MCNEIL REAL ESTATE FUND XV LTD /CA, 10-K405, 1997-03-28

MCNEIL REAL ESTATE FUND XV LTD /CA
10-K405, 1997-03-28
REAL ESTATE

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K405

[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended December 31, 1996
-------------------------------------------------

[ ] 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 600, LB70, Dallas, Texas, 75240
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code (972) 448-5800
------------------------------

Securities registered pursuant to Section 12(b) of the Act: None
- ----------------------------------------------------------

Securities registered pursuant to Section 12(g) of the Act:
Limited partnership units
- --------------------------------------------------------------------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

101,479 of the registrant's 102,796 limited partnership units are held by
non-affiliates of this registrant. The aggregate market value of units held by
non-affiliates is not determinable since there is no public trading market for
limited partnership units and transfers of units are subject to certain
restrictions.

Documents Incorporated by Reference: See Item 14, Page 34

TOTAL OF 36 PAGES
<PAGE>
PART I

ITEM 1. BUSINESS
- ------- --------

Organization
- ------------

McNeil Real Estate Fund XV, Ltd. (the "Partnership") was organized June 26, 1984
as a limited partnership 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 ("McNeil"). The Partnership is governed by an amended and restated
partnership agreement of limited partnership dated October 11, 1991, as amended
(the "Amended Partnership Agreement"). Prior to October 11, 1991, McNeil Realty
Investors Corporation (the prior "Corporate General Partner"), a wholly-owned
subsidiary of Southmark Corporation ("Southmark"), and McNeil were the general
partners of the Partnership, which was governed by an agreement of limited
partnership dated June 26, 1984 (the "Original Partnership Agreement"). The
principal place of business for the Partnership and General Partner is 13760
Noel Road, Suite 600, LB70, Dallas, Texas, 75240.

On September 14, 1984, a Registration Statement on Form S-11 was declared
effective by the Securities and Exchange Commission whereby the Partnership
offered for sale $35,000,000 of limited partnership units ("Units"), with the
General Partners' right to increase the offering up to $60,000,000. The Units
represent equity interests in the Partnership and entitle the holders thereof to
participate in certain allocations and distributions of the Partnership. The
sale of Units closed on January 31, 1986, with 101,519 Units sold at $500 each,
for gross proceeds of $50,759,500 to the Partnership. In addition, the original
general partners purchased a total of 10 Units for $5,000. In 1991 and in 1992,
651 and 696 Units, respectively, were issued to the General Partner for payment
of the Management Incentive Distribution ("MID"). During 1993 to 1995, 40 Units
were relinquished leaving 102,836 Units outstanding as of December 31, 1996.
Subsequent to year end, 40 Units were relinquished leaving 102,796 Units
outstanding at January 31, 1997.

SOUTHMARK BANKRUPTCY AND CHANGE IN GENERAL PARTNER
- --------------------------------------------------

On July 14, 1989, Southmark filed a voluntary petition for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. Neither the Partnership, McNeil nor the
Corporate General Partner were included in the filing. Southmark's
reorganization plan became effective August 10, 1990. Under the plan, most of
Southmark's assets, which included Southmark's interest in the Corporate General
Partner, were sold or liquidated for the benefit of creditors.

In accordance with Southmark's reorganization plan, Southmark, McNeil and
various of their affiliates entered into an asset purchase agreement on October
12, 1990, providing for, among other things, the transfer of control to McNeil
or his affiliates of 34 limited partnerships (including the Partnership) in the
Southmark portfolio.

<PAGE>
On February 14, 1991, pursuant to the asset purchase agreement as amended on
that date: (a) an affiliate of McNeil purchased the Corporate General Partner's
economic interest in the Partnership; (b) McNeil became the managing general
partner of the Partnership pursuant to an agreement with the Corporate General
Partner that delegated management authority to McNeil; and (c) McNeil Real
Estate Management, Inc. ("McREMI"), an affiliate of McNeil, acquired the assets
relating to the property management and partnership administrative business of
Southmark and its affiliates and commenced management of the Partnership's
properties pursuant to an assignment of the existing property management
agreements from the Southmark affiliates.

On October 11, 1991, the limited partners approved a restructuring proposal
providing for (i) the replacement of the Corporate General Partner and McNeil
with the General Partner; (ii) the adoption of the Amended Partnership
Agreement, which substantially alters provisions of the Original Partnership
Agreement relating to, among other things, compensation, reimbursements of
expenses, and voting rights; and (iii) the approval of a new property management
agreement with McREMI, the Partnership's property manager.

The Amended Partnership Agreement provides for a MID to replace all other forms
of general partner compensation other than property management fees and
reimbursements of certain costs. Additional Units may be issued in connection
with the payment of the MID pursuant to the Amended Partnership Agreement. See
Item 8 - Note 2 - "Transactions with Affiliates". In 1992, the General Partner
received 696 Units for such a payment. For a discussion of the methodology for
calculating and distributing the MID see Item 13 - Certain Relationships and
Related Transactions.

Settlement of Claims:

The Partnership filed claims with the United States Bankruptcy Court for the
Northern District of Texas, Dallas Division (the "Bankruptcy Court") against
Southmark for damages relating to improper overcharges, breach of contract and
breach of fiduciary duty. The Partnership settled these claims in 1991, and such
settlement was approved by the Bankruptcy Court.

An Order Granting Motion to Distribute Funds to Class 8 Claimants dated April
14, 1995 was issued by the Bankruptcy Court. In accordance with the Order, in
May 1995 the Partnership received in full satisfaction of its claims, $26,655 in
cash, and common and preferred stock in the reorganized Southmark which
represents the Partnership's pro-rata share of Southmark assets available for
Class 8 Claimants. The Partnership sold the Southmark common and preferred stock
in May 1995 for $8,608 which, combined with the cash proceeds from Southmark,
resulted in a gain on legal settlement of $35,263.

CURRENT OPERATIONS
- ------------------

General:

The Partnership does not directly employ any personnel. The Partnership is
managed by the General Partner and, in accordance with the Amended Partnership
Agreement, the Partnership reimburses affiliates of the General Partner for
certain costs incurred by affiliates in connection with the management of the
Partnership's business. See Item 8 - Note 2 - "Transactions With Affiliates."
<PAGE>
The business of the Partnership to date has involved only one industry segment.
See Item 8 - Financial Statements and Supplementary Data. The Partnership has no
foreign operations. The business of the Partnership is not seasonal.

Business Plan:

The Partnership determined to evaluate market and other economic conditions to
establish the optimum time to commence an orderly liquidation of the
Partnership's assets in accordance with the terms of the Amended Partnership
Agreement. Taking such conditions as well as other pertinent information into
account, 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 Unitholders by December 2001. Until such time as the
Partnership's assets are liquidated, the Partnerships plan of operations is to
preserve or increase the net operating income of its assets whenever possible,
while at the same time making whatever capital expenditures are reasonable under
the circumstances in order to preserve and enhance the value of the
Partnership's assets.

Competitive Conditions:

Since the principal business of the Partnership is to own and operate real
estate, the Partnership is subject to all of the risks incident to ownership of
real estate and interests therein, many of which relate to the illiquidity of
this type of investment. These risks include changes in general or local
economic conditions, changes in supply or demand for competing properties in an
area, changes in interest rates and availability of permanent mortgage funds
which may render the sale or refinancing of a property difficult or
unattractive, changes in real estate and zoning laws, increases in real property
tax rates and Federal or local economic or rent controls. The illiquidity of
real estate investments generally impairs the ability of the Partnership to
respond promptly to changed circumstances. The Partnership competes with
numerous established companies, private investors (including foreign investors),
real estate investment trusts, limited partnerships and other entities (many of
which have greater resources than the Partnership) in connection with the sale,
financing and leasing of properties. The impact of these risks on the
Partnership, including losses from operations and foreclosures of the
Partnership's properties, is described in Item 7 - Management's Discussion and
Analysis of Financial Condition and Results of Operations. See Item 2 -
Properties for discussion of competitive conditions at the Partnership's
properties.

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 December 31, 1996. All of these statements are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. These statements are not
historical and involve risks and uncertainties. The Partnership's actual
occupancy trends, financial condition, results of operations, and cash flows for
future periods may differ materially due to several factors. These factors
include, but are not limited to, the Partnership's ability to control costs,
make necessary capital improvements, negotiate sales or refinancings of its
properties and respond to changing economic and competitive factors.
<PAGE>
Other information:

The environmental laws of the federal government and of certain state and local
governments impose liability on current property owners for the clean-up of
hazardous and toxic substances discharged on the property. This liability may be
imposed without regard to the timing, cause or person responsible for the
release of such substances onto the property. The Partnership could be subject
to such liability in the event that it owns properties having such environmental
problems. The Partnership has no knowledge of any pending claims or proceedings
regarding such environmental problems.

