-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HrihR3xzh3tL3DFqkpB+cC8dF00RYHaZezPIUUx1QqIZXEY9lqOh50Lge0YykkPL //I7N5j66f/ISmW5X4Va2A== 0000276326-96-000004.txt : 19960515 0000276326-96-000004.hdr.sgml : 19960515 ACCESSION NUMBER: 0000276326-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCNEIL REAL ESTATE FUND IX LTD CENTRAL INDEX KEY: 0000276326 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 942491437 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09026 FILM NUMBER: 96563007 BUSINESS ADDRESS: STREET 1: 13760 NOEL RD STE 700 STREET 2: LB70 CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 2144485800 MAIL ADDRESS: STREET 1: 13760 NOEL ROAD SUITE 700 LB 70 CITY: DALLAS STATE: TX ZIP: 75240 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended March 31, 1996 ------------------------------------------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to_____________ Commission file number 0-9026 McNEIL REAL ESTATE FUND IX, LTD. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 94-2491437 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (214) 448-5800 ------------------------------ Indicate by check mark whether the registrant, (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ McNEIL REAL ESTATE FUND IX, LTD. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- BALANCE SHEETS (Unaudited)
March 31, December 31, 1996 1995 ---------------- --------------- ASSETS - ------- Real estate investments: Land..................................................... $ 6,716,099 $ 6,716,099 Buildings and improvements............................... 84,140,248 83,847,294 -------------- -------------- 90,856,347 90,563,393 Less: Accumulated depreciation.......................... (49,177,539) (48,129,231) -------------- -------------- 41,678,808 42,434,162 Cash and cash equivalents................................... 3,095,386 3,059,582 Cash segregated for security deposits....................... 534,624 534,609 Accounts receivable......................................... 114,298 114,367 Prepaid expenses and other assets........................... 219,609 223,959 Escrow deposits............................................. 1,775,450 1,418,389 Deferred borrowing costs, net of accumulated amorti- zation of $743,267 and $689,693 at March 31, 1996 and December 31, 1995, respectively................. 2,132,244 2,185,818 -------------- -------------- $ 49,550,419 $ 49,970,886 ============== ============== LIABILITIES AND PARTNERS' DEFICIT Mortgage notes payable, net................................. $ 51,201,391 $ 51,390,822 Accounts payable............................................ 121,840 266,777 Accrued property taxes...................................... 1,146,058 962,251 Accrued interest............................................ 373,282 374,740 Other accrued expenses...................................... 206,212 306,022 Payable to affiliates - General Partner..................... 753,747 508,369 Security deposits and deferred rental revenue............... 581,743 562,665 -------------- -------------- 54,384,273 54,371,646 -------------- -------------- Partners' deficit: Limited partners - 110,200 limited partnership units authorized; 110,170 limited partnership units outstanding............................................ (1,734,238) (1,574,003) General Partner.......................................... (3,099,616) (2,826,757) -------------- -------------- (4,833,854) (4,400,760) $ 49,550,419 $ 49,970,886 ============== ==============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. McNEIL REAL ESTATE FUND IX, LTD. STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31, ----------------------------------- 1996 1995 --------------- --------------- Revenue: Rental revenue........................................... $ 4,873,033 $ 4,678,641 Interest................................................. 35,374 66,454 -------------- -------------- Total revenue.......................................... 4,908,407 4,745,095 -------------- -------------- Expenses: Interest................................................. 1,210,799 1,209,446 Depreciation............................................. 1,048,308 934,155 Property taxes........................................... 390,994 355,635 Personnel expenses....................................... 666,807 710,447 Repair and maintenance................................... 548,397 501,311 Property management fees - affiliates...................................... 242,455 233,284 Utilities................................................ 476,655 440,898 Other property operating expenses............................................... 297,032 312,697 General and administrative............................... 44,768 38,924 General and administrative - affiliates.................. 150,861 183,169 -------------- -------------- Total expenses......................................... 5,077,076 4,919,966 -------------- -------------- Net loss.................................................... $ (168,669) $ (174,871) ============== ============== Net loss allocated to limited partners...................... $ (160,235) $ (466,157) Net income allocated to General Partner..................... (8,434) 291,286 -------------- -------------- Net loss.................................................... $ (168,669) $ (174,871) ============== ============== Net loss per limited partnership unit....................... $ (1.45) $ (4.23) ============== ==============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. McNEIL REAL ESTATE FUND IX, LTD. STATEMENTS OF PARTNERS' DEFICIT (Unaudited) For the Three Months Ended March 31, 1996 and 1995
