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, 1997
----------------------------------------------------
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 0-12915
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McNEIL REAL ESTATE FUND XIV, LTD.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 94-2822299
- --------------------------------------------------------------------------------
(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
---------------------------
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 XIV, LTD.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ------- --------------------
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
--------------- ---------------
ASSETS
- ------
Real estate investments:
<S> <C> <C>
Land..................................................... $ 4,663,828 $ 4,663,828
Buildings and improvements............................... 36,144,636 35,944,879
-------------- --------------
40,808,464 40,608,707
Less: Accumulated depreciation.......................... (19,889,055) (18,951,741)
-------------- --------------
20,919,409 21,656,966
Assets held for sale, net................................... 4,161,735 7,942,855
Cash and cash equivalents................................... 5,143,687 1,903,902
Cash segregated for security deposits....................... 416,704 399,366
Accounts receivable......................................... 412,917 385,721
Prepaid expenses and other assets........................... 154,036 173,908
Escrow deposits............................................. 791,386 681,430
Deferred borrowing costs, net of accumulated
amortization of $394,083 and $346,255 at
June 30, 1997, and December 31, 1996,
respectively............................................. 996,909 1,044,737
-------------- --------------
$ 32,996,783 $ 34,188,885
============== ==============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- ------------------------------------------
Mortgage notes payable, net................................. $ 25,356,989 $ 27,423,689
Accounts payable............................................ 69,632 103,747
Accrued interest............................................ 178,326 197,124
Accrued property taxes...................................... 246,979 100,981
Other accrued expenses...................................... 62,776 82,329
Payable to affiliates - General Partner..................... 61,938 1,388,371
Security deposits and deferred rental revenue............... 413,459 411,318
-------------- --------------
26,390,099 29,707,559
-------------- --------------
Partners' equity (deficit):
Limited partners - 100,000 limited partnership
units authorized; 86,534 limited partnership
units outstanding...................................... 7,648,141 7,648,141
General Partner.......................................... (1,041,457) (3,166,815)
-------------- --------------
6,606,684 4,481,326
-------------- --------------
$ 32,996,783 $ 34,188,885
============== ==============
</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 XIV, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1997 1996 1997 1996
-------------- --------------- -------------- --------------
Revenue:
<S> <C> <C> <C> <C>
Rental revenue................ $ 2,236,551 $ 2,318,311 $ 4,663,282 $ 4,620,968
Interest...................... 63,945 27,166 102,099 57,150
Gain on sale of real estate... 2,208,359 - 2,208,359 -
------------- ------------- ------------- -------------
Total revenue............... 4,508,855 2,345,477 6,973,740 4,678,118
------------- ------------- ------------- -------------
Expenses:
Interest...................... 601,749 672,304 1,263,872 1,347,691
Depreciation and
amortization................ 468,657 574,217 937,314 1,146,316
Property taxes................ 163,053 184,991 356,229 385,941
Personnel expenses............ 218,827 218,320 495,773 473,226
Utilities..................... 119,328 126,345 245,424 246,391
Repair and maintenance........ 312,061 360,255 559,031 644,989
Property management
fees - affiliates........... 113,236 114,993 230,593 227,185
Other property operating
expenses.................... 132,496 140,498 269,223 271,829
General and administrative.... 21,093 16,262 52,144 40,082
General and administrative -
affiliates.................. 61,577 80,821 122,728 161,763
------------- ------------- ------------- -------------
Total expenses.............. 2,212,077 2,489,006 4,532,331 4,945,413
------------- ------------- ------------- -------------
Net income (loss)................ $ 2,296,778 $ (143,529) $ 2,441,409 $ (267,295)
============= ============= ============= =============
Net income (loss) allocated to
limited partners.............. $ - $ (142,094) $ - $ (264,622)
Net income (loss) allocated to
General Partner............... 2,296,778 (1,435) 2,441,409 (2,673)
------------- ------------- ------------- -------------
Net income (loss)................ $ 2,296,778 $ (143,529) $ 2,441,409 $ (267,295)
============= ============= ============= =============
Net income (loss) per limited
partnership unit.............. $ - $ (1.64) $ - $ (3.06)
============= ============= ============= =============
</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 XIV, LTD.
