MCNEIL REAL ESTATE FUND IX LTD, 10-K405, 1996-03-29

MCNEIL REAL ESTATE FUND IX LTD
10-K405, 1996-03-29
OPERATORS OF NONRESIDENTIAL BUILDINGS

Previous: CORPORATE PROPERTY ASSOCIATES, 10-K405, 1996-03-29

Next: SPIEGEL INC, 10-K405, 1996-03-29

<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K405

[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended December 31, 1995
-------------------------------------------------

[ ] 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 0-9026
---------

McNEIL REAL ESTATE FUND IX, LTD.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

California 94-2491437
- --------------------------------------------------------------------------------
(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
-----------------------------

Securities registered pursuant to Section 12(b) of the Act: None
- ----------------------------------------------------------

Securities registered pursuant to Section 12(g) of the Act: Limited partnership
units
- ----------------------------------------------------------

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
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

104,455 of the registrant's 110,170 limited partnership units are held by
non-affiliates of this registrant. The aggregate market value of units held by
non-affiliates is not determinable since there is no public trading market for
limited partnership units and transfers of units are subject to certain
restrictions.

Documents Incorporated by Reference: See Item 14, Page 42

TOTAL OF 47 PAGES
<PAGE>
PART I

ITEM 1. BUSINESS
- ------- --------

ORGANIZATION
- ------------

McNeil Real Estate Fund IX, Ltd., (the "Partnership") was organized May 1, 1978,
as a limited partnership under provisions of the California Uniform Limited
Partnership Act. 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 Partnership is governed by an amended and restated
partnership agreement of limited partnership dated November 12, 1991, as amended
(the "Amended Partnership Agreement"). Prior to November 12, 1991, Pacific
Investors Corporation (the prior "Corporate General Partner"), a wholly-owned
subsidiary of Southmark Corporation ("Southmark"), and McNeil were the general
partners of the Partnership, which was governed by an agreement of limited
partnership dated May 1, 1978 (the "Original Partnership Agreement"). The
principal place of business for the Partnership and the General Partner is 13760
Noel Road, Suite 700, LB70, Dallas, Texas, 75240.

On January 10, 1979, a Registration Statement on Form S-11 was declared
effective by the Securities and Exchange Commission whereby the Partnership
offered for sale $55,000,000 of limited partnership units ("Units"). The Units
represent equity interests in the Partnership and entitle the holders thereof to
participate in certain allocations and distributions of the Partnership. The
sale of Units closed on September 7, 1979, with 110,000 Units sold at $500 each,
or gross proceeds of $55,000,000 to the Partnership. In addition, the original
general partners purchased an additional 200 Units for $100,000. In 1993, 30
Units were relinquished leaving 110,170 Units outstanding at December 31, 1995.

SOUTHMARK BANKRUPTCY AND ASSET PURCHASE AGREEMENT
- -------------------------------------------------

On July 14, 1989, Southmark filed a voluntary petition for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. Neither the Partnership, McNeil nor the
Corporate General Partner were included in the filing. Southmark's
reorganization plan became effective August 10, 1990. Under the plan, most of
Southmark's assets, which included Southmark's interests in the Corporate
General Partner, are being sold or liquidated for the benefit of creditors.

In accordance with Southmark's reorganization plan, Southmark, McNeil and
various of their affiliates entered into an asset purchase agreement on October
12, 1990 providing for, among other things, the transfer of control to McNeil or
his affiliates of 34 limited partnerships (including the Partnership) in the
Southmark portfolio.

On February 14, 1991, pursuant to the asset purchase agreement as amended on
that date: (a) an affiliate of McNeil purchased the Corporate General Partner's
economic interest in the Partnership; (b) McNeil became the managing general
partner of the Partnership pursuant to an agreement with the Corporate General
Partner that delegated management authority to McNeil; and (c) McNeil Real
Estate Management, Inc. ("McREMI"), an affiliate of McNeil, acquired the assets
relating to the property management and partnership administrative business of
Southmark and its affiliates and commenced management of the Partnership's
properties pursuant to an assignment of the existing property management
agreements from the Southmark affiliates.

<PAGE>

On November 12, 1991, the limited partners approved a restructuring proposal
that provided for (i) the replacement of the Corporate General Partner and
McNeil with the General Partner; (ii) the adoption of the Amended Partnership
Agreement, which substantially alters the provisions of the Original Partnership
Agreement relating to, among other things, compensation, reimbursement of
expenses, and voting rights; and (iii) the approval of a new property management
agreement with McREMI, the Partnership's property manager.

The Amended Partnership Agreement provides for a Management Incentive
Distribution ("MID") to replace all other forms of general partner compensation
other than property management fees and reimbursements of certain costs.
Additional Units may be issued in connection with the payment of the MID
pursuant to the Amended Partnership Agreement. See Item 8 - Note 2 -
"Transactions with Affiliates." For a discussion of the methodology for
calculating and distributing MID, see Item 13 - Certain Relationships and
Related Transactions.

Settlement of Claims:

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, $53,573
in cash, and common and preferred stock in the reorganized Southmark. The cash
and stock represent the Partnership's pro-rata share of Southmark assets
available for Class 8 claimants. The Partnership sold the Southmark common and
preferred stock in May 1995 for $17,244 which, when combined with the cash
proceeds from Southmark, resulted in a gain on settlement of litigation of
$70,817.

CURRENT OPERATIONS
- ------------------

General:

The Partnership is engaged in real estate activities, including the ownership,
operation and management of residential real estate and other real estate
related assets. At December 31, 1995, the Partnership owned fourteen
income-producing properties as described in Item 2 - Properties.

The Partnership does not directly employ any personnel. The General Partner
conducts the business of the Partnership directly and through its affiliates.
The Partnership is managed by the General Partner. The Partnership has
reimbursed affiliates of the General Partner for certain expenses incurred by
the affiliates in connection with the management of the Partnership. See Item 8
- - Note 2 - "Transactions With Affiliates."

The business of the Partnership to date has involved only one industry segment.
See Item 8 - Financial Statements and Supplementary Data. The Partnership has no
foreign operations. The business of the Partnership is not seasonal.

<PAGE>

Business Plan:

The Partnership's anticipated plan of operations for 1996 is to preserve or
increase the net operating income of its properties whenever possible, while at
the same time making whatever capital expenditures are reasonable under the
circumstances in order to preserve and enhance the value of the Partnership's
properties. The General Partner is evaluating market and other economic
conditions to determine the optimum time to commence an orderly liquidation of
the Partnership's properties in accordance with the terms of the Amended
Partnership Agreement. In conjunction therewith, the General Partner will
continue to explore potential avenues to enhance the value of the limited
partners' Units, which may include, among other things, asset sales or
refinancings of the Partnership's properties followed by distributions. See Item
7 - Management's Discussion and Analysis of Financial Condition and Results of
Operations.

Competitive Conditions:

Since the principal business of the Partnership is to own and operate real
estate, the Partnership is subject to all of the risks incident to ownership of
real estate and interests therein, many of which relate to the illiquidity of
this type of investment. These risks include changes in general or local
economic conditions, changes in supply or demand for competing properties in an
area, changes in interest rates and availability of permanent mortgage funds
which may render the sale or refinancing of a property difficult or
unattractive, changes in real estate and zoning laws, increases in real property
tax rates and Federal or local economic or rent controls. The illiquidity of
real estate investments generally impairs the ability of the Partnership to
respond promptly to changed circumstances. The Partnership competes with
numerous established companies, private investors (including foreign investors),
real estate investment trusts, limited partnerships and other entities (many of
which have greater resources than the Partnership) in connection with the sale,
financing and leasing of properties. The impact of these risks on the
Partnership, including losses from operations and foreclosures of the
Partnership's properties, is described in Item 7 - Management's Discussion and
Analysis of Financial Condition and Results of Operations. See Item 2 -
Properties for discussion of competitive conditions at the Partnership's
properties.

Other information:

The environmental laws of the Federal government and of certain state and local
governments impose liability on current property owners for the clean-up of
hazardous and toxic substances discharged on the property. This liability may be
imposed without regard to the timing, cause or person responsible for the
release of such substances onto the property. The Partnership could be subject
to such liability in the event that it owns properties having such environmental
problems. The Partnership has no knowledge of any pending claims or proceedings
regarding such environmental problems.

In August 1995, High River Limited Partnership, a Delaware limited partnership
controlled by Carl C. Icahn ("High River") made an unsolicited tender offer (the
"HR Offer") to purchase from holders of Units up to approximately 45% of the
outstanding Units of the Partnership for a purchase price of $143 per Unit. In
addition, High River made unsolicited tender offers for certain other
partnerships controlled by the General Partner. The Partnership recommended that
the limited partners reject the HR Offer made with respect to the Partnership
and not tender their Units pursuant to the HR Offer. The HR Offer terminated,
after numerous extensions, on October 6, 1995. The General Partner believes that
as of February 29, 1996, High River has purchased approximately 7.23% of the
outstanding Units pursuant to the HR Offer. In addition, all litigation filed by
High River, Mr. Icahn and his affiliates in connection with the HR Offer has
been dismissed without prejudice.

<PAGE>

ITEM 2. PROPERTIES
- ------- ----------

The following table sets forth the real estate investment portfolio of the
Partnership at December 31, 1995. The buildings and the land on which they are
located are owned by the Partnership in fee, subject in each case (with the
exception of Westridge, which is unencumbered by mortgage indebtedness) to a
first lien deed of trust as set forth more fully in Item 8 - Note 5 - "Mortgage
Notes Payable." See also Item 8 - Note 4 - "Real Estate Investments" and
Schedule III - "Real Estate Investments and Accumulated Depreciation." In the
opinion of management, the properties are adequately covered by insurance.

<TABLE>
<CAPTION>
Net Basis 1995 Date
Property Description of Property Debt Property Tax Acquired
- -------- ----------- --------------- -------------- --------------- --------
<S> <C> <C> <C> <C> <C>
Berkley Hills (1) Apartments
Madison, TN 251 units $ 2,517,754 $ 3,255,924 $ 66,132 6/79

Cherry Hills (2) Apartments
Wichita, KS 348 units 4,624,405 4,634,041 80,477 6/80

Forest Park
Village (3) Apartments
Columbus, OH 376 units 4,056,519 6,192,845 182,342 12/79

Heather Square Apartments
Dallas, TX 288 units 4,235,681 3,429,615 153,017 10/79

Lantern Tree (4) Apartments
Omaha, NE 110 units 1,523,877 2,404,122 63,486 7/79

Meridian West (5) Apartments
Puyallup, WA 181 units 2,553,373 3,352,624 85,691 1/80

Pennbrook (6) Apartments
Dallas, TX 216 units 3,447,954 3,187,297 148,613 1/80

Rockborough (7) Apartments
Addison, TX 136 units 2,156,550 2,212,544 67,906 1/80

Rolling Hills (8) Apartments
Louisville, KY 400 units 4,100,405 6,685,297 80,137 9/79

Ruskin Place (9) Apartments
Lincoln, NE 270 units 2,911,102 4,581,309 165,054 12/79

Sheraton Hills Apartments
Nashville, TN 272 units 2,597,459 2,838,674 88,191 6/79
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Net Basis 1995 Date
Property Description of Property Debt Property Tax Acquired
- -------- ----------- --------------- -------------- --------------- --------
<S> <C> <C> <C> <C> <C>
Westgate (10) Apartments
Lansing, MI 264 units $ 2,956,800 $ 5,893,110 $ 145,457 12/79

Westridge Apartments
Ft. Worth, TX 176 units 2,311,872 - 50,667 1/80

Williamsburg (11) Apartments
Shreveport, LA 194 units 2,440,411 2,723,420 59,283 12/79
-------------- ------------- ------------

$ 42,434,162 $ 51,390,822 $ 1,436,453
============== ============= ============
</TABLE>

- -----------------------------------------
Total: Apartments - 3,482 units

(1) Berkley Hills Apartments is owned by Berkley Hills Associates which is
wholly-owned by the Partnership and the General Partner.

(2) Cherry Hills Apartments is owned by Cherry Hills Fund IX Limited
Partnership which is wholly-owned by the Partnership.

(3) Forest Park Village Apartments is owned by Forest Park Fund IX Associates
Limited Partnership which is wholly-owned by the Partnership and the
General Partner.

(4) Lantern Tree Apartments is owned by Lantern Tree Fund IX Limited
Partnership which is wholly-owned by the Partnership.

(5) Meridian West Apartments is owned by Meridian West Fund IX Limited
Partnership which is wholly-owned by the Partnership.

(6) Pennbrook Apartments is owned by Pennbrook Fund IX Associates, L.P. which
is wholly-owned by the Partnership and the General Partner.

(7) Rockborough Apartments is owned by Rockborough Fund IX Limited Partnership
which is wholly-owned by the Partnership.

(8) Rolling Hills Apartments is owned by Rolling Hills Fund IX Associates L.P.
which is wholly-owned by the Partnership and the General Partner.

(9) Ruskin Place Apartments is owned by Ruskin Place Fund IX Associates which
is wholly-owned by the Partnership and the General Partner.

(10) Westgate Apartments (formerly known as Sherwood Forest Apartments) is owned
by Sherwood Forest Fund IX Associates which is wholly-owned by the
Partnership and the General Partner.

(11) Williamsburg Apartments is owned by Williamsburg Fund IX Limited
Partnership which is wholly-owned by the Partnership.

