-----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, HaWUthocEToe5EhWdAkTaPgN0zQHib3qz6QWMyu630DXHSS6rUnlOFqHmOsmAyA8 KrFKxBOZvLWZi2EfOmCppg== 0000750334-99-000010.txt : 19990519 0000750334-99-000010.hdr.sgml : 19990519 ACCESSION NUMBER: 0000750334-99-000010 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990518 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCNEIL REAL ESTATE FUND XX L P CENTRAL INDEX KEY: 0000750334 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330050225 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-14007 FILM NUMBER: 99629447 BUSINESS ADDRESS: STREET 1: 13760 NOEL RD STE 600 LB70 CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 9724485800 MAIL ADDRESS: STREET 1: 13760 NOEL ROAD SUITE 600 LB 70 STREET 2: 13760 NOEL ROAD SUITE 600 LB 70 CITY: DALLAS STATE: TX ZIP: 75240 FORMER COMPANY: FORMER CONFORMED NAME: SOUTHMARK INCOME INVESTORS LTD DATE OF NAME CHANGE: 19920413 10-Q/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A [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 0-14007 --------- MCNEIL REAL ESTATE FUND XX, L.P. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 33-0050225 - -------------------------------------------------------------------------------- (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 XX, L.P. BALANCE SHEETS (Unaudited)
March 31, December 31, 1999 1998 ----------- ------------ ASSETS - ------ Real estate investments: Land ......................................................... $ 392,000 $ 392,000 Buildings and improvements ................................... 3,988,288 3,981,407 ----------- ----------- 4,380,288 4,373,407 Less: Accumulated depreciation .............................. (1,583,113) (1,525,208) ----------- ----------- 2,797,175 2,848,199 Cash and cash equivalents ....................................... 1,518,836 3,070,785 Cash segregated for security deposits ........................... 33,936 28,773 Accounts receivable ............................................. 5,252 6,603 Escrow deposits ................................................. 72,715 180,267 Deferred borrowing costs, net of accumulated amortization of $80,397 and $76,154 at March 31, 1999 and December 31, 1998, respectively ........... 81,097 85,340 Prepaid expenses and other assets ............................... 5,500 5,500 ----------- ----------- $ 4,514,511 $ 6,225,467 =========== =========== LIABILITIES AND PARTNERS' EQUITY (DEFICIT) - ------------------------------------------ Mortgage note payable, net ...................................... $ 2,586,742 $ 2,613,312 Accounts payable and other accrued expenses ..................... 67,132 52,848 Accrued property taxes .......................................... 35,542 142,490 Payable to affiliates ........................................... 277,526 376,849 Security deposits and deferred rental revenue ................... 26,165 27,702 ----------- ----------- 2,993,107 3,213,201 ----------- ----------- Partners' equity (deficit): Limited partners - 60,000 limited partnership units authorized; 49,512 limited partnership units issued and outstanding at March 31, 1999 and December 31, 1998 ................................................... 1,805,190 3,296,145 General Partner .............................................. (283,786) (283,879) ----------- ----------- 1,521,404 3,012,266 ----------- ----------- $ 4,514,511 $ 6,225,467 =========== ===========
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 XX, L.P. STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31, ------------------------ 1999 1998 -------- -------- Revenue: Rental revenue ......................................... $326,553 $337,688 Interest income on mortgage loan investments ........... -- 69,496 Interest income on mortgage loan investments - affiliate ............................................ -- 108,214 Other interest income .................................. 34,936 22,163 -------- -------- Total revenue ........................................ 361,489 537,561 -------- -------- Expenses: Interest ............................................... 60,394 61,304 Depreciation ........................................... 57,905 59,445 Property taxes ......................................... 35,826 36,892 Personnel costs ........................................ 38,719 40,797 Utilities .............................................. 19,181 20,225 Repairs and maintenance ................................ 26,775 28,876 Property management fees - affiliates .................. 15,819 14,994 Other property operating expenses ...................... 15,625 20,709 General and administrative ............................. 37,614 48,435 General and administrative - affiliates ................ 44,292 64,400 -------- -------- Total expenses ....................................... 352,150 396,077 -------- -------- Net income ................................................ $ 9,339 $141,484 ======== ======== Net income allocable to limited partners .................. $ 9,246 $140,069 Net income allocable to General Partner ................... 93 1,415 -------- -------- Net income ................................................ $ 9,339 $141,484 ======== ======== Net income per limited partnership unit ................... $ .19 $ 2.83 ======== ======== Distributions per limited partnership unit ................ $ 30.30 $ 29.94 ======== ========
