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, 1996
-------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to_____________
Commission file number 0-9325
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McNEIL REAL ESTATE FUND X, LTD.
- --------------------------------------------------------------------------------
(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 600, LB70, Dallas, Texas, 75240
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (972) 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 ]
133,248 of the registrant's 134,980 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 46
TOTAL OF 50 PAGES
<PAGE>
PART I
ITEM 1. BUSINESS
- ------- --------
ORGANIZATION
- ------------
McNeil Real Estate Fund X, Ltd. (the "Partnership") was organized on June 1,
1979 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 dated October 9, 1991, as amended (the "Amended
Partnership Agreement"). Prior to October 9, 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 (the
"Original Partnership Agreement") dated June 1, 1979. The principal place of
business for the Partnership and the General Partner is 13760 Noel Road, Suite
600, LB70, Dallas, Texas, 75240.
On December 14, 1979, a Registration Statement on Form S-11 was declared
effective by the Securities and Exchange Commission whereby the Partnership
offered for sale $67,500,000 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 July 17, 1980, with 135,000 Units sold at $500 each, or
gross proceeds of $67,500,000 to the Partnership. The original general partners
purchased an additional 200 Units for $100,000. Limited partners relinquished
220 Units between 1993 and 1996, leaving 134,980 Units outstanding at December
31, 1996.
SOUTHMARK BANKRUPTCY AND CHANGE IN GENERAL PARTNER
- --------------------------------------------------
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 interest in the Corporate General
Partner, were 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.
<PAGE>
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.
On October 11, 1991, the limited partners approved a restructuring proposal
providing 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 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 reimbursement 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 the 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 $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.
CURRENT OPERATIONS
- ------------------
General:
The Partnership is engaged in diversified real estate activities, including the
ownership, operation and management of residential and commercial real estate
and other real estate related assets. At December 31, 1996, the Partnership
owned eleven income-producing properties as described in Item 2 - Properties.
<PAGE>
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, and, in accordance with the
Amended Partnership Agreement, the Partnership reimburses affiliates of the
General Partner for certain expenses incurred by the affiliates in connection
with the management of the Partnership's business.
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.
Business Plan:
The Partnership determined to evaluate market and other economic conditions to
establish the optimum time to commence an orderly liquidation of the
Partnership's assets in accordance with the terms of the Amended Partnership
Agreement. Taking such conditions as well as other pertinent information into
account, the Partnership has determined to begin orderly liquidation of all its
assets. Although there can be no assurance as to the timing of the liquidation
due to real estate market conditions, the general difficulty of disposing of
real estate, and other general economic factors, it is anticipated that such
liquidation would result in the dissolution of the Partnership followed by a
liquidating distribution to Unitholders by December 2001. In this regard, the
Partnership has placed Cave Spring Corners and Iberia Plaza on the market for
sale. Until such time as the Partnership's assets are liquidated, the
Partnership's plan of operations is to preserve or increase the net operating
income of its assets 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 assets.
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 a discussion of competitive conditions at the Partnership's
properties.
<PAGE>
Forward-Looking Information:
Within this document, certain statements are made as to the expected occupancy
trends, financial condition, results of operations, and cash flows of the
Partnership for periods after December 31, 1996. All of these statements are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. These statements are not
historical and involve risks and uncertainties. The Partnership's actual
occupancy trends, financial condition, results of operations, and cash flows for
future periods may differ materially due to several factors. These factors
include, but are not limited to, the Partnership's ability to control costs,
make necessary capital improvements, negotiate sales or refinancings of its
properties and respond to changing economic and competitive factors.
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 to
purchase from holders of Units up to approximately 45% of the outstanding Units
of the Partnership for a purchase price of $72 per Unit. In September 1996, High
River made another unsolicited tender offer to purchase any and all of the
outstanding Units of the Partnership for a purchase price of $85.50 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 tender offers made with respect to the
Partnership and not tender their Units. The General Partner believes that as of
January 31, 1997, High River has purchased 8.65% of the outstanding Units
pursuant to the tender offers. In addition, all litigation filed by High River,
Mr. Icahn and his affiliates in connection with the tender offers have been
dismissed without prejudice.
<PAGE>
ITEM 2. PROPERTIES
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The following table sets forth the real estate investment portfolio of the
Partnership at December 31, 1996. The buildings and the land on which they are
located are owned by the Partnership in fee, subject in each case to a first
lien deed of trust as set forth more fully in Item 8 - Note 5 - "Mortgage Notes
Payable" and Note 6 - "Mortgage Note Payable - Affiliate." See also Item 8 -
Note 4 - "Real Estate Investments" and Schedule III - "Real Estate Investments
and Accumulated Depreciation and Amortization." In the opinion of management,
the properties are adequately covered by insurance.
<TABLE>
<CAPTION>
Net Basis 1996 Date
Property Description of Property Debt Property Tax Acquired
- --------- ----------- ----------- ---- ------------ --------
<S> <C> <C> <C> <C> <C>
Real Estate Investments:
Briarwood (1) Apartments
Tucson, AZ 196 units $ 1,976,109 $ 2,124,642 $ 60,687 07/80
Coppermill (2) Apartments
Tulsa, OK 544 units 3,856,487 4,994,151 79,720 10/80
La Plaza Office Building
Las Vegas, NV 104,230 sq. ft. 4,938,178 2,396,381 61,327 09/80
Lakeview Plaza Retail Center
Lexington, KY 172,252 sq. ft. 3,572,062 4,091,999 49,244 07/80
Orchard (3) Apartments
Lawrence, IN 378 units 3,278,665 6,185,485 205,961 12/80
Quail Meadows (4) Apartments
Wichita, KS 440 units 4,270,416 5,872,125 72,687 06/80
Regency Park (5) Apartments
Ft. Wayne, IN 226 units 2,116,157 2,390,794 115,676 06/80
Sandpiper (6) Apartments
Westminster, CO 360 units 3,705,377 5,450,041 60,498 04/80
Spanish Oaks (7) Apartments
San Antonio, TX 239 units 2,543,669 3,970,703 136,140 08/80
--------------- ------------- ---------
$ 30,257,120 $ 37,476,321 $ 841,940
=============== ============= =========
Assets Held for Sale:
Cave Spring
Corners Retail Center
Roanoke, VA 165,547 sq. ft. $ 2,257,480 $ 3,077,041 $ 58,891 10/80
Iberia Plaza Retail Center
New Iberia, LA 134,275 sq. ft. 3,051,251 1,858,930 52,804 06/80
--------------- ------------- ---------
$ 5,308,731 $ 4,935,971 $ 111,695
=============== ============= =========
</TABLE>
- ----------------------------------------
Total: Apartments - 2,383 units
Retail Centers - 472,074 sq. ft.
Office Building - 104,230 sq. ft.
<PAGE>
(1) Briarwood Apartments is owned by Briarwood Fund X Limited
Partnership, which is wholly-owned by the Partnership.
(2) Coppermill Apartments is owned by Coppermill Fund X Limited
Partnership, which is wholly-owned by the Partnership.
(3) Orchard Apartments is owned by Orchard Fund X Limited Partnership,
which is wholly-owned by the Partnership.
(4) Quail Meadows Apartments is owned by Quail Meadows Fund X Limited
Partnership, which is wholly-owned by the Partnership.
(5) Regency Park Apartments is owned by Regency Park Fund X Associates,
L.P. which is wholly-owned by the Partnership and the General Partner.
(6) Sandpiper Apartments is owned by Sandpiper Fund X Limited Partnership,
which is wholly-owned by the Partnership.
(7) Spanish Oaks Apartments is owned by Spanish Fund X, Ltd., which is
wholly-owned by the Partnership.
The following table sets forth the occupancy rates and rent per square foot of
the Partnership's properties for each of the last five years:
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
------------- ------------- -------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Real Estate Investments:
- ------------------------
Briarwood
Occupancy Rate............ 84% 92% 99% 99% 96%
Rent Per Square Foot...... $ 9.34 $ 9.91 $ 9.62 $ 8.58 $ 8.07
Coppermill
Occupancy Rate............ 89% 94% 92% 92% 89%
Rent Per Square Foot...... $ 5.74 $ 5.46 $ 5.28 $ 4.99 $ 4.73
La Plaza
Occupancy Rate............ 88% 77% 97% 99% 95%
Rent Per Square Foot...... $ 12.41 $ 10.10 $ 13.97 $ 12.56 $ 12.58
Lakeview Plaza
Occupancy Rate............ 99% 98% 100% 100% 95%
Rent Per Square Foot...... $ 5.55 $ 4.71 $ 5.69 $ 5.35 $ 4.97
Orchard
Occupancy Rate............ 93% 98% 94% 93% 89%
Rent Per Square Foot...... $ 7.40 $ 7.25 $ 6.95 $ 6.24 $ 6.20
Quail Meadows
Occupancy Rate............ 91% 94% 89% 77% 92%
Rent Per Square Foot...... $ 6.21 $ 5.80 $ 5.62 $ 5.53 $ 5.99
Regency Park
Occupancy Rate............ 89% 92% 94% 89% 86%
Rent Per Square Foot...... $ 5.19 $ 5.45 $ 5.09 $ 4.46 $ 4.64
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
------------- ------------- -------------- ------------- -------
<S> <C> <C> <C> <C> <C>
Real Estate Investments (continued):
Sandpiper
Occupancy Rate............ 96% 94% 95% 94% 98%
Rent Per Square Foot...... $ 9.48 $ 9.29 $ 8.93 $ 8.33 $ 7.46
Spanish Oaks
Occupancy Rate............ 87% 90% 91% 96% 95%
Rent Per Square Foot...... $ 6.17 $ 6.18 $ 5.97 $ 5.64 $ 5.23
Assets Held for Sale:
Cave Spring Corners
Occupancy Rate............ 100% 98% 100% 99% 95%
Rent Per Square Foot...... $ 5.14 $ 4.75 $ 4.53 $ 3.92 $ 3.93
Iberia Plaza
Occupancy Rate............ 100% 98% 94% 90% 88%
Rent Per Square Foot...... $ 4.91 $ 3.71 $ 3.90 $ 3.59 $ 3.41
</TABLE>
Occupancy rate represents all units or square footage leased divided by the
total number of units or square footage of the property as of December 31 of the
given year. Rent per square foot represents all revenue, except interest,
derived from the properties' operations divided by the leasable square footage
of the property.
Competitive Conditions at Properties
- ------------------------------------
Students at nearby University of Arizona make up 69% of the tenants at Briarwood
Apartments. Briarwood has an excellent location near the university and a bike
route to the university. Due to the heavy student-tenant profile, occupancy at
the property typically drops during the summer months, giving Briarwood an
average occupancy rate four to five percentage points below market averages. The
Tucson market softened during 1996 and 1995 due to new construction. Market
occupancy rates decreased to 91% during 1996. The occupancy rate at Briarwood
decreased to 84% at the end of 1996. Planned developments in the area may have a
short-term impact on the property, but long-term impact is expected to be
negligible due to Briarwood's excellent location.
A major exterior renovation recently finished at Cave Spring Corners Shopping
Center has allowed the Partnership to increase the property's rental rates up to
area averages. Occupancy remains high due to a good location. Competing
properties have also been renovated during the past five to six years. The
economic outlook for the Roanoke area is expected to be positive, and should
allow Cave Spring Corners to maintain its high occupancy throughout 1997. The
Partnership placed Cave Spring Corners on the market for sale effective October
1, 1996.
<PAGE>
The average occupancy rate at Coppermill Apartments mirrors the local area
average of 92%. Tulsa area occupancy rates are expected to be stable in the 92%
to 93% range. Most properties in the immediate area, including Coppermill, were
built by the same developer using identical floor plans. Thus, the local market
is very price-sensitive. Management is working to differentiate Coppermill's
units by upgrading interior fixtures and appliances. The average monthly rent
per square foot city-wide is $.54 per square foot. Coppermill's monthly rental
rates average $.515 per square foot, and are scheduled to increase to $.53 per
square foot in 1997.
Iberia Plaza gained a new anchor tenant during 1995. The property remained 97%
leased, but the proportion of the space that was "dark" or vacant decreased from
84% to 19% during 1995. The new tenant, a grocery store, has increased the
amount of traffic into the New Iberia property. In connection with the new
anchor tenant lease, the Partnership invested over $700,000 in capital
improvements to replace the asphalt, roof, exterior lighting and HVAC equipment.
The primary competition for the property is a retail center constructed in 1991
across the street from Iberia Plaza. The new retail center charges an average
rental rate of $8 to $10 per square foot as opposed to $6 at Iberia Plaza. The
Partnership placed Iberia Plaza on the market for sale effective October 1,
1996.
