-----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, NSC+8acbE4X/Oicd6iWSDyPUA3y479vrq2xeYRBYwyWSsgScJ0jUzF2WRe392A5/ jL8WE22pQtiZh89QgcL9CA== 0000318140-99-000004.txt : 19990519 0000318140-99-000004.hdr.sgml : 19990519 ACCESSION NUMBER: 0000318140-99-000004 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990518 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/A SEC ACT: SEC FILE NUMBER: 000-09783 FILM NUMBER: 99629421 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/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1999 ------------------------------------------- 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, 1999 1998 ------------ ------------- ASSETS - ------ Real estate investments: Land ....................................................... $ 4,407,325 $ 4,407,325 Buildings and improvements ................................. 48,383,085 48,327,237 ------------ ------------ 52,790,410 52,734,562 Less: Accumulated depreciation ............................ (33,578,927) (33,063,795) ------------ ------------ 19,211,483 19,670,767 Asset held for sale ........................................... 4,806,811 4,765,942 Cash and cash equivalents ..................................... 2,962,122 2,397,968 Cash segregated for security deposits ......................... 440,554 459,382 Cash restricted for mortgage payments ......................... 262,840 286,160 Accounts receivable ........................................... 47,339 149,681 Prepaid expenses and other assets ............................. 232,779 233,791 Escrow deposits ............................................... 685,549 617,502 Deferred borrowing costs (net of accumulated amortization of $726,733 and $682,223 at March 31, 1999 and December 31, 1998, respectively) .............................................. 1,120,676 1,165,186 ------------ ------------ $ 29,770,153 $ 29,746,379 ============ ============ LIABILITIES AND PARTNERS' DEFICIT - --------------------------------- Mortgage notes payable, net ................................... $ 35,832,593 $ 36,064,590 Accrued interest .............................................. 212,582 240,794 Accrued expenses .............................................. 586,943 414,875 Payable to affiliates - General Partner ....................... 3,157,846 2,950,388 Deferred gain - fire .......................................... -- 25,037 Security deposits and deferred rental revenue ................. 474,803 466,504 ------------ ------------ 40,264,767 40,162,188 ------------ ------------ Partners' deficit: Limited partners - 159,813 limited partnership unit authorized and outstanding at March 31, 1999 and December 31, 1998 .................................... (3,489,199) (3,598,672) General Partner ............................................ (7,005,415) (6,817,137) ------------ ------------ (10,494,614) (10,415,809) ------------ ------------ $ 29,770,153 $ 29,746,379 ============ ============
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, ---------------------------- 1999 1998 ---------- ---------- Revenue: Rental revenue .................................... $3,763,677 $3,890,225 Interest .......................................... 16,454 49,765 Gain on involuntary conversion .................... 36,012 -- ---------- ---------- Total revenue ................................... 3,816,143 3,939,990 ---------- ---------- Expenses: Interest .......................................... 751,505 871,705 Interest - affiliate mortgage ..................... -- 60,646 Depreciation ...................................... 515,132 509,395 Property taxes .................................... 221,373 231,183 Personnel expenses ................................ 434,547 489,422 Utilities ......................................... 261,778 269,591 Repair and maintenance ............................ 438,324 425,711 Property management fees - affiliates ............. 186,141 193,453 Other property operating expenses ................. 182,046 212,359 General and administrative ........................ 94,730 146,012 General and administrative - affiliates ........... 73,482 80,749 ---------- ---------- Total expenses .................................. 3,159,058 3,490,226 ---------- ---------- Net income ........................................... $ 657,085 $ 449,764 ========== ========== Net income allocable to limited partners ............. $ 609,687 $ 427,276 Net income allocable to General Partner .............. 47,398 22,488 ---------- ---------- Net income ........................................... $ 657,085 $ 449,764 ========== ========== Net income per limited partnership unit .............. $ 3.82 $ 2.67 ========== ========== Distribution per limited partnership unit ............ $ 3.13 $ 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, 1999 and 1998
