UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
NATIONAL PROPERTY INVESTORS 7
- ------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
Limited Partnership Units
- ------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
60,571
- ------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): $7,750,000
is the purchase price for the property to be sold
- ------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
$7,750,000
- ------------------------------------------------------------------------------
(5) Total fee paid:
$1,550
- ------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date
of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
NATIONAL PROPERTY INVESTORS 7
CONSENT SOLICITATION STATEMENT
December __, 2005
Dear Limited Partner:
We have entered into an agreement (the "Purchase and Sale Agreement")
with the California State Teachers' Retirement System, a public entity
("Calstrs"), to sell Fairway View II (the "Property"), the last remaining
property owned by National Property Investors 7, a California limited
partnership (the "Partnership"), for $7,750,000. Upon completion of the Sale,
we will pay, or establish appropriate reserves for, all known Partnership
liabilities and other obligations, and distribute the remaining net sale
proceeds to partners. Although the actual distribution to limited partners may
vary, we currently estimate that it will be approximately $11 per limited
partnership unit, based on information available as of November 30, 2005.
Under the Purchase and Sale Agreement, the purchaser of the Property
will be SH Partners, L.P., a Delaware limited partnership ("SH Partners"),
which is a joint venture between Calstrs (which owns 66.7%) and certain of our
affiliates (which own the remaining 33.3% interest and act as general
partner). Although our affiliates own an interest in SH Partners, by agreement
with Calstrs, our affiliates will not be entitled to receive any distributions
or allocations of gain or loss with respect to SH Partners' investment in the
Property.
We are writing to request your consent to: (i) the sale (the "Sale")
of the Property pursuant to the Purchase and Sale Agreement; and (ii)
amendments (the "Amendments") to the Partnership's partnership agreement (the
"Partnership Agreement") to permit the Sale of the Property to SH Partners.
Under the Partnership Agreement, because Fairway View II is the only
property currently owned by the Partnership, its sale requires the consent of
limited partners owning more than 50% of the outstanding limited partnership
units (the "Majority Approval"). Under the Partnership Agreement, amendments
to the Partnership Agreement require the Majority Approval as well. However,
because an affiliate of ours owns an interest in SH Partners, in order to
authorize the Amendments, we are also seeking consents from limited partners
who hold a majority of the outstanding limited partnership units held by
limited partners other than us and our affiliates (the "Approval of
Unaffiliated Partners"). Under the Purchase and Sale Agreement, if the Sale
and the Amendments are both approved, the Property will be sold to SH
Partners. If the Sale is approved but the Amendments are not approved, then
the Property will not be sold to SH Partners, but Calstrs will have an option
to purchase the Property. Approval of the Sale will authorize the Sale of the
Property to Calstrs. However, Calstrs would not be obligated to purchase the
Property and, as a result, the Sale might not occur.
We recommend that you consent to the Sale. The Sale to SH Partners
involves certain risks, including that SH Partners is an affiliate of ours. As
a result, we have a conflict of interest in connection with the Amendments,
and make no recommendation as to whether you should consent to the Amendments.
See "Risk Factors" beginning on page 4 of this Solicitation Statement for a
description of risk factors to consider in connection with the Sale and the
Amendments.
This Consent Solicitation Statement (the "Solicitation Statement")
and the accompanying form of Consent of Limited Partner (the "Consent Form")
are first being mailed on or about December __, 2005, to limited partners of
record as of the close of business on December ___, 2005 (the "Record Date").
Your participation is very important. Please review this Solicitation
Statement and return the enclosed Consent Form in accordance with the
instructions in this Solicitation Statement. Please note that this
solicitation will expire at 5:00 P.M., New York City Time, on December __,
2005 (the "Expiration Date"), unless extended.
If you have any questions or require any assistance in completing and
returning the Consent Form, please contact our Solicitation Agent, The Altman
Group, Inc., by mail at1200 Wall Street 3rd Floor, Lyndhurst, New Jersey
07071; by overnight courier service at 1200 Wall Street 3rd Floor, Lyndhurst,
New Jersey 07071; by fax at (201) 460-0050; or by telephone at (800) 217-9608.
Very truly yours,
NPI EQUITY INVESTMENTS, INC.,
Managing General Partner
DESCRIPTION OF THE TRANSACTION
General
Under the Purchase and Sale Agreement, the Partnership and seven
other partnerships (collectively, the "Sellers") have agreed to sell nine
properties (the "Nine Sale Properties"), including Fairway View II, for an
aggregate net purchase price of $86,820,000 (subject to customary prorations
and adjustments), of which $7,750,000 has been allocated to Fairway View II.
Upon completion of the Sale, we will pay, or establish appropriate reserves
for, all known Partnership liabilities and other obligations, and distribute
the remaining net sale proceeds to partners. Although the actual distribution
to limited partners may vary, we currently estimate that it will be
approximately $11 per limited partnership unit, based on information available
as of November 30, 2005. If the Sale and the Amendments are both approved, the
closing of the Sale to SH Partners is expected to occur shortly after the
expiration of this consent solicitation.
The Purchaser
The purchaser is intended to be SH Partners, a joint venture between
Calstrs (which owns 66.7%) and certain of our affiliates (which own the
remaining 33.3% interest and act as general partner). Calstrs is the largest
teachers' retirement fund in the United States. Calstrs had a total membership
of approximately 755,000 and assets of $128.9 billion as of June 2005.
Calstrs' primary responsibility is to provide retirement related benefits and
services to teachers in public schools from kindergarten through community
college. Calstrs and our affiliates (collectively referred to herein as
"Aimco") formed SH Partners in August 2002 in order to invest in student
housing. To date, SH Partners has invested in seven properties with an
aggregate gross property value of $152 million. By agreement between Calstrs
and Aimco, although Aimco owns a 33.3% interest in SH Partners, in order to
fund the purchase of the Nine Sale Properties, Calstrs will contribute all of
the funds necessary for SH Partners to pay the purchase price and related
expenses, and Aimco will not be entitled to receive any distributions or
allocations of gain or loss with respect to SH Partners' investment in the
Nine Sale Properties. Although there are circumstances in which Aimco could
benefit as a result of SH Partners' investment in the Nine Sale Properties,
the intention of Aimco and Calstrs is that Calstrs receive all of the
benefits, and bear all of the burdens, of SH Partners' investment in the Nine
Sale Properties.
The Property
The Partnership has owned and operated the Fairway View II
Apartments, a 204-unit apartment complex located in Baton Rouge, Louisiana,
since November 1984. The Property is the only remaining property owned by the
Partnership. There is a first mortgage loan on the Property with an unpaid
balance of approximately $4,856,176 (as of November 30, 2005). At the closing
of the Sale of the Property, the Partnership will pay off the loan encumbering
the Property with the proceeds from the Sale, and all lender fees and other
costs of such payment-in-full will be deducted from the purchase price payable
to the Partnership, including a prepayment penalty which we estimate will be
$1,000,177.
