0000751044-95-000004.txt : 19950815 0000751044-95-000004.hdr.sgml : 19950815 ACCESSION NUMBER: 0000751044-95-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCNEIL REAL ESTATE FUND XV LTD /CA CENTRAL INDEX KEY: 0000751044 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 942941516 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14258 FILM NUMBER: 95562471 BUSINESS ADDRESS: STREET 1: 13760 NOEL RD STE 700 LB70 CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 2144485800 MAIL ADDRESS: STREET 2: 13760 NOEL ROAD SUITE 700 LB 70 CITY: DALLAS STATE: TX ZIP: 75240 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended June 30, 1995 ----------------------------------------------- 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 0-14258 MCNEIL REAL ESTATE FUND XV, LTD. ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 94-2941516 ------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240 ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (214) 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 XV, LTD. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ------- -------------------- BALANCE SHEETS (Unaudited)
June 30, December 31, 1995 1994 ------------ ------------ ASSETS Real estate investments: Land..................................................... $ 7,087,195 $ 7,087,195 Buildings and improvements............................... 44,150,962 43,721,466 ----------- ----------- 51,238,157 50,808,661 Less: Accumulated depreciation.......................... (19,427,702) (18,472,016) ----------- ----------- 31,810,455 32,336,645 Cash and cash equivalents................................... 3,517,012 3,284,547 Cash segregated for security deposits....................... 251,044 244,994 Accounts receivable......................................... 15,367 11,488 Prepaid expenses and other assets........................... 49,986 85,623 Escrow deposits............................................. 275,265 278,490 Deferred borrowing costs (net of accumulated amortization of $160,066 and $124,350 at June 30, 1995 and December 31, 1994, respectively)............................................ 752,668 788,384 ----------- ----------- $ 36,671,797 $ 37,030,171 =========== =========== LIABILITIES AND PARTNERS' EQUITY (DEFICIT) Mortgage notes payable, net................................. $ 25,249,137 $ 25,443,252 Accounts payable............................................ 69,401 26,499 Accrued property taxes...................................... 200,696 212,148 Accrued expenses............................................ 99,586 79,404 Accrued interest............................................ 187,236 188,816 Payable to affiliates - General Partner..................... 57,713 56,915 Security deposits and deferred rental income................ 262,044 267,359 ----------- ----------- 26,125,813 26,274,393 ----------- ----------- Partners' equity (deficit): Limited partners - 120,000 limited partnership units authorized; 102,836 and 102,846 limited partnership units issued and outstanding at June 30, 1995 and December 31, 1994, respectively.................... 10,904,682 11,104,028 General Partner.......................................... (358,698) (348,250) ----------- ----------- 10,545,984 10,755,778 ----------- ----------- $ 36,671,797 $ 37,030,171 =========== ===========
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 XV, LTD. STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ----------------------------- ----------------------------- 1995 1994 1995 1994 ---------- ---------- ---------- ---------- Revenue: Rental revenue................ $1,924,485 $1,836,853 $3,831,618 $3,630,764 Interest...................... 54,773 33,563 101,340 60,800 Gain on legal settlement...... 35,263 - 35,263 - --------- --------- --------- --------- Total revenue............... 2,014,521 1,870,416 3,968,221 3,691,564 --------- --------- --------- --------- Expenses: Interest...................... 594,144 600,273 1,187,657 1,202,580 Depreciation.................. 477,843 464,949 955,686 929,898 Property taxes................ 100,455 100,341 200,910 200,682 Personnel expenses............ 190,960 186,177 419,147 394,922 Utilities..................... 81,252 70,338 179,502 178,483 Repair and maintenance........ 214,534 212,494 372,269 388,574 Property management fees - affiliates........... 96,009 93,805 192,504 185,392 Other property operating expenses.................... 125,043 100,418 243,516 212,767 General and administrative.... 16,765 21,602 33,505 43,612 General and administrative - affiliates.................. 62,155 56,625 124,598 116,215 --------- --------- --------- --------- Total expenses.............. 1,959,160 1,907,022 3,909,294 3,853,125 --------- --------- --------- --------- Net income (loss)................ $ 55,361 $ (36,606) $ 58,927 $ (161,561) ========= ======== ========= ========= Net loss allocable to limited partners...................... $ (77,848) $(142,929) $ (199,346) $ (353,234) Net income allocable to General Partner............... 133,209 106,323 258,273 191,673 --------- --------- --------- --------- Net income (loss)................ $ 55,361 $ (36,606) $ 58,927 $ (161,561) ========= ========= ========= ========= Net loss per limited partnership unit.............. $ (.76) $ (1.39) $ (1.94) $ (3.43) ======== ========= ========= =========