Total General Limited Partners' Partner Partners Deficit --------------- ------------- ------------- 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) ============== ============ ============ Balance at December 31, 1998 ................... $ (6,817,137) $ (3,598,672) $(10,415,809) Net income ..................................... 47,398 609,687 657,085 Management Incentive Distribution .............. (235,676) -- (235,676) Distributions to limited partners .............. -- (500,214) (500,214) -------------- ------------ ------------ Balance at March 31, 1999 ...................... $ (7,005,415) $ (3,489,199) $(10,494,614) ============== ============ ============
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, 1999 1998 ------------ ------------ Cash flows from operating activities: Cash received from tenants ........................... $ 3,856,531 $ 3,913,739 Cash paid to suppliers ............................... (1,362,432) (1,590,983) Cash paid to affiliates .............................. (214,686) (191,881) Interest received .................................... 16,454 49,765 Interest paid ........................................ (728,554) (829,995) Interest paid - affiliates ........................... -- (60,646) Property taxes paid .................................. (163,013) (288,204) ----------- ----------- Net cash provided by operating activities ............... 1,404,300 1,001,795 ----------- ----------- Cash flow from investing activities: Additions to real estate investments and assets held for sale ............................... (96,717) (179,837) Insurance proceeds from fire ......................... 45,270 -- ----------- ----------- Net cash used in investing activities ................... (51,447) (179,837) ----------- ----------- Cash flows from financing activities: Principal payments on mortgage notes payable ............................................ (238,650) (127,312) Cash restricted for mortgage payments ................ 23,320 -- Management Incentive Distribution .................... (73,155) -- Distributions to limited partners .................... (500,214) (2,000,014) ----------- ----------- Net cash used in financing activities ................... (788,699) (2,127,326) ----------- ----------- Net increase (decrease) in cash and cash equivalents .......................................... 564,154 (1,305,368) Cash and cash equivalents at beginning of period ............................................... 2,397,968 3,045,785 ----------- ----------- Cash and cash equivalents at end of period .............. $ 2,962,122 $ 1,740,417 =========== ===========
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, ------------------------------- 1999 1998 ----------- ----------- Net income ............................................. $ 657,085 $ 449,764 ----------- ----------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation ........................................ 515,132 509,395 Amortization of deferred borrowing costs ............ 44,510 36,877 Amortization of discounts on mortgage notes payable ..................................... 6,653 5,785 Gain on involuntary conversion ...................... (36,012) -- Changes in assets and liabilities: Cash segregated for security deposits ............. 18,828 (26,448) Accounts receivable ............................... 68,047 21,013 Prepaid expenses and other assets ................. 1,012 76,645 Escrow deposits ................................... (68,047) (306,914) Accrued interest .................................. (28,212) (952) Accrued expenses .................................. 172,068 131,095 Payable to affiliates - General Partner ........... 44,937 82,321 Security deposits and deferred rental revenue ......................................... 8,299 23,214 ----------- ----------- Total adjustments ............................... 747,215 552,031 ----------- ----------- Net cash provided by operating activities .............. $ 1,404,300 $ 1,001,795 =========== ===========
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, 1999 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, 1999 are not necessarily indicative of the results to be expected for the year ending December 31, 1999. 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, 1998, 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. 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. The maximum MID percentage decreases to .75% in 2000, .50% in 2001 and .25% thereafter. 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, 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 was secured by The Village Apartments and required monthly interest-only payments equal to the prime lending rate of Bank of America plus 1% with the principal balance due November 25, 1999. This mortgage note was paid off on April 27, 1998. 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, 1999 1998 -------- -------- Property management fees - affiliates .................. $186,141 $193,453 Interest - affiliates .................................. -- 60,646 Charged to general and administrative affiliates: Partnership administration .......................... 73,482 80,749 -------- -------- $259,623 $334,848 ======== ======== Charged to General Partner's deficit: MID ................................................. $235,676 $239,111 ======== ========
