-----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, NdSnJWN7Fyrj0A3cc7+QvA36hdMLS0Wh7tsjjDm7QdjrDGFbv8KGewEAkLitRcYZ DCtUsWUfiFAwGOw7AkZpCg== 0000351708-95-000014.txt : 19951119 0000351708-95-000014.hdr.sgml : 19951119 ACCESSION NUMBER: 0000351708-95-000014 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 XII LTD CENTRAL INDEX KEY: 0000351708 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 942717957 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10743 FILM NUMBER: 95590513 BUSINESS ADDRESS: STREET 1: 13760 NOEL ROAD, STE 700 STREET 2: LB70, CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 2144485800 MAIL ADDRESS: STREET 1: 13760 NOEL ROAD SUITE 700 STREET 2: 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 0-10743 MCNEIL REAL ESTATE FUND XII, LTD. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 94-2717957 - ------------------------------------------------------------------------------- (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 XII, LTD. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- BALANCE SHEETS (Unaudited)
September 30, December 31, 1995 1994 ASSETS ------------- ------------ - ------ Real estate investments: Land..................................................... $ 6,280,580 $ 6,280,580 Buildings and improvements............................... 72,418,940 71,739,632 ----------- ----------- 78,699,520 78,020,212 Less: Accumulated depreciation and amortization......... (39,609,984) (37,105,195) ----------- ------------ 39,089,536 40,915,017 Assets held for sale........................................ 3,207,264 12,724,693 Cash and cash equivalents................................... 2,590,184 3,313,765 Cash segregated for security deposits ...................... 309,241 303,436 Accounts receivable, less allowance for doubtful accounts of $5,629 and $36,410 at September 30, 1995 and December 31, 1994, respectively................. 182,680 317,559 Prepaid expenses and other assets........................... 407,859 258,668 Escrow deposits............................................. 1,034,505 896,234 Deferred borrowing costs, net of accumulated amorti- zation of $737,939 and $652,691 at September 30, 1995 and December 31, 1994, respectively................. 1,454,919 1,459,976 ----------- ----------- $ 48,276,188 $ 60,189,348 =========== =========== LIABILITIES AND PARTNERS' DEFICIT - --------------------------------- Mortgage notes payable, net................................. $ 53,545,919 $ 68,152,522 Accounts payable............................................ 185,249 220,341 Accrued expenses............................................ 154,556 146,722 Accrued interest............................................ 327,661 1,680,833 Accrued property taxes...................................... 1,090,843 961,459 Advances from Southmark..................................... 34,535 32,690 Advances from affiliates - General Partner.................. 1,938,254 1,814,115 Payable to affiliates - General Partner..................... 6,832,215 5,926,684 Security deposits and deferred rental income................ 524,659 546,313 ----------- ----------- 64,633,891 79,481,679 ----------- ----------- Partners' deficit: Limited partners - 240,000 limited partnership units authorized; 229,980 and 230,594 limited partnership units issued and outstanding at March 30, 1995 and December 31, 1994, respectively............... (6,325,644) (9,844,782) General Partner.......................................... (10,032,059) (9,447,549) ----------- ----------- (16,357,703) (19,292,331) ----------- ----------- $ 48,276,188 $ 60,189,348 =========== ===========
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 XII, LTD. STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ----------------------------- ------------------------------ 1995 1994 1995 1994 ---------- ---------- ----------- ----------- Revenue: Rental revenue................ $4,144,714 $5,466,449 $13,466,770 $16,280,905 Interest...................... 47,465 10,036 104,625 39,236 Gain on disposition of real estate................. 1,164,231 - 3,427,513 - Gain on legal settlement...... - - 65,856 - --------- --------- ---------- ---------- Total revenue............... 5,356,410 5,476,485 17,064,764 16,320,141 --------- --------- ---------- ---------- Expenses: Interest...................... 1,247,512 1,856,914 4,696,851 5,607,494 Interest - affiliates......... 41,426 36,021 124,139 100,132 Depreciation and amortization................ 920,480 1,181,244 3,059,738 3,472,998 Property taxes................ 350,240 448,749 1,024,026 1,346,247 Personnel expenses............ 551,899 762,345 1,666,178 2,101,150 Utilities..................... 277,300 368,702 1,051,646 1,394,611 Repair and maintenance........ 651,063 888,546 1,818,350 2,221,327 Property management fees - affiliates........... 205,204 273,323 674,514 812,796 Other property operating expenses.................... 313,216 402,313 918,037 1,061,391 General and administrative.... 16,845 50,481 86,270 122,735 General and administrative - affiliates.................. 103,474 120,015 347,284 372,097 --------- --------- ---------- ---------- Total expenses.............. 