-----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, Qdz8ThMcRWufNJ4fv3JzcNRFpXF/PCuq/GPiUbebbAvkYodDubHdvyox4XSJIee9 QK3ZjLPHvYc6N7/Ak+nnGQ== 0000318140-95-000007.txt : 19951119 0000318140-95-000007.hdr.sgml : 19951119 ACCESSION NUMBER: 0000318140-95-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCNEIL REAL ESTATE FUND XI LTD CENTRAL INDEX KEY: 0000318140 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 942669577 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09783 FILM NUMBER: 95590988 BUSINESS ADDRESS: STREET 1: 13760 NOEL ROAD STREET 2: SUITE 700 LB70 CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 2144485800 MAIL ADDRESS: STREET 1: 13760 NOEL ROAD SUITE 700 LB70 CITY: DALLAS STATE: TX ZIP: 75240 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended September 30, 1995 ------------------------------------------------- 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 0-9783 MCNEIL REAL ESTATE FUND XI, LTD. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 94-2669577 - ------------------------------------------------------------------------------- (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 XI, LTD. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- BALANCE SHEETS
September 30, December 31, 1995 1994 ------------ ------------- ASSETS - ------ Real estate investments: Land..................................................... $ 5,938,464 $ 5,938,464 Buildings and improvements............................... 57,768,580 56,588,508 ----------- ----------- 63,707,044 62,526,972 Less: Accumulated depreciation.......................... (36,453,804) (34,610,759) ----------- ----------- 27,253,240 27,916,213 Cash and cash equivalents................................... 1,947,811 1,932,351 Cash segregated for security deposits....................... 368,322 363,849 Accounts receivable......................................... 22,558 24,577 Prepaid expenses and other assets........................... 160,502 361,909 Escrow deposits............................................. 1,413,461 983,972 Deferred borrowing costs (net of accumulated amortization of $470,867 and $361,743 at September 30, 1995 and December 31, 1994, respectively)............................................ 1,664,003 1,773,127 ----------- ----------- $ 32,829,897 $ 33,355,998 =========== =========== LIABILITIES AND PARTNERS' DEFICIT - --------------------------------- Mortgage notes payable, net................................. $ 39,791,063 $ 40,090,432 Accounts payable............................................ 110,867 112,735 Accrued interest............................................ 303,174 240,267 Accrued property taxes...................................... 642,639 95,268 Accrued expenses............................................ 430,842 223,360 Deferred gain - storm damage................................ 67,016 67,016 Payable to affiliates - General Partner..................... 2,596,492 2,919,444 Security deposits and deferred rental revenue............... 415,342 367,044 ----------- ----------- 44,357,435 44,115,566 ----------- ----------- Partners' deficit: Limited partners - 159,813 and 159,917 limited partnership units authorized and outstanding at September 30, 1995 and December 31, 1994, respectively........................................... (5,420,799) (5,275,373) General Partner.......................................... (6,106,739) (5,484,195) ----------- ----------- (11,527,538) (10,759,568) ----------- ----------- $ 32,829,897 $ 33,355,998 =========== ===========
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 XI, LTD. STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ----------------------------- ------------------------------ 1995 1994 1995 1994 ---------- ---------- ----------- ---------- Revenue: Rent revenue.................. $3,612,685 $3,347,642 $10,626,590 $9,913,795 Interest...................... 34,841 21,146 101,357 57,020 Deferred gain on involuntary conversion...... - - - 28,109 --------- --------- ---------- --------- Total revenue............... 3,647,526 3,368,788 10,727,947 9,998,924 --------- --------- ---------- --------- Expenses: Interest...................... 968,784 984,138 2,922,581 2,946,666 Interest - affiliates......... - - - 3,589 Depreciation.................. 628,271 647,527 1,843,045 1,756,153 Property taxes................ 240,570 263,412 721,710 790,236 Personnel expenses............ 434,980 466,705 1,336,845 1,315,538 Utilities..................... 292,631 275,569 782,775 747,935 Repair and maintenance........ 456,882 397,127 1,358,462 1,223,765 Property management fees - affiliates........... 179,532 172,454 531,451 501,254 Other property operating expenses.................... 237,267 209,917 682,065 621,500 General and administrative.... 261,894 55,380 316,988 108,882 General and administrative - affiliates.................. 