UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the period ended September 30, 1995
-----------------------------
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 0-14267
MCNEIL REAL ESTATE FUND XXIV, L.P.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 74-2339537
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13760 Noel Road, Suite 700, LB70, Dallas, Texas, 75240
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (214) 448-5800
-------------------------
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
<PAGE>
MCNEIL REAL ESTATE FUND XXIV, L.P.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ------ --------------------
BALANCE SHEETS
(Unaudited)
<TABLE>
September 30, December 31,
1995 1994
---------- ----------
<S> <C> <C>
ASSETS
- ------
Real estate investments:
Land..................................................... $ 7,039,867 $ 7,039,867
Buildings and improvements............................... 29,557,765 29,272,835
---------- ----------
36,597,632 36,312,702
Less: Accumulated depreciation and amortization......... (12,079,385) (11,061,009)
---------- ----------
24,518,247 25,251,693
Cash and cash equivalents................................... 2,507,048 1,720,161
Cash segregated for security deposits....................... 91,942 85,851
Accounts receivable, net of allowance for doubtful
accounts of $77,044 at September 30, 1995 and
December 31, 1994........................................ 461,793 401,525
Prepaid expenses and other assets, net...................... 199,195 215,741
---------- ----------
$27,778,225 $27,674,971
========== ==========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- -----------------------------------------
Mortgage note payable....................................... $ 5,562,893 $ 5,660,558
Accounts payable and accrued expenses....................... 506,566 194,613
Payable to affiliates - General Partner..................... 69,079 38,716
Advances from affiliates.................................... 642,581 642,581
Deferred gain............................................... 1,700 17,000
Security deposits and deferred rental income................ 153,824 87,413
---------- ----------
6,936,643 6,640,881
---------- ----------
Partners' equity (deficit):
Limited partners - 40,000 limited partnership
units authorized and outstanding at September 30,
1995 and December 31, 1994............................. 20,849,339 21,039,922
General Partner.......................................... (7,757) (5,832)
---------- ----------
20,841,582 21,034,090
---------- ----------
$27,778,225 $27,674,971
========== ==========
</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 XXIV, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenue:
Rental revenue................ $1,021,347 $1,037,290 $3,096,514 $3,179,842
Interest...................... 33,500 20,210 88,652 45,926
Property tax refund........... 9,709 - 35,142 -
--------- --------- --------- -
Total revenue............... 1,064,556 1,057,500 3,220,308 3,225,768
--------- --------- --------- ---------
Expenses:
Interest...................... 114,681 88,353 323,958 283,413
Depreciation and
amortization................ 343,764 318,530 1,018,376 948,884
Property taxes................ 124,463 112,590 374,435 345,791
Personnel costs............... 67,504 72,599 221,565 203,956
Utilities..................... 53,322 49,594 147,188 157,207
Repairs and maintenance....... 112,657 88,151 303,870 335,455
Property management
fees - affiliates........... 60,126 58,930 177,202 178,205
Other property operating
expenses.................... 64,508 75,058 184,702 207,095
General and administrative.... 114,289 12,218 179,644 43,557
General and administrative -
affiliates.................. 159,016 148,689 481,876 460,639
--------- --------- --------- ---------
Total expenses.............. 1,214,330 1,024,712 3,412,816 3,164,202
--------- --------- --------- ---------
Net income (loss)................ $ (149,774) $ 32,788 $ (192,508) $ 61,566
========= ========= ========= =========
Net income (loss) allocable
to limited partners........... $ (148,276) $ 32,460 $ (190,583) $ 60,950
Net income (loss) allocable
to General Partner............ (1,498) 328 (1,925) 616
--------- --------- --------- ---------
Net income (loss)................ $ (149,774) $ 32,788 $ (192,508) $ 61,566
========= ========= ========= =========
Net income (loss) per limited
partnership unit.............. $ (3.71) $ .81 $ (4.76) $ 1.52
========= ========= ========= =========
</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 XXIV, L.P.
