-----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, Cg2WGtmtpK6LTx1bxTUhtZn8fISKQWYYSWKHCsJ1lbJ3ssFCSlqFbWQpgbAhQHUl teJkgd0M5tIlXs2QRw+ZdQ== 0000793307-97-000007.txt : 19970814 0000793307-97-000007.hdr.sgml : 19970814 ACCESSION NUMBER: 0000793307-97-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCNEIL REAL ESTATE FUND XXVI LP CENTRAL INDEX KEY: 0000793307 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330168395 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15460 FILM NUMBER: 97658678 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 EQUITY 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 June 30, 1997 ---------------------------------------------------- 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 0-15460 --------- MCNEIL REAL ESTATE FUND XXVI, L.P. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 33-0168395 - -------------------------------------------------------------------------------- (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 --- --- MCNEIL REAL ESTATE FUND XXVI, L.P. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- BALANCE SHEETS (Unaudited)
June 30, December 31, 1997 1996 --------------- -------------- ASSETS - ------ Real estate investments: Land..................................................... $ 6,750,456 $ 6,750,456 Buildings and improvements............................... 54,215,146 53,911,061 -------------- ------------- 60,965,602 60,661,517 Less: Accumulated depreciation and amortization......... (22,999,528) (21,682,401) -------------- ------------- 37,966,074 38,979,116 Asset held for sale......................................... 3,008,374 3,008,374 Cash and cash equivalents................................... 2,872,819 2,211,029 Cash segregated for security deposits....................... 233,005 233,426 Accounts receivable, net of allowance for doubtful accounts of $572,392 at June 30, 1997 and December 31, 1996........................................ 1,481,967 1,276,997 Prepaid commissions......................................... 324,532 349,018 Prepaid expenses and other assets........................... 335,138 709,030 Deferred borrowing costs, net of accumulated amortization of $261,537 and $215,640 at June 30, 1997 and December 31, 1996, respectively........ 311,625 357,522 -------------- ------------- $ 46,533,534 $ 47,124,512 ============== ============= LIABILITIES AND PARTNERS' EQUITY (DEFICIT) - ------------------------------------------ Mortgage notes payable...................................... $ 21,632,470 $ 21,815,746 Accounts payable and accrued expenses....................... 216,310 306,284 Accrued property taxes...................................... 348,672 58,660 Payable to affiliates - General Partner..................... 98,228 91,462 Security deposits and deferred rental revenue............... 228,891 236,436 -------------- ------------- 22,524,571 22,508,588 -------------- ------------- Partners' equity (deficit): Limited Partners - 90,000,000 Units authorized; 86,530,671 and 86,533,671 Units issued and outstanding at June 30, 1997 and December 31, 1996, respectively... 24,413,425 25,016,816 General Partner.......................................... (404,462) (400,892) -------------- ------------- 24,008,963 24,615,924 -------------- ------------- $ 46,533,534 $ 47,124,512 ============== =============
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 XXVI, L.P. STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, --------------------------------- --------------------------------- 1997 1996 1997 1996 -------------- --------------- -------------- -------------- Revenue: Rental revenue................ $ 2,249,106 $ 2,199,094 $ 4,531,845 $ 4,383,643 Interest...................... 58,892 60,592 84,275 120,239 ------------- ------------- ------------- ------------ Total revenue............... 2,307,998 2,259,686 4,616,120 4,503,882 ------------- ------------- ------------- ------------ Expenses: Interest...................... 435,498 442,675 873,758 886,982 Interest - affiliates......... - 2,614 - 16,090 Depreciation and amortization................ 673,967 636,597 1,317,127 1,370,931 Property taxes................ 211,380 204,234 422,752 408,468 Personnel expenses............ 193,069 185,974 430,388 403,838 Utilities..................... 237,069 225,508 496,639 509,847 Repairs and maintenance....... 215,263 249,234 464,752 515,913 Property management fees - affiliates........... 128,823 128,891 254,990 251,449 Other property operating expenses.................... 124,466 145,510 280,078 301,980 General and administrative.... 27,002 19,652 70,247 58,495 General and administrative - affiliates.................. 204,050 186,558 362,350 375,119 ------------- ------------- ------------- ------------- Total expenses.............. 2,450,587 2,427,447 4,973,081 5,099,112 ------------- ------------- ------------- ------------- Net loss......................... $ (142,589) $ (167,761) $ (356,961) $ (595,230) ============= ============= ============= ============= Net loss allocable to limited partners........... $ (141,163) $ (166,083) $ (353,391) $ (589,278) Net loss allocable to General Partner............ (1,426) (1,678) (3,570) (5,952) ------------- ------------- ------------- ------------- Net loss......................... $ (142,589) $ (167,761) $ (356,961) $ (595,230) ============= ============= ============= ============= Net loss per thousand limited partnership units..... $ (1.63) $ (1.92) $ (4.08) $ (6.81) ============= ============= ============= ============= Distribution per thousand limited partnership units..... $ - $ - $ 2.89 $ - ============= ============= ============= =============
