-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, U/8rcFmNdB1la1r7K9VGzGqoWbLm228Jx7RHoznmzw3aYUFfcX3mz+Uk240gSgOf u5K4PfZAb3r/dLLs5AGazQ== 0000783414-95-000002.txt : 19950530 0000783414-95-000002.hdr.sgml : 19950530 ACCESSION NUMBER: 0000783414-95-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCNEIL REAL ESTATE FUND XXIII LP CENTRAL INDEX KEY: 0000783414 STANDARD INDUSTRIAL CLASSIFICATION: 6500 IRS NUMBER: 330139793 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15459 FILM NUMBER: 95538421 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 III 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, 1995 -------------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to _____________ Commission file number 0-15459 MCNEIL REAL ESTATE FUND XXIII, L.P. - - - - - ----------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 33-0139793 - - - - - ----------------------------------------------------------------------------- (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 XXIII, L.P. (Debtor-in-possession) PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - - - - - ------ -------------------- BALANCE SHEETS (Unaudited)
March 31, December 31, 1995 1994 ASSETS Real estate investments: Land..................................................... $ 239,966 $ 239,966 Buildings and improvements............................... 5,713,332 5,711,776 --------- --------- 5,953,298 5,951,742 Less: Accumulated depreciation.......................... (2,461,292) (2,405,420) --------- --------- 3,492,006 3,546,322 Asset held for sale......................................... 2,334,886 2,373,130 Cash and cash equivalents ($99,115 and $79,303 restricted by the Bankruptcy Court at March 31, 1995 and December 31, 1994, respectively)..................... 136,168 107,815 Cash segregated for security deposits....................... 81,639 76,307 Accounts receivable......................................... 16,113 17,033 Escrow deposits............................................. 273,661 364,419 Prepaid expenses and other assets........................... 36,671 35,382 --------- --------- $6,371,144 $6,520,408 ========= ========= LIABILITIES AND PARTNERS' EQUITY (DEFICIT) Mortgage notes payable, net of discounts.................... $3,812,207 $3,814,667 Accounts payable and accrued expenses....................... 42,920 75,624 Accrued property taxes...................................... 31,851 123,773 Payable to affiliates - General Partner..................... 5,418 4,986 Security deposits and deferred rental income................ 59,791 56,348 --------- --------- 3,952,187 4,075,398 --------- --------- Liabilities subject to compromise........................... 4,301,654 4,184,977 --------- --------- Partners' equity (deficit): Limited partners - 45,000,000 Units authorized; 16,108,041 Units issued and outstanding (9,419,080 Current Income Units and 6,688,961 Growth/Shelter Units) at March 31, 1995 and December 31, 1994........... (6,721,039) (6,579,736) General Partner.......................................... 4,838,342 4,839,769 --------- --------- (1,882,697) (1,739,967) --------- --------- $6,371,144 $6,520,408 ========= =========
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 XXIII, L.P. (Debtor-in-Possession) STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31, ---------------------------- 1995 1994 --------- -------- Revenue: Rental revenue.............................................. $ 490,828 $ 442,947 Interest.................................................... 1,754 923 --------- -------- Total revenue............................................... 492,582 443,870 Expenses: Interest.................................................... 151,180 155,609 Interest - affiliates....................................... 12,695 83,494 Depreciation................................................ 94,116 102,135 Property taxes.............................................. 41,760 52,275 Personnel costs............................................. 73,337 73,145 Utilities................................................... 55,870 56,869 Repairs and maintenance..................................... 76,861 55,922 Property management fees -affiliates........................ 20,678 21,820 Other property operating expenses........................... 50,102 46,925 General and administrative.................................. 9,626 13,252 General and administrative - affiliates..................... 49,087 51,090 Write-down for permanent impairment of real estate.......... - 661,921 --------- --------- Total expenses............................................ 635,312 1,374,457 --------- --------- Net loss....................................................... $ (142,730) $ (930,587) ========= ========= Net loss allocable to limited partners - Current Income Unit... $ (12,846) $ (83,753) Net loss allocable to limited partners - Growth/Shelter Unit... (128,457) (837,528) Net loss allocable to General Partner.......................... (1,427) (9,306) ---------- --------- Net loss....................................................... $ (142,730) $ (930,587) ========= ========= Net loss per thousand limited partnership units:............... Current Income Units........................................... $ (1.36) $ (8.89) ========= ========= Growth/Shelter Units........................................... $ (19.20) $ (124.84) ========= =========
