-----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, TQn01aKY7VbW0JJ6T3PukL98SiA6HbAgkWRooSXcTkv6EpAiOyADhp61MAVa2IeZ 1PrRT5uJZxgA/1UPVNSpow== 0000276326-96-000008.txt : 19961118 0000276326-96-000008.hdr.sgml : 19961118 ACCESSION NUMBER: 0000276326-96-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 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: 96663620 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 September 30, 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 (972) 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)
September 30, December 31, 1996 1995 --------------- --------------- ASSETS - ------ Real estate investments: Land..................................................... $ 6,370,834 $ 6,716,099 Buildings and improvements............................... 81,029,837 83,847,294 -------------- -------------- 87,400,671 90,563,393 Less: Accumulated depreciation.......................... (48,703,512) (48,129,231) -------------- -------------- 38,697,159 42,434,162 Cash and cash equivalents................................... 2,794,581 3,059,582 Cash segregated for security deposits....................... 564,697 534,609 Accounts receivable......................................... 63,372 114,367 Insurance proceeds receivable............................... 529,799 - Prepaid expenses and other assets........................... 222,719 223,959 Escrow deposits............................................. 1,514,593 1,418,389 Mortgage note receivable.................................... 1,550,000 - Deferred borrowing costs, net of accumulated amorti- zation of $850,415 and $689,693 at September 30, 1996 and December 31, 1995, respectively................. 2,025,096 2,185,818 -------------- -------------- $ 47,962,016 $ 49,970,886 ============== ============== LIABILITIES AND PARTNERS' DEFICIT - --------------------------------- Mortgage notes payable, net................................. $ 50,806,894 $ 51,390,822 Accounts payable............................................ 15,033 266,777 Accrued interest............................................ 370,263 374,740 Accrued property taxes...................................... 1,019,725 962,251 Other accrued expenses...................................... 207,936 306,022 Payable to affiliates - General Partner..................... 160,683 508,369 Deferred gain on involuntary conversion..................... 440,506 - Security deposits and deferred rental revenue............... 599,291 562,665 -------------- -------------- 53,620,331 54,371,646 -------------- -------------- Partners' deficit: Limited partners - 110,200 limited partnership units authorized; 110,170 limited partnership units outstanding............................................ (3,003,557) (1,574,003) General Partner.......................................... (2,654,758) (2,826,757) -------------- -------------- (5,658,315) (4,400,760) -------------- -------------- $ 47,962,016 $ 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 Nine Months Ended September 30, September 30, --------------------------------- --------------------------------- 1996 1995 1996 1995 -------------- --------------- -------------- -------------- Revenue: Rental revenue................ $ 4,954,103 $ 4,822,479 $ 14,780,033 $ 14,243,494 Interest on mortgage note receivable.................. 26,264 - 26,264 - Other interest................ 55,068 53,630 123,978 175,865 Gain on involuntary conversion.................. - 108,653 - 108,653 Gain on legal settlement...... - - - 70,817 ------------- ------------- ------------- ------------- Total revenue............... 5,035,435 4,984,762 14,930,275 14,598,829 ------------- ------------- ------------- ------------- Expenses: Interest...................... 1,198,085 1,212,292 3,612,711 3,633,285 Depreciation.................. 1,036,344 1,005,555 3,147,117 2,892,412 Property taxes................ 373,574 350,190 1,139,074 1,061,004 Personnel expense............. 652,542 671,144 1,902,232 1,968,316 Repair and maintenance........ 639,013 572,991 1,877,673 1,731,049 Property management fees - affiliates........... 246,027 240,965 733,862 709,053 Utilities..................... 377,055 388,028 1,266,188 1,192,983 Other property operating expenses.................... 280,150 317,992 882,770 937,207 General and administrative.... 75,952 169,560 156,131 244,637 General and administrative - affiliates.................. 120,293 118,668 421,426 546,073 Loss on disposition of real estate...................... - - 220,157 - ------------- ------------- -------------- -------------- Total expenses.............. 4,999,035 5,047,385 15,359,341 14,916,019 ------------- ------------- -------------- -------------- Net income (loss)................ $ 36,400 $ (62,623) $ (429,066) $ (317,190) ============= ============= ============== ============= Net loss allocated to limited partners...................... $ (183,014) $ (240,346) $ (1,429,554) $ (852,564) Net income allocated to General Partner............... 219,414 177,723 1,000,488 535,374 ------------- ------------- -------------- -------------- Net income (loss)................ $ 36,400 $ (62,623) $ (429,066) $ (317,190) ============= ============= ============== ============== Net loss per limited partnership unit.............. $ (1.67) $ (2.18) $ (12.98) $ (7.74) ============= ============= ============== =============