In August 1995, High River Limited Partnership, a Delaware limited partnership
controlled by Carl C. Icahn ("High River") made an unsolicited tender offer to
purchase from holders of Units up to approximately 6.9% of the outstanding Units
of the Partnership for a purchase price of $95.00 per Unit. In September 1996,
High River made another unsolicited tender offer to purchase any and all of the
outstanding Units of the Partnership for a purchase price of $100.24 per unit.
In addition High River made unsolicited tender offers for certain other
partnerships controlled by the General Partner. The Partnership recommended that
the limited partners reject the tender offers made with respect to the
Partnership and not tender their Units. The General Partner believes that as of
January 31, 1997, High River has purchased approximately 10.3% of the
outstanding Units pursuant to the tender offers. In addition, all litigation
filed by High River, Mr. Icahn and his affiliates in connection with the tender
offers have been dismissed without prejudice.

<PAGE>

ITEM 2. PROPERTIES
- ------- ----------

The following table sets forth the real estate investment portfolio of the
Partnership at December 31, 1996. The buildings and the land on which they are
located are owned by the Partnership in fee, subject in each case (with the
exception of Cedar Run, which is unencumbered by mortgage indebtedness) to a
first lien deed of trust as set forth more fully in Item 8 - Note 5 - "Mortgage
Notes Payable". See also Item 8 - Note 4 - "Real Estate Investments" and
Schedule III - "Real Estate Investments and Accumulated Depreciation." In the
opinion of management, the properties are adequately covered by insurance.

<TABLE>
<CAPTION>
Net Basis 1996 Date
Property Description of Property Debt Property Tax Acquired
- ---------- ------------ -------------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
Arrowhead (1) Apartments
Shawnee, KS 436 units $ 8,198,117 $ 6,999,878 $ 153,169 3/85

Cedar Run Apartments
Lexington, KY 152 units 3,482,114 - 30,617 12/85

Mountain
Shadows (2) Apartments
Albuquerque, NM 504 units 12,809,173 11,656,890 187,976 8/85

Woodcreek (3) Apartments
Cary, NC 200 units 5,762,089 5,200,253 61,758 12/85
------------- ------------- ----------
$ 30,251,493 $ 23,857,021 $ 433,520
============= ============= ==========

</TABLE>

- -----------------------------------------
Total: Apartments - 1,292 units

(1) Arrowhead Apartments is owned by Arrowhead Fund XV Limited Partnership
which is wholly-owned by the Partnership.

(2) Mountain Shadows Apartments is owned by McNeil Mountain Shadows Fund XV
Limited Partnership which is wholly-owned by the Partnership.

(3) Woodcreek Apartments is owned by Woodcreek Fund XV, Ltd. which is wholly-
owned by the Partnership.

<PAGE>

The following table sets forth the properties' occupancy rate and rent per
square foot for each of the last five years:

1996 1995 1994 1993 1992
--------- ---------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Arrowhead
Occupancy Rate............ 95% 95% 95% 96% 92%
Rent Per Square Foot...... $ 7.12 $ 6.76 $ 6.42 $ 5.95 $ 5.49

Cedar Run
Occupancy Rate............ 95% 95% 95% 91% 92%
Rent Per Square Foot...... $ 7.62 $ 7.22 $ 7.14 $ 6.61 $ 6.32

Mountain Shadows
Occupancy Rate............ 87% 88% 94% 95% 93%
Rent Per Square Foot...... $ 8.28 $ 8.24 $ 7.97 $ 7.53 $ 6.88

Woodcreek
Occupancy Rate............ 96% 95% 99% 97% 92%
Rent Per Square Foot...... $ 8.80 $ 8.42 $ 8.08 $ 7.40 $ 6.87
</TABLE>

Occupancy rate represents all units leased divided by the total number of units
of the property as of December 31 of the given year. Rent per square foot
represents all revenue, except interest, derived from the property's operations
divided by the leasable square footage of the property.

Competitive Conditions at Properties
- ------------------------------------

The occupancy rate at Arrowhead is running slightly above the local area average
of 94%. Area occupancy rates are expected to remain in the 95% range. Arrowhead
is located in an affluent county in metropolitan Kansas City. The apartment
market is extremely concentrated with over 3,000 apartment units within a one
mile radius of Arrowhead. The increase in capital improvements over the last
several years has allowed the property to reposition itself as one of the
leaders in the market.

Over the past three years, Cedar Run has reduced its dependency on college
students. This has enabled Cedar Run to maintain an occupancy rate of 95% since
1994. The market has fluctuated from 90% to 96%, while Cedar Run has held its
occupancy rate constant throughout the year. The property's rent per square foot
is currently 12% higher than the local market rate. There has been little new
development of multi-family projects in the area.

Mountain Shadows is located in a very competitive market in Albuquerque and has
experienced a decline in occupancy rates since 1993. This decline can be
attributed to the construction of new multi-family units. The market maintains
an occupancy level at 90%. The capital improvements program that Mountain
Shadows has been involved in has kept the property aggressive in the market.

<PAGE>
The occupancy rate at Woodcreek currently mirrors the market rate of 96%. The
property is located in a rapidly developing area of Wake County in North
Carolina with an additional 6,189 units planned in 1997. The current capital
improvement program has enabled the property to stay competitive in a growing
market.

ITEM 3. LEGAL PROCEEDINGS
- ------- -----------------

The Partnership is not party to, nor are any of the Partnership's properties the
subject of, any material pending legal proceedings, other than ordinary, routine
litigation incidental to the Partnership's business, except for the following:

1) James F. Schofield, Gerald C. Gillett, Donna S. Gillett, Jeffrey Homburger,
Elizabeth Jung, Robert Lewis, and Warren Heller et al. v. McNeil Partners
L.P., McNeil Investors, Inc., McNeil Real Estate Management, Inc., Robert
A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd.,
McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil
Real Estate Fund XI, Ltd., McNeil Real Estate Fund XII, Ltd., McNeil Real
Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate
Fund XX, L.P., McNeil Real Estate Fund XXI, L.P., McNeil Real Estate Fund
XXII, L.P., McNeil Real Estate Fund 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).

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 (as defined in this Section 1,
the "Partnerships"). Plaintiffs allege that McNeil Investors, Inc., its
affiliate McNeil Real Estate Management, Inc. and three of their senior
officers and/or directors (as defined in this Section 1, 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. On January 7, 1997, the Court ordered consolidation with three
other similar actions listed below.

The Partnerships filed a demurrer to the complaint and a motion to strike
on February 14, 1997, seeking to dismiss the complaint in all respects. The
demurrer is pending. The Partnerships deny that there is any merit to
Plaintiff's allegations and intend to vigorously defend this action.

<PAGE>
2) Alfred Napoletano v. McNeil Partners, L.P., McNeil Investors, Inc., Robert
A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd.,
McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil
Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real
Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate
Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund
XXV, L.P. - Superior Court of the State of California, County of Los
Angeles, Case No. BC133849 (Class Action Complaint). On January 7, 1997,
this action was consolidated by court order with Scholfield, et al.,
referenced above.

3) Warren Heller v. McNeil Partners, L.P., McNeil Investors, Inc., Robert A.
McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd., McNeil
Real Estate Fund V, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real
Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate
Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund
XX, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV,
L.P. - Superior Court of the State of California, County of Los Angeles,
Case No. BC133957 (Class Action Complaint). On January 7, 1997, this action
was consolidated by court order with Scholfield, et al., referenced above.

4) Robert Lewis v. McNeil Partners, L.P., McNeil Investors, Inc., Robert
A. McNeil et al. - In the District Court of Dallas County, Texas, A-14th
Judicial District, Cause No. 95-08535 (Class Action) - Plaintiff, Robert
Lewis, is a limited partner with McNeil Pacific Investors Fund 1972, Ltd.,
McNeil Real Estate Fund X, Ltd. and McNeil Real Estate Fund XV, Ltd.

On April 11, 1996, the action was dismissed without prejudice in
anticipation of consolidation with other class action complaints. On
January 7, 1997, this action was consolidated by court order with
Schofield, et al., referenced above.

For a discussion of the Southmark bankruptcy, see Item 1 - Business.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------

None.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP AND RELATED
- ------- ----------------------------------------------------------------------
SECURITY HOLDER MATTERS
-----------------------

(A) There is no established public trading market for Units, nor is one expected
to develop.

