Filed Pursuant to Rule 424(b)(3)
Registration File No. 333-175853

 

INFORMATION STATEMENT/PROSPECTUS

 

CONSOLIDATED CAPITAL PROPERTIES IV, LP

 

Consolidated Capital Properties IV, LP, or CCP IV, has entered into an agreement and plan of merger with a wholly-owned subsidiary of AIMCO Properties, L.P., or Aimco OP. Under the merger agreement, the Aimco Subsidiary, AIMCO CCP IV Merger Sub LLC, will be merged with and into CCP IV, with CCP IV as the surviving entity. The Aimco Subsidiary was formed for the purpose of effecting this transaction and does not have any assets or operations. In the merger, each Unit of Limited Partnership Interest of CCP IV, or CCP IV Unit, will be converted into the right to receive, at the election of the holder of such unit, either:

 

 

The merger consideration of $56.14 per CCP IV Unit was based on independent third party appraisals of each of CCP IV’s three properties by Cogent Realty Advisors, LLC, or CRA, an independent valuation firm.

 

The number of OP Units offered for each CCP IV Unit will be calculated by dividing $56.14 by the average closing price of common stock of Apartment Investment and Management Company, or Aimco, as reported on the New York Stock Exchange, or the NYSE, over the ten consecutive trading days ending on the second trading day immediately prior to the consummation of the merger. For example, as of November 10, 2011, the average closing price of Aimco common stock over the preceding ten consecutive trading days was $23.79, which would have resulted in 2.36 OP Units offered for each CCP IV Unit. However, if Aimco OP determines that the law of the state or other jurisdiction in which a limited partner resides would prohibit the issuance of OP Units in that state or other jurisdiction (or that registration or qualification in that state or jurisdiction would be prohibitively costly), then such limited partner will not be entitled to elect OP Units, and will receive cash.

 

The OP Units are not listed on any securities exchange nor do they trade in an active secondary market. However, after a one-year holding period, OP Units are redeemable for shares of Aimco common stock (on a one-for-one basis) or cash equal to the value of such shares, as Aimco elects. As a result, the trading price of Aimco common stock is considered a reasonable estimate of the fair market value of an OP Unit. Aimco’s common stock is listed and traded on the NYSE under the symbol “AIV.”

 

In the merger, Aimco OP’s interest in the Aimco Subsidiary will be converted into CCP IV Units. As a result, after the merger, Aimco OP will own all of the outstanding CCP IV Units and will be the sole limited partner of CCP IV.

 

Within ten days after the effective time of the merger, Aimco OP will prepare and mail to the former holders of CCP IV Units an election form pursuant to which they can elect to receive cash or OP Units. Holders of CCP IV Units may elect their form of consideration by completing and returning the election form in accordance with its instructions. If the information agent does not receive a properly completed election form from a holder before 5:00 p.m., New York time, on the 30th day after the mailing of the election form, the holder will be deemed to have elected to receive cash. Former holders of CCP IV Units may also use the election form to elect to receive, in lieu of the merger consideration, the appraised valued of their CCP IV Units, determined through an arbitration proceeding.

 

Under Delaware law, the merger must be approved by CCP IV’s general partner and a majority in interest of the CCP IV Units. The general partner has determined that the merger is advisable, fair to and in the best interests of CCP IV and its limited partners and has approved the merger and the merger agreement. As of November 18, 2011, there were issued and outstanding 342,759 CCP IV Units, and Aimco OP and its affiliates owned 237,778.5 of those units, or approximately 69.37% of the number of units outstanding. Aimco OP and its affiliates have indicated that they intend to take action by written consent, as permitted under the partnership agreement, to approve the merger on or about January 23, 2012. As a result, approval of the merger is assured, and your consent to the merger is not required.

 

WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY

 

This information statement/prospectus contains information about the merger and the securities offered hereby, and the reasons that CCP IV’s general partner has decided that the merger is in the best interests of CCP IV and its limited partners. CCP IV’s general partner has conflicts of interest with respect to the merger that are described in greater detail herein. Please read this information statement/prospectus carefully, including the section entitled “Risk Factors” beginning on page 22. It provides you with detailed information about the merger and the securities offered hereby. The merger agreement is attached to this information statement/prospectus as Annex A.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in connection with the merger, determined if this information statement/prospectus is truthful or complete, approved or disapproved of the merger, passed upon the merits or fairness of the merger, or passed upon the adequacy or accuracy of the disclosure in this information statement/prospectus. Any representation to the contrary is a criminal offense.

 

This information statement/prospectus is dated November 21, 2011, and is first being mailed to limited partners on or about November 23, 2011.

 

WE ARE CURRENTLY SEEKING QUALIFICATION TO ALLOW ALL HOLDERS OF CCP IV UNITS THE ABILITY TO ELECT TO RECEIVE OP UNITS IN CONNECTION WITH THE MERGER. HOWEVER, AT THE PRESENT TIME, IF YOU ARE A RESIDENT OF ONE OF THE FOLLOWING STATES, YOU ARE NOT PERMITTED TO ELECT TO RECEIVE OP UNITS IN CONNECTION WITH THE MERGER:

 

CALIFORNIA
MASSACHUSETTS

 

THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

 

ADDITIONAL INFORMATION

 

This information statement/prospectus incorporates important business and financial information about Aimco from documents that it has filed with the Securities and Exchange Commission, or the SEC, but that have not been included in or delivered with this information statement/prospectus. For a listing of documents incorporated by reference into this information statement/prospectus, please see “Where You Can Find Additional Information” beginning on page 96 of this information statement/prospectus.

 

Aimco will provide you with copies of such documents relating to Aimco (excluding all exhibits unless Aimco has specifically incorporated by reference an exhibit in this information statement/prospectus), without charge, upon written or oral request to:

 

ISTC Corporation
P.O. Box 2347
Greenville, South Carolina 29602
(864) 239-1029

 

If you have any questions or require any assistance, please contact our information agent, Eagle Rock Proxy Advisors, LLC, by mail at 12 Commerce Drive, Cranford, New Jersey 07016; by fax at (908) 497-2349; or by telephone at (800) 217-9608.

 

ABOUT THIS INFORMATION STATEMENT/PROSPECTUS

 

This information statement/prospectus, which forms a part of a registration statement on Form S-4 filed with the SEC by Aimco and Aimco OP, constitutes a prospectus of Aimco OP under Section 5 of the Securities Act of 1933, as amended, or the Securities Act, with respect to the OP Units that may be issued to holders of CCP IV Units in connection with the merger, and a prospectus of Aimco under Section 5 of the Securities Act with respect to shares of Aimco common stock that may be issued in exchange for such OP Units tendered for redemption. This document also constitutes an information statement under Section 14(c) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, with respect to the action to be taken by written consent to approve the merger.

 

TABLE OF CONTENTS

 

 

SUMMARY TERM SHEET

	•	The Merger:  CCP IV has entered into an agreement and plan of merger with the Aimco Subsidiary and Aimco OP. Under the merger agreement, at the effective time of the merger, the Aimco Subsidiary will be merged with and into CCP IV, with CCP IV as the surviving entity. A copy of the merger agreement is attached as Annex A to this information statement/prospectus. You are encouraged to read the merger agreement carefully in its entirety because it is the legal agreement that governs the merger.

	•	Merger Consideration:  In the merger, each CCP IV Unit will be converted into the right to receive, at the election of the holder of such CCP IV Unit, either $56.14 in cash or equivalent value in OP Units, except in those jurisdictions where the law prohibits the offer of OP Units (or registration or qualification would be prohibitively costly). The number of OP Units issuable with respect to each CCP IV Unit will be calculated by dividing the $56.14 per unit cash merger consideration by the average closing price of Aimco common stock, as reported on the NYSE, over the ten consecutive trading days ending on the second trading day immediately prior to the consummation of the merger. Each holder of CCP IV Units must make the same election (cash or OP Units) for all of his or her CCP IV Units. For a full description of the determination of the merger consideration, see “The Merger — Determination of Merger Consideration” beginning on page 43.

	•	Fairness of the Merger:  Although the Aimco Entities have interests that may conflict with those of CCP IV’s unaffiliated limited partners, each of the Aimco Entities believe that the merger is fair to the unaffiliated limited partners of CCP IV. See “Special Factors — Fairness of the Transaction” beginning on page 7. The merger consideration of $56.14 per CCP IV Unit was based on independent third party appraisals of each of CCP IV’s three properties by CRA, an independent valuation firm.

	•	Opinion of Financial Advisor:  In connection with the merger, Duff & Phelps, LLC, or Duff & Phelps, has delivered its written opinion to the boards of directors of Aimco, the general partner of Aimco OP and the general partner of CCP IV to the effect that, as of November 15, 2011, the cash consideration of $56.14 per unit is fair, from a financial point of view, to the unaffiliated limited partners of CCP IV. The full text of Duff & Phelps’s written opinion, which sets forth the assumptions made, procedures followed, factors considered and qualifications and limitations on the review undertaken by Duff & Phelps in connection with its opinion, is attached to this information statement/prospectus as Annex C. You are encouraged to read Duff & Phelps’s opinion, and the section entitled “Special Factors — Opinion of Financial Advisor” beginning on page 15, carefully and in their entirety. Duff & Phelps’s opinion was directed to the boards of directors of Aimco, the general partner of Aimco OP and the general partner of CCP IV, and addresses only the fairness to the unaffiliated limited partners of CCP IV, from a financial point of view, of the cash consideration of $56.14 per unit as of the date of the opinion. Duff & Phelps’s opinion did not address any other aspect of the merger and was not intended to and does not constitute a recommendation as to how any party should vote or act with respect to the merger or any matter relating thereto.

	•	Effects of the Merger:  After the merger, Aimco OP will own all of the outstanding CCP IV Units, and will be the sole limited partner of CCP IV. As a result, after the merger, you will cease to have any rights in CCP IV as a limited partner. See “Special Factors — Effects of the Merger,” beginning on page 5.

	•	Appraisal Rights:  Pursuant to the terms of the merger agreement, Aimco OP will provide each limited partner with contractual dissenters’ appraisal rights that are similar to the dissenters’ appraisal rights available to a stockholder of a constituent corporation in a merger under Delaware law, and which will enable a limited partner to obtain an appraisal of the value of the limited partner’s CCP IV Units in connection with the merger. See “The Merger — Appraisal Rights,” beginning on page 45. A description of the appraisal rights being provided, and the procedures that a limited partner must follow to seek such rights, is attached to this information statement/prospectus as Annex B.

	•	List of Investors:  Under CCP IV’s partnership agreement and Delaware law, a limited partner has the right to obtain by mail, free of charge, a list of the names and addresses and interests owned of the limited partners. This list may be obtained by making written request to ConCap Equities, Inc., c/o Eagle Rock Proxy Advisors, LLC, 12 Commerce Drive, Cranford, New Jersey 07016, or by fax at (908) 497-2349.

	•	Parties Involved:

	•	Consolidated Capital Properties IV, LP, or CCP IV, is a Delaware limited partnership formed on April 25, 2008, following a redomestication of the partnership from California to Delaware. CCP IV owns and operates three investment properties: the Arbours of Hermitage Apartments, which consists of a 350 unit apartment project located in Hermitage, Tennessee, or the Arbours Property; the 865 Bellevue Apartments, a 326 unit apartment project located in Nashville, Tennessee, or the Bellevue Property; and the Post Ridge Apartments, a 150 unit apartment project located in Nashville, Tennessee, or the Post Ridge Property. See “Information About Consolidated Capital Properties IV, LP,” beginning on page 35. CCP IV’s principal address is 55 Beattie Place, P.O. Box 1089, Greenville, South Carolina 29602, and its telephone number is (864) 239-1000.

	•	Apartment Investment and Management Company, or Aimco, is a Maryland corporation that is a self-administered and self-managed real estate investment trust, or REIT. Aimco’s principal financial objective is to provide predictable and attractive returns to its stockholders. Aimco’s common stock is listed and traded on the NYSE under the symbol “AIV.” See “Information about the Aimco Entities,” beginning on page 33. Aimco’s principal address is 4582 South Ulster Street, Suite 1100, Denver, Colorado 80237, and its telephone number is (303) 757-8101.

	•	AIMCO Properties, L.P., or Aimco OP, is a Delaware limited partnership which, through its operating divisions and subsidiaries, holds substantially all of Aimco’s assets and manages the daily operations of Aimco’s business and assets. See “Information about the Aimco Entities,” beginning on page 33. Aimco OP’s principal address is 4582 South Ulster Street, Suite 1100, Denver, Colorado 80237, and its telephone number is (303) 757-8101.

	•	AIMCO CCP IV Merger Sub LLC, or the Aimco Subsidiary, is a Delaware limited liability company formed for the purpose of consummating the merger with CCP IV. The Aimco Subsidiary is a direct wholly-owned subsidiary of Aimco OP. See “Information about the Aimco Entities,” beginning on page 33.

	•	Reasons for the Merger:  Under its partnership agreement, CCP IV’s term expires on December 31, 2011. As a result, ConCap, as the general partner of CCP IV, would be obligated to liquidate and wind-up the partnership at that time. ConCap and the other Aimco Entities considered a liquidation of CCP IV in light of, among other things, concerns that, in liquidation, limited partners would recognize taxable gain that could exceed any proceeds from liquidation. On the other hand, Aimco and Aimco OP are in the business of acquiring, owning and managing apartment properties such as those owned by CCP IV, and have decided to proceed with the merger as a means of acquiring the properties currently owned by CCP IV in a manner that they believe (a) provides fair value to limited partners, (b) offers limited partners an opportunity to receive immediate liquidity, or defer recognition of taxable gain (except where the law of the state or other jurisdiction in which a limited partner resides would prohibit the issuance of OP Units in that state or other jurisdiction, or where registration or qualification would be prohibitively costly), and (c) relieves CCP IV of the expenses associated with a sale of the properties, including marketing and other transaction costs. The Aimco Entities decided to proceed with the merger at this time for the following reasons:

	•	The proximity of CCP IV’s upcoming termination date. As discussed in more detail below, the Aimco Entities had previously pursued several sale attempts of the Arbours Property but none were successfully consummated. The Aimco Entities had previously listed the Post Ridge Property for sale in early 2009, but had failed to find a buyer at an acceptable price. The Aimco Entities had not previously pursued a sale of the Bellevue Property because they did not think that it could be sold at prices that would provide net proceeds sufficient to repay the related mortgage debt (taking into account the prepayment penalties associated with the loan) and other liabilities.

	•	In the absence of a transaction, limited partners of CCP IV have only limited options to liquidate their investment in CCP IV. The CCP IV Units are not traded on an exchange or other reporting system, and transactions in the securities are limited and sporadic.
	•	The value of the properties owned by CCP IV is not sufficient to justify its continued operation as a public company. As a public company with a significant number of unaffiliated limited partners, CCP IV incurs costs associated with preparing audited annual financial statements, unaudited quarterly financial statements, tax returns and partner Schedule K-1s, periodic SEC reports and other expenses. The Aimco Entities estimate these costs to be approximately $162,000 per year.

	•	CCP IV has been operating at a loss from operations for the past several years. CCP IV has received advances of only $140,000 since late 2010, when CCP IV was able to fully repay all the advances it owed at that time. CCP IV may receive additional advances of funds from Aimco OP, although Aimco OP is not obligated to provide such advances. If the Aimco Entities acquire 100% ownership of CCP IV, they will have greater flexibility in financing and operating its properties.

	•	Conflicts of Interest:  ConCap is the general partner of CCP IV and is wholly-owned by AIMCO/IPT, Inc., which in turn is wholly-owned by Aimco. Therefore, ConCap has a conflict of interest with respect to the merger. ConCap has fiduciary duties to AIMCO/IPT, Inc., ConCap’s sole stockholder and an affiliate of Aimco, on the one hand, and to CCP IV and its limited partners, on the other hand. The duties of ConCap to CCP IV and its limited partners conflict with the duties of ConCap to AIMCO/IPT, Inc., which could result in ConCap approving a transaction that is more favorable to Aimco than might be the case absent such conflict of interest. See, “The Merger — Conflicts of Interest,” beginning on page 44.

	•	Risk Factors:  In evaluating the merger agreement and the merger, CCP IV limited partners should carefully read this information statement/prospectus and especially consider the factors discussed in the section entitled “Risk Factors” beginning on page 22. Some of the risk factors associated with the merger are summarized below:

	•	Aimco owns ConCap, the general partner of CCP IV. As a result, ConCap has a conflict of interest in the merger. A transaction with a third party in the absence of this conflict could result in better terms or greater consideration to CCP IV limited partners.
	•	CCP IV limited partners who receive cash may recognize taxable gain in the merger and that gain could exceed the merger consideration.

