UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended September 30, 1997
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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 0-14007
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MCNEIL REAL ESTATE FUND XX, L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 33-0050225
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13760 Noel Road, Suite 600, LB70, Dallas, Texas, 75240
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (972) 448-5800
----------------------------
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
<PAGE>
MCNEIL REAL ESTATE FUND XX, L.P.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ------- --------------------
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
--------------- --------------
ASSETS
- -------
Real estate investments:
<S> <C> <C>
Land..................................................... $ 392,000 $ 699,697
Buildings and improvements............................... 3,862,084 6,192,970
-------------- -------------
4,254,084 6,892,667
Less: Accumulated depreciation.......................... (1,224,101) (1,435,080)
-------------- -------------
3,029,983 5,457,587
Mortgage loan investments, net of allowance of
$792,013 at September 30, 1997 and
December 31, 1996........................................ 3,302,969 3,404,553
Mortgage loan investment - affiliate........................ 733,900 733,900
Cash and cash equivalents .................................. 4,620,991 3,188,257
Cash segregated for security deposits....................... 30,221 54,950
Interest and other accounts receivable...................... 88,994 74,629
Escrow deposits............................................. 120,716 153,977
Deferred borrowing costs, net of accumulated amorti-
zation of $56,485 and $45,275 at September
30, 1997 and December 31, 1996, respectively............. 105,009 116,219
Prepaid expenses and other assets........................... 4,200 5,034
-------------- -------------
$ 12,036,983 $ 13,189,106
============== =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- ------------------------------------------
Mortgage note payable, net.................................. $ 2,679,526 $ 2,715,909
Accounts payable and other accrued expenses................. 50,614 97,230
Accrued property taxes...................................... 104,545 130,957
Payable to affiliates....................................... 145,717 40,962
Deferred revenue............................................ 158,884 163,852
Security deposits and deferred rental revenue............... 27,808 43,782
-------------- -------------
3,167,094 3,192,692
-------------- -------------
Partners' equity (deficit):
Limited partners - 60,000 limited partnership units
authorized; 49,512 limited partnership units issued
and outstanding at September 30, 1997 and
December 31, 1996...................................... 9,167,517 10,315,277
General Partner.......................................... (297,628) (318,863)
-------------- -------------
8,869,889 9,996,414
-------------- -------------
$ 12,036,983 $ 13,189,106
============== =============
</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 XX, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------- ---------------------------------
1997 1996 1997 1996
-------------- --------------- -------------- --------------
Revenue:
<S> <C> <C> <C> <C>
Rental revenue................ $ 308,473 $ 338,728 $ 966,384 $ 1,047,295
Interest income on mortgage
loan investments............ 80,065 73,221 210,317 215,078
Interest income on mortgage
loan investment - affiliate. 15,473 15,473 45,915 46,083
Other interest income......... 50,624 44,304 120,424 137,618
Gain on disposition of real
estate...................... 1,962,280 - 1,962,280 -
------------- ------------- ------------- -------------
Total revenue............... 2,416,915 471,726 3,305,320 1,446,074
------------- ------------- ------------- -------------
Expenses:
Interest...................... 61,553 62,348 185,528 187,847
Depreciation.................. 33,287 85,185 178,311 254,539
Property taxes................ 39,406 36,302 128,645 121,278
Personnel costs............... 38,539 37,009 116,001 107,733
Utilities..................... 22,647 24,054 62,286 61,985
Repairs and maintenance....... 33,783 32,955 103,091 95,005
Property management
fees - affiliates........... 14,944 16,358 47,767 50,174
Other property operating
expenses.................... 26,610 25,366 72,884 68,207
General and administrative.... 25,749 48,879 82,213 96,964
General and administrative -
affiliates.................. 73,197 67,848 205,132 235,784
------------- ------------- ------------- -------------
Total expenses.............. 369,715 436,304 1,181,858 1,279,516
------------- ------------- ------------- -------------
Net income....................... $ 2,047,200 $ 35,422 $ 2,123,462 $ 166,558
============= ============= ============= =============
Net income allocable
to limited partners........... $ 2,026,728 $ 35,068 $ 2,102,227 $ 164,892
Net income allocable
to General Partner............ 20,472 354 21,235 1,666
------------- ------------- ------------- -------------
Net income....................... $ 2,047,200 $ 35,422 $ 2,123,462 $ 166,558
============= ============= ============= =============
Net income per limited
partnership unit.............. $ 40.94 $ .71 $ 42.46 $ 3.33
============= ============= ============= =============
Distributions per limited
partnership unit.............. $ 50.49 $ 12.12 $ 65.64 $ 24.24
============= ============= ============= =============
</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 XX, L.P.