(B) Title of Class Number of Record Unit Holders
-------------- -----------------------------

Limited partnership units 5,314 as of January 31, 1997

(C) Cash distributions of $999,981 were made to the limited partners during
1996. The distributions consisted of funds from operations. No
distributions were made to the limited partners during 1995. The
Partnership accrued distributions of $511,760 and $519,812 for the
benefit of the General Partner for the years ended December 31, 1996 and
1995, respectively, of which all but $42,651 was paid as of December 31,
1996. These distributions are the MID pursuant to the Amended Partnership
<PAGE>
Agreement. Distributions of the MID are expected to be paid to the
General Partner in 1997. See Item 8 - Note 2 - "Transactions with
Affiliates." See Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations for a discussion of
distributions and the likelihood they will continue to limited partners.
In February 1997, a distribution of $500,000 was made to the limited
partners.

ITEM 6. SELECTED FINANCIAL DATA
- ------- -----------------------

The following table sets forth a summary of certain financial data for the
Partnership. This summary should be read in conjunction with the Partnership's
financial statements and notes thereto appearing in Item 8.

Statements of Years Ended December 31,
Operations 1996 1995 1994 1993 1992
- ------------------ ------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Rental revenue................. $ 7,973,979 $ 7,716,859 $ 7,415,746 $ 7,237,745 $ 7,897,402
Total revenue.................. 8,076,096 7,991,130 7,772,979 7,280,900 7,982,880
Write-down for permanent
impairment of real
estate...................... - - - - 3,327,000
Loss on disposition of real
estate...................... - - - (2,002,611) -
Loss before extraordinary
items....................... (133,470) (198,113) (41,096) (3,099,381) (5,450,278)
Extraordinary gain on early
extinguishment of debt...... - - - 2,681,807 52,623
Net loss....................... (133,470) (198,113) (41,096) (417,574) (5,397,655)

Net loss per limited partner-
ship unit:
Loss before extraordinary
items......................... $ (5.66) $ (6.90) $ (5.19) $ (35.26) $ (52.45)
Extraordinary gain on early
extinguishment of debt........ - - - 25.81 .51
--------- ---------- ------------ ------------ ------------

Net loss....................... $ (5.66) $ (6.90) $ (5.19) $ (9.45) $ (51.94)
========= ========== ============ ============ ===========

Distribution per limited
partnership unit............ $ 9.70 $ - $ 4.86 $ - $ -
========= ========== ============ ============ ===========

</TABLE>

<PAGE>

As of December 31,
Balance Sheets 1996 1995 1994 1993 1992
- -------------- ------------- ------------- -------------- ------------- --------
<S> <C> <C> <C> <C> <C>
Real estate investments,
net......................... $ 30,251,493 $ 31,548,994 $ 32,336,645 $ 33,207,297 $ 35,470,317
Asset held for sale............ - - - - 6,515,301
Total assets................... 33,180,985 35,129,849 37,030,171 38,348,427 43,663,439
Mortgage notes payable,
net......................... 23,857,021 24,216,133 25,443,252 25,803,685 30,191,039
Partners' equity............... 8,392,642 10,037,853 10,755,778 11,805,729 12,627,676
</TABLE>

See Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations. The Partnership sold Riverway Five on December 28, 1993,
while La Plaza East was foreclosed upon on May 11, 1993.

ITEM 7. 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. As of December 31, 1996, the
Partnership owned four apartment properties. Three of the four Partnership's
properties are subject to mortgage notes.

Riverway Five was sold by the Partnership on December 28, 1993 yielding cash
proceeds of $2,034,822. The property had very limited parking spaces and was
only 64% occupied. The Partnership had previously recorded write-downs of
$1,800,000 and $2,000,000 in 1992 and 1991, respectively, due to reevaluations
of the long-term prospects for the market and the lack of available parking.
Management believed that leasing the vacant space would be difficult, therefore
the Partnership accepted a purchase offer, and the property was sold for
$2,100,000. The Partnership filed suit against the title company involved in the
Partnership's purchase of the property over representations of rights to
additional parking when the property was acquired. In September 1994, the
Partnership and Chicago Title reached a settlement of $300,000 which is recorded
as gain on settlement of litigation on the Statements of Operations net of
related legal costs.

RESULTS OF OPERATIONS
- ---------------------

1996 compared to 1995

Revenue:

Partnership revenues increased by $84,966 or 1.1% for the year ended 1996 as
compared to 1995. Rental revenue increased by $257,120 or 3%, while interest
income decreased $136,891.

<PAGE>
Rental revenue was $7,973,979 for 1996 as compared to $7,716,859 in 1995. The
increase of $257,120 or 3% is primarily due to increases in rental rates, offset
by a slight increase in rental discounts given to Mountain Shadow tenants.

Interest income decreased by $136,891 or 57% in 1996 as compared to 1995 due to
smaller average cash balances invested in interest-bearing accounts.

The Partnership also recognized a gain on legal settlement from Southmark of
$35,263 in 1995. No such gain has been recognized in 1996.

Expenses:

Partnership expenses increased in 1996 by $20,323 or 0.2% as compared to the
same period last year. Increases in personnel, repairs and maintenance, and
general and administrative expenses were offset by decreases in mortgage
interest and general and administrative - affiliate expenses.

Mortgage interest expense decreased for the year ended 1996, compared to 1995,
by $299,187 or 12%. The decrease is due to the payoff of the Cedar Run mortgage
note payable in December 1995.

Personnel expenses for 1996 were $883,514 as compared to $835,031 in 1995. The
increase of $48,483 or 6% is due to increased office and maintenance salaries at
all of the properties.

Repairs and maintenance expense for the period ended 1996 increased by $216,826
or 28%, compared to 1995. The increase is partially due to the replacement of
carpeting, which met the Partnership's criteria for capitalization in 1995 based
on the magnitude of replacements, but were expensed in 1996. In addition,
furniture rental increased at Mountain Shadows due to an increase in corporate
unit leases where furniture rental is included in the lease. The Partnership
also experienced increases in contract painting and cleaning services as a
result of increased turnover of residents at the properties.

General and administrative expenses increased in 1996 by $35,200 or 14%, as
compared to 1995, due to costs incurred by the Partnership to evaluate and
disseminate information regarding an unsolicited 1996 tender offer as discussed
in Item 1 - Business.

General and administrative - affiliates expense decreased by $45,581 or 18% for
the period ended 1996 as compared to 1995. The decrease is due to the reduction
of overhead expenses allocable to the Partnership.

1995 compared to 1994

Revenue:

Partnership revenues increased by $218,151 or 3% for the year ended 1995 as
compared to 1994. Rental revenue and interest income increased by $301,113 and
$104,776, respectively.

Rental revenue was $7,716,859 for 1995 as compared to $7,415,746 in 1994. The
increase was primarily due to increases in rental rates, offset by slight
decreases in occupancy rates at all the properties.

Interest income earned on cash and cash equivalents increased from 1994 to 1995
due to an increase in the interest rates and larger average cash balances
invested in interest-bearing accounts.

<PAGE>
In 1994, the Partnership recognized income of $223,001 for the settlement of
litigation, as discussed above. In 1995, the Partnership recognized a gain on
legal settlement of $35,263 as a result of the settlement with Southmark.

Expenses:

Partnership expenses increased in 1995 by $375,168 or 5% as compared to the same
period in 1994. The increase was primarily due to increases in property taxes,
other property operating and general and administrative expenses.

Property tax expense for 1995 was $421,633 as compared to $393,660 in 1994. The
increase of $27,973 or 7% was a result of an increase in the assessed property
value at Mountain Shadows.

Other property operating expenses increased $53,477 or 12% for the year ended
1995 as compared to the year ended 1994. The increase can be attributed to
increases in hazard insurance at Arrowhead and Mountain Shadows, as well as
increases in office supplies and marketing at all four properties.

General and administrative expenses during 1995 increased $145,222 as compared
to 1994 due to costs incurred by the Partnership in the third quarter of 1995 to
evaluate and disseminate information regarding an unsolicited 1995 tender offer.

LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------

The Partnership has experienced positive cash flow from operations of $6,004,721
for the three years ended December 31, 1996. In 1995, the Partnership received
net cash proceeds of $1,367,557 through the refinancing of Woodcreek. Over the
last three years the Partnership has used cash to fund $3,010,580 in additions
to real estate investments, $1,236,697 in scheduled principal payments on
mortgage notes payable, $143,638 for additional deferred borrowing costs,
$1,511,397 for payment of the MID and $1,499,974 for distributions to the
limited partners. In December 1995, proceeds from the refinancing of Woodcreek
and current cash reserves totaling $2,217,856 were used to pay off the principal
balance of the mortgage note on Cedar Run.

Cash generated from operating activities increased by $67,918 in 1996 as
compared to 1995. The increase in cash received from tenants and the reduction
in interest paid as well as cash paid to affiliates offset the increase in cash
paid to suppliers and the decrease in interest received.

The Partnership generated cash flow of $1,914,501 through operating activities
in 1995 as compared to $2,107,801 in 1994. This decline of $193,300 in cash
provided by operating activities is primarily due to the proceeds received from
the litigation settlement in 1994. The increases in the cash received from
tenants and interest received were offset by the increase in the cash paid to
suppliers and the property taxes paid.