113,309 107,499 385,105 323,861 --------- --------- ---------- ---------- Total expenses.............. 3,814,120 3,579,728 10,881,027 10,339,379 --------- --------- ---------- ---------- Net loss......................... $ (166,594) $ (210,940) $ (153,080) $ (340,455) ========= ========= ========== ========== Net loss allocable to limited partners...................... $ (158,264) $ (200,393) $ (145,426) $ (812,682) Net loss allocable to General Partner....................... (8,330) (10,547) (7,654) 472,227 --------- --------- ---------- ---------- Net loss......................... $ (166,594) $ (210,940) $ (153,080) $ (340,455) ========= ========= ========== ========== Net loss per limited partnership unit.............. $ (.99) $ (1.25) $ (.91) $ (5.08) ========= ========= ========= ==========
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 XI, LTD. STATEMENTS OF PARTNERS' DEFICIT (Unaudited) For the Nine Months Ended September 30, 1995 and 1994
Total General Limited Partners' Partner Partners Deficit ------------ ------------ ------------- Balance at December 31, 1993.............. $(5,157,708) $(4,638,590) $ (9,796,298) Net income (loss)......................... 472,227 (812,682) (340,455) Contingent Management Incentive Distribution........................... (557,476) - (557,476) ---------- ----------- ----------- Balance at September 30, 1994............. $(5,242,957) $(5,451,272) $(10,694,229) ========== ========== =========== Balance at December 31, 1994.............. $(5,484,195) $(5,275,373) $(10,759,568) Net loss.................................. (7,654) (145,426) (153,080) Contingent Management Incentive Distribution........................... (614,890) - (614,890) ---------- ----------- ----------- Balance at September 30, 1995............. $(6,106,739) $(5,420,799) $(11,527,538) ========== ========== ===========
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 XI, LTD. STATEMENTS OF CASH FLOWS (Unaudited) Increase (Decrease) in Cash and Cash Equivalents
Nine Months Ended September 30, ----------------------------------- 1995 1994 ----------- ----------- Cash flows from operating activities: Cash received from tenants........................ $10,662,495 $ 9,922,737 Cash paid to suppliers............................ (3,928,592) (3,673,390) Cash paid to affiliates........................... (1,854,398) (479,151) Interest received................................. 101,357 57,020 Interest paid..................................... (2,734,299) (2,849,878) Interest paid to affiliates....................... - (4,308) Property taxes paid............................... (735,411) (514,747) ---------- ---------- Net cash provided by operating activities............ 1,511,152 2,458,283 ---------- ---------- Cash flows from investing activities: Additions to real estate investments.............. (1,180,072) (1,546,649) ---------- ---------- Cash flows from financing activities: Principal payments on mortgage notes payable......................................... (315,620) (285,861) Repayment of advances from affiliates............. - (935,658) Additions to deferred borrowing costs............. - (128,401) Contingent Management Incentive Distribution.................................... - (560,035) ---------- ---------- Net cash used in financing activities................ (315,620) (1,909,955) ---------- ---------- Net increase (decrease) in cash and cash equivalents....................................... 15,460 (998,321) Cash and cash equivalents at beginning of period............................................ 1,932,351 2,920,957 ---------- ---------- Cash and cash equivalents at end of period........... $ 1,947,811 $ 1,922,636 ========== ===========
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 XI, LTD. STATEMENTS OF CASH FLOWS (Unaudited) Reconciliation of Net Loss to Net Cash Provided by Operating Activities
Nine Months Ended September 30, ----------------------------------- 1995 1994 ----------- ----------- Net loss............................................. $ (153,080) $ (340,455) --------- --------- Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation...................................... 1,843,045 1,756,153 Amortization of discounts on mortgage notes payable................................... 16,251 17,991 Amortization of deferred borrowing costs.......... 109,124 108,539 Changes in assets and liabilities: Cash segregated for security deposits........... (4,473) (24,407) Accounts receivable............................. 2,019 31,290 Prepaid expenses and other assets............... 201,407 152,923 Escrow deposits................................. (429,489) (189,231) Accounts payable................................ (1,868) (105,125) Accrued interest................................ 62,907 (30,461) Accrued property taxes.......................... 547,371 629,943 Accrued expenses................................ 207,482 99,528 Payable to affiliates - General Partner......... (937,842) 345,964 Deferred gain - storm damage.................... - (28,109) Security deposits and deferred rental revenue....................................... 48,298 33,740 --------- --------- Total adjustments............................. 1,664,232 2,798,738 --------- --------- Net cash provided by operating activities............ $1,511,152 $2,458,283 ========= =========
