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 0-13356
MCNEIL REAL ESTATE FUND XXI, L.P.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 33-0030615
- ------------------------------------------------------------------------------
(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 XXI, L.P.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEETS (Unaudited)
<TABLE>
<S> <C> <C>
September 30, December 31,
1995 1994
------------ -----------
ASSETS
- ------
Real estate investments:
Land..................................................... $ 3,607,307 $ 3,607,306
Buildings and improvements............................... 33,123,927 32,646,371
36,731,234 36,253,677
Less: Accumulated depreciation and amortization......... (14,879,046) (13,696,125)
21,852,188 22,557,552
Assets held for sale........................................ - 8,153,520
Cash and cash equivalents................................... 2,027,768 1,151,098
Cash segregated for security deposits....................... 182,238 205,581
Accounts receivable, net of allowance for doubtful accounts
of $17,302 and $51,086 at September 30, 1995
and December 31, 1994, respectively...................... 124,556 663,548
Advances to affiliates - General Partner.................... - 362,186
Escrow deposits............................................. 648,457 252,798
Deferred borrowing costs, net of accumulated amortization
of $73,379 and $186,603 at September 30, 1995
and December 31, 1994, respectively...................... 486,581 413,094
Prepaid expenses and other assets........................... 73,688 225,680
----------- ----------
$ 25,395,476 $33,985,057
=========== ==========
LIABILITIES AND PARTNERS' DEFICIT
- ---------------------------------
Mortgage notes payable, net................................. $ 22,062,706 $28,914,573
Mortgage notes payable - affiliates......................... 733,900 2,064,900
Accounts payable and accrued expenses....................... 334,329 430,340
Accrued property taxes...................................... 367,315 480,166
Payable to affiliates - General Partner..................... 4,019,343 3,079,178
Advances from affiliates - General Partner.................. 661,145 1,910,982
Security deposits and deferred rental income................ 193,080 228,012
---------- ----------
28,371,818 37,108,151
---------- ----------
Partners' deficit:
Limited partners - 50,000 Units authorized;
47,308 and 47,326 Units outstanding at September 30,
1995 and December 31, 1994, respectively,
(24,949 and 24,960 Current Income Units
outstanding at September 30, 1995 and December 31,
1994, respectively, and 22,359 and 22,366
Growth/Shelter Units outstanding at September 30,
1995 and December 31,1994, respectively)............... (2,628,966) (2,774,251)
General Partner.......................................... (347,376) (348,843)
---------- ----------
(2,976,342) (3,123,094)
---------- ----------
$25,395,476 $33,985,057
========== ==========
</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 XXI, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
1995 1994 1995 1994
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Revenue:
- -------
Rental revenue................ $1,523,538 $2,009,084 $5,057,887 $6,065,037
Interest...................... 27,334 21,109 86,576 54,880
Gain on disposition of real
estate...................... - - 1,615,811 29,440
Other income.................. 1,524 - 3,952 154,134
--------- --------- --------- ---------
Total revenue............... 1,552,396 2,030,193 6,764,226 6,303,491
--------- --------- --------- ---------
Expenses:
Interest...................... 541,237 771,140 1,844,910 2,235,843
Interest - affiliates......... 31,277 85,091 165,581 226,315
Depreciation and
amortization................ 418,203 535,037 1,325,801 1,533,793
Property taxes................ 144,023 194,537 442,160 531,655
Personnel costs............... 199,148 210,485 613,232 615,655
Utilities..................... 114,335 121,767 335,573 359,073
Repairs and maintenance....... 199,156 245,200 547,099 677,972
Property management
fees - affiliates........... 78,324 108,653 271,870 335,755
Other property operating
expenses.................... 152,716 130,158 428,311 344,698
General and administrative.... 4,537 15,164 41,715 57,855
General and administrative -
affiliates.................. 193,735 235,371 601,222 715,451
--------- --------- --------- ---------
Total expenses.............. 2,076,691 2,652,603 6,617,474 7,634,065
--------- --------- --------- ----------
Net income (loss)................ $ (524,295) $ (622,410) $ 146,752 $(1,330,574)
========= ========= ========= ==========
Net income (loss) allocable
to limited partners - Current
Income Unit................... (47,186) (56,017) 13,208 (119,752)
Net income (loss) allocable to
to limited partners - Growth/
Shelter Unit.................. (471,865) (560,169) 132,077 (1,197,516)
Net income (loss) allocable
to General Partner............ (5,244) (6,224) 1,467 (13,306)
--------- --------- --------- ----------
Net income (loss)................ (524,295) (622,410) 146,752 (1,330,574)
========= ========= ========= ==========
Net income (loss) per limited
partnership unit:
Current Income Units.......... $ (1.89) $ (2.24) $ .53 $ (4.79)
========= ========= ========= ==========
Growth/Shelter Units.......... $ (21.10) (25.01) 5.91 (53.46)
========= ========= ========= ==========
</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 XXI, L.P.
STATEMENTS OF PARTNERS' DEFICIT
(Unaudited)
For the Nine Months Ended September 30, 1995 and 1994
<TABLE>
Total
Partners'
General Limited Equity
Partner Partners (Deficit)
---------- ----------- -----------
<S> <C> <C> <C>
Balance at December 31, 1993.............. $(329,927) $ (901,571) $(1,231,498)
Net loss
General Partner........................ (13,306) - (13,306)
Current Income Units................... - (119,752) (119,752)
Growth/Shelter Units................... - (1,197,516) (1,197,516)
--------- ---------- ----------
Total net loss............................ (13,306) (1,317,268) (1,330,574)
--------- ---------- ----------
Balance at September 30, 1994............. $ (343,233) $(2,218,839) $(2,562,072)
========= ========== ==========
Balance at December 31, 1994.............. $ (348,843) $(2,774,251) $(3,123,094)
Net income
General Partner........................ 1,467 - 1,467
Current Income Units................... - 13,208 13,208
Growth/Shelter Units................... - 132,077 132,077
--------- ---------- ----------
Total net income.......................... 1,467 145,285 146,752
--------- ---------- ----------
Balance at September 30, 1995............. $ (347,376) $(2,628,966) $(2,976,342)
========= ========== ==========
</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 XXI, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (decrease) in Cash and Cash Equivalents
<TABLE>
Nine Months Ended
September 30,
-----------------------------------
1995 1994
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Cash received from tenants........................ $5,224,781 $6,332,236
Cash paid to suppliers............................ (1,904,727) (2,516,718)
Cash paid to affiliates........................... (278,977) (730,528)
Interest received................................. 77,148 31,702
Interest received - affiliates.................... 71,614 -
Interest paid..................................... (1,882,234) (2,004,961)
Deferred borrowing costs paid..................... (169,146) (20,000)
Interest paid to affiliates....................... (496,075) (97,948)
Property taxes paid............................... (673,395) (541,111)
---------- ----------
Net cash provided by (used in)
operating activities............................ (31,011) 452,672
---------- ----------
Cash flows from investing activities:
Additions to real estate investments.............. (484,174) (634,688)
Net proceeds from disposition of real estate...... 2,199,917 39,850
Repayment of advances to affiliates............... 300,000 20,874
---------- ----------
Net cash provided by (used in)
investing activities.............................. 2,015,743 (573,964)
---------- ----------
Cash flows from financing activities:
Proceeds from refinancings........................ 60,103 -
Principal payments on mortgage notes
payable......................................... (195,165) (259,553)
Repayment of advances from affiliates............. (973,000) -
---------- ----------
Net cash used in financing activities................ (1,108,062) (259,553)
---------- ----------
Net increase (decrease) in cash and cash
equivalents....................................... 876,670 (380,845)
Cash and cash equivalents at beginning of
period............................................ 1,151,098 1,773,720
---------- ----------
Cash and cash equivalents at end of period........... $ 2,027,768 $1,392,875
========== =========
</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 XXI, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
Reconciliation of Net Income (Loss) to Net Cash Provided by (Used in)
Operating Activities
<TABLE>
Nine Months Ended
September 30,
---------------------------------
1995 1994
--------- ---------
<S> <C> <C>
Net income (loss).................................... $ 146,752 $(1,330,574)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization..................... 1,325,801 1,533,793
Amortization of deferred borrowing costs.......... 45,270 62,908
Amortization of discounts on mortgage
notes payable................................... 15,823 131,937
Interest added to advances to affiliates -
General Partner, net of payments................ 62,186 (23,178)
Interest added to advances from affiliates -
General Partner, net of payments................ (276,837) 93,828
Gain on disposition of real estate................ (1,615,811) (29,440)
Changes in assets and liabilities:
Cash segregated for security deposits........... 23,343 28,527
Accounts receivable............................. 141,264 57,560
Escrow deposits................................. (395,659) 79,443
Deferred borrowing costs........................ (169,146) (20,000)
Prepaid expenses and other assets............... 48,408 (24,086)
Accounts payable and accrued expenses........... 50,100 (434,790)
Accrued property taxes.......................... (36,594) (25,787)
Payable to affiliates - General Partner......... 594,115 320,677
Security deposits and deferred rental income.... 9,974 31,854
---------- ----------
Total adjustments............................. (177,763) 1,783,246
---------- ----------
Net cash provided by (used in)
operating activities............................ $ (31,011) $ 452,672
=========== =========
</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 XXI, L.P.
