-----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, TphRz2w6azUw0GXwfq/YxwNr0i6BQV44kgYKCmCT9hpwENveuR704ODoPm4i0xUz XkjuigwZJ+P/f10oi/CNCA== 0000064309-97-000004.txt : 19970520 0000064309-97-000004.hdr.sgml : 19970520 ACCESSION NUMBER: 0000064309-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 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: 97606464 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 March 31, 1997 ------------------------------------------------------ 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 ----------------------------- 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)
March 31, December 31, 1997 1996 --------------- --------------- ASSETS - ------ Asset held for sale $ 6,312,061 $ 6,253,753 Cash and cash equivalents................................... 577,085 581,031 Cash segregated for security deposits....................... 57,512 57,204 Accounts receivable......................................... 282 4,147 Prepaid expenses and other assets........................... 20,828 23,694 Escrow deposits............................................. 61,119 33,232 Deferred borrowing costs, net of accumulated amortization of $50,202 and $47,607 at March 31, 1997 and December 31, 1996, respectively............................................. 1,732 4,327 -------------- -------------- $ 7,030,619 $ 6,957,388 ============== ============== LIABILITIES AND PARTNERS' EQUITY - -------------------------------- Mortgage note payable....................................... $ 1,987,254 $ 2,023,577 Accrued interest............................................ 14,490 14,755 Accrued property taxes...................................... 29,762 - Other accrued expenses...................................... 5,530 24,346 Payable to affiliates - General Partner..................... 22,649 17,108 Security deposits and deferred rental revenue............... 62,169 58,081 -------------- -------------- 2,121,854 2,137,867 -------------- -------------- Partners' equity: Limited partners - 15,000 limited partnership units authorized; 13,752.5 limited partnership units issued and outstanding................................. 4,598,821 4,509,577 General Partner.......................................... 309,944 309,944 -------------- -------------- 4,908,765 4,819,521 -------------- -------------- $ 7,030,619 $ 6,957,388 ============== ==============
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 March 31, ---------------------------------- 1997 1996 -------------- -------------- Revenue: Rental revenue................................... $ 446,579 $ 390,949 Interest......................................... 7,517 6,550 ------------- ------------- Total revenue.................................. 454,096 397,499 ------------- ------------- Expenses: Interest......................................... 46,334 55,071 Depreciation..................................... - 95,676 Property taxes................................... 29,762 28,974 Personnel expenses............................... 87,783 72,786 Utilities........................................ 18,267 16,879 Repair and maintenance........................... 92,529 87,105 Property management fees - affiliates............ 26,687 23,867 Other property operating expenses................ 40,642 30,198 General and administrative....................... 10,089 10,435 General and administrative - affiliates.......... 12,759 16,986 ------------- ------------- Total expenses................................. 364,852 437,977 ------------- ------------- Net income (loss)................................... $ 89,244 $ (40,478) ============= ============= Net income (loss) allocated to limited partners..... $ 89,244 $ (40,478) Net income (loss) allocated to General Partner...... - - ------------- ------------- Net income (loss)................................... $ 89,244 $ (40,478) ============= ============= Net income (loss) per limited partnership unit...... $ 6.49 $ (2.94) ============= =============
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 Three Months Ended March 31, 1997 and 1996
Total General Limited Partners' Partner Partners Equity -------------- --------------- ---------------- Balance at December 31, 1995.............. $ 309,944 $ 4,405,038 $ 4,714,982 Net loss.................................. - (40,478) (40,478) ------------- ------------- ------------- Balance at March 31, 1996................. $ 309,944 $ 4,364,560 $ 4,674,504 ============= ============= ============= Balance at December 31, 1996.............. $ 309,944 $ 4,509,577 $ 4,819,521 Net income................................ - 89,244 89,244 ------------- ------------- ------------- Balance at March 31, 1997................. $ 309,944 $ 4,598,821 $ 4,908,765 ============= ============= =============
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) Decrease in Cash and Cash Equivalents
Three Months Ended March 31, ----------------------------------- 1997 1996 --------------- --------------- Cash flows from operating activities: Cash received from tenants....................... $ 452,488 $ 405,624 Cash paid to suppliers........................... (263,524) (242,422) Cash paid to affiliates.......................... (33,905) (42,094) Interest received................................ 7,517 6,550 Interest paid.................................... (44,004) (47,035) Property taxes paid and escrowed................. (27,887) (24,385) ------------- ------------- Net cash provided by operating activities........... 90,685 56,238 ------------- ------------- Cash flows from investing activities: Additions to real estate investments............. (58,308) (23,559) ------------- ------------- Cash flows from financing activities: Principal payments on mortgage notes payable........................................ (36,323) (33,290) ------------- ------------- Net decrease in cash and cash equivalents................................. (3,946) (611) Cash and cash equivalents at beginning of period........................................ 581,031 523,389 ------------- ------------- Cash and cash equivalents at end of period.......... $ 577,085 $ 522,778 ============= =============