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
(Unaudited)
For the Nine Months Ended September 30, 1995 and 1994
<TABLE>
Total
General Limited Partners'
Partner Partners Equity
-------- ---------- ----------
<S> <C> <C> <C>
Balance at December 31, 1993.............. $(5,177) $21,104,778 $21,099,601
Net income................................ 616 60,950 61,566
------ ---------- ----------
Balance at September 30, 1994............. $(4,561) $21,165,728 $21,161,167
====== ========== ==========
Balance at December 31, 1994.............. $(5,832) $21,039,922 $21,034,090
Net loss.................................. (1,925) (190,583) (192,508)
------ ---------- ----------
Balance at September 30, 1995............. $(7,757) $20,849,339 $20,841,582
====== ========== ==========
</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 XXIV, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
Increase in Cash and Cash Equivalents
<TABLE>
Nine Months Ended
September 30,
---------------------------------
1995 1994
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Cash received from tenants........................ $3,077,873 $3,132,792
Cash paid to suppliers............................ (945,852) (935,304)
Cash paid to affiliates........................... (628,715) (934,068)
Interest received................................. 88,652 45,926
Interest paid..................................... (296,578) (260,946)
Property taxes paid............................... (161,040) (268,751)
Property tax refund............................... 35,142 -
--------- ---------
Net cash provided by operating activities............ 1,169,482 1,079,649
--------- ---------
Cash flows from investing activities:
Additions to real estate investments.............. (284,930) (421,452)
--------- ---------
Cash flows from financing activities:
Principal payments on mortgage note
payable......................................... (97,665) (165,264)
--------- ---------
Net increase in cash and cash
equivalents....................................... 786,887 492,933
Cash and cash equivalents at beginning of
period............................................ 1,720,161 1,435,591
--------- ---------
Cash and cash equivalents at end of period........... $2,507,048 $1,928,524
========= =========
</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 XXIV, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
Reconciliation of Net Income (Loss) to Net Cash Provided by
Operating Activities
<TABLE>
Nine Months Ended
September 30,
---------------------------------
1995 1994
--------- ---------
<S> <C> <C>
Net income (loss).................................... $ (192,508) $ 61,566
-------- ---------
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization..................... 1,018,376 948,884
Amortization of deferred borrowing costs.......... 23,309 23,309
Amortization of deferred gain..................... (15,300) (15,300)
Changes in assets and liabilities:
Cash segregated for security deposits........... (6,091) (8,203)
Accounts receivable, net........................ (60,268) (15,855)
Prepaid expenses and other assets, net.......... (6,763) 7,725
Accounts payable and accrued expenses........... 311,953 78,265
Payable to affiliates - General Partner......... 30,363 4,776
Security deposits and deferred rental
income........................................ 66,411 (5,518)
--------- ---------
Total adjustments............................. 1,361,990 1,018,083
--------- ---------
Net cash provided by operating activities............ $1,169,482 $1,079,649
========= =========
</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 XXIV, L.P.
Notes to Financial Statements
September 30, 1995
(Unaudited)
NOTE 1.
- ------
McNeil Real Estate Fund XXIV, L.P. (the "Partnership"), formerly known as
Southmark Equity Partners, Ltd., was organized on October 19, 1984, as a limited
partnership under the provisions of the California Revised Limited Partnership
Act to acquire and operate commercial and residential properties. The general
partner of the Partnership is McNeil Partners, L.P. (the "General Partner"), a
Delaware limited partnership, an affiliate of Robert A. McNeil ("McNeil"). The
principal place of business for the Partnership and the General Partner is 13760
Noel Road, Suite 700, 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 nine months ended September 30, 1995
are not necessarily indicative of the results to be expected for the year ending
December 31, 1995.
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, 1994, and the notes thereto, as filed with the
Securities and Exchange Commission, which is available upon request by writing
to McNeil Real Estate Fund XXIV, L.P., c/o McNeil Real Estate Management, Inc.,
Investor Services, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240.
NOTE 3.
- ------
The Partnership pays property management fees equal to 5% of the gross rental
receipts for its residential properties and 6% of gross rental receipts for its
commercial 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. McREMI may also choose to provide leasing services
for the Partnership's commercial properties, in which case McREMI will receive
property management fees from such commercial properties equal to 3% of the
property's gross rental receipts plus leasing commissions based on the
prevailing market rate for such services where the property is located.
The Partnership reimburses McREMI for its costs, including overhead, of
administering the Partnership's affairs.