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
(Unaudited)
For the Nine Months Ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Equity
--------------- -------------- ---------------
<S> <C> <C> <C>
Balance at December 31, 1995.............. $ (320,030) $ 11,399,658 $ 11,079,628
Net income................................ 1,666 164,892 166,558
Distributions............................. - (1,199,950) (1,199,950)
------------- ------------- -------------
Balance at September 30, 1996............. $ (318,364) $ 10,364,600 $ 10,046,236
============= ============= =============
Balance at December 31, 1996.............. $ (318,863) $ 10,315,277 $ 9,996,414
Net income................................ 21,235 2,102,227 2,123,462
Distributions............................. - (3,249,987) (3,249,987)
------------- ------------- -------------
Balance at September 30, 1997............. $ (297,628) $ 9,167,517 $ 8,869,889
============= ============= =============
</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 XX, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------------------------------------
1997 1996
------------------- ----------------
Cash flows from operating activities:
<S> <C> <C>
Cash received from tenants........................ $ 973,198 $ 1,054,770
Cash paid to suppliers............................ (485,988) (493,926)
Cash paid to affiliates........................... (272,644) (307,090)
Interest received................................. 325,966 345,346
Interest received from affiliates................. 36,665 36,665
Interest paid..................................... (168,562) (171,873)
Property taxes paid............................... (24,100) (1,993)
Property taxes escrowed........................... (97,044) (88,645)
----------------- --------------
Net cash provided by operating activities............ 287,491 373,254
----------------- --------------
Cash flows from investing activities:
Additions to real estate investments.............. (157,761) (42,041)
Proceeds from disposition of real estate.......... 4,493,834 -
Collection of principal on mortgage loan
investments..................................... 101,584 99,399
----------------- --------------
Net cash provided by investing activities............ 4,437,657 57,358
----------------- --------------
Cash flows from financing activities:
Principal payments on mortgage note payable....... (42,427) (39,117)
Distributions paid................................ (3,249,987) (1,199,950)
----------------- --------------
Net cash used in financing activities................ (3,292,414) (1,239,067)
----------------- --------------
Net increase (decrease) in cash and cash
equivalents....................................... 1,432,734 (808,455)
Cash and cash equivalents at beginning of
period............................................ 3,188,257 3,927,223
----------------- --------------
Cash and cash equivalents at end of period........... $ 4,620,991 $ 3,118,768
================= ==============
</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 XX, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
Reconciliation of Net Income to Net Cash Provided by
Operating Activities
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------------------
1997 1996
---------------- ---------------
<S> <C> <C>
Net income........................................... $ 2,123,462 $ 166,558
--------------- --------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation...................................... 178,311 254,539
Amortization of deferred borrowing costs.......... 11,210 10,508
Amortization of discount on mortgage note
payable......................................... 6,044 5,732
Gain on disposition of real estate................ (1,962,280) -
Disposition fee payable to affiliate.............. (124,500) -
Changes in assets and liabilities:
Cash segregated for security deposits........... 24,729 2,658
Interest and other accounts receivable.......... (14,365) 2,003
Escrow deposits................................. 33,261 22,529
Prepaid expenses and other assets............... 834 1,119
Accounts payable and other accrued
expenses...................................... (46,616) (63,049)
Accrued property taxes.......................... (26,412) 7,069
Payable to affiliates........................... 104,755 (21,132)
Deferred revenue................................ (4,968) (4,967)
Security deposits and deferred rental
revenue....................................... (15,974) (10,313)
--------------- --------------
Total adjustments............................. (1,835,971) 206,696
--------------- --------------
Net cash provided by operating activities............ $ 287,491 $ 373,254
=============== ==============
</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 XX, L.P.
