-----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, QfM43MJ37cHhVnIDlIsZESK3Ry7e0+uelxfJ0Z674O5K499wggRDHBbc0O3H7wl1 63xcxg/M3Svn7aWrfUkIBA== 0000702657-95-000008.txt : 19951119 0000702657-95-000008.hdr.sgml : 19951119 ACCESSION NUMBER: 0000702657-95-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCNEIL REAL ESTATE FUND XIV LTD CENTRAL INDEX KEY: 0000702657 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 942822299 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12915 FILM NUMBER: 95591587 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 September 30, 1995 ---------------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to_____________ Commission file number 0-12915 MCNEIL REAL ESTATE FUND XIV, LTD. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 94-2822299 - ------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (214) 448-5800 ---------------------------- Indicate by check mark whether the registrant, (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ MCNEIL REAL ESTATE FUND XIV, LTD. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- BALANCE SHEETS (Unaudited)
September 30, December 31, 1995 1994 ------------- ------------ ASSETS - ------ Real estate investments: Land..................................................... $ 6,833,471 $ 6,833,471 Buildings and improvements............................... 45,252,651 44,237,251 ----------- ----------- 52,086,122 51,070,722 Less: Accumulated depreciation.......................... (21,258,248) (19,674,640) ----------- ----------- 30,827,874 31,396,082 Cash and cash equivalents................................... 1,931,346 1,045,158 Cash segregated for security deposits....................... 394,166 372,157 Accounts receivable......................................... 384,095 394,285 Prepaid expenses and other assets........................... 214,369 230,521 Escrow deposits............................................. 813,534 655,767 Deferred borrowing costs, net of accumulated amorti- zation of $225,947 and $170,822 at September 30, 1995 and December 31, 1994, respectively................. 1,168,296 1,120,896 ----------- ----------- $ 35,733,680 $ 35,214,866 =========== =========== LIABILITIES AND PARTNERS' EQUITY (DEFICIT) - ------------------------------------------ Mortgage notes payable, net................................. $ 27,978,584 $ 27,161,556 Accounts payable............................................ 173,199 79,005 Accrued interest............................................ 202,263 203,282 Accrued property taxes...................................... 276,085 84,880 Other accrued expenses...................................... 148,519 157,671 Payable to affiliates - General Partner..................... 1,101,790 991,530 Security deposits and deferred rental revenue............... 385,540 384,769 ----------- ----------- 30,265,980 29,062,693 ----------- ----------- Partners' equity (deficit): Limited partners - 100,000 limited partnership units authorized; 86,534 limited partnership units outstanding...................................... 7,866,091 8,094,114 General Partner.......................................... (2,398,391) (1,941,941) ----------- ----------- 5,467,700 6,152,173 ----------- ----------- $ 35,733,680 $ 35,214,866 =========== ===========
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. MCNEIL REAL ESTATE FUND XIV, LTD. STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ----------------------------- ----------------------------- 1995 1994 1995 1994 ---------- ---------- ---------- ---------- Revenue: Rental revenue................ $2,305,697 $2,256,271 $6,886,211 $6,607,223 Interest...................... 25,850 9,202 80,005 21,414 Gain on legal settlement...... - - 39,841 - --------- --------- --------- --------- Total revenue............... 2,331,547 2,265,473 7,006,057 6,628,637 --------- --------- --------- --------- Expenses: Interest...................... 680,161 680,013 2,019,180 2,048,520 Depreciation and amortization................ 521,427 478,377 1,583,608 1,435,131 Property taxes................ 193,390 179,517 559,998 542,635 Personnel expenses............ 251,719 253,827 765,204 729,446 Utilities..................... 124,667 113,111 350,929 351,206 Repair and maintenance........ 257,856 238,115 733,479 748,589 Property management fees - affiliates........... 115,579 115,506 343,552 332,609 Other property operating expenses.................... 142,144 138,062 428,287 410,582 General and administrative.... 139,667 11,127 173,418 46,572 General and administrative - affiliates.................. 90,517 107,514 278,728 278,344 --------- --------- --------- --------- Total expenses.............. 2,517,127 2,315,169 7,236,383 6,923,634 --------- --------- --------- --------- Net loss......................... $ (185,580) $ (49,696) $ (230,326) $ (294,997) ========= ========= ========= ========= Net loss allocated to limited partners.............. $ (183,724) $ (49,199) $ (228,023) $ (292,047) Net loss allocated to General Partner............... (1,856) (497) (2,303) (2,950) --------- --------- --------- --------- Net loss......................... $ (185,580) $ (49,696) $ (230,326) $ (294,997) ========= ========= ========= ========= Net loss per limited partnership unit.............. $ (2.12) $ (0.57) $ (2.64) $ (3.37) ========= ========= ========= =========
