-----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, NHzulnFxZ/JtZt/jxqmNMyEBgZxzMbrwfEHMS+1nlgEhGCxh2QArpGiBGOViHLsi 6uMPxAFl/KtFwzJ7XAyE2w== 0000734761-97-000006.txt : 19970814 0000734761-97-000006.hdr.sgml : 19970814 ACCESSION NUMBER: 0000734761-97-000006 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 XXI L P CENTRAL INDEX KEY: 0000734761 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330030615 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13356 FILM NUMBER: 97659498 BUSINESS ADDRESS: STREET 1: 13760 NOEL RD,. SUITE 700, LB70 CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 2144485800 MAIL ADDRESS: STREET 1: 2711 LBJ FREEWAY, SUITE 900 CITY: DALLAS STATE: TX ZIP: 75234 FORMER COMPANY: FORMER CONFORMED NAME: SOUTHMARK REALTY PARTNERS LTD DATE OF NAME CHANGE: 19920413 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 0-13356 MCNEIL REAL ESTATE FUND XXI, L.P. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 33-0030615 - -------------------------------------------------------------------------------- (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 XXI, L.P. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- BALANCE SHEETS (Unaudited)
June 30, December 31, 1997 1996 --------------- -------------- ASSETS - ------- Real estate investments: Land..................................................... $ 3,240,113 $ 3,240,113 Buildings and improvements............................... 29,911,356 29,542,828 -------------- ------------- 33,151,469 32,782,941 Less: Accumulated depreciation and amortization......... (15,414,340) (14,661,016) -------------- ------------- 17,737,129 18,121,925 Asset held for sale......................................... 2,744,391 2,731,674 Cash and cash equivalents................................... 1,657,410 1,670,843 Cash segregated for security deposits....................... 180,578 167,645 Accounts receivable......................................... 302,236 317,152 Escrow deposits............................................. 565,933 425,750 Deferred borrowing costs, net of accumulated amortiz- ation of $188,054 and $153,724 at June 30, 1997 and December 31, 1996, respectively...................... 398,347 432,677 Prepaid expenses and other assets........................... 60,941 63,559 -------------- ------------- $ 23,646,965 $ 23,931,225 ============== ============= LIABILITIES AND PARTNERS' DEFICIT - --------------------------------- Mortgage notes payable, net................................. $ 21,658,382 $ 21,780,275 Mortgage note payable - affiliate........................... 733,900 733,900 Accounts payable and accrued expenses....................... 263,550 282,667 Accrued property taxes...................................... 416,573 347,845 Payable to affiliates....................................... 4,532,899 4,210,324 Advances from affiliates.................................... 764,769 735,253 Deferred gain on involuntary conversion..................... 40,070 66,879 Security deposits and deferred rental revenue............... 205,875 195,060 -------------- ------------- 28,616,018 28,352,203 -------------- ------------- Partners' deficit: Limited partners - 50,000 Units authorized; 47,086 and 47,288 Units outstanding at June 30, 1997 and December 31, 1996, respectively, (24,906 Current Income Units and 22,180 Growth/Shelter Units outstanding at June 30, 1997 and 24,949 Current Income Units and 22,339 Growth/Shelter Units outstanding at December 31,1996)....................... (4,601,750) (4,059,156) General Partner.......................................... (367,303) (361,822) -------------- ------------- (4,969,053) (4,420,978) -------------- ------------- $ 23,646,965 $ 23,931,225 ============== =============
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 XXI, L.P. STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, --------------------------------- --------------------------------- 1997 1996 1997 1996 -------------- --------------- -------------- -------------- Revenue: Rental revenue................ $ 1,614,511 $ 1,605,888 $ 3,221,812 $ 3,199,384 Interest...................... 19,740 31,826 38,241 53,875 Gain on involuntary conversion.................. 26,809 - 26,809 - ------------- ------------- ------------- ------------- Total revenue............... 1,661,060 1,637,714 3,286,862 3,253,259 ------------- ------------- ------------- ------------- Expenses: Interest...................... 505,794 471,064 1,019,645 984,980 Interest - affiliates......... 30,411 29,853 59,958 59,845 Depreciation and amortization................ 387,101 405,871 753,324 808,585 Property taxes................ 135,339 125,445 270,678 245,136 Personnel costs............... 172,259 168,161 381,452 375,353 Utilities..................... 96,252 97,408 211,564 210,490 Repairs and maintenance....... 211,357 175,433 390,122 351,538 Property management fees - affiliates........... 82,757 85,525 166,284 167,347 Other property operating expenses.................... 