MCNEIL PACIFIC INVESTORS FUND 1972, 10-K405, 1997-03-28

MCNEIL PACIFIC INVESTORS FUND 1972
10-K405, 1997-03-28
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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
-------------------------------------------------

[ ] 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 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 ]

13,702.5 of the registrant's 13,752.5 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 31.

TOTAL OF 33 PAGES
<PAGE>
PART I

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

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

McNeil Pacific Investors Fund 1972 (the "Partnership") was organized September
30, 1971 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 General Partner was elected at a
meeting of limited partners on March 30, 1992, at which time the Partnership's
restated certificate and agreement of limited partnership (the "Partnership
Agreement") was amended. Prior to March 30, 1992, Pacific Investors Corporation
(the "Corporate General Partner"), an affiliate of Southmark Corporation
("Southmark"), and McNeil were the general partners of the Partnership. The
principal place of business for the Partnership and the General Partner is 13760
Noel Road, Suite 600, LB70, Dallas, Texas, 75240.

On March 8, 1972, a Registration Statement on Form S-11 was declared effective
by the Securities and Exchange Commission whereby the Partnership offered for
sale $15,000,000 of limited partnership units ("Units"). The Units represent
equity interests in the Partnership and entitle the holders thereof to
participate in certain allocations and distributions of the Partnership. The
sale of Units closed on April 30, 1973 with 13,795 Units sold for gross proceeds
of $13,795,000 to the Partnership, including 50 Units purchased by the original
general partners. 37.5 and 5 Units were relinquished in 1994 and 1995,
respectively, leaving 13,752.5 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, including 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.

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.

<PAGE>
On March 30, 1992, the limited partners approved a proposal to (i) replace
McNeil and the Corporate General Partner as general partners of the Partnership
with the General Partner, and (ii) amend the Partnership Agreement to (a) extend
the term of the Partnership from December 31, 1992, until December 31, 2002, (b)
provide for a limitation on administrative operating expenses equal to 2% of
tangible asset value, as defined, and (c) provide for the establishment of an
oversight committee that will review and report on the Partnership's compliance
with the 2% limitation on administrative operating expenses.

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

General:

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. In accordance with the
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. 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 liquidation of the Partnership's asset.
However, 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. In this regard, the Partnership has
placed Palm Bay Apartments on the market for sale. Until such time as the
Partnership's asset is liquidated, the Partnership's plan of operations is to
preserve or increase the net operating income of the asset 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 asset. See Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations.

Competitive Conditions:

Since the principal business of the Partnership is to own and operate real
estate, the Partnership is subject to all of the risks incident to ownership of
real estate and interests therein, many of which relate to the illiquidity of
this type of investment. These risks include changes in general or local
economic conditions, changes in supply or demand for competing properties in an
area, changes in interest rates and availability of permanent mortgage funds
which may render the sale or refinancing of a property difficult or

<PAGE>
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, are described in Item 7 - Management's Discussion and
Analysis of Financial Condition and Results of Operations. See Item 2 - Property
for discussion of competitive conditions at the Partnership's property.

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 the sale or refinancing of its
property 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 the property has 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 $110 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 $224.50 per Unit.
In addition, High River made unsolicited tender offers for certain other
partnerships controlled by the General Partner. The Partnership made no
recommendation to the limited partners concerning the tender offers made with
respect to the Partnership. The General Partner believes that as of January 31,
1997, High River has purchased approximately 11.59% 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. PROPERTY
- ------- --------

The following table sets forth the real estate assets of the Partnership at
December 31, 1996. On October 1, 1996, the Partnership determined to market for
sale its sole remaining real estate asset, Palm Bay Apartments. Consequently,
the Partnership's investment in Palm Bay Apartments is shown as an asset held
for sale on the accompanying Balance Sheet dated December 31, 1996. The
buildings and land on which they are located are owned by the Partnership in
fee, subject to a first lien deed of trust as set forth more fully in Item 8 -
Note 5 "Mortgage Note Payable" and Schedule III - "Real Estate Investments and
Accumulated Depreciation." In the opinion of management, the property is
adequately covered by insurance.

<TABLE>
<CAPTION>
Net Basis 1996 Date
Property Description of Property Debt Property Tax Acquired
- -------- ----------- ----------- ---- ------------ --------
<S> <C> <C> <C> <C> <C>
Palm Bay Apartments
Orlando, FL 346 units $ 6,253,753 $ 2,023,577 $ 121,352 6/91
=========== ============ ===========
</TABLE>

The following table sets forth the occupancy rate and rent per square foot of
the Partnership's property for each of the last five years.

<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
------------- ------------- -------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Palm Bay
Occupancy Rate............ 94% 86% 82% 77% 73%
Rent Per Square Foot...... $ 5.83 $ 4.77 $ 4.58 $ 4.15 $ 3.71
</TABLE>

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

Competitive Conditions

The financial performance of Palm Bay Apartments has improved as a result of the
capital renovation program. Occupancy rates have risen from 63% at the date the
Partnership repossessed Palm Bay Apartments in 1992 to 94% at the end of 1996.
Occupancy rates in the submarket average 90%. Rental rates have also improved
due to the renovation program. The renovation program has made the property much
more competitive in its market. The local area offers diverse competition from
high quality property to low quality subsidized housing. The property's location
and townhouse units give it a competitive edge in the market. Conversely,
several of the property's competitors offer tax-subsidized rental rates. An
interior upgrade program is addressing the dated appearance of the units'
interiors so that the property can compete effectively with the newer properties
in the area.

