-----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, NuiOlpi2zGP0LM/9/Wfcw4LVpNQO9Lv4z6Vnr3/3ilDvmIiNhL3+RUZw2IfRHgqW R+/TTnws0nKtwCKjN5S5VA== 0000702657-97-000014.txt : 19971115 0000702657-97-000014.hdr.sgml : 19971115 ACCESSION NUMBER: 0000702657-97-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 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: SEC FILE NUMBER: 000-12915 FILM NUMBER: 97717445 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, 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 0-12915 -------- 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 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 REAL ESTATE FUND XIV, LTD. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- BALANCE SHEETS (Unaudited)
September 30, December 31, 1997 1996 ---------------- ---------------- ASSETS - ------ Real estate investments: Land..................................................... $ 4,663,828 $ 4,663,828 Buildings and improvements............................... 36,324,866 35,944,879 -------------- -------------- 40,988,694 40,608,707 Less: Accumulated depreciation.......................... (20,359,661) (18,951,741) -------------- -------------- 20,629,033 21,656,966 Assets held for sale, net................................... 1,931,823 7,942,855 Cash and cash equivalents................................... 3,298,659 1,903,902 Cash segregated for security deposits....................... 403,329 399,366 Accounts receivable......................................... 248,667 385,721 Prepaid expenses and other assets........................... 145,421 173,908 Escrow deposits............................................. 653,332 681,430 Deferred borrowing costs, net of accumulated amortization of $417,998 and $346,255 at September 30, 1997, and December 31, 1996, respectively............................................. 972,994 1,044,737 -------------- -------------- $ 28,283,258 $ 34,188,885 ============== ============== LIABILITIES AND PARTNERS' EQUITY (DEFICIT) - ------------------------------------------ Mortgage notes payable, net................................. $ 23,992,176 $ 27,423,689 Accounts payable............................................ 69,223 103,747 Accrued interest............................................ 165,550 197,124 Accrued property taxes...................................... 124,853 100,981 Other accrued expenses...................................... 66,970 82,329 Payable to affiliates - General Partner..................... 26,791 1,388,371 Security deposits and deferred rental revenue............... 398,454 411,318 -------------- -------------- 24,844,017 29,707,559 -------------- -------------- Partners' equity (deficit): Limited partners - 100,000 limited partnership units authorized; 86,534 limited partnership units outstanding...................................... 3,982,385 7,648,141 General Partner.......................................... (543,144) (3,166,815) -------------- -------------- 3,439,241 4,481,326 -------------- -------------- $ 28,283,258 $ 34,188,885 ============== ==============
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, --------------------------------- --------------------------------- 1997 1996 1997 1996 -------------- --------------- -------------- -------------- Revenue: Rental revenue................ $ 2,235,232 $ 2,394,794 $ 6,898,514 $ 7,015,762 Interest...................... 65,661 26,676 167,760 83,826 Gain on sale of real estate... 873,396 - 3,081,755 - ------------- ------------- ------------- ------------- Total revenue............... 3,174,289 2,421,470 10,148,029 77,099,588 ------------- ------------- ------------- -------------- Expenses: Interest...................... 593,552 668,854 1,857,424 2,016,545 Depreciation and amortization................ 470,606 578,013 1,407,920 1,724,329 Property taxes................ 154,836 203,574 511,065 589,515 Personnel expenses............ 248,530 243,055 744,303 716,281 Utilities..................... 121,549 130,435 366,973 376,826 Repair and maintenance........ 295,169 226,062 854,200 871,051 Property management fees - affiliates........... 114,687 116,222 345,280 343,407 Other property operating expenses.................... 131,856 112,884 401,079 384,713 General and administrative.... 24,907 47,079 77,051 87,161 General and administrative - affiliates.................. 58,512 63,269 181,240 225,032 ------------- ------------- ------------- ------------- Total expenses.............. 2,214,204 2,389,447 6,746,535 7,334,860 ------------- ------------- ------------- ------------- Net income (loss)................ $ 960,085 $ 32,023 $ 3,401,494 $ (235,272) ============= ============= ============= ============= Net income (loss) allocated to limited partners.............. $ 334,246 $ 31,703 $ 334,246 $ (232,919) Net income (loss) allocated to General Partner............... 625,839 320 3,067,248 (2,353) ------------- ------------- ------------- ------------- Net income (loss)................ $ 960,085 $ 32,023 $ 3,401,494 $ (235,272) ============= ============= ============= ============= Net income (loss) per limited partnership unit.............. $ 3.86 $ .37 $ 3.86 $ (2.69) ============= ============= ============= ============= Distributions per limited partnership unit.............. $ 46.22 $ - $ 46.22 $ - ============= ============= ============= =============