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 Nine Months Ended September 30, 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)......................... 535,374 (852,564) (317,190) Management Incentive Distribution......... (802,513) - (802,513) ------------- ------------- ------------- Balance at September 30, 1995............. $ (2,707,135) $ (1,413,569) $ (4,120,704) ============= ============= ============= Balance at December 31, 1995.............. $ (2,826,757) $ (1,574,003) $ (4,400,760) Net income (loss)......................... 1,000,488 (1,429,554) (429,066) Management Incentive Distribution......... (828,489) - (828,489) ------------- ------------- ------------- Balance at September 30, 1996............. $ (2,654,758) $ (3,003,557) $ (5,658,315) ============= ============= =============
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) Decrease in Cash and Cash Equivalents
Nine Months Ended September 30, ------------------------------------ 1996 1995 ---------------- ---------------- Cash flows from operating activities: Cash received from tenants............................... $ 14,807,554 $ 14,266,728 Cash received from legal settlement...................... - 70,817 Cash paid to suppliers................................... (6,427,926) (6,008,580) Cash paid to affiliates.................................. (1,173,619) (1,256,197) Mortgage interest received............................... 26,264 - Other interest received.................................. 123,978 175,865 Interest paid............................................ (3,424,660) (3,381,014) Property taxes paid and escrowed......................... (1,153,450) (1,037,911) -------------- -------------- Net cash provided by operating activities................... 2,778,141 2,829,708 -------------- -------------- Cash flows from investing activities: Additions to real estate investments..................... (1,761,948) (2,583,791) Proceeds from sale of real estate........................ 2,042,384 - Proceeds from sale of real estate invested in mortgage note receivable............................ (1,550,000) - Insurance proceeds from storm damage..................... - 144,666 -------------- -------------- Net cash used in investing activities....................... (1,269,564) (2,439,125) --------------- -------------- Cash flows from financing activities: Principal payments on mortgage notes payable................................................ (615,734) (552,592) Management Incentive Distribution........................ (1,157,844) (679,994) --------------- -------------- Net cash used in financing activities....................... (1,773,578) (1,232,586) -------------- -------------- Decrease in cash and cash equivalents....................... (265,001) (842,003) Cash and cash equivalents at beginning of period................................................... 3,059,582 4,199,844 -------------- -------------- Cash and cash equivalents at end of period.................. $ 2,794,581 $ 3,357,841 ============== ==============
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
Nine Months Ended September 30, ------------------------------------ 1996 1995 ---------------- ---------------- Net loss.................................................... $ (429,066) $ (317,190) -------------- -------------- Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation............................................. 3,147,117 2,892,412 Amortization of deferred borrowing costs................. 160,722 150,376 Amortization of mortgage discounts....................... 31,806 30,128 Gain on involuntary conversion........................... (108,653) Loss on disposition of real estate....................... 220,157 - Changes in assets and liabilities: Cash segregated for security deposits.................. (30,088) (20,599) Accounts receivable.................................... 50,995 7,215 Prepaid expenses and other assets...................... 1,240 45,341 Escrow deposits........................................ (96,204) (65,604) Accounts payable....................................... (251,744) (69,250) Accrued interest....................................... (4,477) 71,767 Accrued property taxes................................. 57,474 108,786 Other accrued expenses................................. (98,086) 33,152 Payable to affiliates - General Partner................ (18,331) (1,071) Security deposits and deferred rental revenue.............................................. 36,626 72,898 -------------- -------------- Total adjustments.................................... 3,207,207 3,146,898 -------------- -------------- Net cash provided by operating activities................... $ 2,778,141 $ 2,829,708 ============== ==============