Notes to Financial Statements
September 30, 1997
(Unaudited)
NOTE 1.
- -------
McNeil Real Estate Fund XX, L.P. (the "Partnership"), formerly known as
Southmark Income Investors, Ltd., was organized on July 19, 1984 as a limited
partnership under the provisions of the California Revised Uniform Limited
Partnership Act. The general partner of the Partnership is McNeil Partners, L.P.
(the "General Partner"), a Delaware limited partnership, an affiliate of Robert
A. McNeil ("McNeil"). The principal place of business for the Partnership and
the General Partner is 13760 Noel Road, Suite 700, Dallas, Texas 75240.
In the opinion of management, the financial statements reflect all adjustments
necessary for a fair presentation of the Partnership's financial position and
results of operations. All adjustments were of a normal recurring nature.
However, the results of operations for the nine months ended September 30, 1997
are not necessarily indicative of the results to be expected for the year ending
December 31, 1997.
NOTE 2.
- -------
The financial statements should be read in conjunction with the financial
statements contained in the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1996, and the notes thereto, as filed with the
Securities and Exchange Commission, which is available upon request by writing
to McNeil Real Estate Fund XX, L.P., c/o The Herman Group, 2121 San Jacinto St.,
26th Floor, Dallas, Texas 75201.
NOTE 3.
- -------
Certain prior period amounts have been reclassified to conform with the current
period presentation.
NOTE 4.
- -------
The Partnership pays property management fees equal to 5% of the gross rental
receipts for its properties to McNeil Real Estate Management, Inc. ("McREMI"),
an affiliate of the General Partner, for providing property management services.
Under the terms of its partnership agreement, the Partnership pays a disposition
fee to an affiliate of the General Partner equal up to 3% of the gross sales
price for brokerage services performed in connection with the sale of the
Partnership's properties, provided, however, that in no event shall all real
estate commissions (including the disposition fee) paid to all persons exceed
the amount customarily charged in similar arms-length transactions. The fee is
due and payable at the time the sale closes. The Partnership incurred $124,500
of such fees during 1997 in connection with the sale of 1130 Sacramento
Condominiums. This amount represents 2.65% of the gross sales price. These fees
have not yet been paid by the Partnership and are included in payable to
affiliates - General Partner on the Balance Sheets at September 30, 1997.
<PAGE>
The Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs.
The Partnership is paying an asset management fee which is payable to the
General Partner. Through 1999, the asset management fee is calculated as 1% of
the Partnership's tangible asset value. Tangible asset value is determined by
using the greater of (i) an amount calculated by applying a capitalization rate
of 9% to the annualized net operating income of each property, (ii) a value of
$10,000 per apartment unit or (iii) on 1130 Sacramento, the net book value of
the property is used 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 to or accrued for the benefit of the
General Partner and its affiliates are as follows:
Nine Months Ended
September 30,
----------------------
1997 1996
--------- ---------
Property management fees............................. $ 47,767 $ 50,174
Charged to gain on disposition of real estate:
Disposition fees.................................. 124,500 -
Charged to general and administrative -
affiliates:
Partnership administration........................ 83,087 113,098
Asset management fee.............................. 122,045 122,686
-------- --------
$ 377,399 $ 285,958
======== ========
Payable to affiliates at September 30, 1997 and December 31, 1996 consisted
primarily of unpaid property management fees, disposition fees (1997 only),
Partnership general and administrative expenses and asset management fees and
are due and payable from current operations.
NOTE 5.
- -------
The Partnership extended the maturity of its mortgage loan investment-affiliate
from April 1, 1997 to September 1, 1997. The Partnership has verbally agreed to
further extend the maturity to December 15, 1997. The borrowing partnership is
currently attempting to refinance the mortgage loan.
<PAGE>
NOTE 6.
- -------
In 1996, the Partnership adopted the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
This statement requires the cessation of depreciation on assets held for sale.
