respect to the Units
from and after the Offer Date.
As of December 31, 2003, the Partnership had 789 Unit holders of record and
there were 1,222,000 Units outstanding according to the Partnership's annual
report on Form 10-K filed in March 2004. As of March, 2005, 1,222,000 Units were
issued and outstanding, of which AIMCO Properties, L.P., a general partner of
the Partnership, and its affiliates own 828,227, or approximately 67.78%, of the
outstanding Units, according to a Preliminary Information Statement on Schedule
14C filed by the Partnership in March 2005. One of the Purchasers, Steven Gold,
owns a total of 13,000 Units, or approximately 1% of the outstanding Units. The
Purchasers and their affiliates currently beneficially own no other Units. The
305,500 Units subject to the Offer constitute 25% of the outstanding Units.
Consummation of the Offer, if all Units sought are tendered, would require
payment by the Purchasers of up to $1,298,375 in aggregate purchase price, which
the Purchasers intend to fund out of their current working capital.
Holders of Units ("Unit holders") are urged to consider the following factors:
o Unit holders who tender their Units will give up the opportunity to
participate in any future benefits from the ownership of Units,
including potential future distributions by the Partnership from
property operations or dispositions, and the purchase price per Unit
payable to a tendering Unit holder by the Purchasers may be less than
the total amount which might otherwise be received by the Unit holder
with respect to the Unit over the remaining term of the Partnership.
o The Purchasers are making the Offer for investment purposes and with
the intention of making a profit from the ownership of the Units. In
establishing the purchase price of $4.25 per Unit, the Purchasers are
motivated to establish the lowest price which might be acceptable to
Unit holders consistent with the Purchasers' objectives. There is no
public market for the Units, and neither the Unit holders nor the
Purchasers have any accurate means for determining the actual present
value of the Units. Although there can be no certainty as to the actual
present value of the Units, the Purchasers have estimated, solely for
the purposes of determining an acceptable Offer price, that the
Partnership could have an estimated liquidation value of approximately
$5.05 per Unit. It should be noted, however, that the Purchasers have
not made an independent appraisal of the Units or the Partnership's
properties, and are not qualified to appraise real estate. Furthermore,
there can be no assurance as to the timing or amount of any future
Partnership
1
distributions, and there cannot be any assurance that the Purchasers'
estimate accurately reflects an approximate value of the Units or that
the actual amounts which may be realized by holders for the Units may
not vary substantially from this estimate.
o Unit holders tendering their Units pursuant to this Offer will not have
the right to object to the sale of the Twin Lakes Apartments (the
"Sale") pursuant to the General Partner's information statement; as a
result of tendering pursuant to this Offer, unitholders grant an
irrevocable proxy to the Purchasers such that the Purchasers can
exercise the right to vote tendered Units. The Purchasers could end up
owning in excess of 25% of the outstanding Units if this Offer is fully
subscribed, which would enable them to have significant voting power
and the ability to object to the Sale by the Partnership. The
Purchasers have not yet formed an intention with respect to that
objection, but would likely object. The Purchasers believe that
management has, according to its own statement, not marketed the
property in any way and, as such, has no idea as to whether the
Partnership might achieve a better price than the present offer. In
fact, one of the Purchasers, Steve Gold, has offered to purchase the
property for more than the General Partner's affiliate. We are inclined
to believe that management should reject the sale and undertake an
active marketing process. Mr. Gold is able to both purchase the Twin
Lakes Apartments and participate in this Offer.
o The Depositary, MacKenzie Patterson Fuller, Inc., is an affiliate of
certain of the Purchasers. No independent party will hold securities
tendered until the offer closes and payment is made. Because there is
no independent intermediary to hold the Purchasers' funds and tendered
securities, the Purchasers may have access to the securities before all
conditions to the Offer have been satisfied and selling Unit holders
have been paid.
o The Purchasers may accept only a portion of the Units tendered by a
Unitholder if a total of more than 305,500 Units are tendered.
THE OFFER TO PURCHASE IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS BEING
TENDERED. IF MORE THAN 305,500 UNITS ARE VALIDLY TENDERED AND NOT WITHDRAWN, THE
PURCHASERS WILL ACCEPT FOR PURCHASE 305,500 UNITS FROM TENDERING UNITHOLDERS ON
A PRO RATA BASIS, SUBJECT TO THE TERMS AND CONDITIONS HEREIN. A UNIT HOLDER MAY
TENDER ANY OR ALL UNITS OWNED BY SUCH UNIT HOLDER.
The Purchasers expressly reserve the right, in their sole discretion, at any
time and from time to time, (i) to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and the payment for,
any Units, (ii) upon the occurrence of any of the conditions specified in
Section 13 of this Offer to Purchase, to terminate the Offer and not accept for
payment any Units, and (iii) to amend the Offer in any respect. Notice of any
such extension, termination, or amendment will promptly be disseminated to Unit
holders in a manner reasonably designed to inform Unit holders of such change in
compliance with Rule 14d-4(c) under the Securities Exchange Act of 1934 (the
"Exchange Act"). In the case of an extension of the Offer, such extension will
be followed by a press release or public announcement which will be issued no
later than 9:00 a.m., Eastern Time, on the next business day after the scheduled
Expiration Date, in accordance with Rule 14e-1(d) under the Exchange Act.
March 22, 2005
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IMPORTANT
Any Unit holder desiring to tender any or all of such Unit holder's Units should
complete and sign the Letter of Transmittal (a copy of which is enclosed with
this Offer to Purchase, printed on yellow paper) in accordance with the
instructions in the Letter of Transmittal and mail, deliver or telecopy the
Letter of Transmittal and any other required documents to MacKenzie Patterson
Fuller, Inc. (the "Depositary"), an affiliate of certain of the Purchasers, at
the address or facsimile number set forth below.
MACKENZIE PATTERSON FULLER, INC.
1640 SCHOOL STREET
MORAGA, CALIFORNIA 94556
TELEPHONE: 800-854-8357
FACSIMILE: 925-631-9119
E-MAIL ADDRESS: OFFERS@MPFI.COM
Questions or requests for assistance or additional copies of this Offer to
Purchase or the Letter of Transmittal may be directed to the Purchasers at
1-800-854-8357.
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NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY REPRESENTATION
ON BEHALF OF THE PURCHASERS OR TO PROVIDE ANY INFORMATION OTHER THAN AS
CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. NO SUCH RECOMMENDATION,
INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING BEEN AUTHORIZED.
- ---------------------------
The Partnership is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is required to file reports and other
information with the Securities and Exchange Commission ("Commission") relating
to its business, financial condition and other matters. Such reports and other
information are available on the Commission's electronic data gathering and
retrieval (EDGAR) system, at its internet web site at www.sec.gov, may be
inspected at the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of such material can also be obtained from the Public Reference Room of
the Commission in Washington, D.C. at prescribed rates.
The Purchasers have filed with the Commission a Tender Offer Statement on
Schedule TO (including exhibits) pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional information
with respect to the Offer. Such statement and any amendments thereto, including
exhibits, may be inspected and copies may be obtained from the offices of the
Commission in the manner specified above.
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TABLE OF CONTENTS
PAGE
SUMMARY TERM SHEET............................................................5
INTRODUCTION..................................................................8
TENDER OFFER.................................................................12
Section 1. Terms of the Offer.........................................12
Section 2. Acceptance for Payment and Payment for Units; Proration....12
Section 3. Procedures for Tendering Units.............................13
Section 4. Withdrawal Rights..........................................14
Section 5. Extension of Tender Period; Termination; Amendment.........14
Section 6. Certain Federal Income Tax Consequences....................15
Section 7. Effects of the Offer.......................................17
Section 8. Future Plans...............................................17
Section 9. The Business of the Partnership............................18
Section 10. Conflicts of Interest......................................18
Section 11. Certain Information Concerning the Purchasers..............19
Section 12. Source of Funds............................................19
Section 13. Conditions of the Offer....................................19
Section 14. Certain Legal Matters......................................21
Section 15. Fees and Expenses..........................................21
Section 16. Miscellaneous..............................................21
4
SUMMARY TERM SHEET
The Purchasers are offering to purchase any and all outstanding Units for $4.25
per Unit in cash. The following are some of the questions that you, as a Unit
holder of the Partnership may have and answers to those questions. The
information in this summary is not complete, and we urge you to carefully read
the remainder of this Offer to Purchase and the accompanying Letter of
Transmittal.
WHO IS OFFERING TO BUY MY SECURITIES?
The offer to purchase your Units is being made jointly by MPF DEWAAY PREMIER
FUND, LLC; MP VALUE FUND 7, LLC; MPF SPECIAL FUND 8, LLC; MACKENZIE PATTERSON
SPECIAL FUND 7, LLC; MORAGA GOLD, LLC; STEVEN GOLD; and MPF-NY 2005, LLC. Each
of the entity Purchasers is a real estate investment fund managed or advised by
MacKenzie Patterson Fuller, Inc., a private, independent real estate investment
firm. None of the Purchasers is affiliated with the Partnership or its General
Partners.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking to purchase 305,500 Depositary Units Certificates, which are the
"Units" issued to investors in the Partnership in its initial public offering of
equity securities.
