-----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, Ua0ViqEKEYo9j3PtlmqEVqfH/uat1W67mr5LHWj6ZOSHRdz7R7rAQncUkmmPBCMx bZ6g7EFjx8tFAsSYvNsssw== 0000751044-99-000005.txt : 19990518 0000751044-99-000005.hdr.sgml : 19990518 ACCESSION NUMBER: 0000751044-99-000005 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 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: SEC FILE NUMBER: 000-14258 FILM NUMBER: 99625608 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 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 0-14258 --------- 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 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 XV, LTD. BALANCE SHEETS (Unaudited)
March 31, December 31, 1999 1998 ------------- ------------- ASSETS - ------ Real estate investments: Land ....................................................... $ 6,220,730 $ 6,220,730 Buildings and improvements ................................. 42,144,255 42,086,266 ------------ ------------ 48,364,985 48,306,996 Less: Accumulated depreciation ............................ (24,502,737) (24,021,290) ------------ ------------ 23,862,248 24,285,706 Asset held for sale ........................................... 3,487,893 3,487,893 Cash and cash equivalents ..................................... 1,140,110 1,199,360 Cash segregated for security deposits ......................... 231,214 214,190 Accounts receivable ........................................... 26,344 33,736 Prepaid expenses and other assets ............................. 37,105 37,105 Escrow deposits ............................................... 456,577 365,199 Deferred borrowing costs (net of accumulated amortization of $479,902 and $455,712 at March 31, 1999 and December 31, 1998, respectively) .................................... 529,430 553,620 ------------ ------------ $ 29,770,921 $ 30,176,809 ============ ============ LIABILITIES AND PARTNERS' EQUITY (DEFICIT) - ------------------------------------------ Mortgage notes payable, net ................................... $ 22,948,009 $ 23,057,324 Accrued expenses .............................................. 140,936 126,907 Accrued property taxes ........................................ 292,200 177,643 Accrued interest .............................................. 159,538 160,388 Payable to affiliates - General Partner ....................... 964,291 851,407 Security deposits and deferred rental revenue ................. 189,737 185,874 ------------ ------------ 24,694,711 24,559,543 ------------ ------------ Partners' equity (deficit): Limited partners - 120,000 limited partnership units authorized; 102,796 limited partnership units issued and outstanding at March 31, 1999 and December 31, 1998 .................................... 6,217,455 6,672,660 General Partner ............................................ (1,141,245) (1,055,394) ------------ ------------ 5,076,210 5,617,266 ------------ ------------ $ 29,770,921 $ 30,176,809 ============ ============
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 March 31, ------------------------------- 1999 1998 ----------- ----------- Revenue: Rental revenue ..................................... $ 1,940,568 $ 2,028,217 Interest ........................................... 13,274 26,442 ----------- ----------- Total revenue .................................... 1,953,842 2,054,659 ----------- ----------- Expenses: Interest ........................................... 518,937 532,124 Depreciation and amortization ...................... 481,447 474,364 Property taxes ..................................... 114,557 115,473 Personnel expenses ................................. 240,074 237,200 Utilities .......................................... 111,463 106,004 Repair and maintenance ............................. 183,560 146,353 Property management fees - affiliates .............. 98,168 101,452 Other property operating expenses .................. 122,566 129,689 General and administrative ......................... 52,964 85,711 General and administrative - affiliates ............ 47,899 45,805 ----------- ----------- Total expenses ................................... 1,971,635 1,974,175 ----------- ----------- Net income (loss) ..................................... $ (17,793) $ 80,484 =========== =========== Net income (loss) allocable to limited partners ....... $ (55,329) $ 79,680 Net income allocable to General Partner ............... 37,536 804 ----------- ----------- Net income (loss) ..................................... $ (17,793) $ 80,484 =========== =========== Net income (loss) per limited partnership unit ........ $ (.54) $ .78 =========== =========== Distribution per limited partnership unit ............. $ 3.89 $ 4.86 =========== ===========
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 Three Months Ended March 31, 1999 and 1998
Total General Limited Partners' Partner Partners Equity (Deficit) ------------ ------------ ---------------- Balance at December 31, 1997 ............... $ (561,038) $ 7,555,525 $ 6,994,487 Net income ................................. 804 79,680 80,484 Management Incentive Distribution .......... (138,180) -- (138,180) Distributions to limited partners .......... -- (500,004) (500,004) ----------- ----------- ----------- Balance at March 31, 1998 .................. $ (698,414) $ 7,135,201 $ 6,436,787 =========== =========== =========== Balance at December 31, 1998 ............... $(1,055,394) $ 6,672,660 $ 5,617,266 Net loss ................................... 37,536 (55,329) (17,793) Management Incentive Distribution .......... (123,387) -- (123,387) Distributions to limited partners .......... -- (399,876) (399,876) ----------- ----------- ----------- Balance at March 31, 1999 .................. $(1,141,245) $ 6,217,455 $ 5,076,210 =========== =========== ===========