<PAGE>
ITEM 3. LEGAL PROCEEDINGS
- ------- -----------------
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).

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.

<PAGE>
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.

For discussion of the Southmark bankruptcy, see Item 1 - Business."

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

None.

PART II

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

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

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

Limited partnership units 1,187 as of January 31, 1997

(C) No distributions were paid to the partners in 1996 or 1995. If the
Partnership completes the sale of Palm Bay Apartments, it is
anticipated that the General Partner would take the necessary steps to
wind-up the Partnership's affairs, including the distribution of all
remaining Partnership cash reserves to the partners, except for
sufficient cash reserves to pay the Partnership's final winding-up
expenses. 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
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>
Statements of Years Ended December 31,
Operations 1996 1995 1994 1993 1992
- ------------------ ------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Rental revenue............... $ 1,688,524 $ 1,376,148 $ 1,475,264 $ 1,894,385 $ 1,815,723
Gain on sale of
real estate............... - - 574,701 - -
Total revenue................ 1,715,535 1,439,428 2,095,660 1,908,162 1,870,452
Write-down for
permanent impairment
of real estate............ - - - 2,700,000 -
Net income (loss)............ 104,539 (285,886) 433,544 (3,102,551) (816,851)

Net income (loss) per
limited partnership unit.. $ 7.60 $ (20.79) $ 48.52 $ (224.90) $ (59.21)
============ ============ ============= ============ ============

As of December 31,
Balance Sheets 1996 1995 1994 1993 1992
- -------------- ------------- ------------- -------------- ------------- --------

Real estate
investments, net............ $ - $ 6,335,493 $ 6,239,081 $ 5,814,474 $ 11,528,672
Assets held for sale........... 6,253,753 - - 3,209,269 -
Total assets................... 6,957,388 6,993,903 7,516,368 9,405,117 12,665,342
Mortgage notes payable......... 2,023,577 2,161,204 2,287,341 4,523,714 4,738,775
Partners' equity............... 4,819,521 4,714,982 5,000,868 4,567,324 7,669,875
</TABLE>

See Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations. The Partnership sold Pacesetter Apartments on March 17,
1994.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------

FINANCIAL CONDITION
- -------------------

The Partnership reported 1996 net income of $104,539, an increase of $390,425
from the $285,886 loss incurred by the Partnership in 1995. The capital
improvement program begun shortly after the Partnership repossessed Palm Bay
Apartments has allowed the Partnership to first, improve the physical condition
of Palm Bay Apartments; second, improve the tenant profile of the property; and
finally, improve the occupancy rate at Palm Bay Apartments. These steps have
increased net rental revenue, and have decreased the Partnership's rental
expenses.

<PAGE>
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). For the three year period
ending December 31, 1996, the Partnership has completed capital renovation
projects totaling $1,300,937. Occupancy rates have improved from 63% shortly
after the Partnership repossessed Palm Bay Apartments, to 94% at the end of
1996. On October 1, 1996, the General Partner decided to begin marketing Palm
Bay Apartments for sale. The sale of Palm Bay Apartments, if it can be
successfully accomplished, would eliminate the need to refinance Palm Bay's
mortgage note that matures on June 1, 1997. As the Partnership's last real
estate asset, a sale of Palm Bay Apartments would also begin the process of
dissolving the Partnership and, after establishing reserves for contingencies
and winding-up expenses, distributing all remaining funds to the partners.

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

1996 compared to 1995:

Revenue:

Rental revenue increased $312,376 or 23% in 1996 compared to 1995. Base rental
rates were increased 1.7% at Palm Bay Apartments during 1996. However, most of
the increased rental revenue came from improved occupancy at the Orlando
property. The capital improvement program and other management strategies have
successfully improved the tenant profile, increased base rental rates, and
raised the occupancy rate to acceptable levels.

Interest revenue decreased 57% because the Partnership did not have as much cash
and cash equivalents invested in interest bearing accounts in 1996 compared to
1995.

Expenses:

Partnership expenses decreased $114,318 or 6.7% in 1996 compared to 1995.
Increased expenses were concentrated in property taxes, personnel expenses,
property management fees, and general and administrative expenses. However,
these increases were more than offset by decreases in depreciation, repairs and
maintenance, utilities, and general and administrative expenses paid to
affiliates.

Property taxes increased 19% due to an increased assessed valuation of Palm Bay
Apartments. Prior to 1994, the assessed value of Palm Bay Apartments remained
relatively low as a result of the deferred maintenance at the property. The
extensive capital renovation program has enhanced the value of the property and
raised its assessed value for property tax purposes.

Personnel expenses increased $20,993 or 8.7% in 1996 compared to 1995. The
Partnership increased maintenance staffing at Palm Bay Apartments. The
additional staffing enabled the property to assume some of the maintenance tasks
formerly done by outside contractors. The additional staffing also gives
management more flexibility in scheduling work orders for repairs requested by
tenants and thereby helps to improve relations with the property's tenants.

Property management fees-affiliates increased $20,207 or 25% in 1996 compared to
1995. The increase in net rental revenue of Palm Bay Apartments also caused a
corresponding increase in property management fees that are based on a
percentage of rental receipts of the property.

<PAGE>
The increase in occupancy at Palm Bay Apartments allowed the Partnership to
reduce expenditures for advertising and referral or locator fees. Improving the
tenant profile generally will decrease the amount of bad debts incurred by a
property. These factors led to a $52,655 or 28% decrease in other property
operating expenses.

