UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
-------------------------------------------
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
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MCNEIL REAL ESTATE FUND XXI, L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 33-0030615
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13760 Noel Road, Suite 600, LB70, Dallas, Texas, 75240
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (972) 448-5800
-----------------------------
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ------- --------------------
MCNEIL REAL ESTATE FUND XXI, L.P.
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
------------- -------------
ASSETS
- ------
Real estate investments:
<S> <C> <C>
Land ..................................................... $ 1,842,544 $ 1,842,544
Buildings and improvements ............................... 22,751,604 22,468,887
------------ ------------
24,594,148 24,311,431
Less: Accumulated depreciation and amortization ......... (13,219,114) (12,611,818)
------------ ------------
11,375,034 11,699,613
Cash and cash equivalents ................................... 1,165,849 1,253,238
Cash segregated for security deposits ....................... 147,948 181,524
Accounts receivable ......................................... 23,501 25,391
Escrow deposits ............................................. 494,759 470,958
Deferred borrowing costs, net of accumulated amortiz-
ation of $288,595 and $255,111 at June 30, 1999
and December 31, 1998, respectively ...................... 272,333 305,817
Prepaid expenses and other assets ........................... 336,768 35,922
------------ ------------
$ 13,816,192 $ 13,972,463
============ ============
LIABILITIES AND PARTNERS' DEFICIT
- ---------------------------------
Mortgage notes payable, net ................................. $ 12,272,441 $ 12,372,597
Accounts payable and accrued expenses ....................... 308,086 172,803
Accrued property taxes ...................................... 279,126 304,699
Payable to affiliates ....................................... 5,658,721 5,446,918
Security deposits and deferred rental revenue ............... 185,333 170,108
------------ ------------
18,703,707 18,467,125
------------ ------------
Partners' deficit:
Limited partners - 50,000 Units authorized;
46,898 and 46,948 Units outstanding at June
30, 1999 and December 31, 1998, respectively (24,863
Current Income Units and 22,035 Growth/Shelter Units
outstanding at June 30, 1999 and 24,863 Current
Income Units and 22,085 Growth/Shelter Units
outstanding at December 31,1998)................. (4,521,027) (4,132,103)
General Partner.......................................... (366,488) (362,559)
------------ ------------
(4,887,515) (4,494,662)
------------ ------------
$ 13,816,192 $ 13,972,463
============ ============
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXI, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- -------------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
Revenue:
<S> <C> <C> <C> <C>
Rental revenue ............................. $ 1,301,790 $ 1,448,230 $ 2,581,904 $ 3,102,311
Interest ................................... 11,818 16,111 22,476 32,912
Gain on sale of real estate ................ -- 863,350 -- 863,350
----------- ----------- ----------- -----------
Total revenue ............................ 1,313,608 2,327,691 2,604,380 3,998,573
----------- ----------- ----------- -----------
Expenses:
Interest ................................... 279,528 390,131 560,279 810,956
Interest - affiliates ...................... -- 11,591 -- 137,371
Depreciation and amortization............... 303,648 351,818 607,296 739,076
Property taxes ............................. 107,199 114,713 212,799 252,298
Personnel costs ............................ 211,845 182,712 411,163 385,646
Utilities .................................. 95,992 105,957 201,398 222,926
Repairs and maintenance .................... 200,550 199,206 356,913 363,112
Property management
fees - affiliates ........................ 64,759 78,742 128,893 165,023
Other property operating
expenses ................................. 75,812 81,899 156,844 185,809
General and administrative ................. 15,879 151,539 104,528 244,035
General and administrative -
affiliates ............................... 125,485 161,543 257,120 332,134
----------- ----------- ----------- -----------
Total expenses ........................... 1,480,697 1,829,851 2,997,233 3,838,386
----------- ----------- ----------- -----------
Income (loss) before
extraordinary items ........................ (167,089) 497,840 (392,853) 160,187
Extraordinary items ........................... -- 1,816,152 -- 1,816,152
----------- ----------- ----------- -----------
Net income (loss) ............................. $ (167,089) $ 2,313,992 $ (392,853) $ 1,976,339
=========== =========== =========== ===========
Net income (loss) allocable to:
Current Income Unit ........................ $ (15,038) $ 208,260 $ (35,357) $ 177,871
Growth/Shelter Unit ........................ (150,380) 2,082,593 (353,567) 1,778,705
General Partner ............................ (1,671) 23,139 (3,929) 19,763
----------- ----------- ----------- -----------
Net income (loss) ............................. $ (167,089) $ 2,313,992 $ (392,853) $ 1,976,339
=========== =========== =========== ===========
Net income (loss) per limited partnership unit:
Current Income Unit Holders:
Income (loss) before
extraordinary items ...................... $ (.60) $ 1.80 $ (1.42) $ .58
Extraordinary items ........................ -- 6.57 -- 6.57
----------- ----------- ----------- -----------
Net income (loss) .......................... $ (.60) $ 8.37 $ (1.42) $ 7.15
=========== =========== =========== ===========
Growth/Shelter Unit Holders:
Income (loss) before
extraordinary items ...................... $ (6.83) $ 20.29 $ (16.05) $ 6.53
Extraordinary items ........................ -- 74.01 -- 74.01
----------- ----------- ----------- -----------
Net income (loss) .......................... $ (6.83) $ 94.30 $ (16.05) $ 80.54
=========== =========== =========== ===========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXI, L.P.