4,678,659 6,388,653 15,467,033 18,612,978 --------- --------- ---------- ---------- Net income (loss) before extraordinary item............ 677,751 (912,168) 1,597,731 (2,292,837) Extraordinary gain on extinguishment of debt........ - - 2,106,625 - --------- --------- ---------- ---------- Net income (loss)................ $ 677,751 $ (912,168) $ 3,704,356 $(2,292,837) ========= ========= ========== ========== Net income (loss) allocable to limited partners........... $ 643,864 $ (866,560) $ 3,519,138 $(2,178,195) Net income (loss) allocable to General Partner............ 33,887 (45,608) 185,218 (114,642) --------- --------- ---------- ---------- Net income (loss)................ $ 677,751 $ (912,168) $ 3,704,356 $(2,292,837) ========= ========= ========== ========== Net income (loss) per limited partnership unit: Income (loss) before extraordinary item............ $ 2.80 $ (3.76) $ 6.60 $ (9.45) Extraordinary gain from extinguishment of debt........ - - 8.70 - --------- --------- ----------- ---------- Net income (loss) per limited partnership unit.............. $ 2.80 $ (3.76) $ 15.30 $ (9.45) ========= ========= =========== ==========
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 XII, 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.............. $ (8,456,354) $(13,138,511) $(21,594,865) Net loss.................................. (114,642) (2,178,195) (2,292,837) Contingent Management Incentive Distribution........................... (869,037) - (869,037) ----------- ----------- ----------- Balance at September 30, 1994............. $ (9,440,033) $(15,316,706) $(24,756,739) =========== =========== =========== Balance at December 31, 1994.............. $ (9,447,549) $ (9,844,782) $(19,292,331) Net income................................ 185,218 3,519,138 3,704,356 Contingent Management Incentive Distribution........................... (769,728) - (769,728) ----------- ----------- ----------- Balance at September 30, 1995............. $(10,032,059) $ (6,325,644) $(16,357,703) =========== =========== ===========
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 XII, 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........................ $13,514,491 $16,359,986 Cash received from legal settlement............... 65,856 - Cash paid to suppliers............................ (5,677,208) (6,634,407) Cash paid to affiliates........................... (885,995) (1,541,405) Interest received................................. 104,625 39,236 Interest paid..................................... (4,047,664) (5,105,188) Interest paid to affiliates....................... - (470,489) Property taxes paid............................... (1,012,936) (1,384,293) Deferred borrowing costs paid..................... (131,246) - ---------- ---------- Net cash provided by (used in) operating activities.............................. 1,929,923 1,263,440 ---------- ---------- Cash flows used in investing activities: Additions to real estate investments.............. (721,389) (1,537,331) Net proceeds from disposition of real estate...... 45,000 - ---------- ---------- Net cash used in investing activities................ (676,389) (1,537,331) ---------- ---------- Cash flows from financing activities: Proceeds from refinancing of mortgage notes payable................................... 334,062 - Principal payments on mortgage notes payable......................................... (2,311,177) (1,154,293) Additions to deferred borrowing costs............. - (36,992) Repayment of mortgage loans from affiliates....... - (1,603,135) Advances from affiliates - General Partner........ - 6,000 Repayment of advances from affiliates - General Partner................................. (1,206,664) ---------- ---------- Net cash used in financing activities................ (1,977,115) (3,995,084) ---------- ---------- Net decrease in cash and cash equivalents............ (723,581) (4,268,975) Cash and cash equivalents at beginning of period............................................ 3,313,765 4,938,029 ---------- ---------- Cash and cash equivalents at end of period........... $ 2,590,184 $ 669,054 ========== ==========
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 XII, LTD. STATEMENTS OF CASH FLOWS (Unaudited) Reconciliation of Net Income (Loss) to Net Cash Provided by Operating Activities
Nine Months Ended September 30, ----------------------------------- 1995 1994 ---------- ------------ Net income (loss).................................... $ 3,704,356 $(2,292,837) --------- ---------- Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization..................... 3,059,738 3,472,998 Amortization of deferred borrowing costs.......... 136,303 87,779 Amortization of discounts on mortgage notes payable................................... 210,785 147,288 Net interest added on advances from affiliates - General Partner.................... 124,139 93,032 Net interest added on advances from Southmark....................................... 1,845 1,460 Extraordinary gain on extinguishment of debt......................................... (2,106,625) - Gain on disposition of real estate................ (3,427,513) - Changes in assets and liabilities: Cash segregated for security deposits........... (5,805) 131,025 Accounts receivable............................. 