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 March 31, 1996
-------------------------------------------------------
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>
March 31, December 31,
1996 1995
--------------- --------------
<S> <C> <C>
ASSETS
- ------
Asset held for sale......................................... $ 13,789,030 $ 13,789,030
Cash and cash equivalents................................... 1,933,577 2,025,005
Cash segregated for security deposits....................... 145,438 144,797
Accounts receivable......................................... 2,694 8,260
Prepaid expenses and other asset............................ 41,684 61,414
Deferred borrowing costs (net of accumulated
amortization of $31,215 and $29,037 at
March 31, 1996 and December 31, 1995,
respectively)............................................ 230,118 232,296
-------------- -------------
$ 16,142,541 $ 16,260,802
============== =============
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Mortgage note payable....................................... $ 11,335,136 $ 11,358,707
Accounts payable............................................ 3,717 33,528
Accrued interest............................................ 71,156 72,090
Accrued property taxes...................................... 60,900 -
Accrued expenses............................................ 34,502 48,936
Payable to affiliates - General Partner..................... 42,038 15,734
Security deposits and deferred rental revenue............... 162,449 152,328
-------------- -------------
11,709,898 11,681,323
-------------- -------------
Partners' equity:
Limited partners - 20,000 limited partnership
units authorized; 18,223 limited partnership
units outstanding...................................... 4,415,658 4,562,494
General Partner.......................................... 16,985 16,985
-------------- -------------
4,432,643 4,579,479
-------------- -------------
$ 16,142,541 $ 16,260,802
============== =============
</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
March 31,
---------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
Revenue:
Rental revenue................................... $ 1,024,210 $ 1,035,205
Interest......................................... 27,231 25,899
------------- -------------
Total revenue.................................. 1,051,441 1,061,104
------------- -------------
Expenses:
Interest......................................... 216,858 203,705
Depreciation..................................... - 125,361
Property taxes................................... 60,900 60,186
Personnel expenses............................... 86,064 90,850
Utilities........................................ 76,865 81,557
Repairs and maintenance.......................... 108,950 89,755
Property management fees - affiliates............ 51,466 51,777
Other property operating expenses................ 70,111 58,740
General and administrative....................... 27,062 7,104
Partnership management fee....................... 25,000 15,000
------------- -------------
Total expenses................................. 723,276 784,035
------------- -------------
Net income.......................................... $ 328,165 $ 277,069
============= =============
Net income allocable to limited partners............ $ 328,165 $ 277,069
Net income allocable to General Partner............. - -
------------- -------------
Net income.......................................... $ 328,165 $ 277,069
============= =============
Net income per limited partnership unit............. $ 18.00 $ 15.20
============= =============
Distributions per limited partnership unit.......... $ 26.06 $ 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 Three Months Ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Equity
-------------- -------------- --------------
<S> <C> <C> <C>
Balance at December 31, 1994.............. $ 16,985 $ 4,383,431 $ 4,400,416
Net income................................ - 277,069 277,069
Distributions............................. - (285,008) (285,008)
------------- ------------- -------------
Balance at March 31, 1995................. $ 16,985 $ 4,375,492 $ 4,392,477
============= ============= =============
Balance at December 31, 1995.............. $ 16,985 $ 4,562,494 $ 4,579,479
Net income................................ - 328,165 328,165
Distributions............................. - (475,001) (475,001)
------------- ------------- -------------
Balance at March 31, 1996................. $ 16,985 $ 4,415,658 $ 4,432,643
============= ============= =============
</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>
Three Months Ended
March 31,
-------------------------------------------
1996 1995
------------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Cash received from tenants........................ $ 1,039,410 $ 1,035,443
Cash paid to suppliers............................ (393,721) (349,424)
Cash paid to affiliates........................... (50,162) (67,583)
Interest received................................. 27,231 25,899
Interest paid..................................... (215,614) (196,354)
Property taxes paid............................... - (60,186)
----------------- --------------
Net cash provided by operating activities............ 407,144 387,795
----------------- --------------
Net cash used in investing activities:
Additions to real estate investments.............. - (59,044)
----------------- --------------
Cash flows from financing activities:
Principal payments on mortgage note payable....... (23,571) (31,473)
Distributions..................................... (475,001) (285,008)
----------------- --------------
Net cash used in financing activities................ (498,572) (316,481)
----------------- --------------
Net increase (decrease) in cash and cash
equivalents....................................... (91,428) 12,270
Cash and cash equivalents at beginning of
year.............................................. 2,025,005 1,799,590
----------------- --------------
Cash and cash equivalents at end of year............. $ 1,933,577 $ 1,811,860
================= ==============
</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>
Three Months Ended
March 31,
---------------------------------------
1996 1995
---------------- ---------------
<S> <C> <C>
Net income........................................... $ 328,165 $ 277,069
--------------- --------------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation...................................... - 125,361
Amortization of deferred borrowing costs.......... 2,178 2,178
Changes in assets and liabilities:
Cash segregated for security deposits........... (641) (637)
Accounts receivable............................. 5,566 2,123
Prepaid expenses and other assets............... 19,730 (31,058)
Accounts payable................................ (29,811) (7,435)
Accrued interest................................ (934) 5,173
Accrued property taxes.......................... 60,900 -
Accrued expenses................................ (14,434) 14,653
Payable to affiliates - General Partner......... 26,304 (806)
Security deposits and deferred rental
revenue....................................... 10,121 1,174
--------------- --------------
Total adjustments............................. 78,979 110,726
--------------- --------------
Net cash provided by operating activities............ $ 407,144 $ 387,795
=============== ==============
</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)
March 31, 1996
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 three months ended March 31, 1996 are
not necessarily indicative of the results to be expected for the year ending
December 31, 1996.
