-----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, F7YVqQKEXHLsWnus/L4ALO5CmtLDCls+0pBZCMGNoV5a3mgMElGRfL7BzzzC3J6w p0/0W3gbCsDgaQSDZBSnVg== 0000778921-96-000006.txt : 19960517 0000778921-96-000006.hdr.sgml : 19960517 ACCESSION NUMBER: 0000778921-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCNEIL REAL ESTATE FUND XXV LP CENTRAL INDEX KEY: 0000778921 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330120335 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15446 FILM NUMBER: 96565322 BUSINESS ADDRESS: STREET 1: 13760 NOEL RD SUITE 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: MCNEIL REAL ESTATE FUND XXV DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: SOUTHMARK EQUITY 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 period ended March 31, 1996 ------------------------------------------------------ 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 0-15446 MCNEIL REAL ESTATE FUND XXV, L.P. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 33-0120335 - -------------------------------------------------------------------------------- (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 XXV, L.P. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- BALANCE SHEETS (Unaudited)
March 31, December 31, 1996 1995 --------------- -------------- ASSETS - ------ Real estate investments: Land..................................................... $ 5,524,462 $ 5,524,462 Buildings and improvements............................... 64,569,687 64,330,457 -------------- ------------- 70,094,149 69,854,919 Less: Accumulated depreciation and amortization......... (30,105,067) (29,234,446) -------------- ------------- 39,989,082 40,620,473 Cash and cash equivalents................................... 4,369,093 3,987,381 Cash segregated for security deposits....................... 302,472 300,223 Note receivable............................................. 344,225 344,225 Accounts receivable, net of allowance for doubtful accounts of $714,050 at March 31, 1996 and December 31, 1995........................................ 852,280 802,426 Escrow deposits............................................. 904,005 979,938 Deferred borrowing costs, net of accumulated amortization of $69,906 and $67,623 at March 31, 1996 and December 31, 1995, respectively................. 248,844 251,127 Prepaid expenses and other assets........................... 434,225 438,148 -------------- ------------- $ 47,444,226 $ 47,723,941 ============== ============= LIABILITIES AND PARTNERS' EQUITY (DEFICIT) - ------------------------------------------ Mortgage note payable....................................... $ 7,381,507 $ 7,381,507 Accounts payable and accrued expenses....................... 482,355 694,624 Accrued interest............................................ 738,491 686,502 Accrued property taxes...................................... 371,245 450,530 Payable to affiliates - General Partner..................... 259,508 98,407 Land lease obligation....................................... 270,184 277,132 Deferred gain............................................... 344,225 344,225 Security deposits and deferred rental revenue............... 339,736 326,032 -------------- ------------- 10,187,251 10,258,959 -------------- ------------- Partners' equity (deficit): Limited partners - 84,000,000 limited partnership units authorized; 83,894,648 limited partnership units issued and outstanding at March 31, 1996 and December 31, 1995.................................. 37,692,654 37,898,581 General Partner.......................................... (435,679) (433,599) -------------- ------------- 37,256,975 37,464,982 -------------- ------------- $ 47,444,226 $ 47,723,941 ============== =============
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 XXV, L.P. STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31, --------------------------------- 1996 1995 -------------- -------------- Revenue: Rental revenue............................................... $ 2,309,392 $ 2,061,322 Interest..................................................... 56,130 47,501 ------------- ------------- Total revenue.............................................. 2,365,522 2,108,823 ------------- ------------- Expenses: Interest..................................................... 216,136 206,426 Depreciation and amortization................................ 870,621 856,497 Property taxes............................................... 238,501 185,034 Personnel costs.............................................. 230,575 199,301 Utilities.................................................... 187,276 187,731 Repairs and maintenance...................................... 238,558 309,410 Property management fees - affiliates........................ 128,129 121,383 Other property operating expenses............................ 193,786 207,921 General and administrative................................... 