134,879 47,626 Prepaid expenses and other assets............... (149,191) 2,830 Escrow deposits................................. (138,271) (144,289) Deferred borrowing costs........................ (131,246) - Accounts payable................................ (35,092) (155,432) Accrued expenses................................ 7,834 112,387 Accrued interest................................ 300,254 (197,608) Accrued property taxes.......................... 129,384 331,667 Payable to affiliates - General Partner......... 135,803 (356,512) Security deposits and deferred rental .......... income........................................ (21,654) (17,974) ---------- ---------- Total adjustments............................. (1,774,433) 3,556,277 ---------- ---------- Net cash provided by operating activities............ $ 1,929,923 $ 1,263,440 ========== ==========
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 XII, LTD. Notes to Financial Statements (Unaudited) September 30, 1995 NOTE 1. - ------- McNeil Real Estate Fund XII, Ltd. (the "Partnership") was organized February 2, 1981 as a limited partnership organized 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 September 6, 1991 (the "Amended Partnership Agreement"). The principal place of business for the Partnership and the General Partner is 13760 Noel Road, Suite 700, LB70, Dallas, Texas, 75240. In the opinion of management, the financial statements reflect all adjustments necessary for a fair presentation of the Partnership's financial position and results of operations. All adjustments were of a normal recurring nature. However, the results of operations for the 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 XII, Ltd. c/o McNeil Real Estate Management, Inc., Investor Services, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240. NOTE 3. - ------- The accompanying financial statements have been prepared assuming that the Partnership will continue as a going concern. The Partnership has suffered recurring losses from operations and has a net Partners' deficit that raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. NOTE 4. - ------- Certain reclassifications have been made to prior period amounts to conform with current period presentation. NOTE 5. - ------- The Partnership pays property management fees equal to 5% of the gross rental receipts of the Partnership's properties to McNeil Real Estate Management, Inc. ("McREMI"), an affiliate of the General Partner, for providing property management services for the Partnership's residential and commercial properties and leasing services for its residential properties. McREMI may choose to provide leasing services for the Partnership's commercial properties, in which case McREMI will receive a property management fee from such commercial properties equal to 3% of the property's gross rental receipts plus commissions based on the prevailing market rate for such services where the property is located. The Partnership reimburses McREMI for its costs, including overhead, of administering the Partnership's affairs. Affiliates of the General Partner have advanced funds to the Partnership to meet working capital requirements. These advances and mortgage loans accrue interest at a rate equal to the prime lending rate plus 1%. Under terms of the Amended Partnership Agreement, the Partnership is paying a Management Incentive Distribution ("MID") to the General Partner. The maximum MID is calculated as 1% of the tangible asset value of the Partnership. The maximum MID percentage decreases subsequent to 1999. Tangible asset value is determined by using the greater of (i) an amount calculated by applying a capitalization rate of 9% to the annualized net operating income of each property or (ii) a value of $10,000 per apartment unit for residential property and $50 per gross square foot for commercial property to arrive at the property tangible asset value. The property tangible asset value is then added to the book value of all other assets excluding intangible items. Prior to July 1, 1993, the MID consists of two components: (i) the fixed portion which is payable without respect to the net income of the Partnership and is equal to 25% of the maximum MID (the "Fixed MID") and (ii) a contingent portion which is 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 will 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, 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 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 ---------- ---------- Charged to other assets: Property management fees - affiliates................ $ 674,514 $ 812,796 Interest - affiliates................................ 124,139 100,132 Charged to general and administrative - affiliates: Partnership administration........................ 347,284 372,097 --------- --------- $1,145,937 $1,285,025 ========= ========= Charged to General Partner's deficit: Contingent MID.................................... $ 769,728 $ 869,037 ========= =========