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. MCNEIL REAL ESTATE FUND XIV, LTD. STATEMENTS OF PARTNERS' EQUITY (DEFICIT) (Unaudited) For the Nine Months Ended September 30, 1995 and 1994
Total Partners' General Limited Equity Partner Partners (Deficit) ------------ ---------- ---------- Balance at December 31, 1993.............. $(1,365,025) $8,391,866 $7,026,841 Net loss.................................. (2,950) (292,047) (294,997) Contingent Management Incentive Distribution........................... (408,381) - (408,381) --------- --------- --------- Balance at September 30, 1994............. $(1,776,356) $8,099,819 $6,323,463 ========== ========= ========= Balance at December 31, 1994.............. $(1,941,941) $8,094,114 $6,152,173 Net loss.................................. (2,303) (228,023) (230,326) Contingent Management Incentive Distribution........................... (454,147) - (454,147) ---------- --------- --------- Balance at September 30, 1995............. $(2,398,391) $7,866,091 $5,467,700 ========== ========= =========
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. MCNEIL REAL ESTATE FUND XIV, LTD. STATEMENTS OF CASH FLOWS (Unaudited) Increase in Cash and Cash Equivalents
Nine Months Ended September 30, ---------------------------------- 1995 1994 ---------- ----------- Cash flows from operating activities: Cash received from tenants........................ $6,863,411 $ 6,640,226 Cash received from legal settlement............... 39,841 - Cash paid to suppliers............................ (2,508,996) (2,175,673) Cash paid to affiliates........................... (966,167) (358,238) Interest received................................. 80,005 21,414 Interest paid..................................... (1,861,383) (1,891,068) Deferred borrowing costs paid..................... (107,525) 5,435 Property taxes paid and escrowed.................. (355,935) (450,418) ---------- ---------- Net cash provided by operating activities............ 1,183,251 1,791,678 ---------- ---------- Cash flows from investing activities: Additions to real estate investments.............. (1,015,400) (738,600) ---------- ---------- Cash flows from financing activities: Principal payments on mortgage notes payable......................................... (397,430) (366,839) Proceeds from refinancing of mortgage note payable.................................... 1,115,767 - ---------- ---------- Net cash provided by (used in) financing activities........................................ 718,337 (366,839) ---------- ---------- Net increase in cash and cash equivalents............ 886,188 686,239 Cash and cash equivalents at beginning of period............................................ 1,045,158 331,350 ---------- ---------- Cash and cash equivalents at end of period........... $ 1,931,346 $ 1,017,589 ========== ==========
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. MCNEIL REAL ESTATE FUND XIV, LTD. STATEMENTS OF CASH FLOWS (Unaudited) Reconciliation of Net Loss to Net Cash Provided by Operating Activities
Nine Months Ended September 30, ---------------------------------- 1995 1994 ----------- ---------- Net loss............................................. $ (230,326) $(294,997) --------- -------- Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization..................... 1,583,608 1,435,131 Amortization of deferred borrowing costs.......... 60,125 52,440 Amortization of discounts on mortgage notes payable................................... 98,691 102,404 Changes in assets and liabilities: Cash segregated for security deposits........... (22,009) (50,446) Accounts receivable............................. 10,190 55,488 Prepaid expenses and other assets............... 16,152 18,382 Escrow deposits................................. (157,767) 11,750 Deferred borrowing costs........................ (107,525) 5,435 Accounts payable................................ 94,194 (36,301) Accrued interest................................ (1,019) 2,608 Accrued property taxes.......................... 191,205 151,790 Other accrued expenses.......................... (9,152) 54,394 Payable to affiliates - General Partner......... (343,887) 252,714 Security deposits and deferred rental revenue....................................... 771 30,886 --------- --------- Total adjustments............................. 1,413,577 2,086,675 --------- --------- Net cash provided by operating activities............ $1,183,251 $1,791,678 ========= =========
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. McNEIL REAL ESTATE FUND XIV, LTD. Notes to Financial Statements (Unaudited) September 30, 1995 NOTE 1. - ------- McNeil Real Estate Fund XIV, Ltd. (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 affiliated with Robert A. McNeil. The Partnership is governed by an agreement of limited partnership ("Amended Partnership Agreement") that was adopted September 20, 1991. The principal place of business for the Partnership and the General Partner is 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240. In the opinion of management, the financial statements reflect all adjustments necessary for a fair presentation of the Partnership's financial position and results of operations. All adjustments were of a normal recurring nature. However, the results of operations for the nine months ended September 30, 1995 are not necessarily indicative of the results to be expected for the year