OFFER TO PURCHASE FOR CASH
1,140 Units of
Limited Partnership Interests in
URBAN IMPROVEMENT FUND LIMITED - 1974
by
EVEREST PROPERTIES II, LLC
at a Cash Purchase Price of
$500 per Unit
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 5:00 P.M., LOS
ANGELES TIME, ON FRIDAY, FEBRUARY 6, 2004, UNLESS THE OFFER IS EXTENDED.
Everest Properties II, LLC ("Everest" or the "Purchaser"), a California
limited liability company, is offering to purchase up to 1,140 Units of Urban
Improvement Fund Limited - 1974 (the "Partnership"), at a cash purchase price of
$500 per Unit, without interest, less the amount of the Distributions (as
defined below) per Unit, if any, made to the Unit Holders by the Partnership
after the date of this Offer. No transfer fees will be deducted. The Offer (as
defined below) is subject to certain terms and conditions set forth in this
Offer to Purchase, as it may be supplemented from time to time (the "Offer to
Purchase") and in the related Agreement of Transfer and Letter of Transmittal,
as it may be supplemented or amended from time to time (the "Letter of
Transmittal," which together with the Offer to Purchase, constitutes the
"Offer"). This Offer is not subject to brokerage commissions and is not
conditioned upon financing.
The enclosed Letter of Transmittal may be used to tender Units for the
Offer. Please read all Offer materials completely before completing and
returning the Letter of Transmittal (blue form).
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For More Information or for Further Assistance,
Please Call or Contact the Purchaser at:
Everest Properties II, LLC
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January 6, 2004
TABLE OF CONTENTS
Page
INTRODUCTION..................................................................1
SUMMARY OF THE OFFER..........................................................1
DETAILS OF THE OFFER..........................................................2
1. Terms of the Offer; Expiration Date; Proration....................2
2. Acceptance for Payment and Payment of Purchase Price..............3
3. Procedure to Accept the Offer.....................................3
4. Determination of Validity; Rejection of Units; Waiver of Defects;
No Obligation to Give Notice of Defects...........................4
5. Withdrawal Rights.................................................4
6. Extension of Tender Period; Termination; Amendment................5
7. Conditions of the Offer...........................................5
8. Backup Federal Income Tax Withholding.............................7
9. FIRPTA Withholding................................................7
CERTAIN INFORMATION CONCERNING THE PARTNERSHIP................................7
General................................................................7
Outstanding Units......................................................7
Trading History of the Units...........................................7
Selected Financial and Property Related Data...........................8
DETERMINATION OF OFFER PRICE..................................................8
CERTAIN INFORMATION CONCERNING THE PURCHASER..................................8
The Purchaser..........................................................8
General................................................................8
Prior Acquisitions of Units and Prior Contacts.........................9
Source of Funds........................................................9
FUTURE PLANS OF THE PURCHASER.................................................9
EFFECTS OF THE OFFER.........................................................10
Future Benefits of Unit Ownership.....................................10
Limitations on Resales................................................10
Influence on Voting Decisions by the Purchaser........................10
CERTAIN FEDERAL INCOME TAX MATTERS...........................................10
CERTAIN LEGAL MATTERS........................................................12
General...............................................................12
State Takeover Statutes...............................................12
Fees and Expenses.....................................................12
Miscellaneous.........................................................12
SCHEDULE I - EXECUTIVE OFFICERS
APPENDIX A - PARTNERSHIP INFORMATION
INTRODUCTION
The Purchaser hereby offers to purchase up to 1,140 Units of limited
partnership interests ("Unit(s)") in the Partnership at a cash purchase price of
$500 per Unit, without interest, less the amount of Distributions (defined
below) per Unit, if any, made to Unit Holders by the Partnership after the date
of this Offer. No transfer fees will be deducted - the Purchaser will pay any
such fees.
SUMMARY OF THE OFFER.
The purpose of the Offer is for the Purchaser to acquire a substantial
equity interest in the Partnership for investment purposes.
In considering the Offer, Unit Holders are urged to consider the following:
o The price offered for the Units is $500 in CASH, less any
Distributions made after the date of this Offer. No transfer fees will
be deducted. See "Details of the Offer - Acceptance for Payment and
Payment of Purchase Price."
o The Offer price is $150 per Unit (43%) higher than the highest prior
offer for Units of which Purchaser is aware, made March 10, 2003,
based on the offers that Purchaser has received as an existing limited
partner in the Partnership and a review of public SEC filings.
o No trades of Partnership interests have been reported over the last 12
months, according to Partnership Spectrum, an independent industry
publication. See "Certain Information Concerning the Partnership -
Trading History of the Units."
o The Partnership will not be required to terminate before December 31,
2015, and could be extended into 2021, unless a majority of the
limited partners approve an earlier dissolution or an event occurs
that would require a dissolution under the Partnership's limited
partnership agreement, according to the Partnership Agreement.
o The Purchaser is not affiliated with the Partnership or its sole
general partner, Interfinancial Real Estate Management Company
("General Partner"). The General Partner may be expected to
communicate its position on the Offer in the next two weeks.
o The Offer allows Unit Holders to dispose of their Units without
incurring the Partnership's transfer fee ($150 per transfer) or the
sales commissions (typically up to 8% with a minimum of $150-$200)
associated with sales arranged through brokers or other
intermediaries. See "Certain Information Concerning the Partnership -
Trading History of the Units."
o The Purchaser is making the Offer with a view to making a profit for
itself. Accordingly, the desire of the Purchaser to purchase Units at
a low price conflicts with the desire of the Unit Holders to sell
their Units at a high price.
o The Offer is an immediate opportunity for Unit Holders to liquidate
their investment in the Partnership, but Unit Holders who tender their
Units will be giving up the opportunity to participate in any
potential future benefits from ownership of Units, including
distributions resulting from any future sale of the Partnership's
properties. Unit Holders may have a more immediate need to use the
cash now tied up in the Units, and may consider the Offer more certain
to achieve a prompt liquidation of their investment in the Units. Unit
Holders who sell all of their Units may also eliminate the need to
file Form K-1 information for the Partnership with their federal tax
returns for years after 2004. See "Details of the Offer - Acceptance
for Payment and Payment of Purchase Price."
o The Offer allows Unit Holders the option to sell "All or None" of
their Units, thereby allowing Unit Holders the option to avoid
proration if more than 1,140 Units are tendered. See "Details of the
Offer - Terms of the Offer; Expiration Date; Proration" and "-
Acceptance for Payment and Payment of Purchase Price."
