-----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, LyVLc9nIwA31uG03DVN8bqMdkVLQLzGcrtW/L3h1xnE4oo2BLy1EivKV8wblIMvD dHETHv4d6L8c6jMjJFZQhQ== 0000312812-96-000007.txt : 19960816 0000312812-96-000007.hdr.sgml : 19960816 ACCESSION NUMBER: 0000312812-96-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09325 FILM NUMBER: 96614025 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-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended June 30, 1996 ------------------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to_____________ Commission file number 0-9325 -------- 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 700, LB70, Dallas, Texas 75240 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (214) 448-5800 ----------------------------- Indicate by check mark whether the registrant, (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- MCNEIL REAL ESTATE FUND X, LTD. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- BALANCE SHEETS (Unaudited)
June 30, December 31, 1996 1995 ---------------- --------------- ASSETS - ------ Real estate investments: Land..................................................... $ 10,464,914 $ 10,464,914 Buildings and improvements............................... 79,355,514 78,886,121 -------------- ------------- 89,820,428 89,351,035 Less: Accumulated depreciation.......................... (54,089,621) (52,651,505) -------------- ------------- 35,730,807 36,699,530 Asset held for sale, net.................................... 2,242,450 2,237,733 Cash and cash equivalents................................... 2,636,882 1,813,594 Cash segregated for security deposits....................... 345,631 317,834 Accounts receivable......................................... 373,734 432,618 Insurance proceeds receivable............................... 520,148 - Prepaid expenses and other assets........................... 318,392 332,665 Escrow deposits............................................. 1,057,714 625,344 Deferred borrowing costs, net of accumulated amorti- zation of $368,592 and $306,342 at June 30, 1996 and December 31, 1995, respectively...................... 1,229,322 1,179,331 -------------- ------------- $ 44,455,080 $ 43,638,649 ============== ============= LIABILITIES AND PARTNERS' DEFICIT - --------------------------------- Mortgage notes payable, net................................. $ 44,467,844 $ 44,454,316 Mortgage note payable - affiliates.......................... 800,000 800,000 Accounts payable............................................ 98,523 186,785 Accrued property taxes...................................... 773,516 522,951 Accrued interest............................................ 333,258 370,294 Accrued interest - affiliates............................... 6,625 6,625 Other accrued expenses...................................... 217,688 318,324 Deferred gain on involuntary conversion..................... 350,927 - Payable to affiliates - General Partner..................... 3,512,923 2,907,490 Security deposits and deferred rental revenue............... 399,153 385,231 -------------- ------------- 50,960,457 49,952,016 -------------- ------------- Partners' deficit: Limited partners - 135,200 limited partnership units authorized; 135,030 limited partnership units out- standing at June 30, 1996 and December 31, 1995....... (1,475,286) (1,788,928) General Partner.......................................... (5,030,091) (4,524,439) -------------- ------------- (6,505,377) (6,313,367) $ 44,455,080 $ 43,638,649 ============== =============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. MCNEIL REAL ESTATE FUND X, LTD. STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, --------------------------------- ---------------------------------- 1996 1995 1996 1995 -------------- -------------- -------------- --------------- Revenue: Rental revenue................ $ 4,039,535 $ 4,331,493 $ 8,017,638 $ 8,699,158 Interest...................... 28,158 35,785 77,515 65,125 Gain on legal settlement...... - 91,517 - 91,517 ------------- ------------- ------------- ------------- Total revenue............... 4,067,693 4,458,795 8,095,153 8,855,800 ------------- ------------- ------------- ------------- Expenses: Interest...................... 1,072,539 1,306,516 2,152,935 2,611,865 Interest - affiliates......... 18,652 20,164 37,611 37,961 Depreciation and amortization................ 826,996 925,407 1,639,182 1,857,498 Property taxes................ 264,323 302,401 542,704 591,047 Personnel expenses............ 403,219 476,739 877,844 1,033,517 Utilities..................... 301,000 316,262 609,002 686,139 Repair and maintenance........ 500,085 533,147 919,646 1,012,935 Property management fees - affiliates........... 