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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 III,
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 $107 for each unit of limited
partnership interest ("Unit") of X. Xxxx Price Realty Income Fund III, 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 115,000 Units, representing
approximately 45% of the Units outstanding on the date of the Offer. If more
than 115,000 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 $107
per Unit, net to you in cash, without brokerage commissions or other transaction
costs generally associated with market sales.
We encourage you to consider the following points:
-The Offer provides Unitholders with an opportunity to dispose of their
Units for $107 per Unit, net to seller in cash, which is equal to
approximately 75% of the $143 per Unit net asset value ("NAV") reported in
the Partnership's November 12, 1996 Form 8-K.
-The Offer is approximately 179% higher than the $38.40 per Unit offer
recently made by Fir Investors, LLC, which offer was adjusted, in
accordance with its terms, from the original $60 offer, to reflect a
reduction to such offer for a recently announced $21.60 per Unit
distribution.
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 $107 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."
As reported in the PARTNERSHIP SPECTRUM, the range of prices paid for
Units in the so-called "secondary market" during the twelve-month period
ending September 30, 1996, was $90 per Unit to $242 per Unit. An
affiliate of the Purchaser acquired the Units at the $242 price, which
was substantially in excess of the then-reported NAV of $154 per Unit.
The affiliate of the Purchaser acquired a total of twenty (20) Units and
was willing to pay a substantial premium for these Units in order to
facilitate the ability of the Purchaser to commence this Offer.
According to the PARTNERSHIP SPECTRUM, 872 Units (or .3% of the
outstanding Units) have traded in the secondary market during the
twelve-month period ended September 30, 1996. The secondary market is
made up of third party resale services specializing in limited
partnership 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
Holders of Units of Limited Partnership Interests Page 2
of X. Xxxx Price Realty Income Fund III,
America's Sales-Commission-Free
Real Estate Limited Partnership
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 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 the 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 $2.00 per Unit in operational
cashflow for each of the first three quarters of 1996. Based on the then
applicable NAV of $154 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 $290,000
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 $107 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.
