UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended September 30, 1995
---------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to_____________
Commission file number 0-8229
MCNEIL REAL ESTATE FUND V, LTD.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 94-6356980
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (214) 448-5800
---------------------------
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___
<PAGE>
MCNEIL REAL ESTATE FUND V, LTD.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ----------------------------
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
ASSETS
<S> <C> <C>
Real estate investments:
Land..................................................... $11,022,353 $11,022,353
Buildings and improvements............................... 9,086,929 8,799,260
---------- ----------
20,109,282 19,821,613
Less: Accumulated depreciation.......................... (6,286,945) (5,897,942)
---------- ----------
13,822,337 13,923,671
Cash and cash equivalents................................... 2,334,379 1,799,590
Cash segregated for security deposits....................... 143,957 145,245
Accounts receivable......................................... 4,875 4,326
Prepaid expenses and other asset............................ 77,942 31,953
Deferred borrowing costs (net of accumulated
amortization of $26,859 and $20,326 at
September 30, 1995 and December 31, 1994,
respectively)............................................ 234,474 241,007
---------- ----------
$16,617,964 $16,145,792
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Mortgage note payable....................................... $11,380,957 $11,424,420
Accounts payable............................................ 34,991 70,538
Accrued interest............................................ 72,498 63,663
Accrued property taxes...................................... 57,587 -
Accrued expenses............................................ 73,416 21,617
Payable to affiliates - General Partner..................... 16,209 17,212
Security deposits and deferred rental income................ 146,119 147,926
---------- ----------
11,781,777 11,745,376
---------- ----------
Partners' equity:
Limited partners - 20,000 limited partnership
units authorized; 18,223 limited partnership
units outstanding...................................... 4,819,202 4,383,431
General Partner.......................................... 16,985 16,985
---------- ----------
4,836,187 4,400,416
---------- ----------
$16,617,964 $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 Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
1995 1994 1995 1994
---------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue:
Rental revenue................ $1,000,943 $966,384 $3,050,958 $2,848,767
Interest...................... 31,593 12,407 85,381 38,725
Gain on legal settlement...... - - 4,398 -
--------- ------- --------- ---------
Total revenue............... 1,032,536 978,791 3,140,737 2,887,492
--------- ------- --------- ---------
Expenses:
Interest...................... 219,284 195,377 639,397 576,395
Depreciation.................. 138,281 123,312 389,003 345,018
Property taxes................ 57,586 64,761 171,229 194,283
Personnel expenses............ 83,689 81,190 251,952 240,952
Utilities..................... 68,430 49,773 212,648 177,511
Repairs and maintenance....... 120,267 116,639 333,334 326,332
Property management
fees - affiliates........... 49,057 48,565 151,249 142,501
Other property operating
expenses.................... 70,381 44,933 188,842 146,977
General and administrative.... 52,806 4,746 67,304 18,153
Partnership management
fee......................... - 15,000 15,000 30,000
--------- ------- --------- ---------
Total expenses.............. 859,781 744,296 2,419,958 2,198,122
--------- ------- --------- ---------
Net income....................... $ 172,755 $234,495 $ 720,779 $ 689,370
========= ======= ========= =========
Net income allocable to
limited partners.............. $ 172,755 $234,495 $ 720,779 $ 689,370
Net income allocable to
General Partner............... - - - -
--------- ------- --------- ---------
Net income....................... $ 172,755 $234,495 $ 720,779 $ 689,370
========= ======= ========= =========
Net income per limited
partnership unit.............. $ 9.48 $ 12.86 $ 39.55 $ 37.83
========= ======= ========= ==========
Distributions per limited
partnership unit.............. $ - $ 15.64 $ 15.64 $ 31.28
========= ======= ========= ==========
</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 Nine Months Ended September 30, 1995 and 1994
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Equity
-------- ---------- ----------
<S> <C> <C> <C>
Balance at December 31, 1993.............. $16,985 $3,978,206 $3,995,191
Net income................................ - 689,370 689,370
Distributions............................. - (570,008) (570,008)
------ --------- ---------
Balance at September 30, 1994............. $16,985 $4,097,568 $4,114,553
====== ========= =========
Balance at December 31, 1994.............. $16,985 $4,383,431 $4,400,416
Net income................................ - 720,779 720,779
Distributions............................. - (285,008) (285,008)
------ --------- ---------
Balance at September 30, 1995............. $16,985 $4,819,202 $4,836,187
====== ========= =========
</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>
Nine Months Ended
September 30,
----------------------------------
1995 1994
---------- ----------
Cash flows from operating activities:
<S> <C> <C>
Cash received from tenants........................ $3,049,002 $2,852,792
Cash received from legal settlement............... 4,398 -