Each Unit Holder must make his own decision, based on the Unit Holder's
particular circumstances, whether to tender Units. Unit Holders should consult
with their respective advisors about the financial, tax, legal and other
implications of accepting the Offer.
The above statements are intended only as a brief overview of the principal
terms and considerations regarding the Offer. The entire Offer to Purchase,
which follows, provides substantially greater detail about the Offer, and all of
the statements above are qualified by the entire Offer to Purchase. You should
read it completely and carefully before deciding whether or not to tender your
Units. The Offer is subject to certain terms and conditions set forth in this
Offer to Purchase, and in the related Agreement of Transfer and Letter of
Transmittal, that are not summarized above.
DETAILS OF THE OFFER
1. Terms of the Offer; Expiration Date; Proration. On the terms and subject
to the conditions of the Offer, the Purchaser will accept and purchase up to
1,140 validly tendered, and not withdrawn, Units in accordance with the
procedures set forth in this Offer to Purchase ("Properly Tendered"). For
purposes of the Offer, the term "Expiration Date" means 5:00 p.m., Los Angeles
time, on Friday, February 6, 2004, unless the Purchaser extends the period of
time during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date to which the Offer is extended by the
Purchaser.
If, prior to the Expiration Date, the Purchaser increases the price offered
to the Unit Holders pursuant to the Offer, the increased price will be paid for
all Units accepted for payment pursuant to the Offer, whether or not the Units
were tendered prior to the increase in consideration.
If more than 1,140 Units are Properly Tendered (or if the number of Units
that are Properly Tendered exceeds applicable limitations on resales) the
Purchaser will, upon the terms and subject to the conditions of the Offer,
accept for payment and pay for an aggregate of 1,140 Units (or, if less, the
maximum number of such Units that can be transferred without exceeding
applicable limitations on resales), pro rata, according to the number of Units
that are Properly Tendered by each Unit Holder, with appropriate adjustments to
avoid purchases of fractional Units. Subject to its obligation to pay for Units
promptly after the Expiration Date, the Purchaser intends to pay for any Units
accepted for payment pursuant to the Offer after determining the final proration
or other adjustments. If the number of Units that are Properly Tendered is less
than or equal to 1,140 Units (or, if less, the maximum number of such Units
which can be transferred without exceeding applicable limitations on resales),
the Purchaser will purchase all Units that are Properly Tendered, upon the terms
and subject to the conditions of the Offer. See "Effects of the Offer -
Limitations on Resales."
Unit Holders may indicate, by checking a box on the Letter of Transmittal
(the "All or None Box"), that they only wish to sell their Units if they will be
able to sell all of their Units, without any proration. If on the Expiration
Date more than 1,140 Units have been Properly Tendered, unless the Purchaser
amends the Offer to increase the number of Units to be purchased, the Purchaser
will not accept for payment any Units from Unit Holders that checked the All or
None Box. If more than 1,140 Units have been Properly Tendered without checking
the All or None Box, then the above description of proration will apply only to
tenders of such Units that do not have the All or None Box checked.
If prior to the Expiration Date any or all of the conditions of the Offer
have not been satisfied, or waived by the Purchaser, the Purchaser reserves the
right to: (i) decline to purchase any of the Units tendered, terminate the Offer
and return all tendered Units, (ii) waive the unsatisfied conditions and,
subject to complying with applicable rules and regulations of the Securities and
Exchange Commission (the "Commission"), purchase all Units that are Properly
Tendered, (iii) extend the Offer and, subject to the right of Unit Holders to
withdraw Units until the Expiration Date, retain previously tendered Units for
the period or periods for which the Offer is extended, and (iv) amend the Offer.
2. Acceptance for Payment and Payment of Purchase Price. On the terms and
subject to the conditions of the Offer, the Purchaser will purchase and will pay
for up to 1,140 Properly Tendered Units, promptly following the Expiration Date.
In all cases, payment for Units purchased pursuant to the Offer will be made
only after timely receipt by the Purchaser of: (i) a properly completed and duly
executed and acknowledged Letter of Transmittal, (ii) any other documents
required in accordance with the Letter of Transmittal, and (iii) written
confirmation from the Partnership of the transfer of the Units to the Purchaser.
Any Distributions made or declared on or after the date of this Offer
would, by the terms of the Offer and as set forth in the Letter of Transmittal,
be assigned by tendering Unit Holders to the Purchaser and deducted from your
proceeds. No transfer fees will be deducted. UNDER NO CIRCUMSTANCE WILL INTEREST
ON THE PURCHASE PRICE BE PAID, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
If any tendered Units are not purchased for any reason (other than
proration adjustments), the Purchaser may destroy the original Letter of
Transmittal with respect to the Units. If for any reason acceptance for payment
of, or payment for, any Units tendered pursuant to the Offer is delayed or the
Purchaser is unable to accept for payment, purchase or pay for Units tendered,
then, without prejudice to the Purchaser's rights under Section 4 herein, the
Purchaser may, nevertheless, retain documents concerning tendered Units, and
those Units may not be withdrawn except to the extent that the tendering Unit
Holders are otherwise entitled to withdrawal rights as described in Section 5
herein, subject, however, to the Purchaser's obligation under Rule 14e-1(c)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to
pay Unit Holders the purchase price in respect of Units tendered or return
documents, if any, representing those Units promptly after termination or
withdrawal of the Offer.
3. Procedure to Accept the Offer. For the tender of any Units to be valid,
the Purchaser must receive, at the address listed on the back page of this Offer
to Purchase on or prior to the Expiration Date, a properly completed and duly
executed Letter of Transmittal and all documents required by the Instructions.
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 Purchaser. If delivery is
by mail, registered mail with return receipt requested, properly insured, is
recommended. In all cases, sufficient time should be allowed to assure timely
delivery.
By executing and delivering a Letter of Transmittal, a tendering Unit
Holder irrevocably appoints the Purchaser and its officers and any other
designee of the Purchaser, and each of them, the attorneys-in-fact and proxies
of the Unit Holder, in the manner set forth in the Letter of Transmittal, each
with full power of substitution, to the full extent of the Unit Holder's rights
with respect to the Units tendered by the Unit Holder and accepted for payment
by the Purchaser (and with respect to any and all distributions, other Units,
rights or other securities issued or issuable in respect thereof (collectively,
"Distributions")), including without limitation the right to direct any IRA
custodian, trustee or other record owner to execute and deliver the Letter of
Transmittal, the right to accomplish a withdrawal of any previous tender of the
Unit Holder's Units and the right to complete the transfer contemplated thereby.
