-----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, StVRdO8IqoQsybXIQW4HSP1I8g9xKP55WYlB0hYGO/bcgLXohnY72c9jiULj1u15 kUgi4aDktmCszwY95/Zd6A== 0000064309-96-000011.txt : 19960816 0000064309-96-000011.hdr.sgml : 19960816 ACCESSION NUMBER: 0000064309-96-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCNEIL PACIFIC INVESTORS FUND 1972 CENTRAL INDEX KEY: 0000064309 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 946279375 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-07162 FILM NUMBER: 96612237 BUSINESS ADDRESS: STREET 1: 13760 NOEL RD STE 700 LB70 CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 2144485800 MAIL ADDRESS: STREET 1: 13760 NOEL ROAD SUITE 700 LB 70 CITY: DALLAS STATE: TX ZIP: 75240 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended June 30, 1996 -------------------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to_____________ Commission file number 0-7162 -------- MCNEIL PACIFIC INVESTORS FUND 1972 - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 94-6279375 - -------------------------------------------------------------------------------- (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 PACIFIC INVESTORS FUND 1972 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- BALANCE SHEETS (Unaudited)
June 30, December 31, 1996 1995 ---------------- --------------- ASSETS - ------ Real estate investment: Land..................................................... $ 2,336,000 $ 2,336,000 Buildings and improvements............................... 5,109,622 5,010,483 -------------- -------------- 7,445,622 7,346,483 Less: Accumulated depreciation.......................... (1,204,987) (1,010,990) -------------- -------------- 6,240,635 6,335,493 Cash and cash equivalents................................... 532,900 523,389 Cash segregated for security deposits....................... 56,586 43,885 Accounts receivable......................................... 469 3,849 Prepaid expenses and other assets........................... 23,210 23,220 Escrow deposits............................................. 98,822 49,353 Deferred borrowing costs, net of accumulated amorti- zation of $42,413 and $37,220 at June 30, 1996 and December 31, 1995, respectively...................... 9,521 14,714 -------------- -------------- $ 6,962,143 $ 6,993,903 ============== ============== LIABILITIES AND PARTNERS' EQUITY - -------------------------------- Mortgage note payable....................................... $ 2,093,890 $ 2,161,204 Accounts payable............................................ 4,268 20,363 Accrued interest............................................ 15,268 10,076 Accrued property taxes...................................... 57,948 - Other accrued expenses...................................... 12,723 24,853 Payable to affiliates - General Partner..................... 14,521 15,227 Security deposits and deferred rental revenue............... 59,150 47,198 -------------- -------------- 2,257,768 2,278,921 -------------- -------------- Partners' equity: Limited partners - 15,000 limited partnership units authorized; 13,752.5 limited partnership units issued and outstanding................................. 4,394,431 4,405,038 General Partner.......................................... 309,944 309,944 -------------- -------------- 4,704,375 4,714,982 -------------- -------------- $ 6,962,143 $ 6,993,903 ============== ==============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. MCNEIL PACIFIC INVESTORS FUND 1972 STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, --------------------------------- --------------------------------- 1996 1995 1996 1995 -------------- -------------- -------------- -------------- Revenue: Rental revenue................ $ 425,396 $ 338,055 $ 816,345 $ 713,034 Interest...................... 4,611 13,845 11,161 22,814 ------------- ------------- ------------- ------------- Total revenue............... 430,007 351,900 827,506 735,848 ------------- ------------- ------------- ------------- Expenses: Interest...................... 48,650 45,829 103,721 98,017 Depreciation.................. 98,321 84,776 193,997 162,620 Property taxes................ 28,974 29,475 57,948 58,950 Personnel expenses............ 63,798 63,987 136,584 120,445 Utilities..................... 16,023 19,723 32,902 41,274 Repair and maintenance........ 73,441 92,133 160,546 158,011 Property management fees - affiliates........... 24,614 19,091 48,481 40,463 Other property operating expenses.................... 38,029 44,073 68,227 88,096 General and administrative.... 5,942 6,713 16,377 14,835 General and administrative - affiliates.................. 2,344 19,824 19,330 40,554 ------------- ------------- ------------- ------------- Total expenses.............. 