Cash paid to suppliers............................ (1,082,929) (956,940)
Cash paid to affiliates........................... (167,252) (160,158)
Interest received................................. 85,381 38,725
Interest paid..................................... (624,029) (564,433)
Property taxes paid............................... (113,642) (132,406)
--------- ---------
Net cash provided by operating activities............ 1,150,929 1,077,580
--------- ---------
Net cash used in investing activities:
Additions to real estate investments.............. (287,669) (304,471)
--------- ---------
Cash flows from financing activities:
Principal payments on mortgage note payable....... (43,463) (203,854)
Distributions..................................... (285,008) (570,008)
--------- ---------
Net cash used in financing activities................ (328,471) (773,862)
--------- ---------
Net increase (decrease) in cash and cash
equivalents....................................... 534,789 (753)
Cash and cash equivalents at beginning of
year.............................................. 1,799,590 1,542,656
--------- ---------
Cash and cash equivalents at end of year............. $2,334,379 $1,541,903
========= =========
</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>
Nine Months Ended
September 30,
----------------------------------
1995 1994
---------- ----------
<S> <C> <C>
Net income........................................... $ 720,779 $ 689,370
--------- ---------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation...................................... 389,003 345,018
Amortization of deferred borrowing costs.......... 6,533 13,067
Changes in assets and liabilities:
Cash segregated for security deposits........... 1,288 (17,615)
Accounts receivable............................. (549) 4,401
Prepaid expenses and other assets............... (45,989) (43,957)
Accounts payable................................ (35,547) (16,088)
Accrued interest................................ 8,835 (1,104)
Accrued property taxes.......................... 57,587 61,877
Accrued expenses................................ 51,799 3,720
Payable to affiliates - General Partner......... (1,003) 12,343
Security deposits and deferred rental
income........................................ (1,807) 26,548
--------- ---------
Total adjustments............................. 430,150 388,210
--------- ---------
Net cash provided by operating activities............ $1,150,929 $1,077,580
========= =========
</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)
September 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 nine months ended September 30, 1995
are not necessarily indicative of the results to be expected for the year ending
December 31, 1995.
NOTE 2.
- -------
The financial statements should be read in conjunction with the financial
statements contained in the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1994, and the notes thereto, as filed with the
Securities and Exchange Commission, which is available upon request by writing
to McNeil 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>
Nine Months Ended
September 30,
-------------------------------
1995 1994
-------- --------
<S> <C> <C>
Property management fees............................. $151,249 $142,501
Partnership management fees.......................... 15,000 30,000
------- -------
$166,249 $172,501
======= =======
</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 September 30, 1995, the
Partnership owned one apartment property which is subject to a mortgage note.
RESULTS OF OPERATIONS
- ---------------------
Revenue:
Total Partnership revenues increased by $253,245 or 9% and $53,745 or 5%,
respectively, for the nine months and three months ended September 30, 1995.
Rental revenue and interest income increased $202,191 or 7% and $46,656 or 120%,
respectively.
Rental revenue for the first nine months of 1995 was $3,050,958 as compared to
$2,848,767 for the same period in 1994. The increase in rental revenue for the
nine months ended September 30, 1995 is due to an increase in the average
occupancy rate and a reduction in discounts and concessions at Sycamore Valley.
The average occupancy rate increased to 95% in 1995 up from 91% for the same
period in 1994.
Interest income for the nine months and three months ended September 30, 1995
increased by $46,656 and $19,186, respectively. 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.
<PAGE>
Expenses:
Total Partnership expenses increased by $221,836 or 10% the first nine months of
1995 as compared to the same period in 1994. The most significant increases
occurred in mortgage interest, depreciation, utilities, 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 nine months and three months ended September 30, 1995,
increased $63,002 or 11% and $23,907 or 12% 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 increased from 6.5% at
September 30, 1994 to 7.7% at September 30, 1995.
Depreciation expense for the nine months ended September 30, 1995 increased by
$43,985 or 13% as compared to the same period in 1994. This increase is due to
capital improvements made at the property. As of September 30, 1995, the
Partnership made $287,669 in capital improvements for the year.
Property tax expense decreased by $23,054 or 12% and $7,175 or 11% for the nine
months and three months ended September 30, 1995 as compared to the same period
in 1994. The decrease is due to 1994 supplemental taxes on land purchased in
1993. These supplemental taxes were not incurred in 1995.
Utility expense increased $35,137 or 20% and $18,657 or 37% for the nine and
three months ended September 30, 1995 as compared to the same period in 1994.
