-----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, OJBOF7yBMo0RTdwJvXy3ddgX3dILcpsFFJj/sQoFV1tg2Z0xEWQomOCSkmld7hik sbb1Go45bLt3fy6md4HqpQ== 0000318140-98-000004.txt : 19980515 0000318140-98-000004.hdr.sgml : 19980515 ACCESSION NUMBER: 0000318140-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 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: SEC FILE NUMBER: 000-09783 FILM NUMBER: 98619846 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 quarterly period ended March 31, 1998 -------------------------------------------- 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 600, LB70, Dallas, Texas 75240 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (972) 448-5800 ------------------------------ Indicate by check mark whether the registrant, (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS MCNEIL REAL ESTATE FUND XI, LTD. BALANCE SHEETS (Unaudited)
March 31, December 31, 1998 1997 ---------------- ---------------- ASSETS - ------ Real estate investments: Land..................................................... $ 4,407,325 $ 4,407,325 Buildings and improvements............................... 47,333,820 47,211,527 -------------- -------------- 51,741,145 51,618,852 Less: Accumulated depreciation.......................... (31,451,060) (30,941,665) -------------- -------------- 20,290,085 20,677,187 Assets held for sale........................................ 5,968,409 5,910,865 Cash and cash equivalents................................... 1,740,417 3,045,785 Cash segregated for security deposits....................... 439,935 413,487 Accounts receivable......................................... 19,005 40,018 Prepaid expenses and other assets........................... 166,316 242,961 Escrow deposits............................................. 990,699 683,785 Deferred borrowing costs (net of accumulated amortization of $714,526 and $677,649 at March 31, 1998 and December 31, 1997, respectively)............................................ 1,318,954 1,355,831 -------------- -------------- $ 30,933,820 $ 32,369,919 ============== ============== LIABILITIES AND PARTNERS' DEFICIT - --------------------------------- Mortgage notes payable, net................................. $ 36,086,151 $ 36,207,678 Mortgage note payable - affiliate........................... 2,588,971 2,588,971 Accrued interest............................................ 270,925 271,877 Accrued interest - affiliate................................ 20,889 20,889 Accrued expenses............................................ 513,541 382,446 Payable to affiliates - General Partner..................... 2,552,821 2,231,389 Security deposits and deferred rental revenue............... 483,781 460,567 -------------- -------------- 42,517,079 42,163,817 -------------- -------------- Partners' deficit: Limited partners - 159,813 limited partnership units authorized and outstanding at March 31, 1998 and December 31, 1997.................................. (5,175,012) (3,602,274) General Partner.......................................... (6,408,247) (6,191,624) -------------- -------------- (11,583,259) (9,793,898) -------------- -------------- $ 30,933,820 $ 32,369,919 ============== ==============
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 March 31, -------------------------------- 1998 1997 -------------- ------------ Revenue: Rental revenue................................... $ 3,890,225 $ 3,750,149 Interest......................................... 49,765 25,894 ------------- ------------ Total revenue.................................. 3,939,990 3,776,043 ------------- ------------ Expenses: Interest......................................... 871,705 887,215 Interest - affiliate mortgage.................... 60,646 59,431 Depreciation..................................... 509,395 523,065 Property taxes................................... 231,183 217,794 Personnel expenses............................... 489,422 496,334 Utilities........................................ 269,591 276,681 Repair and maintenance........................... 425,711 504,104 Property management fees - affiliates............ 193,453 186,323 Other property operating expenses................ 212,359 203,098 General and administrative....................... 146,012 56,682 General and administrative - affiliates.......... 80,749 65,879 ------------- ------------ Total expenses................................. 3,490,226 3,476,606 ------------- ------------ Net income.......................................... $ 449,764 $ 299,437 ============= ============ Net income (loss) allocable to limited partners..... $ 427,276 $ (574,860) Net income allocable to General Partner............. 22,488 874,297 ------------- ------------ Net income.......................................... $ 449,764 $ 299,437 ============= ============ Net income (loss) per limited partnership unit...... $ 2.67 $ (3.60) ============= ============ Distribution per limited partnership unit........... $ 12.51 $ - ============= ============
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 Three Months Ended March 31, 1998 and 1997
Total General Limited Partners' Partner Partners Deficit ------------- ------------- ------------- Balance at December 31, 1996.............. $ (6,454,008) $ (4,179,456) $ (10,633,464) Net income (loss)......................... 874,297 (574,860) 299,437 Management Incentive Distribution......... (215,025) - (215,025) ------------- ------------- ------------- Balance at March 31, 1997................. $ (5,794,736) $ (4,754,316) $ (10,549,052) ============= ============= ============= Balance at December 31, 1997.............. $ (6,191,624) $ (3,602,274) $ (9,793,898) Net income................................ 22,488 427,276 449,764 Management Incentive Distribution......... (239,111) - (239,111) Distributions to limited partners......... - (2,000,014) (2,000,014) ------------- ------------- ------------- Balance at March 31, 1998................. $ (6,408,247) $ (5,175,012) $ (11,583,259) ============= ============= =============
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