STATEMENTS OF PARTNERS' DEFICIT
(Unaudited)
For the Six Months Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Deficit
------------ ------------ ------------
<S> <C> <C> <C>
Balance at December 31, 1997.......... $ (376,608) $(5,522,974) $(5,899,582)
Net income
General Partner ................... 19,763 -- 19,763
Current Income Units .............. -- 177,871 177,871
Growth/Shelter Units .............. -- 1,778,705 1,778,705
----------- ----------- -----------
Total net income ..................... 19,763 1,956,576 1,976,339
----------- ----------- -----------
Balance at June 30, 1998 ............. $ (356,845) $(3,566,398) $(3,923,243)
=========== =========== ===========
Balance at December 31, 1998 ......... $ (362,559) $(4,132,103) $(4,494,662)
Net loss
General Partner ................... (3,929) -- (3,929)
Current Income Units .............. -- (35,357) (35,357)
Growth/Shelter Units .............. -- (353,567) (353,567)
----------- ----------- -----------
Total net loss ....................... (3,929) (388,924) (392,853)
----------- ----------- -----------
Balance at June 30, 1999 ............. $ (366,488) $(4,521,027) $(4,887,515)
=========== =========== ===========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXI, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------------
1999 1998
------------ ------------
Cash flows from operating activities:
<S> <C> <C>
Cash received from tenants ............................... $ 2,623,864 $ 3,163,151
Cash paid to suppliers ................................... (1,423,899) (1,404,149)
Cash paid to affiliates .................................. (174,210) (170,555)
Interest received ........................................ 22,476 32,912
Interest paid ............................................ (516,494) (627,102)
Interest paid to affiliates .............................. -- (407,432)
Property taxes paid and escrowed ......................... (225,264) (317,182)
----------- -----------
Net cash provided by operating activities ................... 306,473 269,643
----------- -----------
Cash flows from investing activities:
Additions to real estate investments ..................... (282,717) (164,987)
Proceeds from disposition of real estate ................. -- 3,698,365
----------- -----------
Net cash provided by (used in) investing activities.......... (282,717) 3,533,378
----------- -----------
Cash flows from financing activities:
Principal payments on mortgage notes
payable ................................................ (111,145) (118,700)
Principal payments on mortgage notes
payable - affiliate .................................... -- (5,482)
Retirement of mortgage notes payable -
affiliate .............................................. -- (3,534,157)
Repayment of advances from affiliates .................... -- (630,574)
----------- -----------
Net cash used in financing activities ....................... (111,145) (4,288,913)
----------- -----------
Net decrease in cash and cash equivalents ................... (87,389) (485,892)
Cash and cash equivalents at beginning of
period ................................................... 1,253,238 1,817,585
----------- -----------
Cash and cash equivalents at end of period .................. $ 1,165,849 $ 1,331,693
=========== ===========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXI, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
Reconciliation of Net Income (Loss) to Net Cash Provided by
Operating Activities
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------------------
1999 1998
------------ -----------
<S> <C> <C>
Net income (loss) ....................................... $ (392,853) $ 1,976,339
----------- -----------
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization ........................ 607,296 739,076
Amortization of deferred borrowing costs ............. 33,484 31,259
Amortization of discounts on mortgage
notes payable ...................................... 10,989 10,444
Accrued interest on advances from affiliates ......... -- 17,684
Gain on sale of real estate .......................... -- (863,350)
Extraordinary items .................................. -- (1,816,152)
Changes in assets and liabilities:
Cash segregated for security deposits .............. 33,576 (33,007)
Accounts receivable ................................ 1,890 116,379
Escrow deposits .................................... (23,801) 137,569
Prepaid expenses and other assets .................. (300,846) 4,819
Accounts payable and accrued expenses .............. 135,283 (58,511)
Accrued property taxes ............................. (25,573) (119,926)
Payable to affiliates .............................. 211,803 326,602
Security deposits and deferred rental
revenue .......................................... 15,225 (17,491)
----------- -----------
Total adjustments ................................ 699,326 (1,524,605)
----------- -----------
Net cash provided by operating activities ............... $ 306,473 $ 451,734
=========== ===========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXI, L.P.
Notes to Financial Statements
(Unaudited)
June 30, 1999
NOTE 1.
- -------
McNeil Real Estate Fund XXI, L.P. (the "Partnership"), formerly known as
Southmark Realty Partners, Ltd., was organized on November 23, 1983 as a limited
partnership under the provisions of the California Revised Limited Partnership
Act to acquire and operate commercial and residential properties. The general
partner of the Partnership is McNeil Partners, L.P. (the "General Partner"), a
Delaware limited partnership, an affiliate of Robert A. McNeil ("McNeil"). The
principal place of business for the Partnership and the General Partner is 13760
Noel Road, Suite 600, LB70, Dallas, Texas, 75240.
In the opinion of management, the financial statements reflect all adjustments
necessary for a fair presentation of the Partnership's financial position and
results of operations. All adjustments were of a normal recurring nature.
However, the results of operations for the six months ended June 30, 1999 are
not necessarily indicative of the results to be expected for the year ending
December 31, 1999.
NOTE 2.
- -------
The financial statements should be read in conjunction with the financial
statements contained in the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1998, and the notes thereto, as filed with the
Securities and Exchange Commission, which is available upon request by writing
to McNeil Real Estate Fund XXI, L.P., c/o McNeil Real Estate Management, Inc.,
Investor Services, 13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240.
NOTE 3.
- -------
Certain reclassifications have been made to prior period amounts to conform with
the current period presentation.
NOTE 4.
- -------
The Partnership pays property management fees equal to 5% of gross rental
receipts for its residential properties and 6% of gross rental receipts for its
commercial properties to McNeil Real Estate Management, Inc. ("McREMI"), an
affiliate of the General Partner, for providing property management services for
the Partnership's residential and commercial properties and leasing services for
its residential properties. McREMI may also choose to provide leasing services
for the Partnership's commercial properties, in which case McREMI will receive
property management fees from such commercial properties equal to 3% of the
property's gross rental receipts plus leasing commissions based on the
prevailing market rate for such services where the property is located.
