Skip to main content

Dear Limited Partner:

As you may be aware by now, Peachtree Partners initiated an unsolicited mini-tender offer (the “Mini-Tender Offer”) to buy up to 4% of the outstanding units of limited partnership interest (the “Units”) of United Development Funding III, L.P., a Delaware limited partnership (the “Fund”), for a price of $1.50 per Unit less any distributions paid by the Fund after October 25, 2017 and less a $100 charge per tendering limited partner. The Fund’s general partner first became aware of the offer by Peachtree Partners on November 6, 2017. You should be aware that the Fund is not in any way affiliated with Peachtree Partners, the Mini-Tender Offer or other Mini-Tender Offer documentation and the Fund’s general partner expresses no opinion and remains neutral regarding whether you should accept or reject the Mini-Tender Offer by Peachtree Partners.

As Peachtree Partners states in its letter, Peachtree Partners is making this offer “intending to make a profit.” 

Mini-tender offers are third-party offers to purchase less than 5% of an entity’s outstanding securities, thereby avoiding many of the filing, disclosure and procedural requirements established by the U.S. Securities and Exchange Commission (“SEC”) to protect investors from certain abuses that may occur in a tender offer. The SEC has warned that mini-tender offers “have been increasingly used to catch investors off guard.” [1] In this instance, Peachtree Partners’ letter states that they have not undertaken any due diligence of the Fund’s delinquent filings.  As a limited partner of the Fund, Peachtree Partners is entitled to a list of limited partners and has used that list to contact you directly.

The Fund is required by the Securities Exchange Act of 1934, as amended, and the rules and regulations under it, to inform you of its position, if any, with respect to the Mini-Tender Offer. As a result, the Fund’s general partner:  (1) reviewed the terms and conditions of the Mini-Tender Offer; (2) considered other information relating to the Fund’s historical financial performance, portfolio of assets, current financial condition and future opportunities; and (3) evaluated various other factors it deemed relevant in light of its knowledge of the Fund’s business, financial condition, portfolio of assets and future prospects.

The following are the material factors considered by the Fund’s general partner in evaluating the Mini-Tender Offer:

  • Peachtree Partners is making the offer for investment purposes and with the intention of making a profit from the ownership of the Units by purchasing them at a low price, and limited partners who tender their Units pursuant to the Mini-Tender Offer may be deprived of the potential opportunity to realize the long-term value of their investment in the Fund;
  • The Fund’s general partner has not determined an estimated value of the Fund’s Units since March 2015 and events have occurred since that time which may cause the March 2015 estimate to no longer be accurate;
  • The Fund was unable to timely complete its annual financial statements for the years ended December 31, 2015 and December 31, 2016 or its quarterly financial statements for the quarters ended March 31, 2017, June 30, 2017 and September 30, 2017  because its independent accounting firm elected not to stand for reappointment in November 2015;
  • In June 2016, the Fund announced that it has engaged EisnerAmper LLP as its independent accounting firm, and the Fund intends to file its required financial statements and update the estimated value of the Fund’s Units as soon as possible. The Fund is not currently able to indicate when the audit of its financial statements will be completed or when the Fund will file periodic reports with the SEC for periods subsequent to September 30, 2015;
  • In November 2017, the Fund announced that the outstanding balance of its $15 million line of credit is approximately $1.1 million;
  • The Fund has received a “Wells Notice” from the staff of the SEC’s Division of Enforcement stating that the SEC staff has made a preliminary determination to recommend that the SEC file an enforcement action against the Fund and certain individuals alleging violations of certain specific provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. A Wells Notice is not a formal allegation or a finding of wrongdoing, but is a preliminary determination by the SEC staff that it may recommend to the SEC that a civil enforcement action or administrative proceeding be brought against the recipient. The Fund responded to the Wells Notice in December 2016 and requested that the SEC reject the staff’s recommendation and not authorize an enforcement action against the Fund, as the Fund continues to believe that it has complied with all applicable laws and regulations. The Fund is unable to predict how long the SEC process will last, the outcome of the SEC’s investigation or any action that the SEC may ultimately decide to pursue, or any impact on the Fund as a result of the proposed or any actual enforcement action.
  • The $100 charge per tendering limited partner significantly dilutes the $1.50 per Unit price offered to you;
  • In light of the Mini-Tender Offer, it is possible that in the near future other bidders may emerge and make offers to purchase the Units at prices that may be higher than the price offered by Peachtree Partners. In addition, Peachtree Partners may choose to make one or more tender offers for the Units in the near future at prices that may be above the current $1.50 per Unit price offered in the Mini-Tender Offer. It is important to note that last year Peachtree Partners initiated a mini-tender offer for the Units at a price of $1.25 per Unit. It is possible that Peachtree Partners may in the future make additional tender offers at prices above $1.50 per Unit. However, no assurances can be given at this time as to what actions Peachtree Partners or third parties may take, including whether any other mini-tender offers will be made or what prices Peachtree Partners or other bidders may offer in the future;
  • The Fund believes that Peachtree Partners’ Mini-Tender Offer contains statements that are misleading to limited partners and that Peachtree Partners’ Mini-Tender Offer is intended to prey upon investors who are uninformed. For example, the Fund believes that Peachtree Partners’ statement that the “viability of the partnership [is] in jeopardy” is misleading, because the general partner remains confident of the Fund’s business strategy; and
  • The Fund believes that Peachtree Partners’ statement that “you may prefer to receive cash now rather than waiting for the partnership to liquidate” is misleading and intended to pressure limited partners into making hasty decisions without taking adequate time to consider all of the facts relating to the Mini-Tender Offer.