97,985 100,477 198,656 200,932 General and administrative.... 34,892 23,444 62,306 45,201 General and administrative - affiliates.................. 163,349 187,047 320,948 368,354 ------------- ------------- ------------- ------------- Total expenses.............. 1,917,496 1,869,728 3,834,937 3,817,761 ------------- ------------- ------------- ------------- Net loss......................... $ (256,436) $ (232,014) $ (548,075) $ (564,502) ============= ============= ============= ============= Net loss allocable to limited partners - Current Income Unit................... $ (23,079) $ (20,881) $ (49,327) $ (50,805) Net loss allocable to limited partners - Growth/ Shelter Unit.................. (230,793) (208,813) (493,267) (508,052) Net loss allocable to General Partner............... (2,564) (2,320) (5,481) (5,645) ------------- ------------- ------------- ------------- Net loss......................... $ (256,436) $ (232,014) $ (548,075) $ (564,502) ============= ============= ============= ============= Net loss per limited partnership unit: Current Income Units.......... $ (.93) $ (.84) $ (1.98) $ (2.04) ============= ============= ============= ============= Growth/Shelter Units.......... $ (10.41) $ (9.34) $ (22.24) $ (22.74) ============= ============= ============= =============
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 XXI, L.P. STATEMENTS OF PARTNERS' DEFICIT (Unaudited) For the Six Months Ended June 30, 1997 and 1996
Total General Limited Partners' Partner Partners Deficit --------------- --------------- --------------- Balance at December 31, 1995.............. $ (350,551) $ (2,943,347) $ (3,293,898) Net loss General Partner........................ (5,645) - (5,645) Current Income Units................... - (50,805) (50,805) Growth/Shelter Units................... - (508,052) (508,052) ------------- ------------- ------------- Total net loss............................ (5,645) (558,857) (564,502) ------------- ------------- ------------- Balance at June 30, 1996.................. $ (356,196) $ (3,502,204) $ (3,858,400) ============= ============= ============= Balance at December 31, 1996.............. $ (361,822) $ (4,059,156) $ (4,420,978) Net loss General Partner........................ (5,481) - (5,481) Current Income Units................... - (49,327) (49,327) Growth/Shelter Units................... - (493,267) (493,267) ------------- ------------- ------------- Total net loss............................ (5,481) (542,594) (548,075) ------------- ------------- ------------- Balance at June 30, 1997.................. $ (367,303) $ (4,601,750) $ (4,969,053) ============= ============= =============
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 XXI, L.P. 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........................ $ 3,223,375 $ 3,231,345 Cash paid to suppliers............................ (1,302,991) (1,170,281) Cash paid to affiliates........................... (164,657) (166,595) Interest received................................. 38,241 53,875 Interest paid..................................... (976,353) (944,609) Interest paid to affiliates....................... (24,443) (24,443) Property taxes paid............................... (293,553) (238,126) ----------------- -------------- Net cash provided by operating activities............ 499,619 741,166 ----------------- -------------- Cash flows from investing activities: Additions to real estate investments.............. (381,245) (306,352) ----------------- -------------- Cash flows from financing activities: Deferred borrowing costs paid..................... - (312) Principal payments on mortgage notes payable......................................... (131,807) (120,920) ----------------- -------------- Net cash used in financing activities................ (131,807) (121,232) ----------------- -------------- Net increase (decrease) in cash and cash equivalents.................................. (13,433) 313,582 Cash and cash equivalents at beginning of period............................................ 1,670,843 1,998,301 ----------------- -------------- Cash and cash equivalents at end of period........... $ 1,657,410 $ 2,311,883 ================= ==============
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 XXI, L.P. STATEMENTS OF CASH FLOWS (Unaudited) Reconciliation of Net Loss to Net Cash Provided by Operating Activities
