-----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, MWmuTBwl5cl9XrTI2Oy4rmgCXLGLc9gzmCJTav0JFspcdpkCF+02lB6w0D4I1nAt g7mGpctmK8Yo40gQ4gwHZQ== 0000734761-99-000005.txt : 19990518 0000734761-99-000005.hdr.sgml : 19990518 ACCESSION NUMBER: 0000734761-99-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 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: SEC FILE NUMBER: 000-13356 FILM NUMBER: 99625655 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 quarterly period ended March 31, 1999 ------------------------------------------ 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 --- --- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- MCNEIL REAL ESTATE FUND XXI, L.P. BALANCE SHEETS (Unaudited)
March 31, December 31, 1999 1998 ------------- -------------- ASSETS - ------ Real estate investments: Land ....................................................... $ 1,842,544 $ 1,842,544 Buildings and improvements ................................. 22,535,805 22,468,887 ------------ ------------ 24,378,349 24,311,431 Less: Accumulated depreciation and amortization ........... (12,915,466) (12,611,818) ------------ ------------ 11,462,883 11,699,613 Cash and cash equivalents ..................................... 1,315,755 1,253,238 Cash segregated for security deposits ......................... 171,727 181,524 Accounts receivable ........................................... 22,459 25,391 Escrow deposits ............................................... 414,801 470,958 Deferred borrowing costs, net of accumulated amortiz- ation of $271,853 and $255,111 at March 31, 1999 and December 31, 1998, respectively ........................ 289,075 305,817 Prepaid expenses and other assets ............................. 35,922 35,922 ------------ ------------ $ 13,712,622 $ 13,972,463 ============ ============ LIABILITIES AND PARTNERS' DEFICIT - --------------------------------- Mortgage notes payable, net ................................... $ 12,323,090 $ 12,372,597 Accounts payable and accrued expenses ......................... 178,303 172,803 Accrued property taxes ........................................ 218,510 304,699 Payable to affiliates ......................................... 5,533,168 5,446,918 Security deposits and deferred rental revenue ................. 179,977 170,108 ------------ ------------ 18,433,048 18,467,125 ------------ ------------ Partners' deficit: Limited partners - 50,000 Units authorized; 46,898 and 46,948 Units outstanding at March 31, 1999 and December 31, 1998, respectively (24,863 Current Income Units and 22,035 Growth/Shelter Units out- standing at March 31, 1999 and 24,863 Current Income Units and 22,085 Growth/Shelter Units outstanding at December 31,1998) ................... (4,355,609) (4,132,103) General Partner ............................................ (364,817) (362,559) ------------ ------------ (4,720,426) (4,494,662) ------------ ------------ $ 13,712,622 $ 13,972,463 ============ ============
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 March 31, ------------------------------- 1999 1998 ----------- ----------- Revenue: Rental revenue ............................................. $ 1,280,114 $ 1,654,081 Interest ................................................... 10,658 16,801 ----------- ----------- Total revenue ............................................ 1,290,772 1,670,882 ----------- ----------- Expenses: Interest ................................................... 280,751 420,825 Interest - affiliates ...................................... -- 125,780 Depreciation and amortization .............................. 303,648 387,258 Property taxes ............................................. 105,600 137,585 Personnel costs ............................................ 199,318 202,934 Utilities .................................................. 105,406 116,969 Repairs and maintenance .................................... 156,363 163,906 Property management fees - affiliates ...................... 64,134 86,281 Other property operating expenses .......................... 81,032 103,910 General and administrative ................................. 88,649 92,496 General and administrative - affiliates .................... 131,635 170,591 ----------- ----------- Total expenses ........................................... 1,516,536 2,008,535 ----------- ----------- Net loss ...................................................... $ (225,764) $ (337,653) =========== =========== Net loss allocable to limited partners - Current Income Unit ........................................ $ (20,319) $ (30,389) Net loss allocable to limited partners - Growth/Shelter Unit ........................................ (203,187) (303,888) Net loss allocable to General Partner ......................... (2,258) (3,376) ----------- ----------- Net loss ...................................................... $ (225,764) $ (337,653) =========== =========== Net loss per limited partnership unit: Current Income Units .......................................... $ (.82) $ (1.22) =========== =========== Growth/Shelter Units .......................................... $ (9.22) $ (13.76) =========== ===========
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 Three Months Ended March 31, 1999 and 1998