400,136 425,624 838,113 823,265 ------------- ------------- ------------- ------------- Net income (loss)................ $ 29,871 $ (73,724) $ (10,607) $ (87,417) ============= ============= ============= ============= Net income (loss) allocated to limited partners........... $ 29,871 $ (73,274) $ (10,607) $ (87,417) Net income (loss) allocated to General Partner............ - - - - ------------- ------------- ------------- ------------- Net income (loss)................ $ 29,871 $ (73,274) $ (10,607) $ (87,417) ============= ============= ============= ============= Net income (loss) per limited partnership unit.............. $ 2.17 $ (5.33) $ (0.77) $ (6.36) ============= ============= ============= =============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. MCNEIL PACIFIC INVESTORS FUND 1972 STATEMENTS OF PARTNERS' EQUITY (Unaudited) For the Six Months Ended June 30, 1996 and 1995
Total General Limited Partners' Partner Partners Equity -------------- --------------- --------------- Balance at December 31, 1994.............. $ 309,944 $ 4,690,924 $ 5,000,868 Net loss.................................. - (87,417) (87,417) ------------- ------------- ------------- Balance at June 30, 1995.................. $ 309,944 $ 4,603,507 $ 4,913,451 ============= ============= ============= Balance at December 31, 1995.............. $ 309,944 $ 4,405,038 $ 4,714,982 Net loss.................................. - (10,607) (10,607) ------------- -------------- ------------- Balance at June 30, 1996.................. $ 309,944 $ 4,394,431 $ 4,704,375 ============= ============= =============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. MCNEIL PACIFIC INVESTORS FUND 1972 STATEMENTS OF CASH FLOWS (Unaudited) Increase (Decrease) in Cash and Cash Equivalents
Six Months Ended June 30, ----------------------------------- 1996 1995 --------------- --------------- Cash flows from operating activities: Cash received from tenants....................... $ 817,642 $ 678,765 Cash paid to suppliers........................... (441,517) (433,510) Cash paid to affiliates.......................... (68,517) (162,086) Interest received................................ 11,161 22,814 Interest paid.................................... (93,336) (98,957) Property taxes paid and escrowed................. (49,469) (22,300) ------------- ------------- Net cash provided by (used in) operating activities....................................... 175,964 (15,274) ------------- ------------- Cash flows from investing activities: Additions to real estate investments............. (99,139) (248,758) ------------- ------------- Cash flows from financing activities: Principal payments on mortgage notes payable........................................ (67,314) (61,694) ------------- ------------- Net increase (decrease) in cash and cash equivalents................................. 9,511 (325,726) Cash and cash equivalents at beginning of period........................................ 523,389 1,062,361 ------------- ------------- Cash and cash equivalents at end of period.......... $ 532,900 $ 736,635 ============= =============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. MCNEIL PACIFIC INVESTORS FUND 1972 STATEMENTS OF CASH FLOWS (Unaudited) Reconciliation of Net Loss to Net Cash Provided by (Used in) Operating Activities
Six Months Ended June 30, ----------------------------------- 1996 1995 --------------- --------------- Net loss............................................ $ (10,607) $ (87,417) ------------- ------------- Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation..................................... 193,997 162,620 Amortization of deferred borrowing costs......... 5,193 5,193 Changes in assets and liabilities: Cash segregated for security deposits.......... (12,701) (3,095) Accounts receivable............................ 3,380 (5,755) Prepaid expenses and other assets.............. 10 2,685 Escrow deposits................................ (49,469) (22,294) Accounts payable............................... (16,095) (10,787) Accrued interest............................... 5,192 (6,133) Accrued property taxes......................... 57,948 58,944 Other accrued expenses......................... (12,130) (22,310) Payable to affiliates - General Partner........ (706) (81,069) Security deposits and deferred rental revenue...................................... 11,952 (5,856) ------------- ------------- Total adjustments............................ 