-----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, Ax97EV+7JYhrqnAk7kVRo3v7OQ+BxdwZYMiLaac3bxVP8m3LHqOr2HQ7FTvbHYw/ UK9vMdX4pKjqH1UxBRY2tA== 0000758745-98-000010.txt : 19981118 0000758745-98-000010.hdr.sgml : 19981118 ACCESSION NUMBER: 0000758745-98-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCNEIL REAL ESTATE FUND XXII L P CENTRAL INDEX KEY: 0000758745 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330085680 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14268 FILM NUMBER: 98750249 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 FORMER COMPANY: FORMER CONFORMED NAME: SOUTHMARK REALTY PARTNERS II LTD DATE OF NAME CHANGE: 19920413 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1998 ------------------------------------------- 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 0-14268 --------- MCNEIL REAL ESTATE FUND XXII, L.P. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 33-0085680 - -------------------------------------------------------------------------------- (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 XXII, L.P. BALANCE SHEETS (Unaudited)
September 30, December 31, 1998 1997 ------------ ------------ ASSETS - ------ Real estate investments: Land ........................................................... $ 380,414 $ 380,414 Buildings and improvements ..................................... 10,840,238 10,595,887 ------------ ------------ 11,220,652 10,976,301 Less: Accumulated depreciation ................................ (6,006,872) (5,586,872) ------------ ------------ 5,213,780 5,389,429 Cash and cash equivalents ......................................... 1,009,747 794,630 Cash segregated for security deposits ............................. 68,550 67,510 Accounts receivable ............................................... 2,774 11,508 Escrow deposits ................................................... 163,267 68,310 Prepaid expenses and other assets ................................. 9,000 9,953 ------------ ------------ $ 6,467,118 $ 6,341,340 ============ ============ LIABILITIES AND PARTNERS' DEFICIT - --------------------------------- Mortgage note payable, net ........................................ $ 5,885,151 $ 5,928,021 Accounts payable and accrued expenses ............................. 116,752 114,584 Accrued property taxes ............................................ 127,503 68,129 Payable to affiliates - General Partner ........................... 2,088,802 1,933,837 Security deposits and deferred rental revenue ..................... 114,409 69,670 ------------ ------------ 8,332,617 8,114,241 ------------ ------------ Partners' deficit: Limited partners - 55,000,000 Units authorized; 32,736,117 and 32,815,117 Units issued and out- standing at September 30, 1998 and December 31, 1997, respectively (19,493,088 and 19,567,088 Current Income Units outstanding at September 30, 1998 and December 31, 1997, respectively, and 13,243,029 and 13,248,029 Growth/Shelter Units outstanding at September 30, 1998 and December 31, 1997, respectively) ................................................ (1,611,868) (1,520,196) General Partner ................................................ (253,631) (252,705) ------------ ------------ (1,865,499) (1,772,901) ------------ ------------ $ 6,467,118 $ 6,341,340 ============ ============
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 XXII, L.P. STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------------------------- ------------------------------- 1998 1997 1998 1997 ----------- ----------- ----------- ----------- Revenue: Rental revenue ..................... $ 652,397 $ 606,423 $ 1,871,961 $ 1,751,122 Interest ........................... 11,070 10,666 33,345 28,326 ----------- ----------- ----------- ----------- Total revenue .................... 663,467 617,089 1,905,306 1,779,448 ----------- ----------- ----------- ----------- Expenses: Interest ........................... 133,335 134,992 401,273 409,143 Depreciation ....................... 142,501 103,288 420,000 320,336 Property taxes ..................... 42,501 50,250 127,503 150,750 Personnel costs .................... 77,226 78,763 231,346 221,290 Utilities .......................... 21,097 14,427 87,908 94,247 Repair and maintenance ............. 92,278 94,982 229,521 233,910 Property management fees - affiliates ................ 31,773 29,932 92,559 86,910 Other property operating expenses ......................... 22,360 26,592 63,565 79,323 General and administrative ......... 39,612 14,675 162,023 53,827 General and administrative - affiliates ....................... 63,762 53,899 182,206 155,959 ----------- ----------- ----------- ----------- Total expenses ................... 666,445 601,800 1,997,904 1,805,695 ----------- ----------- ----------- ----------- Net income (loss) ..................... $ (2,978) $ 15,289 $ (92,598) $ (26,247) =========== =========== =========== =========== Net income (loss) allocable to limited partners - Current Income Unit ........................ $ (268) $ 1,376 $ (8,334) $ (2,362) Net income (loss) allocable to limited partners - Growth Shelter Unit ....................... (2,680) 13,760 (83,338) (23,623) Net income (loss) allocable to General Partner ................. (30) 153 (926) (262) ----------- ----------- ----------- ----------- Net income (loss) ..................... $ (2,978) $ 15,289 $ (92,598) $ (26,247) =========== =========== =========== =========== Net income (loss) per thousand limited partnership units: Current Income Units .................. $ (.01) $ .07 $ (.43) $ (.12) =========== =========== =========== =========== Growth/Shelter Units .................. $ (.20) $ 1.04 $ (6.29) $ (1.78) =========== =========== =========== ===========