The Partnership is paying an asset management fee which is payable to the
General Partner. Through 1999, the asset management fee is calculated as 1% of
the Partnership's tangible asset value. Tangible asset value is determined by
using the greater of (i) an amount calculated by applying a capitalization rate
of 9% to the annualized net operating income of each property or (ii) a value of
$10,000 per apartment unit for residential properties and $50 per gross square
foot for commercial properties to arrive at the property tangible asset value.
The property tangible asset value is then added to the book value of all other
assets excluding intangible items. The fee percentage decreases subsequent to
1999.
Compensation and reimbursements paid to or accrued for the benefit of the
General Partner or its affiliates are as follows:
<TABLE>
Nine Months Ended
September 30,
-------------------------------
1995 1994
------- -------
<S> <C> <C>
Property management fees............................. $177,202 $178,205
Charged to general and administrative -
affiliates:
Partnership administration........................ 231,537 217,064
Asset management fee.............................. 250,339 243,575
------- -------
$659,078 $638,844
======= =======
</TABLE>
Payable to affiliates - General Partner at September 30, 1995 and December 31,
1994 consisted primarily of unpaid property management fees, Partnership general
and administrative expenses and asset management fees and are due and payable
from current operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------ ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
There has been no significant change in the operations of the Partnership's
properties since December 31, 1994. The Partnership reported net loss for the
first nine months of 1995 of $192,508 as compared to net income of $61,566 for
the first nine months of 1994. Revenues were $3,220,308 in 1995, down from
$3,225,768 for the same period in 1994. Expenses increased to $3,412,816 in
1995, from $3,164,202 in 1994.
Net cash provided by operating activities was $1,169,482 for the first nine
months of 1995, an increase from the $1,079,649 provided during the first nine
months of 1994. After principal payments on the Partnership's mortgage note
payable of $97,665 and capital improvements of $284,930, cash and cash
equivalents at September 30, 1995 were $2,507,048 up by $786,887 since December
31, 1994.
RESULTS OF OPERATIONS
- ---------------------
Revenue:
Total revenue increased by $7,056 and decreased by $5,460 for the three and nine
months ended September 30, 1995, respectively, as compared to the same periods
in 1994. The change in the three and nine months was primarily due to a decrease
in rental revenue, an increase in interest income and a property tax refund, as
discussed below.
Rental revenue decreased by $15,943 and $83,328 for three and nine months ended
September 30, 1995, respectively, in relation to the respective periods in 1994.
The decrease was mainly due to a decrease of approximately $96,000 at
Southpointe Plaza Shopping Center due to a decrease in common area maintenance
costs billed to tenants and a decrease in occupancy from 90% at September 30,
1994 to 85% at September 30, 1995. In addition, there was a decrease in
occupancy at Island Plaza from 84% at the end of the third quarter of 1994 to
79% at the end of the same quarter in 1995. These decreases were partially
offset by increases in rental revenue as a result of higher rental rates at Pine
Hills and Sleepy Hollow apartments. In addition there was an increase in rental
revenue at Towne Center due to a large tenant occupying previously vacant space
in the third quarter of 1994.
Interest income increased by $13,290 and $42,726 for the three and nine months
ended September 30, 1995, respectively, as compared to the same periods in 1994.
The increase was due to a greater amount of cash available for short-term
investment in 1995. The partnership held approximately $2.5 million of cash and
cash equivalents at September 30, 1995, as compared to $1.9 million at September
30, 1994. In addition, there was an increase in interest rates earned on
invested cash in 1995.
In 1995, the Partnership received $35,142 in refunds of prior years' property
taxes for Southpointe Plaza, River Bay Plaza and Springwood Plaza shopping
centers. No such refunds were received in 1994.
Expenses:
Total expenses increased by $189,618 and $248,614 for the three and nine months
ended September 30, 1995, respectively, as compared to the same periods in 1994.
The increase was primarily the result of an increase in general and
administrative expenses, as discussed below.
Interest expense increased $26,328 and $40,545 for the three and nine months
ended September 30, 1995, respectively, due to an increase in the adjustable
interest rate on the Southpointe Plaza mortgage note payable.
Repairs and maintenance expense increased by $24,506 for the quarter and
decreased by $31,585 for the nine months ended September 30, 1995, as compared
to the same periods in 1994. The overall decrease was partially due to a
decrease in exterminating expense. Pine Hills and Sleepy Hollow Apartments were
both completely exterminated in the second quarter of 1994. In addition, there
was a decrease in the replacement of carpet and appliances at Pine Hills and
Sleepy Hollow Apartments, which were expensed in the first half of 1994.