<PAGE>

The following table sets forth the properties' occupancy rate and rent per
square foot for each of the last five years:

<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------------- ------------- -------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Berkley Hills
Occupancy Rate............ 98% 98% 98% 94% 87%
Rent Per Square Foot...... $5.69 $5.35 $4.87 $4.48 $4.39

Cherry Hills
Occupancy Rate............ 89% 89% 81% 85% 92%
Rent Per Square Foot...... $5.75 $5.80 $5.05 $5.15 $4.90

Forest Park Village
Occupancy Rate............ 85% 92% 91% 91% 92%
Rent Per Square Foot...... $5.80 $5.57 $5.51 $5.38 $5.22

Heather Square
Occupancy Rate............ 99% 99% 97% 93% 93%
Rent Per Square Foot...... $7.00 $6.61 $6.20 $5.75 $5.58

Lantern Tree
Occupancy Rate............ 99% 99% 96% 97% 96%
Rent Per Square Foot...... $7.58 $7.07 $6.83 $6.41 $6.02

Meridian West
Occupancy Rate............ 93% 90% 92% 95% 96%
Rent Per Square Foot...... $7.18 $6.99 $7.35 $7.11 $6.89

Pennbrook
Occupancy Rate............ 98% 94% 97% 95% 87%
Rent Per Square Foot...... $7.62 $7.23 $7.03 $6.62 $6.05

</TABLE>

<PAGE>

1995 1994 1993 1992 1991
------------- ------------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Rockborough
Occupancy Rate............ 97% 99% 96% 93% 93%
Rent Per Square Foot...... $7.80 $7.40 $7.00 $6.67 $6.25

Rolling Hills
Occupancy Rate............ 94% 97% 90% 91% 93%
Rent Per Square Foot...... $4.66 $4.33 $3.95 $3.79 $3.69

Ruskin Place
Occupancy Rate............ 97% 96% 97% 96% 95%
Rent Per Square Foot...... $6.78 $6.47 $6.26 $6.10 $5.68

Sheraton Hills
Occupancy Rate............ 98% 97% 98% 94% 92%
Rent Per Square Foot...... $5.53 $5.14 $4.85 $4.37 $4.25

Westgate
Occupancy Rate............ 86% 92% 94% 94% 93%
Rent Per Square Foot...... $6.66 $6.51 $6.15 $6.11 $5.91

Westridge
Occupancy Rate............ 89% 96% 86% 92% 91%
Rent Per Square Foot...... $4.80 $4.64 $4.43 $4.48 $4.26

Williamsburg
Occupancy Rate............ 95% 99% 97% 95% 91%
Rent Per Square Foot...... $6.22 $5.86 $5.41 $4.98 $4.74

</TABLE>

Occupancy rate represents all units leased divided by the total number of units
of the property as of December 31 of the given year. Rent per square foot
represents all revenue, except interest, derived from the property divided by
the leasable square footage of the property.

Competitive Conditions at Properties
- ------------------------------------

A strong local economy has benefited Berkley Hills Apartments. The property
increased rental rates 6% over 1994 levels, in line with averages for the local
area. Occupancy rates, too, have been comparable with the property's
competition. Capital improvements at Berkley Hills have allowed the property to
remain competitive with nearby apartment communities. The strong local economy,
and the high occupancy rates are prompting new construction in the area; but to
date, the new construction has not been located near Berkley Hills, and has been
targeted to upscale single residents while Berkley Hills targets middle class
families and singles.

Cherry Hills Apartments is one of Wichita's finer apartment communities in terms
of interior and exterior appearance. The well-maintained property's occupancy
rate is several points above the average occupancy rate of its competitors.
Rental rates, also, have typically been higher than the rates charged by the
property's competitors. The Wichita area, however, has been a difficult market
for apartment communities. Nearby McConnell Air Force Base has constructed new
housing facilities for military personnel, upon which Cherry Hills relies for
many of its tenants. Cuts in military spending may also impact McConnell Air
Force Base and thereby impact Cherry Hills.

<PAGE>

Forest Park Village Apartments is currently in the midst of a four-year capital
improvement program. Exterior renovations are largely complete, and interior
upgrades are in process. The capital program is needed to allow the property to
compete with numerous other apartment communities in the Northeast Columbus
submarket. Forest Park Village represents a common property in the submarket,
with no distinguishing characteristics other than basements in all its units.
The submarket is very competitive, and many of the competing properties have
been renovated in the past few years. The capital program will allow Forest Park
Village to maintain its competitiveness.

Occupancy rates at Heather Square Apartments typically run 2 or 3 percentage
points above the market due to the excellent curb appeal of the property. The
property also is able to command rental rates slightly higher than most of its
competition. Competition is mixed in the Dallas submarket where Heather Square
is located. As long as the local economy remains strong, it is anticipated that
the property will do well in competition with both older properties and new
construction under development. Annual absorption of apartment units has roughly
equaled newly constructed units the past two years.

Lantern Tree Apartments has maintained occupancy and rental rates higher than
its competition due to spacious and attractive floor plans. The average area
occupancy rate is 95%, but Lantern Tree usually exceeds that level. Depending on
the size of the unit, rent per square foot at Lantern Tree averages 13% to 30%
higher than its competition. The property appeals to single, upper-middle class
residents. The principal competitive disadvantage of the property is its
location that is set back from the main thoroughfare reducing its drive-by
visibility.

The economy in Meridian West Apartments' submarket has improved during the past
year. The area's major employer, Boeing, has increased its activity in the area.
As a result, rental and occupancy rates in the area are on the upswing. Meridian
West's occupancy rate improved in 1995 over 1994. Management plans to increase
rental rates and eliminate discounts in 1996. Meridian West competes primarily
with better quality apartment communities, and thus the Partnership generally
expects rental and occupancy rates lower than local market rates. Capital
improvements placed in service during 1995 and 1994 were critical to allow the
property to compete effectively with its better-quality competition.

Occupancy rates at Pennbrook Apartments are in-line with the 95% average of the
submarket where the property is located. Extensive capital improvements during
1991-1993 have positioned the property to compete effectively for the
middle-class, single residents that dominate its resident profile. The Dallas
market is expected to remain strong. For the past two years, new apartment
construction has roughly equaled the number of apartment units absorbed by the
market. Absorption is expected to lag construction in 1996, but the surplus
units will likely be limited to newer, high-quality apartment properties and
should have little effect on Pennbrook.

Rockborough Apartments boasts excellent curb appeal, which has enabled the
property to maintain occupancy levels a few percentage points above the 94%
market average. Rockborough compares well to the established apartment
communities in the area. New construction is going in the area, but at rental
rates substantially higher than the rates charged at Rockborough. The Dallas
area economy is expected to remain strong. New apartment construction is
expected to exceed absorption in 1996, but the surplus units will likely be
limited to newer, high-quality apartment properties and should have little
effect on Rockborough.

<PAGE>

The area surrounding Rolling Hills Apartments is experiencing strong growth.
Capital improvements at Rolling Hills the past two years have upgraded the
property to compete more effectively with the high-quality apartment communities
in the immediate area. Rolling Hills offers the largest floor plans in the area.
The interiors of the units are dated, necessitating scheduled 1996 improvements
to unit interiors. Occupancy rates are comparable to the market's 96% average,
but average rental rates are lower than the market. Rolling Hills is a good
quality property competing against even-better quality properties.

Ruskin Place Apartments has steadily improved its performance over the past
several years despite competitive pressures from newer apartment properties. The
newer properties, and new construction in progress, have put upward pressure on
local rental rates. Ruskin Place Apartments has been able to offer its units at
lower, but still rising rental rates. This trend is expected to continue given
the population increases and stable economic conditions in the local area.

The Nashville economy is expected to remain strong through 1997, and developers
are planning new apartment projects in the area of Sheraton Hills Apartments.
Older properties, such as Sheraton Hills, have been able to increase rental
rates an average of 6% to 7% since 1993. Although Sheraton Hills will not
compete directly with the new construction, the new construction will tend to
slow the increases in rental rates that older properties may expect in coming
years. The capital improvements placed in service at Sheraton Hills over the
past two years allow the property to compete effectively against older
properties in the area.

Westgate Apartments is in need of extensive capital improvements to compete
effectively with other area apartment properties. The exterior and interiors of
the units are dated and unattractive. Occupancy rates are averaging four
percentage points below competing properties, and rental rates are averaging
approximately 85% of the average rental rates charged by competing properties.
Nine percent of Westgate's units are three and four bedroom floor plans, which
are the only three and four bedroom units in the area. The local economy is
doing very well, with unemployment at 2.8%. The property also has a good
location in a desirable school district.

The economy of the Fort Worth sub-market where Westridge Apartments is located
remains weak due to the closing of nearby Carswell Air Force Base and layoffs at
Lockheed. Weakness in the area economy has prevented any meaningful rental
increases since 1990. Westridge is well maintained and offers attractive
floorplans. The occupancy rate has averaged 5 percentage points higher than
competitive properties in the area.

The physical condition of Williamsburg Apartments is good, with only minor
capital improvements needed. The property offers attractive floor plans with
interiors that are being upgraded with new fixtures. The Shreveport market has
experienced modest improvement over the past three years. Nearby Barksdale Air
Force Base and a growing gambling industry provide the employment base for many
of the property's tenants. The occupancy rate at Williamsburg usually exceeds
market occupancy rates by two percentage points due to its excellent curb
appeal. New apartment developments within a mile of the property are a concern.

<PAGE>

ITEM 3. LEGAL PROCEEDINGS
- ------- -----------------

The Partnership is not party to, nor are any of the Partnership's properties the
subject of, any material pending legal proceedings, other than ordinary, routine
litigation incidental to the Partnership's business, except for the following:

1) High River Limited Partnership v. McNeil Partners, L.P., McNeil Investors,
Inc., McNeil Pacific Investors 1972, Ltd., McNeil Real Estate Fund V, Ltd.,
McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil
Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real
Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate
Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., Robert A. McNeil and
Carole J. McNeil (L95012) - High River ("HR") filed this action in the
United States District Court for the Southern District of New York against
McNeil Partners, L.P., McNeil Investors, Inc. and Mr. and Mrs. McNeil (as
defined in this Section 1, collectively, the "Defendants") requesting,
among other things, names and addresses of the limited partners in the
partnerships referenced above (as defined in this Section 1, the
"Partnerships"). The District Court issued a preliminary injunction against
the Partnerships requiring them to commence mailing materials relating to
the HR tender offer on August 14, 1995.

On August 18, 1995, the Defendants filed an Answer and Counterclaim. The
Counterclaim principally asserts (1) the HR tender offers have been
undertaken in violation of the federal securities laws, on the basis of
material, non-public, and confidential information, and (2) that the HR
offer documents omit and/or misrepresent certain material information about
the HR tender offers. The Counterclaim seeks a preliminary and permanent
injunction against the continuation of the HR tender offers and,
alternatively, ordering corrective disclosure with respect to allegedly
false and misleading statements contained in the tender offer documents.

This action was dismissed without prejudice in November 1995.

2) High River Limited Partnership v. McNeil Partners, L.P., McNeil Investors,
Inc., McNeil Pacific Investors 1972, Ltd., McNeil Real Estate Fund V, Ltd.,
McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil
Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real
Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate
Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., Robert A. McNeil and
Carole J. McNeil - United States District Court for the Southern District
of New York, (Case No. 95 Civ. 9488) (Second Action).

<PAGE>

preliminary injunctive relief requiring the General Partner to admit High
River as a limited partner in each of the ten partnerships referenced above
and to transfer the tendered units of interest in the partnerships to High
River; an unspecified award of damages payable to High River and an
additional unspecified award of damages payable to certain of the
partnerships; an order that defendants must discharge their fiduciary
duties and must account for all fees they have received from certain of the
partnerships; and attorneys' fees.

On January 31, 1996, this action was dismissed without prejudice.

3) Robert Lewis v. McNeil Partners, L.P., McNeil Investors, Inc., Robert A.
McNeil et al - In the District Court of Dallas County, Texas, A-14th
Judicial District, Cause No. 95-08535 (Class Action) - Plaintiff, Robert
Lewis, is a limited partner with McNeil Pacific Investors Fund 1972, Ltd.,
McNeil Real Estate Fund X, Ltd. and McNeil Real Estate Fund XV, Ltd.

Plaintiff brings this action on his own behalf and as a class action on
behalf of the class of all limited partners of McNeil Pacific Investors
Fund 1972, Ltd., McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund
IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI,
Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd.,
McNeil Real Estate Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P. and
McNeil Real Estate Fund XXV, Ltd. (as defined in this Section 3, the
"Partnerships") as of August 4, 1995.

Plaintiff alleges that McNeil Partners, L.P., McNeil Investors, Inc.,
Robert A. McNeil and other senior officers (as defined in this Section 3,
collectively, the "Defendants") breached their fiduciary duties by, among
other things, (1) failing to attempt to sell the properties owned by the
Partnerships (as defined in this Section 3, the "Properties") and extending
the lives of the Partnerships indefinitely, contrary to the Partnerships'
business plans, (2) paying distributions to themselves and generating fees
for their affiliates, (3) refusing to make significant distributions to the
class members, despite the fact that the Partnerships have positive cash
flows and substantial cash balances, and (4) failing to take steps to
create an auction market for equity interests of the Partnerships, despite
the fact that a third party bidder filed tender offers for approximately
forty-five percent (45%) of the outstanding units of each of the
Partnerships. Plaintiff also claims that Defendants have breached the
partnership agreements of the Partnerships by failing to take steps to
liquidate the Properties and by their alteration of the Partnerships'
primary purposes, their acts in contravention of these agreements, and
their use of the assets of the Partnerships for their own benefit instead
of for the benefit of the Partnerships.

The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.

