UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the period ended September 30, 1995
--------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______________ to_____________
Commission file number 0-7162
MCNEIL PACIFIC INVESTORS FUND 1972
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 94-6279375
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (214) 448-5800
---------------------------
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___
<PAGE>
MCNEIL PACIFIC INVESTORS FUND 1972
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ------- --------------------
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
ASSETS
- ------
<S> <C> <C>
Real estate investment:
Land..................................................... $2,336,000 $2,336,000
Buildings and improvements............................... 4,895,835 4,569,577
--------- ---------
7,231,835 6,905,577
Less: Accumulated depreciation.......................... (918,384) (666,496)
--------- ---------
6,313,451 6,239,081
Cash and cash equivalents................................... 677,779 1,062,361
Cash segregated for security deposits....................... 36,693 36,309
Accounts receivable......................................... 2,195 3,741
Prepaid expenses and other assets........................... 23,931 24,594
Escrow deposits............................................. 105,929 125,181
Deferred borrowing costs, net of accumulated amorti-
zation of $34,622 and $26,833 at September 30, 1995
and December 31, 1994, respectively...................... 17,311 25,101
--------- ---------
$7,177,289 $7,516,368
========= =========
LIABILITIES AND PARTNERS' EQUITY
Mortgage note payable....................................... $2,193,777 $2,287,341
Accounts payable............................................ 28,306 31,328
Accrued interest............................................ 10,314 16,679
Accrued property taxes...................................... 88,419 -
Other accrued expenses...................................... 12,420 38,685
Payable to affiliates - General Partner..................... 12,593 93,329
Security deposits and deferred rental revenue............... 46,936 48,138
--------- ---------
2,392,765 2,515,500
--------- ---------
Partners' equity:
Limited partners - 15,000 limited partnership units
authorized; 13,752.5 limited partnership units
issued and outstanding................................. 4,474,580 4,690,924
General Partner.......................................... 309,944 309,944
--------- ---------
4,784,524 5,000,868
--------- ---------
$7,177,289 $7,516,368
========= =========
</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 PACIFIC INVESTORS FUND 1972
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ------------------------------
1995 1994 1995 1994
-------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenue:
Rental revenue................ $ 328,653 $ 336,568 $1,041,687 $1,124,697
Interest...................... 10,026 10,583 32,840 27,043
Gain on disposition of real
estate...................... - - - 574,701
-------- -------- --------- ---------
Total revenue............... 338,679 347,151 1,074,527 1,726,441
-------- -------- --------- ---------
Expenses:
Interest...................... 50,819 54,276 148,836 196,976
Depreciation.................. 89,268 45,564 251,888 171,354
Property taxes................ 29,475 34,476 88,425 123,516
Personnel expenses............ 63,403 65,551 183,848 225,253
Utilities..................... 20,032 23,484 61,306 68,968
Repair and maintenance........ 86,828 134,148 244,839 245,208
Property management
fees - affiliates........... 18,739 16,718 59,202 55,599
Other property operating
expenses.................... 48,354 45,832 136,450 124,583
General and administrative.... 41,219 2,505 56,054 11,820
General and administrative -
affiliates.................. 19,469 17,694 60,023 47,391
-------- -------- --------- ---------
Total expenses.............. 467,606 440,248 1,290,871 1,270,668
-------- -------- --------- ---------
Net income (loss)................ $(128,927) $ (93,097) $ (216,344) $ 455,773
======== ======== ========= =========
Net income (loss) allocated
to limited partners........... $(128,927) $ (93,097) $ (216,344) $ 689,787
Net loss allocated
to General Partner............ - - - (234,014)
-------- -------- --------- ---------
Net income (loss)................ $(128,927) $ (93,097) $ (216,344) $ 455,773
======== ======== ========== =========
Net income (loss) per limited
partnership unit.............. $ (9.37) $ (6.77) $ (15.73) $ 50.16
======== ======== ========= =========
</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 PACIFIC INVESTORS FUND 1972
STATEMENTS OF PARTNERS' EQUITY
(Unaudited)
For the Nine Months Ended September 30, 1995 and 1994
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Equity
--------- ----------- ----------
<S> <C> <C> <C>
Balance at December 31, 1993.............. $ 543,958 $ 4,023,366 $4,567,324
Net income (loss)......................... (234,014) 689,787 455,773
-------- ---------- ---------
Balance at September 30, 1994............. $ 309,944 $ 4,713,153 $5,023,097
