-----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, CW8PQdbse0Zp600CCKYahEugoRLSfGDnwyHtVIqqOco7CX+5F++zpd9z01XConDb UivyVanqh/aoas0oJ657bw== 0000793307-97-000009.txt : 19971117 0000793307-97-000009.hdr.sgml : 19971117 ACCESSION NUMBER: 0000793307-97-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 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: SEC FILE NUMBER: 000-15460 FILM NUMBER: 97719009 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 September 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)
September 30, December 31, 1997 1996 --------------- -------------- ASSETS - ------ Real estate investments: Land..................................................... $ 6,750,456 $ 6,750,456 Buildings and improvements............................... 54,336,161 53,911,061 -------------- ------------- 61,086,617 60,661,517 Less: Accumulated depreciation and amortization......... (23,638,373) (21,682,401) -------------- ------------- 37,448,244 38,979,116 Asset held for sale......................................... 3,008,374 3,008,374 Cash and cash equivalents................................... 2,833,804 2,211,029 Cash segregated for security deposits....................... 234,346 233,426 Accounts receivable, net of allowance for doubtful accounts of $572,392 at September 30, 1997 and December 31, 1996........................................ 1,447,411 1,276,997 Prepaid commissions......................................... 341,316 349,018 Prepaid expenses and other assets........................... 158,659 709,030 Deferred borrowing costs, net of accumulated amortization of $284,489 and $215,640 at September 30, 1997 and December 31, 1996, respectively... 288,676 357,522 ------------- -------------- $ 45,760,830 $ 47,124,512 ============= ============== LIABILITIES AND PARTNERS' EQUITY (DEFICIT) - ------------------------------------------ Mortgage notes payable...................................... $ 21,538,169 $ 21,815,746 Accounts payable and accrued expenses....................... 263,461 306,284 Accrued property taxes...................................... 274,872 58,660 Payable to affiliates - General Partner..................... 109,258 91,462 Security deposits and deferred rental revenue............... 290,199 236,436 -------------- ------------- 22,475,959 22,508,588 -------------- ------------- Partners' equity (deficit): Limited Partners - 90,000,000 Units authorized; 86,530,671 and 86,533,671 Units issued and out- standing at September 30, 1997 and December 31, 1996, respectively........................................... 23,691,574 25,016,816 General Partner.......................................... (406,703) (400,892) -------------- ------------- 23,284,871 24,615,924 -------------- ------------- $ 45,760,830 $ 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 Nine Months Ended September 30, September 30, --------------------------------- --------------------------------- 1997 1996 1997 1996 -------------- --------------- -------------- -------------- Revenue: Rental revenue................ $ 2,189,623 $ 2,201,332 $ 6,721,468 $ 6,584,975 Interest...................... 35,975 29,933 120,250 150,172 ------------- ------------- ------------- ------------ Total revenue............... 2,225,598 2,231,265 6,841,718 6,735,147 ------------- ------------- ------------- ------------ Expenses: Interest...................... 434,704 441,012 1,308,462 1,327,994 Interest - affiliates......... - - - 16,090 Depreciation and amortization................ 638,845 665,724 1,955,972 2,036,655 Property taxes................ 217,719 186,650 640,471 595,118 Personnel expenses............ 209,368 208,043 639,756 611,881 Utilities..................... 242,615 256,755 739,254 766,602 Repairs and maintenance....... 225,863 222,765 690,615 738,678 Property management fees - affiliates........... 137,550 121,639 392,540 373,088 Other property operating expenses.................... 135,933 138,622 416,011 440,602 General and administrative.... 31,556 36,947 101,803 95,442 General and administrative - affiliates.................. 175,549 179,744 537,899 554,863 ------------- ------------- ------------- ------------- Total expenses.............. 2,449,702 2,457,901 7,422,783 7,557,013 ------------- ------------- ------------- ------------- Net loss......................... $ (224,104) $ (226,636) $ (581,065) $ (821,866) ============= ============= ============= ============= Net loss allocable to limited partners........... $ (221,863) $ (224,370) $ (575,254) $ (813,647) Net loss allocable to General Partner............ (2,241) (2,266) (5,811) (8,219) ------------- ------------- ------------- ------------ Net loss......................... $ (224,104) $ (226,636) $ (581,065) $ (821,866) ============= ============= ============ ============= Net loss per thousand limited partnership units..... $ (2.56) $ (2.59) $ (6.65) $ (9.40) ============= ============= ============ ============= Distribution per thousand limited partnership units..... $ 5.78 $ 4.33 $ 8.67 $ 4.33 ============= ============= ============ =============