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 XI, LTD. Notes to Financial Statements (Unaudited) September 30, 1995 NOTE 1. - ------- McNeil Real Estate Fund XI, Ltd. (the "Partnership") was organized June 2, 1980 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 limited partnership agreement, dated August 6, 1991 (the "Amended Partnership Agreement"). The principal place of business for the Partnership and for 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 financial position and results of operations of the Partnership. All adjustments were of a normal recurring nature. However, the results of operations for the nine months ended September 30, 1995 are not necessarily indicative of the results to be expected for the year ending December 31, 1995. 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, 1994, and the notes thereto, as filed with the Securities and Exchange Commission, which is available upon request by writing to McNeil Real Estate Fund XI, Ltd. c/o McNeil Real Estate Management, Inc., Investor Services, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240. NOTE 3. - ------- Certain reclassifications have been made to prior period amounts to conform with the current year presentation. NOTE 4. - ------- The Partnership pays property management fees equal to 5% of gross rental receipts of the Partnership's properties to McNeil Real Estate Management, Inc. ("McREMI"), an affiliate of the General Partner, for providing property management and leasing services. 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 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. Prior to July 1, 1993, the MID consisted of two components: (i) the fixed portion which was payable without respect to the net income of the Partnership and was equal to 25% of the maximum MID (the "Fixed MID") and (ii) a contingent portion which was payable only to the extent of the lesser of the Partnership's excess cash flow, as defined, or net operating income (the "Entitlement Amount") and is equal to up to 75% of the maximum MID (the "Contingent MID"). Effective July 1, 1993 the General Partner amended the Amended Partnership Agreement as a settlement to a class action complaint. This amendment eliminates the Fixed MID portion and makes the entire MID payable to the extent of the Entitlement Amount. In all other respects the calculation and payment of the MID remain the same. Fixed MID was payable in limited partnership units ("Units") unless the Entitlement Amount exceeded the amount necessary to pay the Contingent MID, in which case, at the General Partner's option, the Fixed MID was paid in cash to the extent of such excess. Contingent MID will be paid to the extent of 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 per Unit, as defined. 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 Fixed MID was treated as a fee payable to the General Partner by the Partnership for services rendered. The Contingent MID represents a return of equity to the General Partner for increasing cash flow, as defined, and accordingly is treated as a distribution. Compensation, reimbursements and distributions paid to or accrued for the benefit of the General Partner and its affiliates are as follows:
Nine Months Ended September 30, -------------------------------- 1995 1994 -------- -------- Property management fees - affiliates................ $531,451 $501,254 Charged to interest expense: Interest - affiliate.............................. - 3,589 Charged to general and administrative - affiliates: Partnership administration........................ 385,105 323,861 ------- -------- $916,556 $828,704 ======= ======= Charged to General Partner's deficit: Contingent MID.................................... $614,890 $557,476 ======= =======