The increase is primarily due to an increase in gas rates of 7% and aging
boilers at the property. These boilers are currently being replaced and utility
rates should level off for the remaining portion of the year.
Other property operating expenses increased $41,865 or 28% and $25,448 or 57%
for the nine and three months ended September 30, 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.
General and administrative expenses increased $49,151 and $48,060 for the nine
and three months ended September 30, 1995 as compared to the same period last
year, respectively. The increase was due to costs incurred by the Partnership in
the third quarter of 1995 to evaluate and disseminate information regarding an
unsolicited tender offer as discussed in Item 5 - Other Information.
Partnership management fee decreased by $15,000 or 50% for the nine months ended
September 30, 1995 due to the timing of the limited partners distribution, the
basis for computing such fees. The distribution, which was scheduled for August
1995, was not paid until October 1995.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnership's primary source of cash flows is from operating activities,
which generated $1,150,929 for the first nine months of 1995 as compared to
$1,077,580 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 $287,669 and $304,471 for capital improvements to
Sycamore Valley in 1995 and 1994, respectively.
The Partnership distributed $285,008 and $570,008 to the limited partners in
1995 and 1994, respectively. Principal payments on the mortgage note payable
declined by $160,391 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 September 30, 1995, the Partnership held $2,334,379 of cash, up $534,789
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.
<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 September 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. The distribution scheduled for
August was paid in October 1995 in the amount of $475,000. 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 3. LEGAL PROCEEDINGS
- ------- -----------------
1) HCW Pension Real Estate Fund, Ltd. et al. v. Ernst & Young, BDO Seidman et
al (Case #92-06560-A). This suit was filed on behalf of the Partnership and
other affiliated partnerships (the "Affiliated Partnerships") on May 26,
1992, in the 14th Judicial District Court of Dallas County. The petition
sought recovery against the Partnership's former auditors, BDO Seidman, for
negligence and fraud in failing to detect and/or report overcharges of
fees/expenses by Southmark, the former general partner. The former auditors
asserted counterclaims against the Affiliated Partnerships based on alleged
fraudulent misrepresentations made to the auditors by the former management
of the Affiliated Partnerships (Southmark) in the form of client
representation letters executed and delivered to the auditors by Southmark
management. The counterclaims sought recovery of attorneys' fees and costs
incurred in defending this action. The original petition also alleged
causes of action against certain former officers and directors of the
Partnership's original general partner for breach of fiduciary duty, fraud
and conspiracy relating to the improper assessment and payment of certain
administrative fees/expenses. On January 11, 1994 the allegations against
the former officers and directors were dismissed.
The trial court granted summary judgment in favor of Ernst & Young and BDO
Seidman on the fraud and negligence claims based on the statute of
limitations. The Affiliated Partnerships appealed the summary judgment to
the Dallas Court of Appeals. In August 1995, the Appeals Court upheld all
of the summary judgments in favor of BDO Seidman. In exchange for the
plaintiff's agreement not to file any motions for rehearing or further
appeals, BDO Seidman agreed that it will not pursue the counterclaims
against the Partnership.
2) High River Limited Partnership vs. McNeil Partners, L.P., McNeil Investors,
Inc., McNeil Pacific Investors 1972, Ltd., McNeil Real Estate Fund V, Ltd.,
McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil
Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real
Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate
Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., Robert A. McNeil and
Carole J. McNeil (L95012) - High River ("HR") filed this action in the
United States District Court for the Southern District of New York against
McNeil Partners, McNeil Investors and Mr. and Mrs. McNeil requesting, among
other things, names and addresses of the Partnership's limited partners.
The District Court issued a preliminary injunction against the Partnerships
requiring them to commence mailing materials relating to High River tender
offer materials on August 14, 1995.
On August 18, 1995, McNeil Partners, McNeil Investors, the Partnerships,
and Mr. and Mrs. McNeil filed an Answer and Counterclaim. The Counterclaim
principally asserts (1) the HR tender offers have been undertaken in
violation of the federal securities laws, on the basis of material,
non-public, and confidential information, and (2) that the HR offer
documents omit and/or misrepresent certain material information about the
HR tender offers. The counterclaim seeks a preliminary and permanent
injunction against the continuation of the HR tender offers and,
alternatively, ordering corrective disclosure with respect to allegedly
false and misleading statements contained in the tender offer documents.