All such proxies will be considered coupled with an interest in the tendered
Units, are irrevocable and are granted in consideration of, and are effective
upon, the acceptance for payment of the Units by the Purchaser in accordance
with the terms of the Offer. Upon acceptance for payment, all prior powers of
attorney and proxies given by the Unit Holder with respect to the Units and
Distributions will, without further action, be revoked, and no subsequent powers
of attorney or proxies may be given (and, if given, will be without force or
effect). The officers and designees of the Purchaser will, with respect to the
Units for which the appointment is effective, be empowered to exercise all
voting and other rights of the Unit Holder as they in their discretion may deem
proper at any meeting of the Partnership or any adjournment or postponement
thereof.
By executing and delivering a Letter of Transmittal, a tendering Unit
Holder irrevocably assigns to the Purchaser and its assigns all of the right,
title and interest of the Unit Holder in and to any and all Distributions made
by the Partnership, effective upon and after the date of acceptance with respect
to Units accepted for payment and thereby purchased by the Purchaser.
4. Determination of Validity; Rejection of Units; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions about the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Units pursuant to the Offer will be determined by the Purchaser, which
determination will be final and binding. The Purchaser reserves the right to
reject any or all tenders of any particular Units determined by it not to be in
proper form or if the acceptance of or payment for those Units may, in the
opinion of Purchaser's counsel, be unlawful. The Purchaser also reserves the
right to waive or amend any of the conditions of the Offer that it is legally
permitted to waive and to waive any defect in any tender with respect to any
particular Units. The Purchaser's interpretation of the terms and conditions of
the Offer (including the Letter of Transmittal) will be final and binding. No
tender of Units will be deemed to have been validly made until all defects have
been cured or waived. Neither the Purchaser nor any other person will be under
any duty to give notification of any defects in the tender of any Units or will
incur any liability for failure to give any such notification.
A tender of Units pursuant to the procedure described above and the
acceptance for payment of such Units will constitute a binding agreement between
the tendering Unit Holder and the Purchaser on the terms set forth in the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment pursuant to this Offer, and thereby purchased, Properly Tendered
Units if, as and when the Purchaser gives written notice to the Partnership or
its Transfer Agent of the Purchaser's acceptance of those Units for payment
pursuant to the Offer. Upon the terms and subject to the conditions of the
Offer, payment for Units accepted for payment pursuant to the Offer will be made
and transmitted directly to Unit Holders whose Units have been accepted for
payment.
5. Withdrawal Rights. Tenders of Units made pursuant to the Offer are
irrevocable, except that Units tendered pursuant to the Offer may be withdrawn
at any time on or prior to the Expiration Date and, unless already accepted for
payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after March 6, 2004. If purchase of, or payment for, Units is delayed for
any reason, including extension by the Purchaser of the Expiration Date, or if
the Purchaser is unable to purchase or pay for Units for any reason (for
example, because of proration adjustments) then, without prejudice to the
Purchaser's rights under the Offer, tendered Units may be retained by the
Purchaser and may not be withdrawn, except to the extent that tendering Unit
Holders are otherwise entitled to withdrawal rights as set forth in this Section
5; subject, however, to the Purchaser's obligation, pursuant to Rule 14e-1(c)
under the Exchange Act, to pay Unit Holders the purchase price in respect of
Units tendered promptly after termination or withdrawal of the Offer.
For withdrawal to be effective, a written notice of withdrawal must be
timely received by the Purchaser at its address listed on the back cover of this
Offer to Purchase. Any notice of withdrawal must specify the name of the
person(s) 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. Any Units properly withdrawn will be deemed not
validly tendered for purposes of the Offer. Withdrawn Units may be re-tendered,
however, by following the procedures described in Section 3 herein at any time
prior to the Expiration Date.
All questions about the validity and form (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, which determination
shall be final and binding. Neither the Purchaser nor any other person will be
under any duty to give notice of any defects in any notice of withdrawal or
incur any liability for failure to give any such notice.
6. Extension of Tender Period; Termination; Amendment. The Purchaser
expressly reserves the right at any time:
o 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;
o to delay for a reasonable period the acceptance for payment of, or
payment for, any Units not already accepted for payment or paid for,
if the Purchaser reasonably anticipates the prompt receipt of any
authorization, consent, order of, or filing with, or the expiration of
waiting periods imposed by, any court, government, administrative
agency or other governmental authority, necessary for the consummation
of the transactions contemplated by the Offer;
o to amend the Offer in any respect (including, without limitation, by
increasing or decreasing the price, increasing or decreasing the
number of Units being sought, or both).
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 Exchange Act.
In the case of an extension of the Offer, the extension will be followed by a
press release or public announcement which will be issued no later than 9:00
a.m., New York City time, on the next business day after the scheduled
Expiration Date, in accordance with Rule 14e-1(d) under the Exchange Act. If the
Purchaser makes a material change in the terms of the Offer or waives a
condition that constitutes a material change in the terms of the Offer, the
Purchaser will extend the Offer and disseminate additional tender offer
materials to the extent required by Rules 14d-4(c) and 14d-6(d) under the
Exchange Act. If a Distribution occurs before the Expiration Date and the
Purchaser reduces its Offer price as a result, the Purchaser will provide notice
thereof to Unit Holders and extend the Expiration Date in accordance with Rule
14e-1(b) under the Exchange Act.
