-----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, SQbFG95b+c5lUyy3NVPuXAv/E8GL4jEE/smOT3ssZJ5Rr1GCgD+Ty8YySM3b5XwT cV7CDNYqBiwb1kf6DOXIuA== 0000783414-98-000006.txt : 19980817 0000783414-98-000006.hdr.sgml : 19980817 ACCESSION NUMBER: 0000783414-98-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 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: 98688325 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 June 30, 1998 ------------------------------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to _____________ Commission file number 0-15459 -------- 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)
June 30, December 31, 1998 1997 -------------- --------------- ASSETS - ------ Real estate investments: Land..................................................... $ 239,966 $ 239,966 Buildings and improvements............................... 6,340,309 6,260,613 -------------- -------------- 6,580,275 6,500,579 Less: Accumulated depreciation.......................... (3,346,535) (3,197,623) -------------- -------------- 3,233,740 3,302,956 Cash and cash equivalents................................... 334,335 308,271 Cash segregated for security deposits....................... 44,322 43,947 Accounts receivable and other assets........................ 21,943 16,818 Escrow deposits............................................. 82,083 50,876 -------------- ------------- $ 3,716,423 $ 3,722,868 ============== ============= LIABILITIES AND PARTNERS' EQUITY (DEFICIT) - ------------------------------------------ Mortgage note payable, net.................................. $ 3,708,609 $ 3,726,154 Accounts payable and accrued expenses....................... 91,496 66,691 Accrued property taxes...................................... 58,002 44,676 Payable to affiliates - General Partner..................... 449,306 402,922 Security deposits and deferred rental revenue............... 53,943 50,364 -------------- -------------- 4,361,356 4,290,807 -------------- -------------- Partners' equity (deficit): Limited partners - 45,000,000 Units authorized; 11,492,696 and 11,512,696 Units outstanding at June 30, 1998 and December 31, 1997, respectively (6,631,985 and 6,651,985 Current Income Units outstanding at June 30, 1998 and December 31, 1997, respectively; 4,860,711 Growth/Shelter Units outstanding at June 30, 1998 and December 31, 1997)............................ (5,495,698) (5,419,474) General Partner.......................................... 4,850,765 4,851,535 -------------- -------------- (644,933) (567,939) -------------- -------------- $ 3,716,423 $ 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 Six Months Ended June 30, June 30, ---------------------- ---------------------- 1998 1997 1998 1997 --------- --------- --------- --------- Revenue: Rental revenue .............................. $ 367,155 $ 343,315 $ 715,778 $ 685,614 Interest .................................... 3,599 2,807 7,829 4,998 --------- --------- --------- --------- Total revenue ............................. 370,754 346,122 723,607 690,612 --------- --------- --------- --------- Expenses: Interest .................................... 84,531 85,496 169,309 173,024 Depreciation ................................ 74,955 70,886 148,912 139,438 Property taxes .............................. 29,001 30,573 58,002 61,146 Personnel expenses .......................... 46,789 42,261 101,895 94,183 Utilities ................................... 26,553 26,516 58,568 58,068 Repair and maintenance ...................... 58,186 47,568 93,572 82,224 Property management fees - affiliates ......................... 17,981 17,030 35,464 34,417 Other property operating expenses .................................. 10,729 13,969 26,067 27,059 General and administrative .................. 20,566 9,636 39,473 22,868 General and administrative - affiliates ................................ 35,692 35,368 69,339 69,051 --------- --------- --------- --------- Total expenses ............................ 404,983 379,303 800,601 761,478 --------- --------- --------- --------- Net loss ....................................... $ (34,229) $ (33,181) $ (76,994) $ (70,866) ========= ========= ========= ========= Net loss allocated to limited partners - Current Income Units ................................ $ (3,080) $ (2,986) $ (6,929) $ (6,378) Net loss allocated to limited partners - Growth/ Shelter Units ............................... (30,807) (29,863) (69,295) (63,779) Net loss allocated to General Partner ............................. (342) (332) (770) (709) --------- --------- --------- --------- Net loss ....................................... $ (34,229) $ (33,181) $ (76,994) $ (70,866) ========= ========= ========= ========= Net loss per thousand limited partnership units: Current Income Units ........................ $ (.46) $ (.45) $ (1.04) $ (.96) ========= ========= ========= ========= Growth/Shelter Units ........................ $ (6.34) $ (6.14) $ (14.26) $ (13.12) ========= ========= ========= =========