<PAGE>
The Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs. Total accrued but unpaid Partnership
general and administration fees of $1,543,766 and $1,443,393 were outstanding at
June 30, 1999 and December 31, 1998, respectively.
The Partnership is paying an asset management fee which is payable to the
General Partner. Through 1999, the Asset Management Fee is calculated as 1% of
the Partnership's tangible asset value. Tangible asset value is determined by
using the greater of (i) an amount calculated by applying a capitalization rate
of 9% to the annualized net operating income of each property or (ii) a value of
$10,000 per apartment unit for residential property and $50 per gross square
foot for commercial property to arrive at the property tangible asset value. The
property tangible asset value is then added to the book value of all other
assets excluding intangible items. The fee percentage decreases to .75% in 2000,
.50% in 2001 and .25% thereafter. Total accrued but unpaid asset management fees
of $3,747,086 and $3,636,836 were outstanding at June 30, 1999 and December 31,
1998, respectively.
The Partnership pays a disposition fee to the General Partner equal to 3% of the
gross sales price for brokerage services performed in connection with the sale
of the Partnership's properties. The fee is due and payable at the time the sale
closes. In connection with the sales of Suburban Plaza and Wyoming Mall, total
accrued but unpaid disposition fees of $346,050 were outstanding at June 30,
1999 and December 31, 1998. In connection with the sale of Fort Meigs Plaza, the
General Partner waived its right to receive a disposition fee, which would have
totaled $114,000.
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 were payable to, the
General Partner. These advances totaling $630,574, and accrued interest of
$182,091, were repaid in full in April 1998.
Compensation and reimbursements paid to or accrued for the benefit of the
General Partner and its affiliates are as follows:
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------
1999 1998
-------- --------
<S> <C> <C>
Property management fees .............................. $128,893 $165,023
Charged to interest - affiliates:
Interest on advances from affiliates ............... -- 17,684
Interest on mortgage notes payable - affiliate...... -- 119,687
Charged to general and administrative -affiliates:
Partnership administration ......................... 123,775 148,829
Asset management fee ............................... 133,345 183,305
-------- --------
$386,013 $634,528
======== ========
</TABLE>
Payable to affiliates at June 30, 1999 and December 31, 1998 consisted primarily
of unpaid asset management fees, property management fees, disposition fees and
partnership general and administrative expenses and is due and payable from
current operations.
<PAGE>
The mortgage notes payable - affiliate secured by Fort Meigs Plaza were repaid
in full when the property was sold in April 1998. See Note 5.
NOTE 5.
- -------
On April 20, 1998, the Partnership sold Fort Meigs Plaza Shopping Center,
located in Perrysburg, Ohio, to an unaffiliated purchaser for a cash purchase
price of $3,800,000. Cash proceeds from the sale, after payment of prorated
rents and property taxes, were used to repay the mortgage notes payable to
McNeil Real Estate Fund XX, L.P. ("Fund XX"), an affiliate. Cash proceeds, as
well as the gain on sale, are detailed on the following page.
<TABLE>
<CAPTION>
Gain Cash
on Sale Proceeds
------------ ------------
<S> <C> <C>
Sales price ...................................... $ 3,800,000 $ 3,800,000
Selling costs .................................... (101,635) (101,635)
Straight-line rents receivable written off........ (28,979)
Prepaid leasing commissions written off .......... (10,048)
Carrying value ................................... (2,795,988)
----------- -----------
Gain on sale of real estate ...................... $ 863,350
===========
Proceeds from sale ............................... 3,698,365
Prorated rents and property taxes paid at
closing ....................................... (83,012)
Repayment of mortgage notes payable to
Fund XX and related accrued interest .......... (3,615,353)
-----------
Net cash proceeds ................................ $ --
===========
</TABLE>
The Partnership recognized a $190,437 extraordinary gain on repayment of the
mortgage notes payable to Fund XX, as follows:
First lien mortgage note payable - affiliate......... $ 2,990,694
Second lien mortgage note payable - affiliate........ 733,900
Accrued interest payable .......................... 81,196
-----------
Total principal and interest payable to
Fund XX ....................................... 3,805,790
Cash for repayment in full of principal and
interest payable to Fund XX....................... (3,615,353)
-----------
Extraordinary gain on repayment of mortgage
notes payable - affiliate......................... $ 190,437
===========
<PAGE>
Under the terms of its partnership agreement, the Partnership normally pays a
disposition fee to the General Partner equal to 3% of the gross sales price for
brokerage services performed in connection with the sale of the Partnership's
properties. The fee is due and payable at the time the sale closes. In
connection with the sale of Fort Meigs Plaza, the General Partner waived its
right to receive such fee, which would have totaled $114,000.
NOTE 6.
- -------
The mortgage notes payable secured by Wise County Plaza matured on August 1,
1997 and the Partnership was unable to negotiate a modification and extension of
the loans. On May 29, 1998, Wise County Plaza was foreclosed on by the lender in
full settlement of the mortgage indebtedness secured by the property. In
connection with this transaction, the Partnership recognized an extraordinary
gain on retirement of mortgage note payable as set forth on the following page.
Estimated fair value of real estate.................. $ 4,535,814
Accounts receivable written off...................... (61,910)
Prepaid expenses written off......................... (10,855)
Accrued property taxes written off................... 20,335
Deferred rental revenue written off.................. 750
Carrying value ..................................... (4,484,134)
-----------
Gain on disposition ............................. $ --
===========
Amount of mortgage note payable settled.............. $ 5,957,419
Amount of accrued interest payable settled........... 222,172
Escrow deposits applied .......................... (18,062)
Estimated fair value of real estate.................. (4,535,814)
-----------
Extraordinary gain on repayment of mortgage
note payable ..................................... $ 1,625,715
===========
NOTE 7.