204,913 217,007 404,498 436,324 Other property operating expenses.................... 254,064 285,629 504,420 552,980 General and administrative.... 57,632 44,843 106,302 80,012 General and administrative - affiliates.................. 119,455 167,525 240,456 334,289 ------------- ------------- ------------- ------------- Total expenses.............. 4,022,878 4,595,640 8,034,600 9,234,567 ------------- ------------- ------------- ------------- Income (loss) before extraordinary item............ $ 44,815 $ (136,845) $ 60,553 $ (378,767) Extraordinary gain on extinguishment of debt........ - - 269,596 - ------------- ------------- ------------- ------------- Net income (loss)................ $ 44,815 $ (136,845) $ 330,149 $ (378,767) ============= ============= ============= ============= Net income (loss) allocated to limited partners........... $ 42,575 $ (130,003) $ 313,642 $ (359,829) Net income (loss) allocated to General Partner............ 2,240 (6,842) 16,507 (18,938) ------------- ------------- ------------- ------------- Net income (loss)................ $ 44,815 $ (136,845) $ 330,149 $ (378,767) ============= ============= ============= ============= Net income (loss) per limited partnership unit: Income (loss) before extraordinary item.......... $ .31 $ (.96) $ .42 $ (2.66) Extraordinary gain on extinguishment of debt...... - - 1.90 - ------------- ------------- ------------- ------------- Net income (loss)................ $ .31 $ (.96) $ 2.32 $ (2.66) ============= ============= ============= =============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. MCNEIL REAL ESTATE FUND X, LTD. STATEMENTS OF PARTNERS' DEFICIT (Unaudited) For the Six Months Ended June 30, 1996 and 1995
Total General Limited Partners' Partner Partners Deficit --------------- --------------- --------------- Balance at December 31, 1994.............. $ (3,569,840) $ (3,872,434) $ (7,442,274) Net loss.................................. (18,938) (359,829) (378,767) Management Incentive Distribution......... (552,733) - (552,733) ------------- ------------- ------------- Balance at June 30, 1995.................. $ (4,141,511) $ (4,232,263) $ (8,373,774) ============= ============= ============= Balance at December 31, 1995.............. $ (4,524,439) $ (1,788,928) $ (6,313,367) Net income................................ 16,507 313,642 330,149 Management Incentive Distribution......... (522,159) - (522,159) ------------- ------------- ------------- Balance at June 30, 1996.................. $ (5,030,091) $ (1,475,286) $ (6,505,377) ============= ============= =============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. MCNEIL REAL ESTATE FUND X, LTD. STATEMENTS OF CASH FLOWS (Unaudited) Increase in Cash and Cash Equivalents
Six Months Ended June 30, ------------------------------------ 1996 1995 ---------------- ---------------- Cash flows from operating activities: Cash received from tenants............................... $ 8,059,340 $ 8,700,671 Cash paid to suppliers................................... (3,227,362) (2,997,948) Cash paid to affiliates.................................. (561,680) (431,771) Interest received........................................ 77,515 65,125 Cash received from legal settlement...................... - 91,517 Interest paid............................................ (1,966,625) (2,346,774) Interest paid to affiliates.............................. (37,611) (36,373) Property taxes paid and escrowed......................... (624,546) (357,597) -------------- -------------- Net cash provided by operating activities................... 1,719,031 2,686,850 -------------- -------------- Cash flows from investing activities: Additions to real estate investments..................... (844,397) (764,389) -------------- -------------- Cash flows from financing activities: Net proceeds from refinancing mortgage note payable........................................... 475,775 - Principal payments on mortgage notes payable................................................ (414,880) (790,422) Deferred borrowing costs paid............................ (112,241) (21,253) -------------- -------------- Net cash used in financing activities....................... (51,346) (811,675) -------------- -------------- Net increase in cash and cash equivalents................... 823,288 1,110,786 Cash and cash equivalents at beginning of period................................................... 1,813,594 574,589 -------------- -------------- Cash and cash equivalents at end of period.................. $ 2,636,882 $ 1,685,375 ============== ==============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. MCNEIL REAL ESTATE FUND X, LTD. STATEMENTS OF CASH FLOWS (Unaudited) Reconciliation of Net Income (Loss) to Net Cash Provided By Operating Activities