Since 1130 Sacramento Condominiums was placed on the market for sale, no
depreciation was taken effective April 15, 1997. On August 1, 1997, the
Partnership sold one of four units of 1130 Sacramento to an unaffiliated
purchaser. The remaining three units were sold to the same purchaser on August
28, 1997. The cash purchase price for all four units was $4,700,000. Cash
proceeds and the gain on disposition of real estate are detailed below:
Gain on Sale Cash Proceeds
------------- -------------
Cash sales price.......................... $ 4,700,000 $ 4,700,000
Selling costs............................. (330,666) (206,166)
-----------
Net cash proceeds......................... $ 4,493,834
===========
Carrying value............................ (2,407,054)
-----------
Gain on disposition of real estate........ $ 1,962,280
===========
As discussed in Note 4, the Partnership incurred $124,500 of disposition fees
payable to an affiliate of the General Partner in connection with the sale of
1130 Sacramento. These fees reduced the amount of the gain on disposition of
real estate (they are included in selling costs, above). However, since the fees
have not yet been paid, they did not reduce the amount of net cash proceeds from
the sale. The net cash proceeds from the sale of 1130 Sacramento will be
$4,369,334 after payment of the disposition fees.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
There has been no significant change in the operations of Sterling Springs
Apartments; 1130 Sacramento Condominiums was sold in August 1997.
The Partnership reported net income of $2,123,462 for the first nine months of
1997 as compared to $166,558 for the same period in 1996. Revenues in 1997
increased to $3,305,320 from $1,446,074 in 1996, while expenses were $1,181,858
in 1997 as compared to $1,279,516 in 1996.
<PAGE>
Net cash provided by operating activities was $287,491 for the nine months ended
September 30, 1997. The Partnership expended $157,761 for capital improvements,
made $42,427 in principal payments on its mortgage note payable and distributed
$3,249,987 to the limited partners. After receiving proceeds from disposition of
1130 Sacramento of $4,493,834 and collecting $101,584 of principal on mortgage
loan investments, cash and cash equivalents totaled $4,620,991 at September 30,
1997, a net increase of $1,432,734 from the balance at December 31, 1996.
RESULTS OF OPERATIONS
- ---------------------
Revenue:
Total revenue increased by $1,945,189 and $1,859,246 for the three and nine
month periods ended September 30, 1997, respectively, as compared to the same
periods in 1996. The increase was mainly due to a gain on the disposition of
1130 Sacramento, partially offset by a decrease in rental revenues and other
interest income, as discussed below.
Rental revenue for the three and nine months ended September 30, 1997 decreased
by $30,255 and $80,911, respectively, as compared to the same periods in 1996.
The decrease was mainly due to a decrease in rental revenue at 1130 Sacramento.
One of the four condominium units was vacated in April 1997 and was sold at the
beginning of August 1997. The remaining three units were sold at the end of
August 1997. There was also a decline in rental rates in 1997.
Other interest income increased by $6,320 and decreased by $17,194 for the three
and nine month periods ended September 30, 1997, respectively, as compared to
the same periods in 1996. The overall decrease was the result of a decrease in
cash available for short-term investment in the first half of 1997, mainly due
to the payment of distributions to limited partners. Cash available for
short-term investment increased in the third quarter of 1997 due to proceeds
received from the sale of 1130 Sacramento in August 1997.
On August 1, 1997, the Partnership sold one of four units of 1130 Sacramento
Condominiums to an unaffiliated purchaser. The remaining three units were sold
to the same purchaser on August 28, 1997. The cash purchase price for all four
units was $4,700,000. The Partnership recognized a gain on disposition of real
estate of $1,962,280 as more fully discussed in Item 1, Note 6.
Expenses:
Total expenses for the three and nine month periods ended September 30, 1997
decreased by $66,589 and $97,658, respectively, as compared to the same periods
in 1996. The decrease was mainly due to a decrease in depreciation expense and
general and administrative expenses, as discussed below.
Depreciation and amortization expense for the three and nine months ended
September 30, 1997 decreased by $51,898 and $76,228, respectively, in relation
to the same periods in 1996. The decrease was due to 1130 Sacramento
Condominiums being classified as an asset held for sale by the Partnership
effective April 15, 1997. In accordance with the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,"
the Partnership ceased recording depreciation on the asset at the time it was
placed on the market for sale.