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 September 30, 1995, the Partnership owned eight apartment properties, which are all subject to mortgage notes. RESULTS OF OPERATIONS - --------------------- Revenue: Total Partnership revenues increased by $729,023 or 7% and $278,738 or 8%, respectively, for the nine months and three months ended September 30, 1995. Rental revenue and interest income increased $712,795 or 7% and $44,337 or 78%, respectively. The Partnership also recognized a gain on involuntary conversion of $28,109 in 1994 as a result of a fire at Sun Valley in 1993. Rental revenue for the first nine months of 1995 was $10,626,590, as compared to $9,913,795 for the same period in 1994. The increase in rental revenue for the nine months ended September 30, 1995 is due to an increase in the rental rates at all of the Partnership's properties and increases in the occupancy rate at five of the Partnership's properties. Of the five properties that experienced increases in their occupancy, Rock Creek and The Village showed the largest increases of 4%. Interest income for the nine months and three months ended September 30, 1995 increased $44,337 or 78% and $13,695 or 65%, respectively, due to an increase in the interest rates. Expenses: Total Partnership expenses increased by $541,648 or 5% for the period ending September 30, 1995 as compared to the period ending September 30, 1994. Interest expense - affiliates for the nine months ended September 30, 1995 decreased by $3,589 or 100%. This is due to the repayment of all affiliate advances and mortgage loans during 1994. Depreciation expense for the nine months ended September 30, 1995 increased by $86,892 or 5%. The increase is due to capital improvements made at the properties. During 1995, the Partnership has made $1,180,072 in capital improvements of which $344,716 of the improvements were made during the third quarter of 1995. Property taxes decreased $68,526 or 9% and $22,842 or 9%, respectively, for the nine months and the three months ended September 30, 1995. This is due to an decrease in the estimated tax liability at Acacia Lakes, Knollwood, Sun Valley, Rock Creek, and The Village. Personnel expenses for the nine months ended September 30, 1995 remained comparable to the same period in 1994. For the three months ended September 30, 1995, personnel expenses decreased by $31,725 or 7% because of additional temporary maintenance personnel hired at Knollwood in 1994 to assist with a capital improvements project, which has been completed. In addition, there was a decrease in the cost of workers' compensation insurance at all the properties. Repairs and maintenance increased by $134,697 or 11% for the nine months ended September 30, 1995 and $59,755 or 15% for the three months ended September 30, 1995. This increase can be attributed to increases in ground maintenance, exterminating, carpet cleaning and sheet rock repairs. Property management fees - affiliates for the nine months and the three months ended September 30, 1995 increased by $30,197 or 6% and $7,078 or 4%, respectively, due to the increase in the rental receipts at the properties, the basis for computing such fees. General and administrative increased $208,106 and $206,514, respectively, for the nine and the three months ended September 30, 1995 as compared to the same period in 1994. The increase was due to costs incurred by the Partnership in the third quarter of 1995 to evaluate and disseminate information regarding an unsolicited tender offer, as discussed in Item 5 - Other Information. General and administrative - affiliates for the nine months and the three months ended September 30, 1995 increased by $61,244 or 19% and $5,810 or 5%, respectively, due to an increase in reimbursements to affiliates because of fewer partnerships over which overhead costs are allocated. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Partnership generated $1,511,152 through operating activities for the period ending September 30, 1995 as compared to $2,458,283 for the same period in 1994. This decrease of $947,131 can be attributed to the increase in the cash paid to affiliates for Partnership administrative expenses which had previously been deferred. The Partnership funded $1,180,072 in additions to real estate investments for the nine months ending September 30, 1995. All of the Partnership's properties continued capital improvements projects to enhance the value of the properties so they can remain competitive in the market. There was a net use of cash from financing activities of $315,620 and $1,909,955 for the nine months ended September 30, 1995 and 1994, respectively. This decrease in cash used was due to the repayment of advances from affiliates and the payment of the Contingent MID in 1994. Short Term Liquidity: At September 30, 1995, the Partnership held cash and cash equivalents of $1,947,811 as compared to $1,932,351 at December 31, 1994. The General Partner considers the Partnership's cash reserves adequate for operations for the remainder of 1995. During 1995, operations of the Partnership's properties are expected to provide positive cash flow from operations. However, cash flow from property operations will not be sufficient to make distributions to the General Partner for the Contingent MID in 1995. Management will continue to address ongoing capital improvements needs in light of the aging condition of the Partnership's properties. The Partnership has budgeted approximately $1.2 million for capital improvements for 1995. The General Partner believes these capital improvements