The High River tender offer expired on October 6, 1995. The Defendants
believe that the action is moot and expect the matter to be dismissed
shortly.
3) Robert Lewis vs. McNeil Partners, L.P., McNeil Investors, Inc., Robert
A. McNeil et al - In the District Court of Dallas County, Texas, A-14th
Judicial District, Cause No. 95-08535 (Class Action)
Plaintiff, Robert Lewis, is a limited partner with McNeil Pacific Investors
Fund 1972, McNeil Real Estate Fund X, Ltd. and McNeil Real Estate Fund XV,
Ltd. Plaintiff brings this action on his own behalf and as a class action
on behalf of the class of all limited partners of McNeil Pacific Investors
Fund 1972, McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund IX,
Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd.,
McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil
Real Estate Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P. and McNeil
Real Estate Fund XXV, Ltd. (the "Partnerships") as of August 4, 1995.
Plaintiff alleges that McNeil Partners, L.P., McNeil Investors, Inc.,
Robert A. McNeil and other senior officers (collectively, the "Defendants")
breached their fiduciary duties by, among other things, (1) failing to
attempt to sell the properties owned by the Partnerships ("Properties") and
extending the lives of the Partnerships indefinitely, contrary to the
Partnerships' business plans, (2) paying distributions to themselves and
generating fees for their affiliates, (3) refusing to make significant
distributions to the class members, despite the fact that the Partnerships
have positive cash flows and substantial cash balances, and (4) failing to
take steps to create an auction market for Partnership equity interests,
despite the fact that a third party bidder filed tender offers for
approximately forty-five percent (45%) of the outstanding units of each of
the Partnerships. Plaintiff also claims that Defendants have breached the
Partnership Agreements by failing to take steps to liquidate the Properties
and by their alteration of the Partnerships' primary purposes, their acts
in contravention of these agreements, and their use of the Partnership
assets for their own benefit instead of for the benefit of the
Partnerships.
The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.
4) James F. Schofield, Gerald C. Gillett and Donna S. Gillett vs. McNeil
Partners, L.P., McNeil Investors, Inc., McNeil Real Estate Management,
Inc., Robert A. McNeil, Carole J. McNeil, 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.
et al - Superior Court of the State of California for the County of Los
Angeles, Case No. BC133799 (Class and Derivative Action Complaint) and
United States District Court, Southern District of New York, Case No.
95CIV.6711 (Class and Derivative Action Complaint)
These are corporate/securities class and derivative actions brought in
state and federal court by limited partners of each of the nine (9) limited
partnerships that are named as Nominal Defendants as listed above
("Partnerships"). Plaintiffs allege that Defendants McNeil Investors, Inc.,
its affiliate McNeil Real Estate Management, Inc. and four (4) of their
senior officers and/or directors have breached their fiduciary duties.
Specifically, Plaintiffs allege that Defendants have caused the
Partnerships to enter into several wasteful transactions that have no
business purpose or benefit to the Partnerships and which have rendered
such units highly illiquid and artificially depressed the prices that are
available for units on the limited resale market. Plaintiffs also allege
that Defendants have engaged in a course of conduct to prevent the
acquisition of units by Carl Icahn by disseminating false, misleading and
inadequate information. Plaintiffs further allege that Defendants have
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 and, thereby, have
breached the Partnership Agreements.
The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend these actions.
5) Alfred Napoletano vs. McNeil Partners, L.P., McNeil Investors, Inc.,
Robert A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972,
Ltd., McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund IX, Ltd.,
McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil
Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real
Estate Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real
Estate Fund XXV, L.P. - Superior Court of the State of California, County
of Los Angeles, Case No. BC133849 (class action complaint)
Plaintiff brings this class action on behalf of a class of all persons and
entities who are current owners of units and/or are limited partners in one
or more of the partnerships referenced above ("Partnerships"). Plaintiff
alleges that Defendants have breached their fiduciary duties to the class
members by, among other things, (1) taking steps to prevent the
consummation of the High River tender offers, (2) failing to take steps to
maximize unitholders' or limited partners' values, including failure to
liquidate the properties owned by the Partnerships, (3) managing the
Partnerships so as to extend indefinitely the present fee arrangements, and
(4) paying itself and entities owned and controlled by the general partner
excessive fees and reimbursements of general and administrative expenses.
The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.