The Amendments
The Partnership Agreement has three provisions that prohibit the Sale
of the Property to SH Partners. Section 15.3.7 prohibits the sale of real
property to any entity in which a general partner or any affiliate has an
interest. Section 15.3.26 prohibits the Partnership from entering into any
transaction with any other partnership in which a general partner or any
affiliate has an interest. Section 15.3.32 imposes restrictions on the
Partnership entering into any agreement with a general partner or its
affiliate. We are seeking your approval to amend the Partnership Agreement so
that the Sale of the Property to SH Partners pursuant to the Purchase and Sale
Agreement would not be prohibited by these provisions. The complete text of
the proposed Amendments is attached hereto as Annex A.
As a result of our affiliation with SH Partners, in order to
authorize the Amendments which are necessary to sell the Property to SH
Partners, we are seeking the Majority Approval and the Approval of
Unaffiliated Partners. Under the Purchase and Sale Agreement, if the Sale and
the Amendments are both approved, the Property will be sold to SH Partners. If
the Sale is approved but the Amendments are not approved, then the Property
will not be sold to SH Partners, but Calstrs will have an option to purchase
the Property. Approval of the Sale will authorize the Sale of the Property to
Calstrs. However, Calstrs would not be obligated to purchase the Property and,
as a result, the Sale might not occur.
Estimated Distribution to Limited Partners
Upon completion of the Sale of the Property, the Partnership will
dissolve and we will wind up the affairs of the Partnership. After paying, or
establishing appropriate reserves for, all known Partnership liabilities and
other obligations, we will distribute the remaining net sale proceeds to
partners. We estimate that the net proceeds from the Sale that will be
available for distribution to limited partners will be approximately $11 per
limited partnership unit. We expect that this distribution to limited partners
will occur within 90 days after the Sale closes. However, this amount and
timing is estimated based on a number of assumptions. The actual amount and
timing of the distribution may be different. In making our estimate, we used
information available as of November 30, 2005 and made other assumptions based
on information currently known to us. Of course, many factors could cause the
actual proceeds to limited partners to vary from this estimate, including
delays or unforeseen complications with the closing, or contingent liabilities
of the Partnership. Our estimate of the distribution to limited partners was
calculated as follows:
Estimated Distribution to Limited Partners
(in thousands, except per Unit amounts)
Purchase Price (less capital spending adjustment of $2,040,000)(a) $ 7,750,000
Plus: Cash and cash equivalents 135,511
Plus: Other Partnership assets 166,295
Less: Mortgage debt, including accrued interest (4,856,176)
Less: Prepayment penalty (1,000,177)
Less: Loans from general partner and/or affiliates (474,332)
Less: Accounts payable, accrued expenses and other liabilities (b) (431,695)
Less: Reserves for contingencies (293,700)
Less: Closing costs (293,700)
Less: Incentive compensation fee payable to Managing General Partner (c) (27,939)
Less: Nonresident withholding taxes (15,751)
----------------
TOTAL $ 658,337
================
Net proceeds available for distribution to all partners $ 658,337
Percentage of net proceeds allocable to limited partners 99 %
----------------
Net proceeds available for distribution to limited partners $ 651,753
Total number of limited partnership units 60,517
----------------
Distribution per limited partnership unit $ 11
================
- ------------------------------------------------------------------------------
(a) The final purchase price is subject to prorations and adjustments.
(b) Includes (i) $30,000 to pay for costs associated with pending
litigation, and (ii) approximately $172,000 to cover the
administrative costs of winding up the Partnership, including
management fees, taxes, the costs of audits, the preparation and
filing of documents with the Secretary of State in California and
other jurisdictions, and the preparation, filing, printing and
mailing of the Partnership's tax returns.
(c) Pursuant to the terms of the Partnership Agreement, the Managing
General Partner is entitled to receive an incentive compensation fee
upon the sale of the Property.
Appraisal Rights
Limited partners of the Partnership are not entitled to dissenters'
appraisal rights under California law or the Partnership Agreement in
connection with the Sale of the Property.
Regulatory Approvals
Other than the filing and distribution of this Solicitation
Statement, no material governmental filings or approvals are required for the
Sale of the Property.
RISK FACTORS
The following describes risks and disadvantages to you of consenting
to the Sale or the Amendments. Before deciding whether or not to consent to
the Sale or the Amendments, you should carefully consider these risks:
Limited Partners will recognize taxable income from the Sale. Limited
partners will recognize taxable gain as a result of the Sale of the Property.
Each limited partner should consult and rely on the limited partner's tax
advisor regarding the tax consequences to the limited partner of the Sale of
the Property. Cash distributions from the Sale may be less than any tax
liability resulting from the taxable gain recognized by each limited partner.
Certain possible tax consequences of the sale are discussed in more detail
below under "Federal Income Tax Consequences."
We are affiliated with SH Partners and therefore have a conflict of
interest in connection with the proposed Sale to SH Partners. Our affiliates
(Aimco) own a 33.3% interest in, and act as general partner of, SH Partners.
By agreement between Aimco and Calstrs, Calstrs is responsible for funding all
of the costs for SH Partners to purchase the Property, and is entitled to
receive all distributions and allocations of gain or loss attributable to SH
Partners' investment in the Property. However, through its interest in SH
Partners, Aimco could still benefit as a result of SH Partners' acquisition of
the Property. For example, upon a liquidation of SH Partners, if its assets
other than the Property were insufficient to satisfy all of SH Partners'
creditors, proceeds from a disposition of the Property might be used to pay SH
Partners' liabilities, which could inure to the benefit of Aimco.
We are not making a recommendation regarding the proposed Amendments.
We make no recommendation as to whether or not you should consent to the
Amendments. Although we believe the Sale is fair, you must make your own
decision whether to consent to the Amendments, based upon a number of factors,
including several factors that may be personal to you, such as your financial
position, your need or desire for liquidity, your tax position and the tax
consequences to you of the Sale. You are encouraged to carefully review this
Solicitation Statement and any other information available to you and to seek
advice from your independent lawyer, tax advisor and/or financial advisor
before deciding whether to consent to the Amendments.
If the Sale is approved but the Amendments are not approved, the
Property might not be sold. If the Sale is approved but the Amendments are not
approved, then, under the Purchase and Sale Agreement, Calstrs will have an
option to purchase the Property. Calstrs would not be obligated to purchase
the Property and, as a result, the Sale might not occur.
We did not market the Property to other prospective purchasers. We
negotiated the purchase price for the Property with Calstrs with a view to
maximizing the proceeds to the Partnership. However, we did not solicit offers
from other prospective purchasers, and it is possible that a higher price
might have been obtained if the Property had been marketed to other parties.
We have not obtained any recent appraisals of the Property or any
fairness opinions with respect to the Sale. In the absence of an appraisal or
a fairness opinion, we could be mistaken in believing that the purchase price
for the Property under the Purchase and Sale Agreement is a fair price. The
most recent appraisal of the Property was done as of May 22, 2003, by American
Appraisal Associates, Inc. ("AAA"), in which AAA determined that the "as is"
market value of the Property was $7,700,000.
