-----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, GHSOEjyODeeIY7W/an2qNzuStAPfevLe6u6CqhFjb3ZTJesw06RdJHhz6JHtrd3n 1ZL51kn8E7npzUOG1abdAA== 0000810481-96-000009.txt : 19961118 0000810481-96-000009.hdr.sgml : 19961118 ACCESSION NUMBER: 0000810481-96-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCNEIL REAL ESTATE FUND XXVII LP CENTRAL INDEX KEY: 0000810481 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE DEALERS (FOR THEIR OWN ACCOUNT) [6532] IRS NUMBER: 330214387 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17173 FILM NUMBER: 96664583 BUSINESS ADDRESS: STREET 1: 13760 NOEL ROAD STREET 2: SUITE 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 PRIME PLUS L P 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, 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 0-17173 ---------- MCNEIL REAL ESTATE FUND XXVII, L.P. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 33-0214387 - -------------------------------------------------------------------------------- (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 (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 XXVII, L.P. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- BALANCE SHEETS (Unaudited)
September 30, December 31, 1996 1995 --------------- -------------- ASSETS Real estate investments: Land..................................................... $ 5,387,855 $ 5,387,855 Buildings and improvements............................... 27,056,811 26,635,813 -------------- ------------- 32,444,666 32,023,668 Less: Accumulated depreciation and amortization......... (8,199,161) (7,046,093) -------------- ------------- 24,245,505 24,977,575 -------------- ------------- Mortgage loan investment.................................... - 1,538,932 Less: Allowance for impairment.............................. - (177,161) -------------- ------------- - 1,361,771 Mortgage loan investments - affiliates...................... 1,283,364 2,235,902 Cash and cash equivalents .................................. 4,789,802 5,718,657 Cash segregated for security deposits and repurchase of limited partnership units............................. 256,803 407,565 Accounts receivable......................................... 315,264 299,835 Accrued interest receivable................................. 11,997 23,978 Deferred borrowing costs, net of accumulated amortization of $121,912 and $48,764 at September 30, 1996 and December 31, 1995, respectively............. 73,147 146,295 Prepaid expenses and other assets........................... 272,537 318,163 -------------- ------------- $ 31,248,419 $ 35,489,741 ============== ============= LIABILITIES AND PARTNERS' EQUITY (DEFICIT) - ------------------------------------------ Accounts payable and accrued expenses....................... $ 36,463 $ 68,471 Accrued property taxes...................................... 390,415 - Payable to limited partners................................. - 332,928 Payable to affiliates....................................... 227,757 253,044 Security deposits and deferred rental revenue............... 237,923 204,368 -------------- ------------- 892,558 858,811 -------------- ------------- Partners' equity (deficit): Limited partners - 10,000,000 limited partnership units authorized; 5,273,885 limited partnership units out- standing at September 30, 1996 and December 31, 1995... 30,465,902 34,758,220 General Partner.......................................... (110,041) (127,290) -------------- ------------- 30,355,861 34,630,930 -------------- ------------- $ 31,248,419 $ 35,489,741 ============== =============
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 XXVII, L.P. STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, --------------------------------- --------------------------------- 1996 1995 1996 1995 -------------- --------------- -------------- -------------- Revenue: Rental revenue................ $ 2,058,000 $ 1,970,685 $ 5,988,540 $ 5,781,708 Interest income on mortgage loan investment............. - 40,239 85,285 145,880 Interest income on mortgage loan investments - affiliates 36,790 65,835 112,140 225,906 Other interest income......... 76,666 80,506 243,890 278,751 Property tax refund........... - - - 30,515 Gain on legal settlement...... - - - 1,302,324 ------------- ------------- ------------- ------------- Total revenue............... 2,171,456 2,157,265 6,429,855 7,765,084 ------------- ------------- ------------- ------------- Expenses: Interest...................... 27,542 43,540 82,661 357,290 Depreciation and amortization................ 386,874 382,305 1,153,068 1,126,975 Property taxes................ 214,130 202,375 633,176 607,192 Personnel costs............... 173,335 163,729 520,269 492,152 Utilities..................... 128,872 128,746 341,618 333,009 Repairs and maintenance....... 146,138 154,189 449,516 439,059 Property management fees - affiliates........... 112,729 105,792 325,908 322,558 Other property operating expenses.................... 