La Plaza Business Center made significant leasing strides in 1995 and 1996 while
recovering from large vacancies in 1995 due to space vacated by two large
tenants. Occupancy fell from 97% at the beginning of 1995 to a range of 60 to
70% in mid 1995. Occupancy has since recovered to 88% and is projected to be
approximately 94% by the end of 1997. The Partnership has invested substantial
funds in tenant improvements, bringing the property in compliance with local
building codes, updating interiors of the buildings, and reconfiguring interior
space. The investments will continue into early 1998. The Partnership intends to
fund the tenant improvements as lease negotiations proceed with new tenants.
Demand for office space in Las Vegas is expected to be strong in 1997. New
construction is aimed at the high-end of the market, and is not expected to
compete with La Plaza.
Lakeview Plaza's anchor tenant space was sublet to two tenants in 1996. The
anchor tenant space is now occupied and drawing customers to the center once
again. The local market area appears to be strong, with several national
retailers opening new stores or announcing plans for new stores in the Lexington
area. There are several, newer competing properties in close proximity to
Lakeview Plaza. All but one space at the center remains leased, but little
growth in rental rates has been seen since the early 1990s.
Orchard Apartments has benefited from extensive capital improvements during the
past several years. The property, as a result, has good curb appeal and a
favorable local reputation. Orchard's occupancy rate is usually two percentage
points above its competitors. The property is also able to command rental rates
slightly in excess of its competitors. The Lawrence market, however, appears to
be softening due to a favorable climate for first-time home buyers and an
unusual number of job transfers by residents out of the area. Consequently, the
property is likely to have slower revenue growth in 1997 than has been achieved
in recent years.
<PAGE>
Quail Meadows Apartments is one of the nicer properties in the Wichita area.
Both interiors and exteriors of the property are above average relative to the
competition. Quail Meadows has maintained occupancy rates higher than market
averages, but has not been able to increase rental rates despite significant
capital improvements. However, the local market appears to be improving, with
local employers doing well. Rental rates, which have been depressed for several
years, are expected to rise in 1997. No new apartment communities are planned
for the submarket, and none have been built for the past twelve years.
Occupancy rates in the Regency Park Apartments market area average 92%, slightly
better than Regency Park's occupancy rate. Rental rates realized at Regency Park
are approximately 8% lower than its competitors. The property competes with
numerous properties, some of which are newer or have more appeal to prospective
tenants. Capital improvements made by the Partnership during the past three
years have allowed the property to close some of the gap between Regency Park
and its competitors. The rental market in the Ft. Wayne area, however, remains
price sensitive. Improvements in operating results generally are coming through
improved occupancy rather than rate increases.
Capital improvements placed in service since 1992 have allowed Sandpiper
Apartments to repeatedly increase its base rental rates. Occupancy and rental
rates are above market averages. There is significant new construction under
development in the market area. It is expected that the new construction will
put downward pressure on Westminster market rent levels, but management expects
that well-maintained Sandpiper will continue to compete effectively.
Average occupancy rates at Spanish Oaks Apartments have decreased 3.5 percentage
points during the past two years due to competition with new construction, older
properties that have been renovated, and rate hikes at Spanish Oaks. The
Partnership has increased base rental rates at the property, but rental rates at
Spanish Oaks remain below San Antonio market averages. The interiors at Spanish
Oaks will need to be updated to allow the property to raise its rents to current
market levels. Also of concern is the reliance upon personnel employed or
stationed at Fort Sam Houston Army Base for many of the property's tenants.
<PAGE>
The following schedule shows lease expirations for each of the Partnership's
commercial properties for 1997 through 2006:
<TABLE>
<CAPTION>
Number of Annual % of Gross
Expirations Square Feet Rent Annual Rent
----------- ----------- ------ -----------
<C> <C> <C> <C> <C>
Real Estate Investments:
- ------------------------
La Plaza
- --------
1997 12 9,646 $ 142,356 11%
1998 4 10,793 162,048 12%
1999 4 13,410 242,856 18%
2000 6 34,085 521,568 39%
2001 4 12,253 183,768 14%
Thereafter 0 - - -
Lakeview Plaza
- --------------
1997 3 10,568 93,780 11%
1998 2 1,025 15,168 2%
1999 2 6,071 54,648 7%
2000 1 913 9,432 1%
2001 0 - - -
2002 0 - - -
2003 2 16,721 118,380 14%
2004 2 121,942 455,700 56%
2005 0 - - -
2006 0 - - -
Assets Held for Sale:
- ---------------------
Cave Spring Corners
- -------------------
1997 1 1,920 $ 26,808 4%
1998 2 6,255 42,156 6%
1999 2 3,758 43,896 7%
2000 2 3,298 37,968 6%
2001 5 105,071 335,820 51%
2002 0 - - -
2003 2 46,432 171,156 26%
2004 0 - - -
2005 0 - - -
2006 0 - - -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Number of Annual % of Gross
Expirations Square Feet Rent Annual Rent
----------- ----------- ------ -----------
<C> <C> <C> <C> <C>
Iberia Plaza
- ------------
1997 3 4,008 $ 23,808 4%
1998 5 33,285 139,260 26%
1999 5 7,243 56,808 10%
2000 0 - - -
2001 1 3,240 27,540 5%
2002 0 - - -
2003 1 79,902 271,668 50%
2004 0 - - -
2005 1 3,360 26,040 5%
2006 0 - - -
</TABLE>
No residential tenant leases 10% or more of the available rental space of any
residential property. The following schedule reflects information on commercial
tenants occupying 10% or more of the leasable square feet for each property:
<TABLE>
<CAPTION>
Nature of
Business Square Footage Lease
Use Leased Annual Rent Expiration
- --------- -------------- ----------- -----------
<S> <C> <C> <C>
Real Estate Investments:
- ------------------------
La Plaza:
- ---------
Governmental agency 12,097 $224,052 1999
Lakeview Plaza:
- ---------------
Discount department store 78,337 252,996 2004
Grocery store 43,605 202,704 2004
Assets Held for Sale:
- ---------------------
Cave Spring Corners:
- --------------------
Department store 84,217 192,000 2001
Grocery store 46,432 143,556 2003
Iberia Plaza:
- -------------
Grocery store 26,445 89,916 1998
Discount department store 79,902 271,668 2003
</TABLE>
<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 as noted below.
1) James F. Schofield, Gerald C. Gillett, Donna S. Gillett, Jeffrey Homburger,
Elizabeth Jung, Robert Lewis, and Warren Heller et al. v. McNeil Partners
L.P., McNeil Investors, Inc., McNeil Real Estate Management, Inc., Robert
A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd.,
McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil
Real Estate Fund XI, Ltd., McNeil Real Estate Fund XII, Ltd., McNeil Real
Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate
Fund XX, L.P., McNeil Real Estate Fund XXI, L.P., McNeil Real Estate Fund
XXII, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund
XXV, L.P., McNeil Real Estate Fund XXVI, L.P., and McNeil Real Estate Fund
XXVII, L.P., et al. - Superior Court of the State of California for the
County of Los Angeles, Case No. BC133799 (Class and Derivative Action
Complaint).
The action involves purported class and derivative actions brought by
limited partners of each of the fourteen limited partnerships that were
named as nominal defendants as listed above (as defined in this Section 1,
the "Partnerships"). Plaintiffs allege that McNeil Investors, Inc., its
affiliate McNeil Real Estate Management, Inc. and three of their senior
officers and/or directors (as defined in this Section 1, collectively, the
"Defendants") breached their fiduciary duties and certain obligations under
the respective Amended Partnership Agreement. Plaintiffs allege that
Defendants have rendered such Units highly illiquid and artificially
depressed the prices that are available for Units on the resale market.
Plaintiffs also allege that Defendants engaged in a course of conduct to
prevent the acquisition of Units by an affiliate of Carl Icahn by
disseminating purportedly false, misleading and inadequate information.
Plaintiffs further allege that Defendants acted to advance their own
personal interests at the expense of the Partnerships' public unit holders
by failing to sell Partnership properties and failing to make distributions
to Unitholders.
On December 16, 1996, the Plaintiffs filed a consolidated and amended
complaint. Plaintiffs are suing for breach of fiduciary duty, breach of
contract and an accounting, alleging, among other things, that the
management fees paid to the McNeil affiliates over the last six years are
excessive, that these fees should be reduced retroactively and that the
respective Amended Partnership Agreements governing the Partnerships are
invalid. On January 7, 1997, the Court ordered consolidation with three
other similar actions listed below.
The Partnerships filed a demurrer to the complaint and a motion to strike
on February 14, 1997, seeking to dismiss the complaint in all respects. The
demurrer is pending. The Partnerships deny that there is any merit to
Plaintiff's allegations and intend to vigorously defend this action.
<PAGE>
2) 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). On January 7, 1997,
this action was consolidated by court order with Schofield, et al.,
referenced above.
3) 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). On January 7, 1997, this action
was consolidated by court order with Schofield, et al., referenced above.
4) 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.
On April 11, 1996, the action was dismissed without prejudice in
anticipation of consolidation with other class action complaints. On
January 7, 1997, this action was consolidated by court order with
Schofield, et al., referenced above.
5) The First National Bank of Chicago, as Trustee Under That Certain Pooling
and Servicing Agreement Dated as of December 1, 1995, for Resolution Trust
Corporation Commercial Mortgage Pass-Through Certificates, Series 1995-C2
v. McNeil Real Estate Fund X, Ltd., McNeil Partners, L.P. and McNeil
Investors, Inc. - U.S. District Court, Northern District of Dallas, Dallas
Division; Civil Action No. 33-96CV3198-D; and District Court, Dallas
County, Texas, F-116th Judicial District; Case No.: 96-13066(P96014).
The plaintiffs are the holder of a certain Second Lien Wraparound
Promissory Note ("Wraparound Note") secured by the Spanish Oaks Apartments.
This action involves a dispute of the principal payoff amount on the
Wraparound Note. The plaintiffs contend that the payoff balance is
$3,399,592; however, the Partnership has calculated the payoff balance to
be significantly less. On January 26, 1996, the Partnership refinanced the
Spanish Oaks Apartments. At that time the $3,399,592 was escrowed with the
American Title Company. The plaintiff claims that pursuant to the terms of
the Wraparound Note, the Partnership owes the entire escrowed balance. The
parties have been ordered to mediation before July 28, 1997, which is the
current trial date. The Partnership anticipates that this matter will be
concluded through settlement with no adverse effect to the Partnership.
For discussion of the Southmark bankruptcy, see Item 1 - Business."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------
None.
<PAGE>
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 6,617 as of January 31, 1997
(C) No distributions were paid to the limited partners in 1996 or 1995 and
none are anticipated in 1997. The Partnership accrued distributions of
$1,048,667 and $1,064,257 for the benefit of the General Partner for
the years ended December 31, 1996 and 1995, respectively. These
distributions are the Management Incentive Distribution (the "MID")
pursuant to the Amended Partnership Agreement. 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.
<TABLE>
<CAPTION>
Years Ended December 31,
Statements of --------------------------------------------------------------------------
Operations 1996 1995 1994 1993 1992
- ------------------ -------------- ------------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Rental revenue............... $ 16,089,109 $ 16,878,076 $ 17,375,904 $ 16,217,889 $ 16,023,798
Gain on involuntary
conversion.................. 285,127 - - 268,434 192,168
Gain on sale of real estate.. 353,389 3,183,698 - - -
Total revenue................ 16,853,542 20,258,594 17,428,487 16,542,802 16,283,680
Loss on replacement
of assets................... - - - - (675,420)
Income (loss) before
extraordinary items......... 872,382 2,193,164 (1,199,904) (1,693,057) (2,101,133)
Extraordinary items.......... 269,596 - 292,539 (1,078,519) -
Net income (loss)............ 1,141,978 2,193,164 (907,365) (2,771,576) (2,101,133)
Net income (loss) per
limited partnership unit:
Income (loss) before
extraordinary items......... $ 6.14 $ 15.43 $ (10.25) $ (15.62) $ (24.66)
Extraordinary items.......... 1.90 - 2.06 (7.58) -
------------ ----------- ------------ ----------- ------------
Net income (loss)............ $ 8.04 $ 15.43 $ (8.19) $ (23.20) $ (24.66)
============ =========== ============ =========== ============
As of December 31,
Balance Sheets 1996 1995 1994 1993 1992
- -------------- ------------- ------------- -------------- ------------- ------------
Real estate investments, net... $ 30,257,120 $36,699,530 $ 37,024,893 $ 45,705,474 $ 44,968,959
Assets held for sale........... 5,308,731 2,237,733 7,215,032 - -
Total assets................... 41,407,352 43,638,649 48,379,933 50,632,244 48,958,917
Mortgage notes payable, net.... 42,412,292 44,454,316 52,078,850 54,484,455 49,141,717
Partners' deficit.............. (6,220,056) (6,313,367) (7,442,274) (5,900,107) (2,304,044)
</TABLE>
See Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations. The Partnership sold the following properties during the
five year period ended December 31, 1996.
