UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
-------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to_____________
Commission file number 0-14258
----------
MCNEIL REAL ESTATE FUND XV, LTD.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 94-2941516
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (972) 448-5800
-----------------------------
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MCNEIL REAL ESTATE FUND XV, LTD.
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------------- --------------
ASSETS
- ------
Real estate investments:
<S> <C> <C>
Land..................................................... $ 6,220,730 $ 6,220,730
Buildings and improvements............................... 41,461,740 41,433,896
-------------- -------------
47,682,470 47,654,626
Less: Accumulated depreciation.......................... (22,603,408) (22,129,044)
-------------- -------------
25,079,062 25,525,582
Asset held for sale......................................... 3,403,186 3,400,316
Cash and cash equivalents................................... 1,076,487 1,118,379
Cash segregated for security deposits....................... 225,779 213,528
Accounts receivable......................................... 50,858 94,750
Prepaid expenses and other assets........................... 32,575 36,974
Escrow deposits............................................. 501,036 341,153
Deferred borrowing costs (net of accumulated
amortization of $373,427 and $344,742 at
March 31, 1998 and December 31, 1997,
respectively)............................................ 635,905 664,590
-------------- -------------
$ 31,004,888 $ 31,395,272
============== =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- ------------------------------------------
Mortgage notes payable, net................................. $ 23,373,791 $ 23,474,480
Accrued property taxes...................................... 291,214 175,741
Accrued expenses............................................ 110,662 120,757
Accrued interest............................................ 162,837 163,621
Payable to affiliates - General Partner..................... 433,550 249,503
Security deposits and deferred rental revenue............... 196,047 216,683
-------------- -------------
24,568,101 24,400,785
-------------- -------------
Partners' equity (deficit):
Limited partners - 120,000 limited partnership units
authorized; 102,796 limited partnership units issued
and outstanding at March 31, 1998 and December 31, 1997.. 7,135,201 7,555,525
General Partner.......................................... (698,414) (561,038)
-------------- -------------
6,436,787 6,994,487
-------------- -------------
$ 31,004,888 $ 31,395,272
============== =============
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
MCNEIL REAL ESTATE FUND XV, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1998 1997
-------------- --------------
Revenue:
<S> <C> <C>
Rental revenue................................... $ 2,028,217 $ 1,949,655
Interest......................................... 26,442 17,109
------------- -------------
Total revenue.................................. 2,054,659 1,966,764
------------- -------------
Expenses:
Interest......................................... 532,124 535,834
Depreciation and amortization.................... 474,364 517,239
Property taxes................................... 115,473 111,285
Personnel expenses............................... 237,200 243,240
Utilities........................................ 106,004 112,518
Repair and maintenance........................... 146,353 213,606
Property management fees - affiliates............ 101,452 101,259
Other property operating expenses................ 129,689 124,194
General and administrative....................... 85,711 39,796
General and administrative - affiliates.......... 45,805 37,526
------------- -------------
Total expenses................................. 1,974,175 2,036,497
------------- -------------
Net income (loss)................................... $ 80,484 $ (69,733)
============= =============
Net income (loss) allocable to limited partners..... $ 79,680 $ (185,317)
Net income allocable to General Partner............. 804 115,584
------------- -------------
Net income (loss)................................... $ 80,484 $ (69,733)
============= =============
Net income (loss) per limited partnership unit...... $ .78 $ (1.80)
============= =============
Distribution per limited partnership unit........... $ 4.86 $ 4.86
============= =============
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
MCNEIL REAL ESTATE FUND XV, LTD.