Other property operating expenses decreased by $10,550 and $22,393 for the three
and nine months ended September 30, 1995, respectively, as compared to the same
periods in 1994. The decrease was mainly due to decreased advertising and
leasing commissions recognized, mainly at Southpointe Plaza Shopping Center,
which were paid in an effort to increase occupancy in 1994.
General and administrative expenses increased by $102,071 and $136,087 for the
three and nine months ended September 30, 1995, respectively, as compared to the
same periods in 1994. The increase was mainly due to expenses incurred in the
third quarter of 1995 relating to evaluation and dissemination of information
regarding an unsolicited tender offer as discussed in Item 5 - Other
Information. In addition, there was an increase in expenses incurred in
connection with a lawsuit involving a tenant's lease at Southpointe Plaza
Shopping Center.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnership's primary source of cash flows is from operating activities
which generated $1,169,482 of cash in the first nine months of 1995 as compared
to $1,079,649 for the same period in 1994.
The Partnership expended $284,930 and $421,452 for additions to its real estate
investments in the first nine months of 1995 and 1994, respectively. The
decrease in 1995 was mainly due to fewer tenant improvements being performed at
Southpointe Plaza Shopping Center.
Short-term liquidity:
- --------------------
At September 30, 1995, the Partnership held cash and cash equivalents of
$2,507,048. This balance provides a reasonable level of working capital for the
Partnership's immediate needs in operating its properties.
For the remainder of 1995, Partnership properties are expected to provide
positive cash flow from operations after payment of debt service and capital
improvements. The Partnership has budgeted $436,000 for necessary capital
improvements for all properties in 1995 which is expected to be funded from
available cash reserves or from operations of the properties. The present cash
balance is believed to provide an adequate reserve for property operations.
At the present time, the Partnership anticipates making distributions to the
limited partners in the foreseeable future. Management is currently reviewing
cash requirements to determine the amount and timing of such distributions.
Long-term liquidity:
- -------------------
Only one property, Southpointe Plaza Shopping Center, is encumbered with
mortgage debt. The Partnership will attempt to obtain refinancing or extension
of the mortgage note when it matures in 1997.
While the outlook for maintenance of adequate levels of liquidity is favorable,
should operations deteriorate and present cash resources become insufficient to
fund current needs, the Partnership would require other sources of working
capital. No such sources have been identified. The Partnership has no
established lines of credit from outside sources. Other possible actions to
resolve cash deficiencies include refinancings, deferral of capital expenditures
on Partnership properties except where improvements are expected to increase the
competitiveness and marketability of the properties, arranging financing from
affiliates or the ultimate sale of the properties. Sales and refinancings are
possibilities only, and there are at present no plans for any such sales or
refinancings.
The General Partner has established a revolving credit facility not to exceed
$5,000,000 in the aggregate which is available on a "first-come, first-served"
basis to the Partnership and other affiliated partnerships if certain conditions
are met. Borrowings under the facility may be used to fund deferred maintenance,
refinancing obligations and working capital needs. There is no assurance that
the Partnership will receive any funds under the facility because no amounts are
reserved for any particular partnership. As of September 30, 1995, $2,362,004
remained available for borrowing under the facility; however, additional funds
could become available as other partnerships repay existing borrowings.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- ------ -----------------
1) Martha Hess, et. al. v. Southmark Equity Partners II, Ltd., Southmark Income
Investors, Ltd., Southmark Equity Partners, Ltd. (presently known as McNeil Real
Estate Fund XXIV, L.P.), Southmark Realty Partners III, Ltd., and Southmark
Realty Partners II, Ltd., et al. ("Hess"); Kotowski v. Southmark Equity
Partners, Ltd. and Donald Arceri v. Southmark Income Investors, Ltd. These cases
were previously pending in the Illinois Appellate Court for the First District
("Appellate Court"), as consolidated case no. 90-107. Consolidated with these
cases are an additional 14 matters against unrelated partnership entities. The
Hess case was filed on May 20, 1988, by Martha Hess, individually and on behalf
of a putative class of those similarly situated. The original, first, second and
third amended complaints in Hess sought rescission, pursuant to the Illinois
Securities Act, of over $2.7 million of principal invested in five Southmark
(now McNeil) partnerships, and other relief including damages for breach of
fiduciary duty and violation of the Illinois Consumer Fraud and Deceptive
Business Practices Act. The original, first, second and third amended complaints
in Hess were dismissed against the defendant-group because the Appellate Court
held that they were not the proper subject of a class action complaint. Hess
was, thereafter, amended a fourth time to state causes of action against
unrelated partnership entities. Hess went to judgment against that unrelated
entity and the judgment, along with the prior dismissal of the class action, was
appealed. The Hess appeal was decided by the Appellate Court during 1992. The
Appellate Court affirmed the dismissal of the breach of fiduciary duty and
consumer fraud claims. The Appellate Court did, however, reverse in part,
holding that certain putative class members could file class action complaints
against the defendant-group. Although leave to appeal to the Illinois Supreme
Court was sought, the Illinois Supreme Court refused to hear the appeal. The
effect of the denial is that the Appellate Court's opinion remains standing. On
June 15, 1994, the Appellate Court issued its mandate sending the case back to
trial court.