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) September 30, 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 nine months ended September 30, 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: Nine Months Ended September 30, ------------------------- 1996 1995 ----------- ----------- Property management fees - affiliates......... $ 733,862 $ 709,053 Charged to general and administrative - affiliates: Partnership administration................. 421,426 546,073 ---------- ---------- $ 1,155,288 $ 1,255,126 ========== ========== Charged to General Partner's deficit: Management Incentive Distribution.......... $ 828,489 $ 802,513 ========== ========== NOTE 4. - ------- The Partnership filed claims with the United States Bankruptcy Court for the Northern District of Texas, Dallas Division (the "Bankruptcy Court") against Southmark for damages relating to improper overcharges, breach of contract and breach of fiduciary duty. The Partnership settled these claims in 1991, and such settlement was approved by the Bankruptcy Court. An Order Granting Motion to Distribute Funds to Class 8 Claimants dated April 14, 1995 was issued by the Bankruptcy Court. In accordance with the Order, in May 1995, the Partnership received in full satisfaction of its claims, $53,574 in cash, and common and preferred stock in the reorganized Southmark. The cash and stock represent the Partnership's pro-rata share of Southmark assets available for Class 8 claimants. The Partnership sold the Southmark common and preferred stock in May 1995, for $17,243 which, when combined with the cash proceeds from Southmark, resulted in a gain on legal settlement of $70,817. NOTE 5. - ------- On April 24, 1996, a fire destroyed or damaged 12 units at Sheraton Hills Apartments. The estimated cost to repair the fire damage is $529,799. Insurance proceeds will reimburse the Partnership for all costs incurred as a result of the fire. A deferred gain on involuntary conversion of $440,506 has been recorded on the Partnership's September 30, 1996 Balance Sheet. The deferred gain on involuntary conversion equals the insurance proceeds receivable less the adjusted basis of the property destroyed or damaged by the fire. The deferred gain on involuntary conversion will be recognized as the insurance proceeds are received. Reconstruction of the destroyed or damaged units was completed during the third quarter of 1996. NOTE 6. - ------- On July 30, 1996, the Partnership sold Westridge Apartments to an unaffiliated purchaser for a cash sales price of $2,110,500. The Partnership agreed to finance a portion of the sales price by accepting a short-term, $1,550,000 mortgage note from the purchaser. The mortgage note bears interest at 10.0% per annum and requires monthly interest-only payments. The mortgage note matures nine months from the date of sale, by which time the purchaser is to have arranged permanent financing. Cash proceeds from the sale, as well as the loss on sale of Westridge Apartments are detailed below. Loss on Sale Cash Proceeds ------------- ------------- Cash sales price............................. $ 2,110,500 $ 2,110,500 Selling costs................................ (68,116) (68,116) Basis of real estate sold.................... (2,262,541) ----------- Loss on disposition of real estate........... $ (220,157) =========== Mortgage note retained by the Partnership.... (1,550,000) ----------- Net cash proceeds............................ $ 492,384 ============ In 1996, the Partnership adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." This accounting standard requires that assets held for sale be valued at the lesser of the assets' carrying value or the sum of the expected future cash flows of the assets. Consequently, the loss on disposition of real estate incurred by the Partnership during the third quarter was recognized in the second quarter as a "loss on impairment of value" on the Partnership's Statements of Operations for the three month and six month periods ended June 30, 1996. For the nine months ended September 30, 1996, the loss on disposition of real estate is recognized on the Partnership's Statements of Operations as a "loss on disposition of real estate." 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 September 30, 1996, the Partnership owned 13 apartment properties. All of the Partnership's properties are subject to mortgage notes. On July 30, 1996, the Partnership sold Westridge Apartments. The Partnership invested $1,550,000 of the proceeds from the sale of Westridge Apartments in a short-term, mortgage note receivable secured by Westridge Apartments. Proceeds from the sale of Westridge Apartments and from the ultimate collection of the $1,550,000 mortgage note will be added to the Partnership's cash reserves. RESULTS OF OPERATIONS - --------------------- Revenue: Rental revenue increased $131,624 or 2.7% and $536,539 or 3.8% for the three month and nine month periods ended September 30, 1996 as compared to the same periods of 1995. Rental revenues increased at twelve of the Partnership's thirteen properties. The sole exception, Westgate Apartments, reported a 3.5% decrease in rental revenue. Base rental rates increased an average of 4% at the Partnership's various properties. Increases in base rental rates were partially offset by lower occupancy rates at four of the Partnership's properties. The eight remaining properties reported increased or stable occupancy rates. Cherry Hills Apartments reported