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 XX, L.P. STATEMENTS OF PARTNERS' EQUITY (DEFICIT) (Unaudited) For the Three Months Ended March 31, 1999 and 1998
Total General Limited Partners' Partner Partners Equity (Deficit) ------------ ------------ ---------------- Balance at December 31, 1997 ............ $ (296,465) $ 9,282,684 $ 8,986,219 Net income .............................. 1,415 140,069 141,484 Distributions to limited partners........ -- (1,482,316) (1,482,316) ----------- ----------- ----------- Balance at March 31, 1998 ............... $ (295,050) $ 7,940,437 $ 7,645,387 =========== =========== =========== Balance at December 31, 1998 ............ $ (283,879) $ 3,296,145 $ 3,012,266 Net income .............................. 93 9,246 9,339 Distributions to limited partners ....... -- (1,500,201) (1,500,201) ----------- ----------- ----------- Balance at March 31, 1999 ............... $ (283,786) $ 1,805,190 $ 1,521,404 =========== =========== ===========
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 XX, 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 ......................... $ 322,930 $ 364,529 Cash paid to suppliers ............................. (136,357) (173,329) Cash paid to affiliates ............................ (159,434) (15,262) Interest received .................................. 34,936 90,074 Interest received from affiliate ................... -- 108,131 Interest paid ...................................... (41,526) (55,301) Property taxes paid ................................ (284) (281) Property taxes escrowed ............................ (36,329) (46,800) ----------- ----------- Net cash provided by (used in) operating activities ......................................... (16,064) 271,761 ----------- ----------- Cash flows from investing activities: Additions to real estate investments ............... (6,881) (6,021) Collection of principal on mortgage loan investments ...................................... -- 34,465 Collection of principal on mortgage loan investments - affiliate .......................... -- 4,089 ----------- ----------- Net cash provided by (used in) investing activities ...................................... (6,881) 32,533 ----------- ----------- Cash flows from financing activities: Principal payments on mortgage note payable......... (28,803) (15,029) Distributions to limited partners .................. (1,500,201) (1,482,316) ----------- ----------- Net cash used in financing activities ................. (1,529,004) (1,497,345) ----------- ----------- Net decrease in cash and cash .equivalents ............ (1,551,949) (1,193,051) Cash and cash equivalents at beginning of period ............................................. 3,070,785 1,824,293 ----------- ----------- Cash and cash equivalents at end of period ............ $ 1,518,836 $ 631,242 =========== ===========
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 XX, L.P. STATEMENTS OF CASH FLOWS (Unaudited) Reconciliation of Net Income to Net Cash Provided by (Used In) Operating Activities
Three Months Ended March 31, --------------------------- 1999 1998 ---------- --------- Net income .......................................... $ 9,339 $ 141,484 --------- --------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation ..................................... 57,905 59,445 Amortization of deferred borrowing costs ......... 4,243 3,983 Amortization of discount on mortgage note payable ........................................ 2,233 2,122 Changes in assets and liabilities: Cash segregated for security deposits .......... (5,163) (4,506) Accounts receivable ............................ 1,351 33,191 Escrow deposits ................................ 107,552 (42,735) Accounts payable and other accrued expenses ..................................... 14,284 (18,859) Accrued property taxes ......................... (106,948) 36,611 Payable to affiliates .......................... (99,323) 64,132 Deferred revenue ............................... -- (1,656) Security deposits and deferred rental revenue ...................................... (1,537) (1,451) --------- --------- Total adjustments ............................ (25,403) 130,277 --------- --------- Net cash provided by (used in) operating activities .................................... $ (16,064) $ 271,761 ========= =========