4) James F. Schofield, Gerald C. Gillett and Donna S. Gillett v. McNeil
Partners, L.P., McNeil Investors, Inc., McNeil Real Estate Management,
Inc., Robert A. McNeil, Carole J. McNeil, McNeil Real Estate Fund V, Ltd.,
McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil
Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real
Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate
Fund XXIV, L.P., McNeil Real Estate Fund XXV, 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) and United States District Court,
Southern District of New York, Case No. 95CIV.6711 (Class and Derivative
Action Complaint)

<PAGE>

These are corporate/securities class and derivative actions brought in
state and federal court by limited partners of each of the nine (9) limited
partnerships that are named as nominal defendants as listed above (as
defined in this Section 4, the "Partnerships"). Plaintiffs allege that
McNeil Investors, Inc., its affiliate McNeil Real Estate Management, Inc.
and four (4) of their senior officers and/or directors (as defined in this
Section 4, collectively, the "Defendants") have breached their fiduciary
duties. Specifically, Plaintiffs allege that Defendants have caused the
Partnerships to enter into several wasteful transactions that have no
business purpose or benefit to the Partnerships and which have rendered
such units highly illiquid and artificially depressed the prices that are
available for units on the limited resale market. Plaintiffs also allege
that Defendants have engaged in a course of conduct to prevent the
acquisition of units by Carl Icahn by disseminating false, misleading and
inadequate information. Plaintiffs further allege that Defendants have
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 and, thereby, have
breached the partnership agreements.

The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend these actions.

5) Alfred Napoletano v. McNeil Partners, L.P., McNeil Investors, Inc., Robert
A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd.,
McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil
Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real
Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate
Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund
XXV, L.P. - Superior Court of the State of California, County of Los
Angeles, Case No. BC133849 (Class Action Complaint)

Plaintiff brings this class action on behalf of a class of all persons and
entities who are current owners of units and/or are limited partners in one
or more of the partnerships referenced above (as defined in this Section 5,
the "Partnerships"). Plaintiff alleges that McNeil Partners, L.P., McNeil
Investors, Inc., Robert A. McNeil and other senior officers (as defined in
this Section 5, collectively, the "Defendants") have breached their
fiduciary duties to the class members by, among other things, (1) taking
steps to prevent the consummation of the High River tender offers, (2)
failing to take steps to maximize unitholders' or limited partners' values,
including failure to liquidate the properties owned by the Partnerships,
(3) managing the Partnerships so as to extend indefinitely the present fee
arrangements, and (4) paying itself and entities owned and controlled by
the general partner excessive fees and reimbursements of general and
administrative expenses.

The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.

6) Warren Heller v. McNeil Partners, L.P., McNeil Investors, Inc., Robert A.
McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd., McNeil
Real Estate Fund V, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real
Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate
Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund
XX, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV,
L.P. - Superior Court of the State of California, County of Los Angeles,
Case No. BC133957 (Class Action Complaint)

<PAGE>

Plaintiff brings this class action on behalf of a class of all persons and
entities who are current owners of units and/or are limited partners in one
or more of the partnerships referenced above (as defined in this Section 6,
the "Partnerships"). Plaintiff alleges that McNeil Partners, L.P., McNeil
Investors, Inc., Robert A. McNeil and other senior officers (as defined in
this Section 6, collectively, the "Defendants") have breached their
fiduciary duties to the class members by, among other things, (1) taking
steps to prevent the consummation of the High River tender offers, (2)
failing to take steps to maximize unitholders' or limited partners' values,
including failure to liquidate the properties owned by the Partnerships,
(3) managing the Partnerships so as to extend indefinitely the present fee
arrangements, and (4) paying itself and entities owned and controlled by
the general partner excessive fees and reimbursements of general and
administrative expenses.

The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.

For a discussion of the Southmark bankruptcy, see Item 1 - Business. See also
Item 8 - Note 9 - "Gain on Legal Settlement."

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------

None.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP AND
- ------- ------------------------------------------------------------
RELATED SECURITY HOLDER MATTERS
-------------------------------

(A) There is no established public trading market for limited partnership
units, nor is one expected to develop.

(B) Title of Class Number of Record Unit Holders
-------------- -----------------------------

Limited partnership units 4,896 as of February 16, 1996

(C) No distributions were made to the limited partners during 1995 or 1994 and
none are anticipated in 1996. The Partnership accrued distributions of
$1,070,763 and $973,023 for the benefit of the General Partner for the
years ended December 31, 1995 and 1994, respectively, of which $357,763
remains unpaid at December 31, 1995. These distributions relate to the
contingent MID pursuant to the Amended Partnership Agreement. Distributions
of contingent MID are expected to be paid to the General Partner in 1996.
See Item 8 - Note 2 - "Transactions with Affiliates." See Item 7 -
Management's Discussion and Analysis of Financial Condition and Results of
Operations for a discussion of the likelihood that the Partnership will
resume distributions to the limited partners.

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth a summary of certain financial data for the
Partnership. This summary should be read in conjunction with the Partnership's
financial statements and notes thereto appearing in Item 8.

Statements of Years Ended December 31,
Operations 1995 1994 1993 1992 1991
- ------------------ ------------- ------------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Rental revenue............... $ 19,123,434 $ 18,202,306 $ 17,215,644 $ 16,487,239 $ 15,808,082
Total revenue................ 19,567,182 18,642,220 17,367,511 16,636,929 16,123,484
Loss before extraordinary
items....................... (328,996) (387,787) (1,320,829) (1,613,265) (1,927,436)
Extraordinary items.......... - - (31,055) 104,096 -
Net loss..................... (328,996) (387,787) (1,351,884) (1,509,169) (1,927,436)

Net loss per limited
partnership unit:
Loss before
extraordinary items......... $ (9.19) $ (9.21) $ (19.30) $ (22.05) $ (16.62)
Extraordinary items......... - - (.28) .94 -
------------ ------------ ------------ ------------ -----------

Net loss..................... $ (9.19) $ (9.21) $ (19.58) $ (21.11) $ (16.62)
============ ============ ============ =========== ===========

December 31,
Balance Sheets 1995 1994 1993 1992 1991
- -------------- ------------- ------------- -------------- ------------- -------------

Real estate investments, net... $ 42,434,162 $ 42,830,552 $ 42,133,962 $ 42,478,066 $ 42,764,914
Total assets................... 49,970,886 51,749,891 53,376,263 49,696,209 51,098,910
Mortgage notes payable, net.... 51,390,822 52,098,952 52,610,769 46,917,274 44,846,933
Partners' equity (deficit)..... (4,400,760) (3,001,001) (1,640,191) 519,560 2,700,630

</TABLE>

See Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations.

ITEM 7. 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 real properties. At the end of 1995, the
Partnership owned fourteen apartment properties. All but one of the
Partnership's properties are subject to mortgage notes.

<PAGE>

RESULTS OF OPERATIONS
- ---------------------

1995 compared to 1994

Revenue:

Rental revenue for 1995 increased $921,128 or 5.1% over 1994 rental revenues.
Rental revenues increased at all of the Partnership's properties, except for a
.7% decrease at Cherry Hills. The Partnership raised base rental rates an
average of 4.0% at all of its properties. Increases in base rental rates were
partially offset by lower average occupancy rates at Berkley Hills, Westgate,
Westridge and Williamsburg. Occupancy rates at the remainder of the
Partnership's properties increased or remained steady.

As discussed in Note 9 - "Gain on Legal Settlement," 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 one-time gain of $70,817 gain as result of this settlement.

The Partnership also recorded a $125,967 gain on involuntary conversion in 1995.
The gain relates to hail damage incurred at Westridge Apartments on May 5, 1995,
and to a fire that destroyed two units at Cherry Hill Apartments on November 3,
1995. The Partnership incurred damages of $150,938 and $55,495 at Westridge
Apartments and Cherry Hill Apartments, respectively. The Partnership received a
total of $185,094 from its insurance carrier to repair the damage at both
properties. The excess of insurance proceeds over the adjusted basis of the
property destroyed resulted in gains of $109,006 and $16,961, respectively.

Expenses:

Partnership expenses increased $866,171 or 4.6% in 1995 compared to 1994. The
increased expenses were concentrated in depreciation and general and
administrative expenses.

Depreciation expense increased $527,010 or 15.5% in 1995 compared to 1994.
Increased depreciation expense is the result of depreciation on the $3.6 million
of new capital improvements placed in service during 1995. The capital
improvements are generally depreciated over lives ranging from five to ten
years.

General and administrative expenses increased $120,290 or 68% in 1995 compared
to 1994. The Partnership incurred $173,497 of costs relating to the evaluation
and dissemination of information with regards to an unsolicited tender offer. No
such expenses were incurred in 1994.

1994 compared to 1993

Revenue:

Rental revenues for 1994 increased $986,662 or 5.7% over 1993 rental revenues.
Rental revenues increased at thirteen of the Partnership's fourteen properties.
The Partnership raised base rental rates at all of its properties except for
Westridge Apartments. Increases in base rental rates were partially offset by
lower average occupancy rates at Meridian West Apartments, Pennbrook Apartments,
Ruskin Place Apartments, Sheraton Hills Apartments and Westgate Apartments.
Average occupancy rates at the remainder of the properties increased or remained
the same.

<PAGE>

Interest revenue increased 66% because of refinancing proceeds invested by the
Partnership in interest-bearing accounts.

The Partnership recorded a $187,854 gain on involuntary conversion in 1994. The
gain relates to freeze damage incurred at Rolling Hills Apartments on January
19, 1994, and to a fire that destroyed eleven units at Rockborough Apartments on
April 25, 1994. The Partnership incurred damages of $157,680 and $225,123 at
Rolling Hills Apartments and Rockborough Apartments, respectively. The
Partnership received a total of $359,878 from its insurance carrier to repair
the damage at both properties. The excess of insurance proceeds over the
adjusted basis of the property destroyed resulted in gains of $108,522 and
$79,332 at Rolling Hills Apartments and Rockborough Apartments, respectively.

Expenses:

Partnership expenses increased $341,667 or 1.8% in 1994 compared to 1993.
Expenses increased at eight of the Partnership's fourteen properties. The
increased expenses were concentrated in depreciation, personnel expenses and
property management fees - affiliates.

Depreciation expense increased $375,961 or 12.5% in 1994 compared to 1993. The
increase is due to capital improvements placed in service during the past three
years. These improvements generally are being depreciated over lives ranging
from five to ten years.

Personnel expenses increased $200,579 or 8.8% in 1994 compared to 1993.
Personnel expenses have increased and are expected to continue to increase due
to the Partnership's effort to increase occupancy rates by the continuous
refurbishment of residential units and upgrade of services offered to tenants.
Such improvements are partially achieved through higher maintenance standards
that require additional personnel and maintenance expenditures. Higher personnel
expenses can also be attributed to on-site personnel performing certain
maintenance procedures that were formerly contracted to vendors.

Property management fees paid to affiliates increased $60,579 or 7.1% in 1994
compared to 1993. The increase is due to the increase of rental receipts of the
Partnership, as noted above. Net rental receipts are the figures upon which
property management fees are based.

General and administrative expense decreased $58,891 or 25% for the year ended
December 31, 1994. This decrease was due to savings the Partnership achieved
through a new tax processing and reporting system and reduction in legal and
professional fees. General and administrative expenses paid to affiliates
decreased $17,982 or 2.4% during 1994 compared to 1993. These expenses include
the fixed portion of the MID and reimbursement of overhead costs incurred by
McREMI in managing the Partnership. Fixed MID decreased $114,720 due to
elimination of the fixed MID effective July 1, 1993. Cost reimbursements
increased $96,738 due to a reduction in the number of properties managed by
McREMI over which such costs are allocated.

All other expense items decreased a total of 1.9% in 1994 compared to 1993.

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------

During the three year period ended December 31, 1995, the Partnership
experienced losses totaling $2,068,667. However, during the same three year
period, the Partnership generated $10,013,508 of cash flow from operating
activities. Cash provided by operating activities increased $71,879 of 1.9% in
1995 compared to 1994. A 17.6% increase in cash paid to suppliers was more than
offset by an increase in cash received from tenants and decreases in interest
paid and property taxes paid and escrowed.

The Partnership continued to invest in capital improvements at its properties
during 1995. The Partnership invested $3.4 million for capital improvements
during 1995, net of insurance proceeds, a decrease from the $3.9 million
invested by the Partnership during 1994. These expenditures are necessary to
allow the Partnership's aging properties to maintain their appeal to current and
prospective tenants. The Partnership has budgeted an additional $1.6 million for
capital improvements for 1996.

During 1994 and 1993, the Partnership refinanced or modified nine of its
thirteen mortgage notes. These transactions added $5,055,199 to the
Partnership's cash reserves, after payment of related deferred borrowing costs,
and have reduced the weighted average interest rate of the Partnership's
mortgage indebtedness to 8.61% from 9.79%. Cash proceeds from these transactions
decreased to $161,809 in 1994 compared to $6,282,227 in 1993. As a result of
these transactions, the Partnership's next maturing mortgage does not come due
until January 1998.

Short-term liquidity:

Due to the refinancing transactions, the Partnership enters 1996 with
substantial cash reserves. These reserves will be needed to address continuing
capital improvement needs in light of the aging condition of the Partnership's
properties. The Partnership has budgeted $1,600,000 for capital improvements for
1996 in addition to the $10.5 million of capital improvements made during the
past three years. The General Partner believes these capital improvements are
necessary to allow the Partnership to increase its rental revenues in the
competitive markets in which the Partnership's properties operate. These
expenditures also allow the Partnership to reduce certain repairs and
maintenance expenses from amounts that would otherwise be incurred.

At December 31, 1995, the Partnership held $3,059,582 of cash and cash
equivalents, down $1,140,262 from the balance at the end of 1994. The General
Partner anticipates that cash generated from operations in 1996 will be
sufficient to fund the Partnership's budgeted capital improvements and to repay
the current portion of the Partnership's mortgage notes. The Partnership's next
maturing mortgage note does not come due until January 1998. However, 1996 cash
flow from operations likely will not be adequate to pay administrative costs and
MID obligations due to affiliates. The Partnership will use its cash reserves
for these expenditures. The General Partner considers the Partnership's cash
reserves adequate for anticipated operations for 1996.

<PAGE>

The General Partner has established a revolving credit facility, not to exceed
$5,000,000 in the aggregate, which will be 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 additional funds from the
facility because no amount will be reserved for any particular partnership. As
of December 31, 1995, $2,662,819 remained available from the facility; however,
additional funds could become available as other partnerships repay borrowings.
This commitment will terminate on November 12, 1996.