- -------
On June 24, 1999, the Partnership and 18 affiliated partnerships, collectively
(the "Partnerships"), the General Partner, McNeil Investors, Inc., McNeil Real
Estate Management, Inc. ("McREMI"), McNeil Summerhill, Inc. and Robert A. McNeil
entered into a definitive acquisition agreement (the "Master Agreement") with
WXI/McN Realty L.L.C. ("Newco"), an affiliate of Whitehall Street Real Estate
Limited Partnership XI, a real estate investment fund managed by Goldman, Sachs
& Co., whereby Newco and its subsidiaries will acquire the Partnerships. The
Master Agreement provides that the Partnerships will be merged with subsidiaries
of Newco. The Master Agreement also provides for the acquisition by Newco and
its subsidiaries of the assets of McREMI. The aggregate consideration in the
transaction, including the assumption or prepayment of all outstanding mortgage
debt of the Partnerships, is approximately $644,440,000.
<PAGE>
Pursuant to the terms of the Master Agreement, the limited partners in the
Partnership will receive cash on the closing date of the transaction (the
"Closing Date") in exchange for their limited partnership interests. In
addition, the Partnership will declare a special distribution to its limited
partners on the Closing Date equal to its then positive net working capital
balance, if any. The estimated aggregate consideration and net working capital
distribution to be received per unit of limited partnership interest in the
Partnership is currently estimated as $99 (Current Income Units only).
On the Closing Date, the General Partner of the Partnership, will receive an
equity interest in Newco in exchange for its contribution to Newco of the
general partnership interests in the Partnerships, the limited partnership
interests in Fairfax Associates II L.P. and McNeil Summerhill Associates and the
assets of McREMI.
The Partnership's participation in the transaction is subject to, among other
conditions, the approval by a majority of the limited partners of the
Partnership.
In some circumstances, as defined in the Master Agreement, the Partnerships may
be subject to a break-up fee, up to an aggregate maximum of $18,000,000, if the
Master Agreement is terminated with respect to one or more of the Partnerships.
In the case of termination of the Master Agreement in these circumstances, each
of the Partnerships with respect to which the Master Agreement has been
terminated will be severally, but not jointly, liable for payment to Newco of
its respective break-up fee. The break-up fee ratably calculated for the
Partnership is $575,226.
All previous costs associated with this transaction had been allocated among the
Partnerships and McREMI based on the relative number of properties contained
therein. On June 24, 1999, a fairness opinion (the "Fairness Opinion") was
rendered by Robert A. Stanger & Co., Inc., an independent financial advisor, to
the effect that the aggregate consideration to be paid for the general
partnership interests and limited partnership interests in all of the
Partnerships and the assets of McREMI is fair from a financial point of view to
the holders of each class of limited partnership interests. Based on the
relative values as set forth in the Fairness Opinion, the Partnership recorded
an adjustment to general and administrative expenses and prepaid expenses and
other assets during the second quarter of 1999 in the amount of $(293,841) to
reflect the reallocation of previously paid transaction costs among the
Partnerships and McREMI. This overpayment of general and administrative expenses
is included in prepaid expenses and other assets on the Balance Sheet at June
30, 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
Fort Meigs Plaza Shopping Center was sold on April 20, 1998. Wise County Plaza
Shopping Center was foreclosed on by the lender on May 29, 1998. There has been
no significant change in the operations of the remainder of the Partnership's
properties since December 31, 1998. The Partnership reported a net loss for the
first six months of 1999 of $392,853, as compared to net income of $1,976,339
for the first six months of 1998. Revenues decreased to $2,604,380 in the first
six months of 1999 from $3,998,573 for the first six months of 1998, while
expenses decreased to $2,997,233 for the six months ended June 30, 1999 from
$3,838,386 for the same period in 1998.
<PAGE>
Net cash provided by operating activities was $306,473 for the first six months
of 1999. The Partnership expended $282,717 for capital improvements and $111,145
for regularly scheduled principal payments on its mortgage notes payable. Cash
and cash equivalents decreased by $87,389 in the first six months of 1999,
leaving a balance of $1,165,849 at June 30, 1999.
The Partnership has had little ready cash reserves since its inception. It has
been largely dependent on deferring affiliate payables in order to support its
operations. At June 30, 1999, the Partnership owed payables to affiliates for
property management fees, Partnership general and administrative expenses, asset
management fees and disposition fees totaling $5,658,721.
RECENT DEVELOPMENTS
- -------------------
On June 24, 1999, McNeil Partners, L.P. (the General Partner of the Partnership)
and WXI/McN Realty L.L.C., an affiliate of Whitehall Street Real Estate Limited
Partnership XI ("Whitehall"), a real estate investment fund managed by Goldman,
Sachs & Co., announced that they have entered into a definitive acquisition
agreement whereby the Whitehall affiliate will acquire by merger nineteen real
estate limited partnerships operated by McNeil Partners, L.P. and Robert A.
McNeil. The limited partnerships involved are the Partnership and McNeil Real
Estate Funds IX, X, XI, XII, XIV, XV, XX, XXII, XXIII, XXIV, XXV, XXVI and
XXVII, Hearth Hollow Associates, McNeil Midwest Properties I, L.P., Regency
North Associates, Fairfax Associates and McNeil Summerhill (collectively, the
"Partnerships"). The Partnerships (other than Fairfax Associates and McNeil
Summerhill which are wholly-owned by Robert A. McNeil and related parties) will
be merged with subsidiaries of WXI/McN Realty L.L.C. The acquisition agreement
also provides for the acquisition by WXI/McN Realty L.L.C. of the assets of
McNeil Real Estate Management, Inc. ("McREMI"). The aggregate consideration in
the transaction, including all outstanding mortgage debt of the Partnerships, is
approximately $644,440,000.