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 Six Months Ended June 30, 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........................ (709) - (709) Current Income Units................... - (6,378) (6,378) Growth/Shelter Units................... - (63,779) (63,779) ------------- ------------- ------------- Total net loss....................... (709) (70,157) (70,866) ------------- ------------- ------------- Balance at June 30, 1997.................. $ 4,851,751 $ (5,398,007) $ (546,256) ============= ============= ============= Balance at December 31, 1997.............. $ 4,851,535 $ (5,419,474) $ (567,939) Net loss: General Partner........................ (770) - (770) Current Income Units................... - (6,929) (6,929) Growth/Shelter Units................... - (69,295) (69,295) ------------- ------------- ------------- Total net loss....................... (770) (76,224) (76,994) ------------- ------------- ------------- Balance at June 30, 1998.................. $ 4,850,765 $ (5,495,698) $ (644,933) ============= ============= ============
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
Six Months Ended June 30, ----------------------- 1998 1997 ---------- ---------- Cash flows from operating activities: Cash received from tenants ............... $ 753,417 $ 695,166 Cash paid to suppliers ................... (334,165) (247,343) Cash paid to affiliates .................. (58,419) (34,327) Interest received ........................ 7,829 4,998 Interest paid ............................ (160,661) (164,363) Property taxes paid and escrowed ......... (75,883) (46,139) --------- --------- Net cash provided by operating activities.... 132,118 207,992 --------- --------- Cash flows from investing activities: Additions to real estate investments ..... (79,696) (45,834) --------- --------- Cash flows from financing activities: Principal payments on mortgage note payable ................................ (26,358) (24,461) --------- --------- Net increase in cash and cash equivalents.... 26,064 137,697 Cash and cash equivalents at beginning of period ................................... 308,271 193,812 --------- --------- Cash and cash equivalents at end of period... $ 334,335 $ 331,509 ========= =========
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
Six Months Ended June 30, ----------------------- 1998 1997 ---------- ---------- Net loss ...................................................................... $ (76,994) $ (70,866) --------- --------- Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation ............................................................... 148,912 139,438 Amortization of discount on mortgage note payable ............................................................. 8,813 8,813 Changes in assets and liabilities: Cash segregated for security deposits .................................... (375) (433) Accounts receivable and other assets ..................................... (5,125) (4,018) Escrow deposits .......................................................... (31,207) 45,396 Accounts payable and accrued expenses .................................... 24,805 (2,382) Accrued property taxes ................................................... 13,326 17,627 Payable to affiliates - General Partner .................................. 46,384 69,141 Security deposits and deferred rental revenue ................................................................ 3,579 5,276 --------- --------- Total adjustments ...................................................... 209,112 278,858 --------- --------- Net cash provided by operating activities ..................................... $ 132,118 $ 207,992 ========= =========
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) June 30, 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 six months ended June 30, 1998, are not necessarily indicative of the results to be expected for the year ending December 31, 1998. NOTE 2. - ------- The financial statements should be read in conjunction with the financial statements contained in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1997, and the notes thereto, as filed with the Securities and Exchange Commission, which is available upon request by writing to McNeil Real Estate 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 $251,734 were outstanding at June 30, 1998. Compensation and reimbursements paid to or accrued for the benefit of the General Partner and its affiliates are as follows: Six Months Ended June 30, ------------------- 1998 1997 -------- -------- Property management fees ................. $ 35,464 $ 34,417 Charged to general and administrative - affiliates: Partnership administration ............ 27,393 29,782 Asset management fee .................. 41,946 39,269 -------- -------- $104,803 $103,468 ======== ======== Payable to affiliates - General Partner at June 30, 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 Partnership reported a net loss of $34,229 and $76,994 for the three month and six month periods ended June 30, 1998. The losses were 3.2% and 8.6% greater than the losses reported for the same periods of 1997, respectively. The occupancy rate at Harbour Club II Apartments was 94% at June 30, 1998. The occupancy rate at December 31, 1997 was 89%. Operations at Harbour Club II Apartments for the second 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: The Partnership's rental revenue increased $23,840 or 6.9% and $30,164 or 4.4% for the three month and six month periods ended June 30, 1998 as compared to the same periods of 1997. The increase in rental revenue was mostly the result of increased rental rates at Harbour Club II Apartments. Rental rates were increased an average of 3.1% beginning in January 1998. In addition to increased rental rates, rental losses, such as vacancy, decreased 6.6% for the periods ended June 30, 1998 as compared to the same periods of 1997. Interest revenue increased 28% and 57% for the three month and six month periods ended June 30, 1998 as compared to the same periods of 1997. The increase was