NOTE 6. - ------- The Partnership filed claims with the United States Bankruptcy Court for the Northern District of Texas, Dallas Division (the "Bankruptcy Court") against Southmark for damages relating to improper overcharges, breach of contract and breach of fiduciary duty. The Partnership settled these claims in 1991, and such settlement was approved by the Bankruptcy Court. An Order Granting Motion to Distribute Funds to Class 8 Claimants dated April 14, 1995 was issued by the Bankruptcy Court. In accordance with the Order, in May 1995 the Partnership received in full satisfaction of its claims, $49,818 in cash, and common and preferred stock in the reorganized Southmark currently valued at approximately $16,000, which amounts represent the Partnership's pro-rata share of Southmark assets available for Class 8 Claimants. The Partnership sold the Southmark common and preferred stock in May for $16,038, which combined with the cash proceeds from Southmark, resulted in a gain on legal settlement of $65,856. NOTE 7. - ------- On March 24, 1995, the Partnership refinanced the mortgage note payable on Plaza Westlake. The new loan bears an interest rate of 9.5% and will mature January 31, 2000. Following is a summary of the transaction:
New loan proceeds...................... $ 4,000,000 Capital improvement account............ (300,000) Existed debt retired................... (3,365,938) ---------- Cash proceeds from refinancing......... $ 334,062 ==========
In addition, the Partnership incurred loan costs of $131,246 relating to the refinancing. On February 26, 1995, the Partnership paid off the interest in net profits on Buccaneer Village for retirement of $3,588,192 of debt. The debt was retired at a discounted payoff of $1,750,000, which resulted in an extraordinary gain on extinguishment of debt of $1,838,192. NOTE 8. - ------- On June 19, 1995 the Partnership sold its investment in Sundance to an unaffiliated buyer for a cash sales price of $45,000 and assumption of the first, second and third liens by the purchaser. Cash proceeds and the gain on disposition are detailed below.
Gain on Sale Cash Proceeds ------------- ------------- Sales price.......................................... $ 45,000 $ 45,000 Mortgages and accrued interest assumed by purchaser......................................... 8,191,859 Basis of real estate sold............................ (5,973,567) ---------- Gain on disposition of real estate................... $ 2,263,292 ========== Net cash proceeds.................................... $ 45,000 ========
Also related to the sale of Sundance, the Partnership recognized a $268,433 gain on early extinguishment of debt. NOTE 9. ======= On July 27, 1995, the Partnership sold its investment in Lamar Plaza to an unaffiliated buyer for assumption of the first and second liens by the purchaser. The gain on disposition is detailed below:
Gain on Sale ------------ Mortgage and accrued interest by purchaser........... $ 4,195,215 Basis of real estate sold............................ (3,030,994) ----------- Gain on disposition of real estate................... $ 1,164,221 ==========
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 properties. At September 30, 1995, the Partnership owned six apartment properties and one shopping centers. On June 19 and July 27, 1995, the Partnership sold Sundance Apartments and Lamar Plaza, respectively. All of the Partnership's properties are subject to mortgage notes. RESULTS OF OPERATIONS - --------------------- Revenue: Total Partnership revenues increased by $744,623 or 5% and decreased by $120,075 or 2% for the nine months and three months ended September 30, 1995. Rental revenue decreased by $2,814,135 or 17% while interest income increased by $65,389. Rental revenue for the nine months ended September 30, 1995 was $13,466,770 as compared to $16,280,905 for the same period last year. This decrease of $2,814,135 is due to the loss in rental revenue generated by Village East and Fox Run, which were sold in November and December of 1994 and Sundance and Lamar Plaza, which were sold in June and July of 1995. This decrease was partially offset by the increase in rental revenue at five of the Partnership's properties. Interest income increased by $65,389 and $37,429 for the nine and three months ended September 30, 1995, respectively, as compared to the same period last year. This increase is due to larger average cash balances being invested in interest-bearing accounts. The Partnership also recognized a gain on disposition of real estate of $3,427,513 as a result of the sale of Sundance in June 1995 and Lamar Plaza in July 1995. Expenses: Partnership expenses decreased by $3,145,945 for the first nine months of 1995 as compared to the same period last year primarily due to the sale of Fox Run and Village East in 1994 and Sundance and Lamar Plaza in 1995. The effects from these transactions were declines of $1,056,832 for interest, $561,439 for depreciation, $267,501 for property taxes, $427,479 for personnel expenses, $279,413 for utilities, $445,475 for repair and maintenance, $151,197 for property management fees - affiliates, and $166,528 other property operating expenses. In addition to the sale of Fox Run, Village East, Sundance and Lamar, other factors affected the level of expenses reported by the remaining properties. Interest expense - affiliates increased by $24,007 or 24% and $5,405 or 15% for the