-----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, FkleGzKJtitiANQ4tlEcFel6mnTlXLn9iULG3bUDM2fq7zMdAzkzo+dn6WWbb9NJ nCVRg19HNp9EasfL5/KSHw== 0000702657-97-000010.txt : 19970814 0000702657-97-000010.hdr.sgml : 19970814 ACCESSION NUMBER: 0000702657-97-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 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: 97658761 BUSINESS ADDRESS: STREET 1: 13760 NOEL RD STE 700 LB70 CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 2144485800 MAIL ADDRESS: STREET 1: 13760 NOEL ROAD SUITE 700 LB 70 CITY: DALLAS STATE: TX ZIP: 75240 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended June 30, 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)
June 30, December 31, 1997 1996 --------------- --------------- ASSETS - ------ Real estate investments: Land..................................................... $ 4,663,828 $ 4,663,828 Buildings and improvements............................... 36,144,636 35,944,879 -------------- -------------- 40,808,464 40,608,707 Less: Accumulated depreciation.......................... (19,889,055) (18,951,741) -------------- -------------- 20,919,409 21,656,966 Assets held for sale, net................................... 4,161,735 7,942,855 Cash and cash equivalents................................... 5,143,687 1,903,902 Cash segregated for security deposits....................... 416,704 399,366 Accounts receivable......................................... 412,917 385,721 Prepaid expenses and other assets........................... 154,036 173,908 Escrow deposits............................................. 791,386 681,430 Deferred borrowing costs, net of accumulated amortization of $394,083 and $346,255 at June 30, 1997, and December 31, 1996, respectively............................................. 996,909 1,044,737 -------------- -------------- $ 32,996,783 $ 34,188,885 ============== ============== LIABILITIES AND PARTNERS' EQUITY (DEFICIT) - ------------------------------------------ Mortgage notes payable, net................................. $ 25,356,989 $ 27,423,689 Accounts payable............................................ 69,632 103,747 Accrued interest............................................ 178,326 197,124 Accrued property taxes...................................... 246,979 100,981 Other accrued expenses...................................... 62,776 82,329 Payable to affiliates - General Partner..................... 61,938 1,388,371 Security deposits and deferred rental revenue............... 413,459 411,318 -------------- -------------- 26,390,099 29,707,559 -------------- -------------- Partners' equity (deficit): Limited partners - 100,000 limited partnership units authorized; 86,534 limited partnership units outstanding...................................... 7,648,141 7,648,141 General Partner.......................................... (1,041,457) (3,166,815) -------------- -------------- 6,606,684 4,481,326 -------------- -------------- $ 32,996,783 $ 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 Six Months Ended June 30, June 30, --------------------------------- --------------------------------- 1997 1996 1997 1996 -------------- --------------- -------------- -------------- Revenue: Rental revenue................ $ 2,236,551 $ 2,318,311 $ 4,663,282 $ 4,620,968 Interest...................... 63,945 27,166 102,099 57,150 Gain on sale of real estate... 2,208,359 - 2,208,359 - ------------- ------------- ------------- ------------- Total revenue............... 4,508,855 2,345,477 6,973,740 4,678,118 ------------- ------------- ------------- ------------- Expenses: Interest...................... 601,749 672,304 1,263,872 1,347,691 Depreciation and amortization................ 468,657 574,217 937,314 1,146,316 Property taxes................ 163,053 184,991 356,229 385,941 Personnel expenses............ 218,827 218,320 495,773 473,226 Utilities..................... 119,328 126,345 245,424 246,391 Repair and maintenance........ 312,061 360,255 559,031 644,989 Property management fees - affiliates........... 113,236 114,993 230,593 227,185 Other property operating expenses.................... 132,496 140,498 269,223 271,829 General and administrative.... 21,093 16,262 52,144 40,082 General and administrative - affiliates.................. 61,577 80,821 122,728 161,763 ------------- ------------- ------------- ------------- Total expenses.............. 2,212,077 2,489,006 4,532,331 4,945,413 ------------- ------------- ------------- ------------- Net income (loss)................ $ 2,296,778 $ (143,529) $ 2,441,409 $ (267,295) ============= ============= ============= ============= Net income (loss) allocated to limited partners.............. $ - $ (142,094) $ - $ (264,622) Net income (loss) allocated to General Partner............... 2,296,778 (1,435) 2,441,409 (2,673) ------------- ------------- ------------- ------------- Net income (loss)................ $ 2,296,778 $ (143,529) $ 2,441,409 $ (267,295) ============= ============= ============= ============= Net income (loss) per limited partnership unit.............. $ - $ (1.64) $ - $ (3.06) ============= ============= ============= =============
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 Six Months Ended June 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.................................. (2,673) (264,622) (267,295) Management Incentive Distribution......... (290,175) - (290,175) ------------- ------------- ------------- Balance at June 30, 1996.................. $ (2,839,684) $ 7,501,628 $ 4,661,944 ============= ============= ============= Balance at December 31, 1996.............. $ (3,166,815) $ 7,648,141 $ 4,481,326 Net income................................ 2,441,409 - 2,441,409 Management Incentive Distribution......... (316,051) - (316,051) ------------- ------------- ------------- Balance at June 30, 1997.................. $ (1,041,457) $ 7,648,141 $ 6,606,684 ============= ============= =============
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 (Decrease) in Cash and Cash Equivalents