153,582 165,619 459,076 499,599 General and administrative.... 53,010 19,221 77,764 41,979 General and administrative - affiliates.................. 202,140 240,727 661,875 743,802 ------------- ------------- ------------- ------------- Total expenses.............. 1,598,352 1,606,243 4,704,931 4,963,615 ------------- ------------- ------------- ------------- Net income before extraordinary item............ 573,104 551,022 1,724,924 2,801,469 Extraordinary item............... - (102,110) - (252,402) ------------- ------------- ------------- ------------- Net income....................... $ 573,104 $ 448,912 $ 1,724,924 $ 2,549,067 ============= ============= ============= ============= Net income allocable to limited partners........... $ 567,373 $ 444,423 $ 1,707,675 $ 2,523,576 Net income allocable to General Partner............ 5,731 4,489 17,249 25,491 ------------- ------------- ------------- ------------- Net income ...................... $ 573,104 $ 448,912 $ 1,724,924 $ 2,549,067 ============= ============= ============= ============= Net income per weighted average hundred limited partnership units: Net income before extra- ordinary item............... $ 10.76 $ 10.28 $ 32.38 $ 52.23 Extraordinary item............ - (1.91) - (4.71) ------------- ----------- ------------- ------------ Net income.................... $ 10.76 $ 8.37 $ 32.38 $ 47.52 ============= =========== ============= ============ Distributions per weighted average hundred limited partnership units............. $ 56.89 $ - $ 113.77 $ - ============= =========== ============= ============
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 XXVII, L.P. STATEMENTS OF PARTNERS' EQUITY (DEFICIT) (Unaudited) For the Nine Months Ended September 30, 1996 and 1995
Total General Limited Partners' Partner Partners Equity --------------- ---------------- --------------- Balance at December 31, 1994.............. $ (157,447) $ 32,105,597 $ 31,948,150 Net income................................ 25,491 2,523,576 2,549,067 ------------- --------------- -------------- Balance at September 30, 1995............. $ (131,956) $ 34,629,173 $ 34,497,217 ============= =============== ============== Balance at December 31, 1995.............. $ (127,290) $ 34,758,220 $ 34,630,930 Net income................................ 17,249 1,707,675 1,724,924 Distributions............................. - (5,999,993) (5,999,993) ------------- --------------- -------------- Balance at September 30, 1996............. $ (110,041) $ 30,465,902 $ 30,355,861 ============= =============== ==============
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 XXVII, L.P. STATEMENTS OF CASH FLOWS (Unaudited) Decrease in Cash and Cash Equivalents
Nine Months Ended September 30, ----------------------------------------- 1996 1995 ----------------- ---------------- Cash flows from operating activities: Cash received from tenants........................ $ 5,948,618 $ 5,855,825 Cash paid to suppliers............................ (1,789,365) (1,575,586) Cash paid to affiliates........................... (1,013,070) (1,012,354) Interest received................................. 329,175 250,381 Interest received from affiliates................. 124,121 253,947 Interest paid..................................... (9,513) (313,995) Property taxes paid............................... (242,761) (402,214) Property tax refund............................... - 30,515 Cash received from legal settlement............... - 1,302,324 --------------- -------------- Net cash provided by operating activities............ 3,347,205 4,388,843 --------------- -------------- Cash flows from investing activities: Additions to real estate investments.............. (420,998) (499,967) Proceeds from collection of mortgage loan investment...................................... 1,361,771 241,922 Proceeds from collection of mortgage loan investments - affiliates........................ 952,538 972,000 --------------- -------------- Net cash provided by investing activities............ 1,893,311 713,955 --------------- -------------- Cash flows from financing activities: Net decrease in cash segregated for repurchase of limited partnership units......... 163,550 164,229 Deferred borrowing costs paid..................... - (195,059) Principal payments on mortgage note payable......................................... - (6,726,266) Mortgage prepayment penalty paid.................. - (66,949) Repurchase of limited partnership units........... (332,928) (332,931) Distributions paid................................ (5,999,993) - --------------- -------------- Net cash used in financing activities................ (6,169,371) (7,156,976) --------------- -------------- Net decrease in cash and cash equivalents............ (928,855) (2,054,178) Cash and cash equivalents at beginning of period............................................ 5,718,657 7,196,410 --------------- -------------- Cash and cash equivalents at end of period........... $ 4,789,802 $ 5,142,232 =============== ==============