nine and three months ended September 30, 1995, respectively, due to an increase in the prime rate used to calculate the interest expense on the advances. General and administrative expenses decreased $36,465 or 30% and $33,636 or 67% for the nine and three months ended September 30, 1995 as compared to the same period last year, respectively. This decrease is due to a reduction in fees paid for professional services. General and administrative - affiliate expenses decreased $24,813 or 7% and $16,541 or 14% for the nine and three months ended September 30, 1995 as compared to the same period last year, respectively. This decrease is due to a decrease in the percentage of the Partnership's portion of reimbursable costs. All other remaining expense categories remained comparable to the same period last year. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Partnership generated $1,929,923 through operating activities for the first nine months of 1995 as compared to a $1,263,440 generated for the first nine months of 1994. This increase in cash can be attributed to the reduction in interest paid as a result of the sales of Fox Run and Village East in 1994. Also declines in cash and interest paid to affiliates attributed to the increase in cash. In January 1994, the Partnership used the proceeds from the sale of Cedar Mill to pay down on the affiliate advances and the payment of the Fixed MID. The Partnership also experienced a reduction in the cash paid to supplies and property taxes paid. The Partnership expended $721,389 and $1,537,331 for capital improvements to its properties for the nine months ended September 30, 1995 and 1994, respectively. The Partnership also received cash proceeds of $45,000 for the sale of Sundance. During the first nine months of 1995, the Partnership expended $1,977,115 for financing activities as compared to $3,995,084 for the same period in 1994. This reduction is primarily due to the payoff in 1994 of the mortgage loan from affiliates and the pay down of the advances from affiliates. During 1995, the Partnership received cash proceeds of $334,062 for the refinancing of Plaza Westlake. The increase in the principal payments on mortgage notes is due to $1,750,000 discounted payoff of the interest in net profits on Buccaneer Village. Short Term Liquidity: At September 30, 1995, the Partnership held cash and cash equivalents of $2,590,184. The General Partner considers the Partnership's cash reserves adequate for anticipated operations for 1995. In 1995, the Partnership's properties are expected to provide positive cash flow from operations. Management will continue to address ongoing capital improvement needs in light of the aging condition of the Partnership's properties. The Partnership has budgeted approximately $1,948,000 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. During 1994, the Partnership began paying the Contingent MID and anticipates to continue to make payments to the General Partner in 1995. During 1995, the Partnership was faced with mortgage principal payments and mortgage maturities on Buccaneer Village, Lamar Plaza, Millwood Park, Palisades at the Galleria, Sundance and Plaza Westlake, totaling approximately $28,144,000. In February 1995, the Partnership paid off the interest in net profits on Buccaneer Village at a discounted payoff of $1,750,000 for retirement of $3,588,192 of debt which resulted in an extraordinary gain on extinguishment of debt of $1,838,192. Additionally, management successfully refinanced the mortgage notes on Plaza Westlake, Palisades at the Galleria, Buccaneer Village and Millwood Park. The mortgage note on Plaza Westlake was refinanced on March 24, 1995 with a new 5 year mortgage note in the amount of $4,000,000 which retired the maturing mortgage note of $3,366,000 and yielding proceeds of $334,062 to the Partnership. The mortgage note on Palisades at the Galleria was refinanced on October 13, 1995 with a new 7 year mortgage note in the amount of $10,600,000 which retired the maturing mortgage note of $8,412,000 and yielding proceeds of approximately $1,914,000 to the Partnership. The mortgage notes on Buccaneer Village was refinanced on October 20, 1995 with a new 7 year mortgage note of $5,500,000, which retired the maturing mortgage notes of $3,406,000 and yielded proceeds of approximately $1,925,000. The mortgage notes on Millwood Park was refinanced on November 1, 1995 with a new 7 year mortgage note of $3,982,500, which retired the maturing notes of $3,173,000 and yielded proceeds of approximately $136,000. The remaining two properties with 1995 maturities, Lamar Plaza and Sundance, had maturing debt of approximately $11,700,000 were sold on June 19, 1995 and July 23, 1995, respectively. Long Term Liquidity: The Partnership's working capital needs have been supported by advances from affiliates during the past several years. Some of that support was provided on a short-term basis to meet monthly operating requirements, with repayment occurring as funds became available; other advances were longer term in nature due to lack of funds for repayment. Additionally, the General Partner has allowed the Partnership to defer payment of MID and reimbursements until such time as the Partnership 's cash reserves allow payments. During 1994, the Partnership began to make repayments to the General Partner for advances and has paid some of the accrued MID. The Partnership will continue to make such payments as is allowed by cash reserves and cash flows of the Partnership. However, the Partnership will not be able to repay the General Partner all payables outstanding in the foreseeable future. The General Partner will continue to defer the unpaid sums until the Partnership's cash reserves allow such payments. 