We and our affiliates will receive certain benefits from the Sale
that other partners will not receive. We and our affiliates hold approximately
$489,929 of Partnership indebtedness, which will be repaid from the Sale
proceeds. Upon completion of the Sale, we will receive an incentive
compensation fee, which we estimate will be approximately $28,000, based on
information available as of November 30, 2005. In addition, upon completion of
the Sale (whether to SH Partners or Calstrs), an affiliate of ours is expected
to assume responsibility for managing the Property. In consideration for
managing the Property, this affiliate would receive a management fee equal to
3.65% of gross revenues, which is less than the property management fee
currently paid by the partnership to an affiliate of ours, which is 5% of
gross revenues.
The purchase price for the Property might have been higher if it was
not sold as part of a portfolio sale. The purchase price for the Property was
determined by allocating a portion of the aggregate purchase price under the
Purchase and Sale Agreement for all Nine Sale Properties. It is possible that
Calstrs or a different purchaser might have been willing to pay more for the
Property if it was sold by itself.
We had a conflict of interest in allocating the aggregate purchase
price among the Nine Sale Properties. Our affiliates have varying ownership
interests in each of the Nine Sale Properties being sold pursuant to the
Purchase and Sale Agreement. Five of the Nine Sale Properties are wholly owned
by our affiliates. The other four properties, including Fairway View II, are
owned by three partnerships in which our affiliates own between 68% and 80% of
the outstanding limited partnership interests. We and the other Sellers have
allocated the aggregate purchase price among the Nine Sale Properties based on
their relative fair market values. However, our affiliates' different levels
of ownership in the properties created a conflict of interest in which we have
an incentive to ascribe greater value to those properties which are wholly
owned by our affiliates. See "Purchase and Sale Agreement - Purchase Price."
Events or circumstances relating to the other Nine Sale Properties
may interfere with the Sale of the Property. The Sale of the Property may not
occur if there is a default or failure to satisfy a condition relating to one
of the other Nine Sale Properties. Under the Purchase and Sale Agreement, the
purchaser is not obligated to purchase the Property if certain conditions
relating to any of the other Nine Sale Properties are not satisfied. See
"Purchase and Sale Agreement -- Conditions."
GENERAL PARTNER'S ANALYSIS
We recommend that the limited partners consent to the Sale of the
Property. We believe that the Sale is fair and in the best interests of the
Partnership and its limited partners, and have approved the Purchase and Sale
Agreement. However, as a result of our affiliation with SH Partners, we make
no recommendation as to whether any individual limited partner should consent
to the Amendments to permit the Sale to SH Partners. In approving the Sale, we
considered the risk factors described above, as well as a number of other
factors, including the following:
o The net purchase price for the Property is $7,750,000 (subject to customary
prorations and adjustments).
o Upon completion of the Sale, the net proceeds will be used to pay a
distribution to limited partners, which we estimate will be
approximately $11 per unit, based on information available as of
November 30, 2005.
o There is no established trading market for the limited partnership
units and the Sale would provide immediate liquidity for limited
partners.
o Commencing with the tax year following the tax year in which the
termination, dissolution and winding-up of the Partnership have been
completed, the limited partners will no longer need to include in
their federal and state income tax returns the various items of
income, loss, deduction and credit as previously reported on Schedule
K-1's delivered by the Partnership.
o The tax benefits of continued investment in the Property have been
substantially reduced or eliminated for most limited partners due
principally to declining depreciation deductions from the Property.
o The Property was completed in 1981 and, given its age, probably will
require substantial capital expenditures in the future for which
existing reserves may not be adequate.
o Market conditions are currently favorable for selling properties of
this type.
o It may be difficult to find a buyer at a future date or to sell the
Property at as favorable a price in the future.
THE CONSENT SOLICITATION
Approval of the Sale and the Amendments; Consents Required
We are soliciting consents from limited partners to approve:
o the Sale of the Property pursuant to the Purchase and Sale Agreement;
and
o Amendments to the Partnership Agreement to permit the Sale of the
Property to SH Partners.
The limited partners' approval of the Sale of the Property will also be deemed
to authorize us in our discretion, to reduce the purchase price for the
Property by up to 10% and make any other amendments to the Purchase and Sale
Agreement which, in our opinion, are necessary, appropriate or desirable in
connection with the Sale, and that do not materially and adversely affect the
Partnership.
If the Sale and the Amendments are both approved, the Property will
be sold to SH Partners. If the Sale is approved but the Amendments are not
approved, then the Property will not be sold to SH Partners, but Calstrs will
have an option to purchase the Property. Approval of the Sale will authorize
the Sale of the Property to Calstrs. However, Calstrs would not be obligated
to purchase the Property and, as a result, the Sale might not occur.
Consents Required for the Sale. Section 16.2.5 of the Partnership
Agreement provides that the Partnership's sale of all or substantially all of
its assets, or 66-2/3% or more of the net book value of all of the
Partnership's property, in a single sale, or in multiple sales in the same
12-month period, must be approved by the limited partners owning a majority of
the limited partnership units entitled to vote thereon. Fairway View II is the
Partnership's only remaining Property, so the Sale requires the Majority
Approval.
As of December 1, 2005, the Partnership had approximately 1,064
limited partners who collectively own 60,517 outstanding limited partnership
units. Each limited partnership unit represents approximately 0.0017% of the
outstanding limited partnership units. Our affiliates currently own 42,461.67
limited partnership units, or 70.16% of the outstanding limited partnership
units. These affiliates will consent to the Sale. However, 25,399 of these
limited partnership units (approximately 42% of the total outstanding) held by
our affiliates are subject to a voting restriction. Under a settlement
agreement, DeForest Ventures II, L.P., a prior owner of these units, agreed
that these 25,399 limited partnership units would be voted in the same
proportion as the votes of units not held or controlled by it on any matter
that is submitted to a vote of the limited partners by the general partner of
the Partnership or its affiliates. These limited partnership units were
acquired by one of our affiliates through a merger, and are still subject to
this voting restriction. Our affiliates can vote free of this voting
restriction an aggregate of 17,062.67 limited partnership units (approximately
28.19% of the total outstanding), which were acquired by our affiliates in
transactions unrelated to the merger and are owned by an entity which is not
controlled by the owner of the units subject to the voting restriction. As a
result, the consent of the owners of an additional 497.33 limited partnership
units, or approximately .82% of the limited partnership units outstanding,
will be required to obtain the Majority Approval for the Sale.
Consents Required for the Amendments. Section 16.2.4 of the
Partnership Agreement provides that an amendment of the Partnership Agreement
requires Majority Approval. However, because an affiliate of ours owns an
interest in SH Partners, in order to authorize the proposed Amendments, we are
also seeking the Approval of Unaffiliated Partners.
As described above, as of December 1, 2005, 60,517 outstanding
limited partnership units were outstanding, of which our affiliates owned
42,461.67 units (representing 70.16% of the total outstanding limited
partnership units), and other limited partners owned 18,055.33 units
(representing 29.84% of the total outstanding limited partnership units).
These affiliates will consent to the Amendments. However, as a result of the
voting restriction described above, the consent of the owners of an additional
497.33 limited partnership units, or approximately .82% of the limited
partnership units outstanding, will be required to obtain the Majority
Approval for the Sale. The consent of owners of 9,028 limited partnership
units that are not owned by our affiliates will be required to obtain the
Approval of Unaffiliated Partners.
