-----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, LWxdlQXev7yHrioffwNk8O8klFjW08U4DgFuR7vO11TpBVTDFM4ft5fJ3cTQeFpq bVIijk5bOlZ5LjKuLVDvdA== 0000312812-97-000005.txt : 19970401 0000312812-97-000005.hdr.sgml : 19970401 ACCESSION NUMBER: 0000312812-97-000005 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970331 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCNEIL REAL ESTATE FUND X LTD CENTRAL INDEX KEY: 0000312812 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 942577781 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-09325 FILM NUMBER: 97569048 BUSINESS ADDRESS: STREET 1: 13760 NOEL ROAD 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-K405 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K405 [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 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 0-9325 -------- McNEIL REAL ESTATE FUND X, LTD. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 94-2577781 - ------------------------------------------------------------------------------- (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 ----------------------------- Securities registered pursuant to Section 12(b) of the Act: None - ---------------------------------------------------------- Securities registered pursuant to Section 12(g) of the Act: Limited partnership units - ---------------------------------------------------------- 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 --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] 133,248 of the registrant's 134,980 limited partnership units are held by non-affiliates of this registrant. The aggregate market value of units held by non-affiliates is not determinable since there is no public trading market for limited partnership units and transfers of units are subject to certain restrictions. Documents Incorporated by Reference: See Item 14, Page 46 TOTAL OF 50 PAGES PART I ITEM 1. BUSINESS - ------- -------- ORGANIZATION - ------------ McNeil Real Estate Fund X, Ltd. (the "Partnership") was organized on June 1, 1979 as a limited partnership under provisions of the California Uniform Limited Partnership Act. 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 partnership agreement dated October 9, 1991, as amended (the "Amended Partnership Agreement"). Prior to October 9, 1991, Pacific Investors Corporation (the prior "Corporate General Partner"), a wholly-owned subsidiary of Southmark Corporation ("Southmark"), and McNeil were the general partners of the Partnership, which was governed by an agreement of limited partnership (the "Original Partnership Agreement") dated June 1, 1979. The principal place of business for the Partnership and the General Partner is 13760 Noel Road, Suite 600, LB70, Dallas, Texas, 75240. On December 14, 1979, a Registration Statement on Form S-11 was declared effective by the Securities and Exchange Commission whereby the Partnership offered for sale $67,500,000 of limited partnership units ("Units"). The Units represent equity interests in the Partnership and entitle the holders thereof to participate in certain allocations and distributions of the Partnership. The sale of Units closed on July 17, 1980, with 135,000 Units sold at $500 each, or gross proceeds of $67,500,000 to the Partnership. The original general partners purchased an additional 200 Units for $100,000. Limited partners relinquished 220 Units between 1993 and 1996, leaving 134,980 Units outstanding at December 31, 1996. SOUTHMARK BANKRUPTCY AND CHANGE IN GENERAL PARTNER - -------------------------------------------------- On July 14, 1989, Southmark filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Neither the Partnership, McNeil nor the Corporate General Partner were included in the filing. Southmark's reorganization plan became effective August 10, 1990. Under the plan, most of Southmark's assets, which included Southmark's interest in the Corporate General Partner, were sold or liquidated for the benefit of creditors. In accordance with Southmark's reorganization plan, Southmark, McNeil and various of their affiliates entered into an asset purchase agreement on October 12, 1990 providing for, among other things, the transfer of control to McNeil or his affiliates of 34 limited partnerships (including the Partnership) in the Southmark portfolio. On February 14, 1991, pursuant to the asset purchase agreement as amended on that date: (a) an affiliate of McNeil purchased the Corporate General Partner's economic interest in the Partnership; (b) McNeil became the managing general partner of the Partnership pursuant to an agreement with the Corporate General Partner that delegated management authority to McNeil; and (c) McNeil Real Estate Management, Inc. ("McREMI"), an affiliate of McNeil, acquired the assets relating to the property management and partnership administrative business of Southmark and its affiliates and commenced management of the Partnership's properties pursuant to an assignment of the existing property management agreements from the Southmark affiliates. On October 11, 1991, the limited partners approved a restructuring proposal providing for (i) the replacement of the Corporate General Partner and McNeil with the General Partner; (ii) the adoption of the Amended Partnership Agreement, which substantially alters provisions of the Original Partnership Agreement relating to, among other things, compensation, reimbursement of expenses, and voting rights; and (iii) the approval of a new property management agreement with McREMI, the Partnership's property manager. The Amended Partnership Agreement provides for a Management Incentive Distribution ("MID") to replace all other forms of general partner compensation other than property management fees and reimbursement of certain costs. Additional Units may be issued in connection with the payment of the MID pursuant to the Amended Partnership Agreement. See Item 8 - Note 2 - "Transactions with Affiliates." For a discussion of the methodology for calculating and distributing the MID see Item 13 - Certain Relationships and Related Transactions. Settlement of Claims: 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 $69,234 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 $22,283 which, when combined with the cash proceeds from Southmark, resulted in a gain on settlement of litigation of $91,517. CURRENT OPERATIONS - ------------------ General: The Partnership is engaged in diversified real estate activities, including the ownership, operation and management of residential and commercial real estate and other real estate related assets. At December 31, 1996, the Partnership owned eleven income-producing properties as described in Item 2 - Properties. The Partnership does not directly employ any personnel. The General Partner conducts the business of the Partnership directly and through its affiliates. The Partnership is managed by the General Partner, and, in accordance with the Amended Partnership Agreement, the Partnership reimburses affiliates of the General Partner for certain expenses incurred by the affiliates in connection with the management of the Partnership's business. See Item 8 - Note 2 - "Transactions With Affiliates." The business of the Partnership to date has involved only one industry segment. See Item 8 - Financial Statements and Supplementary Data. The Partnership has no foreign operations. The business of the Partnership is not seasonal. Business Plan: The Partnership determined to evaluate market and other economic conditions to establish the optimum time to commence an orderly liquidation of the Partnership's assets in accordance with the terms of the Amended Partnership Agreement. Taking such conditions as well as other pertinent information into account, the Partnership has determined to begin orderly liquidation of all its assets. Although there can be no assurance as to the timing of the liquidation due to real estate market conditions, the general difficulty of disposing of real estate, and other general economic factors, it is anticipated that such liquidation would result in the dissolution of the Partnership followed by a liquidating distribution to Unitholders by December 2001. In this regard, the Partnership has placed Cave Spring Corners and Iberia Plaza on the market for sale. Until such time as the Partnership's assets are liquidated, the Partnership's plan of operations is to preserve or increase the net operating income of its assets whenever possible, while at the same time making whatever capital expenditures are reasonable under the circumstances in order to preserve and enhance the value of the Partnership's assets. Competitive Conditions: Since the principal business of the Partnership is to own and operate real estate, the Partnership is subject to all of the risks incident to ownership of real estate and interests therein, many of which relate to the illiquidity of this type of investment. These risks include changes in general or local economic conditions, changes in supply or demand for competing properties in an area, changes in interest rates and availability of permanent mortgage funds which may render the sale or refinancing of a property difficult or unattractive, changes in real estate and zoning laws, increases in real property tax rates and Federal or local economic or rent controls. The illiquidity of real estate investments generally impairs the ability of the Partnership to respond promptly to changed circumstances. The Partnership competes with numerous established companies, private investors (including foreign investors), real estate investment trusts, limited partnerships and other entities (many of which have greater resources than the Partnership) in connection with the sale, financing and leasing of properties. The impact of these risks on the Partnership, including losses from operations and foreclosures of the Partnership's properties, is described in Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations. See Item 2 - Properties for a discussion of competitive conditions at the Partnership's properties. Forward-Looking Information: Within this document, certain statements are made as to the expected occupancy trends, financial condition, results of operations, and cash flows of the Partnership for periods after December 31, 1996. All of these statements are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical and involve risks and uncertainties. The Partnership's actual occupancy trends, financial condition, results of operations, and cash flows for future periods may differ materially due to several factors. These factors include, but are not limited to, the Partnership's ability to control costs, make necessary capital improvements, negotiate sales or refinancings of its properties and respond to changing economic and competitive factors. Other Information: The environmental laws of the Federal government and of certain state and local governments impose liability on current property owners for the clean-up of hazardous and toxic substances discharged on the property. This liability may be imposed without regard to the timing, cause or person responsible for the release of such substances onto the property. The Partnership could be subject to such liability in the event that it owns properties having such environmental problems. The Partnership has no knowledge of any pending claims or proceedings regarding such environmental problems. In August 1995, High River Limited Partnership, a Delaware limited partnership controlled by Carl C. Icahn ("High River") made an unsolicited tender offer to purchase from holders of Units up to approximately 45% of the outstanding Units of the Partnership for a purchase price of $72 per Unit. In September 1996, High River made another unsolicited tender offer to purchase any and all of the outstanding Units of the Partnership for a purchase price of $85.50 per Unit. In addition, High River made unsolicited tender offers for certain other partnerships controlled by the General Partner. The Partnership recommended that the limited partners reject the tender offers made with respect to the Partnership and not tender their Units. The General Partner believes that as of January 31, 1997, High River has purchased 8.65% of the outstanding Units pursuant to the tender offers. In addition, all litigation filed by High River, Mr. Icahn and his affiliates in connection with the tender offers have been dismissed without prejudice. ITEM 2. PROPERTIES - ------- ---------- The following table sets forth the real estate investment portfolio of the Partnership at December 31, 1996. The buildings and the land on which they are located are owned by the Partnership in fee, subject in each case to a first lien deed of trust as set forth more fully in Item 8 - Note 5 - "Mortgage Notes Payable" and Note 6 - "Mortgage Note Payable - Affiliate." See also Item 8 - Note 4 - "Real Estate Investments" and Schedule III - "Real Estate Investments and Accumulated Depreciation and Amortization." In the opinion of management, the properties are adequately covered by insurance.
