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 March 31, 1996
-------------------------------------------------------
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 0-14258
MCNEIL REAL ESTATE FUND XV, LTD.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 94-2941516
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (214) 448-5800
-----------------------------
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___
<PAGE>
MCNEIL REAL ESTATE FUND XV, LTD.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ------- --------------------
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------------- ---------------
ASSETS
- ------
<S> <C> <C>
Real estate investments:
Land..................................................... $ 7,087,195 $ 7,087,195
Buildings and improvements............................... 45,034,171 44,889,821
-------------- -------------
52,121,366 51,977,016
Less: Accumulated depreciation.......................... (20,933,129) (20,428,022)
-------------- -------------
31,188,237 31,548,994
Cash and cash equivalents................................... 1,890,112 2,079,352
Cash segregated for security deposits....................... 231,198 249,574
Accounts receivable......................................... 10,420 6,691
Prepaid expenses and other assets........................... 42,895 43,905
Escrow deposits............................................. 412,299 364,431
Deferred borrowing costs (net of accumulated
amortization of $194,845 and $172,430 at
March 31, 1996 and December 31, 1995,
respectively)............................................ 814,487 836,902
-------------- -------------
$ 34,589,648 $ 35,129,849
============== =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- ------------------------------------------
Mortgage notes payable, net................................. $ 24,131,026 $ 24,216,133
Accounts payable............................................ 73,509 42,258
Accrued property taxes...................................... 278,477 164,534
Accrued expenses............................................ 100,099 197,112
Accrued interest............................................ 168,626 169,346
Payable to affiliates - General Partner..................... 174,413 48,469
Security deposits and deferred rental revenue............... 251,371 254,144
-------------- -------------
25,177,521 25,091,996
-------------- -------------
Partners' equity (deficit):
Limited partners - 120,000 limited partnership units
authorized; 102,836 limited partnership units
issued and outstanding at March 31, 1996 and
December 31, 1995...................................... 9,898,016 10,394,645
General Partner.......................................... (485,889) (356,792)
-------------- -------------
9,412,127 10,037,853
-------------- -------------
$ 34,589,648 $ 35,129,849
============== =============
</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 XV, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1996 1995
-------------- --------------
Revenue:
<S> <C> <C>
Rental revenue................................... $ 1,969,533 $ 1,907,133
Interest......................................... 26,590 46,567
------------- -------------
Total revenue.................................. 1,996,123 1,953,700
------------- -------------
Expenses:
Interest......................................... 541,501 593,513
Depreciation and amortization.................... 505,107 477,843
Property taxes................................... 114,283 100,455
Personnel expenses............................... 239,445 228,187
Utilities........................................ 95,068 98,250
Repair and maintenance........................... 198,165 157,735
Property management fees - affiliates............ 99,944 96,495
Other property operating expenses................ 110,432 118,473
General and administrative....................... 32,765 16,740
General and administrative - affiliates.......... 56,017 62,443
------------- -------------
Total expenses................................. 1,992,727 1,950,134
------------- -------------
Net income.......................................... $ 3,396 $ 3,566
============= =============
Net income allocable to limited partners............ $ 3,362 $ (127,486)
Net income allocable to General Partner............. 34 131,052
------------- -------------
Net income.......................................... $ 3,396 $ 3,566
============= =============
Net income per limited partnership unit............. $ 0.03 $ (1.24)
============= =============
Distribution per limited partnership unit........... $ 4.86 $ -
============= =============
</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 XV, LTD.