Total General Limited Partners' Partner Partners Deficit --------------- --------------- --------------- Balance at December 31, 1994.............. $ (2,439,996) $ (561,005) $ (3,001,001) Net income (loss)......................... 291,286 (466,157) (174,871) Management Incentive Distribution......... (252,244) - (252,244) ------------- ------------- ------------- Balance at March 31, 1995................. $ (2,400,954) $ (1,027,162) $ (3,428,116) ============= ============= ============= Balance at December 31, 1995.............. $ (2,826,757) $ (1,574,003) $ (4,400,760) Net loss.................................. (8,434) (160,235) (168,669) Management Incentive Distribution......... (264,425) - (264,425) ------------- ------------- ------------- Balance at March 31, 1996................. $ (3,099,616) $ (1,734,238) $ (4,833,854) ============= ============= =============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. McNEIL REAL ESTATE FUND IX, LTD. STATEMENTS OF CASH FLOWS (Unaudited) Increase (Decrease) in Cash and Cash Equivalents
Three Months Ended March 31, ------------------------------------ 1996 1995 ---------------- ---------------- Cash flows from operating activities: Cash received from tenants............................... $ 4,878,186 $ 4,697,131 Cash paid to suppliers................................... (2,319,541) (2,193,723) Cash paid to affiliates.................................. (412,363) (419,490) Interest received........................................ 35,374 66,454 Interest paid............................................ (1,148,080) (1,076,784) Property taxes paid and escrowed......................... (504,784) (409,878) -------------- -------------- Net cash provided by operating activities................... 528,792 663,710 -------------- -------------- Cash flows from investing activities: Additions to real estate investments..................... (292,954) (426,042) -------------- -------------- Cash flows from financing activities: Principal payments on mortgage notes payable................................................ (200,034) (172,050) Management Incentive Distribution........................ - (337,994) -------------- -------------- Net cash used in financing activities....................... (200,034) (510,044) -------------- -------------- Increase (decrease) in cash and cash equivalents.............................................. 35,804 (272,376) Cash and cash equivalents at beginning of period................................................... 3,059,582 4,199,844 -------------- -------------- Cash and cash equivalents at end of period.................. $ 3,095,386 $ 3,927,468 ============== ==============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. McNEIL REAL ESTATE FUND IX, LTD. STATEMENTS OF CASH FLOWS (Unaudited) Reconciliation of Net Loss to Net Cash Provided by Operating Activities
Three Months Ended March 31, ------------------------------------ 1996 1995 ---------------- ---------------- Net loss.................................................... $ (168,669) $ (174,871) -------------- -------------- Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation............................................. 1,048,308 934,155 Amortization of deferred borrowing costs................. 53,574 50,479 Amortization of mortgage discounts....................... 10,603 10,043 Changes in assets and liabilities: Cash segregated for security deposits.................. (15) 14,400 Accounts receivable.................................... 69 7,442 Prepaid expenses and other assets...................... 4,350 42,324 Escrow deposits........................................ (357,061) (213,760) Accounts payable....................................... (144,937) (280,859) Accrued property taxes................................. 183,807 213,000 Accrued interest....................................... (1,458) 72,141 Other accrued expenses................................. (99,810) (16,829) Payable to affiliates - General Partner................ (19,047) (3,037) Security deposits and deferred rental revenue.............................................. 19,078 9,082 -------------- -------------- Total adjustments.................................... 