42,391 24,870 General and administrative - affiliates...................... 227,556 224,005 ------------- ------------- Total expenses............................................. 2,573,529 2,522,578 ------------- ------------- Net loss....................................................... $ (208,007) $ (413,755) ============= ============= Net loss allocable to limited partners......................... $ (205,927) $ (409,617) Net loss allocable to General Partner.......................... (2,080) (4,138) ------------- ------------- Net loss....................................................... $ (208,007) $ (413,755) ============= ============= Net loss per thousand limited partnership units................ $ (2.45) $ (4.88) ============= =============
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 XXV, L.P. STATEMENTS OF PARTNERS' EQUITY (DEFICIT) (Unaudited) For the Three Months Ended March 31, 1996 and 1995
Total General Limited Partners' Partner Partners Equity --------------- --------------- --------------- Balance at December 31, 1994.............. $ (374,160) $ 43,783,028 $ 43,408,868 Net loss.................................. (4,138) (409,617) (413,755) ------------- ------------- ------------- Balance at March 31, 1995................. $ (378,298) $ 43,373,411 $ 42,995,113 ============= ============= ============= Balance at December 31, 1995.............. $ (433,599) $ 37,898,581 $ 37,464,982 Net loss.................................. (2,080) (205,927) (208,007) ------------- ------------- ------------- Balance at March 31, 1996................. $ (435,679) $ 37,692,654 $ 37,256,975 ============= ============= =============
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 XXV, L.P. STATEMENTS OF CASH FLOWS (Unaudited) Increase in Cash and Cash Equivalents
Three Months Ended March 31, ----------------------------------------- 1996 1995 ----------------- ---------------- Cash flows from operating activities: Cash received from tenants........................ $ 2,272,161 $ 2,104,676 Cash paid to suppliers............................ (1,040,342) (894,772) Cash paid to affiliates........................... (194,584) (364,606) Interest received................................. 56,130 47,501 Interest paid..................................... (161,864) (128,828) Property taxes paid and escrowed.................. (303,611) (239,483) --------------- -------------- Net cash provided by operating activities............ 627,890 524,488 --------------- -------------- Cash flows from investing activities: Additions to real estate investments.............. (239,230) (376,915) --------------- -------------- Cash flows from financing activities: Payments on capitalized land lease obligation...................................... (6,948) (9,821) --------------- -------------- Net increase in cash and cash equivalents............ 381,712 137,752 Cash and cash equivalents at beginning of period............................................ 3,987,381 3,125,937 --------------- -------------- Cash and cash equivalents at end of period........... $ 4,369,093 $ 3,263,689 =============== ==============
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 XXV, L.P. STATEMENTS OF CASH FLOWS (Unaudited) Reconciliation of Net Loss to Net Cash Provided by Operating Activities
Three Months Ended March 31, ----------------------------------------- 1996 1995 ----------------- ----------------- Net loss............................................. $ (208,007) $ (413,755) --------------- --------------- Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization..................... 870,621 856,497 Amortization of deferred borrowing costs.......... 2,283 2,284 Changes in assets and liabilities: Cash segregated for security deposits........... (2,249) (8,831) Accounts receivable, net........................ (49,854) 43,154 Escrow deposits................................. 75,933 117,858 Prepaid expenses and other assets............... 3,923 36,252 Accounts payable and accrued expenses........... (212,269) 7,322 Accrued interest................................ 51,989 75,314 Accrued property taxes.......................... (79,285) (188,365) Payable to affiliates - General Partner......... 161,101 (19,218) Security deposits and deferred rental revenue....................................... 13,704 15,976 --------------- -------------- Total adjustments............................. 835,897 938,243 --------------- -------------- Net cash provided by operating activities............ $ 627,890 $ 524,488 =============== ==============