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 XXIII, L.P. (Debtor-in-Possession) STATEMENTS OF PARTNERS' EQUITY (DEFICIT) (Unaudited) For the Three Months Ended March 31, 1995 and 1994
Total General Limited Partners' Partner Partners Equity(Deficit) -------- ---------- -------------- Balance at December 31, 1993.............. $(225,716) $(5,128,564) $(5,354,280) Net loss General Partner........................ (9,306) - (9,306) Current Income Units................... - (83,753) (83,753) Growth/Shelter Units................... - (837,528) (837,528) --------- ---------- ---------- Total net loss............................ (9,306) (921,281) (930,587) --------- ---------- ---------- Balance at March 31, 1994................. $ (235,022) $(6,049,845) $(6,284,867) ========= ========== ========== Balance at December 31, 1994.............. $4,839,769 $(6,579,736) $(1,739,967) Net loss General Partner........................ (1,427) - (1,427) Current Income Units................... - (12,846) (12,846) Growth/Shelter Units................... - (128,457) (128,457) --------- ---------- ---------- Total net loss............................ (1,427) (141,303) (142,730) --------- ---------- ---------- Balance at March 31, 1995................. $4,838,342 $(6,721,039) $(1,882,697) ========= ========== ==========
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 XXIII, L.P. (Debtor-in-Possession) STATEMENTS OF CASH FLOWS (Unaudited) Increase (Decrease) in Cash and Cash Equivalents
Three Months Ended March 31, --------------------------------- 1995 1994 --------- -------- Cash flows from operating activities: Cash received from tenants........................ $ 486,844 $ 436,204 Cash paid to suppliers............................ (238,626) (230,664) Cash paid to affiliates........................... (21,345) (35,612) Interest received................................. 1,754 923 Interest paid..................................... (146,402) (146,042) Property taxes escrowed........................... (30,150) (46,737) -------- --------- Net cash provided by (used in) operating activities.............................. 52,075 (21,928) -------- -------- Cash flows from investing activities: Additions to real estate investments.............. (1,556) (6,034) -------- -------- Cash flows from financing activities: Principal payments on mortgage notes payable......................................... (22,166) (20,624) Advances from affiliates - General Partner........ - 33,804 -------- -------- Net cash provided by (used in) financing activities.............................. (22,166) 13,180 -------- -------- Net increase (decrease) in cash and cash equivalents. 28,353 (14,782) Cash and cash equivalents at beginning of period............................................ 107,815 89,311 -------- -------- Cash and cash equivalents at end of period........... $ 136,168 $ 74,529 ======== ========
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 XXIII, L.P. (Debtor-in-Possession) STATEMENTS OF CASH FLOWS (Unaudited) Reconciliation of Net Loss to Net Cash Provided by (Used in) Operating Activities
Three Months Ended March 31, ------------------------------- 1995 1994 -------- -------- Net loss............................................. $(142,730) $(930,587) -------- -------- Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation...................................... 94,116 102,135 Amortization of discounts on mortgage notes payable................................... 8,695 8,325 Interest added to advances from affiliates - General Partner................................. 12,695 83,494 Write-down for permanent impairment of real estate.................................. - 661,921 Changes in assets and liabilities: Cash segregated for security deposits........... (5,332) (348) Accounts receivable............................. 920 (763) Escrow deposits................................. 90,758 119,127 Prepaid expenses and other assets............... (1,289) (6,422) Accounts payable and accrued expenses........... 22,301 (41,773) Accrued property taxes.......................... (82,013) (60,962) Claims settlement payable....................... 1,354 1,842 Payable to affiliates - General Partner......... 48,420 37,298 Security deposits and deferred rental income........................................ 4,180 4,785 ------- ------- Total adjustments............................. 194,805 908,659 ------- ------- Net cash provided by (used in) operating activities.............................. $ 52,075 $(21,928) ======= =======
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 XXIII, L.P. (Debtor-in-Possession) Notes to Financial Statements (Unaudited) March 31, 1995 NOTE 1. - - - - - ------ McNeil Real Estate Partners XXIII, L.P., (the "Partnership"), formerly known as Southmark Realty Partners III, Ltd. was organized on March 4, 1985 as a limited partnership under the provisions of the California Revised Limited Partnership Act to acquire and operate 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, 1995 are not necessarily indicative of the results to be expected for the year ending December 31, 1995. NOTE 2. - - - - - ------ The financial statements should be read in conjunction with the financial statements contained in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994, and the notes thereto, as filed with the Securities and Exchange Commission, which is available upon request by writing to McNeil Real Estate XXIII, L.P., c/o