UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K405
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1995
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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.
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(Exact name of registrant as specified in its charter)
California 33-0030615
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13760 Noel Road, Suite 700, LB70, Dallas, Texas, 75240
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (214) 448-5800
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Securities registered pursuant to Section 12(b) of the Act: None
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Securities registered pursuant to Section 12(g) of the Act: Current Income
Limited Partnership
Units
Growth/Shelter
Limited Partnership
Units
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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
All of the Registrant's 47,308 outstanding limited partnership units are held by
non-affiliates. The aggregate market value of units held by non-affiliates is
not determinable since there is no public trading market for limited partnership
units and transfers of units are subject to certain restrictions.
Documents Incorporated by Reference: See Item 14, Page 41
TOTAL OF 43 PAGES
<PAGE>
PART I
ITEM 1. BUSINESS
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ORGANIZATION
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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
General Partner was elected at a meeting of limited partners on March 26, 1992,
at which time an amended and restated partnership agreement (the "Amended
Partnership Agreement") was adopted. Prior to March 26, 1992, the general
partner of the Partnership was Southmark Partners, Ltd. (the "Original General
Partner"), a Texas limited partnership of which the general partner is Southmark
Investment Group, Inc., a wholly-owned subsidiary of Southmark Corporation
("Southmark"). The principal place of business for the Partnership and the
General Partner is 13760 Noel Road, Suite 700, LB70, Dallas, Texas, 75240.
On February 3, 1984, the Partnership registered with the Securities and Exchange
Commission ("SEC") under the Securities Act of 1933 (File No. 2-88171) and
commenced a public offering for sale of $50,000,000 of limited partnership
units. There were two classes of limited partnership units offered, designated
as Current Income Units and Growth/Shelter Units, (referred to collectively as
"Units"). The Units represent equity interests in the Partnership and entitle
the holders thereof to participate in certain allocations and distributions of
the Partnership. The sale of Units closed on February 2, 1985 with 47,382 Units
(24,982 Current Income Units and 22,400 Growth/Shelter Units) sold at $1,000
each, or gross proceeds of $47,382,000 to the Partnership. The Partnership
subsequently filed a Form 8-A Registration Statement with the SEC and registered
its Units under the Securities Exchange Act of 1934 (File No. 0-13356). During
1995, 11 Current Income Units and 7 Growth/Shelter Units were relinquished and
in 1994, 22 Current Income Units and 34 Growth/Shelter Units were relinquished
leaving 47,308 Units (24,949 Current Income Units and 22,359 Growth/Shelter
Units) outstanding at December 31, 1995.
SOUTHMARK BANKRUPTCY AND CHANGE IN GENERAL PARTNER
- --------------------------------------------------
On July 14, 1989, Southmark filed a voluntary petition for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. Neither the Partnership, the General
Partner nor the Original General Partner were included in the filing.
Southmark's reorganization plan became effective August 10, 1990. Under the
plan, most of Southmark's assets, which included Southmark's interests in the
Original General Partner, are being sold or liquidated for the benefit of
creditors.
In accordance with Southmark's reorganization plan, Southmark, McNeil and
various of their affiliates entered into an asset purchase agreement on October
12, 1990, providing for, among other things, the transfer of control to McNeil
or his affiliates of 34 limited partnerships (including the Partnership) in the
Southmark portfolio (the "Selected Partnerships").
On February 14, 1991, pursuant to the asset purchase agreement as amended on
that date, McNeil Real Estate Management, Inc. ("McREMI"), an affiliate of
McNeil, acquired the assets relating to the property management and partnership
administrative business of Southmark and its affiliates and commenced management
of the Partnership's properties pursuant to an assignment of the existing
property management agreements from the Southmark affiliates.
On March 26, 1992, the limited partners approved a restructuring proposal that
provided for (i) the replacement of the Original General Partner with a new
general partner, the General Partner; (ii) the adoption of the Amended
Partnership Agreement which substantially alters the provisions of the original
partnership agreement relating to, among other things, compensation,
reimbursement of expenses and voting rights; (iii) the approval of an amended
property management agreement with McREMI, the Partnership's property manager;
and (iv) the approval to change the Partnership's name to McNeil Real Estate
Fund XXI, L.P. Under the Amended Partnership Agreement, the Partnership began
accruing an asset management fee, retroactive to February 14, 1991, which is
payable to the General Partner. For a discussion of the methodology for
calculating the asset management fee, see Item 13 Certain Relationships and
Related Transactions. The proposals approved at the March 26, 1992 meeting were
implemented as of that date.
Concurrent with the approval of the restructuring, the General Partner acquired
from Southmark and its affiliates, for aggregate consideration of $389,023 (i)
the right to receive payment on the advances owing from the Partnership to
Southmark and its affiliates in the amount of $1,131,143, and (ii) the general
partner interest of the Original General Partner. None of the Units are owned by
the General Partner or its affiliates.
CURRENT OPERATIONS
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General:
The Partnership is engaged in diversified real estate activities, including the
ownership, operation and management of residential, commercial office, and
retail real estate. As described in Item 2 - Properties, at December 31, 1995,
the Partnership owned seven revenue-producing properties.
The Partnership does not directly employ any personnel. The General Partner
conducts the business of the Partnership directly and through its affiliates.
The Partnership reimburses affiliates of the General Partner for such services
rendered in accordance with the Amended Partnership Agreement. See Item 8 - Note
2 "Transactions With Affiliates."
The business of the Partnership to date has involved only one industry segment.
See Item 8 - Financial Statements and Supplementary Data. The Partnership has no
foreign operations. The business of the Partnership is not seasonal.
Business Plan:
The Partnership's anticipated plan of operations for 1996 is to preserve or
increase the net operating income of its properties whenever possible, while at
the same time making whatever capital expenditures are reasonable under the
circumstances in order to preserve and enhance the value of the Partnership's
properties. The General Partner is evaluating market and other economic
conditions to determine the optimum time to commence an orderly liquidation of
the Partnership's properties in accordance with the terms of the Amended
Partnership Agreement. In conjunction therewith, the General Partner will
continue to explore potential avenues to enhance the value of the Units in the
Partnership, which may include, among other things, asset sales or refinancings
of the Partnership's properties which may result in distributions to the limited
partners. See Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Competitive Conditions:
Since the principal business of the Partnership is to own and operate real
estate, the Partnership is subject to all of the risks incident to ownership of
real estate and interests therein, many of which relate to the illiquidity of
this type of investment. These risks include changes in general or local
economic conditions, changes in supply or demand for competing properties in an
area, changes in interest rates and availability of permanent mortgage funds
which may render the sale or refinancing of a property difficult or
unattractive, changes in real estate and zoning laws, increases in real property
tax rates and Federal or local economic or rent controls. The illiquidity of
real estate investments generally impairs the ability of the Partnership to
respond promptly to changed circumstances. The Partnership competes with
numerous established companies, private investors (including foreign investors),
real estate investment trusts, limited partnerships and other entities (many of
which have greater resources than the Partnership) in connection with the sale,
financing and leasing of properties. The impact of these risks on the
Partnership, including losses from operations and foreclosures of the
Partnership's properties, is described in Item 7 - Management's Discussion and
Analysis of Financial Condition and Results of Operations. For a detailed
discussion of the competitive conditions for the Partnership's properties see
Item 2 - Properties.
Other Information:
The environmental laws of the Federal government and of certain state and local
governments impose liability on current property owners for the clean-up of
hazardous and toxic substances discharged on the property. This liability may be
imposed without regard to the timing, cause or person responsible for the
release of such substances onto the property. The Partnership could be subject
to such liability in the event that it owns properties having such environmental
problems. The Partnership has no knowledge of any pending claims or proceedings
regarding such environmental problems.
<PAGE>
ITEM 2. PROPERTIES
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The following table sets forth the investment portfolio of the Partnership at
December 31, 1995. All of the buildings and the land on which they are located
are owned by the Partnership in fee and are subject to a first lien deed of
trust. Certain of the properties are also subject to one or more junior
mortgages as described more fully in Item 8 - Note 5 - "Mortgage Notes Payable"
and Note 6 - "Mortgage Notes Payable - Affiliates." See also Item 8 - Note 4 -
"Real Estate Investments" and Schedule III - "Real Estate Investments and
Accumulated Depreciation and Amortization." In the opinion of management, the
properties are adequately covered by insurance.
<TABLE>
Net Basis of 1995 Date
Property Description Property Debt Property Tax Acquired
- -------- ----------- ---------- --------- ------ --------
<S> <C> <C> <C> <C> <C>
Bedford Green (1) Apartments
Bedford, OH 156 units $ 2,186,869 $ 3,291,885 $ 90,021 6/84
Breckenridge (2) Apartments
Davenport, IA 120 units 1,602,079 1,719,731 73,972 10/84
Evergreen
Square (3) Apartments
Tupelo, MS 257 units 2,801,056 1,975,871 74,926 11/84
Fort Meigs Plaza Retail Center
Perrysburg, OH 104,990 sq. ft. 2,850,193 3,758,501 69,682 10/84
Governour's
Square (4) Apartments
Wilmington, NC 219 units 3,958,424 3,099,038 65,200 11/84
Wise County Plaza Retail Center
Wise, VA 147,848 sq. ft. 5,497,775 6,091,918 47,355 2/84
Woodcreek (5) Apartments
Ft. Wayne, IN 204 units 2,774,795 2,805,584 84,983 11/84
---------- ---------- -------
$21,671,191 $22,742,528 $506,139
========== ========== =======
</TABLE>
Total: Apartments - 956 Units
Retail Centers - 252,838 sq. ft.
(1) Bedford Green Apartments is owned by Bedford Green Fund XXI Limited
Partnership, which is wholly-owned by the Partnership.
(2) Breckenridge Apartments is owned by Breckenridge Fund XXI Limited
Partnership, which is wholly-owned by the Partnership.
(3) Evergreen Apartments is owned by Evergreen Fund XXI Limited Partnership,
which is wholly-owned by the Partnership.
(4) Governour's Square Apartments is owned by Governour's Square Fund XXI
Limited Partnership, which is wholly-owned by the Partnership.
(5) Woodcreek Apartments is owned by Woodcreek Fund XXI Limited Partnership,
which is wholly-owned by the Partnership.
<PAGE>
The following table sets forth the properties' occupancy rate and rent per
square foot for the last five years:
<TABLE>
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Bedford Green
Occupancy Rate............ 99% 87% 95% 94% 87%
Rent Per Square Foot...... $8.31 $7.99 $7.83 $7.36 $7.22
Breckenridge
Occupancy Rate............ 97% 89% 88% 88% 93%
Rent Per Square Foot...... $7.79 $7.07 $7.09 $7.00 $6.96
Evergreen Square
Occupancy Rate............ 90% 91% 90% 92% 88%
Rent Per Square Foot...... $4.52 $4.24 $3.88 $3.70 $3.35
Fort Meigs Plaza
Occupancy Rate............ 96% 98% 100% 99% 100%
Rent Per Square Foot...... $6.38 $6.40 $6.45 $6.25 $5.93
Governour's Square
Occupancy Rate............ 99% 97% 97% 96% 92%
Rent Per Square Foot...... $6.85 $6.44 $6.01 $5.70 $5.64
Wise County Plaza
Occupancy Rate............ 94% 83% 91% 93% 93%
Rent Per Square Foot...... $5.56 $5.90 $6.33 $6.54 $6.49
Woodcreek
Occupancy Rate............ 87% 92% 98% 88% 88%
Rent Per Square Foot...... $6.09 $6.22 $5.42 $5.43 $4.95
</TABLE>
Occupancy rate represents all units leased divided by the total number of units
for residential properties and square footage leased divided by total square
footage for commercial properties as of December 31 of the given year. Rent per
square foot represents all revenue, except interest, derived from the property's
operations divided by the leasable square footage of the property.
Competitive Conditions
- ----------------------
Bedford Green Apartments is located in Bedford, Ohio, southeast of Cleveland,
Ohio. Bedford Green continues to be one of the nicest apartment communities in
the market and charges higher rents than its competitors. The property ended the
year at a 99% occupancy rate, giving the property a 92% average occupancy rate
for 1995. Management expects to maintain occupancy in the middle 90% range in
1996 through aggressive marketing and a strong resident renewal program.
