-----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, E6PnXE9x01fbFVOjgIybRQ1xLF0HOROF75LCPQ1poJpaKypGbxruaKtM+pHG2e0L a94SF+//3r9gFmi2PAVMBw== 0000064309-97-000002.txt : 19970329 0000064309-97-000002.hdr.sgml : 19970329 ACCESSION NUMBER: 0000064309-97-000002 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970328 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-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-07162 FILM NUMBER: 97566571 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-K405 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K405 [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 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 600, LB70, Dallas, Texas, 75240 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (972) 448-5800 ----------------------------- Securities registered pursuant to Section 12(b) of the Act: None - ---------------------------------------------------------- Securities registered pursuant to Section 12(g) of the Act: Limited partnership units - ---------------------------------------------------------- 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 --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] 13,702.5 of the registrant's 13,752.5 limited partnership units are held by non-affiliates of this registrant. The aggregate market value of units held by non-affiliates is not determinable since there is no public trading market for limited partnership units and transfers of units are subject to certain restrictions. Documents Incorporated by Reference: See Item 14, page 31. TOTAL OF 33 PAGES PART I ITEM 1. BUSINESS - ------- -------- ORGANIZATION - ------------ McNeil Pacific Investors Fund 1972 (the "Partnership") was organized September 30, 1971 as a limited partnership under 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 ("McNeil"). The General Partner was elected at a meeting of limited partners on March 30, 1992, at which time the Partnership's restated certificate and agreement of limited partnership (the "Partnership Agreement") was amended. Prior to March 30, 1992, Pacific Investors Corporation (the "Corporate General Partner"), an affiliate of Southmark Corporation ("Southmark"), and McNeil were the general partners of the Partnership. The principal place of business for the Partnership and the General Partner is 13760 Noel Road, Suite 600, LB70, Dallas, Texas, 75240. On March 8, 1972, a Registration Statement on Form S-11 was declared effective by the Securities and Exchange Commission whereby the Partnership offered for sale $15,000,000 of limited partnership units ("Units"). The Units represent equity interests in the Partnership and entitle the holders thereof to participate in certain allocations and distributions of the Partnership. The sale of Units closed on April 30, 1973 with 13,795 Units sold for gross proceeds of $13,795,000 to the Partnership, including 50 Units purchased by the original general partners. 37.5 and 5 Units were relinquished in 1994 and 1995, respectively, leaving 13,752.5 Units outstanding at December 31, 1996. SOUTHMARK BANKRUPTCY AND CHANGE IN GENERAL PARTNER - -------------------------------------------------- On July 14, 1989, Southmark filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Neither the Partnership, McNeil, nor the Corporate General Partner were included in the filing. Southmark's reorganization plan became effective August 10, 1990. Under the plan, most of Southmark's assets, including Southmark's interest in the Corporate General Partner, were sold or liquidated for the benefit of creditors. In accordance with Southmark's reorganization plan, Southmark, McNeil and various of their affiliates entered into an asset purchase agreement on October 12, 1990, providing for, among other things, the transfer of control to McNeil or his affiliates of 34 limited partnerships (including the Partnership) in the Southmark portfolio. On February 14, 1991, pursuant to the asset purchase agreement as amended on that date: (a) an affiliate of McNeil purchased the Corporate General Partner's economic interest in the Partnership; (b) McNeil became the managing general partner of the Partnership pursuant to an agreement with the Corporate General Partner that delegated management authority to McNeil; and (c) McNeil Real Estate Management, Inc. ("McREMI"), an affiliate of McNeil, acquired the assets relating to the property management and partnership administrative business of Southmark and its affiliates. On March 30, 1992, the limited partners approved a proposal to (i) replace McNeil and the Corporate General Partner as general partners of the Partnership with the General Partner, and (ii) amend the Partnership Agreement to (a) extend the term of the Partnership from December 31, 1992, until December 31, 2002, (b) provide for a limitation on administrative operating expenses equal to 2% of tangible asset value, as defined, and (c) provide for the establishment of an oversight committee that will review and report on the Partnership's compliance with the 2% limitation on administrative operating expenses. CURRENT OPERATIONS - ------------------ General: The Partnership is engaged in real estate activities, including the ownership, operation and management of residential rental real estate and other real estate related assets. At December 31, 1996, the Partnership owned one income-producing property as described in Item 2 - Property. The Partnership does not directly employ any personnel. The General Partner conducts the business of the Partnership directly and through its affiliates. The Partnership is managed by the General Partner. In accordance with the Partnership Agreement, the Partnership reimburses affiliates of the General Partner for certain expenses incurred by the affiliates in connection with the management of the Partnership. See Item 8 Note 2 - "Transactions With Affiliates." The business of the Partnership to date has involved only one industry segment. See Item 8 - Financial Statements and Supplementary Data. The Partnership has no foreign operations. The business of the Partnership is not seasonal. Business Plan: The Partnership determined to evaluate market and other economic conditions to establish the optimum time to commence liquidation of the Partnership's asset. However, there can be no assurance as to the timing of the liquidation due to real estate market conditions, the general difficulty of disposing of real estate, and other general economic factors. In this regard, the Partnership has placed Palm Bay Apartments on the market for sale. Until such time as the Partnership's asset is liquidated, the Partnership's plan of operations is to preserve or increase the net operating income of the asset whenever possible, while at the same time making whatever capital expenditures are reasonable under the circumstances in order to preserve and enhance the value of the Partnership's asset. See Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations. Competitive Conditions: Since the principal business of the Partnership is to own and operate real estate, the Partnership is subject to all of the risks incident to ownership of real estate and interests therein, many of which relate to the illiquidity of this type of investment. These risks include changes in general or local economic conditions, changes in supply or demand for competing properties in an area, changes in interest rates and availability of permanent mortgage funds which may render the sale or refinancing of a property difficult or unattractive, changes in real estate and zoning laws, increases in real property tax rates and Federal or local economic or rent controls. The illiquidity of real estate investments generally impairs the ability of the Partnership to respond promptly to changed circumstances. The Partnership competes with numerous established companies, private investors (including foreign investors), real estate investment trusts, limited partnerships and other entities (many of which have greater resources than the Partnership) in connection with the sale, financing and leasing of properties. The impact of these risks on the Partnership, including losses from operations and foreclosures of the Partnership's properties, are described in Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations. See Item 2 - Property for discussion of competitive conditions at the Partnership's property. 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 December 31, 1996. 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 the sale or refinancing of its property and respond to changing economic and competitive factors. Other Information: The environmental laws of the Federal government and of certain state and local governments impose liability on current property owners for the clean-up of hazardous and toxic substances discharged on the property. This liability may be imposed without regard to the timing, cause or person responsible for the release of such substances onto the property. The Partnership could be subject to such liability in the event that the property has such environmental problems. The Partnership has no knowledge of any pending claims or proceedings regarding such environmental problems. In August 1995, High River Limited Partnership, a Delaware limited partnership controlled by Carl C. Icahn ("High River") made an unsolicited tender offer to purchase from holders of Units up to approximately 45% of the outstanding Units of the Partnership for a purchase price of $110 per Unit. In September 1996, High River made another unsolicited tender offer to purchase any and all of the outstanding Units of the Partnership for a purchase price of $224.50 per Unit. In addition, High River made unsolicited tender offers for certain other partnerships controlled by the General Partner. The Partnership made no recommendation to the limited partners concerning the tender offers made with respect to the Partnership. The General Partner believes that as of January 31, 1997, High River has purchased approximately 11.59% of the outstanding Units pursuant to the tender offers. In addition, all litigation filed by High River, Mr. Icahn and his affiliates in connection with the tender offers have been dismissed without prejudice. ITEM 2. PROPERTY - ------- -------- The following table sets forth the real estate assets of the Partnership at December 31, 1996. On October 1, 1996, the Partnership determined to market for sale its sole remaining real estate asset, Palm Bay Apartments. Consequently, the Partnership's investment in Palm Bay Apartments is shown as an asset held for sale on the accompanying Balance Sheet dated December 31, 1996. The buildings and land on which they are located are owned by the Partnership in fee, subject to a first lien deed of trust as set forth more fully in Item 8 - Note 5 "Mortgage Note Payable" and Schedule III - "Real Estate Investments and Accumulated Depreciation." In the opinion of management, the property is adequately covered by insurance.