Property Date Sold
-------- ---------
Parkway Plaza September 18, 1996
The Courts Apartments September 14, 1995
<PAGE>
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 1996, the
Partnership owned seven apartment buildings, three retail centers and one office
building. All of the Partnership's properties are subject to mortgage
indebtedness.
On September 18, 1996, the Partnership sold Parkway Plaza shopping center, a
135,682 square foot retail center located in Lafayette, Louisiana. The decision
to sell Parkway Plaza was influenced by both the General Partner's belief that
the appreciation potential of the property was limited and the impending
maturity of the mortgage note secured by the property. The Partnership recorded
a $275,424 gain on the sale of Parkway Plaza. Net proceeds from the sale
amounted to $283,585 and were added to the Partnership's balance of cash
reserves.
The mortgage note secured by La Plaza Office Building in Las Vegas matured on
March 1, 1997. Subsequent to year end, on February 28, 1997, the Partnership
resolved the impending maturity by refinancing the La Plaza mortgage note. The
Partnership obtained a 3-year, $2,336,029 mortgage note from another partnership
affiliated with the General Partner. The new mortgage note bears interest at a
variable rate equal to 1% plus the prime lending rate. No net proceeds were
realized from the refinancing.
Earlier, the Partnership realized $475,775 from the January 26, 1996 refinancing
of the Spanish Oaks mortgage note. The new mortgage note, in the amount of
$4,000,000, reduced the interest rate on the debt secured by Spanish Oaks
Apartments to 7.71% from the previous mortgage note's 10% rate. Monthly debt
service payments were reduced to $28,546 from $31,392. In connection with the
payoff of the previous mortgage note, the Partnership negotiated a discounted
payoff that resulted in a $269,596 extraordinary gain on extinguishment of debt.
RESULTS OF OPERATIONS
- ---------------------
1996 compared to 1995
Partnership net income decreased in 1996 to $1,141,978 from $2,193,164 in 1995.
Included in net income for both years are gains on sale of real estate. Gains on
sale of real estate amounted to $353,389 and $3,183,698 for the years 1996 and
1995, respectively. Partnership income from continuing property operations,
excluding gains on sale of real estate and all other one-time transaction gains,
increased to $233,866 in 1996 from a loss of $1,082,051 in 1995. The improved
performance of the Partnership is attributable to the improving performance of
the Partnership's properties generally, and to the elimination of rental
operations at The Courts Apartments which was sold on September 14, 1995.
<PAGE>
Revenue:
Rental revenue decreased $788,967 to $16,089,109 in 1996 compared to 1995.
However, after excluding rental revenue attributable to Parkway Plaza and The
Courts Apartments, the two Partnership properties sold during 1996 and 1995, the
Partnership reported a $747,824 or 5.0% increase in rental revenue in 1996
compared to 1995.
Rental revenue increased at four of the Partnership's seven residential
properties. All of the residential properties increased base rental rates by
small amounts except for Quail Meadows Apartments. The increases in base rental
rates averaged 2.6%. Although Quail Meadows Apartments did not increase its base
rental rates, an increase in average occupancy rates resulted in the Wichita
property reporting the largest net increase in rental revenue of the
Partnership's seven residential properties. Coppermill also reported an increase
in average occupancy rates. Rate hikes at Orchard Apartments and Sandpiper
Apartments were partially offset by decreased average occupancy rates. The
decrease in occupancy at Briarwood Apartments more than offset a small rental
rate increase. The Tucson property is competing in a soft market where new
construction is not being fully absorbed. Rental revenue at Regency Park
Apartments was adversely affected by a fire that destroyed 16 units, and the
following reconstruction. Rental revenue was essentially unchanged at Spanish
Oaks Apartments in 1996 compared to 1995.
The Partnership's four commercial properties reported much larger increases in
rental revenue than did the Partnership's residential properties. The increases
were led by La Plaza Office Building. Rental revenue at La Plaza increased 23%
in 1996. The increase was achieved through an increase in the occupancy rate
from 77% at the end of 1995 to 88% at the end of 1996. The Partnership is in the
process of reconfiguring the Las Vegas property, after the property's two
largest tenants vacated their space in 1995, to take advantage of a strong
market for office space in the Las Vegas market. The Partnership's three retail
centers also posted increased rental revenue, largely through increased
recoveries of operating expenses and property taxes from their respective
tenants.
Expenses:
Partnership expenses decreased $2,084,270 or 11.5% in 1996 compared to 1995.
Expenses decreased in all categories except for property taxes and general and
administrative expenses. However, most of the decrease in expenses is due to the
sale of The Courts Apartments and Parkway Plaza. Expenses incurred by the
Partnership's remaining properties decreased $148,950 or 0.9% in 1996 compared
to 1995. Every expense category changed by less than 5% at the remaining
properties except for property taxes, general and administrative, and general
and administrative expenses paid to affiliates.
Property tax expense increased $147,776 or 17.1% at the eleven properties
remaining in the Partnership's portfolio at the end of 1996. Property tax
expense increased by more than 10% at five properties: Cave Spring Corners,
Iberia Plaza, Lakeview Plaza, Regency Park Apartments and Spanish Oaks
Apartments. Generally, the increases result from increased valuations placed on
properties by local tax jurisdictions. Some of the change, particularly at
Lakeview Plaza, results from adjustments to prior year taxes as a result of
appeal proceedings. The Partnership was able to reduce Lakeview Plaza's 1994
property taxes as the result of a 1995 administrative hearing that reduced the
property's assessed value. However, in 1996 the tax jurisdictions appealed and
won a reversal of the decreased assessed value.
<PAGE>
General and administrative expenses increased $54,481 or 14.7% in 1996 compared
to 1995. Expenses related to the evaluation and dissemination of information
regarding an unsolicited tender offer increased $20,638 in 1996 compared to
1995. Also, the Partnership incurred a $23,139 increase in sales and use taxes
paid to various states and a $13,000 increase in fees paid to appraisers.
General and administrative expenses paid to affiliates decreased $239,503 or 36%
in 1996 compared to 1995. Reimbursements charged to the Partnership decreased
because of reduced expenses incurred by affiliates in managing the Partnership
and other affiliated partnerships. Expenses also decreased because of the sale
of Parkway Plaza and The Courts Apartments in 1996 and 1995, respectively.
Expenses charged by affiliates have and will continue to decrease as the
Partnership liquidates its portfolio of properties.
1995 compared to 1994
Revenue:
The Partnership reported two non-recurring items of revenue in 1995. A
$3,183,698 gain was recognized on the September 1995 sale of The Courts
Apartments. The Partnership also reported a $91,517 gain on a legal settlement
that pertained to the settlement of the Partnership's claims in the Southmark
bankruptcy filing.
The Partnership's rental revenue decreased $497,828 or 2.9% in 1995 compared to
1994. Most of the decrease is attributable to the sale of The Courts Apartments
in September 1995. However, rental revenue, excluding rental revenue from The
Courts Apartments for 1995 and 1994, also decreased by $79,997 or 0.5%. Eight of
the Partnership's properties reported steady increases in rental revenue ranging
from 3 to 4.5 percent. One property, Regency Park Apartments, reported a 7.0%
increase in rental revenue, the result of a 5% increase in base rental rates
combined with a decrease in vacancy losses.
Decreases in rental revenue were reported at Iberia Plaza, La Plaza Office
Building and Lakeview Plaza. Behind the 3.8% decrease in rental revenue at
Iberia Plaza was a decrease in percentage rents from the property's tenants. 78%
of the property's leasable space was "dark" (space that is under lease, but
vacant) for some period of time during 1995. Tenants who have vacated their
space, but are still paying base rent do not provide the Partnership with any
percentage rents. Expense recoveries also decreased at Iberia Plaza. A new
anchor tenant (a grocery store) is now in place at Iberia Plaza. The General
Partner anticipated that expense recoveries would improve in 1996 due to the new
anchor tenant. Rental revenue at La Plaza Office Building decreased 28% as a
major tenant moved to a competing property and another tenant reduced its space
requirements by half. The Partnership is reconfiguring space arrangements at La
Plaza Office Building to take advantage of the shortage of smaller office suites
in the Las Vegas market. Rental revenue was expected to remain depressed at La
Plaza for 1996, before improving in 1997. Lakeview Plaza also had difficulty
with dark space in 1995. Rental revenue at the Lexington, Kentucky property
decreased 17.3% in 1995 principally due to decreases in expense recoveries from
tenants no longer operating businesses at the property.
Expenses:
Total Partnership expenses decreased $562,961 or 3.0% in 1995 compared to 1994.
Excluding the effect of expenses incurred at The Courts Apartments reveals an
$8,949 decrease in expenses.
<PAGE>
Property tax expense decreased at six of the Partnership's properties. The most
significant decrease was reported at Lakeview Plaza. A preliminary reduction in
the assessed value of Lakeview Plaza resulted in a $78,000 reduction in property
tax expense for 1995. Property taxes were also reduced by lesser amounts at Cave
Spring Corners Shopping Center, Orchard Apartments, Regency Park Apartments,
Sandpiper Apartments and Spanish Oaks Apartments.
Other property operating expenses, excluding other property operating expenses
incurred at The Courts Apartments, increased $86,128 or 9.3% in 1995 compared to
1994. The increase is principally attributable to increased insurance expense
for the Partnership's properties. Also included in this category are advertising
and marketing expenses, bad debt expense, and office and administrative
expenses.
Partnership general and administrative expenses increased $167,761 or 83% in
1995 compared to 1994. The Partnership incurred $242,486 of expenses related to
the evaluation and dissemination of information with regards to a 1995
unsolicited tender offer. No such expenses were incurred in 1994.
Interest incurred on loans from affiliates increased to $78,822 in 1995 from
$5,206 in 1994. This expense represents interest on the $800,000 loan from an
affiliate of the General Partner secured by Lakeview Plaza. Only one month of
affiliate interest expense was incurred in 1994 as opposed to twelve months of
such expense during 1995.
General and administrative expenses incurred for the benefit of affiliates
increased $61,400 or 10.1% in 1995 compared to 1994. These expenses are the
reimbursable expenses incurred by affiliates of the General Partner. These costs
increased due to a reduction in the number of properties managed by McREMI over
which such costs are allocated.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the three year period ended December 31, 1996, the Partnership reported
net income of $2,427,777. However, during the same three-year period, the
Partnership generated $10,079,048 of cash flow from operating activities. Cash
flow provided by operating activities decreased $1,106,418 to $3,031,951 in 1996
compared to 1995. The decrease was primarily caused by an increase in cash paid
to affiliates. Cash paid to affiliates increased 92% in 1996 because the
Partnership resumed payment of reimbursements to affiliates of the General
Partner in 1996. Such expenses were not paid in 1995 to enable the Partnership
to restore its balance of cash reserves. Decreased cash flow from operating
activities is also attributable to the sale of Parkway Plaza and The Courts
Apartments in 1996 and 1995, respectively.
<PAGE>
The sale of Parkway Plaza in September 1996 provided cash proceeds of
$2,828,051; however, $2,544,466 of that amount was used to retire the Parkway
Plaza mortgage note. The Partnership continues to invest substantial resources
into capital improvements at its properties. A total of $7,411,032 of
improvements have been added to the Partnership's properties over the past three
years. In 1996, $422,619 of the improvements were reimbursed to the Partnership
by its insurance carrier as a result of a fire that destroyed 16 units at
Regency Park Apartments. An additional $1.6 million of capital improvements are
budgeted for 1997.
The January 1996 refinancing of the Spanish Oaks mortgage note provided $475,775
of refinancing proceeds for the Partnership. The refinancing also reduced the
interest rate on the Spanish Oaks mortgage debt to 7.71% from 10.0% and reduced
monthly debt service payments by $2,846 to $28,546. Amortization of mortgage
principal balances through monthly debt service payments accounted for most of
the $911,444 of principal repayments made by the Partnership during 1996.
MID payments to the General Partner have been suspended since the beginning of
1994 to improve the cash position of the Partnership. See short-term liquidity
below.
