UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended June 30, 1995
-----------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to_____________
Commission file number 0-8229
MCNEIL REAL ESTATE FUND V, LTD.
-------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 94-6356980
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (214) 448-5800
---------------------------
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___
<PAGE>
MCNEIL REAL ESTATE FUND V, LTD.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
------- --------------------
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
----------- ------------
ASSETS
Real estate investments:
<S> <C> <C>
Land..................................................... $11,022,353 $11,022,353
Buildings and improvements............................... 9,002,277 8,799,260
--------- ---------
20,024,630 19,821,613
Less: Accumulated depreciation.......................... (6,148,664) (5,897,942)
---------- ----------
13,875,966 13,923,671
Cash and cash equivalents................................... 2,014,198 1,799,590
Cash segregated for security deposits....................... 143,519 145,245
Accounts receivable......................................... 2,395 4,326
Prepaid expenses and other asset............................ 91,838 31,953
Deferred borrowing costs (net of accumulated
amortization of $24,682 and $20,326 at
June 30, 1995 and December 31, 1994,
respectively)............................................ 236,651 241,007
---------- ----------
$16,364,567 $16,145,792
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Mortgage note payable....................................... $11,386,358 $11,424,420
Accounts payable............................................ 43,302 70,538
Accrued interest............................................ 72,487 63,663
Accrued expenses............................................ 33,831 21,617
Payable to affiliates - General Partner..................... 16,514 17,212
Security deposits and deferred rental income................ 148,643 147,926
---------- ----------
11,701,135 11,745,376
---------- ----------
Partners' equity:
Limited partners - 20,000 limited partnership
units authorized; 18,223 limited partnership
units outstanding...................................... 4,646,447 4,383,431
General Partner.......................................... 16,985 16,985
---------- ----------
4,663,432 4,400,416
---------- ----------
$16,364,567 $16,145,792
========== ==========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
MCNEIL REAL ESTATE FUND V, LTD.
STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- -----------------------------
1995 1994 1995 1994
---------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue:
Rental revenue................ $1,014,810 $951,702 $2,050,015 $1,882,383
Interest...................... 27,889 13,875 53,788 26,318
Gain on legal settlement...... 4,398 - 4,398 -
--------- ------- --------- ---------
Total revenue............... 1,047,097 965,577 2,108,201 1,908,701
--------- ------- --------- ---------
Expenses:
Interest...................... 216,408 189,959 420,113 381,018
Depreciation.................. 125,361 110,853 250,722 221,706
Property taxes................ 53,457 64,761 113,643 129,522
Personnel expenses............ 77,413 73,209 168,263 159,762
Utilities..................... 62,661 50,558 144,218 127,738
Repairs and maintenance....... 123,312 104,639 213,067 209,693
Property management
fees - affiliates........... 50,415 47,200 102,192 93,936
Other property operating
expenses.................... 59,721 50,866 118,461 102,044
General and administrative.... 7,394 4,523 14,498 13,407
Partnership management
fee......................... - - 15,000 15,000
--------- ------- --------- ---------
Total expenses.............. 776,142 696,568 1,560,177 1,453,826
--------- ------- --------- ---------
Net income....................... $ 270,955 $269,009 $ 548,024 $ 454,875
========= ======= ========= =========
Net income allocable to
limited partners.............. $ 270,955 $269,009 $ 548,024 $ 454,875
Net income allocable to
General Partner............... - - - -
--------- ------- --------- ---------
Net income....................... $ 270,955 $269,009 $ 548,024 $ 454,875
========= ======= ========= =========
Net income per limited
partnership unit.............. $ 14.63 $ 14.76 $ 30.07 $ 24.96
========= ======= ========= =========
Distributions per limited
partnership unit.............. $ - $ - $ 15.64 $ 15.64
========= ======== ========= =========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
MCNEIL REAL ESTATE FUND V, LTD.