ending December 31, 1995. NOTE 2. - ------- The financial statements should be read in conjunction with the financial statements contained in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994, and the notes thereto, as filed with the Securities and Exchange Commission, which is available upon request by writing to McNeil Real Estate Fund XIV, Ltd., c/o McNeil Real Estate Management, Inc., Investor Services, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240. NOTE 3. - ------- Certain prior period amounts within the accompanying financial statements have been reclassified to conform with current year presentation. NOTE 4. - ------- The Partnership pays property management fees equal to 5% of the gross rental receipts of the Partnership's properties to McNeil Real Estate Management, Inc. ("McREMI"), an affiliate of the General Partner, for providing property management services for the Partnership's residential and commercial properties and leasing services for its residential properties. McREMI may also choose to provide leasing services for the Partnership's commercial properties, in which case McREMI will receive property management fees from such commercial properties equal to 3% of the property's gross rental receipts plus leasing commissions based on the prevailing market rate for such services where the property is located. The Partnership reimburses McREMI for its costs, including overhead, of administering the Partnership's affairs. Under the terms of the Amended Partnership Agreement, the Partnership is paying a Management Incentive Distribution ("MID") to the General Partner. The maximum MID is calculated as 1% of the tangible asset value of the Partnership. Tangible asset value is determined by using the greater of (i) an amount calculated by applying a capitalization rate of 9% to the annualized net operating income of each property or (ii) a value of $10,000 per apartment unit for residential property and $50 per gross square foot for commercial property to arrive at the property tangible asset value. The property tangible asset value is then added to the book value of all other assets excluding intangible assets. Prior to July 1, 1993, the MID consisted of two components: (i) the fixed portion which was payable without respect to the net income of the Partnership and was equal to 25% of the maximum MID (the "Fixed MID") and (ii) a contingent portion which is payable only to the extent of the lesser of the Partnership's excess cash flow, as defined, or net operating income (the "Entitlement Amount") and was equal to up to 75% of the maximum MID (the "Contingent MID"). The maximum MID percentage decreases subsequent to 1999. The General Partner amended the Amended Partnership Agreement as a settlement to a class action complaint. This amendment eliminated the Fixed MID and makes the entire MID payable to the extent of the Entitlement Amount. In all other respects, the calculation and payment of the MID will remain the same. This modified MID became effective July 1, 1993. Fixed MID was payable in limited partnership units ("Units") unless the Entitlement Amount exceeded the amount necessary to pay the Contingent MID, in which case, at the General Partner's option, the Fixed MID could have been paid in cash to the extent of such excess. Contingent MID will be paid to the extent of the Entitlement Amount, and may be paid (i) in cash, unless there is insufficient cash to pay the distribution in which event any unpaid portion not taken in Units will be deferred and is payable, without interest, from the first available cash and/or (ii) in Units. A maximum of 50% of the MID may be paid in Units. The number of Units issued in payment of the MID is based on the greater of $50 per Unit or the net tangible asset value, as defined, per Unit. Any amount of the MID that is paid to the General Partner in Units will be treated as if cash was distributed to the General Partner. The Fixed MID was treated as a fee payable to the General Partner by the Partnership for services rendered. The Contingent MID represents a return of equity to the General Partner for increasing cash flow, as defined, and accordingly, is treated as a distribution to the General Partner in compliance with the Amended Partnership Agreement. Compensation, reimbursements and distributions paid to or accrued for the benefit of the General Partner and its affiliates are as follows:
Nine Months Ended September 30, -------------------------------- 1995 1994 -------- -------- Property management fees - affiliates................ $343,552 $332,609 Charged to general and administrative - affiliates: Partnership administration........................ 278,728 278,344 ------- ------- $622,280 $610,953 ======= ======= Charged to General Partner's deficit: Contingent Management Incentive Distribution.................................... $454,147 $408,381 ======= =======
NOTE 5. - ------- On March 13, 1995, the Partnership refinanced the Windrock mortgage note. The new mortgage note, in the amount of $3,450,000, bears interest at 9.44% per annum, and requires monthly principal and interest payments of $28,859. The maturity date of the new mortgage note is April 1, 2002. Cash proceeds from the refinancing transaction are as follows:
New loan proceeds....................... $ 3,450,000 Existing first lien retired............. (1,894,233) Existing second lien retired............ (440,000) ---------- Cash proceeds from refinancing.......... $ 1,115,767 ==========