<PAGE>
General and administrative expenses decreased by $23,130 and $14,751 for the
three and nine months ended September 30, 1997, respectively, in relation to the
comparable periods in 1996. The decrease was mainly due to a decrease in costs
incurred relating to evaluation and dissemination of information regarding an
unsolicited tender offer. This decrease was partially offset by costs incurred
for investor services which were paid to an unrelated third party in 1997. In
1996, such costs were paid to an affiliate of the General Partner and were
included in general and administrative - affiliates on the Statements of
Operations.
General and administrative - affiliates increased by $5,349 for the three months
and decreased by $30,652 for the nine months ended September 30, 1997,
respectively, as compared to the same periods in 1996. The overall decrease was
due to a decrease in overhead expenses allocated to the Partnership by McREMI,
approximately $20,000 of which was due to investor services being performed by
an unrelated third party in 1997.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnership generated $287,491 of cash through operating activities for the
first nine months of 1997 as compared to $373,254 generated during the first
nine months of 1996. The decrease in 1997 was primarily due to a decrease in
cash received from tenants (see discussion of decrease in rental revenue,
above).
The Partnership expended $157,761 and $42,041 for capital improvements to its
properties during the first nine months of 1997 and 1996, respectively. The
increase in 1997 was mainly due to exterior painting and carpentry work at
Sterling Springs Apartments. In addition, the pool was resurfaced and a
retaining wall was replaced at Sterling Springs. The exterior of 1130 Sacramento
condominiums was also repainted and the parking lot was refurbished in 1997.
The Partnership received net proceeds from the sale of 1130 Sacramento of
$4,493,834 in August 1997. No such proceeds were received in 1996.
The Partnership distributed $3,249,987 and $1,199,950 to the limited partners
during the nine months ended September 30, 1997 and 1996, respectively.
Short-term liquidity:
At September 30, 1997, the Partnership held cash and cash equivalents of
$4,620,991. This balance provides a reasonable level of working capital for the
Partnership's immediate needs in operating its remaining property.
In 1997, the operation of Sterling Springs Apartments, the Partnerships only
remaining property, is expected to provide sufficient positive cash flow for
normal operations. Management will perform routine repairs and maintenance on
the property to preserve and enhance its value and competitiveness in the
market. Capital improvements to the Partnership's property in 1997 are expected
to be funded from operations of the property.
For 1997, management expects that cash from operations of its property and
principal and interest collections on the mortgage loan investments, along with
the present balance of cash and cash equivalents held, will allow the
Partnership to meet its obligations as they come due.
<PAGE>
Long-term liquidity:
The Partnership's remaining property, Sterling Springs Apartments, is encumbered
with mortgage debt. The mortgage on this property is not due until 2003.
In the event that the Partnership acquires ownership of other properties through
foreclosure, the cash and cash equivalent balances presently held will provide a
source for the maintenance and improvement of the properties. Because the timing
and number of properties which may be foreclosed is uncertain, there is no
assurance that the balances presently held will be sufficient for needed capital
improvements. At present, there are no commitments nor any known needs for
improvements to the properties securing the Partnership's loans. The Partnership
has no existing lines of credit from outside sources.
Another possible source of funds is the sale of the Partnership's mortgage loan
investments or properties securing the Partnership's mortgage loans. Such sales
are possibilities only, and since the Partnership does not control the
properties securing its loans, sales of those properties may occur only if
initiated by the borrower or in the event of foreclosure by the Partnership.
There is no assurance that any sales can be contracted or closed to coincide
with the Partnership's future cash needs. For the long term, the Partnership
will remain dependent on operations of the properties it owns or of the
properties securing its loans as the primary source of debt repayment, until the
properties can be sold.
The Partnership has determined to begin orderly liquidation of all its assets.