Notes to Financial Statements
(Unaudited)
September 30, 1995
NOTE 1.
- ------
McNeil Real Estate Fund XXI, L.P., (the "Partnership"), formerly known as
Southmark Realty Partners, Ltd. was organized on November 23, 1983 as a limited
partnership under the provisions of the California Revised Limited Partnership
Act to acquire and operate commercial and residential properties. The general
partner of the Partnership is McNeil Partners, L.P. (the "General Partner"), a
Delaware limited partnership, an affiliate of Robert A. McNeil ("McNeil"). The
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 XXI, L.P. c/o McNeil Real Estate Management, Inc.,
Investor Services, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240.
NOTE 3.
- ------
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. The Partnership has suffered
recurring losses from operations and has relied on advances from affiliates to
meet its debt obligations and to fund capital improvements. There is no
guarantee that such advances will continue to be available. These conditions
raise substantial doubt about the Partnership's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
NOTE 4.
- ------
Certain reclassifications have been made to prior period amounts to conform
to the current presentation.
NOTE 5.
- ------
The Partnership pays property management fees equal to 5% of
gross rental receipts for its residential properties and 6% of gross rental
receipts for its commercial 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.
<PAGE>
The Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs.
The Partnership is paying an asset management fee which is payable to the
General Partner. Through 1999, the Asset Management Fee is calculated as 1% of
the Partnership's tangible asset value. 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. The fee percentage decreases subsequent to
1999. Total accrued but unpaid asset management fees of $2,430,388 were
outstanding at September 30, 1995.
The Partnership pays a disposition fee to an affiliate of the General
Partner equal to 3% of the gross sales price for brokerage services performed in
connection with the sale of the Partnership's properties. The fee is due and
payable at the time the sale closes. In connection with the sales of Suburban
Plaza and Wyoming Mall, total accrued but unpaid disposition fees of $346,050
were outstanding at September 30, 1995.
The General Partner has, in its discretion, advanced funds to the
Partnership to meet its working capital requirements. These advances, which are
unsecured and due on demand, accrue interest at a rate equal to the prime
lending rate plus 1%.
The total advances from affiliates at September 30, 1995 and December 31, 1994
consist of the following:
<TABLE>
September 30, December 31,
------------ -----------
1995 1994
---------- ---------
<S> <C> <C>
Advances from General Partner - revolver............. $ - $ 92,371
Advances from General Partner - other................ - 380,060
Advances purchased by General Partner................ 630,574 1,131,143
Accrued interest payable............................. 30,571 307,408
---------- ---------
$ 661,145 $1,910,982
</TABLE>
In April 1995, the Partnership utilized $1,320,745 of the proceeds from the
sales of Suburban Plaza and Wyoming Mall to repay affiliate advances and accrued
interest.
McNeil Real Estate Fund XXVII, L.P., ("McNeil XXVII") an affiliate of the
General Partner, is permitted to make nonrecourse mortgage loans to affiliates
under certain conditions and limitations and subject to availability of funds.
In 1992, the Partnership borrowed $972,000 from McNeil XXVII, which was secured
by a third lien mortgage on Suburban Plaza. This loan and the accrued interest
were repaid at the sale of Suburban Plaza.
Additionally, the Partnership had a $359,000 mortgage loan from an
affiliate of the General Partner that was secured by a second lien mortgage on
Suburban Plaza. This loan and the related accrued interest were also repaid at
the sale of Suburban Plaza.
During 1992, the Partnership made advances totaling $320,874 to McNeil Real
Estate Fund XXII, L.P. ("McNeil XXII"), the joint owner of Wyoming Mall, for
tenant improvements and operations at Wyoming Mall. The advances, which were
unsecured and due on demand, accrued interest at 9 1/2%. During the second
period of 1994, McNeil XXII was able to repay $20,874 of the advances, leaving
$300,000 of advances still owed to the Partnership, plus accrued interest. In
April 1995, McNeil XXII utilized the proceeds from the sale of Wyoming Mall to
repay the remaining balance of $300,000 of the advance plus the accrued interest
of $71,614.
Compensation and reimbursements paid to or accrued for the benefit of the
General Partner and its affiliates are as follows:
<TABLE>
Nine Months Ended
September 30,
-------------------------------
1995 1994
------- -------
<S> <C> <C> <C>
Property management fees............................. $ 271,870 $335,755
Charged to gain on disposition of real estate:
Disposition fee........................................ 346,050 -
Charged to interest -affiliates:
Interest on advances from affiliates - General
Partner......................................... 70,908 93,828
Interest on mortgage note payable - affiliates.... 94,673 132,487
Charged to general and administrative -affiliates:
Partnership administration........................ 301,077 310,230
Asset management fee.............................. 300,145 405,221
--------- ---------
$1,384,723 $1,277,521
========= =========
</TABLE>
The payable to affiliates - General Partner at September 30, 1995 and
December 31, 1994 consisted primarily of unpaid asset management fees, property
management fees, disposition fees and partnership general and administrative
expenses and are due and payable from current operations.
NOTE 6.
- ------
On March 31, 1995, Suburban Plaza was sold to an unrelated third party for
a cash price of $6,910,000. Cash proceeds and the gain on the disposition is
detailed below:
<TABLE>
Gain on Sale Cash Proceeds
------------ -------------
<S> <C> <C>
Sales Price.......................................... $ 6,910,000 $ 6,910,000
Selling costs........................................ (293,754) (86,454)
Retirement of mortgage discount...................... (683,198)
Carrying value....................................... (3,691,594)
Accounts receivable.................................. (315,979)
Deferred borrowing costs............................. (479)
Prepaid expenses..................................... (63,548)
----------
Gain on disposition of real estate................... $ 1,861,448
==========
Retirement of mortgage note.......................... (3,963,489)
Retirement of mortgage notes - affiliates............ (1,331,000)
Accrued interest paid on retired notes............... (146,111)
Real estate tax proration............................ (38,368)
Credit for security deposit liability................ (22,325)
----------
Net cash proceeds.................................... $ 1,322,253
==========
</TABLE>
On March 31, 1995, Wyoming Mall was sold to an unrelated third party for a
cash price of $9,250,000. The Partnership had a 50% undivided interest in the
assets, liabilities and operations of Wyoming Mall, owned jointly with McNeil
Real Estate Fund XXII, L.P. Cash proceeds and the gain on the disposition is
detailed below:
<TABLE>
Gain on Sale Cash Proceeds
------------ -------------
<S> <C> <C>
Sales Price.......................................... $4,625,000 $4,625,000
Selling costs........................................ (234,838) (96,088)
Mortgage note prepayment penalty..................... (138,441) (138,441)
Carrying value....................................... (4,325,663)
Accounts receivable.................................. (81,749)
Deferred borrowing costs............................. (49,910)
Prepaid expenses..................................... (40,036)
----------
Loss on disposition of real estate................... $ (245,637)
==========
Retirement of mortgage note.......................... (3,452,337)
Payment of 1994 taxes at closing..................... (23,735)
Real estate tax proration............................ (14,154)
Credit for security deposit liability................ (22,581)
----------
Net cash proceeds.................................... $ 877,664
==========
</TABLE>
NOTE 7.
- ------
The mortgage notes payable on Bedford Green and Woodcreek Apartments that
matured in June 1995 were refinanced in July 1995 for $3,300,000 and $2,812,500,
respectively. The new mortgage loans bear an interest rate of 8.48%, require
monthly principal and interest payments of $25,327 and $21,586, respectively,
and mature in July 2002. The following is a summary of the cash proceeds
relating to the refinancings:
<TABLE>
Bedford
Green Woodcreek Total
--------- --------- ---------
<S> <C> <C> <C>
New loan proceeds.................. $3,300,000 $2,812,500 $6,112,500
Existing debt retired.............. (3,118,570) (2,933,827) (6,052,397)
--------- --------- ---------
Loan proceeds.................... $ 181,430 $ (121,327) $ 60,103
========= ========= =========
</TABLE>
The Partnership incurred loan costs of $169,146 related to the refinancing.