Six Months Ended June 30, ----------------------------------------- 1997 1996 ----------------- ----------------- Net loss............................................. $ (548,075) $ (564,502) --------------- --------------- Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization..................... 753,324 808,585 Amortization of deferred borrowing costs.......... 34,330 31,838 Amortization of discounts on mortgage notes payable................................... 9,914 9,406 Accrued interest on advances from affiliates...... 29,516 29,235 Gain on involuntary conversion.................... (26,809) - Changes in assets and liabilities: Cash segregated for security deposits........... (12,933) (3,341) Accounts receivable............................. 14,916 23,832 Escrow deposits................................. (140,183) 60,538 Prepaid expenses and other assets............... 2,618 (3,478) Accounts payable and accrued expenses........... (19,117) (9,914) Accrued property taxes.......................... 68,728 (25,612) Payable to affiliates........................... 322,575 369,106 Security deposits and deferred rental revenue....................................... 10,815 15,473 --------------- -------------- Total adjustments............................. 1,047,694 1,305,668 --------------- -------------- Net cash provided by operating activities............ $ 499,619 $ 741,166 =============== ==============
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 XXI, L.P. Notes to Financial Statements (Unaudited) June 30, 1997 NOTE 1. - ------- McNeil Real Estate Fund XXI, L.P. (the "Partnership"), formerly known as Southmark Realty Partners, Ltd., was organized on November 23, 1983 as a limited partnership under the provisions of the California Revised Limited Partnership Act to acquire and operate commercial and residential properties. The general partner of the Partnership is McNeil Partners, L.P. (the "General Partner"), a Delaware limited partnership, an affiliate of Robert A. McNeil ("McNeil"). The 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 XXI, L.P., c/o The Herman Group, 2121 San Jacinto St., 26th Floor, Dallas, Texas 75201. NOTE 3. - ------- Certain reclassifications have been made to prior period amounts to conform with the current period presentation. NOTE 4. - ------- The accompanying financial statements have been prepared assuming that the Partnership will continue as a going concern. The Partnership has had to defer payment of payables to affiliates in order to meet its working capital needs. Additionally, in 1997, the mortgage notes payable secured by Wise County Plaza and Fort Meigs Plaza mature. The mortgage note payable - affiliate secured by Fort Meigs Plaza also matures in 1997. In addition to regularly scheduled debt service payments, balloon payments totaling approximately $9.7 million are due in 1997. Management expects to refinance these mortgage notes as they mature. However, if management is unable to refinance the mortgage notes as they mature, the Partnership will require other sources of cash. No such sources have been identified. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. NOTE 5. - ------- The Partnership pays property management fees equal to 5% of gross rental receipts for its residential properties and 6% of gross rental receipts for its commercial 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. The Partnership is paying an asset management fee which is payable to the General Partner. Through 1999, the Asset Management Fee is calculated as 1% of the Partnership's tangible asset value. 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. The fee percentage decreases subsequent to 1999. Total accrued but unpaid asset management fees of $3,122,480 and $2,927,930 were outstanding at June 30, 1997 and December 31, 1996, respectively. The Partnership pays a disposition fee to an affiliate of the General Partner equal to 3% of the gross sales price for brokerage services performed in connection with the sale of the Partnership's properties. The fee is due and payable at the time the sale closes. In connection with the sales of Suburban Plaza and Wyoming Mall, total accrued but unpaid disposition fees of $346,050 were outstanding at June 30, 1997 and December 31, 1996. Prior to the restructuring of the Partnership, affiliates of the Original General Partner advanced funds to enable the Partnership to meet its working capital requirements. These advances were purchased by, and are now payable to, the General Partner. The total advances from affiliates at June 30, 1997 and December 31, 1996 consisted of the following: June 30, December 31, 1997 1996 --------- ------------ Advances purchased by General Partner.......... $ 630,574 $ 630,574 Accrued interest payable....................... 134,195 104,679 -------- --------- $ 764,769 $ 735,253 ======== ========= Compensation and reimbursements 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....................... $ 166,284 $ 167,347 Charged to interest - affiliates: Interest on advances from affiliates........ 29,516 29,235 Interest on mortgage note payable - affiliate................................ 30,442 30,610 Charged to general and administrative - affiliates: Partnership administration.................. 