Limited partners are cautioned that Peachtree Partners and its principals have made previous below-market mini-tender offers for the securities of companies and that in 2003, Ira Gaines, one of Peachtree Partners’ principals, suffered an action by the SEC in connection with a prior mini-tender offer, resulting in a consent decree enjoining him from offering, making or engaging in mini-tender offers for a public company’s securities. This consent specifies that it does not pertain to offers to purchase limited partnership interests such as the Fund’s Units. Furthermore, in 2013, the State of North Dakota issued a stop order suspending an attempted tender offer by Peachtree Partners after the State of North Dakota determined, in part, that Peachtree Partners had failed “to disclose the regulatory actions taken by the Securities and Exchange Commission against Peachtree Partners, Ira J. Gaines, and other entities controlled by Gaines, concerning mini-tender offers of public companies,” which the State of North Dakota determined to be “omissions of material facts, necessary to make the statements made in the tender offer…not misleading.” Peachtree Partners then rescinded the proposed tender offer in order to have the North Dakota stop order vacated. It is noted the Peachtree Partners has once again failed to disclose the regulatory actions taken by the SEC against Peachtree Partners and Ira Gaines in the Mini-Tender Offer with respect to the Fund. To read more about Mr. Gaines and the orders against him and his affiliated entities in connection with mini-tender offers, please see:, and

In addition, we note that the Mini-Tender Offer is open only until December 29, 2017 and decisions by limited partners to tender their Units may not be withdrawn after 15 days, which may cause limited partners to make hasty decisions without taking adequate time to consider all of the facts relating to the Mini-Tender Offer.

After evaluating the Mini-Tender Offer and information regarding the Fund as discussed above, because the Fund does not have current financial information available, the Fund’s general partner determined it is not in a position to express an opinion regarding whether you should accept or reject the Mini-Tender Offer by Peachtree Partners at this time. The Fund urges each limited partner to make its own decision regarding the Mini-Tender Offer based on all of the available information, including the adequacy of the Mini-Tender Offer price in light of the limited partner’s own investment objectives and liquidity needs, individual tax and other circumstances as well as the limited partner’s own views as to the Fund’s prospects and outlook and the factors considered by the Fund’s general partner, as described above. Limited partners are urged to consult with their own financial advisor or broker, and to exercise caution with respect to mini-tender offers. Additional information regarding the SEC’s regulatory concerns about mini-tender offers is available at the SEC’s website at

Please be aware that you are not required to tender your Units to Peachtree Partners. To reject the Mini-Tender Offer, simply ignore it; you do not need to respond to anything. If you have already agreed to tender your Units pursuant to the Mini-Tender Offer, Peachtree Partners’ offer permits you to withdraw and rescind any acceptance of the offer within 15 days; however, we understand that thereafter your tender will be irrevocable, even if you have not received payment for your Units at that time. 


UMTH Land Development, L.P.
General Partner of United Development Funding III, L.P.

/s/ Hollis M. Greenlaw
Hollis M. Greenlaw
President and Chief Executive Officer

This correspondence contains forward-looking statements relating to the Mini-Tender Offer and the business and financial outlook of United Development Funding III, L.P. that are based on the Fund’s current expectations and estimates, and are not guarantees of future performance or future events. Such forward-looking statements generally can be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” or other similar words. Readers of this correspondence should be aware that there are various factors, many of which are beyond the Fund’s control, that could cause actual results to differ materially from any forward-looking statements made in this correspondence. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this correspondence. A number of important factors could cause actual results to differ materially from the forward-looking statements contained in this correspondence. Forward-looking statements in this document speak only as of the date on which such statements were made, and we undertake no obligation to update any such statements that may become untrue because of subsequent events.

[1]   U.S. Securities and Exchange Commission, “Mini-Tender Offers: Tips for Investors,” (modified January 31, 2008).