An additional $404,074 of tax, insurance and property replacement escrows were
established at the closing of the refinancing.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------ ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
Net income for the first nine months of 1995 was $146,752 as compared to a
net loss of $1,330,574 for the same period in 1994.
On March 31, 1995, Wyoming Mall was sold to an unrelated third party for a
cash price of $9,250,000. The Partnership had a 50% undivided interest in the
assets, liabilities and operations of Wyoming Mall, owned jointly with McNeil
Real Estate Fund XXII, L.P. The Partnership received net cash proceeds of
$877,664 from the sale of the property and recorded a loss on disposition of
real estate of $245,637. The Partnership recorded $258,066 of revenue and
$272,049 of expense for the first nine months of 1995 for Wyoming Mall.
Suburban Plaza was sold to an unrelated third party for a cash price of
$6,910,000. The Partnership received net cash proceeds of $1,322,253 and
recorded a gain on disposition of real estate of $1,861,448. The Partnership
recorded $306,746 of revenue and $328,727 of expense for the first nine months
of 1995 for Suburban Plaza.
The Partnership's working capital needs have been supported by net proceeds
from the December 1993 sale of Hickory Lake Apartments and the March 1995 sales
of Suburban Plaza and Wyoming Mall and by deferring certain affiliate payables.
In addition, the sale of Homestead Manor on February 22, 1994 provided net cash
proceeds of $39,850.
The Partnership has had little ready cash reserves since its inception. It
has been largely dependent on affiliates to support its operations. Although no
additional advances from affiliates were required during the first nine months
of 1995, at September 30, 1995 the Partnership owed affiliate advances of
$661,145 and payables to affiliates for property management fees, Partnership
general and administrative expenses, asset management fees and disposition fees
totaling $4,019,343. In April 1995, the proceeds from the sales of Suburban
Plaza and Wyoming Mall enabled the Partnership to repay $1,320,745 of affiliate
advances and accrued interest.
RESULTS OF OPERATIONS
- ---------------------
Revenue:
Rental revenue decreased by $485,546 and $1,007,150 for the three and nine
months ended September 30, 1995, respectively, as compared to the same periods
in 1994. The decrease is primarily due to the sales of Suburban Plaza and
Wyoming Mall in the first quarter of 1995.
Interest income increased by $6,225 and $31,696 for the three and nine
months ended September 30, 1995, respectively, as compared to the same periods
in 1994. The increase was due primarily to higher average cash balances that
resulted from the sale proceeds of Suburban Plaza and Wyoming Mall.
During the first quarter of 1995, the partnership recognized a gain on
disposition of real estate on Suburban Plaza of $1,861,448 and a loss on the
sale of Wyoming Mall of $245,637. During the first quarter of 1994, the
partnership recognized a gain on disposition of real estate on Homestead Manor
Apartments of $29,440. Also related to the sale of Homestead Manor Apartments,
the partnership reduced previously accrued property taxes of $154,134, which was
recorded as other income during the first quarter of 1994.
Expenses:
Total expenses decreased by $575,912 and $1,016,591 for the three and nine
months ended September 30, 1995, respectively, as compared to the same periods
in 1994. The decreases in interest expense, depreciation and amortization
expense, property taxes, utilities and property management fees are primarily
due to the sales of Suburban Plaza and Wyoming Mall in the first quarter of
1995.
Interest expense-affiliates decreased by $53,814 and $60,734 for the three
and nine months ended September 30, 1995, respectively, as compared to the same
periods in 1994. The decrease was mainly due to the repayment of $973,000 of
advances from affiliates in the second quarter of 1995.
Repairs and maintenance expense decreased by $46,044 and $130,873 for the
three and nine months ended September 30, 1995, respectively as compared to the
same periods in 1994. The decrease was mainly due to the sales of Suburban Plaza
and Wyoming Mall. Additionally, Evergreen Square and Governour's Square
Apartments completed interior upgrade programs in early 1994; therefore contract
painting and supplies as well as interior light fixture replacement expenses
decreased in 1995.
Other property operating expenses increased by $22,558 and $83,613 for the
three and nine months ended September 30, 1995, respectively, as compared to the
same period in 1994, mainly due to an increase in property hazard insurance
rates at Governour's Square, Breckenridge and Evergreen Square Apartments. In
addition, Suburban Plaza had an increase in legal fees relating to the sale of
the property in March 1995.
General and administrative expense decreased by $10,627 and $16,140 for the
three and nine months ended September 30, 1995, as compared to the same period
in 1994. In 1994 the Partnership paid approximately $11,000 of state withholding
taxes on behalf of the limited partners. No such withholding taxes were paid in
1995.
General and administrative expense-affiliates decreased by $41,636 and
$114,229 for the three and nine months ended September 30, 1995, as compared to
the same period in 1994. The decrease was due mainly to a decline in the asset
management fees, the result of a decrease in tangible asset value of the
partnership, on which the fee is based, primarily because of the sale of
Homestead Manor Apartments, Suburban Plaza and Wyoming Mall.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At September 30, 1995, the Partnership held cash and cash equivalents of
$2,027,768.
The Partnership used $31,011 of cash from operating activities during the
first nine months of 1995 as compared to cash provided by operations of $452,672
for the same period of 1994. The decrease in cash received from tenants, cash
paid to suppliers and interest paid is primarily due to the sales of Suburban
Plaza and Wyoming Mall. Interest paid to affiliates increased due to the payment
of accrued interest on affiliate advances. The Partnership incurred $169,146 of
deferred borrowing costs relating to the refinancings of Bedford Green and
Woodcreek Apartments. Property taxes paid and escrowed increased due to the
additional escrow deposits required when Bedford Green and Woodcreek Apartments
were refinanced.
Cash provided by investing activities totaled $2,015,743 for the first nine
months of 1995 as compared to cash used in investing activities of $573,964 for
the same period of 1994. Cash used for additions to real estate totaled $484,174
for the nine months ended September 30, 1995 as compared to $634,688 for the
same period of the prior year. The Partnership received $2,199,917 of proceeds
from the sales of Suburban Plaza and Wyoming Mall during the first nine months
of 1995. The Partnership received $39,850 from the sale of Homestead Manor
Apartments during the first nine months of 1994. Additionally, in 1995 the
Partnership received $300,000 from McNeil XXII for repayment of previous
advances for Wyoming Mall.
Cash used in financing activities totaled $1,108,062 for the first nine
months of 1995 as compared to $259,553 for the same period of 1994. In April
1995, the Partnership utilized a portion of the property sales proceeds to repay
affiliate advances totaling $973,000. This increase was partially offset by a
reduction in mortgage principal payments due to the retirement of the mortgage
notes related to Wyoming Mall and Suburban Plaza when the properties were sold.
Additionally the mortgage notes related to Bedford Green and Woodcreek
Apartments were refinanced in July 1995 giving the Partnership $60,103 of net
proceeds.
Short-term liquidity
- --------------------
In March 1995, the Partnership sold two of its properties, Suburban Plaza
and Wyoming Mall, for net cash proceeds of $2,199,917. In April 1995, the
Partnership utilized $1,320,745 of the proceeds to repay advances from
affiliates and accrued interest.
The mortgage notes payable on Bedford Green and Woodcreek Apartments that
matured in June 1995 were refinanced in July 1995 for $3,300,000 and $2,812,500,
respectively. The new mortgage loans bear an interest rate of 8.48%, require
monthly principal and interest payments of $25,327 and $21,586, respectively,
and mature in July 2002. The Partnership incurred loan costs of $169,146 related
to the refinancing. An additional $404,074 of tax, insurance and property
replacement escrows were established at the closing of the refinancing.
For the rest of 1995, present cash balances, operations of the properties
and proceeds from the sale of Suburban Plaza and Wyoming Mall are expected to
provide sufficient cash for normal operating expenses, debt service payments and
budgeted capital improvements. The Partnership has no established lines of
credit from outside sources. Although affiliates of the Partnership have
previously funded cash deficits, there can be no assurance the Partnership will
receive additional funds. Other possible actions to resolve cash deficiencies
include refinancing, deferring major capital or repair expenditures on
Partnership properties except where improvements are expected to enhance the
competitiveness and marketability of the properties, deferring payables to or
arranging financing from affiliates or the ultimate sale of other properties.