General and administrative expense increased $12,258 or 19.0% in 1996 compared
to 1995. Most of the increase was due to increased expenditures incurred during
1996 to respond to and disseminate information about an unsolicited tender offer
for the Partnership's Units.

Depreciation expense decreased $50,493 or 14.7% in 1996 compared to 1995. The
Partnership ceased depreciating its investment in Palm Bay Apartments after the
October 1, 1996 decision to market the property for sale. Otherwise, 1996
depreciation charges would have increased approximately 15% over depreciation
charges incurred in 1995.

Repairs and maintenance expense decreased $33,997 or 9.8% in 1996 compared to
1995. New capital assets have replaced older assets that needed repairs.
Furthermore, raising the occupancy rate, and improving both the tenant profile
and tenant turnover have decreased make-ready costs associated with releasing
apartments units to new tenants.

Improved occupancy means that more tenants are paying for electricity for their
individual units. Otherwise, the Partnership bears the cost of keeping utilities
turned on in vacant units. This factor led to a $15,153 or 18.7% decrease in
utility expenses for the Partnership.

Finally, general and administrative expenses paid to affiliates decreased
$34,660 or 43% in 1996 compared to 1995. This decrease is due to a reduced level
of overhead expenses charged to the Partnership by affiliates.

1995 compared to 1994:

Revenue:

Rental revenues for 1995 decreased $99,116 or 6.7% compared to 1994. The
decrease was principally due to the sale of Pacesetter Apartments in March 1994.
Rental revenue from Palm Bay Apartments increased $54,794 or 4.1%. The
Partnership was able to increase both occupancy and base rental rates due to the
major capital improvements undertaken at Palm Bay Apartments. The occupancy rate
at December 31, 1995 was 86%, up from 82% at December 31, 1994. The Partnership
increased rental rates at Palm Bay Apartments an average of 2.9% in 1995.

Revenues for 1994 also included the $574,701 gain on the sale of Pacesetter
Apartments.

Expenses:

Partnership expenses increased $63,198 or 3.8% in 1995 compared to 1994.
However, after excluding expenses pertaining to Pacesetter Apartments, expenses
increased $238,253 or 18% in 1995 compared to 1994. Increased expenses were
concentrated in depreciation, repair and maintenance, other property operating,
and general and administrative.

<PAGE>
The largest increase, on both an absolute and percentage basis, was the increase
in depreciation expense. Depreciation expense at Palm Bay Apartments increased
$121,331 or 54% in 1995 compared to 1994. The increase in depreciation expense
was due to the continued investment of Partnership resources into capital
improvements. During 1995, the Partnership invested $440,906 in capital
improvements. These capital improvements are generally being depreciated over
lives ranging from five to ten years.

Repairs and maintenance expenses at Palm Bay increased $54,740 or 19% in 1995 as
compared to 1994. The increased level of repairs and maintenance expenses are
attributable to costs incurred preparing vacant units for rental. Repairs and
maintenance expenses were expected to increase until Palm Bay's occupancy rate
stabilized.

Other property operating expenses increased substantially at Palm Bay
Apartments. Efforts to refurbish down units and intensive leasing activity had
increased a number of expense categories to unusually high levels. The General
Partner anticipated that these expenses would decrease after the restored units
have been leased. The increase in other property operating expenses at Palm Bay
Apartments totaled $61,564 or 47%.

Property management fees - affiliates at Palm Bay Apartments increased $14,390
or 22% in 1995 compared to 1994. An increase in rental receipts, upon which such
fees are based, and the increase in the management fee percentage to 6% from 5%
(effective January 1, 1995) were the reasons for the increase.

General and administrative for 1995 increased $34,678 or 116% compared to 1994.
The Partnership incurred $44,554 of costs during 1995 relating to the evaluation
and dissemination of information regarding an unsolicited tender offer.

General and administrative - affiliates increased $14,312 or 22% in 1995
compared to 1994. Reimbursements to affiliates are based, in part, on a
declining number of properties managed by affiliates of the General Partner.

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

The Partnership generated $407,530 from operating activities in 1996, an
increase of $379,459 from the $28,071 provided by operating activities in 1995.
Cash paid to affiliates in 1995 included an $81,000 brokerage commission on the
sale of Pacesetter Apartments that was incurred in 1994 but not paid until 1995.

The Partnership used its cash reserves to fund $212,261 of capital improvements
to Palm Bay Apartments during 1996. An additional $137,627 was expended for
mortgage note principal payments. These payments will gradually pay down the
mortgage note balance until June 1997, when the Palm Bay mortgage note matures
and a balloon payment of approximately $1,975,000 will be due.

During the three year period ended December 31, 1996, the Partnership reported
net income of $252,197. Cash provided by operations during the three year period
totaled $597,964. The Partnership has used cash from operations as well as its
cash reserves and the sale of Pacesetter Apartments to fund $1.3 million of
capital improvements at the Palm Bay Apartments during the last three years. The
sale of Pacesetter Apartments simultaneously provided a substantial addition to
the Partnership's cash reserves and removed a substantial drain on Partnership
resources.

<PAGE>
Due to the sale of Pacesetter Apartments, the Partnership entered 1996 with
adequate cash reserves. A substantial portion of the proceeds from the sale of
Pacesetter Apartments has been invested in capital improvements at Palm Bay
Apartments. The Partnership has budgeted $157,000 of capital improvements for
1997 in addition to the $1.3 million of capital improvements made during the
three year period ended December 31, 1996. The capital improvements at Palm Bay
Apartments were necessary to allow the property to increase its rental revenues
and remain competitive in the Orlando sub-market where the property is located.