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 XXII, L.P. STATEMENTS OF PARTNERS' DEFICIT (Unaudited) For the Nine Months Ended September 30, 1998 and 1997
Total General Limited Partners' Partner Partners Deficit ------------ ------------ ------------ Balance at December 31, 1996 ....... $ (252,917) $(1,541,156) $(1,794,073) Net loss General Partner ................. (262) -- (262) Current Income Units ............ -- (2,362) (2,362) Growth/Shelter Units ............ -- (23,623) (23,623) ----------- ----------- ----------- Total net loss ..................... (262) (25,985) (26,247) ----------- ----------- ----------- Balance at September 30, 1997 ...... $ (253,179) $(1,567,141) $(1,820,320) =========== =========== =========== Balance at December 31, 1997........ $ (252,705) $(1,520,196) $(1,772,901) Net loss General Partner ................. (926) -- (926) Current Income Units ............ -- (8,334) (8,334) Growth/Shelter Units ............ -- (83,338) (83,338) ----------- ----------- ----------- Total net loss ..................... (926) (91,672) (92,598) ----------- ----------- ----------- Balance at September 30, 1998 ...... $ (253,631) $(1,611,868) $(1,865,499) =========== =========== ===========
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 XXII, L.P. STATEMENTS OF CASH FLOWS (Unaudited) Increase (Decrease) in Cash and Cash Equivalents
Nine Months Ended September 30, -------------------------------- 1998 1997 ------------ ------------ Cash flows from operating activities: Cash received from tenants .................... $ 1,934,431 $ 1,750,749 Cash paid to suppliers ........................ (780,859) (602,851) Cash paid to affiliates ....................... (119,800) (134,838) Interest received ............................. 33,345 28,326 Interest paid ................................. (372,562) (380,404) Property taxes paid and escrowed .............. (163,086) (88,969) ----------- ----------- Net cash provided by operating activities ........ 531,469 572,013 ----------- ----------- Cash used in investing activities: Additions to real estate investments .......... (244,351) (186,602) ----------- ----------- Cash used in financing activities: Principal payments on mortgage note payable ..................................... (72,001) (67,146) ----------- ----------- Net increase in cash and cash equivalents ........ 215,117 318,265 Cash and cash equivalents at beginning of period ........................................ 794,630 602,462 ----------- ----------- Cash and cash equivalents at end of period........ $ 1,009,747 $ 920,727 =========== ===========
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 XXII, L.P. STATEMENTS OF CASH FLOWS (Unaudited) Reconciliation of Net Loss to Net Cash Provided by Operating Activities
Nine Months Ended September 30, ---------------------------- 1998 1997 ---------- ---------- Net loss ............................................ $ (92,598) $ (26,247) --------- --------- Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation ..................................... 420,000 320,336 Amortization of discounts on mortgage note payable ................................... 29,131 29,131 Changes in assets and liabilities: Cash segregated for security deposits .......... (1,040) (1,000) Accounts receivable ............................ 8,734 (2,473) Escrow deposits ................................ (94,957) 56,721 Prepaid expenses and other assets .............. 953 1,492 Accounts payable and accrued expenses .......... 2,168 (4,294) Accrued property taxes ......................... 59,374 84,323 Payable to affiliates - General Partner ........ 154,965 108,031 Security deposits and deferred rental revenue ...................................... 44,739 5,993 --------- --------- Total adjustments ............................ 624,067 598,260 --------- --------- Net cash provided by operating activities ........... $ 531,469 $ 572,013 ========= =========
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 XXII, L.P. Notes to Financial Statements (Unaudited) September 30, 1998 NOTE 1. - ------- McNeil Real Estate Fund XXII, L.P., (the "Partnership"), formerly known as Southmark Realty Partners II, Ltd., was organized on November 30, 1984 as a limited partnership under the provisions of the California Revised Limited Partnership Act to acquire and operate commercial and residential properties. The general partner of the Partnership is McNeil Partners, L.P. (the "General Partner"), a Delaware limited partnership, an affiliate of Robert A. McNeil ("McNeil"). The principal place of business for the Partnership and the General Partner is 13760 Noel Road, Suite 600, LB70, Dallas, Texas, 75240. In the opinion of management, the financial statements reflect all adjustments necessary for a fair presentation of the Partnership's financial position and results of operations. All adjustments were of a normal recurring nature. However, the results of operations for the nine months ended September 30, 1998 are not necessarily indicative of the results to be expected for the year ending December 31, 1998. 