Pursuant to the terms of the acquisition agreement, the limited partners in each
of the Partnerships (other than those wholly-owned by Robert A. McNeil) will
receive cash on the closing date of the transaction in exchange for their
limited partnership interests. In addition, each Partnership will make a special
distribution to its limited partners on the closing date of the transaction
equal to its then net positive working capital balance. McNeil Partners, L.P.
will receive an equity interest in WXI/McN Realty L.L.C. in exchange for its
contribution of its general partnership interests in the Partnerships, the
limited partnership interests in its wholly-owned Partnerships and the assets of
McREMI.
The proposed transaction follows an extensive marketing effort by PaineWebber
Incorporated, exclusive financial advisor to the Partnerships.
The transaction has been unanimously approved by the Board of Directors of
McNeil Investors, Inc., the general partner of McNeil Partners, L.P., the
general partner of each of the Partnerships other than Regency North Associates,
Fairfax Associates and McNeil Summerhill. The respective general partners of
Regency North Associates, Fairfax Associates and McNeil Summerhill also have
approved the transaction. The Board of Directors of McNeil Investors, Inc. based
its approval upon, among other things, the recommendation of a Special Committee
of the Board, appointed at the beginning of the discussions with Whitehall to
represent the interests of holders of limited partnership interests in each of
the Partnerships. In addition, the Special Committee and the Board relied upon
<PAGE>
fairness opinions given by Robert A. Stanger & Co., Inc. ("Stanger & Co."), an
independent financial advisor to the Partnerships, to the effect that the
aggregate consideration is fair to the holders of each class of limited
partnership interests in each of the Partnerships. The Special Committee's
recommendation was also based upon the separate opinions of Eastdil Realty
Company ("Eastdil"), the independent financial advisor to the Special Committee.
Stanger & Co. and Eastdil have each also rendered an opinion that the aggregate
consideration to be paid for the general partnership interests and limited
partnership interests in all of the Partnerships and the assets of McREMI is
fair from a financial point of view to the holders of each class of limited
partnership interests in each of the Partnerships.
Each of the Partnerships' participation in the transaction is subject to, among
other conditions, the approval by a majority of the limited partners of the
respective Partnerships. The approval of the limited partners of the
Partnerships will be sought at meetings to be held in the coming months after
the filing of proxy statements with the Securities and Exchange Commission with
respect to the publicly traded Partnerships, and the subsequent mailing of proxy
statements to the limited partners. Preliminary proxy statements were filed with
the SEC on August 3, 1999.
The aggregate consideration in the transaction has been allocated preliminarily
among the general partnership interests and the limited partnership interests in
each of the Partnerships and McREMI, based upon an allocation analysis prepared
by Stanger & Co. and confirmed by Eastdil. Based upon this allocation analysis
and the fairness opinions rendered by Stanger & Co. and Eastdil, the Special
Committee, the Board of Directors of McNeil Investors, Inc., the respective
general partners of Regency North Associates, Fairfax Associates and McNeil
Summerhill have each unanimously approved the allocation of the aggregate
consideration. The estimated aggregate consideration and working capital
distribution to be received per unit of limited partnership interest of the
Partnership is currently estimated as $99 (Current Income Units only).
McNeil Partners, L.P. will contribute its real estate investment and management
company business to a subsidiary of WXI/McN Realty, L.L.C., along with its
general partnership interests in the Partnerships and its limited partnership
interests in the wholly-owned Partnerships, having an aggregate allocated value,
as determined by Stanger & Co., of approximately $58,640,000, of which
approximately $29,400,000 reflects balances due to McNeil Partners, L.P. and
McREMI as reflected on the Partnerships' financial statements as of March 31,
1999.
The above estimates of the Partnership per unit estimated merger consideration
and working capital distribution and the interest of McNeil Partners, L.P. are
based upon, among other things, the balance sheet of the Partnership as of March
31, 1999, adjusted for intangible assets, non-cash liabilities, transaction
expenses and the McNeil Partners, L.P. interest in the Partnership. Actual
amounts, including the estimate allocable to McNeil Partners, L.P., will vary
with the performance of the Partnership and McNeil Partners, L.P. through the
closing date. The above estimated merger consideration and special working
capital distribution will be adjusted at closing to reflect the then working
capital position of the Partnership.
Whitehall is a $2.26 billion equity fund and is the seventh in a series of funds
sponsored and capitalized by Goldman, Sachs & Co. and its affiliates, along with
public and private investors, to acquire real estate worldwide.
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
Revenue:
Total revenue decreased by $1,014,083 and $1,394,193 for the three and six
months ended June 30, 1999, respectively, as compared to the same periods in
1998, as discussed below.
Rental revenue for the quarter and six months ended June 30, 1999 decreased by
$146,440 and $520,407, respectively, in relation to the same periods in the
prior year. Excluding rental revenue from Fort Meigs Plaza and Wise County
Plaza, which were disposed of in 1998, rental revenue increased by $7,900 and
$41,462 for the three and six months ending June 30, 1999, respectively, as
compared to the same periods in 1998. Rental revenue increased by approximately
$22,000, $15,000, $14,000 and $8,000 at Woodcreek, Breckenridge, Governour's
Square and Bedford Green apartments, respectively, mainly due to an increase in
rental rates charged to tenants. This increase in rental revenues was partially
offset by an approximately $12,000 decrease in rental revenue at Evergreen
Square Apartments due to a 4% decrease in occupancy at the property.
Interest income decreased by $4,293 and $10,436 for the three and six months
ended June 30, 1999, respectively, in relation to the comparable periods in
1998, mainly due to a decline in the amount of cash available for short-term
investment in the first quarter of 1999. The Partnership held cash and cash
equivalents of approximately $1.17 million at June 30, 1999 as compared to
approximately $1.33 million at June 30, 1998.