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 XXVII, L.P. STATEMENTS OF CASH FLOWS (Unaudited) Reconciliation of Net Income to Net Cash Provided by Operating Activities
Nine Months Ended September 30, ---------------------------------------- 1996 1995 ---------------- --------------- Net income........................................... $ 1,724,924 $ 2,549,067 --------------- -------------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization..................... 1,153,068 1,126,975 Amortization of deferred borrowing costs.......... 73,148 43,295 Allowance for impairment of mortgage loan investment...................................... - (172,164) Extraordinary item................................ - 252,402 Changes in assets and liabilities: Cash segregated for security deposits........... (12,788) 2,294 Accounts receivable............................. (15,429) 103,103 Accrued interest receivable..................... 11,981 25,956 Prepaid expenses and other assets............... 45,626 183,661 Accounts payable and accrued expenses........... (32,008) (10,286) Accrued property taxes.......................... 390,415 204,978 Payable to affiliates........................... (25,287) 54,006 Security deposits and deferred rental revenue....................................... 33,555 25,556 --------------- -------------- Total adjustments............................. 1,622,281 1,839,776 --------------- -------------- Net cash provided by operating activities............ $ 3,347,205 $ 4,388,843 =============== ==============
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 XXVII, L.P. Notes to Financial Statements September 30, 1996 (Unaudited) NOTE 1. - ------- McNeil Real Estate Fund XXVII, L.P. (the "Partnership"), formerly known as Southmark Prime Plus, L.P., was organized by affiliates of Southmark Corporation ("Southmark") on January 16, 1987, as a limited partnership under the provisions of the Delaware Revised Uniform Limited Partnership Act to make short-term loans to affiliates of the general partner. 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, 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, 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 Annual 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 XXVII, L.P., c/o McNeil Real Estate Management, Inc., Investor Services, 13760 Noel Road, Suite 700, Dallas, Texas 75240. NOTE 3. - ------- The Partnership pays property management fees equal to 5% of the gross rental receipts for its mini-storage warehouses 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 mini-storage warehouses and commercial properties and leasing services for its mini-storage warehouses. 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 paying 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 $30 per gross square foot for mini-storage warehouses and $50 per gross square foot for commercial properties 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. Compensation and reimbursements paid to or accrued for the benefit of the General Partner or its affiliates are as follows: Nine Months Ended September 30, ------------------------- 1996 1995 ------------------------- Property management fees..................... $ 325,908 $ 322,558 Charged to general and administrative - affiliates: Partnership administration................ 246,274 322,487 Asset management fee...................... 415,601 421,315 --------- --------- $ 987,783 $1,066,360 ========= ========= Under the terms of its amended partnership agreement, the Partnership is expressly permitted to make loans to affiliates of the General Partner, so long as such loans meet certain conditions, including that such loans bear interest at a rate of prime plus 2.5%, or prime plus 3.5% if the loan is junior to other indebtedness. These loans are secured by income-producing real estate and may be either junior or senior to other indebtedness secured by such property. The Partnership received repayments from affiliates of $952,538 and $972,000 during the first nine months of 1996 and 1995, respectively. In order to induce the Partnership to lend funds to affiliates of the General Partner, the General Partner agreed to pay (i) the difference between the interest rate required by the Partnership's amended partnership agreement to be charged to affiliates and the interest rate actually paid by certain of those affiliates, and (ii) all points (1.5% or 2% if the loan is junior to other indebtedness), closing costs and expenses. The Partnership recorded interest income on affiliate loans of $112,140 and $225,906 for the nine months ended September 30, 1996 and 1995, respectively, of which $20,457 and $20,324, respectively, was paid or payable by the General Partner. Payable to affiliates at September 30, 1996 and December 31, 1995 consisted primarily of a performance incentive fee of $141,647 