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
Three Months Ended March 31, -------------------------------- 1999 1998 ------------ ------------ Cash flows from operating activities: Cash received from tenants ......................... $ 1,920,928 $ 2,035,722 Cash paid to suppliers ............................. (664,333) (746,714) Cash paid to affiliates ............................ (114,220) (101,390) Interest received .................................. 13,274 26,442 Interest paid ...................................... (480,318) (490,083) Property taxes paid ................................ (109,772) (120,322) ----------- ----------- Net cash provided by operating activities ............. 565,559 603,655 ----------- ----------- Cash used in investing activities: Additions to real estate investments and asset held for sale .............................. (57,989) (30,714) ----------- ----------- Cash flows from financing activities: Principal payments on mortgage notes payable .......................................... (124,594) (114,829) Management Incentive Distribution .................. (42,350) -- Distributions to limited partners .................. (399,876) (500,004) ----------- ----------- Net cash used in financing activities ................. (566,820) (614,833) ----------- ----------- Net decrease in cash and cash equivalents ............. (59,250) (41,892) Cash and cash equivalents at beginning of period ............................................. 1,199,360 1,118,379 ----------- ----------- Cash and cash equivalents at end of period ............ $ 1,140,110 $ 1,076,487 =========== ===========
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
Three Months Ended March 31, --------------------------- 1999 1998 ---------- --------- Net income (loss) ......................................... $ (17,793) $ 80,484 --------- --------- Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation ........................................... 481,447 474,364 Amortization of discounts on mortgage notes payable ........................................ 15,279 14,140 Amortization of deferred borrowing costs ............... 24,190 28,685 Changes in assets and liabilities: Cash segregated for security deposits ................ (17,024) (12,251) Accounts receivable .................................. 7,392 43,892 Prepaid expenses and other assets .................... -- 4,399 Escrow deposits ...................................... (91,378) (159,883) Accrued expenses ..................................... 14,029 (10,095) Accrued property taxes ............................... 114,557 115,473 Accrued interest ..................................... (850) (784) Payable to affiliates - General Partner .............. 31,847 45,867 Security deposits and deferred rental revenue ............................................ 3,863 (20,636) --------- --------- Total adjustments .................................. 583,352 523,171 --------- --------- Net cash provided by operating activities ................. $ 565,559 $ 603,655 ========= =========
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) March 31, 1999 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 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 XV, Ltd., 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 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. 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 maximum MID percentage decreases to .75% in 2000, .50% in 2001 and .25% thereafter. MID will be paid to the extent of the lesser of the Partnership's excess cash flow, as defined, or net operating income, as defined, 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 limited partnership units ("Units") will be deferred and is payable, without interest, from the first available cash and/or (ii) in Units. A maximum of 50% of the MID may be paid in Units. The number of Units issued in payment of the MID is based on the greater of $50 per Unit or the net tangible asset value, as defined, per Unit. Any amount of the MID that is paid to the General Partner in Units will be treated as if cash is distributed to the General Partner and is then contributed to the Partnership by the General Partner. The MID represents a return of equity to the General Partner for increasing cash flow, as defined, and accordingly is treated as a distribution. Compensation, reimbursements and distributions paid to or accrued for the benefit of the General Partner and its affiliates are as follows: Three Months Ended March 31, ----------------------- 1999 1998 --------- --------- Property management fees - affiliates................ $ 98,168 $ 101,452 Charged to general and administrative - affiliates: Partnership administration........................ 