-----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, O5S7FiGEkhnhc3+uzLo63tJrCWqKkjylHXdeJowIU6HStUG7tMEcG5iRagiArXfJ HtHI7V3kE3j0s0hUBqytKw== 0000778921-98-000004.txt : 19980515 0000778921-98-000004.hdr.sgml : 19980515 ACCESSION NUMBER: 0000778921-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 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: SEC FILE NUMBER: 000-15446 FILM NUMBER: 98619728 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 quarterly period ended March 31, 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 0-15446 --------- 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 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 XXV, L.P. BALANCE SHEETS (Unaudited)
March 31, December 31, 1998 1997 --------------- -------------- ASSETS - ------ Real estate investments: Land..................................................... $ 4,205,425 $ 4,205,425 Buildings and improvements............................... 47,897,171 47,835,062 -------------- ------------- 52,102,596 52,040,487 Less: Accumulated depreciation and amortization......... (27,636,892) (27,037,306) -------------- ------------- 24,465,704 25,003,181 Asset held for sale......................................... 8,989,818 8,989,818 Cash and cash equivalents................................... 1,533,370 3,044,669 Cash segregated for security deposits....................... 342,537 340,879 Accounts receivable, net of allowance for doubtful accounts of $730,668 at March 31, 1998 and December 31, 1997........................................ 584,514 539,431 Escrow deposits............................................. 41,206 56,758 Deferred borrowing costs, net of accumulated amortization of $88,170 and $85,887 at March 31, 1998 and December 31, 1997, respectively................. 230,580 232,863 Prepaid expenses and other assets........................... 337,174 355,305 -------------- ------------- $ 36,524,903 $ 38,562,904 ============== ============= LIABILITIES AND PARTNERS' EQUITY (DEFICIT) - ------------------------------------------ Mortgage note payable....................................... $ 7,140,831 $ 7,155,626 Accounts payable and accrued expenses....................... 116,252 126,854 Accrued interest............................................ 60,995 61,121 Accrued property taxes...................................... 431,865 561,973 Payable to affiliates....................................... 491,476 279,505 Land lease obligation....................................... 194,483 205,902 Deferred gain............................................... 29,006 - Security deposits and deferred rental revenue............... 377,210 382,684 -------------- ------------- 8,842,118 8,773,665 -------------- ------------- Partners' equity (deficit): Limited partners - 84,000,000 limited partnership units authorized; 82,943,685 limited partnership units issued and outstanding at March 31, 1998 and December 31, 1997.................................... 28,172,646 30,280,535 General Partner.......................................... (489,861) (491,296) -------------- ------------- 27,682,785 29,789,239 -------------- ------------- $ 36,524,903 $ 38,562,904 ============== =============
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, --------------------------------- 1998 1997 -------------- -------------- Revenue: Rental revenue............................................. $ 2,396,359 $ 2,215,120 Interest ................................................... 47,549 39,437 -------------- ------------- Total revenue............................................. 2,443,908 2,254,557 ------------- ------------- Expenses: Interest.................................................... 199,860 211,015 Depreciation and amortization............................... 599,586 787,890 Property taxes.............................................. 220,401 205,343 Personnel costs............................................. 215,468 238,505 Utilities................................................... 186,540 189,471 Repairs and maintenance..................................... 241,547 258,197 Property management fees - affiliates....................... 138,617 127,106 Other property operating expenses........................... 181,387 205,501 General and administrative.................................. 99,094 51,481 General and administrative - affiliates..................... 217,872 199,049 ------------- ------------- Total expenses............................................ 2,300,372 2,473,558 ------------- ------------- Net income (loss).............................................. $ 143,536 $ (219,001) ============= ============= Net income (loss) allocable to limited partners................ $ 142,101 $ (216,811) Net income (loss) allocable to General Partner................. 1,435 (2,190) ------------- ------------- Net income (loss).............................................. $ 143,536 $ (219,001) ============= ============= Net income (loss) per thousand limited partnership units....... $ 1.71 $ (2.61) ============= ============= Distributions per thousand limited partnership units........... $ 27.13 $ 6.03 ============= =============
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, 1998 and 1997
Total General Limited Partners' Partner Partners Equity (Deficit) --------------- --------------- ---------------- Balance at December 31, 1996.............. $ (459,375) $ 34,440,696 $ 33,981,321 Net loss.................................. (2,190) (216,811) (219,001) Distributions to limited partners......... - (499,994) (499,994) ------------- ------------- ------------- Balance at March 31, 1997................. $ (461,565) $ 33,723,891 $ 33,262,326 ============= ============= ============= Balance at December 31, 1997.............. $ (491,296) $ 30,280,535 $ 29,789,239 Net income................................ 1,435 142,101 143,536 Distributions to limited partners......... - (2,249,990) (2,249,990) ------------- ------------- ------------- Balance at March 31, 1998................. $ (489,861) $ 28,172,646 $ 27,682,785 ============= ============= =============
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 (Decrease) in Cash and Cash Equivalents
