-----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, MIj2X7Hu10mYCWWQs2DDvW22JM6Mw8pXXXQk6AtkpKnwF/Cy5SIRfbmrJqWhdgLu Q2a/VT/ZbGXgAFhzPcv3Iw== 0000276326-97-000005.txt : 19970520 0000276326-97-000005.hdr.sgml : 19970520 ACCESSION NUMBER: 0000276326-97-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 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: 97606414 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, 1997 ---------------------------------------------------- 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 600, 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)
March 31, December 31, 1997 1996 --------------- --------------- ASSETS - ------ Real estate investments: Land..................................................... $ 6,370,834 $ 6,370,834 Buildings and improvements............................... 81,975,670 81,666,317 -------------- -------------- 88,346,504 88,037,151 Less: Accumulated depreciation.......................... (50,769,111) (49,728,546) -------------- -------------- 37,577,393 38,308,605 Cash and cash equivalents................................... 2,231,550 3,001,521 Cash segregated for security deposits....................... 600,100 571,749 Accounts receivable......................................... 67,065 59,871 Insurance proceeds receivable............................... 562,560 562,560 Prepaid expenses and other assets........................... 189,386 214,497 Escrow deposits............................................. 1,210,091 1,401,648 Mortgage note receivable.................................... - 1,550,000 Deferred borrowing costs, net of accumulated amortization of $953,212 and $895,853 at March 31, 1997 and December 31, 1996, respectively............................................. 1,922,299 1,979,658 -------------- -------------- $ 44,360,444 $ 47,650,109 ============== ============== LIABILITIES AND PARTNERS' DEFICIT - --------------------------------- Mortgage notes payable, net................................. $ 50,392,918 $ 50,600,006 Accrued interest............................................ 366,967 368,556 Accrued property taxes...................................... 605,812 928,103 Other accrued expenses...................................... 186,219 271,227 Payable to affiliates - General Partner..................... 254,123 279,716 Deferred gain on involuntary conversion..................... 474,376 474,376 Security deposits and deferred rental revenue............... 570,264 556,428 -------------- -------------- 52,850,679 53,478,412 -------------- -------------- Partners' deficit: Limited partners - 110,200 limited partnership units authorized; 110,170 limited partnership units outstanding............................................ (5,694,629) (3,029,682) General Partner.......................................... (2,795,606) (2,798,621) -------------- -------------- (8,490,235) (5,828,303) -------------- -------------- $ 44,360,444 $ 47,650,109 ============== ==============
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, ----------------------------------- 1997 1996 --------------- --------------- Revenue: Rental revenue........................................... $ 4,868,923 $ 4,873,033 Interest................................................. 58,481 35,374 -------------- -------------- Total revenue.......................................... 4,927,404 4,908,407 -------------- -------------- Expenses: Interest................................................. 1,198,827 1,210,799 Depreciation............................................. 1,040,565 1,048,308 Property taxes........................................... 353,303 390,994 Personnel expenses....................................... 668,585 666,807 Repair and maintenance................................... 658,057 548,397 Property management fees - affiliates.................... 242,179 242,455 Utilities................................................ 493,269 476,655 Other property operating expenses........................ 269,264 297,032 General and administrative............................... 53,212 44,768 General and administrative - affiliates.................. 107,224 150,861 -------------- -------------- Total expenses......................................... 5,084,485 5,077,076 -------------- -------------- Net loss.................................................... $ (157,081) $ (168,669) ============== ============== Net loss allocated to limited partners...................... $ (414,944) $ (160,235) Net income (loss) allocated to General Partner.............. 257,863 (8,434) -------------- -------------- Net loss.................................................... $ (157,081) $ (168,669) ============== ============== Net loss per limited partnership unit....................... $ (3.77) $ (1.45) ============== ==============
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, 1997 and 1996
Total General Limited Partners' Partner Partners Deficit --------------- --------------- --------------- 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) ============= ============= ============= Balance at December 31, 1996.............. $ (2,798,621) $ (3,029,682) $ (5,828,303) Net income (loss)......................... 257,863 (414,944) (157,081) Management Incentive Distribution......... (254,848) - (254,848) Distribution to limited partners.......... - (2,250,003) (2,250,003) ------------- ------------- ------------- Balance at March 31, 1997................. $ (2,795,606) $ (5,694,629) $ (8,490,235) ============= ============= =============
