SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
300 South Grand Avenue
Los Angeles, California 90071-3144
(213) 687-5000
Fax: (213) 687-5600
January 6, 2006
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0303
Attention: Charito A. Mittelman, Esq.
Owen Pinkerton, Esq.
Division of Corporation Finance
Re: National Property Investors 7
Schedule 14A Proxy Statement
Filed December 16, 2005
File No. 0-13454
Ladies & Gentlemen:
On behalf of National Property Investors 7 ("NPI 7"), we are
responding to your comment letter, dated December 29, 2005, regarding the
Schedule 14A Proxy Statement referred to above (the "Proxy Statement"). We have
set forth below the comment and NPI 7's response:
Comment: We note that National Property Investors 7 intends to solicit
consents from limited partners to sell its last remaining property interest to
SH Partners, L.P., an entity partially owned and controlled by an affiliate of
the registrant. Furthermore, we note that upon completion of the sale, the
partnership will dissolve and wind up its affairs. It appears that your
proposed transaction may constitute a going private transaction pursuant to
Rule 13e-3 of the Exchange Act. Please provide us with a detailed analysis as
to the applicability of Rule 13e-3 to your transaction and any obligation you
may have to provide additional disclosure on Schedule 13e-3.
Response: Rule 13e-3 (the "Rule") under the Securities Exchange Act of
1934, as amended (the "Act"), defines a "Rule 13e-3 transaction" as any
transaction or series of transactions involving one or more specified
transactions which has either a reasonable likelihood or a purpose of
producing, either directly or indirectly, any of the specified effects. The
specified transactions are:
o a purchase of any equity security by the issuer of such security or
by an affiliate of such issuer;
o a tender offer for or request or invitation for tenders of any equity
security made by the issuer of such class of securities or by an
affiliate of such issuer; or
o a solicitation subject to Regulation 14A of any proxy, consent or
authorization of, or a distribution subject to Regulation 14C of
information statements to, any equity security holder by the issuer
of the class of securities or by an affiliate of such issuer, in
connection with: a merger, consolidation, reclassification,
recapitalization, reorganization or similar corporate transaction of
an issuer or between an issuer (or its subsidiaries) and its
affiliate; a sale of substantially all the assets of an issuer to its
affiliate or group of affiliates; or a reverse stock split of any
class of equity securities of the issuer involving the purchase of
fractional interests.
The specified effects are:
o causing any class of equity securities of the issuer which is subject
to section 12(g) or section 15(d) of the Act to be held of record by
less than 300 persons; or
o causing any class of equity securities of the issuer which is either
listed on a national securities exchange or authorized to be quoted
in an inter-dealer quotation system of a registered national
securities association to be neither listed on any national
securities exchange nor authorized to be quoted on an inter-dealer
quotation system of any registered national securities association.
The NPI 7 Proxy Statement describes a transaction in which Fairway
View II Apartments (the "Sale Property") will be sold to SH Partners, L.P. ("SH
Partners") or the California State Teachers' Retirement System ("Calstrs") (or
its designee). NPI 7 does not believe that this constitutes a Rule 13e-3
transaction for the following reasons:
1. It is neither one of the specified transactions, nor part of a
series of transactions involving one or more of the specified transactions.
The transaction does not involve a purchase or tender offer relating
to any NPI 7 equity securities, and neither NPI 7 nor any of its affiliates has
any current intention of effecting any such purchase or tender offer. Although
there is a solicitation subject to Schedule 14A relating to a sale of NPI 7's
last remaining property, NPI 7 does not believe that the purchaser should be
considered an "affiliate," as that term is intended to be used in the Rule.
Calstrs is a public entity that is not affiliated with NPI 7. SH Partners is a
joint venture between Calstrs and affiliates of NPI 7 (collectively referred to
as "Aimco"). Although Aimco owns a 33.3% interest in SH Partners, and acts as
general partner of SH Partners, the limited partnership agreement for SH
Partners would be amended to provide that 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 Sale Property.
The amended limited partnership agreement for SH Partners would give
Calstrs (and not Aimco) control over the Sale Property acquired by SH Partners.
Under the limited partnership agreement, the general partner is not permitted
to take any action on certain matters (collectively, "Major Decisions") without
the prior approval of a management committee comprised of three representatives
of Calstrs and three representatives of Aimco. Major Decisions include, among
other things, the sale or other transfer of a property, any lease with a term
of more than two years, any financing or refinancing, approval of business
plans and budgets for each project, expenditures outside of the approved plan
or budget, material agreements, employment of consultants, legal proceedings
outside the ordinary course and bankruptcy filings. As amended, the SH Partners
agreement would give the Calstrs representatives sole and exclusive authority
to make all Major Decisions with respect to the Sale Property. Representatives
of Aimco that serve on the SH Partners management committee would have no
authority whatsoever with respect to the Sale Property. Although an Aimco
affiliate has agreed to enter into a management agreement to act as the
property manager of the Sale Property, Calstrs could terminate such management
agreement upon 30 days notice, in its sole discretion without any payment or
penalty. The amended limited partnership agreement would also provide that
Calstrs would have the right at any time to direct SH Partners to sell the Sale
Property to a third party, or to transfer title to the Sale Property to Calstrs
or its designee for no consideration.
In substance, the transaction is an arms-length transaction between
NPI 7 and Calstrs, which negotiated all of the terms of the purchase and sale
agreement on behalf of SH Partners. In this context, NPI 7 does not believe
that this transaction has the potential for abuse or overreaching associated
with the types of transactions intended to be covered by the Rule, and SH
Partners should not be considered an affiliate for purposes of the Rule.
2. There is not a reasonable likelihood or a purpose of producing,
either directly or indirectly, any of the specified effects.
NPI 7 equity securities are neither listed on a national securities
exchange nor authorized to be quoted in an inter-dealer quotation system of a
registered national securities association. Pending the dissolution and winding
up of NPI 7, the transaction will not cause the NPI 7 limited partnership units
to be held of record by less than 300 persons and, in fact, will have no effect
on the number of holders of record of outstanding limited partnership units.
When the dissolution and winding up is completed, there will not be any holders
of NPI 7 securities, as NPI 7 will cease to exist. The Commission has
previously indicated that the Rule's specified effects were selected because
they result in security holders being deprived of the benefits of "public
ownership." In this case, the limited partners of NPI 7 will retain all of the
benefits of public ownership until the dissolution and winding up are
completed, at which time the entity will cease to exist. Investors will never
have any "private ownership" in NPI 7. The transaction is better characterized
as a "dissolution transaction" rather than a "going private transaction."
* * * *
Please note that NPI 7 will be filing a letter next week which
acknowledges that:
o the company is responsible for the adequacy and accuracy of the
disclosure in the filings;
o staff comments or changes to disclosure in response to staff comments
do not foreclose the Commission from taking any action with respect
to the filing; and
o the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
We hope that this addresses your comment adequately. If you have any
questions, please contact me at (213) 687-5396.
Very truly yours,
/s/ Jonathan L. Friedman
Jonathan L. Friedman
cc: Martha Long
Danielle McClure
Miles Cortez, Esq.
Derek McCandless, Esq.
Meryl Chae, Esq.
Joseph Coco, Esq.