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
(Unaudited)
For the Six Months Ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
Total
Partners'
General Limited Equity
Partner Partners (Deficit)
--------------- --------------- ---------------
<S> <C> <C> <C>
Balance at December 31, 1995.............. $ (2,546,836) $ 7,766,250 $ 5,219,414
Net loss.................................. (2,673) (264,622) (267,295)
Management Incentive Distribution......... (290,175) - (290,175)
------------- ------------- -------------
Balance at June 30, 1996.................. $ (2,839,684) $ 7,501,628 $ 4,661,944
============= ============= =============
Balance at December 31, 1996.............. $ (3,166,815) $ 7,648,141 $ 4,481,326
Net income................................ 2,441,409 - 2,441,409
Management Incentive Distribution......... (316,051) - (316,051)
------------- ------------- -------------
Balance at June 30, 1997.................. $ (1,041,457) $ 7,648,141 $ 6,606,684
============= ============= =============
</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 XIV, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------------------
1997 1996
---------------- ----------------
Cash flows from operating activities:
<S> <C> <C>
Cash received from tenants............................... $ 4,588,033 $ 4,560,513
Cash paid to suppliers................................... (1,661,084) (1,580,548)
Cash paid to affiliates.................................. (382,710) (394,710)
Interest received........................................ 102,099 57,150
Interest paid............................................ (1,178,054) (1,231,657)
Property taxes paid and escrowed......................... (308,466) (263,712)
-------------- --------------
Net cash provided by operating activities................... 1,159,818 1,147,036
-------------- --------------
Cash flows from investing activities:
Additions to real estate investments..................... (210,585) (210,824)
Proceeds from sale of real estate........................ 6,424,694 -
-------------- --------------
Net cash provided by (used in) investing activities......... 6,214,109 (210,824)
-------------- --------------
Cash flows from financing activities:
Principal payments on mortgage notes
payable................................................ (289,609) (287,956)
Retirement of mortgage note payable...................... (2,231,438) -
Management incentive distribution paid................... (1,613,095) -
-------------- --------------
Net cash used in financing activities....................... (4,134,142) (287,956)
-------------- --------------
Net increase in cash and cash equivalents................... 3,239,785 648,256
Cash and cash equivalents at beginning of
period................................................... 1,903,902 1,417,948
-------------- --------------
Cash and cash equivalents at end of period.................. $ 5,143,687 $ 2,066,204
============== ==============
</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 XIV, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
Reconciliation of Net Income (Loss) to Net Cash Provided by
Operating Activities
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------------------
1997 1996
--------------- ----------------
<S> <C> <C>
Net income (loss)........................................... $ 2,441,409 $ (267,295)
-------------- --------------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization............................ 937,314 1,146,316
Amortization of deferred borrowing costs................. 47,828 47,829
Amortization of discounts on mortgage
notes payable.......................................... 56,788 70,261
Gain on sale of real estate.............................. (2,208,359) -
Changes in assets and liabilities:
Cash segregated for security deposits.................. (17,338) (43,512)
Accounts receivable.................................... (54,024) (35,031)
Prepaid expenses and other assets...................... 19,872 17,253
Escrow deposits........................................ (109,956) 17,361
Accounts payable....................................... (34,115) (33,284)
Accrued interest....................................... (18,798) (2,056)
Accrued property taxes................................. 145,998 231,546
Other accrued expenses................................. (19,553) (16,296)
Payable to affiliates - General Partner................ (29,389) (5,762)
Security deposits and deferred rental
revenue.............................................. 2,141 19,706
-------------- --------------
Total adjustments.................................... (1,281,591) 1,414,331
-------------- --------------
Net cash provided by operating activities................... $ 1,159,818 $ 1,147,036
============== ==============
</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 XIV, LTD.
Notes to Financial Statements
(Unaudited)
June 30, 1997
NOTE 1.
- -------
McNeil Real Estate Fund XIV, Ltd. (the "Partnership") is a limited partnership
organized under the laws of the State of California to invest in real property.
The general partner of the Partnership is McNeil Partners, L.P. (the "General
Partner"), a Delaware limited partnership, an affiliate of Robert A. McNeil. The
Partnership is governed by an agreement of limited partnership ("Amended
Partnership Agreement") that was adopted September 20, 1991. The principal place
of business for the Partnership and the General Partner is 13760 Noel Road,
Suite 600, 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, 1997 are
not necessarily indicative of the results to be expected for the year ending
December 31, 1997.