======== ========== =========
Balance at December 31, 1994.............. $ 309,944 $ 4,690,924 $5,000,868
Net loss.................................. - (216,344) (216,344)
-------- ---------- ---------
Balance at September 30, 1995............. $ 309,944 $ 4,474,580 $4,784,524
======== ========== =========
</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 PACIFIC INVESTORS FUND 1972
STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------------------------
1995 1994
---------- ------------
<S> <C> <C>
Cash flows from operating activities:
Cash received from tenants........................ $1,011,917 $ 1,116,978
Cash paid to suppliers............................ (681,391) (694,474)
Cash paid to affiliates........................... (199,961) (78,066)
Interest received................................. 32,840 27,043
Interest paid..................................... (147,411) (221,730)
Property taxes paid and escrowed.................. 19,246 (75,985)
--------- ----------
Net cash provided by operating activities............ 35,240 73,766
--------- ----------
Cash flows from investing activities:
Additions to real estate investments.............. (326,258) (422,605)
Proceeds from sale of real estate investment...... - 3,749,308
--------- ----------
Net cash provided by (used in) investing
activities........................................ (326,258) 3,326,703
--------- ----------
Cash flows from financing activities:
Principal payments on mortgage notes
payable......................................... (93,564) (122,263)
Retirement of mortgage note payable............... - (2,094,135)
--------- ----------
Net cash used in financing activities................ (93,564) (2,216,398)
--------- ----------
Net increase (decrease) in cash and
cash equivalents.................................. (384,582) 1,184,071
Cash and cash equivalents at beginning of
period............................................ 1,062,361 85,057
--------- ----------
Cash and cash equivalents at end of period........... $ 677,779 $ 1,269,128
========= ==========
</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 PACIFIC INVESTORS FUND 1972
STATEMENTS OF CASH FLOWS
(Unaudited)
Reconciliation of Net Income (Loss) to Net Cash Provided by Operating Activities
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------------------
1995 1994
---------- ---------
<S> <C> <C>
Net income (loss).................................... $(216,344) $ 455,773
-------- --------
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation...................................... 251,888 171,354
Amortization of deferred borrowing costs.......... 7,790 7,790
Gain on disposition of real estate................ - (574,701)
Changes in assets and liabilities:
Cash segregated for security deposits........... (384) 15,444
Accounts receivable............................. 1,546 7,807
Prepaid expenses and other assets............... 663 30,551
Escrow deposits................................. 19,252 (52,333)
Accounts payable................................ (3,022) (43,261)
Accrued interest................................ (6,365) (32,544)
Accrued property taxes.......................... 88,419 99,864
Other accrued expenses.......................... (26,265) (23,075)
Payable to affiliates - General Partner......... (80,736) 24,924
Security deposits and deferred rental
revenue....................................... (1,202) (13,827)
-------- --------
Total adjustments............................. 251,584 (382,007)
-------- --------
Net cash provided by operating activities............ $ 35,240 $ 73,766
======== ========
</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 PACIFIC INVESTORS FUND 1972
Notes To Financial Statements
(Unaudited)
September 30, 1995
NOTE 1.
- -------
McNeil Pacific Investors Fund 1972 (the "Partnership") is a limited partnership
organized under the laws of the State of California to invest in real property.
The general partner of the Partnership is McNeil Partners, L.P. (the "General
Partner"), a Delaware limited partnership affiliated with Robert A. McNeil. The
principal place of business for the Partnership and the General Partner is 13760
Noel Road, Suite 700, LB70, Dallas, Texas 75240.
In the opinion of management, the financial statements reflect all adjustments
necessary for a fair presentation of the Partnership's financial position and
results of operations. All adjustments were of a normal recurring nature.
However, the results of operations for the nine months ended September 30, 1995,
are not necessarily indicative of the results to be expected for the year ending
December 31, 1995.
NOTE 2.
- -------
The financial statements should be read in conjunction with the financial
statements contained in the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1994, and the notes thereto, as filed with the
Securities and Exchange Commission, which is available upon request by writing
to McNeil Pacific Investors Fund 1972, c/o McNeil Real Estate Management, Inc.,
Investor Services, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240.
NOTE 3.
