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, 1995
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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.
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(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
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Securities registered pursuant to Section 12(b) of the Act: None
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Securities registered pursuant to Section 12(g) of the Act: Limited partnership
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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
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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 ]
All of the registrant's 40,000 outstanding limited partnership units are held by
non-affiliates. 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 39
TOTAL OF 40 PAGES
<PAGE>
PART I
ITEM 1. BUSINESS
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ORGANIZATION
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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
General Partner was elected at a meeting of limited partners on March 30, 1992,
at which time an amended and restated partnership agreement (the "Amended
Partnership Agreement") was adopted. Prior to March 30, 1992, the general
partner of the Partnership was Southmark Investment Group, Inc. (the "Original
General Partner"), a wholly-owned subsidiary of Southmark Corporation
("Southmark"). The principal place of business for the Partnership and the
General Partner is 13760 Noel Road, Suite 700, LB70, Dallas, Texas, 75240.
On January 8, 1985, the Partnership registered with the Securities and Exchange
Commission ("SEC") under the Securities Act of 1933 (File No. 2-93979) and
commenced a public offering for sale of $40,000,000 of limited partnership units
("Units"). 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 December 15, 1985 with 40,000 Units
sold at $1,000 each, or gross proceeds of $40,000,000 to the Partnership. The
Partnership subsequently filed a Form 8-A Registration Statement with the SEC
and registered its Units under the Securities Exchange Act of 1934 (File No.
0-14267).
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, the General
Partner nor the Original 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 interests in the
Original General Partner, are being 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.
On February 14, 1991, pursuant to the asset purchase agreement as amended on
that date, 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 March 30, 1992, the limited partners approved a restructuring proposal that
provided for (i) the replacement of the Original General Partner with a new
general partner, McNeil Partners, L.P.; (ii) the adoption of the Amended
Partnership Agreement which substantially alters the provisions of the original
partnership agreement relating to, among other things, compensation,
reimbursement of expenses and voting rights; (iii) the approval of an amended
property management agreement with McREMI, the Partnership's property manager;
and (iv) the approval to change the Partnership's name to McNeil Real Estate
Fund XXIV, L.P. Under the Amended Partnership Agreement, the Partnership began
accruing an asset management fee, retroactive to February 14, 1991, which is
payable to the General Partner. For a discussion of the methodology for
calculating the asset management fee, see Item 13 Certain Relationships and
Related Transactions. The proposals approved at the March 30, 1992 meeting were
implemented as of that date.
Concurrent with the approval of the restructuring, the General Partner acquired
from Southmark and its affiliates, for aggregate consideration of $43,193, (i)
the right to receive payment on the advances owing from the Partnership to
Southmark and its affiliates in the amount of $642,581, and (ii) the general
partner interest of the Original General Partner. None of the Units are owned by
the General Partner or its affiliates.
CURRENT OPERATIONS
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General:
The Partnership is engaged in the ownership, operation and management of
residential and retail real estate. At December 31, 1995, the Partnership owned
seven income-producing properties as described in Item 2 - Properties. Six of
the Partnership's seven properties were acquired in transactions involving
payment of all cash to the sellers. A large portion of the Partnership's rental
revenue is attributable to one property, Southpointe Plaza Shopping Center.
Southpointe Plaza Shopping Center contributed approximately 30% of the total
Partnership rental revenue in 1995, 1994 and 1993.
The Partnership does not directly employ any personnel. The General Partner
conducts the business of the Partnership directly and through its affiliates.
The Partnership reimburses affiliates of the General Partner for such services
rendered in accordance with the Amended Partnership Agreement. See Item 8 - Note
2 "Transactions With Affiliates."
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's anticipated plan of operations for 1996 is to preserve or
increase the net operating income of its properties 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
properties. The General Partner is evaluating market and other economic
conditions to determine the optimum time to commence an orderly liquidation of
the Partnership's properties in accordance with the terms of the Amended
Partnership Agreement. In conjunction therewith, the General Partner will
continue to explore potential avenues to enhance the value of the Units in the
Partnership, which may include, among other things, asset sales or refinancings
of the Partnership's properties which may result in distributions to the limited
partners. See Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations.
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 incidental 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 a discussion of the competitive conditions at each of the
Partnership's properties.
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. The 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 ("High River"), a Delaware
limited partnership controlled by Carl C. Icahn, made an unsolicited tender
offer (the "HR Offer") to purchase from holders of Units up to approximately 45%
of the outstanding Units of the Partnership for a purchase price of $150 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 HR Offer made with respect to the Partnership
and not tender their Units pursuant to the HR Offer. The HR Offer terminated,
after numerous extensions, on October 6, 1995. The General Partner believes that
as of February 29, 1996, High River has purchased approximately 5.28% of the
outstanding Units pursuant to the HR Offer. In addition, all litigation filed by
High River, Mr. Icahn and his affiliates in connection with the HR Offer has
been dismissed without prejudice.
ITEM 2. PROPERTIES
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The following table sets forth the real estate investment portfolio of the
Partnership at December 31, 1995. All of the buildings and the land on which
they are located are owned by the Partnership in fee and are unencumbered by
mortgage indebtedness, with the exception of Southpointe Plaza Shopping Center,
which is subject to a first lien deed of trust as set forth more fully in Item 8
- - Note 5 - "Mortgage Note Payable." See also Item 8 - Note 4 - "Real Estate
Investments" and Schedule III - Real Estate Investments and Accumulated
Depreciation and Amortization. In the opinion of management, the properties are
adequately covered by insurance.
<TABLE>
Net Basis 1995 Date
Property Description of Property Debt Property Taxes Acquired
- -------- ----------- ----------- ---------- ------- --------
<S> <C> <C> <C> <C> <C>
Island Plaza Retail Center
Ft. Myers, FL 60,076 sq. ft. $ 2,035,574 $ - $ 45,905 4/85
Pine Hills Apartments
Livingston, TX 128 units 2,718,632 - 38,996 10/85
Riverbay Plaza Retail Center
Riverview, FL 73,065 sq. ft. 3,714,454 - 67,105 4/85
Sleepy Hollow Apartments
Cleveland, TX 112 units 2,856,648 - 55,992 8/85
Southpointe Plaza Retail Center
Sacramento, CA 83,506 sq. ft. 7,325,359 5,538,527 92,846 11/85
Springwood Plaza Retail Center
Dellwood, MO 88,323 sq. ft. 2,634,187 - 66,170 9/85
Towne Center Retail Center
Derby, KS 94,320 sq. ft. 1,531,502 - 35,555 7/85
---------- ---------- -------
$22,816,356 $ 5,538,527 $402,569
========== ========== =======
</TABLE>
- ---------------------------------------
Total: Apartments - 240 units
Retail Centers - 394,229 sq. ft.
The following table sets forth the properties' occupancy rate and rent per
square foot for the last five years:
<TABLE>
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Island Plaza
Occupancy Rate............ 79% 80% 84% 79% 83%
Rent Per Square Foot...... $ 6.20 $ 7.09 $ 7.56 $ 7.42 $ 6.55
Pine Hills
Occupancy Rate............ 99% 99% 98% 99% 91%
Rent Per Square Foot...... $ 6.76 $ 6.44 $ 6.06 $ 5.57 $ 5.08
Riverbay Plaza
Occupancy Rate............ 94% 92% 88% 89% 89%
Rent Per Square Foot...... $ 6.85 $ 8.55 $ 7.03 $ 6.85 $ 4.89
Sleepy Hollow
Occupancy Rate............ 100% 99% 95% 98% 97%
Rent Per Square Foot...... $ 7.32 $ 6.91 $ 6.76 $ 6.58 $ 6.07
Southpointe Plaza
Occupancy Rate............ 97% 90% 86% 98% 98%
Rent Per Square Foot...... $14.18 $14.35 $13.41 $16.24 $14.81
Springwood Plaza
Occupancy Rate............ 80% 72% 80% 82% 90%
Rent Per Square Foot...... $ 4.49 $ 4.59 $ 4.96 $ 6.52 $ 6.30
Towne Center
Occupancy Rate............ 100% 100% 53% 51% 48%
Rent Per Square Foot...... $ 3.59 $ 3.21 $ 2.93 $ 2.73 $ 2.45
</TABLE>
Occupancy rate represents all units leased divided by the total number of units
for residential properties and square footage leased divided by total square
footage for other properties 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:
Island Plaza
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Island Plaza is a 60,076 square foot, single-story retail strip shopping center
located near a major intersection of a suburban market in Ft. Myers, Florida.
The property is set back from its frontage road behind three out parcels. The
center is anchored by a grocery chain which occupies 30,800 square feet. Two new
grocery-anchored shopping centers have recently been developed within the area
which have brought strong competition to Island Plaza. The competitors' grocery
anchors occupy approximately 65,000 square feet--more than twice the square
footage of Island Plaza's anchor. As a result, the anchor tenant at Island Plaza
has filed for reorganization under the U.S. bankruptcy laws. In order to keep
the anchor open and maintain the viability of Island Plaza, it was necessary to
negotiate a modification of the lease resulting in a reduction in rent.