McNeil Real Estate Management, Inc., Investor Services, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240. NOTE 3. - - - - - ------ The accompanying financial statements have been prepared assuming that the Partnership will continue as a going concern. The Partnership has suffered recurring losses from operations and has relied on advances from affiliates to meet its debt obligations and to fund capital improvements. There is no guarantee that such advances will continue to be available. As discussed in Note 6, the Partnership has filed a Voluntary Petition for reorganization under Chapter 11 of the United States Bankruptcy Court. The Partnership's First Amended Plan of Reorganization (the "Reorganization Plan") was filed with the Bankruptcy Court on February 13, 1995, and the Partnership's Disclosure Statement of Debtor-in-Possession (the "Disclosure Statement") was approved by the Bankruptcy Court on February 14, 1995. The Partnership is operating in this Chapter 11 proceeding as a debtor-in-possession. Accordingly, the General Partner has continued to manage the business and affairs of the Partnership subject to the jurisdiction and supervision of the United States Bankruptcy Court - Northern District of Texas (the "Bankruptcy Court"). Additionally, the Partnership is involved in certain litigation, the ultimate outcome of which could result in a significant loss to the Partnership. These conditions raise substantial doubt about the Partnership's ability to continue as a going concern. The accompanying financial statements have been prepared on the basis of accounting principles applicable to a going concern that presume the realization of assets and settlement of liabilities in the ordinary course of business, rather than through a process of forced liquidations. Accordingly, the statements do not include any adjustments relating to the realizable values of all assets or the settlement amounts of all liabilities. Under the bankruptcy proceedings, certain liabilities have priority and the payment of certain other liabilities existing at June 30, 1994, have been deferred. Such liabilities have been set forth separately in the financial statements. The Partnership, subject to approval of the Plan of Reorganization, has a contract for the sale of Woodbridge Apartments. Accordingly the net book value of the property has been reclassified as an asset held for sale. Assets held for sale are stated at the lower of cost or net realizable value. NOTE 4. - - - - - ------ Certain reclassifications have been made to prior period amounts to conform with the current period presentation. NOTE 5. - - - - - ------ The Partnership pays property management fees equal to 5% of the gross rental receipts for its residential properties to McNeil Real Estate Management, Inc. ("McREMI"), an affiliate of the General Partner, for providing property management and leasing services. Due to the bankrupty proceedings, the property management fees paid by Woodbridge Apartments were reduced to 3% beginning December 1, 1994. 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 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 $355,749 were outstanding at March 31, 1995. 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 additional funds under the facility because no amounts have been reserved for any particular partnership. As of March 31, 1995, $2,102,530 remained available for borrowing under the facility; however, additional funds could become available as other partnerships repay existing borrowings. The General Partner has, in its discretion, advanced funds to the Partnership to meet its working capital requirements. These advances, which are unsecured and due on demand, accrue interest at a rate equal to the prime lending rate plus 1%. McNeil Real Estate Fund XXV, L.P., an affiliate which owns a phase of Harbour Club Apartments, has advanced funds to the Partnership for working capital requirements. The advance, which is unsecured and due on demand, accrues interest at a rate equal to the prime lending rate plus 1%. The total advances from affiliates at March 31, 1995 and December 31, 1994 consist of the following:
March 31, December 31, 1995 1994 ------- ------- Advances from General Partner- revolving credit facility..................................... $ 65,670 $ 65,670 Advances from General Partner - other................... 281,823 281,823 Advance from McNeil Real Estate Fund XXV, L.P........... 113,000 113,000 Accrued interest payable................................ 83,278 70,583 ------- ------- $543,771 $531,076 ======= =======
Compensation and reimbursements paid to or accrued for the benefit of the General Partner and its affiliates are as follows:
Three Months Ended March 31, ------------------------------ 1995 1994 ------ ------ Property management fees............................... $20,678 $21,820 Charged to interest - affiliates: Interest on advances from affiliates - General Partner........................................... 12,695 83,494 Charged to general and administrative - affiliates: Partnership administration.......................... 28,352 35,616 Asset management fee................................ 20,735 15,474 ------ ------ $82,460 $156,404 ====== =======