Expenses:
Total expenses decreased by $349,154 and $841,153 for the three and six months
ended June 30, 1999, respectively, as compared to the same periods in 1998.
Excluding the sale of Fort Meigs Plaza and the foreclosure of Wise County Plaza
in 1998, total expenses decreased by $109,451 and $147,165 during the same three
and six month periods. This decrease in expenses was mainly due to decreases in
interest - affiliates, general and administrative and general and administrative
- - affiliates, partially offset by an increase in repairs and maintenance, as
discussed below.
Interest expense for the three and six months ended June 30, 1999 decreased by
$110,603 and $250,677, respectively, in relation to the same periods in the
prior year. The decrease was mainly due to the foreclosure of Wise County Plaza
in May 1998.
Interest - affiliates decreased by $11,591 and $137,371 for the three and six
months ended June 30, 1999, respectively, as compared to the respective periods
in the prior year. The decrease was mainly the result of the April 1998 payoff
of the affiliate loans secured by Fort Meigs Plaza. Additionally, in April 1998
the Partnership repaid $630,574 of interest-bearing advances from affiliates
($17,684 of interest was recorded on these advances in the first half of 1998).
In the three and six months ended June 30, 1999, depreciation and amortization,
property taxes, property management fees - affiliates and other property
operating expenses decreased by $48,170 and $131,780, $7,514 and $39,499,
$13,983 and $36,130, and $6,087 and $28,965, respectively, as compared to the
same periods in 1998. These decreases were mainly attributable to Fort Meigs
Plaza and Wise County Plaza, which were disposed of in 1998.
<PAGE>
General and administrative expenses decreased by $135,660 and $139,507 for the
quarter and six months ended June 30, 1999, respectively, as compared to the
same periods in the prior year. The decrease was mainly due to a $(293,841)
reallocation of previously paid transaction costs among the Partnerships and
McREMI in the second quarter of 1999 (see Item 1, Note 7), partially offset by
an increase in costs related to this transaction in the first half of 1999.
For the three and six months ended June 30, 1999, general and administrative -
affiliates decreased by $36,058 and $75,014, respectively, as compared to the
same periods in 1998. The decrease was mainly due to a decrease in asset
management fees due to a decline in the tangible asset value of the Partnership,
on which the fees are based, as a result of the disposition of Fort Meigs Plaza
and Wise County Plaza in 1998. In addition, there was a decrease in overhead
expenses allocated to the Partnership by McREMI. The amount of expenses
allocated by McREMI is partly a function of the number of properties the
Partnership owns, which decreased in 1999 due to the disposition of Fort Meigs
Plaza and Wise County Plaza in 1998.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At June 30, 1999, the Partnership held cash and cash equivalents of $1,165,849.
Cash of $306,473 was provided by operating activities during the first six
months of 1999 as compared to $269,643 provided during the same period in 1998.
Excluding cash provided by operations of Fort Meigs Plaza which was sold in
April 1998 and Wise County Plaza which was foreclosed on in May 1998, cash
provided by operating activities increased by $97,025 in the first six months of
1999. The increase was mainly due to a decrease in interest paid to affiliates.
The Partnership paid $182,091 of interest accrued on affiliate advances in the
first half of 1998. Cash received from tenants increased due to an increase in
rental revenue and security deposits collected from tenants in 1999. These
increases in cash provided were partially offset by a decrease in cash paid to
suppliers in 1999 due to the timing of the payment of invoices at the end of the
period.
Cash used for additions to real estate investments totaled $282,717 for the
first six months of 1999 as compared to $164,987 for the same period in 1998. A
greater amount was expended in 1999 for windows at Governour's Square Apartments
and for repaving of the parking lots at Bedford Green and Woodcreek apartments.
In April 1998, the Partnership received $3,698,365 in proceeds from the
disposition of Fort Meigs Plaza, $3,534,157 of which was used to pay off the
principal balance of its mortgage notes payable - affiliate.
The Partnership repaid $630,574 of advances from affiliates in the first six
months of 1998. No such advances were repaid during the first six months of
1999.
Short-term liquidity
In 1999, present cash balances and operations of the properties are expected to
provide sufficient cash for normal operating expenses, debt service payments and
budgeted capital improvements.
<PAGE>
The Partnership has no established lines of credit from outside sources.
Although affiliates of the Partnership have previously funded cash deficits,
affiliates are not obligated to advance funds to the Partnership and there can
be no assurance the Partnership will receive additional funds. Other possible
actions to resolve cash deficiencies include refinancing, deferring major
capital or repair expenditures on Partnership properties except where
improvements are expected to enhance the competitiveness and marketability of
the properties, deferring payables to or arranging financing from affiliates or
the ultimate sale of Partnership properties.
For the Partnership as a whole, management projects positive cash flow from
operations in 1999. The Partnership has budgeted approximately $1,017,000 for
necessary capital improvements for all properties in 1999, which are expected to
be funded from available cash reserves or from operations of the properties.
Additional efforts to maintain and improve Partnership liquidity have included
continued attention to property management activities. The objective has been to
obtain maximum occupancy rates while holding expenses to levels necessary to
maximize cash flows. The Partnership has made capital expenditures on its
properties where improvements were expected to increase the competitiveness and
marketability of the properties.
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's working capital needs have been
supported by deferring certain affiliate payables. The Partnership owed payables
to affiliates for property management fees, Partnership general and
administrative expenses, asset management fees and disposition fees totaling
$5,658,721 at June 30, 1999. See "Recent Developments" above.
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.
Forward-Looking Information
Within this document, certain statements are made as to the expected occupancy
trends, financial condition, results of operations, and cash flows of the
Partnership for periods after June 30, 1999. All of these statements are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. These statements are not
historical and involve risks and uncertainties. The Partnership's actual
occupancy trends, financial condition, results of operations, and cash flows for
future periods may differ materially due to several factors. These factors
include, but are not limited to, the Partnership's ability to control costs,
make necessary capital improvements, negotiate sales or refinancings of its
properties, and respond to changing economic and competitive factors.