Net Basis 1996 Date Property Description of Property Debt Property Tax Acquired - -------- ----------- ----------- ---- ------------ -------- Palm Bay Apartments Orlando, FL 346 units $ 6,253,753 $ 2,023,577 $ 121,352 6/91 =========== ============ ===========
The following table sets forth the occupancy rate and rent per square foot of the Partnership's property for each of the last five years.
1996 1995 1994 1993 1992 ------------- ------------- -------------- ------------- ---------- Palm Bay Occupancy Rate............ 94% 86% 82% 77% 73% Rent Per Square Foot...... $ 5.83 $ 4.77 $ 4.58 $ 4.15 $ 3.71
Occupancy rate represents all units leased divided by the total number of units of the property as of December 31 of the given year. Rent per square foot represents all revenue, except interest, derived from the property's operations divided by the leasable square footage of the property. Competitive Conditions The financial performance of Palm Bay Apartments has improved as a result of the capital renovation program. Occupancy rates have risen from 63% at the date the Partnership repossessed Palm Bay Apartments in 1992 to 94% at the end of 1996. Occupancy rates in the submarket average 90%. Rental rates have also improved due to the renovation program. The renovation program has made the property much more competitive in its market. The local area offers diverse competition from high quality property to low quality subsidized housing. The property's location and townhouse units give it a competitive edge in the market. Conversely, several of the property's competitors offer tax-subsidized rental rates. An interior upgrade program is addressing the dated appearance of the units' interiors so that the property can compete effectively with the newer properties in the area. ITEM 3. LEGAL PROCEEDINGS - ------- ----------------- 1) 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 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., et al. - 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 fourteen limited partnerships that were named as nominal defendants as listed above (as defined in this Section 1, the "Partnerships"). Plaintiffs allege that McNeil Investors, Inc., its affiliate McNeil Real Estate Management, Inc. and three of their senior officers and/or directors (as defined in this Section 1, 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. On January 7, 1997, the Court ordered consolidation with three other similar actions listed below. The Partnerships filed a demurrer to the complaint and a motion to strike on February 14, 1997, seeking to dismiss the complaint in all respects. The demurrer is pending. The Partnerships deny that there is any merit to Plaintiff's allegations and intend to vigorously defend this action. 2) Alfred Napoletano v. McNeil Partners, L.P., McNeil Investors, Inc., Robert A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P. - Superior Court of the State of California, County of Los Angeles, Case No. BC133849 (Class Action Complaint). On January 7, 1997, this action was consolidated by court order with Schofield, et al., referenced above. 3) Warren Heller v. McNeil Partners, L.P., McNeil Investors, Inc., Robert A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P. - Superior Court of the State of California, County of Los Angeles, Case No. BC133957 (Class Action Complaint). On January 7, 1997, this action was consolidated by court order with Schofield, et al., referenced above. 4) Robert Lewis v. McNeil Partners, L.P., McNeil Investors, Inc., Robert A. McNeil et al. - In the District Court of Dallas County, Texas, A-14th Judicial District, Cause No. 95-08535 (Class Action) - Plaintiff, Robert Lewis, is a limited partner with McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund X, Ltd. and McNeil Real Estate Fund XV, Ltd. On April 11, 1996, the action was dismissed without prejudice in anticipation of consolidation with other class action complaints. On January 7, 1997, this action was consolidated by court order with Schofield, et al., referenced above. For discussion of the Southmark bankruptcy, see Item 1 - Business." ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------- --------------------------------------------------- None. PART II ITEM 5. MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP AND - ------- ------------------------------------------------------------ RELATED SECURITY HOLDER MATTERS ------------------------------- (A) There is no established public trading market for limited partnership units, nor is one expected to develop. (B) Title of Class Number of Record Unit Holders -------------- ----------------------------- Limited partnership units 1,187 as of January 31, 1997 (C) No distributions were paid to the partners in 1996 or 1995. If the Partnership completes the sale of Palm Bay Apartments, it is anticipated that the General Partner would take the necessary steps to wind-up the Partnership's affairs, including the distribution of all remaining Partnership cash reserves to the partners, except for sufficient cash reserves to pay the Partnership's final winding-up expenses. See Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the likelihood that the Partnership will resume distributions to the partners. ITEM 6. SELECTED FINANCIAL DATA - ------- ----------------------- The following table sets forth a summary of certain financial data for the Partnership. This summary should be read in conjunction with the Partnership's financial statements and notes thereto appearing in Item 8.
Statements of Years Ended December 31, Operations 1996 1995 1994 1993 1992 - ------------------ ------------- ------------- -------------- ------------- ------------- Rental revenue............... $ 1,688,524 $ 1,376,148 $ 1,475,264 $ 1,894,385 $ 1,815,723 Gain on sale of real estate............... - - 574,701 - - Total revenue................ 1,715,535 1,439,428 2,095,660 1,908,162 1,870,452 Write-down for permanent impairment of real estate............ - - - 2,700,000 - Net income (loss)............ 104,539 (285,886) 433,544 (3,102,551) (816,851) Net income (loss) per limited partnership unit.. $ 7.60 $ (20.79) $ 48.52 $ (224.90) $ (59.21) ============ ============ ============= ============ ============ As of December 31, Balance Sheets 1996 1995 1994 1993 1992 - -------------- ------------- ------------- -------------- ------------- -------- Real estate investments, net............ $ - $ 6,335,493 $ 6,239,081 $ 5,814,474 $ 11,528,672 Assets held for sale........... 6,253,753 - - 3,209,269 - Total assets................... 6,957,388 6,993,903 7,516,368 9,405,117 12,665,342 Mortgage notes payable......... 2,023,577 2,161,204 2,287,341 4,523,714 4,738,775 Partners' equity............... 4,819,521 4,714,982 5,000,868 4,567,324 7,669,875
See Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations. The Partnership sold Pacesetter Apartments on March 17, 1994. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - ------- --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- FINANCIAL CONDITION - ------------------- The Partnership reported 1996 net income of $104,539, an increase of $390,425 from the $285,886 loss incurred by the Partnership in 1995. The capital improvement program begun shortly after the Partnership repossessed Palm Bay Apartments has allowed the Partnership to first, improve the physical condition of Palm Bay Apartments; second, improve the tenant profile of the property; and finally, improve the occupancy rate at Palm Bay Apartments. These steps have increased net rental revenue, and have decreased the Partnership's rental expenses. Since the sale of Pacesetter Apartments on March 17, 1994, the focus of the Partnership's efforts have been directed to the renovation program at Palm Bay Apartments (formerly known as Greentree Apartments). For the three year period ending December 31, 1996, the Partnership has completed capital renovation projects totaling $1,300,937. Occupancy rates have improved from 63% shortly after the Partnership repossessed Palm Bay Apartments, to 94% at the end of 1996. On October 1, 1996, the General Partner decided to begin marketing Palm Bay Apartments for sale. The sale of Palm Bay Apartments, if it can be successfully accomplished, would eliminate the need to refinance Palm Bay's mortgage note that matures on June 1, 1997. As the Partnership's last real estate asset, a sale of Palm Bay Apartments would also begin the process of dissolving the Partnership and, after establishing reserves for contingencies and winding-up expenses, distributing all remaining funds to the partners. RESULTS OF OPERATIONS - --------------------- 1996 compared to 1995: Revenue: Rental revenue increased $312,376 or 23% in 1996 compared to 1995. Base rental rates were increased 1.7% at Palm Bay Apartments during 1996. However, most of the increased rental revenue came from improved occupancy at the Orlando property. The capital improvement program and other management strategies have successfully