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 Income (Loss) to Net Cash Provided by Operating Activities
Three Months Ended March 31, ----------------------------------- 1997 1996 -------------- --------------- Net income (loss)................................... $ 89,244 $ (40,478) ------------- ------------- Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation..................................... - 95,676 Amortization of deferred borrowing costs......... 2,595 2,596 Changes in assets and liabilities: Cash segregated for security deposits.......... (308) (6,232) Accounts receivable............................ 3,865 3,284 Prepaid expenses and other assets.............. 2,866 672 Escrow deposits................................ (27,887) (24,385) Accounts payable............................... - (6,216) Accrued interest............................... (265) 5,440 Accrued property taxes......................... 29,762 28,974 Other accrued expenses......................... (18,816) (20,439) Payable to affiliates - General Partner........ 5,541 (1,241) Security deposits and deferred rental revenue...................................... 4,088 18,587 ------------- ------------- Total adjustments............................ 1,441 96,716 ------------- ------------- Net cash provided by operating activities........... $ 90,685 $ 56,238 ============ =============
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) March 31, 1997 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 600, 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 three months ended March 31, 1997, are not necessarily indicative of the results to be expected for the year ending December 31, 1997. 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, 1996, 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 The Herman Group, 2121 San Jacinto St., 26th Floor, Dallas, Texas 75201. NOTE 3. - ------- 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. 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 or paid during the three month periods ended March 31, 1997 and 1996. 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 General Partner is also entitled to a distribution of cash from sales and refinancings and cash from working capital reserves equal to 9.5% of such distributions. No such distributions were paid to the partners during 1997 or 1996. Compensation and reimbursements accrued for the benefit of the General Partner and its affiliates are as follows: Three Months Ended March 31, ---------------------- 1997 1996 --------- --------- Property management fees - affiliates........ $ 26,687 $ 23,867 Charged to general and administrative - affiliates: Partnership administration................ 12,759 16,986 -------- ------- $ 39,446 $ 40,853 ======== ======= NOTE 4. - ------- On October 1, 1996, the General Partner placed the Partnership's only remaining property, Palm Bay Apartments, on the market for sale. Consequently, Palm Bay Apartments is classified as an Asset Held for Sale on the accompanying financial statements. In 1996, the Partnership adopted the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." This statement requires the cessation of depreciation on assets held for sale. Accordingly, no depreciation charges have been incurred since October 1, 1996. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - ------- --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- 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. RESULTS OF OPERATIONS - --------------------- Revenues: Rental revenues at Palm Bay Apartments increased $55,630 or 14.2% for the first quarter of 1997 as compared to the first quarter of 1996. Most of the increase in rental revenue was obtained by improving the occupancy rate of the Orlando property. Vacancy losses decreased 52%, and other rental discounts and concessions decreased 77%. The occupancy rate at March 31 improved to 97.1% from 94.2% at December 31, 1996 and 93.4% at March 31, 1996. The Partnership also increased base rental rates an average of 2% for the property's units. Although small rental rate increases have been implemented, most of the increase in rental revenues is from improved occupancy rates at the property. Expenses: Partnership expenses decreased $73,125 or 16.7% in the first quarter of 1997 as compared to the first quarter of 1996. In accordance with accounting standards, the Partnership ceased depreciating Palm Bay Apartments after deciding to sell the property in October 1996. Thus, no depreciation is recorded for the first quarter of 1997 as opposed to $95,676 of depreciation during the first quarter of 1996. Excluding depreciation, expenses increased $22,551 or 6.6% in the first quarter of 1997. Increases in personnel expenses and other property operating expenses were partially offset by decreased interest expense. Personnel expenses increased $14,997 or 21% for the first quarter of 1997 as compared to 1996. Incentive based compensation increased during the first quarter reflecting improved operating results over the past year. Also, expenses for contract and temporary workers increased during the first quarter due to staff turnover. Other property operating expenses increased $10,444 or 35% for the first quarter of 1997 as compared to 1996. Palm Bay Apartments recorded increased costs related to advertising and other marketing expenses as well as increased expenses related to tenant retention, credit and collection expenses. Interest expense decreased $8,737 or 15.9% in the first quarter of 1997 as compared to the first quarter of 1996. Interest expense on the Palm Bay mortgage note continues to decrease as the balance of the note is paid down through monthly debt service payments. Approximately half of the decrease is attributable to a one-time adjustment that increased interest expense in 1996. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Cash generated by Partnership operating activities increased to $90,685 for the first quarter of 1997, a 61% increase over the $56,238 generated by operating activities during the first quarter of 1996. The capital renovation projects undertaken at Palm Bay Apartments during the past three years have enabled the property to compete effectively with other apartment communities in the surrounding area. For the balance of 1997, financing and investing activities are projected to be limited to minimal capital improvements and repayment of the Palm Bay mortgage note through monthly debt service payments. Such activities are projected to be adequately funded by cash flow from operations. Having completed the renovation, and restored net operating income to an acceptable level, the Partnership is now in a position to profitably dispose of its investment in Palm Bay Apartments. Short Term Liquidity: As discussed above, the Partnership placed Palm Bay Apartments on the market for sale. However, it is unlikely that a sale will close before the Palm Bay mortgage note matures on June 1, 1997. Furthermore, the Partnership will not have adequate cash reserves to pay off the Palm Bay mortgage note at that time. The General Partner has discussed the situation with the holder of the Palm Bay mortgage note, and, although no formal agreement has been reached, it appears the holder will defer foreclosure proceedings pending the sale of Palm Bay Apartments. Should the Partnership be required to pay off the Palm Bay mortgage note prior to the sale of Palm Bay Apartments, the General Partner will attempt to arrange interim financing from an affiliate of the General Partner or from a third party. The General Partner does not anticipate unusual difficulties securing temporary financing for Palm Bay Apartments given the high level of equity the Partnership has in the property and the Partnership's decision to sell the property. However, such temporary financing, if needed, is not assured. At March 31, 1997, the Partnership held $577,085 of cash and cash equivalents, down $3,946 from the balance at the end of 1996. The General Partner considers the Partnership's cash reserves adequate for anticipated Partnership operations for the balance of 1997, or until Palm Bay Apartments is sold. Furthermore, the General Partner believes that operations at Palm Bay Apartments will generate sufficient cash flow to pay the operating expenses of the property, pay the required monthly debt service payments on the Palm Bay mortgage note, and provide funds to make necessary capital improvements to the property. Long Term Liquidity: The Partnership has determined to begin an orderly liquidation of the Partnership's remaining assets. Although there can be no assurance as to the timing of any liquidation, it is anticipated that such liquidation would result in distributions to the limited partners of the cash proceeds from the sale of the Partnership's remaining property, subject to cash reserve requirements, to be followed by a dissolution of the Partnership. Consummation of any contract to sell Palm Bay Apartments would be contingent upon the approval of the sale by the limited partners. 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 Palm Bay Apartments is sold and all liabilities of the Partnership are provided for. 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 - ------- ----------------- 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 (the "Partnerships"). Plaintiffs allege that McNeil Investors, Inc., its affiliate McNeil Real Estate Management, Inc. and three of their senior officers and/or directors (collectively, the "Defendants") breached their fiduciary duties and certain obligations under the respective Amended Partnership Agreement. Plaintiffs allege that Defendants have rendered such Units highly illiquid and artificially depressed the prices that are available for Units on the resale market. Plaintiffs also allege that Defendants engaged in a course of conduct to prevent the acquisition of Units by an affiliate of Carl Icahn by disseminating purportedly false, misleading and inadequate information. Plaintiffs further allege that Defendants acted to advance their own personal interests at the expense of the Partnerships' public unit holders by failing to sell Partnership properties and failing to make distributions to unitholders. On December 16, 1996, the Plaintiffs filed a consolidated and amended complaint. Plaintiffs are suing for breach of fiduciary duty, breach of contract and an accounting, alleging, among other things, that the management fees paid to the McNeil affiliates over the last six years are excessive, that these fees should be reduced retroactively and that the respective Amended Partnership Agreements governing the Partnerships are invalid. Defendants filed a demurrer to the consolidated and amended complaint and a motion to strike on February 14, 1997, seeking to dismiss the consolidated and amended complaint in all respects. A hearing on Defendant's demurrer and motion to strike was held on May 5, 1997. The Court granted Defendants' demurrer, dismissing the consolidated and amended complaint with leave to amend. Plaintiffs have until May 27, 1997 to file a second amended complaint, unless otherwise agreed to by the parties. 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 Agreement 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 1997 and 1996. 27. Financial Data Schedule for the quarter ended March 31, 1997. (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 March 31, 1997. 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 May 15, 1997 By: /s/ Ron K. Taylor - -------------- ----------------------------------------- Date Ron K. Taylor President and Director of McNeil Investors, Inc. (Principal Financial Officer) May 15, 1997 By: /s/ Brandon K. Flaming - -------------- ----------------------------------------- Date Brandon K. Flaming Vice President of McNeil Investors, Inc. (Principal Accounting Officer) EX-27 2
5 3-MOS DEC-31-1997 MAR-31-1997 577,085 0 0 0 0 0 0 0 7,030,619 0 1,987,254 0 0 0 0 7,030,619 446,579 454,096 0 0 318,518 0 46,334 89,244 0 0 0 0 0 89,244 0 0
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