The Partnership expended $827,496, $1,168,355 and $1,014,729 for capital
improvements to the properties in 1996, 1995 and 1994, respectively.

During 1996 and 1994, the Partnership paid distributions to the limited partners
of $1,499,974. In 1995, proceeds from the refinancing of a mortgage note were
used to retire another mortgage note, as discussed above.

<PAGE>
Short-term liquidity:

The Partnership held cash and cash equivalents of $1,362,812 at December 31,
1996, down $716,540 from the balance at December 31, 1995. This balance provides
a reasonable level of working capital for the Partnership's operations.

In 1997, 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 the past three years the Partnership has spent $2.9 million renovating the
properties so they can remain competitive in their respective markets. In 1997,
the Partnership has budgeted to spend approximately $547,000 on capital
improvements, which are expected to be funded from operations of the properties.

Long-term liquidity:

For the long-term, property operations will remain the primary source of funds.
While the present outlook for the 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. The
Partnership has determined to evaluate market and other economic conditions to
establish the optimum time to commence an orderly liquidation of the
Partnership's assets in accordance with the terms of the Amended Partnership
Agreement. Taking such conditions as well as other pertinent information into
account, 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 Unitholders by December 2001.

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 99:1 to the limited partners and
the General Partner, respectively. Therefore, for each of the three years ended
December 31, 1996, income of $448,715, $511,270 and $492,604, respectively, was
allocated to the General Partner. The limited partners received allocations of
net loss of $582,185, $709,383 and $533,700 for each of the three years ended
December 31, 1996, respectively.

<PAGE>
During 1996, the limited partners received a cash distribution of $999,981. This
distribution consisted of funds from operations. A distribution of $511,760 for
the MID was accrued by the Partnership for the General Partner in 1996. In light
of the Cedar Run mortgage note payoff, management did not make any distributions
to the limited partners in 1995. In February 1997, a distribution of $500,000
was made to the limited partners. 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.

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Page
Number

INDEX TO FINANCIAL STATEMENTS

Financial Statements:

<S> <C>
Report of Independent Public Accountants....................................... 14

Balance Sheets at December 31, 1996 and 1995................................... 15

Statements of Operations for each of the three years in the period
ended December 31, 1996..................................................... 16

Statements of Partners' Equity (Deficit) for each of the three years
in the period ended December 31, 1996....................................... 17

Statements of Cash Flows for each of the three years in the
period ended December 31, 1996.............................................. 18

Notes to Financial Statements.................................................. 20

Financial Statement Schedule -

Schedule III - Real Estate Investments and Accumulated
Depreciation............................................................. 29

</TABLE>

All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Partners of
McNeil Real Estate Fund XV, Ltd.:

We have audited the accompanying balance sheets of McNeil Real Estate Fund XV,
Ltd. (a California limited partnership) as of December 31, 1996 and 1995, and
the related statements of operations, partners' equity (deficit) and cash flows
for each of the three years in the period ended December 31, 1996. These
financial statements and the schedule referred to below are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements and the schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of McNeil Real Estate Fund XV,
Ltd. as of December 31, 1996 and 1995, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in our audits of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.

/s/ Arthur Andersen LLP

Dallas, Texas
March 17, 1997

<PAGE>
McNEIL REAL ESTATE FUND XV, LTD.

BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
------------------------------------
1996 1995
---------------- --------------
ASSETS
- ------
<S> <C> <C>
Real estate investments:
Land..................................................... $ 7,087,195 $ 7,087,195
Buildings and improvements............................... 45,563,139 44,889,821
-------------- -------------
52,650,334 51,977,016
Less: Accumulated depreciation.......................... (22,398,841) (20,428,022)
-------------- -------------
30,251,493 31,548,994

Cash and cash equivalents................................... 1,362,812 2,079,352
Cash segregated for security deposits....................... 263,255 249,574
Accounts receivable......................................... 188,831 6,691
Prepaid expenses and other assets........................... 43,266 43,905
Escrow deposits............................................. 310,888 364,431
Deferred borrowing costs, net of accumulated
amortization of $248,892 and $172,430 at
December 31, 1996 and 1995, respectively ................ 760,440 836,902
-------------- -------------
$ 33,180,985 $ 35,129,849
============== =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- -------------------------------------------

Mortgage notes payable, net................................. $ 23,857,021 $ 24,216,133
Accounts payable............................................ - 42,258
Accrued expenses............................................ 149,324 197,112
Accrued interest............................................ 166,600 169,346
Accrued property taxes...................................... 170,447 164,534
Deferred gain - involuntary conversion...................... 97,210 -
Payable to affiliates - General Partner..................... 99,892 48,469
Security deposits and deferred rental income................ 247,849 254,144
-------------- -------------
24,788,343 25,091,996
-------------- -------------
Partners' equity (deficit):
Limited partners - 120,000 limited partnership units
authorized; 102,836 limited partnership units
issued and outstanding at December 31, 1996 and 1995... 8,812,479 10,394,645
General Partner.......................................... (419,837) (356,792)
-------------- -------------
8,392,642 10,037,853
-------------- -------------
$ 33,180,985 $ 35,129,849
============== =============

</TABLE>
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XV, LTD.

STATEMENTS OF OPERATIONS

For the Years Ended December 31,
----------------------------------------------------
1996 1995 1994
-------------- -------------- ---------------

Revenue:
<S> <C> <C> <C>
Rental revenue.......................... $ 7,973,979 $ 7,716,859 $ 7,415,746
Interest................................ 102,117 239,008 134,232
Gain on settlement of legal expenses.... - 35,263 -
Gain on settlement of litigation, net... - - 223,001
------------- ------------- --------------
Total revenue......................... 8,076,096 7,991,130 7,772,979
------------- ------------- --------------

Expenses:
Interest................................ 2,134,252 2,433,439 2,397,880
Depreciation and amortization........... 2,039,432 1,956,006 1,885,381
Property taxes.......................... 433,520 421,633 393,660
Personnel expenses...................... 883,514 835,031 810,327
Repairs and maintenance................. 1,002,566 785,740 801,181
Property management fees -
affiliates............................ 399,829 385,074 376,559
Utilities............................... 362,268 378,487 366,026
Other property operating expenses....... 458,335 487,602 434,125
General and administrative.............. 293,281 258,081 112,859
General and administrative -
affiliates............................ 202,569 248,150 236,077
------------- ------------- --------------
Total expenses........................ 8,209,566 8,189,243 7,814,075
------------- ------------- --------------

Net loss................................... $ (133,470) $ (198,113) $ (41,096)
============= ============= ==============

Net loss allocable to limited partners..... $ (582,185) $ (709,383) $ (533,700)
Net income allocable to
General Partner......................... 448,715 511,270 492,604
------------- ------------- --------------
Net loss................................... $ (133,470) $ (198,113) $ (41,096)
============= ============= ==============

Net loss per limited partnership unit...... $ (5.66) $ (6.90) $ (5.19)
============= ============= ==============

Distribution per limited partnership unit.. $ 9.70 $ - $ 4.86
============= ============= ==============

</TABLE>

See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XV, LTD.

STATEMENTS OF PARTNERS' EQUITY (DEFICIT)

For the Years Ended December 31, 1996, 1995 and 1994

<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Equity
---------------- ---------------- ----------------
<S> <C> <C> <C>
Balance at December 31, 1993.............. $ (331,992) $ 12,137,721 $ 11,805,729

Net income (loss)......................... 492,604 (533,700) (41,096)

Limited partners distribution............. - (499,993) (499,993)

Management Incentive Distribution......... (508,862) - (508,862)
-------------- -------------- --------------

Balance at December 31, 1994.............. (348,250) 11,104,028 10,755,778

Net income (loss)......................... 511,270 (709,383) (198,113)

Management Incentive Distribution......... (519,812) - (519,812)
-------------- -------------- --------------

Balance at December 31, 1995.............. (356,792) 10,394,645 10,037,853

Net income (loss)......................... 448,715 (582,185) (133,470)

Limited partners distribution............. - (999,981) (999,981)

Management Incentive Distribution......... (511,760) - (511,760)
-------------- -------------- --------------

Balance at December 31, 1996.............. $ (419,837) $ 8,812,479 $ 8,392,642
============== ============== ==============

</TABLE>

See accompanying notes to financial statements.

<PAGE>
McNEIL REAL ESTATE FUND XV, LTD.