Long-term liquidity:

For the long term, property operations will remain the primary source of funds.
In this regard, the General Partner expects that the $10.5 million of capital
improvements made by the Partnership during the past three years will yield
improved cash flow from property operations in 1996. Furthermore, the General
Partner has budgeted an additional $1,600,000 of capital improvements for 1996.
If the Partnership's cash position deteriorates, the General Partner may elect
to defer certain of the capital improvements, except where such improvements are
expected to increase the competitiveness or marketability of the Partnership's
properties.

As an additional source of liquidity, the General Partner may attempt to sell
Partnership properties judged to be mature considering the circumstances of the
market where the properties are located, as well as the Partnership's need for
liquidity. However, there can be no guarantee that the Partnership will be able
to sell any of its properties for an amount sufficient to retire the related
mortgage note and still provide cash proceeds to the Partnership, or that such
cash proceeds could be timed to coincide with the liquidity needs of the
Partnership. Currently, no Partnership properties are being marketed for sale.

Income Allocations and Distributions:

Terms of the Amended Partnership Agreement specify that income before
depreciation is allocated to the General Partner to the extent of contingent MID
paid in cash. Depreciation is allocated in the ratio of 95:5 to the limited
partners and the General Partner, respectively. Therefore for the three year
period ended December 31, 1995, $684,002, $627,358, and $804,977, respectively,
was allocated to the General Partner. The limited partners received allocations
of net loss of ($1,012,998), ($1,015,145), and ($2,156,861) for the three year
period ended December 31, 1995, respectively.

With the exception of the contingent MID, distributions to partners have been
suspended since 1986 as part of the General Partner's policy of maintaining
adequate cash reserves. Distributions to Unit holders will remain suspended for
the foreseeable future. The General Partner will continue to monitor the cash
reserves and working capital needs of the Partnership to determine when cash
flows will support distributions to the Unit holders. During 1995, the
Partnership recorded contingent MID of $1,070,763.

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- -------------------------------------------

<TABLE>
<CAPTION>
Page
Number
------

INDEX TO FINANCIAL STATEMENTS
- -----------------------------

Financial Statements:
<S> <C>
Report of Independent Public Accountants............. 18

Balance Sheets at December 31, 1995 and 1994......... 19

Statements of Operations for each of the three
years in the period ended December 31, 1995........ 20

Statements of Partners' Equity (Deficit) for each
of the three years in the period ended
December 31, 1995.................................. 21

Statements of Cash Flows for each of the three
years in the period ended December 31, 1995........ 22

Notes to Financial Statements........................ 24

Financial Statement Schedule:

Schedule III - Real Estate Investments and
Accumulated Depreciation....................... 37

</TABLE>

All other schedules are omitted because they are not applicable or the financial
information required is included in the financial statements or the notes
thereto.

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Partners of
McNeil Real Estate Fund IX, Ltd.:

We have audited the accompanying balance sheets of McNeil Real Estate Fund IX,
Ltd. (a California limited partnership) as of December 31, 1995 and 1994, and
the related statements of operations, partners' equity (deficit) and cash flows
for each of the three years in the period ended December 31, 1995. These
financial statements and the schedule referred to below are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements and the schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of McNeil Real Estate Fund IX,
Ltd. as of December 31, 1995 and 1994, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in our audits of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.

/s/ Arthur Andersen LLP

Dallas, Texas
March 6, 1996

<PAGE>
McNEIL REAL ESTATE FUND IX, LTD.

BALANCE SHEETS

<TABLE>
<CAPTION>
December 31,
-----------------------------------
1995 1994
--------------- --------------
ASSETS
- ------
<S> <C> <C>
Real estate investments:
Land..................................................... $ 6,716,099 $ 6,716,099
Buildings and improvements............................... 83,847,294 80,388,616
-------------- -------------
90,563,393 87,104,715
Less: Accumulated depreciation.......................... (48,129,231) (44,274,163)
-------------- -------------
42,434,162 42,830,552

Cash and cash equivalents................................... 3,059,582 4,199,844
Cash segregated for security deposits....................... 534,609 494,801
Accounts receivable......................................... 114,367 64,464
Prepaid expenses and other assets........................... 223,959 211,266
Escrow deposits............................................. 1,418,389 1,561,384
Deferred borrowing costs, net of accumulated
amortization of $689,693 and $487,931 at
December 31, 1995 and 1994, respectively................. 2,185,818 2,387,580
-------------- -------------

$ 49,970,886 $ 51,749,891
============== =============

LIABILITIES AND PARTNERS' DEFICIT
- ---------------------------------

Mortgage notes payable, net................................. $ 51,390,822 $ 52,098,952
Accounts payable............................................ 266,777 413,894
Accrued property taxes...................................... 962,251 934,733
Accrued interest............................................ 374,740 303,521
Other accrued expenses...................................... 306,022 192,952
Payable to affiliates - General Partner..................... 508,369 308,131
Security deposits and deferred rental revenue............... 562,665 498,709
-------------- -------------
54,371,646 54,750,892
-------------- -------------

Partners' deficit:
Limited partners - 110,200 limited partnership
units authorized, 110,170 limited partnership
units issued and outstanding........................... (1,574,003) (561,005)
General Partner.......................................... (2,826,757) (2,439,996)
-------------- -------------
(4,400,760) (3,001,001)
-------------- -------------
$ 49,970,886 $ 51,749,891
============== =============
</TABLE>

See accompanying notes to financial statements.

<PAGE>
McNEIL REAL ESTATE FUND IX, LTD.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------
1995 1994 1993
-------------- -------------- ---------------
<S> <C> <C> <C>
Revenue:
Rental revenue.......................... $ 19,123,434 $ 18,202,306 $ 17,215,644
Interest................................ 246,964 252,060 151,867
Gain on legal settlement................ 70,817 - -
Gain on involuntary conversions......... 125,967 187,854 -
------------- ------------- --------------
Total revenue......................... 19,567,182 18,642,220 17,367,511
------------- ------------- --------------

Expenses:
Interest................................ 4,856,024 4,884,548 4,881,418
Depreciation............................ 3,919,845 3,392,835 3,016,874
Property taxes.......................... 1,436,453 1,341,960 1,360,979
Personnel expenses...................... 2,511,799 2,472,613 2,272,034
Repairs and maintenance................. 2,377,270 2,423,640 2,577,210
Property management fees -
affiliates............................ 946,627 915,989 855,410
Utilities............................... 1,556,159 1,527,997 1,535,302
Other property operating expenses....... 1,261,940 1,174,837 1,216,652
General and administrative.............. 296,175 175,885 234,776
General and administrative -
affiliates............................ 733,886 719,703 737,685
------------- ------------- --------------
Total expenses........................ 19,896,178 19,030,007 18,688,340
------------- ------------- --------------

Loss before extraordinary items............ (328,996) (387,787) (1,320,829)
Extraordinary items........................ - - (31,055)
------------- ------------- --------------

Net loss................................... $ (328,996) $ (387,787) $ (1,351,884)
============= ============= ==============

Net loss allocated to limited
partners................................ $ (1,012,998) $ (1,015,145) $ (2,156,861)
Net income allocated to the
General Partner......................... 684,002 627,358 804,977
------------- ------------- --------------

Net loss................................... $ (328,996) $ (387,787) $ (1,351,884)
============= ============= ==============

Net loss per limited partnership unit:
Loss before extraordinary items......... $ (9.19) $ (9.21) $ (19.30)
Extraordinary items..................... - - (.28)
------------- ------------- -------------
Net loss per limited partnership
unit.................................. $ (9.19) $ (9.21) $ (19.58)
============= ============= =============
</TABLE>

See accompanying notes to financial statements.

<PAGE>
McNEIL REAL ESTATE FUND IX, LTD.

STATEMENTS OF PARTNERS' EQUITY (DEFICIT)

For the Years Ended December 31, 1995, 1994 and 1993

<TABLE>
<CAPTION>
Total
Partners'
General Limited Equity
Partner Partners (Deficit)

<S> <C> <C> <C>
Balance at December 31, 1992.............. $ (2,091,441) $ 2,611,001 $ 519,560

Net income (loss)......................... 804,977 (2,156,861) (1,351,884)

Contingent Management Incentive
Distribution........................... (807,867) - (807,867)
-------------- -------------- --------------

Balance at December 31, 1993.............. (2,094,331) 454,140 (1,640,191)

Net income (loss)......................... 627,358 (1,015,145) (387,787)

Contingent Management Incentive
Distribution........................... (973,023) - (973,023)
-------------- -------------- --------------

Balance at December 31, 1994.............. (2,439,996) (561,005) (3,001,001)

Net income (loss)......................... 684,002 (1,012,998) (328,996)

Contingent Management Incentive
Distribution........................... (1,070,763) - (1,070,763)
-------------- -------------- --------------

Balance at December 31, 1995.............. $ (2,826,757) $ (1,574,003) $ (4,400,760)
============== ============== ==============
</TABLE>

See accompanying notes to financial statements.

<PAGE>
McNEIL REAL ESTATE FUND IX, LTD.

STATEMENTS OF CASH FLOWS

Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------
1995 1994 1993
-------------- -------------- ---------------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from tenants.............. $ 19,040,536 $ 18,213,413 $ 17,136,777
Cash received from legal settlement..... 70,817 - -
Cash paid to suppliers.................. (7,922,261) (6,737,217) (7,410,556)
Cash paid to affiliates................. (1,671,044) (1,623,756) (1,598,588)
Interest received....................... 246,964 252,060 151,867
Interest paid........................... (4,542,671) (4,851,901) (4,502,322)
Property taxes paid and escrowed........ (1,336,619) (1,438,756) (1,463,235)
------------- ------------- --------------
Net cash provided by operating
activities.............................. 3,885,722 3,813,843 2,313,943
------------- ------------- --------------

Cash flows from investing activities:
Additions to real estate
investments........................... (3,582,582) (4,261,449) (2,672,770)
Insurance proceeds from fire/freeze
damage................................ 185,094 359,878 -
------------- ------------- --------------
Net cash used in investing
activities.............................. (3,397,488) (3,901,571) (2,672,770)
------------- ------------- --------------

Cash flows from financing activities:
Principal payments on mortgage
notes payable......................... (748,502) (711,658) (632,553)
Deferred borrowing costs paid........... - (120,486) (1,268,351)
Contingent Management Incentive
Distribution.......................... (879,994) (797,000) (955,821)
Net cash proceeds from refinancing/
modification of mortgage
notes payable......................... - 161,809 6,282,227
------------- ------------- --------------
Net cash provided by (used in)
financing activities.................... (1,628,496) (1,467,335) 3,425,502
------------- ------------- --------------

Net increase (decrease) in cash and
cash equivalents........................ (1,140,262) (1,555,063) 3,066,675

Cash and cash equivalents at
beginning of year....................... 4,199,844 5,754,907 2,688,232
------------- ------------- --------------

Cash and cash equivalents at end
of year................................. $ 3,059,582 $ 4,199,844 $ 5,754,907
============= ============= =============
</TABLE>

See accompanying notes to financial statements.

<PAGE>
McNEIL REAL ESTATE FUND IX, LTD.

STATEMENTS OF CASH FLOWS

Reconciliation of Net Loss to Net Cash Provided by
Operating Activities

For the Years Ended December 31,
-----------------------------------------------------
1995 1994 1993
--------------- --------------- ----------------

<S> <C> <C> <C>
Net loss................................... $ (328,996) $ (387,787) $ (1,351,884)
------------- ------------- --------------

Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation............................ 3,919,845 3,392,835 3,016,874
Amortization of discounts on
mortgage notes payable................ 40,372 38,032 18,241
Amortization of deferred borrowing
costs................................. 201,762 159,019 173,538
Extraordinary items..................... - - 31,055
Gain on involuntary conversions......... (125,967) (187,854) -
Changes in assets and liabilities:
Cash segregated for security
deposits............................ (39,808) (11,032) (56,623)
Accounts receivable................... (49,903) 40,537 66,724
Prepaid expenses and other
assets.............................. (12,693) 19,334 234,713
Escrow deposits....................... 142,995 680,527 (112,959)
Accounts payable...................... (147,117) 158,350 141,302
Accrued property taxes................ 27,518 6,890 (71,809)
Accrued interest...................... 71,219 (164,404) 187,317
Other accrued expenses................ 113,070 32,114 31,076
Payable to affiliates - General
Partner............................. 9,469 11,936 (5,493)
Security deposits and deferred
rental revenue...................... 63,956 25,346 11,871
------------- ------------- --------------

Total adjustments................. 4,214,718 4,201,630 3,665,827
------------- ------------- --------------

Net cash provided by operating
activities............................ $ 3,885,722 $ 3,813,843 $ 2,313,943
============= ============= =============
</TABLE>

See accompanying notes to financial statements.

<PAGE>
McNEIL REAL ESTATE FUND IX, LTD.

NOTES TO FINANCIAL STATEMENTS

December 31, 1995

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------

Organization
- ------------

The Partnership is engaged in real estate activities, including the ownership,
operation and management of residential real estate and other real estate
related assets. At December 31, 1995, the Partnership owned 14 income-producing
properties as described in Note 4 - Real Estate Investments.