STATEMENTS OF PARTNERS' EQUITY
(Unaudited)
For the Six Months Ended June 30, 1995 and 1994
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Equity
-------- --------- ----------
<S> <C> <C> <C>
Balance at December 31, 1993.............. $16,985 $3,978,206 $3,995,191
Net income................................ - 454,875 454,875
Distributions............................. - (285,004) (285,004)
------ -------- --------
Balance at June 30, 1994.................. $16,985 $4,148,077 $4,165,062
====== ========= =========
Balance at December 31, 1994.............. $16,985 $4,383,431 $4,400,416
Net income................................ - 548,024 548,024
Distributions............................. - (285,008) (285,008)
------ --------- ---------
Balance at June 30, 1995.................. $16,985 $4,646,447 $4,663,432
====== ========= =========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
MCNEIL REAL ESTATE FUND V, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------
1995 1994
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Cash received from tenants........................ $2,054,693 $1,875,877
Cash received from legal settlement............... 4,398 -
Cash paid to suppliers............................ (733,718) (614,479)
Cash paid to affiliates........................... (117,890) (113,497)
Interest received................................. 53,788 26,318
Interest paid..................................... (406,933) (439,863)
Property taxes paid............................... (113,643) (132,406)
--------- ---------
Net cash provided by operating activities............ 740,695 601,950
--------- ---------
Net cash used in investing activities:
Additions to real estate investments.............. (203,017) (163,035)
--------- ---------
Cash flows from financing activities:
Principal payments on mortgage note payable....... (38,062) (157,693)
Distributions..................................... (285,008) (285,004)
--------- ---------
Net cash used in financing activities................ (323,070) (442,697)
--------- ---------
Net increase (decrease) in cash and cash
equivalents....................................... 214,608 (3,782)
Cash and cash equivalents at beginning of
year.............................................. 1,799,590 1,542,656
--------- ---------
Cash and cash equivalents at end of year............. $2,014,198 $1,538,874
========= =========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
MCNEIL REAL ESTATE FUND V, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
Reconciliation of Net Income to Net Cash Provided by
Operating Activities
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------------
1995 1994
-------- --------
<S> <C> <C>
Net income........................................... $548,024 $454,875
------- -------
Adjustments to reconcile net income to net
cash provided by operating
activities:
Depreciation...................................... 250,722 221,706
Amortization of deferred borrowing costs.......... 4,356 4,356
Changes in assets and liabilities:
Cash segregated for security deposits........... 1,726 (6,990)
Accounts receivable............................. 1,931 2,876
Prepaid expenses and other assets............... (59,885) (23,497)
Accounts payable................................ (27,236) 5,010
Accrued interest................................ 8,824 (63,201)
Accrued expenses................................ 12,214 3,766
Payable to affiliates - General Partner......... (698) (4,561)
Security deposits and deferred rental
income........................................ 717 7,610
------- -------
Total adjustments............................. 192,671 147,075
------- -------
Net cash provided by operating activities............ $740,695 $601,950
======= =======
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND V, LTD.
Notes to Financial Statements
(Unaudited)
June 30, 1995
NOTE 1.
-------
McNeil Real Estate Fund V, Ltd. (the "Partnership") was organized September 12,
1974 as a limited partnership under the provisions of the California Uniform
Limited Partnership Act. The general partner of the Partnership is McNeil
Partners, L.P. (the "General Partner"), a Delaware limited partnership, an
affiliate of Robert A. McNeil. The Partnership is governed by an agreement of
limited partnership dated September 12, 1974 (the "Partnership Agreement"). The
principal place of business for the Partnership and the General Partner is 13760
Noel Road, Suite 700, LB70, Dallas, Texas 75240.
In the opinion of management, the financial statements reflect all adjustments
necessary for a fair presentation of the Partnership's financial position and
results of operations. All adjustments were of a normal recurring nature.
However, the results of operations for the six months ended June 30, 1995 are
not necessarily indicative of the results to be expected for the year ending
December 31, 1995.
NOTE 2.
-------
The financial statements should be read in conjunction with the financial
statements contained in the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1994, and the notes thereto, as filed with the
Securities and Exchange Commission, which is available upon request by writing
to McNeil Real Estate Fund V, Ltd. c/o McNeil Real Estate Management, Inc.,
Investor Services, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240.
NOTE 3.
-------
Certain reclassifications have been made to prior period amounts to conform with
current year presentation.
NOTE 4.
-------
The Partnership pays property management fees equal to 5% of gross rental
receipts of Sycamore Valley, the Partnership's residential property, to McNeil
Real Estate Management, Inc. ("McREMI"), an affiliate of the General Partner,
for providing management and leasing services.
As compensation for administering the affairs of the Partnership, the General
Partner receives a partnership management fee equal to 5% of cash from
operations, as defined, but only if the limited partners receive distributions
of cash from operations equal to a 6% per annum non-cumulative return on their
adjusted invested capital. In addition, the General Partner is entitled to
receive a subordinated incentive fee. This fee is equal to 10% of the remaining
cash from sales and refinancings in excess of the cost of all Partnership
properties, as defined. The cash from sales or refinancing distributed to the
limited partners has exceeded the subordination requirement.
The Partnership is obligated to pay commissions for real estate brokerage
services to an affiliate of the General Partner in connection with the sale of
the Partnership's property. Such commissions shall not exceed the lesser of (i)
the normal and competitive rate for similar services in the locality where the
services are performed, (ii) 50% of the standard commission or (iii) one-half of
the total acquisition fees which could have been paid to the General Partner
under the terms of the Partnership Agreement.