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 XX, L.P. Notes to Financial Statements March 31, 1999 (Unaudited) NOTE 1. - ------- McNeil Real Estate Fund XX, L.P. (the "Partnership"), formerly known as Southmark Income Investors, Ltd., was organized on July 19, 1984 as a limited partnership under the provisions of the California Revised Uniform Limited Partnership Act. 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, 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 XX, 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 the gross rental receipts for its properties to McNeil Real Estate Management, Inc. ("McREMI"), an affiliate of the General Partner, for providing property management services. Under the terms of its partnership agreement, the Partnership pays a disposition fee to an affiliate of the General Partner equal up to 3% of the gross sales price for brokerage services performed in connection with the sale of the Partnership's properties, provided, however, that in no event shall all real estate commissions (including the disposition fee) paid to all persons exceed the amount customarily charged in similar arms-length transactions. The fee is due and payable at the time the sale closes. The Partnership incurred $124,500 of such fees during 1997 in connection with the sale of 1130 Sacramento Condominiums. This amount represents 2.65% of the gross sales price. These fees were paid in the first quarter of 1999 and were included in payable to affiliates on the Balance Sheet at December 31, 1998. 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 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 $160,863 and $148,528 were outstanding at March 31, 1999 and December 31, 1998, respectively. Compensation and reimbursements paid to or accrued for the benefit of the General Partner or its affiliates are as follows: Three Months Ended March 31, ------------------------- 1999 1998 ---------- ---------- Property management fees....................... $ 15,819 $ 14,994 Charged to general and administrative - affiliates: Partnership administration.................. 21,480 25,167 Asset management fee........................ 22,812 39,233 --------- --------- $ 60,111 $ 79,394 ========= ========= Payable to affiliates at March 31, 1999 and December 31, 1998 consisted primarily of unpaid property management fees, disposition fees (1998 only), Partnership general and administrative expenses and asset management fees and is due and payable from current operations. NOTE 4. - ------- The Partnership's mortgage loan investments - affiliate were secured by first and second liens on Fort Meigs Plaza Shopping Center, which was owned by an affiliate of the General Partner. On April 20, 1998, Fort Meigs Plaza was sold to a non-affiliate for a gross sales price of $3.8 million. The Partnership received $3,615,353 as payment in full for both principal and interest receivable on the loans, which represented the available cash proceeds from the sale of the property. NOTE 5. - ------- The mortgage loan investment secured by Idlewood Nursing Home matured in February 1998. On May 1, 1998, the Partnership received $2.4 million from the borrower as payment in full for both principal and interest receivable on the loan (the actual balance of the loan was greater than the book value). Since the Partnership owned an 83% participation interest in the note, $408,000 of the $2.4 million settlement was paid to the owner of the remaining 17% of the note. NOTE 6. - ------- On August 20, 1998, the Partnership received $2,541,572 as payment in full for both principal and interest receivable on the mortgage loan investment secured by Lakeland Nursing Home. Since the Partnership owned a 90% participation interest in the note, $254,157 of the payoff was paid to the owner of the remaining 10% of the note. Of the $2,287,415 net proceeds received, $2,249,181 was applied to the principal balance of the loan and the remaining was applied to accrued interest receivable. 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 Sterling Springs Apartments, the Partnership's only property. The Partnership's mortgage loan investments - affiliate secured by Fort Meigs Plaza were repaid in April 1998. The Partnerships two mortgage loan investments secured by Idlewood Nursing Home and Lakeland Nursing Home were repaid in May 1998 and August 1998, respectively. The Partnership reported net income of $9,339 for the first three months of 1999 as compared to $141,484 for the same period in 1998. Revenues in the first quarter of 1999 decreased to $361,489 from $537,561 in the first quarter of 1998, while expenses were $352,150 in the first quarter of 1999 as compared to $396,077 in the first quarter of 1998. Net cash used in operating activities was $16,064 for the three months ended March 31, 1999. The Partnership expended $6,881 for capital improvements, made $28,803 in principal payments on its mortgage note payable and distributed $1,500,201 to the limited partners. Cash and cash equivalents totaled $1,518,836 at March 31, 1999, a net decrease of $1,551,949 from the balance at December 31, 1998. RESULTS OF OPERATIONS - --------------------- Revenue: Total revenue decreased by $176,072 for the three months ended March 31, 1999 as compared to the same period in 1998. The decrease was mainly due to a decrease in interest income on mortgage loan investments and mortgage loan investments - affiliate, partially offset by