Net Basis 1996 Date Property Description of Property Debt Property Tax Acquired - --------- ----------- ----------- ---- ------------ -------- Real Estate Investments: Briarwood (1) Apartments Tucson, AZ 196 units $ 1,976,109 $ 2,124,642 $ 60,687 07/80 Coppermill (2) Apartments Tulsa, OK 544 units 3,856,487 4,994,151 79,720 10/80 La Plaza Office Building Las Vegas, NV 104,230 sq. ft. 4,938,178 2,396,381 61,327 09/80 Lakeview Plaza Retail Center Lexington, KY 172,252 sq. ft. 3,572,062 4,091,999 49,244 07/80 Orchard (3) Apartments Lawrence, IN 378 units 3,278,665 6,185,485 205,961 12/80 Quail Meadows (4) Apartments Wichita, KS 440 units 4,270,416 5,872,125 72,687 06/80 Regency Park (5) Apartments Ft. Wayne, IN 226 units 2,116,157 2,390,794 115,676 06/80 Sandpiper (6) Apartments Westminster, CO 360 units 3,705,377 5,450,041 60,498 04/80 Spanish Oaks (7) Apartments San Antonio, TX 239 units 2,543,669 3,970,703 136,140 08/80 --------------- ------------- --------- $ 30,257,120 $ 37,476,321 $ 841,940 =============== ============= ========= Assets Held for Sale: Cave Spring Corners Retail Center Roanoke, VA 165,547 sq. ft. $ 2,257,480 $ 3,077,041 $ 58,891 10/80 Iberia Plaza Retail Center New Iberia, LA 134,275 sq. ft. 3,051,251 1,858,930 52,804 06/80 --------------- ------------- --------- $ 5,308,731 $ 4,935,971 $ 111,695 =============== ============= =========
- ---------------------------------------- Total: Apartments - 2,383 units Retail Centers - 472,074 sq. ft. Office Building - 104,230 sq. ft. (1) Briarwood Apartments is owned by Briarwood Fund X Limited Partnership, which is wholly-owned by the Partnership. (2) Coppermill Apartments is owned by Coppermill Fund X Limited Partnership, which is wholly-owned by the Partnership. (3) Orchard Apartments is owned by Orchard Fund X Limited Partnership, which is wholly-owned by the Partnership. (4) Quail Meadows Apartments is owned by Quail Meadows Fund X Limited Partnership, which is wholly-owned by the Partnership. (5) Regency Park Apartments is owned by Regency Park Fund X Associates, L.P. which is wholly-owned by the Partnership and the General Partner. (6) Sandpiper Apartments is owned by Sandpiper Fund X Limited Partnership, which is wholly-owned by the Partnership. (7) Spanish Oaks Apartments is owned by Spanish Fund X, Ltd., which is wholly-owned by the Partnership. The following table sets forth the occupancy rates and rent per square foot of the Partnership's properties for each of the last five years:
1996 1995 1994 1993 1992 ------------- ------------- -------------- ------------- ----------- Real Estate Investments: - ------------------------ Briarwood Occupancy Rate............ 84% 92% 99% 99% 96% Rent Per Square Foot...... $ 9.34 $ 9.91 $ 9.62 $ 8.58 $ 8.07 Coppermill Occupancy Rate............ 89% 94% 92% 92% 89% Rent Per Square Foot...... $ 5.74 $ 5.46 $ 5.28 $ 4.99 $ 4.73 La Plaza Occupancy Rate............ 88% 77% 97% 99% 95% Rent Per Square Foot...... $ 12.41 $ 10.10 $ 13.97 $ 12.56 $ 12.58 Lakeview Plaza Occupancy Rate............ 99% 98% 100% 100% 95% Rent Per Square Foot...... $ 5.55 $ 4.71 $ 5.69 $ 5.35 $ 4.97 Orchard Occupancy Rate............ 93% 98% 94% 93% 89% Rent Per Square Foot...... $ 7.40 $ 7.25 $ 6.95 $ 6.24 $ 6.20 Quail Meadows Occupancy Rate............ 91% 94% 89% 77% 92% Rent Per Square Foot...... $ 6.21 $ 5.80 $ 5.62 $ 5.53 $ 5.99 Regency Park Occupancy Rate............ 89% 92% 94% 89% 86% Rent Per Square Foot...... $ 5.19 $ 5.45 $ 5.09 $ 4.46 $ 4.64
1996 1995 1994 1993 1992 ------------- ------------- -------------- ------------- ------- Real Estate Investments (continued): Sandpiper Occupancy Rate............ 96% 94% 95% 94% 98% Rent Per Square Foot...... $ 9.48 $ 9.29 $ 8.93 $ 8.33 $ 7.46 Spanish Oaks Occupancy Rate............ 87% 90% 91% 96% 95% Rent Per Square Foot...... $ 6.17 $ 6.18 $ 5.97 $ 5.64 $ 5.23 Assets Held for Sale: Cave Spring Corners Occupancy Rate............ 100% 98% 100% 99% 95% Rent Per Square Foot...... $ 5.14 $ 4.75 $ 4.53 $ 3.92 $ 3.93 Iberia Plaza Occupancy Rate............ 100% 98% 94% 90% 88% Rent Per Square Foot...... $ 4.91 $ 3.71 $ 3.90 $ 3.59 $ 3.41
Occupancy rate represents all units or square footage leased divided by the total number of units or square footage of the property as of December 31 of the given year. Rent per square foot represents all revenue, except interest, derived from the properties' operations divided by the leasable square footage of the property. Competitive Conditions at Properties - ------------------------------------ Students at nearby University of Arizona make up 69% of the tenants at Briarwood Apartments. Briarwood has an excellent location near the university and a bike route to the university. Due to the heavy student-tenant profile, occupancy at the property typically drops during the summer months, giving Briarwood an average occupancy rate four to five percentage points below market averages. The Tucson market softened during 1996 and 1995 due to new construction. Market occupancy rates decreased to 91% during 1996. The occupancy rate at Briarwood decreased to 84% at the end of 1996. Planned developments in the area may have a short-term impact on the property, but long-term impact is expected to be negligible due to Briarwood's excellent location. A major exterior renovation recently finished at Cave Spring Corners Shopping Center has allowed the Partnership to increase the property's rental rates up to area averages. Occupancy remains high due to a good location. Competing properties have also been renovated during the past five to six years. The economic outlook for the Roanoke area is expected to be positive, and should allow Cave Spring Corners to maintain its high occupancy throughout 1997. The Partnership placed Cave Spring Corners on the market for sale effective October 1, 1996. The average occupancy rate at Coppermill Apartments mirrors the local area average of 92%. Tulsa area occupancy rates are expected to be stable in the 92% to 93% range. Most properties in the immediate area, including Coppermill, were built by the same developer using identical floor plans. Thus, the local market is very price-sensitive. Management is working to differentiate Coppermill's units by upgrading interior fixtures and appliances. The average monthly rent per square foot city-wide is $.54 per square foot. Coppermill's monthly rental rates average $.515 per square foot, and are scheduled to increase to $.53 per square foot in 1997. Iberia Plaza gained a new anchor tenant during 1995. The property remained 97% leased, but the proportion of the space that was "dark" or vacant decreased from 84% to 19% during 1995. The new tenant, a grocery store, has increased the amount of traffic into the New Iberia property. In connection with the new anchor tenant lease, the Partnership invested over $700,000 in capital improvements to replace the asphalt, roof, exterior lighting and HVAC equipment. The primary competition for the property is a retail center constructed in 1991 across the street from Iberia Plaza. The new retail center charges an average rental rate of $8 to $10 per square foot as opposed to $6 at Iberia Plaza. The Partnership placed Iberia Plaza on the market for sale effective October 1, 1996. La Plaza Business Center made significant leasing strides in 1995 and 1996 while recovering from large vacancies in 1995 due to space vacated by two large tenants. Occupancy fell from 97% at the beginning of 1995 to a range of 60 to 70% in mid 1995. Occupancy has since recovered to 88% and is projected to be approximately 94% by the end of 1997. The Partnership has invested substantial funds in tenant improvements, bringing the property in compliance with local building codes, updating interiors of the buildings, and reconfiguring interior space. The investments will continue into early 1998. The Partnership intends to fund the tenant improvements as lease negotiations proceed with new tenants. Demand for office space in Las Vegas is expected to be strong in 1997. New construction is aimed at the high-end of the market, and is not expected to compete with La Plaza. Lakeview Plaza's anchor tenant space was sublet to two tenants in 1996. The anchor tenant space is now occupied and drawing customers to the center once again. The local market area appears to be strong, with several national retailers opening new stores or announcing plans for new stores in the Lexington area. There are several, newer competing properties in close proximity to Lakeview Plaza. All but one space at the center remains leased, but little growth in rental rates has been seen since the early 1990s. Orchard Apartments has benefited from extensive capital improvements during the past several years. The property, as a result, has good curb appeal and a favorable local reputation. Orchard's occupancy rate is usually two percentage points above its competitors. The property is also able to command rental rates slightly in excess of its competitors. The Lawrence market, however, appears to be softening due to a favorable climate for first-time home buyers and an unusual number of job transfers by residents out of the area. Consequently, the property is likely to have slower revenue growth in 1997 than has been achieved in recent years. Quail Meadows Apartments is one of the nicer properties in the Wichita area. Both interiors and exteriors of the property are above average relative to the competition. Quail Meadows has maintained occupancy rates higher than market averages, but has not been able to increase rental rates despite significant capital improvements. However, the local market appears to be improving, with local employers doing well. Rental rates, which have been depressed for several years, are expected to rise in 1997. No new apartment communities are planned for the submarket, and none have been built for the past twelve years. Occupancy rates in the Regency Park Apartments market area average 92%, slightly better than Regency Park's occupancy rate. Rental rates realized at Regency Park are approximately 8% lower than its competitors. The property competes with numerous properties, some of which are newer or have more appeal to prospective tenants. Capital improvements made by the Partnership during the past three years have allowed the property to close some of the gap between Regency Park and its competitors. The rental market in the Ft. Wayne area, however, remains price sensitive. Improvements in operating results generally are coming through improved occupancy rather than rate increases. Capital improvements placed in service since 1992 have allowed Sandpiper Apartments to repeatedly increase its base rental rates. Occupancy and rental rates are above market averages. There is significant new construction under development in the market area. It is expected that the new construction will put downward pressure on Westminster market rent levels, but management expects that well-maintained Sandpiper will continue to compete effectively. Average occupancy rates at Spanish Oaks Apartments have decreased 3.5 percentage points during the past two years due to competition with new construction, older properties that have been renovated, and rate hikes at Spanish Oaks. The Partnership has increased base rental rates at the property, but rental rates at Spanish Oaks remain below San Antonio market averages. The interiors at Spanish Oaks will need to be updated to allow the property to raise its rents to current market levels. Also of concern is the reliance upon personnel employed or stationed at Fort Sam Houston Army Base for many of the property's tenants. The following schedule shows lease expirations for each of the Partnership's commercial properties for 1997 through 2006:
Number of Annual % of Gross Expirations Square Feet Rent Annual Rent ----------- ----------- ------ ----------- Real Estate Investments: - ------------------------ La Plaza - -------- 1997 12 9,646 $ 142,356 11% 1998 4 10,793 162,048 12% 1999 4 13,410 242,856 18% 2000 6 34,085 521,568 39% 2001 4 12,253 183,768 14% Thereafter 0 - - - Lakeview Plaza - -------------- 1997 3 10,568 93,780 11% 1998 2 1,025 15,168 2% 1999 2 6,071 54,648 7% 2000 1 913 9,432 1% 2001 0 - - - 2002 0 - - - 2003 2 16,721 118,380 14% 2004 2 121,942 455,700 56% 2005 0 - - - 2006 0 - - - Assets Held for Sale: - --------------------- Cave Spring Corners - ------------------- 1997 1 1,920 $ 26,808 4% 1998 2 6,255 42,156 6% 1999 2 3,758 43,896 7% 2000 2 3,298 37,968 6% 2001 5 105,071 335,820 51% 2002 0 - - - 2003 2 46,432 171,156 26% 2004 0 - - - 2005 0 - - - 2006 0 - - -
Number of Annual % of Gross Expirations Square Feet Rent Annual Rent ----------- ----------- ------ ----------- Iberia Plaza - ------------ 1997 3 4,008 $ 23,808 4% 1998 5 33,285 139,260 26% 1999 5 7,243 56,808 10% 2000 0 - - - 2001 1 3,240 27,540 5% 2002 0 - - - 2003 1 79,902 271,668 50% 2004 0 - - - 2005 1 3,360 26,040 5% 2006 0 - - -
No residential tenant leases 10% or more of the available rental space of any residential property. The following schedule reflects information on commercial tenants occupying 10% or more of the leasable square feet for each property:
Nature of Business Square Footage Lease Use Leased Annual Rent Expiration - --------- -------------- ----------- ----------- Real Estate Investments: - ------------------------ La Plaza: - --------- Governmental agency 12,097 $224,052 1999 Lakeview Plaza: - --------------- Discount department store 78,337 252,996 2004 Grocery store 43,605 202,704 2004 Assets Held for Sale: - --------------------- Cave Spring Corners: - -------------------- Department store 84,217 192,000 2001 Grocery store 46,432 143,556 2003 Iberia Plaza: - ------------- Grocery store 26,445 89,916 1998 Discount department store 79,902 271,668 2003
ITEM 3. LEGAL PROCEEDINGS - ------- ----------------- The Partnership is not party to, nor are any of the Partnership's properties the subject of, any material pending legal proceedings, other than ordinary, routine litigation incidental to the Partnership's business, except as noted below. 1) 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 (as defined in this Section 1, the "Partnerships"). Plaintiffs allege that McNeil Investors, Inc., its affiliate McNeil Real Estate Management, Inc. and three of their senior officers and/or directors (as defined in this Section 1, 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. On January 7, 1997, the Court ordered consolidation with three other similar actions listed below. The Partnerships filed a demurrer to the complaint and a motion to strike on February 14, 1997, seeking to dismiss the complaint in all respects. The demurrer is pending. The Partnerships deny that there is any merit to Plaintiff's allegations and intend to vigorously defend this action. 2) Alfred Napoletano v. McNeil Partners, L.P., McNeil Investors, Inc., Robert A. McNeil, Carole J. McNeil, 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., McNeil Real Estate Fund XXV, L.P. - Superior Court of the State of California, County of Los Angeles, Case No. BC133849 (Class Action Complaint). On January 7, 1997, this action was consolidated by court order with Schofield, et al., referenced above. 3) Warren Heller v. McNeil Partners, L.P., McNeil Investors, Inc., Robert A. McNeil, Carole J. McNeil, 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., McNeil Real Estate Fund XXV, L.P. - Superior Court of the State of California, County of Los Angeles, Case No. BC133957 (Class Action Complaint). On January 7, 1997, this action was consolidated by court order with Schofield, et al., referenced above. 4) Robert Lewis v. McNeil Partners, L.P., McNeil Investors, Inc., Robert A. McNeil et al. - In the District Court of Dallas County, Texas, A-14th Judicial District, Cause No. 95-08535 (Class Action) - Plaintiff, Robert Lewis, is a limited partner with McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund X, Ltd. and McNeil Real Estate Fund XV, Ltd. On April 11, 1996, the action was dismissed without prejudice in anticipation of consolidation with other class action complaints. On January 7, 1997, this action was consolidated by court order with Schofield, et al., referenced above. 5) The First National Bank of Chicago, as Trustee Under That Certain Pooling and Servicing Agreement Dated as of December 1, 1995, for Resolution Trust Corporation Commercial Mortgage Pass-Through Certificates, Series 1995-C2 v. McNeil Real Estate Fund X, Ltd., McNeil Partners, L.P. and McNeil Investors, Inc. - U.S. District Court, Northern District of Dallas, Dallas Division; Civil Action No. 33-96CV3198-D; and District Court, Dallas County, Texas, F-116th Judicial District; Case No.: 96-13066(P96014). The plaintiffs are the holder of a certain Second Lien Wraparound Promissory Note ("Wraparound Note") secured by the Spanish Oaks Apartments. This action involves a dispute of the principal payoff amount on the Wraparound Note. The plaintiffs contend that the payoff balance is $3,399,592; however, the Partnership has calculated the payoff balance to be significantly less. On January 26, 1996, the Partnership refinanced the Spanish Oaks Apartments. At that time the $3,399,592 was escrowed with the American Title Company. The plaintiff claims that pursuant to the terms of the Wraparound Note, the Partnership owes the entire escrowed balance. The parties have been ordered to mediation before July 28, 1997, which is the current trial date. The Partnership anticipates that this matter will be concluded through settlement with no adverse effect to the Partnership. For discussion of the Southmark bankruptcy, see Item 1 - Business." ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------- --------------------------------------------------- None. PART II ITEM 5. MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP AND - ------- ------------------------------------------------------------ RELATED SECURITY HOLDER MATTERS ------------------------------- (A) There is no established public trading market for limited partnership units, nor is one expected to develop. (B) Title of Class Number of Record Unit Holders -------------- ----------------------------- Limited partnership units 6,617 as of January 31, 1997 (C) No distributions were paid to the limited partners in 1996 or 1995 and none are anticipated in 1997. The Partnership accrued distributions of $1,048,667 and $1,064,257 for the benefit of the General Partner for the years ended December 31, 1996 and 1995, respectively. These distributions are the Management Incentive Distribution (the "MID") pursuant to the Amended Partnership Agreement. See Item 8 - Note 2 - "Transactions with Affiliates." See Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the likelihood that the Partnership will resume distributions to the limited partners. ITEM 6. SELECTED FINANCIAL DATA - ------- ----------------------- The following table sets forth a summary of certain financial data for the Partnership. This summary should be read in conjunction with the Partnership's financial statements and notes thereto appearing in Item 8.