Breckenridge Apartments is located in a northwest residential area of Davenport,
Iowa. The 1993 refinancing of the property enabled the Partnership to make
previously deferred capital improvements which allowed the property to compete
more effectively. The property currently has no deferred maintenance and its
curb appeal is equal to that of its competition. The Davenport market continues
to maintain strong occupancy levels and, due to the improved appearance of the
property, management increased occupancy in 1995. The Partnership anticipates
maintaining occupancy in 1996 while at the same time increasing rental rates.
Evergreen Square Apartments, built in 1970 in Tupelo, Mississippi, offers
attractive floor plans, a renovated exterior and various amenities which
position it as a strong competitor in its market area. Exterior improvements,
including new roofs, painting and paving, amenity upgrades, and interior
upgrades have helped Evergreen Square maintain a stabilized occupancy in spite
of being located in a declining neighborhood. Competing apartment communities
accept assisted/subsidized housing renters whereas Evergreen Square does not.
Although there has been no recent multifamily development in the immediate area,
the area offers a very reasonably priced home buying market and an abundance of
rental homes and duplexes. Based upon a continued capital improvement program
and focused management, Evergreen Square should be able to maintain current
occupancy rates. However, its location in a declining neighborhood will limit
long-range growth.
Fort Meigs Plaza is a strip shopping center located in Perrysburg, Ohio, a city
lying just outside of Toledo, Ohio. The center is surrounded by upper-middle
income residential neighborhoods which are very well established. With the
exception of one property, all of the competitors are newer, yet Fort Meigs has
earned a reputation in the marketplace as a well maintained center. Occupancy
decreased slightly in 1995 due to a square footage addition at a major
competitor. Management expects the tenant mix to change from primarily discount
retailers to service-oriented tenants since the retailers are moving to the
newer centers. The property is expected to operate at current occupancy levels
in 1996.
Governour's Square Apartments, located in Wilmington, North Carolina was built
in 1974. Extensive exterior renovations from 1992 through early 1995 have
allowed the asset to reposition itself as a strong competitor in the Wilmington
market. These exterior improvements as well as interior upgrades enabled the
property to achieve an occupancy rate slightly above the market, even with some
new construction and renovations by competitors in the immediate area. The
apartments are marketed primarily to middle income residents and many of the
families who select the property do so for its favorable school location.
Management expects to maintain occupancy rates in the mid to high 90% range in
1996.
Wise County Plaza, located in Wise, Virginia, was built in 1971 and its colonial
design is unique to the area. Although the shopping center is located in an area
besieged by high unemployment rates and a lackluster economy due to the
declining coal industry, it has remained a consistent competitor in the local
retail market. In August 1994, one of the center's major tenants, which occupied
50,000 square feet, filed bankruptcy and closed its store. The center
subsequently renovated and leased 37,000 square feet of this space at a lower
rate. Although this caused a decrease in rental revenue, it created a positive
impact on the center by updating its appearance. In conjunction with this new
lease, exterior renovations were updated significantly. In 1996, leases
comprising approximately 26% of the center's square footage are scheduled to
expire. Management has held preliminary lease renewal discussions with the
tenant occupying much of this square footage.
Woodcreek Apartments, located in Fort Wayne, Indiana, was built in 1978 and
offers attractive floor plans which were renovated in 1991 to make the property
more marketable. The property has a high turnover rate due to a contract with
Collegiate Housing which induces short term contracts. During 1994, occupancy
increased due to discounts and concessions offered to the tenants. However,
average occupancy decreased in 1995 due to an increase in rental rates.
Management plans to add a weight room in 1996 which should appeal to the large
number of young professionals in the complex. The stable economy in the area
should allow the property to increase occupancy during 1996 to approximately
92%.
The following schedule shows lease expirations for each of the Partnership's
commercial properties for 1996 through 2005:
<TABLE>
Number of Annual % of Gross
Expirations Square Feet Rent Annual Rent
----------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Fort Meigs Plaza
- ----------------
1996 6 15,655 $ 116,958 20%
1997 1 1,250 5,625 1%
1998 2 2,562 18,564 3%
1999 2 40,010 109,545 19%
2000 3 6,250 61,651 10%
2001 1 32,470 222,420 38%
2002-2005 - - -
Number of Annual % of Gross
Expirations Square Feet Rent Annual Rent
----------- ----------- --------- ---------
Wise County Plaza
1996 8 33,821 $ 307,392 36%
1997 1 4,250 25,500 3%
1998 5 13,689 108,619 13%
1999 2 6,543 27,220 3%
2000 1 1,119 6,994 1%
2001 2 15,817 58,556 7%
2002 - - - -
2003 - - - -
2004 1 36,893 55,340 6%
2005 - - - -
</TABLE>
<PAGE>
No residential tenant leases 10% or more of the available rental space. The
following schedule reflects information on commercial tenants occupying 10% or
more of the leasable square feet for each property.
<TABLE>
Nature of
Business Square Footage Lease
Use Leased Annual Rent Expiration
- -------- ------- ------- --------
<S> <C> <C> <C>
Fort Meigs Plaza
Variety Store 30,000 $ 64,500 1999
Grocery Store 32,470 222,420 2001
Wise County Plaza
General Office 21,062 $226,279 1996
Department Store 36,893 55,340 2004
Grocery Store 21,000 99,750 2008
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
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The Partnership is not party to, nor are the Partnership's properties the
subject of, any material pending legal proceedings, other than ordinary routine
litigation incidental to the Partnership's business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP AND
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RELATED SECURITY HOLDER MATTERS
-------------------------------
(A) There is no established public trading market for limited partnership
units, nor is one expected to develop.
(B) Title of Class Number of Record Unit Holders
-------------- -----------------------------
Limited partnership units 4,343 as of February 16, 1996
(C) No distributions were paid to the partners in 1995 or 1994 and none are
anticipated in 1996. 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. See
Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations, and Item 8 - Note 1 "Organization and
Summary of Significant Accounting Policies - Distributions."
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
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The following table sets forth a summary of certain financial data for the
Partnership. This summary should be read in conjunction with the Partnership's
financial statements and notes thereto appearing in Item 8 - Financial
Statements and Supplementary Data.
<TABLE>
Statements of Years Ended December 31,
Operations 1995 1994 1993 1992 1991
- ------------------ ------------- ------------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Rental revenue............... $ 6,642,725 $ 8,054,097 $ 9,985,424 $ 9,905,279 $ 10,094,281
Write-down for permanent
impairment of real estate... - - (976,800) - (1,044,416)
Gain on disposition of
real estate................. 1,615,811 29,440 678,830 - -
Loss before extraordinary
items....................... (170,804) (1,891,596) (3,106,420) (2,719,318) (4,231,265)
Extraordinary items.......... - - (1,182,974) 283,273 1,350,144
Net loss..................... (170,804) (1,891,596) (4,289,394) (2,436,045) (2,881,121)
Net loss per limited
partnership Unit:
Loss before extraordinary
items:
Current Income Units $ 31.62 $ (6.82) $ (11.19) $ (9.80) $ (15.24)
Growth/Shelter Units (42.85) (76.12) (124.81) (109.26) (170.01)
Extraordinary items:
Current Income Units - - (4.26) 1.02 4.86
Growth/Shelter Units - - (47.53) 11.38 54.25
Net loss:
Current Income Units 31.62 (6.82) (15.45) (8.78) (10.38)
Growth/Shelter Units (42.85) (76.12) (172.34) (97.88) (115.76)
As of December 31,
-------------------------------------------------------------------------
Balance Sheets 1995 1994 1993 1992 1991
- -------------- ------------ ----------- ------------- ------------- -------------
Real estate, net............... $ 21,671,191 $ 22,557,552 $ 27,856,319 $ 39,497,843 $ 45,631,268
Assets held for sale........... - 8,153,520 5,935,338 2,257,185 -
Total assets................... 25,178,649 33,985,057 38,017,866 44,449,501 47,635,150
Mortgage notes payable, net.... 22,742,528 30,979,473 33,040,885 36,420,172 37,928,926
Partners' equity (deficit)..... (3,293,898) (3,123,094) (1,231,498) 3,057,896 5,493,941
</TABLE>
See Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations. Georgetown Apartments was foreclosed on by its lender in
September 1992. Hickory Lake Apartments was sold in December 1993 and Homestead
Manor Apartments was sold in February 1994. Wyoming Mall and Suburban Plaza
shopping centers were sold on March 31, 1995.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
- ------- -----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnership generated $410,990 of cash through operating activities in 1995
as compared to $546,157 in 1994 and $1,023,382 in 1993. Cash received from
tenants and cash paid to suppliers decreased in 1995 and 1994 as compared to the
respective prior years primarily due to the sales of Hickory Lake in 1993,
Homestead Manor in 1994 and Suburban Plaza and Wyoming Mall in 1995. There was a
greater amount of cash paid to affiliates in 1994, mainly due to the payment of
a $201,000 disposition fee related to the sale of Hickory Lake Apartments.
Interest received increased in 1995 compared to 1994, primarily as a result of
higher average cash balances due to proceeds received from the sales of
Surburban Plaza and Wyoming Mall. Interest paid decreased in 1995 and 1994 as
compared to the respective prior years, primarily due to the sales of properties
discussed above. In addition, the Partnership refinanced two of its properties
in 1995 and three of its properties in 1993, resulting in a reduction in
interest paid on each of these loans. In 1995, the Partnership paid a greater
amount of previously deferred interest on advances from affiliates from the
proceeds received from property sales. Interest paid to affiliates decreased in
1994 as compared to 1993 due to the reduction in the affiliate mortgage notes
payable balance that occurred when Governour's Square Apartments was refinanced
in 1993. Property taxes paid include the funding of escrow accounts which were
established as a part of the refinancing of Bedford Green and Woodcreek
Apartments in 1995, and Breckenridge, Evergreen Square and Governour's Square
Apartments in 1993.
Cash used for additions to real estate investments in 1995 totaled $702,157 as
compared to $882,381 and $1,225,407 in 1994 and 1993, respectively. As a part of
the refinancing agreement for three of the Partnership's properties in 1993,
certain capital improvements were required. Escrows were established to fund
these expenditures at the time of the refinancing. A majority of the work was
completed during 1993, and the remainder was finished during 1994.
During 1995 and 1994, the Partnership received $300,000 and $20,874,
respectively, for repayment of the advance to McNeil Real Estate Fund XXII,
L.P., the joint owner of Wyoming Mall.
In 1995, the sale of Suburban Plaza and Wyoming Mall shopping centers provided
net cash proceeds of $2,199,917. In 1994, the sale of Homestead Apartments
provided net cash proceeds of $39,850. During 1993, the sale of Hickory Lake
Apartments provided net cash proceeds of $1,372,298.
In 1995, the Partnership paid $194,952 in deferred borrowing costs relating to
the refinancing of Bedford Green and Woodcreek apartments. In 1993, the
Partnership paid $369,754 in deferred borrowing costs, the majority of which
related to the refinancing of Breckenridge, Evergreen Square and Governour's
Square apartments.
Mortgage principal payments totaled $253,698 in 1995, as compared to $345,980
and $568,549 in 1994 and 1993, respectively. The decrease in payments is
primarily due to the sales of properties previously discussed.
In 1995, the Partnership received $60,103 and in 1993 the Partnership received
$902,326 of proceeds from refinancing of mortgage notes payable.
In 1993, the Partnership received $225,355 of advances from affiliates which
were used for Wyoming Mall's operating expenses and to pay costs related to the
refinancings of three of the Partnership's properties. In 1995, the Partnership
repaid $973,000 in advances from affiliates of the General Partner.
At December 31, 1995, the Partnership held cash and cash equivalents of
$1,998,301.
Short-term liquidity:
During 1995, the Partnership sold two shopping centers, Wyoming Mall and
Suburban Plaza. Proceeds from these sales enabled the Partnership to repay most
of its affiliate advances and the related 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 $194,952 related
to the refinancing. An additional $404,074 of tax, insurance and property
replacement escrows were established at the closing of the refinancing.