the best improvement in occupancy, raising its occupancy rate to 96.8% from 91.4% at the end of 1995. Included in revenue for the third quarter is $26,264 of interest on the mortgage note the Partnership took back in connection with the sale of Westridge Apartments on July 30, 1996. The $1,550,000 mortgage note, that bears a 10% interest rate, matures May 1, 1997. Other interest revenue increased $53,161 or 75% for the nine month period ended September 30, 1996 due to an increase in Partnership cash balances available for investment in interest-bearing accounts. Revenues for 1995 also reflect a $70,187 gain on settlement of the Partnership's claims against Southmark Corporation's (the parent of the former general partner of the Partnership) bankruptcy estate. No such revenue was received in 1996. Expenses: Partnership expenses decreased $48,350 or 1.0% and increased $443,322 or 3.0% for the three month and nine month periods ended September 30, 1996 as compared to the same periods of 1995. Included in expenses for the nine months ended September 30, 1996 is a $220,157 loss on disposition of real estate related to the sale of Westridge Apartments on July 30, 1996. Increased expenses were concentrated in depreciation and repair and maintenance. These increases were partially offset decreases in general and administrative expenses and general and administrative expenses paid to affiliates. Depreciation expense increased 3.1% and 8.8% for the three month and nine month periods ended September 30, 1996 as compared to the same periods of 1995. The Partnership added approximately $2.76 million of capital improvements to its properties in the twelve months ended September 30, 1996. These improvements are being depreciated over lives ranging from five to ten years. Depreciation charges on the new improvements accounts for the increased depreciation expense. Repair and maintenance expense increased 11.5% and 8.5% for the three month and nine month periods ended September 30, 1996 as compared to the same periods of 1995. Repair and maintenance expense increased at nine of the Partnership's properties. The increase is attributable to the replacement of carpeting and appliances, which met the Partnership's criteria for capitalization based on the magnitude of replacements in 1995, but were expensed in 1996. General and administrative expenses decreased $88,506 or 36% for the nine month period ended September 30, 1996 compared to the same period of 1995. The decrease is due to a $106,315 decrease in costs incurred to evaluate and disseminate information regarding an unsolicited tender offer. The Partnership anticipates incurring such costs in the fourth quarter of 1996 in response to an additional unsolicited tender offer, as discussed in Item 5 - Other Information. General and administrative expenses paid to affiliates increased 1.4% but decreased 23% for the three month and nine month periods ended September 30, 1996 as compared to the same periods of 1995. Partnership administrative expenses charged to the Partnership by affiliates of the General Partner decreased in 1996 compared to 1995. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Partnership reported a loss of $429,066 for the first nine months of 1996. Excluding the loss on disposition of real estate, the net loss improved to $208,909 in 1996 from $317,190 in 1995. For the third quarter, the Partnership reported net income of $36,400, a $99,023 improvement from the third quarter of 1995. Cash provided by operations decreased 1.8% to $2,778,141. The principal changes in cash provided by operations resulted from increased expenditures for carpet and appliance replacements, and increased interest received due to the $1,550,000 mortgage note receivable associated with the sale of Westridge Apartments Although the Partnership continues to invest significant resources into capital improvements at its properties, the scope of such investments has decreased in 1996. In each of the past three years, the Partnership has, on average, expended in excess of $3.5 million annually for capital improvements. The budgeted capital improvements for 1996 total only $1.56 million. To date, the Partnership has expended $1.76 million for capital improvements, but approximately $530,000 of the amount expended to date in 1996 relates to unbudgeted expenditures to restore and repair fire damage at Sheraton Hills Apartments. The Partnership expects to be reimbursed for these expenditures with insurance proceeds. Management Incentive Distributions ("MID") paid by the Partnership increased to $1,157,844 for the first nine months of 1996. The Partnership paid MID accrued but unpaid from 1995 as well as MID from 1996. Principal payments on the Partnership's mortgage notes account for the balance of the Partnership's financing activities. Such payments will increase modestly from year to year as the Partnership continues to pay down its mortgage notes. 