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 XXVI, L.P. STATEMENTS OF PARTNERS' EQUITY (DEFICIT) (Unaudited) For the Six Months Ended June 30, 1997 and 1996
Total Partners' General Limited Equity Partner Partners (Deficit) --------------- --------------- --------------- Balance at December 31, 1995.............. $ (377,413) $ 27,716,222 $ 27,338,809 Net loss.................................. (5,952) (589,278) (595,230) -------------- ------------- ------------- Balance at June 30, 1996.................. $ (383,365) $ 27,126,944 $ 26,743,579 ============= ============= ============= Balance at December 31, 1996.............. $ (400,892) $ 25,016,816 $ 24,615,924 Net loss.................................. (3,570) (353,391) (356,961) Distributions............................. - (250,000) (250,000) ------------- ------------- ------------- Balance at June 30, 1997.................. $ (404,462) $ 24,413,425 $ 24,008,963 ============= ============= =============
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 XXVI, L.P. STATEMENTS OF CASH FLOWS (Unaudited) Increase (Decrease) in Cash and Cash Equivalents
Six Months Ended June 30, ----------------------------------------- 1997 1996 ----------------- ----------------- Cash flows from operating activities: Cash received from tenants........................ $ 4,313,036 $ 4,214,487 Cash paid to suppliers............................ (1,318,638) (1,906,906) Cash paid to affiliates........................... (610,574) (3,567,889) Interest received................................. 84,275 120,239 Interest paid..................................... (829,731) (734,035) Interest paid to affiliates....................... - (53,903) Property taxes paid and escrowed.................. (239,217) (178,603) --------------- -------------- Net cash provided by (used in) operating activities........................................ 1,399,151 (2,106,610) --------------- -------------- Net cash used in investing activities: Additions to real estate investments.............. (304,085) (551,994) --------------- -------------- Cash flows from financing activities: Principal payments on mortgage notes payable...... (183,276) (145,665) Retirement of mortgage note - affiliate........... - (952,538) Repayments of advances from affiliates - General Partner................................. - (130,517) Deferred borrowing costs paid..................... - (15,684) Distributions..................................... (250,000) - --------------- -------------- Net cash used in financing activities................ (433,276) (1,244,404) --------------- -------------- Net increase (decrease) in cash and cash equivalents.................................. 661,790 (3,903,008) Cash and cash equivalents at beginning of period............................................ 2,211,029 6,761,516 --------------- -------------- Cash and cash equivalents at end of period........... $ 2,872,819 $ 2,858,508 =============== ==============
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 XXVI, L.P. STATEMENTS OF CASH FLOWS (Unaudited) Reconciliation of Net Loss to Net Cash Provided by (Used in) Operating Activities
Six Months Ended June 30, ----------------------------------------- 1997 1996 ----------------- ----------------- Net loss............................................. $ (356,961) $ (595,230) --------------- --------------- Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization..................... 1,317,127 1,370,931 Amortization of deferred borrowing costs.......... 45,897 44,555 Allowance for doubtful accounts................... - (13,391) Changes in assets and liabilities: Cash segregated for security deposits........... 421 (21,641) Accounts receivable............................. (204,970) (140,808) Prepaid commissions............................. 24,486 7,316 Prepaid expenses and other assets............... 373,892 (36,838) Accounts payable and accrued expenses........... (89,974) (78,762) Accrued property taxes.......................... 290,012 274,517 Payable to affiliates - General Partner......... 6,766 (2,941,321) Security deposits and deferred rental revenue....................................... (7,545) 24,062 --------------- -------------- Total adjustments............................. 1,756,112 (1,511,380) --------------- -------------- Net cash provided by (used in) operating activities........................................ $ 1,399,151 $ (2,106,610) =============== ==============