The General Partner has established a revolving credit facility not to
exceed $5,000,000 in the aggregate which is 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 any additional funds under the
facility because no amounts have been reserved for any particular partnership.
As of September 30, 1995, $2,362,004 remained available for borrowing under the
facility; however, additional funds could be available as other partnerships
repay existing borrowings. Additionally, the General Partner has, in its
discretion, advanced funds to the Partnership in addition to the revolving
credit facility. The General Partner is not obligated to advance funds to the
Partnership and there is no assurance that the Partnership will receive
additional funds.
McNeil Real Estate Fund XXVII, L.P., ("McNeil XXVII") an affiliate of the
General Partner, is permitted to make nonrecourse mortgage loans to affiliates
under certain conditions and limitations and subject to availability of funds.
In 1992, the Partnership borrowed $972,000 from McNeil XXVII, which was secured
by a third lien mortgage on Suburban Plaza. This loan was repaid at the sale of
Suburban Plaza on March 31, 1995.
Additionally, the Partnership had a $359,000 mortgage loan from an
affiliate of the General Partner that was secured by a second lien mortgage on
Suburban Plaza. This loan and the related accrued interest were also repaid at
the sale of Suburban Plaza on March 31, 1995.
Long-term liquidity
- -------------------
Operations of the Partnership's properties are expected to provide
sufficient cash flow for operating expenses, debt service payments and capital
improvements in the foreseeable future. The proceeds from the sales of Wyoming
Mall and Suburban Plaza will enable the Partnership to reduce a significant
portion of its affiliate debt as well as affiliate payables. The Partnership has
significant mortgage maturities during 1997, and management expects to refinance
these mortgage notes as they mature. If management is unable to refinance the
mortgage notes as they mature; the Partnership will require other sources of
cash. No such sources have been identified.
These conditions raise substantial doubt about the Partnership's ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Distributions
- -------------
To maintain adequate cash balances of the Partnership, distributions to
Current Income Unit holders were suspended in 1989. There have been no
distributions to Growth/Shelter Units holders. Distributions to Unit holders
will remain suspended for the foreseeable future. The General Partner will
continue to monitor the cash reserves and working capital needs of the
Partnership to determine when cash flows will support distributions to the Unit
holders.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------ --------------------------------
(a) Exhibits.
<TABLE>
Exhibit
Number Description
<S> <C> <C>
4. Amended and Restated Limited Partnership Agreement dated March 26, 1992.
(Incorporated by reference to the Current Report of the Registrant on Form 8-K
dated March 26, 1992, as filed on April 9, 1992).
10.15 Loan Agreement dated July 14, 1995 between Fleet Real Estate Capital, Inc. and
Bedford Green Fund XXI, L.P.
10.16 Loan Agreement dated July 14, 1995 between Fleet Real Estate Capital, Inc. and
Woodcreek Fund XXI, L.P.
11. Statement regarding computation of Net Income (Loss) per Limited Partnership
Unit: Net income (loss) per limited partnership unit is computed by dividing
net income (loss) allocated to the limited partners by the weighted average
number of limited partnership units outstanding. Per unit information has
been computed based on 24,949 and 24,982 Current Income Units outstanding in
1995 and 1994, respectively, and 22,359 and 22,400 Growth/Shelter Units
outstanding in 1995 and 1994, respectively.
</TABLE>
(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 XXI, L.P.
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>
<S> <C>
McNEIL REAL ESTATE FUND XXI, L.P.
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
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/ Carol A. Fahs
- ------------------------------------- ---------------------------------------------
Date Carol A. Fahs
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> 2,210,006
<SECURITIES> 0
<RECEIVABLES> 199,540
<ALLOWANCES> (17,302)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 36,731,234
<DEPRECIATION> (14,879,046)
<TOTAL-ASSETS> 25,395,476
<CURRENT-LIABILITIES> 0
<BONDS> 22,796,606
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 25,395,476
<SALES> 5,057,887
<TOTAL-REVENUES> 6,764,226
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,606,983
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,010,491
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 146,752
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
Loan No. 55-9506015
MORTGAGE NOTE
$2,812,500.00 July 14, 1995
FOR VALUE RECEIVED, WOODCREEK FUND XXI, L.P., a Texas limited partnership
having its principal office at 13760 Noel Road, Suite 700, Dallas, Texas 75240
("Maker") promises to pay to the order of FLEET REAL ESTATE CAPITAL, INC., a
Rhode Island corporation, or its assigns ("Payee") having its principal office
at 4275 Executive Square, Suite 200, La Jolla, California 92037, the Principal
Amount (as defined below), together with interest from the date hereof at the
Interest Rate (as defined below). Interest accruing hereunder shall be
calculated on the basis of a 360-day year of twelve 30-day months.
WHEN USED HEREIN, the following capitalized terms shall have
the following meanings:
"Commencement Date" shall be September 1, 1995.
"Closing Date" shall be July 19, 1995.
"Default Rate" shall be the Interest Rate plus five percent
(5%) per annum.
"Interest Rate" shall be eight and forty-eight one hundredths
percent (8.48%) per annum.
"Lockout Period" shall be the period from July 19, 1995
through August 1, 1999.
"Maturity Date" shall be July 14, 2002.
"Monthly Amount" shall be the sum of Twenty-One Thousand
Five Hundred Eighty-Five and 84/100 Dollars ($21,585.84).
"Payment Date" shall be the first business day of each month
commencing on the first business day of the second full month
after the closing date and continuing to and including the
Maturity Date.
"Principal Amount" shall be Two Million Eight Hundred Twelve
Thousand Five Hundred and No/100 United States Dollars.
The Principal Amount and interest thereon shall be due and payable in
lawful money of the United States as follows:
<PAGE>
Loan No. 55-9506015
(a) On the date hereof, all accrued and unpaid interest on the unpaid
balance through the end of the month in which the Closing Date occurs shall be
due and payable. Thereafter, commencing on the Commencement Date, eighty-three
(83) equal monthly installments of principal and interest at the Monthly Amount
each shall be due and payable. Each installment of principal and interest shall
be applied first to interest and the remainder thereof to reduction of
principal. Each monthly installment shall be due on each Payment Date. In
addition, all amounts advanced by Payee pursuant to applicable provisions of the
Security Documents (as hereinafter defined), together with any interest at the
Default Rate or other charges as therein provided, shall be immediately due and
payable hereunder. In the event any such advance is not so repaid by Maker,
Payee may, at its option, first apply any payments received hereunder to repay
said advances together with any interest thereon or other charges as provided in
the Security Documents, and the balance, if any, shall be applied in payment of
any installment then due. The entire remaining unpaid balance of principal of
this Note, all interest accrued thereon and all other sums payable hereunder or
under the Security Documents shall be due and payable in full on the Maturity
Date.
(b) Amounts due on this Note shall be payable, without any counterclaim,
setoff or deduction whatsoever, at the office of Payee or its agent or designee
at the address set forth in Exhibit 1 or at such other place as Payee or its
agent or designee may from time to time designate in writing.
(c) This Note is secured by a Deed of Trust, Mortgage, Security Agreement
and Assignment of Rents and Leases of even date herewith (the "Mortgage") from
Maker to Payee and by an Assignment of Rents and Leases of even date herewith
(the "Assignment") from Maker to Payee. The Mortgage, the Assignment and any
other instrument given at any time to secure this Note are hereinafter
collectively called the "Security Documents."
(d) This Note may not be prepaid prior to the end of the Lockout Period,
except as set forth herein. Any prepayment of this Note, in whole or in part,
prior to the end of the Lockout Period, except as permitted herein, shall
constitute an "Event of Default" under the Mortgage. Maker has the right to
prepay the principal of this Note in full or in part on any Payment Date after
the end of the Lockout Period, upon sixty days' prior written notice and
payment, together with the portion of the principal to be prepaid, of a
prepayment premium in an amount calculated as specified in Appendix 1. The
calculation of the prepayment premium shall be made by Payee and shall, absent
manifest error, be conclusive. In the event this Note is prepaid from the
proceeds of insurance or condemnation awards in accordance with Sections 10, 11
and 12 of the Mortgage either prior to or after the end of the Lockout Period, a
prepayment premium shall be payable calculated as specified in Appendix 1.