Additionally, road construction completed during 1995 has moved the flow of
traffic away from Island Plaza toward the two new shopping centers previously
described. These events have caused a decline in anticipated future cash flows
that are considered to be a permanent impairment; accordingly, the Partnership
recorded a write-down for permanent impairment of $1,500,085 during the fourth
quarter of 1995.
Pine Hills
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Pine Hills is a two-story class "A" apartment community located in the small
town of Livingston, approximately 60 miles north of Houston, Texas. There is no
class "A" competition within the area at present. If a vacant wooded lot in
front of the property is developed, it could block the view of the property.
However, development has not begun and is somewhat in question. The Partnership
projects one rental rate increase in 1996 and expects to maintain occupancy in
the high 90% range.
Riverbay Plaza
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Riverbay Plaza is a single-story retail shopping center located at the busiest
intersection of a rural area near Riverview, Florida. It is anchored by a
grocery store and a drugstore and there are two out parcels in front of the
center that draw customers to the center. Currently, there is only one competing
shopping center in the area which is not as well maintained as Riverbay Plaza.
Building improvements were made in 1995 to enhance marketability and aid
retention. The Partnership expects to maintain occupancy in the low 90% range.
Sleepy Hollow
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Sleepy Hollow is a two-story class "A" apartment community located in the small
town of Cleveland, approximately 30 miles north of Houston, Texas. There is no
class "A" competition within the area at present. Although exterior renovations
completed in 1995 have made a neighboring apartment community more competitive
than Sleepy Hollow, the Partnership expects to maintain occupancy in the mid 90%
range in 1996.
Southpointe Plaza
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Southpointe Plaza is a retail strip shopping center located in the southern
quadrant of Sacramento, California. The declining economic conditions in the
area have resulted in increased criminal activity. The property is easily
accessible and highly visible from the highway. Southpointe Plaza is
aesthetically superior to its immediate competitors. The center has strong
anchor tenants which, while doing well, seem to be destination stores and do not
generate a lot of foot traffic for the center. Management is currently
restructuring the tenant mix to accommodate changing demographics and appeal to
value consciousness. The Partnership anticipates maintaining occupancy in 1996
and reducing concessions to tenants.
Springwood Plaza
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Springwood Plaza is a multi-leveled strip shopping center located in a suburb of
St. Louis, Missouri. The center is anchored by a popular local grocery chain and
contains fifteen other retail spaces. The area surrounding the property has been
in a slow state of decline for the past few years. Occupancy, which had declined
in 1994, increased in 1995 due to capital improvements made to improve the
appearance of the center. Most of the comparable properties in the area are
superior to Springwood Plaza. However, with continued attention to the
appearance of the property and rental rates lower than the newer centers in the
area, management expects to increase occupancy in 1996.
Towne Center
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Towne Center is a retail strip shopping center located in a suburb 10 miles
south of Wichita, Kansas. The property is one of five strip shopping centers
located in Derby, and it is by far the largest. The property is in good physical
condition; however, a new retail center is being developed approximately two
miles from Towne Center that could affect the center's performance.
In 1994, the center became 100% occupied due to the leasing of a large space
that had been vacant for several years. The lease on this space expires in 1997
as does the lease for the center's grocery store anchor tenant.
The Partnership expects to maintain occupancy in the high 90% range in 1996.
The following schedule shows lease expirations for each of the Partnership's
commercial properties for 1996 through 2005:
<TABLE>
Number of Annual % of Gross
Expirations Square Feet Rent Annual Rent
----------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Island Plaza
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1996 2 2,117 $ 17,132 5%
1997 2 3,967 31,756 9%
1998 4 6,819 59,734 17%
1999 2 3,415 26,264 7%
2000 - - - -
2001 - - - -
2002 - - - -
2003 - - - -
2004 1 30,800 153,996 43%
2005 - - - -
Riverbay Plaza
- --------------
1996 1 755 $ 7,550 2%
1997 4 4,959 34,403 7%
1998 2 1,950 15,788 3%
1999 1 1,800 16,200 3%
2000 2 6,593 44,888 9%
2001 - - - -
2002 - - - -
2003 - - - -
2004 1 40,297 236,250 49%
2005 - - - -
Southpointe Plaza
- -----------------
1996 1 1,100 $ 21,399 2%
1997 7 12,665 180,536 17%
1998 2 5,843 76,099 7%
1999 1 1,588 22,867 2%
2000 2 3,872 45,398 4%
2001 - - - -
2002 3 17,206 206,340 20%
2003 2 19,848 213,614 20%
2004 1 5,220 75,168 7%
2005 - - - -
Springwood Plaza
- ----------------
1996 4 8,192 $ 63,808 14%
1997 1 1,937 15,670 3%
1998 1 2,000 10,000 2%
1999 2 49,060 235,193 52%
2000 2 4,316 22,064 5%
Thereafter - - - -
Towne Center
- ------------
1996 5 10,747 $ 60,774 20%
1997 8 75,986 187,282 64%
1998 1 2,120 10,600 4%
1999 3 4,808 34,662 12%
Thereafter - - - -
</TABLE>
No residential tenant leases 10% or more of the available rental space. The
following schedule reflects information on commercial tenants occupying 10% or
more of the leasable square feet for each property:
<TABLE>
Nature of
Business Square Footage Lease
Use Leased Annual Rent Expiration
- --------- -------------- ----------- ----------
<S> <C> <C> <C>
Island Plaza
Grocery Store 30,800 $ 153,996 2004
Riverbay Plaza
Grocery Store 40,297 $ 236,250 2004
Drugstore 101,250 2042
Southpointe Plaza
Sporting Goods 10,000 $ 50,000 2002
Toy Store 14,850 126,225 2003
Springwood Plaza
Grocery Store 46,558 $ 217,679 1999
Towne Center
Home Furnishings 40,034 $ 44,838 1997
Grocery Store 22,660 61,616 1997
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
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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) High River Limited Partnership v. McNeil Partners, L.P., McNeil Investors,
Inc., McNeil Pacific Investors 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., Robert A. McNeil and
Carole J. McNeil (L95012) - High River ("HR") 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 (as
defined in this Section 1, collectively, the "Defendants") requesting,
among other things, names and addresses of the limited partners in the
partnerships referenced above (as defined in this Section 1, the
"Partnerships"). The District Court issued a preliminary injunction against
the Partnerships requiring them to commence mailing materials relating to
the HR tender offer on August 14, 1995.
On August 18, 1995, the Defendants filed an Answer and Counterclaim. The
Counterclaim principally asserts (1) the HR tender offers have been
undertaken in violation of the Federal securities laws, on the basis of
material, non-public, and confidential information, and (2) that the HR
offer documents omit and/or misrepresent certain material information about
the HR tender offers. The Counterclaim seeks a preliminary and permanent
injunction against the continuation of the HR tender offers and,
alternatively, ordering corrective disclosure with respect to allegedly
false and misleading statements contained in the tender offer documents.
This action was dismissed without prejudice in November 1995.
2) High River Limited Partnership v. McNeil Partners, L.P., McNeil Investors,
Inc., McNeil Pacific Investors 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., 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 filed a second complaint with the District
Court which alleges, inter alia, that McNeil Partners, L.P.'s (the "General
Partner") 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 the General Partner has wrongfully refused to
admit High River as a limited partner to the ten partnerships referenced
above. Additionally, High River purports to assert claims derivatively on
behalf of McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund XI,
Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XXIV, L.P.
and McNeil Real Estate Fund XXV, L.P., for breach of contract and breach of
fiduciary duty, asserting that the General Partner has charged these
partnerships excessive fees. High River's complaint seeks, inter alia,
preliminary injunctive relief requiring the General Partner to admit High
River as a limited partner in each of the ten partnerships referenced above
and to transfer the tendered units of interest in the partnerships to High
River; an unspecified award of damages payable to High River and an
additional unspecified award of damages payable to certain of the
partnerships; an order that defendants must discharge their fiduciary
duties and must account for all fees they have received from certain of the
partnerships; and attorneys' fees.
On January 31, 1996, this action was dismissed without prejudice.
3) 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. The amended cases against the defendant-group, and others,
are proceeding under the caption George and Joy Kugler v. I.R.E. Real
Estate Income Fund, Jerry and Barbara Neumann v. Southmark Equity Partners
II, Richard and Theresa Bartoszewski v. Southmark Realty Partners III, and
Edward and Rose Weskerna v. Southmark Realty Partners II.
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.
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.
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, 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. (as defined in this Section 3, the
"Partnerships") as of August 4, 1995.
Plaintiff alleges that McNeil Partners, L.P., McNeil Investors, Inc.,
Robert A. McNeil and other senior officers (as defined in this Section 4,
collectively, the "Defendants") breached their fiduciary duties by, among
other things, (1) failing to attempt to sell the properties owned by the
Partnerships (as defined in this Section 4, the "Properties") and extending
the lives of the Partnerships indefinitely, contrary to the Partnerships'
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 Partnerships have positive cash
flows and substantial cash balances, and (4) failing to take steps to
create an auction market for equity interests of the Partnerships, 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
Partnerships. Plaintiff also claims that Defendants have breached the
partnership agreements of the Partnerships by failing to take steps to
liquidate the Properties and by their alteration of the Partnerships'
primary purposes, their acts in contravention of these agreements, and
their use of the assets of the Partnerships for their own benefit instead
of for the benefit of the Partnerships.