HOW MUCH ARE YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
We are offering to pay $4.25 per Unit, net to you in cash, less the amount of
any distributions declared or made with respect to the Units between March 22,
2005 and the date the Offer expires. The Offer price would be reduced by the
amount of distributions made or declared prior to the Expiration Date. Any
distributions made or declared after the Expiration Date would, by the terms of
the Offer and as set forth in the Letter of Transmittal, be assigned by
tendering Unit holders to the Purchasers. If you tender your Units to us in the
Offer, you will not have to pay brokerage fees or similar expenses.
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
If the total amount of Units sought is purchased, the Purchasers' capital
commitment will be approximately $1,298,375. The Purchasers have an aggregate of
approximately $16 million in total assets, and more than $3.5 million in total
net current assets at their disposal to fund payment to selling Unit holders.
The Purchasers currently have sufficient funded capital to fund all of their
commitments under this offer and all other tender offers they are presently
making.
IS THE FINANCIAL CONDITION OF THE BIDDERS RELEVANT TO MY DECISION ON WHETHER TO
TENDER IN THE OFFER?
Because this is a cash offer that is not conditioned on financing being
available, and the Purchasers have more than adequate resources and no intention
to take control of the Partnership, other information concerning the Purchasers'
financial condition would seem to have little relevance to your decision.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have at least until 12:00 midnight, Pacific Time, on May 6, 2005, to
decide whether to tender your Units in the Offer.
5
WILL ALL OF THE UNITS I TENDER BE ACCEPTED BY THE PURCHASERS?
The Purchasers desire to purchase up to 305,500 Units. If the number of Units
validly tendered and not properly withdrawn on or prior to the Expiration Date
is less than or equal to 305,500, we will purchase all Units so tendered and not
withdrawn, upon the terms and subject to the conditions of the Offer. However,
if more than 305,500 Units are so tendered and not withdrawn, we will accept for
payment and pay for 305,500 Units so tendered, pro rata according to the number
of Units so tendered, adjusted by rounding down to the nearest whole number of
Units tendered by each Unit holder to avoid purchases of fractional Units, as
appropriate. See "Tender Offer -- Section 2. Acceptance for Payment and Payment
for Units; Proration."
CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
The Offer can be extended in our discretion.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will make a public announcement of the extension, not
later than 9:00 a.m., Eastern Time, on the day after the day on which the Offer
was scheduled to expire.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
There are no conditions to the offer based on a minimum number of Units
tendered, the availability of financing, or the success of the offer. However,
we may not be obligated to purchase any Units if certain conditions occur, such
as legal or government actions which would prohibit the purchase. Furthermore,
we are not obligated to purchase any Units which are validly tendered if, among
other things, there is a material adverse change in the Partnership or its
business. Please see the discussion in Section 13, Conditions of the Offer, for
a description of all conditions.
WHEN WILL YOU PAY ME FOR THE UNITS I TENDER?
Upon the Expiration of the Offer and our acceptance of the Units you tender, we
will pay you upon confirmation that the General Partner will recognize the
change of address for distributions and correspondence on the Units.
HOW DO I TENDER MY UNITS?
To tender your Units, you must deliver a completed Letter of Transmittal
(printed on yellow paper), to the Depositary at: MacKenzie Patterson Fuller,
Inc., 1640 School Street, Moraga, California 94556 (Telephone: 800-854-8357;
Facsimile Transmission: 925-631-9119), no later than the time the Offer expires.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED UNITS?
You can withdraw previously tendered Units at any time until the Offer has
expired and, if we have not agreed to accept your Units for payment by May 20,
2005, you can withdraw them at any time after such time until we do accept your
Units for payment.
HOW DO I WITHDRAW PREVIOUSLY TENDERED UNITS?
To withdraw Units, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the Depositary while you
still have the right to withdraw the Units.
WHAT DO THE PARTNERSHIP'S GENERAL PARTNERS THINK OF THE OFFER?
The General Partners have remained neutral on the Offer.
WILL THE PARTNERSHIP CONTINUE AS A PUBLIC COMPANY?
The Partnership reported 789 holders of its outstanding Units as of the date of
its most recent annual report. If the total number of Unit holders is below 300,
the Partnership can elect to discontinue its status as a public reporting
company. Accordingly, it is possible, though the Purchasers believe unlikely,
that the Offer could result in the total
6
number of Unit holders falling below the 300 holder level. However, there has
never been a public trading market for the Units and none is expected to
develop, so the Partnership's status as a public company will not affect a
trading market in the Units. While the Partnership's Agreement of Limited
Partnership requires that all Unit holders be provided annual audited financial
statements, quarterly interim financial statements, and timely reports providing
other information regarding the operations and condition of the Partnership, a
change in the Partnership's status as a public company could reduce the
information available to Unit holders about the Partnership in the event the
information required by the Partnership Agreement is not as extensive as that
provided in reports required to be filed by public companies under applicable
rules of the Securities and Exchange Commission.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY UNITS?
The Purchasers do not anticipate that Units held by non-tendering Unit holders
will be affected by the completion of the offer, except that the Purchasers may
have some control over voting if the Offer is substantially subscribed. The
General Partners control over 67% of the Units, so unless they elect to seek the
consent of the minority, as they are presently doing with respect to the sale of
the Twin Lake Apartments, the Purchasers would not be able to influence voting.
However, when the General Partners solicit the consent of the minority, the
Purchasers could have significant influence over whether or not the
Partnership's properties are sold. Further, it is possible, as mentioned above,
that the Partnership could cease being a public company if a sufficient number
of Unit holders tender pursuant to this Offer.
WHAT ARE THE PURCHASERS' FUTURE INTENTIONS CONCERNING THE PARTNERSHIP?
The Purchasers have no present intention to seek control of the Partnership or
to change the management or operations of the Partnership. The Purchasers do not
have any present intention to take action in connection with the liquidation of
the Partnership or with any extraordinary transaction concerning the Partnership
or its assets, other than the offer by Mr. Gold to purchase the Twin Lakes
Apartments. Mr. Gold is able to both purchase the Twin Lakes Apartments and
participate in this Offer. Although the Purchasers do not have any present
intention to take any action with respect to management or control of the
Partnership, the Purchasers reserve the right, at an appropriate time, to
exercise their rights as limited partners to vote on matters subject to a
limited partner vote, including any vote affecting the sale of the Partnership's
assets and the liquidation and dissolution of the Partnership.
WHAT IS THE MARKET VALUE OF MY UNITS?
The Units do not have a readily ascertainable market value, and neither the Unit
holders nor the Purchasers have any accurate means for determining the actual
present value of the Units. According to the Partnership, ". . . no public
trading market has developed for the Units and it is not anticipated that such a
market will develop in the future." (Form 10-K for the year ended December 31,
2003). The Purchasers review of independent secondary market reporting
publications such as The Direct Investments Spectrum (formerly The Partnership
Spectrum) and The Stanger Report, reported no sales of Units on secondary
markets during the most recent six months. The information published by these
independent sources is believed to be the product of their private market
research and does not constitute the comprehensive transaction reporting of a
securities exchange. Accordingly, the Purchasers do not know whether the
foregoing information is accurate or complete. Although there can be no
certainty as to the actual present value of the Units, the Purchasers have
estimated, solely for the purposes of determining an acceptable Offer price,
that the Partnership could have an estimated liquidation value of approximately
$5.05 per Unit, or higher. It should be noted, that the Purchasers have not made
an independent appraisal of the Units or the Partnership's properties, and are
not qualified to appraise real estate. Accordingly, there can be no assurance
that this estimate accurately reflects an approximate value of the Units or that
the actual amounts which may be realized by Unit holders for the may not vary
substantially from this estimate.
TO WHOM CAN I TALK IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call MacKenzie Patterson Fuller, Inc., toll-free, at 800-854-8357.
7
TO THE UNIT HOLDERS OF U.S. REALTY PARTNERS LIMITED PARTNERSHIP:
INTRODUCTION
The Purchasers hereby offer to purchase up to 305,500 Units at a
purchase price of $4.25 per Unit ("Offer Price"), less the amount of any
distributions declared or paid with respect to the Units between March 22, 2005,
and the Expiration Date, in cash, without interest, upon the terms and subject
to the conditions set forth in the Offer. The Purchasers are unaware of any
distributions declared or paid since March 22, 2005. Unit holders who tender
their Units will not be obligated to pay any Partnership transfer fees, or any
other fees, expenses or commissions in connection with the tender of Units. The
Purchasers will pay all such costs and all charges and expenses of the
Depositary, an affiliate of certain of the Purchasers, as depositary in
connection with the Offer.
For further information concerning the Purchasers, see Section 11 below
and Schedule I. None of the Purchasers or the Depositary is affiliated with the
Partnership or the Partnership's General Partner. The address of the
Partnership's principal executive offices is 55 Beattie Place, P.O. Box 1089,
Greenville, South Carolina 29602, and its phone number is (864) 239-1000.