186,571 72,143 ------------- ------------- Net cash provided by (used in) operating activities....................................... $ 175,964 $ (15,274) ============= =============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. MCNEIL PACIFIC INVESTORS FUND 1972 Notes To Financial Statements (Unaudited) June 30, 1996 NOTE 1. - ------- McNeil Pacific Investors Fund 1972 (the "Partnership") is a limited partnership organized under the laws of the State of California to invest in real property. The general partner of the Partnership is McNeil Partners, L.P. (the "General Partner"), a Delaware limited partnership, an affiliate of Robert A. McNeil. The principal place of business for the Partnership and the General Partner is 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240. In the opinion of management, the financial statements reflect all adjustments necessary for a fair presentation of the Partnership's financial position and results of operations. All adjustments were of a normal recurring nature. However, the results of operations for the six months ended June 30, 1996, are not necessarily indicative of the results to be expected for the year ending December 31, 1996. NOTE 2. - ------- The financial statements should be read in conjunction with the financial statements contained in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1995, and the notes thereto, as filed with the Securities and Exchange Commission, which is available upon request by writing to McNeil Pacific Investors Fund 1972, c/o McNeil Real Estate Management, Inc., Investor Services, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240. NOTE 3. - ------- The General Partner is entitled to receive a partnership management fee equal to 9.5% of distributions of cash from operations when distributable cash from operations is distributed to the limited partners. No partnership management fees were incurred during the six month periods ended June 30, 1996 and 1995. The Partnership pays property management fees equal to 6% of the gross rental receipts of the Partnership's property to McNeil Real Estate Management, Inc. ("McREMI"), an affiliate of the General Partner, for providing property management and leasing services for the Partnership's property. The Partnership reimburses McREMI for its costs, including overhead, of administering the Partnership's affairs. Compensation and reimbursements paid to or accrued for the benefit of the General Partner and its affiliates are as follows: Six Months Ended June 30, --------------------- 1996 1995 --------- -------- Property management fees - affiliates....... $ 48,481 $ 40,463 Charged to general and administrative - affiliates: Partnership administration............... 19,330 40,554 -------- ------- $ 67,811 $ 81,017 ======== ======= ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS - ------- ----------------------------------------------------------------------- OF OPERATIONS ------------- Since the sale of Pacesetter Apartments in 1994, the focus of the Partnership's efforts have been directed to the renovation program at Palm Bay Apartments (formerly known as Greentree Apartments). During 1994 and 1995, the Partnership completed capital improvements totaling $1,088,676. The Partnership's emphasis in 1996 has been to improve the rental and occupancy rates at Palm Bay Apartments. Although the occupancy rate at Palm Bay Apartments has improved, the Partnership has not been able to increase rental rates at Palm Bay Apartments as quickly as had been hoped. RESULTS OF OPERATIONS - --------------------- Revenues: Rental revenues at Palm Bay Apartments increased $87,341 and $103,311 or 25.8% and 14.5% for the three month and six month periods ended June 30, 1996 as compared to the similar periods of 1995. Although small rental rate increases have been implemented, most of the increase in rental revenues is from improved occupancy rates at the property. The occupancy rate at June 30 had improved to 95.1%, up from 85.5% at December 31, 1995. Although occupancy rates are finally improving, the Partnership has not yet been able to increase base rental rates as quickly as had been hoped. Several apartment communities in the immediate area of Palm Bay Apartments have undergone major rehabilitation, and several competing apartment communities are able to offer their units at rates that are subsidized by various government programs. The effect of this competition has restricted expected increases in rental rates at Palm Bay Apartments. After occupancy rates stabilize in the mid-90% range, Management hopes to resume rental rate increases to improve the revenue growth of the property. Expenses: Partnership expenses decreased $25,488 or 6.0% in the second quarter of 1996 as compared to the second quarter of 1995. For the six month period ended June 30, expenses increased $14,848 or 1.8% in 1996 as compared to 1995. Increased expenses were concentrated in depreciation, personnel expenses, and property management fees. Depreciation increased $31,377 or 19.3% for the first six months of 1996 as compared to the same period of 1995. In the twelve months ended June 30, 1996, the Partnership placed in service $291,284 of capital improvements at