Three Months Ended March 31 ----------------------------------------- 1998 1997 ----------------- ---------------- Cash flows from operating activities: Cash received from tenants........................ $ 2,378,107 $ 2,199,446 Cash paid to suppliers............................ (921,464) (1,709,729) Cash paid to affiliates........................... (144,518) (414,295) Interest received................................. 47,549 39,437 Interest paid..................................... (197,703) (387,009) Property taxes paid and escrowed.................. (334,957) (278,419) --------------- -------------- Net cash provided by (used in) operating activities........................................ 827,014 (550,569) --------------- -------------- Cash flows from investing activities: Additions to real estate investments.............. (62,109) (160,171) --------------- -------------- Cash flows from financing activities: Principal payments on mortgage note payable......................................... (14,795) - Payments on capitalized land lease obligation...................................... (11,419) (9,307) Distributions to limited partners................. (2,249,990) (499,994) --------------- -------------- Net cash used in financing activities................ (2,276,204) (509,301) --------------- -------------- Net decrease in cash and cash equivalents............ (1,511,299) (1,220,041) Cash and cash equivalents at beginning of period............................................ 3,044,669 3,256,746 --------------- -------------- Cash and cash equivalents at end of period........... $ 1,533,370 $ 2,036,705 =============== ==============
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 Income (Loss) to Net Cash Provided by (Used In) Operating Activities
Three Months Ended March 31 ----------------------------------------- 1998 1997 ----------------- ---------------- Net income (loss).................................... $ 143,536 $ (219,001) ---------------- -------------- Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization..................... 599,586 787,890 Amortization of deferred borrowing costs.......... 2,283 2,283 Deferred gain..................................... 29,006 - Changes in assets and liabilities: Cash segregated for security deposits........... (1,658) (2,263) Accounts receivable, net........................ (45,083) 1,791 Escrow deposits................................. 15,552 34,009 Prepaid expenses and other assets............... 18,131 11,481 Accounts payable and accrued expenses........... (10,602) (781,984) Accrued interest................................ (126) (178,277) Accrued property taxes.......................... (130,108) (107,085) Payable to affiliates........................... 211,971 (88,140) Security deposits and deferred rental revenue....................................... (5,474) (11,273) ---------------- -------------- Total adjustments............................. 683,478 (331,568) --------------- -------------- Net cash provided by (used in) operating activities........................................ $ 827,014 $ (550,569) =============== ==============
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, 1998 (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 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, 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 XXV, 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 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. 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 ---------------------------- 1998 1997 ----------- ---------- Property management fees................... $ 138,617 $ 127,106 Charged to general and administrative expense: Partnership administration.............. 43,317 42,928 Asset management fee.................... 174,555 156,121 ---------- --------- $ 356,489 $ 326,155 ========== ========= Payable to affiliates at March 31, 1998 and December 31, 1997 consisted primarily of unpaid property management fees, Partnership general and administrative expenses and asset management fees and are due and payable from current operations. 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, 1997. The Partnership reported net income of $143,536 for the first three months of 1998 as compared to a net loss of $219,001 for the first three months of 1997. Revenue in 1998 increased to $2,443,908 from $2,254,557 in 1997, and expenses decreased to $2,300,372 from $2,473,558. Net cash provided by operating activities was $827,014 for the three months ended March 31, 1998. The Partnership expended $62,109 for capital improvements, $14,795 for principal payments on its mortgage note payable and $11,419 for payments on the capitalized land lease obligation. After distributions of $2,249,990 to the limited partners, cash and cash equivalents totaled $1,533,370 at March 31, 1998, a net decrease of $1,511,299 from the balance at December 31, 1997. RESULTS OF OPERATIONS - --------------------- Revenue: Total Partnership revenue increased by $189,351 for the three months ended March 31, 1998 as compared to the same period in 1997, as discussed below. Rental revenue increased by $181,239 for the first three months of 1998 as compared to the first three months of 1997. Rental revenue increased at all of the Partnership's properties in 1998. The largest increases were at Century Park and Fidelity Plaza office buildings where rental revenue increased by approximately $58,000 and $44,000, respectively, mainly due to an increase in average occupancy in the first quarter of 1998. In addition, there was an increase in rental rates and a decrease in concessions given to tenants at Century Park in 1998. Interest income for the three months ended March 31, 1998 increased by $8,112 as compared to the same period in 1997. The increase was due to a larger average amount of cash and cash equivalents available for short-term investment in 1998. Although cash and cash equivalents decreased by approximately $1.5 million in the first quarter of 1998, $2,249,990 of the decrease was due to distributions paid to the limited partners in the last week of March 1998. Expenses: Total expenses decreased by $173,186 for the three months ended March 31, 1998 as compared to the same period in 1997. The decrease was primarily due to decreases in depreciation and amortization and other property operating expenses, partially offset by an increase in general and administrative expenses, as discussed below. Depreciation and amortization expense for the three months ended March 31, 