UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended June 30, 1995
----------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to_____________
Commission file number 0-9325
MCNEIL REAL ESTATE FUND X, LTD.
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(Exact name of registrant as specified in its charter)
California 94-2577781
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (214) 448-5800
---------------------------
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___
<PAGE>
MCNEIL REAL ESTATE FUND X, LTD.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
------- --------------------
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
------------ ------------
ASSETS
<S> <C> <C>
Real estate investments:
Land..................................................... $10,464,914 $10,449,117
Buildings and improvements............................... 76,715,251 76,026,423
---------- ----------
87,180,165 86,475,540
Less: Accumulated depreciation.......................... (51,088,851) (49,450,647)
----------- -----------
36,091,314 37,024,893
Assets held for sale, net 7,055,502 7,215,032
Cash and cash equivalents................................... 1,685,375 574,589
Cash segregated for security deposits....................... 425,457 411,045
Accounts receivable, net of allowance for doubtful
accounts of $7,428....................................... 481,540 490,391
Prepaid expenses and other assets........................... 278,786 365,292
Escrow deposits............................................. 808,130 990,453
Deferred borrowing costs, net of accumulated amorti-
zation of $390,542 and $319,020 at June 30, 1995
and December 31, 1994, respectively...................... 1,257,969 1,308,238
--------- ---------
$48,084,073 $48,379,933
========== ==========
LIABILITIES AND PARTNERS' DEFICIT
Mortgage notes payable, net................................. $51,381,835 $52,078,850
Mortgage note payable - affiliates.......................... 800,000 800,000
Accounts payable............................................ 272,506 130,856
Accrued property taxes...................................... 761,583 573,451
Accrued interest............................................ 404,762 304,600
Accrued interest - affiliates............................... 6,795 5,206
Other accrued expenses...................................... 306,218 307,295
Payable to affiliates - General Partner..................... 2,063,841 1,172,267
Security deposits and deferred rental revenue............... 460,307 449,682
---------- ----------
56,457,847 55,822,207
---------- ----------
Partners' deficit:
Limited partners - 135,200 limited partnership units
authorized; 135,030 and 135,090 limited partnership
units outstanding at June 30, 1995 and December 31,
1994, respectively..................................... (4,232,263) (3,872,434)
General Partner.......................................... (4,141,511) (3,569,840)
---------- ----------
(8,373,774) (7,442,274)
$48,084,073 $48,379,933
========== ==========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
MCNEIL REAL ESTATE FUND X, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- -----------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue:
Rental revenue................ $4,331,493 $4,352,270 $8,699,158 $8,521,551
Interest...................... 35,785 15,669 65,125 30,475
Gain on legal settlement...... 91,517 - 91,517 -
--------- --------- --------- ---------
Total revenue............... 4,458,795 4,367,969 8,855,800 8,552,026
--------- --------- --------- ---------
Expenses:
Interest...................... 1,306,516 1,347,005 2,611,865 2,700,351
Interest - affiliates......... 20,164 - 37,961 -
Depreciation and
amortization................ 925,407 916,018 1,857,498 1,807,633
Property taxes................ 302,401 298,974 591,047 597,948
Personnel expenses............ 476,739 454,916 1,033,517 954,896
Utilities..................... 316,262 346,747 686,139 749,555
Repair and maintenance........ 533,147 668,243 1,012,935 1,246,126
Property management
fees - affiliates........... 217,007 217,996 436,324 422,777
Other property operating
expenses.................... 285,629 263,511 552,980 512,612
General and administrative.... 44,843 52,011 80,012 82,658
General and administrative -
affiliates.................. 167,525 146,217 334,289 298,139
--------- --------- --------- ---------
Total expenses.............. 4,595,640 4,711,638 9,234,567 9,372,695
--------- --------- --------- ---------
Loss before extraordinary
item.......................... (136,845) (343,669) (378,767) (820,669)
Extraordinary gain on
extinguishment of debt........ - 292,539 - 292,539
--------- --------- --------- ---------
Net loss......................... $ (136,845) $ (51,130) $ (378,767) $ (528,130)
========= ========= ========= =========
Net loss allocated to limited
partners...................... $ (130,003) $ (48,574) $ (359,829) $ (501,724)
Net loss allocated to
General Partner............... (6,842) (2,556) (18,938) (26,406)
--------- --------- --------- ---------
Net loss......................... $ (136,845) $ (51,130) $ (378,767) $ 528,130)
========= ========= ========= =========
Net loss per limited partnership unit:
Loss before extraordinary
item........................ $ (.96) $ (2.53) $ (2.66) $ (5.88)
Extraordinary gain on
extinguishment of debt...... - 2.17 - 2.17
--------- --------- ---------- ----------
Net loss...................... $ (.96) $ (.36) $ (2.66) $ (3.71)
========= ========= ========== ==========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
MCNEIL REAL ESTATE FUND X, LTD.