697,461 838,581 -------------- -------------- Net cash provided by operating activities................... $ 528,792 $ 663,710 ============== ==============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. McNEIL REAL ESTATE FUND IX, LTD. Notes to Financial Statements (Unaudited) March 31, 1996 NOTE 1. - ------- McNeil Real Estate Fund IX, Ltd. (the "Partnership") is a limited partnership organized under the laws of the State of California to invest in real property. The general partner of the Partnership is McNeil Partners, L.P. (the "General Partner"), a Delaware limited partnership, an affiliate of Robert A. McNeil ("McNeil"). The Partnership is governed by an amended and restated limited partnership agreement ("Amended Partnership Agreement") that was adopted September 20, 1991. The principal place of business for the Partnership and the General Partner is 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240. In the opinion of management, the financial statements reflect all adjustments necessary for a fair presentation of the Partnership's financial position and results of operations. All adjustments were of a normal recurring nature. However, the results of operations for the three months ended March 31, 1996 are not necessarily indicative of the results to be expected for the year ending December 31, 1996. NOTE 2. - ------- The financial statements should be read in conjunction with the financial statements contained in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1995, and the notes thereto, as filed with the Securities and Exchange Commission, which is available upon request by writing to McNeil Real Estate Fund IX, Ltd., c/o McNeil Real Estate Management, Inc., Investor Services, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240. NOTE 3. - ------- The Partnership pays property management fees equal to 5% of the gross rental receipts of the Partnership's properties to McNeil Real Estate Management, Inc. ("McREMI"), an affiliate of the General Partner, for providing property management and leasing services for the Partnership's properties. The Partnership reimburses McREMI for its costs, including overhead, of administering the Partnership's affairs. Under terms of the Amended Partnership Agreement, the Partnership is paying a Management Incentive Distribution ("MID") to the General Partner. The maximum MID is calculated as 1% of the tangible asset value of the Partnership. The maximum MID percentage decreases subsequent to 1999. Tangible asset value is determined by using the greater of (i) an amount calculated by applying a capitalization rate of 9% to the annualized net operating income of each property or (ii) a value of $10,000 per apartment unit for residential property and $50 per gross square foot for commercial property to arrive at the property tangible asset value. The property tangible asset value is then added to the book value of all other assets excluding intangible items. MID will be paid to the extent of the lesser of the Partnership's excess cash flow, as defined, or net operating income, as defined ("the Entitlement Amount"), and may be paid (i) in cash, unless there is insufficient cash to pay the distribution in which event any unpaid portion not taken in Units will be deferred and is payable, without interest, from the first available cash and/or (ii) in Units. A maximum of 50% of the MID may be paid in Units. The number of Units issued in payment of the MID is based on the greater of $50 per Unit or the net tangible asset value, as defined, per Unit. Any amount of the MID that is paid to the General Partner in Units will be treated as if cash is distributed to the General Partner and is then contributed to the Partnership by the General Partner. The Contingent MID represents a return of equity to the General Partner for increasing cash flow, as defined, and accordingly is treated as a distribution. Compensation, reimbursements and distributions paid to or accrued for the benefit of the General Partner and its affiliates are as follows:
Three Months Ended March 31, ----------------------------------- 1996 1995 --------------- --------------- Property management fees - affiliates....................... $ 242,455 $ 233,284 Charged to general and administrative - affiliates: Partnership administration............................... 150,861 183,169 -------------- -------------- $ 393,316 $ 416,453 ============== ============== Charged to General Partner's deficit: Management Incentive Distribution........................ $ 264,425 $ 252,244 ============== ==============