- -------
Certain prior period amounts within the accompanying financial statements have
been reclassified to conform with current year presentation.
NOTE 4.
- -------
The General Partner is entitled to receive a partnership management fee equal to
9.5% of distributions of cash from operations when distributable cash from
operations is distributed to the limited partners. No partnership management
fees were incurred during the nine month periods ended September 30, 1995 and
1994.
The Partnership pays property management fees equal to 6% of the gross rental
receipts of the Partnership's property to McNeil Real Estate Management, Inc.
("McREMI"), an affiliate of the General Partner, for providing property
management and leasing services for the Partnership's property. Prior to
December 31, 1994, the Partnership paid property management fees equal to 5% of
the gross rental receipts of the Partnership's properties.
The Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs.
<PAGE>
Compensation and reimbursements paid to or accrued for the benefit of the
General Partner and its affiliates are as follows:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------
1995 1994
-------- -------
<S> <C> <C>
Property management fees - affiliates................ $ 59,202 $ 55,599
Charged to general and administrative -
affiliates:
Partnership administration........................ 60,023 47,391
Charged to gain on disposition of real estate:
Brokerage commission.............................. - 81,000
------- -------
$119,225 $183,990
======= =======
</TABLE>
NOTE 5.
- -------
On March 17, 1994, the Partnership sold its investment in Pacesetter Apartments
to an unaffiliated buyer for a cash sales price of $4,050,000. Cash proceeds
from the transaction, as well as the gain on sale, are detailed below.
<TABLE>
<CAPTION>
Proceeds
Gain on Sale from Sale
------------ ------------
<S> <C> <C>
Sales price.......................................... $ 4,050,000 $ 4,050,000
Selling costs........................................ (300,692) (300,692)
Basis of real estate sold............................ (3,174,607)
----------
Gain on sale of real estate investment............... $ 574,701
========== ----------
Proceeds from sale of real
estate investment................................. 3,749,308
Retirement of mortgage note payable.................. (2,094,135)
----------
Net cash proceeds.................................... $ 1,655,173
==========
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Since the sale of Pacesetter Apartments on March 17, 1994, the focus of the
Partnership's efforts have been directed to the renovation program at Palm Bay
Apartments (formerly known as Greentree Apartments). From the beginning of 1994
through the third quarter of 1995, the Partnership has completed capital
renovation projects totaling $974,027. To date, occupancy at Palm Bay Apartments
has not recovered as much as was hoped. At September 30, 1995, occupancy at Palm
Bay Apartments stood at 78% up from 72% at June 30, 1995 and down from 82% at
December 31, 1994. As the capital renovation program winds down, the focus of
the Partnership will turn to leasing the restored units and increasing operating
efficiencies at the property.
RESULTS OF OPERATIONS
- ---------------------
The Partnership reported a loss of $216,344 for the first nine months of 1995
compared to net income of $445,773 for the first nine months of 1994. The
results for the first nine months of 1994 included a one-time gain of $574,701
from the sale of Pacesetter Apartments. Rental revenues and operating expenses
were both lower for the nine months ending September 30, 1995 because the 1995
figures do not include rental revenues or expenses of Pacesetter Apartments as
do the 1994 figures.
<PAGE>
Unlike the year-to-date figures, the third quarter figures from both 1995 and
1994 contain only operating results from Palm Bay Apartments. The net loss for
the third quarter of 1995 increased to $128,927 from the $93,097 loss for the
third quarter of 1994.
Revenues:
Rental revenues decreased $83,010 or 7.4% for the first nine months of 1995
compared to the first nine months of 1994. The decrease is principally due to
the sale of Pacesetter Apartments in March 1994. The rental revenue of Palm Bay
Apartments increased $51,612 or 5.3% for the nine month period, but decreased
$7,915 or 2.4% during the third quarter of 1995 compared to the third quarter of
1994. Net rental rates for Palm Bay's apartment units are unchanged in 1995
compared to 1994. Changes in rental revenue achieved at Palm Bay Apartments from
1994 to 1995 are due to changes in occupancy rates. The occupancy rate at
September 30, 1995 was 78%, down from 82% reported at December 31, 1994, but up
from 73% reported at June 30, 1995. A portion of the capital improvements
completed this year related to restoring approximately 70 out-of-service units
to leasable condition.