accrued in prior years, Partnership general and administrative expenses, asset management fees and prepaid interest. Except for the performance incentive fee and prepaid interest, all accrued fees are due and payable from current operations. NOTE 4. - ------- On March 21, 1996, the mortgage loan investment, plus accrued interest, secured by A-Quality Mini-Storage, was repaid in full by the borrower. NOTE 5. - ------- The Partnership filed claims with the United States Bankruptcy Court for the Northern District of Texas, Dallas Division (the "Bankruptcy Court") against Southmark for damages relating to improper overcharges, breach of contract and breach of fiduciary duty. The Partnership settled these claims in 1991, and such settlement was approved by the Bankruptcy Court. An Order Granting Motion to Distribute Funds to Class 8 Claimants dated April 14, 1995 was issued by the Bankruptcy Court. In accordance with the Order, in May 1995 the Partnership received in full satisfaction of its claims, $984,649 in cash, and common and preferred stock in the reorganized Southmark subsequently sold for $317,675, which amounts represent the Partnership's pro-rata share of Southmark assets available for Class 8 Claimants. NOTE 6. - ------- On May 9, 1995, the Partnership paid down its mortgage note payable by $4,628,250. In June 1995, the Partnership secured a $5 million line of credit that may be used to fund any loans made to affiliates of the General Partner as well as for working capital and general partnership purposes. In connection with obtaining the line of credit, the Partnership paid off the remaining $2,019,844 balance of its mortgage note payable. In connection with the repayments, the Partnership paid prepayment penalties of $66,949 and wrote off $185,453 of deferred borrowing costs, resulting in an extraordinary loss of $252,402 in 1995. NOTE 7. - ------- Certain prior period amounts have been reclassified to conform to the current period presentations. 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, 1995. The Partnership reported net income for the first nine months of 1996 of $1,724,924 as compared to $2,549,067 for the first nine months of 1995. Revenues were $6,429,855 for the first nine months of 1996, down from $7,765,084 for the same period in 1995. Expenses were $4,704,931 in 1996 as compared to $4,963,615 in 1995. Net cash provided by operating activities was $3,347,205 for the nine months ended September 30, 1996, and $4,388,843 during the same nine month period in 1995. The Partnership expended $420,998 for capital improvements, $169,378 for the repurchase of limited partnership units (net of a decrease in cash segregated for the repurchase of limited partnership units) and distributed $5,999,993 to the limited partners. The Partnership received $952,538 for repayment of affiliate loans and collected $1,361,771 of principal on its mortgage loan investment to an unaffiliated borrower, resulting in a net decrease in cash and cash equivalents of $928,855 for the nine months ended September 30, 1996. RESULTS OF OPERATIONS - --------------------- Revenue: Total revenue increased by $14,191 for the three months ended and decreased by $1,335,229 for the nine months ended September 30, 1996, respectively, as compared to the same periods in the prior year, as discussed below. Rental revenue remained substantially the same for the first three and nine months of 1996 as compared to the same periods of 1995. Rental revenue decreased slightly at AAA Sentry and Margate mini-storages due to small decreases in occupancy in 1996. Rental revenue increased at the remainder of the properties, mainly due to increases in rental rates. Interest income on the Partnership's mortgage loan investment to an unaffiliated borrower (the A-Quality Mini-Storage loan) decreased by $40,239 and $60,595 for the three and nine months ended September 30, 1996, respectively, in relation to the comparable periods in the prior year. The decreases were due to the repayment of the loan by the borrower in the first quarter of 1996. Interest income on mortgage loans investments - affiliates decreased by $29,045 and $113,766 for the three and nine months ended September 30, 1996, respectively, as compared to the same periods in the prior year. The decreases were mainly the result of lower total loans outstanding in 1996. The Partnership had $1.3 million of loans outstanding at September 30, 1996 as compared to $2.2 million at September 30, 1995. Other interest income decreased by $3,840 for the three months and by $34,861 for the nine months ended September 30, 1995, due to the Partnership holding a lower average amount of cash available for short-term investment in the first half of 1996. In the first quarter of 1995, the Partnership received a $30,515 refund of prior years' property taxes for AAA Century Mini Storage as a result of an appeal filed on behalf of the property. No such tax refund was received in 1996. As