The Partnership incurred $107,525 of deferred borrowing costs related to the refinancing of the Windrock mortgage note. The Partnership was also required to fund $184,172 into various escrows for capital improvements, property taxes and insurance. NOTE 6. - ------- The Partnership filed claims with the United States Bankruptcy Court for the Northern District of Texas, Dallas Division (the "Bankruptcy Court") against Southmark for damages relating to improper overcharges, breach of contract and breach of fiduciary duty. The Partnership settled these claims in 1991, and such settlement was approved by the Bankruptcy Court. An Order Granting Motion to Distribute Funds to Class 8 Claimants dated April 14, 1995 was issued by the Bankruptcy Court. In accordance with the Order, in May 1995, the Partnership received in full satisfaction of its claims, $30,118 in cash, and common and preferred stock in the reorganized Southmark. The cash and stock represent the Partnership's pro-rata share of Southmark assets available for Class 8 Claimants. The Partnership sold the Southmark common and preferred stock in May, 1995, for $9,723 which, when combined with the cash proceeds from Southmark, resulted in a gain on settlement of litigation of $39,841. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - ------- --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- The Partnership was formed to acquire, operate and ultimately dispose of a portfolio of income-producing real properties. At September 30, 1995, the Partnership owned four apartment properties and three shopping centers. All of the Partnership's properties are subject to mortgage notes. On March 13, 1995, the Partnership refinanced Windrock Apartments with a new $3,450,000 mortgage note. Proceeds from the new mortgage were used to payoff the prior first and second mortgage notes encumbering Windrock Apartments, to fund various escrows for the payment of property taxes, insurance, repairs and replacements, and to pay for loan fees and other costs associated with obtaining the new mortgage note. Residual proceeds of approximately $824,000 were added to the Partnership's cash reserves. The Partnership's next maturing mortgage note does not come due until April 1, 2002. RESULTS OF OPERATIONS - --------------------- For the first nine months of 1995, the Partnership incurred a loss of $230,326, an improvement over the $294,997 loss for the first nine months of 1994. For the third quarter of 1995, the Partnership recorded a net loss of $185,580 as opposed to a loss of $49,696 in the year earlier quarter. As discussed below, the net loss for the third quarter of 1995 was impacted be increased general and administrative expenses. For year-to-date results, improving property operations achieved higher rental revenues while limiting the increase in operating expenses. Revenues: Rental revenue for the first nine months of 1995 increased $278,988 or 4.2% over rental revenue earned during the first nine months of 1994. Rental revenue increased at five of the Partnership's seven properties. Increased rental rates and improving occupancy rates led to increases ranging from 20% at Redwood Plaza to 2.8% at Country Hills Plaza. Redwood Plaza became fully leased during the second quarter of 1995. New tenants in 1994 and 1995 have boosted base rental rates, the occupancy rate, and expense recoveries at the Salt Lake City property. Particularly noteworthy was the $126,000 or 7.6% increase in rental revenue at Embarcadero Club Apartments. The Partnership has invested substantial resources in capital improvements at Embarcadero Club Apartments that are increasing rental revenue at the property. Rental revenue realized at Midvale Plaza decreased 2.8%. Although occupancy remains high at the Utah property, 1995 rental rates decreased compared to 1994 rates. A decrease in average occupancy was responsible for a 4.3% decrease in rental revenue achieved at Windrock Apartments. Several new apartment communities have been completed in the sub-market in which Windrock Apartments is located. The General Partner intends to use some of the proceeds from the refinancing of the Windrock mortgage note to make capital improvements at Windrock Apartments that will, hopefully, allow the El Paso property to compete effectively against the newer apartment communities. Interest revenue increased four-fold to $80,005 during the first nine months of 1995. Steps taken during the course of 1994 to raise the Partnership's cash reserves have resulted in increased funds invested in interest-bearing accounts. During the second quarter, the Partnership received $39,841 in cash and securities from Southmark Corporation in settlement of the Partnership's claims in the Southmark bankruptcy case. Proceeds from the settlement were recorded as a gain in the second quarter of 1995. Expenses: Partnership expenses increased $312,749 or 4.5% for the first nine months of 1995 compared to the same period of 1994. For the third quarter, expenses increased $201,958 or 8.7% compared to the third quarter of 1994. Expenses increased at five of the Partnership's seven properties. Expenses were unchanged at Midvale Plaza, and decreased 2.7% at Thunder Hollow Apartments. The increased expenses were concentrated in depreciation and amortization, and general