-----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, UywoJKMeljEjXrvs0OepWZ/zZ+cpHIpnOCdkON5+VegLhdydGcdzrZZk3D2gS85f TUisL+oiJG+/jaX1X018Ww== 0000793307-96-000006.txt : 19960515 0000793307-96-000006.hdr.sgml : 19960515 ACCESSION NUMBER: 0000793307-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 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: 96564497 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 March 31, 1996 ------------------------------------------------------- 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 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 XXVI, L.P. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- BALANCE SHEETS (Unaudited)
March 31, December 31, 1996 1995 --------------- -------------- ASSETS - ------ Real estate investments: Land..................................................... $ 6,750,456 $ 9,189,092 Buildings and improvements............................... 53,067,677 56,695,050 -------------- ------------- 59,818,133 65,884,142 Less: Accumulated depreciation and amortization......... (19,670,710) (21,255,141) -------------- ------------- 40,147,423 44,629,001 Asset held for sale......................................... 3,957,492 - Cash and cash equivalents................................... 5,992,993 6,761,516 Cash segregated for security deposits....................... 209,484 202,396 Accounts receivable, net of allowance for doubtful accounts of $608,220 and $596,156 at March 31, 1996 and December 31, 1995, respectively................. 1,209,595 1,096,937 Prepaid commissions......................................... 374,413 379,444 Prepaid expenses and other assets........................... 771,238 716,091 Deferred borrowing costs, net of accumulated amortization of $147,918 and $125,641 at March 31, 1996 and December 31, 1995, respectively................. 425,139 431,838 -------------- ------------- $ 53,087,777 $ 54,217,223 ============== ============= LIABILITIES AND PARTNERS' EQUITY (DEFICIT) - ------------------------------------------ Mortgage notes payable...................................... $ 22,084,814 $ 22,144,921 Mortgage note payable - affiliate........................... - 952,538 Accounts payable and accrued expenses....................... 308,451 358,856 Accrued property taxes...................................... 264,098 59,864 Payable to affiliates - General Partner..................... 3,134,413 2,983,409 Advances from affiliates - General Partner.................. 170,408 168,330 Security deposits and deferred rental revenue............... 214,253 210,496 -------------- ------------- 26,176,437 26,878,414 -------------- ------------- Partners' equity (deficit): Limited Partners -90,000,000 Units authorized; 86,533,671 and 86,548,983 Units issued and outstanding at March 31, 1996 and December 31, 1995, respectively........................ 27,293,028 27,716,222 General Partner.......................................... (381,688) (377,413) -------------- ------------- 26,911,340 27,338,809 -------------- ------------- $ 53,087,777 $ 54,217,223 ============== =============
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 March 31, ---------------------------------- 1996 1995 --------------- -------------- Revenue: Rental revenue ........................................... $ 2,184,549 $ 1,754,616 Interest .................................................. 59,647 16,849 -------------- ------------- Total revenue............................................ 2,244,196 1,771,465 ------------- ------------- Expenses: Interest................................................... 444,307 182,875 Interest - affiliates...................................... 13,476 29,364 Depreciation and amortization.............................. 734,334 576,791 Property taxes............................................. 204,234 195,889 Personnel costs............................................ 217,864 224,147 Utilities.................................................. 284,339 281,113 Repairs and maintenance.................................... 266,679 222,761 Property management fees -affiliates....................... 122,558 93,260 Other property operating expenses.......................... 156,470 113,154 General and administrative................................. 38,843 18,278 General and administrative - affiliates.................... 188,561 195,962 Loss on demolition and removal of assets................... - 1,247,940 ------------- ------------- Total expenses........................................... 2,671,665 3,381,534 ------------- ------------- Net loss....................................................... $ (427,469) $ (1,610,069) ============= ============= Net loss allocable to limited partners......................... $ (423,194) $ (1,593,968) Net loss allocable to General Partner.......................... (4,275) (16,101) ------------- -------------- Net loss....................................................... $ (427,469) $ (1,610,069) ============= ============= Net loss per thousand limited partnership units:............... $ (4.89) $ (18.42) ============= =============
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 Three Months Ended March 31, 1996 and 1995
Total Partners' General Limited Equity Partner Partners (Deficit) --------------- --------------- ---------------- Balance at December 31, 1994.............. $ (326,783) $ 32,728,638 $ 32,401,855 Net loss.................................. (16,101) (1,593,968) (1,610,069) -------------- ------------- ------------- Balance at March 31, 1995................. $ (342,884) $ 31,134,670 $ 30,791,786 ============= ============= ============== Balance at December 31, 1995.............. $ (377,413) $ 27,716,222 $ 27,338,809 Net loss.................................. (4,275) (423,194) (427,469) ------------- ------------- ------------- Balance at March 31, 1996................. $ (381,688) $ 27,293,028 $ 26,911,340 ============= ============== ==============
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