The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.
5) James F. Schofield, Gerald C. Gillett and Donna S. Gillett v. McNeil
Partners, L.P., McNeil Investors, Inc., McNeil Real Estate Management,
Inc., Robert A. McNeil, Carole J. McNeil, 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. et al. - Superior Court
of the State of California for the County of Los Angeles, Case No. BC133799
(Class and Derivative Action Complaint) and 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 (9) limited
partnerships that are named as nominal defendants as listed above (as
defined in this Section 5, the "Partnerships"). Plaintiffs allege that
McNeil Investors, Inc., its affiliate McNeil Real Estate Management, Inc.
and four (4) of their senior officers and/or directors (as defined in this
Section 5, collectively, the "Defendants") have breached their fiduciary
duties. Specifically, Plaintiffs allege that Defendants have caused the
Partnerships to enter into several wasteful transactions that have no
business purpose or benefit to the Partnerships and which have rendered
such units highly illiquid and artificially depressed the prices that are
available for units on the limited resale market. Plaintiffs also allege
that Defendants have engaged in a course of conduct to prevent the
acquisition of units by Carl Icahn by disseminating false, misleading and
inadequate information. Plaintiffs further allege that Defendants have
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 and, thereby, have
breached the partnership agreements.
The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend these actions.
6) 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).
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 (as defined in this Section 6,
the "Partnerships"). Plaintiff alleges that McNeil Partners, L.P., McNeil
Investors, Inc., Robert A. McNeil and other senior officers (as defined in
this Section 6, collectively, 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 Partnerships,
(3) managing the Partnerships 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 Plaintiff's allegations and
intend to vigorously defend this action.
7) 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).
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 (as defined in this Section 7,
the "Partnerships"). Plaintiff alleges that McNeil Partners, L.P., McNeil
Investors, Inc., Robert A. McNeil and other senior officers (as defined in
this Section 7, collectively, 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 Partnerships,
(3) managing the Partnerships 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 Plaintiff's allegations and
intend to vigorously defend this action.
8) Henry Lim, Charles Chen, Paul Van dba Shangri-La Restaurant & Bar, Robert
Narayan and Jackie Kim v. McNeil Real Estate Fund XXIV, L.P. and McNeil
Real Estate Management, Inc. ("McREMI") et al. This was a complaint for
breach of contract, breach of covenant to extend term of lease, intentional
and negligent interference with respective economic relationships, civil
rights violations, intentional and negligent misrepresentation, injurious
false suit and negligent and intentional infliction of emotional distress
brought by former tenants of the Southpointe Plaza Shopping Center, based
on a purported claim that both the Partnership and McREMI orally promised
to agree to extend the lease and approve an assignment of lease from three
of the plaintiffs to two of the other plaintiffs for a restaurant and bar.
On April 10, 1995, a settlement was reached such that the Partnership
agreed to pay the first three plaintiffs $42,500, of which $20,000 was paid
by the Partnership's insurance carrier. The remaining two plaintiffs are
free to continue to pursue their action, however, they would only be able
to prove damages up to $1,500.
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 limited partnership
units, nor is one expected to develop.
(B) Title of Class Number of Record Unit Holders
-------------- -----------------------------
Limited partnership units 3,450 as of February 16, 1996
(C) No distributions were paid to the partners in 1995 or 1994. See Item 7 -
Management's Discussion and Analysis of Financial Condition and Results
of Operations, and Item 8 - Note 1 - "Organization and Summary of
Significant Accounting Policies - Distributions."
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 - Financial
Statements and Supplementary Data.
<TABLE>
Years Ended December 31,
Statements of -----------------------------------------------------------------------
Operations 1995 1994 1993 1992 1991
- ------------------ ---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Rental revenue............... $ 4,058,503 $4,127,396 $3,903,950 $4,174,958 $ 3,737,718
Write-down for permanent
impairment of real estate.. (1,500,085) - - - (1,192,000)
Loss before extraordinary
items (1,694,787) (65,511) (30,846) (260,259) (1,357,270)
Extraordinary items.......... - - - 51,510 1,281,009
Net loss..................... (1,694,787) (65,511) (30,846) (208,749) (76,261)
Net loss per limited
partnership unit:
Loss before extraordinary
items $ (41.95) $ (1.62) $ (.76) $ (6.44) $ (33.59)
Extraordinary items........ - - - 1.27 31.70
---------- --------- --------- --------- ----------
Net loss................... $ (41.95) $ (1.62) $ (.76) $ (5.17) $ (1.89)
========== ========= ========= ========= ==========
Distributions per limited
partnership unit $ - $ - $ - $ - $ 7.08
========== ========= ========= ========= ==========
</TABLE>
<TABLE>
As of December 31,
-----------------------------------------------------------------------
Balance Sheets 1995 1994 1993 1992 1991
- -------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Real estate investments, net... $22,816,356 $25,251,693 $25,836,338 $26,303,508 $27,146,117
Total assets................... 25,912,389 27,674,971 28,067,428 28,453,312 29,218,226
Mortgage note payable.......... 5,538,527 5,660,558 5,874,740 6,126,404 6,295,171
Partners' equity............... 19,339,303 21,034,090 21,099,601 21,130,447 21,339,196
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
- ------ -----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
FINANCIAL CONDITION
- -------------------
The Partnership was formed to engage in the business of acquiring and operating
income-producing real properties and holding the properties for investment.
Since completion of its capital formation and property acquisition phases in
1985, when it completed the purchase of seven properties, the Partnership has
operated its properties for production of income.
Island Plaza, a 60,076 square foot single-story strip shopping center, is
located in Fort Myers, Florida. It is anchored by a grocery chain which occupies
30,800 square feet. Two new grocery-anchored shopping centers have recently been
developed within the area which have brought strong competition to Island Plaza.
The competitors' grocery anchors occupy approximately 65,000 square feet--more
than twice the square footage of Island Plaza's anchor. As a result, the anchor
tenant at Island Plaza has filed for reorganization under the U.S. bankruptcy
laws. In order to keep the anchor open and maintain the viability of Island
Plaza, it was necessary to negotiate a modification of the lease resulting in a
reduction in rent. Additionally, road construction completed during 1995 has
moved the flow of traffic away from Island Plaza toward the two new shopping
centers previously described. These events have caused a decline in anticipated
future cash flows that are considered to be a permanent impairment; accordingly,
the Partnership recorded a write-down for permanent impairment of $1,500,085
during the fourth quarter of 1995.
RESULTS OF OPERATIONS
- ---------------------
1995 compared to 1994
Revenue:
Total Partnership revenues increased by $18,582 in 1995 as compared to 1994. The
increase was primarily due to a refund of property taxes and an increase in
interest income, partially offset by a decrease in rental revenue, as discussed
below.
Rental revenue decreased by $68,893 in 1995 in relation to 1994. Rental revenue
decreased by approximately $81,000 at Riverbay Plaza Shopping Center, mainly due
to the property receiving approximately $58,000 for land condemned by the county
in 1994. In addition, there was a decrease in property taxes billed to tenants
in 1995 due to a decrease in the assessed taxable value of the property by
taxing authorities. Rental revenue also decreased by approximately $53,000 at
Island Plaza Shopping Center as a result of a reduction in rent charged to the
center's main anchor tenant due to financial difficulties experienced by the
tenant. These decreases were partially offset by increases in rental revenue of
approximately $31,000 and $33,000 at Pine Hills and Sleepy Hollow apartments,
respectively, due to an increase in rental rates in 1995. See Item 2 -
Properties for a more detailed analysis of occupancy and rents per square foot.
Interest income increased by $52,333 in 1995 as compared to 1994, primarily due
to a greater amount of cash available for short-term investment. The partnership
held approximately $2.4 million of cash and cash equivalents at December 31,
1995, as compared to $1.7 million at December 31, 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 Riverbay Plaza, Southpointe Plaza and Springwood Plaza shopping
centers. No such refunds were received in 1994.
Expenses:
Total Partnership expenses in 1995 increased by $1,647,858 as compared to 1994,
primarily due to a write-down for permanent impairment of real estate and an
increase in general and administrative expenses, as discussed below.
Interest expense increased $52,901 in 1995 in relation to 1994. The increase was
primarily due to an increase in the adjustable interest rate on the Southpointe
Plaza mortgage note payable.
Depreciation and amortization expense increased by $76,508 in 1995 compared to
1994 due to the addition of depreciable capital improvements.
Property taxes decreased by $72,242 in 1995 as compared to the prior year. The
decrease was primarily attributable to a decrease in the assessed taxable value
of Riverbay Plaza, Southpointe Plaza and Springwood Plaza shopping centers by
taxing authorities as a result of an appeal filed by the Partnership on behalf
of the properties.