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, 1997 and 1996
Total Partners' General Limited Equity Partner Partners (Deficit) --------------- --------------- --------------- Balance at December 31, 1995.............. $ (2,546,836) $ 7,766,250 $ 5,219,414 Net loss.................................. (2,353) (232,919) (235,272) Management Incentive Distribution......... (452,443) - (452,443) ------------- ------------- ------------- Balance at September 30, 1996............. $ (3,001,632) $ 7,533,331 $ 4,531,699 ============= ============= ============= Balance at December 31, 1996.............. $ (3,166,815) $ 7,648,141 $ 4,481,326 Net income................................ 3,067,248 334,246 3,401,494 Management Incentive Distribution......... (443,577) - (443,577) Distributions to limited partners......... - (4,000,002) (4,000,002) ------------- ------------- ------------- Balance at September 30, 1997............. $ (543,144) $ 3,982,385 $ 3,439,241 ============= ============= =============
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, ------------------------------------ 1997 1996 ---------------- ---------------- Cash flows from operating activities: Cash received from tenants............................... $ 6,900,605 $ 6,899,382 Cash paid to suppliers................................... (2,457,038) (2,352,159) Cash paid to affiliates.................................. (556,800) (576,605) Interest received........................................ 167,760 83,826 Interest paid............................................ (1,738,869) (1,842,529) Property taxes paid and escrowed......................... (475,286) (405,409) -------------- -------------- Net cash provided by operating activities................... 1,840,372 1,806,506 -------------- -------------- Cash flows from investing activities: Additions to real estate investments..................... (390,094) (488,322) Proceeds from sale of real estate........................ 9,868,594 - -------------- -------------- Net cash provided by (used in) investing activities......... 9,478,500 (488,322) -------------- -------------- Cash flows from financing activities: Principal payments on mortgage notes payable................................................ (426,868) (436,854) Retirement of mortgage notes payable..................... (3,722,368) - Management incentive distribution paid................... (1,774,877) (500,000) Distributions to limited partners........................ (4,000,002) - -------------- -------------- Net cash used in financing activities....................... (9,924,115) (936,854) -------------- -------------- Net increase in cash and cash equivalents................... 1,394,757 381,330 Cash and cash equivalents at beginning of period................................................... 1,903,902 1,417,948 -------------- -------------- Cash and cash equivalents at end of period.................. $ 3,298,659 $ 1,799,278 ============== ==============
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 Income (Loss) to Net Cash Provided by Operating Activities
Nine Months Ended September 30, ------------------------------------ 1997 1996 --------------- ---------------- Net income (loss)........................................... $ 3,401,494 $ (235,272) -------------- -------------- Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization............................ 1,407,920 1,724,329 Amortization of deferred borrowing costs................. 71,743 71,743 Amortization of discounts on mortgage notes payable.......................................... 78,386 105,391 Gain on sale of real estate.............................. (3,081,755) - Changes in assets and liabilities: Cash segregated for security deposits.................. (3,963) (39,092) Accounts receivable.................................... 25,029 (96,716) Prepaid expenses and other assets...................... 14,149 17,918 Escrow deposits........................................ 28,098 89,508 Accounts payable....................................... (34,524) (84,280) Accrued interest....................................... (31,574) (3,118) Accrued property taxes................................. 23,872 247,556 Other accrued expenses................................. (15,359) (2,161) Payable to affiliates - General Partner................ (30,280) (8,166) Security deposits and deferred rental revenue.............................................. (12,864) 18,866 -------------- -------------- Total adjustments.................................... (1,561,122) 2,041,778 -------------- -------------- Net cash provided by operating activities................... $ 1,840,372 $ 1,806,506 ============== ==============