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 XXVI, L.P. Notes to Financial Statements June 30, 1997 (Unaudited) NOTE 1. - ------- McNeil Real Estate Partners XXVI, L.P., (the "Partnership"), formerly known as Southmark Equity 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 and commercial 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, 1997 are not necessarily indicative of the results to be expected for the year ending December 31, 1997. NOTE 2. - ------- The financial statements should be read in conjunction with the financial statements contained in the Partnership's Report on Form 10-K for the year ended December 31, 1996, and the notes thereto, as filed with the Securities and Exchange Commission, which is available upon request by writing to McNeil Real Estate Fund XXVI, L.P., c/o The Herman Group, 2121 San Jacinto St., 26th Floor, Dallas, Texas 75201. NOTE 3. - ------- The Partnership pays property management fees equal to 5% of gross rental receipts for its residential property and 6% of gross rental receipts for its commercial properties to McNeil Real Estate Management, Inc., ("McREMI"), an affiliate of the General Partner, for providing property management services for the Partnership's residential and commercial properties and leasing services for its residential property. McREMI may also choose to provide leasing services for the Partnership's commercial properties, in which case McREMI will receive property management fees from such commercial properties equal to 3% of the property's gross rental receipts plus leasing commissions based on the prevailing market rate for such services where the property is located. The Partnership reimburses McREMI for its costs, including overhead, of administering the Partnership's affairs. The Partnership is 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 for residential property and $50 per gross square foot for commercial property 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. The General Partner has, in its discretion, advanced funds to enable the Partnership to meet its working capital requirements. These advances, which were unsecured and due on demand, accrued interest at a rate equal to the prime lending rate plus 1%. In May 1996, the Partnership repaid all outstanding affiliate advances and the related accrued interest. In March 1993, the Partnership obtained a loan from McNeil Real Estate Fund XXVII, L.P., an affiliate of the General Partner, which allows the Partnership to borrow funds totaling $1,536,000. Of this amount available, $952,538 was borrowed at December 31, 1995. The note was secured by Continental Plaza and required monthly interest-only payments equal to the prime lending rate of Bank of America plus 2 1/2% with the principal balance due March 1, 1996. On January 8, 1996 the Partnership repaid the mortgage loan. 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, --------------------- 1997 1996 --------- --------- Property management fees - affiliates................ $ 254,990 $ 251,449 Charged to interest - affiliates: Interest on advances from affiliates - General Partner......................................... - 4,692 Interest on mortgage note payable - affiliate..... - 11,398 Charged to general and administrative affiliates: Partnership administration........................ 71,425 111,264 Asset management fee.............................. 290,925 263,855 -------- -------- $ 617,340 $ 642,658 ======== ======== The total payable to affiliates - General Partner at June 30, 1997 and December 31, 1996 consisted primarily of unpaid asset management fees, property management fees and partnership general and administrative expenses and are due and payable from current operations. NOTE 4. - ------- In 1996, the Partnership adopted the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." This statement requires the cessation of depreciation on assets held for sale. Since Edison Ford Square is currently classified as an asset held for sale, no depreciation was taken effective April 1, 1996. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - ------- --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- FINANCIAL CONDITION - ------------------- There has been no significant change in the operations of the Partnership's properties since December 31, 1996. The Partnership reported a net loss of $356,961 for the first six months of 1997 as compared to $595,230 for the first six months of 1996. Revenues increased slightly to $4,616,120 in 1997 from $4,503,882 in 1996, while expenses dropped to $4,973,081 in 1997 from $5,099,112 in 1996. Net cash provided by operating activities was $1,399,151 for the first six months of 1997. The Partnership expended $304,085 for capital improvements and $183,276 for principal payments on its mortgage notes payable. After distributions of $250,000 to the limited partners, cash and cash equivalents totaled $2,872,819 at June 30, 1997, an increase of $661,790 from the balance at December 31, 1996. RESULTS OF OPERATIONS - --------------------- Revenue: Total Partnership revenue increased by $48,312 and $112,238 for the three and six months ended June 30, 1997, respectively, as compared to the same periods of 1996, mainly due to an increase of rental revenue, slightly offset by a decrease in interest income, as discussed below. Rental revenue for the three and six months ended June 30, 1997 increased by $50,012 and $148,202, respectively, as compared to the same periods in 1996. Rental revenue of all properties increased slightly in 1997 as compared to 1996, except at Edison Ford Square where rental revenue decreased by $65,000 due to decreases in occupancy rate and reimbursements from tenants for common area maintenance. In addition, the property received $11,000 of rental revenue from a move-out tenant in 1996. No such revenue was received in 1997. Rental revenue at Westwood Center and Northway Mall increased approximately $59,000 and $123,000, respectively, due to an increase in straight-line rent adjustments at both properties. Additionally, there was an increase in occupancy and rental rates at Northway Mall. Interest