UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 0-14007
---------
MCNEIL REAL ESTATE FUND XX, L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 33-0050225
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(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 XX, L.P.
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- ------------
ASSETS
- ------
Real estate investments:
<S> <C> <C>
Land ......................................................... $ 392,000 $ 392,000
Buildings and improvements ................................... 3,988,288 3,981,407
----------- -----------
4,380,288 4,373,407
Less: Accumulated depreciation .............................. (1,583,113) (1,525,208)
----------- -----------
2,797,175 2,848,199
Cash and cash equivalents ....................................... 1,518,836 3,070,785
Cash segregated for security deposits ........................... 33,936 28,773
Accounts receivable ............................................. 5,252 6,603
Escrow deposits ................................................. 72,715 180,267
Deferred borrowing costs, net of accumulated
amortization of $80,397 and $76,154 at
March 31, 1999 and December 31, 1998, respectively ........... 81,097 85,340
Prepaid expenses and other assets ............................... 5,500 5,500
----------- -----------
$ 4,514,511 $ 6,225,467
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- ------------------------------------------
Mortgage note payable, net ...................................... $ 2,586,742 $ 2,613,312
Accounts payable and other accrued expenses ..................... 67,132 52,848
Accrued property taxes .......................................... 35,542 142,490
Payable to affiliates ........................................... 277,526 376,849
Security deposits and deferred rental revenue ................... 26,165 27,702
----------- -----------
2,993,107 3,213,201
----------- -----------
Partners' equity (deficit):
Limited partners - 60,000 limited partnership units
authorized; 49,512 limited partnership units issued
and outstanding at March 31, 1999 and December
31, 1998 ................................................... 1,805,190 3,296,145
General Partner .............................................. (283,786) (283,879)
----------- -----------
1,521,404 3,012,266
----------- -----------
$ 4,514,511 $ 6,225,467
=========== ===========
</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
March 31,
------------------------
1999 1998
-------- --------
Revenue:
<S> <C> <C>
Rental revenue ......................................... $326,553 $337,688
Interest income on mortgage loan investments ........... -- 69,496
Interest income on mortgage loan investments -
affiliate ............................................ -- 108,214
Other interest income .................................. 34,936 22,163
-------- --------
Total revenue ........................................ 361,489 537,561
-------- --------
Expenses:
Interest ............................................... 60,394 61,304
Depreciation ........................................... 57,905 59,445
Property taxes ......................................... 35,826 36,892
Personnel costs ........................................ 38,719 40,797
Utilities .............................................. 19,181 20,225
Repairs and maintenance ................................ 26,775 28,876
Property management fees - affiliates .................. 15,819 14,994
Other property operating expenses ...................... 15,625 20,709
General and administrative ............................. 37,614 48,435
General and administrative - affiliates ................ 44,292 64,400
-------- --------
Total expenses ....................................... 352,150 396,077
-------- --------
Net income ................................................ $ 9,339 $141,484
======== ========
Net income allocable to limited partners .................. $ 9,246 $140,069
Net income allocable to General Partner ................... 93 1,415
-------- --------
Net income ................................................ $ 9,339 $141,484
======== ========
Net income per limited partnership unit ................... $ .19 $ 2.83
======== ========
Distributions per limited partnership unit ................ $ 30.30 $ 29.94
======== ========
</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 Three Months Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Equity (Deficit)
------------ ------------ ----------------
<S> <C> <C> <C>
Balance at December 31, 1997 ............ $ (296,465) $ 9,282,684 $ 8,986,219
Net income .............................. 1,415 140,069 141,484
Distributions to limited partners........ -- (1,482,316) (1,482,316)
----------- ----------- -----------
Balance at March 31, 1998 ............... $ (295,050) $ 7,940,437 $ 7,645,387
=========== =========== ===========
Balance at December 31, 1998 ............ $ (283,879) $ 3,296,145 $ 3,012,266
Net income .............................. 93 9,246 9,339
Distributions to limited partners ....... -- (1,500,201) (1,500,201)
----------- ----------- -----------
Balance at March 31, 1999 ............... $ (283,786) $ 1,805,190 $ 1,521,404
=========== =========== ===========
</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>
Three Months Ended
March 31,
--------------------------------
1999 1998
------------ ------------
Cash flows from operating activities:
<S> <C> <C>
Cash received from tenants ......................... $ 322,930 $ 364,529
Cash paid to suppliers ............................. (136,357) (173,329)