STATEMENTS OF CASH FLOWS

Increase (Decrease) in Cash and Cash Equivalents

<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------------------
1996 1995 1994
-------------- --------------- ----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from tenants.............. $ 7,957,172 $ 7,687,865 $ 7,446,868
Cash received from legal settlement..... - 35,263 -
Cash paid to suppliers.................. (2,999,800) (2,639,152) (2,486,722)
Cash paid to affiliates................. (593,626) (630,652) (611,940)
Interest received....................... 102,117 239,008 134,232
Interest paid........................... (2,017,275) (2,308,035) (2,285,387)
Property taxes paid..................... (466,169) (469,796) (312,251)
Net proceeds from litigation
settlement............................ - - 223,001
------------- ------------- --------------
Net cash provided by operating activities.. 1,982,419 1,914,501 2,107,801
------------- ------------- --------------

Net cash used in investing activities:
Additions to real estate
investments........................... (827,496) (1,168,355) (1,014,729)
------------- ------------- --------------

Cash flows from financing activities:
Net proceeds from refinancing of
mortgage notes payable................ - 1,367,557 -
Principal payments on mortgage
notes payable......................... (402,373) (2,644,430) (407,750)
Deferred borrowing costs paid........... - (143,638) -
Limited partners distribution........... (999,981) - (499,993)
Management Incentive Distribution....... (469,109) (530,830) (511,458)
------------- ------------- --------------
Net cash used in financing activities...... (1,871,463) (1,951,341) (1,419,201)
------------- ------------- --------------

Net decrease in cash and cash
equivalents............................. (716,540) (1,205,195) (326,129)

Cash and cash equivalents at
beginning of year..................... 2,079,352 3,284,547 3,610,676
------------- ------------- --------------

Cash and cash equivalents at end
of year............................... $ 1,362,812 $ 2,079,352 $ 3,284,547
============= ============= ==============
</TABLE>

See discussions of noncash investing and financing activities in Note 6.

See accompanying notes to financial statements.
<PAGE>

McNEIL REAL ESTATE FUND XV, LTD.

STATEMENTS OF CASH FLOWS

Reconciliation of Net Loss to Net Cash Provided by
Operating Activities

<TABLE>
<CAPTION>
For the Years Ended December 31,
---------------------------------------------------
1996 1995 1994
--------------- --------------- --------------
<S> <C> <C> <C>
Net loss................................... $ (133,470) $ (198,113) $ (41,096)
------------- ------------- -------------

Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation and amortization........... 2,039,432 1,956,006 1,885,381
Amortization of discounts on
mortgage notes payable................ 43,261 49,754 47,317
Amortization of deferred borrowing
costs................................. 76,462 95,120 68,136
Changes in assets and liabilities:
Cash segregated for security
deposits............................ (13,681) (4,580) 12,952
Accounts receivable................... 635 4,797 8,137
Prepaid expenses and other assets..... 639 41,718 (29,561)
Escrow deposits....................... 53,543 (85,941) 61,811
Accounts payable...................... (42,258) 15,759 (9,505)
Accrued expenses...................... (47,788) 117,708 12,911
Accrued interest...................... (2,746) (19,470) (2,960)
Accrued property taxes................ 5,913 (47,614) 70,734
Payable to affiliates - General
Partner............................. 8,772 2,572 696
Security deposits and deferred
rental income....................... (6,295) (13,215) 22,848
------------- ------------- --------------

Total adjustments................. 2,115,889 2,112,614 2,148,897
------------- ------------- --------------

Net cash provided by operating activities.. $ 1,982,419 $ 1,914,501 $ 2,107,801
============= ============= ==============
</TABLE>

See accompanying notes to financial statements.

<PAGE>
McNEIL REAL ESTATE FUND XV, LTD.

NOTES TO FINANCIAL STATEMENTS
December 31, 1996

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ------ -----------------------------------------------------------

Organization
- ------------

The Partnership is engaged in real estate activities, including the ownership,
operation and management of residential and commercial real estate and other
real estate related assets. The Partnership has determined to evaluate market
and other economic conditions to establish the optimum time to commence an
orderly liquidation of the Partnership's assets in accordance with the terms of
the Amended Partnership Agreement. At December 31, 1996, the Partnership owned
four income-producing properties as described in Note 4 - Real Estate
Investments.

Basis of Presentation
- ---------------------

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP"). The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

The Partnership's financial statements include the accounts of the following
listed tier partnerships. These single asset tier partnerships were formed to
accommodate the refinancing of the respective property. The Partnership has a
100% ownership interest in each of the following tier partnerships:

Tier Partnership
----------------

Arrowhead Fund XV Limited Partnership (a)(b)
McNeil Mountain Shadows Fund XV
Limited Partnership (a)(b)
Woodcreek Fund XV, Ltd. (a)(c)

(a) The general partner of these partnerships is a corporation whose stock is
100% owned by the Partnership.

<PAGE>

(b) Included in financial statements for years ended December 31, 1996, 1995 and
1994.

Real Estate Investments
- -----------------------

Real estate investments are generally stated at the lower of depreciated cost or
fair value. Real estate investments are reviewed for impairment whenever events
or changes in circumstances indicate that their carrying amounts may not be
recoverable. When the carrying value of a property exceeds the sum of all
estimated future cash flows, an impairment loss is recognized. At such time, a
write-down is recorded to reduce the basis of the property to its estimated
recoverable amount.

The Partnership's method of accounting for real estate investments is in
accordance with Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of" ("SFAS 121"), which the Partnership adopted effective January 1, 1996. The
adoption of SFAS 121 did not have a material impact on the accompanying
financial statements.

Improvements and betterments are capitalized and expensed through depreciation
charges. Repairs and maintenance are charged to operations as incurred.

Depreciation and Amortization
- -----------------------------

Buildings and improvements are depreciated using the straight-line method over
the estimated useful lives of the assets, ranging from 3 to 25 years. Tenant
improvements were amortized over the terms of the related tenant lease using the
straight-line method.

Cash and Cash Equivalents
- -------------------------

Cash and cash equivalents include cash on hand and cash on deposit with
financial institutions with original maturities of three months or less.
Carrying amounts for cash and cash equivalents approximate fair value.

Escrow Deposits
- ---------------

The Partnership is required to maintain escrow accounts in accordance with the
terms of various mortgage indebtedness agreements. These escrow accounts are
controlled by the mortgagee and are used for payment of property taxes, hazard
insurance, capital improvements and/or property replacements. Carrying amounts
for escrow deposits approximate fair value.

Deferred Borrowing Costs
- ------------------------

Loan fees and other related costs incurred to obtain long-term financing on real
property are capitalized and amortized using a method that approximates the
effective interest method over the terms of the related mortgage notes payable.
Amortization of deferred borrowing costs is included in interest expense on the
Statements of Operations.
<PAGE>
Discounts on Mortgage Notes Payable
- -----------------------------------

Discounts on mortgage notes payable are being amortized over the remaining terms
of the related mortgage notes using the effective interest method. Amortization
of discounts on mortgage notes payable is included in interest expense on the
Statements of Operations.

Rental Revenue
- --------------

The Partnership leases its residential properties under short-term operating
leases. Lease terms generally are less than one year in duration. Rental revenue
is recognized as earned.

Income Taxes
- ------------

No provision for Federal income taxes is necessary in the financial statements
of the Partnership because, as a partnership, it is not subject to Federal
income tax and the tax effect of its activities accrues to the partners.

Allocation of Net Income and Net Loss
- -------------------------------------

The Amended Partnership Agreement provides for net income of the Partnership for
both financial statements and income tax reporting purposes to be allocated as
indicated below. For allocation purposes, net income and net loss of the
Partnership are determined prior to deductions for depreciation:

a) first, deductions for depreciation shall be allocated 1% to the General
Partner and 99% to the limited partners;

b) then, net income in an amount equal to the greater of 1) 1% of net income
or 2) the cumulative amount distributed for the Management Incentive
Distribution ("MID") for which no income allocation has previously been
made shall be allocated to the General Partner; provided that if all or a
portion of such distribution consists of limited partnership units
("Units"), the amount of net income allocated shall be equal to the amount
of cash the General Partner would have otherwise received; and

c) any remaining net income shall be allocated 100% to the limited partners.

The Amended Partnership Agreement provides that net losses shall be allocated
1% to the General Partner and 99% to the limited partners.

Federal income tax law provides that the allocation of loss to a partner will
not be recognized unless the allocation is in accordance with a partner's
interest in the partnership or the allocation has substantial economic effect.
Internal Revenue Code Section 704(b) and accompanying Treasury Regulations
establish criteria for allocation of Partnership deductions attributable to
debt. The Partnership's tax allocations for 1996, 1995 and 1994 have been made
in accordance with these provisions.

<PAGE>
Distributions
- -------------

Pursuant to the Amended Partnership Agreement and at the discretion of the
General Partner, distributions of cash from property operations shall be made as
follows:

(a) first, to the General Partner, an amount equal to the MID; and

(b) any remaining distributable cash, as defined, shall be distributed 100%
to the limited partners.