<PAGE>
Compensation and reimbursements paid to or accrued for the benefit of the
General Partner and its affiliates are as follows:
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------------------
1995 1994
-------- --------
<S> <C> <C>
Property management fees............................. $102,192 $ 93,936
Partnership management fees.......................... 15,000 15,000
------- -------
$117,192 $108,936
======= =======
</TABLE>
NOTE 5.
-------
The Partnership filed claims with the United States Bankruptcy Court for the
Northern District of Texas, Dallas Division (the "Bankruptcy Court") against
Southmark for damages relating to improper overcharges, breach of contract and
breach of fiduciary duty. The Partnership settled these claims in 1991, and such
settlement was approved by the Bankruptcy Court.
An Order Granting Motion to Distribute Funds to Class 8 Claimants dated April
14, 1995 was issued by the Bankruptcy Court. In accordance with the Order, in
May 1995 the Partnership received in full satisfaction of its claims, $3,325 in
cash, and common and preferred stock in the reorganized Southmark currently
valued at approximately $1,100, which amounts represent the Partnership's
pro-rata share of Southmark assets available for Class 8 Claimants. The
Partnership sold the Southmark common and preferred stock in May for $1,073,
which combined with the cash proceeds from Southmark, resulted in a gain on
legal settlement of $4,398.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------- ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
-------------------
The Partnership was formed to acquire, operate and ultimately dispose of a
portfolio of income-producing real properties. At June 30, 1995, the Partnership
owned one apartment property which is subject to a mortgage note.
RESULTS OF OPERATIONS
---------------------
Revenue:
Total Partnership revenues increased by $199,500 or 10% for the first six months
of 1995 as compared to 1994. Rental revenue and interest income increased
$167,632 and $27,470, respectively.
Rental revenue increased $167,632 or 9% due to the increase in the occupancy
rate and a reduction in discounts and concessions at Sycamore Valley. The
occupancy rate increased to 96% in 1995 up from 92% for the same the same period
in 1994.
Interest income increased by $27,470 or 104% for the six months ended June 30,
1995. This increase is due the increase in cash being invested in
interest-bearing accounts and an increase in the interest rates.
The Partnership also recognized a gain on legal settlement of $4,398 as a result
of the settlement with Southmark received in 1995.
Expenses:
Total Partnership expenses increased by $106,351 or 7% the first six months of
1995 as compared to the same period in 1994. The most significant increases
occurred in mortgage interest, depreciation, utilities, property management
fees-affiliates, other property operating expenses, and general and
administrative expenses. The total increase in expense was offset by decreases
in property tax expense.
Interest expense for the six months and three months ended June 30, 1995,
increased $39,095 or 10% and $26,449 or 14% as compared to 1994, respectively.
The increase is due to an increase in the index used to calculate interest
expense on the mortgage. The mortgage note interest rate was 7.564% and 6.502%
at June 31, 1995 and 1994, respectively.
Depreciation expense for the six months and three months ended June 30, 1995
increased by $29,016 or 13% and $14,508 or 13%, as compared to the same period
in 1994, respectively. This increase is due to capital improvements made at the
property. As of June 30, 1995, the Partnership made $203,017 in capital
improvements for the year.
Property tax expense decreased by $15,879 or 12% and $11,304 or 17% for the six
months and three months ended June 30, 1995 as compared to the same period in
1994, respectively. The decrease is due to 1994 supplemental taxes on land
purchased in 1993. This supplement taxes were not incurred in 1995.
Due to an increase in the occupancy rate, utilities increased $16,480 or 13% for
the six months of 1995 as compared to the same period in 1994. The increase is
primarily due to an increase in gas & oil rates and aging boilers at the
property. These boilers are being replaced during the third quarter and utility
rates should level off for the remaining portion of the year.
For the first six months of 1995 repairs and maintenance increased only 2% as
compared to the first six months of 1994; however, repairs and maintenance for
the three months ended June 30, 1995 increased $18,673 or 18%. The increase for
the three months ended June 30, 1995 is due an increase in grounds maintenance,
equipment rental, and the make-ready costs associated with the turn-over of
apartment units.
Due to an increase in occupancy property management fees-affiliates increased
$8,256 or 9% over the same six month period in 1994. This is due to an increase
in rental receipts of the property which is the basis for the property
management computation.
Other property operating expenses increased $16,417 or 16% for the first six
months of 1995 as compared to 1994 due to the increase in earthquake insurance
for Sycamore Valley. This increase was partially offset by decreases in bad debt
and advertising expenses.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Partnership's primary source of cash flows is from operating activities,
which generated $740,695 for the first six months of 1995 as compared to
$601,950 in 1994. The increase in 1995 was partially due to the increase in cash
received from tenants and the reduction in the property taxes paid.
