Attached files
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8-K - 8-K - Behringer Harvard Mid-Term Value Enhancement Liquidating Trust | v211655_8k.htm |
EX-10.2 - EX-10.2 - Behringer Harvard Mid-Term Value Enhancement Liquidating Trust | v211655_ex10-2.htm |
EX-10.1 - EX-10.1 - Behringer Harvard Mid-Term Value Enhancement Liquidating Trust | v211655_ex10-1.htm |
February
__, 2011
Dear
Investor:
As we
have discussed in recent communications, Behringer Harvard Mid-Term Value
Enhancement Fund I LP (the “Partnership”) is entering its final disposition
phase. This is when an investment program sells or otherwise disposes
of its assets and winds down to its end. Only four properties remain
in our current portfolio, and as we have stated previously, it is our intention
to complete the disposition of these properties as soon as practicable and
return distributable net proceeds to you. As part of that process,
our co-general partners are transferring our remaining assets to a liquidating
trust, which, as we mentioned in the third quarter 2010 summary report, is a
money saving alternative that we believe to be in the best interests of the unit
holders. The expenses associated with operating a public company,
like Behringer Harvard Mid-Term Value Enhancement Fund I LP, are very high and
therefore detract from distributable proceeds and returns it can make to its
unit holders. This is further exacerbated by the fact that we have
sold assets and intend to continue to sell assets, so these operating expenses
are even more difficult to support against a smaller asset base. The
reorganization into a liquidating trust will eliminate significant expenses and
reporting requirements in support of our unit holders. Cutting
expenses and maximizing investor returns is a primary focus in this disposition
phase. Please be assured that this transfer will not result in any
change to your basis or percentage ownership in the Partnership, and further we
do not anticipate any differences in taxation and tax reporting under the new
structure, as is discussed in greater detail below.
In
accordance with a Plan of Liquidation approved by the Partnership’s co-general
partners, the Partnership entered into a liquidating trust agreement (the “Trust
Agreement”) as of February 16, 2011 (the “Effective Date”) for the purpose of
winding up its affairs and liquidating its assets. Concurrently with the
execution of the Trust Agreement, the Partnership transferred its remaining
assets to the Behringer Harvard Mid-Term Value Enhancement Liquidating Trust
(the “Liquidating Trust”). The Liquidating Trust also assumed the
Partnership’s remaining liabilities. As mentioned above, this action
is expected to enable the Partnership to reduce costs associated with public
reporting obligations and related audit expenses that may not be applicable to
the Liquidating Trust, preserving capital
throughout our disposition phase for the benefit of our
investors.
Under the
terms of the Trust Agreement, each holder of limited partnership units of the
Partnership on the Effective Date (each, a “beneficiary”) automatically became
the holder of the same number of units of beneficial interest in the Liquidating
Trust. Investors of the Partnership are not required to take any
action to receive beneficial interests in the Liquidating Trust. Just
as was the case for Partnership unit holders, the rights of beneficiaries will
not be represented by any form of certificate or other
instrument. Rather, the Liquidating Trust’s managing trustee will
maintain a record of the name and address of each beneficiary and such
beneficiary’s aggregate units of beneficial interest in the Liquidating Trust
through our existing transfer agent, DST Systems, Inc., who will remain the
transfer agent for the Liquidating Trust. Except for certain
transfers by will, intestate succession or operation of law, or from a qualified
account to a non-qualified account if necessary to allow holders of beneficial
interests to comply with certain IRA required minimum distribution requirements
under the Internal Revenue Code, if applicable, beneficial interests in the
Liquidating Trust are not transferable, and beneficiaries do not have authority
or power to sell or in any other manner dispose of their beneficial
interests.
The
managing trustee of the Liquidating Trust is Behringer Harvard Advisors I LP,
previously one of the Partnership’s co-general partners. Successor
trustees may be appointed to administer the Liquidating Trust in accordance with
the terms of the Liquidating Trust Agreement. As we have previously
communicated to you and is common in real estate related direct investments,
when a fund enters its final disposition phase and sells assets, thereby
reducing the asset base available to generate distributable cash, it is normal
for monthly distributions to cease, and for further distributions to come in the
form of special distributions as assets are sold. As a result, the
terms of the Trust Agreement do not contemplate that the Liquidating Trust will
make monthly distributions; rather, it is expected that from time to time the
Liquidating Trust will make special cash distributions to beneficiaries,
including in connection with the disposition of its remaining assets, to the
extent that such cash will not be needed to provide for the liabilities
(including contingent liabilities) assumed by the Liquidating
Trust. We cannot provide any assurance as to the amount or timing of
any distributions by the Liquidating Trust, but because, as you will recall, the
portfolio assets were purchased with all cash and there is no property-level
debt associated with any of the properties, we do expect a substantial portion
of the sales proceeds, less customary selling expenses, to be available for
distribution. In March, beneficiaries will receive a final regular monthly
distribution on their prior limited partnership units, accrued from February 1
through the Effective Date.