Basis of Presentation
- ---------------------

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP"). The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

The Partnership's financial statements include the accounts of the following
listed tier partnerships for the years ended December 31, 1995, 1994 and 1993.
These single asset tier partnerships were formed to accommodate the refinancings
of the related properties. The ownership interest of the Partnership and the
General Partner in each tier partnership is detailed below. The Partnership
retains effective control of each tier partnership. The General Partner's
minority interest is not presented because it is either negative or immaterial.
<TABLE>
<CAPTION>
% of Ownership Interest
Tier Partnership Partnership General Partner
---------------- ----------- ---------------
<S> <C> <C>
Limited partnerships:
Cherry Hills Fund IX Limited Partnership (a) ................ 100 -
Forest Park Fund IX Associates Limited Partnership (b)....... 99 1
Lantern Tree Fund IX Limited Partnership (a) ................ 100 -
Meridian West Fund IX Limited Partnership (a)................ 100 -
Pennbrook Fund IX Associates, L.P............................ 99 1
Rockborough Fund IX Limited Partnership (a).................. 100 -
Rolling Hills Fund IX Associates, L.P........................ 99 1
Williamsburg Fund IX Limited Partnership (a)................. 100 -

General partnerships:
Berkley Hills Associates..................................... 99 1
Ruskin Place Fund IX Associates.............................. 99 1
Sherwood Forest Fund IX Associates........................... 99 1
</TABLE>

<PAGE>

(a) The general partner of these partnerships is a corporation whose stock is
100% owned by the Partnership.

(b) Forest Park Fund IX Associates has assigned all interest and rights to the
Partnership.

Real Estate Investments
- -----------------------

Real estate investments are generally stated at the lower of cost or net
realizable value. Real estate investments are monitored on an ongoing basis to
determine if the property has sustained a permanent impairment in value. At such
time, a write-down is recorded to reduce the basis of the property to its net
realizable value. A permanent impairment is determined to have occurred when a
decline in property value is considered to be other than temporary based upon
management's expectations with respect to projected cash flows and prevailing
economic conditions.

Improvements and betterments are capitalized and expensed through depreciation
charges. Repairs and maintenance are charged to operations as incurred.

In March 1995, the Financial Accounting Standards Board issued 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 that long-lived assets and certain identifiable intangibles to be held
and used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. This statement is effective for financial statements for fiscal
years beginning after December 15, 1995. The Partnership has not adopted the
principles of this statement within the accompanying financial statements;
however, it is not anticipated that adoption will have a material effect on the
carrying value of the Partnership's long-lived assets.

Depreciation
- ------------

Buildings and improvements are depreciated using the straight-line method over
the estimated useful lives of the assets, ranging from 3 to 32 years.

Cash and Cash Equivalents
- -------------------------

Cash and cash equivalents include cash on hand and cash on deposit with
financial institutions with original maturities of three months or less.
Carrying amounts for cash and cash equivalents approximate fair value.

Escrow Deposits
- ---------------

The Partnership is required to maintain escrow accounts in accordance with the
terms of various mortgage agreements. These escrow accounts are controlled by
the mortgagee and are used for payment of property taxes, hazard insurance,
capital improvements and/or property replacements. Carrying amounts for escrow
deposits approximate fair value.

<PAGE>

Deferred Borrowing Costs
- ------------------------

Loan fees and other related costs incurred to obtain long-term financing on real
property are capitalized and amortized using a method that approximates the
effective interest method over the terms of the related mortgage notes payable.
Amortization of deferred borrowing costs is included in interest expense on the
Statements of Operations.

Discounts on Mortgage Notes Payable
- -----------------------------------

Discounts on mortgage notes payable are amortized over the remaining terms of
the related mortgage notes using the effective interest method. Amortization of
discounts on mortgage notes payable is included in interest expense on the
Statements of Operations.

Rental Revenue
- --------------

The Partnership leases its properties under short-term operating leases. Lease
terms generally are less than one year in duration. Rental revenue is recognized
as earned.

Income Taxes
- ------------

No provision for Federal income taxes is necessary in the financial statements
of the Partnership because, as a partnership, it is not subject to Federal
income tax and the tax effect of its activities accrues to the partners.

Allocation of Net Income and Net Loss
- -------------------------------------

The Amended Partnership Agreement provides for net income or net loss of the
Partnership for both financial statement and income tax reporting purposes to be
allocated as indicated below. For allocation purposes, net income and net loss
of the Partnership are determined prior to deductions for depreciation.

(a) First, 5% of all deductions for depreciation shall be allocated to the
General Partner, and 95% of all deductions for depreciation shall be
allocated to the limited partners;

(b) then, an amount of net income equal to the cumulative amount of Contingent
Management Incentive Distribution ("Contingent MID") paid to the General
Partner for which no income has previously been allocated (see Note 2 -
"Transactions with Affiliates") shall be allocated to the General Partner;
however, if all or a portion of the Contingent MID consists of limited
partnership units ("Units"), the amount of net income so allocated to the
General Partner shall be equal to the amount of cash the General Partner
would have otherwise received;

(c) then, any remaining net income shall be allocated to the General Partner
and to the limited partners so that the total amount of net income
allocated to the General Partner pursuant to paragraph (b) above and this
paragraph (c), and to the limited partners pursuant to this paragraph (c),
shall be in the ratio of 5% to the General Partner and 95% to the limited
partners.

<PAGE>

(d) Net loss shall be allocated 95% percent to the limited partners and 5% to
the General Partner.

Federal income tax law provides that the allocation of loss to a partner will
not be recognized unless the allocation is in accordance with a partner's
interest in the partnership or the allocation has substantial economic effect.
Internal Revenue Code Section 704(b) and accompanying Treasury Regulations
establish criteria for allocations of Partnership deductions attributable to
debt. The Partnership's tax allocations for 1995, 1994 and 1993 have been made
in accordance with these provisions.

Distributions
- -------------

Pursuant to the Amended Partnership Agreement and at the sole discretion of the
General Partner, distributions during each taxable year shall be made as
follows:

(a) first, to the General Partner, an amount equal to the Contingent MID; and

(b) any remaining distributable cash, as defined, shall be distributed 100% to
the limited partners.

No distributions were made to the limited partners in 1995, 1994 or 1993. The
Partnership accrued distributions of $1,070,763, $973,023 and $807,867 for the
benefit of the General Partner for the years ended December 31, 1995, 1994 and
1993, respectively. These distributions are the Contingent MID pursuant to the
Amended Partnership Agreement.

Net Loss Per Limited Partnership Unit
- -------------------------------------

Net loss per limited partnership unit is computed by dividing net loss allocated
to the limited partners by the weighted average number of Units outstanding. Per
Unit information has been computed based on 110,170 Units outstanding in 1995
and 1994, and 110,200 Units outstanding in 1993.

Reclassifications
- -----------------

Certain reclassifications have been made to prior period amounts to conform with
the current year presentation.

NOTE 2 - TRANSACTIONS WITH AFFILIATES
- -------------------------------------

The Partnership pays property management fees equal to 5% of the gross rental
receipts of the Partnership's properties to McNeil Real Estate Management, Inc.
("McREMI"), an affiliate of the General Partner, for providing property
management and leasing services for the Partnership's properties.

The Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs.

The Partnership reimbursed an affiliate of the General Partner for costs
incurred in connection with refinancing and modification of mortgage notes
payable. These costs are capitalized as deferred borrowing costs and amortized
over the remaining term of the related mortgage notes.

<PAGE>

Under terms of the Amended Partnership Agreement, the Partnership is paying a
Management Incentive Distribution ("MID") to the General Partner. The maximum
MID is calculated as 1% of the tangible asset value of the Partnership. The
maximum MID percentage decreases subsequent to 1999. Tangible asset value is
determined by using the greater of (i) an amount calculated by applying a
capitalization rate of 9% to the annualized net operating income of each
property or (ii) a value of $10,000 per apartment unit to arrive at the property
tangible asset value. The property tangible asset value is then added to the
book value of all other assets excluding intangible items. Prior to July 1,
1993, the MID consisted of two components: (i) the fixed portion which was
payable without respect to the net income of the Partnership and was equal to
25% of the maximum MID (the "Fixed MID") and (ii) a contingent portion which was
payable only to the extent of the lesser of the Partnership's excess cash flow,
as defined, or net operating income (the "Entitlement Amount") and is equal to
up to 75% of the maximum MID (the "Contingent MID").

Effective July 1, 1993, the General Partner amended the Amended Partnership
Agreement as a settlement to a class action complaint. This amendment eliminates
the Fixed MID and makes the entire MID payable to the extent of the Entitlement
Amount. In all other respects, the calculation and payment of the MID remain the
same.

Fixed MID was payable in Units unless the Entitlement Amount exceeded the amount
necessary to pay the Contingent MID in which case, at the General Partner's
option, the Fixed MID was paid in cash to the extent of such excess.

Contingent MID will be paid to the extent of the Entitlement Amount, and may be
paid (i) in cash, unless there is insufficient cash to pay the distribution in
which event any unpaid portion not taken in Units will be deferred and is
payable, without interest, from the first available cash and/or (ii) in Units. A
maximum of 50% of the MID may be paid in Units. The number of Units issued in
payment of the MID is based on the greater of $50 per Unit or the net tangible
asset value, as defined, per Unit. During 1995, 1994 and 1993, no Units were
issued as payment for the MID.

During 1991, the Partnership amended its capitalization policy and began
capitalizing certain costs of improvements and betterments which under policies
of prior management had been expensed when incurred. The purpose of the
amendment was to more properly recognize items which were capital in nature. The
effect of the amendment standing alone was evaluated at the time the change was
made and determined not to be material to the financial statements of the
Partnership in 1991, nor was it expected to be material in any future year.
However, the amendment can have a material effect on the calculation of the
Entitlement Amount which determines the amount of Contingent MID earned and the
amount of Fixed MID payable in cash. Capital improvements are excluded from cash
flow, as defined. The majority of base period cash flow was measured under the
previous capitalization policy, while incentive period cash flow is determined
using the amended policy. Under the amended policy, more items are capitalized,
and cash flow increases. Had base period cash flow been measured on a basis
comparable with incentive period cash flow, Contingent MID for the years ended
December 31, 1995 and 1994, would have been reduced by $111,248 and 169,741,
respectively. The amendment of the capitalization policy did not materially
affect the MID for 1993 because the Entitlement Amount was sufficient to pay
Contingent MID notwithstanding the amendment to the capitalization policy.

<PAGE>

Any amount of the MID which is paid to the General Partner in Units will be
treated as if cash is distributed to the General Partner and is then contributed
to the Partnership by the General Partner. The Fixed MID was treated as a fee
payable to the General Partner by the Partnership for services rendered. The
Contingent MID represents a return of equity to the General Partner for
increasing cash flow, as defined, and accordingly is treated as a distribution.

Compensation and reimbursements paid or accrued for the benefit of the General
Partner or its affiliates are as follows:

<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------
1995 1994 1993
-------------- -------------- ---------------
<S> <C> <C> <C>
Deferred borrowing costs................... $ - $ - $ 45,418
Property management fees -
affiliates.............................. 946,627 915,989 855,410
Charged to general and
administrative - affiliates:
Partnership administration.............. 733,886 719,703 622,965
Fixed MID............................... - - 114,720
------------- ------------- --------------

$ 1,680,513 $ 1,635,692 $ 1,638,513
============= ============= ==============

Charged to General Partner's deficit:
Contingent Management Incentive
Distribution $ 1,070,763 $ 973,023 $ 807,867
============= ============= ==============
</TABLE>

Payable to affiliates - General Partner at December 31, 1995 and 1994 consists
of Contingent MID, reimbursable costs and property management fees which are due
and payable from current operations.

NOTE 3 - TAXABLE LOSS
- ---------------------

McNeil Real Estate Fund IX, Ltd. is a partnership and is not subject to Federal
and state income taxes. Accordingly, no recognition has been given to income
taxes in the accompanying financial statements of the Partnership since the
income or loss of the Partnership is to be included in the tax returns of the
individual partners. The tax returns of the Partnership are subject to
examination by Federal and state taxing authorities. If such examinations result
in adjustments to distributive shares of taxable income or loss, the tax
liability of the partners could be adjusted accordingly.

The Partnership's net assets and liabilities for tax purposes exceeded the net
assets and liabilities for financial reporting purposes by $9,613,062 in 1995,
$8,983,358 in 1994 and $8,766,818 in 1993.

<PAGE>

NOTE 4 - REAL ESTATE INVESTMENTS
- --------------------------------

The basis and accumulated depreciation of the Partnership's real estate
investments at December 31, 1995 and 1994 are set forth in the following tables:

Buildings and Accumulated Net Book
1995 Land Improvements Depreciation Value
---- -------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Berkley Hills
Madison, TN $ 246,988 $ 5,914,125 $ (3,643,359) $ 2,517,754
Cherry Hills
Wichita, KS 514,205 8,771,156 (4,660,956) 4,624,405
Forest Park Village
Columbus, OH 716,395 8,891,627 (5,551,503) 4,056,519
Heather Square
Dallas, TX 853,746 7,294,403 (3,912,468) 4,235,681
Lantern Tree
Omaha, NE 217,809 3,245,613 (1,939,545) 1,523,877
Meridian West
Puyallup, WA 253,167 4,838,970 (2,538,764) 2,553,373
Pennbrook
Dallas, TX 692,515 6,068,091 (3,312,652) 3,447,954
Rockborough
Addison, TX 427,932 3,595,458 (1,866,840) 2,156,550
Rolling Hills
Louisville, KY 557,249 8,594,002 (5,050,846) 4,100,405
Ruskin Place
Lincoln, NE 920,061 4,975,901 (2,984,860) 2,911,102
Sheraton Hills
Nashville, TN 296,531 6,211,692 (3,910,764) 2,597,459
Westgate
Lansing, MI 390,482 6,093,518 (3,527,200) 2,956,800
Westridge
Ft. Worth, TX 345,265 4,269,089 (2,302,482) 2,311,872
Williamsburg
Shreveport, LA 283,754 5,083,649 (2,926,992) 2,440,411
------------- ------------- ------------- -------------

$ 6,716,099 $ 83,847,294 $ (48,129,231) $ 42,434,162
============= ============= ============= =============
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Buildings and Accumulated Net Book
1994 Land Improvements Depreciation Value
---- -------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Berkley Hills $ 246,988 $ 5,617,461 $ (3,347,169) $ 2,517,280
Cherry Hills 514,205 8,589,653 (4,318,464) 4,785,394
Forest Park Village 716,395 8,446,693 (5,116,033) 4,047,055
Heather Square 853,746 7,097,310 (3,600,447) 4,350,609
Lantern Tree 217,809 3,133,808 (1,791,815) 1,559,802
Meridian West 253,167 4,755,163 (2,290,739) 2,717,591
Pennbrook 692,515 5,910,773 (3,018,815) 3,584,473
Rockborough 427,932 3,527,790 (1,685,438) 2,270,284
Rolling Hills 557,249 8,052,914 (4,599,161) 4,011,002
Ruskin Place 920,061 4,771,531 (2,747,650) 2,943,942
Sheraton Hills 296,531 5,887,264 (3,605,483) 2,578,312
Westgate 390,482 5,616,778 (3,282,595) 2,724,665
Westridge 345,265 4,060,462 (2,164,643) 2,241,084
Williamsburg 283,754 4,921,016 (2,705,711) 2,499,059
------------- ------------- ------------- -------------

$ 6,716,099 $ 80,388,616 $ (44,274,163) $ 42,830,552
============= ============= ============= =============
</TABLE>

NOTE 5 - MORTGAGE NOTES PAYABLE
- -------------------------------

The table below sets forth the mortgage notes payable of the Partnership at
December 31, 1995 and 1994. All mortgage notes are secured by real estate
investments.