Three Months Ended March 31, ------------------------------------------ 1998 1997 ------------------ --------------- Cash flows from operating activities: Cash received from tenants........................ $ 3,913,738 $ 3,852,396 Cash paid to suppliers............................ (1,590,983) (1,567,827) Cash paid to affiliates........................... (191,881) (236,850) Interest received................................. 49,765 25,894 Interest paid..................................... (829,995) (838,432) Interest paid - affiliates........................ (60,646) (62,331) Property taxes paid............................... (288,204) (237,611) ----------------- -------------- Net cash provided by operating activities............ 1,001,795 935,239 ----------------- -------------- Cash flow from investing activities: Additions to real estate investments.............. (122,293) (275,161) Additions to assets held for sale................. (57,544) - ------------------ -------------- Net cash used in investing activities................ (179,837) (275,161) ----------------- -------------- Cash flows from financing activities: Principal payments on mortgage notes payable......................................... (127,312) (116,487) Management Incentive Distribution................. - (900,450) Distributions to limited partners................. (2,000,014) - ----------------- -------------- Net cash used in financing activities................ (2,127,326) (1,016,937) ----------------- -------------- Net decrease in cash and cash equivalents............ (1,305,368) (356,859) Cash and cash equivalents at beginning of period............................................ 3,045,785 2,351,879 ----------------- -------------- Cash and cash equivalents at end of period........... $ 1,740,417 $ 1,995,020 ================= ==============
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 Income to Net Cash Provided by Operating Activities
Three Months Ended March 31, ---------------------------------------- 1998 1997 ---------------- --------------- Net income........................................... $ 449,764 $ 299,437 --------------- -------------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation...................................... 509,395 523,065 Amortization of deferred borrowing costs.......... 36,877 40,487 Amortization of discounts on mortgage notes payable................................... 5,785 5,883 Changes in assets and liabilities: Cash segregated for security deposits........... (26,448) 106,950 Accounts receivable............................. 21,013 (23,592) Prepaid expenses and other assets............... 76,645 86,831 Escrow deposits................................. (306,914) (148,803) Accounts payable................................ - (51,071) Accrued interest................................ (952) 2,413 Accrued interest-affiliates..................... - (2,900) Accrued expenses................................ 131,095 61,047 Payable to affiliates - General Partner......... 82,321 15,352 Security deposits and deferred rental revenue....................................... 23,214 20,140 --------------- -------------- Total adjustments............................. 552,031 635,802 --------------- -------------- Net cash provided by operating activities............ $ 1,001,795 $ 935,239 =============== ==============
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) March 31, 1998 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 600, 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 three months ended March 31, 1998 are not necessarily indicative of the results to be expected for the year ending December 31, 1998. 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, 1997, 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 600, LB70, Dallas, Texas 75240. NOTE 3. - ------- 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 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 limited partnership units ("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. In November 1996, the Partnership obtained a loan from McNeil Real Estate Fund XXVII, L.P., an affiliate of the General Partner, for $2,588,971. The note is secured by Rock Creek Apartments and requires monthly interest-only payments equal to the prime lending rate of Bank of America plus 1% with the principal balance due November 25, 1999. Compensation, reimbursements and distributions paid to or accrued for the benefit of the General Partner and its affiliates are as follows:
Three Months Ended March 31, ---------------------------------------- 1998 1997 ---------------- --------------- Property management fees - affiliates................ $ 193,453 $ 186,323 Interest - affiliates................................ 60,646 59,431 Charged to general and administrative affiliates: Partnership administration........................ 80,749 65,879 --------------- -------------- $ 334,848 $ 311,633 =============== ============== Charged to General Partner's deficit: MID............................................... $ 239,111 $ 215,025 =============== ============== NOTE 4. - ------- On April 30,1998, the Partnership sold to Park Associates, L.P., an unaffiliated buyer, The Park, a 192 unit apartment complex in Joplin, Missouri, for a cash purchase price of $4,900,000. Net cash proceeds to the Partnership, after payoff of the first mortgage note and various closing costs, amounted to approximately $2,161,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - ------- --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- FINANCIAL CONDITION - ------------------- The Partnership is engaged in real estate activities, including the ownership, operation and management of residential and other real estate related assets. At March 31, 1998, the Partnership owned eight apartment properties, which are all subject to mortgage notes. RESULTS OF OPERATIONS - --------------------- Revenue: Partnership revenues increased by $163,947 for the three months ended March 31, 1998 as compared to the same period last year. Rental revenue increased $140,076 or 4% for the three months ended March 31, 1998. Interest income increased by $23,871 or 92% for the period ended March 31, 1998. Rental revenue for the first three months of 1998 was $3,890,224 as compared to $3,750,149 for the same period in 1997. The increase in rental revenue is primarily due to an increase in occupancy rates at Acacia Lakes along with increases in the rental rates at Acacia Lakes, Knollwood, Sun Valley and Villa Del Rio. Expenses: Total Partnership expenses increased by $13,620 for the three months ended March 31, 1998 as compared to the same period in 1997. Decreases