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 $1.56 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 September 30, 1996, the Partnership held $2,794,581 of cash and cash equivalents, down $265,001 from the balance at the beginning of 1996. The General Partner anticipates that cash generated from operations for the remainder of 1996 and 1997 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. On July 30, 1996, the Partnership sold its investment in Westridge Apartments. Proceeds from the sale amounted to approximately $492,000 of cash and a $1,550,000 short-term mortgage note. The mortgage note bears interest at 10% per annum, and matures nine months from the date of sale. The Partnership will use the proceeds from the sale of Westridge Apartments and proceeds from the collection of the mortgage note to increase its reserves of cash and cash equivalents. Long-term liquidity: While the present outlook for the Partnership's liquidity is favorable, market conditions may change and property operations can deteriorate. In that event, the Partnership would require other sources of working capital. No such other sources have been identified, and the Partnership has no established lines of credit. Other possible actions to resolve working capital deficiencies include refinancing or renegotiating terms of existing loans, deferring major capital expenditures on Partnership properties except where improvements are expected to enhance the competitiveness or marketability of the properties, or arranging working capital support from affiliates. No affiliate support has been required in the past, and there is no assurance that support from affiliates would be provided in the future, since neither the General Partner nor any affiliates have any obligation in this regard. The Partnership has determined to begin an orderly liquidation of all the Partnership's assets. Although there can be no assurance as to the timing of any liquidation, it is anticipated that such liquidation would result in distributions to the limited partners of the cash proceeds from the sale of the Partnership's properties, subject to cash reserve requirements, as they are sold with the last property disposition before December 2001, followed by a dissolution of the Partnership. 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 and nine month periods ended September 30, 1996, net income of $219,414 and $1,000,488, respectively, was allocated to the General Partner. The limited partners received allocations of net loss of ($183,014) and ($1,429,554) for the three month and nine month periods ended September 30, 1996, respectively. 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 nine months of 1996 amounted to $828,489. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - ------- ----------------- McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P., and McNeil Real Estate Fund XXV, L.P. vs. High River Limited Partnership, Riverdale Investors Corp., Carl C. Icahn, and Unicorn Associates Corporation - United States District Court for the Central District of California, Case No. 96-5680SVW. On August 12, 1996, High River Limited Partnership ("High River"), a partnership controlled by Carl C. Icahn, sent a letter to the partnerships referenced above demanding lists of the names, current residences or business addresses and certain other information concerning the unitholders of such partnerships. On August 19, 1996, these partnership commenced the above action seeking, among other things, to declare that such partnerships are not required to provide High River with a current list of unitholders on the grounds that the defendants commenced a tender offer in violation of the federal securities laws by filing certain Schedule 13D Amendments on August 5, 1996. On October 17, 1996, the presiding judge denied the partnerships' requests for a permanent and preliminary injunction to enjoin High River's tender offers and granted the defendants request for an order directing the partnerships to turn over current lists of unitholders to High River forthwith. On October 24, 1996, the partnerships delivered the unitholder lists to High River. ITEM 5. OTHER INFORMATION - ------- ----------------- On September 20, 1996, High River announced that it had commenced a tender offer for any and all units of the Partnership at $180 per unit. The tender was originally due to expire October 18, 1996, however, this offer has been extended until November 22, 1996. 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 September 30, 1996. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended September 30, 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 November 14, 1996 By: /s/ Donald K. Reed - ----------------- ---------------------------------------- Date Donald K. Reed President and Chief Executive Officer November 14, 1996 By: /s/ Ron K. Taylor - ----------------- ---------------------------------------- Date Ron K. Taylor Acting Chief Financial Officer of McNeil Investors, Inc. November 14, 1996 By: /s/ Brandon K. Flaming - ----------------- ---------------------------------------- Date Brandon K. Flaming Chief Accounting Officer of McNeil Real Estate Management, Inc. EX-27 2
5 9-MOS DEC-31-1996 SEP-30-1996 2,794,581 0 593,171 0 0 0 87,400,671 (48,703,512) 47,962,016 0 50,806,894 0 0 0 0 47,962,016 14,780,033 14,930,275 0 0 11,526,473 220,157 3,612,711 (429,066) 0 0 0 0 0 (429,066) 0 0
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