Palm Bay Apartments. These capital improvements have increased the depreciation expense incurred by the property. The new improvements are generally being depreciated over lives ranging from five to ten years. Personnel expenses increased $16,139 or 13.4% for the first six months of 1996 as compared to the same period of 1995. The Partnership has increased the level of staffing at Palm Bay Apartments in an effort to provide a higher level of service to the tenants of Palm Bay Apartments. One of the strategies the Partnership is using the differentiate itself in the local market is to provide a greater level of services to its tenants. Property management fees increased $8,018 or 19.8% for the first six months of 1996 as compared to the same period of 1995. Increased rental revenue caused a corresponding increase in property management fees which are based on a percentage of the revenue of the Partnership's property. Besides the increased expenses discussed above, the Partnership incurred reduced expenses for utilities, other property operating expenses, and general and administrative expenses paid to affiliates. The increase in Palm Bay Apartments' occupancy rate resulted in a 20% reduction in utility expenditures. The Partnership's tenants pay for most of their own utilities. As the occupancy rate increases, there are fewer units incurring utility charges at the Partnership's expense. Other property operating expenses decreased 23% due to a reduction in bad debt expenses incurred by the Partnership. Finally, general and administrative expenses paid to affiliates decreased 52% due to a one-time downward adjustment in the amount of such expenses paid to the General Partner. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Cash generated by Partnership operating activities amounted to $175,964 for the first six months of 1996, an improvement over the $15,274 of cash used by operating activities during the first six months of 1995. The Partnership anticipates that the capital renovation projects at Palm Bay Apartments will continue to yield improved cash flow from operations as the restored and refurbished units are leased to new tenants. The General Partner anticipates that cash flow from operations for the balance of 1996 will be sufficient to fund Partnership operating expenses, debt service requirements, and budgeted capital improvements. If cash flows from operations are not sufficient to meet Partnership obligations, the Partnership will use its cash reserves to fund such deficits. For the six months ended June 30, 1996, cash flows used in investing activities decreased to $99,139 from $248,758 in 1995. The capital renovation program at Palm Bay Apartments is complete. The Partnership's capital improvement budget for 1996 forward should remain substantially below the amounts incurred in 1995 and 1994. The financing activities of the Partnership consist of the repayment of the Palm Bay mortgage note through monthly debt service payments. These payments are scheduled to gradually increase until June 1997, when the Palm Bay mortgage note matures. Short Term Liquidity: At June 30, 1996, the Partnership held $532,900 of cash and cash equivalents, up $9,511 from the balance at the end of 1995. The General Partner considers the Partnership's cash reserves adequate for anticipated Partnership operations for the balance of 1996. The General Partner has established a revolving credit facility not to exceed $5,000,000 in the aggregate which is available on a "first-come, first-served" basis to the Partnership and other affiliated partnerships if certain conditions are met. However, there is no assurance that the Partnership will receive additional funds under the facility because no amounts will be reserved for any particular partnership. As of June 30, 1996, $4,082,159 remained available for borrowing under the facility; however, additional funds could become available as other partnerships repay borrowings. This commitment will terminate on March 30, 1997. Long Term Liquidity: For the long term, property operations will remain the primary source of funds. While the present outlook for the Partnership's liquidity is favorable, market conditions may change and property operations may deteriorate. The General Partner expects that the capital improvements at Palm Bay Apartments will yield improved cash flow from operations in 1996. Most of the Partnership's budgeted capital improvement projects for 1996 have already been completed. If the Partnership's cash position deteriorates, the General Partner may elect to defer completion of capital improvements, except where such improvements are expected to increase the competitiveness or marketability of the Partnership's property. As a additional source of liquidity, the General Partner may attempt to refinance the Palm Bay mortgage note. The General Partner estimates that such a refinancing could yield proceeds to the Partnership in excess of the amount needed to retire the current mortgage note. However, there can be no guarantee that the Partnership will be able to obtain such mortgage refinancing on terms or in amounts favorable to the Partnership, or that the cash proceeds from such refinancing could be timed to coincide with the liquidity needs of the Partnership. Distributions: Distributions to partners have been suspended as part of the General Partner's policy of maintaining adequate cash reserves. Distributions to Unit holders 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 Unit holders. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - ------- ----------------- The class action lawsuit styled Robert Lewis vs. McNeil Partners, L.P., et. al., filed in the District Court of Dallas County, Texas has been voluntarily dismissed without prejudice by the respective plaintiffs in such action. ITEM 5. OTHER INFORMATION - ------- ----------------- On August 5, 1996, High River Limited Partnership ("High River"), a partnership controlled by Carl Icahn ("Icahn"), and certain Icahn's affiliates, filed documents with the Securities and Exchange Commission disclosing that High River had entered into a letter agreement dated August 2, 1996 with the attorneys for the plaintiffs in the case styled James F. Schofield, et. al. ("Plaintiffs") v. McNeil Partners, L.P., et. al. The letter agreement provided, among other things, that (i) High River will commence, as soon as possible, but in no event more than six months, a tender offer for any and all of the outstanding Units of the Partnership and other affiliated partnerships (the "Partnerships") at a price that is not less than 75% of the estimated liquidation value of the Units (as determined by utilizing the same methodology that was used to determine the liquidation values in High River's previous tender offers for the Partnerships, as previously disclosed), which tender offer may be subject to such other terms and conditions as High River determines in its sole discretion; (ii) in the event that High River attains the position of general partner in any of the Partnerships: (a) High River will take all actions necessary to cause a 25% reduction of fees of such Partnerships, (b) High River will not cause such Partnerships to take any action to discontinue the litigation with respect to receivable claims and (c) High River and Plaintiffs' counsel will in good faith execute an appropriate Stipulation of Settlement based upon the terms of the letter agreement, which stipulation shall not include a settlement or provide a release of the receivable claims; and (iii) from and after the date of the letter agreement, Plaintiffs' counsel agreed they will not enter into any settlement of the claims asserted in such litigation that does not provide for all consideration contained in a demand letter dated June 24, 1996. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ------- -------------------------------- (a) Exhibits. Exhibit Number Description ------- ----------- 3. Restated Certificate and Agreement of Limited Partnership dated of March 8, 1972. (1) 4. Amendment to Restated Certificate and Agree- ment of Limited Partnership dated March 30, 1992. (2) 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 13,752.5 limited partnership units outstanding in 1996 and 1995. 27. Financial Data Schedule for the quarter ended June 30, 1996. (1) Incorporated by reference to the Annual Report of Registrant on Form 10-K for the period ended December 31, 1990, as filed on March 29, 1991. (2) Incorporated by reference to the Current Report on Form 8-K filed by the Registrant with the Securities and Exchange Commission on April 10, 1992. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended June 30, 1996. McNEIL PACIFIC INVESTORS FUND 1972 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 PACIFIC INVESTORS FUND 1972 By: McNeil Partners, L.P., General Partner By: McNeil Investors, Inc., General Partner August 14, 1996 By: /s/ Donald K. Reed - ---------------------- ----------------------------------------- Date Donald K. Reed President and Chief Executive Officer August 14, 1996 By: /s/ Ron K. Taylor - ---------------------- ----------------------------------------- Date Ron K. Taylor Acting Chief Financial Officer of McNeil Investors, Inc. August 14, 1996 By: /s/ Brandon K. Flaming - ---------------------- ---------------------------------------- Date Brandon K. Flaming Chief Accounting Officer of McNeil Real Estate Management, Inc. EX-27 2
5 6-MOS DEC-31-1996 JUN-30-1996 532,900 0 0 0 0 0 7,445,622 1,204,987 6,962,143 0 2,093,890 0 0 0 0 6,962,143 816,345 827,506 0 0 734,392 0 103,721 0 0 0 0 0 0 (10,607) 0 0
-----END PRIVACY-ENHANCED MESSAGE-----