Years Ended December 31, Statements of -------------------------------------------------------------------------- Operations 1996 1995 1994 1993 1992 - ------------------ -------------- ------------- -------------- ------------- ------------ Rental revenue............... $ 16,089,109 $ 16,878,076 $ 17,375,904 $ 16,217,889 $ 16,023,798 Gain on involuntary conversion.................. 285,127 - - 268,434 192,168 Gain on sale of real estate.. 353,389 3,183,698 - - - Total revenue................ 16,853,542 20,258,594 17,428,487 16,542,802 16,283,680 Loss on replacement of assets................... - - - - (675,420) Income (loss) before extraordinary items......... 872,382 2,193,164 (1,199,904) (1,693,057) (2,101,133) Extraordinary items.......... 269,596 - 292,539 (1,078,519) - Net income (loss)............ 1,141,978 2,193,164 (907,365) (2,771,576) (2,101,133) Net income (loss) per limited partnership unit: Income (loss) before extraordinary items......... $ 6.14 $ 15.43 $ (10.25) $ (15.62) $ (24.66) Extraordinary items.......... 1.90 - 2.06 (7.58) - ------------ ----------- ------------ ----------- ------------ Net income (loss)............ $ 8.04 $ 15.43 $ (8.19) $ (23.20) $ (24.66) ============ =========== ============ =========== ============ As of December 31, Balance Sheets 1996 1995 1994 1993 1992 - -------------- ------------- ------------- -------------- ------------- ------------ Real estate investments, net... $ 30,257,120 $36,699,530 $ 37,024,893 $ 45,705,474 $ 44,968,959 Assets held for sale........... 5,308,731 2,237,733 7,215,032 - - Total assets................... 41,407,352 43,638,649 48,379,933 50,632,244 48,958,917 Mortgage notes payable, net.... 42,412,292 44,454,316 52,078,850 54,484,455 49,141,717 Partners' deficit.............. (6,220,056) (6,313,367) (7,442,274) (5,900,107) (2,304,044)
See Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations. The Partnership sold the following properties during the five year period ended December 31, 1996. Property Date Sold -------- --------- Parkway Plaza September 18, 1996 The Courts Apartments September 14, 1995 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION - ------- ----------------------------------------------------------- AND RESULTS OF OPERATIONS ------------------------- FINANCIAL CONDITION - ------------------- The Partnership was formed to acquire, operate and ultimately dispose of a portfolio of income-producing real properties. At the end of 1996, the Partnership owned seven apartment buildings, three retail centers and one office building. All of the Partnership's properties are subject to mortgage indebtedness. On September 18, 1996, the Partnership sold Parkway Plaza shopping center, a 135,682 square foot retail center located in Lafayette, Louisiana. The decision to sell Parkway Plaza was influenced by both the General Partner's belief that the appreciation potential of the property was limited and the impending maturity of the mortgage note secured by the property. The Partnership recorded a $275,424 gain on the sale of Parkway Plaza. Net proceeds from the sale amounted to $283,585 and were added to the Partnership's balance of cash reserves. The mortgage note secured by La Plaza Office Building in Las Vegas matured on March 1, 1997. Subsequent to year end, on February 28, 1997, the Partnership resolved the impending maturity by refinancing the La Plaza mortgage note. The Partnership obtained a 3-year, $2,336,029 mortgage note from another partnership affiliated with the General Partner. The new mortgage note bears interest at a variable rate equal to 1% plus the prime lending rate. No net proceeds were realized from the refinancing. Earlier, the Partnership realized $475,775 from the January 26, 1996 refinancing of the Spanish Oaks mortgage note. The new mortgage note, in the amount of $4,000,000, reduced the interest rate on the debt secured by Spanish Oaks Apartments to 7.71% from the previous mortgage note's 10% rate. Monthly debt service payments were reduced to $28,546 from $31,392. In connection with the payoff of the previous mortgage note, the Partnership negotiated a discounted payoff that resulted in a $269,596 extraordinary gain on extinguishment of debt. RESULTS OF OPERATIONS - --------------------- 1996 compared to 1995 Partnership net income decreased in 1996 to $1,141,978 from $2,193,164 in 1995. Included in net income for both years are gains on sale of real estate. Gains on sale of real estate amounted to $353,389 and $3,183,698 for the years 1996 and 1995, respectively. Partnership income from continuing property operations, excluding gains on sale of real estate and all other one-time transaction gains, increased to $233,866 in 1996 from a loss of $1,082,051 in 1995. The improved performance of the Partnership is attributable to the improving performance of the Partnership's properties generally, and to the elimination of rental operations at The Courts Apartments which was sold on September 14, 1995. Revenue: Rental revenue decreased $788,967 to $16,089,109 in 1996 compared to 1995. However, after excluding rental revenue attributable to Parkway Plaza and The Courts Apartments, the two Partnership properties sold during 1996 and 1995, the Partnership reported a $747,824 or 5.0% increase in rental revenue in 1996 compared to 1995. Rental revenue increased at four of the Partnership's seven residential properties. All of the residential properties increased base rental rates by small amounts except for Quail Meadows Apartments. The increases in base rental rates averaged 2.6%. Although Quail Meadows Apartments did not increase its base rental rates, an increase in average occupancy rates resulted in the Wichita property reporting the largest net increase in rental revenue of the Partnership's seven residential properties. Coppermill also reported an increase in average occupancy rates. Rate hikes at Orchard Apartments and Sandpiper Apartments were partially offset by decreased average occupancy rates. The decrease in occupancy at Briarwood Apartments more than offset a small rental rate increase. The Tucson property is competing in a soft market where new construction is not being fully absorbed. Rental revenue at Regency Park Apartments was adversely affected by a fire that destroyed 16 units, and the following reconstruction. Rental revenue was essentially unchanged at Spanish Oaks Apartments in 1996 compared to 1995. The Partnership's four commercial properties reported much larger increases in rental revenue than did the Partnership's residential properties. The increases were led by La Plaza Office Building. Rental revenue at La Plaza increased 23% in 1996. The increase was achieved through an increase in the occupancy rate from 77% at the end of 1995 to 88% at the end of 1996. The Partnership is in the process of reconfiguring the Las Vegas property, after the property's two largest tenants vacated their space in 1995, to take advantage of a strong market for office space in the Las Vegas market. The Partnership's three retail centers also posted increased rental revenue, largely through increased recoveries of operating expenses and property taxes from their respective tenants. Expenses: Partnership expenses decreased $2,084,270 or 11.5% in 1996 compared to 1995. Expenses decreased in all categories except for property taxes and general and administrative expenses. However, most of the decrease in expenses is due to the sale of The Courts Apartments and Parkway Plaza. Expenses incurred by the Partnership's remaining properties decreased $148,950 or 0.9% in 1996 compared to 1995. Every expense category changed by less than 5% at the remaining properties except for property taxes, general and administrative, and general and administrative expenses paid to affiliates. Property tax expense increased $147,776 or 17.1% at the eleven properties remaining in the Partnership's portfolio at the end of 1996. Property tax expense increased by more than 10% at five properties: Cave Spring Corners, Iberia Plaza, Lakeview Plaza, Regency Park Apartments and Spanish Oaks Apartments. Generally, the increases result from increased valuations placed on properties by local tax jurisdictions. Some of the change, particularly at Lakeview Plaza, results from adjustments to prior year taxes as a result of appeal proceedings. The Partnership was able to reduce Lakeview Plaza's 1994 property taxes as the result of a 1995 administrative hearing that reduced the property's assessed value. However, in 1996 the tax jurisdictions appealed and won a reversal of the decreased assessed value. General and administrative expenses increased $54,481 or 14.7% in 1996 compared to 1995. Expenses related to the evaluation and dissemination of information regarding an unsolicited tender offer increased $20,638 in 1996 compared to 1995. Also, the Partnership incurred a $23,139 increase in sales and use taxes paid to various states and a $13,000 increase in fees paid to appraisers. General and administrative expenses paid to affiliates decreased $239,503 or 36% in 1996 compared to 1995. Reimbursements charged to the Partnership decreased because of reduced expenses incurred by affiliates in managing the Partnership and other affiliated partnerships. Expenses also decreased because of the sale of Parkway Plaza and The Courts Apartments in 1996 and 1995, respectively. Expenses charged by affiliates have and will continue to decrease as the Partnership liquidates its portfolio of properties. 1995 compared to 1994 Revenue: The Partnership reported two non-recurring items of revenue in 1995. A $3,183,698 gain was recognized on the September 1995 sale of The Courts Apartments. The Partnership also reported a $91,517 gain on a legal settlement that pertained to the settlement of the Partnership's claims in the Southmark bankruptcy filing. The Partnership's rental revenue decreased $497,828 or 2.9% in 1995 compared to 1994. Most of the decrease is attributable to the sale of The Courts Apartments in September 1995. However, rental revenue, excluding rental revenue from The Courts Apartments for 1995 and 1994, also decreased by $79,997 or 0.5%. Eight of the Partnership's properties reported steady increases in rental revenue ranging from 3 to 4.5 percent. One property, Regency Park Apartments, reported a 7.0% increase in rental revenue, the result of a 5% increase in base rental rates combined with a decrease in vacancy losses. Decreases in rental revenue were reported at Iberia Plaza, La Plaza Office Building and Lakeview Plaza. Behind the 3.8% decrease in rental revenue at Iberia Plaza was a decrease in percentage rents from the property's tenants. 78% of the property's leasable space was "dark" (space that is under lease, but vacant) for some period of time during 1995. Tenants who have vacated their space, but are still paying base rent do not provide the Partnership with any percentage rents. Expense recoveries also decreased at Iberia Plaza. A new anchor tenant (a grocery store) is now in place at Iberia Plaza. The General Partner anticipated that expense recoveries would improve in 1996 due to the new anchor tenant. Rental revenue at La Plaza Office Building decreased 28% as a major tenant moved to a competing property and another tenant reduced its space requirements by half. The Partnership is reconfiguring space arrangements at La Plaza Office Building to take advantage of the shortage of smaller office suites in the Las Vegas market. Rental revenue was expected to remain depressed at La Plaza for 1996, before improving in 1997. Lakeview Plaza also had difficulty with dark space in 1995. Rental revenue at the Lexington, Kentucky property decreased 17.3% in 1995 principally due to decreases in expense recoveries from tenants no longer operating businesses at the property. Expenses: Total Partnership expenses decreased $562,961 or 3.0% in 1995 compared to 1994. Excluding the effect of expenses incurred at The Courts Apartments reveals an $8,949 decrease in expenses. Property tax expense decreased at six of the Partnership's properties. The most significant decrease was reported at Lakeview Plaza. A preliminary reduction in the assessed value of Lakeview Plaza resulted in a $78,000 reduction in property tax expense for 1995. Property taxes were also reduced by lesser amounts at Cave Spring Corners Shopping Center, Orchard Apartments, Regency Park Apartments, Sandpiper Apartments and Spanish Oaks Apartments. Other property operating expenses, excluding other property operating expenses incurred at The Courts Apartments, increased $86,128 or 9.3% in 1995 compared to 1994. The increase is principally attributable to increased insurance expense for the Partnership's properties. Also included in this category are advertising and marketing expenses, bad debt expense, and office and administrative expenses. Partnership general and administrative expenses increased $167,761 or 83% in 1995 compared to 1994. The Partnership incurred $242,486 of expenses related to the evaluation and dissemination of information with regards to a 1995 unsolicited tender offer. No such expenses were incurred in 1994. Interest incurred on loans from affiliates increased to $78,822 in 1995 from $5,206 in 1994. This expense represents interest on the $800,000 loan from an affiliate of the General Partner secured by Lakeview Plaza. Only one month of affiliate interest expense was incurred in 1994 as opposed to twelve months of such expense during 1995. General and administrative expenses incurred for the benefit of affiliates increased $61,400 or 10.1% in 1995 compared to 1994. These expenses are the reimbursable expenses incurred by affiliates of the General Partner. These costs increased due to a reduction in the number of properties managed by McREMI over which such costs are allocated. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- During the three year period ended December 31, 1996, the Partnership reported net income of $2,427,777. However, during the same three-year period, the Partnership generated $10,079,048 of cash flow from operating activities. Cash flow provided by operating activities decreased $1,106,418 to $3,031,951 in 1996 compared to 1995. The decrease was primarily caused by an increase in cash paid to affiliates. Cash paid to affiliates increased 92% in 1996 because the Partnership resumed payment of reimbursements to affiliates of the General Partner in 1996. Such expenses were not paid in 1995 to enable the Partnership to restore its balance of cash reserves. Decreased cash flow from operating activities is also attributable to the sale of Parkway Plaza and The Courts Apartments in 1996 and 1995, respectively. The sale of Parkway Plaza in September 1996 provided cash proceeds of $2,828,051; however, $2,544,466 of that amount was used to retire the Parkway Plaza mortgage note. The Partnership continues to invest substantial resources into capital improvements at its properties. A total of $7,411,032 of improvements have been added to the Partnership's properties over the past three years. In 1996, $422,619 of the improvements were reimbursed to the Partnership by its insurance carrier as a result of a fire that destroyed 16 units at Regency Park Apartments. An additional $1.6 million of capital improvements are budgeted for 1997. The January 1996 refinancing of the Spanish Oaks mortgage note provided $475,775 of refinancing proceeds for the Partnership. The refinancing also reduced the interest rate on the Spanish Oaks mortgage debt to 7.71% from 10.0% and reduced monthly debt service payments by $2,846 to $28,546. Amortization of mortgage principal balances through monthly debt service payments accounted for most of the $911,444 of principal repayments made by the Partnership during 1996. MID payments to the General Partner have been suspended since the beginning of 1994 to improve the cash position of the Partnership. See short-term liquidity below. Short-term liquidity: At December 31, 1996, the Partnership held cash and cash equivalents of $2,660,679, up $847,085 from the balance at the end of 1995. Cash reserves of the Partnership have increased significantly from the depressed levels at the end of 1994. The General Partner is continuing to take steps to increase the Partnership's liquidity. Some of these steps are discussed in the following paragraphs. Over the past three years, the Partnership has invested large amounts of funds in capital improvements at the Partnership's properties. Although significant challenges remain, total capital expenditures for 1997 are expected to decrease from the average amount expended in each of the past three years. The Partnership's capital improvement budget for 1997 amounts to $1.6 million. The largest capital projects of the Partnership will be concentrated at La Plaza Office Building as the property undergoes refurbishment to allow it to take advantage of a strong Las Vegas market. The La Plaza mortgage note matures on March 1, 1997. Subsequent to year end, the Partnership refinanced the La Plaza mortgage note with a $2,336,029 mortgage note obtained from a partnership affiliated with the General Partner. The new mortgage note matures in three years, bears interest at a variable rate equal to 1% plus the prime lending rate, and requires monthly interest-only payments. During 1996, 1995 and 1994, the General Partner deferred collection of the MID. As of December 31, 1996, approximately $2.7 million of deferred MID payments were due to the General Partner. The General Partner anticipates resuming payment of MID if the Partnership's properties continue to perform as anticipated. 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 $7.4 million of capital improvements made by the Partnership during the past three years will yield improved cash flow from property operations in the future. Furthermore, the General Partner has budgeted an additional $1.6 million of capital improvements for 1997. If the Partnership's cash position deteriorates, the General Partner may elect to defer certain of the capital improvements, except where such improvements are expected to increase the competitiveness or marketability of the Partnership's properties. The Partnership determined to evaluate market and other economic conditions to establish the optimum time to commence an orderly liquidation of the Partnership's assets in accordance with the terms of the Amended Partnership Agreement. Taking such conditions as well as other pertinent information into account, the Partnership has determined to begin orderly liquidation of all its assets. Although there can be no assurance as to the timing of the liquidation due to real estate market conditions, the general difficulty of disposing of real estate, and other general economic factors, it is anticipated that such liquidation would result in the dissolution of the Partnership followed by a liquidating distribution to Unitholders by December 2001. In this regard, the Partnership has placed Cave Spring Corners and Iberia Plaza on the market 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 each of the three years in the period ended December 31, 1996, net income of $57,099, $109,658 and $199,163, respectively, was allocated to the General Partner. The limited partners were allocated net income (loss) of $1,084,879, $2,083,506 and $(1,106,528) for each of the three years in the period ended December 31, 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. Payments of MID have been suspended since the beginning of 1994. The General Partner will continue to monitor the cash reserves and working capital needs of the Partnership to determine when cash flows will support payments of MID and distributions to the Unit holders. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - ------- -------------------------------------------
