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LIDO ASSOCIATES, L.L.C.
0000 XXX XXXXXX XXXXXX
XXXXXXX XXXXX, XX 00000
DECEMBER 10, 1996
To Holders of Units of Limited Partnership Interests
of X. Xxxx Price Realty Income Fund IV,
America's Sales-Commission-Free
Real Estate Limited Partnership
Dear Unitholder:
We are pleased to enclose with this letter the offer (the "Offer") by Lido
Associates, L.L.C. (the "Purchaser") to pay $22 for each unit of limited
partnership interest ("Unit") of X. Xxxx Price Realty Income Fund IV, America's
Sales-Commission-Free Real Estate Limited Partnership (the "Partnership"), less
the amount per Unit of distributions declared or paid with respect to each Unit
between November 25, 1996 and the close of business, Eastern Standard Time on
January 17, 1997. The Offer is for up to 350,000 Units, representing
approximately 45% of the Units outstanding on the date of the Offer. If more
than 350,000 Units are tendered, Units will be accepted on a pro rata basis.
THE PURCHASER IS NOT AN AFFILIATE OF THE GENERAL PARTNER OF THE PARTNERSHIP.
The Offer will provide you with an opportunity to sell your Units for $22
per Unit, net to you in cash, without brokerage commissions or other transaction
costs generally associated with market sales, which is equal to approximately
75% of the $30 per Unit net asset value ("NAV") reported on November 15, 1996 by
a representative of the General Partner to a representative of the Purchaser.
Limited Partners might consider accepting a 25% discount from the NAV for
one or more of the following reasons:
A. ILLIQUIDITY.
The Offer provides Unitholders with an opportunity to immediately
liquidate their investment in the Partnership for $22 per Unit net to
the seller in cash. The General Partner stated in the Partnership's Form
10-K for the year ended December 31, 1995 ("Form 10-K") that "Units
cannot currently be sold at a price equal to the estimated (net asset)
value." The Purchaser is unaware of any Units being sold in the
so-called secondary market within the past twelve months. The secondary
market is made up of third party resale services specializing in limited
partnership units.
The Partnership has a limited procedure to acquire Units from
Unitholders for a price equal to 90% of NAV. However, this procedure is
permitted only in circumstances where the Unitholder has become bankrupt
or insolvent, or has experienced a loss of primary employment, medical
emergency, long-term disability, divorce or death. The amount of cash
held by the Partnership as of September 30, 1996 for this procedure was
$1.17 million, or enough to acquire less than 6% of the outstanding
Units.
B. UNCERTAINTY.
Unitholders who tender their Units will be giving up the opportunity to
participate in any future potential benefits represented by ownership of
Units, including, for example, the right to participate in any future
distribution of cash or property, whether from operations, the proceeds
of a sale or refinancing of one or more of the Partnership's properties
or in connection with any future liquidation of the Partnership.
However, there is no guarantee of future results of the Partnership and
investment in the Partnership remains speculative. While the General
Partner has stated its intention to sell the Partnership's properties by
the end of 1998, there is no guarantee such sales will occur or that
such sales will allow Unitholders to
Holders of Units of Limited Partnership Interests Page 2
of X. Xxxx Price Realty Income Fund IV,
America's Sales-Commission-Free
Real Estate Limited Partnership
realize the per Unit NAV. As the General Partner noted in the Form 10-K,
the NAV "is not necessarily representative of the value of the Units
when the Partnership ultimately liquidates its holdings." Also, property
selling costs and expenses (E.G. real estate brokers commissions,
attorneys' fees, escrow fees, title company costs, rent guarantees,
repair of deferred maintenance items, etc.), which could be incurred by
the Partnership in disposing of its properties, generally can range from
3% to 10% of a given property's gross sale price and may reduce the
amount of cash available for distribution to the Unitholders per Unit to
an amount that is less than NAV.
C. ALTERNATIVE INVESTMENTS.
The Offer will permit Unitholders to liquidate their investment in the
Partnership, which could then allow such holders to invest in less
speculative and more liquid alternative investments which may yield
greater annual cashflows. According to information provided by the
Partnership, the Partnership distributed $.40 per Unit in operational
cashflow for each of the first three quarters of 1996. Based on the
applicable NAV of $31 per Unit, applicable to the first three quarters
of 1996, annualized cashflow per Unit is approximately 5.2% of NAV.
In addition, the Partnership expends hundreds of thousands of dollars
each year in Partnership management expenses (approximately $233,000
through September 30, 1996). A portion of those expenses are fixed, and,
accordingly, will be incurred by the Partnership regardless of how many
properties it owns. Therefore, as Partnership properties are sold, the
Partnership cashflow available for distribution to Unitholders will
likely be reduced as a percentage of NAV.
D. TAX RETURNS.
The Offer will expire on January 17, 1997, unless extended. By accepting
the Offer, Unitholders may avoid the expenses, delays and complications
of tax filings in connection with ownership of Units in the Partnership.
The Purchaser is making the Offer with a view towards making a profit. The
Purchaser's intent is to acquire the Units at a discount to the value that the
Purchaser might ultimately realize from owning the Units. No independent person
has been retained to evaluate or render any opinion with respect to the fairness
of the $22 Offer price and no representation is made as to such fairness. Other
measures of value may be relevant to a Unitholder and all Unitholders are urged
to carefully consider all of the information contained in the Offer to Purchase
and Letter of Transmittal and to consult with their own advisors (tax, financial
or otherwise) in evaluating the terms of the Offer before deciding whether to
tender Units.
If you wish to sell some or all of your Units now, please read carefully the
enclosed Offer to Purchase and the Letter of Transmittal. All you need to do is
complete the Letter of Transmittal in accordance with the instructions provided
therein, sign where indicated, and return it to The Xxxxxx Group, Inc., the
Information Agent and Depository, in the pre-addressed return envelope or by
facsimile to (000) 000-0000 or (000) 000-0000.
Except as indicated above, no other action on your part is required. This
Offer will expire at 12:00 midnight, Eastern Standard Time, on January 17, 1997,
unless extended.
If you have any questions or need assistance in completing the Letter of
Transmittal, please call The Xxxxxx Group, Inc. at (000) 000-0000.
Very truly yours,
Lido Associates, L.L.C.