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, 1996, and the notes thereto, as filed with the
Securities and Exchange Commission, which is available upon request by writing
to McNeil Real Estate Fund XIV, Ltd., c/o The Herman Group, 2121 San Jacinto
St., 26th Floor, Dallas, Texas 75201.
NOTE 3.
- -------
The Partnership pays property management fees equal to 5% 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 services for the Partnership's residential and commercial properties
and leasing services for its residential properties. McREMI may also choose to
provide leasing services for the Partnership's commercial properties, in which
case McREMI will receive property management fees from such commercial
properties equal to 3% of the property's gross rental receipts plus leasing
commissions based on the prevailing market rate for such services where the
property is located.
The Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs.
<PAGE>
Under terms of the Amended Partnership Agreement, the Partnership is paying a
Management Incentive Distribution ("MID") to the General Partner. The maximum
MID is calculated as 1% of the tangible asset value of the Partnership. The
maximum MID percentage decreases subsequent to 1999. Tangible asset value is
determined by using the greater of (i) an amount calculated by applying a
capitalization rate of 9% to the annualized net operating income of each
property or (ii) a value of $10,000 per apartment unit for residential property
and $50 per gross square foot for commercial property to arrive at the property
tangible asset value. The property tangible asset value is then added to the
book value of all other assets excluding intangible items.
MID will be paid to the extent of the lesser of the Partnership's excess cash
flow, as defined, or net operating income, as defined (the "Entitlement
Amount"), and may be paid (i) in cash, unless there is insufficient cash to pay
the distribution in which event any unpaid portion not taken in Units will be
deferred and is payable, without interest, from the first available cash and/or
(ii) in Units. A maximum of 50% of the MID may be paid in Units. The number of
Units issued in payment of the MID is based on the greater of $50 per Unit or
the net tangible asset value, as defined, per Unit.
Any amount of the MID that is paid to the General Partner in Units will be
treated as if cash is distributed to the General Partner and is then contributed
to the Partnership by the General Partner. The MID represents a return of equity
to the General Partner for increasing cash flow, as defined, and accordingly is
treated as a distribution.
Compensation, reimbursements and distributions paid to or accrued for the
benefit of the General Partner and its affiliates are as follows:
Six Months Ended
June 30,
-----------------------
1997 1996
--------- -----------
Property management fees - affiliates.......... $ 230,593 $ 227,185
Charged to general and administrative -
affiliates:
Partnership administration.................. 122,728 161,763
-------- ----------
$ 353,321 $ 388,948
======== ==========
Charged to General Partner's deficit:
Management Incentive Distribution........... $ 316,051 $ 290,175
======== ==========
NOTE 4.
- -------
On October 1, 1996, the Partnership placed Country Hills Plaza, Midvale Plaza
and Redwood Plaza on the market for sale. Country Hills Plaza was sold to an
unaffiliated purchaser on April 8, 1997. These three properties are shown as
assets held for sale on the accompanying financial statements. Country Hills
Plaza was sold to an unaffiliated purchaser on April 8, 1997 (see Note 5). In
accordance with 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," the Partnership
ceased recording depreciation charges on these three properties effective
October 1, 1996.
<PAGE>
NOTE 5.
- -------
On April 8, 1997, the Partnership sold Country Hills Plaza to an unaffiliated
purchaser for a cash sales price of $6,610,000. Cash proceeds from the sale, as
well as the gain on sale are detailed below.
Gain on Sale Cash Proceeds
------------- -------------
Cash sales price............................... $ 6,610,000 $ 6,610,000
Selling costs.................................. (185,306) (185,306)
Mortgage discount written off.................. (397,559)
Straight-line rent receivables written off..... (26,828)
Basis of real estate sold...................... (3,791,948)
-----------
Gain on sale of real estate.................... $ 2,208,359
===========
Proceeds from sale of real estate.............. 6,424,694
Retirement of mortgage note payable............ (2,231,438)
-----------
Net cash proceeds.............................. $ 4,193,256
===========
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
The Partnership was formed to acquire, operate and ultimately dispose of a
portfolio of income-producing real properties. At June 30, 1997, the Partnership
owned four apartment properties and two shopping centers. All of the
Partnership's properties are subject to mortgage notes.