Unit holders are urged to consider the following factors:
o The Offer will provide Unit holders with an opportunity to liquidate
their investment without the usual transaction costs associated with
market sales. Unit holders may have a more immediate need to use the
cash now tied up in an investment in the Units and may wish to sell
them to the Purchasers.
o Unit holders who tender their Units will give up the opportunity to
participate in any future benefits from the ownership of Units,
including potential future distributions by the Partnership from
property dispositions or operations from future development, if any,
and the purchase price per Unit payable to a tendering Unit holder by
the Purchasers may be less than the total amount which might otherwise
be received by the Unit holder with respect to the Unit over the
remaining term of the Partnership.
o The Purchasers are making the Offer for investment purposes and with
the intention of making a profit from the ownership of the Units. In
establishing the purchase price of $4.25 per Unit, the Purchasers are
motivated to establish the lowest price which might be acceptable to
Unit holders consistent with the Purchasers' objectives. There is no
public market for the Units, and neither the Unit holders nor the
Purchasers have any accurate means for determining the actual present
value of the Units. Although there can be no certainty as to the actual
present value of the Units, the Purchasers have estimated, solely for
the purposes of determining an acceptable Offer price, that the
Partnership could have an estimated liquidation value of approximately
$5.05 per Unit. It should be noted, however, that the Purchasers have
not made an independent appraisal of the Units or the Partnership's
properties, and are not qualified to appraise real estate. Furthermore,
although the Partnership has announced that it is attempting to sell
its remaining property, there can be no assurance as to the timing or
amount of any future Partnership distributions, and there can be no
assurance that the Purchasers' estimate accurately reflects an
approximate value of the Units or that the actual amounts which may be
realized by holders for the Units may not vary substantially from this
estimate.
o Unit holders tendering their Units pursuant to this Offer will not have
the right to object to the sale of the Twin Lakes Apartments (the
"Sale") pursuant to the General Partner's information statement; as a
result of tendering pursuant to this Offer, unitholders grant an
irrevocable proxy to the Purchasers such that the Purchasers can
exercise the right to vote tendered Units. The Purchasers could end up
owning in excess of 25% of the outstanding Units if this Offer is fully
subscribed, which would enable them to have significant voting power
and the ability to object to the Sale by the Partnership. The
Purchasers have not yet formed an intention with respect to that
objection, but would likely object. The Purchasers believe that
management has, according to its own statement, not marketed the
property in any way and, as such, has no idea as to whether the
Partnership might achieve a better price than the present offer. In
fact, one of the Purchasers, Steve Gold, has offered to purchase the
property for more than the General Partner's affiliate. We are inclined
to believe that management should reject the sale and undertake an
active marketing process. Mr. Gold is able to both purchase the Twin
Lakes Apartments and participate in this Offer.
8
o The Depositary, MacKenzie Patterson Fuller, Inc., is an affiliate of
certain of the Purchasers. No independent party will hold securities
tendered until the offer closes and payment is made. Because there is
no independent intermediary to hold the Purchasers' funds and tendered
securities, the Purchasers may have access to the securities before all
conditions to the Offer have been satisfied and selling Unit holders
have been paid.
o The Purchasers may accept only a portion of the Units tendered by a
Unitholder in the event a total of more than 305,500 Units are
tendered.
Establishment of the Offer Price
- --------------------------------
The Purchasers have set the Offer Price at $4.25 per Unit, less the
amount of any distributions declared or made with respect to the Units between
March 22, 2005 and the Expiration Date. In determining the Offer Price, the
Purchasers analyzed a number of quantitative and qualitative factors, including:
(i) the lack of a secondary market for resales of the Units and the resulting
lack of liquidity of an investment in the Partnership; (ii) the estimated value
of the Partnership's real estate assets; and (iii) the costs to the Purchasers
associated with acquiring the Units.
The Partnership made the following statements in its annual report on
Form 10-K for the year ended December 31, 2003: ". . . no public trading market
has developed for the Units and it is not anticipated that such a market will
develop in the future." The lack of any public market for the sale of Units
means that Unit holders have limited alternatives if they seek to sell their
Units. As a result of such limited alternatives for Unit holders, the Purchasers
may not need to offer as high a price for the Units as they would otherwise. On
the other hand, the Purchasers take a greater risk in establishing a purchase
price as there is no prevailing market price to be used for reference and the
Purchasers themselves will have limited liquidity for the Units upon
consummation of the purchase. The Purchasers review of independent secondary
market reporting publications such as The Direct Investments Spectrum, and The
Stanger Report, reported no sales of Units on secondary markets during the most
recent six months. The information published by these independent sources is
believed to be the product of their private market research and does not
constitute the comprehensive transaction reporting of a securities exchange.
Accordingly, the Purchasers do not know whether the foregoing information is
accurate or complete.
According to the Partnership's annual report for the year ended
December 31, 2003, the Partnership's investments in properties consist of the
following two real properties:
Date of
Property Purchase Type of Ownership Use
- -------- -------- ----------------- ---
Governor's Park Apartments 08/29/86 Fee ownership subject to Apartment
Little Rock, Arkansas first mortgage 154 units
Twin Lakes Apartments 08/28/86 Fee ownership subject to Apartment
Palm Harbor, Florida first mortgage 262 units
On January 24, 2005, the General Partners furnished a proxy statement
(as supplemented by that certain Supplement to Proxy Statement dated February
14, 2005, the "Proxy Statement") to the Unit holders in connection with:
(i) an amendment to the Partnership's agreement of limited partnership
(the "Partnership Agreement") to permit sales of the Partnership's property to
the General Partners or their affiliates; and
(ii) the sale by the Partnership of Twin Lakes Apartments, to Twin
Lakes Apartments, L.L.C., a Delaware limited liability company which is wholly
owned by one of the General Partners.
As described in the Proxy Statement, the General Partners have
represented to the Unit holders that they will not consummate the proposed sale
of Twin Lakes to their affiliate if Unit holders holding a majority of the Units
held by persons not affiliated with the General Partners object in writing to
such as described in the Proxy Statement. Unit holders must return their Notice
of Objection by March 31, 2005 (unless such date is extended by the General
Partners in their discretion and as described in the Proxy Statement).
9
According to the Proxy Statement, the Partnership entered into an
agreement, dated September 3, 2004 (the "Purchase Agreement"), with a
wholly-owned subsidiary of AIMCO Properties, L.P., pursuant to which that
purchaser would purchase the Twin Lakes property for a gross purchase price of
$11,210,472. The rights under the Purchase Agreement were thereafter assigned to
another affiliated purchaser. As set forth in the Proxy Statement, the General
Partners "anticipate that the Partnership will distribute $4,463,383, or
approximately $3.65 per unit, to the Limited Partners in connection with the
Sale" of Twin Lakes to the General Partner affiliate if the amendments are not
subject to objection by a majority of the unaffiliated Unit holders and the
property is sold pursuant to the Purchase Agreement.
Steven Gold, one of the Purchasers in this Offer and holder of
approximately 1% of the outstanding Units, has submitted a written offer to
purchase Twin Lakes for a purchase price of $11.65 million and has requested
that the General Partners provide him with an opportunity to revise his offer in
the event the General Partner's affiliate should elect to increase the purchase
price in the Purchase Agreement currently in effect. The General Partners have
stated in their public filings that this offer is currently under review by the
Partnership. As of the date of this Offer Mr. Gold has received no reply from
the Partnership to his offer to purchase Twin Lakes. Mr. Gold is able to both
purchase the Twin Lakes Apartments and participate in this Offer.
According to a Preliminary Information Statement on Schedule 14C filed
by the Partnership in March 2005, the Partnership "has marketed Governor's Park
to potential purchasers. The Partnership intends to continue to seek a buyer for
Governor's Park and the general partners of the Partnership believe that
additional time may be required in order to locate a buyer for Governor's Park."
The Purchasers' valuation is based upon the sale of the assets of the
Partnership, but such assets may not be liquidated for an indefinite period of
time even though Twin Lakes is under contract of sale and Governor's Park is
being marketed. Accordingly, the underlying asset value of the Partnership is
only one factor used by the Purchasers in arriving at the Offer Price. However,
in the absence of trading price information, the Purchasers estimate of the net
asset value of the Partnership may be relevant to Unit holders' review of the
Offer Price. Using publicly available information concerning the Partnership
contained in the Partnership's Form 10-K for the fiscal year ended December 31,
2003 and the quarterly report for the quarter ended September 30, 2004, the
Purchasers derived an estimated net asset value for the Units. The Purchasers
are not qualified as real estate appraisers and have relied solely on publicly
available information in making their estimate of the value of the Partnership's
assets. The Purchasers estimated value of Partnership assets was calculated
solely for purposes of formulating their offer and cannot be relied upon as
representing an amount which might actually be realized upon a liquidation of
the Partnership's assets, whether now or at any time in the future.
In determining their estimated value of the Units, the Purchasers first
calculated the "Estimated Net Sales Value" of the Partnership's real property
investments. The Estimated Net Sales Value was determined by first determining
the properties' net operating income ("NOI"). The NOI was calculated by
subtracting from rental income the property operating expenses. This NOI was
then divided by an 9% capitalization rate (the "Cap Rate") and the result
reduced by 3% to take into account the estimated closing costs which would be
incurred upon sale by the Partnership of the properties, including brokerage
commissions, title costs, surveys, appraisals, legal fees and transfer taxes.