At the discretion of the General Partner, distribution of cash from sales or
refinancing shall be distributed as follows:

(a) first, to the General Partner, an amount equal to any MID not satisfied
through distributions of cash from property operations; and

(b) any remaining cash shall be distributed to the limited partners in the
following proportions: 95/270 to Group A subscribers, 90/270 to Group B
subscribers and 85/270 to Group C subscribers of the pro rata portion
of the original invested capital attributable to each group of
subscribers.

Cash distributions of $999,981 and $499,993 were made to the limited partners
during 1996 and 1994, respectively. No distributions were made to the limited
partners during 1995. The Partnership accrued distributions of $511,760,
$519,812 and $508,862 for the benefit of the General Partner for the years ended
December 31, 1996, 1995 and 1994, respectively. The distributions are the MID
pursuant to the Amended Partnership Agreement. In February 1997, a distribution
of $500,000 was made to the limited partners. 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.

Net Loss Per Limited Partnership Unit
- -------------------------------------

Net loss per Unit is computed by dividing net loss allocated to the limited
partners by the weighted average number of Units outstanding calculated on the
last day of each calendar month. Per Unit information has been computed based on
102,836 weighted average Units outstanding in 1996 and 1995, and 102,846
weighted average Units outstanding in 1994.

NOTE 2 - TRANSACTIONS WITH AFFILIATES
- -------------------------------------

The Partnership pays property management fees equal to 5% of the 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 for the Partnership's residential and commercial properties
and leasing services for its residential properties.

The Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs.

<PAGE>

Under the terms of the Amended Partnership Agreement, the Partnership is paying
the 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 assets.

MID will be paid to the extent of 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.

During 1991, the Partnership amended its capitalization policy and began
capitalizing certain costs of improvements and betterments which under policies
of prior management had been expensed when incurred. The purpose of the
amendment was to more properly recognize items which were capital in nature. The
effect of the amendment standing alone was evaluated at the time the change was
made and determined not to be material to the financial statements of the
Partnership in 1991, nor was it expected to be material in any future year.
However, the amendment can have a material effect on the calculation of the
Entitlement Amount which determines the amount of MID earned. Capital
improvements are excluded from cash flow, as defined. The majority of base
period cash flow was measured under the previous capitalization policy, while
incentive period cash flow is determined using the amended policy. Under the
amended policy, more items are capitalized, and cash flow increases. The
amendment of the capitalization policy did not materially affect the MID for
1996, 1995 or 1994 because the Entitlement Amount was sufficient to pay MID
notwithstanding the amendment to the capitalization policy.

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 MID represents a return of equity
to the General Partner for increasing cash flow, as defined, and accordingly is
treated as a distribution.

<PAGE>
Compensation and reimbursements paid or accrued for the benefit of the General
Partner or its affiliates are as follows:

<TABLE>
<CAPTION>
For the Years Ended December 31,
---------------------------------------------------
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Property management fees - affiliates...... $ 399,829 $ 385,074 $ 376,559
Charged to general and
administrative - affiliates:
Partnership administration.............. 202,569 248,150 236,077
------------- ------------- --------------
$ 602,398 $ 633,224 $ 612,636
============= ============= ==============

Charged to General Partner's deficit:
MID..................................... $ 511,760 $ 519,812 $ 508,862
============= ============ ==============
</TABLE>

Payable to affiliates - General Partner at December 31, 1996 and 1995 consists
primarily of MID, reimbursable costs and property management fees which are due
and payable from current operations.

NOTE 3 - TAXABLE LOSS
- ---------------------

McNeil Real Estate Fund XV, Ltd. is a partnership and is not subject to Federal
and state income taxes. Accordingly, no recognition has been given to income
taxes in the accompanying financial statements of the Partnership since the
income or loss of the Partnership is to be included in the tax returns of the
individual partners. The tax returns of the Partnership are subject to
examination by Federal and state taxing authorities. If such examinations result
in adjustments to distributive shares of taxable income or loss, the tax
liability of the partners could be adjusted accordingly.

The Partnership's net assets and liabilities for tax purposes exceeded the net
assets and liabilities for financial reporting purposes by $713,934 in 1996,
$472,231 in 1995 and $284,142 in 1994.

<PAGE>

NOTE 4 - REAL ESTATE INVESTMENTS
- --------------------------------

The basis and accumulated depreciation of the Partnership's real estate
investments at December 31, 1996 and 1995 are set forth in the following tables:

<TABLE>
<CAPTION>
Buildings and Accumulated Net Book
1996 Land Improvements Depreciation Value
---- -------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Arrowhead
Shawnee, KS $ 1,537,294 $ 13,912,565 $ (7,251,742) $ 8,198,117
Cedar Run
Lexington, KY 866,465 4,770,183 (2,154,534) 3,482,114
Mountain Shadows
Albuquerque, NM 3,236,768 19,140,288 (9,567,883) 12,809,173
Woodcreek
Cary, NC 1,446,668 7,740,103 (3,424,682) 5,762,089
------------- ------------- ------------- -------------
$ 7,087,195 $ 45,563,139 $ (22,398,841) $ 30,251,493
============= ============= ============= =============

Buildings and Accumulated Net Book
1995 Land Improvements Depreciation Value
---- -------------- -------------- --------------- --------------

Arrowhead $ 1,537,294 $ 13,723,961 $ (6,644,247) $ 8,617,008
Cedar Run 866,465 4,660,303 (1,915,041) 3,611,727
Mountain Shadows 3,236,768 19,017,982 (8,739,577) 13,515,173
Woodcreek 1,446,668 7,487,575 (3,129,157) 5,805,086
------------- ------------- ------------- -------------
$ 7,087,195 $ 44,889,821 $ (20,428,022) $ 31,548,994
============= ============== ============= =============
</TABLE>

On or about August 19, 1993, the Partnership filed an action against the title
company regarding the lack of parking at a former Partnership property, Riverway
Five. Although Riverway Five was sold December 28, 1993, the Partnership
continued to pursue the action filed against the title company. On September 14,
1994, the Partnership received a settlement of $300,000 which is included in the
Statement of Operations net of related legal costs.

Except for Cedar Run, the Partnership's real estate properties are encumbered by
mortgage indebtedness as discussed in Note 5.

<PAGE>

NOTE 5 - MORTGAGE NOTES PAYABLE
- -------------------------------

The following table sets forth the mortgage notes payable of the Partnership at
December 31, 1996 and 1995. All mortgage notes are secured by real estate
investments.

<TABLE>
<CAPTION>
Mortgage Annual Monthly
Lien Interest Payments/ December 31,
Property Position (a) Rates % Maturity Date (d) 1996 1995
- -------- --------------- ------- ----------------- --------------- ----------------

<S> <C> <C> <C> <C> <C>
Arrowhead (c) First 8.150 $ 60,450 07/03 $ 7,158,921 $ 7,294,796
Discount (b) (159,043) (175,401)
------------- --------------
6,999,878 7,119,395
------------- --------------

Mountain
Shadows (c) First 8.150 100,670 07/03 11,922,091 12,148,372
Discount (b) (265,201) (292,104)
------------- --------------
11,656,890 11,856,268

Woodcreek First 8.540 40,517 08/02 5,200,253 5,240,470
------------- --------------
$ 23,857,021 $ 24,216,133
============= ==============
</TABLE>
(a) The debt is non-recourse to the Partnership.

(b) Discounts are based on an effective interest rate of 8.62% for Arrowhead
and Mountain Shadows.

(c) Financing was obtained under the terms of a Real Estate Mortgage Investment
Conduit financing. The mortgage notes payable are cross-collateralized and
may not be prepaid in whole or part before July 1998. Any prepayments made
during the sixth or seventh loan years are subject to a Yield Maintenance
premium, as defined. Additionally, the Partnership must pay a release
payment equal to 25% of the prepaid balance which will be applied to the
remaining mortgage notes in the collateral pool.

(d) Balloon payments on the mortgage notes payable are due as follows:

Property Balloon Payment Date
-------- --------------- -----

Woodcreek $4,894,767 08/02
Arrowhead 5,947,622 07/03
Mountain Shadows 9,904,857 07/03

<PAGE>
On December 28, 1995, the Partnership paid off the mortgage note payable on
Cedar Run in the amount of $2,217,856. The related deferred borrowing costs in
the amount of $47,040 were written off.

Scheduled principal maturities of the mortgage notes payable under existing
agreements, before consideration of discounts of $424,244, are as follows:

1997.................................... $ 436,589
1998.................................... 473,715
1999.................................... 513,999
2000.................................... 557,709
2001.................................... 605,137
Thereafter.............................. 21,694,116
----------
Total................................. $24,281,265
==========

Based on borrowing rates currently available to the Partnership for mortgage
loans with similar terms and average maturities, the fair value of notes payable
was approximately $23,497,000 at December 31, 1996 and $24,307,000 at December
31, 1995.