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
(Unaudited)
For the Three Months Ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Equity
--------------- --------------- ---------------
<S> <C> <C> <C>
Balance at December 31, 1994.............. $ (348,250) $ 11,104,028 $ 10,755,778
Net income (loss)......................... 131,052 (127,486) 3,566
Management Incentive Distribution......... (133,734) - (133,734)
------------- ------------- -------------
Balance at March 31, 1995................. $ (350,932) $ 10,976,542 $ 10,625,610
============= ============== =============
Balance at December 31, 1995.............. $ (356,792) $ 10,394,645 $ 10,037,853
Net income................................ 34 3,362 3,396
Management Incentive Distribution......... (129,131) - (129,131)
Limited partner distribution.............. - (499,991) (499,991)
------------- ------------- -------------
Balance at March 31, 1996................. $ (485,889) $ 9,898,016 $ 9,412,127
============= ============= =============
</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 XV, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------------------
1996 1995
------------------- -----------------
Cash flows from operating activities:
<S> <C> <C>
Cash received from tenants........................ $ 1,983,662 $ 1,878,015
Cash paid to suppliers............................ (706,563) (560,120)
Cash paid to affiliates........................... (159,148) (169,626)
Interest received................................. 26,590 46,567
Interest paid..................................... (506,978) (565,671)
Property taxes paid............................... (84,527) (145,520)
----------------- --------------
Net cash provided by operating activities............ 553,036 483,645
----------------- --------------
Net cash used in investing activities:
Additions to real estate investments.............. (144,350) (102,031)
----------------- --------------
Cash flows from financing activities:
Principal payments on mortgage notes
payable......................................... (97,935) (116,958)
Management Incentive Distribution................. - (135,830)
Limited partner distribution...................... (499,991) -
------------------ --------------
Net cash used in financing activities................ (597,926) (252,788)
------------------ --------------
Net increase (decrease) in cash and cash
equivalents....................................... (189,240) 128,826
Cash and cash equivalents at beginning of
period............................................ 2,079,352 3,284,547
----------------- --------------
Cash and cash equivalents at end of period........... $ 1,890,112 $ 3,413,373
================= ==============
</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 XV, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
Reconciliation of Net Income to Net Cash Provided by
Operating Activities
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
----------------- ----------------
<S> <C> <C>
Net income........................................... $ 3,396 $ 3,566
--------------- --------------
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation...................................... 505,107 477,843
Amortization of discounts on mortgage
notes payable................................... 12,828 11,694
Amortization of deferred borrowing costs.......... 22,415 16,929
Changes in assets and liabilities:
Cash segregated for security deposits........... 18,376 (17,801)
Accounts receivable............................. (3,729) (3,411)
Prepaid expenses and other assets............... 1,010 27,489
Escrow deposits................................. (47,868) (77,829)
Accounts payable................................ 31,251 6,422
Accrued property taxes.......................... 113,943 35,538
Accrued expenses................................ (97,013) 28,012
Accrued interest................................ (720) (781)
Payable to affiliates - General Partner......... (3,187) (10,688)
Security deposits and deferred rental
revenue....................................... (2,773) (13,338)
--------------- --------------
Total adjustments............................. 549,640 480,079
--------------- --------------
Net cash provided by operating activities............ $ 553,036 $ 483,645
=============== ==============
</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 XV, LTD.
Notes to Financial Statements
(Unaudited)
March 31, 1996
NOTE 1.
- -------
McNeil Real Estate Fund XV, Ltd. (the "Partnership") was organized June 26, 1984
as a limited partnership organized under the provisions of the California
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. The Partnership is governed by an amended and
restated limited partnership agreement, dated October 11, 1991 (the "Amended
Partnership Agreement"). The principal place of business for the Partnership and
the General Partner is 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240.
In the opinion of management, the financial statements reflect all adjustments
necessary for a fair presentation of the Partnership's financial position and
results of operations. All adjustments were of a normal recurring nature.
However, the results of operations for the three months ended March 31, 1996 are
not necessarily indicative of the results to be expected for the year ending
December 31, 1996.
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, 1995, and the notes thereto, as filed with the
Securities and Exchange Commission, which is available upon request by writing
to McNeil Real Estate Fund XV, Ltd., c/o McNeil Real Estate Management, Inc.,
Investor Relations, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240.
NOTE 3.
- -------
The Partnership pays property management fees equal to 5% of gross rental
receipts of the Partnership's properties to McNeil Real Estate Management, Inc.
("McREMI"), an affiliate of the General Partner, for providing property
management services and leasing services.
The Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs.
Under terms of the Amended Partnership Agreement, the Partnership is paying a
Management Incentive Distribution ("MID") to the General Partner. The maximum
MID is calculated as 1% of the tangible asset value of the Partnership. The
maximum MID percentage decreases subsequent to 1999. 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.
<PAGE>
MID will be paid to the extent of the lesser of the Partnership's excess cash
flow, as defined, or net operating income, as defined ("the Entitlement
Amount"), and may be paid (i) in cash, unless there is insufficient cash to pay
the distribution in which event any unpaid portion not taken in Units will be
deferred and is payable, without interest, from the first available cash and/or
(ii) in Units. A maximum of 50% of the MID may be paid in Units. The number of
Units issued in payment of the MID is based on the greater of $50 per Unit or
the net tangible asset value, as defined, per Unit.