The Purchasers believe that the Cap Rate utilized is within a range of
capitalization rates currently employed in the marketplace for properties of
similar type, age, and quality. The utilization of different capitalization
rates, however, could also be appropriate. In this regard, Unit holders should
be aware that the use of lower capitalization rate would result in a higher
Estimated Net Sales Value.
To determine the Estimated Liquidation Value of the Partnership's
assets, the Purchaser added to the Estimated Net Sales Value of the
Partnership's properties the net current assets, as reported in the
Partnership's most recent Form 10-Q for the quarter ended September 30, 2004,
and calculated the amount of the balance allocable to the Units. The resulting
Estimated Liquidation Value of the Partnership's assets per was approximately
$5.05 per Unit. The Purchasers emphasize that this value was calculated by them
solely for purposes of selecting an Offer Price. There can be no assurance as to
the actual liquidation value of Partnership assets or as to the amount or timing
of distributions of liquidation proceeds which may be received by Unit holders.
Accordingly, there can be no assurance as to the availability or timing of any
liquidation proceeds. Additional quantitative detail is given below:
10
- --------------------------------------------------------------------------------
Gross valuation of partnership properties $17,362,963
- --------------------------------------------------------------------------------
Less: Selling Costs at 1.5% (520,889)
- --------------------------------------------------------------------------------
Plus: Net Current Assets (305,000)
- --------------------------------------------------------------------------------
Less: Mortgage Debt (10,016,000)
- --------------------------------------------------------------------------------
Estimated net valuation of your partnership $6,521,074
- --------------------------------------------------------------------------------
Percentage of estimated net valuation allocated to holders of units 95%
based upon subordinated general partner participation
- --------------------------------------------------------------------------------
Estimated net valuation of units $6,177,023
- --------------------------------------------------------------------------------
Total number of units 1,222,000
- --------------------------------------------------------------------------------
Estimated valuation per unit $5.05
- --------------------------------------------------------------------------------
The Offer Price represents the price at which the Purchasers are
willing to purchase Units. The Purchasers arrived at the $4.25 Offer Price by
applying a liquidity discount to their calculations of Estimated Liquidation
Value of the Partnership's assets, after deducting selling and liquidation
costs. The Purchasers apply such a discount with the intention of making a
profit by holding on to the Units until the Partnership is liquidated, hopefully
at close to the full Estimated Liquidation Value. No independent person has been
retained to evaluate or render any opinion with respect to the fairness of the
Offer Price and no representation is made by the Purchasers or any affiliate of
the Purchasers as to such fairness. Other measures of the value of the Units may
be relevant to Unit holders. Unit holders are urged to consider carefully all of
the information contained herein and consult with their own advisers, tax,
financial or otherwise, in evaluating the terms of the Offer before deciding
whether to tender Units.
The Offer is not made with any current view toward or plan or purpose
of acquiring Units in a series of successive and periodic offers. Nevertheless,
the Purchasers reserve the right to gauge the response to this solicitation,
and, if not successful in purchasing 305,500 Units pursuant to this Offer, may
consider future offers. Factors affecting the Purchasers' future interest in
acquiring additional Units include, but are not limited to, the relative success
of the current Offer, any increase or decrease in the availability of capital
for investment by the Purchasers and their investment fund affiliates, the
current diversification and performance of each affiliated fund's portfolio of
real estate interests, the development of any public market in the Units or
actions by unrelated parties to tender for or purchase Units, the status of and
changes and trends in the Partnership's operations, announcement of pending
property sales and the proposed terms of sales, and local and national real
estate and financial market developments and trends.
General Background Information
Certain information contained in this Offer to Purchase which relates
to, or represents, statements made by the Partnership or the General Partners,
has been derived from information provided in reports filed by the Partnership
with the Securities and Exchange Commission.
Tendering Unit holders will not be obligated to pay transfer fees,
brokerage fees, or commissions on the sale of the Units to the Purchasers
pursuant to the Offer. The Purchasers will pay all charges and expenses incurred
in connection with the Offer. The Purchasers desire to purchase up to 305,500
Units. If the number of Units validly tendered and not properly withdrawn on or
prior to the Expiration Date is less than or equal to 305,500, we will purchase
all Units so tendered and not withdrawn, upon the terms and subject to the
conditions of the Offer. However, if more than 305,500 Units are so tendered and
not withdrawn, we will accept for payment and pay for 305,500 Units so tendered,
pro rata according to the number of Units so tendered, adjusted by rounding down
to the nearest whole number of Units tendered by each Unit holder to avoid
purchases of fractional Units, as appropriate. (See "Tender Offer -- Section 2.
Acceptance for Payment and Payment for Units; Proration.")
IF, PRIOR TO THE EXPIRATION DATE, THE PURCHASERS INCREASE THE
CONSIDERATION OFFERED TO UNIT HOLDERS PURSUANT TO THE OFFER, SUCH INCREASED
CONSIDERATION WILL BE PAID WITH RESPECT TO ALL UNITS THAT ARE PURCHASED PURSUANT
TO THE OFFER, WHETHER OR NOT SUCH UNITS WERE TENDERED PRIOR TO SUCH INCREASE IN
CONSIDERATION.
UNIT HOLDERS ARE URGED TO READ THIS OFFER TO PURCHASE AND THE
ACCOMPANYING LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER
THEIR UNITS.
11
TENDER OFFER
SECTION 1. TERMS OF THE OFFER. Upon the terms and subject to the conditions of
the Offer, the Purchasers will accept for payment and pay for Units validly
tendered on or prior to the Expiration Date and not withdrawn in accordance with
Section 4 of this Offer to Purchase. The term "Expiration Date" shall mean 12:00
midnight, Pacific Time, on May 6, 2005, unless and until the Purchasers shall
have extended the period of time for which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date on which the Offer,
as so extended by the Purchasers, shall expire.
The Offer is conditioned on satisfaction of certain conditions. See
Section 13, which sets forth in full the conditions of the Offer. The Purchasers
reserve the right (but shall not be obligated), in their sole discretion and for
any reason, to waive any or all of such conditions. If, by the Expiration Date,
any or all of such conditions have not been satisfied or waived, the Purchasers
reserve the right (but shall not be obligated) to (i) decline to purchase any of
the Units tendered, terminate the Offer and return all tendered Units to
tendering Unit holders, (ii) waive all the unsatisfied conditions and, subject
to complying with applicable rules and regulations of the Commission, purchase
all Units validly tendered, (iii) extend the Offer and, subject to the right of
Unit holders 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 (iv) to amend the Offer. Notwithstanding the foregoing, upon the expiration
of the Offer, if all conditions are either satisfied or waived, the Purchasers
will promptly pay for all validly tendered Units, upon confirmation that the
general partner will recognize the change of address for distributions and
correspondence on the Units, and the Purchasers do not intend to imply that the
foregoing rights of the Purchasers would permit the Purchasers to delay payment
for validly tendered Units following expiration.
THE PURCHASERS DO NOT ANTICIPATE AND HAVE NO REASON TO BELIEVE THAT ANY
CONDITION OR EVENT WILL OCCUR THAT WOULD PREVENT THE PURCHASERS FROM PURCHASING
TENDERED UNITS AS OFFERED HEREIN.
SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS; PRORATION. Upon the
terms and subject to the conditions of the Offer (including, if the Offer is
extended or amended, the terms and conditions of any extension or amendment),
the Purchasers will accept for payment, and will pay for, Units validly tendered
and not withdrawn in accordance with Section 4, promptly following the
Expiration Date and upon confirmation that the general partner will recognize
the change of address for distributions and correspondence on the Units. In all
cases, payment for Units purchased pursuant to the Offer will be made only after
timely receipt by the Depositary of a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) and any other documents required by
the Letter of Transmittal.
The Purchasers desire to purchase up to 305,500 Units. If the number of
Units validly tendered and not properly withdrawn on or prior to the Expiration
Date is less than or equal to 305,500, we will purchase all Units so tendered
and not withdrawn, upon the terms and subject to the conditions of the Offer.
However, if more than 305,500 Units are so tendered and not withdrawn, we will
accept for payment and pay for 305,500 Units so tendered, pro rata according to
the number of Units so tendered, adjusted by rounding down to the nearest whole
number of Units tendered by each Unit holder to avoid purchases of fractional
Units, as appropriate.
In the event that proration is required, because of the difficulty of
immediately determining the precise number of Units to be accepted, the
Purchasers will announce the final results of proration as soon as practicable,
but in no event later than five business days following the Expiration Date. The
Purchasers will not pay for any Units tendered until after the final proration
factor has been determined.