In 1996, present cash balances and operations of the properties are expected to
provide sufficient positive cash for normal operating expenses, debt service
payments and budgeted capital improvements. However, any unanticipated capital
improvements will require other sources of cash. No such sources have been
identified. The Partnership has no established lines of credit from outside
sources. Other possible actions to resolve cash deficiencies include
refinancings, deferral of capital expenditures on Partnership properties except
where improvements are expected to increase the competitiveness and
marketability of the properties, deferral of 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. During 1993, the Partnership
received unsecured advances under the revolving credit facility to fund
additions to the Partnership's real estate investment and costs incurred in
connection with the refinancing of certain of the Partnership's mortgage notes
payable. During 1995, the Partnership used the proceeds from the sales of
Wyoming Mall and Suburban Plaza to repay the affiliate advances and the related
accrued interest. There is no assurance that the Partnership will receive any
additional funds under the facility because no amounts will be reserved for any
particular partnership. As of December 31, 1995, $2,662,819 remained available
for borrowing under the facility; however, additional funds could become
available as other partnerships repay existing borrowings. This commitment will
terminate on March 26, 1997.
Additionally, the General Partner has, at its discretion, advanced funds to the
Partnership in addition to the revolving credit facility. As discussed below,
the Partnership received such other advances that were used to fund working
capital requirements. During 1995, the Partnership repaid these advances from
the proceeds from the sales of Wyoming Mall and Suburban Plaza. The General
Partner is not obligated to advance funds to the Partnership, and there is no
assurance that the Partnership will receive additional funds.
Prior to the restructuring of the Partnership, affiliates of the Original
General Partner advanced funds to enable the Partnership to meet its working
capital requirements. These advances were purchased by, and are now payable to,
the General Partner. During 1995 the Partnership repaid a portion of the
purchased advances and the related accrued interest from the proceeds from the
sales of Wyoming Mall and Suburban Plaza.
The total advances from affiliates at December 31, 1995 and 1994 consisted of
the following:
<TABLE>
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 46,027 307,408
------------ -----------
$ 676,601 $ 1,910,982
============ ===========
</TABLE>
The advances are unsecured, due on demand and accrue interest at the prime
lending rate of Bank of America plus 1%. The prime lending rate was 8.5% at
December 31, 1995 and 1994.
McNeil Real Estate Fund XXVII, L.P., ("Fund 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 Fund XXVII secured by Suburban Plaza.
This note matured in 1995 and the Partnership used the proceeds from the sale of
Suburban Plaza to pay off the note. See Item 8 Note 6 - "Mortgage Notes Payable
- - Affiliates" and Item 13 - Certain Relationships and Related Transactions.
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 Partnership has significant mortgage maturities
during 1997, and management expects to refinance these mortgage notes as they
mature. However, 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.
FINANCIAL CONDITION
- -------------------
The Partnership was formed to engage in the business of acquiring and operating
income-producing real properties, and holding the properties for investment.
Since completion of its capital formation and property acquisition phases in
1985, when it completed the purchase of thirteen properties, the Partnership has
operated its properties for production of income. The Partnership's properties
were adversely affected by competitive and overbuilt markets, resulting in
continuing cash flow problems. In 1990, Commerce Tower in Amarillo, Texas, was
foreclosed on by the lender in full settlement of the mortgage indebtedness on
the property. Georgetown Apartments, located in Lakeland, Florida, was
foreclosed on by the lender in full settlement of mortgage indebtedness in
September, 1992. Hickory Lake Apartments was sold in December 1993, and
Homestead Manor Apartments was sold in February 1994. During 1995, the
Partnership sold the Suburban Plaza and Wyoming Mall shopping centers. The
Partnership continues to operate the seven remaining properties.
When McNeil took over management of Wyoming Mall in 1991, the property had been
experiencing large vacancy losses and negative cash flow. An intensive marketing
and leasing effort over the next several years was embarked upon to sign new
tenants for long-term leases in order to stabilize occupancy and the economic
performance of the property. This effort resulted in improved occupancy over the
ensuing periods and by the second quarter of 1993, occupancy had stabilized to a
level of 92%. Until a stable occupancy could be reached, management was not in a
position to determine if any permanent impairment had occurred because the size,
location and demographics of the mall were unique to the Albuquerque, New Mexico
area. Accordingly, a "wait and see" posture was taken until such stabilization
occurred. At about that time, during the third quarter of 1993, the Partnership
received an unsolicited offer to buy the property. Management began serious
negotiations with the prospective purchaser, and although the decision was made
not to sell at that time, this offer from an unaffiliated third party
established a market value that was close to the value calculated by the future
cash flows of the stabilized leases. Accordingly, a write-down for permanent
impairment was recorded during the third quarter of 1993, to adjust the carrying
value to its estimated net realizable value.
During 1994, management determined that Wyoming Mall had reached its optimum
value and therefore began actively marketing the property for sale. The property
was sold on March 31, 1995.
In November 1993, the Partnership ceased making debt service payments on the
first and second mortgages of Homestead Manor Apartments, and a receiver was
subsequently appointed on January 24, 1994. This property had been on the market
since 1992, and management was in negotiations with a buyer at the time the
receiver was appointed. The sale was successfully completed on February 22, 1994
for a cash purchase price of $60,810 and assumption of the first and second
liens by the purchaser. Since the net book value of the property was higher than
the full settled amount, the Partnership recorded a $241,512 write-down for
permanent impairment to reduce the carrying value to the realizable value during
1993.
RESULTS OF OPERATIONS
- ---------------------
1995 compared to 1994
Revenue:
Total revenues increased by $67,128 in 1995 as compared to 1994. The increase
was mainly due to a gain on the sale of Suburban Plaza Shopping Center, net of
the loss on the sale of Wyoming Mall. The change is partially offset by a
decrease in rental revenue, as discussed below.
Rental revenue decreased by $1,411,372 in 1995 as compared to 1994. The decrease
was primarily due to the sales of Suburban Plaza and Wyoming Mall in the first
quarter of 1995. Increased occupancy and rental rates at Bedford Green,
Breckenridge, Evergreen Square and Governour's Square apartments slightly offset
the loss in rental revenues from the sold properties.
Interest income increased by $46,263 in 1995, as compared to 1994. The increase
was primarily the result of higher average cash balances due to proceeds
received from the sales of Suburban Plaza and Wyoming Mall. The Partnership held
approximately $2 million of cash and cash equivalents at December 31, 1995 as
compared to $1.2 million at December 31, 1994.
During 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 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 1994. No such income was
recorded in 1995.
Expenses:
Total expenses decreased by $1,653,664 in 1995 as compared to 1994, primarily
due to the sales of Suburban Plaza and Wyoming Mall shopping centers in the
first quarter of 1995. Suburban Plaza and Wyoming Mall incurred expenses
totaling approximately $272,000 and $334,000, respectively, in 1995, as compared
to $1,000,000 and $1,188,000, respectively, in 1994.
Interest expense decreased by $611,478 in 1995 as compared to 1994. The decrease
was primarily due to the sales of Suburban Plaza and Wyoming Mall in the first
quarter of 1995.
Interest expense-affiliates decreased by $117,364 in 1995 as compared to 1994.
The decrease was mainly due to the repayment of $973,000 in advances and
$1,331,000 in mortgage notes payable from affiliates in 1995.
Depreciation and amortization decreased by $322,666 in 1995 as compared to 1994.
The decrease was mainly due to the sales of Suburban Plaza and Wyoming Mall in
the first quarter of 1995. This decrease was slightly offset by an increase at
the remaining properties, the result of the addition of depreciable capital
improvements.
Property taxes and property management fees-affiliates decreased by $146,667 and
$84,886, respectively, in 1995 as compared to 1994. The decreases were primarily
due to the sales of Suburban Plaza and Wyoming Mall in the first quarter of
1995.
Repairs and maintenance decreased by $153,064 in 1995 as compared to 1994. The
decrease was primarily due to the sales of Suburban Plaza and Wyoming Mall in
the first quarter of 1995. In addition, Governour's Square experienced a decline
in painting expense due to decreased turnover of tenants in 1995.
General and administrative expense decreased by $23,683 in 1995 as compared to
1994. In 1994 the Partnership paid approximately $7,000 of state withholding
taxes on behalf of the limited partners. No such withholding taxes were paid in
1995. In addition, the Partnership incurred a greater amount of legal expenses
in 1994 relating to the sale of Homestead Manor Apartments and Suburban Plaza.
General and administrative expense-affiliates decreased by $136,218 in 1995 as
compared to 1994. The decrease was due mainly to a decline in 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 Suburban Plaza and
Wyoming Mall.
1994 compared to 1993
Revenues:
Rental revenue for 1994 decreased by $1,931,327 as compared to 1993. The
decrease was primarily due to the sales of Hickory Lake and Homestead Manor
Apartments. Increases in rental rates at Bedford Green, Evergreen Square, and
Governour's Square Apartments and decreased vacancy losses at Suburban Plaza,
Wyoming Mall, and Woodcreek Apartments slightly offset the loss in rental
revenues from the sold properties.
Interest income increased by $29,899 in 1994 as compared to 1993. The increase
was partially the result of higher interest rates earned on invested cash in
1994. In addition, there was more average cash available in 1994 resulting from
the sale proceeds of Hickory Lake and Homestead Manor Apartments.
During 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 1994. During 1993, the
Partnership recognized a gain on disposition of real estate on Hickory Lake
Apartments of $678,830.
Expenses:
Total expenses decreased by $3,611,508 in 1994 as compared to 1993. The 1993
expenses include a $976,800 write-down for permanent impairment of real estate
for Wyoming Mall. The decrease in the remaining expenses is primarily due to the
sales of Hickory Lake and Homestead Manor Apartments.
Interest expense decreased by $697,619 in 1994 as compared to 1993. A decrease
of $742,630 due to the sale of Hickory Lake and Homestead Manor Apartments was
partially offset by an increase in interest expense at Suburban Plaza and Fort
Meigs Plaza. The interest rate on the first mortgage note payable for Fort Meigs
Plaza increased from 9% to 12.81% in September 1994, and the interest rate on
the first mortgage note payable for Suburban Plaza increased from 9% to 11% in
July 1994.
Interest expense - affiliates decreased by $109,823 in 1994 as compared to 1993.
The decrease was due to a decline in the affiliate mortgage balance. In June,
1993, as part of the REMIC refinancing, a portion of the mortgage note payable -
affiliate related to Governour's Square was settled. The Partnership substituted
a second lien on Fort Meigs Plaza as collateral for the remaining balance of the
mortgage note.
Depreciation and amortization expense decreased in 1994 by $396,440 as compared
to 1993. A decrease of $511,950 due to the sale of Hickory Lake and Homestead
Manor Apartments was offset by an increased expense at the Partnership's
remaining properties due to capital additions.
Property taxes decreased by $203,189 in 1994 as compared to 1993. A decrease of
$270,900 due to the sale of Hickory Lake and Homestead Manor Apartments was
offset by an increase in tax expense for county taxes at Suburban Plaza.
Personnel costs decreased by $200,559 in 1994 as compared to 1993. A decrease of
$284,522 due to the sale of Hickory Lake and Homestead Manor Apartments was
offset by increases at Evergreen, Governour's Square, and Woodcreek Apartments
due to additional full-time and part-time office personnel and additional
personnel for make-ready apartment requirements.
Property management fees - affiliates decreased by $92,994 in 1994 as compared
to 1993. The decrease was due to a decline in gross rental receipts, on which
the fees are based, resulting from the sale of Hickory Lake and Homestead Manor
Apartments.
Repairs and maintenance expense, utilities and other property operating expenses
decreased by $313,798, $228,608 and $237,230, respectively, in 1994 as compared
to 1993. These decreases were primarily due to the sale of Hickory Lake and
Homestead Manor Apartments. These expenses at the Partnership's remaining
properties were comparable.
General and administrative expense decreased by $57,653 in 1994 as compared to
1993. The decrease was primarily due to lower legal fees and tax return
preparation expenses.