income decreased by $1,700 and $35,964 for the three and six months ended June 30, 1997, respectively, as compared to the same periods in 1996 due to a lower amount of cash available for short-term investment in 1997. Expenses: Total expenses increased by $23,140 for the three months ended June 30, 1997 and decreased by $126,031 for the six months ended June 30, 1997 as compared to the same periods of 1996. No interest expense - affiliates was recorded in 1997 as compared to $2,614 and $16,090 for the three and six months ended June 30, 1996, respectively, due to the repayment of the loan from McNeil Real Estate Fund XXVII, L.P. in January 1996, as well as the repayment of all advances from affiliates in May 1996. Repairs and maintenance expenses decreased by $33,971 and $51,161 for the three and six months ended June 30, 1997, respectively, as compared to the same periods in 1996. The decrease was due to decreased expenses for snow removal and roof repairs at Northway Mall, as well as general maintenance at Westwood Center. Other property operating expenses decreased by $21,044 and $21,902 for the three and six months ended June 30, 1997, respectively, as compared to the same periods in 1996. The decrease was due to decreases in marketing and leasing and utilities at Westwood Center, as well as bad debt expenses at Northway Mall. General and administrative expenses increased by $7,350 and $11,752 for the three and six months ended June 30, 1997, respectively, as compared to the same periods in 1996. Costs incurred for investor services were paid to an unrelated third party in 1997. In the first half of 1996, such costs were paid to an affiliate of the General Partner and were included in general and administrative - - affiliates on the Statements of Operations. The increase was also attributable to costs incurred by the Partnership to evaluate and disseminate information regarding an unsolicited 1996 tender offer. The increase was partially offset by a decrease of professional fees. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Partnership generated $1,399,151 of cash through operating activities for the six months ended June 30, 1997 as compared to $2,106,610 used for the same period in 1996. The change in cash flow from operations is primarily due to decreases in cash paid to suppliers and cash paid to affiliates. In May 1997, the Partnership received $479,000 for capital reimbursements from escrow held by the mortgagee of Northway Mall after completion of the required roof repairs and asbestos removal, as well as a refund of $50,000 of prepaid deferred borrowing costs. No such reimbursements or refund were received in 1996. With the loan proceeds of the Northway Mall's financing, the Partnership paid approximately $3.5 million to affiliates including deferred asset management fees and overhead reimbursements to McREMI during the first half of 1996. Additions to real estate investments totaled $304,085 for the six months ended June 30, 1997 as compared to $551,994 for the same period of 1996. A majority of the capital improvements in 1997 was spent at Northway Mall and Westwood Center and in 1996 at Northway Mall. A greater amount was spent in 1996 at Amargosa Creek Apartments for roof replacements, at Edison Ford Square for paving and roof replacements and at Continental Plaza for paving and outdoor lighting. Total principal payments on mortgage notes payable were $183,276 for the six months ended June 30, 1997 as compared to $145,665 for the same period of 1996. With the loan proceeds of Northway Mall, the Partnership repaid a loan of $952,538 from McNeil Real Estate Fund XXVII, L.P. and advances from affiliates of $130,517 in the first half of 1996. Additional deferred borrowing costs of $15,684 were paid in 1996 relating to the Northway Mall's refinancing. The Partnership distributed $250,000 to the limited partners during the first half of 1997. No distributions were made during the first half of 1996. Short-term liquidity: At June 30, 1997, the Partnership held cash and cash equivalents of $2,872,819. The present cash balance plus cash to be provided by operating activities is considered adequate to meet the Partnership's needs for debt service, normal amounts of repairs and maintenance and capital improvements to preserve and enhance the value of the properties. The Partnership has budgeted $2,041,000 for necessary capital improvements for all properties in 1997. The General Partner has, at its discretion, advanced funds to the Partnership to fund working capital requirements. All outstanding advances from affiliates and the related accrued interest were repaid in 1996. The General Partner is not obligated to advance funds to the Partnership and there is no assurance that the Partnership will receive additional funds. Long-term liquidity: While the present outlook for Partnership's liquidity is favorable, market conditions may change and property operations could deteriorate. In that event, the Partnership would require other sources of working capital. No such other sources have been identified, and the Partnership has no established lines of credit. Other possible actions to resolve working capital deficiencies include refinancing or renegotiating terms of existing loans, deferring major capital expenditures on Partnership properties except where improvements are expected to enhance the competitiveness or marketability of the properties, or