For purposes of the Offer, the Purchasers shall be deemed to have
accepted for payment (and thereby purchased) tendered Units when, as and if the
Purchasers give oral or written notice to the Depositary of the Purchasers'
acceptance for payment of such Units pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Units purchased pursuant to
the Offer will in all cases be made by deposit of the Offer Price with the
Depositary, which will act as agent for the tendering Unit holders for the
purpose of receiving payment from the Purchasers and transmitting payment to
tendering Unit holders.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE OFFER PRICE BY
REASON OF ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Units are not purchased for any reason (other than due
to proration as described above), the
12
Letter of Transmittal with respect to such Units not purchased will be of no
force or effect. If, for any reason whatsoever, acceptance for payment of, or
payment for, any Units tendered pursuant to the Offer is delayed or the
Purchasers are unable to accept for payment, purchase or pay for Units tendered
pursuant to the Offer, then, without prejudice to the Purchasers' rights under
Section 13, the Depositary may, nevertheless, on behalf of the Purchasers,
retain tendered Units and such Units may not be withdrawn (but subject to
compliance with Rule 14e-1(c) under the Exchange Act, which requires that the
Purchasers pay the consideration offered or return the Units deposited by or on
behalf of the Unit holder promptly after the termination or withdrawal of a
tender offer), except to the extent that the tendering Unit holders are entitled
to withdrawal rights as described in Section 4.
If, prior to the Expiration Date, the Purchasers shall increase the
consideration offered to Unit holders pursuant to the Offer, such increased
consideration shall be paid for all Units accepted for payment pursuant to the
Offer, whether or not such 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 Letter of Transmittal (a copy of which is enclosed
with this Offer to Purchase, printed on yellow paper) with any other documents
required by the Letter of Transmittal must be received by the Depositary at its
address set forth on the back cover of this Offer to Purchase on or prior to the
Expiration Date. A Unit holder may tender any or all Units owned by such Unit
holder.
IN ORDER FOR A TENDERING UNIT HOLDER TO PARTICIPATE IN THE OFFER, UNITS MUST BE
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE, WHICH IS 12:00
MIDNIGHT, PACIFIC TIME, ON MAY 6, 2005, OR SUCH DATE TO WHICH THE OFFER MAY BE
EXTENDED.
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING UNIT HOLDER AND DELIVERY
WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY.
BACKUP FEDERAL INCOME TAX WITHHOLDING. To prevent the possible application of
31% backup federal income tax withholding with respect to payment of the Offer
Price for Units purchased pursuant to the Offer, a tendering Unit holder must
provide the Depositary with such Unit holder's correct taxpayer identification
number and make certain certifications that such Unit holder is not subject to
backup federal income tax withholding. Each tendering Unit holder must insert in
the Letter of Transmittal the Unit holder's taxpayer identification number or
social security number in the space provided on the front of the Letter of
Transmittal. The Letter of Transmittal also includes a substitute Form W-9,
which contains the certifications referred to above. (See the Instructions to
the Letter of Transmittal.)
FIRPTA WITHHOLDING. To prevent the withholding of federal income tax in an
amount equal to 10% of the sum of the Offer Price plus the amount of Partnership
liabilities allocable to each Unit tendered, each Unit holder must complete the
FIRPTA Affidavit included in the Letter of Transmittal certifying such Unit
holder's taxpayer identification number and address and that the Unit holder is
not a foreign person. (See the Instructions to the Letter of Transmittal and
"Section 6. Certain Federal Income Tax Consequences.")
OTHER REQUIREMENTS. By executing a Letter of Transmittal as set forth above, a
tendering Unit holder irrevocably appoints the designees of the Purchasers as
such Unit holder's proxies, in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of such
Unit holder's rights with respect to the Units tendered by such Unit holder and
accepted for payment by the Purchasers. Such appointment will be effective when,
and only to the extent that, the Purchasers accept such Units for payment. Upon
such acceptance for payment, all prior proxies given by such Unit holder with
respect to such Units will, without further action, be revoked, and no
subsequent proxies may be given (and if given will not be effective). The
designees of the Purchasers will, with respect to such Units, be empowered to
exercise all voting and other rights of such Unit holder as they in their sole
discretion may deem proper at any meeting of Unit holders, by written consent or
otherwise. In addition, by executing a Letter of Transmittal, a Unit holder also
assigns to the Purchasers all of the Unit holder's rights to receive
distributions from the Partnership with respect to Units which are accepted for
payment and purchased pursuant to the Offer, other than those distributions
declared or paid during the period commencing on the Offer Date and terminating
on the Expiration Date.
13
DETERMINATION OF VALIDITY; REJECTION OF UNITS; WAIVER OF DEFECTS; NO OBLIGATION
TO GIVE NOTICE OF DEFECTS. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance for payment of any tender of Units
pursuant to the procedures described above will be determined by the Purchasers,
in their sole discretion, which determination shall be final and binding. The
Purchasers reserve the absolute right to reject any or all tenders if not in
proper form or if the acceptance of, or payment for, the absolute right to
reject any or all tenders if not in proper form or if the acceptance of, or
payment for, the Units tendered may, in the opinion of the Purchasers' counsel,
be unlawful. The Purchasers also reserve the right to waive any defect or
irregularity in any tender with respect to any particular Units of any
particular Unit holder, and the Purchasers' interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
Instructions thereto) will be final and binding. Neither the Purchasers, the
Depositary, nor any other person will be under any duty to give notification of
any defects or irregularities in the tender of any Units or will incur any
liability for failure to give any such notification.
A tender of Units pursuant to any of the procedures described above will
constitute a binding agreement between the tendering Unit holder and the
Purchasers upon the terms and subject to the conditions of the Offer, including
the tendering Unit holder's representation and warranty that (i) such Unit
holder owns the Units being tendered within the meaning of Rule 14e-4 under the
Exchange Act and (ii) the tender of such Unit complies with Rule 14e-4. Rule
14e-4 requires, in general, that a tendering security holder actually be able to
deliver the security subject to the tender offer, and is of concern particularly
to any Unit holders who have granted options to sell or purchase the Units, hold
option rights to acquire such securities, maintain "short" positions in the
Units (i.e., have borrowed the Units) or have loaned the Units to a short
seller. Because of the nature of limited partnership interests, the Purchasers
believe it is unlikely that any option trading or short selling activity exists
with respect to the Units. In any event, a Unit holder will be deemed to tender
Units in compliance with Rule 14e-4 and the Offer if the holder is the record
owner of the Units and the holder (i) delivers the Units pursuant to the terms
of the Offer, (ii) causes such delivery to be made, (iii) guarantees such
delivery, (iv) causes a guaranty of such delivery, or (v) uses any other method
permitted in the Offer (such as facsimile delivery of the Transmittal Letter).
SECTION 4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4,
all tenders of Units pursuant to the Offer are irrevocable, provided that Units
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment as provided in this
Offer to Purchase, may also be withdrawn at any time on or after May 20, 2005.
For withdrawal to be effective a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at the address or
the facsimile number set forth in the attached Letter of Transmittal. Any such
notice of withdrawal must specify the name of the person who tendered the Units
to be withdrawn and must be signed by the person(s) who signed the Letter of
Transmittal in the same manner as the Letter of Transmittal was signed.
If purchase of, or payment for, Units is delayed for any reason or if
the Purchasers are unable to purchase or pay for Units for any reason, then,
without prejudice to the Purchasers' rights under the Offer, tendered Units may
be retained by the Depositary on behalf of the Purchasers and may not be
withdrawn except to the extent that tendering Unit holders are entitled to
withdrawal rights as set forth in this Section 4, subject to Rule 14e-1(c) under
the Exchange Act, which provides that no person who makes a tender offer shall
fail to pay the consideration offered or return the securities deposited by or
on behalf of security holders promptly after the termination or withdrawal of
the tender offer.
All questions as to the form and validity (including time of receipt)
of notices of withdrawal will be determined by the Purchasers, in their sole
discretion, which determination shall be final and binding. Neither the
Purchasers, nor the Depositary, nor any other person will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or will incur any liability for failure to give any such notification.
Any Units properly withdrawn will be deemed not to be validly tendered
for purposes of the Offer. Withdrawn Units may be re-tendered, however, by
following the procedures described in Section 3 at any time prior to the
Expiration Date.
SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT. The Purchasers
expressly reserve the right, in their sole discretion, at any time and from time
to time, (i) to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any Units by
giving oral or written notice
14
of such extension to the Depositary, (ii) upon the occurrence or failure to
occur of any of the conditions specified in Section 13, to delay the acceptance
for payment of, or payment for, any Units not heretofore accepted for payment or
paid for, or to terminate the Offer and not accept for payment any Units not
theretofore accepted for payment or paid for, by giving oral or written notice
of such termination to the Depositary, and (iii) to amend the Offer in any
respect (including, without limitation, by increasing or decreasing the
consideration offered or the number of Units being sought in the Offer or both
or changing the type of consideration) by giving oral or written notice of such
amendment to the Depositary. Any extension, termination, or amendment will be
followed as promptly as practicable by public announcement, the announcement 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 the public announcement requirement of Rule 14d-4(c) under the
Exchange Act. Without limiting the manner in which the Purchasers may choose to
make any public announcement, except as provided by applicable law (including
Rule 14d-4(c) under the Exchange Act), the Purchasers will have no obligation to
publish, advertise, or otherwise communicate any such public announcement, other
than by issuing a release to the Dow Jones News Service. The Purchasers may also
be required by applicable law to disseminate to Unit holders certain information
concerning the extensions of the Offer and any material changes in the terms of
the Offer.