Record Date
The Partnership has fixed December __, 2005 as the Record Date for
determining the limited partners entitled to consent to the Sale and the
Amendments. Only limited partners of record on the Record Date may execute and
deliver a Consent Form.
Solicitation of Consents
This solicitation is being made by NPI Equity Investments, Inc., the
managing general partner, on behalf of the Partnership. Consents will be
solicited by mail, telephone, e-mail and in person. Solicitations may be made
by our representatives, none of whom will receive additional compensation for
such solicitations. The cost of preparing, assembling, printing and mailing
this Solicitation Statement and the enclosed Consent Form will be borne by the
Partnership. We have retained The Altman Group, Inc. to act as its
Solicitation Agent in connection with this consent solicitation. The fees and
expenses of the Solicitation Agent will be paid by the Partnership.
Solicitation Period
The solicitation period will begin upon our mailing of this
Solicitation Statement and end on the Expiration Date, or such later date as
we may indicate by a future written notice of extension of the solicitation
period.
Consent Procedures
Limited partners who desire to consent to the Sale and the Amendments
should do so by marking the appropriate boxes on the included Consent Form and
by signing, dating and delivering the Consent Form to the Solicitation Agent
by hand, mail, overnight courier or facsimile at the address or facsimile
number set forth on the Consent Form, all in accordance with the instructions
contained herein and therein.
All Consent Forms that are properly completed, signed and delivered
to the Solicitation Agent and not properly revoked (See "Revocation of
Instructions" below) prior to the Expiration Date, will be given effect in
accordance with the specifications thereof.
If a Consent Form is delivered and neither the "Consents," the "Withholds
Consent" nor the "Abstains" box is marked with respect to a particular
proposal (the Sale or the Amendment), but the Consent Form is otherwise
properly completed and signed, the limited partner will be deemed to have
consented to the proposal.
Consent Forms must be executed in exactly the same manner as the
name(s) in which ownership of the limited partnership units is registered. If
the limited partnership units to which a Consent Form relates are held by two
or more joint holders, all such holders should sign the Consent Form. If a
Consent Form is signed by a trustee, partner, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in
a fiduciary, agency or representative capacity, such person must so indicate
when signing and submit with the Consent Form evidence satisfactory to the
Partnership of authority to execute the Consent Form.
The execution and delivery of a Consent Form will not affect a
limited partner's right to sell or transfer the limited partnership units. All
Consent Forms received by the Solicitation Agent prior to the Expiration Date
will be effective notwithstanding a record transfer of such limited
partnership units subsequent to the Record Date, unless the limited partner
revokes such Consent Form prior to 5:00 p.m., New York City time, on the
Expiration Date by following the procedures set forth under "Revocation of
Instructions" below.
All questions as to the validity, form and eligibility (including
time of receipt) regarding consent procedures will be determined by us in our
sole discretion, which determination will be conclusive and binding. The
Partnership reserves the right to reject any or all Consent Forms that are not
in proper form. The Partnership also reserves the right to waive any defects,
irregularities or conditions of delivery as to particular Consent Forms.
Unless waived, all such defects or irregularities in connection with the
deliveries of Consent Forms must be cured within such time as we determine.
Neither we nor any of our affiliates or any other persons shall be under any
duty to give any notification of any such defects, irregularities or waivers,
nor shall any of them incur any liability for failure to give such
notification. Deliveries of Consent Forms will not be deemed to have been made
until any irregularities or defects therein have been cured or waived. The
interpretations of the terms and conditions of this solicitation by us shall
be conclusive and binding.
Revocation of Instructions
Any limited partner who has delivered a Consent Form to the
Solicitation Agent may revoke the instructions set forth in such Consent Form
by delivering to the Solicitation Agent a written notice of revocation prior
to 5:00 p.m., New York City time, on the Expiration Date. In order to be
effective, a notice of revocation of the instructions set forth in a Consent
Form must (i) contain the name of the person who delivered the Consent Form,
(ii) be in the form of a subsequent Consent Form marked either as "Consents,"
"Withholds Consent" or "Abstains," as the case may be, for either proposal, or
in a writing delivered to us stating that the prior Consent Form is revoked,
(iii) be signed by the limited partner in the same manner as the original
signature on the Consent Form, and (iv) be received by the Solicitation Agent
prior to 5:00 p.m., New York City time, on the Expiration Date at one of its
addresses or facsimile number set forth on the Consent Form. A purported
notice of revocation that lacks any of the required information, is dispatched
to an improper address or telephone number or is not received in a timely
manner will not be effective to revoke the instructions set forth in a Consent
Form previously given. A revocation of the instructions set forth in a Consent
Form can only be accomplished in accordance with the foregoing procedures. No
limited partner may revoke the instructions set forth in a Consent Form after
5:00 pm, New York City time, on the Expiration Date.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
As of the date of this consent solicitation statement, none of our
directors or officers own any limited partnership units. The table below sets
forth certain information regarding limited partnership units of the
Partnership owned by each person or entity who is known by the Partnership to
beneficially own more than 5% of the limited partnership units as of December
1, 2005.
Number of Units Percentage of
Name and Address of Beneficial Owner Beneficially Owned Class
------------------------------------ ------------------ ---------------------
AIMCO IPLP, L.P. (1) 25,399 41.97%
Stanford Place 3, 4582 S. Ulster St. Parkway, Suite 1100
Denver, CO 80237
AIMCO Properties, L.P. (2) 17,062.67 28.19%
Stanford Place 3, 4582 S. Ulster St. Parkway, Suite 1100
Denver, CO 80237
------------------ ---------------------
TOTAL 42,461.67 70.16%
- ------------------------------------------------------------------------------
(1) The Units may be deemed beneficially owned by AIMCO/IPT, Inc. (which
is the general partner of AIMCO IPLP, L.P.) and Apartment Investment
and Management Company (which owns AIMCO/IPT, Inc.), which is the
ultimate parent corporation of NPI Equity Investments, Inc., the
Managing General Partner of the Partnership.
(2) The Units may be deemed beneficially owned by AIMCO-GP, Inc. (which
is the general partner of AIMCO Properties, L.P.) and Apartment
Investment and Management Company (which owns AIMCO-GP, Inc.), which
is the ultimate parent corporation of NPI Equity Investments, Inc.,
the Managing General Partner of the Partnership.
PURCHASE AND SALE AGREEMENT
We entered into the Purchase and Sale Agreement with Calstrs and the
other Sellers on November 14, 2005. Under the terms and subject to the
conditions of the Purchase and Sale Agreement, Calstrs has agreed to purchase
the Nine Sale Properties, including Fairway View II. Under the agreement,
Calstrs must assign its purchase rights to SH Partners. The representations,
warranties, obligations, and covenants of each Seller are individual and
several, and not joint and several, and each Seller is responsible and liable
only for its own property and its own representations, warranties,
obligations, and covenants. The purchaser has agreed to look solely to the
applicable Seller for any amount due hereunder or, obligation owed hereunder.