discussed in Item 1 - Note 5, in 1995 the Partnership received cash and common and preferred stock in the reorganized Southmark in settlement of its bankruptcy claims against Southmark. The Partnership recognized a $1,302,324 gain as a result of this settlement. No such gain was recognized in 1996. In May 1995, the Partnership recognized a $252,402 extraordinary loss incurred in connection with the pay down of its mortgage note payable as discussed in Item 1 - Note 6. The loss consisted of $66,949 in prepayment penalties and a $185,453 write off of deferred borrowing costs relating to the loan repaid. Expenses: Total expenses decreased by $7,891 and $258,684 for the three and nine months ended September 30, 1996, respectively, as compared to the same periods in the prior year, mainly due to a decrease in interest expense and general and administrative - affiliates, partially offset by an increase in general and administrative expense, as discussed below. Interest expense decreased by $15,998 and $274,629 for the three and nine months ended September 30, 1996, respectively, in relation to the respective periods in the prior year. The decrease was due to the repayment of the Partnership's mortgage note payable in the third quarter of 1995. The interest expense recorded in 1996 represents amortization of deferred borrowing costs incurred in connection with obtaining a $5 million line of credit. General and administrative expenses increased by $33,789 and $35,785 for the three and nine months ended September 30, 1996, respectively, as compared to the same periods in 1995. The increase was mainly due to costs incurred by the Partnership in the third quarter of 1996 for evaluation of information regarding an unsolicited tender offer, as discussed in Item 5 - Other Information. General and administrative - affiliates decreased by $38,587 and $81,927 for the three and nine months ended September 30, 1996, respectively, as compared to the same periods in 1995. The decrease was mainly due to a decrease in overhead expenses allocated to the Partnership by McREMI. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Partnership generated $3,347,205 of cash through operating activities in the first nine months of 1996 as compared to $4,388,843 for the same period in 1995. The decrease in 1996 was mainly due to the Partnership receiving $1,302,324 from the settlement of a lawsuit in 1995. The Partnership received $1,361,771 of principal on its mortgage loan investment to an unaffiliated borrower in 1996 as compared to $241,922 in 1995. The increase was due to the balance of the mortgage loan investment being repaid in full by the borrower in 1996. The Partnership paid $6,726,266 in principal payments on its mortgage note payable in the nine months ended September 30, 1995. No principal payments were made in 1996 since the loan was repaid in full in 1995. The Partnership distributed $5,999,993 to the limited partners in the first nine months of 1996. No distributions were paid to the limited partners in 1995. Short-term liquidity: At September 30, 1996, the Partnership held cash and cash equivalents of $4,789,802. This balance provides a reasonable level of working capital for the Partnership's immediate needs in operating its properties. For the Partnership as a whole, management projects positive cash flow from operations in 1996. The Partnership has budgeted $586,000 for necessary capital improvements for all properties in 1996 which is expected to be funded from available cash reserves or from operations of the properties. 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. Borrowings 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 are reserved for any particular partnership. As of September 30, 1996, $4,082,159 remained available for borrowing under the facility; however, additional funds could become available as other partnerships repay existing borrowings. This commitment will terminate on March 30, 1997. The Partnership acquired a $5 million line of credit in 1995 that may be used for property operations. Long-term liquidity: While the present outlook for the Partnership's liquidity is favorable, market conditions may charge and property operations can deteriorate. In that event, the Partnership would require other sources of working capital. The Partnership acquired a $5 million line of credit in 1995 that may be used for property operations. Other possible actions to resolve cash deficiencies include 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. No affiliate support has been required in the past, and there is no assurance that support would be provided in the future, since neither the General Partner nor any affiliates have any obligation in this regard. The Partnership has determined to begin an orderly liquidation of all the Partnership's assets. Although there can be no assurance as to the timing of any liquidation, it is anticipated that such liquidation would result in distributions to the limited partners of the cash proceeds from the sale of the Partnership's properties, subject to cash reserve requirements, as they are sold with the last property disposition before December 1999 followed by a dissolution of the Partnership. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - ------- ----------------- HCW Pension Real Estate Fund, Ltd. et al. v. Ernst & Young, BDO Seidman et al. (Case #92-06560-A). This suit was filed on behalf of the Partnership and other affiliated partnerships (the "Affiliated Partnerships") on May 26, 1992, in the 14th Judicial District Court of Dallas County. The petition sought recovery against the Partnership's former auditors, Ernst & Young, for negligence and fraud in failing to detect and/or report overcharges of fees/expenses by Southmark Corporation ("Southmark"), the former general partner. The former auditors initially asserted counterclaims against the Affiliated Partnerships based on alleged fraudulent misrepresentations made to the auditors by the former management of the Affiliated Partnerships (Southmark) in the form of client representation letters executed and delivered to the auditors by Southmark management. The counterclaims sought recovery of attorneys' fees and costs incurred in defending this action. The counterclaims were later dismissed on appeal, as discussed below. The trial court granted summary judgment against the Partnership based on the statute of limitations; however, on appeal, the Dallas Court of Appeals reversed the trial court and remanded for trial the Affiliated Partnerships' fraud claims against Ernst & Young. The Texas Supreme Court denied Ernst & Young's application for writ of error on January 11, 1996. The Partnership is continuing to pursue vigorously its claims against Ernst & Young. Trial is anticipated to be set for early December 1996; however, the final outcome of this litigation cannot be determined at this time. ITEM 5. OTHER INFORMATION - ------- ----------------- On September 20, 1996, High River announced that it had commenced a tender offer for any and all units of the Partnership at $5.62 per unit (the original offer price of $6.19 was reduced by the August 1996 distributions to unitholders of $0.57 per unit). The tender was originally due to expire October 18, 1996, however, this offer has been extended until November 22, 1996. On October 17, 1996, McNeil Real Estate Fund XXVII, L.P. announced that it had received an unsolicited offer from an unaffiliated third party to acquire all outstanding Units of Fund XXVII at $6.50 per Unit. After meeting with the offeror in Dallas and considering the $6.50 offer, the partnership rejected it as being inadequate. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ------- -------------------------------- (a) Exhibits. Exhibit Number Document Description ------- -------------------- 4.2 Amended and Restated Partnership Agreement of McNeil XXVII, L.P. dated March 30, 1992. (Incorporated by reference to the Current Report of the registrant on Form 8-K dated March 30, 1992, as filed on April 10, 1992). 10. Mutual Release and Settlement Agreement between Southmark Storage Associates Limited Partnership and McNeil Real Estate Fund XXVII, L.P. (incorporated by reference to the Quarterly Report of the registrant on Form 10-Q for the period ended March 31, 1995, as filed on May 15, 1995). 11. Statement regarding computation of Net Income (Loss) per Hundred Limited Partnership Units. Net income (loss) per one hundred limited partnership units is computed by dividing net income (loss) allocated to the limited partners by the weighted average number of limited partnership units outstanding (expressed in hundreds). Per unit information has been computed based on 52,739 and 53,109 weighted average limited partnership units (in hundreds) outstanding in 1996 and 1995. 27. Financial Data Schedule for the quarter ended September 30, 1996. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended September 30, 1996. MCNEIL REAL ESTATE FUND XXVII, 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 XXVII, L.P. By: McNeil Partners, L.P., General Partner By: McNeil Investors, Inc., General Partner November 14, 1996 By: /s/ Donald K. Reed - ----------------- ---------------------------------------- Date Donald K. Reed President and Chief Executive Officer November 14, 1996 By: /s/ Ron K. Taylor - ----------------- ---------------------------------------- Date Ron K. Taylor Acting Chief Financial Officer of McNeil Investors, Inc. November 14, 1996 By: /s/ Carol A. Fahs - ----------------- ---------------------------------------- Date Carol A. Fahs Chief Accounting Officer of McNeil Real Estate Management, Inc.
EX-27 2
5 9-MOS DEC-31-1996 SEP-30-1996 4,789,802 0 315,264 0 0 0 32,444,666 (8,199,161) 31,248,419 0 0 0 0 0 30,355,861 31,248,419 5,988,540 6,429,855 0 0 4,622,270 0 82,661 1,724,924 0 1,724,924 0 0 0 1,724,924 0 0
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