The payable to affiliates - General Partner at March 31, 1995 and December 31, 1994 consisted primarily of unpaid asset management fees, property management fees and partnership general and administrative expenses. As discussed in Note 6, Advances from affiliates - General Partners and a portion of Payable to affiliates - General Partner have been classified as unsecured claims and are deferred under the Chapter 11 proceedings, therefore, the amounts due have been reclassified as "Liabilities subject to compromise" on the financial statements for the Partnership. NOTE 6. - - - - - ------ One of the Partnership's properties, Woodbridge Apartments, is encumbered by two mortgage notes payable. The first lien mortgage note payable is co-insured by the Federal Housing Administration and is, therefore, regulated by the Department of Housing and Urban Development ("HUD"). The second lien mortgage note payable, in the amount of $982,260, is payable in monthly installments of interest only and payments are limited to "surplus cash", as defined by HUD, and as calculated at June 30 and December 31 of each year. No "surplus cash" has been available to make the interest payments on the second lien and therefore, the Partnership ceased making such payments in April 1994. The Partnership was unsuccessful in attempting to negotiate a restructuring of the mortgage and the second lienholder was expected to initiate foreclosure proceedings. In an effort to prevent the loss of the property, the Partnership filed a Voluntary Petition for reorganization under Chapter 11 of the United States Bankruptcy Court, Northern District of Texas on June 30, 1994. As a result of its Chapter 11 proceeding, the realization of assets and liquidation of liabilities attributable to the Partnership are subject to significant uncertainties. The Partnership's financial statements include adjustments and reclassifications to reflect the liabilities that have been deferred under the Chapter 11 proceeding as "Liabilities subject to compromise." The Partnership's First Amended Plan of Reorganization (the "Reorganization Plan") was filed with the Bankruptcy Court on February 13, 1995, and the Partnership's Disclosure Statement of Debtor-in-Possession (the "Disclosure Statement") was approved by the Bankruptcy Court on February 14, 1995. The Reorganization Plan contemplates the sale of Woodbridge Apartments, and the Partnership presently has a contract to sell the property. On April 12, 1995, the Bankruptcy Court issued an order to sell Woodbridge Apartments and closing of the sale is expected to occur May 23, 1995. In accordance with the Disclosure Statement, if the property is not sold by June 1, 1995, the mortgage holders will be allowed to foreclose on the property. On or before 120 days after the date the Reorganization Plan is confirmed, the Partnership will send an election form for each limited partner to choose whether to redeem their interest in the Partnership. The election to redeem the limited partner interests must be returned to the Partnership within thirty days. The redemption price would be 1/1000th of a cent per Unit. Notwithstanding any other provision of the Reorganization Plan, if the Partnership is not able to secure a "no-action" letter from the Securities and Exchange Commission ("SEC") in a form satisfactory to the Partnership in its sole and absolute discretion, then this election shall be void and the limited partners will retain their interests. The "no-action" letter shall, at a minimum, provide (1) that the purchase of partnership interests can be accomplished without compliance with Rule 13e-3 of the Securities Exchange Act of 1934 and (2) that the SEC has not been advised by the Division of the SEC issuing the letter to pursue an enforcement action if the Reorganization Plan is consummated. In the event that a "no-action" letter satisfactory to the Partnership is not issued by the SEC, the limited partners shall retain their interests. If one hundred percent (100%) of the limited partners elect to redeem their interest or the General Partner of the Partnership determines that the level of redemption could potentially result in the treatment of the Partnership as a corporation for tax purposes, then this provision shall be void and the limited partners will retain their interests. The Partnership's Reorganization Plan and Disclosure Statement were submitted February 20, 1995 to a vote of the impaired creditors, as defined. The judgment lien creditors filed objections to confirmation of the Partnership's First Amended Plan of Reorganization. On April 12, 1995, the Bankruptcy Court did grant the order to sell Woodbridge Apartments but denied confirmation of the Reorganization Plan. The Partnership has filed an appeal of the Court's ruling and, in the meantime, is attempting to settle the matter with the judgment lien creditors which would allow for confirmation of the Reorganization Plan. Management cannot presently predict the outcome of these negotiations. The Partnership's financial statements include the accounts of Beckley Associates Limited Partnership. Beckley Associates, which owns Harbour Club II Apartments, is wholly-owned by the Partnership and the General Partner. Beckley Associates was not included in the bankruptcy filing. Summarized below is a statement of assets, liabilities and partners' equity of the portion of the Partnership included in the Chapter 11 reorganization as of March 31, 1995, and the results of operations for the three months ended March 31, 1995, prepared on a going concern basis. The assets, liabilities and transactions of Beckley Associates have been excluded.