Other property expenses decreased by $64,217 in 1995 as compared to 1994. The
decrease was mainly due to a decrease in bad debt expense at Southpointe Plaza
and Springwood Plaza in 1995. In addition, there was a higher amount of legal
fees incurred at Riverbay Plaza in 1994 concerning their sewage treatment
system. Leasing commissions recognized in 1995 were less than in 1994 at
Southpointe Plaza, due to a tenant vacating their space early in 1994.
General and administrative expenses increased by $142,903 in 1995 in relation to
1994. The increase was mainly due to approximately $122,000 in legal fees in
1995 relating to evaluation and dissemination of information regarding an
unsolicited tender offer as discussed in Item 1 - Business and Item 3 - Legal
Proceedings. In addition, the Partnership paid $22,500 to settle a lawsuit
involving a former tenant's lease as discussed in Item 3 - Legal Proceedings.
In 1995, the Partnership recorded a $1,500,085 write-down for permanent
impairment of Island Plaza Shopping Center. No such write-down was recorded in
1994.
1994 compared to 1993
Revenue:
Total Partnership revenues increased by $135,263 in 1994 as compared to 1993.
The increase was primarily due to an increase in rental revenue, partially
offset by the recognition of a gain on involuntary conversion in 1993 as
discussed below.
Rental revenue increased by $223,446 in 1994 in relation to 1993. Rental revenue
increased by approximately $103,000, $78,000 and $26,000 at Riverbay Plaza,
Southpointe Plaza and Towne Center shopping centers, respectively. These
increases were mainly due to increased occupancy and an increase in common area
maintenance costs billed to tenants. Rental revenue also increased by
approximately $37,000 and $13,000 at Pine Hills and Sleepy Hollow apartments,
respectively, due to an increase in occupancy and an increase in rental rates in
1994. These increases were partially offset by decreases in rental revenue at
Springwood Plaza and Island Plaza of approximately $33,000 and $28,000,
respectively. Rental revenue decreased at these two shopping centers due to
decreased occupancy and a decline in rental rates. See Item 2 - Properties for a
more detailed analysis of occupancy and rents per square foot.
Interest income increased by $27,596 in 1994 as compared to 1993, primarily due
to a greater amount of cash available for short-term investment. The Partnership
held approximately $1.7 million of cash and cash equivalents at December 31,
1994 as compared to $1.4 million at December 31, 1993. In addition, there was a
slight increase in interest rates earned on invested cash in 1994.
The Partnership recognized a $115,778 gain on involuntary conversion in 1993,
which relates to hail damage that occurred at Towne Center Shopping Center in
1992. No such gain was recorded in 1994.
Expenses:
Total Partnership expenses increased by $169,928 in 1994 as compared to 1993.
The increase was primarily due to an increase in repairs and maintenance expense
in 1994 as discussed below.
Interest expense in 1994 decreased by $23,448 in relation to the prior year. The
decrease was primarily due to a decrease in the adjustable interest rate on the
Southpointe Plaza mortgage note payable.
Property taxes increased by $28,765 in 1994 as compared to the prior year. The
increase was primarily attributable to an increase in the appraised taxable
value of Riverbay Plaza Shopping Center by taxing authorities.
Repairs and maintenance expense increased by $77,038 in 1994 as compared to the
prior year. The increase was mainly due to a greater amount of termite
exterminating at Pine Hills and Sleepy Hollow Apartments in 1994. In addition,
there was an increase in security services at Southpointe Plaza Shopping Center
as a result of the increased crime rate in the area and the high incidence of
graffiti at the property. Additional landscape work was also performed at
Southpointe Plaza in 1994 in an effort to improve the attractiveness of the
property.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnership's primary source of cash flows is from operating activities
which generated $1,215,207 of cash through operating activities in 1995 as
compared to $1,205,005 in 1994 and $1,065,891 in 1993. The majority of the
increase in 1995 and 1994 in relation to 1993 was attributable to an increase in
cash received from tenants due to an increase in rental revenue, as previously
discussed.
In 1993, the Partnership received $115,779 of net insurance proceeds for hail
damage suffered at Towne Center Shopping Center in 1992. The Partnership spent
$432,154, $706,253 and $534,621 on capital additions to its real estate
investments in 1995, 1994 and 1993, respectively. The increase in expenditures
in 1994 in relation to 1995 and 1993 was primarily due to the modification of
the sewage treatment system at Riverbay Plaza in 1994. The Partnership also paid
$224,829 for two parcels of land in front of Island Plaza Shopping Center in
1993.
The Partnership made a total of $122,031, $214,182 and $251,664 in principal
payments on the Southpointe Plaza mortgage loan in 1995, 1994 and 1993,
respectively. The interest rate on this loan varies monthly as more fully
discussed in Item 8 - Note 5 - "Mortgage Note Payable." Under the terms of the
mortgage note agreement, the total payment on the loan was adjusted by the
lender in 1994 and again in 1995, resulting in a decrease in the amount of
principal payments made on the loan in 1994 and 1995. In 1993 the Partnership
paid $62,384 in fees in order to obtain the lender's consent to the 1992
restructuring of the Partnership.
Short-term liquidity:
At December 31, 1995, the Partnership held cash and cash equivalents of
$2,381,183. This balance provides a reasonable level of working capital for the
Partnership's immediate needs in operating its properties.
For the Partnership as a whole, management projects positive cash flow from
operations in 1996. The Partnership has budgeted $431,000 for necessary capital
improvements for all properties in 1996, which are 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.
In March 1996, the Partnership distributed $375,000 to the limited partners.
Additional efforts to maintain and improve partnership liquidity have included
continued attention to property management activities. The objective has been to
obtain maximum occupancy rates while holding expenses to levels necessary to
maximize cash flows. The Partnership has made capital expenditures on its
properties where improvements were expected to increase the competitiveness and
marketability of the properties.
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 December 31, 1995, $2,662,819
remained available for borrowing under the facility; however, additional funds
could become available as other partnerships repay existing borrowings. This
commitment will terminate on March 30, 1997.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------ -------------------------------------------
<TABLE>
Page
Number
------
INDEX TO FINANCIAL STATEMENTS
- -----------------------------
<S> <C>
Financial Statements:
Report of Independent Public Accountants....................................... 17
Balance Sheets at December 31, 1995 and 1994................................... 18
Statements of Operations for each of the three years in the period
ended December 31, 1995..................................................... 19
Statements of Partners' Equity (Deficit) for each of the three years
in the period ended December 31, 1995....................................... 20
Statements of Cash Flows for each of the three years in the period
ended December 31, 1995..................................................... 21
Notes to Financial Statements.................................................. 23
Financial Statement Schedule -
Schedule III - Real Estate Investments and Accumulated
Depreciation and Amortization ........................................... 31
</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 XXIV, L.P.:
We have audited the accompanying balance sheets of McNeil Real Estate Fund XXIV,
L.P. (a California limited partnership) as of December 31, 1995 and 1994, and
the related statements of operations, partners' equity (deficit) and cash flows
for each of the three years in the period ended December 31, 1995. 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 XXIV,
L.P. as of December 31, 1995 and 1994, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1995, 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 6, 1996
<PAGE>
McNEIL REAL ESTATE FUND XXIV, L.P.
BALANCE SHEETS
<TABLE>
December 31,
------------------------------
1995 1994
---------- ----------
ASSETS
- ------
<S> <C> <C>
Real estate investments:
Land..................................................... $ 6,781,836 $ 7,039,867
Buildings and improvements............................... 28,462,935 29,272,835
---------- ----------
35,244,771 36,312,702
Less: Accumulated depreciation and amortization......... (12,428,415) (11,061,009)
---------- ----------
22,816,356 25,251,693
Cash and cash equivalents .................................. 2,381,183 1,720,161
Cash segregated for security deposits....................... 94,780 85,851
Accounts receivable, net of allowance for doubtful
accounts of $0 and $77,044 at December 31, 1995
and 1994 respectively.................................... 433,580 401,525
Prepaid expenses and other assets, net...................... 186,490 215,741
---------- ----------
$25,912,389 $27,674,971
========== ==========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- -----------------------------------------
Mortgage note payable....................................... $ 5,538,527 $ 5,660,558
Accounts payable and accrued expenses....................... 229,628 194,613
Payable to affiliates - General Partner..................... 59,527 38,716
Advances from affiliates.................................... 642,581 642,581
Deferred gain............................................... - 17,000
Security deposits and deferred rental revenue............... 102,823 87,413
---------- ----------
6,573,086 6,640,881
---------- ----------
Partners' equity (deficit):
Limited partners - 40,000 limited partnership
units authorized and outstanding at
December 31, 1995 and 1994............................. 19,362,083 21,039,922
General Partner.......................................... (22,780) (5,832)
---------- ----------
19,339,303 21,034,090
---------- ----------
$25,912,389 $27,674,971
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXIV, L.P.