General and administrative - affiliates decreased by $96,795 in 1994 as compared
to 1993. The decrease was primarily due to a decline in the asset management fee
in 1994 due to the decrease in tangible asset value of the Partnership, on which
the fees are based, primarily because of the sale of Hickory Lake and Homestead
Manor Apartments.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- -------------------------------------------
<TABLE>
Page
Number
------
INDEX TO FINANCIAL STATEMENTS
- -----------------------------
<S> <C>
Financial Statements:
Report of Independent Public Accountants....................................... 16
Balance Sheets at December 31, 1995 and 1994................................... 17
Statements of Operations for each of the three years in the period
ended December 31, 1995..................................................... 18
Statements of Partners' Equity (Deficit) for each of the three years
in the period ended December 31, 1995....................................... 19
Statements of Cash Flows for each of the three years in the period
ended December 31, 1995..................................................... 20
Notes to Financial Statements.................................................. 22
Financial Statement Schedule -
Schedule III - Real Estate Investments and Accumulated
Depreciation and Amortization............................................ 34
</TABLE>
All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of McNeil Real Estate Fund XXI, L.P.:
We have audited the accompanying balance sheets of McNeil Real Estate Fund XXI,
L.P. (a California limited partnership) as of December 31, 1995 and 1994, and
the related statements of operations, partners' equity (deficit) and cash flows
for each of the three years in the period ended December 31, 1995. These
financial statements and the schedule referred to below are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements and the schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of McNeil Real Estate Fund XXI,
L.P. as of December 31, 1995 and 1994, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 8 to the
financial statements, the Partnership has previously relied on advances from
affiliates to meet its debt obligations and to fund capital improvements.
Additionally, the Partnership has had to defer payment of payables to affiliates
in order to meet its working capital needs. Additionally, the Partnership is
faced with mortgage note maturities of approximately $9.2 million in 1997 for
which no extensions, modifications or refinancings have yet been negotiated.
There is no guarantee that such negotiations can be completed. Management's
plans in regard to these matters are also described in Note 8. 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 these uncertainties.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in our audits of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Dallas, Texas
March 13, 1996
<PAGE>
McNEIL REAL ESTATE FUND XXI, L.P.
BALANCE SHEETS
<TABLE>
December 31,
-------------------------------
1995 1994
----------- -----------
<S> <C> <C>
ASSETS
- ------
Real estate investments:
Land..................................................... $ 3,607,306 $ 3,607,306
Buildings and improvements............................... 33,341,911 32,646,371
---------- ----------
36,949,217 36,253,677
Less: Accumulated depreciation and
amortization........................................... (15,278,026) (13,696,125)
---------- ----------
21,671,191 22,557,552
Assets held for sale........................................ - 8,153,520
Cash and cash equivalents................................... 1,998,301 1,151,098
Cash segregated for security deposits....................... 167,007 205,581
Accounts receivable, net of allowance for doubtful
accounts of $1,800 and $51,086 at
December 31,1995 and 1994, respectively.................. 176,462 663,548
Advances to affiliates...................................... - 362,186
Escrow deposits............................................. 611,639 252,798
Deferred borrowing costs, net of accumulated
amortization of $90,135 and $186,603 at
December 31, 1995 and 1994, respectively................. 495,631 413,094
Prepaid expenses and other assets........................... 58,418 225,680
---------- ----------
$25,178,649 $33,985,057
========== ==========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- ------------------------------------------
Mortgage notes payable, net................................. $22,008,628 $28,914,573
Mortgage notes payable - affiliates......................... 733,900 2,064,900
Accounts payable and accrued expenses....................... 300,985 430,340
Accrued property taxes...................................... 338,135 480,166
Payable to affiliates - General Partner..................... 4,217,978 3,079,178
Advances from affiliates - General Partner.................. 676,601 1,910,982
Security deposits and deferred rental revenue............... 196,320 228,012
----------- -----------
28,472,547 37,108,151
----------- -----------
Partners' deficit:
Limited partners - 50,000 Units authorized; 47,308 and
47,326 Units issued and outstanding at December 31, 1995
and 1994, respectively (24,949 Current Income Units and
22,359 Growth/ Shelter Units outstanding at
December 31, 1995 and 24,960 Current Income Units and
22,366 Growth/Shelter Units outstanding at
December 31, 1994)..................................... (2,943,347) (2,774,251)
General Partner.......................................... (350,551) (348,843)
---------- ----------
(3,293,898) (3,123,094)
---------- ----------
$25,178,649 $33,985,057
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXI, L.P.
STATEMENTS OF OPERATIONS
<TABLE>
For the Years Ended December 31,
-----------------------------------------------
1995 1994 1993
--------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Rental revenue.......................... $ 6,642,725 $ 8,054,097 $ 9,985,424
Interest................................ 124,712 78,449 48,550
Other income............................ - 154,134 -
Gain on disposition of real estate...... 1,615,811 29,440 678,830
---------- ---------- ----------
Total revenue......................... 8,383,248 8,316,120 10,712,804
---------- ---------- ----------
Expenses:
Interest................................ 2,339,653 2,951,131 3,648,750
Interest - affiliates................... 196,240 313,604 423,427
Depreciation and amortization........... 1,724,781 2,047,447 2,443,887
Property taxes.......................... 552,075 698,742 901,931
Personnel costs......................... 789,067 829,324 1,029,883
Repairs and maintenance................. 758,653 911,717 1,225,515
Property management fees -
affiliates............................ 351,663 436,549 529,543
Utilities............................... 432,670 472,466 701,074
Other property operating expenses....... 555,985 533,570 770,800
General and administrative.............. 53,491 77,174 134,827
General and administrative -
affiliates............................ 799,774 935,992 1,032,787
Write-down for permanent
impairment of real estate............. - - 976,800
---------- ---------- ----------
Total expenses........................ 8,554,052 10,207,716 13,819,224
---------- ---------- ----------
Loss before extraordinary items............ (170,804) (1,891,596) (3,106,420)
Extraordinary items........................ - - (1,182,974)
---------- ---------- ----------
Net loss................................... $ (170,804) $(1,891,596) $(4,289,394)
========== ========== ==========
Net gain allocable to limited
partners - Current Income Unit.......... $ 788,960 $ (170,244) $ (386,045)
Net loss allocable to limited
partners - Growth/Shelter Unit.......... (958,056) (1,702,436) (3,860,455)
Net loss allocable to General
Partner................................. (1,708) (18,916) (42,894)
---------- ---------- ----------
Net loss................................... $ (170,804) $(1,891,596) $(4,289,394)
========== ========== ==========
Net gain (loss) per limited partnership unit:
Current Income Unit Holders:
Gain (loss) before extraordinary items.. $ 31.62 $ (6.82) $ (11.19)
Extraordinary items..................... - - (4.26)
---------- ---------- ----------
Net income (loss) ...................... $ 31.62 $ (6.82) $ (15.45)
========== ========== ==========
Growth/Shelter Unit Holders:
Loss before extraordinary items......... $ (42.85) $ (76.12) $ (124.81)
Extraordinary items..................... - - (47.53)
---------- ---------- ----------
Net loss................................ $ (42.85) $ (76.12) $ (172.34)
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXI, L.P.
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For the Years Ended December 31, 1995, 1994 and 1993
<TABLE>
Total
Partners'
General Limited Equity
Partner Partners (Deficit)
----------- ---------- ----------
<S> <C> <C> <C>
Balance at December 31, 1992.............. $ (287,033) $ 3,344,929 $ 3,057,896
Net loss
General Partner........................ (42,894) - (42,894)
Current Income Units................... - (386,045) (386,045)
Growth/Shelter Units................... - (3,860,455) (3,860,455)
----------- ---------- ----------
Total net loss............................ (42,894) (4,246,500) (4,289,394)
----------- ---------- ----------
Balance at December 31, 1993.............. (329,927) (901,571) (1,231,498)
Net loss
General Partner........................ (18,916) - (18,916)
Current Income Units................... - (170,244) (170,244)
Growth/Shelter Units................... - (1,702,436) (1,702,436)
------------ ---------- ----------
Total net loss............................ (18,916) (1,872,680) (1,891,596)
------------ ---------- ----------
Balance at December 31, 1994.............. (348,843) (2,774,251) (3,123,094)
Net loss
General Partner........................ (1,708) - (1,708)
Current Income Units................... - 788,960 788,960
Growth/Shelter Units................... - (958,056) (958,056)
------------ ---------- ----------
Total net loss............................ (1,708) (169,096) (170,804)
------------ ---------- ----------
Balance at December 31, 1995.............. $ (350,551) $(2,943,347) $(3,293,898)
============ ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXI, L.P.
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
For the Years Ended December 31,
------------------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from tenants.............. $ 6,778,734 $ 8,077,101 $ 9,809,349
Cash paid to suppliers.................. (2,600,394) (3,322,165) (3,614,888)
Cash paid to affiliates................. (358,687) (939,041) (557,959)
Interest received....................... 115,284 46,481 18,332
Interest received - affiliates.......... 71,614 - -
Interest paid........................... (2,320,337) (2,715,704) (3,306,755)
Interest paid to affiliates............. (543,878) (153,671) (298,896)
Property taxes paid..................... (731,346) (446,844) (1,025,801)
---------- ---------- ----------
Net cash provided by operating
activities............................ 410,990 546,157 1,023,382
---------- ---------- ----------
Cash flows from investing activities:
Additions to real estate
investments........................... (702,157) (882,381) (1,225,407)
Repayment of advances to affiliates..... 300,000 20,874 -
Net proceeds from disposition of real
estate................................ 2,199,917 39,850 1,372,298
---------- ---------- ----------
Net cash provided by (used in)
investing activities.................... 1,797,760 (821,657) 146,891
---------- ---------- ----------
Cash flows from financing activities:
Deferred borrowing costs paid........... (194,952) (1,142) (369,754)
Principal payments on mortgage
notes payable......................... (253,698) (345,980) (568,549)
Principal payment on mortgage
notes payable - affiliates............ - - (24,746)
Proceeds from refinancing on
mortgage notes payable................ 60,103 - 902,326
Advances from affiliates - General
Partner............................... - - 225,355
Repayment of advances from affiliates -
General Partner....................... (973,000) - -
---------- ---------- ----------
Net cash provided by (used in)
financing activities.................. (1,361,547) (347,122) 164,632
---------- ---------- ----------
Net increase (decrease) in cash and
cash equivalents...................... 847,203 (622,622) 1,334,905
Cash and cash equivalents at
beginning of year..................... 1,151,098 1,773,720 438,815
---------- ---------- ----------
Cash and cash equivalents at end
of year............................... $ 1,998,301 $ 1,151,098 $ 1,773,720
========== ========== ==========
</TABLE>
See discussion of noncash investing and financing activities in Note 7 -
"Property Dispositions."
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXI, L.P.
STATEMENTS OF CASH FLOWS
Reconciliation of Net Loss to Net Cash Provided by
Operating Activities
<TABLE>
For the Years Ended December 31,
------------------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Net loss................................... $ (170,804) $(1,891,596) $(4,289,394)
---------- ---------- ----------
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation and amortization........... 1,724,781 2,047,447 2,443,887
Amortization of discounts on
mortgage notes payable................ 20,278 168,832 289,717
Amortization of deferred borrowing
costs................................. 62,026 67,240 86,477
Accrued interest on advances from
affiliates - General Partner.......... (261,381) 130,711 102,660
Interest added to advances to
affiliates - General Partner.......... (9,428) (31,968) (30,218)
Gain on disposition of real estate...... (1,615,811) (29,440) (678,830)
Write-down for permanent
impairment of real estate............. - - 976,800
Extraordinary items..................... - - 1,182,974
Changes in assets and liabilities:
Cash segregated for security deposits. 38,574 22,600 (6,870)
Accounts receivable, net.............. 89,358 21,307 (61,056)
Advances to affiliates................ 71,614 - -
Escrow deposits....................... (358,841) 229,655 78,910
Prepaid expenses and other assets..... 63,678 1,071 19,294
Accounts payable and accrued
expenses............................ 16,756 (472,560) 143,173
Accrued property taxes................ (65,774) (171,613) (229,422)
Payable to affiliates - General
Partner............................. 792,750 433,500 1,004,455
Security deposits and deferred
rental revenue..................... 13,214 20,971 (9,175)
---------- ---------- ----------
Total adjustments................. 581,794 2,437,753 5,312,776
---------- ---------- ----------
Net cash provided by operating
activities............................ $ 410,990 $ 546,157 $ 1,023,382
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXI, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------
Organization
- ------------
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. The General
Partner was elected at a meeting of limited partners on March 26, 1992, at which
time an amended and restated partnership agreement (the "Amended Partnership
Agreement") was adopted. Prior to March 26, 1992, the general partner of the
Partnership was Southmark Partners, Ltd. (the "Original General Partner"), a
Texas limited partnership of which the general partner is Southmark Investment
Group, Inc., a wholly-owned subsidiary of Southmark Corporation. The principal
place of business for the Partnership and the General Partner is 13760 Noel
Road, Suite 700, LB70, Dallas, Texas, 75240.