Any amount of the MID that is paid to the General Partner in Units will be
treated as if cash is distributed to the General Partner and is then contributed
to the Partnership by the General Partner. The Contingent MID represents a
return of equity to the General Partner for increasing cash flow, as defined,
and accordingly is treated as a distribution.
Compensation, reimbursements and distributions paid to or accrued for the
benefit of the General Partner and its affiliates are as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------------------
1996 1995
---------------- ---------------
<S> <C> <C>
Property management fees - affiliates................ $ 99,944 $ 96,495
Charged to general and administrative -
affiliates:
Partnership administration........................ 56,017 62,443
--------------- --------------
$ 155,961 $ 158,938
=============== ==============
Charged to General Partner's deficit:
MID............................................... $ 129,131 $ 133,734
=============== ==============
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
The Partnership was formed to acquire, operate and ultimately dispose of a
portfolio of income-producing real properties. At March 31, 1996, the
Partnership owned four apartment properties. Three of the four Partnership's
properties are subject to mortgage notes.
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
Revenue:
Partnership revenues increased by $42,423 or 2% for the three months ended March
31, 1996. Rental revenue increased by $62,400 or 3%, while interest income
decreased by $19,977 or 43%.
Rental revenue for the first three months of 1996 was $1,969,533 as compared to
$1,907,133 for the same period in 1995. The increase in rental revenue for the
three months ended March 31, 1996 is due to increases in rental rates at all of
the Partnership's properties.
Interest income for the three months decreased by $19,977 or 43% due to smaller
average cash balances invested in interest-bearing accounts and an increase in
the interest rates.
Expenses:
Partnership expenses decreased by $42,593 or 2% for the first three months of
1996 as compared to the same period last year. Decreases in mortgage interest,
other property operating, and general and administrative - affiliates expense
were offset by increases in property taxes, repair and maintenance, and general
and administrative expenses.
Mortgage interest expense decreased for the period ended March 31,1996 compared
to the same period in 1995 by $52,012 or 9%. The decrease is due to the payoff
of the Cedar Run mortgage note payable in December 1995.
Property tax expense for the period ended March 31, 1996 was $114,283 as
compared to $100,455 in 1995. The increase of $13,828 or 14% is a result of an
increase in the assessed property value at Mountain Shadows.
Repairs and maintenance expense increased by $40,430 or 26% for the first three
months of 1996 as compared to 1995. Furniture rental increased at Mountain
Shadows due to an increase in corporate unit leases where furniture is provided
by the lease. In addition, trash and snow removal and carpet cleaning also
increased for the three months ended March 31, 1996.
Other property operating expenses decreased $8,041 or 7% for the first three
months of 1996. This decrease can be attributed to decreases in legal and
professional fees, as well as decreases in marketing expenses at all four
properties.
General and administrative expenses increased $16,025 or 96% for the three
months of 1996 as compared to the same period last year. The increase was due to
costs incurred by the Partnership to defend class action litigation.
General and administrative - affiliates expense decreased by $6,426 or 10% for
the three months of 1996 as compared to the same period last year due to the
reduction of overhead expenses allocable to the Partnership.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnership's primary source of cash flows is from operating activities
which generated $553,036 of cash in the first three months of 1996 as compared
to $483,645 for the same period in 1995. The increase in cash provided by
operating activities in 1996 was mainly the result of an increase in cash
received from tenants and a decrease in mortgage interest paid due to the payoff
of the Cedar Run mortgage.
The Partnership expended $144,350 and $102,031 for capital improvements to its
properties in the first three months of 1996 and 1995, respectively.
During the first three months of 1996, the Partnership paid distributions of
$499,991 to the limited partners. The principle payments on the mortgage notes
payable declined slightly in 1996 as a result of the pay off of the mortgage
notes on Cedar Run in December 1995. The were no payments of MID in 1996.
Short-term liquidity:
At March 31, 1996, the Partnership held cash and cash equivalents of $1,890,112,
down $189,240 from the balance at December 31, 1995. This balance provides a
comfortable level of working capital for the Partnership's operations.
During 1996, operations of the Partnership's properties are expected to provide
positive cash flow from operations. Management will perform routine repairs and
maintenance on the properties to preserve and enhance their value in the market.