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, 1997, and the notes thereto, as filed with the Securities and Exchange Commission, which is available upon request by writing to McNeil Real Estate Fund XXII, 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 residential property to McNeil Real Estate Management, Inc. ("McREMI"), an affiliate of McNeil, for providing property management and leasing services. The Partnership reimburses McREMI for its costs, including overhead, of administering the Partnership's affairs. The Partnership is incurring an asset management fee which is payable to the General Partner. Through 1999, the asset management fee is calculated as 1% of the Partnership's tangible asset value. Tangible asset value is determined by using the greater of (i) an amount calculated by applying a capitalization rate of 9% to the annualized net operating income of each property or (ii) a value of $10,000 per apartment unit for residential property to arrive at the property tangible asset value. The property tangible asset value is then added to the book value of all other assets excluding intangible items. The fee percentage decreases subsequent to 1999. Total accrued but unpaid asset management fees of $1,425,098 were outstanding at September 30, 1998. Compensation and reimbursements paid to or accrued for the benefit of the General Partner and its affiliates are as follows: Nine Months Ended September 30, ------------------------ 1998 1997 -------- -------- Property management fees ...................... $ 92,559 $ 86,910 Charged to general and administrative - affiliates: Partnership administration ................. 50,568 46,449 Asset management fee ....................... 131,638 109,510 -------- -------- $274,765 $242,869 ======== ======== NOTE 4. - ------- James F. Schofield, Gerald C. Gillett, Donna S. Gillett, Jeffrey Homburger, Elizabeth Jung, Robert Lewis, and Warren Heller et al. v. McNeil Partners L.P., McNeil Investors, Inc., McNeil Real Estate Management, Inc., Robert A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate Fund XII, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate Fund XXI, L.P., McNeil Real Estate Fund XXII, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., McNeil Real Estate Fund XXVI, L.P., and McNeil Real Estate Fund XXVII, L.P., et al. - Superior Court of the State of California for the County of Los Angeles, Case No. BC133799 (Class and Derivative Action Complaint). The action involves purported class and derivative actions brought by limited partners of each of the fourteen limited partnerships that were named as nominal defendants as listed above (the "Partnerships"). Plaintiffs allege that McNeil Investors, Inc., its affiliate McNeil Real Estate Management, Inc. and three of their senior officers and/or directors (collectively, the "Defendants") breached their fiduciary duties and certain obligations under the respective Amended Partnership Agreement. Plaintiffs allege that Defendants have rendered such Units highly illiquid and artificially depressed the prices that are available for Units on the resale market. Plaintiffs also allege that Defendants engaged in a course of conduct to prevent the acquisition of Units by an affiliate of Carl Icahn by disseminating purportedly false, misleading and inadequate information. Plaintiffs further allege that Defendants acted to advance their own personal interests at the expense of the Partnerships' public unit holders by failing to sell Partnership properties and failing to make distributions to unitholders. On December 16, 1996, the Plaintiffs filed a consolidated and amended complaint. Plaintiffs are suing for breach of fiduciary duty, breach of contract and an accounting, alleging, among other things, that the management fees paid to the McNeil affiliates over the last six years are excessive, that these fees should be reduced retroactively and that the respective Amended Partnership Agreements governing the Partnerships are invalid. Defendants filed a demurrer to the consolidated and amended complaint and a motion to strike on February 14, 1997, seeking to dismiss the consolidated and amended complaint in all respects. A hearing on Defendant's demurrer and motion to strike was held on May 5, 1997. The Court granted Defendants' demurrer, dismissing the consolidated and amended complaint with leave to amend. 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 on final Court approval is scheduled for December 17, 1998. Plaintiff's counsel intend 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 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - ------- --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- FINANCIAL CONDITION - ------------------- The occupancy rate at Harbour Club III Apartments was 95% at September 30, 1998 and 96% at September 30, 1997. Harbour Club III Apartments was able to provide enough cash flow from operations to meet ordinary operating expenses as well as the debt service for its related mortgage note for the first nine months of 1998. The property is in need of major capital improvements in order to compete in its local market, and the Partnership has begun a program to complete such capital improvements to be funded from existing cash reserves. However, there can be no assurances that such reserves will be sufficient to complete all needed improvements. RESULTS