Page Number ------ INDEX TO FINANCIAL STATEMENTS - ----------------------------- Financial Statements: Report of Independent Public Accountants....................................... 20 Balance Sheets at December 31, 1996 and 1995................................... 21 Statements of Operations for each of the three years in the period ended December 31, 1996.............................................. 22 Statements of Partners' Deficit for each of the three years in the period ended December 31, 1996................................. 23 Statements of Cash Flows for each of the three years in the period ended December 31, 1996.............................................. 24 Notes to Financial Statements.................................................. 26 Financial Statement Schedule: Schedule III - Real Estate Investments and Accumulated Depreciation and Amortization............................................ 40
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Partners of McNeil Real Estate Fund X, Ltd.: We have audited the accompanying balance sheets of McNeil Real Estate Fund X, Ltd. (a California limited partnership) as of December 31, 1996 and 1995, and the related statements of operations, partners' deficit and cash flows for each of the three years in the period ended December 31, 1996. These financial statements and the schedule referred to below are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and the schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of McNeil Real Estate Fund X, Ltd. as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in the index to financial statements is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. /s/ Arthur Andersen LLP Dallas, Texas March 17, 1997 McNEIL REAL ESTATE FUND X, LTD. BALANCE SHEETS
December 31, ---------------------------------- 1996 1995 --------------- ------------- ASSETS - ------ Real estate investments: Land..................................................... $ 8,836,046 $ 10,464,914 Buildings and improvements............................... 71,110,263 78,886,121 -------------- ------------- 79,946,309 89,351,035 Less: Accumulated depreciation and amortization......... (49,689,189) (52,651,505) -------------- ------------- 30,257,120 36,699,530 Assets held for sale 5,308,731 2,237,733 Cash and cash equivalents................................... 2,660,679 1,813,594 Cash segregated for security deposits....................... 301,259 317,834 Accounts receivable......................................... 575,995 432,618 Prepaid expenses and other assets........................... 329,136 332,665 Escrow deposits............................................. 802,841 625,344 Deferred borrowing costs, net of accumulated amortization of $438,719 and $306,342 at December 31, 1996 and 1995, respectively................. 1,171,591 1,179,331 -------------- ------------- $ 41,407,352 $ 43,638,649 ============== ============= LIABILITIES AND PARTNERS' DEFICIT - --------------------------------- Mortgage notes payable, net................................. $ 41,612,292 $ 44,454,316 Mortgage note payable - affiliates.......................... 800,000 800,000 Accounts payable............................................ 61,356 186,785 Accrued property taxes...................................... 530,973 522,951 Accrued interest............................................ 309,977 370,294 Accrued interest - affiliates............................... 6,625 6,625 Other accrued expenses...................................... 309,981 318,324 Payable to affiliates - General Partner..................... 3,555,343 2,907,490 Deferred gain on involuntary conversion..................... 65,800 - Security deposits and deferred rental revenue............... 375,061 385,231 -------------- ------------- 47,627,408 49,952,016 -------------- ------------- Partners' deficit Limited partners - 135,200 limited partnership units authorized; 134,980 and 135,030 limited partnership units issued and outstanding at December 31, 1996 and 1995, respectively................................. (704,049) (1,788,928) General Partner.......................................... (5,516,007) (4,524,439) -------------- ------------- (6,220,056) (6,313,367) $ 41,407,352 $ 43,638,649 ============== =============
See accompanying notes to financial statements. McNEIL REAL ESTATE FUND X, LTD. STATEMENTS OF OPERATIONS
For the Years Ended December 31, ---------------------------------------------------- 1996 1995 1994 -------------- -------------- --------------- Revenue: Rental revenue.......................... $ 16,089,109 $ 16,878,076 $ 17,375,904 Interest................................ 125,917 105,303 52,583 Gain on sale of real estate............. 353,389 3,183,698 - Gain on involuntary conversion.......... 285,127 - - Gain on legal settlement................ - 91,517 - ------------- ------------- -------------- Total revenue......................... 16,853,542 20,258,594 17,428,487 ------------- ------------- -------------- Expenses: Interest................................ 4,204,981 4,980,917 5,354,150 Interest - affiliates................... 74,915 78,822 5,206 Depreciation and amortization........... 3,232,454 3,567,913 3,609,402 Property taxes.......................... 1,035,988 1,010,754 1,194,939 Personnel expenses...................... 1,694,914 1,950,309 1,950,481 Utilities............................... 1,231,498 1,368,713 1,442,254 Repairs and maintenance................. 1,879,831 2,100,763 2,313,443 Property management fees - affiliates............................ 791,081 846,482 868,408 Other property operating expenses....... 979,099 1,119,336 1,077,848 General and administrative ............. 425,305 370,824 203,063 General and administrative - affiliates............................ 431,094 670,597 609,197 ------------- ------------- -------------- Total expenses........................ 15,981,160 18,065,430 18,628,391 ------------- ------------- -------------- Income (loss) before extraordinary items................................... 872,382 2,193,164 (1,199,904) Extraordinary items........................ 269,596 - 292,539 ------------- ------------- -------------- Net income (loss).......................... $ 1,141,978 $ 2,193,164 $ (907,365) ============= ============= ============== Net income (loss) allocated to limited partners........................ $ 1,084,879 $ 2,083,506 $ (1,106,528) Net income allocated to General Partner......................... 57,099 109,658 199,163 ------------- ------------- -------------- Net income (loss).......................... $ 1,141,978 $ 2,193,164 $ (907,365) ============= ============= ============== Net income (loss) per limited partnership unit: Income (loss) before extraordinary items................................. $ 6.14 $ 15.43 $ (10.25) Extraordinary items..................... 1.90 - 2.06 ------------- ------------- ------------- Net income (loss) per limited partnership unit...................... $ 8.04 $ 15.43 $ (8.19) ============= ============= =============
See accompanying notes to financial statements. McNEIL REAL ESTATE FUND X, LTD. STATEMENTS OF PARTNERS' DEFICIT For the Years Ended December 31, 1996, 1995 and 1994
Total General Limited Partners' Partner Partners (Deficit) ---------------- --------------- ---------------- Balance at December 31, 1993................ $ (3,134,201) $ (2,765,906) $ (5,900,107) Net income (loss)........................... 199,163 (1,106,528) (907,365) Management Incentive Distribution........... (634,802) - (634,802) -------------- ------------- -------------- Balance at December 31, 1994................ (3,569,840) (3,872,434) (7,442,274) Net income.................................. 109,658 2,083,506 2,193,164 Management Incentive Distribution........... (1,064,257) - (1,064,257) -------------- ------------- -------------- Balance at December 31, 1995................ (4,524,439) (1,788,928) (6,313,367) Net income.................................. 57,099 1,084,879 1,141,978 Management Incentive Distribution........... (1,048,667) - (1,048,667) -------------- ------------- -------------- Balance at December 31, 1996................ $ (5,516,007) $ (704,049) $ (6,220,056) ============== ============= ==============
See accompanying notes to financial statements. McNEIL REAL ESTATE FUND X, LTD. STATEMENTS OF CASH FLOWS Increase (Decrease) in Cash and Cash Equivalents
For the Years Ended December 31, ----------------------------------------------------- 1996 1995 1994 --------------- -------------- ----------------- Cash flows from operating activities: Cash received from tenants............... $ 16,001,867 $ 16,953,669 $ 17,305,399 Cash paid to suppliers................... (6,361,556) (6,541,879) (7,157,611) Cash paid to affiliates.................. (1,622,989) (846,113) (1,020,972) Interest received........................ 125,917 105,303 52,583 Interest paid............................ (3,904,205) (4,593,039) (5,142,089) Interest paid to affiliates.............. (74,915) (77,403) - Gain on legal settlement................. - 91,517 - Property taxes paid and escrowed......... (1,132,168) (953,686) (1,128,582) ------------- ------------- -------------- Net cash provided by operating activities............................... 3,031,951 4,138,369 2,908,728 ------------- ------------- -------------- Cash flows from investing activities: Additions to real estate investments..... (2,328,129) (2,939,050) (2,143,853) Proceeds from sale of real estate........ 2,958,375 7,905,804 - Insurance proceeds for fire damage....... 422,619 - - ------------- ------------- --------------- Net cash provided by (used in) investing activities..................... 1,052,865 4,966,754 (2,143,853) ------------- ------------- --------------- Cash flows from financing activities: Net proceeds from (cash used in) refinancing mortgage notes payable................................ 600,408 - (1,123,933) Net proceeds from mortgage note payable - affiliates.............. - - 800,000 Retirement of mortgage notes due to sale of real estate................. (2,544,466) (6,616,231) - Principal payments on mortgage notes payable.......................... (1,036,077) (1,184,440) (1,177,719) Reduction of mortgage note............... (132,959) - - Deferred borrowing costs paid............ (124,637) (65,447) (165,912) ------------- ------------- -------------- Net cash used in financing activities....... (3,237,731) (7,866,118) (1,667,564) ------------- ------------- -------------- Net increase (decrease) in cash and cash equivalents......................... 847,085 1,239,005 (902,689) Cash and cash equivalents at beginning of year........................ 1,813,594 574,589 1,477,278 ------------- ------------- -------------- Cash and cash equivalents at end of year.............................. $ 2,660,679 $ 1,813,594 $ 574,589 ============= ============= ==============
See discussion of noncash investing and financing activity in Note 7 - "Sale of Real Estate," Note 8 "Refinancing of Mortgage Notes," Note 9 - "Gains on Extinguishment of Debt" and Note 10 - "Gain on Involuntary Conversion." See accompanying notes to financial statements. McNEIL REAL ESTATE FUND X, LTD. STATEMENTS OF CASH FLOWS Reconciliation of Net Income (Loss) to Net Cash Provided by Operating Activities
For the Years Ended December 31, ---------------------------------------------------- 1996 1995 1994 -------------- -------------- --------------- Net income (loss).......................... $ 1,141,978 $ 2,193,164 $ (907,365) ------------- ------------- -------------- Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization........... 3,232,454 3,567,913 3,609,402 Amortization of deferred borrowing costs................................. 132,377 146,047 142,512 Amortization of discounts on mortgage notes payable................ 144,886 176,137 188,586 Gain on sale of real estate............. (353,389) (3,183,698) - Gain on involuntary conversion.......... (285,127) - - Extraordinary items..................... (269,596) - (292,539) Changes in assets and liabilities: Cash segregated for security deposits............................ 16,575 93,211 (26,923) Accounts receivable................... (102,151) 57,773 (16,358) Prepaid expenses and other assets.............................. 3,529 32,627 (31,540) Escrow deposits....................... (182,808) 365,109 (17,706) Accounts payable...................... (125,429) 55,929 (163,512) Accrued property taxes................ 8,022 (50,500) (25,133) Accrued interest...................... 23,513 65,694 (119,037) Accrued interest - affiliates......... - 1,419 5,206 Other accrued expenses................ 58,101 11,029 103,180 Payable to affiliates - General Partner............................. (400,814) 670,966 456,633 Security deposits and deferred rental revenue...................... (10,170) (64,451) 3,322 ------------- ------------- -------------- Total adjustments................... 1,889,973 1,945,205 3,816,093 ------------- ------------- -------------- Net cash provided by operating activities.............................. $ 3,031,951 $ 4,138,369 $ 2,908,728 ============= ============= ==============
See accompanying notes to financial statements. McNEIL REAL ESTATE FUND X, LTD. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - -------------------------------------------------------------------- Organization - ------------ McNeil Real Estate Fund X, Ltd. (the "Partnership") was organized on June 1, 1979 as a limited partnership under the provisions of the California Uniform Limited Partnership Act. The general partner of the Partnership is McNeil Partners, L.P. (the "General Partner"), a Delaware limited partnership, an affiliate of Robert A. McNeil. The Partnership is governed by an amended and restated partnership agreement dated October 9, 1991, as amended (the "Amended Partnership Agreement"). The principal place of business for the Partnership and the General Partner is 13760 Noel Road, Suite 600, LB70, Dallas, Texas, 75240. The Partnership is engaged in diversified real estate activities, including the ownership, operation and management of residential and commercial real estate and other real estate related assets. The Partnership has determined to evaluate market and other economic conditions to establish the optimum time to commence an orderly liquidation of the Partnership's assets in accordance with the terms of the Amended Partnership Agreement. At December 31, 1996, the Partnership owned eleven income-producing properties as described in Note 4 - "Real Estate Investments." Basis of Presentation - --------------------- The accompanying financial statements have been prepared in conformity with generally accepted accounting principles ("GAAP"). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Partnership's financial statements include the accounts of the following listed tier limited partnerships. These single asset tier limited partnerships were formed to accommodate the refinancing of the respective properties. The Partnership's and the General Partner's ownership interests in each tier limited partnership are detailed below. The Partnership retains effective control of each tier limited partnership. The General Partner's minority interest is not presented as it is immaterial.