In late January 1995, the plaintiffs filed a Motion to File an Amended
Consolidated Class Action Complaint, which amends the complaint to name McNeil
Partners, L.P. as the successor general partner to Southmark Investment Group.
In February 1995, the plaintiffs filed a Motion for Class Certification.
In September 1995, the court granted the plaintiffs' Motion to File an Amended
Complaint, to Consolidate and for Class Certification. The defendants have
answered the complaint and have plead that the plaintiffs did not give timely
notice of their right to rescind within six months of knowing that right. The
ultimate outcome of this litigation cannot be determined at this time.
2) High River Limited Partnership vs. McNeil Partners, L.P., McNeil Investors,
Inc., McNeil Pacific Investors 1972, 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., Robert A. McNeil and Carole J. McNeil
(L95012). High River Limited Partnership ("High River") filed this action in the
United States District Court for the Southern District of New York against
McNeil Partners, L.P., McNeil Investors, Inc. and Mr. and Mrs. McNeil
requesting, among other things, names and addresses of the limited partners of
the ten partnerships listed above (the "Funds"). The district court issued a
preliminary injunction against the Funds requiring them to commence mailing
materials relating to High River tender offer materials on August 14, 1995.
On August 18, 1995, McNeil Partners, L.P., McNeil Investors, Inc., the Funds,
and Mr. and Mrs. McNeil filed an Answer and Counterclaim. The counterclaim
principally asserted that (1) the High River tender offers were undertaken in
violation of the federal securities laws, on the basis of material, non-public,
and confidential information, and (2) that the High River offer documents
omitted and/or misrepresented certain material information about the High River
tender offers. The counterclaim sought a preliminary and permanent injunction
against the continuation of the High River tender offers and, alternatively,
ordering corrective disclosure with respect to allegedly false and misleading
statements contained in the tender offer documents.
The High River tender offer expired on October 6, 1995. The defendants believe
that the action is moot and expect the matter to be dismissed shortly.
3) Robert Lewis vs. 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). The plaintiff, Robert Lewis, is a
limited partner with McNeil Pacific Investors Fund 1972, McNeil Real Estate Fund
X, Ltd. and McNeil Real Estate Fund XV, Ltd. The plaintiff brings this action on
his own behalf and as a class action on behalf of the class of all limited
partners of McNeil Pacific Investors Fund 1972, 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 as of August 4, 1995.
The plaintiff alleges that McNeil Partners, L.P., McNeil Investors, Inc., Robert
A. McNeil, and other senior officers (collectively, the "Defendants") breached
their fiduciary duties by, amoung other things, (1) failing to attempt to sell
the properties owned by the Funds (the "Properties") and extending the lives of
the Funds indefinitely, contrary to the Funds' business plans, (2) paying
distributions to themselves and generating fees for their affiliates, (3)
refusing to make significant distributions to the class members, despite the
fact that the Funds have positive cash flows and substantial cash balances, and
(4) failing to take steps to create an auction market for Fund equity interests,
despite the fact that a third party bidder filed tender offers for approximately
forty-five percent (45%) of the outstanding units of each of the Funds. The
plaintiff also claims that the Defendants have breached the partnership
agreements by failing to take steps to liquidate the Properties and by their
alteration of the Funds' primary purposes, their acts in contravention of these
agreements, and their use of the Fund assets for their own benefit instead of
for the benefit of the Funds.