With
respect to the four remaining assets, here is a short update on each
one:
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·
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Parkway
Vista: The property is currently 75% leased. We have
one new lease prospect and an existing tenant that has expressed an
interest in possibly expanding. Our goal is to get the building
85%+ leased and then market it for sale later this
year.
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·
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1401
N. Plano Road (ASC): The tenant’s construction under its recent
11 year renewal has recently commenced. Later this year after
the construction is completed and a majority of the free rent has burned
off, we intend to market the building for sale. With a
long-term lease in place to a strong credit tenant, this will be an
attractive investment for quality
buyers.
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·
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2800
Mockingbird: The building is currently 100% vacant after the
single tenant occupying all the space relocated last summer. We
continue to market the property for sale and/or lease. A
potential purchaser that made an offer last year has re-surfaced and has
indicated a continuing interested in acquiring the
property.
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·
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Tucson
Way: The building remains 100% leased to Raytheon Polar
Services. We continue monitoring the tenant’s operations in
hopes that the National Science Foundation will extend its contract beyond
April 2012. We should learn of the result this
summer. Once we have clear direction from Raytheon, our intent
is to either renew the lease or implement a marketing program to
prospective new tenants or
user-buyers.
|
As part
of our efforts to maximize distributable cash returns to our investors, investor
communications will generally now come only in connection with the
aforementioned special distributions as our assets are sold. Filings
by the Liquidating Trust with the Securities and Exchange Commission (the “SEC”)
will be available without charge at www.sec.gov and at
www.behringerharvard.com. You can also receive any communications
electronically if you enroll at our website at
www.behringerharvard.com. Simply choose the “Go Paperless” button at
the top of the website and follow the directions to enroll in our paperless
communications program.
Like the
Partnership, the Liquidating Trust is intending to be classified as a
partnership for federal income tax purposes, and therefore income, gains,
losses, deductions and credits (if any) realized by the Liquidating Trust will
be allocated among the beneficiaries for federal tax purposes in the same manner
as previously allocated by the Partnership. Further, with the
transfer of all of the Partnership’s remaining assets to the Liquidating Trust
and the assumption by the Liquidating Trust of all of the Partnership’s
remaining liabilities, it is contemplated that there will be no change to the
adjusted basis of any beneficiary’s interest in the Liquidating Trust and the
beneficiaries will each have an adjusted basis with respect to such
beneficiary’s beneficial interest in the Liquidating Trust equal to the adjusted
basis of such beneficiary’s limited partnership interest in the Partnership
immediately prior to the Effective Date. On a yearly basis, the
managing trustee will cause the Liquidating Trust to continue to issue a
schedule K-1 to each beneficiary. There can be no assurance that the
Liquidating Trust will be treated as a partnership for federal income tax
purposes. We will advise you if we learn that the tax treatment of
the Liquidating Trust is other than as described herein.
The state
and local tax consequences of the transfer of assets to the Liquidating Trust
may be different from the federal income tax consequences of such
transfer. In addition, any items of income, gain, loss, deduction or
credit of the Liquidating Trust, and any distribution made by the Liquidating
Trust, may be treated differently for state and local tax purposes than for
federal income tax purposes.
The tax
summary in this letter is for general informational purposes only and does not
address all possible tax considerations that may be material to a beneficiary of
the Liquidating Trust and does not constitute legal or tax advice. Moreover, it
does not deal with all tax aspects that might be relevant to a holder of
beneficiary interests of the Liquidating Trust, in light of such holder’s
personal circumstances, nor does it deal with particular types of investors that
are subject to special treatment under the federal income tax
laws. To ensure compliance with requirements imposed by the Internal
Revenue Service, any tax information contained in this press release is not
intended or written to be used, and cannot be used, for the purpose of (i)
avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing
or recommending to another party any transaction or matter addressed
herein.
Beneficiaries
of the Liquidating Trust are urged to consult with their tax advisers as to the
tax consequences to them of the establishment and operation of, and any
distributions by, the Liquidating Trust.
For
additional information regarding the Partnership’s Plan of Liquidation and the
Liquidating Trust, please see the current report on Form 8-K that the
Liquidating Trust has filed with the SEC on February 16, 2011. The
SEC maintains a website at www.sec.gov, which contains copies of this report and
it can also be viewed at www.behringerharvard.com. Also, see the
attached “Questions and Answers about the Partnership’s
Liquidation.” If you have any questions or require additional
information, an investment services representative is available to assist you at
(866) 665-3650 or email at
investment-services@behringerharvard.com.