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 XV, LTD. STATEMENTS OF PARTNERS' EQUITY (DEFICIT) (Unaudited) For the Six Months Ended June 30, 1995 and 1994
Total General Limited Partners' Partner Partners Equity ---------- ----------- ----------- Balance at December 31, 1993.............. $(331,992) $12,137,721 $11,805,729 Net income (loss)......................... 191,673 (353,234) (161,561) Contingent Management Incentive Distribution........................... (254,843) - (254,843) -------- ---------- ---------- Balance at June 30, 1994.................. $(395,162) $11,784,487 $11,389,325 ======== ========== ========== Balance at December 31, 1994.............. $(348,250) $11,104,028 $10,755,778 Net income (loss)......................... 258,273 (199,346) 58,927 Contingent Management Incentive Distribution........................... (268,721) - (268,721) -------- ---------- ---------- Balance at June 30, 1995.................. $(358,698) $10,904,682 $10,545,984 ======== ========== ==========
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 XV, LTD. STATEMENTS OF CASH FLOWS (Unaudited) Increase (Decrease) in Cash and Cash Equivalents
Six Months Ended June 30, ---------------------------------- 1995 1994 ----------- ----------- Cash flows from operating activities: Cash received from tenants........................ $3,818,133 $ 3,633,968 Cash received from legal settlement............... 35,263 - Cash paid to suppliers............................ (1,148,420) (1,234,050) Cash paid to affiliates........................... (317,195) (304,136) Interest received................................. 101,340 60,800 Interest paid..................................... (1,128,982) (1,147,166) Property taxes paid............................... (211,694) (156,965) ---------- ---------- Net cash provided by operating activities............ 1,148,445 852,451 ---------- ---------- Cash flows from investing activities: Additions to real estate investments.............. (429,496) (454,339) ---------- ---------- Cash flows from financing activities: Principal payments on mortgage notes payable......................................... (218,654) (207,389) Contingent Management Incentive Distribution.................................... (267,830) (200,972) ---------- ---------- Net cash used in financing activities................ (486,484) (408,361) ---------- ---------- Net increase (decrease) in cash and cash equivalents....................................... 232,465 (10,249) Cash and cash equivalents at beginning of period............................................ 3,284,547 3,868,622 ---------- ---------- Cash and cash equivalents at end of period........... $ 3,517,012 $ 3,858,373 ========== ==========
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 XV, LTD. STATEMENTS OF CASH FLOWS (Unaudited) Reconciliation of Net Income (Loss) to Net Cash Provided by Operating Activities
Six Months Ended June 30, --------------------------------- 1995 1994 -------- ----------- Net income (loss).................................... $ 58,927 $ (161,561) ------- --------- Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation...................................... 955,686 929,898 Amortization of discounts on mortgage notes payable................................... 24,539 23,439 Amortization of deferred borrowing costs.......... 35,716 33,424 Changes in assets and liabilities: Cash segregated for security deposits........... (6,050) (25,693) Accounts receivable............................. (3,879) 8,861 Prepaid expenses and other assets............... 35,637 (10,883) Escrow deposits................................. 3,225 (148,803) Accounts payable................................ 42,902 21,875 Accrued property taxes.......................... (11,452) 200,682 Accrued expenses................................ 20,182 (45,511) Accrued interest................................ (1,580) (1,449) Payable to affiliates - General Partner......... (93) (2,529) Security deposits and deferred rental income........................................ (5,315) 30,701 --------- --------- Total adjustments............................. 1,089,518 1,014,012 --------- --------- Net cash provided by operating activities............ $1,148,445 $ 852,451 ========= =========