Short-term liquidity:
At December 31, 1996, the Partnership held cash and cash equivalents of
$2,660,679, up $847,085 from the balance at the end of 1995. Cash reserves of
the Partnership have increased significantly from the depressed levels at the
end of 1994. The General Partner is continuing to take steps to increase the
Partnership's liquidity. Some of these steps are discussed in the following
paragraphs.
Over the past three years, the Partnership has invested large amounts of funds
in capital improvements at the Partnership's properties. Although significant
challenges remain, total capital expenditures for 1997 are expected to decrease
from the average amount expended in each of the past three years. The
Partnership's capital improvement budget for 1997 amounts to $1.6 million. The
largest capital projects of the Partnership will be concentrated at La Plaza
Office Building as the property undergoes refurbishment to allow it to take
advantage of a strong Las Vegas market.
The La Plaza mortgage note matures on March 1, 1997. Subsequent to year end, the
Partnership refinanced the La Plaza mortgage note with a $2,336,029 mortgage
note obtained from a partnership affiliated with the General Partner. The new
mortgage note matures in three years, bears interest at a variable rate equal to
1% plus the prime lending rate, and requires monthly interest-only payments.
During 1996, 1995 and 1994, the General Partner deferred collection of the MID.
As of December 31, 1996, approximately $2.7 million of deferred MID payments
were due to the General Partner. The General Partner anticipates resuming
payment of MID if the Partnership's properties continue to perform as
anticipated.
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 $7.4 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 an additional $1.6 million of capital improvements
for 1997. 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.
<PAGE>
The Partnership determined to evaluate market and other economic conditions to
establish the optimum time to commence an orderly liquidation of the
Partnership's assets in accordance with the terms of the Amended Partnership
Agreement. Taking such conditions as well as other pertinent information into
account, the Partnership has determined to begin orderly liquidation of all its
assets. Although there can be no assurance as to the timing of the liquidation
due to real estate market conditions, the general difficulty of disposing of
real estate, and other general economic factors, it is anticipated that such
liquidation would result in the dissolution of the Partnership followed by a
liquidating distribution to Unitholders by December 2001. In this regard, the
Partnership has placed Cave Spring Corners and Iberia Plaza on the market 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 MID paid in
cash. Depreciation is allocated in the ratio of 95:5 to the limited partners and
the General Partner, respectively. Therefore, for each of the three years in the
period ended December 31, 1996, net income of $57,099, $109,658 and $199,163,
respectively, was allocated to the General Partner. The limited partners were
allocated net income (loss) of $1,084,879, $2,083,506 and $(1,106,528) for each
of the three years in the period ended December 31, 1996, respectively.
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. Payments of MID have been suspended since the beginning of
1994. The General Partner will continue to monitor the cash reserves and working
capital needs of the Partnership to determine when cash flows will support
payments of MID and distributions to the Unit holders.
<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....................................... 20
Balance Sheets at December 31, 1996 and 1995................................... 21
Statements of Operations for each of the three years in the
period ended December 31, 1996.............................................. 22
Statements of Partners' Deficit for each of the three
years in the period ended December 31, 1996................................. 23
Statements of Cash Flows for each of the three years in the
period ended December 31, 1996.............................................. 24
Notes to Financial Statements.................................................. 26
Financial Statement Schedule:
Schedule III - Real Estate Investments and Accumulated
Depreciation and Amortization............................................ 40
</TABLE>
All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
McNeil Real Estate Fund X, Ltd.:
We have audited the accompanying balance sheets of McNeil Real Estate Fund X,
Ltd. (a California limited partnership) as of December 31, 1996 and 1995, and
the related statements of operations, partners' deficit and cash flows for each
of the three years in the period ended December 31, 1996. 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 X, Ltd.
as of December 31, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996, 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 17, 1997
<PAGE>
McNEIL REAL ESTATE FUND X, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
----------------------------------
1996 1995
--------------- -------------
<S> <C> <C>
ASSETS
- ------
Real estate investments:
Land..................................................... $ 8,836,046 $ 10,464,914
Buildings and improvements............................... 71,110,263 78,886,121
-------------- -------------
79,946,309 89,351,035
Less: Accumulated depreciation and amortization......... (49,689,189) (52,651,505)
-------------- -------------
30,257,120 36,699,530
Assets held for sale 5,308,731 2,237,733
Cash and cash equivalents................................... 2,660,679 1,813,594
Cash segregated for security deposits....................... 301,259 317,834
Accounts receivable......................................... 575,995 432,618
Prepaid expenses and other assets........................... 329,136 332,665
Escrow deposits............................................. 802,841 625,344
Deferred borrowing costs, net of accumulated
amortization of $438,719 and $306,342 at
December 31, 1996 and 1995, respectively................. 1,171,591 1,179,331
-------------- -------------
$ 41,407,352 $ 43,638,649
============== =============
LIABILITIES AND PARTNERS' DEFICIT
- ---------------------------------
Mortgage notes payable, net................................. $ 41,612,292 $ 44,454,316
Mortgage note payable - affiliates.......................... 800,000 800,000
Accounts payable............................................ 61,356 186,785
Accrued property taxes...................................... 530,973 522,951
Accrued interest............................................ 309,977 370,294
Accrued interest - affiliates............................... 6,625 6,625
Other accrued expenses...................................... 309,981 318,324
Payable to affiliates - General Partner..................... 3,555,343 2,907,490
Deferred gain on involuntary conversion..................... 65,800 -
Security deposits and deferred rental revenue............... 375,061 385,231
-------------- -------------
47,627,408 49,952,016
-------------- -------------
Partners' deficit
Limited partners - 135,200 limited partnership units
authorized; 134,980 and 135,030 limited partnership
units issued and outstanding at December 31, 1996
and 1995, respectively................................. (704,049) (1,788,928)
General Partner.......................................... (5,516,007) (4,524,439)
-------------- -------------
(6,220,056) (6,313,367)
$ 41,407,352 $ 43,638,649
============== =============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND X, LTD.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------
1996 1995 1994
-------------- -------------- ---------------
<S> <C> <C> <C>
Revenue:
Rental revenue.......................... $ 16,089,109 $ 16,878,076 $ 17,375,904
Interest................................ 125,917 105,303 52,583
Gain on sale of real estate............. 353,389 3,183,698 -
Gain on involuntary conversion.......... 285,127 - -
Gain on legal settlement................ - 91,517 -
------------- ------------- --------------
Total revenue......................... 16,853,542 20,258,594 17,428,487
------------- ------------- --------------
Expenses:
Interest................................ 4,204,981 4,980,917 5,354,150
Interest - affiliates................... 74,915 78,822 5,206
Depreciation and amortization........... 3,232,454 3,567,913 3,609,402
Property taxes.......................... 1,035,988 1,010,754 1,194,939
Personnel expenses...................... 1,694,914 1,950,309 1,950,481
Utilities............................... 1,231,498 1,368,713 1,442,254
Repairs and maintenance................. 1,879,831 2,100,763 2,313,443
Property management fees -
affiliates............................ 791,081 846,482 868,408
Other property operating expenses....... 979,099 1,119,336 1,077,848
General and administrative ............. 425,305 370,824 203,063
General and administrative -
affiliates............................ 431,094 670,597 609,197
------------- ------------- --------------
Total expenses........................ 15,981,160 18,065,430 18,628,391
------------- ------------- --------------
Income (loss) before extraordinary
items................................... 872,382 2,193,164 (1,199,904)
Extraordinary items........................ 269,596 - 292,539
------------- ------------- --------------
Net income (loss).......................... $ 1,141,978 $ 2,193,164 $ (907,365)
============= ============= ==============
Net income (loss) allocated to
limited partners........................ $ 1,084,879 $ 2,083,506 $ (1,106,528)
Net income allocated to
General Partner......................... 57,099 109,658 199,163
------------- ------------- --------------
Net income (loss).......................... $ 1,141,978 $ 2,193,164 $ (907,365)
============= ============= ==============
Net income (loss) per limited
partnership unit:
Income (loss) before extraordinary
items................................. $ 6.14 $ 15.43 $ (10.25)
Extraordinary items..................... 1.90 - 2.06
------------- ------------- -------------
Net income (loss) per limited
partnership unit...................... $ 8.04 $ 15.43 $ (8.19)
============= ============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND X, LTD.
STATEMENTS OF PARTNERS' DEFICIT
For the Years Ended December 31, 1996, 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 income (loss)........................... 199,163 (1,106,528) (907,365)
Management Incentive Distribution........... (634,802) - (634,802)
-------------- ------------- --------------
Balance at December 31, 1994................ (3,569,840) (3,872,434) (7,442,274)
Net income.................................. 109,658 2,083,506 2,193,164
Management Incentive Distribution........... (1,064,257) - (1,064,257)
-------------- ------------- --------------
Balance at December 31, 1995................ (4,524,439) (1,788,928) (6,313,367)
Net income.................................. 57,099 1,084,879 1,141,978
Management Incentive Distribution........... (1,048,667) - (1,048,667)
-------------- ------------- --------------
Balance at December 31, 1996................ $ (5,516,007) $ (704,049) $ (6,220,056)
============== ============= ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND X, LTD.
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------------------
1996 1995 1994
--------------- -------------- -----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from tenants............... $ 16,001,867 $ 16,953,669 $ 17,305,399
Cash paid to suppliers................... (6,361,556) (6,541,879) (7,157,611)
Cash paid to affiliates.................. (1,622,989) (846,113) (1,020,972)
Interest received........................ 125,917 105,303 52,583
Interest paid............................ (3,904,205) (4,593,039) (5,142,089)
Interest paid to affiliates.............. (74,915) (77,403) -
Gain on legal settlement................. - 91,517 -
Property taxes paid and escrowed......... (1,132,168) (953,686) (1,128,582)
------------- ------------- --------------
Net cash provided by operating
activities............................... 3,031,951 4,138,369 2,908,728
------------- ------------- --------------
Cash flows from investing activities:
Additions to real estate investments..... (2,328,129) (2,939,050) (2,143,853)
Proceeds from sale of real estate........ 2,958,375 7,905,804 -
Insurance proceeds for fire damage....... 422,619 - -
------------- ------------- ---------------
Net cash provided by (used in)
investing activities..................... 1,052,865 4,966,754 (2,143,853)
------------- ------------- ---------------
Cash flows from financing activities:
Net proceeds from (cash used in)
refinancing mortgage notes
payable................................ 600,408 - (1,123,933)
Net proceeds from mortgage
note payable - affiliates.............. - - 800,000
Retirement of mortgage notes due
to sale of real estate................. (2,544,466) (6,616,231) -
Principal payments on mortgage
notes payable.......................... (1,036,077) (1,184,440) (1,177,719)
Reduction of mortgage note............... (132,959) - -
Deferred borrowing costs paid............ (124,637) (65,447) (165,912)
------------- ------------- --------------
Net cash used in financing activities....... (3,237,731) (7,866,118) (1,667,564)
------------- ------------- --------------
Net increase (decrease) in cash and
cash equivalents......................... 847,085 1,239,005 (902,689)
Cash and cash equivalents at
beginning of year........................ 1,813,594 574,589 1,477,278
------------- ------------- --------------
Cash and cash equivalents at
end of year.............................. $ 2,660,679 $ 1,813,594 $ 574,589
============= ============= ==============
</TABLE>
See discussion of noncash investing and financing activity in Note 7 - "Sale of
Real Estate," Note 8 "Refinancing of Mortgage Notes," Note 9 - "Gains on
Extinguishment of Debt" and Note 10 - "Gain on Involuntary Conversion."
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND X, LTD.