Six Months Ended June 30, ------------------------------------ 1996 1995 --------------- ---------------- Net income (loss)........................................... $ 330,149 $ (378,767) -------------- -------------- Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization............................ 1,639,182 1,857,498 Amortization of discounts on mortgage notes payable.......................................... 77,266 93,407 Amortization of deferred borrowing costs................. 62,250 71,522 Extraordinary gain on extinguishment of debt............. (269,596) - Changes in assets and liabilities: Cash segregated for security deposits.................. (27,797) (14,412) Accounts receivable.................................... 58,884 8,851 Prepaid expenses and other assets...................... 14,273 86,506 Escrow deposits........................................ (437,681) 182,323 Accounts payable....................................... (88,262) 141,650 Accrued property taxes................................. 250,565 188,132 Accrued interest....................................... 46,794 100,162 Accrued interest - affiliates.......................... - 1,589 Other accrued expenses................................. (34,192) (1,077) Payable to affiliates - General Partner................ 83,274 338,841 Security deposits and deferred rental revenue.............................................. 13,922 10,625 -------------- -------------- Total adjustments.................................... 1,388,882 3,065,617 -------------- -------------- Net cash provided by operating activities................... $ 1,719,031 $ 2,686,850 ============== ==============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. McNEIL REAL ESTATE FUND X, LTD. Notes to Financial Statements (Unaudited) June 30, 1996 NOTE 1. - ------- McNeil Real Estate Fund X, Ltd. (the "Partnership") is a limited partnership organized under the laws of the State of California to invest in real property. The general partner of the Partnership is McNeil Partners, L.P. (the "General Partner"), a Delaware limited partnership, an affiliate of Robert A. McNeil. The Partnership is governed by an agreement of limited partnership (the "Amended Partnership Agreement") that was adopted October 9, 1991. The principal place of business for the Partnership and the General Partner is 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240. In the opinion of management, the financial statements reflect all adjustments necessary for a fair presentation of the Partnership's financial position and results of operations. All adjustments were of a normal recurring nature. However, the results of operations for the six months ended June 30, 1996, are not necessarily indicative of the results to be expected for the year ending December 31, 1996. NOTE 2. - ------- The financial statements should be read in conjunction with the financial statements contained in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1995, and the notes thereto, as filed with the Securities and Exchange Commission, which is available upon request by writing to McNeil Real Estate Fund X, Ltd., c/o McNeil Real Estate Management, Inc., Investor Services, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240. NOTE 3. - ------- Certain prior period amounts within the accompanying financial statements have been reclassified to conform with current year presentation. NOTE 4. - ------- 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 also choose to provide leasing services for the Partnership's commercial properties, in which case McREMI will receive property management fees from such commercial properties equal to 3% of the property's gross rental receipts plus leasing commissions based on the prevailing market rate for such services 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 a Management Incentive Distribution ("MID") to the General Partner. The maximum MID is calculated as 1% of the tangible asset value of the Partnership. The maximum MID percentage decreases subsequent to 1999. Tangible asset value is determined by using the greater of (i) an amount calculated by applying a capitalization rate of 9% to the annualized net operating income of each property or (ii) a value of $10,000 per apartment unit for residential property and $50 per gross square foot for commercial property to arrive at the property tangible asset value. The property tangible asset value is then added to the book value of all other assets excluding intangible items. MID will be paid to the extent of the lesser of the Partnership's excess cash flow, as defined, or net operating income, as defined (the "Entitlement Amount"), and may