We
appreciate your continued support in our efforts as we strive to continue to
perform in the current challenging market.
Very
truly yours,
Robert S.
Aisner
President
and CEO
Behringer
Harvard Advisors I LP, Co-General Partner
Robert
Behringer
Co-General
Partner
Questions and Answers about the
Partnership’s Liquidation
The
following are answers to some of the questions you may have as a beneficiary of
the Liquidating Trust in connection with the liquidation and dissolution of the
Partnership and the related transfer of its assets and liabilities to the
Liquidating Trust.
Q:
|
What is the purpose of the
Liquidating Trust?
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A:
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The
purpose of the Liquidating Trust is to wind up the Partnership’s affairs
and liquidate the Partnership’s assets in a cost effective manner,
including, but not limited to, the sale of its remaining real estate
assets, to make appropriate provision for the Partnership’s remaining
obligations and to make special distributions to the investors of
available liquidation proceeds.
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Q:
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Why is the Partnership
transferring assets to a Liquidating Trust to complete its
liquidation?
|
A:
|
The
Partnership expects that the transfer of assets to the trust will enable
the Partnership to reduce costs associated with public reporting
obligations and related audit expenses that may not be applicable to the
Liquidating Trust, preserving capital throughout our disposition phase for
the benefit of our investors.
|
Q:
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When does the Liquidating Trust
expect to complete the liquidation
process?
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A:
|
The
trust agreement for the Liquidating Trust provides for a three year period
to liquidate the remaining four assets. The managing trustee is
working diligently to liquidate these assets in a manner that makes sense
for the beneficiaries, and expects that these assets will be completed
significantly before the end of this three year
period.
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Q:
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What will I receive in
connection with the establishment of the Liquidating
Trust?
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A:
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Under
the terms of the Trust Agreement, if you were a unit holder of record of
the Partnership on the Effective Date, you automatically became the holder
of the same number of units of beneficial interest in the Liquidating
Trust. You are not required to take any action to receive
beneficial interests in the Liquidating Trust. On the date that
the Partnership’s assets and liabilities were transferred to the
Liquidating Trust, the economic value of each unit of beneficial
interest was equivalent to the economic value of one limited partnership
unit in the Partnership. The most recent estimated value per limited
partnership unit was as of December 31, 2010 and should not be relied upon
after such date, as we continue to sell our remaining assets. Because
we are actively in the process of completing the disposition of our
remaining properties as soon as practicable, the Liquidating Trust will
not continue the Partnership’s practice of making annual estimated
valuations of its units.
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Q:
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When will I receive
distributions from the Liquidating
Trust?
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A:
|
It
is expected that from time to time the Liquidating Trust will make special
cash distributions to beneficiaries, including in connection with the
disposition of its remaining assets, after providing for appropriate
reserves for liabilities (including contingent liabilities) assumed by the
Liquidating Trust. Because we cannot be certain about the precise net
realizable value of our assets and the ultimate amount of our
liabilities, we are not able to predict accurately the aggregate cash
amounts which will ultimately be distributed to you or the timing of
any such distributions. The amount and timing of
remaining distributions will be determined by the managing trustee of
the Liquidating Trust based on funds available, net proceeds realized
from the remaining assets, the timing of asset sales, whether the
Liquidating Trust’s total assets exceed total liabilities at such
time, whether the Liquidating Trust has provided for the level of reserves
deemed necessary or appropriate and other
considerations. Also, in March you will receive a final regular
monthly distribution on your prior limited partnership units, accrued from
February 1 through the Effective
Date.
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Q:
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When
a distribution is made, where will it be
sent?
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A:
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Any
special distributions will be sent to the instructions we have on
file. If you wish to change these distribution instructions, please
call an investment services representative at (866)
655-3650.
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Q:
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What continuing information
will I receive from the Liquidating
Trust?