7. Conditions of the Offer. Notwithstanding any other term of the Offer,
the Purchaser will not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to a bidder's obligation to pay for or return
tendered securities promptly after the termination or withdrawal of such
bidder's offer), to pay for any Units tendered, may delay the acceptance for
payment of the Units tendered, or may withdraw the Offer if, at any time on or
after the date of the Offer and on or 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, administrative agency or other governmental authority
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, purchase of or payment for any Units by
the Purchaser; (ii) imposes or confirms limitations on the ability of the
Purchaser effectively to exercise full rights of both legal and beneficial
ownership of the Units; (iii) requires divestiture by the Purchaser of any
Units; (iv) might materially adversely affect the business, properties, assets,
liabilities, financial condition, operations, results of operations or prospects
of the Purchaser, or the Partnership; or (v) seeks to impose any material
condition to the Offer unacceptable to the Purchaser;
(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, administrative agency or
other governmental authority which might, directly or indirectly, result in any
of the consequences referred to in paragraph (a) above;
(c) there shall be any authorization, consent, order of, or filing with, or
expiration of waiting periods imposed by, any court, government, administrative
agency or other governmental authority, necessary for the consummation of the
transactions contemplated by the Offer and requested by ▇▇▇▇▇▇▇▇▇, that shall
not have occurred or been filed or obtained;
(d) any event shall have occurred or been disclosed, or shall have been
threatened, regarding the business, properties, assets, liabilities, financial
condition, operations, results of operations or prospects of the Partnership,
which event is materially adverse, or which threatened event, if fulfilled,
would be materially adverse, to the Partnership or its business or properties,
or there shall be any material lien not disclosed in the Partnership's financial
statements, or the Purchaser shall have become aware of any previously
undisclosed fact that has or with the passage of time would have a material
adverse effect on the value of the Units or the Partnership's properties;
(e) the General Partner of the Partnership shall have stated or otherwise
indicated that it intends to refuse to take any action that the Purchaser deems
necessary, in the Purchaser's reasonable judgment, for the Purchaser to be the
registered owner of the Units tendered and accepted for payment hereunder, with
full voting rights, simultaneously with the consummation of the Offer or as soon
thereafter as is permitted under the Partnership Agreement, in accordance with
the Partnership Agreement and applicable law;
(f) there shall have been threatened, instituted or pending any action or
proceeding before any court or governmental agency or other regulatory or
administrative agency or commission or by any other person, challenging the
acquisition of any Units pursuant to the Offer or otherwise directly or
indirectly relating to the Offer, or otherwise, in the reasonable judgment of
the Purchaser, adversely affecting the Purchaser, the Partnership or its
properties or the value of the Units;
(g) the Partnership shall have (i) issued, or authorized or proposed the
issuance of, any partnership interests of any class, or any securities
convertible into, or rights, warrants or options to acquire, any such interests
or other convertible securities, (ii) issued or authorized or proposed the
issuance of any other securities, in respect of, in lieu of, or in substitution
for, all or any of the presently outstanding Units, (iii) declared or paid any
Distribution, other than in cash, on any of the Units, or (iv) the Partnership
or the General Partner shall have authorized, proposed or announced its
intention to propose any merger, consolidation or business combination
transaction, acquisition of assets, disposition of assets or material change in
its capitalization, or any comparable event not in the ordinary course of
business, other than listing the Partnership's properties for sale; or
(h) the General Partner shall have modified, or taken any step or steps to
modify, in any way, the procedures or regulations applicable to the registration
of Units or transfers of Units on the books and records of the Partnership or
the admission of transferees of Units as registered owners and as Unit Holders.
The foregoing conditions are for the sole benefit of the Purchaser and may
be (but need not be) asserted by the Purchaser regardless of the circumstances
giving rise to such conditions or may be waived by the Purchaser in whole or in
part at any time prior to the Expiration Date, subject to the requirement to
disseminate to Unit Holders, in a manner reasonably designed to inform them of,
any material change in the information previously provided. Any determination by
the Purchaser, in its reasonable judgment, concerning the events described above
will be final and binding upon all parties.
8. Backup Federal Income Tax Withholding. To prevent the possible
application of backup federal income tax withholding with respect to payment of
the purchase price, a tendering Unit Holder must provide the Purchaser with the
Unit Holder's correct taxpayer identification number in the space provided in
the Letter of Transmittal.
9. FIRPTA Withholding. To prevent the withholding of federal income tax in
an amount equal to ten percent of the amount of the purchase price plus
Partnership liabilities allocable to each Unit purchased, the Letter of
Transmittal includes FIRPTA representations certifying the Unit Holder's
taxpayer identification number and address and that the Unit Holder is not a
foreign person.
CERTAIN INFORMATION CONCERNING THE PARTNERSHIP
The Partnership is subject to the information reporting requirements of the
Exchange Act and is required to file reports and other information with the
Commission relating to its business, financial results and other matters. Such
reports and other documents may be examined and copies may be obtained from the
offices of the Commission at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, or
electronically at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇. Copies should be available by mail upon
payment of the Commission's customary charges by writing to the Commission's
principal offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇.
General. Attached as Part I of Appendix A to this Offer to Purchase are
excerpts from the last Annual Report on Form 10-K filed by the Partnership with
the Commission (the "Form 10-K"), which excerpts describe the business and
operations of the Partnership.
Outstanding Units. According to the Form 10-K, there were 11,394 Units
issued and outstanding, held by approximately 500 Unit Holders, as of December
31, 2002.
Trading History of the Units. There is no established trading market for
the Units other than limited and sporadic trading through matching services or
privately negotiated sales. At present, privately negotiated sales and sales
through intermediaries (such as through the American Partnership Board) are the
only means available to a Unit Holder to liquidate an investment in Units (other
than this Offer or other occasional offers by other partnership investors, if
any) because the Units are not listed or traded on any exchange or quoted on any
NASDAQ list or system.
According to Partnership Spectrum, an independent third party publication,
between October 1, 2002 and September 30, 2003 (the most recent published
information), there were no trades of the Partnership's limited partnership
interests. Sales may be conducted which are not reported in the Partnership
Spectrum and the prices of sales through other channels may differ from those
reported by the Partnership Spectrum. The reported gross sales prices may not
reflect the net sales proceeds received by sellers of Units, which typically are
reduced by commissions (typically up to 8% with a minimum of $150-$200) and
other secondary market transaction costs. The Purchaser does not know whether
the information provided by the Partnership Spectrum is accurate or complete.
Selected Financial and Property Related Data. Attached as Part II of
Appendix A is a summary of certain financial and statistical information with
respect to the Partnership and its properties, all of which has been taken from
the Form 10-K and the Quarterly Report on Form 10-Q for the period ended
September 30, 2003 (the "Form 10-Q"). More comprehensive financial and other
information is included in such reports and other documents filed by the
Partnership with the Commission. Part II of Appendix A is qualified in its
entirety by reference to such publicly filed reports and documents, including,
without limitation, all the financial information and related notes contained
therein. Unit Holders should also refer to any Quarterly Reports on Form 10-Q or
Current Reports on Form 8-K filed with the Commission after the Form 10-K or
after the date of this Offer for more recent information relating to the
business and operations of the Partnership.
DETERMINATION OF OFFER PRICE
In establishing the Offer price, the Purchaser reviewed certain publicly
available information including among other things: (i) the Partnership's
limited partnership agreement (the "Partnership Agreement"), (ii) Annual Reports
on Form 10-K, (iii) Quarterly Reports on Form 10-Q, and (iv) other reports filed
with the Commission. The Purchaser also obtained from the General Partner a copy
of the financial statements for each property owned by the Partnership. The
Purchaser did not obtain current independent valuations or appraisals of the
assets.