The Defendants deny that there is any merit to the plaintiff's allegations and
intend to vigorously defend this action.
4) James F. Schofield, Gerald C. Gillett and Donna S. Gillett vs. McNeil
Partners, L.P., McNeil Investors, Inc., McNeil Real Estate Management, Inc.,
Robert A. McNeil, Carole J. McNeil, et al, 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
for the County of Los Angeles, Case No. BC133799 (Class and Derivative Action
Complaint), United States District Court, Southern District of New York, Case
No. 95CIV.6711 (Class and Derivative Action Complaint). These are
corporate/securities class and derivative actions brought in state and federal
court by limited partners of each of the nine limited partnerships that are
named as Nominal Defendants as listed above (the "Nine Funds").
The plaintiffs allege that defendants McNeil Investors, Inc., its affiliate
McNeil Real Estate Management, Inc. and four of their senior officers and/or
directors have breached their fiduciary duties. Specifically, the plaintiffs
allege that the defendants have caused the Nine Funds to enter into several
wasteful transactions that have no business purpose or benefit to the Nine Funds
and which have rendered such units highly illiquid and artificially depressed
the prices that are available for units on the limited resale market. The
plaintiffs also allege that the defendants have engaged in a course of conduct
to prevent the acquisition of units by Carl Icahn by disseminating false,
misleading and inadequate information. The plaintiffs further allege that the
defendants have acted to advance their own personal interests at the expense of
the Nine Funds' public unit holders by failing to sell partnership properties
and failing to make distributions to unitholders and, thereby, have breached the
partnership agreements.
The defendants deny that there is any merit to the plaintiffs' allegations and
intend to vigorously defend these actions.
5) Alfred Napoletano vs. McNeil Partners, L.P., McNeil Investors, Inc., Robert
A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, 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).
The plaintiff brings this class action on behalf of a class of all persons and
entities who are current owners of units and/or are limited partners in one or
more of the partnerships referenced above (the "Funds"). The plaintiff alleges
that the defendants have breached their fiduciary duties to the class members
by, among other things, (1) taking steps to prevent the consummation of the High
River tender offers, (2) failing to take steps to maximize unitholders' or
limited partners' values, including failure to liquidate the properties owned by
the Funds, (3) managing the Funds so as to extend indefinitely the present fee
arrangements, and (4) paying itself and entities owned and controlled by the
general partner excessive fees and reimbursements of general and administrative
expenses.
The defendants deny that there is any merit to the plaintiff's allegations and
intend to vigorously defend this action.
6) Warren Heller vs. McNeil Partners, L.P., McNeil Investors, Inc., Robert A.
McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, 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).
The plaintiff brings this class action on behalf of a class of all persons and
entities who are current owners of units and/or are limited partners in one or
more of the Funds referenced above. The plaintiff alleges that the defendants
have breached their fiduciary duties to the class members by, among other
things, (1) taking steps to prevent the consummation of the High River tender
offers, (2) failing to take steps to maximize unitholders' or limited partners'
values, including failure to liquidate the properties owned by the Funds, (3)
managing the Funds so as to extend indefinitely the present fee arrangements,
and (4) paying itself and entities owned and controlled by the general partner
excessive fees and reimbursements of general and administrative expenses.
The defendants deny that there is any merit to the plaintiff's allegations and
intend to vigorously defend this action.
7) High River Limited Partnership v. McNeil Partners L.P., McNeil Investors,
Inc., McNeil Pacific Investors 1972, 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., Robert A. McNeil and Carole J. McNeil -
United States District Court for the Southern District of New York, (Case No. 95
Civ. 9488) (Second Action).