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, ----------------------------------- 1997 1996 ---------------- --------------- Cash flows from operating activities: Cash received from tenants............................... $ 4,847,536 $ 4,878,186 Cash paid to suppliers................................... (2,202,290) (2,319,541) Cash paid to affiliates.................................. (319,953) (412,363) Interest received........................................ 58,481 35,374 Interest paid............................................ (1,131,821) (1,148,080) Property taxes paid and escrowed......................... (484,353) (504,784) -------------- -------------- Net cash provided by operating activities................... 767,600 528,792 -------------- -------------- Cash flows from investing activities: Additions to real estate investments..................... (309,353) (292,954) Proceeds mortgage note receivable........................ 1,550,000 - -------------- -------------- Net cash provided by (used in) investing activities............................................... 1,240,647 (292,954) -------------- -------------- Cash flows from financing activities: Principal payments on mortgage notes payable................................................ (218,324) (200,034) Management Incentive Distribution........................ (309,891) - Distribution to limited partners......................... (2,250,003) - --------------- -------------- Net cash used in financing activities....................... (2,778,218) (200,034) -------------- -------------- Increase (decrease) in cash and cash equivalents............ (769,971) 35,804 Cash and cash equivalents at beginning of period................................................... 3,001,521 3,059,582 -------------- -------------- Cash and cash equivalents at end of period.................. $ 2,231,550 $ 3,095,386 ============== ==============
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, ------------------------------------ 1997 1996 ---------------- ---------------- Net loss.................................................... $ (157,081) $ (168,669) -------------- -------------- Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation............................................. 1,040,565 1,048,308 Amortization of deferred borrowing costs................. 57,359 53,574 Amortization of mortgage discounts....................... 11,236 10,603 Changes in assets and liabilities: Cash segregated for security deposits.................. (28,351) (15) Accounts receivable.................................... (7,194) 69 Prepaid expenses and other assets...................... 25,111 4,350 Escrow deposits........................................ 191,557 (357,061) Accounts payable....................................... - (144,937) Accrued interest....................................... (1,589) (1,458) Accrued property taxes................................. (322,291) 183,807 Other accrued expenses................................. (85,008) (99,810) Payable to affiliates - General Partner................ 29,450 (19,047) Security deposits and deferred rental revenue.............................................. 13,836 19,078 -------------- -------------- Total adjustments.................................... 924,681 697,461 -------------- -------------- Net cash provided by operating activities................... $ 767,600 $ 528,792 ============== ==============
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, 1997 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 600, 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, 1997 are not necessarily indicative of the results to be expected for the year ending December 31, 1997. 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, 1996, 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 The Herman Group, 2121 San Jacinto St., 26th Floor, Dallas, Texas 75201. 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, ------------------------ 1997 1996 ---------- ---------- Property management fees - affiliates........... $ 242,179 $ 242,455 Charged to general and administrative - affiliates: Partnership administration................... 107,224 150,861 --------- --------- $ 349,403 $ 393,316 ========= ========== Charged to General Partner's deficit: Management Incentive Distribution............ $ 254,848 $ 264,425 ========= ========== NOTE 4. - ------- On April 24, 1996, a fire destroyed or damaged 12 units at Sheraton Hills Apartments. The estimated cost to repair the fire damage is $562,560. Insurance proceeds will reimburse the Partnership for all costs incurred as a result of the fire. A deferred gain on involuntary conversion of $474,376 has been recorded on the Partnership's balance sheets. 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 5. - ------- 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 from the purchaser a short-term, $1,550,000 mortgage note. The mortgage note accrued interest at 10.0% per annum and required monthly interest-only payments. 