March 31, 1995 --------- ASSETS ------ Asset held for sale............................ $2,334,886 Cash and cash equivalents...................... 99,115 Cash segregated for security deposits.......... 23,345 Accounts receivable............................ 1,250 Escrow deposits................................ 204,734 Prepaid expenses and other assets.............. 27,198 --------- 2,690,528 ========= LIABILITIES AND PARTNERS' EQUITY (DEFICIT) ----------------------------------------- Mortgage notes payable, net of discounts....... $2,423,642 Accounts payable and accrued expenses.......... 311,613 Accrued property taxes......................... 27,517 Claims settlement payable...................... 114,516 Payable to affiliates - General Partner........ 858,518 Advances from affiliates - General Partner..... 543,771 Security deposits and deferred rental income... 22,077 --------- $4,310,654 --------- Partners' deficit.............................. (1,611,126) --------- $2,690,528 =========
Three Months Ended March 31, 1995 ---------------- Rental revenue................................. $ 173,138 Interest....................................... 481 -------- Total revenues............................... 173,619 Interest....................................... 59,474 Interest - affiliates.......................... 12,695 Depreciation................................... 38,244 Property taxes................................. 9,909 Personnel costs................................ 20,782 Utilities...................................... 20,010 Repairs and maintenance........................ 28,774 Property management fees - affiliates.......... 5,169 Other property operating....................... 29,234 General and administrative..................... 9,626 General and administrative - affiliates........ 49,087 -------- Total expenses............................... 283,004 -------- Net loss $(109,385) ========
The ultimate outcome of the Chapter 11 proceedings cannot be determined at this time. Concurrent with the filing of the Voluntary Petition for reorganization, the General Partner contributed to the Partnership the purchased advances of $4,375,661 plus accrued interest of $704,482 owing to the General Partner from the Partnership. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - - - - - ------ --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- FINANCIAL CONDITION - - - - - ------------------- Net loss for the first three months of 1995 was $142,730 as compared to $930,587 for the first three months of 1994. The Partnership ceased making the interest only payments on the second lien on the Woodbridge Apartments in April 1994 which constituted a default under the mortgage agreement. The Partnership was unsuccessful in attempting to negotiate a restructuring of the mortgage, and the second lienholder was expected to initiate foreclosure proceedings. Accordingly, the Partnership recorded a write-down for permanent impairment of real estate of $661,921 on Woodbridge Apartments during the first quarter of 1994, to write down the property to its estimated net realizable value. In an effort to prevent the loss of the property, the Partnership filed a Voluntary Petition for reorganization under Chapter 11 in the United States Bankruptcy Court, Northern District of Texas on June 30, 1994. In January 1995, the Partnership received an offer to buy the property from an unaffiliated third party for a purchase price that was higher than its book value, after the write-down. The sale is expected to close on May 23, 1995, and the Partnership expects to record a gain on the sale. Occupancy at Woodbridge Apartments has rebounded to an average occupancy of 83% for the first three months of 1995, as compared to an average occupancy of 69% for the same period of 1994. While operating under Chapter 11 protection, the property has been able to keep current all post-petition liabilities pursuant to the cash collateral order. Harbour Club II is part of a four-phase apartment complex located in Belleville, Michigan. Phases I and III of the complex are owned by partnerships in which McNeil Partners, L.P. is the general partner; while Phase IV is owned by University Real Estate Fund 12, Ltd., ("UREF 12") whose general partner is an affiliate of Southmark Corporation. McREMI had been managing all four phases of the complex until December 1992, when the property management agreement between McREMI and UREF 12 was canceled. Additionally, in January 1993, Phase I defaulted on the mortgage loan to HUD and unless a refinancing agreement can be reached with the lender, the property is subject to foreclosure. If Phase I is lost to foreclosure, it would be extremely difficult to operate Phases II and III because the pool and clubhouse are located in Phase I. Harbour Club II had an improved average occupancy of 91% for the first three months of 