improved the tenant profile, increased base rental rates, and raised the occupancy rate to acceptable levels. Interest revenue decreased 57% because the Partnership did not have as much cash and cash equivalents invested in interest bearing accounts in 1996 compared to 1995. Expenses: Partnership expenses decreased $114,318 or 6.7% in 1996 compared to 1995. Increased expenses were concentrated in property taxes, personnel expenses, property management fees, and general and administrative expenses. However, these increases were more than offset by decreases in depreciation, repairs and maintenance, utilities, and general and administrative expenses paid to affiliates. Property taxes increased 19% due to an increased assessed valuation of Palm Bay Apartments. Prior to 1994, the assessed value of Palm Bay Apartments remained relatively low as a result of the deferred maintenance at the property. The extensive capital renovation program has enhanced the value of the property and raised its assessed value for property tax purposes. Personnel expenses increased $20,993 or 8.7% in 1996 compared to 1995. The Partnership increased maintenance staffing at Palm Bay Apartments. The additional staffing enabled the property to assume some of the maintenance tasks formerly done by outside contractors. The additional staffing also gives management more flexibility in scheduling work orders for repairs requested by tenants and thereby helps to improve relations with the property's tenants. Property management fees-affiliates increased $20,207 or 25% in 1996 compared to 1995. The increase in net rental revenue of Palm Bay Apartments also caused a corresponding increase in property management fees that are based on a percentage of rental receipts of the property. The increase in occupancy at Palm Bay Apartments allowed the Partnership to reduce expenditures for advertising and referral or locator fees. Improving the tenant profile generally will decrease the amount of bad debts incurred by a property. These factors led to a $52,655 or 28% decrease in other property operating expenses. General and administrative expense increased $12,258 or 19.0% in 1996 compared to 1995. Most of the increase was due to increased expenditures incurred during 1996 to respond to and disseminate information about an unsolicited tender offer for the Partnership's Units. Depreciation expense decreased $50,493 or 14.7% in 1996 compared to 1995. The Partnership ceased depreciating its investment in Palm Bay Apartments after the October 1, 1996 decision to market the property for sale. Otherwise, 1996 depreciation charges would have increased approximately 15% over depreciation charges incurred in 1995. Repairs and maintenance expense decreased $33,997 or 9.8% in 1996 compared to 1995. New capital assets have replaced older assets that needed repairs. Furthermore, raising the occupancy rate, and improving both the tenant profile and tenant turnover have decreased make-ready costs associated with releasing apartments units to new tenants. Improved occupancy means that more tenants are paying for electricity for their individual units. Otherwise, the Partnership bears the cost of keeping utilities turned on in vacant units. This factor led to a $15,153 or 18.7% decrease in utility expenses for the Partnership. Finally, general and administrative expenses paid to affiliates decreased $34,660 or 43% in 1996 compared to 1995. This decrease is due to a reduced level of overhead expenses charged to the Partnership by affiliates. 1995 compared to 1994: Revenue: Rental revenues for 1995 decreased $99,116 or 6.7% compared to 1994. The decrease was principally due to the sale of Pacesetter Apartments in March 1994. Rental revenue from Palm Bay Apartments increased $54,794 or 4.1%. The Partnership was able to increase both occupancy and base rental rates due to the major capital improvements undertaken at Palm Bay Apartments. The occupancy rate at December 31, 1995 was 86%, up from 82% at December 31, 1994. The Partnership increased rental rates at Palm Bay Apartments an average of 2.9% in 1995. Revenues for 1994 also included the $574,701 gain on the sale of Pacesetter Apartments. Expenses: Partnership expenses increased $63,198 or 3.8% in 1995 compared to 1994. However, after excluding expenses pertaining to Pacesetter Apartments, expenses increased $238,253 or 18% in 1995 compared to 1994. Increased expenses were concentrated in depreciation, repair and maintenance, other property operating, and general and administrative. The largest increase, on both an absolute and percentage basis, was the increase in depreciation expense. Depreciation expense at Palm Bay Apartments increased $121,331 or 54% in 1995 compared to 1994. The increase in depreciation expense was due to the continued investment of Partnership resources into capital improvements. During 1995, the Partnership invested $440,906 in capital improvements. These capital improvements are generally being depreciated over lives ranging from five to ten years. Repairs and maintenance expenses at Palm Bay increased $54,740 or 19% in 1995 as compared to 1994. The increased level of repairs and maintenance expenses are attributable to costs incurred preparing vacant units for rental. Repairs and maintenance expenses were expected to increase until Palm Bay's occupancy rate stabilized. Other property operating expenses increased substantially at Palm Bay Apartments. Efforts to refurbish down units and intensive leasing activity had increased a number of expense categories to unusually high levels. The General Partner anticipated that these expenses would decrease after the restored units have been leased. The increase in other property operating expenses at Palm Bay Apartments totaled $61,564 or 47%. Property management fees - affiliates at Palm Bay Apartments increased $14,390 or 22% in 1995 compared to 1994. An increase in rental receipts, upon which such fees are based, and the increase in the management fee percentage to 6% from 5% (effective January 1, 1995) were the reasons for the increase. General and administrative for 1995 increased $34,678 or 116% compared to 1994. The Partnership incurred $44,554 of costs during 1995 relating to the evaluation and dissemination of information regarding an unsolicited tender offer. General and administrative - affiliates increased $14,312 or 22% in 1995 compared to 1994. Reimbursements to affiliates are based, in part, on a declining number of properties managed by affiliates of the General Partner. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Partnership generated $407,530 from operating activities in 1996, an increase of $379,459 from the $28,071 provided by operating activities in 1995. Cash paid to affiliates in 1995 included an $81,000 brokerage commission on the sale of Pacesetter Apartments that was incurred in 1994 but not paid until 1995. The Partnership used its cash reserves to fund $212,261 of capital improvements to Palm Bay Apartments during 1996. An additional $137,627 was expended for mortgage note principal payments. These payments will gradually pay down the mortgage note balance until June 1997, when the Palm Bay mortgage note matures and a balloon payment of approximately $1,975,000 will be due. During the three year period ended December 31, 1996, the Partnership reported net income of $252,197. Cash provided by operations during the three year period totaled $597,964. The Partnership has used cash from operations as well as its cash reserves and the sale of Pacesetter Apartments to fund $1.3 million of capital improvements at the Palm Bay Apartments during the last three years. The sale of Pacesetter Apartments simultaneously provided a substantial addition to the Partnership's cash reserves and removed a substantial drain on Partnership resources. Due to the sale of Pacesetter Apartments, the Partnership entered 1996 with adequate cash reserves. A substantial portion of the proceeds from the sale of Pacesetter Apartments has been invested in capital improvements at Palm Bay Apartments. The Partnership has budgeted $157,000 of capital improvements for 1997 in addition to the $1.3 million of capital improvements made during the three year period ended December 31, 1996. The capital improvements at Palm Bay Apartments were necessary to allow the property to increase its rental revenues and remain competitive in the Orlando sub-market where the property is located. Short-term Liquidity: The Partnership's mortgage note, secured by Palm Bay Apartments, matures on June 1, 1997. The Partnership does not have adequate cash reserves to retire the mortgage note. The Partnership intends to resolve the impending maturity by selling Palm Bay Apartments. Should the Partnership be unable to sell Palm Bay Apartments for an amount sufficient to retire the mortgage note, the Partnership would pursue other financing options, such as attempting to extend the maturity date, modify the mortgage note, or refinance the mortgage note. The General Partner does not, however, anticipate unusual difficulties in selling Palm Bay Apartments. At December 31, 1996, the Partnership held $581,031 of cash and cash equivalents, up $57,642 from the balance at the end of 1995. The General Partner anticipates that cash generated from operations in 1997 will be sufficient to pay the Partnership's operating expenses, monthly debt service payments until the mortgage note maturity, and budgeted capital improvements. The Partnership will use its cash reserves to fund any shortfall if operating cash flow should prove insufficient to meet all the Partnership's expected expenditures. Except for the pending maturity of the Palm Bay mortgage note, the General Partner considers the Partnership's cash reserves adequate for anticipated operations for 1997. Long-term Liquidity: 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 1997. Furthermore, the Partnership has budgeted an additional $157,000 of capital improvements for 1997. 