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 received in 1996.......... $ 492,384 =========== On February 5, 1997, the purchaser repaid the $1,550,000 mortgage note to the Partnership together with all accrued interest thereon. 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, 1997, 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. On February 28, 1997, the Partnership paid a $2,250,000 distribution ($20.42 per limited partnership unit) to the limited partners. The distribution was funded by cash proceeds from the sale of Westridge Apartments, collection of the $1,550,000 mortgage note obtained by the Partnership in connection with the sale of Westridge Apartments, and from cash reserves of the Partnership. RESULTS OF OPERATIONS - --------------------- Revenue: Rental revenue decreased $4,110 or .1% for the first quarter of 1997 as compared to the first quarter of 1996. The decrease, however, is attributable to the sale of Westridge Apartments on July 30, 1996. Rental revenue at the remainder of the Partnership's properties increased $166,675 or 3.5% in the first quarter of 1997 as compared to the year earlier quarter. Rental revenues increased at nine of the Partnership's thirteen properties. The properties reporting the largest increases in rental revenue, Cherry Hills, Forest Park Village, Meridian West and Westgate, achieved increases ranging from 5% to 10% by improving their occupancy rates. The other five properties reporting increases achieved their increases through increased base rental rates that were partially offset by lower occupancy rates. Rental revenue was unchanged at Rockborough, Ruskin Place and Williamsburg. Rental revenue decreased 2.3% at Lantern Tree due to decreased occupancy that was partially offset by a modest increase in base rental rates. Interest income increased $23,107 or 65% in the first quarter of 1997 compared to the year earlier quarter. Interest income for the first quarter included $15,500 of interest on the $1,550,000 mortgage note obtained in connection with the sale of Westridge Apartments on July 30, 1996. The mortgage note was repaid on February 5, 1997. No comparable interest was earned by the Partnership during the first quarter of 1996. Expenses: Partnership expenses increased $7,409 or 0.2% for the first quarter of 1997 as compared to the year earlier quarter. The increase in expenses occurred despite the sale of Westridge Apartments during the third quarter of 1996. Expenses at the remaining Partnership properties increased $181,644 or 3.7% for the first quarter of 1997 compared to the year earlier quarter. Increases were concentrated in repair and maintenance and in general and administrative expenses. These increases were partially offset by a decrease in general and administrative expenses paid to affiliates. Excluding the effects of the sale of Westridge, repair and maintenance expense increased 28% for the first quarter of 1997 as compared to the first quarter of 1996. 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 1996, but were expensed in 1997. General and administrative expenses increased or 18.9% for the first quarter of 1996 compared to the first quarter of 1996. The increase is due to the charges for investor services, which, beginning in 1997, are provided by a third party vendor instead of by affiliates of the General Partner. General and administrative expenses paid to affiliates decreased 29% for the three month period ended March 31, 1997 as compared to the same period of 1996. Partnership administrative expenses charged to the Partnership by affiliates of the General Partner decreased in 1997 compared to 1996. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Partnership reported a loss of $157,081 for the first quarter of 1997, a small improvement over the $168,669 loss reported by the Partnership for the first quarter of 1996. However, cash provided by operating activities increased 45% to $767,600. Decreases in cash paid to suppliers and affiliates accounted for most of the increase. Although the Partnership continues to invest significant resources into capital improvements at its properties, the scope of such investments decreased beginning in 1996. The Partnership has, on average, expended approximately $3 million annually for capital improvements over the last few years. The budgeted capital improvements for 1997 total only $1.7 million. To date, the Partnership has expended $309,353 for capital improvements. Management Incentive Distributions ("MID") paid by the Partnership increased to $309,891 for the first three months of 1997. The Partnership paid MID accrued but unpaid from 1996 as well as MID from 1997. 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 has budgeted $1.7 million for capital improvements in 1997. 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 future repair and maintenance expenses from amounts that would otherwise be incurred. At March 31, 1997, the Partnership held $2,231,550 of cash and cash equivalents, down $769,971 from the balance at the beginning of 1997. The General Partner anticipates that cash generated from operations for the remainder of 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, 1997 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 1997. On July 30, 1996, the Partnership sold its investment in Westridge Apartments. Proceeds from the sale amounted to approximately $492,000 of cash received in 1996, and $1,550,000 in proceeds from collection of the short-term mortgage note that was repaid on February 5, 1997. On February 28, 1997, the Partnership used the funds from the sale of Westridge, collection of the $1,550,000 mortgage note, and the Partnership's cash reserves to pay a $2,250,000 distribution ($20.42 per limited partnership unit) to the limited partners. See Income Allocations and Distributions below. 