Short-term Liquidity:

The Partnership's mortgage note, secured by Palm Bay Apartments, matures on June
1, 1997. The Partnership does not have adequate cash reserves to retire the
mortgage note. The Partnership intends to resolve the impending maturity by
selling Palm Bay Apartments. Should the Partnership be unable to sell Palm Bay
Apartments for an amount sufficient to retire the mortgage note, the Partnership
would pursue other financing options, such as attempting to extend the maturity
date, modify the mortgage note, or refinance the mortgage note. The General
Partner does not, however, anticipate unusual difficulties in selling Palm Bay
Apartments.

At December 31, 1996, the Partnership held $581,031 of cash and cash
equivalents, up $57,642 from the balance at the end of 1995. The General Partner
anticipates that cash generated from operations in 1997 will be sufficient to
pay the Partnership's operating expenses, monthly debt service payments until
the mortgage note maturity, and budgeted capital improvements. The Partnership
will use its cash reserves to fund any shortfall if operating cash flow should
prove insufficient to meet all the Partnership's expected expenditures. Except
for the pending maturity of the Palm Bay mortgage note, the General Partner
considers the Partnership's cash reserves adequate for anticipated operations
for 1997.

Long-term Liquidity:

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 1997. Furthermore, the Partnership has
budgeted an additional $157,000 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 property.

Effective October 1, 1996, the General Partner placed Palm Bay Apartments on the
market for sale. The General Partner estimates that such a sale would 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 liquidation on terms or in amounts favorable to the
Partnership, or that the cash proceeds from such sale 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 until such time as Palm Bay is sold and the Partnership is
liquidated. 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>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- -------------------------------------------
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
INDEX TO FINANCIAL STATEMENTS

Financial Statements:

Report of Independent Public Accountants....................................... 13

Balance Sheets at December 31, 1996 and 1995................................... 14

Statements of Operations for each of the three years in the period
ended December 31, 1996..................................................... 15

Statements of Partners' Equity for each of the three years in the
period ended December 31, 1996.............................................. 16

Statements of Cash Flows for each of the three years in the period
ended December 31, 1996..................................................... 17

Notes to Financial Statements.................................................. 19

Financial Statement Schedule:

Schedule III - Real Estate Investment and Accumulated
Depreciation............................................................. 26

</TABLE>

All other schedules are omitted because they are not applicable or the financial
information required is included in the financial statements or the notes
thereto.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Partners of
McNeil Pacific Investors Fund 1972:

We have audited the accompanying balance sheets of McNeil Pacific Investors Fund
1972 (a California limited partnership) as of December 31, 1996 and 1995, and
the related statements of operations, partners' equity 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.

As further discussed in Notes 4 and 5 to the financial statements, on October 1,
1996, the Partnership placed Palm Bay Apartments on the market for sale based
upon favorable market conditions and the June 1997 maturity of the property's
mortgage note payable. Should the Partnership be unable to sell Palm Bay
Apartments for an amount sufficient to retire the mortgage note payable, the
Partnership would pursue other financing options. As Palm Bay Apartments
represents substantially all of the assets of the Partnership, consummation of
any sale is subject to the satisfaction of certain conditions, including the
approval of the limited partners. If the sale of Palm Bay Apartments is
consummated, the Partnership's general partner will commence the dissolution and
termination of the Partnership. The accompanying financial statements have not
been prepared on the liquidation basis of accounting, as the sale of Palm Bay
Apartments is subject to limited partner approval.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of McNeil Pacific Investors Fund
1972 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 a 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 PACIFIC INVESTORS FUND 1972

BALANCE SHEETS

<TABLE>
<CAPTION>
December 31,
-----------------------------------
1996 1995
--------------- --------------
<S> <C> <C>
ASSETS
- ------

Real estate investment:

Land..................................................... $ - $ 2,336,000
Buildings and improvements............................... - 5,010,483
-------------- -------------
- 7,346,483
Less: Accumulated depreciation.......................... - (1,010,990)
-------------- -------------
- 6,335,493

Asset held for sale 6,253,753 -

Cash and cash equivalents................................... 581,031 523,389
Cash segregated for security deposits....................... 57,204 43,885
Accounts receivable......................................... 4,147 3,849
Prepaid expenses and other assets........................... 23,694 23,220
Escrow deposits............................................. 33,232 49,353
Deferred borrowing costs, net of accumulated
amortization of $47,607 and $37,220 at
December 31, 1996 and 1995, respectively................. 4,327 14,714
-------------- ------------

$ 6,957,388 $ 6,993,903
============== ============

LIABILITIES AND PARTNERS' EQUITY
- --------------------------------

Mortgage note payable....................................... $ 2,023,577 $ 2,161,204
Accounts payable............................................ - 20,363
Accrued interest............................................ 14,755 10,076
Other accrued expenses...................................... 24,346 24,853
Payable to affiliates - General Partner..................... 17,108 15,227
Security deposits and deferred rental revenue............... 58,081 47,198
-------------- -------------
2,137,867 2,278,921
-------------- -------------

Partners' equity:
Limited partners - 15,000 limited partnership units
authorized; 13,752.5 limited partnership units issued
and outstanding at December 31, 1996 and 1995.......... 4,509,577 4,405,038
General Partner.......................................... 309,944 309,944
-------------- -------------
4,819,521 4,714,982
-------------- -------------

$ 6,957,388 $ 6,993,903
============== =============
</TABLE>

See accompanying notes to financial statements.
<PAGE>
McNEIL PACIFIC INVESTORS FUND 1972