The Partnership is engaged in diversified real estate activities, including the
ownership, operation and management of residential, commercial office, and
retail real estate. As described in Note 4 - Real Estate Investments, at
December 31, 1995, the Partnership owned seven revenue-producing properties.
Basis of Presentation
- ---------------------
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP"). The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The Partnership's financial statements include the accounts of the following
listed tier partnerships. These single asset tier partnerships were formed to
accommodate the refinancing of the respective property. The Partnership's and
the General Partner's ownership interest in each tier partnerships is detailed
below as follows:
% of Ownership Interest
Tier Partnership Partnership General Partner
---------------- ----------- ---------------
Bedford Green Fund XXI, L.P. (a) 100 -
Breckenridge Fund XXI, L.P. (b) 100 -
Evergreen Fund XXI, L.P. (b) 100 -
Governour's Square Fund XXI, L.P. (b) 100 -
Woodcreek Fund XXI, L.P. (a) 100 -
(a) Included in financial statements for year ended December 31, 1995.
(b) Included in financial statements for years ended December 31, 1995, 1994,
and 1993.
The financial statements also include the accounts (through March 31, 1995) of
the Partnership and its 50% undivided interest in the assets, liabilities and
operations of Wyoming Mall owned jointly with McNeil Real Estate Fund XXII, L.P.
Real Estate Investments
- -----------------------
Real estate investments are generally stated at the lower of cost or net
realizable value. Real estate investments are monitored on an ongoing basis to
determine if the property has sustained a permanent impairment in value. At such
time, a write-down is recorded to reduce the basis of the property to its net
realizable value. A permanent impairment is determined to have occurred when a
decline in property value is considered to be other than temporary based upon
management's expectations with respect to projected cash flows and prevailing
economic conditions.
Improvements and betterments are capitalized and expensed through depreciation
charges. Repairs and maintenance are charged to operations as incurred.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." This statement
requires that long-lived assets and certain identifiable intangibles to be held
and used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. This statement is effective for financial statements for fiscal
years beginning after December 15, 1995. The Partnership has not adopted the
principles of this statement within the accompanying financial statements;
however, it is not anticipated that adoption will have a material effect on the
carrying value of the Partnership's long-lived assets.
Assets Held for Sale
- --------------------
Assets held for sale are stated at the lower of cost or net realizable value.
Depreciation and Amortization
- -----------------------------
Buildings and improvements are depreciated using the straight-line method over
the estimated useful lives of the assets, ranging from 5 to 25 years. Tenant
improvements are capitalized and amortized over the terms of the related tenant
lease using the straight-line method.
Cash and Cash Equivalents
- -------------------------
Cash and cash equivalents include cash on hand and cash on deposit in financial
institutions with original maturities of three months or less. Carrying amounts
for cash and cash equivalents approximate fair value.
Escrow Deposits
- ---------------
The Partnership is required to maintain escrow accounts in accordance with the
terms of various mortgage indebtedness agreements. These escrow accounts are
controlled by the mortgagee and are used for payment of property taxes, hazard
insurance, capital improvements and/or property replacements. Carrying amounts
for escrow deposits approximate fair value.
Prepaid Commissions
- -------------------
Leasing commissions incurred to obtain leases on commercial properties are
capitalized and amortized using the straight-line method over the term of the
related lease and are included in prepaid expenses and other assets on the
Balance Sheets.
Deferred Borrowing Costs
- ------------------------
Loan fees and other related costs incurred to obtain long-term financing on real
property are capitalized and amortized using a method that approximates the
effective interest method over the terms of the related mortgage notes payable.
Amortization of deferred borrowing costs is included in interest expense on the
Statements of Operations.
Discounts on Mortgage Notes Payable
- -----------------------------------
Discounts on mortgage notes payable are being amortized over the remaining terms
of the related mortgage notes using the effective interest method. Amortization
of discounts on mortgage notes payable is included in interest expense on the
Statements of Operations.
Rental Revenue
- --------------
The Partnership leases its residential properties under short-term operating
leases. Lease terms generally are less than one year in duration. Rental revenue
is recognized as earned.
The Partnership leases its commercial properties under non-cancelable operating
leases. Certain leases provide concessions and/or periods of escalating or free
rent. Rental revenue is recognized on a straight-line basis over the term of the
related lease. The excess of the rental revenue recognized over the contractual
rental payments is recorded as accrued rent receivable and is included in
accounts receivable on the Balance Sheets.
Income Taxes
- ------------
No provision for Federal income taxes is necessary in the financial statements
of the Partnership because, as a partnership, it is not subject to Federal
income tax and the tax effect of its activities accrues to the partners.
Allocation of Net Income and Net Loss
- -------------------------------------
The Amended Partnership Agreement generally provides that net income (other than
net income arising from sales or refinancing) shall be allocated one percent
(1%) to the General Partner and ninety-nine percent (99%) to the limited
partners equally as a group, and net loss shall be allocated one percent (1%) to
the General Partner, nine percent (9%) to the limited partners owning Current
Income Units and ninety percent (90%) to the limited partners owning
Growth/Shelter Units.
For financial statement purposes, net income arising from sales or refinancing
shall be allocated one percent (1%) to the General Partner and ninety-nine
percent (99%) to the limited partners equally as a group, and net loss shall be
allocated one percent (1%) to the General Partner, nine percent (9%) to the
limited partners owning Current Income Units and ninety percent (90%) to the
limited partners owning Growth/Shelter Units.
For tax reporting purposes, net income arising from sales or refinancing shall
be allocated as follows: (a) first, amounts of such net income shall be
allocated among the General Partner and limited partners in proportion to, and
to the extent of, the portion of such partner's share of the net decrease in
Partnership Minimum Gain determined under Treasury Regulations, (b) second, to
the General Partner and limited partners in proportion to, and to the extent of,
the amount by which their respective capital account balances are negative by
more than their respective remaining shares of the Partnership's Minimum Gain
attributable to properties still owned by the Partnership and (c) third, 1% of
such net income shall be allocated to the General Partner and 99% of such net
income shall be allocated to the limited partners.
Federal income tax law provides that the allocation of loss to a partner will
not be recognized unless the allocation is in accordance with a partner's
interest in the partnership or the allocation has substantial economic effect.
Internal Revenue Code Section 704(b) and accompanying Treasury Regulations
establish criteria for allocation of Partnership deductions attributable to
debt. The Partnership's tax allocations for 1995, 1994 and 1993 have been made
in accordance with these provisions.
Distributions
- -------------
At the discretion of the General Partner, distributable cash (other than cash
from sales or refinancing) shall be distributed 100% to the limited partners,
with such distributions first paying the Current Income Priority Return and then
the Growth/Shelter Priority Return. Also at the discretion of the General
Partner, the limited partners will receive 100% of distributable cash from sales
or refinancing with such distributions first paying the Current Income Priority
Return, then the Growth/Shelter Priority Return, then repayment of Original
Invested Capital, and of the remainder, 16.66% to limited partners owning
Current Income Units and 83.34% to limited partners owning Growth/Shelter Units.
The limited partners' Current Income and Growth/Shelter Priority Returns
represent a 10% and 8%, respectively, cumulative return on their Adjusted
Invested Capital balance, as defined. No distributions of Current Income
Priority Return have been made since 1988, and no distributions of
Growth/Shelter Priority Return have been made since the Partnership began.
In connection with a Terminating Disposition, as defined, cash from sales or
refinancing and any remaining reserves shall be allocated among, and distributed
to, the General Partner and limited partners in proportion to, and to the extent
of, their positive capital account balances after the net income has been
allocated pursuant to the above.
Net Loss Per Limited Partnership Units
- --------------------------------------
Net loss per limited partnership unit ("Unit") is computed by dividing net loss
allocated to the limited partners by the weighted average number of Units
outstanding. Per Unit information has been computed based on 24,949, 24,960 and
24,982 Current Income Units outstanding in 1995, 1994 and 1993, respectively and
22,359, 22,366 and 22,400 Growth/Shelter Units outstanding in 1995, 1994 and
1993, respectively.
Reclassifications
- -----------------
Certain reclassifications have been made to prior period amounts to conform with
the current year presentation.
NOTE 2 - TRANSACTIONS WITH AFFILIATES
- -------------------------------------
The Partnership pays property management fees equal to 5% of gross rental
receipts for its residential properties and 6% of gross rental receipts for
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.
The Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs.
The Partnership reimbursed an affiliate of the General Partner for costs
incurred in connection with refinancing and modification of mortgage notes
payable. These costs are capitalized and amortized over the remaining term of
the related mortgage.
Under the terms of the Amended Partnership Agreement, 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. The Partnership incurred $346,050 of such fees during 1995 in connection
with the sales of Suburban Plaza and Wyoming Mall and $201,000 of such fees
during 1993 in connection with the sale of Hickory Lake.
Under the terms of the Amended Partnership Agreement, the Partnership is paying
an asset management fee, retroactive to February 14, 1991, which is payable to
the new 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 percent 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.
Compensation and reimbursements paid or accrued for the benefit of the General
Partner or its affiliates are as follows:
<TABLE>
For the Years Ended December 31,
-----------------------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Charged to prepaid expenses and other assets:
Deferred borrowing costs.................. $ - $ - $ 24,677
Property management fees - affiliates........ 351,663 436,549 529,543
Charged to gain on disposition of
real estate:
Disposition fee ......................... 346,050 - 201,000
Charged to interest - affiliates:
Interest on advances from
affiliates - General Partner............ 86,364 130,711 102,660
Interest on mortgage note
payable - affiliates.................... 109,876 182,893 320,767
Charged to general and
administrative - affiliates:
Partnership administration................ 394,802 418,177 436,649
Asset management fee...................... 404,972 517,815 596,138
--------- --------- ---------
$1,693,727 $1,686,145 $2,211,434
========= ========= =========
</TABLE>
During 1992, the Partnership made advances of $320,874 to McNeil Real Estate
Fund XXII, L.P., the joint owner of Wyoming Mall, for tenant improvements and
operations at Wyoming Mall. During 1994, $20,874 of these advances were repaid
and during 1995 the balance of the advances and the related interest were
repaid. The advances, which were unsecured and due on demand, accrued interest
at prime plus 3.5%.
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. During 1993, the Partnership
received unsecured advances under the revolving credit facility to fund
additions to the Partnership's real estate investment and costs incurred in
connection with the refinancing of certain of the Partnership's mortgage notes
payable. These advances and the related accrued interest were repaid in 1995.
There is no assurance that the Partnership will receive any additional funds
under the facility because no amounts are reserved for any particular
partnership. As of December 31, 1995, $2,662,819 remained available for
borrowing under the facility; however, additional funds could become available
as other partnerships repay existing borrowings. This commitment will terminate
on March 26, 1997.
Additionally, the General Partner has, at its discretion, advanced funds to the
Partnership in addition to the revolving credit facility. The Partnership
received such other advances that were used to fund working capital
requirements. These advances and the related accrued interest were repaid in
1995. The General Partner is not obligated to advance funds to the Partnership,
and there is no assurance that the Partnership will receive additional funds.
Prior to the restructuring of the Partnership, affiliates of the Original
General Partner advanced funds to enable the Partnership to meet its working
capital requirements. These advances were purchased by, and are now payable to,
the General Partner. A portion of these advances and the related accrued
interest were repaid in 1995.