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 periods ended March 31, 1997 and 1996, the General Partner received allocations of net income (loss) of $257,863 and ($8,434), respectively. The limited partners received allocations of net loss of $414,944 and $160,235 for the three month periods ended March 31, 1997 and 1996, respectively. On February 28, 1997, the Partnership paid its first distribution to the limited partners since 1986. The $2,250,000 distribution was in large measure funded by proceeds from the sale of Westridge Apartments in 1996. For the foreseeable future, distributions to limited partners will likely be limited to proceeds from the sale of Partnership properties. Currently, no Partnership properties are being marketed for sale. 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 limited partners. During the first quarter, the Partnership recorded MID of $254,848. MID payments totaling $309,891 were paid to the General Partner during the first quarter. MID payments to the General Partner are expected to continue in 1997. To the extent that cash flow from operations is not sufficient to fund payments of MID along with other Partnership obligations, the Partnership will use its cash reserves to make such payments. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - ------- ----------------- James F. Schofield, Gerald C. Gillett, Donna S. Gillett, Jeffrey Homburger, Elizabeth Jung, Robert Lewis, and Warren Heller et al. v. McNeil Partners L.P., McNeil Investors, Inc., McNeil Real Estate Management, Inc., Robert A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate Fund XII, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate Fund XXI, L.P., McNeil Real Estate Fund XXII, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., McNeil Real Estate Fund XXVI, L.P., and McNeil Real Estate Fund XXVII, L.P., et al. - Superior Court of the State of California for the County of Los Angeles, Case No. BC133799 (Class and Derivative Action Complaint). The action involves purported class and derivative actions brought by limited partners of each of the fourteen limited partnerships that were named as nominal defendants as listed above (the "Partnerships"). Plaintiffs allege that McNeil Investors, Inc., its affiliate McNeil Real Estate Management, Inc. and three of their senior officers and/or directors (collectively, the "Defendants") breached their fiduciary duties and certain obligations under the respective Amended Partnership Agreement. Plaintiffs allege that Defendants have rendered such Units highly illiquid and artificially depressed the prices that are available for Units on the resale market. Plaintiffs also allege that Defendants engaged in a course of conduct to prevent the acquisition of Units by an affiliate of Carl Icahn by disseminating purportedly false, misleading and inadequate information. Plaintiffs further allege that Defendants acted to advance their own personal interests at the expense of the Partnerships' public unit holders by failing to sell Partnership properties and failing to make distributions to unitholders. On December 16, 1996, the Plaintiffs filed a consolidated and amended complaint. Plaintiffs are suing for breach of fiduciary duty, breach of contract and an accounting, alleging, among other things, that the management fees paid to the McNeil affiliates over the last six years are excessive, that these fees should be reduced retroactively and that the respective Amended Partnership Agreements governing the Partnerships are invalid. Defendants filed a demurrer to the consolidated and amended complaint and a motion to strike on February 14, 1997, seeking to dismiss the consolidated and amended complaint in all respects. A hearing on Defendant's demurrer and motion to strike was held on May 5, 1997. The Court granted Defendants' demurrer, dismissing the consolidated and amended complaint with leave to amend. Plaintiffs have until May 27, 1997 to file a second amended complaint, unless otherwise agreed to by the parties. 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 1997 and 1996. 27. Financial Data Schedule for the quarter ended March 31, 1997. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended March 31, 1997. 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 15, 1997 By: /s/ Ron K. Taylor - -------------- ------------------------------------------ Date Ron K. Taylor President and Director of McNeil Investors, Inc. (Principal Financial Officer) May 15, 1997 By: /s/ Brandon K. Flaming - -------------- ------------------------------------------ Date Brandon K. Flaming Vice President of McNeil Investors, Inc. (Principal Accounting Officer) EX-27 2
5 3-MOS DEC-31-1997 MAR-31-1997 2,231,550 0 0 0 0 0 88,346,504 (50,769,111) 44,360,444 0 50,392,918 0 0 0 0 44,360,444 4,868,923 4,927,404 0 0 3,885,658 0 1,198,827 (157,081) 0 0 0 0 0 (157,081) 0 0
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