Notwithstanding the foregoing, this Note may be prepaid without a prepayment
<PAGE>
Loan No. 55-9506015
premium during the one hundred eighty (180) day period prior to the Maturity
Date. Upon acceleration of this Note in accordance with its terms and the terms
of the Security Documents, Maker agrees to pay the prepayment premium described
above in the amount that would be due if a voluntary payment were made on the
date of such acceleration. A tender of payment of the amount necessary to pay
and satisfy the entire unpaid principal balance of this Note or any portion
thereof at any time after an Event of Default under the Mortgage or an
acceleration by Payee of the indebtedness evidenced hereby, whether such payment
is tendered voluntarily, during or after foreclosure of the Mortgage, or
pursuant to realization upon other security, shall constitute a purposeful
evasion of the prepayment terms of this Note, shall be deemed to be a voluntary
prepayment hereof, and Maker shall be required to pay the prepayment premium as
described above. Partial prepayments of principal shall not change the Payment
Dates or amounts of subsequent monthly installments, unless Payee shall
otherwise agree in writing. Notwithstanding the foregoing, nothing in this
paragraph (d) shall vary or negate the provisions of Section 18(c) of the
Mortgage.
(e) If Maker defaults in the payment of any installment of principal and
interest on the date on which it shall fall due or in the performance of any of
the agreements, conditions, covenants, provisions or stipulations contained in
this Note or in the Security Documents, and if such default shall continue
beyond any grace period provided for in the Mortgage so as to constitute an
Event of Default thereunder, then Payee, at its option and without further
notice to Maker, may declare immediately due and payable the entire unpaid
principal balance of this Note, together with interest thereon at an annual rate
after the date of such default equal to the Default Rate, together with all sums
due by Maker under the Security Documents, anything herein or in the Security
Documents to the contrary notwithstanding. The foregoing provision shall not be
construed as a waiver by Payee of its right to pursue any other remedies
available to it under the Mortgage, this Note or any other Security Document,
nor shall it be construed to limit in any way the application of the Default
Rate. Any payment hereunder may be enforced and recovered in whole or in part at
such time by one or more of the remedies provided to Payee in this Note or in
the Security Documents. In the event that: (i) this Note or any Security
Document is placed in the hands of an attorney for collection or enforcement or
is collected or enforced through any legal proceeding; (ii) an attorney is
retained to represent Payee in any bankruptcy, reorganization, receivership, or
other proceedings affecting creditors' rights and involving a claim under this
Note or any Security Document; (iii) an attorney is retained to protect or
enforce the lien of the Mortgage or any Security Document; or (iv) an attorney
is retained to represent Payee in any other proceedings whatsoever in connection
with this Note, the Mortgage, any of the Security Documents or any portion of
the Mortgaged Property (as defined in the Mortgage), then Maker shall pay to
<PAGE>
Loan No. 55-9506015
Payee all reasonable attorney's fees, costs and expenses incurred in connection
therewith, including costs of appeal, together with interest on any judgment
obtained by Payee at the Default Rate.
(f) If Maker defaults in the payment of any monthly installment on the
Payment Date, and such default is not cured within five days thereafter, then
Maker shall pay to Payee a late payment charge in an amount equal to six percent
(6%) of the amount of the installment not paid as aforesaid. An additional late
charge equal to six percent (6%) of the monthly payment due will be charged for
each successive month the payment remains outstanding. Said late charge
payments, if payable, shall be secured by the Mortgage and the other Security
Documents, shall be payable without notice or demand by Payee, and are
independent of and have no effect upon the rights of Payee under paragraph (e)
above.
(g) Maker and all endorsers, sureties and guarantors hereby jointly and
severally waive all applicable exemption rights, valuation and appraisement,
presentment for payment, demand, notice of demand, notice of nonpayment or
dishonor, protest and notice of protest of this Note, and all other notices in
connection with the delivery, acceptance, performance, default or enforcement of
the payment of this Note. Maker and all endorsers, sureties and guarantors
consent to any and all extensions of time, renewals, waivers or modifications
that may be granted by Payee with respect to the payment or other provisions of
this Note and to the release of the collateral or any part thereof, with or
without substitution, and agree that additional makers, endorsers, guarantors or
sureties may become parties hereto without notice to them or affecting their
liability hereunder.
(h) Payee shall not be deemed, by any act of omission or commission, to
have waived any of its rights or remedies hereunder unless such waiver is in
writing and signed by Payee, and then only to the extent specifically set forth
in writing. A waiver of one event shall not be construed as continuing or as a
bar to or waiver of any right or remedy to a subsequent event.
(i) This Note shall be governed by and construed in accordance with the
laws of the State in which the Mortgaged Property is located (the "State").
(j) The parties hereto intend and believe that each provision in this Note
comports with all applicable law. However, if any provision in this Note is
found by a court of law to be in violation of any applicable law, and if such
court should declare such provision of this Note to be unlawful, void or
unenforceable as written, then it is the intent of all parties hereto that such
provision shall be given full force and effect to the fullest possible extent
that is legal, valid and enforceable, that the remainder of this Note shall be
construed as if such unlawful, void or unenforceable provision were not
contained therein, and that the rights, obligations and interest of Maker and
<PAGE>
Loan No. 55-9506015
the holder hereof under the remainder of this Note shall continue in full force
and effect; provided, however, that if any provision of this Note which is found
to be in violation of any applicable law concerns the imposition of interest
hereunder, the rights, obligations and interests of Maker and Payee with respect
to the imposition of interest hereunder shall be governed and controlled by the
provisions of the following paragraph.
(k) It being the intention of Payee and Maker to comply with the laws of
the State with regard to the rate of interest charged hereunder, it is agreed
that, notwithstanding any provision to the contrary in this Note, the Mortgage,
or any of the other Security Documents, no such provision, including without
limitation any provision of this Note providing for the payment of interest or
other charges, shall require the payment or permit the collection of any amount
("Excess Interest") in excess of the maximum amount of interest permitted by law
to be charged for the use or detention, or the forbearance in the collection, of
all or any portion of the indebtedness evidenced by this Note. If any Excess
Interest is provided for, or is adjudicated to be provided for, in this Note,
the Mortgage, or any of the other Security Documents, then in such event:
(i) the provisions of this paragraph shall govern;
(ii) Maker shall not be obligated to pay any Excess Interest;
(iii)any Excess Interest that Payee may have received hereunder shall,
at the option of Payee, be (x) applied as a credit against the unpaid principal
balance then due under this Note, accrued and unpaid interest thereon not to
exceed the maximum amount permitted by law, or both, (y) refunded to the payor
thereof or (z) any combination of the foregoing;
(iv)the applicable interest rate or rates provided for herein shall be
automatically subject to reduction to the maximum lawful rate allowed to be
contracted for in writing under the applicable usury laws of the aforesaid
State, and this Note, the Mortgage and the other Security Documents shall be
deemed to have been, and shall be, reformed and modified to reflect such
reduction in such interest rate or rates; and
(v) Maker shall not have any action or remedy against Payee for any
damages whatsoever or any defense to enforcement of this Note, Mortgage or any
other Security Document arising out of the payment or collection of any
Excess Interest.
(l)Upon any endorsement, assignment, or other transfer of this Note by
Payee or by operation of law, the term "Payee," as used herein, shall mean such
endorsee, assignee, or other transferee or successor to Payee then becoming the
holder of this Note. This Note shall inure to the benefit of Payee and its
<PAGE>
Loan No. 55-9506015
successors and assigns and shall be binding upon the undersigned and its
successors and assigns. The term "Maker" as used herein shall include the
respective successors and assigns, legal and personal representatives,
executors, administrators, devisees, legatees and heirs of Maker.
(m) Any notice, demand or other communication which any party may
desire or may be required to give to any other party shall be in writing and
shall be given as provided in the Mortgage.
(n) To the extent that Maker makes a payment or Payee receives any
payment or proceeds for Maker's benefit, which are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, debtor in possession, receiver, custodian or any other party
under any bankruptcy law, common law or equitable cause, then, to such extent,
the obligations of Maker hereunder intended to be satisfied shall be revived
and continue as if such payment or proceeds had not been received by Payee.
(o) Maker shall execute and acknowledge (or cause to be executed
and acknowledged) and deliver to Payee all documents, and take all actions,
reasonably required by Payee from time to time to confirm the rights created or
now or hereafter intended to be created under this Note and the Security
Documents, to protect and further the validity, priority and enforceability of
this Note and the Security Documents, to subject to the Security Documents any
property of Maker intended by the terms of any one or more of the Security
Documents to be encumbered by the Security Documents, or otherwise carry out the
purposes of the Security Documents and the transactions contemplated thereunder;
provided, however, that no such further actions, assurances and confirmations
shall increase Maker's obligations under this Note.