Purchaser is making a speculative offer based on the unique circumstances
of the Partnership. Purchaser set its offer price by reviewing the prior offers
of which Purchaser is aware and selecting a price that Purchaser believes is
sufficiently higher than such prior offers to motivate Unit Holders to sell
their Units.
CERTAIN INFORMATION CONCERNING THE PURCHASER
The Purchaser. The Purchaser is a California limited liability company that
was formed in 1996. The principal office of the Purchaser is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. For certain information concerning the
directors and executive officers of the Purchaser, see Schedule I to this Offer
to Purchase.
The Purchaser and its affiliates invest in limited partnerships such as the
Partnership, and in other forms of real estate oriented investments, and conduct
activities incident thereto.
General. Except as set forth above or elsewhere in this Offer to Purchase:
(i) the Purchaser does not beneficially own or have a right to acquire, and, to
the best knowledge of the Purchaser, no associate or majority-owned subsidiary
of Purchaser or the persons listed in Schedule I hereto, beneficially owns or
has a right to acquire any Units or any other equity securities of the
Partnership; (ii) the Purchaser has not, and to the best knowledge of the
Purchaser, none of the persons and entities referred to in clause (i) above or
any of their executive officers, directors or subsidiaries has, effected any
transaction in the Units or any other equity securities of the Partnership
during the past 60 days other than as stated in this Offer to Purchase; (iii)
the Purchaser does not have and, to the best knowledge of the Purchaser, none of
the persons listed in Schedule I hereto has, any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Partnership, including, but not limited to, the transfer or
voting thereof, joint ventures, loan arrangements, puts or calls, guarantees of
loans, guarantees against loss or the giving or withholding of proxies, consents
or authorizations; (iv) since December 31, 2001, there have been no transactions
which would require reporting under the rules and regulations of the Commission
between the Partnership or any of its affiliates and the Purchaser or any of its
subsidiaries or, to the best knowledge of the Purchaser, any of its executive
officers, directors or affiliates; and (v) since December 31, 2001 except as
otherwise stated in this Offer to Purchase, there have been no contacts,
negotiations or transactions between the Purchaser, or any of its subsidiaries
or, to the best knowledge of the Purchaser, any of the persons listed in
Schedule I hereto, on the one hand, 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 of the Partnership.
Prior Acquisitions of Units and Prior Contacts. The Purchaser owns 400
Units (3.5%) of the Partnership. Everest Investors 9, LLC, an affiliate of the
Purchaser, owns 322 Units (2.8%), and Everest Management, LLC, an affiliate of
the Purchaser, owns 10 Units.
From time to time between March 2003 and December 2003, representatives of
Everest and representatives of the General Partner have discussed possible
transactions by which the General Partner or an affiliate would acquire Units of
the Partnership already owned by Purchaser and its affiliates, in exchange for
interests in other partnerships controlled by the same General Partner. In
December 2003, such discussions were terminated without any agreement being
reached.
Except as set forth above, neither the Purchaser nor its affiliates are
party to any past, present or proposed material contracts, arrangements,
understandings, relationships, or negotiations with the Partnership or with the
General Partner concerning the Partnership.
Source of Funds. Based on the Offer price of $500 per Unit, the Purchaser
estimates that the total amount of funds necessary to purchase all Units sought
by this Offer and to pay related fees and expenses, will be approximately
$600,000. The Purchaser expects to pay such amount from existing lines of credit
and/or existing cash and liquid assets, which exceed such amount.
FUTURE PLANS OF THE PURCHASER
The Purchaser is seeking to acquire Units pursuant to the Offer to obtain a
substantial equity interest in the Partnership, for investment purposes.
Following the completion of the Offer, the Purchaser and persons related to or
affiliated with the Purchaser may acquire additional Units. Any such acquisition
may be made through private purchases, through one or more future tender or
exchange offers or by any other means deemed advisable by the Purchaser. Any
such acquisition may be at a price higher or lower than the price to be paid for
the Units purchased pursuant to the Offer, and may be for cash or other
consideration. The Purchaser also may consider selling some or all of the Units
it acquires pursuant to the Offer, either directly or by a sale of one or more
interests in the Purchaser itself, depending upon liquidity, strategic, tax and
other considerations.
Other than as set forth above, the Purchaser does not currently intend to
change current management, indebtedness, capitalization, corporate structure or
business operations of the Partnership and does not have current plans for any
extraordinary transaction such as a merger, reorganization, liquidation or sale
or transfer of assets involving the Partnership. However, these plans could
change at any time in the future. If any transaction is effected by the
Partnership and financial benefits accrue to the Unit Holders, the Purchaser and
its affiliates will participate in those benefits to the extent of their
ownership of the Units.
EFFECTS OF THE OFFER
Future Benefits of Unit Ownership. Tendering Unit Holders shall receive
cash in exchange for their Units purchased by the Purchaser and will forego all
future distributions and income and loss allocations from the Partnership with
respect to such Units.
Limitations on Resales. The Partnership Agreement provides that the General
Partner may refuse to recognize a transfer of Units if the transfer would result
in 50% or more of the Units being transferred in a 12 month period. This
provision may limit sales of Units on the secondary market and in private
transactions following completion of the Offer. Accordingly, the Partnership may
not recognize any requests for recognition of a transferee Unit Holder upon a
transfer of Units if the transfer would result in 50% or more of the Units being
transferred in a 12 month period. For the same reasons, it is theoretically
possible that the number of Units tendered for purchase by the Purchaser taken
together with the number of Units that have transferred prior to the Offer could
result in 50% or more of the Units being transferred in a 12 month period; in
which case the Purchaser will purchase the maximum number of Units it may
purchase without causing such an event, as informed by the General Partner. It
is not possible for Purchaser to determine how many Units may be purchased
because only the General Partner will know the number of Units that have been
transferred in all other transactions prior to the expiration of the Offer. See
"Details of the Offer - Terms of the Offer; Expiration Date; Proration."
Influence on Voting Decisions by the Purchaser. Under the Partnership
Agreement, Unit Holders holding a majority of the Units are entitled to take
action with respect to a variety of matters, including removal of the General
Partner, dissolution and termination of the Partnership, and approval of most
types of amendments to the Partnership Agreement. The influence of Purchaser and
its affiliates on such actions may be significant.