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 property. Effective October 1, 1996, the General Partner placed Palm Bay Apartments on the market for sale. The General Partner estimates that such a sale would 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 liquidation on terms or in amounts favorable to the Partnership, or that the cash proceeds from such sale 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 until such time as Palm Bay is sold and the Partnership is liquidated. 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. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - ------- -------------------------------------------
Page Number ------ INDEX TO FINANCIAL STATEMENTS Financial Statements: Report of Independent Public Accountants....................................... 13 Balance Sheets at December 31, 1996 and 1995................................... 14 Statements of Operations for each of the three years in the period ended December 31, 1996..................................................... 15 Statements of Partners' Equity for each of the three years in the period ended December 31, 1996.............................................. 16 Statements of Cash Flows for each of the three years in the period ended December 31, 1996..................................................... 17 Notes to Financial Statements.................................................. 19 Financial Statement Schedule: Schedule III - Real Estate Investment and Accumulated Depreciation............................................................. 26
All other schedules are omitted because they are not applicable or the financial information required is included in the financial statements or the notes thereto. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Partners of McNeil Pacific Investors Fund 1972: We have audited the accompanying balance sheets of McNeil Pacific Investors Fund 1972 (a California limited partnership) as of December 31, 1996 and 1995, and the related statements of operations, partners' equity and cash flows for each of the three years in the period ended December 31, 1996. These financial statements and the schedule referred to below are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and the schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As further discussed in Notes 4 and 5 to the financial statements, on October 1, 1996, the Partnership placed Palm Bay Apartments on the market for sale based upon favorable market conditions and the June 1997 maturity of the property's mortgage note payable. Should the Partnership be unable to sell Palm Bay Apartments for an amount sufficient to retire the mortgage note payable, the Partnership would pursue other financing options. As Palm Bay Apartments represents substantially all of the assets of the Partnership, consummation of any sale is subject to the satisfaction of certain conditions, including the approval of the limited partners. If the sale of Palm Bay Apartments is consummated, the Partnership's general partner will commence the dissolution and termination of the Partnership. The accompanying financial statements have not been prepared on the liquidation basis of accounting, as the sale of Palm Bay Apartments is subject to limited partner approval. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of McNeil Pacific Investors Fund 1972 as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in the index to financial statements is presented for purposes of complying with the Securities and Exchange Commission's rules and is not a part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. /s/ Arthur Andersen LLP Dallas, Texas March 17, 1997 McNEIL PACIFIC INVESTORS FUND 1972 BALANCE SHEETS
December 31, ----------------------------------- 1996 1995 --------------- -------------- ASSETS - ------ Real estate investment: Land..................................................... $ - $ 2,336,000 Buildings and improvements............................... - 5,010,483 -------------- ------------- - 7,346,483 Less: Accumulated depreciation.......................... - (1,010,990) -------------- ------------- - 6,335,493 Asset held for sale 6,253,753 - Cash and cash equivalents................................... 581,031 523,389 Cash segregated for security deposits....................... 57,204 43,885 Accounts receivable......................................... 4,147 3,849 Prepaid expenses and other assets........................... 23,694 23,220 Escrow deposits............................................. 33,232 49,353 Deferred borrowing costs, net of accumulated amortization of $47,607 and $37,220 at December 31, 1996 and 1995, respectively................. 4,327 14,714 -------------- ------------ $ 6,957,388 $ 6,993,903 ============== ============ LIABILITIES AND PARTNERS' EQUITY - -------------------------------- Mortgage note payable....................................... $ 2,023,577 $ 2,161,204 Accounts payable............................................ - 20,363 Accrued interest............................................ 14,755 10,076 Other accrued expenses...................................... 24,346 24,853 Payable to affiliates - General Partner..................... 17,108 15,227 Security deposits and deferred rental revenue............... 58,081 47,198 -------------- ------------- 2,137,867 2,278,921 -------------- ------------- Partners' equity: Limited partners - 15,000 limited partnership units authorized; 13,752.5 limited partnership units issued and outstanding at December 31, 1996 and 1995.......... 4,509,577 4,405,038 General Partner.......................................... 309,944 309,944 -------------- ------------- 4,819,521 4,714,982 -------------- ------------- $ 6,957,388 $ 6,993,903 ============== =============
See accompanying notes to financial statements. McNEIL PACIFIC INVESTORS FUND 1972 STATEMENTS OF OPERATIONS
For the Years Ended December 31, ---------------------------------------------------- 1996 1995 1994 -------------- -------------- --------------- Revenue: Rental revenue.......................... $ 1,688,524 $ 1,376,148 $ 1,475,264 Interest and other revenue.............. 27,011 63,280 45,695 Gain on sale of real estate............. - - 574,701 ------------- ------------- -------------- Total revenue......................... 1,715,535 1,439,428 2,095,660 ------------- ------------- -------------- Expenses: Interest................................ 198,739 198,948 249,827 Depreciation............................ 294,001 344,494 257,825 Property taxes.......................... 121,352 101,961 123,227 Personnel expenses...................... 263,324 242,331 293,231 Repairs and maintenance................. 311,527 345,524 316,627 Property management fees - affiliates............................ 99,681 79,474 72,765 Utilities............................... 65,901 81,054 86,617 Other property operating expenses....... 133,627 186,282 165,741 General and administrative.............. 76,907 64,649 29,971 General and administrative - affiliates............................ 45,937 80,597 66,285 ------------- ------------- -------------- Total expenses........................ 1,610,996 1,725,314 1,662,116 ------------- ------------- -------------- Net income (loss).......................... $ 104,539 $ (285,886) $ 433,544 ============= ============= ============== Net income (loss) allocated to limited partners........................ $ 104,539 $ (285,886) $ 667,558 Net loss allocated to General Partner...... - - (234,014) ------------- ------------- -------------- Net income (loss).......................... $ 104,539 $ (285,886) $ 433,544 ============= ============= ============== Net income (loss) per limited partnership unit........................ $ 7.60 $ (20.79) $ 48.52 ============= ============= ==============
See accompanying notes to financial statements. McNEIL PACIFIC INVESTORS FUND 1972 STATEMENTS OF PARTNERS' EQUITY For the Years Ended December 31, 1996, 1995 and 1994