arranging working capital support from affiliates. There is no assurance that affiliate support could be arranged, since neither the General Partner nor any affiliates have any obligation in this regard. The Partnership has significant mortgage maturities during 1998, and management expects to refinance these mortgage notes as they mature. However, if management is unable to refinance the mortgage notes as they mature, the Partnership will require other sources of cash. No such sources have been identified. The Partnership has determined to begin orderly liquidation of all its assets. Although there can be no assurance as to the timing of the liquidation due to real estate market conditions, the general difficulty of disposing of real estate, and other general economic factors, it is anticipated that such liquidation would result in the dissolution of the Partnership followed by a liquidating distribution to Unit holders by December 1998. In this regard, the Partnership has placed Edison Ford Square on the market for sale. Distributions: During the first half of 1997, the Partnership distributed $250,000 to the limited partners. 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 limited partners. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - ------- ----------------- James F. Schofield, Gerald C. Gillett, Donna S. Gillett, Jeffrey Homburger, Elizabeth Jung, Robert Lewis, and Warren Heller et al. v. McNeil Partners L.P., McNeil Investors, Inc., McNeil Real Estate Management, Inc., Robert A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate Fund XII, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate Fund XXI, L.P., McNeil Real Estate Fund XXII, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., McNeil Real Estate Fund XXVI, L.P., and McNeil Real Estate Fund XXVII, L.P., et al. - Superior Court of the State of California for the County of Los Angeles, Case No. BC133799 (Class and Derivative Action Complaint). The action involves purported class and derivative actions brought by limited partners of each of the fourteen limited partnerships that were named as nominal defendants as listed above (the "Partnerships"). Plaintiffs allege that McNeil Investors, Inc., its affiliate McNeil Real Estate Management, Inc. and three of their senior officers and/or directors (collectively, the "Defendants") breached their fiduciary duties and certain obligations under the respective Amended Partnership Agreement. Plaintiffs allege that Defendants have rendered such Units highly illiquid and artificially depressed the prices that are available for Units on the resale market. Plaintiffs also allege that Defendants engaged in a course of conduct to prevent the acquisition of Units by an affiliate of Carl Icahn by disseminating purportedly false, misleading and inadequate information. Plaintiffs further allege that Defendants acted to advance their own personal interests at the expense of the Partnerships' public unit holders by failing to sell Partnership properties and failing to make distributions to unitholders. On December 16, 1996, the Plaintiffs filed a consolidated and amended complaint. Plaintiffs are suing for breach of fiduciary duty, breach of contract and an accounting, alleging, among other things, that the management fees paid to the McNeil affiliates over the last six years are excessive, that these fees should be reduced retroactively and that the respective Amended Partnership Agreements governing the Partnerships are invalid. Defendants filed a demurrer to the consolidated and amended complaint and a motion to strike on February 14, 1997, seeking to dismiss the consolidated and amended complaint in all respects. A hearing on Defendant's demurrer and motion to strike was held on May 5, 1997. The Court granted Defendants' demurrer, dismissing the consolidated and amended complaint with leave to amend. 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 Current Report of the Registrant on Form 8-K dated March 30, 1992, as filed on April 10, 1992). 4.1 Amendment No. 1 to the Amended and Restated Limited Partnership Agreement of McNeil Real Estate Fund XXVI, L.P. dated June 1995. 11. Statement regarding computation of Net Loss per Thousand Limited Partnership Units: Net loss per thousand limited partnership units is computed by dividing net loss allocated to the limited partners by the weighted average number of limited partnership units outstanding expressed in thousands. Per unit information has been computed based on 86,531 and 86,534 limited partnership units (in thousands) outstanding in 1997 and 1996, respectively. 27. Financial Data Schedule for the quarter ended June 30, 1997. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended June 30, 1997. MCNEIL REAL ESTATE FUND XXVI, 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 XXVI, L.P. By: McNeil Partners, L.P., General Partner By: McNeil Investors, Inc., General Partner August 13, 1997 By: /s/ Ron K. Taylor - --------------- ------------------------------------------ Date Ron K. Taylor President and Director of McNeil Investors, Inc. (Principal Financial Officer) August 13, 1997 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-31-1997 JUN-30-1997 2,872,819 0 1,481,967 0 0 0 60,965,602 (22,999,528) 46,533,534 0 21,632,470 0 0 0 0 46,533,534 4,531,845 4,616,120 0 0 4,099,323 0 873,758 0 0 (356,961) 0 0 0 (356,961) 0 0
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