<TABLE>
<CAPTION>
Mortgage Annual Monthly
Lien Interest Payments/ December 31,
Property Position (a) Rates % Maturity Date(e) 1995 1994
- -------- --------------- -------- ---------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Berkley Hills First 8.750 $26,005 12/23 $ 3,255,924 $ 3,281,849
------------- -------------

Cherry Hills First 8.150 39,353 07/03 4,748,209 4,829,752
Discount (b) (114,168) (126,376)
------------- -------------
4,634,041 4,703,376
------------- -------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Mortgage Annual Monthly
Lien Interest Payments/ December 31,
Property Position (a) Rates % Maturity Date(e) 1995 1994
- -------- --------------- -------- ---------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Forest Park Village First 9.125 $59,732 01/98 $ 6,192,845 $ 6,325,750
------------- -------------

Heather Square First 9.625 38,250 03/09 3,429,615 3,552,038
------------- -------------

Lantern Tree First 8.150 20,416 07/03 2,463,353 2,505,657
Discount (b) (59,231) (65,563)
-------------- -------------
2,404,122 2,440,094
------------- -------------

Meridian West First 8.150 28,471 07/03 3,435,223 3,494,217
Discount (b) (82,599) (91,430)
------------- -------------
3,352,624 3,402,787
------------- -------------

Pennbrook First 9.450 27,209 02/00 3,187,297 3,209,439
------------- -------------

Rockborough First 8.150 18,789 07/03 2,267,055 2,305,987
Discount (b) (54,511) (60,339)
------------- -------------
2,212,544 2,245,648
------------- -------------

Rolling Hills First 9.250 55,389 11/24 6,685,297 6,729,342
------------- -------------

Ruskin Place First 8.750 36,348 10/24 4,581,309 4,615,005
------------- -------------

Sheraton Hills First (c) (d) (d) 10/98 2,838,674 2,880,859
------------- -------------

Westgate First 8.000 44,114 09/23 5,893,110 5,948,596
------------- -------------

Williamsburg First 8.150 23,128 07/03 2,790,518 2,838,440
Discount (b) (67,098) (74,271)
------------- -------------
2,723,420 2,764,169
------------- -------------

Total $ 51,390,822 $ 52,098,952
============= =============
</TABLE>

<PAGE>

(a) The debt is non-recourse to the Partnership.

(b) Mortgage discounts are based on an effective interest rate of 8.62%.

(c) The mortgage encumbering Sheraton Hills Apartments contains provisions
which may give the lender the right to accelerate the mortgage debt as a
result of the November 12, 1991, restructuring of the Partnership. The
General Partner has requested that the lender waive its right to accelerate
the mortgage debt. The lender may require the payment of fees or additional
interest as a condition to granting such a waiver. In the event the waiver
is not obtained and the mortgage debt is accelerated, the Partnership would
be required to satisfy the outstanding mortgage debt, which totaled
$2,838,674 at December 31, 1995. In such event, the Partnership will
attempt to arrange alternative sources of mortgage financing. However, such
refinancing may be at an interest rate which is higher or is otherwise on
terms which are less favorable than those provided for by the current
mortgage. Furthermore, if alternative financing cannot be obtained, the
lender could foreclose on Sheraton Hills Apartments. Management believes
the likelihood of this outcome is remote and accordingly has not reflected
this balance as currently due.

(d) The Sheraton Hills mortgage note bears interest at a variable rate,
adjusted at six-month intervals equal to the six-month treasury bill weekly
average rate plus 3.0% per annum, not to exceed 12.75% per annum. The
monthly payment is also adjusted each six months so that the mortgage note
will fully amortize over a period of 30 years. At December 31, 1995, the
interest rate was 8.63%, and the monthly payment was $23,748.

(e) Balloon payments on the Partnership's mortgage notes are due as follows:

Property Balloon Payment Date
-------- --------------- ----
<S> <C> <C>
Forest Park Village .................... $ 5,831,000 01/98
Sheraton Hills .................... 2,661,000 10/98
Pennbrook .................... 3,059,000 02/00
Cherry Hills .................... 3,875,000 07/03
Lantern Tree .................... 2,010,000 07/03
Meridian West .................... 2,804,000 07/03
Rockborough .................... 1,850,000 07/03
Williamsburg .................... 2,278,000 07/03
</TABLE>

Scheduled principal maturities of the mortgage notes payable under existing
agreements, before consideration of discounts of $377,607, are shown below.

<S> <C>
1996.................................... $ 826,951
1997.................................... 902,235
1998.................................... 9,358,326
1999.................................... 812,434
2000.................................... 3,912,038
Thereafter.............................. 35,956,445
----------
$51,768,429
==========
</TABLE>

<PAGE>

Based on borrowing rates currently available to the Partnership for mortgage
loans with similar terms and average maturities, the fair value of the mortgage
notes payable was approximately $52,256,304 at December 31, 1995.

NOTE 6 - REFINANCING AND MODIFICATION OF MORTGAGE NOTES PAYABLE
- ---------------------------------------------------------------

On July 28, 1994, the Partnership and the holder of the Berkley Hills mortgage
note agreed to modify the terms of the Berkley Hills mortgage note. The interest
rate was reduced to 8.75% from 10%, and the monthly debt service payment was
reduced to $26,005 from $28,283. In addition, the Partnership agreed to increase
the principal balance of the mortgage note $74,108 to $3,290,000, the mortgage
note's original balance. The Partnership incurred $46,254 of deferred borrowing
costs in connection with the modification, and the default that existed on the
mortgage note was removed.

On July 28, 1994, the Partnership and the holder of the Ruskin Place mortgage
note agreed to modify the terms of the Ruskin Place mortgage note. The interest
rate was reduced to 8.75% from 9.75%, and the monthly debt service payment was
reduced to $36,348 from $38,882. In addition, the Partnership agreed to increase
the principal balance of the mortgage note $87,701 to $4,625,600, the mortgage
note's original balance. The Partnership incurred $66,734 of deferred borrowing
costs in connection with the modification, and the default that existed on the
mortgage note was removed.

On June 30, 1993, the Partnership and the holder of the Westgate mortgage note
agreed to modify the terms of the Westgate mortgage note. The interest rate was
reduced to 8% from 10.5%, and the monthly debt service payment was reduced to
$44,114 from $54,068. In addition, the Partnership agreed to increase the
principal balance of the mortgage note $102,356 to $6,020,000, the mortgage
note's original balance. The Partnership incurred $109,473 of deferred borrowing
costs in connection with the modification, and the default that existed on the
mortgage note was removed.

On June 24, 1993, the General Partner refinanced a portfolio of properties via a
Real Estate Mortgage Investment Conduit ("REMIC"). This REMIC consists of a pool
of properties from various partnerships affiliated with the General Partner.
Five of the Partnership's properties, Cherry Hills, Lantern Tree, Meridian West,
Rockborough and Williamsburg, were included in the REMIC. The properties in the
REMIC are not cross-collateralized across the partnerships, but are

<PAGE>

cross-collateralized within the same partnership. The new mortgage notes bear an
interest rate of 8.15% that was discounted to yield an effective interest rate
of 8.62%. The maturity date for the new mortgage notes is July 2003. Following
is a summary of the cash proceeds relating to the REMIC refinancings:

<TABLE>
<CAPTION>
Cherry Hills Lantern Tree Meridian West
------------------ ----------------- ------------------
<S> <C> <C> <C>
New loan proceeds $ 4,934,500 $ 2,560,000 $ 3,570,000
Existing debt retired (3,003,554) (1,587,353) (2,103,963)
Mortgage discount (143,390) (74,390) (103,739)
Prepayment penalties - - (21,040)
---------------- --------------- ----------------

Cash proceeds from refinancing $ 1,787,556 $ 898,257 $ 1,341,258
================ =============== ================

Rockborough Williamsburg Total
------------------ ----------------- ------------------

New loan proceeds $ 2,356,000 $ 2,900,000 $ 16,320,500
Existing debt retired (1,487,544) (2,208,551) (10,390,965)
Mortgage discount (68,462) (84,270) (474,251)
Prepayment penalties (44,626) - (65,666)
---------------- --------------- ----------------

Cash proceeds from refinancing $ 755,368 $ 607,179 $ 5,389,618
================ =============== ================
</TABLE>

As part of the REMIC refinancing, the Partnership negotiated a discounted payoff
on the Williamsburg second mortgage note, resulting in a $34,611 extraordinary
gain on extinguishment of debt. The Partnership incurred extraordinary losses
due to prepayment penalties of $21,040 and $44,626 on the Meridian West and
Rockborough mortgage notes, respectively.

The Partnership incurred $892,580 of deferred borrowing costs in connection with
the REMIC refinancing. Additionally, the Partnership was required to use
$534,018 of its loan proceeds to fund various escrow accounts for specified
capital repairs, property taxes and insurance.

On January 29, 1993, the Partnership refinanced the Pennbrook mortgage note. The
new Pennbrook mortgage note, in the amount of $3,250,000, bears interest at an
annual rate of 9.45%, requires monthly debt service payments of $27,209, and
will mature in February 2000. Proceeds from the refinancing of the Pennbrook
mortgage note are as follows:

<S> <C>
New mortgage note........................... $ 3,250,000
Existing debt retired....................... (2,459,747)
--------------

Cash proceeds from refinancing.............. $ 790,253
==============
</TABLE>

<PAGE>

The Partnership incurred $201,439 of deferred borrowing costs in connection with
the refinancing of the Pennbrook mortgage note. The Partnership was also
required to use $266,715 of its loan proceeds to fund escrow accounts for
property taxes, insurance, repairs and replacements.

NOTE 7 - GAIN ON INVOLUNTARY CONVERSIONS
- ----------------------------------------

On May 5, 1995, Westridge Apartments incurred hail damage of $150,938. The
Partnership received $144,666 in insurance reimbursements to cover the cost to
repair Westridge. Insurance reimbursements received in excess of the basis of
the property damaged were recorded as a $109,006 gain on involuntary conversion.

On November 3, 1995, two units at Cherry Hill Apartments were damaged by a fire
that caused $55,495 in damages. The Partnership received $40,428 in insurance
reimbursements to cover the cost to repair Cherry Hill. Insurance reimbursements
received in excess of the basis of the property damage were recorded as a
$16,961 gain on involuntary conversion.

On January 19, 1994, freezing weather caused $157,680 of damage to Rolling Hills
Apartments. The Partnership received $140,496 in insurance reimbursements to
cover the cost to repair Rolling Hills. Insurance reimbursements received in
excess of the basis of the property damaged were recorded as a $108,522 gain on
involuntary conversion.

On April 25, 1994, eleven units at Rockborough Apartments were damaged by a fire
that caused $225,123 in damages. The Partnership received $219,382 in insurance
reimbursements to cover the cost to repair Rockborough. Insurance reimbursements
received in excess of the basis of the property damage were recorded as a
$79,332 gain on involuntary conversion.

NOTE 8 - LEGAL PROCEEDINGS
- --------------------------

<PAGE>

This action was dismissed without prejudice in November 1995.

On November 7, 1995, High River filed a second complaint with the District
Court which alleges, inter alia, that McNeil Partners, L.P.'s (the "General
Partner") Schedule 14D-9 filed in connection with the High River tender
offers was materially false and misleading, in violation of Sections 14(d)
and 14(e) of the Securities Exchange Act of 1934, 15 U.S.C. Section 78n(d)
and (e), and the SEC Regulations promulgated thereunder; and that High
River further alleges that the General Partner has wrongfully refused to
admit High River as a limited partner to the ten partnerships referenced
above. Additionally, High River purports to assert claims derivatively on
behalf of McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund XI,
Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XXIV, L.P.
and McNeil Real Estate Fund XXV, L.P., for breach of contract and breach of
fiduciary duty, asserting that the General Partner has charged these
partnerships excessive fees. High River's complaint seeks, inter alia,
preliminary injunctive relief requiring the General Partner to admit High
River as a limited partner in each of the ten partnerships referenced above
and to transfer the tendered units of interest in the partnerships to High
River; an unspecified award of damages payable to High River and an
additional unspecified award of damages payable to certain of the
partnerships; an order that defendants must discharge their fiduciary
duties and must account for all fees they have received from certain of the
partnerships; and attorneys' fees.

On January 31, 1996, this action was dismissed without prejudice.

<PAGE>

The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.

The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend these actions.

<PAGE>

The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.