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. Borrowings under the facility may be used to fund deferred maintenance, refinancing obligations and working capital needs. There is no assurance that the Partnership will receive additional funds under the facility because no amounts will be reserved for any particular partnership. At September 30, 1995, $2,362,004 remained available for borrowing under the facility; however, additional funds could become available as other partnerships repay borrowings. Should market conditions change and operations deteriorate, present cash resources may be insufficient to meet current needs. Other than available portions of the $5,000,000 revolving credit facility, discussed above, which may not be available when required by the Partnership, the Partnership has no existing lines of credit from outside sources. Other sources of working capital may be required and no such other sources have been identified. Possible actions to resolve operating deficiencies include sales of properties, refinancing or renegotiating terms of existing loans, deferring major capital expenditures, except where improvements are expected to enhance the competitiveness or marketability of the properties, or arranging additional support from affiliates. Additional affiliate support is not assured, since neither the General Partner nor any affiliates have obligations to make advances in excess of any unused portion of the revolving credit facility discussed above. Sales of properties are possibilities, however there is no assurance that a sale can be completed, nor that a closing could be timed to coincide with the Partnership's cash needs. These conditions raise substantial doubt about the Partnership's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. 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 $769,728 for the Contingent MID has been accrued by the Partnership for the period ended September 30, 1995 for the General Partner. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - ------- ----------------- 1) HCW Pension Real Estate Fund, Ltd. et al. v. Ernst & Young BDO Seidman et al (Case #92-06560-A). This suit was filed on behalf of the Partnership and other affiliated partnerships (the "Affiliated Partnerships") on May 26, 1992, in the 14th Judicial District Court of Dallas County. The petition sought recovery against the Partnership's former auditors, BDO Seidman, for negligence and fraud in failing to detect and/or report overcharges of fees/expenses by Southmark, the former general partner. The former auditors asserted counterclaims against the Affiliated Partnerships based on alleged fraudulent misrepresentations made to the auditors by the former management of the Affiliated Partnerships (Southmark) in the form of client representation letters executed and delivered to the auditors by Southmark management. The counterclaims sought recovery of attorneys' fees and costs incurred in defending this action. The original petition also alleged causes of action against certain former officers and directors of the Partnership's original general partner for breach of fiduciary duty, fraud and conspiracy relating to the improper assessment and payment of certain administrative fees/expenses. On January 11, 1994 the allegations against the former officers and directors were dismissed. The trial court granted summary judgment in favor of Ernst & Young and BDO Seidman on the fraud and negligence claims based on the statute of limitations. The Affiliated Partnerships appealed the summary judgment to the Dallas Court of Appeals. In August 1995, the Appeals Court upheld all of the summary judgments in favor of BDO Seidman. In exchange for the plaintiff's agreement not to file any motions for rehearing or further appeals, BDO Seidman agreed that it will not pursue the counterclaims against the Partnership. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ------- -------------------------------- (a) Exhibits.
Exhibit Number Description ------- ----------- 3.3 Amended and Restated Partnership Agreement, dated September 6, 1991 (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 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 229,980 and 230,594 limited partnership units outstanding in 1995 and 1994. 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 XII, 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 XII, 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 2,590,184 0 188,309 (5,629) 0 0 78,699,520 (39,609,984) 48,276,188 0 53,545,919 0 0 0 0 48,276,188 13,466,770 17,064,764 0 0 10,646,043 0 4,820,990 0 0 1,597,731 0 2,106,625 0 3,704,356 0 0
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