and administrative expenses. Depreciation and amortization expense increased $148,477 or 10.3% in the first nine months of 1995 compared to the first nine months of 1994. Increased depreciation and amortization expense is due to the continuing investment of Partnership resources into capital improvements. In the year since September 30, 1994, the Partnership has invested $1.4 million in capital improvements. These capital improvements are generally being depreciated over lives ranging from five to ten years. General and administrative increased $126,846 and $128,540, respectively, for the nine month and three month periods ended September 30, 1995 compared to the same periods of 1994. The Partnership incurred approximately $122,000 of costs relating to evaluation and dissemination of information with regards to an unsolicited tender offer. See Item 5 - Other Information. All other expense line items, both individually and as a group, increased less than 5% in 1995 compared to 1994. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Partnership's net loss for the first nine months was $230,326, an improvement from the $294,997 loss reported for the first nine months of 1994. Cash flow from operating activities decreased to $1,183,251 from $1,791,678 in the first nine months of 1994. The principal cause of the decrease in cash flow from operating activities was a $607,929 increase in cash paid to affiliates. During 1994, the General Partner determined not to collect the Management Incentive Distribution or the reimbursable administrative costs due to an affiliate of the General Partner until such time as the Partnership's cash position improved. Due to these measures, cash reserves increased to $1,045,158 at the end of 1994 from $331,350 at the beginning of 1994. With the additional cash reserves provided by the March 1995 refinancing of the Windrock mortgage note, the General Partner determined to resume payments of reimbursable costs. As a result, the Partnership paid, in addition to reimbursable costs incurred during 1995, $294,446 of reimbursable costs incurred by the Partnership during the course of 1994. Payments of Management Incentive Distribution remain suspended. Another factor in the decrease in cash flow from operating activities in the first half was the refinancing of the Windrock mortgage note. The Partnership expended $107,525 in loan fees and related costs to obtain the new Windrock mortgage note. Additionally, $184,172 of the increase in cash paid to suppliers was the result of various escrows funded with loan proceeds for recurring replacements and other repairs to Windrock Apartments. Net of the retired mortgages, loan costs and funded escrows, the Windrock refinancing yielded proceeds of $824,070 for the Partnership. The balance of changes in cash flow from operating activities is attributable to the generally improving performance of the Partnership's properties. The Partnership continues to invest significant resources into capital improvements at its properties. During the first nine months of 1995, capital improvement expenditures increased to $1,014,400 from $738,600 during the first nine months of 1994. The Partnership has budgeted an additional $185,000 of capital improvements for the balance of 1995. Short Term Liquidity: Due to the General Partner's decision to postpone collection of the Management Incentive Distribution and proceeds received from the refinancing of the Windrock mortgage note, the Partnership currently enjoys a substantially better cash position that it did in 1994. The Partnership's cash reserves will be needed in light of the aging condition of the Partnership's properties. The Partnership will continue to invest in capital improvements for its properties. The General Partner believes that capital improvements are necessary to allow the Partnership to increase its rental revenues in the competitive markets in which the Partnership's properties operate. These expenditures also allow the Partnership to reduce certain repair and maintenance expenses from amounts that would otherwise be incurred. At September 30, 1995, the Partnership held $1,931,346 of cash and cash equivalents, up $886,188 from the balance at the end of 1994. The General Partner considers this level of cash reserves to be adequate to meet the Partnership's operating needs for the balance of 1995. The General Partner anticipates that cash generated from operations for the remainder of 1995 will be sufficient to fund the Partnership's budgeted capital improvements and debt service requirements. However, 1995 cash flow from operations likely will not be adequate to pay the Management Incentive Distribution due to the General Partner. For now, the General Partner is electing to defer collection of the Management Incentive Distribution. Long Term Liquidity: For the long term, property operations will remain the primary source of funds. In this regard, the General Partner expects that the capital improvements made by the Partnership during the past two years will yield improved cash flow from property operations for the balance of 1995. Furthermore, the General Partner had budgeted an additional $185,000 of capital improvements for 1995. If the Partnership's cash position deteriorates, the General Partner may elect to defer certain of the capital improvements, except where such improvements are expected to increase the