% of Ownership Interest Tier Partnership Partnership General Partner ---------------- ----------- --------------- Briarwood Fund X Limited Partnership (a) (b)........ 100% - Coppermill Fund X Limited Partnership (a) (b)....... 100 - Orchard Fund X Limited Partnership (a) (b).......... 100 - Quail Meadows Fund X Limited Partnership (a) (b).... 100 - Regency Park Fund X Associates, L.P. (b)............ 99 1% Sandpiper Fund X Limited Partnership (a) (b)........ 100 - Spanish Fund X, Ltd. (c)............................ 100 -
(a) The general partner of these limited partnerships is a corporation whose stock is 100% owned by the Partnership. (b) Included in financial statements for years ended December 31, 1996, 1995 and 1994. (c) Spanish Fund X, Ltd. commenced business activity on January 26, 1996. The financial statements also include the accounts of the Partnership and its 99% interest in the assets, liabilities and operations (through September 14, 1995) of Courts Fund X Associates, L.P., the tier limited partnership that owned The Courts Apartments. The General Partner owned the remaining 1% of Courts Fund X Associates, L.P. Real Estate Investments - ----------------------- Real estate investments are generally stated at the lower of depreciated cost or fair value. Real estate investments are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. When the carrying value of a property exceeds the sum of all estimated future cash flows, an impairment loss is recognized. At such time, a write-down is recorded to reduce the basis of the property to its estimated recoverable amount. The Partnership's method of accounting for real estate investments is in accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" ("SFAS 121"), which the Partnership adopted effective January 1, 1996. The adoption of SFAS 121 did not have a material impact on the accompanying financial statements. Improvements and betterments are capitalized and expensed through depreciation charges. Repairs and maintenance are charged to operations as incurred. Assets Held for Sale - -------------------- Assets held for sale are stated at the lower of depreciated cost or fair value less costs to sell. Depreciation on these assets ceases at the time they are placed on the market for sale. Depreciation - ------------ Buildings and improvements are depreciated using the straight-line method over the estimated useful lives of the assets, ranging from 3 to 38 years. Tenant improvements are amortized over the terms of the related tenant leases using the straight-line method. Cash and Cash Equivalents - ------------------------- Cash and cash equivalents include cash on hand and cash on deposit with financial institutions with original maturities of three months or less. Carrying amounts for cash and cash equivalents approximate fair value. Escrow Deposits - --------------- The Partnership is required to maintain escrow accounts in accordance with the terms of various mortgage indebtedness agreements. These escrow accounts are controlled by the mortgagee and are used for payment of property taxes, hazard insurance, capital improvements and/or property replacements. Carrying amounts for escrow deposits approximate fair value. Deferred Borrowing Costs - ------------------------ Loan fees and other related costs incurred to obtain long-term financing on real property are capitalized and amortized using a method that approximates the effective interest method over the terms of the related mortgage notes payable. Amortization of deferred borrowing costs is included in interest expense on the Statements of Operations. Discounts on Mortgage Notes Payable - ----------------------------------- Discounts on mortgage notes payable are amortized over the remaining terms of the related mortgage notes using the effective interest method. Amortization of discounts on mortgage notes payable is included in interest expense on the Statements of Operations. Rental Revenue - -------------- The Partnership leases its residential properties under short-term operating leases. Lease terms generally are less than one year in duration. Rental revenue is recognized as earned. The Partnership leases its commercial properties under non-cancelable operating leases. Certain leases provide concessions and/or periods of escalating or free rent. Rental revenue is recognized on a straight-line basis over the term of the related leases. The excess of the rental revenue recognized over the contractual rental payments is recorded as accrued rent receivable and included in accounts receivable on the Balance Sheets. Income Taxes - ------------ No provision for Federal income taxes is necessary in the financial statements of the Partnership because, as a partnership, it is not subject to Federal income tax and the tax effect of its activities accrues to the partners. Allocation of Net Income and Net Loss - ------------------------------------- The Amended Partnership Agreement provides for net income or net loss of the Partnership for both financial statement and income tax reporting purposes to be allocated as indicated below. For allocation purposes, net income and net loss of the Partnership is determined prior to deductions for depreciation. (a) First, 5% of all deductions for depreciation shall be allocated to the General Partner, and 95% of all deductions for depreciation shall be allocated to the limited partners; (b) then, an amount of net income equal to the cumulative amount of the Management Incentive Distribution ("MID") paid to the General Partner for which no income has previously been allocated (see Note 2 "Transactions with Affiliates") shall be allocated to the General Partner; provided, however, that if all or a portion of such payment consists of limited partnership units ("Units"), the amount of net income allocated to the General Partner shall be equal to the amount of cash the General Partner would have otherwise received; (c) then, any remaining net income shall be allocated to the General Partner and to the limited partners so that the total amount of net income allocated to the General Partner pursuant to (b) above and this paragraph (c) and to the limited partners pursuant to this paragraph (c) shall be in the ratio of 5% to the General Partner and 95% to the limited partners. (d) Net loss shall be allocated 5% to the General Partner and 95% to the limited partners. Federal income tax law provides that the allocation of loss to a partner will not be recognized unless the allocation is in accordance with a partner's interest in the partnership or the allocation has substantial economic effect. Internal Revenue Code Section 704(b) and accompanying Treasury Regulations establish criteria for allocations of Partnership deductions attributable to debt. The Partnership's tax allocations for 1996, 1995 and 1994 have been made in accordance with these provisions. Distributions - ------------- Pursuant to the Amended Partnership Agreement and at the discretion of the General Partner, distributions during each taxable year shall be made as follows: (a) first, to the General Partner, an amount equal to the MID, and (b) any remaining distributable cash, as defined, shall be distributed 100% to the limited partners. No distributions were made to the limited partners in 1996, 1995 or 1994. The Partnership accrued distributions of $1,048,667, $1,064,257 and $634,802 for the benefit of the General Partner for the years ended December 31, 1996, 1995 and 1994, respectively. These are the MID distributions pursuant to the Amended Partnership Agreement. Net Income (Loss) Per Limited Partnership Unit - ---------------------------------------------- Net income (loss) per Unit is computed by dividing net income (loss) allocated to the limited partners by the weighted average number of Units outstanding. Per Unit information has been computed based on 134,980, 135,030 and 135,090 Units outstanding in 1996, 1995 and 1994, respectively. NOTE 2 - TRANSACTIONS WITH AFFILIATES - ------------------------------------- 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 services for the Partnership's residential and commercial properties and leasing services for its residential properties. McREMI may choose to perform leasing services for the Partnership's commercial properties, in which case McREMI will receive a property management fee equal to 3% of the gross rental receipts of the Partnership's commercial properties plus a commission for performing leasing services equal to the prevailing market rate for such services in the area where the property is located. 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 the 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% of the annualized net operating income of each property or (ii) a value of $10,000 per apartment unit for residential property or $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 assets. The MID will be paid to the extent of the lesser of the Partnership's excess cash flow, as defined, or net operating income (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. The General Partner has deferred collection of the MID since January 1, 1994. 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. During 1996, 1995 and 1994, no Units were issued as payment for the MID. During 1991, the Partnership amended its capitalization policy and began capitalizing certain costs of improvements and betterments which, under policies of prior management, had been expensed when incurred. The purpose of the amendment was to more properly recognize items which were capital in nature. The effect of the amendment standing alone was evaluated at the time the change was made and determined not to be material to the financial statements of the Partnership in 1991, nor was it expected to be material in any future year. However, the amendment does have a material effect on the calculation of the Entitlement Amount which determines the amount of MID earned. Capital improvements are excluded from cash flow, as defined. The majority of the base period cash flow was measured under the previous capitalization policy, while incentive period cash flow is determined using the amended policy. Under the amended policy, more items are capitalized, and cash flow increases. If base period cash flow had been measured on a basis comparable with incentive period cash flow, MID would have been reduced by $256,656 for the year ended December 31, 1994. The amendment of the capitalization policy did not materially affect MID for 1996 or 1995 as the Entitlement Amount was sufficient to pay the MID notwithstanding the amendment to the capitalization policy. Any amount of MID which 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 MID represents a return of equity to the General Partner for increasing cash flow, as defined, and accordingly is treated as a distribution. Compensation and reimbursements paid to or accrued for the benefit of the General Partner or its affiliates are as follows:
For the Years Ended December 31, ---------------------------------------------------- 1996 1995 1994 -------------- -------------- --------------- Property management fees - affiliates............................... $ 791,081 $ 846,482 $ 868,408 Interest - affiliates....................... 74,915 78,822 5,206 Charged to general and administrative - affiliates: Partnership administration............... 431,094 670,597 609,197 ------------- ------------- -------------- $ 1,297,090 $ 1,595,901 $ 1,482,811 ============= ============= ============== Charged to General Partner's deficit: Management Incentive Distribution........ $ 1,048,667 $ 1,064,257 $ 634,802 ============= ============= ==============
Payable to affiliates - General Partner at December 31, 1996 and 1995 consists of MID, reimbursable costs and property management fees which are due and payable from current operations. NOTE 3 - TAXABLE LOSS - --------------------- McNeil Real Estate Fund X, Ltd. is a partnership and is not subject to Federal and state income taxes. Accordingly, no recognition has been given to income taxes in the accompanying financial statements of the Partnership since the income or loss of the Partnership is to be included in the tax returns of the individual partners. The tax returns of the Partnership are subject to examination by Federal and state taxing authorities. If such examinations result in adjustments to distributive shares of taxable income or loss, the tax liability of the partners could be adjusted accordingly. The Partnership's net assets and liabilities for tax purposes exceeded the net assets and liabilities for financial reporting purposes by $14,833,249, $13,571,531 and $11,156,745 at December 31, 1996, 1995 and 1994, respectively. NOTE 4 - REAL ESTATE INVESTMENTS - -------------------------------- The basis and accumulated depreciation of the Partnership's real estate investments held at December 31, 1996 and 1995 are set forth in the following tables:
Buildings and Accumulated Net Book 1996 Land Improvements Depreciation Value ---- -------------- ------------ ------------ --------------- Briarwood Tucson, AZ $ 489,437 $ 5,200,658 $ (3,713,986) $ 1,976,109 Coppermill Tulsa, OK 1,176,980 12,154,046 (9,474,539) 3,856,487 La Plaza Las Vegas, NV 2,761,442 6,639,931 (4,463,195) 4,938,178 Lakeview Plaza Lexington, KY 1,554,404 7,281,188 (5,263,530) 3,572,062 Orchard Lawrence, IN 366,938 9,383,201 (6,471,474) 3,278,665 Quail Meadows Wichita, KS 754,551 10,985,448 (7,469,583) 4,270,416 Regency Park Ft. Wayne, IN 280,131 5,411,821 (3,575,795) 2,116,157 Sandpiper Westminster, CO 866,107 7,868,920 (5,029,650) 3,705,377 Spanish Oaks San Antonio, TX 586,056 6,185,050 (4,227,437) 2,543,669 ------------- ------------- ------------- ------------- $ 8,836,046 $ 71,110,263 $ (49,689,189) $ 30,257,120 ============= ============= ============= ============= Buildings and Accumulated Net Book 1995 Land Improvements Depreciation Value ---- -------------- ------------ ------------ --------------- Briarwood $ 489,437 $ 5,044,948 $ (3,486,893) $ 2,047,492 Cave Spring Corners Roanoke, VA 792,077 4,487,055 (2,998,581) 2,280,551 Coppermill 1,176,980 12,061,904 (8,900,290) 4,338,594 Iberia Plaza New Iberia, LA 836,792 4,965,167 (2,719,859) 3,082,100 La Plaza 2,761,441 6,361,255 (4,118,450) 5,004,246 Lakeview Plaza 1,554,404 7,262,788 (5,057,438) 3,759,754 Orchard 366,938 9,169,739 (6,144,459) 3,392,218 Quail Meadows 754,551 10,794,946 (7,058,393) 4,491,104 Regency Park 280,131 5,070,196 (3,557,228) 1,793,099 Sandpiper 866,107 7,665,705 (4,691,953) 3,839,859 Spanish Oaks 586,056 6,002,418 (3,917,961) 2,670,513 ------------- ------------- ------------- ------------- $ 10,464,914 $ 78,886,121 $ (52,651,505) $ 36,699,530 ============= ============= ============= =============
During 1994, the General Partner placed The Courts Apartments and Parkway Plaza on the market for sale. The Courts Apartments was sold September 14, 1995. Parkway Plaza was classified as an asset held for sale at December 31, 1995, and then sold on September 18, 1996. See Note 7 - "Sale of Real Estate." On October 1, 1996, the General Partner placed Cave Spring Corners and Iberia Plaza on the market for sale. Cave Spring Corners and Iberia Plaza are classified as assets held for sale at December 31, 1996 at net book values of $2,257,480 and $3,051,251, respectively. The results of operations for the assets held for sale at December 31, 1996 are $210,456, $57,425 and $361,931 for 1996, 1995 and 1994, respectively. Results of operations are operating revenues less operating expenses including depreciation and interest expense. The Partnership leases its commercial properties under various non-cancelable operating leases. In most cases, the Partnership expects that in the normal course of business these leases will be renewed or replaced by other leases. Future minimum rents to be received from commercial properties as of December 31, 1996, are as follows: Real Estate Assets Held Investments For Sale ------------- ------------- 1997............................. $ 1,925,000 $ 1,188,000 1998............................. 1,684,000 1,084,000 1999............................. 1,620,000 951,000 2000............................. 1,161,000 883,000 2001............................. 669,000 559,000 Thereafter....................... 1,659,000 1,106,000 ------------ ------------ $ 8,718,000 $ 5,771,000 ============ ============ Future minimum rents do not include contingent rents based on sales volume of tenants. Contingent rents amounted to $199,927, $86,571 and $99,514 for the years ended December 31, 1996, 1995 and 1994, respectively. Future minimum rents also do not include expense reimbursements for common area maintenance, property taxes, and other expenses. The expense reimbursements amounted to $307,372, $177,095 and $399,360 for the years ended December 31, 1996, 1995 and 1994, respectively. These contingent rents and expense reimbursements, including amounts for assets held for sale, are included in rental revenue on the statements of operations. The Partnership's real estate investments are encumbered by mortgage indebtedness as discussed in Note 5 - "Mortgage Notes Payable" and Note 6 - "Mortgage Note Payable - Affiliates." NOTE 5 - MORTGAGE NOTES PAYABLE - ------------------------------- The following table sets forth the mortgage notes payable of the Partnership at December 31, 1996 and 1995. All mortgage notes payable are secured by the Partnership's real estate assets.