STATEMENTS OF OPERATIONS
<TABLE>
For the Years Ended December 31,
------------------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Rental revenue.......................... $ 4,058,503 $ 4,127,396 $ 3,903,950
Interest................................ 123,838 71,505 43,909
Gain on involuntary conversion.......... - - 115,779
Property tax refund..................... 35,142 - -
---------- ---------- ----------
Total revenue......................... 4,217,483 4,198,901 4,063,638
---------- ---------- ----------
Expenses:
Interest................................ 433,768 380,867 404,315
Depreciation and amortization........... 1,367,406 1,290,898 1,226,620
Property taxes.......................... 402,569 474,811 446,046
Personnel costs......................... 284,238 274,229 267,179
Repairs and maintenance................. 421,102 451,727 374,689
Property management fees -
affiliates............................ 232,136 235,662 225,254
Utilities............................... 201,597 207,398 211,611
Other property operating expenses....... 205,556 269,773 271,656
General and administrative.............. 213,635 70,732 70,016
General and administrative -
affiliates............................ 650,178 608,315 597,098
Write-down for permanent
impairment of real estate............. 1,500,085 - -
---------- ---------- ----------
Total expenses........................ 5,912,270 4,264,412 4,094,484
---------- ---------- ----------
Net loss................................... $(1,694,787) $ (65,511) $ (30,846)
========== ========== ==========
Net loss allocable to limited partners..... $(1,677,839) $ (64,856) $ (30,538)
Net loss allocable to General
Partner................................. (16,948) (655) (308)
---------- ---------- ----------
Net loss................................... $(1,694,787) $ (65,511) $ (30,846)
========== ========== ==========
Net loss per limited partnership unit...... $ (41.95) $ (1.62) $ (.76)
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXIV, L.P.
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For the Years Ended December 31, 1995, 1994 and 1993
<TABLE>
Total
General Limited Partners'
Partner Partners Equity
------- ---------- ----------
<S> <C> <C> <C>
Balance at December 31, 1992.............. $ (4,869) $21,135,316 $21,130,447
Net loss.................................. (308) (30,538) (30,846)
-------- ---------- ----------
Balance at December 31, 1993.............. (5,177) 21,104,778 21,099,601
Net loss.................................. (655) (64,856) (65,511)
--------- ---------- ----------
Balance at December 31, 1994.............. (5,832) 21,039,922 21,034,090
Net loss.................................. (16,948) (1,677,839) (1,694,787)
--------- ---------- ----------
Balance at December 31, 1995.............. $ (22,780) $19,362,083 $19,339,303
========= ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXIV, L.P.
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
For the Years Ended December 31,
------------------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from tenants.............. $ 4,050,223 $ 4,140,189 $ 3,902,150
Cash paid to suppliers.................. (1,323,776) (1,258,002) (1,267,327)
Cash paid to affiliates................. (861,503) (838,624) (851,637)
Interest received....................... 123,838 71,505 43,909
Interest paid........................... (399,056) (349,155) (389,403)
Property taxes paid..................... (409,661) (560,908) (371,801)
Property tax refund..................... 35,142 - -
---------- ---------- ----------
Net cash provided by operating
activities.............................. 1,215,207 1,205,005 1,065,891
---------- ---------- ----------
Cash flows from investing activities:
Net proceeds received from
insurance company..................... - - 115,779
Additions to real estate
investments........................... (432,154) (706,253) (534,621)
Purchase of land........................ - - (224,829)
---------- ---------- ----------
Net cash used in investing activities...... (432,154) (706,253) (643,671)
---------- ---------- ----------
Cash flows from financing activities:
Deferred borrowing costs paid........... - - (62,384)
Principal payments on mortgage
note payable.......................... (122,031) (214,182) (251,664)
---------- ---------- ----------
Net cash used in financing activities...... (122,031) (214,182) (314,048)
---------- ---------- ----------
Net increase in cash and
cash equivalents........................ 661,022 284,570 108,172
Cash and cash equivalents at
beginning of year....................... 1,720,161 1,435,591 1,327,419
---------- ---------- ----------
Cash and cash equivalents at end
of year................................. $ 2,381,183 $ 1,720,161 $ 1,435,591
========== ========== ==========
</TABLE>
See discussion of noncash investing and financing activities in Note 6 - "Gain
on Involuntary Conversion/Deferred Gain."
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXIV, L.P.
STATEMENTS OF CASH FLOWS
Reconciliation of Net Loss to Net Cash Provided by
Operating Activities
<TABLE>
For the Years Ended December 31,
-----------------------------------------------
1995 1994 1993
---------- --------- ---------
<S> <C> <C> <C>
Net loss................................... $(1,694,787) $ (65,511) $ (30,846)
---------- --------- ---------
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization........... 1,367,406 1,290,898 1,226,620
Amortization of deferred borrowing
costs................................. 31,079 31,079 21,153
Amortization of deferred gain........... (17,000) (20,400) (20,400)
Gain on involuntary conversion.......... - - (115,779)
Write-down for permanent
impairment of real estate............. 1,500,085 - -
Changes in assets and liabilities:
Cash segregated for security deposits. (8,929) (2,083) (4,536)
Accounts receivable, net.............. (32,055) 41,443 25,659
Prepaid expenses and other
assets, net......................... (1,828) 21,943 (60,982)
Accounts payable and accrued
expenses............................ 35,015 (93,507) 52,959
Payable to affiliates - General
Partner............................. 20,811 5,353 (29,285)
Security deposits and deferred
rental revenue...................... 15,410 (4,210) 1,328
--------- --------- ---------
Total adjustments................. 2,909,994 1,270,516 1,096,737
--------- --------- ---------
Net cash provided by operating
activities.............................. $1,215,207 $1,205,005 $1,065,891
========= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McNEIL REAL ESTATE FUND XXIV, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ------ -----------------------------------------------------------
Organization
- ------------
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
General Partner was elected at a meeting of limited partners on March 30, 1992,
at which time an amended and restated partnership agreement (the "Amended
Partnership Agreement") was adopted. Prior to March 30, 1992, the general
partner of the partnership was Southmark Investment Group, Inc. (the "Original
General Partner"), a wholly-owned subsidiary of Southmark Corporation
("Southmark"). The principal place of business for the Partnership and the
General Partner is 13760 Noel Road, Suite 700, LB70, Dallas, Texas, 75240.
The Partnership is engaged in diversified real estate activities, including the
ownership, operation and management of residential and commercial properties. At
December 31, 1995, the Partnership owned seven income-producing properties as
described in Note 4 - "Real Estate Investments." Six of the Partnership's seven
properties were acquired in transactions involving payment of all cash to the
sellers. A large portion of the Partnership's rental revenue is attributable to
one property, Southpointe Plaza Shopping Center. Southpointe Plaza Shopping
Center contributed approximately 30% of the total Partnership rental revenue in
1995, 1994 and 1993.
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.
Real Estate Investments
- -----------------------
Real estate investments are generally stated at the lower of cost or net
realizable value. Real estate investments are monitored on an ongoing basis to
determine if the property has sustained a permanent impairment in value. At such
time, a write-down is recorded to reduce the basis of the property to its net
realizable value. A permanent impairment is determined to have occurred when a
decline in property value is considered to be other than temporary based upon
management's expectations with respect to projected cash flows and prevailing
economic conditions.
Improvements and betterments are capitalized and expensed through depreciation
charges. Repairs and maintenance are charged to operations as incurred.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." This statement
requires that long-lived assets and certain identifiable intangibles to be held
and used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. This statement is effective for financial statements for fiscal
years beginning after December 15, 1995. The Partnership has not adopted the
principles of this statement within the accompanying financial statements;
however, it is not anticipated that adoption will have a material effect on the
carrying value of the Partnership's long-lived assets.
Depreciation and Amortization
- -----------------------------
Buildings and improvements are depreciated using the straight-line method over
the estimated useful lives of the assets, ranging from 5 to 25 years. Tenant
improvements are capitalized and are 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 in financial
institutions with original maturities of three months or less. Carrying amounts
for cash and cash equivalents approximate fair value.
Deferred Borrowing Costs
- ------------------------
Loan fees and other related costs incurred to obtain long-term financing on real
property are capitalized and are included in prepaid expenses and other assets
on the Balance Sheets. Amortization is recorded using a method that approximates
the effective interest method over the term of the related mortgage note
payable. Amortization of deferred borrowing costs 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.
The Partnership leases its commercial properties under non-cancelable operating
leases. Certain leases provide concessions and/or periods of escalating or free
rent. Rental revenue is recognized on a straight-line basis over the life of the
related leases. The excess of the rental revenue recognized over the contractual
rental payments is recorded as accrued rent receivable and is included in
accounts receivable on the Balance Sheets.
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 generally provides that net income and net
loss (other than net income arising from sales or refinancing) shall be
allocated 1% to the General Partner and 99% to the limited partners.
For financial statement purposes, net income arising from sales or refinancing
shall be allocated 1% to the General Partner and 99% to the limited partners.