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 Nine Months Ended September 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.................................. (8,219) (813,647) (821,866) Limited partner distribution.............. - (374,965) (374,965) ------------- ------------- ------------- Balance at September 30, 1996............. $ (385,632) $ 26,527,610 $ 26,141,978 ============= ============= ============= Balance at December 31, 1996.............. $ (400,892) $ 25,016,816 $ 24,615,924 Net loss.................................. (5,811) (575,254) (581,065) Limited partner distribution.............. - (749,988) (749,988) ------------- ------------- ------------- Balance at September 30, 1997............. $ (406,703) $ 23,691,574 $ 23,284,871 ============= ============= =============
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
Nine Months Ended September 30, ----------------------------------------- 1997 1996 ----------------- ---------------- Cash flows from operating activities: Cash received from tenants........................ $ 6,588,450 $ 6,261,641 Cash paid to suppliers............................ (2,124,428) (2,807,695) Cash paid to affiliates........................... (912,643) (3,848,416) Interest received................................. 120,250 150,172 Interest paid..................................... (1,241,933) (1,168,527) Interest paid to affiliates....................... - (53,903) Property taxes paid and escrowed.................. (354,256) (332,027) --------------- -------------- Net cash provided by (used in) operating activities........................................ 2,075,440 (1,798,755) --------------- -------------- Net cash used in investing activities: Additions to real estate investments.............. (425,100) (957,121) --------------- -------------- Cash flows from financing activities: Principal payments on mortgage notes payable...... (277,577) (240,134) Retirement of mortgage note - affiliate........... - (952,538) Repayments of advances from affiliates - General Partner................................. - (130,517) Deferred borrowing costs paid..................... - (15,683) Limited partner distributions..................... (749,988) (374,965) --------------- -------------- Net cash used in financing activities................ (1,027,565) (1,713,837) --------------- -------------- Net increase (decrease) in cash and cash equivalents.................................. 622,775 (4,469,713) Cash and cash equivalents at beginning of period............................................ 2,211,029 6,761,516 --------------- -------------- Cash and cash equivalents at end of period........... $ 2,833,804 $ 2,291,803 =============== ==============
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
Nine Months Ended September 30, ----------------------------------------- 1997 1996 ----------------- ---------------- Net loss............................................. $ (581,065) $ (821,866) --------------- -------------- Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization..................... 1,955,972 2,036,655 Amortization of deferred borrowing costs.......... 68,846 66,832 Allowance for doubtful accounts................... - (13,391) Changes in assets and liabilities: Cash segregated for security deposits........... (920) (22,749) Accounts receivable............................. (170,414) (290,097) Prepaid commissions............................. 7,702 21,544 Prepaid expenses and other assets............... 550,371 80,475 Accounts payable and accrued expenses........... (42,823) (154,886) Accrued property taxes.......................... 216,212 199,451 Payable to affiliates - General Partner......... 17,796 (2,920,465) Security deposits and deferred rental revenue....................................... 53,763 19,742 --------------- -------------- Total adjustments............................. 2,656,505 (976,889) --------------- -------------- Net cash provided by (used in) operating activities........................................ $ 2,075,440 $ (1,798,755) =============== ==============
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 September 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 nine months ended September 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: Nine Months Ended September 30, ----------------------- 1997 1996 ---------- ---------- Property management fees - affiliates................ $ 392,540 $ 373,088 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........................ 