Three Months Ended March 31, ----------------------------------------- 1996 1995 ----------------- ---------------- Cash flows from operating activities: Cash received from tenants........................ $ 2,052,350 $ 1,592,508 Cash paid to suppliers............................ (1,091,378) (821,650) Cash paid to affiliates........................... (160,115) (89,615) Interest received................................. 59,647 16,849 Interest paid..................................... (313,090) (159,822) Interest paid to affiliates....................... (11,398) (26,201) Property taxes paid and escrowed.................. (66,068) (69,396) --------------- -------------- Net cash provided by operating activities............ 469,948 442,673 --------------- -------------- Net cash used in investing activities: Additions to real estate investments.............. (210,248) (3,605,897) --------------- -------------- Cash flows from financing activities: Principal payments on mortgage notes payable...... (60,107) (36,591) Proceeds from mortgage notes financing............ - 3,372,287 Retirement of mortgage note - affiliate........... (952,538) - Deferred borrowing costs paid..................... (15,578) - --------------- -------------- Net cash provided by (used in) financing activities........................................ (1,028,223) 3,335,696 --------------- -------------- Net increase (decrease) in cash and cash equivalents....................................... (768,523) 172,472 Cash and cash equivalents at beginning of period............................................ 6,761,516 1,473,850 --------------- -------------- Cash and cash equivalents at end of period........... $ 5,992,993 $ 1,646,322 =============== ==============
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 Operating Activities
Three Months Ended March 31, ----------------------------------------- 1996 1995 ----------------- ---------------- Net loss............................................. $ (427,469) $ (1,610,069) --------------- -------------- Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization..................... 734,334 576,791 Amortization of deferred borrowing costs.......... 22,277 39,270 Allowance for doubtful accounts................... 12,064 (2,344) Interest added to advances from affiliates - General Partner................................. 2,078 3,163 Loss on demolition and removal of assets.......... - 1,247,940 Changes in assets and liabilities: Cash segregated for security deposits........... (7,088) 19,775 Accounts receivable............................. (124,722) (165,691) Prepaid commissions and marketing costs......... 5,031 3,612 Prepaid expenses and other assets............... (55,147) 15,292 Accounts payable and accrued expenses........... (50,405) 2,241 Accrued property taxes.......................... 204,234 126,626 Payable to affiliates - General Partner......... 151,004 199,607 Security deposits and deferred rental revenue....................................... 3,757 (13,540) --------------- -------------- Total adjustments............................. 897,417 2,052,742 --------------- -------------- Net cash provided by operating activities............ $ 469,948 $ 442,673 =============== ==============
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 March 31, 1996 (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 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, 1996 are not necessarily indicative of the results to be expected for the year ending December 31, 1996. 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, 1995, 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 McNeil Real Estate Management, Inc., Investor Services, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240. NOTE 3. - ------- Certain reclassifications have been made to prior period amounts to conform to the current presentation. NOTE 4. - ------- 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. Total accrued but unpaid asset management fees of $2,316,681 were outstanding at March 31, 1996. The General Partner has, in its discretion, advanced funds to enable 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% The advances from affiliates at March 31, 1996 and December 31, 1994 consist of the following:
March 31, December 31, 1996 1995 ---------------- --------------- Advances from General Partner........................ $ 130,518 $ 130,518 Accrued interest payable............................. 39,890 37,812 --------------- -------------- $ 170,408 $ 168,330 =============== ==============
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:
Three Months Ended March 31, ---------------------------------------- 1996 1995 ---------------- --------------- Property management fees - affiliates................ $ 122,558 $ 93,260 Charged to interest - affiliates: Interest on advances from affiliates - General Partner......................................... 2,078 3,163 Interest on mortgage note payable - affiliate..... 11,398 26,201 Charged to general and administrative affiliates: Partnership administration........................ 55,174 74,530 Asset management fee.............................. 133,387 121,432 --------------- -------------- $ 324,595 $ 318,586 =============== ==============
The total payable to affiliates - General Partner at March 31, 1996 and December 31, 1995 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 5. - ------- 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 is currently classified as an asset held for sale, no depreciation will be taken effective April 1, 1996. NOTE 6. - ------- The Partnership recognized a loss on the Northway Mall renovation of $1,247,940 in 1995. This loss is due to the demolition or removal of assets that were previously capitalized. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - ------- --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- FINANCIAL CONDITION - ------------------- The Partnership was formed to acquire, operate and ultimately dispose of a portfolio of income-producing properties. At March 31, 1996, the Partnership owned one apartment properties, two office buildings and two shopping centers. Three of the Partnership's properties are subject to mortgage notes. RESULTS OF OPERATIONS Revenue: Total Partnership revenues increased $472,731 or 27% for the three months ended March 31, 1996, as compared to the same period last year. Rental revenue increased $429,933 or 25% while interest income also increased by $42,798. Rental revenue for the three months ended March 31, 1996 was $2,244,196 as compared to $1,771,465 for the same period. This increase of $429,933 is primarily due to the increased occupancy rate at Northway Mall as a result of the recent capital improvements program. Interest income increased $42,798 for the three months ended March 31, 1996 as compared to the same period of 1995. The increase is due to the higher cash balance maintained as a result of the December 1995 Northway Mall mortgage refinancing. Expenses: Total expenses decreased $709,869 or 21% for the three months ended