126,398 165,253 Asset management fee........................ 194,550 203,101 -------- --------- $ 547,190 $ 595,546 ======== ========= Payable to affiliates at June 30, 1997 and December 31, 1996 consisted primarily of unpaid asset management fees, property management fees, disposition fees and partnership general and administrative expenses and are due and payable from current operations. NOTE 6. - ------- In March 1997, the lender on the Partnership's $733,900 mortgage note payable - affiliate secured by Fort Meigs Plaza extended the maturity of the note to September 1, 1997 from April 1, 1997. NOTE 7. - ------- On July 12 and September 5, 1996, Governour's Square Apartments suffered damages from two separate hurricanes. Repairs of damages totaling $191,402 were completed. Reimbursements for the repairs totaling $40,937 were received from the insurance carrier in 1996, and $40,272 were received during the first half of 1997. The remaining costs of $110,193 less a $50,000 deductible, were received in July 1997 and are included in accounts receivable on the June 30, 1997 Balance Sheet. The Partnership recognized a gain on involuntary conversion of $27,252 and recorded a deferred gain of $66,879 in 1996. The total gain on involuntary conversion of $94,131 represents the insurance claims in excess of the basis of the property damaged by the hurricanes. A $26,809 gain on involuntary conversion was recognized during the first half of 1997, and the remaining deferred gain was recognized in July 1997 when the remaining insurance claim reimbursements were received. NOTE 8. - ------- In 1996, the Partnership adopted the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." This statement requires the cessation of depreciation on assets held for sale. Since Fort Meigs Plaza was placed on the market for sale, no depreciation was taken effective October 1, 1996. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - ------- --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- FINANCIAL CONDITION - ------------------- There has been no significant change in the operations of the Partnership's properties since December 31, 1996. The Partnership reported a net loss for the first six months of 1997 of $548,075 as compared to $564,502 for the first six months of 1996. Revenues increased to $3,286,862 in 1997 from $3,253,259 in 1996. Expenses were $3,834,937 in 1997 as compared to $3,817,761 in 1996. Net cash provided by operating activities was $499,619 for the first six months of 1997. The Partnership expended $381,245 for capital improvements and $131,807 for principal payments on its mortgage notes payable. Cash and cash equivalents decreased by $13,433 for the first six months of 1997, leaving a balance of $1,657,410 at June 30, 1997. The Partnership has had little ready cash reserves since its inception. It has been largely dependent on affiliates to support its operations. Although no additional advances from affiliates were required during the first six months of 1997, at June 30, 1997 the Partnership owed affiliate advances of $764,769 and payables to affiliates for property management fees, Partnership general and administrative expenses, asset management fees and disposition fees totaling $4,532,899. RESULTS OF OPERATIONS - --------------------- Revenue: Total revenue increased by $23,346 and $33,603 for the first three and six months of 1997, respectively, as compared to the same periods of 1996. The increase was due to an increase in rental revenue, partially offset by a decrease in interest income, as discussed below. In addition, the Partnership recognized a $26,809 gain on involuntary conversion during the first half of 1997 relating to hurricane damages at Governour's Square Apartments, as discussed in Item 1, Note 7. Rental revenue increased by $8,623 and $22,428 for the three and six months ended June 30, 1997, respectively, as compared to the same periods in 1996. Rental revenue for all properties increased slightly during the first half of 1997, except at Evergreen Square Apartments where rental revenue decreased due to a decline in occupancy to 82% at the end of June 1997 from 90% at the end of June 1996. In addition, in 1996 the Partnership received approximately $18,000 of rental revenue relating to a property which had previously been sold. No such income was received during the first half of 1997. Interest income decreased by $12,086 and $15,634 for the three and six months ended June 30, 1997, respectively, as compared to the same periods in 1996 due to a lower amount of cash available for short-term investment in 1997. The Partnership held $1.7 million of cash and cash equivalents at June 30, 1997 as compared to $2.3 million at June 30, 1996. Expenses: Total expenses increased by $47,768 and $17,176 for the first three and six months of 1997, respectively, as compared to the same periods in 1996. The increase was mainly due to increases in property taxes, repairs and maintenance and general and administrative expenses, partially offset by a decrease in general and administrative - affiliates, as discussed below. Property taxes increased by $9,894 and $25,542 for the three and six months ended June 30, 1997, respectively, as compared to the same periods in 1996. The increase