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 XXV, L.P. Notes to Financial Statements March 31, 1996 (Unaudited) NOTE 1. - ------- McNeil Real Estate Fund XXV, L.P. (the "Partnership"), formerly known as Southmark Equity Partners II, Ltd., was organized on February 15, 1985 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 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 three months ended March 31, 1996 are not necessarily indicative of the results to be expected for the year ending December 31, 1996. 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, 1995, and the notes thereto, as filed with the Securities and Exchange Commission, which is available upon request by writing to McNeil Real Estate Fund XXV, L.P., c/o McNeil Real Estate Management, Inc., Investor Services, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240. NOTE 3. - ------- The Partnership pays property management fees equal to 5% of the gross rental receipts for its residential property and 6% of gross rental receipts for its commercial properties to McNeil Real Estate Management, Inc. ("McREMI"), an affiliate of the General Partner, for providing property management services for the Partnership's residential and commercial properties and leasing services for its residential properties. McREMI may also choose to provide leasing services for the Partnership's commercial properties, in which case McREMI will receive property management fees from such commercial properties equal to 3% of the property's gross rental receipts plus leasing commissions based on the prevailing market rate for such services where the property is located. The Partnership reimburses McREMI for its costs, including overhead, of administering the Partnership's affairs. The Partnership is paying an asset management fee which is payable to the General Partner. Through 1999, the asset management fee is calculated as 1% of the Partnership's tangible asset value. Tangible asset value is determined by using the greater of (i) an amount calculated by applying a capitalization rate of 9% to the annualized net operating income of each property or (ii) a value of $10,000 per apartment unit for residential property and $50 per gross square foot for commercial properties 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. Accrued but unpaid asset management fees totaled $193,436 at March 31, 1996. 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, ---------------------------------------- 1996 1995 ---------------- --------------- Property management fees............................. $ 128,129 $ 121,383 Charged to general and administrative expense: Partnership administration........................ 62,570 72,561 Asset management fee.............................. 164,986 151,444 --------------- -------------- $ 355,685 $ 345,388 =============== ==============
Payable to affiliates - General Partner at March 31, 1996 and December 31, 1995 consisted primarily of unpaid property management fees, Partnership general and administrative expenses and asset management fees and are due and payable from current operations. NOTE 4. - ------- Martha Hess, et al. v. Southmark Equity Partners II, Ltd. (presently known as McNeil Real Estate Fund XXV, L.P.), Southmark Income Investors, Ltd, Southmark Equity Partners, Ltd., Southmark Realty Partners III, Ltd., and Southmark Realty Partners II, Ltd., et al. ("Hess"); Kotowski v. Southmark Equity Partners, Ltd. and Donald Arceri v. Southmark Income Investors, Ltd. These cases were previously pending in the Illinois Appellate Court for the First District ("Appellate Court"), as consolidated Case No. 90-107. Consolidated with these cases are an additional 14 matters against unrelated partnership entities. The Hess case was filed on May 20, 1988, by Martha Hess, individually and on behalf of a putative class of those similarly situated. The original, first, second and third amended complaints in Hess sought rescission, pursuant to the Illinois Securities Act, of over $2.7 million of principal invested in five Southmark (now McNeil) partnerships, and other relief including damages for breach of fiduciary duty and violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. The original, first, second and third amended complaints in Hess were dismissed against the defendant-group because the Appellate Court held that they were not the proper subject of a class action complaint. Hess was, thereafter, amended a fourth time to state causes of action against unrelated partnership entities. Hess went to judgment against that unrelated entity and the judgment, along with the prior dismissal of the class action, was appealed. The Hess appeal was decided by the Appellate Court during 1992. The Appellate Court affirmed the dismissal of the breach of fiduciary duty and consumer fraud claims. The Appellate Court did, however, reverse in part, holding that certain putative class members could file class action complaints against the defendant-group. Although leave to appeal to the Illinois Supreme Court was sought, the Illinois Supreme Court refused to hear the appeal. The effect of the denial is that the Appellate Court's opinion remains standing. On June 15, 1994, the Appellate Court issued its mandate sending the