STATEMENTS OF PARTNERS' DEFICIT
(Unaudited)
For the Six Months Ended June 30, 1995 and 1994
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Deficit
------------ ----------- ------------
<S> <C> <C> <C>
Balance at December 31, 1993.............. $(3,134,201) $(2,765,906) $(5,900,107)
Net loss.................................. (26,406) (501,724) (528,130)
Contingent Management Incentive
Distribution........................... (11,355) - (11,355)
---------- ----------- ----------
Balance at June 30, 1994.................. $(3,171,962) $ (3,267,630) $(6,439,592)
========== =========== ==========
Balance at December 31, 1994.............. $(3,569,840) $ (3,872,434) $(7,442,274)
Net loss.................................. (18,938) (359,829) (378,767)
Contingent Management Incentive
Distribution........................... (552,733) - (552,733)
----------- ----------- ----------
Balance at June 30, 1995.................. $ (4,141,511) $ (4,232,263) $(8,373,774)
=========== =========== ==========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
MCNEIL REAL ESTATE FUND X, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------------------
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Cash received from tenants........................ $ 8,700,671 $ 8,376,968
Cash paid to suppliers............................ (2,997,948) (3,598,140)
Cash paid to affiliates........................... (431,771) (617,674)
Interest received................................. 65,125 30,475
Cash received from legal settlement............... 91,517 -
Interest paid..................................... (2,346,774) (2,544,587)
Interest paid to affiliates....................... (36,373) -
Deferred borrowing costs paid..................... (21,253) (11,500)
Property taxes paid and escrowed.................. (357,597) (517,425)
---------- ----------
Net cash provided by operating activities............ 2,665,597 1,118,117
---------- ----------
Cash flows from investing activities:
Additions to real estate investments.............. (764,389) (584,899)
---------- ----------
Cash flows from financing activities:
Principal payments on mortgage notes
payable......................................... (790,422) (624,306)
---------- ----------
Net increase (decrease) in cash and
cash equivalents.................................. 1,110,786 (91,088)
Cash and cash equivalents at beginning of
period............................................ 574,589 1,477,278
---------- ----------
Cash and cash equivalents at end of period........... $ 1,685,375 $ 1,386,190
========== ==========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
MCNEIL REAL ESTATE FUND X, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
Reconciliation of Net Loss to Net Cash Provided By Operating Activities
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------------------
1995 1994
----------- -----------
<S> <C> <C>
Net loss............................................. $ (378,767) $ (528,130)
--------- ---------
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization..................... 1,857,498 1,807,633
Amortization of discounts on mortgage
notes payable................................... 93,407 92,656
Amortization of deferred borrowing costs.......... 71,522 70,001
Extraordinary gain on extinguishment
of debt......................................... - (292,539)
Changes in assets and liabilities:
Cash segregated for security deposits........... (14,412) (88,202)
Accounts receivable............................. 8,851 (60,135)
Prepaid expenses and other assets............... 86,506 (21,463)
Escrow deposits................................. 182,323 (1,260)
Deferred borrowing costs........................ (21,253) (11,500)
Accounts payable................................ 141,650 (134,754)
Accrued property taxes.......................... 188,132 233,557
Accrued interest................................ 100,162 (6,894)
Accrued interest - affiliates................... 1,589 -
Other accrued expenses.......................... (1,077) (67,983)
Payable to affiliates - General Partner......... 338,841 103,242
Security deposits and deferred rental
revenue....................................... 10,625 23,888
--------- ---------
Total adjustments............................. 3,044,364 1,646,247
--------- ---------
Net cash provided by operating activities............ $2,665,597 $1,118,117
========= =========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND X, LTD.
Notes to Financial Statements
(Unaudited)
June 30, 1995
NOTE 1.
-------
McNeil Real Estate Fund X, Ltd. ("Partnership") is a limited partnership
organized under the laws of the State of California to invest in real property.