For tax reporting purposes, net income arising from sales or refinancing shall
be allocated as follows: (a) first, amounts of such net income shall be
allocated among the General Partner and limited partners in proportion to, and
to the extent of, the portion of such partners' share of the net decrease in
Partnership Minimum Gain determined under Treasury Regulations, (b) second, to
the General Partner and limited partners in proportion to, and to the extent of,
the amount by which their respective capital account balances are negative by
more than their respective remaining shares of the Partnership's Minimum Gain
attributable to properties still owned by the Partnership and (c) third, 1% of
such net income shall be allocated to the General Partner and 99% of such net
income shall be allocated 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 1995, 1994, and 1993 have been made
in accordance with these provisions.
Distributions
- -------------
At the discretion of the General Partner, distributable cash (other than cash
from sales or refinancing) shall be distributed to the limited partners until
the limited partners have received distributions of cash flow equal to 10% per
annum cumulative on their Adjusted Invested Capital, as defined, and then 100%
to the limited partners as a class. At the discretion of the General Partner,
cash from sales or refinancing shall be distributed to limited partners: (first)
in an amount which when added to prior distributions from all sources to such
limited partners is equal to a cumulative preferred return of 10% per annum; and
(second) to limited partners in an amount which when added to prior
distributions of cash from sales and refinancing to such limited partners is
equal to such limited partners' Original Invested Capital, as defined; and
(third) to the limited partners on a per limited partnership unit ("Unit")
basis.
In connection with a Terminating Disposition as defined, cash from sales or
refinancing and any remaining reserves shall be allocated among, and distributed
to, the General Partner and limited partners in proportion to, and to the extent
of, their positive capital account balances after the net income has been
allocated pursuant to the above.
No distributions were made to the partners in 1995, 1994 or 1993. The
Partnership distributed $375,000 to the limited partners in March 1996.
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 weighted average number of Units outstanding. Per
Unit information has been computed based on 40,000 Units outstanding in 1995,
1994 and 1993.
Reclassifications
- -----------------
Certain reclassifications have been made to prior year amounts to conform with
the current year presentation.
NOTE 2 - TRANSACTIONS WITH AFFILIATES
- ------ ----------------------------
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.
Under the terms of the Amended Partnership Agreement, the Partnership is paying
an asset management fee 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 percent 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>
For the Years Ended December 31,
---------------------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Property management fees................... $232,136 $235,662 $225,254
Charged to general and administrative -
affiliates:
Partnership administration.............. 310,258 291,507 285,788
Asset management fee.................... 339,920 316,808 311,310
------- ------- -------
$882,314 $843,977 $822,352
======= ======= =======
</TABLE>
On June 25, 1993, the Partnership purchased two parcels of vacant land from
McNeil. The parcels are located in front of Island Plaza Shopping Center and
were purchased to ensure an unobstructed view of the shopping center from the
road located in front of the property. The parcels were purchased for $224,829,
the approximate market value and McNeil's basis in the parcels; accordingly, no
gain or loss was recorded by McNeil on the transaction.
Payable to affiliates - General Partner at December 31, 1995 and 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.
NOTE 3 - TAXABLE INCOME (LOSS)
- ------ --------------------
McNeil Real Estate Fund XXIV, L.P. 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 $5,490,840 in 1995,
$4,043,975 in 1994 and $4,145,675 in 1993.
NOTE 4 - REAL ESTATE INVESTMENTS
- ------ -----------------------
The basis and accumulated depreciation of the Partnership's real estate
investments at December 31, 1995 and 1994 are set forth in the following tables:
<TABLE>
Accumulated
Buildings and Depreciation Net Book
1995 Land Improvements and Amortization Value
---- ------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Island Plaza
Ft. Myers, FL $ 832,191 $ 3,100,907 $ (1,897,524) $ 2,035,574
Pine Hills Apartments
Livingston, TX 605,145 3,698,238 (1,584,751) 2,718,632
Riverbay Plaza
Riverview, FL 294,546 5,666,314 (2,246,406) 3,714,454
Sleepy Hollow Apartments
Cleveland, TX 363,051 4,240,757 (1,747,160) 2,856,648
Southpointe Plaza
Sacramento, CA 3,540,531 6,320,334 (2,535,506) 7,325,359
Springwood Plaza
Dellwood, MO 784,767 3,282,809 (1,433,389) 2,634,187
Towne Center
Derby, KS 361,605 2,153,576 (983,679) 1,531,502
--------- ---------- ----------- ----------
$6,781,836 $28,462,935 $(12,428,415) $22,816,356
========= ========== =========== ==========
Accumulated
Buildings and Depreciation Net Book
1994 Land Improvements and Amortization Value
---- --------- ---------- ----------- ----------
Island Plaza $1,090,222 $ 4,333,785 $ (1,704,850) $ 3,719,157
Pine Hills Apartments 605,145 3,548,265 (1,401,506) 2,751,904
Riverbay Plaza 294,546 5,609,169 (1,996,784) 3,906,931
Sleepy Hollow Apartments 363,051 4,190,842 (1,549,728) 3,004,165
Southpointe Plaza 3,540,531 6,215,749 (2,242,634) 7,513,646
Springwood Plaza 784,767 3,221,448 (1,280,691) 2,725,524
Towne Center 361,605 2,153,577 (884,816) 1,630,366
--------- ---------- ---------- ----------
$7,039,867 $29,272,835 $(11,061,009) $25,251,693
========= ========== =========== ==========
</TABLE>
Island Plaza, a 60,076 square foot single-story strip shopping center, is
anchored by a grocery chain which occupies 30,800 square feet. Two new
grocery-anchored shopping centers have recently been developed within the area
which have brought strong competition to Island Plaza. The competitors' grocery
anchors occupy approximately 65,000 square feet--more than twice the square
footage of Island Plaza's anchor. As a result, the anchor tenant at Island Plaza
has filed for reorganization under the U.S. bankruptcy laws. In order to keep
the anchor open and maintain the viability of Island Plaza, it was necessary to
negotiate a modification of the lease resulting in a reduction in rent.
Additionally, road construction completed during 1995 has moved the flow of
traffic away from Island Plaza toward the two new shopping centers previously
described. These events have caused a decline in future cash flows that are
considered to be a permanent impairment; accordingly, the Partnership recorded a
write-down for permanent impairment of $1,500,085 during the fourth quarter of
1995.
In December 1995, wind and hail damage occurred at Pine Hills Apartments.
Although $75,000 was received from the insurance carrier in February 1996,
repairs to the property had not been completed as of March 1996. A determination
as to the total cost of repairs cannot be made at this time.
The Partnership leases its commercial properties under non-cancelable operating
leases. Future minimum rents to be received as of December 31, 1995 are as
follows:
1996.................................... $ 2,260,000
1997.................................... 2,059,000
1998.................................... 1,656,000
1999.................................... 1,474,000
2000.................................... 1,209,000
Thereafter.............................. 5,011,000
----------
Total $13,669,000
Future minimum rents do not include expense reimbursements for common area
maintenance, property taxes and other expenses. These expense reimbursements
amounted to $444,862, $487,347 and $402,121 for the years ended December 31,
1995, 1994 and 1993, respectively.
NOTE 5 - MORTGAGE NOTE PAYABLE
- ------ ---------------------
The following sets forth the mortgage note payable of the Partnership, related
to Southpointe Plaza Shopping Center, at December 31, 1995 and 1994. The
mortgage note payable is secured by the related real estate investment.
<TABLE>
Mortgage Annual Monthly December 31,
Lien Interest Payments/ -----------------------
Property Position (a) Rate %(b) Maturity 1995 1994
- -------- ------------ --------- ----------------- --------- ---------
<S> <C> <C> <C> <C> <C>
Southpointe Plaza First 7.366 $42,281 4/97 $5,538,527 $5,660,558
========= =========
</TABLE>
(a) The debt is non-recourse to the Partnership.
(b) The interest rate varies monthly based on the monthly weighted average
cost of savings, borrowings and advances by the Federal Home Loan Bank of
San Francisco, with a minimum rate of 5% and a maximum interest rate of
13%. The rate listed above represents the interest rate in effect at
December 31, 1995.
The mortgage encumbering Southpointe Plaza Shopping Center contains a provision
which gave the lender the right to accelerate the mortgage debt as a result of
the March 1992 restructuring of the Partnership. The Original General Partner
requested that the lender consent to the restructuring, thereby waiving its
right to accelerate the mortgage debt. In 1993, the Partnership paid
approximately $62,000 in fees in order to obtain such consent from the lender.
These fees were capitalized as deferred borrowing costs and are being amortized
over the remaining term of the related mortgage note payable.
Scheduled principal maturities of the mortgage note payable under existing terms
are as follows:
1996.................................... $ 102,832
1997.................................... 5,435,695
---------
Total $5,538,527
=========
The Partnership will attempt to obtain refinancing or extension of the mortgage
note when it matures in 1997.
Based on borrowing rates currently available to the Partnership for a mortgage
loan with similar terms and average maturities, the fair value of the mortgage
note payable was approximately $5,170,000 at December 31, 1995.