OF OPERATIONS - --------------------- Revenue: Total Partnership revenues increased by $46,378 and $125,858 for the three and nine months ended September 30, 1998, respectively, as compared to the same periods of 1997. Rental revenue was $652,397 and $1,871,961 for the three and nine months ended September 30, 1998, respectively, and remained comparable to $606,423 and $1,751,122 for the same periods in 1997. Interest income for the first nine months of 1998 increased by $5,019 as compared to the prior period. Expenses: Total expenses increased by $64,645 for the three months and $192,209 for the nine months ended September 30, 1998, as compared to the same periods in 1997. Depreciation expense increased $39,213 and $99,664 for the three and nine months ended September 30, 1998, respectively, as compared to the same period for 1997. The increase can be attributed to depreciation of the more than $244,000 and $511,000 of capital improvements added during 1998 and 1997, respectively, being amortized over useful lives ranging from five to ten years. Property tax expense is based on estimates during the year. When the actual bill is received, the expense is adjusted accordingly. During the last quarter of 1997, an approximate $42,000 adjustment to decrease the first three quarters estimate was made. After taking this adjustment into account, the expense is comparable for the periods ended September 30, 1998, and September 30, 1997. Other property operating expenses decreased by $4,232 and $15,758 for the three and nine months ended September 30, 1998, respectively, as compared to the same periods of last year. The decrease is mainly attributed to bad debt collections of approximately $18,000 during the first nine months of 1998. General and administrative expenses increased by $24,937 and $108,196 for the three and nine months ended September 30, 1998, respectively, as compared to the same periods of 1997. The increase was primarily due to increased costs incurred to explore alternatives to maximize the value of the Partnership (see Liquidity and Capital Resources). General and administrative - affiliates increased $9,863 and $26,247 for the three and nine months ended September 30, 1998, respectively, as compared to the same periods of 1997 due to an increase in the asset management fee. This increase was primarily due to the increase of the net operating income on Harbour Club III, on which the fee is based. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Partnership was provided $531,469 of cash by operating activities during the first nine months of 1998 as compared to $572,013 for the same period in 1997. Cash paid to suppliers increased by $178,008 mainly due to payments for increased General and Administrative expenses as discussed above. This increase was partially offset by rental income increases of more than $120,000 at Harbour Club III Apartments. Cash used for additions to real estate was $244,351 during the first nine months of 1998 as compared to $186,602 during the same period of 1997. A greater amount was spent in 1998 at Harbour Club III for landscape and signage improvements, as well as electrical upgrades. In addition, hallway renovations were capitalized during the first nine months of 1998. Cash used for principal payments on mortgage note payable was $72,001 during the first nine months of 1998 as compared to $67,146 for the same period of 1997. Short-term liquidity: At September 30, 1998, the Partnership held $1,009,747 of cash and cash equivalents. The General Partner considers this level of cash reserves to be adequate to meet the Partnership's operating needs. The General Partner believes that anticipated operating results for 1998 will be sufficient to fund the Partnership's budgeted capital improvements for 1998 and to repay the current portion of the Partnership's mortgage note. Effective January 23, 1997, the mortgage note payable was sold by HUD to an unaffiliated buyer. Long-term liquidity: As previously announced, the Partnership has retained PaineWebber, Incorporated ("PaineWebber") 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. The Partnership, through PaineWebber, has provided financial and other information to interested parties and is currently conducting discussions with one such party in an attempt to reach a definitive agreement with respect to a sale transaction. 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 that any such agreement will be reached nor the terms thereof. Distributions: To maintain adequate cash balances of the Partnership, distributions to Current Income Unit holders were suspended in 1988. There have been no distributions to Growth/Shelter Units holders. Distributions to Unit holders will remain suspended for the foreseeable future. The General Partner will continue to monitor the cash reserves and working capital needs of the Partnership to determine when cash flows will support distributions to the Unit holders. Forward-Looking Information: Within this document, certain statements are made as to the expected occupancy trends, financial condition, results of operations, and cash flows of the Partnership for periods after September 30, 1998. 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, and respond to changing economic and competitive factors. Other Information: Management has reviewed its information technology infrastructure to identify any systems that could be affected by the year 2000 problem. 