47,899 45,805 -------- -------- $ 146,067 $ 147,257 ======== ======== Charged to General Partner's deficit: MID............................................... $ 123,387 $ 138,180 ======== ======== ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - ------- --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- FINANCIAL CONDITION - ------------------- The Partnership is engaged in real estate activities, including the ownership, operation and management of residential and other real estate related assets. At March 31, 1999, the Partnership owned four apartment properties. Three of the four Partnership's properties are subject to mortgage notes. RESULTS OF OPERATIONS - --------------------- Revenue: Partnership revenues decreased by $100,817 or 5% for the three months ended March 31, 1999 as compared to the same period last year. Rental revenue decreased by $87,649 or 4% and interest income decreased by $13,168 or 50% for the three months ended March 31, 1999 as compared to the same period last year. Rental revenues decreased $87,649 for the three months ended March 31, 1999 as compared to the same period last year. The decrease in rental revenues is due to a decrease in occupancy at Mountain Shadows offset by increases in rental rates at Arrowhead and Cedar Run. Mountain Shadows, located in Albuquerque, New Mexico, has experience a decline in occupancy as a result of over building in the apartment market. Expenses: Partnership expenses decreased by $2,540 for the three months ended March 31, 1999 as compared to the same period in 1998. A decrease in general and administrative expenses was partially offset by an increase in repairs and maintenance expense. Repairs and maintenance expense increased for the three months ended March 31, 1999 by $37,207 or 25% as compared to the same period in 1998. The increase is due to increases in cleaning and decorating, floor and window replacements and landscaping expense. Most of these increased costs incurred at Mountain Shadows where the increased vacancy rate is forcing the Partnership to spend more to bring units to a market ready condition. General and administrative expenses decreased $32,747 or 38% for the three months ended March 31, 1999 as compared to the same period last year. The decrease is mainly due to decreased costs incurred to explore alternatives to maximize the value of the Partnership (see Liquidity and Capital Resources). LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Partnership's primary source of cash flows is from operating activities which generated $565,559 of cash in the first three months of 1999 as compared to $603,655 for the same period in 1998. The decrease in cash provided by operating activities of $38,096 was mainly the result of an decrease in cash received from tenants which was offset by a reduction in the cash paid to suppliers. The Partnership expended $57,989 and $30,714 for capital improvements to its properties in the first three months of 1999 and 1998, respectively. Total principal payments on mortgage notes payable were $124,594 for the three months ended March 31, 1999 as compared to $114,829 for the same period of 1998. The Partnership distributed $399,876 to the limited partners during 1999, while $500,004 was paid during 1998. Short-term liquidity: At March 31, 1999, the Partnership held cash and cash equivalents of $1,140,110, a decrease of $59,250 from the balance at December 31, 1998. This balance provides a comfortable level of working capital for the Partnership's operations. During 1999, 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 1999, the Partnership has budgeted to spend approximately $408,000 on capital improvements, which are expected to be funded from operations of the properties. Long-term liquidity: For the long-term, property operations will remain the primary source of funds. While the present outlook for the Partnership's liquidity is favorable, market conditions may change and property operations can deteriorate. In that event, the Partnership would require other sources of working capital. No such other sources have been identified, and the Partnership has no established lines of credit. Other possible actions to resolve working capital deficiencies include refinancing or renegotiating terms of existing loans, deferring major capital expenditures on Partnership properties except where improvements are expected to enhance the competitiveness or marketability of the properties, or arranging working capital support from affiliates. 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. 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. The Partnership placed Cedar Run Apartments on the market for sale on August 1, 1997. Income allocations and distributions: Terms of the Amended Partnership Agreement specify that income before depreciation is allocated to the General Partner to the extent of MID paid in cash. Depreciation is allocated in the ratio of 99:1 to the limited partners and the General Partner, respectively. Therefore, for the three months ended March 31, 1999 and 1998, net income of $37,536 and $804, respectively, was allocated to the General Partner. The limited partners received allocations of $(55,329) and $79,680 for the three months ended March 31, 1999 and 1998, respectively. During 1999, the limited partners received a cash distribution of $399,876. The distribution consisted of funds from operations. A distribution of $123,387 for the MID was accrued by the Partnership for the three months ended March 31, 1999 for the General Partner. 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 ------- ------------ 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 102,796 limited partnership units outstanding in 1999 and 1998, respectively. 27. Financial Data Schedule for the quarter ended March 31, 1999. (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 March 31, 1999. 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 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/ Brandon K. Flaming - ------------ --------------------------------------------- Date Brandon K. Flaming Vice President of McNeil Investors, Inc. (Principal Accounting Officer) EX-27 2
5 3-MOS DEC-31-1999 MAR-31-1999 1,140,110 0 26,344 0 0 0 48,364,985 (24,502,737) 29,770,921 0 22,948,009 0 0 0 0 29,770,921 1,940,568 1,953,842 0 0 1,452,698 0 518,937 0 0 (17,793) 0 0 0 (17,793) 0 0
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