NOTE 4. - ------- On April 24, 1996, a fire damaged 12 of the 272 units at Sheraton Hills Apartments. The Partnership is unable to estimate the cost of the damage at this time. Costs to repair or replace the damaged units are expected to be covered by insurance. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION - ------- ----------------------------------------------------------- AND RESULTS OF OPERATIONS ------------------------- The Partnership was formed to acquire, operate and ultimately dispose of a portfolio of income-producing real properties. At March 31, 1996, the Partnership owned fourteen apartment properties. All but one of the Partnership's properties are subject to mortgage notes. RESULTS OF OPERATIONS - --------------------- Revenue: Rental revenue for the three months ended March 31, 1996 increased $194,392 or 4.2% compared to the same period of 1995. Rental revenues increased at eleven of the Partnership's fourteen properties. The Partnership raised base rental rates an average of 11.8% at all of its properties except for Cherry Hills Apartments which remained unchanged. Increases in base rental rates were partially offset by lower average occupancy rates at nine of the Partnership's properties. Of the nine properties that experienced decreases, Westgate Apartments reported the largest decrease of 13% from 96% at March 31, 1995 to 83% at March 31, 1996. At the five remaining Partnership's properties, occupancy rates increased or remained the same. Of the properties that experienced increases in occupancy, Cherry Hills Apartments showed the largest increase of 5% from 86% at March 31, 1995 to 91% at March 31, 1996. Interest revenue decreased by $31,080 or 47% for the first quarter of 1996 compared to the same period of 1995. The decrease is due to a decrease in interest earned on short-term investments of cash and cash equivalents, the result of a decline in the average cash balances invested in these accounts in the first quarter of 1996. In addition, interest revenue received on capital escrow accounts decreased in the first quarter of 1996 due to the capital escrow accounts on Cherry Hills, Lantern Tree, Meridian West, Rockborough, and Williamsburg having been fully reimbursed prior to January 1996. Interest income on these capital escrow accounts was recorded in the first quarter of 1995. No such income was recorded in 1996. Expenses: Partnership expenses increased $157,110 or 3.2% for the first three months of 1996 compared to the first three months of 1995. Expenses increased at twelve of the Partnership's fourteen properties. Expenses were unchanged at Pennbrook Apartments and decreased 1.2% at Rockborough Apartments. The increased expenses were concentrated in depreciation and general and administrative. Depreciation expense increased $114,153 or 12% for the first three months of 1996 compared to first three months of 1995. The Partnership added $3.45 million of capital improvements to its properties in the 12 months ended March 31, 1996. Depreciation on the capital improvements led to the increase in depreciation expense. The improvements generally are being depreciated over lives ranging from five to ten years. General and administrative increased $5,844 or 15% for the three month period ended March 31, 1996 compared to the same period of 1995 due to the Partnership incurring costs to defend class action litigation. General and administrative - affiliate decreased $32,308 or 17.6% for the first three months of 1996 compared to the first three months of 1995. The decrease was due to a decrease in overhead expenses allocated to the Partnership in 1996. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Partnership reported a loss of $168,669 for the first three months of 1996, a slight improvement from the $174,871 loss recorded for the first three months of 1995. Cash provided by operations decreased $134,918 or 20%. The decrease in cash flow provided by operations was principally the result of a 23% increase in property taxes paid and escrowed and a 5.7% increase in cash paid to suppliers. These increases in cash paid were offset by a 4% increase in cash received from tenants. The Partnership continues to invest significant resources into capital improvements at its properties. During the first three months, capital improvement expenditures decreased $133,088 or 45% compared to the first three months of 1995. The Partnership has budgeted $1,563,128 of capital improvement expenditures for 1996. The Partnership also decreased its expenditures in the financing area. Management Incentive Distributions ("MID") incurred by the Partnership have not been paid in 1996. Scheduled principal payments on the Partnership's mortgage notes increased 16% to $200,034. Short-term liquidity: The Partnership began 1996 with adequate cash reserves. These reserves will be needed to address continuing capital improvement needs in light of aging condition of the Partnership's properties. The Partnership has budgeted $1.6 million for capital improvements for 1996 in addition to the $10.5 million of capital improvements made during the past three years. The General Partner believes these capital improvements are necessary to allow the Partnership to increase its rental revenues in the competitive markets in which the Partnership's properties operate. These expenditures also allow the Partnership to reduce certain repair and maintenance expenses from amounts that would otherwise be incurred. At March 31, 1996, the Partnership held $3,095,386 of cash and cash equivalents, up $35,804 from the balance at the beginning of 1996. The General Partner anticipates that cash generated from operations for the remainder of 1996 will be sufficient to fund the Partnership's budgeted