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------
1996 1995 1994
-------------- -------------- ---------------
<S> <C> <C> <C>
Revenue:
Rental revenue.......................... $ 1,688,524 $ 1,376,148 $ 1,475,264
Interest and other revenue.............. 27,011 63,280 45,695
Gain on sale of real estate............. - - 574,701
------------- ------------- --------------
Total revenue......................... 1,715,535 1,439,428 2,095,660
------------- ------------- --------------

Expenses:
Interest................................ 198,739 198,948 249,827
Depreciation............................ 294,001 344,494 257,825
Property taxes.......................... 121,352 101,961 123,227
Personnel expenses...................... 263,324 242,331 293,231
Repairs and maintenance................. 311,527 345,524 316,627
Property management fees -
affiliates............................ 99,681 79,474 72,765
Utilities............................... 65,901 81,054 86,617
Other property operating expenses....... 133,627 186,282 165,741
General and administrative.............. 76,907 64,649 29,971
General and administrative -
affiliates............................ 45,937 80,597 66,285
------------- ------------- --------------
Total expenses........................ 1,610,996 1,725,314 1,662,116
------------- ------------- --------------

Net income (loss).......................... $ 104,539 $ (285,886) $ 433,544
============= ============= ==============

Net income (loss) allocated to
limited partners........................ $ 104,539 $ (285,886) $ 667,558
Net loss allocated to General Partner...... - - (234,014)
------------- ------------- --------------

Net income (loss).......................... $ 104,539 $ (285,886) $ 433,544
============= ============= ==============

Net income (loss) per limited
partnership unit........................ $ 7.60 $ (20.79) $ 48.52
============= ============= ==============
</TABLE>

See accompanying notes to financial statements.

<PAGE>

McNEIL PACIFIC INVESTORS FUND 1972

STATEMENTS OF PARTNERS' EQUITY

For the Years Ended December 31, 1996, 1995 and 1994

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) 667,558 433,544
-------------- -------------- --------------

Balance at December 31, 1994.............. 309,944 4,690,924 5,000,868

Net loss.................................. - (285,886) (285,886)
-------------- -------------- --------------

Balance at December 31, 1995.............. 309,944 4,405,038 4,714,982

Net income................................ - 104,539 104,539
-------------- -------------- --------------

Balance at December 31, 1996.............. $ 309,944 $ 4,509,577 $ 4,819,521
============== ============== ==============

</TABLE>
See accompanying notes to financial statements.
<PAGE>
McNEIL PACIFIC INVESTORS FUND 1972

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.............. $ 1,682,397 $ 1,333,612 $ 1,466,270
Cash paid to suppliers.................. (869,237) (909,351) (923,620)
Cash paid to affiliates................. (143,737) (238,173) (63,881)
Interest received....................... 27,011 63,280 45,695
Interest paid........................... (183,673) (195,164) (255,305)
Property taxes paid..................... (105,231) (26,133) (106,796)
------------- ------------- --------------
Net cash provided by operating
activities............................. 407,530 28,071 162,363
------------- ------------- --------------

Cash flows from investing activities:
Additions to real estate
investments........................... (212,261) (440,906) (647,770)
Proceeds from sale of real estate
investment............................ - - 3,749,308
------------- ------------- --------------
Net cash provided by (used in)
investing activities................... (212,261) (440,906) 3,101,538
------------- ------------- --------------

Cash flows from financing activities:
Principal payments on mortgage
notes payable......................... (137,627) (126,137) (142,238)
Repayment of advances from
affiliates............................ - - (50,000)
Retirement of mortgage note
payable............................... - - (2,094,135)
------------- ------------- --------------
Net cash used in financing activities...... (137,627) (126,137) (2,286,373)
------------- ------------- --------------

Net increase (decrease) in cash and
cash equivalents...................... 57,642 (538,972) 977,528

Cash and cash equivalents at
beginning of year..................... 523,389 1,062,361 84,833
------------- ------------- --------------

Cash and cash equivalents at end
of year............................... $ 581,031 $ 523,389 $ 1,062,361
============= ============= ==============
</TABLE>

See accompanying notes to financial statements.
<PAGE>
McNEIL PACIFIC INVESTORS FUND 1972

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).......................... $ 104,539 $ (285,886) $ 433,544
------------- ------------- --------------

Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation............................ 294,001 344,494 257,825
Amortization of deferred borrowing
costs................................. 10,387 10,387 10,387
Gain on sale of real estate............. - - (574,701)
Changes in assets and liabilities:
Cash segregated for security
deposits............................ (13,319) (7,576) 15,264
Accounts receivable................... (298) (108) 4,408
Prepaid expenses and other
assets.............................. (474) 1,374 29,469
Escrow deposits....................... 16,121 75,828 22,087
Accounts payable...................... (20,363) (10,965) (92,800)
Accrued property taxes................ - - (5,656)
Accrued interest...................... 4,679 (6,603) (15,865)
Other accrued expenses................ (507) (13,832) 12,227
Payable to affiliates - General
Partner............................. 1,881 (78,102) 75,169
Security deposits and deferred
rental revenue...................... 10,883 (940) (8,995)
------------- ------------- --------------

Total adjustments................. 302,991 313,957 (271,181)
------------- ------------- --------------

Net cash provided by operating
activities.............................. $ 407,530 $ 28,071 $ 162,363
============= ============= ==============

</TABLE>

See accompanying notes to financial statements.
<PAGE>
McNEIL PACIFIC INVESTORS FUND 1972

NOTES TO FINANCIAL STATEMENTS

December 31, 1996

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

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

McNeil Pacific Investors Fund 1972 (the "Partnership") was organized September
30, 1971 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 General Partner was elected at a
meeting of limited partners on March 30, 1992, at which time the Partnership's
restated certificate and agreement of limited partnership (the "Partnership
Agreement") was amended. Prior to March 30, 1992, Pacific Investors Corporation,
an affiliate of Southmark Corporation, and McNeil were the general partners of
the Partnership. 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 real estate activities, including the ownership,
operation and management of residential rental 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 a liquidation of
the Partnership's asset in accordance with the terms of the Partnership
Agreement. At December 31, 1996, the Partnership owned one income-producing
property as described in Note 4 - Real Estate Investment.