The general partner of the Partnership is McNeil Partners, L.P. ("General
Partner"), a Delaware limited partnership affiliated with Robert A. McNeil. The
Partnership is governed by an agreement of limited partnership ("Amended
Partnership Agreement") that was adopted October 9, 1991. The principal place of
business for the Partnership and the General Partner is 13760 Noel Road, Suite
700, LB70, Dallas, Texas 75240.
In the opinion of management, the financial statements reflect all adjustments
necessary for a fair presentation of the Partnership's financial position and
results of operations. All adjustments were of a normal recurring nature.
However, the results of operations for the six months ended June 30, 1995, are
not necessarily indicative of the results to be expected for the year ending
December 31, 1995.
NOTE 2.
-------
The financial statements should be read in conjunction with the financial
statements contained in the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1994, and the notes thereto, as filed with the
Securities and Exchange Commission, which is available upon request by writing
to McNeil Real Estate Fund X, Ltd., c/o McNeil Real Estate Management, Inc.,
Investor Services, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240.
NOTE 3.
-------
Certain prior period amounts within the accompanying financial statements have
been reclassified to conform with current year presentation.
NOTE 4.
-------
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 services for the Partnership's residential and commercial properties
and leasing services for its residential properties. McREMI may also choose to
provide leasing services for the Partnership's commercial properties, in which
case McREMI will receive property management fees from such commercial
properties equal to 3% of the property's gross rental receipts plus leasing
commissions based on the prevailing market rate for such services where the
property is located.
The Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs.
Under the 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. Tangible
asset value is determined by using the greater of (i) an amount calculated by
applying a capitalization rate of 9% to the annualized net operating income of
each property or (ii) a value of $10,000 per apartment unit for residential
property and $50 per gross square foot for commercial property to arrive at the
property tangible asset value. The property tangible asset value is then added
to the book value of all other assets excluding intangible assets. Prior to July
1, 1993, the MID consisted of two components: (i) a fixed portion which was
payable without respect to the net income of the Partnership and is equal to 25%
of the maximum MID (the "Fixed MID") and (ii) a contingent portion which is
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 was equal to
up to 75% of the maximum MID (the "Contingent MID"). The maximum MID percentage
decreases subsequent to 1999.
The General Partner amended the Amended Partnership Agreement as a settlement to
a class action complaint. This amendment eliminated 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 will remain the same. This
modified MID became effective July 1, 1993.
Fixed MID was payable in limited partnership units ("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 could have been 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.
Any amount of the MID that is paid to the General Partner in Units will be
treated as if cash was distributed to 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 to the General Partner.
Compensation, reimbursements and distributions paid to or accrued for the
benefit of the General Partner and its affiliates are as follows:
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------------------
1995 1994
-------- --------
<S> <C> <C>
Property management fees - affiliates................ $436,324 $422,777
Charged to general and administrative -
affiliates:
Partnership administration........................ 334,289 298,139
------- -------
$770,613 $720,916
======= =======
Charged to General Partner's deficit:
Contingent Management Incentive
Distribution.................................... $552,733 $ 11,355
======= =======
</TABLE>
NOTE 5.
-------
On May 18, 1994, the Partnership paid off the second mortgage note encumbering
Iberia Plaza Shopping Center. The mortgage note, in the amount of $477,016, was
paid off at a discount that resulted in a $292,539 extraordinary gain on
extinguishment of debt as shown below.
<TABLE>
<CAPTION>
<S> <C>
Principal amount of mortgage
note retired.................................... $477,016
Discount on mortgage note retired................. (83,372)
Costs incurred to retire mortgage note............ (1,105)
Discounted cash payment required to
retire mortgage note............................ (100,000)
--------
Extraordinary gain on
extinguishment of debt.......................... $292,539
=======
</TABLE>
<PAGE>
NOTE 6.
-------
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, $69,234
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 $22,283 which, when combined with the cash
proceeds from Southmark, resulted in a gain on settlement of litigation of
$91,517.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
-------------------
The Partnership was formed to acquire, operate and ultimately dispose a
portfolio of income-producing real properties. At June 30, 1995, the Partnership
owned eight apartment properties, one office building and four shopping centers.
All of the Partnership's properties are subject to mortgage notes.