<PAGE>
YEAR 2000 DISCLOSURE
- --------------------
State of readiness
- ------------------
The year 2000 problem is the result of computer programs being written using two
digits rather than four to define the applicable year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in major systems failure or
miscalculations.
Management has assessed its information technology ("IT") infrastructure to
identify any systems that could be affected by the year 2000 problem. The IT
used by the Partnership for financial reporting and significant accounting
functions was made year 2000 compliant during recent systems conversions. The
software utilized for these functions is licensed by third party vendors who
have warranted that their systems are year 2000 compliant.
Management is in the process of evaluating the mechanical and embedded
technological systems at the various properties. Management has inventoried all
such systems and queried suppliers, vendors and manufacturers to determine year
2000 compliance. Based on this review, management believes these systems are
substantially compliant. In circumstances of non-compliance management will work
with the vendor to remedy the problem or seek alternative suppliers who will be
in compliance. Management believes that the remediation of any outstanding year
2000 conversion issues will not have a material or adverse effect on the
Partnership's operations. However, no estimates can be made as to the potential
adverse impact resulting from the failure of third party service providers and
vendors to be year 2000 compliant.
Cost
- ----
The cost of IT and embedded technology systems testing and upgrades is not
expected to be material to the Partnership. Because all the IT systems have been
upgraded over the last three years, all such systems were compliant, or made
compliant at no additional cost by third party vendors. Management anticipates
the costs of assessing, testing, and if necessary replacing embedded technology
components will be less than $50,000. Such costs will be funded from operations
of the Partnership.
Risks
- -----
Ultimately, the potential impact of the year 2000 issue will depend not only on
the corrective measures the Partnership undertakes, but also on the way in which
the year 2000 issue is addressed by government agencies and entities that
provide services or supplies to the Partnership. Management has not determined
the most likely worst case scenario to the Partnership. As management studies
the findings of its property systems assessment and testing, management will
develop a better understanding of what would be the worst case scenario.
Management believes that progress on all areas is proceeding and that the
Partnership will experience no adverse effect as a result of the year 2000
issue. However, there is no assurance that this will be the case.
<PAGE>
Contingency plans
- -----------------
Management is developing contingency plans to address potential year 2000
non-compliance of IT and embedded technology systems. Management believes that
failure of any IT system could have an adverse impact on operations. However,
management believes that alternative systems are available that could be
utilized to minimize such impact. Management believes that any failure in the
embedded technology systems could have an adverse impact on that property's
performance. Management has assessed these risks and expects to have contingency
plans in place by December 31, 1999 for any material potential failures.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- ------- -----------------
1) James F. Schofield, Gerald C. Gillett, Donna S. Gillett, Jeffrey Homburger,
Elizabeth Jung, Robert Lewis, and Warren Heller et al. v. McNeil Partners
L.P., McNeil Investors, Inc., McNeil Real Estate Management, Inc., Robert
A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd.,
McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil
Real Estate Fund XI, Ltd., McNeil Real Estate Fund XII, Ltd., McNeil Real
Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate
Fund XX, L.P., McNeil Real Estate Fund XXI, L.P., McNeil Real Estate Fund
XXII, L.P., McNeil Real Estate Fund XXIII, L.P., McNeil Real Estate Fund
XXIV, L.P., McNeil Real Estate Fund XXV, L.P., McNeil Real Estate Fund
XXVI, L.P., and McNeil Real Estate Fund XXVII, L.P., Hearth Hollow
Associates, McNeil Midwest Properties I, L.P. and Regency North Associates,
L.P., - Superior Court of the State of California for the County of Los
Angeles, Case No. BC133799 (Class and Derivative Action Complaint).
The action involves purported class and derivative actions brought by
limited partners of each of the limited partnerships that were named as
nominal defendants as listed above (the "Partnerships"). Plaintiffs allege
that McNeil Investors, Inc., its affiliate McNeil Real Estate Management,
Inc. ("McREMI") and three of their senior officers and/or directors
(collectively, the "Defendants") breached their fiduciary duties and
certain obligations under the respective Amended Partnership Agreement.
Plaintiffs allege that Defendants have rendered such Units highly illiquid
and artificially depressed the prices that are available for Units on the
resale market. Plaintiffs also allege that Defendants engaged in a course
of conduct to prevent the acquisition of Units by an affiliate of Carl
Icahn by disseminating purportedly false, misleading and inadequate
information. Plaintiffs further allege that Defendants acted to advance
their own personal interests at the expense of the Partnerships' public
unit holders by failing to sell Partnership properties and failing to make
distributions to unitholders.
On December 16, 1996, the Plaintiffs filed a consolidated and amended
complaint. Plaintiffs are suing for breach of fiduciary duty, breach of
contract and an accounting, alleging, among other things, that the
management fees paid to the McNeil affiliates over the last six years are
excessive, that these fees should be reduced retroactively and that the
respective Amended Partnership Agreements governing the Partnerships are
invalid.
<PAGE>
Defendants filed a demurrer to the consolidated and amended complaint and a
motion to strike on February 14, 1997, seeking to dismiss the consolidated
and amended complaint in all respects. The Court granted Defendants'
demurrer, dismissing the consolidated and amended complaint with leave to
amend. On October 31, 1997, the Plaintiffs filed a second consolidated and
amended complaint. The case was stayed pending settlement discussions.
Because the settlement contemplated a transaction which included all of the
Partnerships and plaintiffs claimed that an effort should be made to sell
all of the Partnerships, in or around September 1998, plaintiffs filed a
third consolidated and amended complaint which included allegations with
respect to the Partnerships which had not been named in previously filed
complaints.