Cash paid to affiliates ............................ (159,434) (15,262)
Interest received .................................. 34,936 90,074
Interest received from affiliate ................... -- 108,131
Interest paid ...................................... (41,526) (55,301)
Property taxes paid ................................ (284) (281)
Property taxes escrowed ............................ (36,329) (46,800)
----------- -----------
Net cash provided by (used in) operating
activities ......................................... (16,064) 271,761
----------- -----------
Cash flows from investing activities:
Additions to real estate investments ............... (6,881) (6,021)
Collection of principal on mortgage loan
investments ...................................... -- 34,465
Collection of principal on mortgage loan
investments - affiliate .......................... -- 4,089
----------- -----------
Net cash provided by (used in) investing
activities ...................................... (6,881) 32,533
----------- -----------
Cash flows from financing activities:
Principal payments on mortgage note payable......... (28,803) (15,029)
Distributions to limited partners .................. (1,500,201) (1,482,316)
----------- -----------
Net cash used in financing activities ................. (1,529,004) (1,497,345)
----------- -----------
Net decrease in cash and cash .equivalents ............ (1,551,949) (1,193,051)
Cash and cash equivalents at beginning of
period ............................................. 3,070,785 1,824,293
----------- -----------
Cash and cash equivalents at end of period ............ $ 1,518,836 $ 631,242
=========== ===========
</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
(Used In) Operating Activities
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1999 1998
---------- ---------
<S> <C> <C>
Net income .......................................... $ 9,339 $ 141,484
--------- ---------
Adjustments to reconcile net income to
net cash provided by (used in) operating
activities:
Depreciation ..................................... 57,905 59,445
Amortization of deferred borrowing costs ......... 4,243 3,983
Amortization of discount on mortgage note
payable ........................................ 2,233 2,122
Changes in assets and liabilities:
Cash segregated for security deposits .......... (5,163) (4,506)
Accounts receivable ............................ 1,351 33,191
Escrow deposits ................................ 107,552 (42,735)
Accounts payable and other accrued
expenses ..................................... 14,284 (18,859)
Accrued property taxes ......................... (106,948) 36,611
Payable to affiliates .......................... (99,323) 64,132
Deferred revenue ............................... -- (1,656)
Security deposits and deferred rental
revenue ...................................... (1,537) (1,451)
--------- ---------
Total adjustments ............................ (25,403) 130,277
--------- ---------
Net cash provided by (used in) operating
activities .................................... $ (16,064) $ 271,761
========= =========
</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
March 31, 1999
(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 600, 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 three months ended March 31, 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 XX, L.P., c/o McNeil Real Estate Management, Inc.,
Investor Services, 13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240.
NOTE 3.
- -------
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
were paid in the first quarter of 1999 and were included in payable to
affiliates on the Balance Sheet at December 31, 1998.
<PAGE>
The Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs.
The Partnership is paying an asset management fee which is payable to the
General Partner. Through 1999, the asset management fee is calculated as 1% of
the Partnership's tangible asset value. Tangible asset value is determined by
using the greater of (i) an amount calculated by applying a capitalization rate
of 9% to the annualized net operating income of each property or (ii) a value of
$10,000 per apartment unit 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 $160,863 and $148,528 were outstanding at March 31, 1999 and December 31,
1998, respectively.
Compensation and reimbursements paid to or accrued for the benefit of the
General Partner or its affiliates are as follows:
Three Months Ended
March 31,
-------------------------
1999 1998
---------- ----------
Property management fees....................... $ 15,819 $ 14,994
Charged to general and administrative -
affiliates:
Partnership administration.................. 21,480 25,167
Asset management fee........................ 22,812 39,233
--------- ---------
$ 60,111 $ 79,394
========= =========
Payable to affiliates at March 31, 1999 and December 31, 1998 consisted
primarily of unpaid property management fees, disposition fees (1998 only),
Partnership general and administrative expenses and asset management fees and is
due and payable from current operations.
NOTE 4.
- -------
The Partnership's mortgage loan investments - affiliate were secured by first
and second liens on Fort Meigs Plaza Shopping Center, which was owned by an
affiliate of the General Partner. On April 20, 1998, Fort Meigs Plaza was sold
to a non-affiliate for a gross sales price of $3.8 million. The Partnership
received $3,615,353 as payment in full for both principal and interest
receivable on the loans, which represented the available cash proceeds from the
sale of the property.
NOTE 5.