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
(Unaudited)
For the Three Months Ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Equity (Deficit)
--------------- --------------- ----------------
<S> <C> <C> <C>
Balance at December 31, 1996.............. $ (419,837) $ 8,812,479 $ 8,392,642
Net income (loss)......................... 115,584 (185,317) (69,733)
Management Incentive Distribution......... (120,978) - (120,978)
Distributions to limited partners......... - (500,004) (500,004)
------------- ------------- -------------
Balance at March 31, 1997................. $ (425,231) $ 8,127,158 $ 7,701,927
============= ============= =============
Balance at December 31, 1997.............. $ (561,038) $ 7,555,525 $ 6,994,487
Net income................................ 804 79,680 80,484
Management Incentive Distribution......... (138,180) - (138,180)
Distributions to limited partners......... - (500,004) (500,004)
------------- ------------- -------------
Balance at March 31, 1998................. $ (698,414) $ 7,135,201 $ 6,436,787
============= ============= =============
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
MCNEIL REAL ESTATE FUND XV, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------------------
1998 1997
------------------- ----------------
Cash flows from operating activities:
<S> <C> <C>
Cash received from tenants........................ $ 2,035,722 $ 1,858,537
Cash paid to suppliers............................ (746,714) (747,550)
Cash paid to affiliates........................... (101,390) (130,424)
Interest received................................. 26,442 17,109
Interest paid..................................... (490,083) (499,082)
Property taxes paid............................... (120,322) (103,802)
------------------ --------------
Net cash provided by operating activities............ 603,655 394,788
----------------- --------------
Cash flows from investing activities:
Additions to real estate investments.............. (27,844) (27,961)
Additions to asset held for sale.................. (2,870) -
----------------- --------------
Net cash used in investing activities................ (30,714) (27,961)
------------------ --------------
Cash flows from financing activities:
Principal payments on mortgage notes
payable......................................... (114,829) (105,830)
Management Incentive Distribution................. - (120,756)
Distributions to limited partners................. (500,004) (500,004)
----------------- --------------
Net cash used in financing activities................ (614,833) (726,590)
----------------- --------------
Net decrease in cash and cash equivalents............ (41,892) (359,763)
Cash and cash equivalents at beginning of
period............................................ 1,118,379 1,362,812
----------------- --------------
Cash and cash equivalents at end of period........... $ 1,076,487 $ 1,003,049
================= ==============
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
MCNEIL REAL ESTATE FUND XV, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
Reconciliation of Net Income (Loss) to Net Cash Provided by
Operating Activities
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------------
1998 1997
---------------- ----------------
<S> <C> <C>
Net income (loss).................................... $ 80,484 $ (69,733)
--------------- --------------
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation...................................... 474,364 517,239
Amortization of discounts on mortgage
notes payable................................... 28,685 13,512
Amortization of deferred borrowing costs.......... 14,140 23,963
Changes in assets and liabilities:
Cash segregated for security deposits........... (12,251) 14,581
Accounts receivable............................. 43,892 (121,771)
Prepaid expenses and other assets............... 4,399 4,362
Escrow deposits................................. (159,883) (108,231)
Accounts payable................................ - 26,579
Accrued property taxes.......................... 115,473 111,285
Accrued expenses................................ (10,095) (39,895)
Accrued interest................................ (784) (723)
Payable to affiliates - General Partner......... 45,867 8,361
Security deposits and deferred rental
revenue....................................... (20,636) 15,259
--------------- --------------
Total adjustments............................. 523,171 464,521
--------------- --------------
Net cash provided by operating activities............ $ 603,655 $ 394,788
=============== ==============
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XV, LTD.
Notes to Financial Statements
(Unaudited)
March 31, 1998
NOTE 1.
- -------
McNeil Real Estate Fund XV, Ltd. (the "Partnership") was organized June 26, 1984
as a limited partnership organized under the provisions of the California
Uniform Limited Partnership Act. The general partner of the Partnership is
McNeil Partners, L.P. (the "General Partner"), a Delaware limited partnership,
an affiliate of Robert A. McNeil. The Partnership is governed by an amended and
restated limited partnership agreement, dated October 11, 1991 (the "Amended
Partnership Agreement"). The principal place of business for the Partnership and
the General Partner is 13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240.
In the opinion of management, the financial statements reflect all adjustments
necessary for a fair presentation of the Partnership's financial position and
results of operations. All adjustments were of a normal recurring nature.
However, the results of operations for the three months ended March 31, 1998 are
not necessarily indicative of the results to be expected for the year ending
December 31, 1998.
NOTE 2.