Two of the Partnership's properties, The Courts Apartments and Parkway Plaza,
are being marketed for sale. There has been some interest in The Courts
Apartments among potential buyers. Preliminary expressions of interest indicate
the Partnership may be able to sell the property for approximately $1.3 million
above the mortgage debt encumbering the property. It appears that Parkway Plaza
may be more difficult to sell and realize an amount to meet Partnership
objectives.
The General Partner has elected to postpone certain payments to affiliates of
the General Partner in an attempt to increase the Partnership's level of cash
reserves. The postponed payments include the Management Incentive Distribution
("MID") and reimbursable administrative costs. These payments have been
postponed since the beginning of 1994, and are expected to continue to be
postponed through 1995.
RESULTS OF OPERATIONS
---------------------
The Partnership incurred a loss of $378,767 for the first six moths of 1995, an
improvement over the $528,130 loss incurred by the Partnership for the first six
months of 1994. The Partnership benefited from a 3.6% increase in revenues while
expenses decreased slightly. For the quarter, the Partnership's net loss
increased to $136,845 from $51,130 in the second quarter of 1994. The loss for
the second quarter of 1994 included a one-time $292,539 extraordinary gain on
extinguishment of debt.
Revenues:
Rental revenue increased $177,607 or 2.1% in the first six months of 1995
compared to the first six months of 1994. Ten of the Partnership's thirteen
properties recorded increased rental revenue, ranging from an 11.4% increase at
Regency Park Apartments to a 2.6% increase at Iberia Plaza. The increased rental
revenue was achieved through a combination of increased rental rates and
improving occupancy. A decrease in occupancy also led to a 7.2% decrease in
rental revenue at Lakeview Plaza. Parkway Plaza recorded a slight decrease in
rental revenue due to a decrease in occupancy. A major tenant vacated its space
at La Plaza Office Building in March of 1995, leading to a 23% decrease in
rental revenue at the Las Vegas property. The resulting decrease in occupancy at
La Plaza Office Building is the reason for a $20,777 or .5% decrease in rental
revenue for the second quarter of 1995 compared to the second quarter of 1994.
Decreased rental revenues at La Plaza Office Building will likely continue until
suitable replacements can be found to lease the space vacated.
Interest revenue doubled in the first six months of 1995 compared to the first
six months of 1994. An increased level of cash reserves invested in
interest-bearing accounts was the principal factor behind the increase.
Expenses:
Partnership expenses decreased $138,127 or 1.5% for the first six months of 1995
compared to the first six months of 1994. Expenses increased at five of the
Partnership's properties in amounts ranging from 6.5% at Lakeview Plaza to 1.1%
at Briarwood Apartments. Four of the Partnership's properties, Iberia Plaza, La
Plaza Office Building, Quail Meadows Apartments and Spanish Oaks Apartments were
able to decrease their expenses by an average of 9.3%. Expenses were essentially
unchanged at Coppermill Apartments, The Courts Apartments, Orchard Apartments
and Sandpiper Apartments. Major changes in expense categories were concentrated
in repair and maintenance, utilities, and personnel expenses.
Repair and maintenance expenses decreased $233,191 or 18.7% for the six months
ended June 30, 1995, compared to the same period for 1994. Expenditures for
floor, window, and appliance replacement decreased substantially at the
Partnership's residential properties. Also, Briarwood Apartments incurred a
large expense during 1994 to remove an underground storage tank. Several
properties incurred severe-weather related expenses during the first half of
1994 that were not incurred during the first half of 1995. The severe weather of
1994 also was a factor in decreased utility expense in 1995 compared to 1994.
Also contributing to the Partnership's 8.5% decrease in utility expenses were
lower occupancy rates at the Partnership's commercial properties, particularly
La Plaza Office Building, and increased occupancy rates at the Partnership's
residential properties. Leases at commercial properties, particularly office
buildings, usually require the landlord to pay for utilities, while the landlord
usually only pays for utilities in vacant units at residential properties.
Personnel expenses increased $78,621 or 8.2% for the six months ended June 30,
1995 compared to the same period for 1994. This increase was due primarily to
the Partnership's efforts to increase occupancy rates by continuing the
renovation of apartment units and upgrades in services offered to tenants. Such
improvements are partially achieved through higher maintenance standards that
require additional personnel.