STATEMENTS OF CASH FLOWS
Reconciliation of Net Income (Loss) to Net Cash Provided by
Operating Activities
<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------
1996 1995 1994
-------------- -------------- ---------------
<S> <C> <C> <C>
Net income (loss).......................... $ 1,141,978 $ 2,193,164 $ (907,365)
------------- ------------- --------------
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization........... 3,232,454 3,567,913 3,609,402
Amortization of deferred borrowing
costs................................. 132,377 146,047 142,512
Amortization of discounts on
mortgage notes payable................ 144,886 176,137 188,586
Gain on sale of real estate............. (353,389) (3,183,698) -
Gain on involuntary conversion.......... (285,127) - -
Extraordinary items..................... (269,596) - (292,539)
Changes in assets and liabilities:
Cash segregated for security
deposits............................ 16,575 93,211 (26,923)
Accounts receivable................... (102,151) 57,773 (16,358)
Prepaid expenses and other
assets.............................. 3,529 32,627 (31,540)
Escrow deposits....................... (182,808) 365,109 (17,706)
Accounts payable...................... (125,429) 55,929 (163,512)
Accrued property taxes................ 8,022 (50,500) (25,133)
Accrued interest...................... 23,513 65,694 (119,037)
Accrued interest - affiliates......... - 1,419 5,206
Other accrued expenses................ 58,101 11,029 103,180
Payable to affiliates - General
Partner............................. (400,814) 670,966 456,633
Security deposits and deferred
rental revenue...................... (10,170) (64,451) 3,322
------------- ------------- --------------
Total adjustments................... 1,889,973 1,945,205 3,816,093
------------- ------------- --------------
Net cash provided by operating
activities.............................. $ 3,031,951 $ 4,138,369 $ 2,908,728
============= ============= ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND X, LTD.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------
Organization
- ------------
McNeil Real Estate Fund X, Ltd. (the "Partnership") was organized on June 1,
1979 as a limited partnership under the 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. The Partnership is governed by an amended and
restated partnership agreement dated October 9, 1991, as amended (the "Amended
Partnership Agreement"). The principal place of business for the Partnership and
the General Partner is 13760 Noel Road, Suite 600, LB70, Dallas, Texas, 75240.
The Partnership is engaged in diversified real estate activities, including the
ownership, operation and management of residential and commercial real estate
and other real estate related assets. The Partnership has determined to evaluate
market and other economic conditions to establish the optimum time to commence
an orderly liquidation of the Partnership's assets in accordance with the terms
of the Amended Partnership Agreement. At December 31, 1996, the Partnership
owned eleven 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.
<PAGE>
The Partnership's financial statements include the accounts of the following
listed tier limited partnerships. These single asset tier limited partnerships
were formed to accommodate the refinancing of the respective properties. The
Partnership's and the General Partner's ownership interests in each tier limited
partnership are detailed below. The Partnership retains effective control of
each tier limited partnership. The General Partner's minority interest is not
presented as it is immaterial.
<TABLE>
<CAPTION>
% of Ownership Interest
Tier Partnership Partnership General Partner
---------------- ----------- ---------------
<S> <C> <C>
Briarwood Fund X Limited Partnership (a) (b)........ 100% -
Coppermill Fund X Limited Partnership (a) (b)....... 100 -
Orchard Fund X Limited Partnership (a) (b).......... 100 -
Quail Meadows Fund X Limited Partnership (a) (b).... 100 -
Regency Park Fund X Associates, L.P. (b)............ 99 1%
Sandpiper Fund X Limited Partnership (a) (b)........ 100 -
Spanish Fund X, Ltd. (c)............................ 100 -
</TABLE>
(a) The general partner of these limited partnerships is a corporation whose
stock is 100% owned by the Partnership.
(b) Included in financial statements for years ended December 31, 1996, 1995
and 1994.
(c) Spanish Fund X, Ltd. commenced business activity on January 26, 1996.
The financial statements also include the accounts of the Partnership and its
99% interest in the assets, liabilities and operations (through September 14,
1995) of Courts Fund X Associates, L.P., the tier limited partnership that owned
The Courts Apartments. The General Partner owned the remaining 1% of Courts Fund
X Associates, L.P.
Real Estate Investments
- -----------------------
Real estate investments are generally stated at the lower of depreciated cost or
fair value. Real estate investments are reviewed for impairment whenever events
or changes in circumstances indicate that their carrying amounts may not be
recoverable. When the carrying value of a property exceeds the sum of all
estimated future cash flows, an impairment loss is recognized. At such time, a
write-down is recorded to reduce the basis of the property to its estimated
recoverable amount.
The Partnership's method of accounting for real estate investments is in
accordance with Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of" ("SFAS 121"), which the Partnership adopted effective January 1, 1996. The
adoption of SFAS 121 did not have a material impact on the accompanying
financial statements.
<PAGE>
Improvements and betterments are capitalized and expensed through depreciation
charges. Repairs and maintenance are charged to operations as incurred.
Assets Held for Sale
- --------------------
Assets held for sale are stated at the lower of depreciated cost or fair value
less costs to sell. Depreciation on these assets ceases at the time they are
placed on the market for sale.
Depreciation
- ------------
Buildings and improvements are depreciated using the straight-line method over
the estimated useful lives of the assets, ranging from 3 to 38 years. Tenant
improvements are amortized over the terms of the related tenant leases using the
straight-line method.
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 indebtedness 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.
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 residential properties under short-term operating
leases. Lease terms generally are less than one year in duration. Rental revenue
is recognized as earned.
<PAGE>
The Partnership leases its commercial properties under non-cancelable operating
leases. Certain leases provide concessions and/or periods of escalating or free
rent. Rental revenue is recognized on a straight-line basis over the term of the
related leases. The excess of the rental revenue recognized over the contractual
rental payments is recorded as accrued rent receivable and included in accounts
receivable on the Balance Sheets.
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 is 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 the
Management Incentive Distribution ("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; provided, however, that if all or a portion of such payment
consists of limited partnership units ("Units"), the amount of net
income 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 (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.
(d) Net loss shall be allocated 5% to the General Partner and 95% to the
limited partners.
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 1996, 1995 and 1994 have been made
in accordance with these provisions.
<PAGE>
Distributions
- -------------
Pursuant to the Amended Partnership Agreement and at the 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 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 1996, 1995 or 1994. The
Partnership accrued distributions of $1,048,667, $1,064,257 and $634,802 for the
benefit of the General Partner for the years ended December 31, 1996, 1995 and
1994, respectively. These are the MID distributions pursuant to the Amended
Partnership Agreement.
Net Income (Loss) Per Limited Partnership Unit
- ----------------------------------------------
Net income (loss) per Unit is computed by dividing net income (loss) allocated
to the limited partners by the weighted average number of Units outstanding. Per
Unit information has been computed based on 134,980, 135,030 and 135,090 Units
outstanding in 1996, 1995 and 1994, respectively.
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 services for the Partnership's residential and commercial properties
and leasing services for its residential properties. McREMI may choose to
perform leasing services for the Partnership's commercial properties, in which
case McREMI will receive a property management fee equal to 3% of the gross
rental receipts of the Partnership's commercial properties plus a commission for
performing leasing services equal to the prevailing market rate for such
services in the area where the property is located.
The Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs.
Under 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% of the annualized net
operating income of each property or (ii) a value of $10,000 per apartment unit
for residential property or $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.
<PAGE>
The MID will be paid to the extent of the lesser of the Partnership's excess
cash flow, as defined, or net operating income (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. The General Partner has deferred collection of the MID since
January 1, 1994. 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 1996, 1995 and 1994,
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 does have a material effect on the calculation of the
Entitlement Amount which determines the amount of MID earned. Capital
improvements are excluded from cash flow, as defined. The majority of the 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. If base
period cash flow had been measured on a basis comparable with incentive period
cash flow, MID would have been reduced by $256,656 for the year ended December
31, 1994. The amendment of the capitalization policy did not materially affect
MID for 1996 or 1995 as the Entitlement Amount was sufficient to pay the MID
notwithstanding the amendment to the capitalization policy.
Any amount of 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 MID represents a return of equity to the
General Partner for increasing cash flow, as defined, and accordingly is treated
as a distribution.
<PAGE>
Compensation and reimbursements paid to or accrued for the benefit of the
General Partner or its affiliates are as follows:
<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------
1996 1995 1994
-------------- -------------- ---------------
<S> <C> <C> <C>
Property management fees -
affiliates............................... $ 791,081 $ 846,482 $ 868,408
Interest - affiliates....................... 74,915 78,822 5,206
Charged to general and
administrative - affiliates:
Partnership administration............... 431,094 670,597 609,197
------------- ------------- --------------
$ 1,297,090 $ 1,595,901 $ 1,482,811
============= ============= ==============
Charged to General Partner's deficit:
Management Incentive Distribution........ $ 1,048,667 $ 1,064,257 $ 634,802
============= ============= ==============
</TABLE>
Payable to affiliates - General Partner at December 31, 1996 and 1995 consists
of MID, reimbursable costs and property management fees which are due and
payable from current operations.
NOTE 3 - TAXABLE LOSS
- ---------------------
McNeil Real Estate Fund X, 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 $14,833,249,
$13,571,531 and $11,156,745 at December 31, 1996, 1995 and 1994, respectively.
<PAGE>
NOTE 4 - REAL ESTATE INVESTMENTS
- --------------------------------
The basis and accumulated depreciation of the Partnership's real estate
investments held at December 31, 1996 and 1995 are set forth in the following
tables:
<TABLE>
<CAPTION>
Buildings and Accumulated Net Book
1996 Land Improvements Depreciation Value
---- -------------- ------------ ------------ ---------------
<S> <C> <C> <C> <C>
Briarwood
Tucson, AZ $ 489,437 $ 5,200,658 $ (3,713,986) $ 1,976,109
Coppermill
Tulsa, OK 1,176,980 12,154,046 (9,474,539) 3,856,487
La Plaza
Las Vegas, NV 2,761,442 6,639,931 (4,463,195) 4,938,178
Lakeview Plaza
Lexington, KY 1,554,404 7,281,188 (5,263,530) 3,572,062
Orchard
Lawrence, IN 366,938 9,383,201 (6,471,474) 3,278,665
Quail Meadows
Wichita, KS 754,551 10,985,448 (7,469,583) 4,270,416
Regency Park
Ft. Wayne, IN 280,131 5,411,821 (3,575,795) 2,116,157
Sandpiper
Westminster, CO 866,107 7,868,920 (5,029,650) 3,705,377
Spanish Oaks
San Antonio, TX 586,056 6,185,050 (4,227,437) 2,543,669
------------- ------------- ------------- -------------
$ 8,836,046 $ 71,110,263 $ (49,689,189) $ 30,257,120
============= ============= ============= =============
Buildings and Accumulated Net Book
1995 Land Improvements Depreciation Value
---- -------------- ------------ ------------ ---------------
Briarwood $ 489,437 $ 5,044,948 $ (3,486,893) $ 2,047,492
Cave Spring Corners
Roanoke, VA 792,077 4,487,055 (2,998,581) 2,280,551
Coppermill 1,176,980 12,061,904 (8,900,290) 4,338,594
Iberia Plaza
New Iberia, LA 836,792 4,965,167 (2,719,859) 3,082,100
La Plaza 2,761,441 6,361,255 (4,118,450) 5,004,246
Lakeview Plaza 1,554,404 7,262,788 (5,057,438) 3,759,754
Orchard 366,938 9,169,739 (6,144,459) 3,392,218
Quail Meadows 754,551 10,794,946 (7,058,393) 4,491,104
Regency Park 280,131 5,070,196 (3,557,228) 1,793,099
Sandpiper 866,107 7,665,705 (4,691,953) 3,839,859
Spanish Oaks 586,056 6,002,418 (3,917,961) 2,670,513
------------- ------------- ------------- -------------
$ 10,464,914 $ 78,886,121 $ (52,651,505) $ 36,699,530
============= ============= ============= =============
</TABLE>
<PAGE>
During 1994, the General Partner placed The Courts Apartments and Parkway Plaza
on the market for sale. The Courts Apartments was sold September 14, 1995.
Parkway Plaza was classified as an asset held for sale at December 31, 1995, and
then sold on September 18, 1996. See Note 7 - "Sale of Real Estate." On October
1, 1996, the General Partner placed Cave Spring Corners and Iberia Plaza on the
market for sale. Cave Spring Corners and Iberia Plaza are classified as assets
held for sale at December 31, 1996 at net book values of $2,257,480 and
$3,051,251, respectively.
The results of operations for the assets held for sale at December 31, 1996 are
$210,456, $57,425 and $361,931 for 1996, 1995 and 1994, respectively. Results of
operations are operating revenues less operating expenses including depreciation
and interest expense.
The Partnership leases its commercial properties under various non-cancelable
operating leases. In most cases, the Partnership expects that in the normal
course of business these leases will be renewed or replaced by other leases.
Future minimum rents to be received from commercial properties as of December
31, 1996, are as follows:
Real Estate Assets Held
Investments For Sale
------------- -------------
1997............................. $ 1,925,000 $ 1,188,000
1998............................. 1,684,000 1,084,000
1999............................. 1,620,000 951,000
2000............................. 1,161,000 883,000
2001............................. 669,000 559,000
Thereafter....................... 1,659,000 1,106,000
------------ ------------
$ 8,718,000 $ 5,771,000
============ ============
Future minimum rents do not include contingent rents based on sales volume of
tenants. Contingent rents amounted to $199,927, $86,571 and $99,514 for the
years ended December 31, 1996, 1995 and 1994, respectively. Future minimum rents
also do not include expense reimbursements for common area maintenance, property
taxes, and other expenses. The expense reimbursements amounted to $307,372,
$177,095 and $399,360 for the years ended December 31, 1996, 1995 and 1994,
respectively. These contingent rents and expense reimbursements, including
amounts for assets held for sale, are included in rental revenue on the
statements of operations.