The total advances from affiliates at December 31, 1995 and 1994 consisted of
the following:
<TABLE>
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 46,027 307,408
----------- -----------
$ 676,601 $ 1,910,982
============ ===========
</TABLE>
The advances are unsecured, due on demand and accrue interest at the prime
lending rate of Bank of America plus 1%. The prime lending rate was 8.5% at
December 31, 1995 and 1994.
Payable to affiliates - General Partner at December 31, 1995 and 1994 consisted
primarily of unpaid property management fees, Partnership general and
administrative expenses, disposition fees (1995 only) and asset management fees
and are due and payable from current operations.
See Note 6 - "Mortgage Notes Payable - Affiliates" for a discussion of mortgage
notes payable to affiliated entities.
NOTE 3 - TAXABLE LOSS
- ---------------------
McNeil Real Estate Fund XXI, L.P. is a partnership and is not subject to Federal
and state income taxes. Accordingly, no recognition has been given to income
taxes in the accompanying financial statements of the Partnership since the
income or loss of the Partnership is to be included in the tax returns of the
individual partners. The tax returns of the Partnership are subject to
examination by Federal and state taxing authorities. If such examinations result
in adjustments to distributive shares of taxable income or loss, the tax
liability of the partners could be adjusted accordingly.
The Partnership's net assets and liabilities for tax reporting purposes exceeded
the net assets and liabilities for financial reporting purposes by $3,563,407,
$3,192,202 and $3,027,677 in 1995, 1994 and 1993, respectively.
<PAGE>
NOTE 4 - REAL ESTATE INVESTMENTS
- --------------------------------
The basis and accumulated depreciation of the Partnership's real estate
investments at December 31, 1995 and 1994 are set forth in the following tables:
<TABLE>
Accumulated
Buildings and Depreciation Net Book
1995 Land Improvements & Amortization Value
---- --------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Bedford Green
Bedford, OH $ 252,310 $ 3,502,644 $ (1,568,085) $ 2,186,869
Breckenridge
Davenport, IA 232,016 2,429,345 (1,059,282) 1,602,079
Evergreen Square
Tupelo, MS 396,856 4,511,320 (2,107,120) 2,801,056
Fort Meigs Plaza
Perrysburg, OH 367,193 4,499,421 (2,016,421) 2,850,193
Governour's Square
Wilmington, NC 577,657 5,881,314 (2,500,547) 3,958,424
Wise County Plaza
Wise, VA 1,397,569 8,236,756 (4,136,550) 5,497,775
Woodcreek
Ft. Wayne, IN 383,705 4,281,111 (1,890,021) 2,774,795
--------- ---------- ----------- ----------
$3,607,306 $33,341,911 $(15,278,026) $21,671,191
========= ========== =========== ==========
Accumulated
Buildings and Depreciation Net Book
1994 Land Improvements & Amortization Value
---- --------- ---------- ----------- ----------
Bedford Green $ 252,310 $ 3,417,727 $ (1,410,506) $ 2,259,531
Breckenridge 232,016 2,375,640 (937,695) 1,669,961
Evergreen Square 396,856 4,355,801 (1,894,651) 2,858,006
Fort Meigs Plaza 367,193 4,470,735 (1,822,710) 3,015,218
Governour's Square 577,657 5,650,150 (2,181,970) 4,045,837
Wise County Plaza 1,397,569 8,223,384 (3,795,385) 5,825,568
Woodcreek 383,705 4,152,934 (1,653,208) 2,883,431
---------- ---------- ----------- ----------
$3,607,306 $32,646,371 $(13,696,125) $22,557,552
========= ========== =========== ==========
</TABLE>
The Partnership leases its commercial properties under non-cancelable operating
leases. Future minimum rents to be received as of December 31, 1995 are as
follows:
1996......................... $ 1,085,000
1997......................... 886,000
1998......................... 817,000
1999......................... 711,000
2000......................... 592,000
Thereafter................... 1,813,000
----------
Total........................ $ 5,904,000
==========
Future minimum rents do not include contingent rentals based on sales volume of
tenants. Contingent rents amounted to $63,777, $89,293 and $119,333 for the
years ended December 31, 1995, 1994, and 1993, respectively. Future minimum
rents also do not include expense reimbursements for common area maintenance,
property taxes, and other expenses. These expense reimbursements amounted to
$233,290, $537,948 and $449,208 for the years ended December 31, 1995, 1994 and
1993, respectively.
<PAGE>
NOTE 5 - MORTGAGE NOTES PAYABLE
- -------------------------------
The following sets forth mortgage notes payable, net of discounts, of the
Partnership at December 31, 1995 and 1994. All mortgage notes payable are
secured by the related real estate investment.
<TABLE>
Mortgage Annual Monthly December 31,
Lien Interest Payments/ ----------------------------------
Property Position(a) Rates % Maturity (h) 1995 1994
- -------- ----------- ------- ------------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Bedford Green First (b) 8.480 $ 25,327 07/02 $ 3,291,885 $ 3,138,214
------------- --------------
Breckenridge First (c) 8.150 $ 14,602 07/03 1,762,115 1,792,377
Discount(c) (42,384) (46,895)
------------- --------------
1,719,731 1,745,482
------------- --------------
Evergreen Square First(c) 8.150 $ 16,777 07/03 2,024,568 2,059,337
Discount(c) (48,697) (53,880)
------------- --------------
1,975,871 2,005,457
------------- --------------
Fort Meigs Plaza First 12.810 $ 27,370 10/97 3,024,601 3,036,317
------------- --------------
Governour's Square First(c) 8.150 $ 26,314 07/03 3,175,416 3,229,948
Discount(c) (76,378) (84,506)
------------- --------------
3,099,038 3,145,442
------------- --------------
Suburban Plaza (d) First 11.000 $ 31,024 07/24 - 3,967,985
Discount(e) - (685,654)
------------- --------------
- 3,282,331
------------- --------------
Wise County Plaza First 8.970 $ 31,296 08/97 3,582,872 3,634,500
3.870 8,092 08/97 2,509,046 2,509,046
------------- --------------
6,091,918 6,143,546
------------- --------------
Woodcreek First (f) 8.480 $ 21,586 07/02 2,805,584 2,952,481
------------- --------------
Wyoming Mall First (g) 10.875 $ 35,688 07/99 - 3,465,303
------------- --------------
Total $ 22,008,628 $ 28,914,573
============= ==============
</TABLE>
(a) The debt is non-recourse to the Partnership.
(b) On July 14, 1995, the Partnership refinanced Bedford Green Apartments
(see Note 10 - "Mortgage Refinancings").
(c) On June 24, 1993, the Partnership refinanced Breckenridge Apartments,
Evergreen Square Apartments and Governour's Square Apartments via a Real
Estate Mortgage Investment Conduit. The three properties are
cross-collateralized. See Note 10 - "Mortgage Refinancings". Discounts
are based on an effective interest rate of 8.62% for these properties.
(d) Suburban Plaza was sold on March 31, 1995.
(e) Discount on Suburban Plaza was based on effective interest rate of
13.55%.
(f) On July 14, 1995, the Partnership refinanced Woodcreek Apartments (see
Note 10 - "Mortgage Refinancings").
(g) Wyoming Mall was sold March 31, 1995.
<PAGE>
(h) Balloon payments on the mortgage notes are due as follows:
<TABLE>
Property Balloon Payment Date
-------- --------- ---------
<S> <C> <C>
Wise County Plaza $6,000,127 08/97
Fort Meigs Plaza 3,000,138 10/97
Bedford Green 3,074,442 07/02
Woodcreek 2,620,263 07/02
Breckenridge 1,436,695 07/03
Evergreen Square 1,650,679 07/03
Governour's Square 2,588,992 07/03
</TABLE>
Scheduled principal maturities of the mortgage notes payable under existing
agreements, excluding discounts of $167,459, are as follows:
1996.................................... $ 247,160
1997.................................... 9,239,336
1998.................................... 209,058
1999.................................... 226,949
2000.................................... 246,372
Thereafter.............................. 12,007,212
----------
$22,176,087
==========
Based on borrowing rates currently available to the Partnership for mortgage
loans with similar terms and average maturities, the fair value of mortgage
notes payable was approximately $21,975,000 at December 31, 1995.
NOTE 6 - MORTGAGE NOTES PAYABLE - AFFILIATES
- --------------------------------------------
The following sets forth mortgage notes payable - affiliates of the Partnership
at December 31, 1995 and 1994. All mortgage notes are secured by the related
real estate investments.
<TABLE>
Mortgage Annual Monthly December 31,
Lien Interest Payments/ ---------------------------
Property Position(a) Rates % Maturity 1995 1994
- -------- ------------ ------- ------------------- -------- ----------
<S> <C> <C> <C> <C> <C>
Fort Meigs First 8.250 $ 4,073(b) 04/97 $ 733,900 $ 733,900
Suburban Plaza Second(c) 9.500 Variable 12/95 - 359,000
Suburban Plaza Third(d) 9.500 Variable 05/95 - 972,000
-------- ----------
Total $ 733,900 $ 2,064,900
======== ==========
</TABLE>
(a) The debt is non-recourse to the Partnership.
(b) Payments are interest-only equal to an effective interest rate of 6.66%.
All accrued interest is due at maturity in April 1997.
(c) In August 1991 and December 1991, the Partnership borrowed $159,000 and
$200,000, respectively, under a $5,000,000 revolving credit facility
established by the General Partner. The Partnership utilized a portion of
the proceeds from property sales to repay the affiliate mortgage and
accrued interest in April 1995.
(d) In May 1992, the Partnership obtained a loan from McNeil Real Estate Fund
XXVII, L.P., an affiliate of the General Partner, totaling $972,000. An
initial amount of $372,000 was funded in May 1992, and the remaining
$600,000 was funded in December 1992. The Partnership utilized a portion
of the proceeds from property sales to repay the affiliate mortgage in
April 1995.
Based on borrowing rates currently available to the Partnership for a mortgage
loan with similar terms and average maturities, the fair value of the mortgage
note payable was approximately $694,000 at December 31, 1995.
<PAGE>
NOTE 7 - PROPERTY DISPOSITIONS
- ------------------------------
On March 31, 1995, Suburban Plaza Shopping Center 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 Shopping Center 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>
<PAGE>
On February 22, 1994, Homestead Manor Apartments was sold to an unrelated third
party for a cash price of $60,810 and assumption of the first and second liens
by the purchaser. Cash proceeds and the gain on the disposition are detailed
below:
<TABLE>
Gain on Sale Cash Proceeds
--------- -------
<S> <C> <C>
Sales price.......................................... $ 60,810 $ 60,810
Credit for onsite petty cash......................... (150) (150)
Mortgages assumed by purchaser....................... 1,884,299
Carrying value....................................... (1,915,519)
---------
Gain on disposition of real estate................... $ 29,440
=========
Credit for security deposit liability................ (20,810)
--------
Net cash proceeds.................................... $ 39,850
========
</TABLE>
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.
On December 17, 1993, the Partnership sold Hickory Lake Apartments for a cash
price of $6,700,000. Cash proceeds and the gain on the disposition of real
estate are detailed below.
<TABLE>
Gain on Sale Cash Proceeds
---------- ----------
<S> <C> <C>
Sales price.......................................... $ 6,700,000 $ 6,700,000
Selling costs........................................ (235,251) (235,251)
Carrying value....................................... (5,785,919)
----------
Gain on disposition of real estate................... $ 678,830
==========
----------
Proceeds from sale of real estate investment......... 6,464,749
Retirement of mortgage note.......................... (5,092,451)
----------
Net cash proceeds.................................... $ 1,372,298
==========
</TABLE>
The carrying value of the property includes $9,065 of prepaid expenses and
$8,763 of accounts receivable.
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. The Partnership incurred $346,050 and
$201,000 of such fees for the years ended December 31, 1995 and December 31,
1993, respectively, in connection with the sale of properties.
NOTE 8 - FINANCIAL CONDITION AND GOING CONCERN CONSIDERATIONS
- -------------------------------------------------------------
The accompanying financial statements have been prepared assuming the
Partnership will continue as a going concern. The Partnership incurred losses of
$170,804, $1,891,596 and $4,289,394 in 1995, 1994 and 1993, respectively.
The Partnership generated $410,990 of cash through operating activities in 1995.