Interest expense decreased $88,486 for the period ending June 30, 1995 compared
to the same period for 1994. Interest expense decreased at Coppermill Apartments
due to the late 1994 refinance of the Coppermill mortgage note. Interest expense
also decreased at Iberia Plaza due to the 1994 discounted payoff of the Iberia
Plaza second mortgage note. The balance of the Partnership's mortgage notes
recorded slightly reduced interest payments as monthly debt service payments pay
down mortgage note balances. The Partnership incurred $37,962 of interest
expense to affiliates due to the new $800,000 mortgage note on Lakeview Plaza.
The Lakeview Plaza second mortgage note is due to a partnership affiliated with
the General Partner.
Depreciation expense increased $49,865 or 2.8% for the six months ended June 30,
1995 compared to the same period for 1994. The increase in depreciation expense
is due to the continuing investment of Partnership resources into capital
improvements. For the twelve month period ended June 30, 1995, the Partnership
invested $2.32 million in capital improvements. These capital improvements are
generally depreciated over lives ranging from 5 to 10 years.
General and administrative - affiliates expenses increased $36,150 in 1995
compared to 1994 due to increased reimbursements to McREMI for services
rendered.
The Partnership also recorded one-time gains in the second quarters of both 1995
and 1994. During the second quarter of 1994, the Partnership paid off the second
mortgage note encumbering Iberia Plaza at a discount that resulted in a $292,539
extraordinary gain on extinguishment of debt. During the second quarter of 1995,
the Partnership received a settlement of its claims in the Southmark bankruptcy
case. The settlement resulted in a one-time gain on legal settlement of $91,517.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Partnership's net loss for the first six months was $378,767, an improvement
from the $528,130 loss reported for the first six months of 1994. Cash flow
generated by operating activities showed a strong improvement, increasing to
$2,665,597 from $1,118,117. The increase in cash flow from operating activities
is remarkable in that both cash receipts increased as well as almost all
categories of operating cash expenditures decreased. These changes can be
attributed to the generally improving performance of the Partnership's
properties and to the General Partner's decision to postpone payment of
reimbursable administrative costs and MID payments due to affiliates.
Short Term Liquidity:
Despite the large amounts of funds invested in capital improvements over the
past three years, the Partnership's properties still face challenges funding the
improvements still needed. The Partnership has budgeted $2.7 million of capital
improvements for the Partnership's properties during 1995. In particular, the
Partnership has identified two properties, Iberia Plaza Shopping Center and La
Plaza Office Building that will require approximately $1.5 million of capital or
tenant improvements during 1995. The Partnership recently signed a long-term
lease with a grocery store company to lease the anchor tenant space at Iberia
Plaza. The lease obligates the Partnership to invest approximately $500,000 of
capital and tenant improvements in the property. Furthermore, the two largest
tenants at La Plaza Office Building are vacating their space during 1995. To
make the building attractive to other tenants and to update the facility, the
Partnership will need to invest approximately $1 million into La Plaza. In both
cases, the General Partner believes that the increased value of the properties
after the improvements are made will provide a strong return on the
Partnership's investment.
At June 30, 1995, the Partnership held cash reserves of $1,685,375, an increase
of $1,110,786 from the balance at the end of 1994. Although the cash reserves of
the Partnership have increased significantly from depressed levels at the end of
1994, additional steps need to be taken to improve the Partnership's liquidity
in light of the need for additional capital improvements discussed in the
preceding paragraph. These steps are discussed in the following paragraphs.
The General Partner has placed two of the Partnership's properties on the market
for sale, The Courts Apartments and Parkway Plaza Shopping Center. Based on
analysis of the market, the General Partner believes that both properties can be
sold for amounts adequate to retire the related mortgage indebtedness and still
provide cash proceeds to the Partnership. Moreover, the General Partner
anticipates that the appreciation potential of both properties is limited, while
extensive capital improvement funds will be required to maintain cash from
operations at its current levels.
Two of the Partnership's mortgage notes mature in 1995, Spanish Oaks Apartments
and Parkway Plaza. The General Partner expects to refinance the Spanish Oaks
mortgage note within the next two months for an amount equal to the currently
existing debt on the property. The current Spanish Oaks mortgage note matures in
August 1995. The Parkway Plaza mortgage note may be called, upon six months
notice by the lender, beginning in December 1995. However, the General Partner
intends to resolve this contingent maturity by selling Parkway Plaza.
As a further source of funds, the Partnership may obtain secondary mortgage
financing from an affiliated partnership secured by La Plaza Office Building.
