UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
--------------------------------------------
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 0-10743
--------
MCNEIL REAL ESTATE FUND XII, LTD.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 94-2717957
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13760 Noel Road, Suite 600, LB70, Dallas, Texas, 75240
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (972) 448-5800
-----------------------------
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ------- --------------------
MCNEIL REAL ESTATE FUND XII, LTD.
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------ ------------
ASSETS
- ------
Real estate investments:
<S> <C> <C>
Land ........................................................................ $ 4,534,618 $ 4,534,618
Buildings and improvements .................................................. 58,996,741 58,352,857
------------ ------------
63,531,359 62,887,475
Less: Accumulated depreciation and amortization ............................ (38,275,755) (36,754,194)
------------ ------------
25,255,604 26,133,281
Asset held for sale ............................................................ - 9,303,533
Cash and cash equivalents ...................................................... 7,332,786 1,423,658
Cash segregated for security deposits .......................................... 467,585 456,356
Accounts receivable ............................................................ 234,678 165,311
Prepaid expenses and other assets .............................................. 109,014 139,468
Escrow deposits ................................................................ 1,497,372 1,350,788
Deferred borrowing costs, net of accumulated amorti-
zation of $513,953 and $767,891 at June 30, 1998
and December 31, 1997, respectively ......................................... 1,470,367 1,544,702
------------ ------------
$ 36,367,406 $ 40,517,097
============ ============
LIABILITIES AND PARTNERS' DEFICIT
- ---------------------------------
Mortgage notes payable ......................................................... $ 41,382,609 $ 54,200,372
Accounts payable ............................................................... - 9,996
Accrued expenses ............................................................... 112,339 277,958
Accrued interest ............................................................... 286,242 378,010
Accrued property taxes ......................................................... 802,302 932,545
Deferred gain - land condemnation .............................................. 297,754 297,754
Advance from Southmark ......................................................... 41,016 39,839
Advances from affiliates - General Partner ..................................... 33,450 32,136
Payable to affiliates - General Partner ........................................ 5,011,928 4,573,052
Security deposits and deferred rental revenue .................................. 351,369 519,042
------------ ------------
48,319,009 61,260,704
------------ ------------
Partners' deficit:
Limited partners - 240,000 limited partnership units authorized;
229,666 and 229,690 limited partnership units issued and
outstanding at June 30, 1998 and December 31, 1997, respectively .......... (1,829,268) (10,579,935)
General Partner ............................................................. (10,122,335) (10,163,672)
------------ ------------
(11,951,603) (20,743,607)
------------ ------------
$ 36,367,406 $ 40,517,097
============ ============
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
MCNEIL REAL ESTATE FUND XII, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ ------------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
Revenue:
<S> <C> <C> <C> <C>
Rental revenue ................ $ 3,176,358 $ 3,836,204 $ 7,345,415 $ 7,643,461
Interest ...................... 76,128 26,818 93,187 49,808
Gain on sale of real estate.... 9,568,850 - 9,568,850 -
----------- ----------- ----------- -----------
Total revenue ............... 12,821,336 3,863,022 17,007,452 7,693,269
----------- ----------- ----------- -----------
Expenses:
Interest ...................... 943,764 1,207,287 2,137,736 2,415,317
Interest - affiliates ......... 660 668 1,314 1,305
Depreciation and
amortization ................ 761,520 987,959 1,521,561 1,934,918
Property taxes ................ 237,569 303,171 538,349 606,342
Personnel expenses ............ 363,591 396,809 826,741 861,193
Utilities ..................... 239,032 266,900 608,358 687,650
Repair and maintenance ........ 482,055 573,231 921,427 1,032,247
Property management
fees - affiliates ........... 156,383 190,977 357,402 383,532
Other property operating
expenses .................... 166,720 199,456 371,950 416,996
General and administrative .... 119,803 50,073 367,978 100,760
General and administrative -
affiliates .................. 78,213 56,798 143,407 111,603
----------- ----------- ----------- -----------
Total expenses .............. 3,549,310 4,233,329 7,796,223 8,551,863
----------- ----------- ----------- -----------
Net income (loss) ................ $ 9,272,026 $ (370,307) $ 9,211,229 $ (858,594)
=========== =========== =========== ===========
Net income (loss) allocable
to limited partners ........... $ 8,808,425 $ (351,792) $ 8,750,667 $ (815,664)
Net income (loss) allocable
to General Partner ............ 463,601 (18,515) 460,562 (42,930)
----------- ----------- ----------- -----------
Net income (loss) ................ $ 9,272,026 $ (370,307) $ 9,211,229 $ (858,594)
=========== =========== =========== ===========
Net income (loss) per limited
partnership unit .............. $ 38.35 $ (1.53) $ 38.10 $ (3.55)
=========== =========== =========== ===========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
MCNEIL REAL ESTATE FUND XII, LTD.