(p) No modification, amendment, extension, discharge, termination or
waiver (a "Modification") of any provision of this Note, or any one or more of
the other Security Documents, nor consent to any departure by Maker therefrom,
shall in any event be effective unless the same shall be in a writing signed by
the party against whom enforcement is sought, and then such waiver or consent
shall be effective only in the specific instance, and for the purpose, for
which given. Except as otherwise expressly provided herein, no notice to, or
demand on, Maker shall entitle Maker to any other or future notice or demand
in the same, similar or other circumstances. Payee does not hereby agree to,
nor does Payee hereby commit itself to, enter into any Modification.
(q) Maker hereby expressly and unconditionally waives, in connection
with any suit, action or proceeding brought by Payee on this Note, any and
every right it may have to (a) a trial by jury, (b) interpose any counterclaim
therein (other than a counterclaim which can only be asserted in the suit,
action or proceeding brought by Payee on this Note and cannot be maintained in
a separate action) and (c) have the same consolidated with any other or separate
suit, action or proceeding.
<PAGE>
Loan No. 55-9506015
(r) Notwithstanding any provision to the contrary in the Mortgage or
this Note, Payee shall not have any recourse to any asset of Maker or its
partners other than the Mortgaged Property in order to satisfy the
indebtedness for payment of the principal and interest evidenced by this Note,
and Payee's sole recourse for satisfaction of the payment of principal and
interest evidenced by this Note shall be to exercise its rights against
the Mortgaged Property encumbered by the Mortgage and the other collateral
securing this Note. The foregoing sentence shall not be deemed or construed
to be a release of the indebtedness evidenced by this Note or in any way
impair, limit or otherwise affect the lien of the Mortgage or any such other
instrument securing repayment of this Note or prevent Payee from naming Maker,
its partners, or their successors or assigns as a defendant to any action to
enforce any remedy for default so long as there is no personal or deficiency
money judgment sought or entered against Maker, its partners, or their
successors or assigns for payment of principal and interest evidenced by this
Note. Notwithstanding the foregoing provisions of this paragraph, it is
expressly understood and agreed that the aforesaid limitation of liability
shall no way affect or apply to Maker's or its partners' continued personal
liability for the payment to Payee of:
(i) any loss or damage occurring by reason of all or any part
of the Mortgaged Property being encumbered by a voluntary lien (other than
the Mortgage) granted by Maker;
(ii) any Rents (as defined in the Mortgage), issues, profits
and/or income collected by Maker in excess of normal and verifiable operating
expenses from the Mortgaged Property after default by Maker hereunder, under the
Mortgage or under any other instrument securing or referring to this Note;
(iii) unrefunded security deposits made by tenants of the
Mortgaged Property;
(iv) payment of Taxes, as defined in Section 5 of the Mortgage,
and insurance premiums, payment of which is required to be made by Maker under
the Mortgage;
(v) Rents, security deposits with respect to leases of the
Mortgaged Property, insurance proceeds, condemnation awards and any other
payments or consideration which Maker receives and to which Payee is entitled
pursuant to the terms of the Mortgage or of any other Security Document;
<PAGE>
Loan No. 55-9506015
(vi) damage to the Mortgaged Property from waste committed or
permitted by Maker;
(vii) loss or damage occurring by reason of the failure of Maker
to comply with any of the provisions of Section 35 of the Mortgage;
(viii) any loss or claim incurred by or asserted against Payee as
a result of fraud or misrepresentation by Maker or any of the partners thereof
with respect to any certification, representation or warranty made by Maker or
such other persons to Payee herein or in any of the Security Documents;
(ix) all indebtedness and obligations arising under or pursuant
to that certain Environmental Indemnity dated of even date herewith executed by
Maker, the general partner of Maker and McNeil Real Estate Fund XXI, L.P. for
the benefit of Payee; and
(x) reasonable attorney's fees incurred by Payee in connection
with suit filed on account of any of the foregoing clauses (i) through (ix).
IN WITNESS WHEREOF, Maker has caused this Note to be executed and delivered
as of the day and year first above written.
WOODCREEK FUND XXI, L.P., a Texas limited partnership
By: Woodcreek Fund XXI Corp., a Delaware corporation, General Partner
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
<PAGE>
Loan No. 55-9506015
APPENDIX 1
Calculation of Prepayment Premium
The prepayment premium shall be equal to the greater of (A) one percent
(1%) of the portion of the principal amount of this Note being repaid or (B) the
product of (i) a fraction whose numerator is an amount equal to the portion of
the principal balance of this Note being prepaid and whose denominator is the
entire outstanding principal balance of this Note on the date of such prepayment
(after subtracting the amount of any scheduled principal payment due on such
Payment Date), multiplied by (ii) an amount equal to the remainder obtained by
subtracting (x) an amount equal to the entire outstanding principal balance of
this Note as of the date of such prepayment (after subtracting the amount of any
scheduled principal payment due on such Payment Date) from (y) the present value
as of the date of such prepayment of the remaining scheduled payments of
principal and interest on this Note (including any final installment of
principal payable on the Maturity Date) determined by discounting such payments
at the Discount Rate (as hereinafter defined).
For purposes of this Note:
(x) "Discount Rate" shall mean the rate which, when compounded monthly, is
equivalent to the Treasury Rate (defined below); and
(y) "Treasury Rate" shall mean the yield calculated by the linear
interpolation of the yield, as reported in Federal Reserve Statistical
Release H.15-Selected Interest Rates under the heading "U.S.
government securities/Treasury constant maturities" for the week
ending prior to the date of the relevant prepayment of this Note, of
U.S. Treasury constant maturities with a maturity date (one longer
and one shorter) most nearly approximating the Maturity Date of this
Note. In the event Release H.15 is no longer published, the Payee
shall select a comparable publication to determine the Treasury Rate.
<PAGE>
Loan No. 55-9506015
EXHIBIT 1
Amounts due on this note shall be payable to Fleet Real Estate Capital,
Inc. at the following address:
Fleet Real Estate Capital, Inc.
4275 Executive Square
Suite 200
La Jolla, CA 92037
Loan No.: 55-9506015
Loan No. 55-9506016
MORTGAGE NOTE
$3,300,000.00 July 14, 1995
FOR VALUE RECEIVED, BEDFORD GREEN FUND XXI, L.P., a Texas
limited partnership having its principal office at 13760 Noel Road, Suite 700,
Dallas, Texas 75240 ("Maker") promises to pay to the order of FLEET REAL ESTATE
-----
CAPITAL, INC., a Rhode Island corporation, or its assigns ("Payee") having its
-----
principal office at 4275 Executive Square, Suite 200, La Jolla, California
92037, the Principal Amount (as defined below), together with interest from the
date hereof at the Interest Rate (as defined below). Interest accruing hereunder
shall be calculated on the basis of a 360-day year of twelve 30-day months.
WHEN USED HEREIN, the following capitalized terms shall have
the following meanings:
"Commencement Date" shall be September 1, 1995.
-----------------
"Closing Date" shall be July 19, 1995.
------------
"Default Rate" shall be the Interest Rate plus five percent
-------------
(5%) per annum.
"Interest Rate" shall be eight and forty-eight one hundredths
-------------
percent (8.48%) per annum.
"Lockout Period" shall be the period from July 19, 1995
---------------
through August 1, 1999.
"Maturity Date" shall be July 14, 2002.
-------------
"Monthly Amount" shall be the sum of Twenty-Five Thousand
---------------
Three Hundred Twenty-Seven and 38/100 Dollars ($25,327.38).
"Payment Date" shall be the first business day of each month
-------------
commencing on the first business day of the second full month after the closing
date and continuing to and including the Maturity Date.
"Principal Amount" shall be Three Million Three Hundred
-----------------
Thousand and No/100 United States Dollars.
The Principal Amount and interest thereon shall be due and
payable in lawful money of the United States as follows:
<PAGE>
Loan No. 55-9506016
(a) On the date hereof, all accrued and unpaid
interest on the unpaid balance through the end of the month in
which the Closing Date occurs shall be due and payable.
Thereafter, commencing on the Commencement Date, eighty-three
(83) equal monthly installments of principal and interest at
the Monthly Amount each shall be due and payable. Each
installment of principal and interest shall be applied first
to interest and the remainder thereof to reduction of
principal. Each monthly installment shall be due on each
Payment Date. In addition, all amounts advanced by Payee
pursuant to applicable provisions of the Security Documents
(as hereinafter defined), together with any interest at the
Default Rate or other charges as therein provided, shall be
immediately due and payable hereunder. In the event any such
advance is not so repaid by Maker, Payee may, at its option,
first apply any payments received hereunder to repay said
advances together with any interest thereon or other charges
as provided in the Security Documents, and the balance, if
any, shall be applied in payment of any installment then due.