Six Months Ended June 30, ------------------------------------ 1997 1996 ---------------- ---------------- Cash flows from operating activities: Cash received from tenants............................... $ 4,588,033 $ 4,560,513 Cash paid to suppliers................................... (1,661,084) (1,580,548) Cash paid to affiliates.................................. (382,710) (394,710) Interest received........................................ 102,099 57,150 Interest paid............................................ (1,178,054) (1,231,657) Property taxes paid and escrowed......................... (308,466) (263,712) -------------- -------------- Net cash provided by operating activities................... 1,159,818 1,147,036 -------------- -------------- Cash flows from investing activities: Additions to real estate investments..................... (210,585) (210,824) Proceeds from sale of real estate........................ 6,424,694 - -------------- -------------- Net cash provided by (used in) investing activities......... 6,214,109 (210,824) -------------- -------------- Cash flows from financing activities: Principal payments on mortgage notes payable................................................ (289,609) (287,956) Retirement of mortgage note payable...................... (2,231,438) - Management incentive distribution paid................... (1,613,095) - -------------- -------------- Net cash used in financing activities....................... (4,134,142) (287,956) -------------- -------------- Net increase in cash and cash equivalents................... 3,239,785 648,256 Cash and cash equivalents at beginning of period................................................... 1,903,902 1,417,948 -------------- -------------- Cash and cash equivalents at end of period.................. $ 5,143,687 $ 2,066,204 ============== ==============
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
Six Months Ended June 30, ------------------------------------ 1997 1996 --------------- ---------------- Net income (loss)........................................... $ 2,441,409 $ (267,295) -------------- -------------- Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization............................ 937,314 1,146,316 Amortization of deferred borrowing costs................. 47,828 47,829 Amortization of discounts on mortgage notes payable.......................................... 56,788 70,261 Gain on sale of real estate.............................. (2,208,359) - Changes in assets and liabilities: Cash segregated for security deposits.................. (17,338) (43,512) Accounts receivable.................................... (54,024) (35,031) Prepaid expenses and other assets...................... 19,872 17,253 Escrow deposits........................................ (109,956) 17,361 Accounts payable....................................... (34,115) (33,284) Accrued interest....................................... (18,798) (2,056) Accrued property taxes................................. 145,998 231,546 Other accrued expenses................................. (19,553) (16,296) Payable to affiliates - General Partner................ (29,389) (5,762) Security deposits and deferred rental revenue.............................................. 2,141 19,706 -------------- -------------- Total adjustments.................................... (1,281,591) 1,414,331 -------------- -------------- Net cash provided by operating activities................... $ 1,159,818 $ 1,147,036 ============== ==============
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) June 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 six months ended June 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: Six Months Ended June 30, ----------------------- 1997 1996 --------- ----------- Property management fees - affiliates.......... $ 230,593 $ 227,185 Charged to general and administrative - affiliates: Partnership administration.................. 122,728 161,763 -------- ---------- $ 353,321 $ 388,948 ======== ========== Charged to General Partner's deficit: Management Incentive Distribution........... $ 316,051 $ 290,175 ======== ========== 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. These three properties are shown as assets held for sale on the accompanying financial statements. Country Hills Plaza was sold to an unaffiliated purchaser on April 8, 1997 (see Note 5). 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 =========== 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 June 30, 1997, the Partnership owned four apartment properties and two shopping centers. 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. The Partnership has entered into a contract to sell Midvale Plaza to an unaffiliated buyer for $3,500,000. The sale of Midvale Plaza is scheduled to close during the third quarter of 1997. Proceeds from the sale of the three properties will be used to first, repay the mortgage note encumbering the property sold; second, pay any deferred payments due to the General Partner or its affiliates; third, ensure that the Partnership maintains an adequate level of cash reserves; and fourth, pay distributions to the Unit holders. RESULTS OF OPERATIONS - --------------------- The Partnership earned $2,441,409 for the first six months of 1997. Included in net income is a $2,208,359 gain on the sale of Country Hills Plaza. For the first six months of 1996, the Partnership incurred $267,295 net loss. Results for the second quarter showed an improvement from the $143,529 net loss incurred in 1996 to net income of $2,296,778 for 1997. Revenues: Rental revenue for the first six months of 1997 increased $42,314 or .9% over rental revenue earned for the first six months of 1996. Excluding rental revenue from Country Hills Plaza, rental revenue increased $257,624 or 6.2% for the first six months of 1997 compared to the same period of 1996. Rental revenue increased at all of the Partnership's properties. The largest increase in both percentage and absolute terms was provided by Windrock Apartments. After struggling with depressed occupancy rates for three years, Windrock's occupancy rate has improved to 91.3% at June 30, 1997, up from 75% a year earlier. Windrock's rental revenue increased 18.6% for the first six 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 1.5% at both Tanglewood Village