1998 decreased by $188,304 in relation to the prior year. The decrease was mainly due to Northwest Plaza being classified as an asset held for sale by the Partnership effective August 1, 1997. In accordance with the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," the Partnership ceased recording depreciation on the asset at the time it was placed on the market for sale. Other property operating expenses decreased by $24,114 for the first quarter of 1998 as compared to the respective quarter in the prior year. The decrease was mainly due to decreased earthquake insurance costs at Fidelity Plaza Office Building. In addition, there was a decline in bad debts at Harbour Club I Apartments and Century Park Office Building. General and administrative expenses increased by $47,613 for the three months ended March 31, 1998 as compared to the same period in 1997. The increase was mainly due to costs incurred to explore alternatives to maximize the value of the Partnership (see Liquidity and Capital Resources). LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Cash flow provided by operating activities totaled $827,014 for the first three months of 1998 as compared to $550,569 used during the same period in 1997. The change in cash from operations was mainly due to the decrease in cash paid to suppliers, cash paid to affiliates and interest paid. In February 1997, the Partnership was required to pay the plaintiffs' attorneys $690,000 for legal expenses for a lawsuit relating to rescission of limited partnership units. During the first three months of 1997, the Partnership paid $250,000 of deferred asset management fees. In March 1997, defaulted interest of $184,000 was paid to the lender of Harbour Club I in addition to the required monthly cash flow payment. The Partnership expended $62,109 and $160,171 for additions to its real estate investments during the three months ended March 31, 1998 and 1997, respectively. A greater amount was spent in 1997 for tenant improvements at Century Park and Fidelity Plaza office buildings. During the three months ended March 31, 1998, the Partnership made $14,795 in principal payments on its mortgage note payable secured by Harbour Club I. No such principal payments were made in the three months ended March 31, 1997. Effective January 1, 1993, the Partnership ceased making regularly scheduled payments on its loan and began funding debt service with the excess cash flow of the property. In July 1997, monthly debt service payments were resumed after the Partnership made all delinquent payments and paid all accrued late charges. The Partnership distributed $2,249,990 and $499,994 to the limited partners in the first three months of 1998 and 1997, respectively. Short-term liquidity: At March 31, 1998, the Partnership held cash and cash equivalents of $1,533,370. This balance provides a reasonable level of working capital for the Partnership's immediate needs in operating its properties. For the Partnership as a whole, management projects positive cash flow from operations for the remainder of 1998. 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 approximately $1,179,000 for necessary capital improvements for all properties in 1998, which are expected to be funded from available cash reserves or from operations of the properties. Additional efforts to maintain and improve Partnership liquidity have included continued attention to property management activities. The objective has been to obtain maximum occupancy rates while holding expenses to levels necessary to maximize cash flows. The Partnership has made capital expenditures on its properties where improvements were expected to increase the competitiveness and marketability of the properties. Long-term liquidity: While the outlook for maintenance of adequate levels of liquidity is favorable, should operations deteriorate and present cash resources be insufficient for current needs, the Partnership would require other sources of working capital. No such sources have been identified. The Partnership has no established lines of credit from outside sources. Other possible actions to resolve cash deficiencies include refinancings, deferral of capital expenditures on 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. Pursuant to the Partnership's previously announced liquidation plans, the Partnership has recently retained PaineWebber, Incorporated as its exclusive financial advisor to explore alternatives to maximize the value of the Partnership. The alternatives being considered by the Partnership include, without limitation, a transaction in which limited partnership interests in the Partnership are converted into cash. The General Partner of the Partnership or entities or persons affiliated with the General Partner will not be involved as a purchaser in any of the transactions contemplated above. Any transaction will be subject to certain conditions including (i) approval by the limited partners of the Partnership, and (ii) receipt of an opinion from an independent financial advisory firm as to the fairness of the consideration received by the Partnership pursuant to such transaction. Finally, there can be no assurance that any transaction will be consummated, or as to the terms thereof. PART II. OTHER INFORMATION 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 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 thousand unit information has been computed based on 82,944 weighted average thousand limited partnership units outstanding in 1998 and 1997. 27. Financial Data Schedule for the quarter ended March 31, 1998. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended March 31, 1998. 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 14, 1998 By: /s/ Ron K. Taylor - ------------ ----------------------------------------- Date Ron K. Taylor President and Director of McNeil Investors, Inc. (Principal Financial Officer) May 14, 1998 By: /s/ Carol A. Fahs - ------------ ----------------------------------------- Date Carol A. Fahs Vice President of McNeil Investors, Inc. (Principal Accounting Officer) EX-27 2
5 3-MOS DEC-31-1998 MAR-31-1998 1,533,370 0 1,315,182 (730,668) 0 0 52,102,596 (27,636,892) 36,524,903 0 7,140,831 0 0 0 27,682,785 36,524,903 2,396,359 2,443,908 1,183,960 1,783,546 316,966 0 199,860 143,536 0 143,536 0 0 0 143,536 0 0
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