Total General Limited Partners' Partner Partners Deficit ------------ ------------ ------------ Balance at December 31, 1997 ............... $ (376,608) $(5,522,974) $(5,899,582) Net loss General Partner ......................... (3,376) -- (3,376) Current Income Units .................... -- (30,389) (30,389) Growth/Shelter Units .................... -- (303,888) (303,888) ----------- ----------- ----------- Total net loss ............................. (3,376) (334,277) (337,653) ----------- ----------- ----------- Balance at March 31, 1998 .................. $ (379,984) $(5,857,251) $(6,237,235) =========== =========== =========== Balance at December 31, 1998 ............... $ (362,559) $(4,132,103) $(4,494,662) Net loss General Partner ......................... (2,258) -- (2,258) Current Income Units .................... -- (20,319) (20,319) Growth/Shelter Units .................... -- (203,187) (203,187) ----------- ----------- ----------- Total net loss ............................. (2,258) (223,506) (225,764) ----------- ----------- ----------- Balance at March 31, 1999 .................. $ (364,817) $(4,355,609) $(4,720,426) =========== =========== ===========
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
Three Months Ended March 31, -------------------------------- 1999 1998 ------------ ------------ Cash flows from operating activities: Cash received from tenants ........................ $ 1,296,740 $ 1,631,609 Cash paid to suppliers ............................ (640,521) (787,618) Cash paid to affiliates ........................... (109,519) (83,284) Interest received ................................. 10,658 16,801 Interest paid ..................................... (258,818) (365,004) Interest paid to affiliates ....................... -- (108,131) Property taxes paid and escrowed .................. (114,104) (153,371) ----------- ----------- Net cash provided by operating activities ............ 184,436 151,002 ----------- ----------- Cash flows from investing activities: Additions to real estate investments .............. (66,918) (41,363) ----------- ----------- Cash flows from financing activities: Principal payments on mortgage notes payable ......................................... (55,001) (66,979) Principal payments on mortgage notes payable - affiliate ............................. -- (4,090) ----------- ----------- Net cash used in financing activities ................ (55,001) (71,069) ----------- ----------- Net increase in cash and cash equivalents ............ 62,517 38,570 Cash and cash equivalents at beginning of period ............................................ 1,253,238 1,817,585 ----------- ----------- Cash and cash equivalents at end of period ........... $ 1,315,755 $ 1,856,155 =========== ===========
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
Three Months Ended March 31, 1999 1998 ---------- ---------- Net loss ................................................ $(225,764) $(337,653) --------- --------- Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization ........................ 303,648 387,258 Amortization of deferred borrowing costs ............. 16,742 15,629 Amortization of discounts on mortgage notes payable ...................................... 5,494 5,222 Accrued interest on advances from affiliates ......... -- 14,777 Changes in assets and liabilities: Cash segregated for security deposits .............. 9,797 (15,653) Accounts receivable ................................ 2,932 (453) Escrow deposits .................................... 56,157 91,890 Prepaid expenses and other assets .................. -- (5,641) Accounts payable and accrued expenses .............. 5,500 (44,095) Accrued property taxes ............................. (86,189) (129,496) Payable to affiliates .............................. 86,250 173,588 Security deposits and deferred rental revenue .......................................... 9,869 (4,371) --------- --------- Total adjustments ................................ 410,200 488,655 --------- --------- Net cash provided by operating activities ............... $ 184,436 $ 151,002 ========= =========
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) March 31, 1999 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 three months ended March 31, 1999 are not necessarily indicative of the results to be expected for the year ending December 31, 1999. 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, 1998, 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 McNeil Real Estate Management, Inc., Investor Services, 13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240. NOTE 3. - ------- 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. Total accrued but unpaid Partnership general and administration fees of $1,483,244 and $1,443,393 were outstanding at March 31, 1999 and December 31, 1998, respectively. 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 to .75% in 2000, .50% in 2001 and .25% thereafter. Total accrued but unpaid asset management fees of $3,682,123 and $3,636,836 were outstanding at March 31, 1999 and December 31, 1998, respectively. The Partnership pays a disposition fee to 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 March 31, 1999 and December 31, 1998. In connection with the sale of Fort Meigs Plaza, the General Partner waived its right to receive a disposition fee, which would have totaled $114,000. 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 were payable to, the General Partner. These advances totaling $630,574, and accrued interest of $182,091, were repaid in full in April 1998. Compensation and reimbursements paid to or accrued for the benefit of the General Partner and its affiliates are as follows:
Three Months Ended March 31, ------------------------ 1999 1998 -------- -------- Property management fees ................................ $ 64,134 $ 86,281 Charged to interest - affiliates: Interest on advances from affiliates ................. -- 14,777 Interest on mortgage notes payable - affiliate ....... -- 111,003 Charged to general and administrative -affiliates: ...... Partnership administration ........................... 63,253 69,374 Asset management fee ................................. 68,382 101,217 -------- -------- $195,769 $382,652 ======== ========
Payable to affiliates at March 31, 1999 and December 31, 1998 consisted primarily of unpaid asset management fees, property management fees, disposition fees and partnership general and administrative expenses and is due and payable from current operations. The mortgage notes payable - affiliate secured by Fort Meigs Plaza were repaid in full when the property was sold in April 1998. See Note 4. NOTE 4. - ------- On April 20, 1998, the Partnership sold Fort Meigs Plaza Shopping Center, located in Perrysburg, Ohio, to an unaffiliated purchaser for a cash purchase price of $3,800,000. Cash proceeds from the sale, after payment of prorated rents and property taxes, were used to repay the mortgage notes payable to McNeil Real Estate Fund XX, L.P. ("Fund XX"), an affiliate. Under the terms of its partnership agreement, the Partnership normally pays a disposition fee to 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 sale of Fort Meigs Plaza, the General Partner waived its right to receive such fee, which would have totaled $114,000. NOTE 5. - ------- The mortgage notes payable secured by Wise County Plaza matured on August 1, 1997 and the Partnership was unable to negotiate a modification and extension of the loans. On May 29, 1998, Wise County Plaza was foreclosed on by the lender in full settlement of the mortgage indebtedness secured by the property. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - ------- --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- FINANCIAL CONDITION - ------------------- Fort Meigs Plaza Shopping Center was sold on April 20, 1998. Wise County Plaza Shopping Center was foreclosed on by the lender on May 29, 1998. There has been no significant change in the operations of the remainder of the Partnership's properties since December 31, 1998. The Partnership reported a net loss for the first three months of 1999 of $225,764 as compared to a net loss of $337,653 for the first three months of 1998. Revenues decreased to $1,290,772 in the first quarter of 1999 from $1,670,882 in the first quarter of 1998, while expenses decreased to $1,516,536 in the first quarter of 1999 from $2,008,535 in the first quarter of 1998. Net cash provided by operating activities was $184,436 for the first three months of 1999. The Partnership expended $66,918 for capital improvements and $55,001 for regularly scheduled principal payments on its mortgage notes payable. Cash and cash equivalents increased by $62,517 in the first three months of 1999, leaving a balance of $1,315,755 at March 31, 1999. The Partnership has had little ready cash reserves since its inception. It has been largely dependent on deferring affiliate payables in order to support its operations. At March 31, 1999 the Partnership owed payables to affiliates for property management fees, Partnership general and administrative expenses, asset management fees and disposition fees totaling $5,533,168. RESULTS OF OPERATIONS - --------------------- Revenue: Total revenue decreased by $380,110 for the three months ended March 31, 1999 as compared to the same period in 1998, as discussed below. Rental revenue in the first quarter of 1999 decreased by $373,967 in relation to the prior year. Excluding rental revenue from Fort Meigs Plaza and Wise County Plaza, which were disposed of in 1998, rental revenue increased by $33,562. Rental revenue increased at all of the Partnership's remaining properties in the first quarter of 1999, mainly due to an increase in rental rates at all of the properties. The largest increases, of approximately $12,000 and $10,000, occurred at Woodcreek and Breckenridge apartments, respectively. Interest income decreased by $6,143 for the three months ended March 31, 1999 in relation to the comparable period in 1998, mainly due to a decline in the amount of cash available for short-term investment in the first quarter of 1999. The Partnership held cash and cash equivalents of approximately $1.32 million at March 31, 1999 as compared to approximately $1.86 million at March 31, 1998. Expenses: Total expenses decreased by $491,999 in the first three months of 1999 as compared to the same period in 1998. Excluding the sale of Fort Meigs Plaza and the foreclosure of Wise County Plaza in 1998, total expenses decreased by $37,714. This decrease in expenses was mainly due to decreases in interest - affiliates and general and administrative - affiliates, as discussed below. Interest expense for the first quarter of 1999 decreased by $140,074 in relation to the first quarter of 1998. The decrease was mainly due to the foreclosure of Wise County Plaza in May 1998. Interest - affiliates decreased by $125,780 in the first three months of 1999 as compared to the same period in the prior year. The