- -------
The financial statements should be read in conjunction with the financial
statements contained in the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1997, and the notes thereto, as filed with the
Securities and Exchange Commission, which is available upon request by writing
to McNeil Real Estate Fund XV, Ltd., c/o McNeil Real Estate Management, Inc.,
Investor Services, 13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240.
NOTE 3.
- -------
The Partnership pays property management fees equal to 5% of gross rental
receipts of the Partnership's properties to McNeil Real Estate Management, Inc.
("McREMI"), an affiliate of the General Partner, for providing property
management services and leasing services.
The Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs.
Under terms of the Amended Partnership Agreement, the Partnership is paying a
Management Incentive Distribution ("MID") to the General Partner. The maximum
MID is calculated as 1% of the tangible asset value of the Partnership. The
maximum MID percentage decreases subsequent to 1999. Tangible asset value is
determined by using the greater of (i) an amount calculated by applying a
capitalization rate of 9% to the annualized net operating income of each
property or (ii) a value of $10,000 per apartment unit to arrive at the property
tangible asset value. The property tangible asset value is then added to the
book value of all other assets excluding intangible items.
<PAGE>
MID will be paid to the extent of the lesser of the Partnership's excess cash
flow, as defined, or net operating income, as defined ("the Entitlement
Amount"), and may be paid (i) in cash, unless there is insufficient cash to pay
the distribution in which event any unpaid portion not taken in limited
partnership units ("Units") will be deferred and is payable, without interest,
from the first available cash and/or (ii) in Units. A maximum of 50% of the MID
may be paid in Units. The number of Units issued in payment of the MID is based
on the greater of $50 per Unit or the net tangible asset value, as defined, per
Unit.
Any amount of the MID that is paid to the General Partner in Units will be
treated as if cash is distributed to the General Partner and is then contributed
to the Partnership by the General Partner. The MID represents a return of equity
to the General Partner for increasing cash flow, as defined, and accordingly is
treated as a distribution.
Compensation, reimbursements and distributions paid to or accrued for the
benefit of the General Partner and its affiliates are as follows:
Three Months Ended
March 31,
--------------------------
1998 1997
------------ -----------
Property management fees - affiliates.......... $ 101,452 $ 101,259
Charged to general and administrative -
affiliates:
Partnership administration.................. 45,805 37,526
---------- ----------
$ 147,257 $ 138,785
========== ==========
Charged to General Partner's deficit:
MID......................................... $ 138,180 $ 120,978
========== ==========
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
The Partnership is engaged in real estate activities, including the ownership,
operation and management of residential and other real estate related assets. At
March 31, 1998, the Partnership owned four apartment properties. Three of the
four Partnership's properties are subject to mortgage notes.
RESULTS OF OPERATIONS
- ---------------------
Revenue:
Partnership revenues increased by $87,895 for the three months ended March 31,
1998 as compared to the same period last year. Rental revenue increased by
$78,562 or 4% and interest income increased by $9,333 or 55% for the period
ended March 31, 1998.
<PAGE>
Rental revenue for the first three months of 1998 was $2,028,217 as compared to
$1,949,655 for the same period in 1997. The increase in rental revenue of
$78,562 is due to an increase in occupancy rates at Woodcreek and Arrowhead.
Expenses:
Partnership expenses decreased by $62,322 or 3% for the three months ended March
31, 1998 as compared to the same period last year. A decrease in repairs and
maintenance and depreciation was offset by an increase in general and
administrative expense.
Depreciation declined by $42,875 or 8% for the three months ended March 31, 1998
as compared to the three months ended March 31, 1997. This decrease is due to
Cedar Run, which is currently classified as an asset held for sale, for which no
depreciation has been recognized since August 1, 1997.
Repairs and maintenance expense for the three months ended March 31, 1998
decreased by $67,253 or 31% compared to the same period in 1997. The decrease is
due to the reduction in appliance and carpet replacement at the properties. This
decrease is also due to a reduction in cleaning and decorating expense.
General and administrative expenses increased $45,915 for the three months ended
March 31, 1998 as compared to the same period last year. The increase was mainly
due to costs incurred to explore alternatives to maximize the value of the
Partnership (see Liquidity and Capital Resources). The increase was partially
offset by decreases attributable to investor services. During 1997, charges for
investor services were provided by a third party vendor. Beginning with 1998,
these services are provided by affiliates of the General Partner.