	•	There are a number of significant differences between CCP IV Units and Aimco OP Units relating to, among other things, the nature of the investment, voting rights, distributions and liquidity and transferability/redemption. For more information regarding those differences, see “Comparison of CCP IV Units and Aimco OP Units,” beginning on page 66.

	•	CCP IV limited partners may elect to receive OP Units as merger consideration, and there are risks related to an investment in OP Units, including the fact that there are restrictions on transferability of OP Units; there is no public market for OP Units; and there is no assurance as to the value that might be realized upon a future redemption of OP Units.

	•	Material United States Federal Income Tax Consequences of the Merger:  The merger will generally be treated as a partnership merger for U.S. federal income tax purposes. In general, any payment of cash for CCP IV Units will be treated as a sale of such CCP IV Units by the holder thereof, and any exchange of CCP IV Units for OP Units under the terms of the merger agreement will be treated as a tax-free transaction, except to the extent described in “Material United States Federal Income Tax Considerations — United States Federal Income Tax Consequences Relating to the Merger,” beginning on page 72.

 

Under its partnership agreement, CCP IV’s term expires on December 31, 2011. As a result, ConCap, as the general partner of CCP IV, would be obligated to liquidate and wind-up the partnership at that time. ConCap and the other Aimco Entities considered a liquidation of CCP IV in light of, among other things, concerns that, in liquidation, limited partners would recognize taxable gain that could exceed any proceeds from liquidation. On the other hand, Aimco and Aimco OP are in the business of acquiring, owning and managing apartment properties such as those owned by CCP IV, and have decided to proceed with the merger as a means of acquiring the properties currently owned by CCP IV in a manner that they believe (a) provides fair value to limited partners, (b) offers limited partners an opportunity to receive immediate liquidity, or defer recognition of taxable gain (except where the law of the state or other jurisdiction in which a limited partner resides would prohibit the issuance of OP Units in that state or other jurisdiction, or where registration or qualification would be prohibitively costly), and (c) relieves CCP IV of the expenses associated with a sale of the properties, including marketing and other transaction costs.

 

The Aimco Entities decided to proceed with the merger at this time for the following reasons:

 

 

 

As discussed in more detail below, the Aimco Entities listed the Post Ridge Property for sale from early 2009 to mid 2009, but failed to find a buyer at an acceptable price. In addition, the Arbours Property was listed for sale in early 2009, and CCP IV entered into multiple sale contracts with third parties between September 2009 and December 2010. However, the most recent sale contract relating to the sale of the Arbours Property was ultimately terminated on March 1, 2011.

 

Before deciding to proceed with the merger, ConCap and the other Aimco Entities considered the alternatives described below:

 

Continuation of CCP IV after Expiration of its Term.  As an alternative to the merger, the Aimco Entities considered the possibility of continuing to operate CCP IV after its term expires. The Aimco Entities rejected this alternative because it would violate the partnership agreement, could result in a default under existing indebtedness and would make it difficult or impossible to refinance such indebtedness.

 

Amend CCP IV’s partnership agreement to extend the term.  Although the CCP IV partnership agreement may generally be amended upon the approval of a majority in interest of the limited partners, the agreement

provides that the limited partners may not amend the agreement to extend the partnership term. Notwithstanding this provision, the Aimco Entities did consider having ConCap seek approval from 100% of the limited partners to amend CCP IV’s partnership agreement to extend the term or make CCP IV’s existence perpetual. The Aimco Entities determined, however, that it would be virtually impossible to obtain unanimous consent from all of the 5,045 unaffiliated limited partners.

 

Continuation of CCP IV as a Public Company Operating the Properties.  As described above, ConCap and the other Aimco Entities did not consider the continuation of CCP IV as a public company operating the properties to be a viable alternative primarily because of the costs associated with preparing financial statements, tax returns, periodic SEC reports and other expenses. If CCP IV is unable to generate sufficient funds to cover operating expenses, advances from Aimco OP may not be available in the future.

 

Liquidation of CCP IV.  As discussed above, ConCap and the other Aimco Entities considered a liquidation of CCP IV in which CCP IV’s properties would be marketed and sold to third parties for cash, with any net proceeds remaining after payment of all liabilities distributed to CCP IV’s limited partners. The primary advantage of such a transaction would be that the sale prices would reflect arm’s-length negotiations and might therefore be higher than the appraised values which have been used to determine the merger consideration. ConCap and the Aimco Entities rejected this alternative because of: (i) the risk that a third party purchaser might not be found that would offer a satisfactory price; (ii) the costs imposed on CCP IV in connection with marketing and selling the properties; and (iii) the fact that limited partners would recognize taxable gain on the sales. In early 2009, ConCap listed the Post Ridge Property for sale and received several offers at that time to purchase the Post Ridge Property for purchase prices ranging from $6,600,000 to $7,500,000. ConCap determined at the time that those offers were not acceptable, and was unable to find a third-party buyer that was willing to buy the property at a price that was acceptable to ConCap. Also in early 2009, ConCap listed the Arbours Property for sale and entered into multiple sale contracts with third parties between September 2009 and December 2010. The most recent sale contract was entered into on December 8, 2010, pursuant to which the third party purchaser agreed to purchase the Arbours Property for a total sales price of $17,000,000. On January 19, 2011, the purchaser terminated this sales contract pursuant to its terms. On January 28, 2011, CCP IV and the purchaser entered into a reinstatement of and amendment to the purchase and sale contract, pursuant to which the termination was rescinded and the agreement was reinstated; however, the sales contract was ultimately terminated on March 1, 2011.

 

Contribution of Properties to Aimco OP.  The Aimco Entities considered a transaction in which CCP IV’s properties would be contributed to Aimco OP in exchange for OP Units. The primary advantage of such a transaction would be that CCP IV limited partners would not recognize taxable gain. The Aimco Entities rejected this alternative because it would not offer limited partners an opportunity for immediate liquidity.

 

The Aimco Entities believe that the merger will have the following benefits and detriments to unaffiliated limited partners, CCP IV and the Aimco Entities:

 

Benefits to Unaffiliated Limited Partners.  The merger is expected to have the following principal benefits to unaffiliated limited partners:

 

Liquidity.  Limited partners are given a choice of merger consideration and may elect to receive either cash or OP Units in the merger, except in those jurisdictions where the law prohibits the offer of OP Units (or registration or qualification would be prohibitively costly). Limited partner who receive the cash consideration will receive immediate liquidity with respect to their investment.

 

Option to Defer Taxable Gain.  Limited partners who receive OP Units in the merger may defer recognition of taxable gain (except where the law of the state or other jurisdiction in which a limited partner resides would prohibit the issuance of OP Units in that state or other jurisdiction, or where registration or qualification would be prohibitively costly).

 

Diversification.  Limited partners who receive OP Units in the merger will have the opportunity to participate in Aimco OP, which has a more diversified property portfolio than CCP IV.

Benefits to CCP IV.  The merger is expected to have the following principal benefits to CCP IV:

 

Elimination of Costs Associated with SEC Reporting Requirements and Multiple Limited Partners.  CCP IV will terminate registration after the merger is completed, and will cease filing periodic reports with the SEC. As a result, CCP IV will no longer incur costs associated with preparing audited financial statements, unaudited quarterly financial statements, tax returns and partner Schedule K-1s, periodic SEC reports and other expenses. The Aimco Entities estimate these expenses to be approximately $162,000 per year.

 

Benefits to the Aimco Entities.  The merger is expected to have the following principal benefits to the Aimco Entities:

 

Increased Interest in CCP IV.  Upon completion of the merger, Aimco OP will own all of the outstanding CCP IV Units, and will be the sole limited partner of CCP IV. As a result, the Aimco Entities will receive all of the benefit from any future appreciation in value of the properties after the merger, and any future income from such properties.

 

Detriments to Unaffiliated Limited Partners.  The merger is expected to have the following principal detriments to unaffiliated limited partners:

 

Taxable Gain.  Limited partners who receive the cash consideration may recognize taxable gain in the merger that could exceed the merger consideration. In addition, limited partners who receive OP Units in the merger could recognize taxable gain if Aimco subsequently sells any of CCP IV’s properties.

 

Risks Related to OP Units.  Limited partners who receive OP Units in the merger will be subject to the risks related to an investment in OP Units, as described in greater detail under the heading “Risk Factors — Risks Related to an Investment in OP Units.”

 

Conflicts of Interest; No Separate Representation of Unaffiliated Limited Partners.  ConCap is the general partner of CCP IV and is wholly-owned by AIMCO/IPT, Inc., which in turn is wholly-owned by Aimco. Therefore, ConCap has a conflict of interest with respect to the merger. ConCap has fiduciary duties to AIMCO/IPT, Inc., ConCap’s sole stockholder and an affiliate of Aimco, on the one hand, and to CCP IV and its limited partners, on the other hand. The duties of ConCap to CCP IV and its limited partners conflict with the duties of ConCap to AIMCO/IPT, Inc., which could result in ConCap approving a transaction that is more favorable to Aimco than might be the case absent such conflict of interest. The general partner’s desire to seek the best possible terms for CCP IV’s limited partners conflicts with Aimco’s interest in obtaining the best possible terms for Aimco OP. In negotiating the merger agreement, no one separately represented the interests of the unaffiliated limited partners. If an independent advisor had been engaged, it is possible that such advisor could have negotiated better terms for CCP IV’s unaffiliated limited partners.

 

Detriments to CCP IV.  The merger is not expected to have any detriments to CCP IV.

 

Detriments to the Aimco Entities.  The merger is expected to have the following principal detriments to the Aimco Entities:

 

Increased Interest in CCP IV.  Upon completion of the merger, the Aimco Entities’ interest in the net book value of CCP IV will increase from 55.8% to 100%, or from a deficit of $7,547,000 to a deficit of $13,526,000 as of December 31, 2010, and their interest in the losses from continuing operations of CCP IV will increase from 69.18% to 100%, or from $1,459,000 to $2,109,000 for the period ended December 31, 2010. Upon completion of the merger, Aimco OP will own all of the outstanding CCP IV Units, and will be the sole limited partner of CCP IV. As a result, Aimco OP will bear the burden of all future operating or other losses of CCP IV, as well as any decline in the value of CCP IV’s properties.

 

Burden of Capital Expenditures.  Upon completion of the merger, the Aimco Entities will have sole responsibility for providing any funds necessary to pay for capital expenditures at the properties.

 

For a discussion of the material U.S. federal income tax consequences of the merger, see “Material United States Federal Income Tax Considerations — United States Federal Income Tax Consequences Relating to the Merger,” beginning on page 72.

 

Factors in Favor of Fairness Determination.  The Aimco Entities (including ConCap as general partner of CCP IV) believe that the merger is advisable, fair to and in the best interests of CCP IV and its unaffiliated limited partners. In support of such determination, the Aimco Entities considered the following factors:

 

 

 

 

 

 

 

 

 

Factors Not in Favor of Fairness Determination.  In addition to the foregoing factors, the Aimco Entities also considered the following countervailing factors:

 

 

The Aimco Entities did not assign relative weights to the above factors in reaching their decision that the merger is fair to CCP IV and its unaffiliated limited partners. However, in determining that the benefits of the proposed merger outweigh the costs and risks, they relied primarily on the following factors: (i) the merger consideration of $56.14 per CCP IV Unit is based on independent third party appraisals of CCP IV’s properties; (ii) the Duff & Phelps opinion that, as of November 15, 2011, based upon and subject to the assumptions made, procedures followed, factors considered, and qualifications and limitations on the review undertaken by Duff & Phelps in connection with its opinion, the cash consideration of $56.14 per unit is fair, from a financial point of view, to the unaffiliated limited partners of CCP IV; (iii) limited partners may defer recognition of taxable gain by electing to receive OP Units in the merger (except in certain jurisdictions); and (iv) limited partners are entitled to contractual dissenters’ appraisal rights. The Aimco Entities were aware of, but did not place much emphasis on, information regarding prices at which CCP IV Units may have sold in the secondary market because they do not view that information as a reliable measure of value. The CCP IV Units are not traded on an exchange or other reporting system, and transactions in the secondary market are very limited and sporadic. In addition, some of the historical prices are not comparable to current value because of intervening events, including distribution of proceeds and advances from ConCap.

 

Procedural Fairness.  The Aimco Entities determined that the merger is fair from a procedural standpoint despite the absence of any customary procedural safeguards, such as the engagement of an unaffiliated representative, the approval of independent directors or approval by a majority of unaffiliated limited partners. In making

this determination, the Aimco Entities relied primarily on the dissenters’ appraisal rights provided to unaffiliated limited partners under the merger agreement that are similar to the dissenters’ appraisal rights available to stockholders in a corporate merger under Delaware law.

 

Selection and Qualifications of Independent Appraiser.  ConCap, in its capacity as the general partner of CCP IV, retained the services of CRA to appraise the market value of each of CCP IV’s properties. CRA is an experienced independent valuation consulting firm that has performed appraisal services for Aimco OP and its affiliates in the past. Aimco OP believes that its relationship with CRA had no negative impact on its independence in conducting the appraisals related to the merger.

 

Factors Considered.  CRA performed complete appraisals of the Arbours Property, the Bellevue Property and the Post Ridge Property. CRA has represented that its reports were prepared in conformity with the Uniform Standards of Professional Appraisal Practice, as promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. CCP IV furnished CRA with all of the necessary information requested by CRA in connection with the appraisals. The appraisals were not prepared in conjunction with a request for a specific value or a value within a given range. In preparing its valuation of each property, CRA, among other things:

 

 

Summary of Approaches and Methodologies Employed.  The following summary describes the approaches and analyses employed by CRA in preparing the appraisals. CRA principally relied on two approaches to valuation: (i) the income capitalization approach and (ii) the sales comparison approach.

 

The income capitalization approach is based on the premise that value is derived by converting anticipated benefits into property value. Anticipated benefits include the present value of the net income and the present value of the net proceeds resulting from the re-sale of the property. CRA reported that each property has an adequate operations history to determine its income-producing capabilities over the near future. In addition, performance levels of competitive properties served as an adequate check as to the reasonableness of each property’s actual performance. As such, the income capitalization approach was utilized in the appraisal of each property.

 

As part of the income capitalization approach, CRA used the direct capitalization method to estimate a value for the Arbours Property, the direct capitalization method to estimate a value for the Bellevue Property and the direct capitalization method to estimate a value for the Post Ridge Property. According to CRA’s reports, the basic steps in the direct capitalization analysis are as follows: (i) calculate potential gross income from all sources that a competent owner could legally generate; (ii) estimate and deduct an appropriate vacancy and collection loss factor to arrive at effective gross income; (iii) estimate and deduct operating expenses that would be expected during a stabilized year to arrive at a probable net operating income; (iv) develop an appropriate overall capitalization rate to apply to the net operating income; and (v) estimate value by dividing the net operating income by the overall capitalization rate. In addition, any adjustments to account for differences between the current conditions and stabilized conditions are also considered. The assumptions utilized by CRA with respect to each property are set forth below. The property-specific assumptions were determined by CRA to be reasonable based on its review of

historical operating and financial data for each property and comparison of said data to the operating statistics of similar properties in the influencing market areas. The capitalization rate for each property was determined to be reasonable by CRA based on its review of applicable data ascertained within the market in which each property is located.

 

The sales comparison approach is an estimate of value based upon a process of comparing recent sales of similar properties in the surrounding or competing areas to the subject property. This comparative process involves judgment as to the similarity of the subject property and the comparable sales with respect to many value factors such as location, contract rent levels, quality of construction, reputation and prestige, age and condition, and the interest transferred, among others. The value estimated through this approach represents the probable price at which the subject property would be sold by a willing seller to a willing and knowledgeable buyer as of the date of value. The reliability of this technique is dependent upon the availability of comparable sales data, the verification of the sales data, the degree of comparability and extent of adjustment necessary for differences, and the absence of atypical conditions affecting the individual sales prices. CRA reported that the volume of sales activity recently accelerated in response to improvement realized in economic conditions, and that its research revealed adequate sales activity to form a reasonable estimation of each of the subject property’s market value pursuant to the sales comparison approach. For each of the appraisals, CRA conducted research in each market in an attempt to locate sales of properties similar to each of the appraised properties. The results of CRA’s research indicated that an adequate number of comparable sales were obtained from the local markets in which the Arbours Property, the Bellevue Property and the Post Ridge Property are located.