Total General Limited Partners' Partner Partners Equity ---------------- --------------- --------------- Balance at December 31, 1993.............. $ 543,958 $ 4,023,366 $ 4,567,324 Net income (loss)......................... (234,014) 667,558 433,544 -------------- -------------- -------------- Balance at December 31, 1994.............. 309,944 4,690,924 5,000,868 Net loss.................................. - (285,886) (285,886) -------------- -------------- -------------- Balance at December 31, 1995.............. 309,944 4,405,038 4,714,982 Net income................................ - 104,539 104,539 -------------- -------------- -------------- Balance at December 31, 1996.............. $ 309,944 $ 4,509,577 $ 4,819,521 ============== ============== ==============
See accompanying notes to financial statements. McNEIL PACIFIC INVESTORS FUND 1972 STATEMENTS OF CASH FLOWS Increase (Decrease) in Cash and Cash Equivalents
For the Years Ended December 31, ----------------------------------------------------- 1996 1995 1994 -------------- --------------- ---------------- Cash flows from operating activities: Cash received from tenants.............. $ 1,682,397 $ 1,333,612 $ 1,466,270 Cash paid to suppliers.................. (869,237) (909,351) (923,620) Cash paid to affiliates................. (143,737) (238,173) (63,881) Interest received....................... 27,011 63,280 45,695 Interest paid........................... (183,673) (195,164) (255,305) Property taxes paid..................... (105,231) (26,133) (106,796) ------------- ------------- -------------- Net cash provided by operating activities............................. 407,530 28,071 162,363 ------------- ------------- -------------- Cash flows from investing activities: Additions to real estate investments........................... (212,261) (440,906) (647,770) Proceeds from sale of real estate investment............................ - - 3,749,308 ------------- ------------- -------------- Net cash provided by (used in) investing activities................... (212,261) (440,906) 3,101,538 ------------- ------------- -------------- Cash flows from financing activities: Principal payments on mortgage notes payable......................... (137,627) (126,137) (142,238) Repayment of advances from affiliates............................ - - (50,000) Retirement of mortgage note payable............................... - - (2,094,135) ------------- ------------- -------------- Net cash used in financing activities...... (137,627) (126,137) (2,286,373) ------------- ------------- -------------- Net increase (decrease) in cash and cash equivalents...................... 57,642 (538,972) 977,528 Cash and cash equivalents at beginning of year..................... 523,389 1,062,361 84,833 ------------- ------------- -------------- Cash and cash equivalents at end of year............................... $ 581,031 $ 523,389 $ 1,062,361 ============= ============= ==============
See accompanying notes to financial statements. McNEIL PACIFIC INVESTORS FUND 1972 STATEMENTS OF CASH FLOWS Reconciliation of Net Income (Loss) to Net Cash Provided by Operating Activities
For the Years Ended December 31, ---------------------------------------------------- 1996 1995 1994 -------------- --------------- --------------- Net income (loss).......................... $ 104,539 $ (285,886) $ 433,544 ------------- ------------- -------------- Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation............................ 294,001 344,494 257,825 Amortization of deferred borrowing costs................................. 10,387 10,387 10,387 Gain on sale of real estate............. - - (574,701) Changes in assets and liabilities: Cash segregated for security deposits............................ (13,319) (7,576) 15,264 Accounts receivable................... (298) (108) 4,408 Prepaid expenses and other assets.............................. (474) 1,374 29,469 Escrow deposits....................... 16,121 75,828 22,087 Accounts payable...................... (20,363) (10,965) (92,800) Accrued property taxes................ - - (5,656) Accrued interest...................... 4,679 (6,603) (15,865) Other accrued expenses................ (507) (13,832) 12,227 Payable to affiliates - General Partner............................. 1,881 (78,102) 75,169 Security deposits and deferred rental revenue...................... 10,883 (940) (8,995) ------------- ------------- -------------- Total adjustments................. 302,991 313,957 (271,181) ------------- ------------- -------------- Net cash provided by operating activities.............................. $ 407,530 $ 28,071 $ 162,363 ============= ============= ==============
See accompanying notes to financial statements. McNEIL PACIFIC INVESTORS FUND 1972 NOTES TO FINANCIAL STATEMENTS December 31, 1996 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - -------------------------------------------------------------------- Organization - ------------ McNeil Pacific Investors Fund 1972 (the "Partnership") was organized September 30, 1971 as a limited partnership under 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 ("McNeil"). The General Partner was elected at a meeting of limited partners on March 30, 1992, at which time the Partnership's restated certificate and agreement of limited partnership (the "Partnership Agreement") was amended. Prior to March 30, 1992, Pacific Investors Corporation, an affiliate of Southmark Corporation, and McNeil were the general partners of the Partnership. The principal place of business for the Partnership and the General Partner is 13760 Noel Road, Suite 600, LB70, Dallas, Texas, 75240. The Partnership is engaged in real estate activities, including the ownership, operation and management of residential rental real estate and other real estate related assets. The Partnership has determined to evaluate market and other economic conditions to establish the optimum time to commence a liquidation of the Partnership's asset in accordance with the terms of the Partnership Agreement. At December 31, 1996, the Partnership owned one income-producing property as described in Note 4 - Real Estate Investment. Basis of Presentation - --------------------- The accompanying financial statements have been prepared in conformity with generally accepted accounting principles ("GAAP"). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Real Estate Investment - ---------------------- The real estate investment is generally stated at the lower of depreciated cost or fair value. The real estate investment is reviewed for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. When the carrying value of a property exceeds the sum of all estimated future cash flows, an impairment loss is recognized. At such time, a write-down is recorded to reduce the basis of the property to its estimated recoverable amount. The Partnership's method of accounting for real estate investments is in accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" ("SFAS 121"), which the Partnership adopted effective January 1, 1996. The adoption of SFAS 121 did not have a material impact on the accompanying financial statements. Improvements and betterments are capitalized and expensed through depreciation charges. Repairs and maintenance are charged to operations as incurred. Asset Held for Sale - ------------------- The asset held for sale is stated at the lower of depreciated cost or fair value less costs to sell. Depreciation on this asset ceased at the time it was placed on the market for sale. Depreciation - ------------ Buildings and improvements were depreciated using the straight-line method over the estimated useful lives of the assets, which ranged from 2 to 25 years. Cash and Cash Equivalents - ------------------------- Cash and cash equivalents include cash on hand and cash on deposit with financial institutions with original maturities of three months or less. Carrying amounts for cash and cash equivalents approximate fair value. Escrow Deposits - --------------- The Partnership is required to maintain an escrow account in accordance with terms of the Palm Bay mortgage note. This escrow account is controlled by the mortgagee and is used for payment of property taxes. Carrying amounts for escrow deposits approximate fair value. Deferred Borrowing Costs - ------------------------ Loan fees and other related costs incurred to obtain or modify long-term financing on real property are capitalized and amortized using a method that approximates the effective interest method over the term of the related mortgage note payable. Amortization of deferred borrowing costs is included in interest expense on the Statements of Operations. Rental Revenue - -------------- The Partnership leases its property under short-term operating leases. Lease terms generally are less than one year in duration. Rental revenue is recognized as earned. Income Taxes - ------------ No provision for Federal income taxes is necessary in the financial statements of the Partnership