1995 as compared to an average occupancy of 87% for the same period of 1994. Harbour Club II was able to provide enough cash flow from operations to meet ordinary operating expenses as well as the debt service for its related mortgage during the first three months of 1995; however, the property is in need of major capital repairs and improvements in order to compete in its local market. The Partnership is seeking alternatives to fund the necessary improvements, but at this time no sources have been found. RESULTS OF OPERATIONS - - - - - --------------------- Revenue: Total Partnership revenues were $492,582 for the three months ended March 31, 1995, as compared to $443,870 for the same period of 1994. Rental revenue for Harbour Club II and Woodbridge Apartments increased due to lower vacancies. Expenses: Total expenses were $635,312 for the three months ended March 31, 1995, as compared to $1,374,457 for the same period of 1994. The 1994 expenses include a $661,921 write-down for permanent impairment of real estate related to Woodbridge Apartments. Interest - affiliates decreased $70,799 for the three months ended March 31, 1995, as compared to the same period of 1994. The decrease was due to the decrease in the balance of advances purchased by the General Partner which were contributed to the Partnership in June 1994. Property taxes decreased $10,515 for the three months ended March 31, 1995, primarily due to reduced tax expense at Harbour Club II Apartments. Repairs and maintenance expense increased $20,939 for the three months ended March 31, 1995. Carpet and appliance replacements at Harbour Club II Apartments increased during the first quarter of 1995 as compared to 1994 due to increased occupancy as well as a renovation of vacant units to improve marketability. LIQUIDITY AND CAPITAL RESOURCES - - - - - ------------------------------- The Partnership was provided with $52,075 of cash flow from operations as compared to cash used in operations of $21,928 for the same period of 1994. The change in cash flow from operations is primarily due to the increased rental revenue at both of the Partnership's properties. The minimal cash balances of the Partnership have continued to limit capital improvements. Additions to real estate totaled $1,556 for the first three months of 1995 as compared to $6,034 for the same period of 1994. During the first three months of 1994, the Partnership received $33,804 of advances from affiliates of the General Partner to fund operating cash shortfalls. The Partnership has received no such advances during the first three months of 1995. At March 31, 1995, the Partnership held cash and cash equivalents of $136,168, of which $99,115 was in segregated accounts which have been restricted by the Bankruptcy Court, and accordingly was not available for general use by the Partnership. Short-term liquidity - - - - - -------------------- As previously discussed in Item 1 - Note 6, the Partnership is operating under Chapter 11 proceedings as a debtor-in-possession. The Reorganization Plan contemplates the sale of Woodbridge Apartments, and the Partnership presently has a contract to sell the property and closing is expected May 23, 1995. In accordance with the Disclosure Statement, if the property is not sold by June 1, 1995, the mortgage holders will be allowed to foreclose on the property. 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 additional funds under the facility because no amounts have been reserved for any particular partnership. As of March 31, 1995, $2,102,530 remained available for borrowing under the facility; however, additional funds could become available as other partnerships repay existing borrowings. Additionally, the General Partner has, at its discretion, advanced funds to the Partnership in addition to the revolving credit facility. The General Partner is not obligated to advance funds to the Partnership and there is no assurance that the Partnership will receive additional funds. The balance of cash and cash equivalents can be considered no more than a minimum level of cash reserves for the properties operation. For the rest of 1995, operations of the properties are expected to provide sufficient positive cash flow for normal operating expenses and some debt service payments. However, any needed capital improvements will require the use of existing cash reserves or other sources of cash. No such sources have been identified. The Partnership has no established lines of credit from outside sources. Although affiliates of the Partnership have previously funded such cash deficits, there can be no assurance that the Partnership will receive additional funds Other possible actions to resolve cash deficiencies include refinancings, deferring capital expenditures on the Partnership properties except where improvements are expected to enhance the competitiveness and