However, cash used for additions to real estate investments totaled $702,157 and
mortgage principal payments totaled $253,698. These cash expenditures exceeded
cash generated from operations by $544,865. The Partnership received $300,000
for repayment of advances to McNeil Real Estate Fund XXII, L.P., the joint owner
of Wyoming Mall. Additionally, the sales of Suburban Plaza and Wyoming Mall in
March 1995 provided net cash proceeds of $2,199,917.
In 1995, the Partnership paid $194,952 in deferred borrowing costs relating to
the refinancing of Bedford Green and Woodcreek apartments, and received $60,103
in proceeds from such refinancings. The Partnership repaid $973,000 of advances
from affiliates with the proceeds received from the sales of Suburban Plaza and
Wyoming Mall.
In 1996, present cash balances and operations of the properties are expected to
provide sufficient positive cash for normal operating expenses, debt service
payments and budgeted capital improvements. However, any unanticipated capital
improvements will require other sources of cash. Additionally, the Partnership
has significant mortgage maturities during 1997, and management expects to
refinance these mortgage notes as they mature. However, 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. The Partnership has
no established lines of credit from outside sources. Other possible actions to
resolve cash deficiencies include refinancings, deferral of capital expenditures
on Partnership properties except where improvements are expected to increase the
competitiveness and marketability of the properties, deferral of payables to or
arranging financing from affiliates, or the ultimate sale of other properties.
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 9 - LEGAL PROCEEDINGS
- --------------------------
The Partnership is subject to ordinary routine litigation incidental to the
Partnership's business. In the opinion of management, none of the litigation is
material to the Partnership's financial statements.
NOTE 10 - MORTGAGE REFINANCINGS
- -------------------------------
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 $194,952 related to the refinancing. An
additional $404,074 of tax, insurance and property replacement escrows were
established at the closing of the refinancing.
On June 24, 1993, the General Partner refinanced a portfolio of properties via a
Real Estate Mortgage Investment Conduit ("REMIC"). This REMIC consists of a pool
of properties from various partnerships affiliated with the General Partner.
Breckenridge, Evergreen Square and Governour's Square are included in the REMIC.
The properties in the REMIC are not collateralized across the partnerships, but
are cross-collateralized within the same partnership. The mortgage loans, which
bear an interest rate of 8.15%, are discounted to an effective rate of 8.62% and
mature in July 2003. The following is a summary of the cash proceeds relating to
the refinancings:
<TABLE>
Evergreen Governour's
Breckenridge Square Square Total
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
New loan proceeds................. $ 1,831,250 $ 2,104,000 $ 3,300,000 $ 7,235,250
Existing debt retired............. (1,426,469) (1,830,605) (2,865,602) (6,122,676)
Mortgage Discount................. (53,214) (61,140) (95,894) (210,248)
---------- ---------- ----------- ----------
Loan Proceeds.................. $ 351,567 $ 212,255 $ 338,504 $ 902,326
========== ========== =========== ==========
</TABLE>
The Partnership incurred loan costs of $365,343 related to the refinancing. An
additional $335,903 of tax, insurance and property replacement escrows were
established at the closing of the refinancing.
The Partnership recognized an extraordinary loss on early extinguishment of debt
on Breckenridge, Evergreen Square and Governour's Square in the amount of
$1,389,074, which is attributable to the unamortized discount and a prepayment
penalty related to the retired mortgages. The discount on the retired mortgages
was originally recorded to yield an effective interest rate of 12.63% for
Evergreen Square and 12.29% for Governour's Square.
The mortgage loan payable on Governour's Square was owned by an affiliate of the
General Partner, which received the loan in the amount of $3,846,290 in August
1992, as part of a litigation settlement with a third party. In order to induce
the Partnership to partially liquidate this loan, the affiliate agreed to reduce
the principal balance of the loan by $206,100, the approximate cost to the
Partnership to obtain alternative REMIC financing. The Partnership then used
$2,865,602 of the REMIC proceeds to pay down the affiliate mortgage note
payable. The $206,100 forgiveness of debt was offset against $1,389,074
attributable to the unamortized discount as discussed above. For the remaining
$733,900 balance of the loan, a new loan agreement was executed; and the
Partnership substituted a second lien on Fort Meigs Shopping Center as
collateral on the loan. The new mortgage loan on Fort Meigs bears interest at
8.25%, of which 6.66% is payable monthly, and matures in April 1997. See Note 6
- -"Mortgage Notes Payable Affiliates."
NOTE 11 - PRO FORMA INFORMATION (UNAUDITED)
- -------------------------------------------
The following pro forma information for the years ended December 31, 1995 and
1994 reflects the results of operations of the Partnership as if the sales of
Wyoming Mall and Suburban Plaza shopping centers had occurred as of January 1,
1994. The pro forma information is not necessarily indicative of the results of
operations which actually would have occurred or those which might be expected
to occur in the future.
<TABLE>
1995 1994
----------- -----------
<S> <C> <C>
Total revenue $ 6,182,132 $ 6,139,088
Loss before extraordinary items (1,756,693) (1,815,611)
Net loss (1,756,693) (1,815,611)
Net loss per thousand limited partnership units:
Current Income Units (6.34) (6.55)
Growth/Shelter Units (70.71) (73.06)
</TABLE>
<PAGE>
McNEIL REAL ESTATE FUND XXI
, LTD.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION AND AMORTIZATION
December 31, 1995
<TABLE>
Initial Cost (b) Cumulative Costs
------------------------------ Write-down Capitalized
Related (b) Buildings and and Permanent Subsequent
Description Encumbrances Land Improvements Impairment To Acquisition
- ----------- ------------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
APARTMENTS:
Bedford Green
Bedford, OH $ 3,291,885 $ 252,310 $ 3,203,996 $ - $ 298,648
Breckenridge
Davenport, IA 1,719,731 232,016 2,184,818 - 244,527
Evergreen
Tupelo, MS 1,975,871 396,856 4,217,746 (491,000) 784,574
Governour's Square
Wilmington, NC 3,099,038 577,657 4,829,242 - 1,052,072
Woodcreek
Fort Wayne, IN 2,805,584 383,705 3,613,217 - 667,894
RETAIL CENTERS
Ft. Meigs Plaza
Perrysburg, OH 3,758,501 367,193 4,032,902 - 466,519
Wise County Plaza
Wise, VA 6,091,918 1,397,569 8,375,648 (500,000) 361,108
----------- -------------- -------------- ------------ -------------
$ 22,742,528 $ 3,607,306 $ 30,457,569 $ (991,000) $ 3,875,342
=========== ============== ============== ============ =============
</TABLE>
See accompanying notes to Schedule III.
<PAGE>
McNEIL REAL ESTATE FUND XII, LTD.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION AND AMORTIZATION
December 31, 1995
<TABLE>
Gross Amount at
Which Carried at Close of Period
-------------------------------------------------- Accumulated
Buildings and Depreciation
Description Land Improvements Total (a) and Amortization
- ----------- ------------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
APARTMENTS:
Bedford Green
Bedford, OH $ 252,310 $ 3,502,644 $ 3,754,954 $ (1,568,085)
Breckenridge
Davenport, IA 232,016 2,429,345 2,661,361 (1,059,282)
Evergreen
Tupelo, MS 396,856 4,511,320 4,908,176 (2,107,120)
Governour's Square
Wilmington, NC 577,657 5,881,314 6,458,971 (2,500,547)
Woodcreek
Fort Wayne, IN 383,705 4,281,111 4,664,816 (1,890,021)
RETAIL CENTERS
Ft. Meigs Plaza
Perrysburg, OH 367,193 4,499,421 4,866,614 (2,016,421)
Wise County Plaza
Wise, VA 1,397,569 8,236,756 9,634,325 (4,136,550)
------------ ------------- --------------- --------------
$ 3,607,306 $ 33,341,911 $ 36,949,217 $ (15,278,026)
============ ============= =============== ==============
</TABLE>
(a) For Federal Income tax purposes, the properties are depreciated over lives
ranging from 15-25 years using ACRS or MACRS methods. The aggregate cost of
real estate investments for Federal income tax purposes was $42,160,533 and
accumulated depreciation was $27,077,516 at December 31, 1995.
(b) The initial cost and encumbrances reflect the present value of future loan
payments discounted, if appropriate, at a rate estimated to be the
prevailing interest rate at the date of acquisition.
(c) The carrying values of Evergreen Square Apartments and Wise County Plaza
Shopping Center were reduced by $176,568 and $500,000, respectively, in
1989. The carrying value of Evergreen Square Apartments was further reduced
by $314,432 in 1991.
See accompanying notes to Schedule III.
<PAGE>
McNEIL REAL ESTATE FUND XII, LTD.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION AND AMORTIZATION
December 31, 1995
<TABLE>
Date of Date Depreciable
Description Construction Acquired lives (years)
- ----------- ----------- ---------- -------------
<S> <C> <C> <C>
APARTMENTS:
Bedford Green
Bedford, OH 1970 06/84 5-25
Breckenridge
Davenport, IA 1974 10/84 5-25
Evergreen
Tupelo, MS 1970 11/84 5-25
Governour's Square
Wilmington, NC 1974 11/84 5-25
Woodcreek
Fort Wayne, IN 1978 11/84 5-25
RETAIL CENTERS
Ft. Meigs Plaza
Perrysburg, OH 1974 10/84 5-25
Wise County Plaza
Wise, VA 1971 02/84 5-25
</TABLE>
<PAGE>
McNEIL REAL ESTATE FUND XXI, L.P.
Notes to Schedule III
Real Estate Investments and Accumulated Depreciation and Amortization
A summary of activity for the Partnership's real estate investments and
accumulated depreciation and amortization is as follows:
<TABLE>
For the Years Ended December 31,
------------------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Real estate investments:
Balance at beginning of year............... $36,253,677 $42,477,794 $57,085,554
Improvements............................... 695,540 870,671 1,158,210
Reclassification to asset held for
sale.................................... - (7,094,788) (6,305,257)
Disposition of real estate................. - - (8,725,425)
Write-down for permanent
impairment of real estate............. - - (735,288)
---------- ---------- ----------
Balance at end of year..................... $36,949,217 $36,253,677 $42,477,794
========== ========== ==========
Accumulated depreciation and amortization:
Balance at beginning of year............... $13,696,125 $14,621,475 $17,587,711
Depreciation............................... 1,724,781 1,775,298 2,288,567
Reclassification to asset held for
sale.................................... (142,880) (2,700,648) (2,297,469)
Disposition of real estate................. - - (2,957,334)
---------- ----------- ----------
Balance at end of year..................... $15,278,026 $13,696,125 $14,621,475
========== ========== ==========
Assets held for sale:
Balance at beginning of year............... $ 8,153,520 $ 5,935,338 $ 2,257,185
Reclassification to asset held for
sale.................................... - 4,394,140 4,007,788
Improvements............................... 6,617 11,710 67,197
Depreciation............................... (142,880) (272,149) (155,320)
Sale of real estate........................ (8,017,257) (1,915,519) -
Write-down for permanent
impairment of real estate............. - - (241,512)
---------- ---------- ----------
Balance at end of year..................... $ - $ 8,153,520 $ 5,935,338
========== ========== ==========
</TABLE>
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------- ---------------------------------------------------------------
FINANCIAL DISCLOSURES
---------------------
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------- --------------------------------------------------
Neither the Partnership nor the General Partner has any directors or executive
officers. The names and ages of, as well as the positions held by, the officers
and directors of McNeil Investors, Inc., the general partner of the General
Partner, are as follows:
<TABLE>
Other Principal Occupations and Other
Name and Position Age Directorships During the Past 5 Years
- ----------------- --- -------------------------------------
<S> <C> <C>
Robert A. McNeil, 75 Mr. McNeil is also Chairman of the Board and Director of McNeil Real
Chairman of the Estate Management, Inc. ("McREMI") which is an affiliate of the General
Board and Director Partner. He has held the foregoing positions since the formation of such
entity in 1990. Mr. McNeil received his B.A. degree from Stanford
University in 1942 and his L.L.B. degree from Stanford Law School in
1948. He is a member of the State Bar of California and has been involved
in real estate financing since the late 1940's and in real estate
acquisitions, syndications, and dispositions since 1960. From 1986 until
active operations of McREMI and McNeil Partners, L.P. began in February
1991, Mr. McNeil was a private investor. Mr. McNeil has been a member of
the International Board of Directors of the Salk Institute, which promotes
research in improvements in health care.