Mortgage Annual Monthly Lien Interest Payments/ December 31, Property Position (a) Rates % Maturity Date 1996 1995 - -------- -------------- ------- -------------------- --------------- --------------- Briarwood (g) First 8.150 $18,340 07/03 (h) $ 2,172,124 $ 2,213,347 Discount (e) (47,482) (53,434) ------------- ------------- 2,124,642 2,159,913 ------------- ------------- Cave Spring Corners First 9.500 27,958 06/98 (h) 3,077,041 3,118,079 ------------- -------------- Coppermill First (b) 10.405 45,800 01/02 (h) 4,994,151 5,022,484 ------------- -------------- Iberia Plaza First 9.250 27,137 11/98 (h) 1,944,704 2,204,675 Discount (e) (85,774) (128,170) ------------- -------------- 1,858,930 2,076,505 ------------- -------------- La Plaza (f) First 10.125 31,386 03/97 (h) 2,396,381 2,523,308 ------------- -------------- Lakeview Plaza First 9.125 38,815 06/08 3,291,999 3,449,492 ------------- -------------- Orchard (g) First 8.150 53,393 07/03 (h) 6,323,712 6,443,726 Discount (e) (138,227) (155,555) ------------- -------------- 6,185,485 6,288,171 ------------- -------------- Parkway Plaza Wrap 9.250 (c) - 2,642,502 Discount (e) - (279,752) ------------- -------------- - 2,362,750 ------------- -------------- Quail Meadows (g) First 8.150 50,634 07/03 (h) 5,996,949 6,110,762 Discount (e) (124,824) (143,537) ------------- -------------- 5,872,125 5,967,225 ------------- --------------
Mortgage Annual Monthly Lien Interest Payments/ December 31, Property Position (a) Rates % Maturity Date 1996 1995 - -------- -------------- ------- -------------------- ------------- --------------- Regency Park First 8.375 $ 23,382 10/17 $ 2,761,437 $ 2,808,581 Discount (e) (370,643) (386,936) ------------- -------------- 2,390,794 2,421,645 ------------- -------------- Sandpiper (g) First 8.150 47,046 07/03 (h) 5,571,968 5,677,715 Discount (e) (121,927) (137,196) ------------- -------------- 5,450,041 5,540,519 ------------- -------------- Spanish Oaks First 7.710 28,546 01/03 (h) 3,970,703 - First (d) 10.000 31,392 - 3,524,225 ------------- -------------- 3,970,703 3,524,225 ------------- -------------- $ 41,612,292 $ 44,454,316 ============= ==============
(a) The debt is non-recourse to the Partnership. (b) The Partnership refinanced the Coppermill mortgage note on December 8, 1994. See Note 8 - "Refinancing of Mortgage Notes." (c) The Partnership sold Parkway Plaza on September 18, 1996, and the Parkway Plaza mortgage note was retired using proceeds from the sale. See Note 7 - "Sale of Real Estate." (d) The Spanish Oaks mortgage note matured in August 1995. Subsequent to August 1995, the Partnership continued to make monthly debt service payments, which were accepted by the holder of the Spanish Oaks mortgage note, while the Partnership negotiated a refinancing of the Spanish Oaks mortgage note. The Partnership succeeded in refinancing the Spanish Oaks mortgage note on January 26, 1996. See Note 8 "Refinancing of Mortgage Notes." (e) Discounts for the Iberia Plaza and Parkway Plaza mortgage notes are based on an effective interest rate of 12%. The discount for the Regency Park mortgage note is based on an effective interest rate of 10.375%. Discounts for the Briarwood, Orchard, Quail Meadows and Sandpiper mortgage notes are based on an effective interest rate of 8.622%. (f) On February 28, 1997, the Partnership refinanced the La Plaza mortgage note with a $2,336,029 mortgage note from an affiliate of the General Partner. See Note 12 - "Subsequent Event." (g) Financing was obtained under the terms of a Real Estate Mortgage Investment Conduit financing. The mortgage notes payable are cross-collateralized and may not be prepaid in whole or part before July 1998. Any prepayments made during the sixth or seventh loan years are subject to a Yield Maintenance premium, as defined. Additionally, the Partnership must pay a release payment equal to 25% of the prepaid balance which will be applied to the remaining mortgage notes in the collateral pool. (h) Balloon payments on the Partnership's mortgage notes are due as follows: Property Balloon Payment Date -------- --------------- ---- La Plaza (see (f) above).............. $ 2,362,599 03/97 Cave Spring Corners.................. 3,007,722 06/98 Iberia Plaza......................... 1,639,486 11/98 Coppermill........................... 4,798,763 01/02 Spanish Oaks......................... 3,689,221 01/03 Briarwood............................ 1,804,449 07/03 Orchard.............................. 5,253,301 07/03 Quail Meadows........................ 4,981,860 07/03 Sandpiper............................ 4,628,805 07/03 Scheduled principal maturities of the Partnership's mortgage notes, but before consideration of discounts of $888,877, are shown below. See Note 12 - "Subsequent Event." 1997................................. $ 3,313,572 1998................................ 5,578,614 1999................................ 835,952 2000................................ 909,755 2001................................ 990,111 Thereafter.......................... 30,873,165 ----------- $ 42,501,169 =========== Based on borrowing rates currently available to the Partnership for mortgage loans with similar terms and average maturities, the fair value of the Partnership's mortgage notes payable was approximately $41,672,000 and $45,756,000 at December 31, 1996 and 1995, respectively. NOTE 6 - MORTGAGE NOTE PAYABLE - AFFILIATE - ------------------------------------------ The following table sets forth the Partnership's mortgage note payable - affiliate at December 31, 1996 and 1995. The affiliate mortgage note is secured by real estate investments of the Partnership.
Mortgage Annual Monthly Lien Interest Payments/ December 31, Property Position (a) Rates % Maturity Date 1996 1995 - -------- ------------ --------- ------------- ----------- ----------- Lakeview Plaza (b) Second (c) (c) 8/97 $ 800,000 $ 800,000 ======== =========
(a) The debt is non-recourse to the Partnership. (b) On August 1, 1994, the Partnership obtained a mortgage loan commitment from an affiliate of the General Partner for an amount up to $1,000,000. An initial amount of $800,000 was funded on December 6, 1994. (c) The note requires monthly payments of interest only equal to 1% plus the prime lending rate of Bank of America. At December 31, 1996, the prime lending rate was 8.25%. Under terms of the Amended Partnership Agreement, borrowings from affiliates approximate fair market value. NOTE 7 - SALE OF REAL ESTATE - ---------------------------- On September 18, 1996, the Partnership sold Parkway Plaza to an unaffiliated buyer for a cash sales price of $2,900,000. Cash proceeds from this transaction, as well as the gain on sale are detailed below.
Gain on Sale Cash Proceeds ------------ ------------- Cash sales price.............................. $ 2,900,000 $ 2,900,000 Selling costs................................. (71,949) (71,949) Mortgage discount written off................. (250,817) Straight-line rent receivables written off.... (56,303) Basis of real estate sold..................... (2,245,507) ----------- Gain on sale.................................. $ 275,424 =========== Proceeds from sale of real estate............. 2,828,051 Retirement of mortgage note................... (2,544,466) ---------- Net cash proceeds............................. $ 283,585 ==========
On January 9, 1996, the Partnership sold an outparcel of land, amounting to 0.675 acres, connected with Iberia Plaza for a purchase price of $142,985. The Partnership recorded a $77,965 gain on the sale. Proceeds from the sale of the outparcel were used to paydown the Iberia Plaza mortgage note. On September 14, 1995, the Partnership sold The Courts Apartments to an unaffiliated buyer for a cash sales price of $8,050,000. The buyer also assumed the improvement district liens that encumbered the property. Cash proceeds from this transaction, as well as the gain on sale of The Courts Apartments are detailed below.