competitiveness or marketability of the Partnership's properties. The General Partner has established a revolving credit facility, not to exceed $5,000,000 in the aggregate, which will be available on a "first-come, first-served" basis to the Partnership and other affiliated partnerships if certain conditions are met. Borrowings under the facility may be used to fund deferred maintenance, refinancing obligations and working capital needs. There is no assurance that the Partnership will receive additional funds from the facility because no amount will be reserved for any particular partnership. As of September 30, 1995, $2,362,004 remained available from the facility; however, additional funds could become available as other partnerships repay borrowings. As an additional source of liquidity, the General Partner may, from time to time, attempt to sell Partnership properties judged to be mature considering the circumstances of the market in which the properties are located, as well as the Partnership's need for liquidity. However, there can be no guarantee that the Partnership will be able to sell any of its properties for an amount sufficient to retire the related mortgage note and still provide cash proceeds to the Partnership, or that such proceeds could be timed to coincide with the liquidity needs of the Partnership. Currently, no Partnership properties are being marketed for sale. Distributions: With the exception of the Contingent MID, distributions to Partners have been suspended since 1986 as a part of the General Partner's policy of maintaining adequate cash reserves. Distributions to Unit holders will remain suspended for the foreseeable future. Although the Partnership recorded a Contingent MID of $454,147 for the first nine months of 1995, payments of Contingent MID have been suspended since the beginning of 1994. The General Partner will continue to monitor the cash reserves and working capital requirements of the Partnership to determine when cash flows will support resumption of Contingent MID payments and distributions to Unit holders. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - ------- ----------------- 1) HCW Pension Real Estate Fund, Ltd. et al. v. Ernst & Young, BDO Seidman et al (Case #92-06560-A). This suit was filed on behalf of the Partnership and other affiliated partnerships (the "Affiliated Partnerships") on May 26, 1992, in the 14th Judicial District Court of Dallas County. The petition sought recovery against the Partnership's former auditors, BDO Seidman, for negligence and fraud in failing to detect and/or report overcharges of fees/expenses by Southmark, the former general partner. The former auditors asserted counterclaims against the Affiliated Partnerships based on alleged fraudulent misrepresentations made to the auditors by the former management of the Affiliated Partnerships (Southmark) in the form of client representation letters executed and delivered to the auditors by Southmark management. The counterclaims sought recovery of attorneys' fees and costs incurred in defending this action. The original petition also alleged causes of action against certain former officers and directors of the Partnership's original general partner for breach of fiduciary duty, fraud and conspiracy relating to the improper assessment and payment of certain administrative fees/expenses. On January 11, 1994 the allegations against the former officers and directors were dismissed. The trial court granted summary judgment in favor of Ernst & Young and BDO Seidman on the fraud and negligence claims based on the statute of limitations. The Affiliated Partnerships appealed the summary judgment to the Dallas Court of Appeals. In August 1995, the Appeals Court upheld all of the summary judgments in favor of BDO Seidman. In exchange for the plaintiff's agreement not to file any motions for rehearing or further appeals, BDO Seidman agreed that it will not pursue the counterclaims against the Partnership. 2) High River Limited Partnership vs. McNeil Partners, L.P., McNeil Investors, Inc., McNeil Pacific Investors 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., Robert A. McNeil and Carole J. McNeil (L95012) - High River ("HR") filed this action in the United States District Court for the Southern District of New York against McNeil Partners, McNeil Investors and Mr. and Mrs. McNeil requesting, among other things, names and addresses of the Partnership's limited partners. The District Court issued a preliminary injunction against the Partnerships requiring them to commence mailing materials relating to High River tender offer materials on August 14, 1995. On August 18, 1995, McNeil Partners, McNeil Investors, the Partnerships, and Mr. and Mrs. McNeil filed an Answer and Counterclaim. The Counterclaim principally asserts (1) the HR tender offers have been undertaken in violation of the federal securities laws, on the basis of material, non-public, and confidential information, and (2) that the HR offer documents omit and/or misrepresent certain material information about the HR tender offers. The counterclaim seeks a preliminary and permanent injunction against the continuation of the HR tender offers and, alternatively, ordering corrective disclosure with respect to allegedly false and misleading statements contained in the tender offer documents. The High River tender offer expired on October 6, 1995. The Defendants believe that the action is moot and expect the matter to be dismissed shortly. 