due to a increased amounts of cash and cash equivalents invested in interest-bearing accounts. Expenses: Total Partnership expenses increased $25,680 or 6.8% and $39,123 or 5.1% for the three month and six month periods ended June 30, 1998 as compared to the same periods of 1997. Most of the increase was concentrated in repair and maintenance expense and general and administrative expense. Repair and maintenance expense increased 22.3% and 13.8% for the three month and six month periods ended June 30, 1998 as compared to the same periods of 1997. In 1997, costs associated with the replacement of appliances were material enough to qualify for capitalization in accordance with the Partnership's capitalization policy. Similar costs in 1998 did not qualify for capitalization and were, therefore, expensed. General and administrative expenses increased $10,930 to $20,566 and $16,605 to $39,473 for the three month and six month periods ended June 30, 1998, respectively, as compared to the same periods of 1997. The increase was principally 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 $132,118 for the first six months of 1998, a 36% decrease from cash flow provided during the first six months of 1997. An increase in cash received from tenants was more than offset by increased payments to suppliers, affiliates and for property taxes. Cash used for additions to real estate improvements totaled $79,696 for the six months ended June 30, 1998 an increase over the $45,834 expended for improvements for the +same period of 1997. Scheduled monthly principal payments on the Partnership's mortgage note totaled $26,358 for the six months ended June 30, 1998 as compared to $24,461 for the same period of 1997. Short-term liquidity: The Partnership's balance of cash and cash equivalents amounted to $334,335 at June 30, 1998, an increase of $26,064 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 affiliated with the General Partner. 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. As previously announced, the Partnership has retained PaineWebber ("PaineWebber"), Incorporated as its exclusive financial advisor to explore alternatives to maximize the value of the Partnership including, without limitation, a transaction in which limited partnership interests in the Partnership are converted into cash. The Partnership, through PaineWebber, has provided financial and other information to interested parties and is currently conducting discussions with one such party in an attempt to reach a definitive agreement with respect to a sale transaction. It is possible that the General Partner and its affiliates will receive non-cash consideration for their ownership interests in connection with any such transaction. There can be no assurance that any such agreement will be reached nor the terms thereof. Distributions To maintain adequate cash balances of the Partnership, distributions to Current Income Unit holders were suspended in 1988. There have been no distributions to Growth/Shelter 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. Forward-Looking Information Within this document, certain statements are made as to the expected occupancy trends, financial condition, results of operations, and cash flows of the Partnership for periods after June 30, 1998. All of these statements are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical and involve risks and uncertainties. The Partnership's actual occupancy trends, financial condition, results of operations, and cash flows for future periods may differ materially due to several factors. These factors include, but are not limited to, the Partnership's ability to control costs, make necessary capital improvements, negotiate the sale or refinancing of its property, and respond to changing economic and competitive factors. Other Information: Management has begun to review its information technology infrastructure to identify any systems that could be affected by the year 2000 problem. The year 2000 problem is the result of computer programs being written using two digits rather than four to define the applicable year. Any programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in major systems failure or miscalculations. The information systems used by the Partnership for financial reporting and significant accounting functions were made year 2000 compliant during recent systems conversions. The Partnership is in the process of evaluating the computer systems at its property. The Partnership also intends to communicate with suppliers, financial institutions and others to coordinate year 2000 issues. Management believes that the remediation of any outstanding year 2000 conversion issues will not have a material or adverse effect on the Partnership's operations. 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 June 30, 1998. b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended June 30, 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 August 14, 1998 By: /s/ Ron K. Taylor - --------------- ---------------------------------------- Date Ron K. Taylor President and Director of McNeil Investors, Inc. (Principal Financial Officer) August 14, 1998 By: /s/ Carol A. Fahs - --------------- ---------------------------------------- Date Carol A. Fahs Vice President of McNeil Investors, Inc. (Principal Accounting Officer) EX-27 2
5 6-MOS DEC-31-1998 JUN-30-1998 334,335 0 0 0 0 0 6,580,275 (3,346,535) 3,716,423 0 3,708,609 0 0 0 0 3,716,423 715,778 723,607 0 0 631,292 0 169,309 (76,994) 0 0 0 0 0 (76,994) 0 0
-----END PRIVACY-ENHANCED MESSAGE-----