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.

Real Estate Investment
- ----------------------

The real estate investment is generally stated at the lower of depreciated cost
or fair value. The real estate investment is reviewed for impairment whenever
events or changes in circumstances indicate that its carrying amount 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.

<PAGE>
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.

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

Asset Held for Sale
- -------------------

The asset held for sale is stated at the lower of depreciated cost or fair value
less costs to sell. Depreciation on this asset ceased at the time it was placed
on the market for sale.

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

Buildings and improvements were depreciated using the straight-line method over
the estimated useful lives of the assets, which ranged from 2 to 25 years.

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

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

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

The Partnership is required to maintain an escrow account in accordance with
terms of the Palm Bay mortgage note. This escrow account is controlled by the
mortgagee and is used for payment of property taxes. Carrying amounts for escrow
deposits approximate fair value.

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

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

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

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

<PAGE>
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 Partnership Agreement provides that income will be allocated to the General
Partner to the extent of distributions to the General Partner of cash from
sales, refinancings, or from working capital reserves. All remaining net income
and all losses are allocated 100% to the limited partners.

An estimated gain on the ultimate disposition of Pacesetter Apartments was
allocated to the General Partner in 1982 based upon a 1982 sales contract for
Pacesetter Apartments. An adjustment was made in 1994 to adjust the amount
allocated to the General Partner based on the 1994 sale of Pacesetter
Apartments.

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.

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

At the discretion of the General Partner, distributions to partners are paid
from operations of the Partnership's property, from the sale or refinancing of
the property, or from cash maintained as working capital reserves.
Cash from operations is distributed 100% to the limited partners.

Distributions of cash from sales and refinancings and cash from working capital
reserves are made in the following order:

(a) First to the limited partners in an amount, when added to all prior
distributions to the limited partners of disposition proceeds, that
equals 109.6% of the portion of net offering proceeds invested in
property sold; then,

(b) of the remaining balance, 90.5% to the limited partners and 9.5% to the
General Partner.

No distributions were paid to the partners during 1996, 1995 or 1994.

Net Income (Loss) Per Limited Partnership Unit

Net income (loss) per limited partnership unit ("Units") 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
13,752.5 Units outstanding in 1996 and 1995, and 13,757.5 Units outstanding in
1994.

<PAGE>
NOTE 2 - TRANSACTIONS WITH AFFILIATES
- -------------------------------------

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 1996, 1995 or 1994.

The Partnership pays property management fees equal to 6% of the gross rental
receipts of the Partnership's properties to McNeil Real Estate Management, Inc.
("McREMI"), an affiliate of the General Partner, for providing property
management and leasing services for the Partnership's properties. Prior to
January 1, 1995, the Partnership paid property management fees equal to 5% of
gross rental receipts.

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

The General Partner is entitled to receive a sales commission as compensation
for selling Partnership property equal to the lesser of 4% of the sales price of
the property sold or the customary fee charged by independent real estate
brokers in the area where the property is located. The Partnership accrued an
$81,000 sales commission in connection with the 1994 sale of Pacesetter
Apartments. The sales commission was paid in 1995.

Compensation and reimbursements paid or accrued for the benefit of the General
Partner or its affiliates are as follows:
<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------------------
1996 1995 1994
------------- -------------- --------------
<S> <C> <C> <C>
Property management fees -
affiliates................................ $ 99,681 $ 79,474 $ 72,765
Charged to general and
administrative - affiliates:
Partnership administration................ 45,937 80,597 66,285
Charged to gain on sale
of real estate:
Brokerage commission...................... - - 81,000
------------ ------------- -------------

$ 145,618 $ 160,071 $ 220,050
============ ============= =============
</TABLE>

Payable to affiliates - General Partner at December 31, 1996 and 1995 consists
of property management fees and reimbursable administrative costs. All amounts
are due and payable from current operations.

<PAGE>
NOTE 3 - TAXABLE INCOME
- -----------------------

McNeil Pacific Investors Fund 1972 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 financial reporting purposes
exceeded the net assets and liabilities for tax purposes by $1,981,839 in 1996,
$1,948,374 in 1995 and $1,973,149 in 1994.

NOTE 4 - REAL ESTATE INVESTMENT
- -------------------------------

On October 1, 1996, the General Partner determined that the market timing was
right for placing the Partnership's sole remaining real estate asset, Palm Bay
Apartments, on the market for sale. This decision was based both on favorable
market conditions and the June 1997 maturity of the Palm Bay mortgage note.
Consequently, the Partnership has classified its investment in Palm Bay
Apartments as an asset held for sale on the accompanying Balance Sheet dated
December 31, 1996 at a net book value of $6,253,753.