The Partnership has not been able to increase occupancy rates or base rental
rates as quickly as was hoped. Several apartment communities in the immediate
area have also undergone major rehabilitation, and several of the competing
apartment communities are able to offer their units at rates that have been
subsidized by various government programs. The effect of the competition has
restricted the increase in rental revenue that was otherwise expected from Palm
Bay Apartments. Management is implementing various marketing strategies to
attempt to improve the revenue growth of the property.
Interest revenues increased $5,797 for the nine months ended September 30, 1995.
The Partnership had substantially more funds invested in interest-bearing
accounts due to the sale of Pacesetter Apartments in the first quarter of 1994.
Revenues for 1994 also include the one-time gain on sale of Pacesetter
Apartments.
Expenses:
Partnership expenses increased $20,203 or 1.6% for the nine months ended
September 30, 1995. However, after excluding expenses pertaining to Pacesetter
Apartments, expenses increased $126,274 or 12% for the nine months ended
September 30, 1995. Third quarter results, which do not include any expenses
related to Pacesetter Apartments, show an increase in expenses of 27,358 or
6.2%. Increased expenses were concentrated in depreciation and general
administrative. Repair and maintenance decreased $47,320 or 35%.
The largest increase, on both an absolute and percentage basis, was the increase
in depreciation expense. For the nine months and the three months ended
September 30, 1995 depreciation expense at Palm Bay Apartments increased
$115,196 or 84% and $43,704 or 96%, respectively. The increase in depreciation
expense is due to the continuing investment of Partnership resources into
capital improvements. In the year since September 30, 1994, the Partnership has
invested $409,298 in capital improvements. These capital improvements are
generally being depreciated over lives ranging from five to ten years.
Repair and maintenance expenses at Palm Bay Apartments decreased $26,033 or 9.6%
and $47,320 or 35%, respectively, for the nine month and three month periods
ended September 30, 1995. Repair and maintenance expense decreased as
expenditures to bring out-of-service units into leasable condition were
completed during the second quarter of 1995.
The Partnership incurred reduced interest expense for the nine months ended
September 30, 1995 compared to the nine months ended September 30, 1994. Again,
the reason was the elimination of interest charges pertaining to the Pacesetter
mortgage note.
Property management fees for the nine months and three months ended September
30, 1995 at Palm Bay Apartments increased $11,284 or 24% and $2,021 or 12%. An
increase in rental receipts, upon which such fees are based, and an increase in
the management fee percentage to 6% from 5% (effective January 1, 1995) were the
reasons for the increase.
<PAGE>
Property tax expense decreased $35,091 for the nine month period ended September
30, 1995. Most of the decrease was due to the elimination of property taxes at
Pacesetter Apartments. However, property taxes also decreased $15,003 or 15% at
Palm Bay Apartments due to tax appeals by the Partnership to local taxing
jurisdictions that resulted in lower assessments.
General and administrative increased $44,234 and $38,714, respectively, for the
nine and the three months ended September 30, 1995 as compared to the same
period in 1994. The increase was due to $36,000 of costs relating to evaluation
and dissemination of information with regards to an unsolicited tender offer.
See Item 5 - Other Information.
General and administrative - affiliates for the nine months and the three months
ended September 30, 1995 increased by $12,632 or 27% and $1,775 or 10%,
respectively, due to an increase in reimbursements to affiliates because of
fewer partnerships over which overhead costs are allocated.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash flows generated by operating activities of the Partnership were $35,240 for
the first nine months of 1995, compared to $73,766 for the first nine months of
1994. The Partnership anticipates that the capital renovation projects at Palm
Bay Apartments will begin to yield improved cash flow from operations as the
restored and refurbished units are leased to new tenants. However, cash flow
from Palm Bay Apartments will not be sufficient to fund both operating expenses
and debt service requirements until the occupancy rate of Palm Bay Apartments
improves. For the balance of 1995, the Partnership will use its cash reserves to
fund debt service requirements if cash flows from operations are insufficient.
Cash paid to affiliates increased $121,896 in 1995 compared to 1994 due to the
$81,000 brokerage commission on the sale of Pacesetter Apartments that was
incurred in 1994 but not paid until 1995.