CERTAIN FEDERAL INCOME TAX MATTERS
The following summary is a general discussion of certain of the federal
income tax consequences of a sale of Units pursuant to the Offer. The summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), applicable
Treasury regulations thereunder, administrative rulings, and judicial authority,
all as of the date of the Offer. All of the foregoing is subject to change, and
any such change could affect the continuing accuracy of this summary. This
summary does not discuss all aspects of federal income taxation that may be
relevant to a particular Unit Holder in light of such Unit ▇▇▇▇▇▇'s specific
circumstances, nor does it describe any aspect of state, local, foreign or other
tax laws. Sales of Units pursuant to the Offer may be taxable transactions under
applicable state, local, foreign and other tax laws. UNIT HOLDERS SHOULD CONSULT
THEIR RESPECTIVE TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THE UNIT
HOLDER OF SELLING UNITS PURSUANT TO THE OFFER.
In general, a Unit Holder will recognize gain or loss on a sale of Units
pursuant to the Offer equal to the difference between (i) the Unit Holder's
"amount realized" on the sale and (ii) the Unit Holder's adjusted tax basis in
the Units sold. The amount of a Unit Holder's adjusted tax basis in a Unit will
vary depending upon the Unit Holder's particular circumstances, and it will
include the amount of the Partnership's liabilities allocable to the Unit (as
determined under Code Section 752). The "amount realized" with respect to a Unit
will be a sum equal to the amount of cash received by the Unit Holder for the
Unit pursuant to the Offer (that is, the purchase price), plus the amount of the
Partnership's liabilities allocable to the Unit (as determined under Code
Section 752).
The gain or loss recognized by a Unit Holder on a sale of a Unit pursuant
to the Offer generally will be treated as a capital gain or loss if the Unit was
held by the Unit Holder as a capital asset. Gain with respect to Units held for
more than one year will be taxed, for federal income tax purposes, at a maximum
long-term capital gain rate of 15 percent. Gain with respect to Units held one
year or less will be taxed at ordinary income rates. It should also be noted
that the Taxpayer Relief Act of 1997 imposed depreciation recapture of
previously deducted straight-line depreciation with respect to real property at
a rate of 25 percent (assuming eligibility for long-term capital gain
treatment). A portion of the gain realized by a Unit Holder with respect to a
disposition of the Units may be subjected to this 25 percent rate to the extent
that the gain is attributable to depreciation recapture inherent in the
properties of the Partnership.
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 ▇▇▇▇▇▇'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.
Capital losses are deductible only to the extent of capital gains, except
that taxpayers who are natural persons may deduct up to $3,000 per year of
capital losses in excess of the amount of their capital gains against ordinary
income. Excess capital losses generally can be carried forward to succeeding
years (a "C" corporation's carry-forward period is five years and an individual
taxpayer can carry forward such losses indefinitely).
Under Code Section 469, individuals, S corporations and certain
closely-held corporations generally are able to deduct "passive activity losses"
in any year only to the extent of the person's passive activity income for that
year. Substantially all post-1986 losses of Unit Holders from the Partnership
are passive activity losses. Unit Holders may have "suspended" passive activity
losses from the Partnership (i.e., post-1986 net taxable losses in excess of
statutorily permitted "phase-in" amounts and which have not been used to offset
income from other passive activities).
If a Unit Holder sells less than all of its interest in the Partnership
pursuant to the Offer, a passive loss recognized by that Unit Holder can be
currently deducted (subject to the other applicable limitations) to the extent
of the Unit Holder's passive income from the Partnership for that year plus any
other net passive activity income for that year, and any gain recognized by a
Unit Holder upon the sale of Units can be offset by the Unit Holder's current or
"suspended" passive activity losses (if any) from the Partnership and other
sources. If, on the other hand, a Unit Holder sells 100 percent of its interest
in the Partnership pursuant to the Offer, any "suspended" passive activity
losses from the Partnership and any passive activity losses recognized upon the
sale of the Units will be offset first against any net passive activity income
from the Unit Holder's other passive activity investments, and the balance of
any net passive activity losses attributable to the Partnership will no longer
be subject to the passive activity loss limitation and, therefore, will be
deductible by such Unit Holder from its other "ordinary" income (subject to any
other applicable limitations). If more than 1,140 Units are Properly Tendered,
some tendering Unit Holders may not be able to sell 100 percent of their Units
pursuant to the Offer because of proration of the number of Units to be
purchased by the Purchaser, unless the Purchaser amends the Offer to increase
the number of Units to be purchased.
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 Purchaser its 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.
Unit Holders (other than tax-exempt persons, corporations and certain
foreign individuals) who tender Units may be subject to 28 percent backup
withholding unless those Unit Holders provide a taxpayer identification number
("TIN") and are certain that the TIN is correct or properly certify that they
are awaiting a TIN. A Unit Holder may avoid backup withholding by properly
completing and signing the Letter of Transmittal. If a Unit Holder who is
subject to backup withholding does not include its TIN, the Purchaser will
withhold 28 percent from payments to such Unit Holder.
CERTAIN LEGAL MATTERS
General. Except as set forth herein, the Purchaser is 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 Purchaser pursuant to the Offer. The Purchaser's obligation to purchase
and pay for Units is subject to certain conditions, including conditions related
to the legal matters discussed herein.
State Takeover Statutes. The Partnership was formed under the laws of the
State of California, which currently does not have any takeover statute
applicable to limited partnerships. However, it is a condition to the Offer that
no state or federal statute impose a material limitation on the Purchaser's
right to vote the Units purchased pursuant to the Offer. If this condition is
not met, Purchaser may terminate or amend the Offer.
If any person seeks to apply any state takeover statute, the Purchaser will
take such action as then appears desirable, which action may include challenging
the validity or applicability of any such statute in appropriate court
proceedings. If there is a claim that one or more takeover statutes apply to the
Offer, and it is not determined by an appropriate court that such statutes do
not apply or are invalid as applied to the Offer, the Purchaser might be
required to file certain information with, or receive approvals from, the
relevant state authorities. This could prevent the Purchaser from purchasing or
paying for Units tendered pursuant to the Offer, or cause delay in continuing or
consummating the Offer. In such case, the Purchaser may not be obligated to
accept for payment or pay for Units tendered.
Fees and Expenses. Purchaser will not pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of Units pursuant to the
Offer. Employees of Purchaser may solicit tenders of Units without any
additional compensation. The Purchaser will pay all costs and expenses of
printing and mailing the Offer and its legal fees and expenses.
Miscellaneous. The Offer is not made to (nor will tenders be accepted on
behalf of) Unit Holders residing in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the securities
or other laws of such jurisdiction. However, the Purchaser may take such action
as it deems necessary to make the Offer in any jurisdiction and extend the Offer
to Unit Holders in such jurisdiction.