NOTE 4. - ------- On November 5, 1998, a fire destroyed two units and damaged four units at Gentle Gale Apartments. The Partnership received $45,270 in insurance reimbursements to cover the cost of repairs. Insurance reimbursements received in excess of the basis of the property damage were recorded as a gain on involuntary conversion. The Partnership recorded a gain of $36,012. 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, 1999, the Partnership owned seven apartment properties, which are all subject to mortgage notes. RESULTS OF OPERATIONS - --------------------- Revenue: Total Partnership revenues decreased $123,847 or 3% for the three months ended March 31, 1999 as compared to the same period last year. Excluding the effects of the sale of The Park in April 1998, Partnership revenue increased $79,928 or 2% for the three months ended March 31, 1999 as compared to the same period last year. Interest income decreased $30,335 for the three months ended March 31, 1999 as compared to the same period last year. During the first quarter of 1999, the Partnership recognized a gain on involuntary conversion of $36,012 related to the fire at Gentle Gale. No such gain was recognized in 1998. Expenses: Total expenses decreased $331,168 or 10% for the three months ended March 31, 1999 as compared to the same period last year. Excluding the effects of the sale of The Park, Partnership expenses decreased $171,675 or 5% for the three months ended March 31, 1999. Interest- affiliate mortgage expense decreased by $60,046 for the three months ended March 31, 1999. This decrease is due to the refinancing of the mortgage loan at The Village in April 1998, which replaced affiliate debt with a third party mortgage note payable. When combined with interest expense paid to unaffiliated lenders, the Partnership's total interest expense, excluding The Park, decreased $12,595 for the first quarter of 1999. General and administrative expenses decreased $51,282 or 35% for the first three months of 1999 as compared to the same period last year. The decrease is mostly due to costs incurred in 1998 to explore alternatives to maximize the value of the Partnership (see Liquidity and Capital Resources). All other remaining expenses, excluding The Park Apartments, remained comparable to the same period last year. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Partnership generated $1,404,300 through operating activities for the three month period ended March 31, 1999 as compared to $1,001,795 for the same period in 1998. This increase is primarily due to decreases in cash paid to suppliers, interest paid and property taxes paid. The Partnership expended $96,717 and $179,837 for capital improvements to its properties in the first three months of 1999 and 1998, respectively. The Partnership also received insurance proceeds of $45,270 for fire at Gentle Gale in during the first quarter of 1999. During the first three months of 1999, the Partnership paid $238,650 in principal payments on the mortgage notes and made distributions of $500,214 to the limited partners. During the first quarter of 1999, the Partnership also paid $73,155 in MID to the General Partner. The Partnership used its cash flow from operations as well as its cash reserves to distribute $500,214 to the limited partners during the first quarter of 1999. The distribution amounted to $3.13 per limited partnership unit. Short-term liquidity: At March 31, 1999, the Partnership held cash and cash equivalents of $2,962,122. The General Partner considers this level of cash reserves to be adequate to meet the Partnership's operating needs. The General Partner believes that anticipated operating results for 1999 will be sufficient to fund the Partnership's budgeted $1.03 million in capital improvements for 1999 and to repay the current portion of the Partnership's mortgage notes. 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. As previously announced, the Partnership has retained PaineWebber, Incorporated as its exclusive financial advisor to explore alternatives to maximize the value of the Partnership, including, without limitation, a transaction in which limited partnership interests in the Partnership are converted into cash. During the last full week of March, the Partnership entered into a 45 day exclusivity agreement with a well-financed bidder with whom it had commenced discussions with respect to a sale transaction. The Partnership and such party have made significant progress in negotiating the terms of a proposed transaction and are continuing to have intensive discussions with respect to a transaction. In light on these continuing negotiations, the exclusivity agreement has been extended for an additional 21 days until June 4, 1999. It is possible that the General Partner and its affiliates will receive non-cash consideration for their ownership interests in connection with any such transaction. There