On September 15, 1998, the parties signed a Stipulation of Settlement. For
purposes of settlement, the parties stipulated to a class comprised of all
owners of limited partner units in the Partnerships during the period
beginning June 21, 1991, the earliest date that proxy materials began to be
issued in connection with the restructuring of the Partnerships, through
September 15, 1998. As structured, the Stipulation of Settlement provided
for the payment of over $35 million in distributions and the commitment to
market the Partnerships for sale, together with McREMI, through a fair and
impartial bidding process overseen by a national investment banking firm.
To ensure the integrity of that process, defendants agreed, among other
things, to involve plaintiffs' counsel in oversight of that process, and
plaintiffs' counsel retained an independent advisor to represent the
interests of limited partners of the Partnerships in the event of a
transaction. The transaction described in Item 2 - Recent Developments is a
result of that process. The settlement was not conditioned on the
consummation of this transaction.
On October 6, 1998, the court gave preliminary approval to the settlement.
It granted final approval to the settlement on July 8, 1999 and entered a
Final Order and Judgment dismissing the consolidated action with prejudice.
As a condition of final approval, the court requested, and the parties
agreed to, a slight modification of the release in the Stipulation of
Settlement with respect to future claims. Plaintiffs' counsel intends to
seek an order awarding attorneys' fees and reimbursing their out-of-pocket
expenses in an amount which is as yet undetermined. Fees and expenses shall
be allocated amongst the Partnerships on a pro rata basis, based upon
tangible asset value of each such partnership, less total liabilities,
calculated in accordance with the Amended Partnership Agreements for the
quarter most recently ended.
2) High River Limited Partnership, Unicorn Associates Corporation and Longacre
Corporation, et al. v. McNeil Partners, L.P. ("MPLP"), McNeil Investors,
Inc., McNeil Real Estate Management, Inc. (McREMI"), Robert A. McNeil and
Carole J. McNeil, - Supreme Court of the State of New York, County of New
York, - Index No. 99 603526.
On July 23, 1999, High River and two other affiliates of Carl C. Icahn
(Unicorn Associates Corporation and Longacre Corporation), filed a
complaint for damages in the Supreme Court of the State of New York, County
of New York. Plaintiffs allege that the defendants improperly interfered
with tender offers made by High River for limited partner units in the
Partnership and other affiliated partnerships in which MPLP serves as
General Partner (the "McNeil Partnerships"), by, among other things, filing
purportedly frivolous litigation to delay High River's offers, issuing
<PAGE>
purportedly false and misleading statements opposing the offers and
purportedly forcing High River itself to file litigation to enforce its
rights. High River also alleges that as a result the defendants caused High
River to incur undue expense and that the defendants ultimately prevented
High River from acquiring a greater number of limited partner units.
Plaintiffs also allege that the defendants improperly excluded High River
from participating in the auction process for the sale of the McNeil
Partnerships, and otherwise took steps to prevent its participation in the
auction. In addition, plaintiffs, who are limited partners in, among
others, McNeil Funds IX, X, XI, XII, XIV, XV, XX, XXIV, XXV, XXVI and
XXVII, have also sued the defendants based on their status as opt-outs from
the Schofield settlement. Plaintiffs seek undisclosed damages and an
accounting.
On July 30, 1999, defendants filed an answer to the High River Complaint,
denying each and every material allegation contained in the High River
Complaint and asserting several affirmative defenses.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- ---------------------------------
(a) Exhibits.
Exhibit
Number Description
------- -----------
4. Amended and Restated Limited Partnership
Agreement dated March 26, 1992.
(Incorporated by reference to the Current
Report of the Registrant on Form 8-K dated
March 26, 1992, as filed on April 9, 1992).
11. Statement regarding computation of Net
Income (Loss) per Limited Partnership Unit:
Net income (loss) per limited partnership
unit is computed by dividing net income
(loss) allocated to the limited partners by
the weighted average number of limited
partnership units outstanding. Per unit
information has been computed based on
24,863 Current Income Units outstanding in
1999 and 1998, and 22,035 and 22,085
Growth/Shelter Units outstanding in 1999 and
1998, respectively.
27. Financial Data Schedule for the quarter
ended June 30, 1999.
(b) Reports on Form 8-K. A Report on Form 8-K dated June 24, 1999 was filed
on June 29, 1999 regarding the transaction detailed in Part 1,
Item 1, Note 7.
<PAGE>
MCNEIL REAL ESTATE FUND XXI, L.P.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized:
McNEIL REAL ESTATE FUND XXI, L.P.
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
August 16, 1999 By: /s/ Ron K. Taylor
- --------------- ---------------------------------------
Date Ron K. Taylor
President and Director of McNeil
Investors, Inc.
(Principal Financial Officer)
August 16, 1999 By: /s/ Carol A. Fahs
- --------------- ---------------------------------------
Date Carol A. Fahs
Vice President of McNeil
Investors, Inc.
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,165,849
<SECURITIES> 0
<RECEIVABLES> 23,501
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 24,594,148
<DEPRECIATION> (13,219,114)
<TOTAL-ASSETS> 13,816,192
<CURRENT-LIABILITIES> 0
<BONDS> 12,272,441
0
0
<COMMON> 0
<OTHER-SE> (4,887,515)
<TOTAL-LIABILITY-AND-EQUITY> 13,816,192
<SALES> 2,581,904
<TOTAL-REVENUES> 2,604,380
<CGS> 1,468,010
<TOTAL-COSTS> 2,075,306
<OTHER-EXPENSES> 361,648
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 560,279
<INCOME-PRETAX> (392,853)
<INCOME-TAX> 0
<INCOME-CONTINUING> (392,853)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (392,853)
<EPS-BASIC> 0
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</TABLE>
