-----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, T/wRoal2lRu4aWkooO3HedSFMWxnVOj03CYD7VkTnp40+NtEwZZVIA2m1SVD3RJI vR98Y8b+9o+xg/08Ip0fvQ== 0000783414-98-000004.txt : 19980515 0000783414-98-000004.hdr.sgml : 19980515 ACCESSION NUMBER: 0000783414-98-000004 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 XXIII LP CENTRAL INDEX KEY: 0000783414 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330139793 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15459 FILM NUMBER: 98619803 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 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 0-15459 -------- 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 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 XXIII, L.P. BALANCE SHEETS (Unaudited)
March 31, December 31, 1998 1997 --------------- --------------- ASSETS - ------ Real estate investments: Land..................................................... $ 239,966 $ 239,966 Buildings and improvements............................... 6,270,985 6,260,613 -------------- -------------- 6,510,951 6,500,579 Less: Accumulated depreciation.......................... (3,271,580) (3,197,623) -------------- -------------- 3,239,371 3,302,956 Cash and cash equivalents................................... 346,405 308,271 Cash segregated for security deposits....................... 44,322 43,947 Accounts receivable and other assets........................ 13,824 16,818 Escrow deposits............................................. 44,141 50,876 -------------- -------------- $ 3,688,063 $ 3,722,868 ============== ============== LIABILITIES AND PARTNERS' EQUITY (DEFICIT) - ------------------------------------------ Mortgage note payable, net.................................. $ 3,717,505 $ 3,726,154 Accounts payable and accrued expenses....................... 52,104 66,691 Accrued property taxes...................................... 29,001 44,676 Payable to affiliates - General Partner..................... 436,421 402,922 Security deposits and deferred rental revenue............... 63,736 50,364 -------------- -------------- 4,298,767 4,290,807 -------------- -------------- Partners' equity (deficit): Limited partners - 45,000,000 Units authorized; 11,492,696 and 11,512,696 Units outstanding at March 31, 1998 and December 31, 1997, respectively (6,631,985 and 6,651,985 Current Income Units out- standing at March 31, 1998 and December 31, 1997, respectively; 4,860,711 Growth/Shelter Units outstanding at March 31, 1998 and December 31, 1997)... (5,461,811) (5,419,474) General Partner.......................................... 4,851,107 4,851,535 -------------- -------------- (610,704) (567,939) -------------- -------------- $ 3,688,063 $ 3,722,868 ============== ==============
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. STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31, ----------------------------------- 1998 1997 --------------- -------------- Revenue: Rental revenue .......................................... $ 348,623 $ 342,299 Interest................................................. 4,230 2,191 -------------- -------------- Total revenue.......................................... 352,853 344,490 -------------- -------------- Expenses: Interest................................................. 84,778 87,528 Depreciation............................................. 73,957 68,552 Property taxes........................................... 29,001 30,573 Personnel expenses....................................... 55,106 51,922 Utilities................................................ 32,015 31,552 Repairs and maintenance.................................. 35,386 34,656 Property management fees - affiliates.................... 17,483 17,387 Other property operating expenses........................ 15,338 13,090 General and administrative............................... 18,907 13,232 General and administrative - affiliates.................. 33,647 33,683 -------------- -------------- Total expenses......................................... 395,618 382,175 -------------- -------------- Net loss.................................................... $ (42,765) $ (37,685) ============== ============== Net loss allocated to limited partners - Current Income Units.......................... $ (3,849) $ (3,392) Net loss allocated to limited partners - Growth/Shelter Units.......................... (38,488) (33,916) Net loss allocated to General Partner....................... (428) (377) --------------- -------------- Net loss.................................................... $ (42,765) $ (37,685) ============== ============== Net loss per thousand limited partnership units: Current Income Units..................................... $ (.58) $ (.51) ============== ============== Growth/Shelter Units..................................... $ (7.92) $ (6.98) ============== ==============
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. 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.............. $ 4,852,460 $ (5,327,850) $ (475,390) Net loss: General Partner........................ (377) - (377) Current Income Units................... - (3,392) (3,392) Growth/Shelter Units................... - (33,916) (33,916) ------------- ------------- ------------- Total net loss....................... (377) (37,308) (37,685) ------------- ------------- ------------- Balance at March 31, 1997................. $ 4,852,083 $ (5,365,158) $ (513,075) ============= ============= ============= Balance at December 31, 1997.............. $ 4,851,535 $ (5,419,474) $ (567,939) Net loss: General Partner........................ (428) - (428) Current Income Units................... - (3,849) (3,849) Growth/Shelter Units................... - (38,488) (38,488) ------------- ------------- ------------- Total net loss....................... (428) (42,337) (42,765) ------------- ------------- ------------- Balance at March 31, 1998................. $ 4,851,107 $ (5,461,811) $ (610,704) ============= ============= =============