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, 1997 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, an affiliate of 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 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 nine months ended September 30, 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 Real Estate Fund XIV, Ltd., c/o The Herman Group, 2121 San Jacinto St., 26th Floor, Dallas, Texas 75201. NOTE 3. - ------- 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 terms of the Amended Partnership Agreement, the Partnership is paying a Management Incentive Distribution ("MID") to the General Partner. The maximum MID is calculated as 1% of the tangible asset value of the Partnership. The maximum MID percentage decreases subsequent to 1999. Tangible asset value is determined by using the greater of (i) an amount calculated by applying a capitalization rate of 9% to the annualized net operating income of each property or (ii) a value of $10,000 per apartment unit for residential property and $50 per gross square foot for commercial property to arrive at the property tangible asset value. The property tangible asset value is then added to the book value of all other assets excluding intangible items. MID will be paid to the extent of the lesser of the Partnership's excess cash flow, as defined, or net operating income, as defined (the "Entitlement Amount"), and may be paid (i) in cash, unless there is insufficient cash to pay the distribution in which event any unpaid portion not taken in Units will be deferred and is payable, without interest, from the first available cash and/or (ii) in Units. A maximum of 50% of the MID may be paid in Units. The number of Units issued in payment of the MID is based on the greater of $50 per Unit or the net tangible asset value, as defined, per Unit. Any amount of the MID that is paid to the General Partner in Units will be treated as if cash is distributed to the General Partner and is then contributed to the Partnership by the General Partner. The MID represents a return of equity to the General Partner for increasing cash flow, as defined, and accordingly is treated as a distribution. Compensation, reimbursements and distributions paid to or accrued for the benefit of the General Partner and its affiliates are as follows: Nine Months Ended September 30, ---------------------- 1997 1996 --------- --------- Property management fees - affiliates................ $ 345,280 $ 343,407 Charged to general and administrative - affiliates: Partnership administration......................... 181,240 225,032 -------- -------- $ 164,520 $ 568,439 ======== ======== Charged to General Partner's deficit: Management Incentive Distribution.................. $ 443,577 $ 452,443 ======== ======== NOTE 4. - ------- On October 1, 1996, the Partnership placed Country Hills Plaza, Midvale Plaza and Redwood Plaza on the market for sale. Country Hills Plaza was sold to an unaffiliated purchaser on April 8, 1997. Midvale Plaza was sold to an unaffiliated purchaser on September 24, 1997. These three properties are shown as assets held for sale on the accompanying financial statements. In accordance with 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," the Partnership ceased recording depreciation charges on these three properties effective October 1, 1996. NOTE 5. - ------- On April 8, 1997, the Partnership sold Country Hills Plaza to an unaffiliated purchaser for a cash sales price of $6,610,000. Cash proceeds from the sale, as well as the gain on sale are detailed below.
Gain on Sale Cash Proceeds --------------- ---------------- Cash sales price....................................... $ 6,610,000 $ 6,610,000 Selling costs.......................................... (185,306) (185,306) Mortgage discount written off.......................... (397,559) Straight-line rent receivables written off............. (26,828) Basis of real estate sold.............................. (3,791,948) -------------- -------------- Gain on sale of real estate............................ $ 2,208,359 ============== Proceeds from sale of real estate...................... 6,424,694 Retirement of mortgage note payable.................... (2,231,438) -------------- Net cash proceeds...................................... $ 4,193,256 ==============
On September 24, 1997, the Partnership sold Midvale Plaza to an unaffiliated purchaser for a cash sales price of $3,500,000. Cash proceeds from the sale, as well as the gain on sale are detailed below.