The sale of Pacesetter Apartments in March 1994, provided the largest change in
the cash flows of the Partnership. Cash generated from the sale, after repayment
of the Pacesetter mortgage note, totaled $1,655,173. The Partnership used these
proceeds to fund capital improvements at Palm Bay Apartments and to improve the
Partnership's cash reserves. Cash expended for capital improvements at Palm Bay
Apartments decreased to $326,258 for the first nine months of 1995 from $422,605
for the first nine months of 1994.
The financing activities of the Partnership, aside from the March 1994
retirement of the Pacesetter mortgage note, consist of the repayment of the Palm
Bay mortgage note through monthly debt service payments. These payments are
scheduled to gradually increase until June 1997, when the Palm Bay mortgage note
matures.
Short Term Liquidity:
Due to the sale of Pacesetter Apartments on March 17, 1994, the Partnership
began 1995 with adequate cash reserves. A substantial portion of the proceeds
from the sale of Pacesetter Apartments have been invested in capital
improvements at Palm Bay Apartments. The Partnership has budgeted $339,000 of
capital improvements for 1995 in addition to the $678,720 of capital
improvements made during 1994 and 1993. The capital improvements at Palm Bay
Apartments are necessary to allow the property to increase its rental revenues
and become competitive in the Orlando sub-market where the property is located.
At September 30, 1995, the Partnership held $677,779 of cash and cash
equivalents, down $384,582 from the balance at the end of 1994. The Partnership
will use its cash reserves, if necessary to complete the capital renovation
projects at Palm Bay Apartments. The General Partner considers the Partnership's
cash reserves adequate for such uses for the balance of 1995.
<PAGE>
Long Term Liquidity:
For the long term, property operations will remain the primary source of funds.
While the present outlook for the Partnership's liquidity is favorable, market
conditions may change and property operations may deteriorate. The General
Partner expects that the capital improvements at Palm Bay Apartments will yield
improved cash flow from operations in 1995. The Partnership has budgeted an
additional $53,000 of capital improvements for the balance of 1995. 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 property.
The General Partner has established a revolving credit facility not to exceed
$5,000,000 in the aggregate which is available on a "first-come, first-served"
basis to the Partnership and other affiliated partnerships if certain conditions
are met. However, there is no assurance that the Partnership will receive
additional funds under the facility because no amounts will be reserved for any
particular partnership. As of September 30, 1995, $2,362,004 remained available
for borrowing under the facility; however, additional funds could become
available as other partnerships repay borrowings.
As a additional source of liquidity, the General Partner may attempt to
refinance the Palm Bay mortgage note. The General Partner estimates that such a
refinancing could yield proceeds to the Partnership in excess of the amount
needed to retire the current mortgage note. However, there can be no guarantee
that the Partnership will be able to obtain such mortgage refinancing on terms
or in amounts favorable to the Partnership, or that the cash proceeds from such
refinancing could be timed to coincide with the liquidity needs of the
Partnership.
Distributions:
Distributions to partners have been suspended as part of the General Partner's
policy of maintaining adequate cash reserves. Distributions to Unit holders will
remain suspended for the foreseeable future. The General Partner will continue
to monitor the cash reserves and working capital needs of the Partnership to
determine when cash flows will support distributions to the Unit holders.
<PAGE>
PART II. OTHER INFORMATION
--------------------------
ITEM 1. LEGAL PROCEEDINGS
- ------- -----------------
1) High River Limited Partnership vs. McNeil Partners, L.P., McNeil Investors,
Inc., McNeil Pacific Investors 1972, Ltd., McNeil Real Estate Fund V,
Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X,
Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV,
Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX,
L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV,
L.P., Robert A. McNeil and Carole J. McNeil (L95012) - High River ("HR")
filed this action in the United States District Court for the Southern
District of New York against McNeil Partners, McNeil Investors and
Mr. and Mrs. McNeil requesting, among other things, names and addresses
of the Partnership's limited partners. The District Court issued a
preliminary injunction against the Partnerships requiring them to
commence mailing materials relating to High River tender offer materials
on August 14, 1995.
On August 18, 1995, McNeil Partners, McNeil Investors, the Partnerships,
and Mr. and Mrs. McNeil filed an Answer and Counterclaim. The Counterclaim
principally asserts (1) the HR tender offers have been undertaken in
violation of the federal securities laws, on the basis of material,
non-public, and confidential information, and (2) that the HR offer
documents omit and/or misrepresent certain material information about
the HR tender offers. The counterclaim seeks a preliminary and
permanent injunction against the continuation of the HR tender offers
and, alternatively, ordering corrective disclosure with respect to
allegedly false and misleading statements contained in the tender offer
documents.