are necessary to allow the Partnership to increase its rental revenues in the competitive markets in which the Partnership's properties operate. These expenditures also allow the Partnership to reduce certain repairs and maintenance expenses from amounts that would otherwise be incurred. Long Term Liquidity: The General Partner has established a revolving credit facility not to exceed $5,000,000 in the aggregate which is available on a "first-come, first-served" basis to the Partnership and other affiliated partnerships if certain conditions are met. However, there is no assurance that the Partnership will receive additional funds under the facility because no amounts will be reserved for any particular partnership. As of September 30, 1995, $2,362,004 remained available for borrowing under the facility; however, additional funds could become available as other partnerships repay borrowings. For the long term, property operations will remain the primary source of funds. While the present outlook for the Partnership's liquidity is favorable, market conditions may change and property operations can deteriorate. In that event, the Partnership would require other sources of working capital. No such other sources have been identified, and the Partnership has no established lines of credit. Other possible actions to resolve working capital deficiencies include refinancing or renegotiating terms of existing loans, deferring major capital expenditures on Partnership properties except where improvements are expected to enhance the competitiveness or marketability of the properties, or arranging working capital support from affiliates. All or a combination of these steps may be inadequate or unfeasible in resolving such potential working capital deficiencies. Affiliate support has been required in the past, but there is no assurance that support would be provided in the future, since neither the General Partner nor any affiliates have any obligation in this regard in excess of the $5,000,000 revolving credit facility discussed above. Distributions: With the exception of the Contingent MID, distributions to partners have been suspended since 1986 as part of the General Partner's policy of maintaining adequate cash reserves. Distributions to the limited partners will remain suspended for the foreseeable future. The General Partner will continue to monitor the cash reserves and working capital needs of the Partnership to determine when cash flows will support distributions to the limited partners. A distribution of $614,890 for the Contingent MID has been accrued by the Partnership for the nine month period ending September 30, 1995 for the General Partner. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - ------- ----------------- 1) High River Limited Partnership vs. McNeil Partners, L.P., McNeil Investors, Inc., McNeil Pacific Investors 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., Robert A. McNeil and Carole J. McNeil (L95012) - High River ("HR") filed this action in the United States District Court for the Southern District of New York against McNeil Partners, McNeil Investors and Mr. and Mrs. McNeil requesting, among other things, names and addresses of the Partnership's limited partners. The District Court issued a preliminary injunction against the Partnerships requiring them to commence mailing materials relating to High River tender offer materials on August 14, 1995. On August 18, 1995, McNeil Partners, McNeil Investors, the Partnerships, and Mr. and Mrs. McNeil filed an Answer and Counterclaim. The Counterclaim principally asserts (1) the HR tender offers have been undertaken in violation of the federal securities laws, on the basis of material, non-public, and confidential information, and (2) that the HR offer documents omit and/or misrepresent certain material information about the HR tender offers. The counterclaim seeks a preliminary and permanent injunction against the continuation of the HR tender offers and, alternatively, ordering corrective disclosure with respect to allegedly false and misleading statements contained in the tender offer documents. The High River tender offer expired on October 6, 1995. The Defendants believe that the action is moot and expect the matter to be dismissed shortly. 2) Robert Lewis vs. 