an increase in other interest income, as discussed below. Interest income on mortgage loan investments for the quarter ended March 31, 1999 decreased by $69,496 in relation to the comparable period in 1998. The decrease was due to the Lakeland Nursing Home mortgage loan investment being paid off by the borrower in August 1998. Although the Idlewood Nursing Home mortgage loan investment was also paid off in 1998, no interest was accrued on this loan in 1998. Interest income on mortgage loan investments - affiliate decreased by $108,214 for the first three months of 1999 as compared to the same period in 1998. The decrease was due to both of the Fort Meigs Plaza loans being repaid by the affiliate borrower in April 1998. Other interest income increased by $12,773 for the three months ended March 31, 1999 as compared to the same period in 1998, due to an increase in cash available for short-term investment. The Partnership held approximately $1.5 million of cash and cash equivalents at March 31, 1999 as compared to approximately $0.6 million at March 31, 1998. Expenses: Total expenses decreased by $43,927 for the three months ended March 31, 1999 as compared to the same period in 1998. The decrease was mainly due to decreases in other property operating expenses, general and administrative expenses and general and administrative - affiliates, as discussed below. Other property operating expenses for the first quarter of 1999 decreased by $5,084 as compared to the first quarter of the prior year. The decrease was mainly due to a decrease in bad debts and property insurance costs at Sterling Springs Apartments. General and administrative expenses decreased by $10,821 for the first three months of 1999 in relation to the same period in 1998. The decrease was mainly due to a greater amount of costs incurred in 1998 to explore alternatives to maximize the value of the Partnership (see Liquidity and Capital Resources). General and administrative expenses - affiliates decreased by $20,108 for the quarter ended March 31, 1999 in relation to the same period in 1998, mainly due to a decrease in asset management fees. The decrease was due to a decline in the tangible asset value of the Partnership, on which the fees are based, due to the payoff of the Partnership's mortgage loan investments and mortgage loan investments - affiliate in 1998. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Partnership used $16,064 of cash in operating activities for the first three months of 1999 as compared to $271,761 generated during the first three months of 1998. The decrease in 1999 was partially due to a decrease in interest received from an affiliate relating to the Fort Meigs Plaza loans (see discussion of decrease in interest income on mortgage loan investments - affiliate, above). In addition, the Partnership paid $124,500 of disposition fees to the General Partner in the first quarter of 1999 as discussed in Note 3. In the first three months of 1998, the Partnership collected $34,465 of principal on mortgage loan investments. No such collections were made in 1999 since the Idlewood Nursing Home loan was repaid in May 1998 and the Lakeland Nursing Home loan was repaid in August 1998. The Partnership distributed $1,500,201 and $1,482,316 to the limited partners during the three months ended March 31, 1999 and 1998, respectively. Short-term liquidity: At March 31, 1999, the Partnership held cash and cash equivalents of $1,518,836. This balance provides a reasonable level of working capital for the Partnership's immediate needs in operating its remaining property. In 1999, operation of Sterling Springs Apartments is expected to provide sufficient positive cash flow for normal operations. Management will perform routine repairs and maintenance on the property to preserve and enhance its value and competitiveness in the market. The Partnership has budgeted approximately $74,000 for capital improvements to Sterling Springs in 1999, which is expected to be funded from operations of the property. 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 property where improvements were expected to increase the competitiveness and marketability of the property. Long-term liquidity: The Partnership's property, Sterling Springs Apartments, is encumbered with mortgage debt. The mortgage is not due until 2003. While the outlook for maintenance of adequate levels of liquidity is favorable, should operations deteriorate and present cash resources be insufficient for current needs, the Partnership would require other sources of working capital. No such sources have been identified. The Partnership has no established lines of credit from outside sources. Other possible actions to resolve cash deficiencies include refinancings, deferral of capital expenditures on the Partnership's property except where improvements are expected to increase the competitiveness and marketability of the property, arranging financing from affiliates or the ultimate sale of the property. 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. 