STATEMENTS OF PARTNERS' DEFICIT
(Unaudited)
For the Six Months Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Deficit
--------------- -------------- -------------
<S> <C> <C> <C>
Balance at December 31, 1996.............. $ (9,232,451) $ (9,148,979) $ (18,381,430)
Net loss.................................. (42,930) (815,664) (858,594)
Management Incentive Distribution......... (429,770) - (429,770)
-------------- ------------- -------------
Balance at June 30, 1997.................. $ (9,705,151) $ (9,964,643) $ (19,669,794)
============== ============= =============
Balance at December 31, 1997.............. $ (10,163,672) $ (10,579,935) $ (20,743,607)
Net income................................ 460,562 8,750,667 9,211,229
Management Incentive Distribution......... (419,225) - (419,225)
-------------- ------------- -------------
Balance at June 30, 1998.................. $ (10,122,335) $ (1,829,268) $ (11,951,603)
============== ============= =============
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
MCNEIL REAL ESTATE FUND XII, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------
1998 1997
------------- -------------
Cash flows from operating activities:
<S> <C> <C>
Cash received from tenants ............ $ 7,102,407 $ 7,710,513
Cash paid to suppliers ................ (3,219,696) (3,037,651)
Cash paid to affiliates ............... (481,158) (828,566)
Interest received ..................... 93,187 49,808
Interest paid ......................... (2,153,992) (2,347,518)
Property taxes paid ................... (842,356) (801,166)
------------ ------------
Net cash provided by operating activities 498,392 745,420
------------ ------------
Cash flows from investing activities:
Additions to real estate investments .. (643,884) (621,599)
Additions to assets held for sale ..... (9,438) -
Proceeds from sale of real estate ..... 18,881,821 -
------------ ------------
Net cash provided by (used in)
investing activities .................. 18,228,499 (621,599)
------------ ------------
Cash used in financing activities:
Principal payments on mortgage notes
payable ............................. (294,702) (322,304)
Retirement of mortgage note payable ... (12,523,061) -
------------ ------------
Net cash used in financing activities .... (12,817,763) (322,304)
------------ ------------
Net increase (decrease) in cash and cash
equivalents ........................... 5,909,128 (198,483)
Cash and cash equivalents at beginning of
period ................................ 1,423,658 1,768,249
------------ ------------
Cash and cash equivalents at end of period $ 7,332,786 $ 1,569,766
============ ============
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
MCNEIL REAL ESTATE FUND XII, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
Reconciliation of Net Income (Loss) to Net Cash Provided by
Operating Activities
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------------
1998 1997
----------- ------------
<S> <C> <C>
Net income (loss) ............................... $ 9,211,229 $ (858,594)
----------- -----------
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization ................ 1,521,561 1,934,918
Amortization of deferred borrowing costs ..... 74,335 69,922
Net interest added on advances from
affiliates - General Partner ............... 1,314 1,305
Net interest added on advances from
Southmark .................................. 1,177 1,169
Gain on sale of real estate .................. (9,568,850) -
Changes in assets and liabilities:
Cash segregated for security deposits ...... (11,229) (5,213)
Accounts receivable ........................ (69,367) 31,980
Prepaid expenses and other assets .......... 30,454 6,389
Escrow deposits ............................ (146,584) (109,242)
Accounts payable ........................... (9,996) (6,466)
Accrued expenses ........................... (165,619) (54,776)
Accrued interest ........................... (91,768) (3,292)
Accrued property taxes ..................... (130,243) 19,300
Payable to affiliates - General Partner .... 19,651 (333,431)
Security deposits and deferred rental
revenue .................................. (167,673) 51,451
----------- -----------
Total adjustments ........................ (8,712,837) 1,604,014
----------- -----------
Net cash provided by operating activities ....... $ 498,392 $ 745,420
=========== ===========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XII, LTD.
Notes to Financial Statements
(Unaudited)
June 30, 1998
NOTE 1.
- -------
McNeil Real Estate Fund XII, Ltd. (the "Partnership") was organized February 2,
1981 as a limited partnership organized 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 limited partnership agreement, dated September 6, 1991 (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.
In the opinion of management, the financial statements reflect all adjustments
necessary for a fair presentation of the Partnership's financial position and
results of operations. All adjustments were of a normal recurring nature.