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, 1995, 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.
- -------
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.
<PAGE>
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.
Under the terms of the Partnership Agreement, the General Partner is also
entitled to receive a subordinated incentive fee. This fee is an amount equal to
10% of the remaining cash from sales or refinancings, as defined, 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.
Compensation and reimbursements paid to or accrued for the benefit of the
General Partner and its affiliates are as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------------------
1996 1995
---------------- ---------------
<S> <C> <C>
Property management fees............................. $ 51,466 $ 51,777
Partnership management fees.......................... 25,000 15,000
--------------- --------------
$ 76,466 $ 66,777
=============== ==============
</TABLE>
NOTE 4.
- -------
In 1996, the Partnership adopted the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
This statement requires the cessation of depreciation on assets held for sale.
Since Sycamore Valley is currently classified as an asset held for sale, no
depreciation was taken in 1996.
NOTE 5.
- -------
On February 5, 1996, the Partnership executed a purchase agreement dated January
23, 1996 with BRE Properties, Inc. to sell to BRE the Sycamore Valley Apartments
which represents substantially all of the assets of the Partnership. The gross
purchase price for Sycamore Valley is $23,300,000, subject to certain
adjustments. Consummation of the sale is subject to the satisfaction of certain
conditions, including the approval of the limited partners of the Partnership
for the sale of Sycamore Valley. The Partnership presently anticipates
submitting the sale and the subsequent dissolution and termination of the
Partnership for limited partner approval at a future meeting.
<PAGE>
If the limited partners approve and the sale of Sycamore Valley is consummated,
the General Partner will commence the dissolution and termination of the
Partnership. In connection with such dissolution and termination, the General
Partner will liquidate any remaining assets, repay creditors, pay to the General
Partner a brokerage fee and subordinated incentive fee (See Note 2), and
authorize distributions to the limited partners of the Partnership, including
distributions of net proceeds from the sale of Sycamore Valley, in accordance
with the terms of the Partnership Agreement of the Partnership. Neither the
amount nor timing of any such distributions has been determined. The financial
statements have not been prepared on the liquidation basis of accounting, as the
sale is subject to limited partner approval.
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 March 31, 1996, the
Partnership owned one apartment property which is subject to a mortgage note.
On February 5, 1996, the Partnership executed a purchase agreement dated January
23, 1996 with BRE Properties, Inc. to sell to BRE the Sycamore Valley Apartments
which represents substantially all of the assets of the Partnership. The gross
purchase price for Sycamore Valley is $23,300,000, subject to certain
adjustments. Consummation of the sale is subject to the satisfaction of certain
conditions, including the approval of the limited partners of the Partnership
for the sale of Sycamore Valley. The Partnership presently anticipates
submitting the sale and the subsequent dissolution and termination of the
Partnership for limited partner approval at a future meeting.
If the limited partners approve and the sale of Sycamore Valley is consummated,
the General Partner will commence the dissolution and termination of the
Partnership. In connection with such dissolution and termination, the General
Partner will liquidate any remaining assets, repay creditors, pay to the General
Partner a brokerage fee and subordinated incentive fee (See Note 2), and
authorize distributions to the limited partners of the Partnership, including
distributions of net proceeds from the sale of Sycamore Valley, in accordance
with the terms of the Partnership Agreement of the Partnership. Neither the
amount nor timing of any such distributions has been determined. The financial
statements have not been prepared on the liquidation basis of accounting, as the
sale is subject to limited partner approval.