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 the sale or refinancing of its property, collect payments on its mortgage loan investment 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 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 XXIII, 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., Hearth Hollow Associates, McNeil Midwest Properties I, L.P. and Regency North Associates, L.P., - 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 limited partnerships that were named as nominal defendants as listed above (the "Partnerships"). Plaintiffs allege that McNeil Investors, Inc., its affiliate McNeil Real Estate Management, Inc. and three of their senior officers and/or directors (collectively, the "Defendants") breached their fiduciary duties and certain obligations under the respective Amended Partnership Agreement. Plaintiffs allege that Defendants have rendered such Units highly illiquid and artificially depressed the prices that are available for Units on the resale market. Plaintiffs also allege that Defendants engaged in a course of conduct to prevent the acquisition of Units by an affiliate of Carl Icahn by disseminating purportedly false, misleading and inadequate information. Plaintiffs further allege that Defendants acted to advance their own personal interests at the expense of the Partnerships' public unit holders by failing to sell Partnership properties and failing to make distributions to unitholders. On December 16, 1996, the Plaintiffs filed a consolidated and amended complaint. Plaintiffs are suing for breach of fiduciary duty, breach of contract and an accounting, alleging, among other things, that the management fees paid to the McNeil affiliates over the last six years are excessive, that these fees should be reduced retroactively and that the respective Amended Partnership Agreements governing the Partnerships are invalid. Defendants filed a demurrer to the consolidated and amended complaint and a motion to strike on February 14, 1997, seeking to dismiss the consolidated and amended complaint in all respects. A hearing on Defendant's demurrer and motion to strike was held on May 5, 1997. The Court granted Defendants' demurrer, dismissing the consolidated and amended complaint with leave to amend. On October 31, 1997, the Plaintiffs filed a second consolidated and amended complaint. The case was stayed pending settlement discussions. A Stipulation of Settlement dated September 15, 1998 has been signed by the parties. Preliminary Court approval was received on October 6, 1998. A hearing for Final Approval of Settlement, initially scheduled for December 17, 1998, has been continued to July 2, 1999. Because McNeil Real Estate Fund XXIII, L.P., Hearth Hollow Associates, McNeil Midwest Properties I, L.P. and Regency North Associates, L.P. would be part of the transaction contemplated in the settlement and Plaintiffs claim that an effort should be made to sell the McNeil Partnerships, Plaintiffs have included allegations with respect to McNeil Real Estate Fund XXIII, L.P., Hearth Hollow Associates, McNeil Midwest Properties I, L.P. and Regency North Associates, L.P. in the third consolidated and amended complaint. Plaintiff's counsel intends to seek an order awarding attorney's fees and reimbursements of their out-of-pocket expenses. The amount of such award is undeterminable until final approval is received from the court. Fees and expenses shall be allocated amongst the Partnerships on a pro rata basis, based upon tangible asset value of each such partnership, less total liabilities, calculated in accordance with the Amended Partnership Agreements for the quarter most recently ended. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ------- -------------------------------- (a) Exhibits. Exhibit Number Document Description ------- -------------------- 4. Amended and Restated Limited Partnership Agreement dated March 30, 1992. (Incorporated by reference to the Current Report of the registrant on Form 8-K dated March 30, 1992, as filed on April 10, 1992). 11. Statement regarding computation of Net Income per Limited Partnership Unit: Net income per limited partnership unit is computed by dividing net income allocated to the limited partners by the weighted average number of limited partnership units outstanding. Per unit information has been computed based on 49,512 limited partnership units outstanding in 1999 and 1998. 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 XX, 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 XX, L.P. By: McNeil Partners, L.P., General Partner By: McNeil Investors, Inc., General Partner May 18, 1999 By: /s/ Ron K. Taylor - -------------- --------------------------------------------- Date Ron K. Taylor President and Director of McNeil Investors, Inc. (Principal Financial Officer) May 18, 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 1,518,836 0 5,252 0 0 0 4,380,288 (1,583,113) 4,514,511 0 2,586,742 0 0 0 1,521,404 4,514,511 326,553 361,489 151,945 209,850 81,906 0 60,394 9,339 0 9,339 0 0 0 9,339 0 0
-----END PRIVACY-ENHANCED MESSAGE-----