Plaintiff brings this class action on behalf of a class of all persons and
entities who are current owners of units and/or are limited partners in one
or more of the partnerships referenced above (as defined in this Section 6,
the "Partnerships"). Plaintiff alleges that McNeil Partners, L.P., McNeil
Investors, Inc., Robert A. McNeil and other senior officers (as defined in
this Section 6, collectively, the "Defendants") have breached their
fiduciary duties to the class members by, among other things, (1) taking
steps to prevent the consummation of the High River tender offers, (2)
failing to take steps to maximize unitholders' or limited partners' values,
including failure to liquidate the properties owned by the Partnerships,
(3) managing the Partnerships so as to extend indefinitely the present fee
arrangements, and (4) paying itself and entities owned and controlled by
the general partner excessive fees and reimbursements of general and
administrative expenses.

The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.

<PAGE>

7) 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, BDO Seidman, for
negligence and fraud in failing to detect and/or report overcharges of
fees/expenses by Southmark, the former general partner. The former auditors
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 original petition also alleged
causes of action against certain former officers and directors of the
Partnership's original general partner for breach of fiduciary duty, fraud
and conspiracy relating to the improper assessment and payment of certain
administrative fees/expenses. On January 11, 1994 the allegations against
the former officers and directors were dismissed.

The trial court granted summary judgment in favor of Ernst & Young and BDO
Seidman on the fraud and negligence claims based on the statute of
limitations. The Affiliated Partnerships appealed the summary judgment to
the Dallas Court of Appeals. In August 1995, the Appeals Court upheld all
of the summary judgments in favor of BDO Seidman. In exchange for the
plaintiff's agreement not to file any motions for rehearing or further
appeals, BDO Seidman agreed that it will not pursue the counterclaims
against the Partnership.

NOTE 9 - GAIN ON LEGAL SETTLEMENT
- ---------------------------------

The Partnership filed claims with the United States Bankruptcy Court for the
Northern District of Texas, Dallas Division (the "Bankruptcy Court") against
Southmark Corporation ("Southmark"), an affiliate of a previous general partner,
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, $53,573
in cash, and common and preferred stock in the reorganized Southmark. The cash
and stock represent the Partnership's pro-rata share of Southmark assets
available for Class 8 claimants. The Partnership sold the Southmark common and
preferred stock in May 1995, for $17,244 which, when combined with the cash
proceeds from Southmark, resulted in a gain on legal settlement of $70,817.

<PAGE>
McNEIL REAL ESTATE FUND IX, LTD.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1995

<TABLE>
<CAPTION>
Cumulative Costs
Initial Cost (b) Write-down Capitalized
Related (b) Buildings and and Permanent Subsequent
Description Encumbrances Land Improvements Impairment To Acquisition
- ----------- --------------- -------------- --------------- -------------- ----------------
APARTMENTS:

<S> <C> <C> <C> <C> <C>
Berkley Hills
Madison, TN $ 3,255,924 $ 246,988 $ 4,779,121 $ - $ 1,135,004

Cherry Hills
Wichita, KS 4,634,041 514,205 7,373,589 - 1,397,567

Forest Park Village
Columbus, OH 6,192,845 716,395 7,095,131 - 1,796,496

Heather Square
Dallas, TX 3,429,615 853,746 6,087,281 - 1,207,122

Lantern Tree
Omaha, NE 2,404,122 217,809 2,467,872 - 777,741

Meridian West
Puyallup, WA 3,352,624 253,167 3,787,807 - 1,051,163

Pennbrook
Dallas, TX 3,187,297 692,515 4,708,479 - 1,359,612

Rockborough
Addison, TX 2,212,544 427,932 2,924,451 - 671,007

Rolling Hills
Louisville, KY 6,685,297 557,249 6,156,595 - 2,437,407

Ruskin Place
Lincoln, NE 4,581,309 899,372 3,792,676 - 1,203,914

Sheraton Hills
Nashville, TX 2,838,674 296,531 4,819,251 - 1,392,441

Westgate
Lansing, MI 5,893,110 390,482 4,963,710 - 1,129,808

Westridge
Fort Worth, TX - 345,265 3,736,843 (200,000) 732,246

Williamsburg
Shreveport, LA 2,723,420 283,754 4,203,172 - 880,477
-------------- -------------- -------------- ------------ -------------

$ 51,390,822 $ 6,695,410 $ 66,895,978 $ (200,000) $ 17,172,005
============== ============== ============== ============ =============
</TABLE>

(b) The initial cost and encumbrances reflect the present value of future loan
payments discounted, if appropriate, at a rate estimated to be the
prevailing interest rate at the date of acquisition or refinancing.

See accompanying notes to Schedule III.

<PAGE>
McNEIL REAL ESTATE FUND IX, LTD.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1995

<TABLE>
<CAPTION>
Gross Amount at
Which Carried at Close of Period Accumulated
Buildings and Depreciation
Description Land Improvements Total (a) and Amortization
- ----------- --------------- --------------- ----------------- ----------------

APARTMENTS:
<S> <C> <C> <C> <C>
Berkley Hills
Madison, TX $ 246,988 $ 5,914,125 $ 6,161,113 $ (3,643,359)

Cherry Hills
Wichita, KS 514,205 8,771,156 9,285,361 (4,660,956)

Forest Park Village
Columbus, OH 716,395 8,891,627 9,608,022 (5,551,503)

Heather Square
Dallas, TX 853,746 7,294,403 8,148,149 (3,912,468)

Lantern Tree
Omaha, NE 217,809 3,245,613 3,463,422 (1,939,545)

Meridian West
Puyallup, WA 253,167 4,838,970 5,092,137 (2,538,764)

Pennbrook
Dallas, TX 692,515 6,068,091 6,760,606 (3,312,652)

Rockborough
Addison, TX 427,932 3,595,458 4,023,390 (1,866,840)

Rolling Hills
Louisville, KY 557,249 8,594,002 9,151,251 (5,050,846)

Ruskin Place
Lincoln, NE 920,061 4,975,901 5,895,962 (2,984,860)

Sheraton Hills
Nashville, TN 296,531 6,211,692 6,508,223 (3,910,764)

Westgate
Lansing, MI 390,482 6,093,518 6,484,000 (3,527,200)

Westridge
Fort Worth, TX 345,265 4,269,089 4,614,354 (2,302,482)

Williamsburg
Shreveport, LA 283,754 5,083,649 5,367,403 (2,926,992)
-------------- -------------- ---------------- -------------
$ 6,716,099 $ 83,847,294 $ 90,563,393 $ (48,129,231)
============== ============== ================ =============
</TABLE>

(a) For Federal income tax purposes, the properties are depreciated over lives
ranging from 15-25 years using ACRS or MACRS methods. The aggregate cost of
real estate investments for Federal income tax purposes was approximately
$94,274,869 and accumulated depreciation was $49,976,438 December 31, 1995.

See accompanying notes to Schedule III.

<PAGE>
McNEIL REAL ESTATE FUND IX, LTD.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1995

Date of Date Depreciable
Description Construction Acquired lives (years)
- ----------- ------------ -------- -------------

APARTMENTS:
<S> <C> <C> <C>
Berkley Hills
Madison, TN 1970 06/79 3-25

Cherry Hills
Wichita, KS 1974 06/80 3-32

Forest Park Village
Columbus, OH 1970 12/79 3-25

Heather Square
Dallas, TX 1978 10/79 4-32

Lantern Tree
Omaha, NE 1974 07/79 3-28

Meridian West
Puyallup, WA 1977 01/80 3-31

Pennbrook
Dallas, TX 1978 01/80 3-31

Rockborough
Addison, TX 1978 01/80 3-32

Rolling Hills
Louisville, KY 1974 09/79 3-25

Ruskin Place
Lincoln, NE 1973 12/79 3-27

Sheraton Hills
Nashville, TN 1971 06/79 3-25

Westgate
Lansing, MI 1974 12/79 3-28

Westridge
Fort Worth, TX 1979 01/80 4-32

Williamsburg
Shreveport, LA 1975 12/79 3-29

</TABLE>

See accompanying notes to Schedule III.

<PAGE>
McNEIL REAL ESTATE FUND IX, LTD.

Notes to Schedule III

Real Estate Investments and Accumulated Depreciation

A summary of activity for the Partnership's real estate investments and
accumulated depreciation is as follows:

<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------
1995 1994 1993
-------------- -------------- --------------

Real estate investments:
- ------------------------
<S> <C> <C> <C>
Balance at beginning of year............... $ 87,104,715 $ 83,199,845 $ 80,527,075

Improvements............................... 3,582,582 4,261,449 2,672,770

Assets replaced............................ (123,904) (356,579) -
------------- ------------- --------------

Balance at end of year..................... $ 90,563,393 $ 87,104,715 $ 83,199,845
============= ============== ==============

Accumulated depreciation:
- -------------------------

Balance at beginning of year............... $ 44,274,163 $ 41,065,883 $ 38,049,009

Depreciation............................... 3,919,845 3,392,835 3,016,874

Assets replaced............................ (64,777) (184,555) -
------------- ------------- --------------

Balance at end of year..................... $ 48,129,231 $ 44,274,163 $ 41,065,883
============= ============= ==============
</TABLE>

<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------- ---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------- --------------------------------------------------

Neither the Partnership nor the General Partner has any directors or executive
officers. The names and ages of, as well as the positions held by, the officers
and directors of McNeil Investors, Inc., the general partner of the General
Partner, are as follows:

Other Principal Occupations and Other
Name and Position Age Directorships During the Past 5 Years
- ----------------- --- -------------------------------------
<S> <C> <C>
Robert A. McNeil, 75 Mr. McNeil is also Chairman of the Board and Director of McNeil Real
Chairman of the Estate Management, Inc. ("McREMI") which is an affiliate of the General
Board and Director Partner. He has held the foregoing positions since the formation of such
entity in 1990. Mr. McNeil received his B.A. degree from Stanford
University in 1942 and his L.L.B. degree from Stanford Law School in
1948. He is a member of the State Bar of California and has been involved
in real estate financing since the late 1940's and in real estate
acquisitions, syndications and dispositions since 1960. From 1986 until
active operations of McREMI and McNeil Partners, L.P. began in February
1991, Mr. McNeil was a private investor. Mr. McNeil is a member of the
International Board of Directors of the Salk Institute, which promotes
research in improvements in health care.

Carole J. McNeil 52 Mrs. McNeil is Co-Chairman, with husband Robert A. McNeil, of McNeil
Co-Chairman of the Investors, Inc. Mrs. McNeil has twenty years of real estate experience,
Board most recently as a private investor from 1986 to 1993. In 1982, she
founded Ivory & Associates, a commercial real estate brokerage firm in
San Francisco, CA. Prior to that, she was a commercial real estate
associate with the Madison Company and, earlier, a commercial sales
associate and analyst with Marcus and Millichap in San Francisco.
In 1978, Mrs. McNeil established Escrow Training Centers,
California's first accredited commercial training program for title
company escrow officers and real estate agents needing college credits
to qualify for brokerage licenses. She began in real estate as Manager
and Marketing Director of Title Insurance and Trust in Marin County,
CA. Mrs. McNeil serves on the International Board of Directors of the
Salk Institute.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Other Principal Occupations and Other
Name and Position Age Directorships During the Past 5 Years
- ----------------- --- -------------------------------------
<S> <C> <C>
Donald K. Reed, 50 Mr. Reed is President, Chief Executive Officer and Director of McREMI
Director, President, which is an affiliate of the General Partner. Prior to joining McREMI in
and Chief Executive March 1993, Mr. Reed was President, Chief Operating Officer and Director
Officer of Duddlesten Management Corporation and Duddlesten Realty Advisors, Inc.,
with responsibility for a management portfolio of office, retail,
multi-family and mixed-use land projects representing $2 billion in asset
value. He was also Chief Operating Officer, Director and member of the
Executive Committee of all Duddlesten affiliates. Mr. Reed started with
the Duddlesten companies in 1976 and served as Senior Vice President and
Chief Financial Officer and as Executive Vice President and Chief
Operating Officer of Duddlesten Management Corporation before his
promotion to President in 1982. He was President and Chief Operating
Officer of Duddlesten Realty Advisors, Inc., which has been engaged
in real estate acquisitions, marketing and dispositions, since its
formation in 1989.

Ron K. Taylor 38 Mr. Taylor is a Senior Vice President of McREMI and has been in this
Vice President capacity since McREMI commenced active operations in 1991. He also serves
as Acting Chief Financial Officer of McREMI since the resignation of
Robert C. Irvine on January 31, 1996. Mr. Taylor is primarily responsible
for Asset Management functions at McREMI, including property dispositions,
commercial leasing, real estate finance and portfolio management. Prior
to joining McREMI, Mr. Taylor served as an Executive Vice President for a
national syndication/property management company. Mr. Taylor has been
involved in the real estate industry since 1983.
</TABLE>

Each director shall serve until his successor shall have been duly elected and
qualified.

ITEM 11. EXECUTIVE COMPENSATION
- -------- ----------------------

No direct compensation was paid or payable by the Partnership to directors or
officers (since it does not have any directors or officers) for the year ended
December 31, 1995, nor was any direct compensation paid or payable by the
Partnership to directors or officers of the general partner of the General
Partner for the year ended December 31, 1995. The Partnership has no plans to
pay any such remuneration to any directors or officers of the general partner of
the General Partner in the future.

See Item 13 - Certain Relationships and Related Transactions for amounts of
compensation and reimbursements paid by the Partnership to the General Partner
and its affiliates.

<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------- --------------------------------------------------------------

(A) Security ownership of certain beneficial owners.

No individual or group, as defined by Section 13(d)(3) of the Securities
Exchange Act of 1934, known to the Partnership is the beneficial owner
of more than 5% of the Partnership's securities, except as noted in
below:

1. A group of limited partnerships affiliated with Liquidity
Financial Corporation, all of whose outstanding stock is owned
by Richard G. Wollack and Brent R. Donaldson, 2200 Powell
Street, Suite 700, Emeryville, California, 94608, collectively
own 6,389 Units (5.80%) as of February 29, 1996.