 

In each of the appraisals, numerous sales were uncovered and the specific sales included in the appraisal reports were deemed representative of the most comparable data available at the time the appraisals were prepared. Important criteria utilized in selecting the most comparable data included: conditions under which the sale occurred (i.e., seller and buyer were typically motivated); date of sale — every attempt was made to utilize recent sales transactions; sales were selected based on their physical similarity to the appraised property; transactions were selected based on the similarity of location between the comparable and appraised property; and, similarity of economic characteristics between the comparable and appraised property. Sales data that may have been uncovered during the course of research that was not included in the appraisal did not meet the described criteria and/or could not be adequately confirmed.

 

According to CRA’s reports, the basic steps in processing the sales comparison approach are outlined as follows: (i) research the market for recent sales transactions, listings, and offers to purchase or sell of properties similar to the subject property; (ii) select a relevant unit of comparison and develop a comparative analysis; (iii) compare comparable sale properties with the subject property using the elements of comparison and adjust the price of each comparable to the subject property; and (iv) reconcile the various value indications produced by the analysis of the comparables.

 

The final step in the appraisal process is the reconciliation of the value indicators into a single value estimate. CRA reviewed each approach in order to determine its appropriateness relative to each property. The accuracy of the data available and the quantity of evidence were weighted in each approach. For the appraisal of the Arbours Property, the Bellevue Property and the Post Ridge Property, CRA placed primary emphasis on the income capitalization approach to valuation, and the direct capitalization approach was considered in the conclusion of value for each property. For each property, CRA relied secondarily on the sales comparison approach, and reported that the value conclusion derived pursuant to the sales comparison approach was utilized as a means to support the value conclusion rendered for the properties pursuant to the income capitalization approach.

 

Arbours Property

 

Summary of Independent Appraisal of the Arbours Property.  CRA performed a complete appraisal of the Arbours Property. The appraisal report of the Arbours Property is dated March 30, 2011, and indicates that the estimated market value of the Arbours Property was $17,400,000 as of March 10, 2011. The appraisal report was updated by CRA as reflected in CRA’s supplemental letters dated June 3, 2011 and October 28, 2011. The appraisal report, as updated by the supplemental letter dated June 3, 2011, indicates that the estimated market value of the Arbours Property was $17,850,000 as of May 31, 2011. The appraisal report, as updated by the supplemental letter dated October 28, 2011, provides an estimate of the property’s market value as of October 1, 2011. The summary set forth below describes the material conclusions reached by CRA based on the value determined under the valuation

approaches and subject to the assumptions and limitations described below. According to CRA’s report, as updated by the supplemental letters, the estimated market value of the Arbours Property was $18,100,000 as of October 1, 2011. The following is a summary of the appraisal report dated March 30, 2011, as updated by the supplemental letters dated June 3, 2011 and October 28, 2011. There is no present intention to further update the appraisal report. The Aimco Entities are not aware of any events that have occurred or conditions that have changed since the October 28, 2011 supplemental letter that may have caused a material change in the value of the Arbours Property.

 

Extraordinary Assumption.  In connection with the preparation of its March 2011 appraisal report of the Arbours Property, CRA inspected the property on March 10, 2011. CRA noted that a physical inspection of the Arbours Property and its environs was not conducted in conjunction with the June 2011 supplemental letter, or the October 2011 supplemental letter, and that it is assumed for purposes of the June 2011 supplemental letter and the October 2011 supplemental letter that the Arbours Property is in a similar state of repair and condition, and that neighborhood conditions and composition are consistent with observations noted on March 10, 2011.

 

Valuation under Income Capitalization Approach.  Using the income capitalization approach, CRA performed a direct capitalization analysis to derive a value for the Arbours Property. The direct capitalization analysis resulted in a valuation conclusion for the Arbours Property of approximately $18,100,000 as of October 1, 2011.

 

The assumptions employed by CRA to determine the value of the Arbours Property under the income capitalization approach using the direct capitalization method included:

 

 

 

 

 

 

 

 

 

Using the direct capitalization method, CRA calculated the value of the Arbours Property by dividing the stabilized net operating income of $1,309,784 by the concluded overall capitalization rate of 7.25%.

 

CRA calculated the value conclusion of the Arbours Property under the income capitalization approach of approximately $18,100,000 as of October 1, 2011.

 

Valuation under Sales Comparison Approach.  CRA estimated the property value of the Arbours Property under the sales comparison approach by analyzing sales from the influencing market that were most similar to the Arbours Property in terms of age, size, tenant profile and location. CRA reported that the local market has been active in terms of investment sales of similar properties, and that adequate sales existed to formulate a value for the Arbours Property under the sales comparison approach.

 

The sales comparison approach resulted in a valuation conclusion for the Arbours Property of approximately $18,200,000 as of October 1, 2011.

 

In reaching a valuation conclusion for the Arbours Property, CRA examined and analyzed comparable sales of five properties in the influencing market. The sales reflected unadjusted sales prices ranging from $38,723 to $68,162 per unit. After adjustment, the comparable sales illustrated a value range of $27,106 to $67,992 per unit, with mean and median adjusted sale prices of $45,299 and $44,692 per unit, respectively. Three of these sales were emphasized in CRA’s analysis, as they were deemed most similar to the Arbours Property. The average adjusted sales price of these three sales was $51,565. CRA estimated a value of $52,000 per unit. Applied to the Arbours Property’s 350 units, this resulted in CRA’s total value estimate for the Arbours Property of approximately $18,200,000.

 

Reconciliation of Values and Conclusion of Appraisal.  For the appraisal of the Arbours Property, CRA placed primary emphasis on the value indicator produced by the income capitalization approach in the final conclusion of market value. CRA relied secondarily on the sales comparison approach, and reported that the value conclusion derived pursuant to the sales comparison approach is utilized as a means to support the value conclusion rendered for the Arbours Property pursuant to the income capitalization approach. The income capitalization approach using a direct capitalization analysis resulted in a value of $18,100,000, and the sales comparison approach resulted in a value of $18,200,000. CRA concluded that the market value of the Arbours Property as of October 1, 2011 was $18,100,000.

 

Bellevue Property

 

Summary of Independent Appraisal of the Bellevue Property.  CRA performed a complete appraisal of the Bellevue Property. The appraisal report of the Bellevue Property is dated March 11, 2011, and indicates that the estimated market value of the Bellevue Property was $28,900,000 as of February 28, 2011. The appraisal report was updated by CRA as reflected in CRA’s supplemental letters dated June 3, 2011 and October 28, 2011. The appraisal report, as updated by the supplemental letter dated June 3, 2011, indicates that the estimated market value of the Bellevue Property was $29,500,000 as of May 31, 2011. The appraisal report, as updated by the supplemental letter dated October 28, 2011, provides an estimate of the property’s market value as of October 1, 2011. The summary set forth below describes the material conclusions reached by CRA based on the value determined under the valuation approaches and subject to the assumptions and limitations described below. According to CRA’s report, as updated by the supplemental letters, the estimated market value of the Bellevue Property was $30,300,000 as of October 1, 2011. The following is a summary of the appraisal report dated March 30, 2011, as updated by the supplemental letters dated June 3, 2011 and October 28, 2011. There is no present intention to further update the appraisal report. The Aimco Entities are not aware of any events that have occurred or conditions that have changed since the October 28, 2011 supplemental letter that may have caused a material change in the value of the Bellevue Property.

 

Extraordinary Assumption.  In connection with the preparation of its March 2011 appraisal report of the Bellevue Property, CRA inspected the property on February 28, 2011 and March 10, 2011. CRA noted that a physical inspection of the Bellevue Property and its environs was not conducted in conjunction with the June 2011 supplemental letter, or the October 2011 supplemental letter, and that it is assumed for purposes of the June 2011 supplemental letter and the October 2011 supplemental letter that the Bellevue Property is in a similar state of repair and condition, and that neighborhood conditions and composition are consistent with observations noted on February 28, 2011 and March 10, 2011. CRA also noted that subsequent to the completion of its March 2011 appraisal report, the Arbours Property suffered fire damage which destroyed one residential building containing eight townhome apartment units. CRA assumed in the October 2011 supplemental letter that insurance proceeds will cover the cost of reconstruction and rent loss and that all fire-damaged units have been successfully rebuilt, placed back into service and are operating at market rent and occupancy. Accordingly, CRA has utilized the total unit count of 326 apartment dwelling units in its analysis.

 

Valuation under Income Capitalization Approach.  Using the income capitalization approach, CRA performed a direct capitalization analysis to derive a value for the Bellevue Property. The direct capitalization analysis resulted in a valuation conclusion for the Bellevue Property of approximately $30,300,000 as of October 1, 2011.

 

The assumptions employed by CRA to determine the value of the Bellevue Property under the income capitalization approach using the direct capitalization method included:

 

 

 

 

 

 

 

 

 

Using the direct capitalization method, CRA calculated the value of the Bellevue Property by dividing the stabilized net operating income of $1,891,212 by the concluded overall capitalization rate of 6.25%.

 

CRA calculated the value conclusion of the Bellevue Property under the income capitalization approach of approximately $30,300,000 as of October 1, 2011.

 

Valuation under Sales Comparison Approach.  CRA estimated the property value of the Bellevue Property under the sales comparison approach by analyzing sales from the influencing market that were most similar to the Bellevue Property in terms of age, size, tenant profile and location. CRA reported that the local and regional markets are becoming more active in terms of investment sales of similar properties, and that adequate sales existed to formulate a value for the Bellevue Property under the sales comparison approach.

 

The sales comparison approach resulted in a valuation conclusion for the Bellevue Property of approximately $31,000,000 as of October 1, 2011.

 

In reaching a valuation conclusion for the Bellevue Property, CRA examined and analyzed comparable sales of five properties in the local and regional markets. The sales reflected unadjusted sales prices ranging from $80,729 to $127,679 per unit. After adjustment, the comparable sales illustrated a value range of $84,766 to $105,760 per unit, with mean and median adjusted sale prices of $95,379 and $93,750 per unit, respectively. CRA estimated a value of $95,000 per unit. Applied to the Bellevue Property’s 326 units, this resulted in CRA’s total value estimate for the Bellevue Property of approximately $31,000,000.

 

Reconciliation of Values and Conclusion of Appraisal.  For the appraisal of the Bellevue Property, CRA placed primary emphasis on the value indicator produced by the income capitalization approach in the final conclusion of market value. CRA relied secondarily on the sales comparison approach, and reported that the value conclusion derived pursuant to the sales comparison approach is utilized as a means to support the value conclusion rendered for the Bellevue Property pursuant to the income capitalization approach. The income capitalization approach using a direct capitalization analysis resulted in a value of $30,300,000, and the sales comparison approach resulted in a value of $31,000,000. CRA concluded that the market value of the Bellevue Property as of October 1, 2011 was $30,300,000.

 

Post Ridge Property

 

Summary of Independent Appraisal of the Post Ridge Property.  CRA performed a complete appraisal of the Post Ridge Property. The appraisal report of the Post Ridge Property is dated March 21, 2011, and indicates that the estimated market value of the Post Ridge Property was $9,400,000 as of February 17, 2011. The appraisal report was updated by CRA as reflected in CRA’s supplemental letters dated June 3, 2011 and October 28, 2011. The appraisal report, as updated by the supplemental letter dated June 3, 2011, indicates that the estimated market value of the Post Ridge Property was $9,500,000 as of May 31, 2011. The appraisal report, as updated by the supplemental letter dated October 28, 2011, provides an estimate of the property’s market value as of October 1, 2011. The summary set forth below describes the material conclusions reached by CRA based on the value determined under the valuation approaches and subject to the assumptions and limitations described below. According to CRA’s report, as updated by the supplemental letters, the estimated market value of the Post Ridge Property was $9,500,000 as of October 1, 2011. The following is a summary of the appraisal report dated March 30, 2011, as updated by the supplemental letters dated June 3, 2011 and October 28, 2011. There is no present intention to further update the appraisal report. The Aimco Entities are not aware of any events that have occurred or conditions that have changed since the October 28, 2011 supplemental letter that may have caused a material change in the value of the Post Ridge Property.

 

Extraordinary Assumption.  In connection with the preparation of its March 2011 appraisal report of the Post Ridge Property, CRA inspected the property on February 17, 2011 and March 10, 2011. CRA noted that a physical inspection of the Post Ridge Property and its environs was not conducted in conjunction with the June 2011 supplemental letter, or the October 2011 supplemental letter, and that it is assumed for purposes of the June 2011 supplemental letter and the October 2011 supplemental letter that the Post Ridge Property is in a similar state of repair and condition, and that neighborhood conditions and composition are consistent with observations noted on February 17, 2011 and March 10, 2011.

 

Valuation under Income Capitalization Approach.  Using the income capitalization approach, CRA performed a direct capitalization analysis to derive a value for the Post Ridge Property. The direct capitalization analysis resulted in a valuation conclusion for the Post Ridge Property of approximately $9,500,000 as of October 1, 2011.

The assumptions employed by CRA to determine the value of the Post Ridge Property under the income capitalization approach using the direct capitalization method included:

 

 

 

 

 

 

 

 

 

Using the direct capitalization method, CRA calculated the value of the Post Ridge Property by dividing the stabilized net operating income of $689,664 by the concluded overall capitalization rate of 7.25%.

 

CRA calculated the value conclusion of the Post Ridge Property under the income capitalization approach of approximately $9,500,000 as of October 1, 2011.

 

Valuation under Sales Comparison Approach.  CRA estimated the property value of the Post Ridge Property under the sales comparison approach by analyzing sales from the influencing market that were most similar to the Post Ridge Property in terms of age, size, tenant profile and location. CRA reported that the local market has been active in terms of investment sales of similar properties, and that adequate sales existed to formulate a value for the Post Ridge Property under the sales comparison approach.

 

The sales comparison approach resulted in a valuation conclusion for the Post Ridge Property of approximately $9,000,000 as of October 1, 2011.

 

In reaching a valuation conclusion for the Post Ridge Property, CRA examined and analyzed comparable sales of five properties in the influencing market. The sales reflected unadjusted sales prices ranging from $38,723 to $68,162 per unit. After adjustment, the comparable sales illustrated a value range of $30,979 to $75,149 per unit, with mean and median adjusted sale prices of $53,212 and $53,631 per unit, respectively. CRA reported that the two sales which received the least adjustments were accorded the most weight. After adjustment, these two sales illustrated values of $56,966 and $75,149 per unit. CRA estimated a value of $60,000 per unit. Applied to the Post Ridge Property’s 150 units, this resulted in CRA’s total value estimate for the Post Ridge Property of approximately $9,000,000.

 

Reconciliation of Values and Conclusion of Appraisal.  For the appraisal of the Post Ridge Property, CRA placed primary emphasis on the value indicator produced by the income capitalization approach in the final conclusion of market value. CRA relied secondarily on the sales comparison approach, and reported that the value conclusion derived pursuant to the sales comparison approach is utilized as a means to support the value conclusion rendered for the Post Ridge Property pursuant to the income capitalization approach. The income capitalization approach using a direct capitalization analysis resulted in a value of $9,500,000, and the sales comparison approach resulted in a value of $9,000,000. CRA concluded that the market value of the Post Ridge Property as of October 1, 2011 was $9,500,000.

 

Assumptions, Limitations and Qualifications of CRA’s Valuations.  In preparing each of the appraisals, CRA relied, without independent verification, on the information furnished by others. Each of CRA’s appraisal reports was subject to the following assumptions and limiting conditions: no responsibility was assumed for the legal description or for matters including legal or title considerations, and title to each property was assumed to be good and marketable unless otherwise stated; each property was appraised free and clear of any or all liens or encumbrances unless otherwise stated; responsible ownership and competent property management were assumed; all engineering was assumed to be correct; there were no hidden or unapparent conditions of the property, subsoil, or structures that render it more or less valuable, and no responsibility was assumed for such conditions or for arranging for engineering studies that may be required to discover them; there was full compliance with all

applicable federal, state, and local environmental regulations and laws unless noncompliance was stated, defined, and considered in the appraisal report; all applicable zoning and use regulations and restrictions have been complied with, unless nonconformity had been stated, defined, and considered in the appraisal report; all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in each report was based; the utilization of the land and improvements is within the boundaries or property lines of the property described and that there is no encroachment or trespass unless noted in either report; the distribution, if any, of the total valuation in each report between land and improvements applies only under the respective stated program of utilization; unless otherwise stated in each report, the existence of hazardous substances, including without limitation, asbestos, polychlorinated biphenyls, petroleum leakage, or agricultural chemicals, which may or may not be present on each property, or other environmental conditions, were not called to the attention of nor did the appraiser become aware of such during the appraiser’s inspection, and the appraiser had no knowledge of the existence of such materials on or in the property unless otherwise stated; the appraiser has not made a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the Americans with Disabilities Act; and former personal property items such as kitchen and bathroom appliances were, at the time of each appraisal report, either permanently affixed to the real estate or were implicitly part of the real estate in that tenants expect the use of such items in exchange for rent and never gain any of the rights of ownership, and the intention of the owners is not to remove the articles which are required under the implied or express warranty of habitability.