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, McNeil Real Estate Fund X, Ltd. and McNeil Real Estate Fund XV, Ltd. Plaintiff brings this action on his own behalf and as a class action on behalf of the class of all limited partners of McNeil Pacific Investors Fund 1972, 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, Ltd. (the "Partnerships") as of August 4, 1995. Plaintiff alleges that McNeil Partners, L.P., McNeil Investors, Inc., Robert A. McNeil and other senior officers (collectively, the "Defendants") breached their fiduciary duties by, among other things, (1) failing to attempt to sell the properties owned by the Partnerships ("Properties") and extending the lives of the Partnerships indefinitely, contrary to the Partnerships' business plans, (2) paying distributions to themselves and generating fees for their affiliates, (3) refusing to make significant distributions to the class members, despite the fact that the Partnerships have positive cash flows and substantial cash balances, and (4) failing to take steps to create an auction market for Partnership equity interests, despite the fact that a third party bidder filed tender offers for approximately forty-five percent (45%) of the outstanding units of each of the Partnerships. Plaintiff also claims that Defendants have breached the Partnership Agreements by failing to take steps to liquidate the Properties and by their alteration of the Partnerships' primary purposes, their acts in contravention of these agreements, and their use of the Partnership assets for their own benefit instead of for the benefit of the Partnerships. The Defendants deny that there is any merit to Plaintiff's allegations and intend to vigorously defend this action. 3) James F. Schofield, Gerald C. Gillett and Donna S. Gillett vs. McNeil Partners, L.P., McNeil Investors, Inc., McNeil Real Estate Management, Inc., Robert A. McNeil, Carole J. McNeil, 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. et al - Superior Court of the State of California for the County of Los Angeles, Case No. BC133799 (Class and Derivative Action Complaint) and United States District Court, Southern District of New York, Case No. 95CIV.6711 (Class and Derivative Action Complaint) These are corporate/securities class and derivative actions brought in state and federal court by limited partners of each of the nine (9) limited partnerships that are named as Nominal Defendants as listed above ("Partnerships"). Plaintiffs allege that Defendants McNeil Investors, Inc., its affiliate McNeil Real Estate Management, Inc. and four (4) of their senior officers and/or directors have breached their fiduciary duties. Specifically, Plaintiffs allege that Defendants have caused the Partnerships to enter into several wasteful transactions that have no business purpose or benefit to the Partnerships and which have rendered such units highly illiquid and artificially depressed the prices that are available for units on the limited resale market. Plaintiffs also allege that Defendants have engaged in a course of conduct to prevent the acquisition of units by Carl Icahn by disseminating false, misleading and inadequate information. Plaintiffs further allege that Defendants have 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 and, thereby, have breached the Partnership Agreements. The Defendants deny that there is any merit to Plaintiff's allegations and intend to vigorously defend these actions. 4) Alfred Napoletano vs. 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) Plaintiff brings this class action on behalf of a class of all persons and entities who are current owners of units and/or are limited partners in one or more of the partnerships referenced above ("Partnerships"). Plaintiff alleges that Defendants have breached their fiduciary duties to the class members by, among other things, (1) taking steps to prevent the consummation of the High River tender offers, (2) failing to take steps to maximize unitholders' or limited partners' values, including failure to liquidate the properties owned by the Partnerships, (3) managing the Partnerships so as to extend indefinitely the present fee arrangements, and (4) paying itself and entities owned and controlled by the general partner excessive fees and reimbursements of general and administrative expenses. The Defendants deny that there is any merit to Plaintiff's allegations and intend to vigorously defend this action. 5) Warren Heller vs. 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) Plaintiff brings this class action on behalf of a class of all persons and entities who are current owners of units and/or are limited partners in one or more of the partnerships referenced above ("Partnerships"). Plaintiff alleges that Defendants have breached their fiduciary duties to the class members by, among other things, (1) taking steps to prevent the consummation of the High River tender offers, (2) failing to take steps to maximize unitholders' or limited partners' values, including failure to liquidate the properties owned by the Partnerships, (3) managing the Partnerships so as to extend indefinitely the present fee arrangements, and (4) paying itself and entities owned and controlled by the general partner excessive fees and reimbursements of general and administrative expenses. The Defendants deny that there is any merit to Plaintiff's allegations and intend to vigorously defend this action. 