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. The information systems used by the Partnership for financial reporting and significant accounting functions were made year 2000 compliant during recent systems conversions. Management is in the process of evaluating the mechanical and embedded technological systems at the various properties. Management intends to inventory all such systems and query suppliers, vendors and manufacturers to determine year 2000 compliance. 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. Management is in the process of identifying those risks as well as developing a contingency plan to mitigate potential adverse effects from non-compliance. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - ------- ----------------- James F. Schofield, Gerald C. Gillett, Donna S. Gillett, Jeffrey Homburger, Elizabeth Jung, Robert Lewis, and Warren Heller et al. v. McNeil Partners L.P., McNeil Investors, Inc., McNeil Real Estate Management, Inc., Robert A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate Fund XII, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate Fund XXI, L.P., McNeil Real Estate Fund XXII, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., McNeil Real Estate Fund XXVI, L.P., and McNeil Real Estate Fund XXVII, L.P., et al. - Superior Court of the State of California for the County of Los Angeles, Case No. BC133799 (Class and Derivative Action Complaint). The action involves purported class and derivative actions brought by limited partners of each of the fourteen limited partnerships that were named as nominal defendants as listed above (the "Partnerships"). Plaintiffs allege that McNeil Investors, Inc., its affiliate McNeil Real Estate Management, Inc. and three of their senior officers and/or directors (collectively, the "Defendants") breached their fiduciary duties and certain obligations under the respective Amended Partnership Agreement. Plaintiffs allege that Defendants have rendered such Units highly illiquid and artificially depressed the prices that are available for Units on the resale market. Plaintiffs also allege that Defendants engaged in a course of conduct to prevent the acquisition of Units by an affiliate of Carl Icahn by disseminating purportedly false, misleading and inadequate information. Plaintiffs further allege that Defendants acted to advance their own personal interests at the expense of the Partnerships' public unit holders by failing to sell Partnership properties and failing to make distributions to unitholders. On December 16, 1996, the Plaintiffs filed a consolidated and amended complaint. Plaintiffs are suing for breach of fiduciary duty, breach of contract and an accounting, alleging, among other things, that the management fees paid to the McNeil affiliates over the last six years are excessive, that these fees should be reduced retroactively and that the respective Amended Partnership Agreements governing the Partnerships are invalid. Defendants filed a demurrer to the consolidated and amended complaint and a motion to strike on February 14, 1997, seeking to dismiss the consolidated and amended complaint in all respects. A hearing on Defendant's demurrer and motion to strike was held on May 5, 1997. The Court granted Defendants' demurrer, dismissing the consolidated and amended complaint with leave to amend. 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 on final Court approval is scheduled for December 17, 1998. Plaintiff's counsel intend 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 Description ------- ----------- 4. Amended and Restated Limited Partnership Agreement dated March 26, 1992. (Incorporated by reference to the Current Report of the Registrant on Form 8-K dated March 26, 1992, as filed on April 9, 1992). 11. Statement regarding computation of Net Income (Loss) per Thousand Limited Partnership Units: Net income (loss) per thousand limited partnership units is computed by dividing net income (loss) allocated to the limited partners by the weighted average number of limited partnership units outstanding expressed in thousands. Per unit information has been computed based on 19,493 and 19,567 weighted average Current Income Units (in thousands) outstanding in 1998 and 1997, respectively, and 13,243 and 13,248 weighted average Growth/Shelter Units (in thousands) outstanding in 1998 and 1997, respectively. 27. Financial Data Schedule for the quarter ended September 30, 1998. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended September 30, 1998. MCNEIL REAL ESTATE FUND XXII, 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 XXII, L.P. By: McNeil Partners, L.P., General Partner By: McNeil Investors, Inc., General Partner November 16, 1998 By: /s/ Ron K. Taylor - ----------------- ------------------------------------------- Date Ron K. Taylor President and Director of McNeil Investors, Inc. (Principal Financial Officer) November 16, 1998 By: /s/ Carol A. Fahs - ----------------- ------------------------------------------- Date Carol A. Fahs Vice President of McNeil Investors, Inc. (Principal Accounting Officer) EX-27 2
5 9-MOS DEC-31-1998 SEP-30-1998 1,009,747 0 2,774 0 0 0 11,220,652 (6,006,872) 6,467,118 0 5,885,151 0 0 0 0 6,467,118 1,871,961 1,905,306 0 0 1,596,631 0 401,273 0 0 (92,598) 0 0 0 (92,598) 0 0
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