In 1996, the Partnership has budgeted to spend approximately $510,000 on capital
improvements, which are expected to be funded from operations of the properties.
The General Partner has established a revolving credit facility not to exceed
$5,000,000 in the aggregate which is available on a "first-come, first-served"
basis to the Partnership and other affiliated partnerships if certain conditions
are met. Borrowings under the facility may be used to fund deferred maintenance,
refinancing obligations and working capital needs. The Partnership has not
received, nor is there any assurance that the Partnership will receive, any
funds under the facility because no amounts will be reserved for any particular
partnership. As of Mach 31, 1996, $2,662,819 remained available for borrowing
under the facility; however, additional funds could become available as other
partnerships repay borrowings. This commitment by the General Partner will
terminate on October 11, 1996.
Long-term liquidity:
For the long term, property operations will remain the primary source of funds.
While the present outlook for Partnership's liquidity is favorable, market
conditions may change and property operations can deteriorate. In that event,
the Partnership would require other sources of working capital. No such other
sources have been identified, and the Partnership has no established lines of
credit. Other possible actions to resolve working capital deficiencies include
refinancing or renegotiating terms of existing loans, deferring major capital
expenditures on Partnership properties except where improvements are expected to
enhance the competitiveness or marketability of the properties, or arranging
working capital support from affiliates. All or a combination of these steps may
be inadequate or unfeasible in resolving such potential working capital
deficiencies. No affiliate support has been required in the past, and there is
no assurance that support would be provided in the future, since neither the
General Partner nor any affiliates have any obligation in this regard in excess
of the $5,000,000 revolving credit facility discussed above.
<PAGE>
Income allocations and distributions:
Terms of the Amended Partnership Agreement specify that income before
depreciation is allocated to the General Partner to the extent of MID paid in
cash. Depreciation is allocated in the ratio of 95:5 to the limited partners and
the General Partner, respectively. Therefore for the three months ended March
31, 1996 and 1995, $34 and $131,052, respectively, was allocated to the General
Partner. The limited partners received allocations of $(127,486) and $3,362 for
the three months ended March 31, 1996 and 1995, respectively.
During 1996, the limited partners received a cash distribution of $499,991. The
distribution consisted of funds from operations A distribution of $129,131 for
of the MID was accrued by the Partnership for the period ended March 31, 1996
for the General Partner. The General Partner will continue to monitor the cash
reserves and working capital needs of the Partnership to determine when cash
flow will support additional distributions to the limited partners.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
(a) Exhibits.
Exhibit
Number Description
------- -----------
3.1 Amended and Restated Partnership Agreement
dated October 11, 1991. (1)
11. Statement regarding computation of net loss
per limited partnership unit: Net loss per
limited partnership unit is computed by
dividing net loss allocated to the limited
partners by the number of limited
partnership units outstanding. Per unit
information has been computed based on
102,836 and 102,846 limited partnership
units outstanding in 1995 and 1994,
respectively.
27. Financial Data Schedule for the quarter
ended March 31, 1996.
(1) Incorporated by reference to the Annual Report of Registrant,
on Form 10-K for the period ended December 31, 1991, as filed
on March 30, 1992.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during
the quarter ended March 31, 1996.
<PAGE>
McNEIL REAL ESTATE FUND XV, LTD.
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 XV, Ltd.
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
May 14, 1996 By: /s/ Donald K. Reed
- ------------------- ----------------------------------------
Date Donald K. Reed
President and Chief Executive Officer
May 14, 1996 By: /s/ Ron K. Taylor
- ------------------- ----------------------------------------
Date Ron K. Taylor
Acting Chief Financial Officer of
McNeil Investors, Inc.
May 14, 1996 By: /s/ Brandon K. Flaming
- ------------------- ----------------------------------------
Date Brandon K. Flaming
Chief Accounting Officer of McNeil
Real Estate Management, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,890,112
<SECURITIES> 0
<RECEIVABLES> 10,420
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 52,121,836
<DEPRECIATION> (20,933,129)
<TOTAL-ASSETS> 34,589,648
<CURRENT-LIABILITIES> 0
<BONDS> 24,131,026
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 34,589,026
<SALES> 1,969,533
<TOTAL-REVENUES> 1,996,123
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,451,226
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 541,501
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,396
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,396
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>