- -------
The mortgage loan investment secured by Idlewood Nursing Home matured in
February 1998. On May 1, 1998, the Partnership received $2.4 million from the
borrower as payment in full for both principal and interest receivable on the
loan (the actual balance of the loan was greater than the book value). Since the
Partnership owned an 83% participation interest in the note, $408,000 of the
$2.4 million settlement was paid to the owner of the remaining 17% of the note.
<PAGE>
NOTE 6.
- -------
On August 20, 1998, the Partnership received $2,541,572 as payment in full for
both principal and interest receivable on the mortgage loan investment secured
by Lakeland Nursing Home. Since the Partnership owned a 90% participation
interest in the note, $254,157 of the payoff was paid to the owner of the
remaining 10% of the note. Of the $2,287,415 net proceeds received, $2,249,181
was applied to the principal balance of the loan and the remaining was applied
to accrued interest receivable.
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, the Partnership's only property. The Partnership's mortgage loan
investments - affiliate secured by Fort Meigs Plaza were repaid in April 1998.
The Partnerships two mortgage loan investments secured by Idlewood Nursing Home
and Lakeland Nursing Home were repaid in May 1998 and August 1998, respectively.
The Partnership reported net income of $9,339 for the first three months of 1999
as compared to $141,484 for the same period in 1998. Revenues in the first
quarter of 1999 decreased to $361,489 from $537,561 in the first quarter of
1998, while expenses were $352,150 in the first quarter of 1999 as compared to
$396,077 in the first quarter of 1998.
Net cash used in operating activities was $16,064 for the three months ended
March 31, 1999. The Partnership expended $6,881 for capital improvements, made
$28,803 in principal payments on its mortgage note payable and distributed
$1,500,201 to the limited partners. Cash and cash equivalents totaled $1,518,836
at March 31, 1999, a net decrease of $1,551,949 from the balance at December 31,
1998.
RESULTS OF OPERATIONS
- ---------------------
Revenue:
Total revenue decreased by $176,072 for the three months ended March 31, 1999 as
compared to the same period in 1998. The decrease was mainly due to a decrease
in interest income on mortgage loan investments and mortgage loan investments -
affiliate, partially offset by an increase in other interest income, as
discussed below.
Interest income on mortgage loan investments for the quarter ended March 31,
1999 decreased by $69,496 in relation to the comparable period in 1998. The
decrease was due to the Lakeland Nursing Home mortgage loan investment being
paid off by the borrower in August 1998. Although the Idlewood Nursing Home
mortgage loan investment was also paid off in 1998, no interest was accrued on
this loan in 1998.
<PAGE>
Interest income on mortgage loan investments - affiliate decreased by $108,214
for the first three months of 1999 as compared to the same period in 1998. The
decrease was due to both of the Fort Meigs Plaza loans being repaid by the
affiliate borrower in April 1998.
Other interest income increased by $12,773 for the three months ended March 31,
1999 as compared to the same period in 1998, due to an increase in cash
available for short-term investment. The Partnership held approximately $1.5
million of cash and cash equivalents at March 31, 1999 as compared to
approximately $0.6 million at March 31, 1998.
Expenses:
Total expenses decreased by $43,927 for the three months ended March 31, 1999 as
compared to the same period in 1998. The decrease was mainly due to decreases in
other property operating expenses, general and administrative expenses and
general and administrative - affiliates, as discussed below.
Other property operating expenses for the first quarter of 1999 decreased by
$5,084 as compared to the first quarter of the prior year. The decrease was
mainly due to a decrease in bad debts and property insurance costs at Sterling
Springs Apartments.
General and administrative expenses decreased by $10,821 for the first three
months of 1999 in relation to the same period in 1998. The decrease was mainly
due to a greater amount of costs incurred in 1998 to explore alternatives to
maximize the value of the Partnership (see Liquidity and Capital Resources).
General and administrative expenses - affiliates decreased by $20,108 for the
quarter ended March 31, 1999 in relation to the same period in 1998, mainly due
to a decrease in asset management fees. The decrease was due to a decline in the
tangible asset value of the Partnership, on which the fees are based, due to the
payoff of the Partnership's mortgage loan investments and mortgage loan
investments - affiliate in 1998.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnership used $16,064 of cash in operating activities for the first three
months of 1999 as compared to $271,761 generated during the first three months
of 1998. The decrease in 1999 was partially due to a decrease in interest
received from an affiliate relating to the Fort Meigs Plaza loans (see
discussion of decrease in interest income on mortgage loan investments -
affiliate, above). In addition, the Partnership paid $124,500 of disposition
fees to the General Partner in the first quarter of 1999 as discussed in Note 3.