because, as a partnership, it is not subject to Federal income tax and the tax effect of its activities accrues to the partners. Allocation of Net Income and Net Loss - ------------------------------------- The Partnership Agreement provides that income will be allocated to the General Partner to the extent of distributions to the General Partner of cash from sales, refinancings, or from working capital reserves. All remaining net income and all losses are allocated 100% to the limited partners. An estimated gain on the ultimate disposition of Pacesetter Apartments was allocated to the General Partner in 1982 based upon a 1982 sales contract for Pacesetter Apartments. An adjustment was made in 1994 to adjust the amount allocated to the General Partner based on the 1994 sale of Pacesetter Apartments. Federal income tax law provides that the allocation of loss to a partner will not be recognized unless the allocation is in accordance with a partner's interest in the partnership or the allocation has substantial economic effect. Internal Revenue Code Section 704(b) and accompanying Treasury Regulations establish criteria for allocations of Partnership deductions attributable to debt. The Partnership's tax allocations for 1996, 1995 and 1994 have been made in accordance with these provisions. Distributions - ------------- At the discretion of the General Partner, distributions to partners are paid from operations of the Partnership's property, from the sale or refinancing of the property, or from cash maintained as working capital reserves. Cash from operations is distributed 100% to the limited partners. Distributions of cash from sales and refinancings and cash from working capital reserves are made in the following order: (a) First to the limited partners in an amount, when added to all prior distributions to the limited partners of disposition proceeds, that equals 109.6% of the portion of net offering proceeds invested in property sold; then, (b) of the remaining balance, 90.5% to the limited partners and 9.5% to the General Partner. No distributions were paid to the partners during 1996, 1995 or 1994. Net Income (Loss) Per Limited Partnership Unit Net income (loss) per limited partnership unit ("Units") is computed by dividing net income (loss) allocated to the limited partners by the weighted average number of Units outstanding. Per Unit information has been computed based on 13,752.5 Units outstanding in 1996 and 1995, and 13,757.5 Units outstanding in 1994. NOTE 2 - TRANSACTIONS WITH AFFILIATES - ------------------------------------- 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 1996, 1995 or 1994. The Partnership pays property management fees equal to 6% 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 and leasing services for the Partnership's properties. Prior to January 1, 1995, the Partnership paid property management fees equal to 5% of gross rental receipts. The Partnership reimburses McREMI for its costs, including overhead, of administering the Partnership's affairs. The General Partner is entitled to receive a sales commission as compensation for selling Partnership property equal to the lesser of 4% of the sales price of the property sold or the customary fee charged by independent real estate brokers in the area where the property is located. The Partnership accrued an $81,000 sales commission in connection with the 1994 sale of Pacesetter Apartments. The sales commission was paid in 1995. Compensation and reimbursements paid or accrued for the benefit of the General Partner or its affiliates are as follows:
For the Years Ended December 31, ----------------------------------------------------- 1996 1995 1994 ------------- -------------- -------------- Property management fees - affiliates................................ $ 99,681 $ 79,474 $ 72,765 Charged to general and administrative - affiliates: Partnership administration................ 45,937 80,597 66,285 Charged to gain on sale of real estate: Brokerage commission...................... - - 81,000 ------------ ------------- ------------- $ 145,618 $ 160,071 $ 220,050 ============ ============= =============
Payable to affiliates - General Partner at December 31, 1996 and 1995 consists of property management fees and reimbursable administrative costs. All amounts are due and payable from current operations. NOTE 3 - TAXABLE INCOME - ----------------------- McNeil Pacific Investors Fund 1972 is a partnership and is not subject to Federal and state income taxes. Accordingly, no recognition has been given to income taxes in the accompanying financial statements of the Partnership since the income or loss of the Partnership is to be included in the tax returns of the individual partners. The tax returns of the Partnership are subject to examination by Federal and state taxing authorities. If such examinations result in adjustments to distributive shares of taxable income or loss, the tax liability of the partners could be adjusted accordingly. The Partnership's net assets and liabilities for financial reporting purposes exceeded the net assets and liabilities for tax purposes by $1,981,839 in 1996, $1,948,374 in 1995 and $1,973,149 in 1994. NOTE 4 - REAL ESTATE INVESTMENT - ------------------------------- On October 1, 1996, the General Partner determined that the market timing was right for placing the Partnership's sole remaining real estate asset, Palm Bay Apartments, on the market for sale. This decision was based both on favorable market conditions and the June 1997 maturity of the Palm Bay mortgage note. Consequently, the Partnership has classified its investment in Palm Bay Apartments as an asset held for sale on the accompanying Balance Sheet dated December 31, 1996 at a net book value of $6,253,753. The basis and accumulated depreciation of the Partnership's real estate investment at December 31, 1995, is set forth in the following table:
Buildings and Accumulated Net Book 1995 Land Improvements Depreciation Value ---- -------------- ------------ ------------ ------------ Palm Bay Apartments Orlando, FL $ 2,336,000 $ 5,010,483 $ (1,010,990) $ 6,335,493 ============ =============== ================ ==============
The results of operations for the asset held for sale at December 31, 1996 are $194,195, $(210,240) and $(26,866) for 1996, 1995 and 1994, respectively. Results of operations are operating revenues less operating expenses including depreciation and interest expense. NOTE 5 - MORTGAGE NOTE PAYABLE - ------------------------------ The following table sets forth the Partnership's mortgage note at December 31, 1996 and 1995. The mortgage note is secured by Palm Bay Apartments, the Partnership's only real estate asset.
Mortgage Annual Monthly Lien Interest Payments/ December 31, Property Position (a) Rates % Maturity Date 1996 1995 - -------- ------------ ------- ------------------ --------------- ------------- Palm Bay First 8.750 $26,775 06/97(b) $ 2,023,577 $ 2,161,204 ============= =============
(a) The debt is non-recourse to the Partnership. (b) The Palm Bay mortgage note matures in June 1997. At that time, a balloon payment of $1,974,969 will be due. Based on borrowing rates currently available to the Partnership for a mortgage loan with similar terms and average maturities, the fair value of the mortgage note payable was approximately $1,945,000 and $2,102,000 at December 31, 1996 and 1995, respectively. As indicated above, the mortgage note is secured by Palm Bay Apartments and is due and payable on June 1, 1997. The General Partner intends to sell Palm Bay Apartments and use the related sales proceeds to retire the mortgage note payable. Should the Partnership be unable to sell Palm Bay Apartments for an amount sufficient to retire the mortgage note payable, the Partnership would pursue other financing options. If the sale of Palm Bay Apartments is consummated, the General Partner will commence the dissolution and termination of the Partnership. The accompanying financial statements have not been prepared on the liquidation basis of accounting, as the sale of Palm Bay Apartments is subject to limited partner approval. NOTE 6 - SALE OF REAL ESTATE - ---------------------------- On March 17, 1994, the Partnership sold its investment in Pacesetter Apartments to an unaffiliated buyer for a cash sales price of $4,050,000. Cash proceeds from this transaction, as well as the gain on sale are detailed below. Gain on Sale Cash Proceeds -------------- ------------- Sales price........................... $ 4,050,000 $ 4,050,000 Selling costs......................... (300,692) (300,692) Basis of real estate sold............. (3,174,607) ------------ Gain on sale.......................... $ 574,701 ============ Proceeds from sale of real estate..... 