RESULTS OF OPERATIONS
- ---------------------
Revenue:
Total Partnership revenues decreased by $9,663 or 1% for the three months ended
March 31, 1996. Rental revenue decreased $10,995 and interest income increased
$1,332.
<PAGE>
Rental revenue for the first three months of 1996 was $1,024,210 as compared to
$1,035,205 for the same period in 1995. The decrease in rental revenue for the
three months ended March 31, 1996 is due to a decrease in the occupancy rate of
the property. The occupancy rate decreased from 98% in March of 1995 to 96% in
March of 1996.
Expenses:
Total Partnership expenses decreased by $60,759 or 8% the first three months of
1996 as compared to the same period in 1995. The most significant decreases
occurred in depreciation and utilities. The total decrease in expense was offset
by increases in mortgage interest, repair and maintenance, other property
operating, general and administrative, and partnership management fees.
Interest expense for the three months ended March 31, 1996 increased $13,153 or
6% as compared to 1995. 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 6.8% at March 31, 1995 to 7.6% at March 31, 1996.
The Partnership did not recognize any depreciation expense during the first
quarter of 1996 as a result of the adoption of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of."
Utility expense decreased $4,692 or 6% for the three months ended March 31, 1996
as compared to the same period in 1995. The decrease is related to the
installation of newer, more efficient boilers at the property.
Repair and maintenance expenses increased $19,195 or 21%, for the three months
ended 1996 as compared to the same period in 1995. The increase is due to the
replacement of carpeting and appliances, which met the Partnership's criteria
for capitalization based on the magnitude of replacements in 1995, but were
expensed in 1996.
Other property operating expenses increased $11,371 or 19% for the three months
ended March 31, 1996 as compared to 1995 due to the increase in earthquake
insurance for Sycamore Valley. This increase was partially offset by decreases
in bad debt, office supplies and eviction costs.
General and administrative expenses increased $19,958 for the three months ended
March 31, 1996 as compared to the same period last year. The increase was due to
proxy costs and professional fees incurred by the Partnership relating to the
proposed sale of Sycamore Valley.
Partnership management fee increased by $10,000 or 67% for the three months
ended March 31, 1996 due to an increase in Partnership management fees. These
fees are based on distributions made to the limited partners which increased in
1996 compared to 1995.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnership's primary source of cash flows is from operating activities,
which generated $407,144 for the first three months of 1996 as compared to
$387,795 in 1995. This increase is due to the timing of the payment of the
property taxes which is partially offset by the increase in cash paid to
suppliers and the increase in interest paid.
<PAGE>
The Partnership expended $59,044 for capital improvements to Sycamore Valley in
1995.
The Partnership distributed $475,001 and $285,008 to the limited partners in
1996 and 1995, respectively. Principal payments on the mortgage note payable
declined by $7,902 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 March 31, 1996, the Partnership held $1,933,577 of cash, down $91,428 since
December 31, 1995. This balance provides for the working capital needs of the
Partnership and allows for distributions to the limited partners. As discussed
in Financial Conditions, the General Partner will seek limited partner approval
for the sale of Sycamore Valley and to commence dissolution and termination of
the Partnership. Until such approval is received, management will perform
routine repairs and maintenance on the property to preserve and enhance its
value in the market.
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 March 31, 1996, $2,662,819
remained available for borrowing under the facility; however, additional funds
could become available as other partnerships repay existing borrowings. This
commitment will terminate March 30, 1997.
Long-term liquidity:
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 1996, the limited partners received a cash distribution of $475,001. 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 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
(a) Exhibits.
Exhibit
Number Description
------- -----------
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 1996 and 1995.
27. Financial Data Schedule for the quarter
ended March 31, 1996.
(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 March 31, 1996.
<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:
McNEIL REAL ESTATE FUND V, LTD.
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
May 15, 1996 By: /s/ Donald K. Reed
- ------------------- ---------------------------------------------
Date Donald K. Reed
President and Chief Executive Officer
May 15, 1996 By: /s/ Ron K. Taylor
- ------------------- ---------------------------------------------
Date Ron K. Taylor
Acting Chief Financial Officer of
McNeil Investors, Inc.
May 15, 1996 By: /s/ Brandon K. Flaming
- ------------------- ---------------------------------------------
Date Brandon K. Flaming
Chief Accounting Officer of McNeil
Real Estate Management, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,933,577
<SECURITIES> 0
<RECEIVABLES> 2,694
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,142,541
<CURRENT-LIABILITIES> 0
<BONDS> 11,335,136
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 16,142,541
<SALES> 1,024,210
<TOTAL-REVENUES> 1,051,441
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 506,418
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 216,858
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 328,165
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 328,165
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