107,506 154,642 Asset management fee.............................. 430,393 400,221 --------- -------- $ 930,439 $ 944,041 ========= ======== The total payable to affiliates - General Partner at September 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 $581,065 for the first nine months of 1997 as compared to $821,866 for the first nine months of 1996. Revenues increased slightly to $6,841,718 in 1997 from $6,735,147 in 1996, while expenses dropped to $7,422,783 in 1997 from $7,557,013 in 1996. Net cash provided by operating activities was $2,075,440 for the first nine months of 1997. The Partnership expended $425,100 for capital improvements and $277,577 for principal payments on its mortgage notes payable. After distributions of $749,988 to the limited partners, cash and cash equivalents totaled $2,833,804 at September 30, 1997, an increase of $622,775 from the balance at December 31, 1996. RESULTS OF OPERATIONS - --------------------- Revenue: Total Partnership revenue for the three months ended September 30, 1997 decreased by $5,667 and increased $106,571 for the nine months ended September 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 months ended September 30, 1997 decreased by $11,709 and increased for the nine months ended September 30, 1997 by $136,493, respectively, as compared to the same periods in 1996. Rental revenue of all properties increased in 1997 as compared to 1996, except at Edison Ford Square where rental revenue decreased by $101,292 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 $106,000 and $64,000, respectively, due to an increase in rental income and straight-line rent adjustments at both properties. Additionally, there was an increase in occupancy and rental rates at Northway Mall. Interest income decreased by $29,922 for the nine months ended September 30, 1997 as compared to the same period in 1996 due to a lower amount of cash available for short-term investment in 1997. Expenses: Total expenses decreased by $8,199 and $134,230 for the three and nine months ended September 30, 1997 as compared to the same periods of 1996. No interest expense - affiliates was recorded in 1997 as compared to $16,090 for the nine months ended September 30, 1996, 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. Property taxes increased $31,069 and $45,353 for the three and nine months ended September 30, 1997, respectively, as compared to the same periods in 1996. This is due to the property tax refund in 1996 of $23,922 for Westwood and an increase of $52,497 on the assessed value at Northway Mall. This increase was somewhat offset by a decline in the assessed value at Edison Ford Square. Repairs and maintenance expenses increased for the three months ended September 30, 1997 by $3,098 and decreased for the nine months ended September 30, 1997 by $48,063, as compared to the same periods in 1996. This increase of $3,098 for the three months ended September 30, 1997 is due to an increase in parking lot and sidewalk repairs at Northway Mall. The decrease was due to decreased expenses for snow removal and roof repairs at Northway Mall, as well as heating and air conditioning repairs and maintenance at Westwood Center. Other property operating expenses decreased by $2,689 and $24,591 for the three and nine months ended September 30, 1997, respectively, as compared to the same periods in 1996. The decrease was due to decreases in marketing and leasing and legal expense at Northway Mall General and administrative expenses decreased for the three months ended September 30, 1997 by $5,391 and increased for the nine months ended September 30, 1997 by $6,361 as compared to the same periods in 1996. The decrease of $5,391 for the three months ended September 30, 1997 is due to a reduction in postage expense. The increase of $6,361 is due to costs incurred for investor services 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 $2,075,440 of cash through operating activities for the nine months ended September 30, 1997 as compared to $1,798,755 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 $3.8 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 $425,100 for the nine months ended September 30, 1997 as compared to $957,121 for the same period of 1996. Total principal payments on mortgage notes payable were $277,577 for the nine months ended September 30, 1997 as compared to $240,134 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 $15,683 were paid in 1996 relating to the Northway Mall's refinancing. The Partnership distributed $749,988 to the limited partners during 1997, while $374,965 was paid during 1996. Short-term liquidity: At September 30, 1997, the Partnership held cash and cash equivalents of $2,833,804. 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 1997, the Partnership distributed $749,988 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. On October 31, 1997, the Plaintiffs filed a second consolidated and amended complaint. Defendants intend to file a demurrer to the second consolidated and amended complaint on or before December 1, 1997. 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 September 30, 1997. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended September 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 November 14, 1997 By: /s/ Ron K. Taylor - ----------------- ------------------------------------------- Date Ron K. Taylor President and Director of McNeil Investors, Inc. (Principal Financial Officer) November 14, 1997 By: /s/ Carol A. Fahs - ----------------- ------------------------------------------- Date Carol A. Fahs Vice President of McNeil Investors, Inc. (Principal Accounting Officer) EX-27 2
5 9-MOS DEC-31-1997 SEP-30-1997 2,833,804 0 2,019,803 (572,392) 0 0 61,086,617 (23,638,373) 45,760,830 0 21,538,169 0 0 0 0 45,760,830 6,721,468 6,841,718 0 0 6,114,321 0 1,308,462 0 0 (581,065) 0 0 0 (581,065) 0 0
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