 

Compensation of Appraiser.  CRA’s fee for the appraisals was approximately $41,100. Aimco OP paid for the costs of the appraisals. CRA’s fee for the appraisals was not contingent on the approval or completion of the merger. Aimco OP also has agreed to indemnify CRA for certain liabilities that may arise out of the rendering of the appraisals. During the past two years, in addition to these fees, Aimco OP and its affiliates have paid CRA approximately $221,200 for other appraisal services, including, but not limited to, fees of approximately $125,400 for appraisal services related to certain other merger transactions that are being effected concurrently with this merger. Except as set forth above, during the prior two years, no material relationship has existed between CRA and CCP IV or Aimco OP or any of their affiliates. Aimco OP believes that its relationship with CRA had no negative impact on its independence in conducting the appraisals.

 

Availability of Appraisal Reports.  You may obtain a full copy of CRA’s appraisals upon request, without charge, by contacting Eagle Rock Proxy Advisors, LLC, by mail at 12 Commerce Drive, Cranford, New Jersey 07016; by fax at (908) 497-2349; or by telephone at (800) 217-9608. In addition, the appraisal reports have been filed with the SEC. For more information about how to obtain a copy of the appraisal reports see “Where You Can Find Additional Information.”

 

Aimco OP retained Duff & Phelps to act as financial advisor to the boards of directors of Aimco, the general partner of Aimco OP, and the general partner of CCP IV in connection with their evaluation of the proposed terms of the merger.

 

On November 15, 2011, Duff & Phelps rendered its written opinion to the boards of directors of Aimco, the general partner of Aimco OP, and the general partner of CCP IV, to the effect that, as of November 15, 2011, based upon and subject to the assumptions made, procedures followed, factors considered, and qualifications and limitations on the review undertaken, the cash consideration offered in the merger is fair from a financial point of view to the unaffiliated limited partners of CCP IV.

 

The full text of the written opinion of Duff & Phelps, dated November 15, 2011, which sets forth the assumptions made, procedures followed, factors considered, and qualifications and limitations on the review undertaken by Duff & Phelps in connection with the opinion, is attached as Annex C to this information statement/prospectus. You are encouraged to read the opinion carefully and in its entirety. The summary of Duff & Phelps’s opinion in this information statement/prospectus is qualified in its entirety by reference to the full text of the opinion.

 

Duff & Phelps’ opinion was directed to the boards of directors of Aimco, the general partner of Aimco OP, and the general partner of CCP IV, and addressed only the fairness from a financial point of view of the

cash consideration of $56.14 per unit, as of the date of the opinion. Duff & Phelps provided its opinion for the information and assistance of the boards of directors of Aimco, the general partner of Aimco OP, and the general partner of CCP IV in connection with their evaluation of the merger. Neither Duff & Phelps’ opinion nor the summary of the opinion and the related analyses set forth in this information statement/prospectus are intended to be, and do not constitute, advice or a recommendation as to how any person should act with respect to any matters relating to the merger, or whether to proceed with the merger or any related transaction.

 

In connection with its opinion, Duff & Phelps made such reviews, analyses and inquiries as it deemed necessary and appropriate under the circumstances. Duff & Phelps also took into account its assessment of general economic, market and financial conditions, as well as its experience in securities and business valuation, in general, and with respect to similar transactions, in particular. Duff & Phelps’ procedures, investigations, and financial analysis with respect to the preparation of its opinion included, but were not limited to, the items summarized below:

 

1. Reviewed the following documents:

 

a. Reviewed CCP IV’s property level internal unaudited financial statements for the nine months ended September 30, 2011 and CCP IV’s property level unaudited annual financial statements for each of the three fiscal years ended December 31, 2010;

 

b. Reviewed other internal documents relating to the history, current operations, and probable future outlook of CCP IV, including financial projections, provided to Duff & Phelps by the management of Aimco OP; and

 

c. Reviewed documents related to the merger, including certain portions of a draft of this information statement/prospectus, including a draft of the merger agreement dated as of November 10, 2011, and certain other documents related to the merger;

 

 

a. Reviewed previously completed appraisal reports associated with the properties owned by CCP IV prepared by CRA as of October 1, 2011 and provided to Duff & Phelps by management of Aimco OP (which appraisal reports are incorporated by reference in Exhibits 99.1 through 99.9 in this information statement/prospectus);

 

b. Reviewed facts and circumstances related to each of the properties owned by CCP IV to understand factors relevant to the appraisals; and

 

c. Reviewed market data for each of the subject markets and assessed current supply and demand trends;

 

3. Reviewed the following information and/or documents related to the properties owned by CCP IV:

 

a. Reviewed operating statements and balance sheets for the twelve month periods ending December 31, 2008, 2009, and 2010;

 

b. Reviewed the year-to-date operating statement and balance sheet for the nine month period ending September 30, 2011;

 

c. Reviewed budgeted financial statements for the twelve month period ending December 31, 2011;

 

d. Reviewed rent rolls prepared as of September 2011; and

 

e. Discussed the information referred to above and the background and other elements of the merger with the management of Aimco OP; and

 

4. Conducted such other analyses and considered such other factors as Duff & Phelps deemed appropriate.

 

In performing its analyses and rendering its opinion with respect to the merger, Duff & Phelps made certain assumptions, qualifications and limiting conditions, which included, but were not limited to, the items summarized below:

 

1. Relied upon the accuracy, completeness, reliability, and fair presentation of all information, data, advice, opinions and representations obtained from public sources or provided to it from private sources regarding or otherwise relating to the properties owned by CCP IV, CCP IV, the merger and/or otherwise received by it in connection with the opinion, including information obtained from Aimco OP management, and did not independently verify such information;

 

2. Assumed that any estimates, evaluations, forecasts or projections furnished to Duff & Phelps by management of Aimco OP were reasonably prepared and based upon the best currently available information and good faith judgment of the person furnishing the same;

 

3. Assumed that the final versions of all documents reviewed by Duff & Phelps in draft form conform in all material respects to the drafts reviewed;

 

4. Assumed that there has been no material change in the assets, financial condition, business, or prospects of CCP IV or any of its owned properties since the respective dates of the appraisal reports, the most recent financial statements and the other information made available to Duff & Phelps;

 

5. Assumed that title to the properties owned by CCP IV is good and marketable, that all material licenses and related regulatory approvals that are required or advisable to be obtained with respect to the properties owned by CCP IV have been obtained and are current, and that, except as expressly disclosed in the appraisal reports, the properties owned by CCP IV are in compliance with applicable material zoning, use, occupancy, environmental, and similar laws and regulations;

 

6. Assumed responsible ownership and competent property management of each of the properties owned by CCP IV, that, except as expressly disclosed in the appraisal reports, there are no unapparent conditions with respect to any of the properties owned by CCP IV that could affect the value of such property, and that, except as expressly disclosed in the appraisal reports, there are no hazardous substances on or near any of the properties owned by CCP IV that could affect the value of such property;

 

7. Assumed that all of the conditions required to implement the merger will be satisfied and that the merger will be completed in accordance with the merger agreement without any amendments thereto or any waivers of any terms or conditions thereof; and

 

8. Assumed that each of the unaffiliated limited partners elects to receive the cash consideration offered, and therefore, Duff & Phelps made no determination as to the fair value of, or fairness with respect to the OP Unit consideration.

 

Duff & Phelps did not evaluate CCP IV’s solvency or conduct an independent appraisal or physical inspection of any specific liabilities (contingent or otherwise). Duff & Phelps did not evaluate the tax consequences the merger may have on any person, including any unaffiliated limited partner, and did not take any such consequences into account in rendering the opinion. Duff & Phelps was not requested to, and did not, (i) initiate any discussions with, or solicit any indications of interest from, third parties with respect to the merger, the assets, businesses or operations of CCP IV, or any alternatives to the merger, (ii) negotiate the terms of the merger, or (iii) advise Aimco OP or any other party with respect to alternatives to the merger.

 

Duff & Phelps did not express any opinion as to the market price or value of CCP IV’s or Aimco OP’s equity (or anything else) after the announcement or the consummation of the merger. Without limiting the generality of the foregoing, Duff & Phelps did not express any opinion as to the liquidity of, rights and/or risks associated with owning, or any other feature or characteristic of, the OP Units. The opinion should not be construed as a valuation opinion, credit rating, solvency opinion, an analysis of CCP IV’s or Aimco OP’s credit worthiness, as tax advice, or as accounting advice. Duff & Phelps did not make, and assumed no responsibility to make, any representation, or render any opinion, as to any legal matter (including with respect to title to or any encumbrances relating to any of the properties owned by CCP IV.

Duff & Phelps did not investigate any of the physical conditions of any of the properties owned by CCP IV and has not made, and assumed no responsibility to make, any representation, or render any opinion, as to the physical condition of any of the properties owned by CCP IV. No independent surveys of the properties owned by CCP IV were conducted by Duff & Phelps. Duff & Phelps did not arrange for any engineering studies that may be required to discover any unapparent condition in the properties owned by CCP IV. Duff & Phelps did not arrange for or conduct any soil analysis or geological studies or any investigation of any water, oil, gas, coal, or other subsurface mineral and use rights or conditions or arrange for or conduct any other environmental analysis, including with respect to any hazardous materials, which may or may not be present on, in or near any of the properties owned by CCP IV.

 

In rendering its opinion, Duff & Phelps did not express any opinion with respect to the amount or nature of any compensation to any of Aimco OP’s and/or Aimco’s respective officers, directors, or employees, or any class of such persons, relative to the consideration offered to the unaffiliated limited partners in the merger, or with respect to the fairness of any such compensation.

 

The opinion (i) does not address the merits of the underlying business decision to enter into the merger versus any alternative strategy or transaction, (ii) does not address any transaction related to the merger, (iii) is not a recommendation as to how any party should vote or act with respect to any matters relating to the merger or any related transaction, or whether to proceed with the merger or any related transaction, and (iv) does not indicate that the consideration offered is the best possibly attainable under any circumstances; instead, the opinion merely states whether the consideration offered in the merger is within a range suggested by certain financial analyses. The decision as to whether to proceed with the merger or any related transaction may depend on an assessment of factors unrelated to the financial analysis on which the opinion was based.

 

Duff & Phelps prepared its opinion effective as of November 15, 2011. The opinion was necessarily based upon market, economic, financial and other conditions as they existed and could be evaluated as of such date, and Duff & Phelps disclaims any undertaking or obligation to advise any person of any change in any fact or matter affecting the opinion which may come or be brought to the attention of Duff & Phelps after such date.

 

The following is a summary of the material financial analyses performed by Duff & Phelps in connection with providing its opinion. The summary of Duff & Phelps’s valuation analyses is not a complete description of the analyses underlying Duff & Phelps’s opinion. The preparation of an opinion regarding fairness is a complex process involving various quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytic methods employed and the adaptation and application of these methods to the unique facts and circumstances presented. As a consequence, neither an opinion regarding fairness nor its underlying analyses is readily susceptible to partial analysis or summary description. Duff & Phelps arrived at its opinion based on the results of all analyses undertaken by it and assessed as a whole and did not draw, in isolation, conclusions from or with regard to any individual analysis, analytic method or factor. Accordingly, Duff & Phelps believes that its analyses must be considered as a whole and that selecting portions of its analyses, analytic methods and factors, without considering all analyses and factors or the narrative description of the analyses could create a misleading or incomplete view of the processes underlying its analyses and opinion.

 

Valuation Analysis

 

Duff & Phelps estimated the value attributable to the interests of the unaffiliated limited partners as follows:

 

 

 

Estimated Value of Limited Partnership Units

 

The table below provides a summary of (i) the estimated range of value for the properties owned by CCP IV by applying a capitalization rate range that was 25 basis points above and below the capitalization rate used by the third party appraiser to the appropriate measure of income from the properties owned by CCP IV used by the third party appraiser, (ii) a summary of the estimated fair market value of mortgage debt associated with the properties owned by CCP IV, and (iii) the proposed merger consideration (which was determined by the Aimco Entities) and Duff & Phelps’ range of value for the CCP IV Units.

 

 

 

 

Based on an aggregate range of value for the properties owned by CCP IV of $55.8 million to $60.1 million, Duff & Phelps estimated the range of value per CCP IV Unit to be approximately $50.02 to $62.55, compared to the cash merger consideration of $56.14 per CCP IV Unit.

 

Other Matters

 

By letter agreement dated June 10, 2011 between Duff & Phelps and Aimco OP, Duff & Phelps was engaged to opine, as to the fairness, from a financial point of view, to the unaffiliated limited partners of each of certain limited partnerships (including CCP IV) of the cash consideration offered in the proposed merger relating to that limited partnership. Duff & Phelps was engaged based on its experience as a leading global independent provider of

financial advisory and investment banking services. Duff & Phelps delivers advice principally in the areas of valuation, transactions, financial restructuring, dispute and taxation. Since 2005, Duff & Phelps has completed hundreds of valuations in the real estate investment trust and real estate operating company industry and rendered over 308 fairness opinions in transactions aggregating over $103 billion. Duff & Phelps has also rendered over 222 solvency opinions in transactions aggregating over $1.02 trillion.

 

Duff & Phelps has received a fee in the aggregate amount of $450,000 for its services with respect to all of the partnerships pursuant to this engagement (which includes a retainer in the amount of $200,000 allocated among eleven partnerships, including CCP IV and a partnership that ultimately did not pursue a merger transaction, and $50,000 for a bringdown of the initial fairness opinions dated July 28, 2011) as well as reimbursement for its expenses in the amount of approximately $50,000. No portion of Duff & Phelps’ fee is contingent upon either the conclusion expressed in this (or any other) opinion or whether or not this (or any other) merger is successfully consummated. Aimco OP also has agreed to indemnify Duff & Phelps for certain liabilities that may arise out of the rendering of this opinion and any related to Duff & Phelps’ engagement. During the two years preceding the date of this opinion, Duff & Phelps has been paid approximately $199,400 for property tax consulting services by Aimco OP and its affiliates for which Duff & Phelps received customary fees and indemnification. Except as set forth above, during the two years preceding the date of this opinion, Duff & Phelps had not had any material relationship with any party to the merger for which compensation has been received or is intended to be received, nor is any such material relationship or related compensation mutually understood to be contemplated.

 

At the end of each calendar year, Aimco OP’s management prepares an estimated operating budget for the next calendar year for each of the properties owned by CCP IV. Aimco OP’s management provided the 2011 estimated operating budgets for these properties to Duff & Phelps for use in connection with the preparation of its fairness opinion, and to CRA in connection with the preparation of its appraisals.

 

In preparing the 2011 estimated operating budgets, Aimco OP’s management made a number of assumptions and estimates, including the following:

 

 

 

 

 

Aimco OP’s management believed these assumptions and estimates were reasonable at the time the budgets were prepared, but these assumptions and estimates may not be realized and are inherently subject to significant uncertainties and contingencies, including, among others, the risks and uncertainties described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in CCP IV’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, which is included as Annex G to this information statement/prospectus. All of these uncertainties and contingencies are difficult to predict and many are beyond the control of Aimco, Aimco OP and CCP IV.

 

The 2011 estimated operating budgets have been prepared by, and are the responsibility of, Aimco OP’s management. The 2011 estimated operating budgets were prepared solely for internal use and not with a view toward public disclosure and, accordingly, do not comply with generally accepted accounting principles, the published guidelines of the SEC regarding projections, or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Neither Aimco’s independent registered public accounting firm, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the 2011 estimated operating budgets, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and they assume no responsibility for, and disclaim any association with, the 2011 estimated operating budgets. Furthermore, the 2011 estimated operating budgets do not take into account any circumstances or events occurring after the date they were prepared.

 

The inclusion of the 2011 estimated operating budgets in this information statement/prospectus should not be regarded as an indication that any of Aimco, Aimco OP or their respective affiliates, advisors or representatives consider the 2011 estimated operating budgets to be predictive of actual future results, and they should not be relied upon as such. There can be no assurance that the underlying assumptions will prove to be accurate or that the estimated results will be realized, and actual results likely will differ, and may differ materially, from those reflected in the 2011 estimated operating budgets. None of Aimco, Aimco OP or their respective affiliates, advisors, officers, directors or representatives undertakes any obligation to update or otherwise revise the 2011 estimated operating budgets to reflect circumstances existing after the date they were prepared, or to reflect the occurrence of future events, even if any or all of the assumptions underlying the 2011 estimated operating budgets are no longer appropriate, except as required by law.