Gain on Sale Cash Proceeds ---------------- ---------------- Cash sales price....................................... $ 3,500,000 $ 3,500,000 Selling costs.......................................... (56,100) (56,100) Mortgage discount written off.......................... (241,778) Straight-line rent receivables written off............. (85,197) Prepaid leasing commissions written off................ (14,338) Basis of real estate sold.............................. (2,229,191) -------------- -------------- Gain on sale of real estate............................ $ 873,396 ============== Proceeds from sale of real estate...................... 3,443,900 Retirement of mortgage note payable.................... (1,490,930) -------------- Net cash proceeds...................................... $ 1,952,970 ==============
NOTE 6. - ------- In accordance with the Amended Partnership Agreement, proceeds from sales are to be distributed in proportionately larger shares to "Group A" and "Group B" unitholders. Group A unitholders purchased the first $10 million of units during the Partnership's offering period. Group B unitholders purchased the second $10 million of units. Limited partners who purchased the remaining units are Group C unitholders. Subsequent transfers and resale of units did not change the group designation to which such units belonged. Distribution of sales proceeds to Group A units receive a premium of 5.556% over sales proceeds distributed to Group B units, while distributions to Group C units receive a discount of 5.556% to sales proceeds distributed to Group B units. 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, 1997, the Partnership owned four apartment properties and one shopping center. All of the Partnership's properties are subject to mortgage notes. On October 1, 1996, the Partnership placed its three commercial properties, County Hills Plaza, Midvale Plaza and Redwood Plaza, on the market for sale. Consequently, the Partnership's investment in these three properties is shown as assets held for sale on the accompanying financial statements. On April 8, 1997, the Partnership sold Country Hills Plaza for $6,610,000 to an unaffiliated buyer. On September 24, 1997, the Partnership sold Midvale Plaza for $3,500,000 to an unaffiliated buyer. Proceeds from the sale of Country Hills Plaza and Midvale Plaza were used first to repay the mortgage notes encumbering the properties. The remaining proceeds from sale were used to pay a $4,000,000 distribution to the limited partners in September 1996, and will be used to pay an additional $2,146,226 distribution to the limited partners during the fourth quarter of 1997. RESULTS OF OPERATIONS - --------------------- The Partnership earned $3,401,494 for the first nine months of 1997, an increase over the $235,272 loss incurred by the Partnership for the first nine months of 1996. For the third quarter, net income increased to $960,085 in 1997 from $32,023 in 1996. Included in the 1997 net income figures are the $2,208,359 gain on the sale of Country Hills Plaza and the $873,396 gain on the sale of Midvale Plaza. After excluding the gains and the effects of rental revenues and expenses related to Country Hills Plaza, the Partnership's net income increased to $254,603 for the first nine months of 1997, up from a loss of $370,478 for the first nine months of 1996. Revenues: Rental revenue for the first nine months of 1997 decreased $117,248 or 1.7% over rental revenue earned for the first nine months of 1996. Excluding rental revenue from Country Hills Plaza, rental revenue increased $333,083 or 5.3% for the first nine months of 1997 compared to the same period of 1996. Rental revenue increased at all of the Partnership's properties except for Midvale Plaza. The largest increase in percentage terms was provided by Windrock Apartments. After struggling with depressed occupancy rates for three years, Windrock's occupancy rate improved to 96% at September 30, 1997, up from 75% at the end of 1995. Windrock's rental revenue increased 14.7% for the first nine months of 1997 compared to the same period of 1996. Increased rental rates provided rental revenue increases ranging from 4% to 6% at Embarcadero Club Apartments, Thunder Hollow Apartments and Redwood Plaza. Rental revenues increased approximately 1.1% at both Tanglewood Village Apartments and decreased 4.4% at Midvale Plaza. An increase in base rental rates at Tanglewood Village was mostly offset by decreased occupancy, while a decrease in base rental rates caused the decrease in Midvale Plaza's revenues. The sale of Country Hills Plaza on April 8, 1997 provided a one-time gain on sale of real estate totaling $2,208,359. An additional gain of $873,396 was realized with the September 24, 1997 sale of Midvale Plaza. Expenses: Partnership expenses decreased $588,325 or 8.0% and $175,243 or 7.3% for the nine month and three month periods ended September 30, 1997 as compared to the same periods of 1996. Expenses decreased primarily because of the sale of Country Hills Plaza on