can be no assurance regarding whether any such agreement will be reached nor the terms thereof. The Partnership placed Rock Creek Apartments on the market for sale on October 1, 1996. Income/Loss 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, 1999 and 1998, net income of $47,398 and $22,488, respectively, was allocated to the General Partner. The limited partners received net income allocations of $609,687 and $427,276 for the three months ended March 31, 1999 and 1998, respectively. The Partnership distributed $500,214 to the limited partners in 1999. A distribution of $235,676 for the MID has been accrued by the Partnership for the three month period ended March 31, 1999 for the General Partner. Forward-Looking Information: Within this document, certain statements are made as to the expected occupancy trends, financial condition, results of operations, and cash flows of the Partnership for periods after March 31, 1999. All of these statements are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical and involve risks and uncertainties. The Partnership's actual occupancy trends, financial condition, results of operations, and cash flows for future periods may differ materially due to several factors. These factors include, but are not limited to, the Partnership's ability to control costs, make necessary capital improvements, negotiate sales or refinancings of its properties, and respond to changing economic and competitive factors. YEAR 2000 DISCLOSURE - -------------------- State of readiness The year 2000 problem is the result of computer programs being written using two digits rather than four to define the applicable year. Any programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in major systems failure or miscalculations. Management has assessed its information technology ("IT") infrastructure to identify any systems that could be affected by the year 2000 problem. The IT used by the Partnership for financial reporting and significant accounting functions was made year 2000 compliant during recent systems conversions. The software utilized for these functions is licensed by third party vendors who have warranted that their systems are year 2000 compliant. Management is in the process of evaluating the mechanical and embedded technological systems at the various properties. Management has inventoried all such systems and queried suppliers, vendors and manufacturers to determine year 2000 compliance. Based on this review, management believes these systems are substantially compliant. In circumstances of non-compliance management will work with the vendor to remedy the problem or seek alternative suppliers who will be in compliance. Management believes that the remediation of any outstanding year 2000 conversion issues will not have a material or adverse effect on the Partnership's operations. However, no estimates can be made as to the potential adverse impact resulting from the failure of third party service providers and vendors to be year 2000 compliant. Cost - ---- The cost of IT and embedded technology systems testing and upgrades is not expected to be material to the Partnership. Because all the IT systems have been upgraded over the last three years, all such systems were compliant, or made compliant at no additional cost by third party vendors. Management anticipates the costs of assessing, testing, and if necessary replacing embedded technology components will be less than $50,000. Such costs will be funded from operations of the Partnership. Risks - ----- Ultimately, the potential impact of the year 2000 issue will depend not only on the corrective measures the Partnership undertakes, but also on the way in which the year 2000 issue is addressed by government agencies and entities that provide services or supplies to the Partnership. Management has not determined the most likely worst case scenario to the Partnership. As management studies the findings of its property systems assessment and testing, management will develop a better understanding of what would be the worst case scenario. Management believes that progress on all areas is proceeding and that the Partnership will experience no adverse effect as a result of the year 2000 issue. However, there is no assurance that this will be the case. Contingency plans - ----------------- Management is developing contingency plans to address potential year 2000 non-compliance of IT and embedded technology systems. Management believes that failure of any IT system could have an adverse impact on operations. However, management believes that alternative systems are available that could be utilized to minimize such impact. Management believes that any failure in the embedded technology systems could have an adverse impact on that property's performance. Management will assess these risks and develop plans to mitigate possible failures by July 1999. PART II. - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - ------- ----------------- James F. Schofield, Gerald C. Gillett, Donna