If the Purchasers extend the Offer, or if the Purchasers (whether
before or after its acceptance for payment of Units) are delayed in their
payment for Units or are unable to pay for Units pursuant to the Offer for any
reason, then, without prejudice to the Purchasers' rights under the Offer, the
Depositary may retain tendered Units on behalf of the Purchasers, and such Units
may be withdrawn to the extent tendering Unit holders are entitled to withdrawal
rights as described in Section 4 (generally, if notice of withdrawal is given to
the Depository prior to the Expiration Date). However, the ability of the
Purchasers to delay payment for Units that the Purchasers have accepted for
payment is limited by Rule 14e-1 under the Exchange Act, which requires that the
Purchasers pay the consideration offered or return the securities deposited by
or on behalf of holders of securities promptly after the termination or
withdrawal of the Offer, except that the Purchasers may delay payment until they
receive confirmation that the general partner will recognize the change of
address for distributions and correspondence on the Units.
If the Purchasers make a material change in the terms of the Offer or
the information concerning the Offer or waive a material condition of the Offer,
the Purchasers will extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an
offer must remain open following a material change in the terms of the offer or
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
(other than an increase of not more than 2% of the 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 to Purchase, "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, Pacific Time.
SECTION 6. MATERIAL FEDERAL INCOME TAX CONSEQUENCES. THE FEDERAL INCOME TAX
DISCUSSION SET FORTH BELOW DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF TAXATION
THAT MAY BE RELEVANT TO A PARTICULAR UNIT HOLDER. For example, this discussion
does not address the effect of any applicable foreign, state, local or other tax
laws other than federal income tax laws. Certain Unit holders (including trusts,
foreign persons, tax-exempt organizations or corporations subject to special
rules, such as life insurance companies or S corporations) may be subject to
special rules not discussed below. This discussion is based on the Internal
Revenue Code of 1986, as amended (the "Code"), existing regulations, court
decisions and Internal Revenue Service ("IRS") rulings and other pronouncements.
EACH UNIT HOLDER TENDERING UNITS SHOULD CONSULT SUCH UNIT HOLDER'S OWN TAX
ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO SUCH UNIT HOLDER OF ACCEPTING
THE OFFER, INCLUDING THE APPLICATION OF THE ALTERNATIVE MINIMUM TAX AND FEDERAL,
FOREIGN, STATE, LOCAL AND OTHER TAX LAWS.
The following discussion is based on the assumption that the
Partnership is treated as a partnership for federal income tax purposes and is
not a "publicly traded partnership" as that term is defined in the Code. Certain
partnerships are classified as "publicly traded partnerships" and, subject to
certain exceptions, are taxed as corporations for federal income tax purposes. A
partnership is a publicly traded partnership if the partnership interests are
traded on an established securities market or readily tradable on a secondary
market (or the substantial equivalent of a secondary market). The Units are not
traded on an established securities market. In the unlikely event that the
Partnership becomes a "publicly traded partnership" and is not excepted from
federal income tax,
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there would be several adverse tax consequences to the Unit holders. For
instance, the Partnership would be regarded as having transferred all of its
assets (subject to all of its liabilities) to a newly-formed corporation in
exchange for stock which would be deemed distributed to the Unit holders in
liquidation of their interests in the Partnership. In addition, if the
Partnership is deemed to be a "publicly traded partnership," then special rules
under Code Section 469 govern the treatment of losses and income of the
Partnership.
GAIN OR LOSS. A taxable Unit holder will recognize a gain or loss on the sale of
such Unit holder's Units in an amount equal to the difference between (i) the
amount realized by such Unit holder on the sale and (ii) such Unit holder's
adjusted tax basis in the Units sold. The amount realized by a Unit holder will
include the Unit holder's share of the Partnership's liabilities, if any (as
determined under Code section 752 and the regulations thereunder). If the Unit
holder reports a loss on the sale, such loss generally could not be currently
deducted by such Unit holder except against such Unit holder's capital gains
from other investments. In addition, such loss would be treated as a passive
activity loss. (See "Suspended Passive Activity Losses" below.)
The adjusted tax basis in the Units of a Unit holder will depend upon
individual circumstances. (See also "Partnership Allocations in Year of Sale"
below.) Each Unit holder who plans to tender hereunder should consult with the
Unit holder's own tax advisor as to the Unit holder's adjusted tax basis in the
Unit holder's Units and the resulting tax consequences of a sale.
If any portion of the amount realized by a Unit holder is attributable
to such Unit holder's share of "unrealized receivables" or "substantially
appreciated inventory items" as defined in Code section 751, a corresponding
portion of such Unit holder's gain or loss will be treated as ordinary gain or
loss. It is possible that the basis allocation rules of Code Section 751 may
result in a Unit holder's recognizing ordinary income with respect to the
portion of the Unit holder's amount realized on the sale of a Unit that is
attributable to such items while recognizing a capital loss with respect to the
remainder of the Unit.
A tax-exempt Unit holder (other than an organization described in Code
Section 501(c)(7) (social club), 501(c)(9) (voluntary employee benefit
association), 501(c)(17) (supplementary unemployment benefit trust), or
501(c)(20) (qualified group legal services plan)) should not be required to
recognize unrelated trade or business income upon the sale of its Units pursuant
to the Offer, assuming that such Unit holder does not hold its Units as a
"dealer" and has not acquired such Units with debt financed proceeds.
PARTNERSHIP ALLOCATIONS IN YEAR OF SALE. A tendering Unit holder will be
allocated the Unit holder's pro rata share of the annual taxable income and
losses from the Partnership with respect to the Units sold for the period
through the date of sale, even though such Unit holder will assign to the
Purchasers their rights to receive certain cash distributions with respect to
such Units. Such allocations and any Partnership distributions for such period
would affect a Unit holder's adjusted tax basis in the tendered Units and,
therefore, the amount of gain or loss recognized by the Unit holder on the sale
of the Units.
POSSIBLE TAX TERMINATION. The Code provides that if 50% or more of the capital
and profits interests in a partnership are sold or exchanged within a single
12-month period, such partnership generally will terminate for federal income
tax purposes. It is possible that the Partnership could terminate for federal
income tax purposes as a result of consummation of the Offer (although the
Partnership Agreement prevents transfers of Units that would cause such a
termination). A tax termination of the Partnership could have an effect on a
corporate or other non-individual Unit holder whose tax year is not the calendar
year, as such a Unit holder might recognize more than one year's Partnership tax
items in one tax return, thus accelerating by a fraction of a year the effects
from such items.
SUSPENDED "PASSIVE ACTIVITY LOSSES". A Unit holder who sells all of the Unit
holder's Units would be able to deduct "suspended" passive activity losses from
the Partnership, if any, in the year of sale free of the passive activity loss
limitation. As a limited partner of the Partnership, which was engaged in real
estate activities, the ability of a Unit holder, who or which is subject to the
passive activity loss rules, to claim tax losses from the Partnership was
limited. Upon sale of all of the Unit holder's Units, such Unit holder would be
able to use any "suspended" passive activity losses first against gain, if any,
on sale of the Unit holder's Units and then against income from any other
source.
FOREIGN UNIT HOLDERS. Gain realized by a foreign Unit holder on a sale of a Unit
pursuant to the Offer will be subject to federal income tax. Under 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
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disposition. The Purchasers will withhold 10% of the amount realized by a
tendering Unit holder from the purchase price payment to be made to such Unit
holder unless the Unit holder properly completes and signs the FIRPTA Affidavit
included as part of the Letter of Transmittal certifying the Unit holder's TIN,
that such Unit holder is not a foreign person and the Unit holder's address.
Amounts withheld would be creditable against a foreign Unit holder's federal
income tax liability and, if in excess thereof, a refund could be obtained from
the Internal Revenue Service by filing a U.S. income tax return.
SECTION 7. EFFECTS OF THE OFFER.
LIMITATIONS ON RESALES. The Purchasers do not believe the provisions of the
Partnership Agreement should restrict transfers of Units pursuant to the Offer,
although no more than 50% of the Units may be transferred in any 12-month
period. This limitation will not affect the tender of Units under this Offer
because, subject to the terms of the Offer, we will pay for the Units upon
confirmation that the General Partners will recognize the change of address for
distributions and correspondence on the Units, and, under the terms of the
Letter of Transmittal, we will take a power of attorney over your Units that
will permit us to change the address to which distributions are sent. We will
then wait to transfer the Units tendered until the Partnership can effect the
transfer of record title in accordance with the Partnership Agreement.
EFFECT ON TRADING MARKET. If a substantial number of Units are purchased
pursuant to the Offer the result would be a reduction in the number of Unit
holders. Reducing the number of security holders in certain kinds of equity
securities might be expected to result in a reduction in the liquidity and
volume of activity in the trading market for the security. However, there is no
established public trading market for the Units and none is expected to develop.
Therefore, the Purchasers do not believe a reduction in the number of Unit
holders will materially further restrict the Unit holders' ability to find
purchasers for their Units through secondary market transactions.