was partially due to increased property taxes at Woodcreek and Evergreen Square Apartments. In addition, in 1996 the Partnership received an approximately $5,700 refund of prior years' property taxes relating to Bedford Green Apartments. No such refund was received in the first half of 1997. Repairs and maintenance expense increased by $35,924 and $38,584 for the three and six months ended June 30, 1997, respectively, as compared to the same periods in 1996. The increase was due to increases in replacement of floor coverings at Woodcreek Apartments and replacement of appliances at Governour's Square Apartments. The replacements, which met the Partnership's criteria for capitalization in 1996, were expensed in 1997. General and administrative expenses for the first three and six months of 1997 increased by $11,448 and $17,105, respectively, as compared to the same periods in 1996. Costs incurred for investor services were paid to an unrelated third party in 1997. In the first six months of 1996, such costs were paid to an affiliate of the General Partner and were included in general and administrative - - affiliates on the Statements of Operations. General and administrative - affiliates decreased by $23,698 and $47,406 for the three and six months ended June 30, 1997, respectively, as compared to the same periods in 1996. The decrease was mainly due to a decrease in overhead expenses allocated to the Partnership by McREMI, which was partially due to investor services being performed by an unrelated third party in 1997, as discussed above. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- At June 30, 1997, the Partnership held cash and cash equivalents of $1,657,410. Cash of $499,619 was provided by operating activities during the first six months of 1997 as compared to $741,166 provided during the same period in 1996. The decrease in cash provided by operations in the first half of 1997 was mainly the result of an increase in cash paid to suppliers, interest paid and property taxes paid due to the timing of the payment of invoices. Cash used for additions to real estate investments totaled $381,245 for the first six months of 1997 as compared to $306,352 for the same period in 1996. A greater amount was spent in the first half of 1997 for landscaping and exterior painting at Governour's Square Apartments. Short-term liquidity For the remainder of 1997, present cash balances and operations of the properties are expected to provide sufficient cash for normal operating expenses, debt service payments and budgeted capital improvements. The mortgage notes payable secured by Wise County Plaza matured on August 1, 1997 and the Partnership is currently attempting to negotiate an extension with the lender. The mortgage note payable - affiliate secured by Fort Meigs Plaza matured on April 1, 1997 and the maturity was extended to September 1, 1997. The Fort Meigs mortgage note payable to a non-affiliate matures in October 1997. In addition to regularly scheduled debt service payments, balloon payments totaling approximately $9.7 million are due in 1997. Management expects to refinance these mortgage notes as they mature or sell the property securing the loan. However, if management is unable to refinance the mortgage notes as they mature, the Partnership will require other sources of cash. No such sources have been identified. The Partnership has no established lines of credit from outside sources. Although affiliates of the Partnership have previously funded cash deficits, there can be no assurance the Partnership will receive additional funds. Other possible actions to resolve cash deficiencies include refinancing, deferring major capital or repair expenditures on Partnership properties except where improvements are expected to enhance the competitiveness and marketability of the properties, deferring payables to or arranging financing from affiliates or the ultimate sale of Partnership properties. Long-term liquidity The Partnership has determined to begin orderly liquidation of all its assets. Although there can be no assurance as to the timing of the liquidation due to real estate market conditions, the general difficulty of disposing of real estate, and other general economic factors, it is anticipated that such liquidation would result in the dissolution of the Partnership followed by a liquidating distribution to the limited partners by December 2001. In this regard, the Partnership has placed Fort Meigs Plaza on the market for sale. The Partnership has received an offer from a non-affiliate to purchase the property for $4.4 million. Operations of the Partnership's properties are expected to provide sufficient cash flow for operating expenses, debt service payments and capital improvements in the foreseeable future. The Partnership has significant mortgage maturities during 1997, and management expects to refinance these mortgage notes as they mature or sell the property securing the loan. If management is unable to refinance the mortgage notes as they mature, the Partnership will require other sources of cash. No such sources have been identified. These conditions raise substantial doubt about the Partnership's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. Distributions To maintain adequate cash balances of the Partnership, distributions to Current Income Unit holders were suspended in 1989. There have been no distributions to Growth/Shelter Units holders. Distributions to Unit holders will remain suspended for the foreseeable future. The General Partner will continue to monitor the cash reserves and working capital needs of the Partnership to determine when cash flows will support distributions to the Unit holders. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - ------- ----------------- James F. Schofield, Gerald C. Gillett, Donna S. Gillett, Jeffrey Homburger, Elizabeth Jung, Robert Lewis, and Warren Heller et al. v. McNeil Partners L.P., McNeil Investors, Inc., McNeil Real Estate Management, Inc., Robert A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate Fund XII, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate Fund XXI, L.P., McNeil Real Estate Fund XXII, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., McNeil Real Estate Fund XXVI, L.P., and McNeil Real Estate Fund XXVII, L.P., et al. - Superior Court of the State of California for the County of Los Angeles, Case No. BC133799 (Class and Derivative Action Complaint). The action involves purported class and derivative actions brought by limited partners of each of the fourteen limited partnerships that were named as nominal defendants as listed above (the "Partnerships"). Plaintiffs allege that McNeil Investors, Inc., its affiliate McNeil Real Estate Management, Inc. and three of their senior officers and/or directors (collectively, the "Defendants") breached their fiduciary duties and certain obligations under the respective Amended Partnership Agreement. Plaintiffs allege that Defendants have rendered such Units highly illiquid and artificially depressed the prices that are available for Units on the resale market. Plaintiffs also allege that Defendants engaged in a course of conduct to prevent the acquisition of Units by an affiliate of Carl Icahn by disseminating purportedly false, misleading and inadequate information. Plaintiffs further allege that Defendants acted to advance their own personal interests at the expense of the Partnerships' public unit holders by failing to sell Partnership properties and failing to make distributions to unitholders. On December 16, 1996, the Plaintiffs filed a consolidated and amended complaint. Plaintiffs are suing for breach of fiduciary duty, breach of contract and an accounting, alleging, among other things, that the management fees paid to the McNeil affiliates over the last six years are excessive, that these fees should be reduced retroactively and that the respective Amended Partnership Agreements governing the Partnerships are invalid. Defendants filed a demurrer to the consolidated and amended complaint and a motion to strike on February 14, 1997, seeking to dismiss the consolidated and amended complaint in all respects. A hearing on Defendant's demurrer and motion to strike was held on May 5, 1997. The Court granted Defendants' demurrer, dismissing the consolidated and amended complaint with leave to amend. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ------- -------------------------------- (a) Exhibits. Exhibit Number Description ------- ----------- 4. Amended and Restated Limited Partnership Agreement dated March 26, 1992. (Incorporated by reference to the Current Report of the Registrant on Form 8-K dated March 26, 1992, as filed on April 9, 1992). 11. Statement regarding computation of Net Income (Loss) per Limited Partnership Unit: Net income (loss) per limited partnership unit is computed by dividing net income (loss) allocated to the limited partners by the weighted average number of limited partnership units outstanding. Per unit information has been computed based on 24,906 and 24,949 Current Income Units outstanding in 1997 and 1996, respectively, and 22,180 and 22,339 Growth/Shelter Units outstanding in 1997 and 1996, respectively. 27. Financial Data Schedule for the quarter ended June 30, 1997. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended June 30, 1997. MCNEIL REAL ESTATE FUND XXI, L.P. 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 XXI, L.P. 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/ Carol A. Fahs - --------------- ------------------------------------------- Date Carol A. Fahs Vice President of McNeil Investors, Inc. (Principal Accounting Officer) EX-27 2
5 6-MOS DEC-31-1997 JUN-30-1997 1,657,410 0 302,236 0 0 0 33,151,469 (15,414,340) 23,646,965 0 22,392,282 0 0 0 (4,969,053) 23,646,965 3,221,812 3,286,862 1,618,756 2,372,080 383,254 0 1,079,603 (548,075) 0 (548,075) 0 0 0 (548,075) 0 0
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