2. High River Limited Partnership, 100 S. Bedford Road, Mount
Kisco, New York, 10549, owns 7,976 Units (7.24%) as of
February 29, 1996.

(B) Security ownership of management.

The General Partner and the officers and directors of its general
partner, collectively, own 5,715 Units (5.19%) as of February 29, 1996.

None.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------

Under the terms of the Amended Partnership Agreement, the Partnership is paying
the MID to the General Partner. The maximum MID is calculated as 1% of the
tangible asset value of the Partnership. The maximum MID percentage decreases
subsequent to 1999. Tangible asset value is determined by using the greater of
(i) an amount calculated by applying a capitalization rate of 9% to the
annualized net operating income of each property or (ii) a value of $10,000 per
apartment unit to arrive at the property tangible asset value. The property
tangible asset value is then added to the book value of all other assets
excluding intangible items. Prior to July 1, 1993, the MID consisted of two
components: (i) the fixed portion which was payable without respect to the net
income of the Partnership and was equal to 25% of the maximum MID (the "Fixed
MID") and (ii) a contingent portion which was payable only to the extent of the
lesser of the Partnership's excess cash flow, as defined, or net operating
income (the "Entitlement Amount") and is equal to up to 75% of the maximum MID
(the "Contingent MID").

Contingent MID will be paid to the extent of the Entitlement Amount, and may be
paid in (i) cash, unless there is insufficient cash to pay the distribution, in
which event any unpaid portion not taken in Units will be deferred and is
payable, without interest, from the first available cash and/or (ii) in Units. A
maximum of 50% of the MID may be paid in Units. The number of Units issued in
payment of the MID is based on the greater of $50 per Unit or the net tangible
asset value, as defined, per Unit. For the year ended December 31, 1995, the
Partnership paid or accrued for the General Partner Contingent MID in the amount
of $1,070,763.

<PAGE>

During 1991, the Partnership amended its capitalization policy and began
capitalizing certain costs of improvements and betterments which under policies
of prior management had been expensed when incurred. The purpose of the
amendment was to more properly recognize items which were capital in nature. The
effect of the amendment standing alone was evaluated at the time the change was
made and determined not to be material to the financial statements of the
Partnership in 1991, nor was it expected to be material in any future year.
However, the amendment can have a material effect on the calculation of the
Entitlement Amount which determines the amount of Contingent MID earned and the
amount of Fixed MID payable in cash. Capital improvements are excluded from cash
flow, as defined. The majority of base period cash flow was measured under the
previous capitalization policy, while incentive period cash flow is determined
using the amended policy. Under the amended policy, more items are capitalized,
and cash flow increases. Had base period cash flow been measured on a basis
comparable with incentive period cash flow, Contingent MID for the years ended
December 31, 1995 and 1994, would have been reduced by $111,248 and 169,741,
respectively. The amendment of the capitalization policy did not materially
affect the MID for 1993 as the Entitlement Amount was sufficient to pay
Contingent MID notwithstanding the amendment to the capitalization policy.

The Partnership pays property management fees equal to 5% of gross rental
receipts of the Partnership's properties to McREMI for providing property
management and leasing services for the Partnership's properties. The
Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs. For the year ended December 31, 1995,
the Partnership paid or accrued $1,680,513 in property management fees and
reimbursements.

See Item 1 - Business, Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations, and Item 8 - Note 2 -
"Transactions with Affiliates."

<PAGE>

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- -------- ---------------------------------------------------------------

See accompanying Index to Financial Statements at Item 8.

(A) The following exhibits are incorporated by reference and are an integral
part of this Form 10-K.

Exhibits

<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
3. Limited Partnership Agreement (Incorporated
by reference to the Annual Report on Form 10-K
for the fiscal year ended September 30, 1987).

3.1 Amended and Restated Limited Partnership
Agreement dated November 12, 1991
(Incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter year ended
September 30, 1991).

3.2 Amendment No. 1 to the Amended and Restated
Partnership Agreement of McNeil Real Estate
Fund IX, Ltd., dated to be effective as of
July 31, 1993. (5)

3.3 Amendment No. 2 to the Amended and Restated
Partnership Agreement of McNeil Real Estate
Fund IX, Ltd., dated March 28, 1994. (5)

10.1 Mortgage Note, dated September 26, 1989,
between Rolling Hills Fund IX Associates
L.P. and Newport Mortgage Corporation. (1)

10.2 Mortgage Note, dated August 11, 1988, between
Sherwood Forest Fund IX Associates and
American Mortgages, Inc. (1)

10.3 Assignment and Assumption Agreement, dated
as of November 12, 1991, between Pacific
Investors Corporation and McNeil Partners,
L.P. regarding Sherwood Forest Fund IX
Associates. (2)

10.4 Assignment and Assumption Agreement, dated
as of November 12, 1991, between Pacific
Investors Corporation and McNeil Partners,
L.P. regarding Berkley Hills Associates. (2)

10.5 Assignment and Assumption Agreement, dated
as of November 12, 1991, between Pacific
Investors Corporation and McNeil Partners,
L.P. regarding Ruskin Place Fund IX
Associates. (2)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
10.6 Assignment and Assumption Agreement, dated
as of November 12, 1991, between Rolling
Hills Apartment Corp. and McNeil Partners,
L.P. regarding Rolling Hills Fund IX
Associates, L.P. (2)

10.7 Assignment and Assumption Agreement, dated
as of November 12, 1991, between Pacific
Investors Corporation, Robert A. McNeil and
McNeil Partners, L.P. regarding McNeil Real
Estate Fund IX, Ltd. (2)

10.8 Termination Agreement, dated as of November
12, 1991, between Ruskin Place Fund IX
Associates and McNeil Real Estate Management,
Inc. (2)

10.9 Termination Agreement, dated as of November
12, 1991. (2) between Rolling Hills Fund
IX Associates, L.P. and McNeil Real Estate
Management, Inc.

10.10 Termination Agreement, dated as of November
12, 1991, between Sherwood Forest Fund IX
Associates and McNeil Real Estate Management,
Inc. (2)

10.11 Termination Agreement, dated as of November
12, 1991, between Berkley Hills Associates
and McNeil Real Estate Management, Inc. (2)

10.12 Property Management Agreement, dated as of
November 12, 1991, between McNeil Real Estate
Fund IX, Ltd. and McNeil Real Estate
Management, Inc. (2)

10.13 Property Management Agreement, dated as of
November 12, 1991, between Ruskin Place Fund
IX Associates and McNeil Real Estate
Management, Inc. (2)

10.14 Property Management Agreement, dated as of
November 12, 1991, between Rolling Hills Fund
IX Associates, L.P. and McNeil Real Estate
Management, Inc. (2)

10.15 Property Management Agreement, dated as of
November 12, 1991, between Sherwood Forest
Fund IX Associates, L.P. and McNeil Real
Estate Management, Inc. (2)

10.16 Property Management Agreement, dated as of
November 12, 1991, between Berkley Hills
Associates and McNeil Real Estate Management,
Inc. (2)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
10.17 Asset Management Agreement, dated as of
November 12, 1991, between McNeil Real Estate
Fund IX, Ltd. and McNeil Partners, L.P. (2)

10.18 Revolving Credit Agreement, dated August 6,
1991, between McNeil Real Estate Fund IX,
Ltd. and McNeil Partners, L.P.(2)

10.19 Amendment of Property Management Agreement
dated March 5, 1993 between the Partnership
and McNeil Real Estate Management, Inc. (3)

10.20 Property management agreement, dated as of
January 28, 1993, between Pennbrook Fund IX,
L.P. and McNeil Real Estate Management,
Inc. (3)

10.21 Amendment of Property Management Agreement
dated March 5, 1993 between Pennbrook Fund
IX Associates, L.P. and McNeil Real Estate
Management, Inc. (3)

10.22 Loan Agreement dated June 24, 1993 between
Lexington Mortgage Company and McNeil Real
Estate Fund IX, Ltd., et. al. (4)

10.23 Master Property Management Agreement, dated
as of June 24, 1993, between McNeil Real
Estate Management, Inc. and McNeil Real Estate
Fund IX, Ltd. (5)

10.24 Mortgage Note, dated September 28, 1989,
between Ruskin Place Fund IX Associates
and American Mortgages, Inc. (6)

10.25 Modification of Mortgage Note, dated
July 28, 1994, between Ruskin Place Fund
IX Associates and American Mortgages, Inc. (6)

10.26 Deed of Trust Note, dated November 3, 1988,
between Berkley Hills Associates and American
Mortgages, Inc. (6)

10.27 Modification of Deed of Trust Note, dated
July 28, 1994, between Berkley Hills
Associates and American Mortgages, Inc. (6)

10.28 Loan Agreement, dated December 30, 1992,
between Forest Park Fund IX Associates
Limited Partnership, McNeil Partners, L.P.,
McNeil Real Estate Fund IX, Ltd. and
Collateral Mortgage, Ltd. (6)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
10.29 Promissory Note, dated February 5, 1979,
between Summers-The Heather Apartments
Company and The Mutual Benefit Life Insurance
Company. (6)

10.30 Promissory Note, dated September 2, 1988,
between McNeil Real Estate Fund IX, Ltd. and
FNB Mortgage Corp. (6)

10.31 Multifamily Note, dated January 29, 1993,
between Pennbrook Fund IX Associates, L.P. and
Washington Mortgage Financial Group, Ltd. (6)

10.32 Modification of Mortgage Note, dated June 30,
1993, between Sherwood Forest Fund IX
Associates and American Mortgages, Inc. (6)

11. Statement regarding computation of Net
Income (Loss) per Limited Partnership
Unit (see Note 1 to Financial Statements).

22. Following is a list of subsidiaries of the
Partnership:
Names Under
Jurisdiction Which It Is
Name of Subsidiary of Incorporation Doing Business
------------------ ---------------- --------------

Berkley Hills Associates Tennessee None

Cherry Hills Fund IX
Limited Partnership Delaware None

Forest Park Fund IX
Associates Limited
Partnership Ohio None

Lantern Tree Fund IX
Limited Partnership Delaware None

Meridian West Fund IX
Limited Partnership Delaware None

Pennbrook Fund XI
Associates, L.P. Texas None

Rockborough Fund IX
Limited Partnership Delaware None

Rolling Hills Fund IX
Associates, L.P. Kentucky None

Ruskin Place
Fund IX Associates Nebraska None

Sherwood Forest
Fund IX Associates Michigan None

Williamsburg Fund IX
Limited Partnership Delaware None
</TABLE>

<PAGE>

The Partnership has omitted instruments with respect to long-term
debt where the total amount of the securities authorized
thereunder does not exceed 10% of the total assets of the
Partnership. The Partnership agrees to furnish a copy of each such
instrument to the Commission upon request.

(1) Incorporated by reference to the Annual Report of McNeil Real
Estate Fund IX, Ltd. (File No. 0-9026) on Form 10-K for the
period ended December 31, 1990, as filed with the Securities
and Exchange Commission on March 29, 1991.

(2) Incorporated by reference to the Annual Report of McNeil Real
Estate Fund IX, Ltd. (File No. 0-9026), on Form 10-K for the
period ended December 31, 1991, as filed with the Securities
and Exchange Commission on March 30, 1992.

(3) Incorporated by reference to the Annual Report of McNeil Real
Estate Fund IX, Ltd. (File No. 0-9026), on Form 10-K for the
period ended December 31, 1992, as filed with the Securities
and Exchange Commission on March 30, 1993.

(4) Incorporated by reference to the Annual Report of McNeil Real
Estate Fund XI, Ltd. (File No. 0-9783), on Form 10-K for the
period ended December 31, 1993, as filed with the Securities
and Exchange Commission on March 30, 1994.

(5) Incorporated by reference to the Annual Report of McNeil Real
Estate Fund IX, Ltd. (File No. 0-9026), on Form 10-K for the
period ended December 31, 1993, as filed with the Securities
and Exchange Commission on March 30, 1994.

(6) Incorporated by reference to the Annual Report of McNeil Real
Estate Fund IX, Ltd. (File No. 0-9026), on Form 10-K for the
period ended December 31, 1995, as filed with the Securities
and Exchange Commission on March 30, 1995.

27. Financial Data Schedule for the year ended December 31, 1995.

(B) Reports on Form 8-K. There were no reports on Form 8-K filed during the
quarter ended December 31, 1995.

<PAGE>

McNEIL REAL ESTATE FUND IX, LTD.
A Limited Partnership

SIGNATURE PAGE

Pursuant to the requirements of Section 13 or 15(d) 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.

<TABLE>
<CAPTION>
McNEIL REAL ESTATE FUND IX, LTD.

By: McNeil Partners, L.P., General Partner

By: McNeil Investors, Inc., General Partner

<S> <C>
March 29, 1996 By: /s/ Robert A. McNeil
- ------------------ ------------------------------------------------
Date Robert A. McNeil
Chairman of the Board and Director
(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

March 29, 1996 By: /s/ Donald K. Reed
- ----------------- ------------------------------------------------
Date Donald K. Reed
President and Director of McNeil Investors, Inc.

March 29, 1996 By: /s/ Ron K. Taylor
- ----------------- ------------------------------------------------
Date Ron K. Taylor
Acting Chief Financial Officer
of McNeil Investors, Inc.

March 29, 1996 By: /s/ Brandon K. Flaming
- ----------------- ------------------------------------------------
Date Brandon K. Flaming
Chief Accounting Officer of McNeil Real Estate
Management, Inc.

</TABLE>

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 3,059,582
<SECURITIES> 0
<RECEIVABLES> 114,367
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 90,563,393
<DEPRECIATION> (48,129,231)
<TOTAL-ASSETS> 49,970,886
<CURRENT-LIABILITIES> 0
<BONDS> 51,390,822
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 49,970,886
<SALES> 19,123,434
<TOTAL-REVENUES> 19,567,182
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 15,040,154
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,856,024
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (328,996)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (328,996)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0

</TABLE>