The Partnership's real estate investments are encumbered by mortgage
indebtedness as discussed in Note 5 - "Mortgage Notes Payable" and Note 6 -
"Mortgage Note Payable - Affiliates."
<PAGE>
NOTE 5 - MORTGAGE NOTES PAYABLE
- -------------------------------
The following table sets forth the mortgage notes payable of the Partnership at
December 31, 1996 and 1995. All mortgage notes payable are secured by the
Partnership's real estate assets.
<TABLE>
<CAPTION>
Mortgage Annual Monthly
Lien Interest Payments/ December 31,
Property Position (a) Rates % Maturity Date 1996 1995
- -------- -------------- ------- -------------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Briarwood (g) First 8.150 $18,340 07/03 (h) $ 2,172,124 $ 2,213,347
Discount (e) (47,482) (53,434)
------------- -------------
2,124,642 2,159,913
------------- -------------
Cave Spring
Corners First 9.500 27,958 06/98 (h) 3,077,041 3,118,079
------------- --------------
Coppermill First (b) 10.405 45,800 01/02 (h) 4,994,151 5,022,484
------------- --------------
Iberia Plaza First 9.250 27,137 11/98 (h) 1,944,704 2,204,675
Discount (e) (85,774) (128,170)
------------- --------------
1,858,930 2,076,505
------------- --------------
La Plaza (f) First 10.125 31,386 03/97 (h) 2,396,381 2,523,308
------------- --------------
Lakeview Plaza First 9.125 38,815 06/08 3,291,999 3,449,492
------------- --------------
Orchard (g) First 8.150 53,393 07/03 (h) 6,323,712 6,443,726
Discount (e) (138,227) (155,555)
------------- --------------
6,185,485 6,288,171
------------- --------------
Parkway Plaza Wrap 9.250 (c) - 2,642,502
Discount (e) - (279,752)
------------- --------------
- 2,362,750
------------- --------------
Quail Meadows (g) First 8.150 50,634 07/03 (h) 5,996,949 6,110,762
Discount (e) (124,824) (143,537)
------------- --------------
5,872,125 5,967,225
------------- --------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Mortgage Annual Monthly
Lien Interest Payments/ December 31,
Property Position (a) Rates % Maturity Date 1996 1995
- -------- -------------- ------- -------------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Regency Park First 8.375 $ 23,382 10/17 $ 2,761,437 $ 2,808,581
Discount (e) (370,643) (386,936)
------------- --------------
2,390,794 2,421,645
------------- --------------
Sandpiper (g) First 8.150 47,046 07/03 (h) 5,571,968 5,677,715
Discount (e) (121,927) (137,196)
------------- --------------
5,450,041 5,540,519
------------- --------------
Spanish Oaks First 7.710 28,546 01/03 (h) 3,970,703 -
First (d) 10.000 31,392 - 3,524,225
------------- --------------
3,970,703 3,524,225
------------- --------------
$ 41,612,292 $ 44,454,316
============= ==============
</TABLE>
(a) The debt is non-recourse to the Partnership.
(b) The Partnership refinanced the Coppermill mortgage note on December 8,
1994. See Note 8 - "Refinancing of Mortgage Notes."
(c) The Partnership sold Parkway Plaza on September 18, 1996, and the
Parkway Plaza mortgage note was retired using proceeds from the sale. See
Note 7 - "Sale of Real Estate."
(d) The Spanish Oaks mortgage note matured in August 1995. Subsequent to
August 1995, the Partnership continued to make monthly debt service
payments, which were accepted by the holder of the Spanish Oaks mortgage
note, while the Partnership negotiated a refinancing of the Spanish Oaks
mortgage note. The Partnership succeeded in refinancing the Spanish Oaks
mortgage note on January 26, 1996. See Note 8 "Refinancing of Mortgage
Notes."
(e) Discounts for the Iberia Plaza and Parkway Plaza mortgage notes are based
on an effective interest rate of 12%. The discount for the Regency Park
mortgage note is based on an effective interest rate of 10.375%.
Discounts for the Briarwood, Orchard, Quail Meadows and Sandpiper
mortgage notes are based on an effective interest rate of 8.622%.
(f) On February 28, 1997, the Partnership refinanced the La Plaza mortgage
note with a $2,336,029 mortgage note from an affiliate of the General
Partner. See Note 12 - "Subsequent Event."
<PAGE>
(g) Financing was obtained under the terms of a Real Estate Mortgage
Investment Conduit financing. The mortgage notes payable are
cross-collateralized and may not be prepaid in whole or part before July
1998. Any prepayments made during the sixth or seventh loan years are
subject to a Yield Maintenance premium, as defined. Additionally, the
Partnership must pay a release payment equal to 25% of the prepaid
balance which will be applied to the remaining mortgage notes in the
collateral pool.
(h) Balloon payments on the Partnership's mortgage notes are due as follows:
Property Balloon Payment Date
-------- --------------- ----
La Plaza (see (f) above).............. $ 2,362,599 03/97
Cave Spring Corners.................. 3,007,722 06/98
Iberia Plaza......................... 1,639,486 11/98
Coppermill........................... 4,798,763 01/02
Spanish Oaks......................... 3,689,221 01/03
Briarwood............................ 1,804,449 07/03
Orchard.............................. 5,253,301 07/03
Quail Meadows........................ 4,981,860 07/03
Sandpiper............................ 4,628,805 07/03
Scheduled principal maturities of the Partnership's mortgage notes, but before
consideration of discounts of $888,877, are shown below. See Note 12 -
"Subsequent Event."
1997................................. $ 3,313,572
1998................................ 5,578,614
1999................................ 835,952
2000................................ 909,755
2001................................ 990,111
Thereafter.......................... 30,873,165
-----------
$ 42,501,169
===========
Based on borrowing rates currently available to the Partnership for mortgage
loans with similar terms and average maturities, the fair value of the
Partnership's mortgage notes payable was approximately $41,672,000 and
$45,756,000 at December 31, 1996 and 1995, respectively.
<PAGE>
NOTE 6 - MORTGAGE NOTE PAYABLE - AFFILIATE
- ------------------------------------------
The following table sets forth the Partnership's mortgage note payable -
affiliate at December 31, 1996 and 1995. The affiliate mortgage note is secured
by real estate investments of the Partnership.
<TABLE>
<CAPTION>
Mortgage Annual Monthly
Lien Interest Payments/ December 31,
Property Position (a) Rates % Maturity Date 1996 1995
- -------- ------------ --------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Lakeview Plaza (b) Second (c) (c) 8/97 $ 800,000 $ 800,000
======== =========
</TABLE>
(a) The debt is non-recourse to the Partnership.
(b) On August 1, 1994, the Partnership obtained a mortgage loan commitment
from an affiliate of the General Partner for an amount up to
$1,000,000. An initial amount of $800,000 was funded on December 6,
1994.
(c) The note requires monthly payments of interest only equal to 1% plus
the prime lending rate of Bank of America. At December 31, 1996, the
prime lending rate was 8.25%.
Under terms of the Amended Partnership Agreement, borrowings from affiliates
approximate fair market value.
NOTE 7 - SALE OF REAL ESTATE
- ----------------------------
On September 18, 1996, the Partnership sold Parkway Plaza to an unaffiliated
buyer for a cash sales price of $2,900,000. Cash proceeds from this transaction,
as well as the gain on sale are detailed below.
<TABLE>
<CAPTION>
Gain on Sale Cash Proceeds
------------ -------------
<S> <C> <C>
Cash sales price.............................. $ 2,900,000 $ 2,900,000
Selling costs................................. (71,949) (71,949)
Mortgage discount written off................. (250,817)
Straight-line rent receivables written off.... (56,303)
Basis of real estate sold..................... (2,245,507)
-----------
Gain on sale.................................. $ 275,424
===========
Proceeds from sale of real estate............. 2,828,051
Retirement of mortgage note................... (2,544,466)
----------
Net cash proceeds............................. $ 283,585
==========
</TABLE>
<PAGE>
On January 9, 1996, the Partnership sold an outparcel of land, amounting to
0.675 acres, connected with Iberia Plaza for a purchase price of $142,985. The
Partnership recorded a $77,965 gain on the sale. Proceeds from the sale of the
outparcel were used to paydown the Iberia Plaza mortgage note.
On September 14, 1995, the Partnership sold The Courts Apartments to an
unaffiliated buyer for a cash sales price of $8,050,000. The buyer also assumed
the improvement district liens that encumbered the property. Cash proceeds from
this transaction, as well as the gain on sale of The Courts Apartments are
detailed below.
<TABLE>
<CAPTION>
Gain on Sale Cash Proceeds
------------ -------------
<S> <C> <C>
Cash sales price.................................... $ 8,050,000 $ 8,050,000
Improvement district liens assumed
by buyer......................................... 140,358 140,358
---------- -----------
Total sales price.................................. 8,190,358 8,190,358
Selling costs...................................... (284,554) (284,554)
Basis of deferred borrowing costs written off...... (48,307)
Basis of real estate sold.......................... (4,673,799)
----------
Gain on sale....................................... $ 3,183,698
==========
Proceeds from sale of real estate.................. 7,905,804
Retirement of mortgage note........................ (6,475,873)
Assumption of improvement district liens........... (140,358)
-----------
Net cash proceeds.................................. $ 1,289,573
===========
</TABLE>
NOTE 8 - REFINANCING OF MORTGAGE NOTES
- --------------------------------------
On January 26, 1996, the Partnership refinanced the Spanish Oaks mortgage note.
The new mortgage note, in the amount of $4,000,000, bears interest at 7.71%,
requires monthly principal and interest payments of $28,546, and matures on
January 26, 2003. See Note 9 - "Gains on Extinguishment of Debt." Cash proceeds
from the refinancing transaction are as follows:
New loan proceeds............................ $ 4,000,000
Negotiated existing debt payoff............. (3,399,592)
----------
Proceeds from refinancing................... $ 600,408
==========
<PAGE>
The Partnership incurred $166,403 of deferred borrowing costs related to the
refinancing of the Spanish Oaks mortgage note. The Partnership was also required
to fund $165,291 into various escrows for property taxes, hazard insurance and
deferred maintenance.
During 1994, the Partnership and the holder of the former Coppermill mortgage
note agreed to extend the maturity date of the former Coppermill mortgage note
from May 1, 1994, to August 1, 1994, and again to December 31, 1994. In
consideration for the maturity date extensions, the Partnership paid four
balloon payments totaling $400,000. In addition to the balloon payments, the
interest rate on the former Coppermill mortgage note increased to 10.0% from
9.25% effective August 22, 1994.
On December 8, 1994, the Partnership refinanced the Coppermill mortgage note.
The new mortgage note, in the amount of $5,046,000, bears interest at 10.405%,
requires monthly principal and interest payments of $45,800, and matures on
January 1, 2002. Cash used to close the refinancing transaction is as follows:
New loan proceeds........................... $ 5,046,000
Existing debt retired....................... (5,769,933)
1994 balloon payments....................... (400,000)
-----------
Cash used in refinancing.................... $ (1,123,933)
===========
The Partnership incurred $165,912 of deferred borrowing costs related to the
refinancing of the Coppermill mortgage note. The Partnership was also required
to fund $146,573 into various escrows for capital improvements, property taxes
and insurance.
NOTE 9 - GAINS ON EXTINGUISHMENT OF DEBT
- ----------------------------------------
In connection with the refinancing of the Spanish Oaks mortgage note (see Note 8
- - "Refinancing of Mortgage Notes"), the Partnership negotiated a discounted
payoff of the prior mortgage note that resulted in a $269,596 extraordinary gain
on extinguishment of debt. The negotiated payoff of the note in the amount of
$3,399,592 has been placed in escrow pending the outcome of legal proceedings,
as discussed in Note 11 - "Legal Proceedings." Neither the old mortgage note
amount or the related escrowed funds are included on the Partnership's Balance
Sheet.
On May 18, 1994, the Partnership paid off the Iberia Plaza second mortgage note
for a cash payment of $100,000. This transaction resulted in an extraordinary
gain on extinguishment of debt as set forth in the following schedule.