Gain on Sale Cash Proceeds ------------ ------------- Cash sales price.................................... $ 8,050,000 $ 8,050,000 Improvement district liens assumed by buyer......................................... 140,358 140,358 ---------- ----------- Total sales price.................................. 8,190,358 8,190,358 Selling costs...................................... (284,554) (284,554) Basis of deferred borrowing costs written off...... (48,307) Basis of real estate sold.......................... (4,673,799) ---------- Gain on sale....................................... $ 3,183,698 ========== Proceeds from sale of real estate.................. 7,905,804 Retirement of mortgage note........................ (6,475,873) Assumption of improvement district liens........... (140,358) ----------- Net cash proceeds.................................. $ 1,289,573 ===========
NOTE 8 - REFINANCING OF MORTGAGE NOTES - -------------------------------------- On January 26, 1996, the Partnership refinanced the Spanish Oaks mortgage note. The new mortgage note, in the amount of $4,000,000, bears interest at 7.71%, requires monthly principal and interest payments of $28,546, and matures on January 26, 2003. See Note 9 - "Gains on Extinguishment of Debt." Cash proceeds from the refinancing transaction are as follows: New loan proceeds............................ $ 4,000,000 Negotiated existing debt payoff............. (3,399,592) ---------- Proceeds from refinancing................... $ 600,408 ========== The Partnership incurred $166,403 of deferred borrowing costs related to the refinancing of the Spanish Oaks mortgage note. The Partnership was also required to fund $165,291 into various escrows for property taxes, hazard insurance and deferred maintenance. During 1994, the Partnership and the holder of the former Coppermill mortgage note agreed to extend the maturity date of the former Coppermill mortgage note from May 1, 1994, to August 1, 1994, and again to December 31, 1994. In consideration for the maturity date extensions, the Partnership paid four balloon payments totaling $400,000. In addition to the balloon payments, the interest rate on the former Coppermill mortgage note increased to 10.0% from 9.25% effective August 22, 1994. On December 8, 1994, the Partnership refinanced the Coppermill mortgage note. The new mortgage note, in the amount of $5,046,000, bears interest at 10.405%, requires monthly principal and interest payments of $45,800, and matures on January 1, 2002. Cash used to close the refinancing transaction is as follows: New loan proceeds........................... $ 5,046,000 Existing debt retired....................... (5,769,933) 1994 balloon payments....................... (400,000) ----------- Cash used in refinancing.................... $ (1,123,933) =========== The Partnership incurred $165,912 of deferred borrowing costs related to the refinancing of the Coppermill mortgage note. The Partnership was also required to fund $146,573 into various escrows for capital improvements, property taxes and insurance. NOTE 9 - GAINS ON EXTINGUISHMENT OF DEBT - ---------------------------------------- In connection with the refinancing of the Spanish Oaks mortgage note (see Note 8 - - "Refinancing of Mortgage Notes"), the Partnership negotiated a discounted payoff of the prior mortgage note that resulted in a $269,596 extraordinary gain on extinguishment of debt. The negotiated payoff of the note in the amount of $3,399,592 has been placed in escrow pending the outcome of legal proceedings, as discussed in Note 11 - "Legal Proceedings." Neither the old mortgage note amount or the related escrowed funds are included on the Partnership's Balance Sheet. On May 18, 1994, the Partnership paid off the Iberia Plaza second mortgage note for a cash payment of $100,000. This transaction resulted in an extraordinary gain on extinguishment of debt as set forth in the following schedule. Principal balance of mortgage note......... $ 477,016 Unamortized discount on mortgage note...... (83,372) Cash payment............................... (100,000) Transaction costs.......................... (1,105) --------- Gain on extinguishment of debt............. $ 292,539 ========= NOTE 10 - GAIN ON INVOLUNTARY CONVERSION - ---------------------------------------- On March 31, 1996, a fire destroyed or damaged 16 units and 2 laundry rooms at Regency Park Apartments. The total cost to repair the fire damage was $530,148. The Partnership's insurance carrier will reimburse the Partnership for all costs incurred as a result of the fire less a standard deductible. The excess of cash to be received over the basis of the property destroyed in the fire resulted in a $350,927 gain on involuntary conversion. Because only part of the insurance proceeds were received by December 31, 1996, only $285,127 of the gain on involuntary conversion was recognized on the Partnership's Statement of Operations for the year ended December 31, 1996. The remainder of the gain is shown as a $65,800 deferred gain on involuntary conversion on the Partnership's December 31, 1996 Balance Sheet, and will be recognized when the Partnership receives the remainder of the insurance proceeds. NOTE 11 - LEGAL PROCEEDINGS - --------------------------- The Partnership is not party to, nor are any of the Partnership's properties the subject of, any material pending legal proceedings, other than ordinary, routine litigation incidental to the Partnership's business, except for the following: 1) 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 (as defined in this Section 1, the "Partnerships"). Plaintiffs allege that McNeil Investors, Inc., its affiliate McNeil Real Estate Management, Inc. and three of their senior officers and/or directors (as defined in this Section 1, 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. On January 7, 1997, the Court ordered consolidation with three other similar actions listed below. The Partnerships filed a demurrer to the complaint and a motion to strike on February 14, 1997, seeking to dismiss the complaint in all respects. The demurrer is pending. The Partnerships deny that there is any merit to Plaintiff's allegations and intend to vigorously defend this action. 2) Alfred Napoletano v. McNeil Partners, L.P., McNeil Investors, Inc., Robert A. McNeil, Carole J. McNeil, 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., McNeil Real Estate Fund XXV, L.P. - Superior Court of the State of California, County of Los Angeles, Case No. BC133849 (Class Action Complaint). On January 7, 1997, this action was consolidated by court order with Schofield, et al., referenced above. 3) Warren Heller v. McNeil Partners, L.P., McNeil Investors, Inc., Robert A. McNeil, Carole J. McNeil, 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., McNeil Real Estate Fund XXV, L.P. - Superior Court of the State of California, County of Los Angeles, Case No. BC133957 (Class Action Complaint). On January 7, 1997, this action was consolidated by court order with Schofield, et al., referenced above. 4) Robert Lewis v. McNeil Partners, L.P., McNeil Investors, Inc., Robert A. McNeil et al. - In the District Court of Dallas County, Texas, A-14th Judicial District, Cause No. 95-08535 (Class Action) - Plaintiff, Robert Lewis, is a limited partner with McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund X, Ltd. and McNeil Real Estate Fund XV, Ltd. On April 11, 1996, the action was dismissed without prejudice in anticipation of consolidation with other class action complaints. On January 7, 1997, this action was consolidated by court order with Schofield, et al., referenced above. 5) The First National Bank of Chicago, as Trustee Under That Certain Pooling and Servicing Agreement Dated as of December 1, 1995, for Resolution Trust Corporation Commercial Mortgage Pass-Through Certificates, Series 1995-C2 v. McNeil Real Estate Fund X, Ltd., McNeil Partners, L.P. and McNeil Investors, Inc. - U.S. District Court, Northern District of Dallas, Dallas Division; Civil Action No. 33-96CV3198-D; and District Court, Dallas County, Texas, F-116th Judicial District; Case No.: 96-13066(P96014). The plaintiffs are the holder of a certain Second Lien Wraparound Promissory Note ("Wraparound Note") secured by the Spanish Oaks Apartments. This action involves a dispute of the principal payoff amount on the Wraparound Note. The plaintiffs contend that the payoff balance is $3,399,592; however, the Partnership has calculated the payoff balance to be significantly less. On January 26, 1996, the Partnership refinanced the Spanish Oaks Apartments. At that time the $3,399,592 was escrowed with the American Title Company. The plaintiff claims that pursuant to the terms of the Wraparound Note, the Partnership owes the entire escrowed balance. The parties have been ordered to mediation before July 28, 1997, which is the current trial date. The Partnership anticipates that this matter will be concluded through settlement with no adverse effect to the Partnership. 6) 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. v. 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 (as defined in this Section 6, "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 partnerships 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 16, 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. The judge's decision resolved all the issues in the action. NOTE 12 - SUBSEQUENT EVENT - -------------------------- On February 28, 1997, the Partnership refinanced the La Plaza mortgage note with a $2,336,029 mortgage note obtained from a partnership affiliated with the General Partner. The new mortgage note is secured by a first lien on La Plaza Office Building. The mortgage note bears a variable interest rate of 1% plus the prime lending rate of Bank of America. At February 28, 1997, the prime lending rate was 8.25%. Payment terms require monthly interest-only payments until the February 28, 2000 maturity date when the entire principal amount will be due. McNEIL REAL ESTATE FUND X, LTD. SCHEDULE III REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION December 31, 1996
Cumulative Costs Initial Cost (b) Write-down Capitalized Related (b) Buildings and and Permanent Subsequent Description Encumbrances Land Improvements Impairment (d) To Acquisition - ----------- ------------ ---- -------------- --------------- -------------- Apartments: Briarwood Tucson, AZ $ 2,124,642 $ 489,437 $ 4,356,477 $ - $ 844,181 Coppermill Tulsa, OK 4,994,151 1,176,980 13,146,794 (2,600,000) 1,607,252 Orchard Lawrence, IN 6,185,485 366,938 7,611,708 - 1,771,493 Quail Meadows Wichita, KS 5,872,125 754,551 9,387,261 - 1,598,187 Regency Park Fort Wayne, IN 2,390,794 280,131 4,060,970 - 1,350,851 Sandpiper Westminster, CO 5,450,041 866,107 5,991,007 - 1,877,913 Spanish Oaks San Antonio, TX 3,970,703 586,056 4,618,711 - 1,566,339 Office Building: La Plaza Las Vegas, NV 2,396,381 2,761,442 4,388,847 - 2,251,084 Shopping Center: Lakeview Plaza Lexington, KY 4,091,999 1,554,404 6,986,277 (129,914) 424,825 -------------- -------------- -------------- ------------ ------------- $ 37,476,321 $ 8,836,04 $ 60,548,052 $ (2,729,914) $ 13,292,125 ============== ============= ============== ============ ============= Assets Held for Sale: Cave Springs Corners Roanoke, VA $ 3,077,041 Iberia Plaza New Iberia, LA 1,858,930 -------------- $ 4,935,971 ==============
See accompanying notes to Schedule III. McNEIL REAL ESTATE FUND X, LTD. SCHEDULE III REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION December 31, 1996
Gross Amount at Which Carried at Close of Period Accumulated Buildings and Depreciation Description Land Improvements Total (a) and Amortization - ----------- ---- ------------- --------- ---------------- Apartments: Briarwood Tucson, AZ $ 489,437 $ 5,200,658 $ 5,690,095 $ (3,713,986) Coppermill Tulsa, OK 1,176,980 12,154,046 13,331,026 (9,474,539) Orchard Lawrence, IN 366,938 9,383,201 9,750,139 (6,471,474) Quail Meadows Wichita, KS 754,551 10,985,448 11,739,999 (7,469,583) Regency Park Fort Wayne, IN 280,131 5,411,821 5,691,952 (3,575,795) Sandpiper Westminster, CO 866,107 7,868,920 8,735,027 (5,029,650) Spanish Oaks San Antonio, TX 586,056 6,185,050 6,771,106 (4,227,437) Office Building: La Plaza Las Vegas, NV 2,761,442 6,639,931 9,401,373 (4,463,195) Shopping Center: Lakeview Plaza Lexington, KY 1,554,404 7,281,188 8,835,592 (5,263,530) -------------- -------------- ---------------- ------------- $ 8,836,046 $ 71,110,263 $ 79,946,309 $ (49,689,189) ============== ============== ================ ============== Assets Held for Sale: Cave Spring Corners Roanoke, VA $ 2,257,480 Iberia Plaza New Iberia, LA 3,051,251 ---------------- $ 5,308,731 ================
See accompanying notes to Schedule III. McNEIL REAL ESTATE FUND X, LTD. SCHEDULE III REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION December 31, 1996
Date of Date Depreciable Description Construction Acquired lives (years) - ----------- ------------ -------- ------------- Apartments: Briarwood Tucson, AZ 1978 07/80 4-33 Coppermill Tulsa, OK 1978 10/80 6-38 Orchard Lawrence, In 1973 12/80 3-33 Quail Meadows Wichita, KS 1978 06/80 6-35 Regency Park Fort Wayne, IN 1970 06/80 3-30 Sandpiper Westminster, CO 1974 04/80 3-34 Spanish Oaks San Antonio, TX 1968 08/80 3-30 Office Building: La Plaza Las Vegas, NV 1977 09/80 4-34 Shopping Center: Lakeview Plaza Lexington, KY 1979 07/80 15-35 Assets Held for Sale: Cave Spring Corners Roanoke VA 1973 10/80 Iberia Plaza New Iberia LA 1978 06/80
See accompanying notes to Schedule III. (a) For Federal income tax purposes, the properties are depreciated over lives ranging from 5-27.5 years using ACRS or MACRS methods. The aggregate cost of real estate investments for Federal income tax purposes was approximately $95,041,428 and accumulated depreciation was $56,312,639 at December 31, 1996. (b) The encumbrances reflect the present value of future loan payments discounted, if appropriate, at a rate estimated to be the prevailing interest rate at the date of acquisition or refinancing. (c) Assets held for sale are carried at the lower of cost or net realizable value. Historical cost, net of accumulative depreciation and cumulative write-downs, becomes the new cost basis when the asset is classified as "Asset Held for Sale." Depreciation ceases at the time the asset is placed on the market for sale. (d) The carrying value of Coppermill Apartments was reduced by $1,228,000 and $1,372,000 in 1986 and 1989, respectively. The carrying value of Lakeview Plaza was reduced by $129,914 in 1991. See accompanying notes to Schedule III. McNEIL REAL ESTATE FUND X, LTD. Notes to Schedule III Real Estate Investments and Accumulated Depreciation and Amortization A summary of activity for the Partnership's real estate investments, accumulated depreciation and amortization, and assets held for sale is as follows:
For the Years Ended December 31, ---------------------------------------------------- 1996 1995 1994 -------------- -------------- --------------- Real estate investments: Balance at beginning of year............... $ 89,351,035 $ 86,475,540 $ 101,188,388 Improvements............................... 2,233,614 2,875,495 2,143,853 Sale of real estate........................ (52,359) - - Assets replaced............................ (370,287) - - Reclassification of assets held for sale................................ (11,215,694) - (16,856,701) ------------- ------------- -------------- Balance at end of year..................... $ 79,946,309 $ 89,351,035 $ 86,475,540 ============= ============= ============== Accumulated depreciation and amortization: Balance at beginning of year............... $ 52,651,505 $ 49,450,647 $ 55,482,914 Depreciation and amortization.............. 3,232,454 3,200,858 3,609,402 Assets replaced............................ (201,066) - - Reclassification of assets held for sale................................ (5,993,704) - (9,641,669) ------------- ------------- -------------- Balance at end of year..................... $ 49,689,189 $ 52,651,505 $ 49,450,647 ============= ============= ============== Assets Held for Sale: Balance at beginning of year............... $ 2,237,733 $ 7,215,032 $ - Reclassification of assets held for sale................................ 5,221,990 - 7,215,032 Improvements............................... 94,515 63,555 - Depreciation and amortization.............. - (367,055) - Sale of assets held for sale............... (2,245,507) (4,673,799) - ------------- ------------- -------------- Balance at end of year..................... $ 5,308,731 $ 2,237,733 $ 7,215,032 ============= ============= ==============