March 31, 1996 as compared to the same period of 1995. During 1995, the Partnership recognized a loss on the Northway Mall renovation of $1,247,940 for the demolition and removal of assets previously capitalized. Interest expense increased $261,432 for the three months ended March 31, 1996 as compared to the same period of 1995 due to the December 1995 mortgage refinancing at Northway Mall. Interest expense - affiliates decreased $15,888 for the three months ended March 31, 1996 as compared to the same period of 1995 due to the repayment of the loan from McNeil Real Estate Fund XXVII, L.P. in January 1996. Depreciation and amortization increased $157,543 for the three months ended March 31, 1996 as compared to the same period of 1995 primarily due to the renovation at Northway Mall along with tenant improvements at Continental Plaza and Westwood Center. Repairs and maintenance increased $43,918 for the three months ended March 31, 1996 as compared to the same period of 1995. The first quarter increase is primarily due to an increase in service and repairs and maintenance expenses at Northway Mall that is attributable to the increased occupancy. Property management fees - affiliates increased $29,298 for the three months ended March 31, 1996 as compared to the same period of 1995. The increased occupancy at Northway Mall led to an increase in tenant receipts on which the management fee is based. Other property operating expenses increased $43,316 for the three months ended March 31, 1996 as compared to the same period of 1995. The increase is primarily due to Northway Mall's increases in bad debt, marketing and leasing. General and administrative expenses increased $20,565 for the three months ended March 31, 1996 as compared to the same period of 1995 due to increased professional fees. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Cash flow from operations was $469,948 for the three months ended March 31, 1996 as compared to $442,673 for the same period of 1995. The change in cash flow from operations is primarily due to increases in tenant receipts, cash paid to suppliers, cash paid to affiliates, interest received and interest paid. The increased occupancy at Northway Mall led to an increase in tenant receipts. The increase in cash paid to suppliers is primarily due to Northway Mall's renovations. The increase in cash paid to affiliates is primarily due to increased property management fees, asset management fees, and partnership general and administrative expenses as a result of Northway Mall's increased occupancy. This increase in cash received is due to interest received on a higher cash balance as a result of Northway Mall's mortgage refinancing. The increase in interest paid is due to the Northway Mall's new mortgage loan. Additions to real estate investments totaled $210,248 for the three months ended March 31, 1996 as compared to $3,605,897 for the same period of 1995. Proceeds from mortgage notes financing totaled $3,372,287 for the three months ended March 31, 1995. The Partnership has undergone a major capital improvement program at Northway Mall in 1995 which greatly enhanced the property's performance. The funding for this program came from a construction mortgage loan encumbering Northway Mall, as well as mortgage loans previously obtained on Westwood Center and Continental Plaza. Permanent financing was obtained in December 1995. Short-term liquidity: 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. Borrowing 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 funds under the facility because no amounts have been reserved for any particular partnership. As of March 31, 1996, $2,662,819 remained available for borrowing under the facility; however, additional funds could be available as other partnerships repay existing borrowings. This commitment will terminate on March 30, 1997. Additionally, the General Partner has, in 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 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 $1,941,000 for necessary capital improvements for all properties in 1996. Long-term liquidity: While the outlook for maintenance of adequate levels of liquidity is favorable, should operations deteriorate and present cash resources be insufficient for current needs, the Partnership would require other sources of working capital. No such sources have been identified. The Partnership has no established lines of credit from outside sources. Other possible actions to resolve cash deficiencies include refinancings, deferral of capital expenditures on Partnership properties except where improvements are expected to increase the competitiveness and marketability of the properties, arranging financing from affiliates, or the ultimate sale of the properties. Sales and refinancings are possibilities only and there are at present no plans for any such sales, other than Edison Ford, which was placed on the market for sale effective April 1, 1996. The mortgage notes payable on Amargosa Creek Apartments and Westwood Center mature in 1998 and the Partnership expects to refinance these notes at that time. Distributions: To maintain adequate cash balances of the Partnership, distributions to the limited partners were suspended in 1991. Distributions to the limited partners 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 limited partners. 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. (Incor- porated 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 86,534 and 86,549 limited partnership units (in thousands) outstanding in 1996 and 1995, respectively. 27. Financial Data Schedule for the quarter ended March 31, 1996. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended March 31, 1996. 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 May 14, 1996 By: /s/ Donald K. Reed - ------------------- ----------------------------------------- Date Donald K. Reed President and Chief Executive Officer May 14, 1996 By: /s/ Ron K. Taylor - ------------------- ----------------------------------------- Date Ron K. Taylor Acting Chief Financial Officer of McNeil Investors, Inc. May 14, 1996 By: /s/ Carol A. Fahs - ------------------- ----------------------------------------- Date Carol A. Fahs Chief Accounting Officer of McNeil Real Estate Management, Inc. EX-27 2
5 3-MOS DEC-31-1996 MAR-31-1996 5,992,993 0 1,817,815 (608,220) 0 0 59,818,133 (19,670,710) 53,087,777 0 22,084,814 0 0 0 0 53,087,777 2,184,549 2,244,196 0 0 2,213,882 0 457,783 0 0 (427,469) 0 0 0 (427,469) 0 0
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