The basis and accumulated depreciation of the Partnership's real estate
investment at December 31, 1995, is set forth in the following table:

<TABLE>
<CAPTION>
Buildings and Accumulated Net Book
1995 Land Improvements Depreciation Value
---- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Palm Bay Apartments
Orlando, FL $ 2,336,000 $ 5,010,483 $ (1,010,990) $ 6,335,493
============ =============== ================ ==============
</TABLE>

The results of operations for the asset held for sale at December 31, 1996 are
$194,195, $(210,240) and $(26,866) for 1996, 1995 and 1994, respectively.
Results of operations are operating revenues less operating expenses including
depreciation and interest expense.

<PAGE>
NOTE 5 - MORTGAGE NOTE PAYABLE
- ------------------------------

The following table sets forth the Partnership's mortgage note at December 31,
1996 and 1995. The mortgage note is secured by Palm Bay Apartments, the
Partnership's only real estate asset.

<TABLE>
<CAPTION>
Mortgage Annual Monthly
Lien Interest Payments/ December 31,
Property Position (a) Rates % Maturity Date 1996 1995
- -------- ------------ ------- ------------------ --------------- -------------
<S> <C> <C> <C> <C> <C>
Palm Bay First 8.750 $26,775 06/97(b) $ 2,023,577 $ 2,161,204
============= =============
</TABLE>

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

(b) The Palm Bay mortgage note matures in June 1997. At that time, a
balloon payment of $1,974,969 will be due.

Based on borrowing rates currently available to the Partnership for a mortgage
loan with similar terms and average maturities, the fair value of the mortgage
note payable was approximately $1,945,000 and $2,102,000 at December 31, 1996
and 1995, respectively.

As indicated above, the mortgage note is secured by Palm Bay Apartments and is
due and payable on June 1, 1997. The General Partner intends to sell Palm Bay
Apartments and use the related sales proceeds to retire the mortgage note
payable. Should the Partnership be unable to sell Palm Bay Apartments for an
amount sufficient to retire the mortgage note payable, the Partnership would
pursue other financing options. If the sale of Palm Bay Apartments is
consummated, the General Partner will commence the dissolution and termination
of the Partnership. The accompanying financial statements have not been prepared
on the liquidation basis of accounting, as the sale of Palm Bay Apartments is
subject to limited partner approval.

<PAGE>

NOTE 6 - SALE OF REAL ESTATE
- ----------------------------

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 this transaction, as well as the gain on sale are detailed below.

Gain on Sale Cash Proceeds
-------------- -------------

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.......................... $ 574,701
============
Proceeds from sale of real estate..... 3,749,308
Retirement of mortgage note........... (2,094,135)
----------

Net cash proceeds..................... $ 1,655,173
==========

NOTE 7 - LEGAL PROCEEDINGS
- --------------------------

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.

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.

5) 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.

<PAGE>
On August 12, 1996, High River Limited Partnership (as defined in this
Section 5, "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 8 - PRO FORMA DISCLOSURE (UNAUDITED)
- -----------------------------------------

The following unaudited pro forma information for the year ended December 31,
1994 reflects the results of operations of the Partnership as if the sale of
Pacesetter Apartments had occurred as of January 1, 1994. The unaudited pro
forma information is not necessarily indicative of the results of operations
that actually would have occurred or those which might be expected to occur in
the future.

Total revenues............................ $ 1,287,125
Net loss.................................. (77,885)
Net loss per limited partnership unit..... (5.66)

<PAGE>

McNEIL PACIFIC INVESTORS FUND 1972
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1996

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

Palm Bay Apartments
Orlando, FL $ 2,023,577
==========
</TABLE>

(b) The asset held for sale is stated at lower of depreciated cost or fair
value less costs to sell. Historical cost net of accumulated depreciation
and write-downs becomes the new cost basis when the asset is classified as
"held for sale." Depreciation ceases at the time the asset is placed on the
market for sale.

See accompanying notes to Schedule III.
<PAGE>
McNEIL PACIFIC INVESTORS FUND 1972
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>
Asset Held for Sale:

Palm Bay Apartments
Orlando, FL $ 6,253,753
==========
</TABLE>

(a) For Federal income tax purposes, the properties are depreciated over lives
ranging from 7-27.5 years using ACRS or MACRS methods. The aggregate cost
of real estate investments for Federal income tax purposes was
approximately $8,537,646 and accumulated depreciation was $1,328,120 at
December 31, 1996.

See accompanying notes to Schedule III.

<PAGE>
McNEIL PACIFIC INVESTORS FUND 1972
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1996

Date of Date Depreciable
Description Construction Acquired lives (years)
- ----------- ------------ -------- -------------
<S> <C> <C>
Asset Held for Sale:

Palm Bay Apartments
Orlando, FL 1974 06/91

</TABLE>

See accompanying notes to Schedule III.

<PAGE>
McNEIL PACIFIC INVESTORS FUND 1972

NOTES TO SCHEDULE III

REAL ESTATE INVESTMENT AND ACCUMULATED DEPRECIATION

A summary of activity for the Partnership's real estate investments and
accumulated depreciation for the years ended December 31, 1996, 1995 and 1994 is
as follows:

Balance at beginning of year............... $ 7,346,483 $ 6,905,577 $ 6,257,807

Improvements............................... 137,450 440,906 647,770

Reclassification to asset held
for sale................................ (7,483,933) - -
-------------- ------------- --------------

Balance at end of year..................... $ - $ 7,346,483 $ 6,905,577
============= ============= ==============

Accumulated depreciation:

Balance at beginning of year............... $ 1,010,990 $ 666,496 $ 443,333

Depreciation............................... 294,001 344,494 223,163

Reclassification to asset held
for sale................................ (1,304,991) - -
-------------- ------------- --------------