3) Robert Lewis vs. 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, McNeil Real Estate Fund X, Ltd. and McNeil Real Estate Fund XV, Ltd. Plaintiff brings this action on his own behalf and as a class action on behalf of the class of all limited partners of McNeil Pacific Investors Fund 1972, 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, Ltd. (the "Partnerships") as of August 4, 1995. Plaintiff alleges that McNeil Partners, L.P., McNeil Investors, Inc., Robert A. McNeil and other senior officers (collectively, the "Defendants") breached their fiduciary duties by, among other things, (1) failing to attempt to sell the properties owned by the Partnerships ("Properties") and extending the lives of the Partnerships indefinitely, contrary to the Partnerships' business plans, (2) paying distributions to themselves and generating fees for their affiliates, (3) refusing to make significant distributions to the class members, despite the fact that the Partnerships have positive cash flows and substantial cash balances, and (4) failing to take steps to create an auction market for Partnership equity interests, despite the fact that a third party bidder filed tender offers for approximately forty-five percent (45%) of the outstanding units of each of the Partnerships. Plaintiff also claims that Defendants have breached the Partnership Agreements by failing to take steps to liquidate the Properties and by their alteration of the Partnerships' primary purposes, their acts in contravention of these agreements, and their use of the Partnership assets for their own benefit instead of for the benefit of the Partnerships. The Defendants deny that there is any merit to Plaintiff's allegations and intend to vigorously defend this action. 4) James F. Schofield, Gerald C. Gillett and Donna S. Gillett vs. McNeil Partners, L.P., McNeil Investors, Inc., McNeil Real Estate Management, Inc., Robert A. McNeil, Carole J. McNeil, 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. et al - Superior Court of the State of California for the County of Los Angeles, Case No. BC133799 (Class and Derivative Action Complaint) and United States District Court, Southern District of New York, Case No. 95CIV.6711 (Class and Derivative Action Complaint) These are corporate/securities class and derivative actions brought in state and federal court by limited partners of each of the nine (9) limited partnerships that are named as Nominal Defendants as listed above ("Partnerships"). Plaintiffs allege that Defendants McNeil Investors, Inc., its affiliate McNeil Real Estate Management, Inc. and four (4) of their senior officers and/or directors have breached their fiduciary duties. Specifically, Plaintiffs allege that Defendants have caused the Partnerships to enter into several wasteful transactions that have no business purpose or benefit to the Partnerships and which have rendered such units highly illiquid and artificially depressed the prices that are available for units on the limited resale market. Plaintiffs also allege that Defendants have engaged in a course of conduct to prevent the acquisition of units by Carl Icahn by disseminating false, misleading and inadequate information. Plaintiffs further allege that Defendants have 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 and, thereby, have breached the Partnership Agreements. The Defendants deny that there is any merit to Plaintiff's allegations and intend to vigorously defend these actions. 5) Alfred Napoletano vs. 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) Plaintiff brings this class action on behalf of a class of all persons and entities who are current owners of units and/or are limited partners in one or more of the partnerships referenced above ("Partnerships"). Plaintiff alleges that Defendants have breached their fiduciary duties to the class members by, among other things, (1) taking steps to prevent the consummation of the High River tender offers, (2) failing to take steps to maximize unitholders' or limited partners' values, including failure to liquidate the properties owned by the Partnerships, (3) managing the Partnerships so as to extend indefinitely the present fee arrangements, and (4) paying itself and entities owned and controlled by the general partner excessive fees and reimbursements of general and administrative expenses. The Defendants deny that there is any merit to Plaintiff's allegations and intend to vigorously defend this action. 6) Warren Heller vs. 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) Plaintiff brings this class action on behalf of a class of all persons and entities who are current owners of units and/or are limited partners in one or more of the partnerships referenced above ("Partnerships"). Plaintiff alleges that Defendants have breached their fiduciary duties to the class members by, among other things, (1) taking steps to prevent the consummation of the High River tender offers, (2) failing to take steps to maximize unitholders' or limited partners' values, including failure to liquidate the properties owned by the Partnerships, (3) managing the Partnerships so as to extend indefinitely the present fee arrangements, and (4) paying itself and entities owned and controlled by the general partner excessive fees and reimbursements of general and administrative expenses. The Defendants deny that there is any merit to Plaintiff's allegations and intend to vigorously defend this action. 