The entire remaining unpaid balance of principal of this Note,
all interest accrued thereon and all other sums payable
hereunder or under the Security Documents shall be due and
payable in full on the Maturity Date.
(b) Amounts due on this Note shall be payable,
without any counterclaim, setoff or deduction whatsoever, at
the office of Payee or its agent or designee at the address
set forth in Exhibit 1 or at such other place as Payee or its
agent or designee may from time to time designate in writing.
(c) This Note is secured by an Open-End Mortgage,
Deed of Trust, Security Agreement and Assignment of Rents and
Leases of even date herewith (the "Mortgage") from Maker to
--------
Payee and by an Assignment of Rents and Leases of even date
herewith (the "Assignment") from Maker to Payee. The Mortgage,
----------
the Assignment and any other instrument given at any time to
secure this Note are hereinafter collectively called the
"Security Documents."
-------- ---------
(d) This Note may not be prepaid prior to the end of
the Lockout Period, except as set forth herein. Any prepayment
of this Note, in whole or in part, prior to the end of the
Lockout Period, except as permitted herein, shall constitute
an "Event of Default" under the Mortgage. Maker has the right
to prepay the principal of this Note in full or in part on any
Payment Date after the end of the Lockout Period, upon sixty
days' prior written notice and payment, together with the
portion of the principal to be prepaid, of a prepayment
premium in an amount calculated as specified in Appendix 1.
The calculation of the prepayment premium shall be made by
Payee and shall, absent manifest error, be conclusive. In the
event this Note is prepaid from the proceeds of insurance or
condemnation awards in accordance with Sections 10, 11 and 12
of the Mortgage either prior to or after the end of the
Lockout Period, a prepayment premium shall be payable
calculated as specified in Appendix 1. Notwithstanding the
foregoing, this Note may be prepaid without a prepayment
premium during the one hundred eighty (180) day period prior
<PAGE>
Loan No. 55-9506016
to the Maturity Date. Upon acceleration of this Note in
accordance with its terms and the terms of the Security
Documents, Maker agrees to pay the prepayment premium
described above in the amount that would be due if a voluntary
payment were made on the date of such acceleration. A tender
of payment of the amount necessary to pay and satisfy the
entire unpaid principal balance of this Note or any portion
thereof at any time after an Event of Default under the
Mortgage or an acceleration by Payee of the indebtedness
evidenced hereby, whether such payment is tendered
voluntarily, during or after foreclosure of the Mortgage, or
pursuant to realization upon other security, shall constitute
a purposeful evasion of the prepayment terms of this Note,
shall be deemed to be a voluntary prepayment hereof, and Maker
shall be required to pay the prepayment premium as described
above. Partial prepayments of principal shall not change the
Payment Dates or amounts of subsequent monthly installments,
unless Payee shall otherwise agree in writing. Notwithstanding
the foregoing, nothing in this paragraph (d) shall vary or
negate the provisions of Section 18(c) of the Mortgage.
(e) If Maker defaults in the payment of any
installment of principal and interest on the date on which it
shall fall due or in the performance of any of the agreements,
conditions, covenants, provisions or stipulations contained in
this Note or in the Security Documents, and if such default
shall continue beyond any grace period provided for in the
Mortgage so as to constitute an Event of Default thereunder,
then Payee, at its option and without further notice to Maker,
may declare immediately due and payable the entire unpaid
principal balance of this Note, together with interest thereon
at an annual rate after the date of such default equal to the
Default Rate, together with all sums due by Maker under the
Security Documents, anything herein or in the Security
Documents to the contrary notwithstanding. The foregoing
provision shall not be construed as a waiver by Payee of its
right to pursue any other remedies available to it under the
Mortgage, this Note or any other Security Document, nor shall
it be construed to limit in any way the application of the
Default Rate. Any payment hereunder may be enforced and
recovered in whole or in part at such time by one or more of
the remedies provided to Payee in this Note or in the Security
Documents. In the event that: (i) this Note or any Security
Document is placed in the hands of an attorney for collection
or enforcement or is collected or enforced through any legal
proceeding; (ii) an attorney is retained to represent Payee in
any bankruptcy, reorganization, receivership, or other
proceedings affecting creditors' rights and involving a claim
under this Note or any Security Document; (iii) an attorney is
retained to protect or enforce the lien of the Mortgage or any
Security Document; or (iv) an attorney is retained to
represent Payee in any other proceedings whatsoever in
connection with this Note, the Mortgage, any of the Security
Documents or any portion of the Mortgaged Property (as defined
in the Mortgage), then Maker shall pay to Payee all reasonable
attorney's fees, costs and expenses incurred in connection
<PAGE>
Loan No. 55-9506016
therewith, including costs of appeal, together with interest
on any judgment obtained by Payee at the Default Rate.
(f) If Maker defaults in the payment of any monthly
installment on the Payment Date, and such default is not cured
within five days thereafter, then Maker shall pay to Payee a
late payment charge in an amount equal to six percent (6%) of
the amount of the installment not paid as aforesaid. An
additional late charge equal to six percent (6%) of the
monthly payment due will be charged for each successive month
the payment remains outstanding. Said late charge payments, if
payable, shall be secured by the Mortgage and the other
Security Documents, shall be payable without notice or demand
by Payee, and are independent of and have no effect upon the
rights of Payee under paragraph (e) above.
(g) Maker and all endorsers, sureties and guarantors
hereby jointly and severally waive all applicable exemption
rights, valuation and appraisement, presentment for payment,
demand, notice of demand, notice of nonpayment or dishonor,
protest and notice of protest of this Note, and all other
notices in connection with the delivery, acceptance,
performance, default or enforcement of the payment of this
Note. Maker and all endorsers, sureties and guarantors consent
to any and all extensions of time, renewals, waivers or
modifications that may be granted by Payee with respect to the
payment or other provisions of this Note and to the release of
the collateral or any part thereof, with or without
substitution, and agree that additional makers, endorsers,
guarantors or sureties may become parties hereto without
notice to them or affecting their liability hereunder.
(h) Payee shall not be deemed, by any act of omission
or commission, to have waived any of its rights or remedies
hereunder unless such waiver is in writing and signed by
Payee, and then only to the extent specifically set forth in
writing. A waiver of one event shall not be construed as
continuing or as a bar to or waiver of any right or remedy to
a subsequent event.
(i) This Note shall be governed by and construed in
accordance with the laws of the State in which the Mortgaged
Property is located (the "State").
-----
(j) The parties hereto intend and believe that each
provision in this Note comports with all applicable law.
However, if any provision in this Note is found by a court of
law to be in violation of any applicable law, and if such
court should declare such provision of this Note to be
unlawful, void or unenforceable as written, then it is the
intent of all parties hereto that such provision shall be
given full force and effect to the fullest possible extent
that is legal, valid and enforceable, that the remainder of
this Note shall be construed as if such unlawful, void or
unenforceable provision were not contained therein, and that
the rights, obligations and interest of Maker and the holder
<PAGE>
Loan No. 55-9506016
hereof under the remainder of this Note shall continue in full
force and effect; provided, however, that if any provision of
-------- -------
this Note which is found to be in violation of any applicable
law concerns the imposition of interest hereunder, the rights,
obligations and interests of Maker and Payee with respect to
the imposition of interest hereunder shall be governed and
controlled by the provisions of the following paragraph.
(k) It being the intention of Payee and Maker to
comply with the laws of the State with regard to the rate of
interest charged hereunder, it is agreed that, notwithstanding
any provision to the contrary in this Note, the Mortgage, or
any of the other Security Documents, no such provision,
including without limitation any provision of this Note
providing for the payment of interest or other charges, shall
require the payment or permit the collection of any amount
("Excess Interest") in excess of the maximum amount of
------ --------
interest permitted by law to be charged for the use or
detention, or the forbearance in the collection, of all or any
portion of the indebtedness evidenced by this Note. If any
Excess Interest is provided for, or is adjudicated to be
provided for, in this Note, the Mortgage, or any of the other
Security Documents, then in such event:
(i) the provisions of this paragraph shall
govern;
(ii) Maker shall not be obligated to pay
any Excess Interest;
(iii) any Excess Interest that Payee may
have received hereunder shall, at the option of
Payee, be (x) applied as a credit against the unpaid
principal balance then due under this Note, accrued
and unpaid interest thereon not to exceed the maximum
amount permitted by law, or both, (y) refunded to the
payor thereof or (z) any combination of the
foregoing;
(iv) the applicable interest rate or rates
provided for herein shall be automatically subject to
reduction to the maximum lawful rate allowed to be
contracted for in writing under the applicable usury
laws of the aforesaid State, and this Note, the
Mortgage and the other Security Documents shall be
deemed to have been, and shall be, reformed and
modified to reflect such reduction in such interest
rate or rates; and
(v) Maker shall not have any action or
remedy against Payee for any damages whatsoever or
any defense to enforcement of this Note, Mortgage or
any other Security Document arising out of the
payment or collection of any Excess Interest.