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. 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............................... $ 365,986 $ 348,902 Cash paid to suppliers................................... (172,630) (178,649) Cash paid to affiliates.................................. (17,631) (21,641) Interest received........................................ 4,230 2,191 Interest paid............................................ (80,453) (83,197) Property taxes paid and escrowed......................... (37,941) (24,631) -------------- -------------- Net cash provided by operating activities................... 61,561 42,975 -------------- -------------- Cash flows from investing activities: Additions to real estate investments..................... (10,372) (5,307) -------------- -------------- Cash flows from financing activities: Principal payments on mortgage note payable................................................ (13,055) (12,116) -------------- -------------- Net increase in cash and cash equivalents................... 38,134 25,552 Cash and cash equivalents at beginning of period................................................... 308,271 193,812 -------------- -------------- Cash and cash equivalents at end of period.................. $ 346,405 $ 219,364 ============== ==============
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. STATEMENTS OF CASH FLOWS (Unaudited) Reconciliation of Net Loss to Net Cash Provided by Operating Activities
Three Months Ended March 31, ------------------------------------ 1998 1997 ---------------- ---------------- Net loss.................................................... $ (42,765) $ (37,685) -------------- -------------- Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation............................................. 73,957 68,552 Amortization of discount on mortgage note payable........................................... 4,406 4,406 Changes in assets and liabilities: Cash segregated for security deposits.................. (375) (219) Accounts receivable and other assets................... 2,994 2,387 Escrow deposits........................................ 6,735 17,210 Accounts payable and accrued expenses.................. (14,587) (30,212) Accrued property taxes................................. (15,675) (12,946) Payable to affiliates - General Partner................ 33,499 29,429 Security deposits and deferred rental revenue.............................................. 13,372 2,053 -------------- -------------- Total adjustments.................................... 104,326 80,660 -------------- -------------- Net cash provided by operating activities................... $ 61,561 $ 42,975 ============== ==============
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 XXIII, L.P. Notes to Financial Statements (Unaudited) March 31, 1998 NOTE 1. - ------- McNeil Real Estate Fund XXIII, L.P. (the "Partnership"), formerly known as Southmark Realty Partners III, Ltd., was organized on March 4, 1985 as a limited partnership under 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 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 XXIII, 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 property to McNeil Real Estate Management, Inc. ("McREMI"), an affiliate of the General Partner, for providing property management and leasing services. The Partnership reimburses McREMI for its costs, including overhead, of administering the Partnership's affairs. The Partnership incurs asset management fees which are 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 in the amount of $230,761 were outstanding at March 31, 1998. 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, ----------------------------------- 1998 1997 --------------- --------------- Property management fees.................................... $ 17,483 $ 17,387 Charged to general and administrative - affiliates: Partnership administration............................... 12,674 14,427 Asset management fee..................................... 20,973 19,256 -------------- -------------- $ 51,130 $ 51,070 ============== ==============
Payable to affiliates - General Partner at March 31, 1998, and December 31, 1997, consists primarily of unpaid asset management fees and reimbursable costs that are due and payable from current operations. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - ------- --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- FINANCIAL CONDITION - ------------------- The occupancy rate at Harbour Club II Apartments was 90% at March 31, 1998. The occupancy rate at December 31, 1997 was 89%. Operations at Harbour Club II Apartments for the first quarter provided sufficient cash flow to pay the property's operating expenses as well as debt service on the related mortgage note. However, the property is in need of major capital improvements in order to compete effectively in its local market. The Partnership does not have sufficient cash reserves to fund the needed capital improvements, nor does the property generate sufficient cash flow from operations to fund such capital improvements. RESULTS OF OPERATIONS - --------------------- Revenue: Rental revenue at Harbour Club II Apartments increased $6,324 or 1.8% for the first quarter of 1998 as compared to the first quarter of 1997. Management began implementing a 3% increase in base rental rates effective January 1, 1998. However, part of the increase in rental rates was offset by an increase in vacancy losses. Interest income increased $2,039 or 93% for the first quarter of 1998 as compared to the first quarter of 1997. The increase was the result of increased levels of Partnership cash and cash equivalents invested in interest-earning accounts. Expenses: Total Partnership expenses increased $13,443 or 3.5% for the first quarter of 1998 as compared to the first quarter of 1997. Increases in depreciation and general and administrative expenses were primarily responsible for the increase in total Partnership expenses. During the twelve month period ended March 31, 1998, the Partnership added $235,780 of capital improvements to Harbour Club II Apartments. Depreciation charges on the new assets account for the $5,405 or 7.9% increase in depreciation expense for the first quarter of 1998 as compared to the first quarter of 1997. General and administrative expenses increased by $5,675 or 43% for the first quarter of 1998 as compared to the first quarter of 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 - ------------------------------- The Partnership's operating activities provided $61,561 for the first quarter of 1998, a 43% increase over cash flow provided during the first quarter of 1997. The increased cash flow from operations came from increased cash receipts from tenants. An increase in cash payments for property taxes was offset by decreases in cash payments to suppliers and affiliates. Cash used for additions to real estate improvements totaled $10,372 for the three months ended March 31, 1998 an increase over the $5,307 expended for improvements for the same period of 1997. Scheduled monthly principal payments on the Partnership's mortgage note totaled $13,055 for the three months ended March 31, 1998 as compared to $12,116 for the same period of 1997. Short-term liquidity: The Partnership's balance of cash and cash equivalents amounted to $346,405 at March 31, 1998, an increase of $38,134 from the balance of cash and cash equivalents at December 31, 1997. The General Partner considers the Partnership's cash reserves adequate for anticipated operations for the remainder of 1998. Operating activities at Harbour Club II Apartments for 1998 are expected to provide sufficient cash flow for operating expenses, debt service payments, and limited capital improvements. However, Harbour Club II Apartments is in need of extensive capital improvements to enable the property to compete effectively in the local market. Projected cash flows from operations will not be adequate to fund such extensive capital improvements. To date, the Partnership has been unable to secure financing for the needed capital improvements. The Partnership has no established lines of credit from outside sources. In the past, the General Partner, at its discretion, has advanced funds to the Partnership to fund working capital requirements. The General Partner is not obligated to advance funds to the Partnership and there is no assurance that the Partnership will receive any additional funds. Long-term liquidity: The long-term operating viability of Harbour Club II Apartments is dependent on the Partnership's ability to fund substantial capital improvements to the property. If the Partnership does not liquidate, as contemplated below, it will seek to obtain additional financing to allow the completion of the extensive capital improvements, which will enable the Partnership to raise rental rates at the property to market rates. Harbour Club II Apartments 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 the General Partner is the general partner; while Phase IV is owned by an unaffiliated entity. McREMI managed all four phases of the complex until December 1992, when the property management agreement between McREMI and Phase IV was canceled. 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. Distributions To maintain adequate cash balances of the Partnership, distributions to Current Income Unit holders were suspended in 1988. There have been no distributions to Growth/Shelter Unit holders. Distributions to Unit holders will remain suspended for the foreseeable future. The General Partner will continue to monitor the cash reserves and working capital needs of the Partnership to determine when cash flows will support distributions to the Unit holders. 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 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 Income (Loss) per Thousand Limited Partnership Units: Net income (loss) per thousand limited partner units is computed by dividing net income (loss) allocated to the limited partners by the weighted average number of limited partnership units outstanding expressed in thousands. Per unit information has been computed based on 6,632 and 6,652 Current Income Units (in thousands) outstanding in 1998 and 1997, respectively, and 4,861 Growth/Shelter Units (in thousands) 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 XXIII, 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 XXIII, 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 346,405 0 0 0 0 0 6,510,951 3,271,580 3,688,063 0 3,717,505 0 0 0 0 3,688,063 348,623 352,853 0 0 310,840 0 84,778 (42,765) 0 0 0 0 0 (42,765) 0 0
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