However, the results of operations for the six months ended June 30, 1998 are
not necessarily indicative of the results to be expected for the year ending
December 31, 1998.
NOTE 2.
- -------
The financial statements should be read in conjunction with the financial
statements contained in the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1997, and the notes thereto, as filed with the
Securities and Exchange Commission, which is available upon request by writing
to McNeil Real Estate Fund XII, Ltd., c/o McNeil Real Estate Management, Inc.,
Investor Services, 13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240.
NOTE 3.
- -------
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
provide leasing services for the Partnership's commercial properties, in which
case McREMI will receive a property management fee from such commercial
properties equal to 3% of the property's gross rental receipts plus commissions
based on the prevailing market rate for such services where the property is
located.
The Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs.
Affiliates of the General Partner have advanced funds to the Partnership to meet
working capital requirements. These advances accrue interest at a rate equal to
the prime lending rate plus 1%.
<PAGE>
Under terms of the Amended Partnership Agreement, the Partnership is paying a
Management Incentive Distribution ("MID") to the General Partner. The maximum
MID is calculated as 1% of the tangible asset value of the Partnership. The
maximum MID percentage decreases subsequent to 1999. Tangible asset value is
determined by using the greater of (i) an amount calculated by applying a
capitalization rate of 9% to the annualized net operating income of each
property or (ii) a value of $10,000 per apartment unit 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, as defined ("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 limited
partnership ("Units") will be deferred and is payable, without interest, from
the first available cash and/or (ii) in Units. A maximum of 50% of the MID may
be paid in Units. The number of Units issued in payment of the MID is based on
the greater of $50 per Unit or the net tangible asset value, as defined, per
Unit.
Any amount of the MID that is paid to the General Partner in Units will be
treated as if cash 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.
Compensation, reimbursements and distributions paid to or accrued for the
benefit of the General Partner and its affiliates are as follows:
Six Months Ended
June 30,
------------------------
1998 1997
-------- --------
Property management fees - affiliates ........... $357,402 $383,532
Interest - affiliates ........................... 1,314 1,305
Charged to general and administrative affiliates:
Partnership administration ................... 143,407 111,603
-------- --------
$502,123 $496,440
======== ========
Charged to General Partner's deficit:
MID .......................................... $419,225 $429,770
======== ========
<PAGE>
NOTE 4.
- -------
The Partnership has become aware of the presence of certain solvent based
contamination in ground water under a portion of the Lodge at Aspen Grove. The
source of the contamination is related to a documented release of solvents from
underground storage tanks located at a Colorado Department of Transportation
("CDOT") facility nearby. The Partnership has been informed that CDOT, as the
responsible party, has agreed to remediate the property to comply with state and
federal standards. CDOT has submitted a corrective action plan to the Colorado
Department of Public Health and Environment and implementation of the plan is
ongoing. The Partnership is unable to estimate impairment, if any, to the
property at this time. However, due to the existence and involvement of the
responsible party, the Partnership does not believe that this event has a
material impact on the accompanying financial statements.
NOTE 5.
- -------
On April 7, 1998, the Partnership sold to W9/PHC Real Estate Limited
Partnership, an unaffiliated buyer, Channingway Apartments, a 770 unit apartment
complex, located in Columbus, Ohio, for a cash sales price of $19,150,000. 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..................................... $ 19,150,000 $ 19,150,000
Selling costs........................................ (268,179) (268,179)
Basis of real estate sold............................ (9,312,971)
-------------
Gain on sale of real estate.......................... $ 9,568,850
============= -----------
Proceeds from sale of real estate.................... 18,881,821
Retirement of mortgage note payable.................. (12,523,061)
-----------
Net cash proceeds.................................... $ 6,358,760
============
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
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 June 30, 1998, the Partnership owned
four apartment properties and one shopping center. All of the Partnership's
properties are subject to mortgage notes.
<PAGE>
The Partnership recorded a $9,568,850 gain on the sale of Channingway
Apartments. Net proceeds from the sale, after repayment of the related mortgage
note, amounted to $6,358,760. The net proceeds from the sale were added to the
Partnership's balance of cash reserves.
RESULTS OF OPERATIONS
- ---------------------
Revenue:
Partnership revenues increased $8,958,314 and $9,314,183 for the three and six
months ended June 30, 1998 as compared to the same period last year. Excluding
the effects of the sale of Channingway Apartments, Partnership revenues
increased $628,482 or 9% for the six months ended June 30, 1998. Greater cash
reserves led to an increase of $43,379 in interest income for the six months
ended June 30, 1998.
Rental revenues increased at all of the Partnership's five remaining properties.