Except for a property for which the requisite limited partner approval was not
obtained, the Sellers' obligations to sell, and the purchaser's obligations to
purchase, the Nine Sale Properties are not severable, and the Sellers must
sell, and the purchaser must purchase, all of the Nine Sale Properties under
the agreement. The following is a summary of the material terms and provisions
of the Purchase and Sale Agreement.
Purchase Price
The aggregate purchase price for the Nine Sale Properties is
$98,010,000, less a credit for capital needs of $11,190,000, for a net
purchase price of $86,820,000. The portion of this aggregate purchase price
that has been allocated to Fairway View II is $9,790,000, less a credit for
capital needs of $2,040,000, for a net purchase price of $7,750,000. With
respect to each of the Nine Sale Properties, all normal and customarily
proratable items, including, without limitation, rents, operating expenses,
personal property taxes, other operating expenses and fees, will be prorated
as of the closing date, with the applicable Seller being charged or credited,
as appropriate, for all of the same attributable to the period up to the
closing date (and credited for any amounts paid by the applicable Seller
attributable to the period on or after the closing date, if assumed by the
purchaser), and the purchaser being responsible for, and credited or charged,
as the case may be, for all of the same attributable to the period on and
after the closing date.
Five of the Nine Sale Properties are wholly owned by our affiliates.
The other four properties, including Fairway View II, are owned by three
partnerships in which our affiliates own less than 100% of the outstanding
limited partnership interests. We and the other Sellers have allocated the
aggregate purchase price among the Nine Sale Properties based on their
relative fair market values. However, our affiliates' different levels of
ownership in the properties created a conflict of interest in which we have an
incentive to ascribe greater value to those properties which are wholly owned
by our affiliates. Each of the Nine Sale Properties, its owner, our
affiliates' percentage ownership in the owner, and its allocated portion of
the aggregate purchase price (net of all credits for capital needs) is
summarized in the table below:
Percentage
Ownership of
Affiliates of the
Managing General Allocated Portion of
Property Owner Partner Purchase Price
-------- ----- ------- --------------
Windsor Hills Windsor Hills I, L.P. 80.36% $ 14,390,000
Place du Plantier National Property Investors 6 69.23% $ 10,500,000
Fairway View I National Property Investors 6 69.23% $ 7,560,000
Fairway View II National Property Investors 7 70.46% $ 7,750,000
Treehouse II TAHF II Limited Partnership 100% $ 4,810,000
Sunstone Couch-Oxford Associates Limited
Partnership 100% $ 14,175,000
Peppermill Village Peppermill Village-Oxford Associates
L.P. 100% $ 8,505,000
Williamsburg on the Wabash Williamsburg Investors Limited
Partnership 100% $ 17,340,000
Mayfair Village Mayfair Village Limited Partnership 100% $ 1,790,000
The Purchased Assets
Each of the Sellers has agreed to sell all of its interest in and to
the Nine Sale Properties, including the land parcel; all buildings and
improvements located thereon; all equipment and appliances affixed to and used
in connection with the property or any of the improvements; rights, privileges
and easements appurtenant to or used in connection with the property; tangible
personal property, equipment and supplies owned by the Seller and located at
the property and used exclusively in connection with the use, operation,
maintenance or repair of all or any portion of the property; and certain
intangible property owned by the Seller and used exclusively in connection
with all or any portion of the property, including, leases, certain service
contracts, property-related files and records, all reports, test results and
environmental assessments, if any, as-built plans, specifications and other
similar documents and materials relating to the use, operation, maintenance,
repair, construction or fabrication of all or any portion of the property,
transferable business licenses, certain architectural, site, landscaping or
other permits, applications, approvals, authorizations and other entitlements
affecting any portion of the property.
Loan Obligations
At the closing, each Seller will use a portion of the purchase price
for its property to pay off all loan obligations encumbering its property.
Fees payable in connection with the payoff of such loans will be paid by the
purchaser but will be deducted from the purchase price otherwise payable to
the Seller.
Limited Partner Approvals
The Partnership, Windsor Hills I, L.P. and National Property
Investors 6 have each agreed to use commercially reasonable efforts to obtain,
as soon as practicable, the requisite approvals of their respective limited
partners (or, in the case of Windsor Hills I, L.P., the approval of limited
partners of Shelter Properties I Limited partnership, which is its sole
limited partner) to permit the sale of the four properties owned by them to SH
Partners. If the limited partners of any of these partnerships fail to approve
the transaction, SH Partners may elect to close on the other Nine Sale
Properties, and Calstrs (rather than SH Partners) may elect to purchase the
property for which limited partner approval was not obtained. If Calstrs does
not elect to purchase any such property, the Seller may either extend the
closing date for that property until such approval is obtained (but not beyond
June 30, 2006) or terminate the agreement with respect to that property.
Closing
The closing of the sale of the five properties that are wholly owned
by our affiliates is expected to occur on or about December 22, 2005. The
closing of the sale of the other four properties, including Fairway View II,
is expected to take place as soon as practicable after the requisite limited
partner approvals have been obtained.
Representations and Warranties
The agreement contains representations and warranties by the Sellers,
including, without limitation, representations and warranties regarding due
organization; authority and validity of agreements; leases and service
contracts in effect at the properties; violations of law; litigation, zoning;
environmental matters; employees; personal property; and property documents.
Each Seller's aggregate liability for a breach of its representations and
warranties is limited to $500,000, and is limited to claims brought within 12
months after the closing.
The agreement also contains representations and warranties by the
purchaser, including, without limitation, representations and warranties
regarding due organization; authority and validity of agreements; and the
purchaser's status under laws relating to terrorist financing and foreign
assets controls.
Conditions to Closing
The obligation of the purchaser to complete the transactions
contemplated by the agreement is subject to the satisfaction or waiver of the
following conditions:
o the title company shall be prepared and irrevocably committed to
issue an extended coverage owner's policy of title insurance for the
property satisfactory to the purchaser;
o all of the representations and warranties of the Sellers in the
agreement shall be true, correct and complete in all material
respects as of the closing date;
o Sellers shall have complied with and/or performed all of the
obligations, covenants and agreements required on their part to be
complied with or performed pursuant to the agreement;
o the physical condition of the properties shall be substantially the
same as on the inspection date of July 12, 2005, except for
reasonable wear and tear;
o there shall have been no material adverse change in or addition to
the information or items reviewed and approved by the purchaser prior
to the inspection date;
o no action or proceeding shall have been commenced by or against any
Seller under the federal bankruptcy code or any state law for the
relief of debtors or for the enforcement of the rights of creditors,
and no attachment, execution, lien or levy shall have attached to or
been issued with respect to any Seller's interest in its property or
any portion thereof; and
o the Sellers shall have delivered such documents or instruments as are
required to be delivered by the Sellers pursuant to the agreement,
including deeds, assignments of leases, bills of sale and assignment,
non-foreign affidavits, a guaranty by Apartment Investment and
Management Company, and an amendment to the agreement of limited
partnership of SH Partners.
If any of the purchaser's closing conditions are not fulfilled, the
purchaser may waive the condition and close, without adjustment of the
purchase price, or terminate the agreement.