On October 1, 1996, the Partnership placed its three commercial properties,
County Hills Plaza, Midvale Plaza and Redwood Plaza, on the market for sale.
Consequently, the Partnership's investment in these three properties is shown as
assets held for sale on the accompanying financial statements.
On April 8, 1997, the Partnership sold Country Hills Plaza for $6,610,000 to an
unaffiliated buyer. The Partnership has entered into a contract to sell Midvale
Plaza to an unaffiliated buyer for $3,500,000. The sale of Midvale Plaza is
scheduled to close during the third quarter of 1997. Proceeds from the sale of
the three properties will be used to first, repay the mortgage note encumbering
the property sold; second, pay any deferred payments due to the General Partner
or its affiliates; third, ensure that the Partnership maintains an adequate
level of cash reserves; and fourth, pay distributions to the Unit holders.
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
The Partnership earned $2,441,409 for the first six months of 1997. Included in
net income is a $2,208,359 gain on the sale of Country Hills Plaza. For the
first six months of 1996, the Partnership incurred $267,295 net loss. Results
for the second quarter showed an improvement from the $143,529 net loss incurred
in 1996 to net income of $2,296,778 for 1997.
Revenues:
Rental revenue for the first six months of 1997 increased $42,314 or .9% over
rental revenue earned for the first six months of 1996. Excluding rental revenue
from Country Hills Plaza, rental revenue increased $257,624 or 6.2% for the
first six months of 1997 compared to the same period of 1996.
Rental revenue increased at all of the Partnership's properties. The largest
increase in both percentage and absolute terms was provided by Windrock
Apartments. After struggling with depressed occupancy rates for three years,
Windrock's occupancy rate has improved to 91.3% at June 30, 1997, up from 75% a
year earlier. Windrock's rental revenue increased 18.6% for the first six months
of 1997 compared to the same period of 1996. Increased rental rates provided
rental revenue increases ranging from 4% to 6% at Embarcadero Club Apartments,
Thunder Hollow Apartments and Redwood Plaza. Rental revenues increased
approximately 1.5% at both Tanglewood Village Apartments and Midvale Plaza. An
increase in rental revenue at Tanglewood Village was mostly offset by decreased
occupancy, while an increase in occupancy provided the increase in Midvale
Plaza's revenues.
The sale of Country Hills Plaza on April 8, 1997 provided a one-time gain on
sale of real estate totaling $2,208,359. The Partnership has entered into a
contract to sell Midvale Plaza for $3,500,000. If the sale of Midvale Plaza
closes as scheduled during the third quarter, the Partnership will have an
additional gain on sale of real estate to report for the third quarter.
Expenses:
Partnership expenses decreased $413,082 or 8.4% for the first six months of 1997
as compared to the same period of 1996. Expenses decreased primarily because of
the sale of Country Hills Plaza on April 8, 1997. After excluding expenses
related to Country Hills Plaza, the Partnership's expenses decreased $204,927 or
4.5% for the first six months of 1997 compared to the same period of 1996.
Decreased expenses were recorded primarily in depreciation and amortization,
repair and maintenance and general and administrative expenses paid to
affiliates. These decreases were offset by an increase in general and
administrative expenses.
Depreciation and amortization expense decreased 18.2% for the first six months
of 1997 as compared to the same period of 1996. The Partnership ceased
depreciating its investment in its three commercial properties, Country Hills
Plaza, Midvale Plaza and Redwood Plaza, effective October 1, 1996, the date the
Partnership placed these properties on the market for sale. Properties being
marketed for sale are classified as "assets held for sale." Accounting
regulations specify that depreciation on assets held for sale should cease
effective the date the properties are placed on the market for sale.
<PAGE>
Excluding expenses related to Country Hills Plaza, repair and maintenance
expenses decreased 14.2% for the first six months of 1997 as compared to the
period of 1996. Part of the decrease is attributed to a decrease in snow removal
expenses at Thunder Hollow Apartments. Expenses totaling $57,000 were incurred
as a result of severe winter weather at the Pennsylvania property during the
first six months of 1996. The comparable amount for 1997 was only $5,000. The
decrease in repair and maintenance expenses also is attributed to an extra
$22,000 expended during 1996 to repair windstorm damage to the roof of Windrock
Apartments and to repair damage from a small fire at Windrock Apartments.