The properties reporting the largest increases in rental revenue, on a
percentage basis, were Plaza Westlake and Brendon Way Apartments. The increase
in rent on Plaza Westlake is due to an increase in contingent rents billed, as
compared to the prior year. The increase at Brendon Way Apartments is primarily
due to greater occupancy during 1998. The Lodge at Aspen Grove increased base
rental rates over 7%, but the increase was partially offset by decreased
occupancy rates. The remainder of the Partnership's properties reported small
increases in rental revenue.
Expenses:
Partnership expenses decreased $684,019 and $755,640 or 9% for the three months
and six months ended June 30, 1998 as compared to the same period last year.
Excluding the effects of the sale of Channingway Apartments, Partnership
expenses increased $333,138 or 4% for the six months ended June 30, 1998.
The Partnership incurred slight decreases in utilities and other property
operating expenses. These expenses were offset by increases in general and
administrative and general and administrative - affiliates.
General and administrative expenses increased $267,218 for the six months ended
June 30, 1998 as compared to the same period last year. The increase was mainly
due to costs incurred to explore alternatives to maximize the value of the
Partnership (see Liquidity and Capital Resources). The increase was partially
offset by decreases attributable to investor services. During 1997, charges for
investor services were provided by a third party vendor and beginning with 1998,
these services are provided by affiliates of the General Partner.
General and administrative-affiliate expenses increased $31,804 for the six
months ended June 30, 1998 as compared to the same period of 1997. The increase
is due to the change in investor relation charges as discussed above.
All other remaining expense categories remained comparable to the same period
last year.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the first six months of 1998, the Partnership provided $498,392 in cash
from operations as compared to $745,420 in cash from operations in 1997. The
$247,028 decrease can be attributed to the increase in cash paid to suppliers
and decrease in cash received from tenants in the first half of 1998 as compared
to the same period in 1997.
The Partnership expended $643,884 and $621,599 for capital improvements to its
properties for the six months ended June 30, 1998 and 1997, respectively. The
Partnership also received proceeds of $18,881,821 for the sale of Channingway in
April 1998.
Total principal payments on mortgage notes payable were $294,702 for the six
months ended June 30, 1998 as compared to $322,304 for the same period in 1997.
The Partnership used also $12,523,061 of the proceeds from the Channingway sale
to retire the mortgage note payable on the property.
Short-term liquidity:
At June 30, 1998, the Partnership held cash and cash equivalents of $7,332,786.
The General Partner believes that anticipated operating results for 1998 will be
sufficient to fund the Partnership's budgeted $1.2 million in capital
improvements for 1998 and to repay the current portion of the Partnership's
mortgage notes. The mortgage note payable on Plaza Westlake, in the amount of
$3,730,000, matures in January 2000 and has a constant of approximately 12%. In
light of the high constant, the Partnership is considering an early payoff of
this mortgage loan during 1998.
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 capital improvements made
by the Partnership during the past will yield improved cash flow from property
operations in the future. If the Partnership's cash position deteriorates, the
General Partner may elect to defer certain of the capital improvements, except
where such improvements are expected to increase the competitiveness or
marketability of the Partnership's properties.
As previously announced, the Partnership has retained PaineWebber
("PaineWebber"), Incorporated as its exclusive financial advisor to explore
alternatives to maximize the value of the Partnership including, without
limitation, a transaction in which limited partnership interests in the
Partnership are converted into cash. The Partnership, through PaineWebber, has
provided financial and other information to interested parties and is currently
conducting discussions with one such party in an attempt to reach a definitive
agreement with respect to a sale transaction. It is possible that the General
Partner and its affiliates will receive non-cash consideration for their
ownership interests in connection with any such transaction. There can be no
assurance that any such agreement will be reached nor the terms thereof.
<PAGE>
Income (loss) allocation and distributions:
Terms of the Amended Partnership Agreement specify that income (loss) 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 the six months ended June 30,
1998 and 1997, $460,562 and $(42,930), respectively, was allocated to the
General Partner. The limited partners received allocations of $8,750,667 and
$(815,664) for the six months ended June 30, 1998 and 1997, 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. The General Partner will continue to monitor the cash reserves,
working capital needs and possible early payoff of mortgage loan, as previously
discussed, to determine when cash flows will support distributions to the
limited partners.