The Partnership expended $203,017 and $163,035 for capital improvements to
Sycamore Valley in 1995 and 1994, respectively.
The Partnership distributed $285,008 and $285,004 to the limited partners in
1995 and 1994, respectively. Principal payments on the mortgage note payable
declined by $119,631 in 1995 as compared to the same period last year. This
decline is due to the reduction in the mortgage payment and the increase in the
interest rate.
Short Term Liquidity:
At June 30, 1995, the Partnership held $2,014,198 of cash, up $214,608 since
December 31, 1994. This balance provides for the working capital needs of the
Partnership and allows for distributions to the limited partners. During 1995,
operations from Sycamore Valley are expected to provide positive cash flow from
operations. Management will perform routine repairs and maintenance on the
property to preserve and enhance its value in the market. The Partnership has
budgeted to spend approximately $230,000 on capital improvements in 1995, which
are expected to be funded from operations of the property.
<PAGE>
Long Term Liquidity:
McNeil has established a revolving credit facility not to exceed $5,000,000 in
the aggregate which will be available on a "first-come, first-served" basis to
the Partnership and other affiliated partnerships if certain conditions are met.
Borrowings under the facility may be used to fund deferred maintenance,
refinancing obligations and working capital needs. There is no assurance that
the partnership will receive funds under the facility because no amounts will be
reserved for any particular partnership. As of June 30, 1995, $2,362,004
remained available for borrowing under the facility; however, additional funds
could become available as other partnerships repay existing borrowings.
If operations should deteriorate and present resources not be adequate for
current needs, the Partnership has no established lines of credit on which to
draw for its working capital needs other than any available portion of the
$5,000,000 revolving credit facility discussed above, and thus would require
other sources of working capital. No such other sources have been identified.
Distributions:
During 1995, the limited partners received a cash distribution of $258,008. The
distribution consisted of funds from operations Any cash not required for
current operations is expected to continue to be distributed to the Partners on
the semi-annual schedule presently followed. Distributions will be subject to
maintenance of adequate levels of cash reserves, and such distributions will
only be available from cash generated from operations.
<PAGE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
------- -----------------
On an unsolicited basis, High River Limited Partnership ("High River"), a
partnership controlled by Carl Icahn, announced that it has commenced an offer
to purchase 8,200 units of limited partnership interest in the Partnership
(approximately 45 percent of the Partnership's units) at $400 per unit. High
River has stated that the offer is being made as "an investment." The tender
offer is due to expire on August 31, 1995, unless extended.
The General Partner, with assistance from its advisors, is in the process of
evaluating the tender offer from a number of important standpoints and will
report to the limited partners its position with respect to such offer.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
------- --------------------------------
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description
<S> <C>
4. Partnership Agreement dated September 12,
1974 and amended and restated January 31,
1975. (1)
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
18,223 limited partnership units outstanding
in 1995 and 1994.
27. Financial Data Schedule for the quarter
ended June 30, 1995.
</TABLE>
(1) Incorporated by reference to the Annual Report of McNeil Real
Estate Fund V, Ltd. on Form 10-K for the period ended December
31, 1990, as filed with the Securities and Exchange Commission on
March 29, 1991.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during
the quarter ended June 30, 1995.
<PAGE>
McNEIL REAL ESTATE FUND V, LTD.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized:
<TABLE>
<CAPTION>
McNEIL REAL ESTATE FUND V, LTD.
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
<S> <C>
August 14, 1995 By: /s/ Donald K. Reed
--------------------- -------------------------------------------------
Date Donald K. Reed
President and Chief Executive Officer
August 14, 1995 By: /s/ Robert C. Irvine
--------------------- -------------------------------------------------
Date Robert C. Irvine
Chief Financial Officer of McNeil Investors, Inc.
Principal Financial Officer
August 14, 1995 By: /s/ Brandon K. Flaming
--------------------- -------------------------------------------------
Date Brandon K. Flaming
Chief Accounting Officer of McNeil Real Estate
Management, Inc.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,014,198
<SECURITIES> 0
<RECEIVABLES> 2,395
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 20,024,630
<DEPRECIATION> (6,148,664)
<TOTAL-ASSETS> 16,364,567
<CURRENT-LIABILITIES> 0
<BONDS> 11,386,358
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 16,364,567
<SALES> 2,050,015
<TOTAL-REVENUES> 2,108,201
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,140,064
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 420,113
<INCOME-PRETAX> 548,024
<INCOME-TAX> 0
<INCOME-CONTINUING> 548,024
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 548,024
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