marketability of the properties, or property sales. A sale or refinancing of the properties is only a possibility and currently Woodbridge Apartments is under contract for sale. Long-term liquidity - - - - - ------------------- The Partnership does not have any mortgage maturities until the second note on Woodbridge Apartments matures in March, 1996. However, the Woodbridge notes payable are classified as current due to the bankruptcy proceedings. As previously discussed, the Partnership currently has a contract for sale on Woodbridge Apartments, and the proceeds from the sale will be used to pay off the first and second mortgage note. The Partnership has been in a distressed cash situation for several years. After the sale of Woodbridge Apartments, the Partnership will have one remaining property, Harbour Club II Apartments. Although Harbour Club II is able to operate in such a manner to provide for operating expenses and debt service payments, the property has not proven the capability to produce the cash flow necessary for capital improvements nor to support Partnership general and administrative operations. The inability to make necessary capital improvements has led to deteriorating conditions at the property. In the opinion of management, if capital improvements are not made to make the property more marketable, the net realizable value of the property may be further impaired. These conditions raise substantial doubt about the Partnership's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. Distributions - - - - - ------------- To maintain adequate cash balances of the Partnership, distributions to Current Income Unit holders were suspended in 1988. There have been no distribution to Growth/Shelter Units holders. Distributions to Unit holders will remain suspended for the foreseeable future. PART II. OTHER INFORMATION ITEM 3. DEFAULT ON PAYMENT OF MORTGAGE NOTE - - - - - ------ ----------------------------------- In April 1994, the Partnership discontinued monthly payments on the second lien mortgage note payable for Woodbridge Apartments. The Partnership has received notice from the lender that the mortgage note payable is in default and the maturity date of the note has been accelerated. The second lienholder was expected to initiate foreclosure proceedings, and in order to prevent the loss of the property, the Partnership filed a Voluntary Petition for reorganization under Chapter 11 of the United States Bankruptcy Court, Northern District of Texas on June 30, 1994. As a Debtor-in-Possession, the Partnership, in October 1994, began making payments to the second lienholder in the amount of excess cash flow, as defined, and as of May 11, 1995, total principal and interest of $1,099,263 was due and unpaid. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - - - - - ------ -------------------------------- (a) Exhibits.
Exhibit Number Description ------- ----------- 4. Amended and Restated Limited Partnership Agreement dated March 30, 1992. (Incorporated by reference to the Current Report of the Registrant on Form 8-K dated March 30, 1992, as filed on April 10, 1992). 11. Statement regarding computation of Net Loss per Thousand Limited Partnership Units: Net loss per thousand limited partner 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 unit information has been computed based on 9,419 Current Income Units (in thousands) outstanding in 1994 and 1993 and 6,709 and 6,689 Growth/Shelter Units (in thousands) outstanding in 1994 and 1993, respectively.
b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended March 31, 1995 MCNEIL REAL ESTATE FUND XXIII, L.P. (Debtor-in-Possession) 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 XXIII, L.P. By: McNeil Partners, L.P., General Partner By: McNeil Investors, Inc., General Partner May 12, 1995 By: /s/ Donald K. Reed - - - - - ----------------------------- ------------------------------------------- Date Donald K. Reed President and Chief Executive Officer May 12, 1995 By: /s/ Robert C. Irvine - - - - - ----------------------------- ------------------------------------------- Date Robert C. Irvine Chief Financial Officer of McNeil Investors, Inc. Principal Financial Officer May 12, 1995 By: /s/ Carol A. Fahs - - - - - ----------------------------- ------------------------------------------- Date Carol A. Fahs Chief Accounting Officer of McNeil Real Estate Management, Inc.
EX-27 2
5 12-MOS 3-MOS DEC-31-1994 DEC-31-1995 DEC-31-1994 MAR-31-1995 107,815 136,168 0 0 17,033 16,113 0 0 0 0 0 0 5,951,742 5,953,298 (2,405,420) (2,461,292) 6,520,408 6,371,144 0 0 3,814,667 3,812,207 0 0 0 0 0 0 (1,739,967) (1,882,697) 6,520,408 6,371,144 1,894,443 490,828 1,900,473 492,582 0 0 0 0 2,527,724 471,437 0 0 838,579 163,875 (1,465,830) (142,730) 0 0 (1,465,830) (142,730) 0 0 0 0 0 0 (1,465,830) (142,730) 0 0 0 0
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