NOTE 6 - REFINANCING OF MORTGAGE NOTES PAYABLE
- ----------------------------------------------

On August 11, 1995, the Partnership refinanced the mortgage notes payable on
Woodcreek. The new loan bears an interest rate of 8.54% and will mature August
11, 2002. Following is a summary of the transaction:

New loan proceeds........................... $ 5,250,000
Existing debt retired....................... (3,882,443)
-----------
Cash proceeds from refinancing.............. $ 1,367,557
===========

The Partnership deposited $131,656 into property tax and deferred maintenance
escrows and incurred loan costs of $143,638 relating to the refinancing.

NOTE 7 - LEGAL PROCEEDINGS
- --------------------------

The Partnership is not party to, nor are any of the Partnership's properties the
subject of, any material pending legal proceedings, other than ordinary routine
litigation incidental to the Partnership's business, except for the following:

2) Alfred Napoletano v. McNeil Partners, L.P., McNeil Investors, Inc., Robert
A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd.,
McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil
Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real
Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate
Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund
XXV, L.P. - Superior Court of the State of California, County of Los
Angeles, Case No. BC133849 (Class Action Complaint). On January 7, 1997,
this action was consolidated by court order with Scholfield, et al.,
referenced above.

<PAGE>
4) Robert Lewis v. McNeil Partners, L.P., McNeil Investors, Inc., Robert
A. McNeil et al. - In the District Court of Dallas County, Texas, A-14th
Judicial District, Cause No. 95-08535 (Class Action) - Plaintiff, Robert
Lewis, is a limited partner with McNeil Pacific Investors Fund 1972, Ltd.,
McNeil Real Estate Fund X, Ltd. and McNeil Real Estate Fund XV, Ltd.

5) McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund V, Ltd.,
McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil
Real Estate Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real
Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate
Fund XXIV, L.P., and McNeil Real Estate Fund XXV, L.P. v. High River
Limited Partnership, Riverdale Investors Corp., Carl C. Icahn, and Unicorn
Associates Corporation - United States District Court for the Central
District of California, Case No. 96-5680SVW.

On August 12, 1996, High River Limited Partnership (as defined in this
Section 5, "High River"), a partnership controlled by Carl C. Icahn, sent a
letter to the partnerships referenced above demanding lists of the names,
current residences or business addresses and certain other information
concerning the unitholders of such partnerships. On August 19, 1996, these
partnerships commenced the above action seeking, among other things, to
declare that such partnerships are not required to provide High River with
a current list of unitholders on the grounds that the defendants commenced
a tender offer in violation of the federal securities laws by filing
certain Schedule 13D Amendments on August 5, 1996.

On October 16, 1996, the presiding judge denied the partnerships' requests
for a permanent and preliminary injunction to enjoin High River's tender
offers and granted the defendants request for an order directing the
partnerships to turn over current lists of unitholders to High River
forthwith. On October 24, 1996, the partnerships delivered the unitholder
lists to High River. The judge's decision resolved all the issues in the
action.

NOTE 8 - GAIN ON INVOLUNTARY CONVERSION
- ---------------------------------------

On October 30, 1996, four units at Woodcreek Apartments were destroyed by fire
causing $192,775 in damages. The insurance reimbursements to cover the cost of
repairs, net of a deductible, will exceed the basis of the property damaged by
$97,210. The Partnership has recorded a deferred gain on involuntary conversion
of $97,210 and a receivable of $182,775 from its insurance company for funds not
reimbursed as of December 31, 1996. The deferred gain will be recognized as the
insurance proceeds are recovered.

<PAGE>

McNEIL REAL ESTATE FUND XV, LTD.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1996

<TABLE>
<CAPTION>
Cumulative Costs
Initial Cost (b) Write-down Capitalized
Related (b) Buildings and and Permanent Subsequent
Description Encumbrances Land Improvements Impairment To Acquisition
- ----------- -------------- -------------- ---------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
APARTMENTS:

Arrowhead

Shawnee, KS $ 6,999,878 $ 1,537,294 $ 12,035,648 $ - $ 1,876,917

Cedar Run
Lexington, KY - 866,465 3,947,228 (150,600) 973,555

Mountain Shadows
Albuquerque, NM 11,656,890 3,236,768 17,555,977 - 1,584,311

Woodcreek
Cary, NC 5,200,253 1,446,668 6,590,377 - 1,149,726
-------------- -------------- -------------- ------------ -------------

$ 23,857,021 $ 7,087,195 $ 40,129,230 $ (150,600) $ 5,584,509
============== ============== ============== ============ =============
</TABLE>

(b) The encumbrances reflect the present value of future loan payments
discounted, if appropriate, at a rate estimated to be the prevailing
interest rate at the date of acquisition or refinancing.

See accompanying notes to Schedule III.
<PAGE>

McNEIL REAL ESTATE FUND XV, LTD.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1996

<TABLE>
<CAPTION>
Gross Amount at
Which Carried at Close of Period Accumulated
Buildings and Depreciation
Description Land Improvements Total (a) and Amortization
- ----------- -------------- -------------- ---------------- ----------------
<S> <C> <C> <C> <C>
APARTMENTS:

Arrowhead

Shawnee, KS $ 1,537,294 $ 13,912,565 $ 15,449,859 $ (7,251,742)

Cedar Run
Lexington, KY 866,465 4,770,183 5,636,648 (2,154,534)

Mountain Shadows
Albuquerque, NM 3,236,768 19,140,288 22,377,056 (9,567,883)

Woodcreek
Cary, NC 1,446,668 7,740,103 9,186,771 (3,424,682)
-------------- -------------- --------------- -------------
$ 7,087,195 $ 45,563,139 $ 52,650,334 $ (22,398,841)
============== ============== =============== =============

</TABLE>

(a) For Federal income tax purposes, the properties are depreciated over lives
ranging from 5-27.5 years using ACRS or MACRS methods. The aggregate cost
of real estate investments for Federal income tax purposes was
approximately $52,928,356 and accumulated depreciation was $20,698,127 at
December 31, 1996.

See accompanying notes to Schedule III.

<PAGE>

McNEIL REAL ESTATE FUND XV, LTD.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1996

Date of Date Depreciable
Description Construction Acquired lives (years)
- ----------- ------------ --------- -------------
<S> <C> <C> <C>
APARTMENTS:

Arrowhead

Shawnee, KS 1971 03/85 3-25

Cedar Run
Lexington, KY 1978 12/85 3-25

Mountain Shadows
Albuquerque, NM 1986 08/85 3-25

Woodcreek
Cary, NC 1981 12/85 3-25

</TABLE>

See accompanying notes to Schedule III.

<PAGE>

McNEIL REAL ESTATE FUND XV, LTD.

Notes to Schedule III

Real Estate Investments and Accumulated Depreciation

A summary of activity for the Partnership's real estate investments and
accumulated depreciation is as follows:

<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------------------
1996 1995 1994
--------------- -------------- ---------------

Real estate investments:
<S> <C> <C> <C>
Balance at beginning of year............... $ 51,977,016 $ 50,808,661 $ 49,793,932

Improvements............................... 827,496 1,168,355 1,014,729

Replacement of assets...................... (154,178) - -
------------- ------------- --------------

Balance at end of year..................... $ 52,650,334 $ 51,977,016 $ 50,808,661
============= ============= ==============

Accumulated depreciation:

Balance at beginning of year............... $ 20,428,022 $ 18,472,016 $ 16,586,635

Depreciation............................... 2,039,432 1,956,006 1,885,381

Replacement of assets...................... (68,613) - -
------------- ------------- --------------

Balance at end of year..................... $ 22,398,841 $ 20,428,022 $ 18,472,016
============= ============= ==============

</TABLE>

<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
- ------- -----------------------------------------------------------
AND FINANCIAL DISCLOSURE
------------------------
None.
PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------- --------------------------------------------------

Neither the Partnership nor the General Partner has any directors or executive
officers. The names and ages of, as well as the positions held by, the officers
and directors of McNeil Investors, Inc., the general partner of the General
Partner, are as follows:

Other Principal Occupations and Other
Name and Position Age Directorships During the Past 5 Years
- ----------------- --- -----------------------------------------

Robert A. McNeil, 76 Mr. McNeil is also Chairman of the
Chairman of the Board and Director of McNeil Real
Board and Director Estate Management, Inc. ("McREMI")
which is an affiliate of the General
Partner. He has held the foregoing
positions since the formation of such
entity in 1990. Mr. McNeil received his
B.A. degree from Stanford University in
1942 and his L.L.B. degree from Stanford
Law School in 1948. He is a member of
the State Bar of California and has been
involved in real estate financing since
the late 1940's and in real estate
acquisitions, syndications and
dispositions since 1960. From 1986 until
active operations of McREMI and McNeil
Partners, L.P. began in February 1991,
Mr. McNeil was a private investor. Mr.
McNeil is a member of the International
Board of Directors of the Salk
Institute, which promotes research in
improvements in health care.