6) High River Limited Partnership v. McNeil Partners L.P., McNeil Investors, Inc., McNeil Pacific Investors 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., Robert A. McNeil and Carole J. McNeil - United States District Court for the Southern District of New York, (Case No. 95 Civ. 9488) (Second Action). On November 7, 1995, High River commenced a second complaint which alleges, inter alia, that McNeil's Schedule 14D-9 filed in connection with the High River tender offers was materially false and misleading, in violation of Sections 14(d) and 14(e) of the Securities Exchange Act of 1934, 15 U.S.C. Section 78n(d) and (e), and the SEC Regulations promulgated thereunder; and that High River further alleges that McNeil has wrongfully refused to admit High River as a limited partner to the Funds. Additionally, High River purports to assert claims derivatively on behalf of Funds IX, XI, XV, XXIV and XXV, for breach of contract and breach of fiduciary duty, asserting that McNeil has charged these Partnerships excessive fees. High River's complaint seeks, inter alia, preliminary injunctive relief requiring McNeil to admit High River as a limited partner in each of the ten Partnerships and to transfer the tendered units of interest in the Partnerships to High River; an unspecified award of damages payable to High River and an additional unspecified award of damages payable to certain of the Partnerships; an order that defendants must discharge their fiduciary duties and must account for all fees they have received from certain of the Partnerships; and attorneys' fees. The Defendants deny that there is any merit to Plaintiff's allegations and intend to vigorously defend this action. ITEM 5. OTHER INFORMATION - ------- ----------------- As previously disclosed, on an unsolicited basis, High River Limited Partnership ("High River"), a partnership controlled by Carl Icahn, announced that it had commenced an offer to purchase 71,916 units of limited partnership interest in the Partnership (approximately 45% of the Partnership's units) at $63 per unit. The tender offer was originally due to expire on August 31, 1995. In connection therewith, the parties entered into certain negotiations and discussions regarding, among other things, possible transactions between the parties and their affiliates, McNeil Partners, McNeil Investors, and McREMI. On September 19, 1995, the parties having not reached any resolution on the terms of the proposed transactions, McNeil Partners terminated the parties' discussion. High River had extended its offer several times until the final expiration date of October 6, 1995. On October 11, 1995 High River announced that based on preliminary information furnished by the depositary for the tender offer, approximately 10,526 Units of the Partnership were tendered and not withdrawn prior to the expiration of the tender offer. On October 12, 1995, McNeil Partners announced that it would continue to explore potential avenues to enhance the value of the Partnership units, which may include, among other things, asset sales, refinancings of Partnership properties followed by distributions or tender offers for units of limited partnership. There can be no assurance that any such plans will develop or that any such transactions will be consummated. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ------- -------------------------------- (a) Exhibits.
Exhibit Number Description ------- ----------- 4. Amended and Restated Limited Partnership Agreement dated as of August 6, 1991. (Incorporated by reference to the Quarterly Report on Form 10-Q, for the quarter ended June 30, 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 159,813 and 159,917 limited partnership units outstanding in 1995 and 1994, respectively. 27. Financial Data Schedule for the quarter ended September 30, 1995.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended September 30, 1995. McNEIL REAL ESTATE FUND XI, 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 XI, Ltd. By: McNeil Partners, L.P., General Partner By: McNeil Investors, Inc., General Partner November 13, 1995 By: /s/ Donald K. Reed - ------------------- -------------------------------------------------- Date Donald K. Reed President and Chief Executive Officer November 13, 1995 By: /s/ Robert C. Irvine - ------------------- -------------------------------------------------- Date Robert C. Irvine Chief Financial Officer of McNeil Investors, Inc. Principal Financial Officer November 13, 1995 By: /s/ Brandon K. Flaming - ------------------- -------------------------------------------------- Date Brandon K. Flaming Chief Accounting Officer of McNeil Real Estate Management, Inc.
EX-27 2
5 9-MOS DEC-31-1995 SEP-30-1995 1,947,811 0 22,558 0 0 0 63,707,044 (36,453,804) 32,829,897 0 39,791,063 0 0 0 0 32,829,897 10,626,590 10,727,947 0 0 7,958,446 0 2,922,581 0 0 (153,080) 0 0 0 (153,080) 0 0
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