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING - ------- ----------------------------------------------------------- AND FINANCIAL DISCLOSURE ------------------------ None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - -------- -------------------------------------------------- Neither the Partnership nor the General Partner has any directors or executive officers. The names and ages of, as well as the positions held by, the officers and directors of McNeil Investors, Inc., the general partner of the General Partner, are as follows: Other Principal Occupations and Other Name and Position Age Directorships During the Past 5 Years - ----------------- --- ------------------------------------- Robert A. McNeil, 76 Mr. McNeil is also Chairman of the Chairman of the Board and Director of McNeil Real Estate Board and Director Management, Inc. ("McREMI") which is an affiliate of the General Partner. He has held the foregoing positions since the formation of such entity in 1990. Mr. McNeil received his B.A. degree from Stanford University in 1942 and his L.L.B. degree from Stanford Law School in 1948. He is a member of the State Bar of California and has been involved in real estate financing since the late 1940's and in real estate acquisitions, syndications and dispositions since 1960. From 1986 until active operations of McREMI and McNeil Partners, L.P. began in February 1991, Mr. McNeil was a private investor. Mr. McNeil is a member of the International Board of Directors of the Salk Institute, which promotes research in improvements in health care. Carole J. McNeil 53 Mrs. McNeil is Co-Chairman, with Co-Chairman of the husband Robert A. McNeil, of McNeil Board Investors, Inc. Mrs. McNeil has twenty years of real estate experience, most recently as a private investor from 1986 to 1993. In 1982, she founded Ivory & Associates, a commercial real estate brokerage firm in San Francisco, CA. Prior to that, she was a commercial real estate associate with the Madison Company and, earlier, a commercial sales associate and analyst with Marcus and Millichap in San Francisco. In 1978, Mrs. McNeil established Escrow Training Centers, California's first accredited commercial training program for title company escrow officers and real estate agents needing college credits to qualify for brokerage licenses. She began in real estate as Manager and Marketing Director of Title Insurance and Trust in Marin County, CA. Mrs. McNeil serves on the International Board of Directors of the Salk Institute. Other Principal Occupations and Other Name and Position Age Directorships During the Past 5 Years - ----------------- --- ------------------------------------- Ron K. Taylor 39 Mr. Taylor is the President and Chief President and Chief Executive Officer of McNeil Real Estate Executive Officer Management which is an affiliate of the General Partner. Mr. Taylor has been in this capacity since the resignation of Donald K. Reed on March 4, 1997. Prior to assuming his current responsibilities, Mr. Taylor served as a Senior Vice President of McREMI. Mr. Taylor has been in this capacity since McREMI commenced operations in 1991. Prior to joining McREMI, Mr. Taylor served as an Executive Vice President for a national syndication/property management firm. In this capacity, Mr. Taylor had the responsibility for the management and leasing of a 21,000,000 square foot portfolio of commercial properties. Mr. Taylor has been actively involved in the real estate industry since 1983. Each director shall serve until his successor shall have been duly elected and qualified. ITEM 11. EXECUTIVE COMPENSATION - -------- ---------------------- No direct compensation was paid or payable by the Partnership to directors or officers (since it does not have any directors or officers) for the year ended December 31, 1996, nor was any direct compensation paid or payable by the Partnership to directors or officers of the general partner of the General Partner for the year ended December 31, 1996. The Partnership has no plans to pay any such remuneration to any directors or officers of the general partner of the General Partner in the future. See Item 13 - Certain Relationships and Related Transactions for amounts of compensation and reimbursements paid by the Partnership to the General Partner and its affiliates. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - -------- -------------------------------------------------------------- (A) Security ownership of certain beneficial owners. No individual or group, as defined by Section 13(d)(3) of the Securities Exchange Act of 1934, known to the Partnership is the beneficial owner of more than 5 percent of the Partnership's securities except as noted below: 1. High River Limited Partnership, 100 S. Bedford Road, Mount Kisco, New York, 10549, owns 11,676 Units (8.65%) as of January 31, 1997. (B) Security ownership of management. The General Partner and the officers and directors of its general partner, collectively, own 1,732 Units (1.28%). (C) Change in control. None. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - -------- ---------------------------------------------- Under terms of the Amended Partnership Agreement, the Partnership is paying the MID to the General Partner. The maximum MID is calculated as 1% of the Partnership's tangible asset value. 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 (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. For the year ended December 31, 1996, the Partnership accrued MID in the amount of $1,048,667. During 1991, the Partnership amended its capitalization policy and began capitalizing certain costs of improvements and betterments which under policies of prior management had been expensed when incurred. The purpose of the amendment was to more properly recognize items which were capital in nature. The effect of the amendment standing alone was evaluated at the time the change was made and determined not to be material to the financial statements of the Partnership in 1991, nor was it expected to be material in any future year. However, the amendment does have a material effect on the calculation of the Entitlement Amount which determines the amount of MID earned. Capital improvements are excluded from cash flow, as defined. The majority of the base period cash flow was measured under the previous capitalization policy, while incentive period cash flow is determined using the amended policy. Under the amended policy, more items are capitalized, and cash flow increases. If base period cash flow had been measured on a basis comparable with incentive period cash flow, MID would have been reduced by $256,656 for the year ended December 31, 1994. The amendment of the capitalization policy did not materially affect the MID for 1996 or 1995 as the Entitlement Amount was sufficient to pay MID notwithstanding the amendment to the capitalization policy. Any amount of the MID which 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 MID represents a return of equity to the General Partner for increasing cash flow, as defined, and accordingly is treated as a distribution. The Partnership pays property management fees equal to 5% of gross rental receipts of the Partnership's properties to McREMI for providing property management and leasing services for the Partnership's residential properties and property management services for the Partnership's commercial properties. The Partnership reimburses McREMI for its costs, including overhead, of administering the Partnership's affairs. For the year ended December 31, 1996, the Partnership paid or accrued $1,222,175 in property management fees and reimbursements. On August 1, 1994, the Partnership obtained a $1,000,000 mortgage loan commitment from McNeil Real Estate Fund XXVII, L.P. ("Fund XXVII"), an affiliate of the General Partner. An initial amount of $800,000 was borrowed pursuant to the commitment on December 6, 1994. The mortgage note is secured by a second lien on Lakeview Plaza and requires monthly interest-only payments of 1% plus the prime lending rate of Bank of America. The mortgage note matures on August 1, 1997. Total interest expense for this mortgage note was $74,915, 78,822 and $5,206 for 1996, 1995 and 1994, respectively. On February 28, 1997, the Partnership refinanced the La Plaza mortgage note with a $2,336,029 mortgage note obtained from Fund XXVII. The new mortgage note is secured by a first lien on La Plaza Office Building. The mortgage note bears a variable interest rate of 1% plus the prime lending rate of Bank of America. The mortgage note matures on February 28, 2000. See Item 1 - Business, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations, Item 8 - Note 2 - "Transactions with Affiliates," Note 6 - "Mortgage Note Payable - Affiliate" and Note 12 - "Subsequent Event." PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K - -------- ----------------------------------------------------------------- See accompanying index to Financial Statements at Item 8. (A) The following documents are incorporated by reference and are an integral part of this report: Exhibits Exhibit Number Description ------- ----------- 3. Limited Partnership Agreement (Incorporated by reference to the Annual Report on Form 10-K for the fiscal year ended September 30, 1987). 3.1 The Amended and Restated Limited Partnership Agreement (incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1991). 3.2 Amendment No. 1 to the Amended and Restated Partnership Agreement of McNeil Real Estate Fund X, Ltd. dated to be effective July 31, 1993. (4) 3.3 Amendment No. 2 to the Amended and Restated Partnership Agreement of McNeil Real Estate Fund X, Ltd. dated March 28, 1994. (4) 10.1 Assignment and Assumption Agreement, dated as of October 9, 1991, between Pacific Investors Corporation, Robert A. McNeil and McNeil Partners, L.P. regarding McNeil Real Estate Fund X, Ltd. (1) 10.2 Property Management Agreement, dated as of October 9, 1991, between McNeil Real Estate Fund X, Ltd. and McNeil Real Estate Management, Inc. (1) 10.3 Asset Management Agreement, dated as of October 9, 1991, between McNeil Real Estate Fund X, Ltd. and McNeil Partners, L.P. (1) Exhibit Number Description ------- ----------- 10.4 Revolving Credit Agreement, dated August 6, 1991, between McNeil Partners, L.P. and certain partnerships, including the Partnership. (1) 10.5 Amendment of Property Management Agreement dated March 5, 1993, between the Partnership and McNeil Real Estate Management, Inc. (2) 10.6 Loan Agreement dated June 24, 1993, between Lexington Mortgage Company and McNeil Real Estate Fund X, Ltd., et. al. (3) 10.7 Master Property Management Agreement, dated as of June 24, 1993, between McNeil Real Estate Management, Inc. and McNeil Real Estate Fund X, Ltd. (4) 10.8 Multifamily Note, dated as of December 8, 1994, between Coppermill Fund X Limited Partnership and Arbor National Commercial Mortgage Corporation. (5) 10.9 Promissory Note, dated August 15, 1994, between McNeil Real Estate Fund X, Ltd. and McNeil Real Estate Fund XXVII, L.P. (5) 10.10 Promissory Note and Note Consolidation, dated January 15, 1988, between McNeil Real Estate Fund X, Ltd. and Goldome Realty Credit Corp. (5) 10.11 Loan Modification and Extension Agreement, dated August 1, 1993, between McNeil Real Estate Fund X, Ltd. and the Federal Deposit Insurance Corporation. (5) 10.12 Promissory Note, dated February 25, 1992, between McNeil Real Estate Fund X, Ltd. and Life Insurance Company of the Southwest. (5) 10.13 Multifamily Note, dated September 4, 1992, between Regency Park Fund X Associates, L.P. and Metmor Financial, Inc. (5) Exhibit Number Description ------- ----------- 10.14 Modification of Promissory Note and Deed of Trust, dated January 23, 1989, between First American Savings Bank, FSB and McNeil Real Estate Fund X, Ltd. (5) 10.15 Note, dated July 1, 1978, between M H Kentucky Ventures and First of Boston Mortgage Corporation. (5) 10.16 Wrap-Around Promissory Note, dated June 18, 1980, between McNeil Real Estate Fund X, Ltd. and James M. Folmar and Emory M. Folmar. (5) 10.17 Act of Amendment to Wrap-Around Promissory Note and Mortgage, dated April 20, 1994, between McNeil Real Estate Fund X, Ltd. and James M. Folmar and Emory M. Folmar. (5) 10.18 Property Management Agreement, dated November 30, 1994, between Coppermill Fund X Limited Partnership and McNeil Real Estate Management, Inc. (5) 11. Statement regarding computation of Net Income (Loss) per Limited Partnership Unit (see Item 8 - Note 1 - "Organization and Summary of Significant Accounting Policies"). 22. List of subsidiaries of the Partnership.
Names Under Jurisdiction of Which It Is Name of Subsidiary Incorporation Doing Business ------------------ --------------- -------------- Briarwood Fund X Limited Partnership Delaware None Coppermill Fund X Limited Partnership Texas None Orchard Fund X Limited Partnership Delaware None Quail Meadows Fund X Limited Partnership Delaware None Regency Park Fund X Associates, L.P. Indiana None Sandpiper Fund X Limited Partnership Delaware None Spanish Fund X, Ltd. Texas None
27. Financial Data Schedule for the year ended December 31, 1996. (1) Incorporated by reference to the Annual Report of McNeil Real Estate Fund X, Ltd., (File No. 0-9325), on Form 10-K for the period ended December 31, 1991, as filed with the Securities and Exchange Commission on March 30, 1992. (2) Incorporated by reference to the Annual Report of McNeil Real Estate Fund X, Ltd. (File No. 0-9325), on Form 10-K for the period ended December 31, 1992, as filed with the Securities and Exchange Commission on March 30, 1993. (3) Incorporated by reference to the Annual Report of McNeil Real Estate Fund XI, Ltd. (File No. 0-9783), on Form 10-K for the period ended December 31, 1995, as filed with the Securities and Exchange Commission on March 30, 1994. (4) Incorporated by reference to the Annual Report of McNeil Real Estate Fund X, Ltd. (File No. 0-9325), on Form 10-K for the period ended December 31, 1993, as filed with the Securities and Exchange Commission on March 30, 1994. (5) Incorporated by reference to the Annual Report of McNeil Real Estate Fund X, Ltd. (File No. 0-9325), on Form 10-K for the period ended December 31, 1994, as filed with the Securities and Exchange Commission on March 30, 1995. The Partnership has omitted instruments with respect to long-term debt where the total amount of the securities authorized thereunder does not exceed 10% of the total assets of the Partnership. The Partnership agrees to furnish a copy of each such instrument to the Commission upon request. (B) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended December 31, 1996. McNEIL REAL ESTATE FUND X, LTD. A Limited Partnership SIGNATURE PAGE Pursuant to the requirements of Section 13 or 15(d) 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 X, LTD. By: McNeil Partners, L.P., General Partner By: McNeil Investors, Inc., General Partner March 31, 1997 By: /s/ Robert A. McNeil - -------------- ----------------------------------------- Date Robert A. McNeil Chairman of the Board and Director (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. March 31, 1997 By: /s/ Ron K. Taylor - -------------- ----------------------------------------- Date Ron K. Taylor President and Director of McNeil Investors, Inc. (Principal Financial Officer) March 31, 1997 By: /s/ Brandon K. Flaming - -------------- ----------------------------------------- Date Brandon K. Flaming Vice President of McNeil Investors, Inc. (Principal Accounting Officer) EX-27 2
5 12-MOS DEC-31-1996 DEC-31-1996 2,660,679 0 575,995 0 0 0 79,946,309 (49,689,189) 41,407,352 0 42,412,292 0 0 0 0 41,407,352 16,089,109 16,853,542 0 0 11,701,264 0 4,279,896 872,382 0 0 0 269,596 0 1,141,978 0 0
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