Apartments and Midvale Plaza. An increase in rental revenue at Tanglewood Village was mostly offset by decreased occupancy, while an increase in occupancy provided the increase 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. The Partnership has entered into a contract to sell Midvale Plaza for $3,500,000. If the sale of Midvale Plaza closes as scheduled during the third quarter, the Partnership will have an additional gain on sale of real estate to report for the third quarter. Expenses: Partnership expenses decreased $413,082 or 8.4% for the first six months of 1997 as compared to the same period 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 $204,927 or 4.5% for the first six months of 1997 compared to the same period of 1996. Decreased expenses were recorded primarily in depreciation and amortization, repair and maintenance and general and administrative expenses paid to affiliates. These decreases were offset by an increase in general and administrative expenses. Depreciation and amortization expense decreased 18.2% for the first six 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. Excluding expenses related to Country Hills Plaza, repair and maintenance expenses decreased 14.2% for the first six months of 1997 as compared to the period of 1996. Part of the decrease is attributed to a decrease in snow removal expenses at Thunder Hollow Apartments. Expenses totaling $57,000 were incurred as a result of severe winter weather at the Pennsylvania property during the first six months of 1996. The comparable amount for 1997 was only $5,000. The decrease in repair and maintenance expenses also is attributed to an extra $22,000 expended during 1996 to repair windstorm damage to the roof of Windrock Apartments and to repair damage from a small fire at Windrock Apartments. General and administrative expenses paid to affiliates decreased $39,035 or 24% for the first six months of 1997 as compared to the same period of 1996. The decrease is due, in part, to decreased 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 the $12,062 or 30% increase in general and administrative expenses incurred by the Partnership for the first six months of 1997 as compared to the same period of 1996. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Cash flow from operations increased $12,782 or 1.1% for the first six months of 1997 as compared to the same period of 1996. 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 quarter 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 provided $4,193,256 for the Partnership, after repayment of the Country Hills mortgage note. The General Partner intends to distribute $4,000,000 of these proceeds to the limited partners in September 1997. See Income Allocations and Distributions below. The improving cash position of the Partnership allowed the General Partner to continue payment of the Management Incentive Distribution ("MID"). The Partnership paid $1,613,095 of MID during the first six 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 June 30, 1997, the Partnership held $5,143,687 of cash and cash equivalents, up $3,239,785 from the balance at the end of 1996. The General Partner has announced that the Partnership will distribute $4,000,000 to the limited partners in September 1997. See Income Allocation and Distributions below. The excess of cash remaining after the September 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, the Partnership has placed Midvale Plaza and Redwood Plaza on the market for sale. Proceeds from the sale of these properties will be used to retire the related mortgage notes payable, provide for an adequate level of cash reserves for the Partnership, and, if surplus proceeds remain, provide distributions to the limited partners. Although the General Partner anticipates being able to successfully sell Midvale Plaza and 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 has placed two of its six remaining properties 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 six month periods ended June 30, 1997 and 1996, net income of $2,441,409 and net loss of $2,673, respectively, were allocated to the General Partner. For the six month period ended June 30, 1997, no net income was allocated to the limited partners, while $264,622 of net loss was allocated to the limited partners for the six months ended June 30, 1996. With the exception of the MID, distributions to Unit holders have been suspended since 1986 as a part of the General Partner's policy of maintaining adequate cash reserves. However, as the Partnership's remaining properties are sold, the General Partner intends to distribute net sales proceeds to the Unit holders. In this connection, the Partnership will distribute $4,000,000 to Unit holders in September 1997. This amount represent the net sales proceeds from the sale of Country Hills Plaza in April 1997. 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 resumed paid $500,000 of MID. During the first six months of 1997, the Partnership paid MID of $1,613,095. The 1996 payment, and the payments during the first six months of 1997 have completely repaid the balance of MID due to the General Partner. The Partnership incurred MID of $316,051 for the first six 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. 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 June 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 April 21, 1997, the Partnership filed a Current Report on Form 8-K to report the sale of Country Hills 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 August 13, 1997 By: /s/ Ron K. Taylor - --------------- ----------------------------------------------- Date Ron K. Taylor President and Director of McNeil Investors, Inc. (Principal Financial Officer) August 13, 1997 By: /s/ Brandon K. Flaming - --------------- ----------------------------------------------- Date Brandon K. Flaming Vice President of McNeil Investors, Inc. (Principal Accounting Officer) EX-27 2
5 6-MOS DEC-31-1997 JUN-30-1997 5,143,687 0 412,917 0 0 0 40,808,464 (19,889,055) 32,996,783 0 25,356,989 0 0 0 0 32,996,783 4,663,282 6,973,740 0 0 3,268,459 0 1,263,872 0 0 2,441,409 0 0 0 2,441,409 0 0
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