NOTE 6 - GAIN ON INVOLUNTARY CONVERSION/DEFERRED GAIN
- ------ --------------------------------------------
In 1993, the Partnership received $168,544 in reimbursement from the insurance
company for hail damage suffered at Towne Center Shopping Center in 1992. The
Partnership recorded a $115,779 gain in 1993, which represents the amount by
which the insurance reimbursement received exceeded the basis of the damaged
property.
The Partnership also recorded a deferred gain relating to a tenant's early buy
out of a lease. The balance of this deferred gain totaled $17,000 at December
31, 1994, and was recognized as rental revenue in 1995 as payments were received
from the tenant.
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:
1) High River Limited Partnership v. McNeil Partners, L.P., McNeil Investors,
Inc., McNeil Pacific Investors 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., Robert A. McNeil and
Carole J. McNeil (L95012) - High River ("HR") 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 (as
defined in this Section 1, collectively, the "Defendants") requesting,
among other things, names and addresses of the limited partners in the
partnerships referenced above (as defined in this Section 1, the
"Partnerships"). The District Court issued a preliminary injunction against
the Partnerships requiring them to commence mailing materials relating to
the HR tender offer on August 14, 1995.
On August 18, 1995, the Defendants filed an Answer and Counterclaim. The
Counterclaim principally asserts (1) the HR tender offers have been
undertaken in violation of the Federal securities laws, on the basis of
material, non-public, and confidential information, and (2) that the HR
offer documents omit and/or misrepresent certain material information about
the HR tender offers. The Counterclaim seeks a preliminary and permanent
injunction against the continuation of the HR tender offers and,
alternatively, ordering corrective disclosure with respect to allegedly
false and misleading statements contained in the tender offer documents.
This action was dismissed without prejudice in November 1995.
2) High River Limited Partnership v. McNeil Partners, L.P., McNeil Investors,
Inc., McNeil Pacific Investors 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., 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 filed a second complaint with the District
Court which alleges, inter alia, that McNeil Partners, L.P.'s (the "General
Partner") 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 the General Partner has wrongfully refused to
admit High River as a limited partner to the ten partnerships referenced
above. Additionally, High River purports to assert claims derivatively on
behalf of McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund XI,
Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XXIV, L.P.
and McNeil Real Estate Fund XXV, L.P., for breach of contract and breach of
fiduciary duty, asserting that the General Partner has charged these
partnerships excessive fees. High River's complaint seeks, inter alia,
preliminary injunctive relief requiring the General Partner to admit High
River as a limited partner in each of the ten partnerships referenced above
and to transfer the tendered units of interest in the partnerships to High
River; an unspecified award of damages payable to High River and an
additional unspecified award of damages payable to certain of the
partnerships; an order that defendants must discharge their fiduciary
duties and must account for all fees they have received from certain of the
partnerships; and attorneys' fees.
On January 31, 1996, this action was dismissed without prejudice.
3) 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. The amended cases against the defendant-group, and others,
are proceeding under the caption George and Joy Kugler v. I.R.E. Real
Estate Income Fund, Jerry and Barbara Neumann v. Southmark Equity Partners
II, Richard and Theresa Bartoszewski v. Southmark Realty Partners III, and
Edward and Rose Weskerna v. Southmark Realty Partners II.
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.
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.
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, 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. (as defined in this Section 3, the
"Partnerships") as of August 4, 1995.
Plaintiff alleges that McNeil Partners, L.P., McNeil Investors, Inc.,
Robert A. McNeil and other senior officers (as defined in this Section 4,
collectively, the "Defendants") breached their fiduciary duties by, among
other things, (1) failing to attempt to sell the properties owned by the
Partnerships (as defined in this Section 4, the "Properties") and extending
the lives of the Partnerships indefinitely, contrary to the Partnerships'
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 Partnerships have positive cash
flows and substantial cash balances, and (4) failing to take steps to
create an auction market for equity interests of the Partnerships, 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
Partnerships. Plaintiff also claims that Defendants have breached the
partnership agreements of the Partnerships by failing to take steps to
liquidate the Properties and by their alteration of the Partnerships'
primary purposes, their acts in contravention of these agreements, and
their use of the assets of the Partnerships for their own benefit instead
of for the benefit of the Partnerships.
The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend this action.
5) James F. Schofield, Gerald C. Gillett and Donna S. Gillett v. McNeil
Partners, L.P., McNeil Investors, Inc., McNeil Real Estate Management,
Inc., Robert A. McNeil, Carole J. McNeil, 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. et al. - Superior Court
of the State of California for the County of Los Angeles, Case No. BC133799
(Class and Derivative Action Complaint) and 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 (9) limited
partnerships that are named as nominal defendants as listed above (as
defined in this Section 5, the "Partnerships"). Plaintiffs allege that
McNeil Investors, Inc., its affiliate McNeil Real Estate Management, Inc.
and four (4) of their senior officers and/or directors (as defined in this
Section 5, collectively, the "Defendants") have breached their fiduciary
duties. Specifically, Plaintiffs allege that Defendants have caused the
Partnerships to enter into several wasteful transactions that have no
business purpose or benefit to the Partnerships and which have rendered
such units highly illiquid and artificially depressed the prices that are
available for units on the limited resale market. Plaintiffs also allege
that Defendants have engaged in a course of conduct to prevent the
acquisition of units by Carl Icahn by disseminating false, misleading and
inadequate information. Plaintiffs further allege that Defendants have
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 and, thereby, have
breached the partnership agreements.
The Defendants deny that there is any merit to Plaintiff's allegations and
intend to vigorously defend these actions.
6) 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).
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 (as defined in this Section 6,
the "Partnerships"). Plaintiff alleges that McNeil Partners, L.P., McNeil
Investors, Inc., Robert A. McNeil and other senior officers (as defined in
this Section 6, collectively, 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 Partnerships,
(3) managing the Partnerships 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 Plaintiff's allegations and
intend to vigorously defend this action.
7) 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).
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 (as defined in this Section 7,
the "Partnerships"). Plaintiff alleges that McNeil Partners, L.P., McNeil
Investors, Inc., Robert A. McNeil and other senior officers (as defined in
this Section 7, collectively, 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 Partnerships,
(3) managing the Partnerships 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 Plaintiff's allegations and
intend to vigorously defend this action.
8) Henry Lim, Charles Chen, Paul Van dba Shangri-La Restaurant & Bar, Robert
Narayan and Jackie Kim v. McNeil Real Estate Fund XXIV, L.P. and McNeil
Real Estate Management, Inc. ("McREMI") et al. This was a complaint for
breach of contract, breach of covenant to extend term of lease, intentional
and negligent interference with respective economic relationships, civil
rights violations, intentional and negligent misrepresentation, injurious
false suit and negligent and intentional infliction of emotional distress
brought by former tenants of the Southpointe Plaza Shopping Center, based
on a purported claim that both the Partnership and McREMI orally promised
to agree to extend the lease and approve an assignment of lease from three
of the plaintiffs to two of the other plaintiffs for a restaurant and bar.
On April 10, 1995, a settlement was reached such that the Partnership
agreed to pay the first three plaintiffs $42,500, of which $20,000 was paid
by the Partnership's insurance carrier. The remaining two plaintiffs are
free to continue to pursue their action, however, they would only be able
to prove damages up to $1,500.
<PAGE>
McNEIL REAL ESTATE FUND XXIV, LTD.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION AND AMORTIZATION
December 31, 1995
<TABLE>
Initial Cost (b) Cumulative Costs
--------------------------- Write-down Capitalized
Related (b) Buildings and and Permanent Subsequent
Description Encumbrances Land Improvements Impairment To Acquisition
- ----------- ---------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
APARTMENTS:
Pine Hills
Livingston, TX $ - $ 605,145 $ 3,917,607 $ (692,000) $ 472,631
Sleepy Hollow
Cleveland, TX - 363,051 4,010,076 - 230,681
RETAIL CENTERS:
Island Plaza
fort Myers, FL - 865,393 4,165,635 (1,500,085) 402,155
Riverbay Plaza
Riverview, FL - 294,546 4,736,097 - 930,217
Southpointe Plaza
Sacramento, CA 5,538,527 3,540,531 5,776,653 - 543,681
Springwood Plaza
Dellwood, MO - 784,767 2,574,183 - 708,626
Towne Center
Derby, KS - 361,605 2,359,900 (500,000) 293,676
--------- --------- ---------- --------- ---------
$5,538,527 $6,815,038 $27,540,151 $(2,692,085) $3,581,667
========= ========= ========== ========== =========
</TABLE>
See accompanying notes to Schedule III.