 

In light of the foregoing factors and the uncertainties inherent in the 2011 estimated operating budgets, holders of CCP IV Units are cautioned not to place undue, if any, reliance on them.

 

The following table summarizes the 2011 estimated operating budgets for each of the properties owned by CCP IV:

 

 

Limited partners are urged to review CCP IV’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, which is included as Annex G to this information statement/prospectus, for information regarding CCP IV’s results of operations during the nine months ended September 30, 2011, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

 

Conflicts of Interest.  ConCap is the general partner of CCP IV and is wholly-owned by AIMCO/IPT, Inc., which in turn is wholly-owned by Aimco. Therefore, ConCap has a conflict of interest with respect to the merger. ConCap has fiduciary duties to AIMCO/IPT, Inc., ConCap’s sole stockholder and an affiliate of Aimco, on the one hand, and to CCP IV and its limited partners, on the other hand. The duties of ConCap to CCP IV and its limited partners conflict with the duties of ConCap to AIMCO/IPT, Inc., which could result in ConCap approving a transaction that is more favorable to Aimco than might be the case absent such conflict of interest. As the general partner of CCP IV, ConCap seeks the best possible terms for CCP IV’s limited partners. This conflicts with Aimco’s interest in obtaining the best possible terms for Aimco OP.

 

No independent representative was engaged to represent the unaffiliated limited partners in negotiating the terms of the merger.  If an independent advisor had been engaged, it is possible that such advisor could have negotiated better terms for CCP IV’s unaffiliated limited partners.

 

The terms of the merger have not been determined in arm’s-length negotiations.  The terms of the merger, including the merger consideration, were determined through discussions between officers and directors of ConCap, on the one hand, and officers of Aimco, on the other. All of the officers and directors of ConCap are also officers of Aimco. There are no independent directors of ConCap. If the terms of the merger had been determined through arm’s-length negotiations, the terms might be more favorable to CCP IV and its limited partners.

 

The merger agreement does not require approval of the merger by a majority of the unaffiliated limited partners.  Under the provisions of the CCP IV partnership agreement and applicable Delaware law, the merger must be approved by a majority in interest of the limited partnership units. As of November 18, 2011, there were issued and outstanding 342,759 CCP IV Units, and Aimco OP and its affiliates owned 237,778.5 of those units, or approximately 69.37% of the units outstanding, enabling them to approve the merger without the consent or approval of any unaffiliated limited partners.

 

In connection with previous partnership merger transactions, lawsuits have been filed alleging that Aimco and certain of its affiliates breached their fiduciary duties to the unaffiliated limited partners.  In February 2011, Aimco and Aimco OP completed six partnership mergers. In each merger, the limited partners who were not affiliated with Aimco received cash or OP Units with a value calculated based on the estimated proceeds that would be available for distribution to limited partners if the partnership’s properties were sold at prices equal to their appraised values. In March 2011, counsel representing a putative class consisting of former limited partners in each of those partnerships contacted Aimco alleging that the merger transactions were unfair to the unaffiliated limited partners because the appraisals used were not of a recent date and no fairness opinions were obtained, among other reasons. Aimco denied the purported class allegations, but agreed to mediate plaintiffs’ claims in June 2011, and agreed to settle this dispute by paying the unaffiliated limited partners additional consideration of $7.5 million. The merger contemplated hereby may also be subject to claims that the merger consideration is unfair and a result of self-dealing.

 

The merger consideration was determined based on the appraised value of the underlying properties as of the date of the appraisals, and there can be no assurance that the value of the properties will not increase as of the date of the consummation of the merger.  CRA appraised CCP IV’s properties as of October 1, 2011 and calculated the amount of the merger consideration based on the appraised values of the properties as of such date. ConCap has not made any other attempt to assess or account for any changes in the value of the properties since the date of the appraisals in its determination of the merger consideration.

 

Alternative valuations of CCP IV’s properties might exceed the appraised values relied on to determine the merger consideration.  Aimco determined the merger consideration in reliance on the appraised values of CCP IV’s three properties. See “Special Factors — The Appraisals,” beginning on page 9, for more information about the appraisals. Although an independent appraiser was engaged to perform complete appraisals of the properties, valuation is not an exact science. There are a number of other methods available to value real estate, each

of which may result in different valuations of a property. Also, others using the same valuation methodology could make different assumptions and judgments, and obtain different results.

 

Actual sales prices of CCP IV’s properties could exceed the appraised values that Aimco relied on to determine the merger consideration.  No recent attempt has been made to market the Bellevue Property or the Post Ridge Property to unaffiliated third parties. There can be no assurance that the Bellevue Property and the Post Ridge Property could not be sold for values higher than the appraised values used to determine the merger consideration if they were marketed to third-party buyers interested in properties of this type. ConCap listed the Post Ridge Property for sale in early 2009 and received several offers at that time to purchase the Post Ridge Property for purchase prices ranging from $6,600,000 to $7,500,000. ConCap determined at the time that those offers were not acceptable, and was unable to find a third-party buyer that was willing to buy the property at a price that was acceptable to ConCap. In early 2009, ConCap also listed the Arbours Property for sale and entered into multiple sale contracts with third parties between September 2009 and December 2010. The most recent sale contract was entered into on December 8, 2010, pursuant to which the third party purchaser agreed to purchase the Arbours Property for a total sales price of $17,000,000. On January 19, 2011, the purchaser terminated this sales contract pursuant to its terms. On January 28, 2011, CCP IV and the purchaser entered into a reinstatement of and amendment to the purchase and sale contract, pursuant to which the termination was rescinded and the agreement was reinstated; however, the sales contract was ultimately terminated on March 1, 2011.

 

The merger consideration may not represent the price limited partners could obtain for their CCP IV Units in an open market.  There is no established or regular trading market for CCP IV Units, nor is there another reliable standard for determining the fair market value of the CCP IV Units. The merger consideration does not necessarily reflect the price that CCP IV limited partners would receive in an open market for their CCP IV Units. Such prices could be higher than the aggregate value of the merger consideration.

 

Limited partners may recognize taxable gain in the merger that could exceed the merger consideration.  Limited partners who elect to receive cash in the merger will recognize gain or loss equal to the difference between their “amount realized” and their adjusted tax basis in the CCP IV Units sold. The resulting tax liability could exceed the value of the cash received in the merger.

 

Limited partners in certain jurisdictions will not be able to elect OP Units.  In those states where the offering of the OP Units hereby is not permitted, residents of those states will receive only the cash consideration in the merger.

 

For a description of risks related to an investment in Aimco and Aimco OP, please see the information set forth under “Part I — Item 1A. Risk Factors” in the Annual Reports on Form 10-K for the year ended December 31, 2010 of each of Aimco and Aimco OP. Aimco’s Annual Report is incorporated herein by reference and is available electronically through the SEC’s website, www.sec.gov, or by request to Aimco. Aimco OP’s Annual Report on Form 10-K for the year ended December 31, 2010 (excluding the report of the independent registered public accounting firm, the financial statements and the notes thereto), is included as Annex H to this information statement/prospectus.

 

There are restrictions on the ability to transfer OP Units, and there is no public market for Aimco OP Units.  The Aimco OP partnership agreement restricts the transferability of OP Units. Until the expiration of a one-year holding period, subject to certain exceptions, investors may not transfer OP Units without the consent of Aimco OP’s general partner. Thereafter, investors may transfer such OP Units subject to the satisfaction of certain conditions, including the general partner’s right of first refusal. There is no public market for the OP Units. Aimco OP has no plans to list any OP Units on a securities exchange. It is unlikely that any person will make a market in the OP Units, or that an active market for the OP Units will develop. If a market for the OP Units develops and the OP Units are considered “readily tradable” on a “secondary market (or the substantial equivalent thereof),” Aimco OP would be classified as a publicly traded partnership for U.S. federal income tax purposes, which could have a material adverse effect on Aimco OP.

Cash distributions by Aimco OP are not guaranteed and may fluctuate with partnership performance.  Aimco OP makes quarterly distributions to holders of OP Units (on a per unit basis) that generally are equal to dividends paid on the Aimco common stock (on a per share basis). However, such distributions will not necessarily continue to be equal to such dividends. Although Aimco OP makes quarterly distributions on its OP Units, there can be no assurance regarding the amounts of available cash that Aimco OP will generate or the portion that its general partner will choose to distribute. The actual amounts of available cash will depend upon numerous factors, including profitability of operations, required principal and interest payments on our debt, the cost of acquisitions (including related debt service payments), its issuance of debt and equity securities, fluctuations in working capital, capital expenditures, adjustments in reserves, prevailing economic conditions and financial, business and other factors, some of which may be beyond Aimco OP’s control. Cash distributions depend primarily on cash flow, including from reserves, and not on profitability, which is affected by non-cash items. Therefore, cash distributions may be made during periods when Aimco OP records losses and may not be made during periods when it records profits. The Aimco OP partnership agreement gives the general partner discretion in establishing reserves for the proper conduct of the partnership’s business that will affect the amount of available cash. Aimco is required to make reserves for the future payment of principal and interest under its credit facilities and other indebtedness. In addition, Aimco OP’s credit facility limits its ability to distribute cash to holders of OP Units. As a result of these and other factors, there can be no assurance regarding actual levels of cash distributions on OP Units, and Aimco OP’s ability to distribute cash may be limited during the existence of any events of default under any of its debt instruments.

 

Holders of OP Units are limited in their ability to effect a change of control.  The limited partners of Aimco OP are unable to remove the general partner of Aimco OP or to vote in the election of Aimco’s directors unless they own shares of Aimco. In order to comply with specific REIT tax requirements, Aimco’s charter has restrictions on the ownership of its equity securities. As a result, Aimco OP limited partners and Aimco stockholders are limited in their ability to effect a change of control of Aimco OP and Aimco, respectively.

 

Holders of OP Units have limited voting rights.  Aimco OP is managed and operated by its general partner. Unlike the holders of common stock in a corporation, holders of OP Units have only limited voting rights on matters affecting Aimco OP’s business. Such matters relate to certain amendments of the partnership agreement and certain transactions such as the institution of bankruptcy proceedings, an assignment for the benefit of creditors and certain transfers by the general partner of its interest in Aimco OP or the admission of a successor general partner. Holders of OP Units have no right to elect the general partner on an annual or other continuing basis, or to remove the general partner. As a result, holders of OP Units have limited influence on matters affecting the operation of Aimco OP, and third parties may find it difficult to attempt to gain control over, or influence the activities of, Aimco OP.

 

Holders of OP Units are subject to dilution.  Aimco OP may issue an unlimited number of additional OP Units or other securities for such consideration and on such terms as it may establish, without the approval of the holders of OP Units. Such securities could have priority over the OP Units as to cash flow, distributions and liquidation proceeds. The effect of any such issuance may be to dilute the interests of holders of OP Units.

 

Holders of OP Units may not have limited liability in specific circumstances.  The limitations on the liability of limited partners for the obligations of a limited partnership have not been clearly established in some states. If it were determined that Aimco OP had been conducting business in any state without compliance with the applicable limited partnership statute, or that the right or the exercise of the right by the OP Unitholders as a group to make specific amendments to the agreement of limited partnership or to take other action under the agreement of limited partnership constituted participation in the “control” of Aimco OP’s business, then a holder of OP Units could be held liable under specific circumstances for Aimco OP’s obligations to the same extent as the general partner.

 

Aimco may have conflicts of interest with holders of OP Units.  Conflicts of interest have arisen and could arise in the future as a result of the relationships between the general partner of Aimco OP and its affiliates (including Aimco), on the one hand, and Aimco OP or any partner thereof, on the other. The directors and officers of the general partner have fiduciary duties to manage the general partner in a manner beneficial to Aimco, as the sole stockholder of the general partner. At the same time, as the general partner of Aimco OP, it has fiduciary duties to manage Aimco OP in a manner beneficial to Aimco OP and its limited partners. The duties of the general partner of Aimco OP to Aimco OP and its partners may therefore come into conflict with the duties of the directors and

officers of the general partner to its sole stockholder, Aimco. Such conflicts of interest might arise in the following situations, among others:

 

 

Provisions in the Aimco OP partnership agreement may limit the ability of a holder of OP Units to challenge actions taken by the general partner.  Delaware law provides that, except as provided in a partnership agreement, a general partner owes the fiduciary duties of loyalty and care to the partnership and its limited partners. The Aimco OP partnership agreement expressly authorizes the general partner to enter into, on behalf of Aimco OP, a right of first opportunity arrangement and other conflict avoidance agreements with various affiliates of Aimco OP and the general partner, on such terms as the general partner, in its sole and absolute discretion, believes are advisable. The latitude given in the Aimco OP partnership agreement to the general partner in resolving conflicts of interest may significantly limit the ability of a holder of OP Units to challenge what might otherwise be a breach of fiduciary duty. The general partner believes, however, that such latitude is necessary and appropriate to enable it to serve as the general partner of Aimco OP without undue risk of liability.

 

The Aimco OP partnership agreement limits the liability of the general partner for actions taken in good faith. Aimco OP’s partnership agreement expressly limits the liability of the general partner by providing that the general partner, and its officers and directors, will not be liable or accountable in damages to Aimco OP, the limited partners or assignees for errors in judgment or mistakes of fact or law or of any act or omission if the general partner or such director or officer acted in good faith. In addition, Aimco OP is required to indemnify the general partner, its affiliates and their respective officers, directors, employees and agents to the fullest extent permitted by applicable law, against any and all losses, claims, damages, liabilities, joint or several, expenses, judgments, fines and other actions incurred by the general partner or such other persons, provided that Aimco OP will not indemnify for (i) willful misconduct or a knowing violation of the law or (ii) for any transaction for which such person received an improper personal benefit in violation or breach of any provision of the partnership agreement. The provisions of Delaware law that allow the common law fiduciary duties of a general partner to be modified by a partnership agreement have not been resolved in a court of law, and the general partner has not obtained an opinion of counsel covering the provisions set forth in the Aimco OP partnership agreement that purport to waive or restrict the fiduciary duties of the general partner that would be in effect under common law were it not for the partnership agreement.

 

The following are among the U.S. federal income tax considerations to be taken into account in connection with an investment in OP Units. For a general discussion of material U.S. federal income tax consequences resulting

from acquiring, holding, exchanging, and otherwise disposing of OP Units, see “Material United States Federal Income Tax Considerations — Taxation of Aimco OP and OP Unitholders.”

 

Aimco OP may be treated as a “publicly traded partnership” taxable as a corporation.  If Aimco OP were treated as a “publicly traded partnership” taxed as a corporation for U.S. federal income tax purposes, material adverse consequences to the partners would result. Moreover, in such case, a holder of CCP IV Units receiving OP Units in the merger would be required to recognize gain or loss on the transaction. In addition, Aimco would not qualify as a REIT for U.S. federal income tax purposes, which would have a material adverse impact on Aimco and its shareholders. Aimco believes and intends to take the position that Aimco OP should not be treated as a “publicly traded partnership” taxable as a corporation. No assurances can be given that the Internal Revenue Service, or the IRS, would not assert, or that a court would not sustain a contrary position. Accordingly, each prospective investor is urged to consult his tax advisor regarding the classification and treatment of Aimco OP as a “partnership” for U.S. federal income tax purposes.

 

The limited partners may recognize gain on the transaction.  If a CCP IV limited partner receives or is deemed to receive cash or consideration other than OP Units in connection with the merger, the receipt of such cash or other consideration may be taxable to the limited partner. Subject to certain exceptions, including exceptions applicable to periodic distributions of operating cash flow, any transfer or deemed transfer of cash by Aimco OP to the limited partner (or its owners) within two years before or after the merger, including cash paid at closing, will generally be treated as part of a disguised sale. The application of the disguised sale rules is complex and depends, in part, upon the facts and circumstances applicable to the limited partner, which Aimco has not undertaken to review. Accordingly, limited partners are particularly urged to consult with their tax advisors concerning the extent to which the disguised sale rules would apply.

 

A contribution of appreciated or depreciated property may result in special allocations to the contributing partner.  If property is contributed to Aimco OP and the adjusted tax basis of the property differs from its fair market value, then Aimco OP tax items must be specially allocated, for U.S. federal income tax purposes, in a manner chosen by Aimco OP such that the contributing partner is charged with and recognizes the unrealized gain, or benefits from the unrealized loss, associated with the property at the time of the contribution. As a result of such special allocations, the amount of net taxable income allocated to a contributing partner may exceed the amount of cash distributions, if any, to which such contributing partner is entitled.