be paid (i) in cash, unless there is insufficient cash to pay the distribution in which event any unpaid portion not taken in Units will be deferred and is payable, without interest, from the first available cash and/or (ii) in Units. A maximum of 50% of the MID may be paid in Units. The number of Units issued in payment of the MID is based on the greater of $50 per Unit or the net tangible asset value, as defined, per Unit. Any amount of the MID that is paid to the General Partner in Units will be treated as if cash is distributed to the General Partner and is then contributed to the Partnership by the General Partner. The MID represents a return of equity to the General Partner for increasing cash flow, as defined, and accordingly is treated as a distribution. Compensation, reimbursements and distributions paid to or accrued for the benefit of the General Partner and its affiliates are as follows: Six Months Ended June 30, ------------------------ 1996 1995 ---------- --------- Property management fees - affiliates........ $ 404,498 $ 436,324 Charged to general and administrative - affiliates: Partnership administration................ 240,456 334,289 --------- -------- $ 644,954 $ 770,613 ========= ======== Charged to General Partner's deficit: Management Incentive Distribution......... $ 522,159 $ 552,733 ========= ======== NOTE 5. - ------- 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. In connection with the refinancing, the Partnership negotiated a discounted payoff of the prior mortgage note that resulted in a $269,596 extraordinary gain on extinguishment of debt. The remainder of the prior mortgage note balance has been placed in escrow pending negotiations concerning the amount of the payoff of the prior mortgage note. Cash proceeds from the refinancing transaction are as follows: New loan proceeds.......................... $ 4,000,000 Existing debt retired...................... (3,524,225) ----------- Proceeds from refinancing.................. $ 475,775 =========== The Partnership incurred $154,007 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. NOTE 6. - ------- On March 31, 1996, a fire destroyed or damaged 16 units and 2 laundry rooms at Regency Park Apartments. The estimated cost to repair the fire damage is $530,148. The Partnership's insurance carrier will reimburse the Partnership for all costs incurred as a result of the fire less a $10,000 deductible. A deferred involuntary conversion gain of $365,851 has been recorded on the Partnership's June 30, 1996 Balance Sheet. The deferred involuntary conversion gain equals the insurance proceeds receivable less the adjusted basis of the property destroyed or damaged by the fire. The deferred involuntary conversion gain will be recognized as the insurance proceeds are received. Reconstruction of the destroyed or damaged units will likely be completed during the third quarter of 1996. NOTE 7. - ------- In 1996, the Partnership adopted the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." This statement requires the cessation of depreciation on assets held for sale. Since Parkway Plaza is currently classified as an asset held for sale, no depreciation charges on Parkway Plaza have been incurred in 1996. NOTE 8. - ------- 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. ITEM 2. 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 June 30, 1996, the Partnership owned seven apartment properties, one office building and four shopping centers. All of the Partnership's properties are subject to mortgage notes. On September 14, 1995, the Partnership sold The Courts Apartments to an unaffiliated purchaser. The Partnership recognized a $3,183,698 gain on the disposition. Cash proceeds to the Partnership amounted to $1,289,572. The Partnership is marketing one of its properties, Parkway Plaza, for sale. A previously reported sales contract between the Partnership and a prospective purchaser that was expected to close in June 1996 was terminated by the prospective purchaser. The Partnership is seeking other bids for the property. There can be no assurance that a sale of Parkway Plaza will be consummated before foreclosure proceedings are initiated by the holder of the Parkway Plaza mortgage note. RESULTS OF OPERATIONS - --------------------- The Partnership reported net income of $44,815 and $330,149 for the three month and six month periods ended June 30, 1996. Included in the net income for the six month period is a $269,596 extraordinary gain relating to the refinancing of the Spanish Oaks mortgage note. Excluding the extraordinary item, net income for the three month and six month periods improved $181,660 and $439,320 over the net losses reported for the comparable year-earlier periods. Revenues: Rental