The High River tender offer expired on October 6, 1995. The Defendants
believe that the action is moot and expect the matter to be dismissed
shortly.
2) Robert Lewis vs. 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, McNeil Real Estate Fund X, Ltd. and McNeil Real Estate Fund XV,
Ltd. Plaintiff brings this action on his own behalf and as a class action
on behalf of the class of all limited partners of McNeil Pacific Investors
Fund 1972, McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund IX,
Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd.,
McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil
Real Estate Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P. and McNeil
Real Estate Fund XXV, Ltd. (the "Partnerships") as of August 4, 1995.
Plaintiff alleges that McNeil Partners, L.P., McNeil Investors, Inc.,
Robert A. McNeil and other senior officers (collectively, the "Defendants")
breached their fiduciary duties by , among other things, (1) failing to
attempt to sell the properties owned by the Partnerships ("Properties") and
extending the lives of the Partnerships indefinitely, contrary to the
Partnerships' business plans, (2) paying distributions to themselves and
generating fees for their affiliates, (3) refusing to make significant
distributions to the class members, despite the fact that the
Partnerships have positive cash flows and substantial cash balances, and
(4) failing to take steps to create an auction market for Partnership
equity interests, despite the fact that a third party bidder filed tender
offers for approximately forty-five percent (45%) of the outstanding units
of each of the Partnerships. Plaintiff also claims that Defendants have
breached the Partnership Agreements by failing to take steps to liquidate
the Properties and by their alteration of the Partnerships' primary
purposes, their acts in contravention of these agreements, and their
use of the Partnership assets for their own benefit instead of for the
benefit of the Partnerships.
The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.
3) Alfred Napoletano vs. McNeil Partners, L.P., McNeil Investors, Inc.,
Robert A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972,
Ltd., McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund IX, Ltd.,
McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil
Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real
Estate Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real
Estate Fund XXV, L.P. - Superior Court of the State of California, County
of Los Angeles, Case No. BC133849 (class action complaint)
Plaintiff brings this class action on behalf of a class of all persons and
entities who are current owners of units and/or are limited partners in one
or more of the partnerships referenced above ("Partnerships"). Plaintiff
alleges that Defendants have breached their fiduciary duties to the class
members by, among other things, (1) taking steps to prevent the
consummation of the High River tender offers, (2) failing to take steps
to maximize unitholders' or limited partners' values, including
failure to liquidate the properties owned by the Partnerships,
(3) managing the Partnerships so as to extend indefinitely the present
fee arrangements, and (4) paying itself and entities owned and
controlled by the general partner excessive fees and reimbursements of
general and administrative expenses.
The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.
4) Warren Heller vs. 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)
Plaintiff brings this class action on behalf of a class of all persons and
entities who are current owners of units and/or are limited partners in one
or more of the partnerships referenced above ("Partnerships"). Plaintiff
alleges that Defendants have breached their fiduciary duties to the class
members by, among other things, (1) taking steps to prevent the
consummation of the High River tender offers, (2) failing to take steps
to maximize unitholders' or limited partners' values, including
failure to liquidate the properties owned by the Partnerships,
(3) managing the Partnerships so as to extend indefinitely the present
fee arrangements, and (4) paying itself and entities owned and
controlled by the general partner excessive fees and reimbursements of
general and administrative expenses.
The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.
5) High River Limited Partnership v. McNeil Partners L.P., McNeil Investors,
Inc., McNeil Pacific Investors 1972, Ltd., McNeil Real Estate Fund V, Ltd.,
McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil
Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real
Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real
Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., Robert A. McNeil
and Carole J. McNeil - United States District Court for the Southern
District of New York, (Case No. 95 Civ. 9488) (Second Action).