VOTING POWER OF PURCHASERS. The General Partners and their affiliates control
approximately 67.78% of the outstanding Units and therefore hold a controlling
interest in the voting power represented by the Units. Nevertheless, if the
Purchasers acquire a significant number of the Units sought hereunder, the
Purchasers could hold a controlling voting interest in matters to which the
General Partners give the unaffiliated limited partners a voice, such as the
current vote to approve amendments to the Partnership Agreement to permit the
General Partner affiliate to purchase Partnership properties. The Purchasers
will not acquire Units in this Offer in time to vote on the proposal now before
the unaffiliated Unit holders, but they could hold such a controlling vote in
any similar matter which may be put to a vote in the future. A Unit holder who
tenders Units to the Purchasers grants a proxy to the Purchasers as of the date
of acceptance of the tender, granting the Purchasers the right to vote such
Units it their sole discretion as to any matters for which the Partnership has
established a record date after the date of acquisition of the Units and prior
to the date the Purchasers are admitted as substituted limited partners with
full voting rights as such. The Purchasers reserve the right to exercise any and
all rights they might hold in the event that any vote is called by the General
Partner, or if, in the future, changes in circumstances would dictate that they
or other limited partners exercise their right to call a vote.
OTHER POTENTIAL EFFECTS. The Units are registered under the Exchange Act, which
requires, among other things that the Partnership furnish certain information to
its Unit holders and to the Commission and comply with the Commission's proxy
rules in connection with meetings of, and solicitation of consents from, Unit
holders. Registration and reporting requirements could be terminated by the
Partnership if the number of record holders falls below 300, or below 500 if the
Partnership's total assets are below $10 million for three consecutive preceding
fiscal years. The Partnership reported 789 holders of its outstanding Units as
of the date of its most recent annual report. Accordingly, it is possible,
though the Purchasers believe unlikely, that the Offer could result in the total
number of Unit holders falling below the 300 holder level. As disclosed by the
Partnership in its public reports, however, there has never been a public
trading market for the Units and none is expected to develop, so the
Partnership's status as a public company will not affect a trading market in the
Units. While the Partnership's Agreement of Limited Partnership requires that
all Unit holders be provided annual audited financial statements, quarterly
interim financial statements and timely reports providing other information
regarding the operations and condition of the Partnership, a change in the
Partnership's status as a public company could reduce the information available
to Unit holders about the Partnership in the event the information required by
the Partnership Agreement is not as extensive as that provided in reports
required to be filed by public companies under applicable rules of the SEC.
SECTION 8. FUTURE PLANS. Following the completion of the Offer, the Purchasers,
or their affiliates, may acquire additional Units. Any such acquisitions may be
made through private purchases, one or more future tender offers or
17
by any other means deemed advisable or appropriate. Any such acquisitions may be
at a consideration higher or lower than the consideration to be paid for the
Units purchased pursuant to the Offer. The Purchasers are seeking to purchase a
total of 305,500 Units. If the Purchasers acquire fewer than 305,500 Units
pursuant to the Offer, the Purchasers may seek to make further purchases on the
open market at prevailing prices, or solicit Units pursuant to one or more
future tender offers at the same price, a higher price or, if the Partnership's
circumstances change, at a lower price. Alternatively, the Purchasers may
discontinue any further purchases of Units after termination of the Offer,
regardless of the number of Units purchased. The Offer is not made with any
current view toward or plan or purpose of acquiring Units in a series of
successive and periodic offers. Nevertheless, as noted above, the Purchasers
reserve the right to gauge the response to this solicitation, and, if not
successful in purchasing 305,500 Units in this Offer, may consider future
offers. Factors affecting the Purchasers' future interest in acquiring
additional Units include, but are not limited to, the relative success of the
current Offer, any increase or decrease in the availability of capital for
investment by the Purchasers and their investment fund affiliates, the current
diversification and performance of each affiliated fund's portfolio of real
estate interests, the development of any public market in the Units or actions
by unrelated parties to tender for or purchase Units, the status of and changes
and trends in the Partnership's operations, announcement of pending property
sales and the proposed terms of sales, and local and national real estate and
financial market developments and trends.
The Purchasers are acquiring the Units pursuant to the Offer solely for
investment purposes. The Purchasers have no present intention to seek control of
the Partnership or to change the management or operations of the Partnership.
The Purchasers do not have any present intention to take any action in
connection with the ongoing liquidation of the Partnership. The Purchasers
nevertheless reserve the right, at an appropriate time, to exercise their rights
as limited partners to vote on matters subject to a limited partner vote,
including, but not limited to, any vote to affecting the sale of the
Partnership's properties and the liquidation and dissolution of the Partnership.
Except as expressly set forth herein, the Purchasers have no present intention
to seek control of the Partnership, to cause the Partnership to engage in any
extraordinary transaction, to cause any purchase, sale or transfer of a material
amount of the assets of any Partnership, to make any change in the distribution
policies, indebtedness or capitalization of any Partnership or to change the
structure, management or operations of the Partnership, the listing status of
the Units or the reporting requirements of the Partnership.
Notwithstanding the foregoing, Unit holders tendering their Units
pursuant to this Offer will not have the right to vote to approve or disapprove
of the Agreement or otherwise object in the current consent solicitation. As a
result of tendering pursuant to this Offer, Unit holders grant an irrevocable
proxy to the Purchasers such that the Purchasers can exercise the right to vote
tendered Units. The Purchasers could end up owning in excess of 25% of the
outstanding Units if this Offer is fully subscribed, which would enable them to
have significant voting power when the General Partners seek the approval of the
minority.
SECTION 9. THE BUSINESS OF THE PARTNERSHIP. Information included herein
concerning the Partnership is derived from the Partnership's publicly filed
reports. Information concerning the Partnership, its assets, operations, and
management is contained in its Annual Reports on Form 10-K and Quarterly Reports
on Form 10-Q, a Definitive Proxy Statement filed on January 24, 2005, a
Preliminary Information Statement filed in March of 2005, and other filings with
the Securities and Exchange Commission. Such reports and filings are available
on the Commission's EDGAR system, at its internet web site at www.sec.gov, and
are available for inspection at the Commission's principal office in Washington,
D.C. The Purchasers have relied on such information to the extent information is
presented herein concerning the Partnership, but the Purchasers have no ability
to independently verify this information. Thus, the information is provided for
informational purposes only; the Purchasers make no statements about, and cannot
guaranty the accuracy of, the information included in such reports and extracted
in this Offer. The Purchasers can only take responsibility for accurately
reporting what the Partnership has reported in its filings.
For information about the Partnership, please refer to the annual report
prepared by the Partnership which was sent to you earlier last year,
particularly Item 2 of Form 10-K, and the Proxy Statement sent to you earlier
this year, including all supplements. These documents contain updated
information concerning the Partnership, including detailed information regarding
the properties owned, including mortgages, rental rates, and taxes. In addition,
the Partnership is subject to the information and reporting requirements of the
Exchange Act and information about the Partnership can be obtained on the
Commission's EDGAR system, at its internet web site at www.sec.gov, and are
available for inspection at the Commission's principal office in Washington,
D.C.
SECTION 10. CONFLICTS OF INTEREST. The Depositary is affiliated with certain
Purchasers. Therefore, by virtue of this affiliation, the Depositary may have
inherent conflicts of interest in acting as Depositary for the Offer. The
18
Depositary's role is administrative only, however, and any conflict of interest
should not be deemed material to Unit holders.
SECTION 11. CERTAIN INFORMATION CONCERNING THE PURCHASERS. The Purchasers are
MPF DEWAAY PREMIER FUND, LLC; MP VALUE FUND 7, LLC; MPF SPECIAL FUND 8, LLC;
MACKENZIE PATTERSON SPECIAL FUND 7, LLC; MORAGA GOLD, LLC, STEVEN GOLD; and
MPF-NY 2005, LLC. For information concerning the Purchasers and their respective
principals, please refer to Schedule I attached hereto. The principal business
of each of the Purchasers is investment in securities, particularly real
estate-based securities. Steven Gold's principal business address is Four
Embarcadero, Suite 3610, San Francisco, California 94111. The principal business
address of each of the other Purchasers is 1640 School Street, Moraga,
California 94556.
The Purchasers have made binding commitments to contribute and have
available sufficient amounts of capital necessary to fund the acquisition of all
Units subject to the Offer, the expenses to be incurred in connection with the
Offer, and all other anticipated costs of the Purchasers. In addition, the
Purchasers have sufficient funded capital to fund all of their commitments under
all other tender offers they are presently making. The Purchasers are not public
companies and have not prepared audited financial statements or financial
statements prepared in accordance with generally accepted accounting principles.
MacKenzie Patterson Fuller, Inc. and its affiliates have been in the business of
purchasing illiquid real estate securities, both in open market transactions and
by means of tender offers, since 1982 and have acquired more than $75 million in
such securities for affiliated portfolios during the last ten years. The
Purchasers have aggregate assets that are more than sufficient to fund their
collective obligation to purchase Units in this Offer.