decrease was mainly the result of the April 1998 payoff of the affiliate loans secured by Fort Meigs Plaza. Additionally, in April 1998 the Partnership repaid $630,574 of interest-bearing advances from affiliates ($14,778 of interest was recorded on these advances in the first quarter of 1998). Depreciation and amortization, property taxes, property management fees - affiliates and other property operating expenses decreased by $83,610, $31,985, $22,147 and $22,878, respectively, in the first three months of 1999 as compared to the same period in 1998. These decreases were mainly attributable to Fort Meigs Plaza and Wise County Plaza, which were disposed of in 1998, but subsequent to March 31, 1998. For the three months ended March 31, 1999, general and administrative - affiliates decreased by $38,956 as compared to the same period in 1998. The decrease was mainly due to a decrease in asset management fees due to a decline in the tangible asset value of the Partnership, on which the fees are based, as a result of the disposition of Fort Meigs Plaza and Wise County Plaza in 1998. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- At March 31, 1999, the Partnership held cash and cash equivalents of $1,315,755. Cash of $184,436 was provided by operating activities during the first three months of 1999 as compared to $151,002 provided during the same period in 1998. Excluding cash provided by operations of Fort Meigs Plaza which was sold in April 1998 and Wise County Plaza which was foreclosed on in May 1998, cash provided by operating activities increased by $88,865 in the first quarter of 1999. The increase was mainly due to an increase in cash received from tenants and a decrease in cash paid to suppliers, partially offset by an increase in cash paid to affiliates in 1999. The increase in cash received from tenants was due to an increase in rental revenue and security deposits collected from tenants in 1999. The timing of the payment of invoices at the end of the period was the primary factor in the decrease in cash paid to suppliers. In the first quarter of 1999, the Partnership paid an affiliate approximately $46,000 of previously accrued asset management fees and reimbursable expenses. No asset management fees or reimbursable expenses were paid during the first quarter of 1998. Cash used for additions to real estate investments totaled $66,918 for the first three months of 1999 as compared to $41,363 for the same period in 1998. A greater amount was expended in 1999 for windows at Governour's Square Apartments and for appliances at Breckenridge Apartments and Evergreen Square Apartments. The foreclosure of Wise County Plaza in May 1998 resulted in a decrease in cash used for principal payments on mortgage notes payable to $55,001 in the first quarter of 1999 from $66,979 in the first quarter of 1998. No principal payments on mortgage notes payable - affiliate were made in 1999 as Fort Meigs Plaza was sold and the affiliate loans were repaid in April 1998. Short-term liquidity In 1999, 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 Partnership has no established lines of credit from outside sources. Although affiliates of the Partnership have previously funded cash deficits, affiliates are not obligated to advance funds to the Partnership and 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. For the Partnership as a whole, management projects positive cash flow from operations in 1999. The Partnership has budgeted approximately $1,017,000 for necessary capital improvements for all properties in 1999, which are expected to be funded from available cash reserves or from operations of the properties. Additional efforts to maintain and improve Partnership liquidity have included continued attention to property management activities. The objective has been to obtain maximum occupancy rates while holding expenses to levels necessary to maximize cash flows. The Partnership has made capital expenditures on its properties where improvements were expected to increase the competitiveness and marketability of the properties. Long-term liquidity As previously announced, the Partnership has retained PaineWebber, Incorporated as its exclusive financial advisor to explore alternatives to maximize the value of the Partnership, including, without limitation, a transaction in which limited partnership interests in the Partnership are converted into cash. During the last full week of March, the Partnership entered into a 45 day exclusivity agreement with a well-financed bidder with whom it had commenced discussions with respect to a sale transaction. The Partnership and such party have made significant progress in negotiating the terms of a proposed transaction and are continuing to have intensive discussions with respect to a transaction. In light on these continuing negotiations, the exclusivity agreement has been extended for an additional 21 days until June 4, 1999. It is possible that the General Partner and its affiliates will receive non-cash consideration for their ownership interests in connection with any such transaction. There can be no assurance regarding whether any such agreement will be reached nor the terms thereof. 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's working capital needs have been supported by deferring certain affiliate payables. The Partnership owed payables to affiliates for property management fees, Partnership general and administrative expenses, asset management fees and disposition fees totaling $5,533,168 at March 31, 1999. 