(l) Upon any endorsement, assignment, or other
transfer of this Note by Payee or by operation of law, the
term "Payee," as used herein, shall mean such endorsee,
assignee, or other transferee or successor to Payee then
becoming the holder of this Note. This Note shall inure to the
<PAGE>
Loan No. 55-9506016
benefit of Payee and its successors and assigns and shall be
binding upon the undersigned and its successors and assigns.
The term "Maker" as used herein shall include the respective
successors and assigns, legal and personal representatives,
executors, administrators, devisees, legatees and heirs of
Maker.
(m) Any notice, demand or other communication which
any party may desire or may be required to give to any other
party shall be in writing and shall be given as provided in
the Mortgage.
(n) To the extent that Maker makes a payment or Payee
receives any payment or proceeds for Maker's benefit, which
are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee,
debtor in possession, receiver, custodian or any other party
under any bankruptcy law, common law or equitable cause, then,
to such extent, the obligations of Maker hereunder intended to
be satisfied shall be revived and continue as if such payment
or proceeds had not been received by Payee.
(o) Maker shall execute and acknowledge (or cause to
be executed and acknowledged) and deliver to Payee all
documents, and take all actions, reasonably required by Payee
from time to time to confirm the rights created or now or
hereafter intended to be created under this Note and the
Security Documents, to protect and further the validity,
priority and enforceability of this Note and the Security
Documents, to subject to the Security Documents any property
of Maker intended by the terms of any one or more of the
Security Documents to be encumbered by the Security Documents,
or otherwise carry out the purposes of the Security Documents
and the transactions contemplated thereunder; provided,
however, that no such further actions, assurances and
confirmations shall increase Maker's obligations under this
Note.
(p) No modification, amendment, extension, discharge,
termination or waiver (a "Modification") of any provision of
------------
this Note, or any one or more of the other Security Documents,
nor consent to any departure by Maker therefrom, shall in any
event be effective unless the same shall be in a writing
signed by the party against whom enforcement is sought, and
then such waiver or consent shall be effective only in the
specific instance, and for the purpose, for which given.
Except as otherwise expressly provided herein, no notice to,
or demand on, Maker shall entitle Maker to any other or future
notice or demand in the same, similar or other circumstances.
Payee does not hereby agree to, nor does Payee hereby commit
itself to, enter into any Modification.
(q) Maker hereby expressly and unconditionally
waives, in connection with any suit, action or proceeding
brought by Payee on this Note, any and every right it may have
to (a) a trial by jury, (b) interpose any counterclaim therein
(other than a counterclaim which can only be asserted in the
suit, action or proceeding brought by Payee on this Note and
<PAGE>
Loan No. 55-9506016
cannot be maintained in a separate action) and (c) have the
same consolidated with any other or separate suit, action or
proceeding.
(r) Notwithstanding any provision to the contrary in
the Mortgage or this Note, Payee shall not have any recourse
to any asset of Maker or its partners other than the Mortgaged
Property in order to satisfy the indebtedness for payment of
the principal and interest evidenced by this Note, and Payee's
sole recourse for satisfaction of the payment of principal and
interest evidenced by this Note shall be to exercise its
rights against the Mortgaged Property encumbered by the
Mortgage and the other collateral securing this Note. The
foregoing sentence shall not be deemed or construed to be a
release of the indebtedness evidenced by this Note or in any
way impair, limit or otherwise affect the lien of the Mortgage
or any such other instrument securing repayment of this Note
or prevent Payee from naming Maker, its partners, or their
successors or assigns as a defendant to any action to enforce
any remedy for default or prevent Payee from exercising any
assignments of rents and leases or obtaining the appointment
of a receiver so long as there is no personal or deficiency
money judgment sought or entered against Maker, its partners,
or their successors or assigns for payment of principal and
interest evidenced by this Note. Notwithstanding the foregoing
provisions of this paragraph, it is expressly understood and
agreed that the aforesaid limitation of liability shall no way
affect or apply to Maker's or its partners' continued personal
liability for the payment to Payee of:
(i) any loss or damage occurring by reason of all or
any part of the Mortgaged Property being encumbered
by a voluntary lien (other than the Mortgage) granted
by Maker;
(ii) any Rents (as defined in the Mortgage), issues,
profits and/or income collected by Maker in excess of
normal and verifiable operating expenses from the
Mortgaged Property after default by Maker hereunder,
under the Mortgage or under any other instrument
securing or referring to this Note;
(iii) unrefunded security deposits made by tenants
of the Mortgaged Property;
(iv) payment of Taxes, as defined in Section 5 of the
Mortgage, and insurance premiums, payment of which is
required to be made by Maker under the Mortgage;
(v) Rents, security deposits with respect to leases
of the Mortgaged Property, insurance proceeds,
condemnation awards and any other payments or
consideration which Maker receives and to which Payee
<PAGE>
Loan No. 55-9506016
is entitled pursuant to the terms of the Mortgage or
of any other Security Document;
(vi) damage to the Mortgaged Property from waste
committed or permitted by Maker;
(vii) loss or damage occurring by reason of the
failure of Maker to comply with any
of the provisions of Section 35 of the Mortgage;
(viii) any loss or claim incurred by or asserted
against Payee as a result of fraud or
misrepresentation by Maker or any of the partners
thereof with respect to any certification,
representation or warranty made by Maker or such
other persons to Payee herein or in any of the
Security Documents;
(ix) all indebtedness and obligations arising under
or pursuant to that certain Environmental Indemnity
dated of even date herewith executed by Maker, the
general partner of Maker and McNeil Real Estate Fund
XXI, L.P. for the benefit of Payee; and
(x) reasonable attorney's fees incurred by Payee in
connection with suit filed on account of any of the
foregoing clauses (i) through (ix).
IN WITNESS WHEREOF, Maker has caused this Note to be executed
and delivered as of the day and year first above written.
BEDFORD GREEN FUND XXI, L.P., a Texas limited partnership
By: Bedford Green Fund XXI Corp., a Delaware
corporation, General Partner
By:
--------------------------------------------
Name:
--------------------------------------------
Title:
--------------------------------------------
<PAGE>
Loan No. 55-9506016
APPENDIX 1
----------
Calculation of Prepayment Premium
---------------------------------
The prepayment premium shall be equal to the greater of (A)
one percent (1%) of the portion of the principal amount of this Note being
repaid or (B) the product of (i) a fraction whose numerator is an amount equal
to the portion of the principal balance of this Note being prepaid and whose
denominator is the entire outstanding principal balance of this Note on the date
of such prepayment (after subtracting the amount of any scheduled principal
payment due on such Payment Date), multiplied by (ii) an amount equal to the
remainder obtained by subtracting (x) an amount equal to the entire outstanding
principal balance of this Note as of the date of such prepayment (after
subtracting the amount of any scheduled principal payment due on such Payment
Date) from (y) the present value as of the date of such prepayment of the
remaining scheduled payments of principal and interest on this Note (including
any final installment of principal payable on the Maturity Date) determined by
discounting such payments at the Discount Rate (as hereinafter defined).
For purposes of this Note:
(x) "Discount Rate" shall mean the rate which, when compounded
--------------
monthly, is equivalent to the Treasury Rate (defined below);
and
(y) "Treasury Rate" shall mean the yield calculated by the linear
-------------
interpolation of the yield, as reported in Federal Reserve
Statistical Release H.15-Selected Interest Rates under the
heading "U.S. government securities/Treasury constant
maturities" for the week ending prior to the date of the
relevant prepayment of this Note, of U.S. Treasury constant
maturities with a maturity date (one longer and one shorter)
most nearly approximating the Maturity Date of this Note. In
the event Release H.15 is no longer published, the Payee shall
select a comparable publication to determine the Treasury
Rate.
<PAGE>
Loan No. 55-9506016
EXHIBIT 1
---------
Amounts due on this note shall be payable to Fleet Real Estate
Capital, Inc. at the following address:
Fleet Real Estate Capital, Inc.
4275 Executive Square
Suite 200
La Jolla, CA 92037
Loan No.: 55-9506016