 

The Aimco OP general partner could take actions that would impose tax liability on a contributing partner.  There are a variety of transactions that Aimco OP may in its sole discretion undertake following a property contribution that could cause the transferor (or its partners) to incur a tax liability without a corresponding receipt of cash. Such transactions include, but are not limited to, the sale or distribution of a particular property and a reduction in nonrecourse debt, or the making of certain tax elections by Aimco OP. In addition, future economic, market, legal, tax or other considerations may cause Aimco OP to dispose of the contributed property or to reduce its debt. As permitted by the Aimco OP partnership agreement, the general partner intends to make decisions in its capacity as general partner of Aimco OP so as to maximize the profitability of Aimco OP as a whole, independent of the tax effects on individual holders of OP Units.

 

An investor’s tax liability from OP Units could exceed the cash distributions received on such OP Units.  A holder of OP Units will be required to pay U.S. federal income tax on such holder’s allocable share of Aimco OP’s income, even if such holder receives no cash distributions from Aimco OP. No assurance can be given that a holder of OP Units will receive cash distributions equal to such holder’s allocable share of taxable income from Aimco OP or equal to the tax liability to such holder resulting from that income. Further, upon the sale, exchange or redemption of any OP Units, a reduction in nonrecourse debt, or upon the special allocation at the liquidation of Aimco OP, an investor may incur a tax liability in excess of the amount of cash received.

 

OP Unitholders may be subject to state, local or foreign taxation.  OP Unitholders may be subject to state, local or foreign taxation in various jurisdictions, including those in which Aimco OP transacts business and owns property. It should be noted that Aimco OP owns properties located in a number of states and local jurisdictions, and an OP Unitholder may be required to file income tax returns in some or all of those jurisdictions. The state, local or foreign tax treatment of OP Unitholders may not conform to the U.S. federal income tax consequences of an investment in OP Units, as described in “Material United States Federal Income Tax Considerations” beginning on page 71.

 

The following table sets forth Aimco’s selected summary historical financial data as of the dates and for the periods indicated. Aimco’s historical consolidated statements of operations data set forth below for each of the five fiscal years in the period ended December 31, 2010 and the historical consolidated balance sheet data for each of the five fiscal year-ends in the period ended December 31, 2010, are derived from information included in Aimco’s Current Report on Form 8-K, filed with the SEC on November 15, 2011. Aimco’s unaudited historical consolidated statements of operations data set forth below for each of the nine months ended September 30, 2011 and 2010, and the unaudited historical consolidated balance sheet data as of September 30, 2011, are derived from information included in Aimco’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, filed with the SEC on October 28, 2011.

 

You should read this information together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with the consolidated financial statements and notes to the consolidated financial statements included in Aimco’s Current Report on Form 8-K, filed with the SEC on November 15, 2011, and Aimco’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, filed with the SEC on April 29, 2011, which are incorporated by reference in this information statement/prospectus. See “Where You Can Find Additional Information” in this information statement/prospectus.

 

 

 

 

 

 

The following table sets forth Aimco OP’s selected summary historical financial data as of the dates and for the periods indicated. Aimco OP’s historical consolidated statements of operations data set forth below for each of the five fiscal years in the period ended December 31, 2010 and the historical consolidated balance sheet data for each of the five fiscal year-ends in the period ended December 31, 2010, are derived from information included in Aimco OP’s Current Report on Form 8-K, filed with the SEC on November 15, 2011, and included as Annex J to this information statement/prospectus. Aimco OP’s unaudited historical consolidated statements of operations data set forth below for each of the three months ended September 30, 2011 and 2010, and the unaudited historical consolidated balance sheet data as of September 30, 2011, are derived from information included in Aimco OP’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 included as Annex I to this information statement/prospectus.

 

You should read this information together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with the consolidated financial statements and notes to the consolidated financial statements included in Aimco OP’s Current Report on Form 8-K, filed with the SEC on November 15, 2011, and Aimco OP’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, filed with the SEC on October 28, 2011, which are included as Annex J and Annex I to this information statement/prospectus.

 

 

 

 

 

 

The following table sets forth CCP IV’s selected summary historical financial data as of the dates and for the periods indicated. CCP IV’s historical consolidated statements of operations and cash flow data set forth below for each of the two fiscal years in the period ended December 31, 2010 and the historical consolidated balance sheet data as of December 31, 2010 and 2009, are derived from CCP IV’s consolidated financial statements included in CCP IV’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010. CCP IV’s unaudited historical consolidated statements of operations and cash flow data set forth below for each of the nine months ended September 30, 2011 and 2010, and the unaudited historical consolidated balance sheet data as of September 30, 2011, are derived from CCP IV’s unaudited consolidated financial statements included in CCP IV’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011.

 

You should read this information together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with the consolidated financial statements and notes to the consolidated financial statements for the fiscal year ended December 31, 2010 included in CCP IV’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the SEC on March 25, 2011, and in CCP IV’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, filed with the SEC on November 9, 2011, which are included as Annex F and Annex G to this information statement/prospectus. See “Where You Can Find Additional Information” in this information statement/prospectus.

 

 

Aimco common stock trades on the NYSE under the symbol “AIV.” The OP Units are not listed on any securities exchange and do not trade in an active secondary market. However, as described below, the trading price of Aimco common stock is considered a reasonable estimate of the fair market value of an OP Unit. After a one-year holding period, OP Units are redeemable for shares of Aimco common stock (on a one-for-one basis) or cash equal to the value of such shares, as Aimco elects. As a result, the trading price of Aimco common stock is considered a reasonable estimate of the fair market value of an OP Unit. The number of OP Units offered in the merger with respect to each CCP IV Unit was calculated by dividing the per unit cash merger consideration by the average closing price of Aimco common stock, as reported on the NYSE over the ten consecutive trading days ending on the second trading day immediately prior to the consummation of the merger. The closing price of Aimco common stock as reported on the NYSE on November 10, 2011, was $22.82.

 

The CCP IV Units are not listed on any securities exchange nor do they trade in an active secondary market. The per unit cash merger consideration payable to each holder of CCP IV Units is greater than ConCap’s estimate of the proceeds that would be available for distribution to limited partners of CCP IV if its properties were sold at prices equal to their respective appraised values.

 

The following tables summarize the historical per share/unit information for Aimco, Aimco OP and CCP IV for the periods indicated:

 

 

 

 

 

 

 

Aimco is a Maryland corporation incorporated on January 10, 1994. Aimco is a self-administered and self-managed real estate investment trust, or REIT. Aimco’s principal financial objective is to provide predictable and attractive returns to its stockholders. Aimco’s business plan to achieve this objective is to:

 

 

As of September 30, 2011, Aimco:

 

 

 

 

Of these properties, Aimco consolidated 199 conventional properties with 63,335 units and 160 affordable properties with 19,969 units.

 

For conventional assets, Aimco focuses on the ownership of primarily B/B+ assets. Aimco measures conventional property asset quality based on average rents of its units compared to local market average rents as reported by a third-party provider of commercial real estate performance and analysis, with A-quality assets earning rents greater than 125% of local market average, B-quality assets earning rents 90% to 125% of local market average and C-quality assets earning rents less than 90% of local market average. Aimco classifies as B/B+ those assets earning rents ranging from 100% to 125% of local market average. Although some companies and analysts within the multifamily real estate industry use asset class ratings of A, B and C, some of which are tied to local market rent averages, the metrics used to classify asset quality as well as the timing for which local markets rents are calculated may vary from company to company. Accordingly, Aimco’s rating system for measuring asset quality is neither broadly nor consistently used in the multifamily real estate industry.

 

Through its wholly-owned subsidiaries, AIMCO-GP, Inc., the general partner of Aimco OP, and AIMCO-LP Trust, Aimco owns a majority of the ownership interests in Aimco OP. As of September 30, 2011, Aimco held approximately 94% of the OP Units and high performance units, or HPUs, of Aimco OP. Aimco conducts substantially all of its business and owns substantially all of its assets through Aimco OP. Interests in Aimco OP that are held by limited partners other than Aimco include OP Units, HPUs, and partnership preferred units. The holders of OP Units receive distributions, prorated from the date of issuance, in an amount equivalent to the dividends paid to holders of Aimco common stock. Holders of OP Units may redeem such units for cash or, at Aimco OP’s option, Aimco common stock. Partnership preferred units entitle the holders thereof to a preference with respect to distributions or upon liquidation. At September 30, 2011, after elimination of shares held by consolidated subsidiaries, 120,916,144 shares of Aimco common stock were outstanding and Aimco OP had 8,289,841 OP Units and HPUs outstanding for a combined total of 129,205,985 shares of Aimco common stock, OP Units and HPUs outstanding.

 

Through its wholly-owned subsidiary, AIMCO/IPT, Inc., a Delaware corporation, Aimco owns all of the outstanding common stock of ConCap, the general partner of CCP IV.

 

AIMCO/IPT, Inc. holds a 70% interest in AIMCO IPLP, L.P. as its general partner. AIMCO/IPT, Inc. and AIMCO IPLP, L.P. share voting and dispositive power over 96,646 CCP IV Units, representing approximately 28.2% of the outstanding CCP IV Units. AIMCO IPLP, L.P. also owns 100% of IPLP Acquisition I, LLC, which owns 29,612.5 CCP IV Units, or approximately 8.64% of the outstanding CCP IV Units.

AIMCO CCP IV Merger Sub LLC, or the Aimco Subsidiary, is a Delaware limited liability company formed on July 27, 2011, for the purpose of consummating the merger with CCP IV. The Aimco Subsidiary is a direct wholly-owned subsidiary of Aimco OP. The Aimco Subsidiary has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the merger agreement.

 

The names, positions and business addresses of the directors and executive officers of Aimco, Aimco OP, AIMCO-GP, Inc., AIMCO/IPT, Inc., AIMCO IPLP, L.P., IPLP Acquisition I, LLC and the Aimco Subsidiary, as well as a biographical summary of the experience of such persons for the past five years or more, are set forth in Annex D attached hereto and are incorporated in this information statement/prospectus by reference. During the last five years, none of Aimco, Aimco OP, Aimco-GP, Inc., AIMCO/IPT, Inc., AIMCO IPLP, L.P., IPLP Acquisition I, LLC, CCP IV or ConCap nor, to the best of their knowledge, any of the persons listed in Annex D of this information statement/prospectus (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining further violations of or prohibiting activities subject to federal or state securities laws or finding any violation with respect to such laws. Additional information about Aimco is included in documents incorporated by reference into this information statement/prospectus. Additional information about Aimco OP is included in Annex H and Annex I to this information statement/prospectus. See “Where You Can Find Additional Information.”

 

The following chart represents the organizational structure of the Aimco Entities:

 

 

CCP IV is a Delaware limited partnership organized on April 25, 2008, in connection with a redomestication of a predecessor limited partnership from California to Delaware in April 2008. The predecessor was organized as a California limited partnership on September 22, 1981. On December 18, 1981, the predecessor of CCP IV commenced a public offering for the sale of 200,000 limited partnership units, with the general partner’s right to increase the offering to 400,000 units. The sale of units closed on December 14, 1983, with 343,106 units sold at $500 each, or gross proceeds of $171,553,000 to the predecessor of CCP IV. Since its initial offering, CCP IV has not received, nor are limited partners required to make, additional capital contributions. CCP IV’s partnership agreement provides that the partnership is to terminate on December 31, 2011 unless terminated prior to such date. ConCap, which is the general partner of CCP IV, is a wholly-owned subsidiary of AIMCO/IPT, which in turn is a wholly-owned subsidiary of Aimco.

 

CCP IV’s primary business and only industry segment is real estate related operations. CCP IV is engaged in the business of operating and holding real estate properties for investment. At September 30, 2011, CCP IV owned the following properties:

 

 

The average annual rental rates for each of the five years ended December 31, 2010 for each property are as follows:

 

 

The average occupancy for each of the five years ended December 31, 2010, and for the nine months ended September 30, 2011 and 2010 for each property is as follows:

 

 

The real estate industry is highly competitive. All of the properties are subject to competition from other residential apartment complexes in the area. ConCap believes that all of the properties are adequately insured. Each property is an apartment complex which leases units for lease terms of one year or less. No residential tenant leases 10% or more of the available rental space.

 

During the year ended December 31, 2010, CCP IV completed approximately $1,135,000 of capital improvements at the Arbours Property consisting primarily of water heaters, HVAC upgrades, kitchen and bath resurfacing, appliance and floor covering replacements and construction related to fire damage. These improvements were funded from operating cash flow, advances from Aimco OP and insurance proceeds. During the year ended December 31, 2010, CCP IV completed approximately $171,000 of capital improvements at the Bellevue Property consisting primarily of water and sewer upgrades and appliance and floor covering replacements. These improvements were funded from operating cash flow. During the year ended December 31, 2010, CCP IV completed approximately $765,000 of capital improvements at the Post Ridge Property consisting primarily of kitchen and bath resurfacing, structural improvements, retaining wall construction, appliance and floor covering

replacements and swimming pool replacement. These improvements were funded from operating cash flow, advances from Aimco OP and replacement reserves.

 

During the nine months ended September 30, 2011, CCP IV completed approximately $1,082,000 of capital improvements at the Arbours Property, consisting primarily of wall covering and floor covering replacements, structural improvements, pool resurfacing, air conditioning unit replacements and construction related to the fire damage to the property. These improvements were funded from operating cash flow, insurance proceeds and partnership reserves. During the nine months ended September 30, 2011, CCP IV completed approximately $519,000 of capital improvements at the Bellevue Property, consisting primarily of wall covering and floor covering replacements, insulation replacement and constructions related to the fire damage to the property. These improvements were funded from operating cash flow, insurance proceeds, advances and partnership reserves. In April 2011, the Bellevue Property suffered fire damage to one of its apartment buildings as a result of lightning strikes. The damages to the building include complete destruction of four of the units and significant smoke and water damage to the remaining four units in the building. All eight units will require complete replacement. The estimated cost to repair the damaged units is approximately $900,000, including approximately $170,000 of clean up costs and $50,000 for lost rents. During the nine months ended September 30, 2011, CCP IV incurred costs of approximately $448,000, of which approximately $295,000 was for capital expenditures and approximately $153,000 was for clean up costs. During the nine months ended September 30, 2011, CCP IV recognized a casualty gain of $400,000 due to the receipt of $400,000 of insurance proceeds, all of which were held in escrow with the mortgage lender at September 30, 2011. CCP IV anticipates receiving additional proceeds related to this casualty during 2011. During the nine months ended September 30, 2011, CCP IV completed approximately $378,000 of capital improvements at the Post Ridge Property, consisting primarily of wall covering and floor covering replacements and structural improvements, including costs incurred to address the land erosion related to May 2010 rain storms. These improvements were funded from operating cash flow, replacement reserves and partnership reserves.

 

CCP IV regularly evaluates the capital improvement needs of the properties. Other than reconstruction related to the fire damage suffered in April 2011 (as discussed above), CCP IV has no material commitments for property improvements and replacements, and anticipates making certain routine capital expenditures with respect to each property during the remainder of 2011. Such capital expenditures will depend on the physical conditions of the properties as well as anticipated cash flows generated by the properties. All of CCP IV’s properties are in good physical condition, subject to normal depreciation and deterioration as is typical for assets of this type and age.

 

The following table sets forth certain information relating to the mortgages encumbering the CCP IV’s properties at September 30, 2011.

 

 

 

 

CCP IV presently has CCP IV Units issued and outstanding. The CCP IV Units are entitled to allocations of profit and loss, and distributions, relating to CCP IV’s interest in all of its three remaining properties. As of November 18, 2011, there were 342,759 CCP IV Units outstanding, and Aimco OP and its affiliates owned 237,778.5 of those units, or approximately 69.37% of those units.

 

CCP IV distributed the following amounts during the years ended December 31, 2010 and 2009 (in thousands except per unit data):

 

 

 

 

There were no distributions declared or paid by CCP IV during the nine months ended September 30, 2011 and 2010. Future cash distributions will depend on the levels of cash generated from operations, and the timing of debt maturities, refinancings and/or property sales. CCP IV’s cash available for distribution is reviewed on a monthly basis. There can be no assurance, however, that CCP IV will generate sufficient funds from operations, after required capital improvement expenditures, to permit any distributions to its partners in 2011 or subsequent periods.