April 8, 1997. After excluding expenses related to Country Hills Plaza, the Partnership's expenses decreased $207,966 or 3.1% for the first nine months of 1997 compared to the same period of 1996. Excluding expenses related to Country Hills Plaza, decreased expenses were recorded primarily in depreciation and amortization, general and administrative expenses, and general and administrative expenses paid to affiliates. Depreciation and amortization expense decreased 9.5% for the first nine months of 1997 as compared to the same period of 1996. The Partnership ceased depreciating its investment in its three commercial properties, Country Hills Plaza, Midvale Plaza and Redwood Plaza, effective October 1, 1996, the date the Partnership placed these properties on the market for sale. Properties being marketed for sale are classified as "assets held for sale." Accounting regulations specify that depreciation on assets held for sale should cease effective the date the properties are placed on the market for sale. General and administrative expenses decreased 11.6% for the first nine months of 1997 as compared to the same period of 1996. In 1996, the Partnership incurred costs to evaluate and disseminate information regarding an unsolicited tender offer. The decrease was partially offset by charges for investor services, which beginning in 1997, are provided by a third party vendor instead of by affiliates of the General Partner. The switch of investor service expenses from affiliates to a third party vendor also accounts for most of the 19.5% decrease in general and administrative expenses paid to affiliates. Also contributing to the decrease in general and administrative expenses paid to affiliates was a decrease in partnership administrative reimbursements due to the sale of Country Hills Apartments in April 1997. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Cash flow from operations increased $33,866 or 1.9% for the first nine months of 1997 as compared to the same period of 1996. Cash flow from operating expenses managed a small increase despite the sale of one of the Partnership's properties early in the year. Performance of the Partnership's properties continues to improve. Windrock Apartments, which had not been contributing to the improved Partnership performance, appears to have turned around, and is now generating increasing amounts of cash flow. Cash flow from Partnership operations for the first nine months of 1997 was more than adequate to fund selected capital improvements and to repay the scheduled principal payments on the Partnership's mortgage debt. Furthermore, the General Partner anticipates that operations for the balance of 1997 will continue to provide more than enough cash flow to fund needed capital improvements and debt service payments. The sale of Country Hills Plaza and Midvale Plaza provided $6,146,226 for the Partnership, after repayment of the related mortgage notes. The General Partner distributed $4,000,000 of sales proceeds to the limited partners in September 1997, and is planning to distribute the remaining $2,146,226 of sales proceeds to the limited partners before the end of the year. The improving cash position of the Partnership allowed the General Partner to continue payment of the Management Incentive Distribution ("MID"). The Partnership paid $1,774,877 of MID during the first nine months of 1997 in addition to the $500,000 payment made during the third quarter of 1996. MID payments had been suspended since the beginning of 1994 to increase the Partnership's cash reserves. All arrearages of MID have now been paid. Short-term liquidity: At September 30, 1997, the Partnership held $3,298,659 of cash and cash equivalents, up $1,394,757 from the balance at the end of 1996. The Partnership distributed $4,000,000 to the limited partners during the third quarter of 1997. An additional distribution of $2,146,226 is planned for the fourth quarter of 1997. The excess of cash remaining after the planned fourth quarter distribution is an adequate level of cash reserves for the Partnership. Furthermore, the General Partner anticipates that cash generated from operations for the remainder of 1997 will be sufficient to fund the Partnership's budgeted capital improvements and debt service requirements. In addition to the sale of Country Hills Plaza and Midvale Plaza, the Partnership has placed Redwood Plaza on the market for sale. Proceeds from the sale of Redwood Plaza will be used to retire the Redwood Plaza mortgage note, and, if surplus proceeds remain, provide distributions to the limited partners. Although the General Partner anticipates being able to successfully sell Redwood Plaza, there can be no assurance that any sale of Partnership properties will provide sufficient cash for additional distributions to the limited partners. Long-term liquidity: While the present outlook for the Partnership's liquidity is favorable, market conditions may change and property operations can deteriorate. In that event, the Partnership would require