3,749,308 Retirement of mortgage note........... (2,094,135) ---------- Net cash proceeds..................... $ 1,655,173 ========== NOTE 7 - LEGAL PROCEEDINGS - -------------------------- 1) 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 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., et al. - 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 fourteen limited partnerships that were named as nominal defendants as listed above (as defined in this Section 1, the "Partnerships"). Plaintiffs allege that McNeil Investors, Inc., its affiliate McNeil Real Estate Management, Inc. and three of their senior officers and/or directors (as defined in this Section 1, 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. On January 7, 1997, the Court ordered consolidation with three other similar actions listed below. The Partnerships filed a demurrer to the complaint and a motion to strike on February 14, 1997, seeking to dismiss the complaint in all respects. The demurrer is pending. The Partnerships deny that there is any merit to Plaintiff's allegations and intend to vigorously defend this action. 2) Alfred Napoletano v. McNeil Partners, L.P., McNeil Investors, Inc., Robert A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P. - Superior Court of the State of California, County of Los Angeles, Case No. BC133849 (Class Action Complaint). On January 7, 1997, this action was consolidated by court order with Schofield, et al., referenced above. 3) Warren Heller v. McNeil Partners, L.P., McNeil Investors, Inc., Robert A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P. - Superior Court of the State of California, County of Los Angeles, Case No. BC133957 (Class Action Complaint). On January 7, 1997, this action was consolidated by court order with Schofield, et al., referenced above. 4) Robert Lewis v. McNeil Partners, L.P., McNeil Investors, Inc., Robert A. McNeil et al. - In the District Court of Dallas County, Texas, A-14th Judicial District, Cause No. 95-08535 (Class Action) - Plaintiff, Robert Lewis, is a limited partner with McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund X, Ltd. and McNeil Real Estate Fund XV, Ltd. On April 11, 1996, the action was dismissed without prejudice in anticipation of consolidation with other class action complaints. On January 7, 1997, this action was consolidated by court order with Schofield, et al., referenced above. 5) McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P., and McNeil Real Estate Fund XXV, L.P. v. High River Limited Partnership, Riverdale Investors Corp., Carl C. Icahn, and Unicorn Associates Corporation - United States District Court for the Central District of California, Case No. 96-5680SVW. On August 12, 1996, High River Limited Partnership (as defined in this Section 5, "High River"), a partnership controlled by Carl C. Icahn, sent a letter to the partnerships referenced above demanding lists of the names, current residences or business addresses and certain other information concerning the Unitholders of such partnerships. On August 19, 1996, these partnerships commenced the above action seeking, among other things, to declare that such partnerships are not required to provide High River with a current list of Unitholders on the grounds that the defendants commenced a tender offer in violation of the federal securities laws by filing certain Schedule 13D Amendments on August 5, 1996. On October 16, 1996, the presiding judge denied the partnerships' requests for a permanent and preliminary injunction to enjoin High River's tender offers and granted the defendants request for an order directing the partnerships to turn over current lists of Unitholders to High River forthwith. On October 24, 1996, the partnerships delivered the Unitholder lists to High River. The judge's decision resolved all the issues in the action. NOTE 8 - PRO FORMA DISCLOSURE (UNAUDITED) - ----------------------------------------- The following unaudited pro forma information for the year ended December 31, 1994 reflects the results of operations of the Partnership as if the sale of Pacesetter Apartments had occurred as of January 1, 1994. The unaudited pro forma information is not necessarily indicative of the results of operations that actually would have occurred or those which might be expected to occur in the future. Total revenues............................ $ 1,287,125 Net loss.................................. (77,885) Net loss per limited partnership unit..... (5.66) McNEIL PACIFIC INVESTORS FUND 1972 SCHEDULE III REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION December 31, 1996
Cumulative Costs Initial Cost Write-down Capitalized Related Buildings and and Permanent Subsequent Description Encumbrances Land Improvements Impairment To Acquisition - ----------- ------------ ---- ------------- ------------- -------------- Asset Held for Sale (b): Palm Bay Apartments Orlando, FL $ 2,023,577 ==========
(b) The asset held for sale is stated at lower of depreciated cost or fair value less costs to sell. Historical cost net of accumulated depreciation and write-downs becomes the new cost basis when the asset is classified as "held for sale." Depreciation ceases at the time the asset is placed on the market for sale. See accompanying notes to Schedule III. McNEIL PACIFIC INVESTORS FUND 1972 SCHEDULE III REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION December 31, 1996
Gross Amount at Which Carried at Close of Period Accumulated Buildings and Depreciation Description Land Improvements Total (a) and Amortization - ----------- ---- ------------- --------- ---------------- Asset Held for Sale: Palm Bay Apartments Orlando, FL $ 6,253,753 ==========
(a) For Federal income tax purposes, the properties are depreciated over lives ranging from 7-27.5 years using ACRS or MACRS methods. The aggregate cost of real estate investments for Federal income tax purposes was approximately $8,537,646 and accumulated depreciation was $1,328,120 at December 31, 1996. See accompanying notes to Schedule III. McNEIL PACIFIC INVESTORS FUND 1972 SCHEDULE III REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION December 31, 1996
Date of Date Depreciable Description Construction Acquired lives (years) - ----------- ------------ -------- ------------- Asset Held for Sale: Palm Bay Apartments Orlando, FL 1974 06/91
See accompanying notes to Schedule III. McNEIL PACIFIC INVESTORS FUND 1972 NOTES TO SCHEDULE III REAL ESTATE INVESTMENT AND ACCUMULATED DEPRECIATION A summary of activity for the Partnership's real estate investments and accumulated depreciation for the years ended December 31, 1996, 1995 and 1994 is as follows:
For the Years Ended December 31, ---------------------------------------------------- 1996 1995 1994 -------------- -------------- --------------- Real estate investments: Balance at beginning of year............... $ 7,346,483 $ 6,905,577 $ 6,257,807 Improvements............................... 137,450 440,906 647,770 Reclassification to asset held for sale................................ (7,483,933) - - -------------- ------------- -------------- Balance at end of year..................... $ - $ 7,346,483 $ 6,905,577 ============= ============= ============== Accumulated depreciation: Balance at beginning of year............... $ 1,010,990 $ 666,496 $ 443,333 Depreciation............................... 294,001 344,494 223,163 Reclassification to asset held for sale................................ (1,304,991) - - -------------- ------------- -------------- Balance at end of year..................... $ - $ 1,010,990 $ 666,496 ============= ============= ============== Assets Held for Sale: Balance at beginning of year............... $ - $ - $ 3,209,269 Depreciation............................... - - (34,662) Reclassification from real estate investments, net........................ 6,178,942 - - Improvements............................... 74,811 - - Sale of real estate........................ - - (3,174,607) ------------- ------------- -------------- Balance at end of year..................... $ 6,253,753 $ - $ - ============= ============= ==============