General and administrative expenses paid to affiliates decreased $39,035 or 24%
for the first six months of 1997 as compared to the same period of 1996. The
decrease is due, in part, to decreased charges for investor services, which,
beginning in 1997, are provided by a third party vendor instead of by affiliates
of the General Partner. The switch of investor service expenses from affiliates
to a third party vendor also accounts for the $12,062 or 30% increase in general
and administrative expenses incurred by the Partnership for the first six months
of 1997 as compared to the same period of 1996.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash flow from operations increased $12,782 or 1.1% for the first six months of
1997 as compared to the same period of 1996. Performance of the Partnership's
properties continues to improve. Windrock Apartments, which had not been
contributing to the improved Partnership performance, appears to have turned
around, and is now generating increasing amounts of cash flow. Cash flow from
Partnership operations for the first quarter of 1997 was more than adequate to
fund selected capital improvements and to repay the scheduled principal payments
on the Partnership's mortgage debt. Furthermore, the General Partner anticipates
that operations for the balance of 1997 will continue to provide more than
enough cash flow to fund needed capital improvements and debt service payments.
The sale of Country Hills Plaza provided $4,193,256 for the Partnership, after
repayment of the Country Hills mortgage note. The General Partner intends to
distribute $4,000,000 of these proceeds to the limited partners in September
1997. See Income Allocations and Distributions below.
The improving cash position of the Partnership allowed the General Partner to
continue payment of the Management Incentive Distribution ("MID"). The
Partnership paid $1,613,095 of MID during the first six months of 1997 in
addition to the $500,000 payment made during the third quarter of 1996. MID
payments had been suspended since the beginning of 1994 to increase the
Partnership's cash reserves. All arrearages of MID have now been paid.
Short-term liquidity:
At June 30, 1997, the Partnership held $5,143,687 of cash and cash equivalents,
up $3,239,785 from the balance at the end of 1996. The General Partner has
announced that the Partnership will distribute $4,000,000 to the limited
partners in September 1997. See Income Allocation and Distributions below. The
excess of cash remaining after the September distribution is an adequate level
of cash reserves for the Partnership. Furthermore, the General Partner
anticipates that cash generated from operations for the remainder of 1997 will
be sufficient to fund the Partnership's budgeted capital improvements and debt
service requirements.
In addition to the sale of Country Hills Plaza, the Partnership has placed
Midvale Plaza and Redwood Plaza on the market for sale. Proceeds from the sale
of these properties will be used to retire the related mortgage notes payable,
provide for an adequate level of cash reserves for the Partnership, and, if
surplus proceeds remain, provide distributions to the limited partners. Although
the General Partner anticipates being able to successfully sell Midvale Plaza
and Redwood Plaza, there can be no assurance that any sale of Partnership
properties will provide sufficient cash for additional distributions to the
limited partners.
<PAGE>
Long-term liquidity:
While the present outlook for the Partnership's liquidity is favorable, market
conditions may change and property operations can deteriorate. In that event,
the Partnership would require other sources of working capital. No such other
sources have been identified, and the Partnership has no established lines of
credit. Other possible actions to resolve working capital deficiencies include
refinancing or renegotiating terms of existing loans, deferring major capital
expenditures on Partnership properties except where improvements are expected to
enhance the competitiveness or marketability of the properties, or arranging
working capital support from affiliates. No affiliate support has been required
in the past, and there is no assurance that support from affiliates would be
provided in the future, since neither the General Partner nor any affiliates
have any obligation in this regard.
The Partnership has determined to begin an orderly liquidation of all the
Partnership's assets. Although there can be no assurance as to the timing of any
liquidation, it is anticipated that such liquidation would result in
distributions to the limited partners of the cash proceeds from the sale of the
Partnership's properties, subject to cash reserve requirements, as they are sold
with the last property disposition before December 2001, followed by a
dissolution of the Partnership. In this regard, the Partnership sold Country
Hills Plaza on April 8, 1997, and has placed two of its six remaining properties
on the market for sale.
None of the Partnership's remaining mortgage notes mature before the expected
dissolution of the Partnership.