On November 7, 1995, High River commenced a second complaint which alleges,
inter alia, that McNeil's Schedule 14D-9 filed in connection with the High River
tender offers was materially false and misleading, in violation of Sections
14(d) and 14(e) of the Securities Exchange Act of 1934, 15 U.S.C. Section 78n(d)
and (e), and the SEC Regulations promulgated thereunder; and that High River
further alleges that McNeil has wrongfully refused to admit High River as a
limited partner to the Funds. Additionally, High River purports to assert claims
derivatively on behalf of Funds IX, XI, XV, XXIV and XXV, for breach of contract
and breach of fiduciary duty, asserting that McNeil has charged these Funds
excessive fees. High River's complaint seeks, inter alia, preliminary injunctive
relief requiring McNeil to admit High River as a limited partner in each of the
ten Funds and to transfer the tendered units of interest in the Funds to High
River; an unspecified award of damages payable to High River and an additional
unspecified award of damages payable to certain of the Funds; an order that
defendants must discharge their fiduciary duties and must account for all fees
they have received from certain of the Funds; and attorneys' fees.
The defendants deny that there is any merit to the plaintiff's allegations and
intend to vigorously defend this action.
ITEM 5. OTHER INFORMATION
- ------ -----------------
As previously disclosed, on an unsolicited basis, High River, a partnership
controlled by Carl Icahn, announced that it had commenced an offer to purchase
18,000 units of limited partnership interest in the Partnership (approximately
45% of the Partnership's units) at $150.00 per unit. The tender offer was
originally due to expire on August 31, 1995. In connection therewith, the
parties entered into certain negotiations and discussions regarding, among other
things, possible transactions between the parties and their affiliates, McNeil
Partners, L.P., McNeil Investors, Inc., and McREMI. On September 19, 1995, the
parties having not reached any resolution on the terms of the proposed
transactions, McNeil Partners, L.P. terminated the parties' discussion. High
River had extended its offer several times until the final expiration date of
October 6, 1995. On October 11, 1995 High River announced that based on
preliminary information furnished by the depositary for the tender offer,
approximately 15,072 limited partnership units of the Partnership were tendered
and not withdrawn prior to the expiration of the tender offer. On October 12,
1995, McNeil Partners, L.P. announced that it would continue to explore
potential avenues to enhance the value of the Partnership units, which may
include, among other things, asset sales, refinancings of Partnership properties
followed by distributions or tender offers for units of limited partnership.
There can be no assurance that any such plans will develop or that any such
transactions will be consummated.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------ --------------------------------
(a) Exhibits.
<TABLE>
<S> <C> <C>
Exhibit
Number Description
4. Amended and Restated Limited Partnership Agreement dated March 30, 1992.
(Incorporated by reference to the Current Report of the registrant on Form 8-K
dated March 30, 1992, as filed on April 10, 1992).
4.1 Amendment No. 1 to the Amended and Restated Limited Partnership Agreement of
McNeil Real Estate Fund XXIV, L.P. dated June 1995 (incorporated by reference
to the Quarterly Report of the registrant on Form 10-Q for the period ended
June 30,1995, as filed on August 14, 1995).
11. Statement regarding computation of NetIncome per Limited Partnership Unit:
Net income per limited partnership unit is computed by dividing net income
allocated to the limited partners by the number of limited partnership
units outstanding. Per unit information has been computed based on 40,000
limited partnership units outstanding in 1995 and 1994.
</TABLE>
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during the
quarter ended September 30, 1995.
<PAGE>
MCNEIL REAL ESTATE FUND XXIV, L.P.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized:
<TABLE>
<S> <C>
McNEIL REAL ESTATE FUND XXIV, L.P.
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
November 13, 1995 By: /s/ Donald K. Reed
- ---------------------------------- ----------------------------------------
Date Donald K. Reed
President and Chief Executive Officer
November 13, 1995 By: /s/ Robert C. Irvine
- ---------------------------------- ----------------------------------------
Date Robert C. Irvine
Chief Financial Officer of McNeil Investors, Inc.
Principal Financial Officer
November 13, 1995 By: /s/ Carol A. Fahs
- ---------------------------------- -----------------------------------------
Date Carol A. Fahs
Chief Accounting Officer of McNeil Real Estate
Management, Inc.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 2,507,048
<SECURITIES> 0
<RECEIVABLES> 538,837
<ALLOWANCES> (77,044)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 36,597,632
<DEPRECIATION> (12,079,385)
<TOTAL-ASSETS> 27,778,225
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0
0
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<TOTAL-LIABILITY-AND-EQUITY> 27,778,225
<SALES> 3,096,514
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