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 June 30, 1998. 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:
Management has begun to review its information technology infrastructure to
identify any systems that could be affected by the year 2000 problem. The year
2000 problem is the result of computer programs being written using two digits
rather than four to define the applicable year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in major systems failure or
miscalculations. The information systems used by the Partnership for financial
reporting and significant accounting functions were made year 2000 compliant
during recent systems conversions. The Partnership is in the process of
evaluating the computer systems at the various properties. The Partnership also
intends to communicate with suppliers, financial institutions and others to
coordinate year 2000 issues. Management believes that the remediation of any
outstanding year 2000 conversion issues will not have a material or adverse
effect on the Partnership's operations.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- ------- -----------------
James F. Schofield, Gerald C. Gillett, Donna S. Gillett, Jeffrey Homburger,
Elizabeth Jung, Robert Lewis, and Warren Heller et al. v. McNeil Partners L.P.,
McNeil Investors, Inc., McNeil Real Estate Management, Inc., Robert A. McNeil,
Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate
Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI,
Ltd., McNeil Real Estate Fund XII, Ltd., McNeil Real Estate Fund XIV, Ltd.,
McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real
Estate Fund XXI, L.P., McNeil Real Estate Fund XXII, L.P., McNeil Real Estate
Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., McNeil Real Estate Fund
XXVI, L.P., and McNeil Real Estate Fund XXVII, L.P., et al. - Superior Court of
the State of California for the County of Los Angeles, Case No. BC133799 (Class
and Derivative Action Complaint).
The action involves purported class and derivative actions brought by limited
partners of each of the fourteen limited partnerships that were named as nominal
defendants as listed above (the "Partnerships"). Plaintiffs allege that McNeil
Investors, Inc., its affiliate McNeil Real Estate Management, Inc. and three of
their senior officers and/or directors (collectively, the "Defendants") breached
their fiduciary duties and certain obligations under the respective Amended
Partnership Agreement. Plaintiffs allege that Defendants have rendered such
Units highly illiquid and artificially depressed the prices that are available
for Units on the resale market. Plaintiffs also allege that Defendants engaged
in a course of conduct to prevent the acquisition of Units by an affiliate of
Carl Icahn by disseminating purportedly false, misleading and inadequate
information. Plaintiffs further allege that Defendants acted to advance their
own personal interests at the expense of the Partnerships' public unit holders
by failing to sell Partnership properties and failing to make distributions to
unitholders.
On December 16, 1996, the Plaintiffs filed a consolidated and amended complaint.
Plaintiffs are suing for breach of fiduciary duty, breach of contract and an
accounting, alleging, among other things, that the management fees paid to the
McNeil affiliates over the last six years are excessive, that these fees should
be reduced retroactively and that the respective Amended Partnership Agreements
governing the Partnerships are invalid.
Defendants filed a demurrer to the consolidated and amended complaint and a
motion to strike on February 14, 1997, seeking to dismiss the consolidated and
amended complaint in all respects. A hearing on Defendant's demurrer and motion
to strike was held on May 5, 1997. The Court granted Defendants' demurrer,
dismissing the consolidated and amended complaint with leave to amend. On
October 31, 1997, the Plaintiffs filed a second consolidated and amended
complaint. The case has been stayed pending settlement discussions. While
actively working toward a final resolution, there can be no assurances regarding
settlement.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- ---------------------------------
(a) Exhibits.
Exhibit
Number Description
------- -----------
3.3 Amended and Restated Partnership Agreement,
dated September 6, 1991 (Incorporated by
reference to the Quarterly Report on Form
10-Q for the quarter ended September 30,
1991).
11. Statement regarding computation of net loss
per limited partnership unit: net loss per
limited partnership unit is computed by
dividing net loss allocated to the limited
partners by the number of limited
partnership units outstanding. Per unit
information has been computed based on
229,666 and 229,690 limited partnership
units outstanding in 1998 and 1997.
27. Financial Data Schedule for the quarter
ended June 30, 1998.
(b) Reports on Form 8-K. A Form 8-K dated April 7, 1998 was filed on
April 14, 1998, regarding the sale of Channingway Apartments.
<PAGE>
McNEIL REAL ESTATE FUND XII, LTD.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized:
McNEIL REAL ESTATE FUND XII, Ltd.
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
August 14, 1998 By: /s/ Ron K. Taylor
- --------------- -----------------------------------------
Date Ron K. Taylor
President and Director of McNeil
Investors, Inc.
(Principal Financial Officer)
August 14, 1998 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 7,332,786
<SECURITIES> 0
<RECEIVABLES> 234,678
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 63,531,359
<DEPRECIATION> (38,275,755)
<TOTAL-ASSETS> 36,367,406
<CURRENT-LIABILITIES> 0
<BONDS> 41,382,609
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 36,367,406
<SALES> 7,345,415
<TOTAL-REVENUES> 17,007,452
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,657,173
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,139,050
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,211,229
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,211,229
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
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