Balance at end of year..................... $ - $ 1,010,990 $ 666,496
============= ============= ==============

Assets Held for Sale:

Balance at beginning of year............... $ - $ - $ 3,209,269

Depreciation............................... - - (34,662)

Reclassification from real estate
investments, net........................ 6,178,942 - -

Improvements............................... 74,811 - -

Sale of real estate........................ - - (3,174,607)
------------- ------------- --------------

Balance at end of year..................... $ 6,253,753 $ - $ -
============= ============= ==============

</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% of the Partnership's securities with
the exception of the following:

1. The General Conference Corporation of Seventh Day Adventists,
12501 Old Columbia Pike, Silver Spring, Maryland, 20904, owns 950
(6.9%) of the Partnership's Units as of January 31, 1997.

<PAGE>
2. A group of ten limited partnerships affiliated with Liquidity
Financial Corporation, all of whose outstanding stock is owned by
Richard G. Wollack and Brent R. Donaldson, 2200 Powell Street,
Suite 700, Emeryville, California, 94608, collectively own 825
(6.0%) of the Partnership's Units as of January 31, 1997.

3. High River Limited Partnership, 100 S. Bedford Road, Mount
Kisco, New York, 10549, owns 1,594 (11.6%) of the Partnership's
Units as of January 31, 1997.

(B) Security ownership of management.

The General Partner and the officers and directors of its general
partner collectively own 50 Units, which is less than 1% of Units
outstanding.

None.

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

The Partnership pays property management fees equal to 6% of gross rental
receipts of the Partnership's property to McREMI for providing property
management and leasing services for the Partnership's property. The Partnership
reimburses McREMI for its costs, including overhead, of administering the
Partnership's affairs. For the year ended December 31, 1996, the Partnership
incurred $145,618 of property management fees and reimbursements.

The General Partner is entitled to receive a sales commission as compensation
for selling Partnership property equal to the lesser of 4% of the sales price of
the property sold or the customary fee charged by independent brokers in the
area where the property is located. During 1995, the Partnership paid an $81,000
commission to the General Partner in connection with the 1994 sale of Pacesetter
Apartments.

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

<PAGE>
PART IV

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

See accompanying Index to Financial Statements at Item 8.

(A) Exhibits

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

Exhibit
Number Description
------- -----------

3.1 Restated Certificate and Agreement of
Limited Partnership dated as of March 8,
1972. Incorporated by reference to the
Annual Report of McNeil Pacific Investors
Fund 1972 on Form 10-K for the period
ended December 31, 1990, as filed with the
Securities and Exchange Commission on
March 29, 1991.

3.2 Amendment to Restated Certificate and
Agreement of Limited Partnership dated as
of March 30, 1992. (1)

10.1 Mortgage Note, dated March 9, 1975,
between McNeil Pacific Investors Fund 1972
and John Hancock Life Insurance Company.
Incorporated by reference to the Annual
Report of McNeil Pacific Investors Fund
1972 (Commission file number 0-7162), on
Form 10-K for the period ended December
31, 1991, as filed with the Securities and
Exchange Commission on March 30, 1992.

10.2 Property Management Agreement, dated as
of October 1, 1993, between McNeil Pacific
Investors Fund 1972 and McNeil Real Estate
Management, Inc. (1)

10.3 Revolving Credit Agreement, dated August
6, 1991 between McNeil Partners, L.P. and
McNeil Pacific Investors Fund 1972. (1)

10.4 Amendment of Property Management
Agreement, dated January 1, 1995, between
McNeil Pacific Investors Fund 1972 and
McNeil Real Estate Management, Inc. (2)

10.5 Modification Agreement, dated effective
June 1, 1992, between M R Partners, Inc.
and John Hancock Mutual Life Insurance
Company. (2)

<PAGE>
Exhibit
Number Description
------- -----------

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

(1) Incorporated by reference to the Annual
Report of McNeil Pacific Investors Fund
1972 (Commission file number 0-7162), on
Form 10-K for the period ended December
31, 1993, as filed with the Securities and
Exchange Commission on March 30, 1994.

(2) Incorporated by reference to the Annual
Report of McNeil Pacific Investors Fund
1972 (Commission file number 0-7162), on
Form 10-K for the period ended December
31, 1994, as filed with the Securities and
Exchange Commission on March 30, 1995.

27. Financial Data Schedule for the year ended
December 31, 1996.

(B) Reports on Form 8-K. There were no reports on Form 8-K filed during the
quarter ended December 31, 1996.

<PAGE>
McNEIL PACIFIC INVESTORS FUND 1972
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 PACIFIC INVESTORS FUND 1972

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

By: McNeil Investors, Inc., General Partner

March 28, 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 28, 1997 By: /s/ Ron K. Taylor
- -------------- ----------------------------------------
Date Ron K. Taylor
President and Director of McNeil
Investors, Inc.
(Principal Financial Officer)

March 28, 1997 By: /s/ Brandon K. Flaming
- -------------- ----------------------------------------
Date Brandon K. Flaming
Vice President of McNeil Investors, Inc.
(Principal Accounting Officer)

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 581,031
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,957,388
<CURRENT-LIABILITIES> 0
<BONDS> 2,023,577
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,957,388
<SALES> 1,688,524
<TOTAL-REVENUES> 1,715,535
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,412,257
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 198,739
<INCOME-PRETAX> 104,539
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 104,539
<EPS-PRIMARY> 0
<EPS-DILUTED> 0

</TABLE>