Carole J. McNeil 52 Mrs. McNeil is Co-Chairman, with husband Robert A. McNeil, of McNeil
Co-Chairman of the Investors, Inc. Mrs. McNeil has twenty years of real estate experience,
Board most recently as a private investor from 1986 to 1993. In 1982, she
founded Ivory & Associates, a commercial real estate brokerage firm in San
Francisco, CA. Prior to that, she was a commercial real estate associate
with the Madison Company and, earlier, a commercial sales associate and
analyst with Marcus and Millichap in San Francisco. In 1978, Mrs. McNeil
established Escrow Training Centers, California's first accredited
commercial training program for title company escrow officers and real
estate agents needing college credits to qualify for brokerage licenses.
She began in real estate as Manager and Marketing Director of Title
Insurance and Trust in Marin County, CA. Mrs. McNeil serves on the
International Board of Directors of the Salk Institute.
</TABLE>
<PAGE>
<TABLE>
Other Principal Occupations and Other
Name and Position Age Directorships During the Past 5 Years
- ----------------- --- -------------------------------------
<S> <C> <C>
Donald K. Reed, 50 Mr. Reed is President, Chief Executive Officer and Director of McREMI
Director, President, which is an affiliate of the General Partner. Prior to joining McREMI in
and Chief Executive March 1993, Mr. Reed was President, Chief Operating Officer and Director
Officer of Duddlesten Management Corporation and Duddlesten Realty Advisors, Inc.,
with responsibility for a management portfolio of office, retail,
multi-family and mixed-use land projects representing $2 billion in asset
value. He was also Chief Operating Officer, Director and member of the
Executive Committee of all Duddlesten affiliates. Mr. Reed started with the
Duddlesten companies in 1976 and served as Senior Vice President and Chief
Financial Officer and as Executive Vice President and Chief Operating
Officer of Duddlesten Management Corporation before his promotion to
President in 1982. He was President and Chief Operating Officer of
Duddlesten Realty Advisors, Inc., which has been engaged in real estate
acquisitions, marketing and dispositions, since its formation in 1989.
Ron K. Taylor 38 Mr. Taylor is a Senior Vice President of McREMI and has been in this
Vice President capacity since McREMI commenced active operations in 1991. He also serves
as Acting Chief Financial Officer of McREMI since the resignation of
Robert C. Irvine on January 31, 1996. Mr. Taylor is primarily responsible
for Asset Management functions at McREMI, including property
dispositions, commercial leasing, real estate finance and portfolio
management. Prior to joining McREMI, Mr. Taylor served as an Executive
Vice President for a national syndication/property management company.
Mr. Taylor has been involved in the real estate industry since 1983.
</TABLE>
Each director shall serve until his successor shall have been duly elected and
qualified.
ITEM 11. EXECUTIVE COMPENSATION
- -------- ----------------------
No direct compensation was paid or payable by the Partnership to directors or
officers (since it does not have any directors or officers) for the year ended
December 31, 1995, nor was any direct compensation paid or payable by the
Partnership to directors or officers of the general partner of the General
Partner for the year ended December 31, 1995. The Partnership has no plans to
pay any such remuneration to any directors or officers of the general partner of
the General Partner in the future.
See Item 13 - Certain Relationships and Related Transactions for amounts of
compensation and reimbursements paid by the Partnership to the General Partner
and its affiliates.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------- --------------------------------------------------------------
(A) Security ownership of certain beneficial owners.
No individual or group, as defined by Section 13(d)(3) of the Securities
Exchange Act of 1934, known to the Partnership is the beneficial owner of
more than 5 percent of the Partnership's securities.
(B) Security ownership of management.
Neither the General Partner nor any of its officers or directors of its
general partner own any limited partnership units.
(C) Change in control.
None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------
The amendments to the Partnership compensation structure included in the Amended
Partnership Agreement provide for an asset management fee to replace all other
forms of General Partner compensation other than property management fees and
reimbursements of certain costs. 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 percent 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. For the year ended December 31, 1995, the
Partnership paid or accrued $404,972 of such asset management fees. Total
accrued but unpaid asset management fees of $2,530,536 were outstanding at
December 31, 1995.
The Partnership pays property management fees equal to 5% of the gross rental
receipts for its residential properties and 6% of gross rental receipts for
commercial properties to McREMI, an affiliate of the General Partner, for
providing property management services. Additionally, the Partnership reimburses
McREMI for its costs, including overhead of administering the Partnership's
affairs. For the year ended December 31, 1995, the Partnership paid or accrued
$746,465 of such property management fees and reimbursements. See Item 1 -
Business, Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations and Item 8 - Note 2 - "Transactions With Affiliates."
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. The Partnership incurred $346,050 of such
fees for the year ended December 31, 1995 in connection with the sale of
properties.
A revolving credit facility has been established by the General Partner for the
benefit of the Partnership. The credit facility may not exceed $5,000,000 in the
aggregate and 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. During 1993, the Partnership
received $92,371 of unsecured advances from the credit facility. The General
Partner has, at its discretion, advanced funds to the Partnership in addition to
the revolving credit facility. Additionally, prior to the restructuring of the
Partnership, affiliates of the Original General Partner advanced funds to enable
the Partnership to meet its working capital requirements. These advances were
purchased by the General Partner. In 1995, the Partnership used a portion of the
proceeds received from property sales to repay the $359,000 secured loan under
the credit facility, $973,000 of unsecured advances from the General Partner and
related accrued interest.
During 1992, the Partnership made advances of $320,874 to McNeil Real Estate
Fund XXII, L.P., the joint owner of Wyoming Mall, for tenant improvements and
operations at Wyoming Mall. During 1994, $20,874 of these advances were repaid.
In 1995, the balance of the advances, plus accrued interest, was repaid when
Wyoming Mall was sold.
Under the terms of its Amended Partnership Agreement, McNeil Real Estate Fund
XXVII, L.P. ("Fund XXVII") is permitted to make loans to affiliates of the
General Partner. On May 1, 1992, the Partnership entered into a loan pursuant to
which Fund XXVII agreed to loan up to $972,000 to the Partnership. This loan was
secured by a third lien on the Suburban Plaza, a shopping center owned by the
Partnership and located in Knoxville, Tennessee. The loan was repaid in 1995
when Suburban Plaza was sold. See Item 1 - Business, Item 7 Management's
Discussion and Analysis of Financial Condition and Results of Operation, and
Item 8 - Note 2 "Transactions with Affiliates."
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
- -------- -----------------------------------------------------------------
See accompanying Index to Financial Statements at Item 8.
(A) Exhibits
--------
Exhibit
Number Description
------ -----------
3.1 and 4.1 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).
10.2 Portfolio Services Agreement, dated February
14, 1991, between Southmark Realty Partners,
Ltd. and McNeil Real Estate Management, Inc.
(Incorporated by reference to the Quarterly
Report of the registrant on Form 10-Q for the
period ended March 31, 1991, as filed on May
14, 1991).
10.3 Amended and Restated Notes, dated March 1,
1991, between Southmark Realty Partners, Ltd.
and The Manhattan Savings Bank relating to
Wise County Plaza. (Incorporated by reference
to the Annual Report of the registrant on Form
10-K for the period ended December 31, 1991,
as filed on March 24, 1992).
10.6 First Amendment and Modification of Mortgage
Note, dated June 10, 1992, between McNeil Real
Estate Fund XXI and Household Bank, F.S.B.
relating to Woodcreek Apartments. (1)
10.7 First Amendment and Modification of Mortgage
Note, dated June 10, 1992, between McNeil Real
Estate Fund XXI, L.P. and Household Bank,
F.S.B. relating to Bedford Green Apartments.
(1)
10.9 Promissory Note, dated May 1, 1992, between
McNeil Real Estate Fund XXI, L.P. and McNeil
Real Estate Fund XXVII, L.P. (1)
10.10 Property Management Agreement dated March 26,
1992, between McNeil Real Estate Fund XXI,
L.P. and McNeil Real Estate Management, Inc.
(1)
10.11 Amendment of Property Management Agreement
dated March 5, 1993 by McNeil Real Estate Fund
XXI, L.P. and McNeil Real Estate Management,
Inc. (1).
10.12 Revolving Credit Agreement dated August 6,
1991, between McNeil Partners, L.P. and
various selected partnerships, including the
Registrant.(2)
10.13 Loan Agreement dated June 23, 1993 between
Lexington Mortgage Company and McNeil Real
Estate Fund XXI, et al. (Incorporated by
reference to the Annual Report of McNeil Real
Estate Fund XI, Ltd. (file No. 0-9783) on Form
10-K for the period ended December 31, 1993,
as filed on March 30, 1994).
10.14 Master Property Management Agreement, dated
June 24, 1993 between McNeil Real Estate
Management, Inc. and McNeil Real Estate Fund
XXI, Ltd. (filed without schedules).(2)
<PAGE>
Exhibit
Number Description
------ -----------
10.15 Loan Agreement dated July 14, 1995 between
Fleet Real Estate Capital, Inc. and Bedford
Green Fund XXI, L.P. (3)
10.16 Loan Agreement dated July 14, 1995 between
Fleet Real Estate Capital, Inc. and Woodcreek
Fund XXI, L.P. (3)
10.17 Sale Agreement dated February 16, 1994 between
McNeil Real Estate Fund XXI and HM Investment
Corp. for the sale of Homestead Apartments
(Incorporated by reference to the Current
Report of the registrant on Form 8-K dated
February 22, 1994, as filed on March 4, 1994)
11. Statement regarding computation of Net Loss
per Limited Partnership Unit (see Note 1 to
Financial Statements)
22. Following is a list of subsidiaries of the
Partnership:
<TABLE>
Names Under
Jurisdiction Which It Is
Name of Subsidiary Incorporation Doing Business
------------------ ------------- --------------
<S> <C> <C>
Bedford Green Fund XXI
Limited Partnership Texas None
Breckenridge Fund XXI
Limited Partnership Delaware None
Evergreen Fund XXI
Limited Partnership Delaware None
Governour's Square Fund
XXI Limited Partnership Delaware None
Woodcreek Fund XXI
Limited Partnership Texas None
</TABLE>
The Partnership has omitted instruments with respect to long-term
debt where the total amount of the securities authorized
thereunder does not exceed 10% of the total assets of the
Partnership. The Partnership agrees to furnish a copy of each such
instrument to the Commission upon request.
(1) Incorporated by reference to the Annual Report
of the registrant on Form 10-K for the period
ended December 31, 1992, as filed on March 30,
1993.
(2) Incorporated by reference to the Annual Report
of the registrant on Form 10-K for the period
ended December 31, 1993, as filed on March 30,
1994.
(3) Incorporated by reference to the Quarterly
Report of the registrant on Form 10-Q for the
period ended September 30, 1995, as filed on
November 13, 1995.
(B) There were no reports on Form 8-K filed by the Partnership during the
quarter ended December 31, 1995.
<PAGE>
McNEIL REAL ESTATE FUND XXI, L.P.
A Limited Partnership
SIGNATURE PAGE
Pursuant to the requirements of Section 13 or 15(d) 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>
McNEIL REAL ESTATE FUND XXI, L.P.
<S> <C>
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
April 1, 1996 By: /s/ Robert McNeil
- ------------------------- --------------------------------------
Date Robert A. McNeil
Chairman of the Board and Director
Principal Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
April 1, 1996 By: /s/ Donald K. Reed
- -------------------------- --------------------------------------
Date Donald K. Reed
President and Director of McNeil Investors, Inc.
April 1, 1996 By: /s/ Ron K. Taylor
- -------------------------- --------------------------------------
Date Ron K. Taylor
Acting Chief Financial Officer
of McNeil Investors, Inc.
April 1, 1996 By: /s/ Carol A. Fahs
- -------------------------- --------------------------------------
Date Carol A. Fahs
Chief Accounting Officer of McNeil Real Estate
Management, Inc.
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0
0
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