Income Allocations and Distributions:
Terms of the Amended Partnership Agreement specify that net losses for financial
reporting purposes are allocated 99% to the limited partners and 1% to the
General Partner. Net income for financial reporting purposes is allocated to the
General Partner in an amount equal to the greater of (a) 1% of net income or (b)
the cumulative amount of the MID paid for which no income allocation has
previously been made; any remaining net income is allocated to the limited
partners. Therefore, for the six month periods ended June 30, 1997 and 1996, net
income of $2,441,409 and net loss of $2,673, respectively, were allocated to the
General Partner. For the six month period ended June 30, 1997, no net income was
allocated to the limited partners, while $264,622 of net loss was allocated to
the limited partners for the six months ended June 30, 1996.
With the exception of the MID, distributions to Unit holders have been suspended
since 1986 as a part of the General Partner's policy of maintaining adequate
cash reserves. However, as the Partnership's remaining properties are sold, the
General Partner intends to distribute net sales proceeds to the Unit holders. In
this connection, the Partnership will distribute $4,000,000 to Unit holders in
September 1997. This amount represent the net sales proceeds from the sale of
Country Hills Plaza in April 1997.
<PAGE>
Payments of MID had been suspended since the beginning of 1994 to preserve the
cash reserves of the Partnership. During the third quarter of 1996, the
Partnership resumed paid $500,000 of MID. During the first six months of 1997,
the Partnership paid MID of $1,613,095. The 1996 payment, and the payments
during the first six months of 1997 have completely repaid the balance of MID
due to the General Partner. The Partnership incurred MID of $316,051 for the
first six months of 1997. The General Partner will continue to monitor the cash
reserves and working capital requirements of the Partnership to ensure that cash
flows and balances will support continued MID payments and distributions of net
sales proceeds to Unit holders.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- ------- -----------------
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 (the "Partnerships"). Plaintiffs allege that McNeil
Investors, Inc., its affiliate McNeil Real Estate Management, Inc. and three of
their senior officers and/or directors (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.
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.
Defendants filed a demurrer to the consolidated and amended complaint and a
motion to strike on February 14, 1997, seeking to dismiss the consolidated and
amended complaint in all respects. A hearing on Defendant's demurrer and motion
to strike was held on May 5, 1997. The Court granted Defendants' demurrer,
dismissing the consolidated and amended complaint with leave to amend.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
(a) Exhibits.
Exhibit
Number Description
------- -----------
4. Amended and Restated Limited Partnership
Agreement dated September 20, 1991. (1)
11. Statement regarding computation of net loss per
limited partnership unit: net loss per limited
partnership unit is computed by dividing net
loss allocated to the limited partners by the
number of limited partnership units
outstanding. Per unit information has been
computed based on 86,534 limited partnership
units outstanding in 1997 and 1996.
27. Financial Data Schedule for the quarter ended
June 30, 1997.
(1) Incorporated by reference to the Annual Report of Registrant, on
Form 10-K for the period ended December 31, 1991, as filed on March
30, 1992.
(b) Reports on Form 8-K. On April 21, 1997, the Partnership filed a Current
Report on Form 8-K to report the sale of Country Hills Plaza to an
unaffiliated purchaser.
<PAGE>
McNEIL REAL ESTATE FUND XIV, 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 XIV, Ltd.
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
August 13, 1997 By: /s/ Ron K. Taylor
- --------------- -----------------------------------------------
Date Ron K. Taylor
President and Director of McNeil
Investors, Inc.
(Principal Financial Officer)
August 13, 1997 By: /s/ Brandon K. Flaming
- --------------- -----------------------------------------------
Date Brandon K. Flaming
Vice President of McNeil Investors, Inc.
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,143,687
<SECURITIES> 0
<RECEIVABLES> 412,917
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 40,808,464
<DEPRECIATION> (19,889,055)
<TOTAL-ASSETS> 32,996,783
<CURRENT-LIABILITIES> 0
<BONDS> 25,356,989
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 32,996,783
<SALES> 4,663,282
<TOTAL-REVENUES> 6,973,740
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,268,459
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,263,872
<INCOME-PRETAX> 0
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<INCOME-CONTINUING> 2,441,409
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 2,441,409
<EPS-PRIMARY> 0
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