<PAGE>
McNEIL REAL ESTATE FUND XXIV, LTD.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION AND AMORTIZATION
December 31, 1995
<TABLE>
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:
Pine Hills
Livingston, TX $ 605,145 $ 3,698,238 $ 4,303,383 $ (1,584,751)
Sleepy Hollow
Cleveland, TX 363,051 4,240,757 4,603,808 (1,747,160)
RETAIL CENTERS
Island Plaza
Fort Myers, FL 832,191 3,100,907 3,933,098 (1,897,524)
Riverbay Plaza
Riverview, FL 294,546 5,666,314 5,960,860 (2,246,406)
Southpointe Plaza
Sacramento, CA 3,540,531 6,320,334 9,860,865 (2,535,506)
Springwood Plaza
Dellwood, MO 784,767 3,282,809 4,067,576 (1,433,389)
Towne Center
Derby, KS 361,605 2,153,576 2,515,181 (983,679)
--------- ---------- ---------- ----------
$6,781,836 $28,462,935 $35,244,771 $(12,428,415)
========= ========== ========== ===========
</TABLE>
(a) For Federal Income tax purposes, the properties are depreciated over lives
ranging from 15-25 years using ACRS or MACRS methods. The aggregate cost of
real estate investments for Federal income tax purposes was $38,075,103 and
accumulated depreciation was $14,831,777 at December 31, 1995.
(b) The carrying values of Pine Hills Apartments and Towne Center Shopping
Center were reduced by $692,000 and $500,000, respectively, in 1991. The
carrying value of Island Plaza Shopping Center was reduced by $1,500,085 in
1995.
See accompanying notes to Schedule III.
<PAGE>
McNEIL REAL ESTATE FUND XXIV, LTD.
SCHEDULE III
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION AND AMORTIZATION
December 31, 1995
<TABLE>
Date of Date Depreciable
Description Construction Acquired lives (years)
- ----------- ------------ -------- ------------
<S> <C> <C> <C>
APARTMENTS:
Pine Hills
Livingston, TX 1984 10/85 5-25
Sleepy Hollow
Cleveland, TX 1983 08/85 5-25
RETAIL CENTERS
Island Plaza
Fort Myers, FL 1985 04/85 5-25
Riverbay Plaza
Riverview, FL 1983 04/85 5-25
Southpointe Plaza
Sacramento, CA 1982-84 11/85 5-25
Springwood Plaza
Dellwood, MO 1974 09/85 5-25
Towne Center
Derby, KS 1976 07/85 5-25
</TABLE>
<PAGE>
McNEIL REAL ESTATE FUND XXIV, L.P.
Notes to Schedule III
Real Estate Investments and Accumulated Depreciation and Amortization
A summary of activity for the Partnership's real estate investments and
accumulated depreciation and amortization is as follows:
<TABLE>
For the Years Ended December 31,
------------------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Real estate investments:
Balance at beginning of year............... $36,312,702 $35,606,449 $34,846,999
Improvements............................... 432,154 706,253 534,621
Acquisition................................ - - 224,829
Write-down for permanent impairment
of real estate.......................... (1,500,085) - -
---------- ---------- ----------
Balance at end of year..................... $35,244,771 $36,312,702 $35,606,449
========== ========== ==========
Accumulated depreciation and amortization:
Balance at beginning of year............... $11,061,009 $ 9,770,111 $ 8,543,491
Depreciation............................... 1,367,406 1,290,898 1,226,620
---------- ---------- ----------
Balance at end of year..................... $12,428,415 $11,061,009 $ 9,770,111
========== ========== ==========
</TABLE>
<PAGE>
PART III
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------ ---------------------------------------------------------------
FINANCIAL DISCLOSURES
---------------------
None.
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:
<TABLE>
Other Principal Occupations and Other
Name and Position Age Directorships During the Past 5 Years
- ----------------- --- -------------------------------------
<S> <C> <C>
Robert A. McNeil, 75 Mr. McNeil is also Chairman of the Board and Director of McNeil Real
Chairman of the Estate Management, Inc. ("McREMI") which is an affiliate of the General
Board and Director 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 52 Mrs. McNeil is Co-Chairman, with husband Robert A. McNeil, of McNeil
Co-Chairman of the Investors, Inc. Mrs. McNeil has twenty years of real estate experience,
Board 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
- ----------------- --- -------------------------------------
Donald K. Reed, 50 Mr. Reed is President, Chief Executive Officer and Director of McREMI
Director, President, which is an affiliate of the General Partner. Prior to joining McREMI in
and Chief Executive March 1993, Mr. Reed was President, Chief Operating Officer and Director
Officer of Duddlesten Management Corporation and Duddlesten Realty Advisors, Inc.,
with responsibility for a management portfolio of office, retail,
multi-family and mixed-use land projects representing $2 billion in asset
value. He was also Chief Operating Officer, Director and member of the
Executive Committee of all Duddlesten affiliates. Mr. Reed started with the
Duddlesten companies in 1976 and served as Senior Vice President and Chief
Financial Officer and as Executive Vice President and Chief Operating
Officer of Duddlesten Management Corporation before his promotion to
President in 1982. He was President and Chief Operating Officer of
Duddlesten Realty Advisors, Inc., which has been engaged in real estate
acquisitions, marketing and dispositions, since its formation in 1989.
Ron K. Taylor 38 Mr. Taylor is a Senior Vice President of McREMI and has been in this
Vice President capacity since McREMI commenced active operations in 1991. He also serves
as Acting Chief Financial Officer of McREMI since the resignation of
Robert C. Irvine on January 31, 1996. Mr. Taylor is primarily responsible
for Asset Management functions at McREMI, including property
dispositions, commercial leasing, real estate finance and portfolio
management. Prior to joining McREMI, Mr. Taylor served as an Executive
Vice President for a national syndication/property management company.
Mr. Taylor has been involved in the real estate industry since 1983.
</TABLE>
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, 1995, 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, 1995. 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.
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 2,113
Units at February 29, 1996 (approximately 5.28% 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.
Neither the General Partner nor any of the officers or directors of its
general partner own any limited partnership units.
(C) Change in control.
None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- ------- ----------------------------------------------
The amendments to the Partnership compensation structure included in the Amended
Partnership Agreement provide for an asset management fee to replace all other
forms of general partner compensation other than property management fees and
reimbursements of certain costs. 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 percent 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. For the year ended December 31, 1995,
the Partnership paid or accrued $339,920 of such asset management fees.
The Partnership pays property management fees equal to 5% of the gross rental
receipts of residential properties and 6% for commercial properties to McREMI,
an affiliate of the General Partner, for providing property management services.
Additionally, the Partnership reimburses McREMI for its costs, including
overhead, of administering the Partnership's affairs. For the year ended
December 31, 1995, the Partnership paid or accrued $542,394 of such 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
--------
Exhibit
Number Description
------- -----------
4. Amended and Restated Limited Partnership
Agreement of McNeil Real Estate Fund XXIV,
L.P. 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 dated
June 30, 1995, as filed on August 14, 1995).
10.1 Revolving Credit Agreement dated August 6,
1991, between McNeil Partners, L.P. and
various selected partnerships, including the
registrant (incorporated by reference to the
Annual Report of the registrant on Form 10-K
dated December 31, 1993, as filed on March
30, 1994).
10.2 Portfolio Services Agreement dated February
14, 1991, between Southmark Equity Partners,
Ltd. and McNeil Real Estate Management, Inc.
(1)
10.3 Promissory Note dated March 23, 1987, between
Southmark Equity Partners, Ltd. and Great
Western Savings relating to Southpointe Plaza
Shopping Center. (1)
10.4 Property Management Agreement dated March 30,
1992, between McNeil Real Estate Fund XXIV,
L.P. and McNeil Real Estate Management, Inc.
(2)
10.5 Amendment of Property Management Agreement
dated March 5, 1993, by McNeil Real Estate
Fund XXIV, L.P. and McNeil Real Estate
Management, Inc. (2)
11. Statement regarding computation of Net Income
per Limited Partnership Unit (see Note 1 to
Financial Statements).
(1) Incorporated by reference to the Quarterly
Report of the registrant on Form 10-Q for the
period ended March 31, 1991, as filed on May
14, 1991.
(2) Incorporated by reference to the Annual
Report of the registrant on form 10-K for the
period ended December 31, 1992, as filed on
March 30, 1993.
(B) Reports on Form 8-K: There were no reports on Form 8-K filed during the
quarter ended December 31, 1995.
<PAGE>
McNEIL REAL ESTATE FUND XXIV, L.P.
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.
<TABLE>
McNEIL REAL ESTATE FUND XXIV, L.P.
<S> <C>
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
April 1, 1996 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.
April 1, 1996 By: /s/ Donald K. Reed
- ------------------------------- --------------------------------------
Date Donald K. Reed
President and Director of McNeil Investors, Inc.
April 1, 1996 By: /s/ Ron K. Taylor
- ------------------------------- --------------------------------------
Date Ron K. Taylor
Acting Chief Financial Officer
of McNeil Investors, Inc.
April 1, 1996 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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 2,381,183
<SECURITIES> 0
<RECEIVABLES> 433,580
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 35,244,771
<DEPRECIATION> (12,428,415)
<TOTAL-ASSETS> 25,912,389
<CURRENT-LIABILITIES> 0
<BONDS> 5,538,527
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 25,912,389
<SALES> 4,058,503
<TOTAL-REVENUES> 4,217,483
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,478,502
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 433,768
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,694,787)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,694,787)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