Although there can be no assurance as to the timing of the liquidation due to
real estate market conditions, the general difficulty of disposing of real
estate, and other general economic factors, it is anticipated that such
liquidation would result in the dissolution of the Partnership followed by a
liquidating distribution to the limited partners by December 1998. In this
regard, the Partnership placed 1130 Sacramento Condominiums on the market for
sale effective April 15, 1997. In August 1997, the Partnership sold all four of
the condominium units to a non-affiliate for $4.7 million.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- ------- -----------------
James F. Schofield, Gerald C. Gillett, Donna S. Gillett, Jeffrey Homburger,
Elizabeth Jung, Robert Lewis, and Warren Heller et al. v. McNeil Partners L.P.,
McNeil Investors, Inc., McNeil Real Estate Management, Inc., Robert A. McNeil,
Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate
Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI,
Ltd., McNeil Real Estate Fund XII, Ltd., McNeil Real Estate Fund XIV, Ltd.,
McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real
Estate Fund XXI, L.P., McNeil Real Estate Fund XXII, L.P., McNeil Real Estate
Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., McNeil Real Estate Fund
XXVI, L.P., and McNeil Real Estate Fund XXVII, L.P., et al. - Superior Court of
the State of California for the County of Los Angeles, Case No. BC133799 (Class
and Derivative Action Complaint).
<PAGE>
The action involves purported class and derivative actions brought by limited
partners of each of the fourteen limited partnerships that were named as nominal
defendants as listed above (the "Partnerships"). Plaintiffs allege that McNeil
Investors, Inc., its affiliate McNeil Real Estate Management, Inc. and three of
their senior officers and/or directors (collectively, the "Defendants") breached
their fiduciary duties and certain obligations under the respective Amended
Partnership Agreement. Plaintiffs allege that Defendants have rendered such
Units highly illiquid and artificially depressed the prices that are available
for Units on the resale market. Plaintiffs also allege that Defendants engaged
in a course of conduct to prevent the acquisition of Units by an affiliate of
Carl Icahn by disseminating purportedly false, misleading and inadequate
information. Plaintiffs further allege that Defendants acted to advance their
own personal interests at the expense of the Partnerships' public unit holders
by failing to sell Partnership properties and failing to make distributions to
unitholders.
On December 16, 1996, the Plaintiffs filed a consolidated and amended complaint.
Plaintiffs are suing for breach of fiduciary duty, breach of contract and an
accounting, alleging, among other things, that the management fees paid to the
McNeil affiliates over the last six years are excessive, that these fees should
be reduced retroactively and that the respective Amended Partnership Agreements
governing the Partnerships are invalid.
Defendants filed a demurrer to the consolidated and amended complaint and a
motion to strike on February 14, 1997, seeking to dismiss the consolidated and
amended complaint in all respects. A hearing on Defendant's demurrer and motion
to strike was held on May 5, 1997. The Court granted Defendants' demurrer,
dismissing the consolidated and amended complaint with leave to amend. On
October 31, 1997, the Plaintiffs filed a second consolidated and amended
complaint. Defendants intend to file a demurrer to the second consolidated and
amended complaint on or before December 1, 1997.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
(a) Exhibits.
Exhibit
Number Document Description
------- --------------------
4. Amended and Restated Limited Partnership
Agreement dated March 30, 1992.
(Incorporated by reference to the Current
Report of the registrant on Form 8-K dated
March 30, 1992, as filed on April 10, 1992).
11. Statement regarding computation of Net
Income per Limited Partnership Unit: Net
income per limited partnership unit is
computed by dividing net income allocated to
the limited partners by the weighted average
number of limited partnership units
outstanding. Per unit information has been
computed based on 49,512 limited partnership
units outstanding in 1997 and 1996.
27. Financial Data Schedule for the quarter
ended September 30, 1997.
(b) Reports on Form 8-K. A Form 8-K with respect to Item 2 dated August 28,
1997 was filed on October 22, 1997 regarding the sale of 1130
Sacramento Condominiums.
<PAGE>
MCNEIL REAL ESTATE FUND XX, 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 XX, L.P.
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
November 13, 1997 By: /s/ Ron K. Taylor
- ----------------- -------------------------------------------
Date Ron K. Taylor
President and Director of McNeil
Investors, Inc.
(Principal Financial Officer)
November 13 , 1997 By: /s/ Carol A. Fahs
- ------------------ ------------------------------------------
Date Carol A. Fahs
Vice President of McNeil Investors, Inc.
(Principal Accounting Officer)
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
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<DEPRECIATION> (1,224,101)
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0
0
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<TOTAL-LIABILITY-AND-EQUITY> 12,036,983
<SALES> 966,384
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