The obligation of the Sellers to complete the transactions
contemplated by the agreement are subject to the satisfaction or waiver of the
following conditions:
o all of the representations and warranties of the purchaser in the
agreement shall be true, correct and complete in all material
respects;
o the purchaser shall have complied with and/or performed all of the
obligations, covenants and agreements required on its part to be
complied with or performed pursuant to the agreement;
o no action or proceeding shall have been commenced by or against the
purchaser under the federal bankruptcy code or any state law for the
relief of debtors or for the enforcement of the rights of creditors;
and
o the purchaser shall have delivered such documents or instruments as
are required to be delivered by the purchaser pursuant to the
agreement, including an amendment to the agreement of limited
partnership of SH Partners, assignments of leases, and bills of sale
and assignment.
If any of the Sellers' closing conditions are not fulfilled, the
Sellers may waive the condition and close, without adjustment of the purchase
price, or terminate the agreement.
Casualty and Condemnation
Prior to the closing, if (i) all or any material portion of any
property is taken by condemnation or eminent domain (or is the subject of a
pending or contemplated taking which has not been consummated), or (ii) any
material damage occurs to any portion of any property as a result of any
earthquake, hurricane, tornado, flood, landslide, fire or other casualty, then
the purchaser will have the option to terminate the agreement within 30 days,
in which case the purchaser and the Sellers will equally share the
cancellation charges of the escrow agent and the title company, if any. The
purchaser does not have a right to terminate the agreement as a result of (i)
any taking of any portion of any property that is not a material portion, or
(ii) any damage or destruction of any portion of any property that does not
constitute material damage. If the purchaser does not elect, or has no right,
to terminate the agreement, the purchaser will be entitled to keep all awards
and insurance proceeds for the condemnation or casualty, and will receive a
credit against the portion of the purchase price applicable to such property
for the cost of any repair and/or restoration not covered by such awards and
insurance proceeds. For this purpose, "material" is defined as having a value
in excess of $350,000.
Ongoing Operations
Until the closing, each Seller has agreed, at its sole cost and
expense, to:
o carry on its business and activities relating to its property,
including leasing, maintenance and operations in the same manner as
it did before entering into the agreement;
o perform all of its obligations under leases and service contracts
applicable to its property and other agreements that may affect its
property;
o not supplement or amend any existing contract or enter into any new
contract that will be an obligation affecting its property subsequent
to the closing, except leases and other contracts entered into in the
ordinary course of business;
o continue to maintain insurance in accordance with its current
business practices;
o afford the purchaser and its representatives reasonable access to the
property owned by such Seller and to such Seller's books, records and
files relating to such property;
o not voluntarily grant or transfer or permit the grant or transfer of
any interest in the property owned by it, including any air rights;
o promptly advise the purchaser of any litigation or governmental
proceeding to which it becomes a party directly affecting its
property; and
o promptly forward to the purchaser any written notice received by it
from any governmental agency in connection with any actual or alleged
violation of any law or regulation applicable to its property.
Remedies
If closing fails to occur as a result of a default by the purchaser,
then the Sellers, collectively, are entitled to receive, as their sole and
exclusive remedy liquidated damages in the amount of $1,100,000. If closing
fails to occur as a result of a default by any Seller, then the purchaser, as
its sole remedy, may elect to either (i) terminate the agreement, in which
event, the Sellers shall reimburse the purchaser for its reasonable
out-of-pocket costs up to a maximum of $100,000 per property, or (ii) seek
specific performance for the conveyance of the property to the purchaser (but
not damages).
Property Management
At the closing, all existing property management agreements affecting
the Nine Sale Properties will be terminated at Sellers' sole cost and expense,
and the purchaser will enter into a new property management agreement with an
Aimco affiliate as property manager with a management fee of 3.65% of gross
revenues.
Expenses and Closing Costs
Each party will pay its own costs and expenses arising in connection
with the closing (including, without limitation, its own attorneys' and
advisors' fees, charges and disbursements), except the following costs, which
shall be allocated between the parties as follows:
o all documentary transfer, stamp, sales and other taxes related to the
transfer of a property shall be paid (i) for each property located in
Louisiana (including Fairway View II), by the purchaser, and (ii) for
each other property, by the applicable Seller;
o the escrow agent's escrow fees and costs for each property shall be
paid (i) for each property located in North Carolina or Texas, by the
applicable Seller, and (ii) for each other property (including
Fairway View II), half by the applicable Seller and half by the
purchaser;
o the cost of a survey and its survey certification shall be paid (i)
for each property located in Louisiana (including Fairway View II) or
Virginia, by the purchaser, and (ii) for each other property, by the
applicable Seller;
o the cost of the owner's title policy for each property (and all
permitted endorsements and amendments thereto) shall be paid (i) for
each property located in Louisiana (including Fairway View II), North
Carolina or Virginia, by the purchaser, and (ii) for each other
property, by the applicable Seller; and
o all recording fees for each property shall be paid by the purchaser.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The tax consequences to you of the Sale of the Property may be
significant. The following discussion briefly summarizes the typical material
aspects of the federal income tax consequences for the limited partners that
should be considered in connection with the Sale; however, the tax
consequences to you could be materially different. Each limited partner should
consult and must rely upon his, her or its own tax advisor in order to
understand fully the federal, state, local and foreign income and estate and
gift tax consequences to him, her or it arising from the Sale of the Property.
The discussion is based on current law, which is subject to change
(possibly with retroactive effect), and does not consider state, local and
foreign income tax aspects of the Sale of the Property. For purposes of this
tax discussion, references to "I.R.C. Section" are to sections of the Internal
Revenue Code of 1986, as amended ("I.R.C." or the "Code"). This discussion
does not address special considerations and rules applicable to limited
partners that are tax-exempt or foreign entities.
No ruling will be requested from the Internal Revenue Service on any
of the tax matters discussed herein. The federal income tax consequences to
the limited partners from the Sale of the Property cannot be predicted with
absolute certainty. We cannot assure that the Internal Revenue Service will
not audit or question the treatment of any item discussed herein.
The following discussion assumes that the Partnership will recognize
taxable gain on the Sale of the Property. The following discussion also
assumes that the Partnership is characterized as a partnership for federal
income tax purposes. If the Partnership is treated for federal income tax
purposes as an association, any cash available for distribution after the Sale
would be substantially reduced and the tax consequences would be materially
different than as described below.
Tax Consequences if the Property is Sold. The Partnership will
recognize taxable gain from the Sale of the Property in an amount equal to the
difference between the Partnership's adjusted tax basis in the Property and
the amount realized. The Partnership's amount realized from the Sale includes
the sum of cash it receives from the purchaser plus the fair market value of
any property it receives other than money. If the purchaser assumes or takes
the Property subject to liabilities that encumber the Property, the face
amount of those liabilities is also included in the Partnership's amount
realized as though the purchaser had made a cash payment to the Partnership in
the same amount. Selling expenses of the Partnership, such as legal fees and
title costs, reduce the Partnership's amount realized with respect to the
Sale. Any gain recognized by the Partnership will be allocated to the
partners, including the limited partners, in accordance with the Partnership
Agreement. We estimate that the Sale will result in total gain of
approximately $60 per limited partnership unit, based on information available
as of November 30, 2005. This amount is an estimate based on a number of
assumptions as discussed under "Use of Proceeds." When the Partnership
completely terminates (which should occur at the conclusion of the Nuanes
litigation), a typical limited partner (the tax bases in whose units have not
been adjusted on account of a sale or death) could recognize a capital loss of
approximately $59 per unit on account of syndication fees that are
nondeductible at the Partnership level.