other sources of working capital. No such other sources have been identified, and the Partnership has no established lines of credit. Other possible actions to resolve working capital deficiencies include refinancing or renegotiating terms of existing loans, deferring major capital expenditures on Partnership properties except where improvements are expected to enhance the competitiveness or marketability of the properties, or arranging working capital support from affiliates. No affiliate support has been required in the past, and there is no assurance that support from affiliates would be provided in the future, since neither the General Partner nor any affiliates have any obligation in this regard. The Partnership has determined to begin an orderly liquidation of all the Partnership's 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 properties, subject to cash reserve requirements, as they are sold with the last property disposition before December 2001, followed by a dissolution of the Partnership. In this regard, the Partnership sold Country Hills Plaza on April 8, 1997, and sold Midvale Plaza on September 24, 1997. One of the partnership's five remaining properties is currently on the market for sale. None of the Partnership's remaining mortgage notes mature before the expected dissolution of the Partnership. Income Allocations and Distributions: Terms of the Amended Partnership Agreement specify that net losses for financial reporting purposes are allocated 99% to the limited partners and 1% to the General Partner. Net income for financial reporting purposes is allocated to the General Partner in an amount equal to the greater of (a) 1% of net income or (b) the cumulative amount of the MID paid for which no income allocation has previously been made; any remaining net income is allocated to the limited partners. Therefore, for the nine month periods ended September 30, 1997 and 1996, net income of $3,067,248 and net loss of $2,353, respectively, were allocated to the General Partner. For the nine month period ended September 30, 1997, net income of $334,246 was allocated to the limited partners, while $232,919 of net loss was allocated to the limited partners for the nine months ended September 30, 1996. Distributions to Unit holders had been suspended since 1986 as a part of the General Partner's policy of maintaining adequate cash reserves. However, with the sale of Country Hills Plaza and Midvale Plaza, the General Partner determined that the Partnership's liquidity was sufficient to justify distribution of the net proceeds from the sale of Country Hills Plaza and Midvale Plaza to the limited partners. Consequently, the Partnership distributed $4,000,000 to the limited partners in September 1997, and plans to distribute an additional $2,146,226 to the limited partners before the end of the year. Further distributions to the limited partners will follow if the Partnership is successful in selling its remaining properties for amounts in excess of the mortgage debt encumbering the properties. Payments of MID had been suspended since the beginning of 1994 to preserve the cash reserves of the Partnership. During the third quarter of 1996, the Partnership paid $500,000 of MID. During the first nine months of 1997, the Partnership paid MID of $1,774,877. The 1996 payment, and the payments during the first nine months of 1997 have completely repaid the balance of MID due to the General Partner. The Partnership incurred MID of 443,577 for the first nine months of 1997. The General Partner will continue to monitor the cash reserves and working capital requirements of the Partnership to ensure that cash flows and balances will support continued MID payments and distributions of net sales proceeds to 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. On October 31, 1997, the Plaintiffs filed a second consolidated and amended complaint. Defendants intend to file a demurrer to the second consolidated and amended complaint on or before December 1, 1997. 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 1997 and 1996. 27. Financial Data Schedule for the quarter ended September 30, 1997. (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. On September 30, 1997, the Partnership filed a Current Report on form 8-K to report the sale of Midvale Plaza to an unaffiliated purchaser. 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 13, 1997 By: /s/ Ron K. Taylor - ----------------- ------------------------------------------ Date Ron K. Taylor President and Director of McNeil Investors, Inc. (Principal Financial Officer) November 13, 1997 By: /s/ Brandon K. Flaming - ----------------- ------------------------------------------ Date Brandon K. Flaming Vice President of McNeil Investors, Inc. (Principal Accounting Officer) EX-27 2
5 9-MOS DEC-31-1997 SEP-30-1997 3,298,659 0 248,667 0 0 0 40,988,694 (20,359,661) 28,283,258 0 23,992,176 0 0 0 0 28,283,258 6,898,514 10,148,029 0 0 4,889,111 0 1,857,424 3,401,494 0 0 0 0 0 3,401,494 0 0
-----END PRIVACY-ENHANCED MESSAGE-----