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 XV, LTD. Notes to Financial Statements (Unaudited) June 30, 1995 NOTE 1. ------- McNeil Real Estate Fund XV, Ltd. (the "Partnership") was organized June 26, 1984 as a limited partnership organized under the provisions of the California 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. The Partnership is governed by an amended and restated limited partnership agreement, dated October 11, 1991 (the "Amended Partnership Agreement"). The principal place of business for the Partnership and the General Partner is 13760 Noel Road, Suite 700, 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, 1995 are not necessarily indicative of the results to be expected for the year ending December 31, 1995. 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, 1994, and the notes thereto, as filed with the Securities and Exchange Commission, which is available upon request by writing to McNeil Real Estate Fund XV, Ltd., c/o McNeil Real Estate Management, Inc., Investor Relations, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240. NOTE 3. ------- Certain reclassifications have been made to prior period amounts to conform with current year presentation. NOTE 4. ------- The Partnership pays property management fees equal to 5% of gross rental receipts of the Partnership's properties to McNeil Real Estate Management, Inc. ("McREMI"), an affiliate of the General Partner, for providing property management services and leasing services. The Partnership reimburses McREMI for its costs, including overhead, of administering the Partnership's affairs. Under terms of the Amended Partnership Agreement, the Partnership is paying a Management Incentive Distribution ("MID") to the General Partner. The maximum MID is calculated as 1% of the tangible asset value of the Partnership. The maximum MID percentage decreases subsequent to 1999. Tangible asset value is determined by using the greater of (i) an amount calculated by applying a capitalization rate of 9% to the annualized net operating income of each property or (ii) a value of $10,000 per apartment unit for residential property and $50 per gross square foot for commercial property to arrive at the property tangible asset value. The property tangible asset value is then added to the book value of all other assets excluding intangible items. Prior to July 1, 1993, the MID consists of two components: (i) the fixed portion which is payable without respect to the net income of the Partnership and is equal to 25% of the maximum MID (the "Fixed MID") and (ii) a contingent portion which is payable only to the extent of the lesser of the Partnership's excess cash flow, as defined, or net operating income (the "Entitlement Amount") and is equal to up to 75% of the maximum MID (the "Contingent MID"). Effective July 1, 1993, the General Partner amended the Amended Partnership Agreement as a settlement to a class action complaint. This amendment eliminates the Fixed MID portion and makes the entire MID payable to the extent of the Entitlement Amount. In all other respects the calculation and payment of the MID remain the same. Fixed MID was payable in limited partnership units ("Units") unless the Entitlement Amount exceeded the amount necessary to pay the Contingent MID, in which case, at the General Partner's option, the Fixed MID could have been paid in cash to the extent of such excess. Contingent MID will be paid to the extent of the Entitlement Amount, and may be paid (i) in cash, unless there is insufficient cash to pay the distribution in which event any unpaid portion not taken in Units will be deferred and is payable, without interest, from the first available cash and/or (ii) Units. A maximum of 50% of the MID may be paid in Units. The number of Units issued in payment of the MID is based on the greater of $50 per Unit or the net tangible asset value, as defined, per Unit. Any amount of the MID that is paid to the General Partner in Units will be treated as if cash was distributed to the General Partner. The Fixed MID was treated as a fee payable to the General Partner by the Partnership for services rendered. The Contingent MID represents a return of equity to the General Partner for increasing cash flow, as defined, and accordingly is treated as a distribution. Compensation, reimbursements and distributions paid to or accrued for the benefit of the General Partner and its affiliates are as follows:
Six Months Ended June 30, ------------------------------- 1995 1994 -------- -------- Property management fees - affiliates................ $192,504 $185,392 Charged to general and administrative - affiliates: Partnership administration........................ 124,598 116,215 ------- ------- $317,102 $301,607 ======= ======= Charged to General Partner's deficit: Contingent MID.................................... $268,721 $254,843 ======= =======
NOTE 5. ------- The Partnership filed claims with the United States Bankruptcy Court for the Northern District of Texas, Dallas Division (the "Bankruptcy Court") against Southmark for damages relating to improper overcharges, breach of contract and breach of fiduciary duty. The Partnership settled these claims in 1991, and such settlement was approved by the Bankruptcy Court. An Order Granting Motion to Distribute Funds to Class 8 Claimants dated April 14, 1995 was issued by the Bankruptcy Court. In accordance with the Order, in May 1995 the Partnership received in full satisfaction of its claims, $26,655 in cash, and common and preferred stock in the reorganized Southmark currently valued at approximately $8,600, which amounts represent the Partnership's pro-rata share of Southmark assets available for Class 8 Claimants. The Partnership sold the Southmark common and preferred stock in May for $8,608 which, combined with the cash proceeds from Southmark, resulted in a gain on legal settlement of $35,263. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND ------- --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- FINANCIAL CONDITION ------------------- The Partnership was formed to acquire, operate and ultimately dispose of a portfolio of income-producing real properties. At June 30, 1995, the Partnership owned four apartment properties, which are all subject to mortgage notes. RESULTS OF OPERATIONS --------------------- Revenue: Partnership revenues increased by $276,658 or 7% for the first six months of 1995 as compared to same period last year. Rental revenue for the first six months of 1995 was $3,831,618 as compared to $3,630,764 for the same period in 1994. The increase of $200,854 in rental revenue is a result of a rental rate increase at all of the four properties. Interest income earned on cash and cash equivalent increased by $40,541 or 67% due to larger average cash balances invested in interest-bearing accounts and an increase in the interest rates. The Partnership also recognized a gain on legal settlement of $35,263 as a result of the settlement with Southmark received in 1995. Expenses: Partnership expenses increased by $56,169 or 2% and $52,138 or 3% for the first six months and three months of 1995 as compared to the same period last year, respectively. Personnel expenses increased $24,225 or 6% and $4,783 or 3% for the six months and three ended June 30, 1995 as compared to the same period in 1994, respectively. This increase is due to an increase in compensation paid and costs relating to temporary personnel. Other property operating expenses increased $30,749 or 15% for the first six months of 1995 compared to the first six months of 1994. The increase can be attributed to increases in hazard insurance at Arrowhead and Mountain Shadow, as well as increases in administrative expenses at all four properties. During the second quarter of 1995, other property operating expenses, increased 21% compared to the second quarter of 1994. The increase is due to such items as insurance and training and seminars. General and administrative for the six months ended June 30, 1995 decreased by $10,107 or 23%. This decrease is primarily due to a reduction in legal fees incurred in 1994 for litigation related to Riverway V parking rights. General and administrative - affiliate for the period ended June 30, 1995 increased $8,383 or 7% due to an increase in reimbursements to affiliates because of fewer partnerships which overhead costs are allocated. Terms of the Amended Partnership Agreement specify that income before depreciation is allocated to the General Partner to the extent of Contingent MID paid in cash. Depreciation is allocated in the ratio of 99:1 to the limited partner and General Partner, respectively. Therefore, for the three month and six month period ended June 30, 1995, $133,209 and $258,273, respectively, was allocated to the General Partner. The limited partners received allocations of a net loss of $(55,656) and $(177,154) for the three month and six month period ended June 30, 1995, respectively. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- The Partnership generated $1,148,445 through operating activities for the first six months of 1995 as compared to $852,451 for the first six months of 1994. The increase in 1995 was mainly due to an increase in the cash received from tenants and the increase in interest received. The Partnership expended $429,496 and $454,339 for capital improvements to its properties in the first six months of 1995 and 1994, respectively. During the six months ended June 30, 1995, the Partnership expended $486,484 for principal payments on mortgage notes and the Contingent MID as compared to $408,361 for the same period in 1994. This increase is primarily due the increase in the amount of the MID that was paid during 1995. Short Term liquidity: At June 30, 1995, the Partnership held cash and cash equivalents of $3,517,012 up $232,465 from the balance at December 31, 1994. This balance provides a comfortable level of working capital for the Partnership's operations. During 1995, operations of the Partnership's properties are expected to provide positive cash flow from operations. Management will perform routine repairs and maintenance on the properties to preserve and enhance their value in the market. In 1995, the Partnership has budgeted to spend approximately $1,122,000 on capital improvements, which are expected to be funded from operations of the properties. The Partnership was faced with mortgage maturities at Woodcreek in August and December 1995; however, management successfully refinanced Woodcreek on August 11, 1995. The new 7 year note, in the amount of $5,250,000, retired the maturing mortgages of $3,882,443 and yielded $1,086,717 in proceeds to the Partnership. Management anticipates using the refinancing proceeds and the current cash reserves to payoff the mortgage on Cedar Run, which is at an unfavorable interest rate. Long Term