Generally, if a partnership is a "dealer" with respect to a property,
any gain that it recognizes on the sale of that property will be taxed as
ordinary income. Under I.R.C. Section 707, certain related party sales result
in gain being taxed as ordinary income; however, the general partner does not
believe this section would be applicable to this transaction. Alternatively,
any gain in excess of "depreciation recapture gain" (discussed below) and
"unrecaptured I.R.C. Section 1250 gain" (discussed below) generally will be
taxed as gain arising from the sale of property used in the Partnership's
trade or business under I.R.C. Section 1231 ("I.R.C. Section 1231 gain"). Each
limited partner will be allocated its share of the Partnership's I.R.C.
Section 1231 gain. In general, if the combination of all I.R.C. Section 1231
gains and losses of a particular limited partner for a taxable year results in
a net gain, all of such gains and losses will be characterized as long-term
capital gains and losses. If the combination results in a net loss, all of
such gains and losses will be characterized as ordinary gains and losses.
However, notwithstanding the foregoing, net I.R.C. Section 1231 gains will be
treated as ordinary gains to the extent of a limited partner's unrecaptured
net I.R.C. Section 1231 losses for the five most recent prior years. As a
result, all or a portion of any I.R.C. Section 1231 gain from the sale of the
Partnership's property allocated to a limited partner may be treated as
ordinary income, rather than long-term capital gain, if the limited partner
has had net I.R.C. Section 1231 losses in prior years.
Under I.R.C. Section 1245, gain recognized by the Partnership from
the sale of any of its depreciable or amortizable personal property and
certain statutorily designated real property (i.e., "depreciation recapture
gain") is re-characterized as ordinary income and will be allocated to the
partners as such. The amount of the Partnership's depreciation recapture gain
equals the amount by which the lower of (i) the amount realized and (ii) the
recomputed basis (i.e., a property's basis plus all amounts allowed for
depreciation) of the transferred property exceeds that property's adjusted
basis.
Generally, under I.R.C. Section 1250, no portion of the gain
recognized by the Partnership upon the disposition of its residential rental
real property is re-characterized as ordinary income because such property is
depreciated using the straight-line method. However, under I.R.C. Section
291(a)(1), a portion of a corporation's capital gain from the disposition of
residential rental real property is re-characterized as ordinary income. The
portion that is re-characterized equals 20% of the excess of the amount that
would have been treated as ordinary income under I.R.C. Section 1245 if the
transferred property were I.R.C. Section 1245 property (which generally would
be all depreciation deductions previously claimed) over the amount treated as
ordinary income under I.R.C. Section 1250 (calculated without regard to I.R.C.
Section 291(a)(1)). Therefore, under I.R.C. Section 291(a)(1), corporate
limited partners of the Partnership may recognize ordinary income upon
disposition of the Partnership's residential rental real property.
In the case of limited partners of the Partnership that are
individuals, estates or trusts, the application of I.R.C. Section 1250 will
not require those taxpayers to recognize gain taxable as ordinary income;
however, those limited partners may be allocated gain from the Partnership's
Sale of the Property that is taxed as "unrecaptured I.R.C. Section 1250 gain."
Unrecaptured I.R.C. Section 1250 gain is generally equal to the gain on the
sale of real property that is attributable to straight-line depreciation. The
maximum federal tax rate applicable to unrecaptured I.R.C. Section 1250 gain
is currently 25%.
In the case of limited partners that are individuals, trusts or
estates, gain from the sale of the Partnership's property that is not taxed as
ordinary income or as unrecaptured I.R.C. Section 1250 gain is generally taxed
at a capital gains tax rate, the current maximum rate of which is 15%. Gain
from the sale of the Partnership's property that is allocated to limited
partners that are corporations is not eligible for preferential capital gains
tax rates.
If a limited partner possesses suspended tax losses, tax credits or
other items of tax benefit, such items may be used to reduce any tax liability
that arises with respect to any gain resulting from the sale of the
Partnership's property and allocated to that limited partner. The
determination of whether a limited partner possesses suspended tax losses, tax
credits or other items of tax benefit that may reduce any gain resulting from
the sale will depend upon such limited partner's individual circumstances.
Limited partners are urged to consult with their tax advisors in this regard.
Distributions of Cash. A distribution of cash by the Partnership to a
limited partner will be treated as an amount realized from a sale of the
limited partner's interest in the Partnership and will result in taxable gain
only to the extent that the distribution exceeds the limited partner's
adjusted tax basis in his, her or its Partnership interest. Otherwise,
distributions will be tax free, and the limited partner's adjusted tax basis
in his Partnership interest will be decreased, but not below zero.
Generally, any gain recognized by a limited partner arising from a
cash distribution by the Partnership will be capital gain. Nevertheless, to
the extent that a portion of that gain is attributable to "unrealized
receivables" of the Partnership, including depreciation recapture, or to
certain inventory items described in I.R.C. Section 751, such gain will be
taxed as ordinary income.
Proceeds available for distribution to the limited partners from the
Sale of the Property after repayment of the Partnership's debt may be less
than any tax liability resulting from the gain recognized by the Partnership
(as a result of the Sale) that is allocable to the partners and their tax
liability resulting from the gain recognized by the partners as a result of
any cash distributions from the Partnership, and any tax liability resulting
from the foregoing. Accordingly, limited partners may be required to use funds
from sources other than the Partnership in order to pay any tax liabilities
that arise as a result of the recognition gain.
Tax Consequences if the Property is Not Sold. The Partnership's
current tax basis in the Property is approximately 15% of its original tax
basis in the Property. As a result, it is possible that continued operation of
the Property may generate taxable income to the limited partners, as there may
not be depreciation and other deductions equal to or greater than the income
generated from the Property. In addition, it is anticipated that there may
not be any cash available for distribution since it is expected that all or
substantially all of the Property's cash flow will be used to service the
Partnership's liabilities. Accordingly, limited partners may be required to
use funds from sources other than the Partnership in order to pay any tax
liabilities that arise as a result of the Partnership's continued operation of
the Property. The Partnership also will continue to incur the administrative
costs of operating the Partnership, including the cost of preparing and filing
partnership tax returns, and it will continue to incur management fees. If a
limited partner possesses suspended tax losses, tax credits or other items of
tax benefit, such items may potentially be used to reduce any tax liability
that arises with respect to any taxable net income as a result of the
continued operation of the Property by the Partnership. Limited partners are
urged to consult their tax advisors in this regard.