In any jurisdiction where the securities or other laws require the Offer to
be made by a licensed broker or dealer, the Offer will be deemed to be made on
behalf of the Purchaser by one or more registered brokers or dealers that are
licensed under the laws of such jurisdiction.
The Purchaser has filed with the Commission a Tender Offer Statement on
Schedule TO pursuant to Rule 14d-3 under the Exchange Act, furnishing certain
additional information with respect to the Offer, and may file amendments
thereto. The Schedule TO and any amendments thereto, including exhibits, may be
inspected and copies may be obtained at the same places and in the same manner
as set forth under the caption "Certain Information Concerning The Partnership
-- General."
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser 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.
EVEREST PROPERTIES II, LLC
January 6, 2004
SCHEDULE I
EXECUTIVE OFFICERS
The business address of each executive officer of Everest Properties II,
LLC is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Each
executive officer is a United States citizen. The name and principal occupation
or employment of each executive officer of Everest Properties II, LLC ("EPII"),
are set forth below.
Present Principal Occupation or Employment
Name Position and Five-Year Employment History
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ President of EPII from 1996 - present. President
and Director of Everest Properties, Inc. from
1994 - present. President and Director of KH
Financial, Inc. from 1994 - present.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Executive Vice President and Secretary of EPII
from 1996 - present. Executive Vice President of
Everest Properties, Inc. from 1995 - present.
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Vice President and the General Counsel of EPII
since 1998. Senior Staff Counsel and then
Director of Corporate Legal of ▇▇▇▇▇▇▇▇▇'▇, Inc.
from 1995 - 1998.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Vice President and the Chief Financial Officer
of EPII since 1996. Chief Financial Officer and
Director of Everest Properties, Inc. since 1996.
A-5
APPENDIX A
PARTNERSHIP INFORMATION
The following information has been copied from the Partnership's Annual
Report on Form 10-K for the year ended December 31, 2002 (the "Form 10-K") and
Quarterly Report on Form 10-Q for the period ended September 30, 2003 (the "Form
10-Q"). Although the Purchaser has no information that any statements contained
in this Appendix A are untrue, the Purchaser has not independently investigated
the accuracy of statements, and takes no responsibility for the accuracy,
inaccuracy, completeness or incompleteness of any of the information contained
in this section or for the failure by the Partnership to disclose events which
may have occurred and may affect the significance or accuracy of any such
information.
PART I
Item 1. Business
Urban Improvement Fund Limited - 1974, a California limited partnership
(the "Partnership" or the "Issuer"), was formed in January 1974 for the purpose
of investing, through Local Limited Partnerships (LLP's), in federally and
state-assisted low and moderate income housing projects. The partnership will
terminate on December 31, 2015. The termination can be earlier or later with the
approval of a majority of the partners. Units of Limited Partnership Interest
were sold in a public offering to investors who require tax shelter for income
from other sources.
The Partnership commenced operations after offering 11,394 limited
partnership units, at a price of $1,000 per interest, through a public offering
registered in 1974 with the Securities and Exchange Commission (the "Offering").
The Offering terminated with subscriptions for all 11,394 limited partnership
units.
The Partnership's business is to hold limited partnership interest in local
limited partnerships, each of which owns and operates a multifamily rental
housing property ("Properties") which receives one or more forms of assistance
from the federal government. There is a local general partner for each Local
Limited Partnership and the Partnership is the principal limited partner. As a
limited partner, the Partnership's liability for obligations of the Local
Limited Partnerships is limited to its investment, and the Partnership does not
exercise control over the activities of the Local Limited Partnerships in
accordance with the partnership agreements.
The Partnership's investment objectives are to: (1) preserve and protect
Partnership capital; (2) provide capital appreciation through increase in value
of the Partnership's investments, subject to considerations of capital
preservation and tax planning; and (3) provide potential cash distributions from
sales or refinancings of the Partnership's investments.
PART II
The following is a schedule of the properties currently owned by the Local
Limited Partnerships in which the Partnership is a limited partner:
Schedule of Properties Owned by Local Limited Partnerships in which
Urban Improvement Fund Limited-1974 has an Investment
------------------ ------------ -------- ----------- --------- ------ ----------
Units Ave.
Receiving Occu- Annual
Property Name, Limited Financed Rental pancy Rental
Location and Partnership Insured and Assistance Rate Per
Partnership Ownership No. of Subsidized Under for Unit
Name Interests Units Under Section 8 2002 for 2002
------------------- ----------- -------- ----------- ---------- ----- -----------
------------------- ----------- -------- ----------- ---------- ----- -----------
Capitol Hill 95.00% Section 236 121 97.2% $ 7,239
Apartments 121
Denver, Colorado residential
(Capitol Hill
Associates)
------------------- ----------- -------- ----------- ---------- ----- -----------
------------------- ----------- -------- ----------- ---------- ----- -----------
Community 99.00% Section 147 98.5% $ 6,466
Apartments 221(d)(3)
Cleveland, Ohio 147
(Community residential
Apartments, Ltd.)
------------------- ----------- -------- ----------- ---------- ----- -----------
------------------- ----------- -------- ----------- ---------- ----- -----------
Met-Paca II 95.00% Section 236 192 96.9% $ 9,866
New York, New York 192
(Met-Paca II residential
Associates)
------------------- ----------- -------- ----------- ---------- ----- -----------
------------------- ----------- -------- ----------- ---------- ----- -----------
Norway Housing 95.00% MHFA 136 97.5% $14,297
Boston, 136
Massachusetts residential
(Norway Housing
Associates)
------------------- ----------- -------- ----------- ---------- ----- -----------
------------------- ----------- -------- ----------- ---------- ----- -----------
Southern Boulevard 95.00% Section 236 175 97.9% $10,519
II Bronx, New York 175
(Southern Boulevard residential
Partners II)
------------------- ----------- -------- ----------- ---------- ----- -----------
------------------- ----------- -------- ----------- ---------- ----- -----------
Trail Walk 98.00% Conventional None 92.3% $11,844
Apartments Kenmore, 180
Washington residential
(Notre Dame
Apartments)
------------------- ----------- -------- ----------- ---------- ----- -----------
------------------- ----------- -------- ----------- ---------- ----- -----------
Village Green 95.00% Conventional None 98.7% $ 8,750
Apartments 460
Santa ▇▇▇▇▇, residential
California
(Monatiquot Village
Associates)
------------------- ----------- -------- ----------- ---------- ----- -----------
------------------- ----------- -------- ----------- ---------- ----- -----------
Weyerbacher Terrace 95.00% Section 236 296 89.3% $ 5,451
Indianapolis, 296
Indiana residential
(Weyerbacher
Terrace Associates)
------------------- ----------- -------- ----------- ---------- ----- -----------
The Issuer owns equity interests as a Limited Partner in the following real
estate projects as of December 31, 2002:
CAPITOL HILL ASSOCIATES. The Partnership owns a multi-site 121-unit
project, located one mile from downtown Denver, Colorado. It is situated within
an established area of the city that is evenly mixed with apartment complexes
and single-family dwellings. The project was financed under the auspices of the
United States Department of Housing and Urban Development (HUD). The mortgage is
insured by HUD under Section 236 of the National Housing Act. The mortgage also
has interest subsidies which reduces the interest rate to approximately one
percent. The Partnership also entered into a regulatory agreement which sets
rental rates, limits distributions and requires monthly deposits to reserves for
replacements.