Except as otherwise set forth herein, (i) neither the Purchasers nor, to the
best knowledge of the Purchasers, the persons listed on Schedule I nor any
affiliate of the Purchasers beneficially owns or has a right to acquire any
Units, (ii) neither the Purchasers nor, to the best knowledge of the Purchasers,
the persons listed on Schedule I nor any affiliate of the Purchasers, or any
director, executive officer or subsidiary of any of the foregoing has effected
any transaction in the Units within the past 60 days, (iii) neither the
Purchasers nor, to the best knowledge of the Purchasers, the persons listed on
Schedule I nor any affiliate of the Purchasers 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, (iv) there have been no transactions or business
relationships which would be required to be disclosed under the rules and
regulations of the Commission between any of the Purchasers or, to the best
knowledge of the Purchasers, the persons listed on Schedule I, or any affiliate
of the Purchasers on the one hand, and the Partnership or its affiliates, on the
other hand, (v) there have been no contracts, negotiations or transactions
between the Purchasers, or to the best knowledge of the Purchasers any affiliate
of the Purchasers on the one hand, the persons listed on Schedule I, and the
Partnership or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets, (vi) no person listed on Schedule I has been convicted in a criminal
proceeding during the past five years (excluding traffic violations or similar
misdemeanors), and (vii) no person listed on Schedule I has been a party to any
judicial or administrative proceeding during the past five years (except for
matters dismissed without sanction or settlement) that resulted in a judgment,
decree, or final order enjoining the person from future violations of, or
prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws. .
SECTION 12. SOURCE OF FUNDS. The Purchasers expect that approximately $1,298,375
would be required to purchase 305,500 Units, if tendered, and an additional
$20,000 may be required to pay related fees and expenses. The Purchasers have an
aggregate of approximately $16 million in total assets, and more than $3.5
million in total net current assets at their disposal to fund payment to selling
Unit holders. The Purchasers anticipate funding all of the purchase price and
related expenses through their existing capital and assets. The cash and liquid
securities necessary to complete the entire purchase are readily available and
are committed to that purpose. Accordingly, there are no financing arrangements
to fall through and no alternative financing plans.
SECTION 13. CONDITIONS OF THE OFFER. Notwithstanding any other term of the
Offer, the Purchasers shall not be required to accept for payment or to pay for
any Units tendered unless all authorizations or approvals of, or expirations of
waiting periods imposed by, any court, administrative agency or other
governmental authority necessary for the consummation of the transactions
contemplated by the Offer shall have been obtained or occurred on or before the
Expiration Date.
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The Purchasers shall not be required to accept for payment or pay for
any Units not theretofore accepted for payment or paid for and may terminate or
amend the Offer as to such Units if, at any time on or after the date of the
Offer and before the Expiration Date, any of the following conditions exists:
(a) a preliminary or permanent injunction or other order of any federal
or state court, government or governmental authority or agency shall have been
issued and shall remain in effect which (i) makes illegal, delays or otherwise
directly or indirectly restrains or prohibits the making of the Offer or the
acceptance for payment of or payment for any Units by the Purchasers, (ii)
imposes or confirms limitations on the ability of the Purchasers effectively to
exercise full rights of ownership of any Units, including, without limitation,
the right to vote any Units acquired by the Purchasers pursuant to the Offer or
otherwise on all matters properly presented to the Partnership's Unit holders,
(iii) requires divestiture by the Purchasers of any Units, (iv) causes any
material diminution of the benefits to be derived by the Purchasers as a result
of the transactions contemplated by the Offer (see the discussion of such
benefits in the Summary Term Sheet and Introduction sections of the Offer to
Purchase--such benefits specifically do not include either the success or the
failure of the Partnership's sale of the Twin Lakes Apartments, such that
neither event is a condition to this Offer) or (v) materially adversely affect
the business, properties, assets, liabilities, financial condition, operations,
results of operations or prospects of the Purchasers or the Partnership, in the
reasonable judgment of the Purchasers;
(b) there shall be any action taken, or any statute, rule, regulation
or order proposed, enacted, enforced, promulgated, issued or deemed applicable
to the Offer by any federal or state court, government or governmental authority
or agency, other than the application of the waiting period provisions of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which will,
directly or indirectly, result in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;
(c) any change or development shall have occurred or been threatened
since the date hereof, in the business, properties, assets, liabilities,
financial condition, operations, results of operations or prospects of the
Partnership, which, in the reasonable judgment of the Purchasers, is or will be
materially adverse to the Partnership, or the Purchasers shall have become aware
of any fact that, in the reasonable judgment of the Purchasers, does or will
have a material adverse effect on the value of the Units;
(d) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange or
in the over-the-counter market in the United States, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation by any governmental authority on, or other
event which might affect, the extension of credit by lending institutions or
result in any imposition of currency controls in the United States, (iv) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States, (v) a material
change in United States or other currency exchange rates or a suspension of a
limitation on the markets thereof, or (vi) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material acceleration
or worsening thereof; or
(e) it shall have been publicly disclosed or the Purchasers shall have
otherwise learned that (i) more than fifty percent of the outstanding Units have
been or are proposed to be acquired by another person (including a "group"
within the meaning of Section 13(d)(3) of the Exchange Act), or (ii) any person
or group that prior to such date had filed a Statement with the Commission
pursuant to Sections 13(d) or (g) of the Exchange Act has increased or proposes
to increase the number of Units beneficially owned by such person or group as
disclosed in such Statement by two percent or more of the outstanding Units.
The foregoing conditions are for the sole benefit of the Purchasers and
may be asserted by the Purchasers or may be waived by the Purchasers in whole or
in part at any time and from time to time prior to the Expiration Date in their
sole exercise of reasonable discretion, and the Offer will remain open for a
period of at least five business days following any such waiver of a material
condition. However, if we waive a certain condition for one tendering
Unitholder, we will waive that condition for all Unitholders tendering Units.
Any termination by the Purchasers concerning the events described above will be
final and binding upon all parties.
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SECTION 14. CERTAIN LEGAL MATTERS.
GENERAL. Except as set forth in this Section 14, the Purchasers are not aware of
any filings, approvals or other actions by any domestic or foreign governmental
or administrative agency that would be required prior to the acquisition of
Units by the Purchasers pursuant to the Offer. Should any such approval or other
action be required, it is the Purchasers' present intention that such additional
approval or action would be sought. While there is no present intent to delay
the purchase of Units tendered pursuant to the Offer pending receipt of any such
additional approval or the taking of any such action, there can be no assurance
that any such 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 business
might not have to be disposed of or held separate or other substantial
conditions complied with in order to obtain such approval or action, any of
which could cause the Purchasers to elect to terminate the Offer without
purchasing Units thereunder. The Purchasers' obligation to purchase and pay for
Units is subject to certain conditions, including conditions related to the
legal matters discussed in this Section 14.
ANTITRUST. The Purchasers do not believe that the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, is applicable to the acquisition of Units
pursuant to the Offer.
MARGIN REQUIREMENTS. The Units are not "margin securities" under the regulations
of the Board of Governors of the Federal Reserve System and, accordingly, such
regulations are not applicable to the Offer.
STATE TAKEOVER LAWS. A number of states have adopted anti-takeover laws which
purport, to varying degrees, to be applicable to attempts to acquire securities
of corporations which are incorporated in such states or which have substantial
assets, security holders, principal executive offices or principal places of
business therein. These laws are directed at the acquisition of corporations and
not partnerships. The Purchasers, therefore, do not believe that any
anti-takeover laws apply to the transactions contemplated by the Offer.
Although the Purchasers have not attempted to comply with any state
anti-takeover statutes in connection with the Offer, the Purchasers reserve the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer nor any action taken in
connection herewith is intended as a waiver of such right. If any state
anti-takeover statute is applicable to the Offer, the Purchasers 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 such case, the Purchasers
may not be obligated to accept for purchase or pay for any Units tendered.
SECTION 15. FEES AND EXPENSES. The Purchasers have retained MacKenzie Patterson
Fuller, Inc., an affiliate of certain Purchasers, to act as Depositary in
connection with the Offer. The Purchasers will pay the Depositary reasonable and
customary compensation for its services in connection with the Offer, plus
reimbursement for out-of-pocket expenses, and will indemnify the Depositary
against certain liabilities and expenses in connection therewith, including
liabilities under the federal securities laws. The Purchasers will also pay all
costs and expenses of printing, publication and mailing of the Offer and all
costs of transfer.
SECTION 16. MISCELLANEOUS. THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE
ACCEPTED FROM OR ON BEHALF OF) UNIT HOLDERS IN ANY JURISDICTION IN WHICH THE
MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH
THE LAWS OF SUCH JURISDICTION. THE PURCHASERS ARE NOT AWARE OF ANY JURISDICTION
WITHIN THE UNITED STATES IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE
THEREOF WOULD BE ILLEGAL.
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No person has been authorized to give any information or to make any
representation on behalf of the Purchasers not contained herein or in the Letter
of Transmittal and, if given or made, such information or representation must
not be relied upon as having been authorized.
March 22, 2005
MPF DEWAAY PREMIER FUND, LLC
MP VALUE FUND 7, LLC
MPF SPECIAL FUND 8, LLC
MACKENZIE PATTERSON SPECIAL FUND 7, LLC
MORAGA GOLD, LLC
STEVEN GOLD and
MPF-NY 2005, LLC
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