WHERE YOU CAN FIND MORE INFORMATION
The Partnership is subject to the informational requirements of the
Exchange Act and is required to file annual and quarterly reports, proxy
statements and other information with the SEC. You can inspect and copy
reports and other information filed by us with the SEC at the SEC's public
reference facilities maintained by the SEC at One Station Place, 100 F Street,
N.E., Washington, D.C. 20002. Copies of such material can also be obtained
from the Public Reference Room of the SEC in Washington, D.C. at prescribed
rates. The SEC also maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
You should only rely on the information provided in this Solicitation
Statement or any supplement. We have not authorized anyone else to provide you
with information. You should not assume that the information in this
Solicitation Statement or any supplement is accurate as of any date other than
the date on the front of this Solicitation Statement or the supplement.
The Partnership's principal executive offices are located at 55
Beattie Place, P.O. Box 1089, Greenville, South Carolina 29602. However,
questions and requests for assistance regarding this Solicitation Statement
and the matters set forth herein may be directed to the Solicitation Agent,
The Altman Group, Inc. by mail at1200 Wall Street 3rd Floor, Lyndhurst, New
Jersey 07071; by overnight courier service at 1275 Valley Brook Avenue,
Lyndhurst, New Jersey 07071; by fax at (201) 460-0050; or by telephone at
(800) 217-9608.
AMENDMENT
TO THE
PARTNERSHIP AGREEMENT
OF
NATIONAL PROPERTY INVESTORS 7
This Amendment (the "Amendment") to the Partnership Agreement, as
amended to date (the Partnership Agreement"), of National Property Investors
7, a California limited partnership (the "Partnership"), is made and entered
into as of ________________, by NPI Equity Investments, Inc., a Florida
corporation, as managing general partner of the Partnership (the "Managing
General Partner"), and as attorney-in-fact for the limited partners.
Capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed thereto in the Partnership Agreement.
WHEREAS, the Managing General Partner has approved this Amendment;
WHEREAS, the Limited Partners have approved this Amendment by a
Majority Vote; and
WHEREAS, limited partners that own a majority of the Units owned by
Limited Partners that are not Affiliates of the Managing General Partner have
approved this Amendment.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Section 15.3.7 of the Partnership Agreement is hereby amended to
read in its entirety as follows:
"15.3.7 Sell or lease real property to any entity in which a General
Partner or any Affiliate has an interest, other than (i) a joint venture or
similar program which complies with the conditions set forth in Paragraph
15.3.8, or (ii) a sale of real property to SH Partners, L.P. pursuant to that
certain Purchase and Sale Agreement and Joint Escrow Instructions, dated as of
November 14, 2005 (the "Calstrs Agreement"), by and among California State
Teachers' Retirement System, Windsor Hills I, L.P., National Property
Investors 6, National Property Investors 7, TAHF II Limited Partnership,
Couch-Oxford Associates Limited Partnership, Peppermill Village-Oxford
Associates, L.P., Williamsburg Investors Limited Partnership and Mayfair
Village Limited Partnership."
2. Section 15.3.26 of the Partnership Agreement is hereby amended to
read in its entirety as follows:
"15.3.26 Cause the Partnership to enter into any transactions with
any other partnership in which a General Partner or any Affiliates have an
interest, including, but not limited to, any transaction involving the sale,
lease or purchase of any property to or from the Partnership, the rendering of
services to or from the Partnership, or the lending of any monies or other
property to or from the Partnership, other than transactions pursuant to the
Calstrs Agreement."
3. Section 15.3.32 of the Partnership Agreement is hereby amended to
read in its entirety as follows:
"15.3.32 Cause the Partnership to enter into any agreements with a
General Partner or its Affiliates which shall not be subject to termination
without penalty by either party upon not more than sixty (60) days' written
notice, other than the Calstrs Agreement."
4. Except as specifically amended hereby, the terms, covenants,
provisions and conditions of the Partnership Agreement shall remain unmodified
and continue in full force and effect and, except as amended hereby, all of
the terms, covenants, provisions and conditions of the Agreement are hereby
ratified and confirmed in all respects.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as
of the date first above written.
NPI EQUITY INVESTMENTS, INC.,
as Managing General Partner and
as Attorney-in-Fact for the Limited Partners
By: _______________________
Name:
Title:
NATIONAL PROPERTY INVESTORS 7
CONSENT OF LIMITED PARTNER
This consent is solicited by NPI Equity Investments, Inc., a Florida
corporation and the managing general partner (the "Managing General Partner"
of National Property Investors 7, a California limited partnership (the
"Partnership")). The Managing General Partner recommends that you "CONSENT" to
Proposal 1. As a result of its affiliation with SH Partners, L.P., the
Managing General Partner makes no recommendation with respect to Proposal 2.
If no election is specified with respect to a particular proposal, any
otherwise properly completed and signed consent form will be deemed to be a
consent to the proposal.
The undersigned limited partner of the Partnership, acting with
respect to all limited partnership units held of record by the undersigned on
December __, 2005, hereby consents, withholds consent or abstains, with
respect to the proposals specified below and more fully described in the
Consent Solicitation Statement, dated December __, 2005 (the "Solicitation
Statement"). All capitalized terms used but not otherwise defined herein shall
have the respective meanings ascribed thereto in the Solicitation Statement.
PROPOSAL 1: Approval of the Sale of the Fairway View II Apartments pursuant to
the Purchase and Sale Agreement.
[ ] Consent [ ] Withhold Consent [ ] Abstain
PROPOSAL 2: Approval of Amendments to the Partnership Agreement to
permit the Sale of Fairway View II Apartments to SH
Partners, L.P., an entity in which an affiliate of the
managing general partner owns a 33.33% interest and acts as
general partner.
[ ] Consent [ ] Withhold Consent [ ] Abstain
The undersigned hereby constitutes and appoints the Managing General
Partner of the Partnership as his or her attorney-in-fact for the purposes of
executing any and all documents and taking any and all actions necessary to
implement the actions set forth above. Approval of the Sale will also be
deemed to authorize the Managing General Partner, in its discretion, to reduce
the purchase price for the Property by up to 10% and make any other amendments
to the Purchase and Sale Agreement which, in its opinion, are necessary,
appropriate or desirable in connection with the Sale, and that do not
materially and adversely affect the Partnership.
Date: ________________ ____________________________________________
Type or Print Name of Individual or Entity
By:
----------------------------------------
Signature
--------------------------------------------
Type or Print Name of Person Signing
--------------------------------------------
Capacity
--------------------------------------------
Tax Identification or Social Security Number
--------------------------------------------
Telephone Number
Please sign exactly as you hold your interest in the Partnership. When signing
as an attorney-in-fact, executors, administrator, trustee or guardian, please
give your full title. If an interest is jointly held, each holder should sign.
If a corporation, please sign in full corporate name by a duly authorized
officer. If a partnership, please sign in partnership name by a duly
authorized person.
A fully completed, signed and dated consent form should be sent by hand, by
mail or by overnight courier to The Altman Group, Inc., 1200 Wall Street 3rd
Floor, Lyndhurst, New Jersey 07071, ; or by fax at (201) 460-0050. The consent
solicitation will expire, and all consent forms must be received by 5:00 p.m.,
New York City time, on December __, 2005, unless extended.