Principal balance of mortgage note......... $ 477,016
Unamortized discount on mortgage note...... (83,372)
Cash payment............................... (100,000)
Transaction costs.......................... (1,105)
---------
Gain on extinguishment of debt............. $ 292,539
=========
<PAGE>
NOTE 10 - GAIN ON INVOLUNTARY CONVERSION
- ----------------------------------------
On March 31, 1996, a fire destroyed or damaged 16 units and 2 laundry rooms at
Regency Park Apartments. The total cost to repair the fire damage was $530,148.
The Partnership's insurance carrier will reimburse the Partnership for all costs
incurred as a result of the fire less a standard deductible. The excess of cash
to be received over the basis of the property destroyed in the fire resulted in
a $350,927 gain on involuntary conversion.
Because only part of the insurance proceeds were received by December 31, 1996,
only $285,127 of the gain on involuntary conversion was recognized on the
Partnership's Statement of Operations for the year ended December 31, 1996. The
remainder of the gain is shown as a $65,800 deferred gain on involuntary
conversion on the Partnership's December 31, 1996 Balance Sheet, and will be
recognized when the Partnership receives the remainder of the insurance
proceeds.
NOTE 11 - 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) James F. Schofield, Gerald C. Gillett, Donna S. Gillett, Jeffrey Homburger,
Elizabeth Jung, Robert Lewis, and Warren Heller et al. v. McNeil Partners
L.P., McNeil Investors, Inc., McNeil Real Estate Management, Inc., Robert
A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd.,
McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil
Real Estate Fund XI, Ltd., McNeil Real Estate Fund XII, Ltd., McNeil Real
Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate
Fund XX, L.P., McNeil Real Estate Fund XXI, L.P., McNeil Real Estate Fund
XXII, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund
XXV, L.P., McNeil Real Estate Fund XXVI, L.P., and McNeil Real Estate Fund
XXVII, L.P., et al. - Superior Court of the State of California for the
County of Los Angeles, Case No. BC133799 (Class and Derivative Action
Complaint).
The action involves purported class and derivative actions brought by
limited partners of each of the fourteen limited partnerships that were
named as nominal defendants as listed above (as defined in this Section 1,
the "Partnerships"). Plaintiffs allege that McNeil Investors, Inc., its
affiliate McNeil Real Estate Management, Inc. and three of their senior
officers and/or directors (as defined in this Section 1, collectively, the
"Defendants") breached their fiduciary duties and certain obligations under
the respective Amended Partnership Agreement. Plaintiffs allege that
Defendants have rendered such Units highly illiquid and artificially
depressed the prices that are available for Units on the resale market.
Plaintiffs also allege that Defendants engaged in a course of conduct to
prevent the acquisition of Units by an affiliate of Carl Icahn by
disseminating purportedly false, misleading and inadequate information.
Plaintiffs further allege that Defendants acted to advance their own
personal interests at the expense of the Partnerships' public unit holders
by failing to sell Partnership properties and failing to make distributions
to Unitholders.
<PAGE>
On December 16, 1996, the Plaintiffs filed a consolidated and amended
complaint. Plaintiffs are suing for breach of fiduciary duty, breach of
contract and an accounting, alleging, among other things, that the
management fees paid to the McNeil affiliates over the last six years are
excessive, that these fees should be reduced retroactively and that the
respective Amended Partnership Agreements governing the Partnerships are
invalid. On January 7, 1997, the Court ordered consolidation with three
other similar actions listed below.
The Partnerships filed a demurrer to the complaint and a motion to strike
on February 14, 1997, seeking to dismiss the complaint in all respects. The
demurrer is pending. The Partnerships deny that there is any merit to
Plaintiff's allegations and intend to vigorously defend this action.
2) 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). On January 7, 1997,
this action was consolidated by court order with Schofield, et al.,
referenced above.
3) 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). On January 7, 1997, this action
was consolidated by court order with Schofield, et al., referenced above.
4) 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.
On April 11, 1996, the action was dismissed without prejudice in
anticipation of consolidation with other class action complaints. On
January 7, 1997, this action was consolidated by court order with
Schofield, et al., referenced above.
5) The First National Bank of Chicago, as Trustee Under That Certain Pooling
and Servicing Agreement Dated as of December 1, 1995, for Resolution Trust
Corporation Commercial Mortgage Pass-Through Certificates, Series 1995-C2
v. McNeil Real Estate Fund X, Ltd., McNeil Partners, L.P. and McNeil
Investors, Inc. - U.S. District Court, Northern District of Dallas, Dallas
Division; Civil Action No. 33-96CV3198-D; and District Court, Dallas
County, Texas, F-116th Judicial District; Case No.: 96-13066(P96014).
<PAGE>
The plaintiffs are the holder of a certain Second Lien Wraparound
Promissory Note ("Wraparound Note") secured by the Spanish Oaks Apartments.
This action involves a dispute of the principal payoff amount on the
Wraparound Note. The plaintiffs contend that the payoff balance is
$3,399,592; however, the Partnership has calculated the payoff balance to
be significantly less. On January 26, 1996, the Partnership refinanced the
Spanish Oaks Apartments. At that time the $3,399,592 was escrowed with the
American Title Company. The plaintiff claims that pursuant to the terms of
the Wraparound Note, the Partnership owes the entire escrowed balance. The
parties have been ordered to mediation before July 28, 1997, which is the
current trial date. The Partnership anticipates that this matter will be
concluded through settlement with no adverse effect to the Partnership.
6) 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, L.P. v. High River
Limited Partnership, Riverdale Investors Corp., Carl C. Icahn, and Unicorn
Associates Corporation - United States District Court for the Central
District of California, Case No. 96-5680SVW.
On August 12, 1996, High River Limited Partnership (as defined in this
Section 6, "High River"), a partnership controlled by Carl C. Icahn, sent a
letter to the partnerships referenced above demanding lists of the names,
current residences or business addresses and certain other information
concerning the Unitholders of such partnerships. On August 19, 1996, these
partnerships commenced the above action seeking, among other things, to
declare that such partnerships are not required to provide High River with
a current list of Unitholders on the grounds that the defendants commenced
a tender offer in violation of the federal securities laws by filing
certain Schedule 13D Amendments on August 5, 1996.
On October 16, 1996, the presiding judge denied the partnerships' requests
for a permanent and preliminary injunction to enjoin High River's tender
offers and granted the defendants request for an order directing the
partnerships to turn over current lists of Unitholders to High River
forthwith. On October 24, 1996, the partnerships delivered the Unitholder
lists to High River. The judge's decision resolved all the issues in the
action.
NOTE 12 - SUBSEQUENT EVENT
- --------------------------
On February 28, 1997, the Partnership refinanced the La Plaza mortgage note with
a $2,336,029 mortgage note obtained from a partnership affiliated with the
General Partner. The new mortgage note is secured by a first lien on La Plaza
Office Building. The mortgage note bears a variable interest rate of 1% plus the
prime lending rate of Bank of America. At February 28, 1997, the prime lending
rate was 8.25%. Payment terms require monthly interest-only payments until the
February 28, 2000 maturity date when the entire principal amount will be due.
<PAGE>
McNEIL REAL ESTATE FUND X, LTD.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1996
<TABLE>
<CAPTION>
Cumulative Costs
Initial Cost (b) Write-down Capitalized
Related (b) Buildings and and Permanent Subsequent
Description Encumbrances Land Improvements Impairment (d) To Acquisition
- ----------- ------------ ---- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Apartments:
Briarwood
Tucson, AZ $ 2,124,642 $ 489,437 $ 4,356,477 $ - $ 844,181
Coppermill
Tulsa, OK 4,994,151 1,176,980 13,146,794 (2,600,000) 1,607,252
Orchard
Lawrence, IN 6,185,485 366,938 7,611,708 - 1,771,493
Quail Meadows
Wichita, KS 5,872,125 754,551 9,387,261 - 1,598,187
Regency Park
Fort Wayne, IN 2,390,794 280,131 4,060,970 - 1,350,851
Sandpiper
Westminster, CO 5,450,041 866,107 5,991,007 - 1,877,913
Spanish Oaks
San Antonio, TX 3,970,703 586,056 4,618,711 - 1,566,339
Office Building:
La Plaza
Las Vegas, NV 2,396,381 2,761,442 4,388,847 - 2,251,084
Shopping Center:
Lakeview Plaza
Lexington, KY 4,091,999 1,554,404 6,986,277 (129,914) 424,825
-------------- -------------- -------------- ------------ -------------
$ 37,476,321 $ 8,836,04 $ 60,548,052 $ (2,729,914) $ 13,292,125
============== ============= ============== ============ =============
Assets Held for Sale:
Cave Springs Corners
Roanoke, VA $ 3,077,041
Iberia Plaza
New Iberia, LA 1,858,930
--------------
$ 4,935,971
==============
</TABLE>
See accompanying notes to Schedule III.
<PAGE>
McNEIL REAL ESTATE FUND X, LTD.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1996
<TABLE>
<CAPTION>
Gross Amount at
Which Carried at Close of Period Accumulated
Buildings and Depreciation
Description Land Improvements Total (a) and Amortization
- ----------- ---- ------------- --------- ----------------
<S> <C> <C> <C> <C>
Apartments:
Briarwood
Tucson, AZ $ 489,437 $ 5,200,658 $ 5,690,095 $ (3,713,986)
Coppermill
Tulsa, OK 1,176,980 12,154,046 13,331,026 (9,474,539)
Orchard
Lawrence, IN 366,938 9,383,201 9,750,139 (6,471,474)
Quail Meadows
Wichita, KS 754,551 10,985,448 11,739,999 (7,469,583)
Regency Park
Fort Wayne, IN 280,131 5,411,821 5,691,952 (3,575,795)
Sandpiper
Westminster, CO 866,107 7,868,920 8,735,027 (5,029,650)
Spanish Oaks
San Antonio, TX 586,056 6,185,050 6,771,106 (4,227,437)
Office Building:
La Plaza
Las Vegas, NV 2,761,442 6,639,931 9,401,373 (4,463,195)
Shopping Center:
Lakeview Plaza
Lexington, KY 1,554,404 7,281,188 8,835,592 (5,263,530)
-------------- -------------- ---------------- -------------
$ 8,836,046 $ 71,110,263 $ 79,946,309 $ (49,689,189)
============== ============== ================ ==============
Assets Held for Sale:
Cave Spring Corners
Roanoke, VA $ 2,257,480
Iberia Plaza
New Iberia, LA 3,051,251
----------------
$ 5,308,731
================
</TABLE>
See accompanying notes to Schedule III.
<PAGE>
McNEIL REAL ESTATE FUND X, LTD.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1996
<TABLE>
<CAPTION>
Date of Date Depreciable
Description Construction Acquired lives (years)
- ----------- ------------ -------- -------------
<S> <C> <C> <C>
Apartments:
Briarwood
Tucson, AZ 1978 07/80 4-33
Coppermill
Tulsa, OK 1978 10/80 6-38
Orchard
Lawrence, In 1973 12/80 3-33
Quail Meadows
Wichita, KS 1978 06/80 6-35
Regency Park
Fort Wayne, IN 1970 06/80 3-30
Sandpiper
Westminster, CO 1974 04/80 3-34
Spanish Oaks
San Antonio, TX 1968 08/80 3-30
Office Building:
La Plaza
Las Vegas, NV 1977 09/80 4-34
Shopping Center:
Lakeview Plaza
Lexington, KY 1979 07/80 15-35
Assets Held for Sale:
Cave Spring Corners
Roanoke VA 1973 10/80
Iberia Plaza
New Iberia LA 1978 06/80
</TABLE>
See accompanying notes to Schedule III.
(a) For Federal income tax purposes, the properties are depreciated over lives
ranging from 5-27.5 years using ACRS or MACRS methods. The aggregate cost
of real estate investments for Federal income tax purposes was
approximately $95,041,428 and accumulated depreciation was $56,312,639 at
December 31, 1996.
(b) The 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.
(c) Assets held for sale are carried at the lower of cost or net realizable
value. Historical cost, net of accumulative depreciation and cumulative
write-downs, becomes the new cost basis when the asset is classified as
"Asset Held for Sale." Depreciation ceases at the time the asset is placed
on the market for sale.
(d) The carrying value of Coppermill Apartments was reduced by $1,228,000
and $1,372,000 in 1986 and 1989, respectively. The carrying value of
Lakeview Plaza was reduced by $129,914 in 1991.
See accompanying notes to Schedule III.
<PAGE>
McNEIL REAL ESTATE FUND X, LTD.