Carole J. McNeil 53 Mrs. McNeil is Co-Chairman, with husband
Co-Chairman of the Robert A. McNeil, of McNeil Investors,
Board Inc. Mrs. McNeil has twenty years of
real estate experience, most recently as
a private investor from 1986 to 1993. In
1982, she founded Ivory & Associates, a
commercial real estate brokerage firm in
San Francisco, CA. Prior to that, she
was a commercial real estate associate
with the Madison Company and, earlier, a
commercial sales associate and analyst
with Marcus and Millichap in San
Francisco. In 1978, Mrs. McNeil
established Escrow Training Centers,
California's first accredited commercial
training program for title company
escrow officers and real estate agents
needing college credits to qualify for
brokerage licenses. She began in real
estate as Manager and Marketing Director
of Title Insurance and Trust in Marin
County, CA. Mrs. McNeil serves on the
International Board of Directors of the
Salk Institute.
<PAGE>

Other Principal Occupations and Other
Name and Position Age Directorships During the Past 5 Years
- ----------------- --- ----------------------------------------
Ron K. Taylor 39 Mr. Taylor is the President and Chief
President and Chief Executive Officer of McNeil Real Estate
Executive Officer Management which is an affiliate of the
General Partner. Mr. Taylor has been in
this capacity since the resignation of
Donald K. Reed on March 4, 1997. Prior
to assuming his current
responsibilities, Mr. Taylor served as a
Senior Vice President of McREMI. Mr.
Taylor has been in this capacity since
McREMI commenced operations in 1991.
Prior to joining McREMI, Mr. Taylor
served as an Executive Vice President
for a national syndication/property
management firm. In this capacity, Mr.
Taylor had the responsibility for the
management and leasing of a 21,000,000
square foot portfolio of commercial
properties. Mr. Taylor has been actively
involved in the real estate industry
since 1983.

Each director shall serve until his successor shall have been duly elected and
qualified.

ITEM 11. EXECUTIVE COMPENSATION
- -------- ----------------------

No direct compensation was paid or payable by the Partnership to directors or
officers (since it does not have any directors or officers) for the year ended
December 31, 1996, nor was any direct compensation paid or payable by the
Partnership to directors or officers of the general partner of the General
Partner for the year ended December 31, 1996. The Partnership has no plans to
pay any such remuneration to any directors or officers of the general partner of
the General Partner in the future.

See Item 13 - Certain Relationships and Related Transactions for amounts of
compensation and reimbursements paid by the Partnership to the General Partner
and its affiliates.

<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------- --------------------------------------------------------------

(A) Security ownership of certain beneficial owners.

No individual or group, as defined by Section 13(d)(3) of the Securities
Exchange Act of 1934, was known by the Partnership to own more than 5%
of the Units, other than High River Limited Partnership which owns
10,538 Units (approximately 10.3% of the outstanding Units). The
business address for High River Limited Partnership is 100 South Bedford
Road, Mount Kisco, New York 10549.

(B) Security ownership of management.

The General Partner and the officers and directors of its general
partner, collectively, own 1,357 Units, which represent less than 2% of
the outstanding Units.

None.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------

<PAGE>

The Partnership pays property management fees equal to 5% of the gross rental
receipts of the Partnership's properties to McREMI, an affiliate of the General
Partner, for providing property management and leasing services for the
Partnership's residential properties. The Partnership reimburses McREMI for its
costs, including overhead, of administering the Partnership's affairs. For the
year ended December 31, 1996, the Partnership paid or accrued $602,398 in
property management fees and reimbursements.

See Item 1 - Business, Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations, and Item 8 - Note 2 -
"Transactions with Affiliates."

<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
- -------- -----------------------------------------------------------------

See accompanying Index to Financial Statements at Item 8.

(A) Exhibits

The following exhibits are incorporated by reference and are an integral
part of this Form 10-K.

Exhibit
Number Description
------- -----------

3. Partnership Agreement dated June 26,
1984 and amended as of September
7, 1984. (1)

3.1 Amended and Restated Partnership
Agreement of McNeil Real Estate Fund
XV, Ltd., dated October 11, 1991.
(1)

3.2 Amendment No. 1 to the Amended and
Restated Partnership Agreement,
dated March 28, 1994. (2)

3.3 Amendment No. 2 to the Amended and
Restated Partnership Agreement,
dated March 28, 1994. (2)

10.1 Property Management Agreement, dated
October 11, 1991, between McNeil
Real Estate Fund XV, Ltd. and McNeil
Real Estate Management, Inc. (1)

10.2 Termination Agreement, dated October
11, 1991, between McNeil Real Estate
Fund XV, Ltd. and McNeil Partners,
L.P. (1)

10.3 Amendment of Property Management
Agreement, dated March 5, 1993,
between McNeil Real Estate Fund XV,
Ltd. and McNeil Real Estate
Management, Inc. (Incorporated by
reference to the Annual Report on
Form 10-K for the year ended
December 31, 1992)

<PAGE>
Exhibit
Number Description
------- ------------

10.4 Loan Agreement, dated June 24,
1993, between Lexington Mortgage
Company and McNeil Real Estate Fund
XV, Ltd. et al. (Incorporated by
reference to the Annual Report of
McNeil Real Estate Fund XI, Ltd.
(File No. 0-9783), on Form 10-K for
the period ended December 31, 1993)

10.5 Master Property Management
Agreement, dated as of June 24, 1993
between McNeil Real Estate
Management, Inc. and McNeil Real
Estate Fund XV, Ltd. (2)

10.6 Mortgage Note, dated August 11,
1995, between Woodcreek Fund XV,
Ltd. and Fleet Real Estate Capital,
Inc. (Incorporated by reference to
the Annual Report on Form 10-K for
the year ended December 31, 1995).

11. Statement regarding computation of
Net Income (Loss) per limited
partnership unit (see Item 8 - Note
1 - "Organization and Summary of
Significant Accounting Policies").

22. Following is a list of subsidiaries
of the Partnership:

<TABLE>
<CAPTION>
Names Under
Jurisdiction Which It Is
Name of Subsidiary Incorporation Doing Business
----------------------- ------------- --------------
<S> <C> <C> <C>
Arrowhead Fund XV Delaware None
Limited Partnership

McNeil Mountain Shadows Delaware None
Fund XV Limited
Partnership

Woodcreek Fund XV, Ltd. Texas None
</TABLE>

(1) Incorporated by reference to the
Annual Report of McNeil Real Estate
Fund XV, Ltd. (File No. 0-14258), on
Form 10-K for the period ended
December 31, 1991, as filed with the
Securities and Exchange Commission
on March 29, 1992.

<PAGE>

(2) Incorporated by reference to the
Annual Report of McNeil Real Estate
Fund XV, Ltd. (File No. 0-14258), on
Form 10-K for the period ended
December 31, 1993, as filed with the
Securities and Exchange Commission
on March 30, 1994.

The Partnership has omitted instruments with respect to long-term debt
where the total amount of the securities authorized thereunder does not
exceed 10% of the total assets of the Partnership and its subsidiaries
on a consolidated basis. The Partnership agrees to furnish a copy of
each instrument to the Commission upon request.

27. Financial Data Schedule for the year
ended December 31, 1996.

(B) Reports on Form 8-K. There were no reports on Form 8-K filed during the
quarter ended December 31, 1996.

<PAGE>

McNEIL REAL ESTATE FUND XV, LTD.
A Limited Partnership

SIGNATURE PAGE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

McNEIL REAL ESTATE FUND XV, LTD.

By: McNeil Partners, L.P., General Partner

By: McNeil Investors, Inc., General Partner

March 28, 1997 By: /s/ Robert A. McNeil
- -------------- ------------------------------------------
Date Robert A. McNeil
Chairman of the Board and Director
(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

March 28, 1997 By: /s/ Ron K. Taylor
- -------------- ------------------------------------------
Date Ron K. Taylor
President and Director of McNeil
Investors, Inc.
(Principal Financial Officer)

March 28, 1997 By: /s/ Brandon K. Flaming
- -------------- -----------------------------------------
Date Brandon K. Flaming
Vice President of McNeil Investors, Inc.
(Principal Accounting Officer)

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,362,812
<SECURITIES> 0
<RECEIVABLES> 188,831
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 52,650,334
<DEPRECIATION> (22,398,841)
<TOTAL-ASSETS> 33,180,985
<CURRENT-LIABILITIES> 0
<BONDS> 23,857,021
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 33,180,985
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,075,314
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,134,252
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (133,470)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (133,470)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0

</TABLE>