S. Gillett, Jeffrey Homburger, Elizabeth Jung, Robert Lewis, and Warren Heller et al. v. McNeil Partners L.P., McNeil Investors, Inc., McNeil Real Estate Management, Inc., Robert A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate Fund XII, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate Fund XXI, L.P., McNeil Real Estate Fund XXII, L.P., McNeil Real Estate Fund XXIII, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., McNeil Real Estate Fund XXVI, L.P., and McNeil Real Estate Fund XXVII, L.P., Hearth Hollow Associates, McNeil Midwest Properties I, L.P. and Regency North Associates, L.P., - Superior Court of the State of California for the County of Los Angeles, Case No. BC133799 (Class and Derivative Action Complaint). The action involves purported class and derivative actions brought by limited partners of each of the limited partnerships that were named as nominal defendants as listed above (the "Partnerships"). Plaintiffs allege that McNeil Investors, Inc., its affiliate McNeil Real Estate Management, Inc. and three of their senior officers and/or directors (collectively, the "Defendants") breached their fiduciary duties and certain obligations under the respective Amended Partnership Agreement. Plaintiffs allege that Defendants have rendered such Units highly illiquid and artificially depressed the prices that are available for Units on the resale market. Plaintiffs also allege that Defendants engaged in a course of conduct to prevent the acquisition of Units by an affiliate of Carl Icahn by disseminating purportedly false, misleading and inadequate information. Plaintiffs further allege that Defendants acted to advance their own personal interests at the expense of the Partnerships' public unit holders by failing to sell Partnership properties and failing to make distributions to unitholders. On December 16, 1996, the Plaintiffs filed a consolidated and amended complaint. Plaintiffs are suing for breach of fiduciary duty, breach of contract and an accounting, alleging, among other things, that the management fees paid to the McNeil affiliates over the last six years are excessive, that these fees should be reduced retroactively and that the respective Amended Partnership Agreements governing the Partnerships are invalid. Defendants filed a demurrer to the consolidated and amended complaint and a motion to strike on February 14, 1997, seeking to dismiss the consolidated and amended complaint in all respects. A hearing on Defendant's demurrer and motion to strike was held on May 5, 1997. The Court granted Defendants' demurrer, dismissing the consolidated and amended complaint with leave to amend. On October 31, 1997, the Plaintiffs filed a second consolidated and amended complaint. The case was stayed pending settlement discussions. A Stipulation of Settlement dated September 15, 1998 has been signed by the parties. Preliminary Court approval was received on October 6, 1998. A hearing for Final Approval of Settlement, initially scheduled for December 17, 1998, has been continued to July 2, 1999. Because McNeil Real Estate Fund XXIII, L.P., Hearth Hollow Associates, McNeil Midwest Properties I, L.P. and Regency North Associates, L.P. would be part of the transaction contemplated in the settlement and Plaintiffs claim that an effort should be made to sell the McNeil Partnerships, Plaintiffs have included allegations with respect to McNeil Real Estate Fund XXIII, L.P., Hearth Hollow Associates, McNeil Midwest Properties I, L.P. and Regency North Associates, L.P. in the third consolidated and amended complaint. Plaintiff's counsel intends to seek an order awarding attorney's fees and reimbursements of their out-of-pocket expenses. The amount of such award is undeterminable until final approval is received from the court. Fees and expenses shall be allocated amongst the Partnerships on a pro rata basis, based upon tangible asset value of each such partnership, less total liabilities, calculated in accordance with the Amended Partnership Agreements for the quarter most recently ended. 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 income per limited partnership unit: Net income per limited partnership unit is computed by dividing net income 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 1999 and 1998. 27. Financial Data Schedule for the quarter ended March 31, 1999. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended March 31, 1999. 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., and General Partner By: McNeil Investors, Inc., General Partner May 18, 1999 By: /s/ Ron K. Taylor - ------------ --------------------------------------------- Date Ron K. Taylor President and Director of McNeil Investors, Inc. (Principal Financial Officer) May 18, 1999 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-31-1999 MAR-31-1999 2,962,122 0 47,339 0 0 0 52,790,410 (33,578,927) 29,770,153 0 35,832,593 0 0 0 0 29,770,153 3,763,677 3,816,143 0 0 2,407,553 0 751,505 0 0 657,085 0 0 0 657,085 0 0
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