Placing a second lien on La Plaza would require the approval of the current
first lien holder, and must also comply with loan criteria of the affiliated
partnership. Proceeds from such a mortgage loan could range from $1 million to
$1.5 million, if approvals are obtained from the first lien holder and the
affiliated partnership.
For the balance of 1995, as in 1994, the General Partner intends to defer
collection of Contingent MID and reimbursements of administrative costs incurred
by affiliates of the General Partner. For the first six months of 1995, these
deferrals postponed payments totaling $887,022 to the General Partner and its
affiliates.
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 $8.8 million of capital
improvements made by the Partnership during the past three years will yield
improved cash flow from property operations in the future. Furthermore, the
General Partner has budgeted $2.7 million of capital improvements for 1995. If
the Partnership's cash position deteriorates due to reverses in property
operations, failure to sell properties currently held for sale, or failure to
obtain refinancing or secondary financing as discussed above, 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.
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 any funds from the facility
because no amount will be reserved for any particular partnership. As of June
30, 1995, $2,362,004 remained available for borrowing under the facility;
however, additional funds could become available as other partnerships repay
existing borrowings.
As a further source of liquidity, the General Partner may, from time to time,
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, The Courts Apartments and Parkway
Plaza Shopping Center are the only Partnership properties being marketed for
sale.
Distributions:
With the exception of the 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. Payments of MID to the
General Partner were suspended at the beginning of 1994; it is not presently
anticipated that such payments will be resumed during 1995.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
------- -----------------
The Partnership is not a party to, nor are any of the Partnership's properties
the subject of, any material pending legal proceedings, other than ordinary
litigation routine to the Partnership's business.
ITEM 5. OTHER INFORMATION
------- -----------------
On an unsolicited basis, High River Limited Partnership ("High River"), a
partnership controlled by Carl Icahn, announced that it has commenced an offer
to purchase 60,791 units of limited partnership interest in the Partnership
(approximately 45 percent of the Partnership's units) at $72 per unit. High
River has stated that the offer is being made as "an investment." The tender
offer is due to expire on August 31, 1995, unless extended.
The General Partner, with assistance from its advisors, is in the process of
evaluating the tender offer from a number of important standpoints and will
report to the limited partners its position with respect to such offer.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
4. Amended and Restated Partnership Agreement,
dated October 9, 1991 (Incorporated by
reference to the Quarterly Report on Form 10-Q
for the quarter ended March 31, 1991).
11. Statement regarding computation of 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 number of limited partnership
units outstanding. Per unit information has
been computed based on 135,090 limited
partnership units outstanding in 1995 and
1994.
27. Financial Data Schedule for the quarter ended
June 30, 1995.
</TABLE>
Registrant has omitted instruments with respect to long-term debt where
the total amount of securities authorized thereunder does not exceed
10% of the total assets of the Registrant. Registrant agrees to furnish
a copy of each such instruments to the Commission upon request.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during
the quarter ended June 30, 1995.
<PAGE>
McNEIL REAL ESTATE FUND X, LTD.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized:
<TABLE>
<CAPTION>
McNEIL REAL ESTATE FUND X, LTD.
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
<S> <C>
August 14, 1995 By: /s/ Donald K. Reed
----------------------- -------------------------------------------------
Date Donald K. Reed
President and Chief Executive Officer
August 14, 1995 By: /s/ Robert C. Irvine
----------------------- -------------------------------------------------
Date Robert C. Irvine
Chief Financial Officer of McNeil Investors, Inc.
Principal Financial Officer
August 14, 1995 By: /s/ Brandon K. Flaming
----------------------- --------------------------------------------------
Date Brandon K. Flaming
Chief Accounting Officer of McNeil Real Estate
Management, Inc.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,685,375
<SECURITIES> 0
<RECEIVABLES> 488,968
<ALLOWANCES> 7,428
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 87,180,165
<DEPRECIATION> (51,088,851)
<TOTAL-ASSETS> 48,084,073
<CURRENT-LIABILITIES> 0
<BONDS> 51,381,835
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> (8,373,774)
<SALES> 8,699,158
<TOTAL-REVENUES> 8,855,800
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,622,702
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,611,865
<INCOME-PRETAX> (378,767)
<INCOME-TAX> 0
<INCOME-CONTINUING> (378,767)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (378,767)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