revenue decreased $291,958 or 6.7% for the second quarter as compared to the second quarter of 1995. Year-to-date, rental revenue has decreased $681,520 or 7.8% as compared to year-to-date rental revenues at June 30, 1995. The decrease in rental revenue is primarily due to the September 1995 sale of The Courts Apartments. The Courts Apartments accounted for $464,595 and $921,702 of the Partnership's rental revenue for the three month and six month periods ended June 30, 1995. After excluding the effects of rental revenue from The Courts Apartments, the Partnership recorded a $240,182 or 3.1% increase in rental revenues at its properties. Rental revenue increased at six of the Partnership's twelve properties: Coppermill Apartments, Orchard Apartments, Quail Meadows Apartments, La Plaza Office Building, Iberia Plaza and Parkway Plaza. All six properties were able to increase both base rental rates and occupancy rates. Year-to-date rental revenue was unchanged at Sandpiper Apartments and Spanish Oaks Apartments. The remainder of the Partnership's properties reported decreased rental revenue. The Partnership increased rental rates at Briarwood Apartments, but the increase was more than offset by a decrease in Briarwood's occupancy rate. Part of the increased rental losses at Regency Park Apartments is due to the March 31 fire at the property that destroyed 16 units. Lakeview Plaza reported a large increase in rental losses because of two tenants who vacated their leases earlier this year. Tenants at Cave Spring Corners are increasing the expense reimbursements they are paying to the Partnership, but base rental rates and the average occupancy rate decreased. Expenses: Partnership expenses decreased $572,762 or 12.5% for the second quarter 1996 as compared to the second quarter of 1995. Year-to-date, expenses decreased $1,199,967 or 13.0% as compared to year-to-date expenses at June 30, 1995. Included in 1995 expenses are $1,102,886 of expenses related to The Courts Apartments which was sold in September 1995. Excluding expenses attributable to The Courts Apartments, expenses decreased $97,491 or 1.2% for the six months ended June 30, 1996 as compared to the six months ended June 30, 1995. Significant increases in expense items included increased property taxes and general and administrative expenses. These increases were offset by a decrease in general and administrative expenses paid to affiliates. Excluding property taxes attributable to The Courts Apartments, property tax expense increased $41,627 or 8.3% for the first six months of 1996 compared to the same period of 1995. Most of the Partnership's properties incurred small increases in property tax assessments. The exception was Spanish Oaks Apartments. Property taxes at Spanish Oaks were unusually low in 1995 due to a refund of 1992 property taxes received during the first quarter of 1995. 1996 property taxes for Spanish Oaks returned to customary levels. General and administrative expenses for 1996 increased $26,290 or 33% over general and administrative expenses incurred in 1995. The Partnership incurred $19,555 of expenses to defend class action litigation. No such expenses were incurred during the first six months of 1995. General and administrative-affiliates expense decreased $93,833 or 28% for the first six months of 1996. The decrease represents both a reduction in the Partnership's share of such expenses, due to the sale of The Courts Apartments, and a reduction in the level of such expenses charged by affiliates of the General Partner to the Partnership and to other partnerships affiliated with the General Partner. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Cash flow provided by operating activities decreased to $1,719,031 from $2,686,850 for the first six months of 1996. Cash received from tenants decreased $641,331 or 7.4% principally due to the sale of The Courts Apartments. Despite the sale of The Courts Apartments, cash paid to suppliers increased 7.7% because of increased general and administrative expenses and the initial funding of two escrow accounts associated with the refinancing of the Spanish Oaks mortgage note. The refinancing of the Spanish Oaks mortgage note also accounts for much of the $266,949 increase in property taxes paid and escrowed. The Partnership was required to fund an escrow account for the payment of property taxes for Spanish Oaks Apartments; no such escrow account was required under terms of the previous mortgage note. Although additions to real estate investments increased approximately $80,000 in the first six months of 1996 compared to 1995, for all of 1996 the Partnership expects to decrease its capital expenditures to a budgeted $1.3 million compared to $2.9 million expended