capital improvements and to repay the current portion of the Partnership's mortgage notes. However, 1996 cash flow from operations likely will not be adequate to pay the MID due to the General Partner. The Partnership will use its cash reserves to pay the MID. The General Partner considers the Partnership's cash reserves adequate for anticipated operations for the remainder of 1996. The General Partner has established a revolving credit facility, not to exceed $5,000,000 in the aggregate, which will be available on a "first-come, first-served" basis to the Partnership and other affiliated partnerships if certain conditions are met. Borrowings under the facility may be used to fund deferred maintenance, refinancing obligations and working capital needs. There is no assurance that the Partnership will receive additional funds from the facility because no amount will be reserved for any particular partnership. As of March 31, 1996, $2,662,819 remained available from the facility; however, additional funds could become available as other partnerships repay borrowings. This commitment will terminate on November 12, 1996. Long-term liquidity: For the long term, property operations will remain the primary source of funds. In this regard, the General Partner expects that the $10.5 million of capital improvements made by the Partnership during the past three years will yield improved cash flow from operations in 1996. Furthermore, the General Partner has budgeted an additional $1.6 of capital improvements for 1996. If the Partnership's cash position deteriorates, the General Partner may elect to defer certain of the capital. As an additional source of liquidity, the General Partner may, from time to time, attempt to sell Partnership properties judged to be mature considering the circumstances of the market in which the properties are located, as well as the Partnership's need for liquidity. However, there can be no guarantee that the Partnership will be able to sell any of its properties for an amount sufficient to retire the related mortgage note and still provide cash proceeds to the Partnership, or that such proceeds could be timed to coincide with the liquidity needs of the Partnership. Currently, no Partnership properties are being marketed for sale. Income Allocations and Distributions: Terms of the Amended Partnership Agreement specify that income before depreciation is allocated to the General Partner to the extent of MID paid in cash. Depreciation is allocated in the ratio of 95:5 to the limited partners and the General Partner, respectively. Therefore, for the three month period ended March 31, 1996, a net loss ($8,434) was allocated to the General Partner. The limited partners received allocations of net loss of ($160,235) for the three month period ended March 31, 1996. With the exception of the MID, distributions to partners have been suspended since 1986 as part of the General Partner's policy of maintaining adequate cash reserves. Distributions to Unit holders will remain suspended for the foreseeable future. The General Partner will continue to monitor the cash reserves and working capital needs of the Partnership to determine when cash flows will support distributions to the Unit holders. MID for the first three months of 1996 amounted to $264,425. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ------- -------------------------------- (a) Exhibits. Exhibit Number Description 4. Amended and Restated Partnership Agreement, dated November 12, 1991. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended March 31, 1991). 11. Statement regarding computation of net loss per limited partnership unit: Net loss per limited partnership unit is computed by dividing net loss allocated to the limited partners by the number of limited partnership units outstanding. Per unit information has been computed based on 110,170 limited partnership units outstanding in 1996 and 1995. 27. Financial Data Schedule for the quarter ended March 31, 1996. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended March 31, 1996. McNEIL REAL ESTATE FUND IX, LTD. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized: McNEIL REAL ESTATE FUND IX, Ltd. By: McNeil Partners, L.P., General Partner By: McNeil Investors, Inc., General Partner May 14, 1996 By: /s/ Donald K. Reed - ------------------- --------------------------------------------- Date Donald K. Reed President and Chief Executive Officer May 14, 1996 By: /s/ Ron K. Taylor - ------------------- --------------------------------------------- Date Ron K. Taylor Acting Chief Financial Officer of McNeil Investors, Inc. May 14, 1996 By: /s/ Brandon K. Flaming - ------------------- --------------------------------------------- Date Brandon K. Flaming Chief Accounting Officer of McNeil Real Estate Management, Inc. EX-27 2
5 3-MOS DEC-31-1996 MAR-31-1996 3,095,386 0 0 0 0 0 90,856,347 (49,177,539) 49,550,419 0 51,201,391 0 0 0 0 49,550,419 4,873,033 4,908,407 0 0 3,866,277 0 1,210,799 0 0 (168,669) 0 0 0 (168,669) 0 0
-----END PRIVACY-ENHANCED MESSAGE-----