In the first three months of 1998, the Partnership collected $34,465 of
principal on mortgage loan investments. No such collections were made in 1999
since the Idlewood Nursing Home loan was repaid in May 1998 and the Lakeland
Nursing Home loan was repaid in August 1998.
The Partnership distributed $1,500,201 and $1,482,316 to the limited partners
during the three months ended March 31, 1999 and 1998, respectively.
<PAGE>
Short-term liquidity:
At March 31, 1999, the Partnership held cash and cash equivalents of $1,518,836.
This balance provides a reasonable level of working capital for the
Partnership's immediate needs in operating its remaining property.
In 1999, operation of Sterling Springs Apartments 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. The Partnership has budgeted
approximately $74,000 for capital improvements to Sterling Springs in 1999,
which is expected to be funded from operations of the property.
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
property where improvements were expected to increase the competitiveness and
marketability of the property.
Long-term liquidity:
The Partnership's property, Sterling Springs Apartments, is encumbered with
mortgage debt. The mortgage is not due until 2003.
While the outlook for maintenance of adequate levels of liquidity is favorable,
should operations deteriorate and present cash resources be insufficient for
current needs, the Partnership would require other sources of working capital.
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 the
Partnership's property except where improvements are expected to increase the
competitiveness and marketability of the property, arranging financing from
affiliates or the ultimate sale of the property.
As previously announced, the Partnership has retained PaineWebber, Incorporated
as its exclusive financial advisor to explore alternatives to maximize the value
of the Partnership, including, without limitation, a transaction in which
limited partnership interests in the Partnership are converted into cash. During
the last full week of March, the Partnership entered into a 45 day exclusivity
agreement with a well-financed bidder with whom it had commenced discussions
with respect to a sale transaction. The Partnership and such party have made
significant progress in negotiating the terms of a proposed transaction and are
continuing to have intensive discussions with respect to a transaction. In light
on these continuing negotiations, the exclusivity agreement has been extended
for an additional 21 days until June 4, 1999. It is possible that the General
Partner and its affiliates will receive non-cash consideration for their
ownership interests in connection with any such transaction. There can be no
assurance regarding whether any such agreement will be reached nor the terms
thereof.
<PAGE>
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 March 31, 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 the sale or refinancing of its
property, collect payments on its mortgage loan investment and respond to
changing economic and competitive factors.
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.
<PAGE>
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.
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 will assess these risks and develop plans to mitigate
possible failures by July 1999.
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 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. 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.
<PAGE>
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. The case was stayed pending settlement discussions. A Stipulation of
Settlement dated September 15, 1998 has been signed by the parties. Preliminary
Court approval was received on October 6, 1998. A hearing for Final Approval of
Settlement, initially scheduled for December 17, 1998, has been continued to
July 2, 1999.
Because McNeil Real Estate Fund XXIII, L.P., Hearth Hollow Associates, McNeil
Midwest Properties I, L.P. and Regency North Associates, L.P. would be part of
the transaction contemplated in the settlement and Plaintiffs claim that an
effort should be made to sell the McNeil Partnerships, Plaintiffs have included
allegations with respect to McNeil Real Estate Fund XXIII, L.P., Hearth Hollow
Associates, McNeil Midwest Properties I, L.P. and Regency North Associates, L.P.
in the third consolidated and amended complaint.
Plaintiff's counsel intends to seek an order awarding attorney's fees and
reimbursements of their out-of-pocket expenses. The amount of such award is
undeterminable until final approval is received from the court. 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.
<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 1999 and 1998.
27. Financial Data Schedule for the quarter ended
March 31, 1999.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during
the quarter ended March 31, 1999.
<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
May 18, 1999 By: /s/ Ron K. Taylor
- -------------- ---------------------------------------------
Date Ron K. Taylor
President and Director of McNeil
Investors, Inc.
(Principal Financial Officer)
May 18, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,518,836
<SECURITIES> 0
<RECEIVABLES> 5,252
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 4,380,288
<DEPRECIATION> (1,583,113)
<TOTAL-ASSETS> 4,514,511
<CURRENT-LIABILITIES> 0
<BONDS> 2,586,742
0
0
<COMMON> 0
<OTHER-SE> 1,521,404
<TOTAL-LIABILITY-AND-EQUITY> 4,514,511
<SALES> 326,553
<TOTAL-REVENUES> 361,489
<CGS> 151,945
<TOTAL-COSTS> 209,850
<OTHER-EXPENSES> 81,906
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 60,394
<INCOME-PRETAX> 9,339
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,339
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,339
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
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