in 1995. Cash flows from financing activities increased $760,329 for the first six months of 1996 compared to the first six months of 1995. The refinancing of the Spanish Oaks mortgage note provided a one-time $475,775 increase to the Partnership's cash flows. The refinancing also required the expenditure of $112,241 for deferred borrowing costs. Short-term liquidity: At June 30, 1996, the Partnership held cash reserves of $2,636,882, an increase of $823,288 from the balance at the end of 1995. Cash reserves of the Partnership have increased significantly from 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. In addition to the sale of The Courts Apartments in September 1995, the General Partner has placed Parkway Plaza on the market for sale. The General Partner believes that the appreciation potential of Parkway Plaza is limited, while extensive capital improvement funds will be required to maintain cash from operations at current levels. The previously reported sales contract for Parkway Plaza was terminated by the prospective purchaser. The Parkway Plaza mortgage note matured on August 1, 1996. Although the holder of the mortgage note has not yet commenced foreclosure proceedings, foreclosure proceedings could be commenced if the Partnership is unable to sell the property or to obtain suitable financing for the property. 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 budgeted capital expenditures for 1996 are expected to decrease to $1.3 million in 1996. For the balance of 1996, 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. As a further source of funds, the Partnership may obtain secondary mortgage financing from an affiliated partnership secured by La Plaza Office Building. Placing a second lien on La Plaza would require the approval of the current first lien holder, and must also comply with loan criteria of the affiliated partnership. Proceeds from such a mortgage loan could range from $1 million to $1.5 million, if approvals are obtained from the first lien holder and the affiliated partnership. Beginning in March, the Partnership resumed payment of reimbursable administrative expenses to affiliates of the General Partner. Such payments had been suspended since the beginning of 1994. The General Partner expects to resume MID payments in 1996, if the Partnership continues to perform as anticipated. MID incurred but not paid for the first six months of 1996 totaled $522,159. The General Partner has established a revolving credit facility, not to exceed $5,000,000 in the aggregate, which will be available on a "first-come, first-served" basis to the Partnership and other affiliated partnerships if certain conditions are met. Borrowings under the facility may be used to fund deferred maintenance, refinancing obligations and working capital needs. There is no assurance that the Partnership will receive any funds from the facility because no amount will be reserved for any particular partnership. As of June 30, 1996, $4,082,159 remained available for borrowing under the facility; however, additional funds could become available as other partnerships repay existing borrowings. This commitment expires on October 9, 1996. Long-term liquidity: For the long-term, property operations will remain the primary source of funds. In this regard, the General Partner expects that the $9.1 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 $1.3 million of capital improvements for 1996. If the Partnership's cash position deteriorates due to reverses in property operations, failure to sell properties currently held for sale, or failure to obtain refinancing or secondary financing as discussed above, 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. As a further source of liquidity, the General Partner may, from time to time, attempt to sell Partnership properties judged to be mature considering the circumstances of the market where the properties are located, as well as the Partnership's need for liquidity. However, there can be no guarantee that the Partnership will be able to sell any of its properties for an amount sufficient to retire the related mortgage note and still provide cash proceeds to the Partnership, or that such cash proceeds could be timed to coincide with the liquidity needs of the Partnership. Currently, Parkway Plaza is the only Partnership property being marketed for sale. Income Allocations and Distributions: Terms of the Amended Partnership Agreement specify that income before depreciation is allocated to the General Partner to the extent of MID paid in cash. Depreciation is allocated in the ratio of 95:5 to the limited partners and the General Partner, respectively. Therefore, for the six month periods ended June 30, 1996 and 1995, $16,507 and ($18,983), respectively, were allocated to the General Partner. The limited partners received allocations of net income (loss) of $313,642 and $(359,829) for the six months ended June 30, 1996 and 1995, 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. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - ------- ----------------- Two class action lawsuits styled Robert Lewis vs. McNeil Partners, L.P., et. al., filed in the District Court of Dallas County, Texas, and James F. Schofield, et. al. vs. McNeil Partners, L.P., et. al., filed in the United States District Court, Southern District of New York, have been voluntarily dismissed without prejudice by the respective plaintiffs in such actions. ITEM 5. OTHER INFORMATION - ------- ----------------- On August 5, 1996, High River Limited Partnership ("High River"), a partnership controlled by Carl Icahn ("Icahn"), and certain Icahn's affiliates, filed documents with the Securities and Exchange Commission disclosing that High River had entered into a letter agreement dated August 2, 1996 with the attorneys for the plaintiffs in the case styled James F. Schofield, et. al. ("Plaintiffs") v. McNeil Partners, L.P., et. al. The letter agreement provided, among other things, that (i) High River will commence, as soon as possible, but in no event more than six months, a tender offer for any and all of the outstanding Units of the Partnership and other affiliated partnerships (the "Partnerships") at a price that is not less than 75% of the estimated liquidation value of the Units (as determined by utilizing the same methodology that was used to determine the liquidation values in High River's previous tender offers for the Partnerships, as previously disclosed), which tender offer may be subject to such other terms and conditions as High River determines in its sole discretion; (ii) in the event that High River attains the position of general partner in any of the Partnerships: (a) High River will take all actions necessary to cause a 25% reduction of fees of such Partnerships, (b) High River will not cause such Partnerships to take any action to discontinue the litigation with respect to receivable claims and (c) High River and Plaintiffs' counsel will in good faith execute an appropriate Stipulation of Settlement based upon the terms of the letter agreement, which stipulation shall not include a settlement or provide a release of the receivable claims; and (iii) from and after the date of the letter agreement, Plaintiffs' counsel agreed they will not enter into any settlement of the claims asserted in such litigation that does not provide for all consideration contained in a demand letter dated June 24, 1996. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ------- -------------------------------- (a) Exhibits. Exhibit Number Description ------- ----------- 4. Amended and Restated Partnership Agreement, dated October 9, 1991 (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended March 31, 1991). 11. Statement regarding computation of net loss per limited partnership unit: Net loss per limited partnership unit is computed by dividing net loss allocated to the limited partners by the number of limited partnership units outstanding. Per unit information has been computed based on 135,030 limited partnership units outstanding in 1996 and 1995. 27. Financial Data Schedule for the quarter ended June 30, 1996. Registrant has omitted instruments with respect to long-term debt where the total amount of securities authorized thereunder does not exceed 10% of the total assets of the Registrant. Registrant agrees to furnish a copy of each such instruments to the Commission upon request. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended June 30, 1996. McNEIL REAL ESTATE FUND X, LTD. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized: McNEIL REAL ESTATE FUND X, LTD. By: McNeil Partners, L.P., General Partner By: McNeil Investors, Inc., General Partner August 14, 1996 By: /s/ Donald K. Reed - ---------------------- ---------------------------------------- Date Donald K. Reed President and Chief Executive Officer August 14, 1996 By: /s/ Ron K. Taylor - --------------------- ---------------------------------------- Date Ron K. Taylor Acting Chief Financial Officer of McNeil Investors, Inc. August 14, 1996 By: /s/ Brandon K. Flaming - --------------------- --------------------------------------- Date Brandon K. Flaming Chief Accounting Officer of McNeil Real Estate Management, Inc. EX-27 2
5 6-MOS DEC-31-1996 JUN-30-1996 2,636,882 0 0 0 0 0 89,820,428 54,089,621 44,455,080 0 44,467,844 0 0 0 0 44,445,080 8,017,638 8,095,153 0 0 5,844,054 0 2,190,546 330,149 0 0 0 0 0 330,149 0 0
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