case back to trial court. In late January 1995, the plaintiffs filed a Motion to File an Amended Consolidated Class Action Complaint, which amends the complaint to name McNeil Partners, L.P. as the successor general partner to Southmark Investment Group. In February 1995, the plaintiffs filed a Motion for Class Certification. The amended cases against the defendant-group, and others, are proceeding under the caption George and Joy Kugler v. I.R.E. Real Estate Income Fund, Jerry and Barbara Neumann v. Southmark Equity Partners II, Richard and Theresa Bartoszewski v. Southmark Realty Partners III, and Edward and Rose Weskerna v. Southmark Realty Partners II. In September 1995, the court granted the plaintiffs' Motion to File an Amended Complaint, to Consolidate and for Class Certification. The defendants have answered the complaint and have plead that the plaintiffs did not give timely notice of their right to rescind within six months of knowing that right. The Court ruled on Plaintiff's Motion for Summary Judgment on April 25, 1996 and entered partial summary judgment, holding in favor of Plaintiffs against the Partnership, as well as the initial general partners. The Court did not enter judgment as to the amount of damages, but, instead, set a May 17, 1996 status hearing and requested both parties to come to an agreement on the amount of damages by that date. The ultimate resolution of this litigation could result in a loss of up to $1.8 million in addition to related legal fees. No accrual has been recorded related to this litigation. 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 the Partnership's properties since December 31, 1995. The Partnership reported a net loss of $208,007 for the first three months of 1996 as compared to a net loss of $413,755 for the first three months of 1995. Revenues in 1996 were $2,365,522 as compared to $2,108,823 in 1995, while expenses increased to $2,573,529 from $2,522,578. Net cash provided by operating activities was $627,890 for the three months ended March 31, 1996, a change from $524,488 provided during the same three month period in 1995. The Partnership expended $239,230 for capital improvements and $6,948 for payments on the capitalized land lease obligation. The balance in cash and cash equivalents increased to $4,369,093 at March 31, 1996, a net increase of $381,712 from the balance at December 31, 1995. Harbour Club I Apartments has continued to experience financial difficulties. The cash flow from operations of the property has not been sufficient to fund necessary capital improvements and to make the required monthly debt service payments. Effective January 1, 1993, the Partnership ceased making regularly scheduled debt service and escrow payments. In lieu of the aforementioned payments, the Partnership is funding debt service with the excess cash flow of the property. The Partnership has been notified that the mortgage note payable is in default and that the servicing agent has assigned the mortgage to the Department of Housing and Urban Development ("HUD"). If the Partnership is unable to successfully cure the default, the mortgagee could declare the entire indebtedness due and proceed with foreclosure on the property or pursue other actions such as gaining control of the property or placing it in receivership. As of March 31, 1996, no steps have been taken toward foreclosure. RESULTS OF OPERATIONS - --------------------- Revenue: Total revenue increased by $256,699 for the three months ended March 31, 1996 as compared to the same period in 1995. The increase was mainly due to an increase in rental revenue, as discussed below. Rental revenue for the three months ended March 31, 1996 increased by $248,070 as compared to the three months ended March 31, 1995. The increase was mainly due to increases of approximately $97,000, $72,000, and $53,000 at Century Park, Kellogg Building and Fidelity Plaza, respectively. These increases were the result of increases in the occupancy rates at March 31, 1996 as compared to March 31, 1995. Century Park occupancy went from 89% to 95%, Kellogg Building increased from 83% to 98% and Fidelity Plaza went from 82% to 87%. Interest income earned on short-term investments of cash and cash equivalents increased by $8,629 for the quarter ended March 31, 1996 as compared to the respective quarter in 1995. The increase was due to greater average cash balances invested in these accounts during the first three months of 1996. The Partnership held $4.4 million of cash and cash equivalents at March 31, 1996 as compared to $3.3 million at March 31, 1995. Expenses: Total expenses increased by $50,951 for the three months ended March 31, 1996 as compared to the same period in 1995. The increase was primarily due to an increase in property taxes and personnel costs, partially offset by a decrease in repair and maintenance expenses, as discussed below. Property taxes increased by $53,467 for the quarter ended March 31, 1996 in relation to the same quarter in 1995. The increase was mainly due to an increase in the assessed taxable value of Kellogg Office Building by taxing authorities. Personnel costs increased by $31,274 for the three months ended March 31, 1996 in relation to the comparable period in 1995. The increase was mainly due to the addition of two maintenance technicians at Fidelity Plaza office building. Repairs and maintenance expense decreased by $70,852 for the quarter ended March 31, 1996 in relation to the same quarter in 1995. The decrease was mainly due to a decline in contracted repairs expense at Fidelity Plaza, the result of the hiring of two maintenance technicians. In addition, Fidelity Plaza experienced a decline in light bulbs and fixtures expense in the first quarter of 1996. For the first quarter of 1996, general and administrative expenses increased by $17,521. The increase was due to costs incurred by the Partnership to defend class action litigation. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Partnership's primary source of cash flows is from operating activities which generated $627,890 of cash in the first three months of 1996 as compared to $524,488 for the same period in 1995. The increase in cash provided by operating activities in 1996 was mainly the result of an increase in cash received from tenants in 1996. See discussion of increase in rental revenue above. The Partnership expended $239,230 and $376,915 for additions to its real estate investments in the first three months of 1996 and 1995, respectively. The decrease in 1996 was mainly the result of the reduction of capital improvements at Fidelity Plaza in 1996. Short-term liquidity: At March 31, 1996, the Partnership held cash and cash equivalents of $4,369,093. This balance provides a reasonable level of working capital for the Partnership's immediate needs in operating its properties. For the remainder of 1996, Partnership properties are expected to provide positive cash flow from operations after payment of debt service and capital improvements. Only one property, Harbour Club I Apartments, is encumbered with mortgage debt and another property, Fidelity Plaza, is encumbered with lease obligations. The Partnership has budgeted $1,906,859 for necessary capital improvements for all properties in 1996 which is expected to be funded from available cash reserves or from operations of the properties. An escrow account restricted to the funding of priority capital needs is held by the lender for Harbour Club I in the amount of $332,407, which is included in escrow deposits on the Balance Sheets. The present cash balance is believed to provide an adequate reserve for property operations. Due to the Partnership's projected cash needs for capital improvements, the uncertain outcome of the lawsuit involving the sale of the Partnership's Units (see Item 1 - Legal Proceedings) and the default on the Harbour Club I mortgage loan, the Partnership does not anticipate making distributions to the limited partners in 1996. There can be no assurance as to when the Partnership will rebuild cash reserves judged adequate to resume distributions to the partners. 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. There is no assurance that the Partnership will receive any funds under the facility because no amounts are reserved for any particular partnership. As of March 31, 1996, $2,662,819 remained available for borrowing under the facility; however, additional funds could become available as other partnerships repay existing borrowings. This commitment will terminate on March 26, 1997. Long-term liquidity: While the outlook for maintenance of adequate levels of liquidity is favorable, should operations deteriorate and present cash resources become insufficient to fund 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 Partnership properties except where improvements are expected to increase the competitiveness and marketability of the properties, arranging financing from affiliates or the ultimate sale of the properties. Sales and refinancings are possibilities only, and there are at present no plans for any such sales or refinancings. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - ------- ----------------- Martha Hess, et al. v. Southmark Equity Partners II, Ltd. (presently known as McNeil Real Estate Fund XXV, L.P.), Southmark Income Investors, Ltd, Southmark Equity Partners, Ltd., Southmark Realty Partners III, Ltd., and Southmark Realty Partners II, Ltd., et al. ("Hess"); Kotowski v. Southmark Equity Partners, Ltd. and Donald Arceri v. Southmark Income Investors, Ltd. These cases were previously pending in the Illinois Appellate Court for the First District ("Appellate Court"), as consolidated Case No. 90-107. Consolidated with these cases are an additional 14 matters against unrelated partnership entities. The Hess case was filed on May 20, 1988, by Martha Hess, individually and on behalf of a putative class of those similarly situated. The original, first, second and third amended complaints in Hess sought rescission, pursuant to the Illinois Securities Act, of over $2.7 million of principal invested in five Southmark (now McNeil) partnerships, and other relief including damages for breach of fiduciary duty and violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. The original, first, second and third amended complaints in Hess were dismissed against the defendant-group because the Appellate Court held that they were not the proper subject of a class action complaint. Hess was, thereafter, amended a fourth time to state causes of action against unrelated partnership entities. Hess went to judgment against that unrelated entity and the judgment, along with the prior dismissal of the class action, was appealed. The Hess appeal was decided by the Appellate Court during 1992. The Appellate Court affirmed the dismissal of the breach of fiduciary duty and consumer fraud claims. The Appellate Court did, however, reverse in part, holding that certain putative class members could file class action complaints against the defendant-group. Although leave to appeal to the Illinois Supreme Court was sought, the Illinois Supreme Court refused to hear the appeal. The effect of the denial is that the Appellate Court's opinion remains standing. On June 15, 1994, the Appellate Court issued its mandate sending the case back to trial court. In late January 1995, the plaintiffs filed a Motion to File an Amended Consolidated Class Action Complaint, which amends the complaint to name McNeil Partners, L.P. as the successor general partner to Southmark Investment Group. In February 1995, the plaintiffs filed a Motion for Class Certification. The amended cases against the defendant-group, and others, are proceeding under the caption George and Joy Kugler v. I.R.E. Real Estate Income Fund, Jerry and Barbara Neumann v. Southmark Equity Partners II, Richard and Theresa Bartoszewski v. Southmark Realty Partners III, and Edward and Rose Weskerna v. Southmark Realty Partners II. In September 1995, the court granted the plaintiffs' Motion to File an Amended Complaint, to Consolidate and for Class Certification. The defendants have answered the complaint and have plead that the plaintiffs did not give timely notice of their right to rescind within six months of knowing that right. The Court ruled on Plaintiff's Motion for Summary Judgment on April 25, 1996 and entered partial summary judgment, holding in favor of Plaintiffs against the Partnership, as well as the initial general partners. The Court did not enter judgment as to the amount of damages, but, instead, set a May 17, 1996 status hearing and requested both parties to come to an agreement on the amount of damages by that date. The ultimate resolution of this litigation could result in a loss of up to $1.8 million in addition to related legal fees. No accrual has been recorded related to this litigation. 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). 4.1 Amendment No. 1 to the Amended and Restated Limited Partnership Agreement of McNeil Real Estate Fund XXV, L.P. dated June 1995 (incorporated by reference to the Quarterly Report of the registrant on form 10-Q for the period ended June 30, 1995, as filed on August 14, 1995). 11. Statement regarding computation of Net Loss per Thousand Limited Partnership Units: Net loss per thousand limited partnership units is computed by dividing net loss allocated to the limited partners by the weighted average number of limited partnership units outstanding expressed in thousands. Per thousand unit information has been computed based on 83,895 weighted average thousand limited partnership units outstanding in 1996 and 1995. 27. Financial Data Schedule for the quarter ended March 31, 1996. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended March 31, 1996. MCNEIL REAL ESTATE FUND XXV, 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 XXV, L.P. By: McNeil Partners, L.P., General Partner By: McNeil Investors, Inc., General Partner May 15, 1996 By: /s/ Donald K. Reed - ------------------- ---------------------------------------- Date Donald K. Reed President and Chief Executive Officer May 15, 1996 By: /s/ Ron K. Taylor - ------------------- ---------------------------------------- Date Ron K. Taylor Acting Chief Financial Officer of McNeil Investors, Inc. May 15, 1996 By: /s/ Carol A. Fahs - ------------------- ---------------------------------------- Date Carol A. Fahs Chief Accounting Officer of McNeil Real Estate Management, Inc. EX-27 2
5 3-MOS DEC-31-1996 MAR-31-1996 4,369,093 0 1,058,275 (714,050) 0 0 70,094,149 (30,105,067) 47,444,226 0 7,381,507 0 0 0 0 47,444,226 2,309,392 2,365,522 0 0 2,357,393 0 216,136 0 0 (208,007) 0 0 0 (208,007) 0 0
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