COMMUNITY APARTMENTS, LTD. The partnership owns a 147-unit project located
in Cleveland, Ohio. The project consists of two-story row-type buildings of wood
frame construction with a masonry exterior. The project was rehabilitated under
Section 221(d)(3) of the National Housing Act. The Partnership also entered into
a regulatory agreement which sets rental rates, limits distributions and
requires monthly deposits to reserves for replacements.
MET-PACA II ASSOCIATES. The partnership owns a multi-site 192-unit project
located in New York City in the area bounded by East 118th and 123rd streets and
Park and Lexington Avenues. The project consists of nine four- and five-story
buildings of masonry and brick construction. The project was rehabilitated and
the mortgage insured under Section 236 of the National Housing Act. The mortgage
also has interest subsidies which reduces the interest rate to approximately one
percent. The partnership also entered into a regulatory agreement which sets
rental rates, limits distributions and requires monthly deposits to reserves for
replacements.
MONATIQUOT VILLAGE ASSOCIATES. The partnership owned a 324-unit project
located in Braintree, Massachusetts consisting of 27 three-story buildings of
prefabricated concrete construction. The property was sold in a tax-free
exchange during February 2000. The proceeds were reinvested during February 2000
in Village Green Apartments, a 460-unit conventional property located in Santa
Maria, California. The property has 26 buildings with stucco and wood exteriors.
NORWAY HOUSING ASSOCIATES. The partnership owns a 136-unit project located
in Boston, Massachusetts. It is situated in a fine residential area surrounded
by the Fenway District and Northeastern University. The project was financed
under the auspices of the Massachusetts Housing Finance Agency (MHFA). The
partnership also entered into a regulatory agreement which sets rental rates,
limits distributions and requires monthly deposits to reserves for replacements.
NOTRE DAME APARTMENTS. The partnership owned a 205-unit project located in
the Pacific Heights area of San Francisco, California, consisting of a
five-story building of reinforced concrete, cement and plaster construction. The
property was sold in December 2000 in a tax-free exchange. The proceeds were
reinvested in May 2001 with the purchase of Trail Walk Apartments, a 180-unit
conventional property located in Kenmore, Washington.
SOUTHERN BOULEVARD PARTNERS II. The partnership owns a 175-unit project
located in the Bronx, New York, consisting of 5 five- and six-story buildings of
brick and masonry construction. The Project was rehabilitated and the mortgage
insured under Section 236 of the National Housing Act. The mortgage also has
interest subsidies which reduces the interest rate to approximately one percent.
The partnership also entered into a regulatory agreement which sets rental
rates, limits distributions and requires monthly deposits to reserves for
replacements.
WEYERBACHER TERRACE ASSOCIATES. The Partnership owns a 296-unit project
located in Indianapolis, Indiana consisting of four and five-story buildings of
masonry construction. This project was formerly St. Vincent's Hospital and was
extensively rehabilitated and converted into apartments designed for elderly
tenants. The project was rehabilitated and the mortgage insured under Section
236 of the National Housing Act. The mortgage has interest subsidies which
reduces the interest rate to approximately one percent. The Partnership also
entered into a regulatory agreement which sets rental rates, limits
distributions and requires monthly deposits to reserves for replacements.
51st AND KING DRIVE PARTNERSHIP. The partnership owned a 96-unit project
located at ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, consisting of a four-story
building of brick and masonry construction. The property of 51st and King Drive
was sold during 2002 resulting in a book gain of $2,280,789 which was recognized
for book and tax purposes. The Issuer's share of the net assets from the sale
was $1,031,574.
Selected Financial Data.
The following selected financial data has been copied from the Form 10-K
and Form 10-Q and should be read in conjunction with the financial statements
and the related notes set forth in such report:
September 30, December 31,
2003 2002
ASSETS
Cash and cash equivalents........ $ 1,504,860 $ 2,144,432
Prepaid expenses................. 82,389 9,320
Investments in and advances to Local
Limited Partnerships accounted for
on the equity method............. 9,353,346 9,352,336
Deposit.......................... 189,709 390,000
$11,130,304 $11,896,088
LIABILITIES AND
PARTNERS' CAPITAL
Distributions payable............ $ 2,096 $ 2,096
Partners' capital
General partner............... 109,494 118,940
Limited partners.............. 11,018,714 11,775,052
11,128,208 11,893,992
$11,130,304 $11,896,088
Nine Months Year ended Year ended
ended Sept 30, December 31, December 31,
2003 2002 2001
Interest Income.................. $ 8,258 $ 4,171 $ 501
Expenses
--------------------------------- 16,500 21,093 22,050
Professional fees............. 137,187 182,919 57,020
Management fees...............
Amortization of costs of 3,387 4,517 6,529
acquisition................... 15,090 4,191 16,965
Other expenses................
172,164 212,720 102,564
Income (loss) before equity in
income of Local Limited
Partnerships.................. (163,906) (208,549) (102,063)
Equity in income (loss) of Local
Limited Partnerships.......... 429,696 2,260,071 (126,239)
Net income (loss)................ $265,790 $2,051,522 $(228,302)
The Letter of Transmittal, and any other required documents should be sent
or delivered by each Unit Holder or his broker, dealer, commercial bank, trust
company or other nominee to the Purchaser at its address set forth below.
Questions and requests for assistance may be directed to the Purchaser at
its address and telephone number listed below. Additional copies of this Offer
to Purchase, the Letter of Transmittal, and other tender offer materials may be
obtained from the Purchaser as set forth below, and will be furnished promptly
at the Purchaser's expense.
Everest Properties II, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