Notes to Schedule III
Real Estate Investments and Accumulated Depreciation and Amortization
A summary of activity for the Partnership's real estate investments, accumulated
depreciation and amortization, and assets held for sale is as follows:
<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------
1996 1995 1994
-------------- -------------- ---------------
<S> <C> <C> <C>
Real estate investments:
Balance at beginning of year............... $ 89,351,035 $ 86,475,540 $ 101,188,388
Improvements............................... 2,233,614 2,875,495 2,143,853
Sale of real estate........................ (52,359) - -
Assets replaced............................ (370,287) - -
Reclassification of assets held
for sale................................ (11,215,694) - (16,856,701)
------------- ------------- --------------
Balance at end of year..................... $ 79,946,309 $ 89,351,035 $ 86,475,540
============= ============= ==============
Accumulated depreciation and amortization:
Balance at beginning of year............... $ 52,651,505 $ 49,450,647 $ 55,482,914
Depreciation and amortization.............. 3,232,454 3,200,858 3,609,402
Assets replaced............................ (201,066) - -
Reclassification of assets held
for sale................................ (5,993,704) - (9,641,669)
------------- ------------- --------------
Balance at end of year..................... $ 49,689,189 $ 52,651,505 $ 49,450,647
============= ============= ==============
Assets Held for Sale:
Balance at beginning of year............... $ 2,237,733 $ 7,215,032 $ -
Reclassification of assets held
for sale................................ 5,221,990 - 7,215,032
Improvements............................... 94,515 63,555 -
Depreciation and amortization.............. - (367,055) -
Sale of assets held for sale............... (2,245,507) (4,673,799) -
------------- ------------- --------------
Balance at end of year..................... $ 5,308,731 $ 2,237,733 $ 7,215,032
============= ============= ==============
</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
- ----------------- --- -------------------------------------
Robert A. McNeil, 76 Mr. McNeil is also Chairman of the
Chairman of the Board and Director of McNeil Real Estate
Board and Director Management, Inc. ("McREMI") which is an
affiliate of the General 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 53 Mrs. McNeil is Co-Chairman, with
Co-Chairman of the husband Robert A. McNeil, of McNeil
Board Investors, Inc. Mrs. McNeil has twenty
years of real estate experience, 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.
<PAGE>
Other Principal Occupations and Other
Name and Position Age Directorships During the Past 5 Years
- ----------------- --- -------------------------------------
Ron K. Taylor 39 Mr. Taylor is the President and Chief
President and Chief Executive Officer of McNeil Real Estate
Executive Officer Management which is an affiliate of the
General Partner. Mr. Taylor has been in
this capacity since the resignation of
Donald K. Reed on March 4, 1997. Prior
to assuming his current
responsibilities, Mr. Taylor served as a
Senior Vice President of McREMI. Mr.
Taylor has been in this capacity since
McREMI commenced operations in 1991.
Prior to joining McREMI, Mr. Taylor
served as an Executive Vice President
for a national syndication/property
management firm. In this capacity, Mr.
Taylor had the responsibility for the
management and leasing of a 21,000,000
square foot portfolio of commercial
properties. Mr. Taylor has been actively
involved in the real estate industry
since 1983.
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, 1996, 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, 1996. 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.
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 percent of the Partnership's securities
except as noted below:
1. High River Limited Partnership, 100 S. Bedford Road, Mount
Kisco, New York, 10549, owns 11,676 Units (8.65%) as of
January 31, 1997.
<PAGE>
(B) Security ownership of management.
The General Partner and the officers and directors of its general
partner, collectively, own 1,732 Units (1.28%).
(C) Change in control.
None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------
Under 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
Partnership's tangible asset value. 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 for residential property and $50 per gross square foot for
commercial property to arrive at the property tangible asset value. The property
tangible asset value is then added to the book value of all other assets
excluding intangible items.
MID will be paid to the extent of the lesser of the Partnership's excess cash
flow, as defined, or net operating income (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. For the year ended December 31, 1996, the
Partnership accrued MID in the amount of $1,048,667.
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 does have a material effect on the calculation of the
Entitlement Amount which determines the amount of MID earned. Capital
improvements are excluded from cash flow, as defined. The majority of the 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. If base
period cash flow had been measured on a basis comparable with incentive period
cash flow, MID would have been reduced by $256,656 for the year ended December
31, 1994. The amendment of the capitalization policy did not materially affect
the MID for 1996 or 1995 as the Entitlement Amount was sufficient to pay MID
notwithstanding the amendment to the capitalization policy.
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 MID represents a return of equity
to the General Partner for increasing cash flow, as defined, and accordingly is
treated as a distribution.
<PAGE>
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 residential properties and
property management services for the Partnership's commercial properties. The
Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs. For the year ended December 31, 1996,
the Partnership paid or accrued $1,222,175 in property management fees and
reimbursements.
On August 1, 1994, the Partnership obtained a $1,000,000 mortgage loan
commitment from McNeil Real Estate Fund XXVII, L.P. ("Fund XXVII"), an affiliate
of the General Partner. An initial amount of $800,000 was borrowed pursuant to
the commitment on December 6, 1994. The mortgage note is secured by a second
lien on Lakeview Plaza and requires monthly interest-only payments of 1% plus
the prime lending rate of Bank of America. The mortgage note matures on August
1, 1997. Total interest expense for this mortgage note was $74,915, 78,822 and
$5,206 for 1996, 1995 and 1994, respectively.
On February 28, 1997, the Partnership refinanced the La Plaza mortgage note with
a $2,336,029 mortgage note obtained from Fund XXVII. The new mortgage note is
secured by a first lien on La Plaza Office Building. The mortgage note bears a
variable interest rate of 1% plus the prime lending rate of Bank of America. The
mortgage note matures on February 28, 2000.
See Item 1 - Business, Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations, Item 8 - Note 2 - "Transactions
with Affiliates," Note 6 - "Mortgage Note Payable - Affiliate" and Note 12 -
"Subsequent Event."
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
- -------- -----------------------------------------------------------------
See accompanying index to Financial Statements at Item 8.
(A) The following documents are incorporated by reference and are an integral
part of this report:
Exhibits
Exhibit
Number Description
------- -----------
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 The Amended and Restated Limited
Partnership Agreement (incorporated
by reference to the Quarterly Report
on Form 10-Q for the quarter ended
September 30, 1991).
3.2 Amendment No. 1 to the Amended and
Restated Partnership Agreement of
McNeil Real Estate Fund X, Ltd.
dated to be effective July 31, 1993.
(4)
3.3 Amendment No. 2 to the Amended and
Restated Partnership Agreement of
McNeil Real Estate Fund X, Ltd.
dated March 28, 1994. (4)
10.1 Assignment and Assumption Agreement,
dated as of October 9, 1991, between
Pacific Investors Corporation,
Robert A. McNeil and McNeil
Partners, L.P. regarding McNeil Real
Estate Fund X, Ltd. (1)
10.2 Property Management Agreement,
dated as of October 9, 1991, between
McNeil Real Estate Fund X, Ltd. and
McNeil Real Estate Management, Inc.
(1)
10.3 Asset Management Agreement, dated
as of October 9, 1991, between
McNeil Real Estate Fund X, Ltd. and
McNeil Partners, L.P. (1)
<PAGE>
Exhibit
Number Description
------- -----------
10.4 Revolving Credit Agreement, dated
August 6, 1991, between McNeil
Partners, L.P. and certain
partnerships, including the
Partnership. (1)
10.5 Amendment of Property Management
Agreement dated March 5, 1993,
between the Partnership and McNeil
Real Estate Management, Inc. (2)
10.6 Loan Agreement dated June 24, 1993,
between Lexington Mortgage Company
and McNeil Real Estate Fund X, Ltd.,
et. al. (3)
10.7 Master Property Management
Agreement, dated as of June 24,
1993, between McNeil Real Estate
Management, Inc. and McNeil Real
Estate Fund X, Ltd. (4)
10.8 Multifamily Note, dated as of
December 8, 1994, between Coppermill
Fund X Limited Partnership and Arbor
National Commercial Mortgage
Corporation. (5)
10.9 Promissory Note, dated August 15,
1994, between McNeil Real Estate
Fund X, Ltd. and McNeil Real Estate
Fund XXVII, L.P. (5)
10.10 Promissory Note and Note
Consolidation, dated January 15,
1988, between McNeil Real Estate
Fund X, Ltd. and Goldome Realty
Credit Corp. (5)
10.11 Loan Modification and Extension
Agreement, dated August 1, 1993,
between McNeil Real Estate Fund X,
Ltd. and the Federal Deposit
Insurance Corporation. (5)
10.12 Promissory Note, dated February 25,
1992, between McNeil Real Estate
Fund X, Ltd. and Life Insurance
Company of the Southwest. (5)
10.13 Multifamily Note, dated September
4, 1992, between Regency Park Fund X
Associates, L.P. and Metmor
Financial, Inc. (5)
<PAGE>
Exhibit
Number Description
------- -----------
10.14 Modification of Promissory Note and
Deed of Trust, dated January 23,
1989, between First American Savings
Bank, FSB and McNeil Real Estate
Fund X, Ltd. (5)
10.15 Note, dated July 1, 1978, between
M H Kentucky Ventures and First of
Boston Mortgage Corporation. (5)
10.16 Wrap-Around Promissory Note, dated
June 18, 1980, between McNeil Real
Estate Fund X, Ltd. and James M.
Folmar and Emory M. Folmar. (5)
10.17 Act of Amendment to Wrap-Around
Promissory Note and Mortgage, dated
April 20, 1994, between McNeil Real
Estate Fund X, Ltd. and James M.
Folmar and Emory M. Folmar. (5)
10.18 Property Management Agreement,
dated November 30, 1994, between
Coppermill Fund X Limited
Partnership and McNeil Real Estate
Management, Inc. (5)
11. Statement regarding computation of
Net Income (Loss) per Limited
Partnership Unit (see Item 8 - Note
1 - "Organization and Summary of
Significant Accounting Policies").
22. List of subsidiaries of the
Partnership.
<TABLE>
<CAPTION>
Names Under
Jurisdiction of Which It Is
Name of Subsidiary Incorporation Doing Business
------------------ --------------- --------------
<S> <C> <C> <C>
Briarwood Fund X
Limited Partnership Delaware None
Coppermill Fund X
Limited Partnership Texas None
Orchard Fund X
Limited Partnership Delaware None
Quail Meadows Fund X
Limited Partnership Delaware None
Regency Park Fund X
Associates, L.P. Indiana None
Sandpiper Fund X
Limited Partnership Delaware None
Spanish Fund X, Ltd. Texas None
</TABLE>
<PAGE>
27. Financial Data Schedule for the year
ended December 31, 1996.
(1) Incorporated by reference to the
Annual Report of McNeil Real Estate
Fund X, Ltd., (File No. 0-9325), on
Form 10-K for the period ended
December 31, 1991, as filed with the
Securities and Exchange Commission
on March 30, 1992.
(2) Incorporated by reference to the
Annual Report of McNeil Real Estate
Fund X, Ltd. (File No. 0-9325), on
Form 10-K for the period ended
December 31, 1992, as filed with the
Securities and Exchange Commission
on March 30, 1993.
(3) 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, 1995, as filed with the
Securities and Exchange Commission
on March 30, 1994.
(4) Incorporated by reference to the
Annual Report of McNeil Real Estate
Fund X, Ltd. (File No. 0-9325), 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 X, Ltd. (File No. 0-9325), on
Form 10-K for the period ended
December 31, 1994, as filed with the
Securities and Exchange Commission
on March 30, 1995.
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.
(B) Reports on Form 8-K. There were no reports on Form 8-K filed during the
quarter ended December 31, 1996.
<PAGE>
McNEIL REAL ESTATE FUND X, 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.
McNEIL REAL ESTATE FUND X, LTD.
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
March 31, 1997 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 31, 1997 By: /s/ Ron K. Taylor
- -------------- -----------------------------------------
Date Ron K. Taylor
President and Director of McNeil
Investors, Inc.
(Principal Financial Officer)
March 31, 1997 By: /s/ Brandon K. Flaming
- -------------- -----------------------------------------
Date Brandon K. Flaming
Vice President of McNeil Investors, Inc.
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 2,660,679
<SECURITIES> 0
<RECEIVABLES> 575,995
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 79,946,309
<DEPRECIATION> (49,689,189)
<TOTAL-ASSETS> 41,407,352
<CURRENT-LIABILITIES> 0
<BONDS> 42,412,292
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 41,407,352
<SALES> 16,089,109
<TOTAL-REVENUES> 16,853,542
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11,701,264
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,279,896
<INCOME-PRETAX> 872,382
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 269,596
<CHANGES> 0
<NET-INCOME> 1,141,978
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