 

CCP IV has no employees and depends on ConCap and its affiliates for the management and administration of all partnership activities. The CCP IV partnership agreement provides that ConCap and its affiliates receive certain payments for services and reimbursement of certain expenses incurred on behalf of CCP IV.

 

The CCP IV partnership agreement also provides that ConCap and its affiliates receive 5% of gross receipts from all of CCP IV’s properties as compensation for providing property management services. CCP IV paid to such affiliates approximately $409,000 for both the years ended December 31, 2010 and 2009, and approximately $313,000 and $307,000 for the nine months ended September 30, 2011 and 2010, respectively.

 

Affiliates of ConCap charged CCP IV for reimbursement of accountable administrative expenses amounting to approximately $233,000 and $249,000 for the years ended December 31, 2010 and 2009, respectively. A portion of these reimbursements for the years ended December 31, 2010 and 2009 are for construction management services provided by an affiliate of ConCap of approximately $85,000 and $112,000, respectively. Additionally, in connection with a redevelopment project at the Bellevue Property completed at December 31, 2008, an affiliate of ConCap received a redevelopment supervision fee of 4% of the actual redevelopment costs incurred. CCP IV was charged approximately $37,000 in redevelopment supervision fees during the year ended December 31, 2009. There were no redevelopment supervision fees charged during the year ended December 31, 2010.

 

Affiliates of ConCap charged CCP IV for reimbursement of accountable administrative expenses amounting to approximately $167,000 and $175,000 for the nine months ended September 30, 2011 and 2010, respectively. A portion of these reimbursements for the nine months ended September 30, 2011 and 2010 are for construction management services provided by an affiliate of ConCap of approximately $66,000 and $63,000 respectively.

 

In accordance with CCP IV’s partnership agreement, during the year ended December 31, 2010, Aimco OP, an affiliate of ConCap, advanced CCP IV approximately $1,189,000 to assist with the payment of real estate taxes and operations for all of CCP IV’s properties, as well as capital expenditures at two of CCP IV’s properties. During the year ended December 31, 2009, Aimco OP advanced CCP IV approximately $11,719,000. Approximately

$11,125,000 of that amount was comprised of a loan from Aimco OP to CCP IV to assist with the repayment of the mortgage and associated accrued interest then encumbering the Bellevue Property. The loan was unsecured and bore interest at 6.0%. CCP IV obtained a new mortgage on the Bellevue Property in February 2009, and CCP IV used approximately $11,200,000 of the net proceeds received from that new mortgage to pay in full the loan from Aimco OP. The remaining approximately $594,000 advanced by Aimco OP during the year ended December 31, 2009 was made to fund operations at all three of CCP IV’s properties. During the year ended December 31, 2010, CCP IV repaid Aimco OP approximately $1,465,000, which included approximately $86,000 of interest with operating cash flow and proceeds from the collection of a note receivable related to the sale of the Belmont Place Apartments in 2008. During the year ended December 31, 2009, CCP IV repaid Aimco OP approximately $12,245,000, which included approximately $87,000 of interest. Interest on the 2009 loan of approximately $11,125,000 was charged at 6.00%, while interest on the 2010 and remaining 2009 advances was charged at a variable rate based on the market rate for similar type loans, which affiliates of ConCap review quarterly. Interest expense was approximately $85,000 and $82,000 for the years ended December 31, 2010 and 2009, respectively. At December 31, 2009, the amount of outstanding loans and associated accrued interest owed to Aimco OP was approximately $191,000. There were no outstanding loans or accrued interest owed at December 31, 2010.

 

In accordance with CCP IV’s partnership agreement, during the nine months ended September 30, 2010, Aimco OP advanced CCP IV approximately $1,189,000 to assist with the payment of real estate taxes and operations for all of CCP IV’s properties, as well as capital expenditures at two of CCP IV’s properties. During the nine months ended September 30, 2011, Aimco OP advanced CCP IV approximately $140,000 to assist with the operations of the Post Ridge Property. Interest on the advances was charged at a variable rate based on the market rate for similar type loans, which affiliates of ConCap review quarterly. The interest rate on outstanding advances at September 30, 2011 was 11.25%. Interest expense was approximately $1,000 and $80,000 for the nine months ended September 30, 2011 and 2010, respectively. During the nine months ended September 30, 2010, CCP IV repaid Aimco OP approximately $276,000, which included approximately $15,000 of accrued interest. There were no such repayments during the nine months ended September 30, 2011. At September 30, 2011 the amount of outstanding loans and associated accrued interest owed to Aimco OP was approximately $141,000. There were no outstanding loans or accrued interest owed at December 31, 2010. Subsequent to September 30, 2011, CCP IV received an advance of approximately $310,000 to assist with capital expenditures at the Bellevue Property. CCP IV may receive additional advances of funds from Aimco OP, although Aimco OP is not obligated to provide such advances.

 

CCP IV’s partnership agreement also provides for a special management fee equal to 9% of the total distributions made to the limited partners of CCP IV from cash flow provided by operations to be paid to ConCap for executive and administrative management services. During the year ended December 31, 2009, CCP IV paid approximately $93,000 for a special management fee in connection with an operating distribution made to the limited partners. There were no special management fees paid or earned during the year ended December 31, 2010, or the nine months ended September 30, 2011 and 2010, as there were no operating distributions during these periods.

 

For acting as real estate broker in connection with the sale of South Port Apartments in 2003, ConCap was paid a real estate commission of approximately $295,000. When CCP IV terminates, ConCap will have to return this commission if the limited partners do not receive their original invested capital plus a 6% per annum cumulative return. ConCap has determined to return this commission to CCP IV as part of the merger consideration.

 

Prior to 2010, CCP IV distributed various amounts from the proceeds of property sales and refinancings. At both September 30, 2011 and December 31, 2010, approximately $3,892,000 of these distributions from proceeds are payable to ConCap and the special limited partners as the distributions are subordinated and deferred per CCP IV’s partnership agreement until the limited partners receive 100% of their original capital contributions from surplus cash. Since CCP IV’s limited partners have not yet achieved this requisite level of return, ConCap and the special limited partners would not be entitled to receive any distributions in connection with a liquidation of CCP IV if CCP IV’s remaining properties were sold at prices equal to their respective appraised values. Accordingly, the merger consideration was determined without deducting any such distributions, and the special limited partners will not receive any consideration in the merger.

CCP IV insures its properties up to certain limits through coverage provided by Aimco, which is generally self-insured for a portion of losses and liabilities related to workers’ compensation, property casualty, general liability and vehicle liability. CCP IV insures its properties above the Aimco limits through insurance policies obtained by Aimco from insurers unaffiliated with ConCap or Aimco. During the years ended December 31, 2010 and 2009, CCP IV was charged by Aimco and its affiliates approximately $229,000 and $185,000, respectively, for insurance coverage and fees associated with policy claims administration. During the nine months ended September 30, 2011, CCP IV was charged by Aimco and its affiliates approximately $135,000 for hazard insurance coverage and fees associated with policy claims administration. Additional charges will be incurred by CCP IV during 2011 as other insurance policies renew later in the year.

 

In addition to its indirect ownership of the general partner interests in CCP IV, Aimco and its affiliates owned 237,778.5 of the CCP IV Units, or approximately 69.37% of the number of CCP IV Units outstanding, at November 18, 2011. Pursuant to the CCP IV partnership agreement, limited partners holding a majority of the units are entitled to take action with respect to a variety of matters that would include, but are not limited to, voting on certain amendments to the CCP IV partnership agreement and voting to remove ConCap as the general partner. As a result of its ownership of 69.37% of the outstanding units of limited partnership interests, Aimco and its affiliates are in a position to control all such voting decisions with respect to CCP IV. Although ConCap owes fiduciary duties to CCP IV’s limited partners, it also owes fiduciary duties to its sole stockholder, which is an affiliate of Aimco. As a result, the duties of ConCap, as general partner, to CCP IV and its limited partners may come into conflict with the duties of ConCap to AIMCO/IPT, Inc. as its sole stockholder.

 

CCP IV has no directors or executive officers of its own. The names and ages of, as well as the positions and offices held by, the present directors and officers of ConCap, CCP IV’s general partner, as of September 30, 2011 are set forth in Annex D to this information statement/prospectus. One or more of those persons are also directors and/or officers of a general partner (or general partner of a general partner) of limited partnerships which either have a class of securities registered pursuant to Section 12(g) of the Exchange Act, or are subject to the reporting requirements of Section 15(d) of the Exchange Act. Further, one or more of those persons are also officers of Aimco and the general partner of Aimco OP, entities that have a class of securities registered pursuant to Section 12(g) of the Exchange Act, or are subject to the reporting requirements of Section 15(d) of the Exchange Act. There are no family relationships between or among any officers or directors. No remuneration was paid to CCP IV nor its directors or officers during the year ended December 31, 2010.

 

The board of directors of ConCap, the general partner of CCP IV, does not have a separate audit committee. As such, the board of directors of ConCap fulfills the functions of an audit committee. The board of directors has determined that Steven D. Cordes meets the requirement of an “audit committee financial expert.”

 

The directors and officers of ConCap with authority over CCP IV are all employees of subsidiaries of Aimco. Aimco has adopted a code of ethics that applies to such directors and officers that is posted on Aimco’s website (www.aimco.com). Aimco’s website is not incorporated by reference to this filing.

 

ConCap is the general partner of CCP IV and owns all of the outstanding general partner interests in CCP IV, which constitute 4% of the total interests in the partnership. CCP IV has no directors or executive officers of its own. ConCap is a Delaware corporation, which is indirectly wholly-owned by Aimco. None of the general partner or any of its directors or executive officers owns any of the limited partnership interests of the partnership. The following table sets forth certain information as of November 18, 2011 with respect to the ownership by any person

(including any “group,” as that term is used in Section 13(d)(3) of the Exchange Act) known to us to be the beneficial owner of more than 5% of the units of limited partnership interest of the partnership.

 

 

 

 

 

For additional information about CCP IV and its properties and operating data related to those properties, see CCP IV’s Annual Report on Form 10-K for the year ended December 31, 2010, attached hereto as Annex F, and CCP IV’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, attached hereto as Annex G.

 

As the general partner of CCP IV, ConCap regularly evaluates CCP IV’s properties by considering various factors, such as CCP IV’s financial position and real estate and capital markets conditions. ConCap monitors a property’s specific locale and sub-market conditions (including stability of the surrounding neighborhood), evaluating current trends, competition, new construction and economic changes. It oversees the operating performance of each property and continuously evaluates the physical improvement requirements. In addition, the financing structure for each property (including any prepayment penalties), tax implications to limited partners, availability of attractive mortgage financing to a purchaser, and the investment climate are all considered. Any of these factors, and possibly others, can potentially contribute to any decision by ConCap to sell, refinance, upgrade with capital improvements or hold a partnership property. Also, CCP IV’s partnership agreement provides that the term of the partnership must end no later than December 31, 2011, and does not allow for amendment of the partnership agreement to extend its term beyond that date. As a result, CCP IV would not be able to retain its properties, and ConCap regularly considered the timing and manner of disposition of CCP IV’s remaining properties.

 

After taking into account the foregoing considerations, in early 2009, ConCap listed the Post Ridge Property for sale and received several offers ranging from $6,600,000 to $7,500,000. Since none of these offers were acceptable to ConCap, ConCap decided to take the Post Ridge Property off the market in mid 2009. In early to mid 2009, ConCap listed the Arbours Property for sale. ConCap entered into negotiations with a third party regarding the sale of the Arbours Property. Between September 2009 and November 2010, CCP IV entered into multiple purchase and sale contracts with third parties to sell the Arbours Property, with total sales prices ranging from $16,600,000 to $17,119,000. None of these contracts resulted in a sale of the Arbours Property. On December 8, 2010, CCP IV entered into another purchase and sale contract to sell the Arbours Property for a total sales price of $17,000,000. This contract was terminated on January 19, 2011, but CCP IV and the purchaser entered into a reinstatement of and amendment to the purchase and sale contract on January 28, 2011, pursuant to which the termination was rescinded and the agreement was reinstated.

 

During January 2011, officers of ConCap, who are also officers of Aimco, met several times to consider and discuss strategic alternatives for CCP IV. During these meetings, they considered the costs of maintaining CCP IV’s current ownership structure, including audit, tax and SEC reporting costs, given Aimco OP’s ownership of 69.37% of the CCP IV Units and past loans and advances that had been made by Aimco OP to CCP IV.

 

After considering all of these factors, the officers agreed to explore the possibility of Aimco OP acquiring some or all of CCP IV’s properties through a transaction that would provide the unaffiliated limited partners with the opportunity to defer taxable gain through an exchange of CCP IV Units for OP Units.

 

During January and February of 2011, ConCap’s management sought advice from outside counsel to determine whether a transaction would be feasible that would result in Aimco OP’s ownership of some or all of CCP IV’s properties while also providing potential tax deferral to limited partners that are unaffiliated with Aimco OP. At the same time, they spoke with appraisers regarding the possibility of appraising the properties for purposes of evaluating a potential transaction with Aimco OP.

 

ConCap engaged CRA on February 11, 2011 to appraise each of the Bellevue Property and the Post Ridge Property. On March 1, 2011, the purchase and sale contract for the Arbours Property, which had been reinstated in late January 2011, was terminated by the purchaser. Following the termination of the contract, ConCap considered the possibility of including the Arbours Property in the potential transaction with Aimco OP and engaged CRA on March 3, 2011 to appraise the Arbours Property. CRA delivered the appraisal for the Bellevue Property on March 11, 2011, the appraisal for the Post Ridge Property on March 21, 2011, and the appraisal for the Arbours Property on March 30, 2011. Pursuant to these appraisals, CRA valued the properties at $28,900,000, $9,400,000 and $17,400,000, respectively.

 

Over the following weeks, ConCap’s management reviewed the appraisal reports and discussed both CRA’s assumptions and its valuations of the properties and determined that CRA’s assumptions were reasonable and the

valuations appropriate. As part of their review, they considered the fiduciary duties owed by ConCap to unaffiliated limited partners, as well as the properties’ appraised worth, the amount of indebtedness secured by each of the properties, which at March 31, 2011 was approximately $9,991,000 for the Arbours Property, $18,890,000 for the Bellevue Property, and $5,939,000 for the Post Ridge Property.

 

In April and May 2011, Aimco OP and ConCap continued discussions regarding a possible merger transaction between CCP IV and Aimco OP. In connection with these discussions, Aimco OP and ConCap agreed that, if they were to pursue the merger, they should consider retaining an independent financial advisor to opine as to the fairness of the merger to the unaffiliated limited partners of CCP IV. Aimco OP and ConCap, together with outside counsel, conducted interviews with representatives of Duff & Phelps and two other financial advisory firms.

 

On June 3, 2011, at the request of Aimco OP and ConCap, CRA delivered updated appraisals for the Bellevue Property, the Post Ridge Property, and the Arbours Property, pursuant to which it valued the properties at $29,500,000, $9,500,000 and $17,850,000, respectively, as of May 31, 2011. Aimco OP and ConCap reviewed and discussed the updated appraisal reports and calculated the equity value of CCP IV Units based on these updated appraisals.

 

On June 10, 2011, Aimco OP engaged Duff & Phelps to provide a fairness opinion, and if requested, an updated fairness opinion, with respect to the proposed merger transaction and ten other possible merger transactions. In the following weeks, Duff & Phelps had due diligence calls with ConCap’s management and received due diligence materials in response to its diligence requests.

 

On July 28, 2011, Duff & Phelps delivered its written opinion to the boards of directors of Aimco, the general partner of Aimco OP and the general partner of CCP IV to the effect that, as of July 28, 2011, based upon and subject to the assumptions made, procedures followed, factors considered, and qualifications and limitations on the review undertaken by Duff & Phelps in connection with its opinion, the cash consideration of $57.44 per unit is fair, from a financial point of view, to the unaffiliated limited partners of CCP IV.

 

On July 28, 2011, ConCap and the general partner of Aimco OP approved an agreement and plan of merger that provided for consideration of $57.44 per unit to holders of CCP IV Units, payable in cash or OP Units. Before doing so, ConCap and the other Aimco Entities considered a number of possible alternatives to the proposed transaction, as described in greater detail in this information statement/prospectus. However, they ultimately determined that the proposed merger is in the best interests of CCP IV and its unaffiliated limited partners that hold CCP IV Units. On July 28, 2011, CCP IV, Aimco OP and the Aimco Subsidiary entered into the agreement and plan of merger.

 

Also on July 28, 2011, Aimco and Aimco OP filed with the SEC a registration statement relating to the merger. In addition, the Aimco Entities made certain other filings required in connection with the merger. From August through November 2011, Aimco and Aimco OP responded to SEC comments and revised the registration statement.