General and administrative-affiliate expenses increased $8,279 or 22% for the
three months ended March 31, 1998 as compared to the same period of 1997. The
increase is due to the change in investor services charges as discussed above.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnership's primary source of cash flows is from operating activities
which generated $603,655 of cash in the first three months of 1998 as compared
to $394,788 for the same period in 1997. The increase in cash of $208,867 was
mainly the result of an increase in cash received from tenants and an decrease
in the cash paid to affiliates.
The Partnership expended $30,714 and $27,961 for capital improvements to its
properties in the first three months of 1998 and 1997, respectively.
During the first three months of 1998, the Partnership paid $114,829 in
principal payments on the mortgage notes and made distributions of $500,004 to
the limited partners.
Short-term liquidity:
At March 31, 1998, the Partnership held cash and cash equivalents of $1,076,487,
down $1,118,379 from the balance at December 31, 1997. This balance provides a
comfortable level of working capital for the Partnership's operations.
<PAGE>
During 1998, 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 1998, the Partnership has budgeted to spend approximately $616,000 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.
Pursuant to the Partnership's previously announced liquidation plans, the
Partnership has recently retained PaineWebber, Incorporated as its exclusive
financial advisor to explore alternatives to maximize the value of the
Partnership. The alternatives being considered by the Partnership include,
without limitation, a transaction in which limited partnership interests in the
Partnership are converted into cash. The General Partner of the Partnership or
entities or persons affiliated with the General Partner will not be involved as
a purchaser in any of the transactions contemplated above. Any transaction will
be subject to certain conditions including (i) approval by the limited partners
of the Partnership, and (ii) receipt of an opinion from an independent financial
advisory firm as to the fairness of the consideration received by the
Partnership pursuant to such transaction. Finally, there can be no assurance
that any transaction will be consummated, or as to the terms thereof.
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 the three months ended March
31, 1998 and 1997, $804 and $115,584, respectively, was allocated to the General
Partner. The limited partners received net income (loss) allocations of $79,680
and $(185,317) for the three months ended March 31, 1998 and 1997, respectively.
During 1998, the limited partners received a cash distribution of $500,004. The
distribution consisted of funds from operations. A distribution of $138,180 for
the MID was accrued by the Partnership for the period ended March 31, 1998 for
the General Partner.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
(a) Exhibits.
Exhibit
Number Description
------- -----------
3.1 Amended and Restated Partnership Agreement
dated October 11, 1991. (1)
11. Statement regarding computation of net loss
per limited partnership unit: Net loss per
limited partnership unit is computed by
dividing net loss allocated to the limited
partners by the number of limited
partnership units outstanding. Per unit
information has been computed based on
102,796 limited partnership units
outstanding in 1998 and 1997, respectively.
27. Financial Data Schedule for the quarter
ended March 31, 1998.
(1) Incorporated by reference to the Annual Report of Registrant,
on Form 10-K for the period ended December 31, 1991, as filed
on March 30, 1992.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during
the quarter ended March 31, 1998.
<PAGE>
McNEIL REAL ESTATE FUND XV, LTD.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized:
McNEIL REAL ESTATE FUND XV, Ltd.
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
May 14, 1998 By: /s/ Ron K. Taylor
- ------------ ----------------------------------------
Date Ron K. Taylor
President and Director of McNeil
Investors, Inc.
(Principal Financial Officer)
May 14, 1998 By: /s/ Brandon K. Flaming
- ------------ ----------------------------------------
Date Brandon K. Flaming
Vice President of McNeil
Investors, Inc.
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,076,487
<SECURITIES> 0
<RECEIVABLES> 50,858
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 47,682,470
<DEPRECIATION> (22,603,408)
<TOTAL-ASSETS> 31,004,888
<CURRENT-LIABILITIES> 0
<BONDS> 23,373,791
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 31,004,888
<SALES> 2,028,217
<TOTAL-REVENUES> 2,054,659
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,442,051
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 532,124
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 80,484
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 80,484
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