in interest, depreciation, repairs and maintenance and utilities were offset by increases in property taxes, general and administrative and property operating expenses. Repairs and maintenance decreased by $78,393 or 16% for the three months ended March 31, 1998 as compared to the three months ended March 31, 1997. This decrease is primarily due to a reduction on carpet and appliance replacement at five of the Partnership's eight properties. General and administrative expenses increased $89,330 or 158% for the first three months of 1998 as compared to the same period last year. The increase was mainly due to costs incurred to explore alternatives to maximize the value of the Partnership (see Liquidity and Capital Resources). The increase was partially offset by decreases attributable to investor services. During 1997, charges for investor services were provided by a third party vendor. Beginning with 1998, these services are provided by affiliates of the General Partner. General and administrative - affiliates expense increased by $14,870 or 23% for the first three months of 1998 as compared to the same period last year due to the change in investor services charges as discussed above. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Partnership generated $1,001,795 through operating activities for the period ending March 31, 1998 as compared to $935,239 for the same period in 1997. This increase is due to an increase in cash received from tenants and a reduction in the cash paid to affiliates. The Partnership funded $179,837 in additions to real estate investments for the three months ending March 31, 1998. All of the Partnership's properties continued capital improvement projects to enhance the value of the properties so they can remain competitive in the market. Financing activities included principal payments on mortgage notes of $127,312. The Partnership made a distribution of $2,000,014 to the limited partners in March 1998. Short-term liquidity: At March 31, 1998, the Partnership held cash and cash equivalents of $1,740,417. The General Partner considers this level of cash reserves to be adequate to meet the Partnership's operating needs. The Partnership resumed MID payments during the third quarter of 1996 and will continue making MID payments as long as the Partnership's properties continue to perform as projected. The General Partner believes that anticipated operating results for 1998 will be sufficient to fund the Partnership's budgeted $1.3 million in capital improvements for 1998 and to repay the current portion of the Partnership's mortgage notes. On April 30,1998, the Partnership sold to Park Associates, L.P., an unaffiliated buyer, The Park, a 192 unit apartment complex in Joplin, Missouri, for a cash purchase price of $4,900,000. Net cash proceeds to the Partnership, after payoff of the first mortgage note and various closing costs, amounted to approximately $2,161,000. 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 capital improvements made by the Partnership during the past will yield improved cash flow from property operations in the future. 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. Pursuant to the Partnership's previously announced liquidation plans, the Partnership has recently retained PaineWebber, Incorporated as its exclusive financial advisor to explore alternatives to maximize the value of the Partnership. The alternatives being considered by the Partnership include, without limitation, a transaction in which limited partnership interests in the Partnership are converted into cash. The General Partner of the Partnership or entities or persons affiliated with the General Partner will not be involved as a purchaser in any of the transactions contemplated above. Any transaction will be subject to certain conditions including (i) approval by the limited partners of the Partnership, and (ii) receipt of an opinion from an independent financial advisory firm as to the fairness of the consideration received by the Partnership pursuant to such transaction. Finally, there can be no assurance that any transaction will be consummated, or as to the terms thereof. Income allocation and distributions: Terms of the Amended Partnership Agreement specify that income before depreciation is allocated to the General Partner to the extent of MID paid in cash. Depreciation is allocated in the ratio of 95:5 to the limited partners and the General Partner, respectively. Therefore, for the three months ended March 31, 1998 and 1997, $22,488 and $874,297, respectively, were allocated to the General Partner. The limited partners received net income (loss) allocations of $427,276 and $(574,860) for the three months ended March 31, 1998 and 1997, respectively. The Partnership distributed $2,000,014 to the limited partners in March 1998. 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. A distribution of $239,911 for the MID has been accrued by the Partnership for the three month period ending March 31, 1998 for the General Partner. PART II. - OTHER INFORMATION ITEM 5. OTHER INFORMATION - ------- ----------------- On April 30,1998, the Partnership sold to Park Associates, L.P., an unaffiliated buyer, The Park, a 192 unit apartment complex in Joplin, Missouri, for a cash purchase price of $4,900,000. Net cash proceeds to the Partnership, after payoff of the first mortgage note and various closing costs, amounted to approximately $2,161,000. 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 limited partnership units outstanding in 1998 and 1997, respectively. 27. Financial Data Schedule for the quarter ended March 31, 1998. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended March 31, 1998. 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 May 14, 1998 By: /s/ Ron K. Taylor - ------------ ----------------------------------------- Date Ron K. Taylor President and Director of McNeil Investors, Inc. (Principal Financial Officer) May 14, 1998 By: /s/ Brandon K. Flaming - ------------ ----------------------------------------- Date Brandon K. Flaming Vice President of McNeil Investors, Inc. (Principal Accounting Officer) EX-27 2
5 3-MOS DEC-31-1998 MAR-31-1998 1,740,417 0 19,005 0 0 0 51,741,145 (31,451,060) 30,933,820 0 38,675,122 0 0 0 0 30,933,820 3,890,225 3,939,990 0 0 2,557,875 0 932,351 0 0 449,764 0 0 0 449,764 0 0
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