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. Forward-Looking Information Within this document, certain statements are made as to the expected occupancy trends, financial condition, results of operations, and cash flows of the Partnership for periods after March 31, 1999. All of these statements are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical and involve risks and uncertainties. The Partnership's actual occupancy trends, financial condition, results of operations, and cash flows for future periods may differ materially due to several factors. These factors include, but are not limited to, the Partnership's ability to control costs, make necessary capital improvements, negotiate sales or refinancings of its properties, and respond to changing economic and competitive factors. YEAR 2000 DISCLOSURE - -------------------- State of readiness - ------------------ The year 2000 problem is the result of computer programs being written using two digits rather than four to define the applicable year. Any programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in major systems failure or miscalculations. Management has assessed its information technology ("IT") infrastructure to identify any systems that could be affected by the year 2000 problem. The IT used by the Partnership for financial reporting and significant accounting functions was made year 2000 compliant during recent systems conversions. The software utilized for these functions is licensed by third party vendors who have warranted that their systems are year 2000 compliant. Management is in the process of evaluating the mechanical and embedded technological systems at the various properties. Management has inventoried all such systems and queried suppliers, vendors and manufacturers to determine year 2000 compliance. Based on this review, management believes these systems are substantially compliant. In circumstances of non-compliance management will work with the vendor to remedy the problem or seek alternative suppliers who will be in compliance. Management believes that the remediation of any outstanding year 2000 conversion issues will not have a material or adverse effect on the Partnership's operations. However, no estimates can be made as to the potential adverse impact resulting from the failure of third party service providers and vendors to be year 2000 compliant. Cost - ---- The cost of IT and embedded technology systems testing and upgrades is not expected to be material to the Partnership. Because all the IT systems have been upgraded over the last three years, all such systems were compliant, or made compliant at no additional cost by third party vendors. Management anticipates the costs of assessing, testing, and if necessary replacing embedded technology components will be less than $50,000. Such costs will be funded from operations of the Partnership. Risks - ----- Ultimately, the potential impact of the year 2000 issue will depend not only on the corrective measures the Partnership undertakes, but also on the way in which the year 2000 issue is addressed by government agencies and entities that provide services or supplies to the Partnership. Management has not determined the most likely worst case scenario to the Partnership. As management studies the findings of its property systems assessment and testing, management will develop a better understanding of what would be the worst case scenario. Management believes that progress on all areas is proceeding and that the Partnership will experience no adverse effect as a result of the year 2000 issue. However, there is no assurance that this will be the case. Contingency plans - ----------------- Management is developing contingency plans to address potential year 2000 non-compliance of IT and embedded technology systems. Management believes that failure of any IT system could have an adverse impact on operations. However, management believes that alternative systems are available that could be utilized to minimize such impact. Management believes that any failure in the embedded technology systems could have an adverse impact on that property's performance. Management will assess these risks and develop plans to mitigate possible failures by July 1999. PART II. OTHER INFORMATION 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 24,863 Current Income Units outstanding in 1999 and 1998, and 22,035 and 22,085 Growth/Shelter Units outstanding in 1999 and 1998, respectively. 27. Financial Data Schedule for the quarter ended March 31, 1999. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended March 31, 1999. 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 May 17, 1999 By: /s/ Ron K. Taylor - ------------ --------------------------------------------- Date Ron K. Taylor President and Director of McNeil Investors, Inc. (Principal Financial Officer) May 17, 1999 By: /s/ Carol A. Fahs - ------------ --------------------------------------------- Date Carol A. Fahs Vice President of McNeil Investors, Inc. (Principal Accounting Officer) EX-27 2
5 3-MOS DEC-31-1999 MAR-31-1999 1,315,755 0 22,459 0 0 0 24,378,349 (12,915,466) 13,712,622 0 12,323,090 0 0 0 (4,720,426) 13,712,622 1,280,114 1,290,772 711,853 1,015,501 220,284 0 280,751 (225,764) 0 (225,764) 0 0 0 (225,764) 0 0
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