7) High River Limited Partnership v. McNeil Partners L.P., McNeil Investors, Inc., McNeil Pacific Investors 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., Robert A. McNeil and Carole J. McNeil - United States District Court for the Southern District of New York, (Case No. 95 Civ. 9488) (Second Action). On November 7, 1995, High River commenced a second complaint which alleges, inter alia, that McNeil's Schedule 14D-9 filed in connection with the High River tender offers was materially false and misleading, in violation of Sections 14(d) and 14(e) of the Securities Exchange Act of 1934, 15 U.S.C. Section 78n(d) and (e), and the SEC Regulations promulgated thereunder; and that High River further alleges that McNeil has wrongfully refused to admit High River as a limited partner to the Funds. Additionally, High River purports to assert claims derivatively on behalf of Funds IX, XI, XV, XXIV and XXV, for breach of contract and breach of fiduciary duty, asserting that McNeil has charged these Partnerships excessive fees. High River's complaint seeks, inter alia, preliminary injunctive relief requiring McNeil to admit High River as a limited partner in each of the ten Partnerships and to transfer the tendered units of interest in the Partnerships to High River; an unspecified award of damages payable to High River and an additional unspecified award of damages payable to certain of the Partnerships; an order that defendants must discharge their fiduciary duties and must account for all fees they have received from certain of the Partnerships; and attorneys' fees. The Defendants deny that there is any merit to Plaintiff's allegations and intend to vigorously defend this action. ITEM 5. OTHER INFORMATION - ------- ----------------- As previously disclosed, on an unsolicited basis, High River Limited Partnership ("High River"), a partnership controlled by Carl Icahn, announced that it had commenced an offer to purchase 38,940 units of limited partnership interest in the Partnership (approximately 45% of the Partnership's units) at $95 per unit. The tender offer was originally due to expire on August 31, 1995. In connection therewith, the parties entered into certain negotiations and discussions regarding, among other things, possible transactions between the parties and their affiliates, McNeil Partners, McNeil Investors, and McREMI. On September 19, 1995, the parties having not reached any resolution on the terms of the proposed transactions, McNeil Partners terminated the parties' discussion. High River had extended its offer several times until the final expiration date of October 6, 1995. On October 11, 1995 High River announced that based on preliminary information furnished by the depository for the tender offer, approximately 9,428 units of the Partnership were tendered and not withdrawn prior to the expiration of the tender offer. On October 12, 1995, McNeil Partners announced that it would continue to explore potential avenues to enhance the value of the Partnership units, which may include, among other things, asset sales, refinancings of Partnership properties followed by distributions or tender offers for units of limited partnership. There can be no assurance that any such plans will develop or that any such transactions will be consummated. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ------- -------------------------------- (a) Exhibits.
Exhibit Number Description ------- ----------- 4. Amended and Restated Limited Partnership Agreement dated September 20, 1991. (1) 11. Statement regarding computation of net loss per limited partnership unit: net loss per limited partnership unit is computed by dividing net loss allocated to the limited partners by the number of limited partnership units outstanding. Per unit information has been computed based on 86,534 limited partnership units outstanding in 1995 and 1994. 27. Financial Data Schedule for the quarter ended September 30, 1995.
(1) Incorporated by reference to the Annual Report of Registrant, on Form 10-K for the period ended December 31, 1991, as filed on March 30, 1992. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended September 30, 1995. McNEIL REAL ESTATE FUND XIV, LTD. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized:
McNEIL REAL ESTATE FUND XIV, Ltd. By: McNeil Partners, L.P., General Partner By: McNeil Investors, Inc., General Partner November 14, 1995 By: /s/ Donald K. Reed - ------------------- ------------------------------------------------- Date Donald K. Reed President and Chief Executive Officer November 14, 1995 By: /s/ Robert C. Irvine - ------------------ ------------------------------------------------- Date Robert C. Irvine Chief Financial Officer of McNeil Investors, Inc. Principal Financial Officer November 14, 1995 By: /s/ Brandon K. Flaming - ------------------ ------------------------------------------------- Date Brandon K. Flaming Chief Accounting Officer of McNeil Real Estate Management, Inc.
EX-27 2
5 9-MOS DEC-31-1995 SEP-30-1995 1,931,346 0 384,095 0 0 0 52,086,122 (21,258,248) 35,733,680 0 27,978,584 0 0 0 0 35,733,680 6,886,211 7,006,057 0 0 5,217,203 0 2,019,180 (230,326) 0 (230,326) 0 0 0 (230,326) 0 0
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