On November 7, 1995, High River commenced a second complaint which
alleges, inter alia, that McNeil's Schedule 14D-9 filed in connection
with the High River tender offers was materially false and misleading,
in violation of Sections 14(d) and 14(e) of the Securities Exchange
Act of 1934, 15 U.S.C. Section 78n(d) and (e), and the SEC Regulations
promulgated thereunder; and that High River further alleges that McNeil
has wrongfully refused to admit High River as a limited partner to
the Funds. Additionally, High River purports to assert claims derivatively
on behalf of Funds IX, XI, XV, XXIV and XXV, for breach of contract and
breach of fiduciary duty, asserting that McNeil has charged these
Partnerships excessive fees. High River's complaint seeks, inter alia,
preliminary injunctive relief requiring McNeil to admit High River as a
limited partner in each of the ten Partnerships and to transfer the
tendered units of interest in the Partnerships to High River; an
unspecified award of damages payable to High River and an additional
unspecified award of damages payable to certain of the Partnerships; an
order that defendants must discharge their fiduciary duties and must
account for all fees they have received from certain of the Partnerships;
and attorneys' fees.
The Defendants deny that there is any merit to Plaintiff's allegations
and intend to vigorously defend this action.
<PAGE>
ITEM 5. OTHER INFORMATION
- ------- -----------------
As previously disclosed, on an unsolicited basis, High River Limited Partnership
("High River"), a partnership controlled by Carl Icahn, announced that it had
commenced an offer to purchase 6,189 units of limited partnership interest in
the Partnership (approximately 45% of the Partnership's units) at $110 per unit.
The tender offer was originally due to expire on August 31, 1995. In connection
therewith, the parties entered into certain negotiations and discussions
regarding, among other things, possible transactions between the parties and
their affiliates, McNeil Partners, McNeil Investors, and McREMI. On September
19, 1995, the parties having not reached any resolution on the terms of the
proposed transactions, McNeil Partners terminated the parties' discussion. High
River had extended its offer several times until the final expiration date of
October 6, 1995. On October 11, 1995 High River announced that based on
preliminary information furnished by the depositary for the tender offer,
approximately 530 units of the Partnership were tendered and not withdrawn prior
to the expiration of the tender offer. On October 12, 1995, McNeil Partners
announced that it would continue to explore potential avenues to enhance the
value of the Partnership units, which may include, among other things, asset
sales, refinancings of Partnership properties followed by distributions or
tender offers for units of limited partnership. There can be no assurance that
any such plans will develop or that any such transactions will be consummated.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description
<S> <C>
3. Restated Certificate and Agreement of
Limited Partnership dated of March 8,
1972. (1)
4. Amendment to Restated Certificate and
Agreement of Limited Partnership dated
March 30, 1992. (2)
11. Statement regarding computation of net
income per limited partnership unit: Net
income per limited partnership unit is
computed by dividing net income allocated to
the limited partners by the number of
limited partnership units outstanding. Per
unit information has been computed based on
13,752.5 and 13,757.5 limited partnership
units outstanding in 1995 and 1994,
respectively.
27. Financial Data Schedule for the quarter
ended September 30, 1995.
</TABLE>
(1) Incorporated by reference to the Annual Report of Registrant on Form
10-K for the period ended December 31, 1990, as filed on March 29,
1991.
(2) Incorporated by reference to the Current Report on Form 8-K filed by
the Registrant with the Securities and Exchange Commission on April
10, 1992.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during the
quarter ended September 30, 1995.
<PAGE>
McNEIL PACIFIC INVESTORS FUND 1972
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized:
<TABLE>
<CAPTION>
McNEIL PACIFIC INVESTORS FUND 1972
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
<S> <C>
November 13, 1995 By: /s/ Donald K. Reed
- --------------------- -------------------------------------------------
Date Donald K. Reed
President and Chief Executive Officer
November 13, 1995 By: /s/ Robert C. Irvine
- --------------------- -------------------------------------------------
Date Robert C. Irvine
Chief Financial Officer of McNeil Investors, Inc.
Principal Financial Officer
November 13, 1995 By: /s/ Brandon K. Flaming
- --------------------- -------------------------------------------------
Date Brandon K. Flaming
Chief Accounting Officer of McNeil Real Estate
Management, Inc.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 677,779
<SECURITIES> 0
<RECEIVABLES> 2,195
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 7,231,835
<DEPRECIATION> (918,384)
<TOTAL-ASSETS> 7,177,289
<CURRENT-LIABILITIES> 0
<BONDS> 2,193,777
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 7,177,289
<SALES> 1,041,687
<TOTAL-REVENUES> 1,074,527
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,142,035
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 148,836
<INCOME-PRETAX> (216,344)
<INCOME-TAX> 0
<INCOME-CONTINUING> (216,344)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (216,344)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