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A:
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Certain
public reporting obligations that are applicable to the Partnership may
not be applicable to the Liquidating Trust. Pursuant to the
Trust Agreement, the managing trustee will cause the Liquidating Trust to
file with the SEC annual reports on Form 10-K showing the assets and
liabilities of the Liquidating Trust at the end of each calendar year and
describing the changes in the assets and liabilities of the Liquidating
Trust and the actions taken by the managing trustee during the
period. The financial statements contained in such report will
be prepared on a liquidation basis in accordance with generally accepted
accounting principles; however, it is not contemplated that the financial
statements will be audited by a registered public accounting
firm. The managing trustee will also cause the Liquidating
Trust to file current reports on Form 8-K to disclose material events
relating to the Liquidating Trust or its assets. It is
contemplated that no
quarterly reports would be filed under cover of Form 10-Q for the
Liquidating Trust, and in order to further maximize distributable
cash returns to our investors, the Liquidating Trust will not mail
quarterly or annual reports to investors. Copies of the
Liquidating Trust’s annual reports on Form 10-K and current reports on
Form 8-K may be viewed on the SEC website at
www.sec.gov or on the Behringer Harvard website at
www.behringerharvard.com. If you have signed up for free online
access, any investor communications including statements and the current
status of your investment will be available through your account on our
protected website.
|
Q:
|
What are the federal income tax
consequences to me from the establishment of the
Liquidating Trust?
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A:
|
Like
the Partnership, the Liquidating Trust intends to be classified as a
partnership for federal income tax purposes, and
therefore, income, gains, losses, deductions and credits (if any) realized
by the Liquidating Trust will be allocated among the beneficiaries for
federal tax purposes in the same manner as previously allocated by the
Partnership. Further, it is contemplated that you will each
have an adjusted basis with respect to your beneficial interest in the
Liquidating Trust equal to the adjusted basis of your limited partnership
interest in the Partnership immediately prior to the Effective
Date. On a yearly basis, the managing trustee will cause
the Liquidating Trust to furnish to you a schedule K-1 of your pro rata
share of the items of income, gain, loss, deduction and credit (if any) of
the Liquidating Trust to be included on your tax returns. You are urged to
consult with your tax adviser as to the tax consequences to you of the
establishment and operation of, and any distributions by, the Liquidating
Trust. As has been the case with your investment in the
Partnership, we do not anticipate that the Liquidating Trust will produce
unrelated business taxable income (UBTI). We will advise you if
we learn that the tax treatment of the Liquidating Trust is other than as
described herein.
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Q:
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Will I be able to transfer,
sell or otherwise dispose of my interest in the Liquidating
Trust?
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A:
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In
order to qualify for certain cost-saving advantages described above, the
Liquidating Trust’s beneficial interests must be
non-transferable. Thus, as a beneficiary of the
Liquidating Trust, you generally will not be able to transfer
your beneficial interests in the Liquidating Trust and you will not
have authority or power to sell, assign, transfer, encumber or in any
other manner dispose of such beneficial interests. However,
beneficial interests will be assignable or transferable by will,
intestate succession or operation of law or from a qualified account to a
non-qualified account if necessary to allow you to comply with IRA
required minimum distribution requirements under the Internal Revenue
Code, if applicable.
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Q:
|
Who will maintain records of
how many units of beneficial interest I own and my
address?
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A:
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The
managing trustee of the Liquidating Trust will maintain a record of the
name and address of each beneficiary and such beneficiary’s aggregate
units of beneficial interest in the Liquidating Trust through DST Systems,
Inc., who will remain the transfer agent for the Liquidating
Trust.
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Q:
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Who can help answer my
additional questions?
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A:
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For
additional information regarding the Partnership’s Plan of Liquidation,
please see the current report on Form 8-K that the Liquidating Trust has
filed with the SEC on February 16, 2011, which can be viewed on the SEC’s
website at www.sec.gov. Additionally, you may access SEC filings and
receive email alerts through the Behringer Harvard website,
www.behringerharvard.com. If you have any questions or require
additional information, an investment services representative is available
to assist you at (866) 665-3600
or email
investment-services@behringerharvard.com.
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Forward-looking
statements that were true at the time made may ultimately prove to be incorrect
or false. The Liquidating Trust cautions investors not to place undue
reliance on forward-looking statements, which reflect the Liquidating Trust’s
management’s view only as of the date of this letter. The Liquidating
Trust undertakes no obligation to update or revise forward-looking
statements to reflect changed assumptions, the occurrence of unanticipated
events or changes to future operating results. Factors that could
cause actual results to differ materially from any forward-looking statements
made in this letter include changes in general economic conditions, changes in
real estate conditions, increases in interest rates, lease-up risks, inability
to obtain new tenants upon the expiration of existing leases, and the potential
need to fund tenant improvements or other capital expenditures out of operating
cash flow. The forward-looking statements should be read in light of
the risk factors identified in the “Risk Factors” section of the Partnership’s
Annual Report on Form 10-K for the year ended December 31, 2009, as filed with
the SEC and the risks identified in Part II, Item 1A of its subsequent quarterly
reports on Form 10-Q as filed with the SEC. The Partnership’s filings
are, and the Liquidating Trust’s filings will be, available free of charge at
the SEC’s website at www.sec.gov or at the website maintained for the
Liquidating Trust at www.behringerharvard.com.