6) Warren Heller vs. McNeil Partners, L.P., McNeil Investors, Inc., Robert
A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd.,
McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil
Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real
Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real
Estate Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real
Estate Fund XXV, L.P. - Superior Court of the State of California, County
of Los Angeles, Case No. BC133957 (class action complaint)
Plaintiff brings this class action on behalf of a class of all persons and
entities who are current owners of units and/or are limited partners in one
or more of the partnerships referenced above ("Partnerships"). Plaintiff
alleges that Defendants have breached their fiduciary duties to the class
members by, among other things, (1) taking steps to prevent the
consummation of the High River tender offers, (2) failing to take steps to
maximize unitholders' or limited partners' values, including failure to
liquidate the properties owned by the Partnerships, (3) managing the
Partnerships so as to extend indefinitely the present fee arrangements, and
(4) paying itself and entities owned and controlled by the general partner
excessive fees and reimbursements of general and administrative expenses.
The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.
7) High River Limited Partnership v. McNeil Partners L.P., McNeil Investors,
Inc., McNeil Pacific Investors 1972, Ltd., McNeil Real Estate Fund V,
Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd.,
McNeil Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil
Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real
Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., Robert A.
McNeil and Carole J. McNeil - United States District Court for the
Southern District of New York, (Case No. 95 Civ. 9488) (Second Action).
On November 7, 1995, High River commenced a second complaint which alleges,
inter alia, that McNeil's Schedule 14D-9 filed in connection with the High
River tender offers was materially false and misleading, in violation of
Sections 14(d) and 14(e) of the Securities Exchange Act of 1934, 15 U.S.C.
Section 78n(d) and (e), and the SEC Regulations promulgated thereunder; and
that High River further alleges that McNeil has wrongfully refused to admit
High River as a limited partner to the Funds. Additionally, High River
purports to assert claims derivatively on behalf of Funds IX, XI, XV, XXIV
and XXV, for breach of contract and breach of fiduciary duty, asserting
that McNeil has charged these Partnerships excessive fees. High River's
complaint seeks, inter alia, preliminary injunctive relief requiring McNeil
to admit High River as a limited partner in each of the ten Partnerships
and to transfer the tendered units of interest in the Partnerships to High
River; an unspecified award of damages payable to High River and an
additional unspecified award of damages payable to certain of the
Partnerships; an order that defendants must discharge their fiduciary
duties and must account for all fees they have received from certain of the
Partnerships; and attorneys' fees.
The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.
ITEM 5. OTHER INFORMATION
- ------- -----------------
As previously disclosed, on an unsolicited basis, High River Limited Partnership
("High River"), a partnership controlled by Carl Icahn, announced that it had
commenced an offer to purchase 8,200 units of limited partnership interest in
the Partnership (approximately 45% of the Partnership's units) at $400 per unit.
The tender offer was originally due to expire on August 31, 1995. In connection
therewith, the parties entered into certain negotiations and discussions
regarding, among other things, possible transactions between the parties and
their affiliates, McNeil Partners, McNeil Investors, and McREMI. On September
19, 1995, the parties having not reached any resolution on the terms of the
proposed transactions, McNeil Partners terminated the parties' discussion. High
River had extended its offer several times until the final expiration date of
October 6, 1995. On October 11, 1995 High River announced that based on
preliminary information furnished by the depositary for the tender offer,
approximately 608 units of the Partnership were tendered and not withdrawn prior
to the expiration of the tender offer. On October 12, 1995, McNeil Partners
announced that it would continue to explore potential avenues to enhance the
value of the Partnership units, which may include, among other things, asset
sales, refinancings of Partnership properties followed by distributions or
tender offers for units of limited partnership. There can be no assurance that
any such plans will develop or that any such transactions will be consummated.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
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 September 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 September 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>
November 13, 1995 By: /s/ Donald K. Reed
- ------------------------ -------------------------------------------------
Date Donald K. Reed
President and Chief Executive Officer
November 13, 1995 By: /s/ Robert C. Irvine
- ------------------------ -------------------------------------------------
Date Robert C. Irvine
Chief Financial Officer of McNeil Investors, Inc.
Principal Financial Officer
November 13, 1995 By: /s/ Brandon K. Flaming
- ------------------------ -------------------------------------------------
Date Brandon K. Flaming
Chief Accounting Officer of McNeil Real Estate
Management, Inc.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 2,334,379
<SECURITIES> 0
<RECEIVABLES> 4,875
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 20,109,282
<DEPRECIATION> (6,286,945)
<TOTAL-ASSETS> 16,617,964
<CURRENT-LIABILITIES> 0
<BONDS> 11,380,957
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 16,617,964
<SALES> 3,050,958
<TOTAL-REVENUES> 3,140,737
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,780,561
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 639,397
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 720,779
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 720,779
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