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING - ------- ----------------------------------------------------------- AND FINANCIAL DISCLOSURE ------------------------ None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - ------- --------------------------------------------------- Neither the Partnership nor the General Partner has any directors or executive officers. The names and ages of, as well as the positions held by, the officers and directors of McNeil Investors, Inc., the general partner of the General Partner, are as follows: Other Principal Occupations and Other Name and Position Age Directorships During the Past 5 Years - ----------------- --- ------------------------------------- Robert A. McNeil, 76 Mr. McNeil is also Chairman of the Chairman of the Board and Director of McNeil Real Estate Board and Director Management, Inc. ("McREMI") which is an affiliate of the General Partner. He has held the foregoing positions since the formation of such entity in 1990. Mr. McNeil received his B.A. degree from Stanford University in 1942 and his L.L.B. degree from Stanford Law School in 1948. He is a member of the State Bar of California and has been involved in real estate financing since the late 1940's and in real estate acquisitions, syndications and dispositions since 1960. From 1986 until active operations of McREMI and McNeil Partners, L.P. began in February 1991, Mr. McNeil was a private investor. Mr. McNeil is a member of the International Board of Directors of the Salk Institute, which promotes research in improvements in health care. Carole J. McNeil 53 Mrs. McNeil is Co-Chairman, with Co-Chairman of the husband Robert A. McNeil, of McNeil Board Investors, Inc. Mrs. McNeil has twenty years of real estate experience, most recently as a private investor from 1986 to 1993. In 1982, she founded Ivory & Associates, a commercial real estate brokerage firm in San Francisco, CA. Prior to that, she was a commercial real estate associate with the Madison Company and, earlier, a commercial sales associate and analyst with Marcus and Millichap in San Francisco. In 1978, Mrs. McNeil established Escrow Training Centers, California's first accredited commercial training program for title company escrow officers and real estate agents needing college credits to qualify for brokerage licenses. She began in real estate as Manager and Marketing Director of Title Insurance and Trust in Marin County, CA. Mrs. McNeil serves on the International Board of Directors of the Salk Institute. Other Principal Occupations and Other Name and Position Age Directorships During the Past 5 Years - ----------------- --- ------------------------------------- Ron K. Taylor 39 Mr. Taylor is the President and Chief President and Chief Executive Officer of McNeil Real Estate Executive Officer Management which is an affiliate of the General Partner. Mr. Taylor has been in this capacity since the resignation of Donald K. Reed on March 4, 1997. Prior to assuming his current responsibilities, Mr. Taylor served as a Senior Vice President of McREMI. Mr. Taylor has been in this capacity since McREMI commenced operations in 1991. Prior to joining McREMI, Mr. Taylor served as an Executive Vice President for a national syndication/property management firm. In this capacity, Mr. Taylor had the responsibility for the management and leasing of a 21,000,000 square foot portfolio of commercial properties. Mr. Taylor has been actively involved in the real estate industry since 1983. Each director shall serve until his successor shall have been duly elected and qualified. ITEM 11. EXECUTIVE COMPENSATION - ------- ---------------------- No direct compensation was paid or payable by the Partnership to directors or officers (since it does not have any directors or officers) for the year ended December 31, 1996, nor was any direct compensation paid or payable by the Partnership to directors or officers of the general partner of the General Partner for the year ended December 31, 1996. The Partnership has no plans to pay any such remuneration to any directors or officers of the general partner of the General Partner in the future. See Item 13 - Certain Relationships and Related Transactions for amounts of compensation and reimbursements paid by the Partnership to the General Partner and its affiliates. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - ------- -------------------------------------------------------------- (A) Security ownership of certain beneficial owners. No individual or group, as defined by Section 13(d)(3) of the Securities Exchange Act of 1934, known to the Partnership is the beneficial owner of more than 5% of the Partnership's securities with the exception of the following: 1. The General Conference Corporation of Seventh Day Adventists, 12501 Old Columbia Pike, Silver Spring, Maryland, 20904, owns 950 (6.9%) of the Partnership's Units as of January 31, 1997. 2. A group of ten limited partnerships affiliated with Liquidity Financial Corporation, all of whose outstanding stock is owned by Richard G. Wollack and Brent R. Donaldson, 2200 Powell Street, Suite 700, Emeryville, California, 94608, collectively own 825 (6.0%) of the Partnership's Units as of January 31, 1997. 3. High River Limited Partnership, 100 S. Bedford Road, Mount Kisco, New York, 10549, owns 1,594 (11.6%) of the Partnership's Units as of January 31, 1997. (B) Security ownership of management. The General Partner and the officers and directors of its general partner collectively own 50 Units, which is less than 1% of Units outstanding. (C) Change in control. None. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - ------- ---------------------------------------------- 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 for the year ended December 31, 1996. The Partnership pays property management fees equal to 6% of gross rental receipts of the Partnership's property to McREMI 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. For the year ended December 31, 1996, the Partnership incurred $145,618 of property management fees and reimbursements. The General Partner is entitled to receive a sales commission as compensation for selling Partnership property equal to the lesser of 4% of the sales price of the property sold or the customary fee charged by independent brokers in the area where the property is located. During 1995, the Partnership paid an $81,000 commission to the General Partner in connection with the 1994 sale of Pacesetter Apartments. See Item 1 - Business, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations, and Item 8 - Note 2 - "Transactions with Affiliates." PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K - -------- ----------------------------------------------------------------- See accompanying Index to Financial Statements at Item 8. (A) Exhibits The following exhibits are incorporated by reference and are an integral part of this Form 10-K. Exhibit Number Description ------- ----------- 3.1 Restated Certificate and Agreement of Limited Partnership dated as of March 8, 1972. Incorporated by reference to the Annual Report of McNeil Pacific Investors Fund 1972 on Form 10-K for the period ended December 31, 1990, as filed with the Securities and Exchange Commission on March 29, 1991. 3.2 Amendment to Restated Certificate and Agreement of Limited Partnership dated as of March 30, 1992. (1) 10.1 Mortgage Note, dated March 9, 1975, between McNeil Pacific Investors Fund 1972 and John Hancock Life Insurance Company. Incorporated by reference to the Annual Report of McNeil Pacific Investors Fund 1972 (Commission file number 0-7162), on Form 10-K for the period ended December 31, 1991, as filed with the Securities and Exchange Commission on March 30, 1992. 10.2 Property Management Agreement, dated as of October 1, 1993, between McNeil Pacific Investors Fund 1972 and McNeil Real Estate Management, Inc. (1) 10.3 Revolving Credit Agreement, dated August 6, 1991 between McNeil Partners, L.P. and McNeil Pacific Investors Fund 1972. (1) 10.4 Amendment of Property Management Agreement, dated January 1, 1995, between McNeil Pacific Investors Fund 1972 and McNeil Real Estate Management, Inc. (2) 10.5 Modification Agreement, dated effective June 1, 1992, between M R Partners, Inc. and John Hancock Mutual Life Insurance Company. (2) Exhibit Number Description ------- ----------- 11. Statement regarding computation of Net Income per Limited Partnership Unit (see Note 1 to Financial Statements). (1) Incorporated by reference to the Annual Report of McNeil Pacific Investors Fund 1972 (Commission file number 0-7162), on Form 10-K for the period ended December 31, 1993, as filed with the Securities and Exchange Commission on March 30, 1994. (2) Incorporated by reference to the Annual Report of McNeil Pacific Investors Fund 1972 (Commission file number 0-7162), on Form 10-K for the period ended December 31, 1994, as filed with the Securities and Exchange Commission on March 30, 1995. 27. Financial Data Schedule for the year ended December 31, 1996. (B) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended December 31, 1996. McNEIL PACIFIC INVESTORS FUND 1972 A Limited Partnership SIGNATURE PAGE Pursuant to the requirements of Section 13 or 15(d) 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 March 28, 1997 By: /s/ Robert A. McNeil - -------------- ---------------------------------------- Date Robert A. McNeil Chairman of the Board and Director (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. March 28, 1997 By: /s/ Ron K. Taylor - -------------- ---------------------------------------- Date Ron K. Taylor President and Director of McNeil Investors, Inc. (Principal Financial Officer) March 28, 1997 By: /s/ Brandon K. Flaming - -------------- ---------------------------------------- Date Brandon K. Flaming Vice President of McNeil Investors, Inc. (Principal Accounting Officer) EX-27 2
5 12-MOS DEC-31-1996 DEC-31-1996 581,031 0 0 0 0 0 0 0 6,957,388 0 2,023,577 0 0 0 0 6,957,388 1,688,524 1,715,535 0 0 1,412,257 0 198,739 104,539 0 0 0 0 0 104,539 0 0
-----END PRIVACY-ENHANCED MESSAGE-----