liquidity: The General Partner has established a revolving credit facility not to exceed $5,000,000 in the aggregate which is available on a "first-come, first-served" basis to the Partnership and other affiliated partnerships if certain conditions are met. Borrowings under the facility may be used to fund deferred maintenance, refinancing obligations and working capital needs. The Partnership has not received, nor is there any assurance that the Partnership will receive, any funds under the facility because no amounts will be reserved for any particular partnership. As of June 30, 1995, $2,362,004 remained available for borrowing under the facility; however, additional funds could become available as other partnerships repay borrowings. For the long term, property operations will remain the primary source of funds. While the present outlook for Partnership's liquidity is favorable, market conditions may change and property operations can deteriorate. In that event, the Partnership would require other sources of working capital. No such other sources have been identified, and the Partnership has no established lines of credit. Other possible actions to resolve working capital deficiencies include refinancing or renegotiating terms of existing loans, deferring major capital expenditures on Partnership properties except where improvements are expected to enhance the competitiveness or marketability of the properties, or arranging working capital support from affiliates. All or a combination of these steps may be inadequate or unfeasible in resolving such potential working capital deficiencies. No affiliate support has been required in the past, and there is no assurance that support would be provided in the future, since neither the General Partner nor any affiliates have any obligation in this regard in excess of the $5,000,000 revolving credit facility discussed above. Distributions: During 1994 , the limited partners received a cash distribution of $499,993. This distribution consisted of funds from the sale of Riverway V. A distribution of $268,721 for the contingent portion of the MID was accrued by the Partnership for the General Partner in June 30, 1995. In light of the Cedar Run payoff, management does not anticipate making further distributions to the limited partners in the foreseeable future. The General Partner will continue to monitor the cash reserves and working capital needs of the Partnership to determine when cash flow will support distributions to the limited partners. PART II. OTHER INFORMATION ITEM 5. OTHER INFORMATION ------- ----------------- On an unsolicited basis, High River Limited Partnership ("High River"), a partnership controlled by Carl Icahn, announced that it has commenced an offer to purchase 46,276 units of limited partnership interest in the Partnership (approximately 45 percent of the Partnership's units) at $95 per unit. High River has stated that the offer is being made as "an investment." The tender offer is due to expire on August 31, 1995, unless extended. The General Partner, with assistance from its advisors, is in the process of evaluating the tender offer from a number of important standpoints and will report to the limited partners its position with respect to such offer. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ------- -------------------------------- (a) Exhibits.
Exhibit Number Description 3.1 Amended and Restated Partnership Agreement dated October 11, 1991. (1) 11. Statement regarding computation of net loss per limited partnership unit: Net loss per limited partnership unit is computed by dividing net loss allocated to the limited partners by the number of limited partnership units outstanding. Per unit information has been computed based on 102,836 and 102,846 limited partnership units outstanding in 1995 and 1994, respectively. 27. Financial Data Schedule for the quarter ended June 30, 1995. (1) Incorporated by reference to the Annual Report of Registrant, on Form 10-K for the period ended December 31, 1991, as filed on March 30, 1992.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended June 30, 1995. McNEIL REAL ESTATE FUND XV, LTD. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized:
McNEIL REAL ESTATE FUND XV, Ltd. By: McNeil Partners, L.P., General Partner By: McNeil Investors, Inc., General Partner August 14, 1995 By: /s/ Donald K. Reed ------------------- -------------------------------------------------- Date Donald K. Reed President and Chief Executive Officer August 14, 1995 By: /s/ Robert C. Irvine ------------------- -------------------------------------------------- Date Robert C. Irvine Chief Financial Officer of McNeil Investors, Inc. Principal Financial Officer August 14, 1995 By: /s/ Brandon K. Flaming ------------------- --------------------------------------------------- Date Brandon K. Flaming Chief Accounting Officer of McNeil Real Estate Management, Inc.
EX-27 2
5 6-MOS DEC-31-1995 JUN-30-1995 3,517,012 0 15,367 0 0 0 51,238,157 (19,427,702) 36,671,797 0 25,249,137 0 0 0 0 51,238,157 3,831,618 3,968,221 0 0 2,721,637 0 1,165,465 81,119 0 81,119 0 0 0 81,119 0 0