 

On September 20, 2011, ConCap’s management met to discuss the merger transaction and the valuations of CCP IV’s properties. On October 4, 2011, ConCap’s management met again to discuss the timing of the merger transaction and considered updating the valuations of CCP IV’s properties. On October 5, 2011, ConCap engaged CRA to update its appraisals and Duff & Phelps to provide an updated fairness opinion with respect to the equity value resulting from such updated appraisals.

 

On October 28, 2011, CRA delivered an updated appraisal for each of the Arbours Property, the Bellevue Property and the Post Ridge Property, pursuant to which it valued the properties at $18,100,000, $30,300,000 and $9,500,000, respectively, each as of October 1, 2011. Aimco OP and ConCap reviewed and discussed the updated appraisal reports and calculated the equity value of the CCP IV Units based on these updated appraisals, CCP IV’s updated financial position and the updated mark-to-market adjustment of the mortgage debt encumbering CCP IV’s properties. This calculation resulted in a decrease of the equity value of the CCP IV Units from $57.44 per unit to $56.14 per unit.

 

On November 15, 2011, Duff & Phelps delivered its updated written opinion to the boards of directors of Aimco, the general partner of Aimco OP and the general partner of CCP IV to the effect that, as of November 15, 2011, based upon and subject to the assumptions made, procedures followed, factors considered, and qualifications

and limitations on the review undertaken by Duff & Phelps in connection with its opinion, the cash consideration of $56.14 per unit is fair, from a financial point of view, to the unaffiliated limited partners of CCP IV.

 

On November 15, 2011, ConCap and the general partner of Aimco OP approved an amendment and restatement of the merger agreement that provides for consideration of $56.14 per unit, payable in cash or OP Units. On November 15, 2011, CCP IV, Aimco OP and the Aimco Subsidiary entered into the amended and restated agreement and plan of merger.

 

In the merger, each CCP IV Unit outstanding immediately prior to consummation of the merger will be converted into the right to receive, at the election of the holder of such CCP IV Unit, either $56.14 in cash or equivalent value in Aimco OP Units, except in those jurisdictions where the law prohibits the offer of OP Units in this transaction (or registration or qualification would be prohibitively costly). Because Aimco indirectly owns ConCap, which is the general partner of CCP IV, the merger consideration has not been determined in an arm’s-length negotiation. In order to arrive at a fair consideration, CRA, an independent real estate appraisal firm, was engaged to perform complete appraisals of each of CCP IV’s three properties. For more detailed information about the independent appraiser’s determination of the estimated values of the properties, see “Special Factors — The Appraisals.” The per unit cash merger consideration payable to each holder of CCP IV Units is greater than ConCap’s estimate of the proceeds that would be available for distribution to limited partners (following the repayment of debt and other liabilities of CCP IV) if the properties were sold at a price equal to their respective appraised values. ConCap did not deduct certain amounts that would be payable upon an immediate sale of the partnership’s properties, such as prepayment penalties on the mortgage debt of the properties. The estimated prepayment penalties would have totaled approximately $9,002,100. ConCap calculated the net proceeds available to all partners by (i) adding to the appraised values the value of any other non-real estate assets of CCP IV that would not be included in the appraisal; and (ii) deducting all liabilities, including the market value of mortgage debt as of September 30, 2011, accounts payable and accrued expenses and certain other costs. The amount of liabilities deducted includes an estimate of $330,400 for expenses attributable to the properties that would be incurred prior to the merger but payable after the merger. In order to determine the per unit cash merger consideration, ConCap divided this amount by the number of total outstanding CCP IV Units. This calculation, which is summarized below, resulted in per unit cash merger consideration of $56.14.

 

 

 

 

Under CCP IV’s partnership agreement, holders of special limited partner interests of CCP IV would not be entitled to receive any distributions in connection with a liquidation of CCP IV if CCP IV’s properties were sold at prices equal to their respective appraised values. Accordingly, holders of special limited partner interests of CCP IV will not receive any consideration in the merger. Following consummation of the merger, special limited partners will cease to have any rights in CCP IV as special limited partners.

 

The number of OP Units offered per CCP IV Unit was calculated by dividing the per unit cash merger consideration by the average closing price of Aimco common stock, as reported on the NYSE, over the ten consecutive trading days ending on the second trading day immediately prior to the consummation of the merger. Although there is no public market for OP Units, after a one-year holding period, each OP Unit is generally redeemable for cash in an amount equal to the value of one share of Aimco common stock at the time, subject to Aimco’s right to acquire each OP Unit in exchange for one share of Aimco common stock (subject to antidilution adjustments). Therefore, ConCap considers the trading price of Aimco common stock to be a reasonable estimate of the fair market value of an OP Unit. As of November 10, 2011, the average closing price of Aimco common stock over the preceding ten consecutive trading days was $23.79, which would have resulted in OP Unit consideration of 2.36 OP Units per CCP IV Unit.

 

ConCap is the general partner of CCP IV and is wholly-owned by AIMCO/IPT, Inc., which in turn is wholly-owned by Aimco. Therefore, ConCap has a conflict of interest with respect to the merger. ConCap has fiduciary duties to AIMCO/IPT, Inc., ConCap’s sole stockholder and an affiliate of Aimco, on the one hand, and to CCP IV

and its limited partners, on the other hand. The duties of ConCap to CCP IV and its limited partners conflict with the duties of ConCap to AIMCO/IPT, Inc., which could result in ConCap approving a transaction that is more favorable to Aimco than might be the case absent such conflict of interest. As the general partner of CCP IV, ConCap seeks the best possible terms for CCP IV’s limited partners. This conflicts with Aimco’s interest in obtaining the best possible terms for Aimco OP.

 

After the merger, Aimco OP will own all of the outstanding CCP IV Units and will be the sole limited partner of CCP IV. ConCap will continue to be the sole general partner of CCP IV after the merger, and CCP IV’s partnership agreement in effect immediately prior to the merger will remain unchanged after the merger. Aimco OP intends to retain the CCP IV Units after the merger.

 

Aimco anticipates owning and operating the properties following the merger. After the merger, Aimco will evaluate the capital improvement needs of the properties, and anticipates making certain routine capital expenditures with respect to each property during the remainder of 2011.

 

For a discussion of the material United States federal income tax consequences of the merger, see “Material United States Federal Income Tax Considerations — United States Federal Income Tax Consequences Relating to the Merger.”

 

No material federal or state regulatory requirements must be satisfied or approvals obtained in connection with the merger, except (1) filing a registration statement that includes this information statement/prospectus with the SEC and obtaining the SEC’s declaration that the registration statement is effective under the Securities Act, (2) registration or qualification of the issuance of OP Units under state securities laws, and (3) filing a certificate of merger with the Secretary of State of the State of Delaware.

 

Aimco and Aimco OP will treat the merger as a purchase of noncontrolling interests for financial accounting purposes. This means that Aimco and Aimco OP will recognize any difference between the purchase price for these noncontrolling interests and the carrying amount of such noncontrolling interests in Aimco and Aimco OP’s consolidated financial statements as an adjustment to the amounts of consolidated equity and partners’ capital attributed to Aimco and Aimco OP, respectively.

 

Limited partners are not entitled to dissenters’ appraisal rights under applicable law or CCP IV’s partnership agreement in connection with the merger. However, pursuant to the terms of the merger agreement, Aimco OP will provide each limited partner with contractual dissenters’ appraisal rights that are similar to the dissenters’ appraisal rights available to a stockholder of a constituent corporation in a merger under Delaware law. These contractual appraisal rights will enable a limited partner to obtain an appraisal of the value of the limited partner’s CCP IV Units in connection with the merger. Prosecution of these contractual appraisal rights will involve an arbitration proceeding, and the consideration paid to a limited partner after the prosecution of such contractual appraisal rights, which will take a period of time that cannot be predicted with accuracy, will be a cash payment, resulting in a taxable event to such limited partner. A description of the appraisal rights being provided, and the procedures that a limited partner must follow to seek such rights, is attached to this information statement/prospectus as Annex B.

 

Under CCP IV’s partnership agreement and Delaware law, a limited partner has the right to obtain by mail, free of charge, a list of the names and addresses and interests owned of the limited partners. This list may be obtained by

making written request to ConCap Equities, Inc., c/o Eagle Rock Proxy Advisors, LLC, 12 Commerce Drive, Cranford, New Jersey 07016, or by fax at (908) 497-2349.

 

The costs of planning and implementing the merger, including the cash merger consideration and the preparation of this information statement/prospectus, will be borne by Aimco OP without regard to whether the merger is effectuated. The estimated amount of these costs is approximately $6,692,600 (assuming all limited partners elect to receive the cash merger consideration). Aimco OP is paying for the costs of the merger with funds on hand or from drawings under its revolving credit facility. The revolving credit facility is pursuant to Aimco OP’s Amended and Restated Senior Secured Credit Agreement, as amended, with a syndicate of financial institutions, with Bank of America, N.A. as administrative agent, swing line lender and L/C issuer. Borrowings under the revolving credit facility bear interest based on a pricing grid determined by leverage (either at LIBOR plus 4.25% with a LIBOR floor of 1.50% or, at Aimco OP’s option, a base rate equal to the Prime rate plus a spread of 3.00%). The revolving credit facility matures May 1, 2013, and may be extended for one year, subject to certain conditions. Aimco OP’s obligations under the Amended and Restated Senior Secured Credit Agreement are secured by its equity interests in its subsidiaries.

 

Under Delaware law, the merger must be approved by CCP IV’s general partner and a majority in interest of the CCP IV Units. The general partner has determined that the merger is advisable, fair to and in the best interests of CCP IV and its limited partners and has approved the merger and the merger agreement. As of November 18, 2011, there were issued and outstanding 342,759 CCP IV Units, and Aimco OP and its affiliates owned 237,778.5 of those units, or approximately 69.37% of the number of units outstanding. Aimco OP and its affiliates have indicated that they intend to take action by written consent, as permitted under the partnership agreement, to approve the merger on or about January 23, 2012.

 

The following is a summary of the material terms of the merger agreement and is qualified in its entirety by reference to the merger agreement, which is attached to this information statement/prospectus as Annex A. You should read the merger agreement carefully in its entirety as it is the legal document that governs this merger.

 

CCP IV has entered into an agreement and plan of merger with the Aimco Subsidiary and Aimco OP. The merger agreement amends and restates a prior merger agreement to reflect a decrease in the merger consideration from $57.44 in cash (or equivalent value in OP Units) to $56.14 in cash (or equivalent value in OP Units) due to, among other things, changes in the mark-to-market adjustment of the mortgage debt encumbering CCP IV’s properties and changes to the estimated market values of CCP IV’s properties which were relied upon to determine the merger consideration. The Aimco Subsidiary is a wholly-owned subsidiary of Aimco OP, and was formed for the purpose of effecting the merger with CCP IV. Aimco owns CCP IV’s general partner, ConCap, and, together with its affiliates, owns a majority of CCP IV’s outstanding limited partnership units.

 

Under the merger agreement, at the effective time of the merger, the Aimco Subsidiary will be merged with and into CCP IV, with CCP IV as the surviving entity. In the merger, each CCP IV Unit outstanding immediately prior to consummation of the merger will be converted into the right to receive, at the election of the holder of such CCP IV Unit, either $56.14 in cash or equivalent value in Aimco OP Units (calculated by dividing $56.14 by the average closing price of Aimco common stock, as reported on the NYSE, over the ten consecutive trading days ending on the second trading day immediately prior to the consummation of the merger); provided, however, that if Aimco OP determines that the law of the state or other jurisdiction in which a limited partner resides would prohibit the issuance of Aimco OP Units in that state or other jurisdiction (or that registration or qualification in that state or jurisdiction would be prohibitively costly), then such limited partner will only be entitled to receive $56.14 in cash for each CCP IV Unit. Each holder of CCP IV Units must make the same election (cash or OP Units) for all of his or her CCP IV Units. Aimco OP’s interest in the Aimco Subsidiary will be converted into CCP IV Units. As a result, after the merger, Aimco OP will own all of the outstanding CCP IV Units and will be the sole limited partner of CCP IV.

 

The agreement of limited partnership of CCP IV as in effect immediately prior to the consummation of the merger will be the agreement of limited partnership of CCP IV after the merger, until thereafter amended in accordance with the provisions thereof and applicable law.

 

CCP IV.  Under the merger agreement, each CCP IV Unit outstanding immediately prior to consummation of the merger will be converted into the right to receive, at the election of the holder of such CCP IV Unit, either $56.14 in cash or equivalent value in Aimco OP Units (calculated by dividing $56.14 by the average closing price of Aimco common stock, as reported on the NYSE, over the ten consecutive trading days ending on the second trading day immediately prior to the consummation of the merger), except in those jurisdictions where the law prohibits the issuance of Aimco OP Units (or registration or qualification would be prohibitively costly). Holders of special limited partner interests of CCP IV will not receive any consideration in the merger. . Following consummation of the merger, special limited partners will cease to have any rights in CCP IV as special limited partners. ConCap will continue to be the sole general partner of CCP IV after the merger, and its current general partner interest will remain unchanged after the merger.

 

Aimco Subsidiary.  All membership interests in the Aimco Subsidiary immediately prior to the effective time of the merger will be converted into CCP IV Units after the merger.

 

Under Delaware law, the merger must be approved by ConCap, as the general partner of CCP IV, and a majority in interest of the CCP IV Units. ConCap has determined that the merger is advisable, fair to and in the best interests of CCP IV and its limited partners and has approved the merger and the merger agreement. As of November 18, 2011, there were issued and outstanding 342,759 CCP IV Units, and Aimco OP and its affiliates

owned 237,778.5 of those units, or approximately 69.37% of the number of units outstanding. Aimco OP and its affiliates have indicated that they intend to take action by written consent, as permitted under the partnership agreement, to approve the merger on or about January 23, 2012. As a result, approval of the merger is assured, and your consent to the merger is not required. Aimco OP has approved the merger on behalf of the Aimco Subsidiary.

 

None of the parties to the merger agreement are required to consummate the merger if any third party consent, authorization or approval that any of the parties deems necessary or desirable in connection with the merger agreement, and the consummation of the transactions contemplated thereby, has not been obtained or received.

 

The merger agreement may be terminated and the merger may be abandoned at any time prior to consummation of the merger, without liability to any party to the merger agreement, by CCP IV, Aimco OP or the Aimco Subsidiary, in each case, acting in its sole discretion and for any reason or for no reason, notwithstanding the approval of the merger agreement by any of the partners of CCP IV or the member of the Aimco Subsidiary.

 

Subject to applicable law, the merger agreement may be amended, modified or supplemented by written agreement of the parties at any time prior to the consummation of the merger with respect to any of the terms contained therein.

 

The merger agreement is governed by and construed in accordance with the laws of the State of Delaware, without reference to the conflict of law provisions thereof.

 

Limited partners are not entitled to dissenters’ appraisal rights under applicable law or CCP IV’s partnership agreement in connection with the merger. However, pursuant to the terms of the merger agreement, Aimco OP will provide each limited partner with contractual dissenters’ appraisal rights that are similar to the dissenters’ appraisal rights available to a stockholder of a constituent corporation in a merger under Delaware law. These contractual appraisal rights will enable a limited partner to obtain an appraisal of the value of the limited partner’s CCP IV Units in connection with the merger. Prosecution of these contractual appraisal rights will involve an arbitration proceeding, and the consideration paid to a limited partner after the prosecution of such contractual appraisal rights, which will take a period of time that cannot be predicted with accuracy, will be a cash payment, resulting in a taxable event to such limited partner. A description of the appraisal rights being provided, and the procedures that a limited partner must follow to seek such rights, is attached to this information statement/prospectus as Annex B.

 

Within 10 days after the effective time of the merger, Aimco OP will prepare and mail to the former holders of CCP IV Units an election form pursuant to which they can elect to receive cash or OP Units. Each holder of CCP IV Units must make the same election (cash or OP Units) for all of his or her CCP IV Units. Limited partners may also elect appraisal of their CCP IV Units pursuant to the election form. Holders of CCP IV Units may elect their form of consideration by completing and returning the election form in accordance with its instructions. If the information agent does not receive a properly completed election form from a holder before 5:00 p.m., New York time, on the 30th day after the mailing of the election form, the holder will be deemed to have elected to receive the cash consideration. Former holders of CCP IV Units may also use the election form to elect to receive, in lieu of the merger consideration, the appraised value of their CCP IV Units, determined through an arbitration proceeding.